PayPal Holdings Inc. (NASDAQ: PYPL), the parent company of the popular Venmo payment app, revealed disappointing financial results for the fourth quarter of 2025 alongside a significant change in its chief executive leadership. The company’s quarterly revenue increased by only 4% year-over-year, reaching $8.68 billion, falling short of analysts’ expectations, which had forecast $8.80 billion. Meanwhile, the adjusted earnings per share (EPS) stood at $1.23, below the anticipated $1.28 consensus estimate.
Despite the lackluster revenue growth, PayPal experienced a 9% annual increase in total payment volume, which reached $475.1 billion during the quarter, while the number of payment transactions rose modestly by 2% to a total of 6.8 billion. However, the average number of payment transactions per active account declined by 5% on a trailing 12-month basis, averaging around 57.7 transactions per active account. The total active user base grew by a slight 1.1% year-over-year to 439 million accounts, with sequential growth registering an additional 0.3% or approximately 1.2 million accounts.
In terms of profitability metrics, PayPal’s operating margin improved by 19 basis points to 17.4%, though the adjusted operating margin decreased slightly by 9 basis points to 17.9%. The firm’s financials also reflected strong cash flow performance, generating $2.4 billion in operating cash flow, $2.2 billion in free cash flow, and $2.1 billion in adjusted free cash flow for the quarter. Liquidity remains robust with cash, cash equivalents, and investments totaling $14.8 billion as of December 31, 2025, while debt obligations amounted to $11.6 billion.
Complementing its financial activity, PayPal’s Board of Directors declared a quarterly dividend of 14 cents per share, payable on March 25, 2026, to shareholders recorded as of March 4, 2026. Additionally, during the fourth quarter, the company returned $1.5 billion to shareholders through the repurchase of roughly 23 million common shares.
On the leadership front, PayPal confirmed a major transition, appointing Enrique Lores as its next CEO, effective March 1, 2026. Lores, who has served on the company’s Board for nearly five years, is set to replace Alex Chriss. In the interim, Jamie Miller will assume the role of CEO until Lores’s official start date.
The Board’s review underscored that although some progress has been achieved under previous leadership, it was not at the desired pace, prompting a change at the executive level. The company hopes that Lores’s prior experience as President and CEO of HP Inc., where he led comprehensive transformational initiatives, will translate into successful outcomes at PayPal.
During the earnings call that followed the announcement, PayPal’s management adopted a cautious tone. Interim CEO and CFO Jamie Miller indicated a shift away from the company’s previously set long-term financial targets through 2027, opting instead to provide guidance on an annual basis. This approach is intended to be more prudent given the uncertain operating conditions prevailing in the market.
Miller acknowledged that the company’s recent performance has not fulfilled internal expectations, citing broad challenges across PayPal's retail merchant portfolio. She specifically highlighted weaker engagement among lower- and middle-income consumer segments and emphasized the necessity to strengthen relationships with key merchants, particularly to capitalize effectively on high-volume shopping seasons. The remarks underscored ongoing pressures from competitive dynamics and subdued consumer spending, which have continued to impede transaction growth and revenue acceleration.
Looking ahead, PayPal forecasts a mid-single digit decline in adjusted EPS for the first quarter of 2026. For the full year, the company anticipates adjusted EPS to range between a slight decrease in the low-single digits to marginally positive levels.
Market reaction was swift and significant, with PayPal shares falling sharply by 15.73% during premarket trading on the day of the announcement, closing at $44.10 and establishing a new 52-week low. This movement reflects investor concerns about the company’s current trajectory and the imminent leadership upheaval.
The developments at PayPal highlight ongoing challenges within the digital payments space, including evolving consumer behaviors, intensified competition, and the imperative for strategic agility. The appointment of Enrique Lores signals an intent to refocus efforts on transformation and operational improvement as the company navigates a complex market environment.