PayPal’s Q3 2025 Earnings: Venmo and BNPL Boom as AI and Dividends Take Center Stage

🤑 PayPal’s Got a New Groove: Unpacking the Q3 Earnings Call

Alright, let’s talk about PayPal. The company just dropped its third-quarter 2025 earnings, and the call with analysts was less of a boring financial report and more of a map for a “New PayPal”. CEO Alex Chriss and CFO/COO Jamie Miller took to the mics to lay out a vision that’s all about moving from “defense to offense”.

So, did they stick the landing? Is PayPal still just that button you click online, or is it becoming something… more? Let’s grab a coffee and unpack the juicy details.

📈 The Q3 Report Card: Crushing It (Mostly)

First, the numbers. In the world of earnings, this was a solid “beat.” PayPal delivered at or above the high end of their own guidance for transaction margin (TM) dollars and earnings per share (EPS).

Here’s the highlight reel:

• Non-GAAP EPS: Grew a healthy 12%.
• Transaction Margin (TM) Dollars (ex-interest): This is a key metric they love, and it grew 7%. For context, two years ago, this number was negative. That’s a serious turnaround.
• Branded Experiences TPV: This is their new favorite metric, which includes all things PayPal and Venmo-branded (online, in-store, debit cards, etc.). It grew 8%.
• A New Dividend! 🚨 Perhaps the biggest “we’re a grown-up company” move, PayPal is initiating a dividend. They assured investors this doesn’t mean they’re done growing; it’s just a way to “strengthen” their capital return program alongside their massive share buybacks.

But the real stars of the show were the two cool kids in PayPal’s portfolio: Venmo and BNPL (Buy Now, Pay Later).

Venmo’s Glow-Up: Venmo is officially not just for splitting pizza with your roommates. It’s becoming a commerce monster.

• Revenue: On pace to hit $1.7 billion this year (excluding interest), which is up more than 20%.
• Active Accounts: Grew to nearly 66 million monthly active users.
• Pay with Venmo: This feature is on fire, with monthly active accounts for it growing by nearly 25%.

The BNPL Land Grab: PayPal is making it clear: they believe Buy Now, Pay Later is a “fundamental change in how consumers want to pay,” and they plan to win.

• Volume: Grew again by more than 20%.
• TPV on Track: They expect to process close to $40 billion in BNPL volume in 2025.
• People Love It: The product has a global Net Promoter Score (NPS) of 80, which is… kind of ridiculously high.

The one “meh” spot? Legacy online branded checkout only grew 5%. They know they need to “close the gap” with e-commerce growth, but they’re confident their new checkout experiences will get them there .

🤔 So, What’s the Catch? A Look at the Future (and the Fine Print)

This all sounds amazing, right? Well, here’s the plot twist.

While PayPal raised its guidance for the full year, its guidance for the fourth quarter signaled a bit of a slowdown. They expect Q4 TM dollars (ex-interest) to grow around 5%, which is a step down from the 7% they’ve been averaging.

So, what gives? Jamie Miller laid out three clear reasons:

1. Tough Comps: Their credit business was on a tear this time last year, so the comparison is just harder.
2. Softer Wallets: They’re seeing a “choppy” macro environment. People are still buying stuff, but the basket sizes (average order value) are shrinking . People are just being more cautious with their cash.
3. Investing Money to Make Money: This is the big one. PayPal is deliberately choosing to reinvest some of its profits right now into marketing and growth initiatives to “drive faster growth over time” .

This last point is what dominated the analyst Q&A session.

The Analyst Grill Session: AI, Venmo, and “Generational Shifts”

This is where the call got really interesting. The analysts basically wanted to know: “What’s the real story with this spending, and what are you buying?”

1. The “Agentic Commerce” (aka The AI Robot Shopper) Question : The first question out of the gate was about “agentic commerce”—a fancy term for AI agents (like ChatGPT or Google’s AI) making purchases for you.

Alex Chriss’s Answer: This isn’t a new priority for PayPal; it’s the evolution of their “be everywhere” strategy (online, in-store, and now agentic). He painted a picture where PayPal becomes the essential, trusted middle layer for AI commerce.

• For Merchants: Instead of trying to integrate with Google, OpenAI, Perplexity, and every other AI model, they integrate once with PayPal .
• For LLMs (The AIs): They get to partner once with PayPal and get instant access to tens of millions of merchants globally .
• For Consumers: You get to use the wallet you trust, with all the buyer protection you’re used to, to shop via an AI.

PayPal announced partnerships with Google and OpenAI to do just this. It’s a massive power play. But, as Jamie Miller added, it will “entail some level of investment” and could be a “near-term headwind” on profits next year.

2. The “Venmo is Crushing It” Question : An analyst basically asked, “Venmo’s growth is wild. How high is up?”.

Alex’s Answer: He was practically beaming. He said they are “just scratching the surface”. He noted that Venmo’s Average Revenue Per Account (ARPA) is still only 1/3 to 1/4 of its potential compared to peers. They’re successfully turning it from a P2P app into a full-blown commerce platform with debit cards (MAAs up 43%!) and Pay with Venmo (MAAs up 24%!). New deals, like the Bilt partnership for paying rent, are just the beginning.

3. The “BNPL Secret Sauce” Question : “Your BNPL growth is very strong. How’s that happening and can it continue?”.

Alex’s Answer: He pointed to a huge strategic shift: “upstream presentment”. Translation: Instead of only offering BNPL at the checkout screen (after you’ve already decided to buy), they’re now showing it on the product page itself. This lets shoppers see they can afford a purchase before they even add it to their cart. It’s a small change with massive implications.

4. The “So… 2026 Will Be…?” Question :  This was the big one. An analyst noted the Q4 slowdown and asked how they should think about 2026, especially with all this new “investment” spending .

Alex’s Big “Mindset” Speech: He didn’t give a number. Instead, he gave a mission statement. He said there are three “generational shifts” happening in commerce right now:

1. Digital Wallets (like PayPal and Venmo)
2. Buy Now, Pay Later
3. Agentic Commerce (AI)

His point was that PayPal is perfectly positioned to win all three. And to do that, they must invest now, even if it means… (and this is the key phrase)… “some near-term headwinds in how fast TM and earnings grow in ’26”.

🚀 The Big Takeaway

So, what’s the story? PayPal’s Q3 was strong, proving the core business (especially Venmo and BNPL) is firing on all cylinders.

But the real news is the strategy. Alex Chriss is basically telling Wall Street: “Stop looking at us quarter-to-quarter. We are in a land grab for the next generation of commerce. We’re going to spend the money needed to win the AI, BNPL, and digital wallet wars. It might ding our margins in the short term, but it will set us up for a decade of durable growth.”

It’s a bold, confident move from a company that’s clearly found its offensive footing. The “New PayPal” isn’t just a checkout button anymore; it’s building an ecosystem. And it’s willing to pay for it.

The question becomes whether or not the market starts rewarding them or if it will wait until these new strategies start to show up in the results. As of now, the market has kept this stock range bound in the $60-$80 range and that doesn’t seem to be changing after this earnings. After all, the stock was up nearly 15% pre-market and ended the day up only 4%. It seems like a case of show us you can walk the walk before we reward you and until then this may remain as a value play that will allow PayPal to buy back their own shares at affordable prices. If they can actually achieve what they’re aiming for, this may end up a great long-term investment but there’s certainly a lot of competition in this space that may make it harder than it sounds.

Disclosure : This is not investment advice. I am long PYPL and may own other stocks discussed in this article now or in the future.