PayPal’s fourth quarter was marked by underperformance relative to Wall Street’s revenue and earnings expectations, with management citing execution issues in its core branded checkout business as a primary challenge. Outgoing CEO Alex Chriss and interim CEO Jamie Miller acknowledged that operational delays and slower-than-expected merchant adoption hampered results. Miller stated, “We have not moved fast enough or with the level of focus required, and we are taking immediate steps to address that reality.” In particular, weaknesses in U.S. retail, international markets like Germany, and high-growth verticals such as travel and crypto contributed to the quarter’s softer performance.
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PayPal (PYPL) Q4 CY2025 Highlights:
- Revenue: $8.68 billion vs analyst estimates of $8.78 billion (3.7% year-on-year growth, 1.2% miss)
- Adjusted EPS: $1.23 vs analyst expectations of $1.29 (4.4% miss)
- Adjusted EBITDA: $2.02 billion vs analyst estimates of $1.79 billion (23.2% margin, 12.9% beat)
- Operating Margin: 17.4%, in line with the same quarter last year
- Market Capitalization: $37.89 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From PayPal’s Q4 Earnings Call
- Tien-Tsin Huang (JPMorgan) asked if the CEO change signals a shift in strategy or is focused on execution. Interim CEO Jamie Miller clarified the decision centers on accelerating execution, with incoming CEO Enrique Lores deeply involved in shaping current strategic plans.
- Ramsey El-Assal (Cantor Fitzgerald) inquired about steps to accelerate merchant adoption of modern checkout solutions. Miller described a new approach focusing on dedicated teams for high-impact merchants to drive integration and co-marketing, aiming for better adoption rates.
- Darrin Peller (Wolfe Research) questioned the timeline for investment payback and whether to expect improvement in branded checkout this year. CFO Steven Winoker said benefits from current investments will be gradual, with no expectation of a back-end loaded year, while Miller emphasized balancing growth investments with continued capital returns.
- Sanjay Sakhrani (KBW) sought clarification on whether the new CEO would change the 2026 outlook or strategic focus. Winoker and Miller both confirmed Enrique Lores helped shape the guidance and strategy, minimizing the likelihood of wholesale changes after his official start.
- Andrew Schmidt (KeyBanc Capital Markets) pressed on whether branded checkout challenges are rooted more in consumer or merchant friction. Miller responded that both sides contributed, underscoring the need for improved integration and loyalty programs to deepen engagement.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace at which PayPal’s merchant partners adopt new checkout experiences and biometric-enabled flows, (2) the effectiveness of loyalty and rewards programs such as PayPal Plus in driving user engagement and repeat usage, and (3) whether growth in Venmo, Enterprise Payments, and buy now, pay later can offset continued branded checkout softness. Execution against these operational milestones will be pivotal for PayPal’s turnaround efforts.
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