PayPal Holdings reported third-quarter revenue of $8.58 billion on Tuesday, up 2% year over year but below the $8.71 billion expected by analysts surveyed by Koyfin. The revenue miss marked the company's slowest quarterly growth this year, and shares fell following the release.
Adjusted earnings per share came in at $1.45, exceeding the $1.31 forecast. Adjusted net income declined 3% to $1.25 billion, but a lower diluted share count helped lift per-share results. Diluted shares fell to 858 million from 960 million a year earlier.
Key Operating Metrics
Total payment volume rose 6% to $487.1 billion. Active accounts reached 440 million, up 0.6%, while payment transactions grew 7% to 6.8 billion, indicating transaction activity increased faster than the customer base.
US revenue rose 5% to $5 billion, while overseas revenue fell 2% to $3.58 billion. Transaction margin dollars, which represent revenue after payment costs and credit losses, increased 2% to $3.95 billion. Interest on customer balances declined to $289 million from $321 million, and free cash flow decreased 17% to $1.43 billion. Restructuring and other charges rose to $255 million.
Buybacks and Outlook
PayPal repurchased approximately 28 million shares for $1.5 billion during the quarter. Over the past 12 months, it spent $6 billion to buy back about 117 million shares.
The company raised its full-year adjusted earnings forecast to approximately $5.60 per share from $5.38. It maintained its reported earnings outlook near $5.07 and projected fourth-quarter adjusted earnings of about $1.43 per share. PayPal also declared a dividend of 14 cents per share, payable December 24 to shareholders of record on December 4.
Chief Executive Enrique Lores said the company's multi-year transformation was progressing.
Separately, Aave opened a lending market supporting PayPal's PYUSD stablecoin on October 23. In Hong Kong, HSBC launched its RedCoin stablecoin through PayMe last week, with plans to support transfers and merchant payments. Canada proposed new rules for stablecoin issuers, including reserve requirements and a cap on redemption fees. These developments are separate from PayPal's earnings announcement and forecast.
