Economy
PayPal Raises 2026 Profit Forecast as Turnaround Gains Traction
PayPal lifted its full-year adjusted profit forecast to about $5.60 per share, citing improving margins and resilient consumer spending, as its multi-year turnaround under CEO Enrique Lores starts to bear fruit.
Photo: Sagarsavla / Wikimedia Commons (CC BY-SA 3.0).
PayPal lifted its annual adjusted profit forecast on Tuesday, as a years-long turnaround starts to bear fruit, with improving margins and resilient consumer spending providing fresh momentum for the payments company.
The company now expects full-year adjusted profit of about $5.60 per share, compared with its previous forecast and Wall Street analysts' expectations of $5.38, according to estimates compiled by LSEG.
"We are making good progress in our multi-year transformation," CEO Enrique Lores said in a statement. Lores took the helm earlier this year after the board ousted Alex Chriss over dissatisfaction with the pace of change and execution. "While there is more work to do, we are increasingly confident in our path to durable, profitable growth and remain focused on execution," he added.
PayPal has stepped up efforts to revive growth as it struggles to sustain its pandemic-era popularity amid intense competition from Apple and Google and newer fintech firms. The company said it was on track to achieve $700 million in gross run-rate cost savings by the end of 2026, driven by cuts to more than 2,000 jobs and a reduction of over 25% in managerial roles. Efforts to streamline operations, optimize its portfolio and accelerate AI adoption, including using AI chat agents to support customer service, are also supporting cost management, the company said. It has set a goal of securing at least $1.5 billion in gross run-rate savings over the next two to three years, and its adjusted operating margin expanded 16 basis points to 18.8% in the third quarter.
More broadly, US consumers have continued to open their wallets despite economic uncertainty and sticky inflation, helping sustain spending growth across the payments industry. PayPal's total payment volume grew 7% on a foreign-exchange-neutral basis to $487.1 billion in the third quarter, and adjusted profit came in at $1.45 per share in the three months ended September 30, sailing past estimates of $1.31.
The year-end holiday season brings a crucial sales period for the payments sector, as retailers roll out discounts for Black Friday, Cyber Monday and Christmas. PayPal expects adjusted profit in the fourth quarter to come in at $1.43 per share, well above Street expectations of $1.35 and $1.23 a year earlier.
Earlier this year, Reuters reported, citing sources, that PayPal had received a buyout offer of $60.50 per share from Stripe and private equity firm Advent International, a bid that many analysts described as "low-ball". The offer, which valued PayPal at about $53 billion, was reportedly deemed inadequate by the board and represented a fraction of the roughly $360 billion valuation the company commanded at its peak in 2021.
Source: Reuters
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