PYPL · Forward model
Revenue by vertical, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
PayPal operates as ONE reportable segment - the 10-Q's Note 15 says the CODM manages the business on consolidated net income - so the only revenue decomposition with dollars attached is the two-category split used here: Transaction revenues and Revenues from other value added services. Both lines are disclosed in the release's Net Revenues by Type table and in the 10-Q disaggregation note, and they sum to reported net revenues with zero residual in all 21 quarters carried here (2021 Q2 - 2026 Q2, assembled from five Q2 releases with four overlap quarters that agreed to the dollar). The deck's channel view - branded experiences 31% of TPV, PSP 45%, P2P and other consumer 27%, Venmo 19% - is TPV only, carries no revenue, and overlaps by construction, so it is NOT used as a revenue split. What is disclosed: both revenue lines, TPV, the transaction take rate, transaction margin dollars, interest on customer balances, volume-based expense, capex, shares, cash and debt. What is assumed: the allocation of volume-based expense between the two lines (constrained to reconcile to the disclosed $3,900M total), every forward growth and drift rate, and the exit multiple. The engine holds share count flat at 882M weighted-average diluted shares; PayPal is guided to repurchase $6B in 2026 and retired 111M shares over the trailing year, so the per-share figures here are deliberately conservative and do not capture the buyback. Corporate overhead is held at a constant 24.7% of revenue: management guides FY2026 non-transaction operating expense to grow 7-8% while the $1.5B savings programme is GROSS run-rate and arrives over two to three years, so a flat ratio is the mid-path between the two and neither takes the savings as a step down nor ignores them. Free cash flow here is taxed EBITDA less capex and prints about $5.0B annualised against the $6B+ of guided adjusted free cash flow, which strips out loan-origination timing this model does not carry.
Latest: $10.69B (2031Q2E)
| Period | Value |
|---|---|
| 2021Q2 | $6.24B |
| 2021Q3 | $6.18B |
| 2021Q4 | $6.92B |
| 2022Q1 | $6.48B |
| 2022Q2 | $6.81B |
| 2022Q3 | $6.85B |
| 2022Q4 | $7.38B |
| 2023Q1 | $7.04B |
| 2023Q2 | $7.29B |
| 2023Q3 | $7.42B |
| 2023Q4 | $8.03B |
| 2024Q1 | $7.70B |
| 2024Q2 | $7.88B |
| 2024Q3 | $7.85B |
| 2024Q4 | $8.37B |
| 2025Q1 | $7.79B |
| 2025Q2 | $8.29B |
| 2025Q3 | $8.42B |
| 2025Q4 | $8.68B |
| 2026Q1 | $8.35B |
| 2026Q2 | $8.68B |
| 2026Q3E | $8.70B |
| 2026Q4E | $9.23B |
| 2027Q1E | $8.79B |
| 2027Q2E | $9.08B |
| 2027Q3E | $9.09B |
| 2027Q4E | $9.64B |
| 2028Q1E | $9.18B |
| 2028Q2E | $9.47B |
| 2028Q3E | $9.49B |
| 2028Q4E | $10.06B |
| 2029Q1E | $9.57B |
| 2029Q2E | $9.87B |
| 2029Q3E | $9.88B |
| 2029Q4E | $10.48B |
| 2030Q1E | $9.97B |
| 2030Q2E | $10.28B |
| 2030Q3E | $10.29B |
| 2030Q4E | $10.91B |
| 2031Q1E | $10.37B |
| 2031Q2E | $10.69B |
What drives each segment
Transaction revenues
Units × priceNinety per cent of PayPal, and literally units times price: the payment volume that crosses the platform multiplied by the take rate PayPal publishes on exactly that definition. Volume is compounding - $486.4B in the basis quarter, +10% year over year and +9% currency-neutral, with Braintree/PSP mid-teens and Venmo TPV +14% - and the take rate is falling just as reliably, 1.68% a year ago against 1.61% now, because the volume growing fastest is the unbranded processing PayPal earns least on. Revenue growth is the residual between the two and has been running 3-7%.
Latest: $9.70B (2031Q2E)
| Period | Value |
|---|---|
| 2021Q2 | $5.80B |
| 2021Q3 | $5.61B |
| 2021Q4 | $6.38B |
| 2022Q1 | $6.00B |
| 2022Q2 | $6.27B |
| 2022Q3 | $6.23B |
| 2022Q4 | $6.70B |
| 2023Q1 | $6.36B |
| 2023Q2 | $6.56B |
| 2023Q3 | $6.65B |
| 2023Q4 | $7.28B |
| 2024Q1 | $7.03B |
| 2024Q2 | $7.15B |
| 2024Q3 | $7.07B |
| 2024Q4 | $7.59B |
| 2025Q1 | $7.02B |
| 2025Q2 | $7.44B |
| 2025Q3 | $7.52B |
| 2025Q4 | $7.82B |
| 2026Q1 | $7.50B |
| 2026Q2 | $7.83B |
| 2026Q3E | $7.85B |
| 2026Q4E | $8.37B |
| 2027Q1E | $7.92B |
| 2027Q2E | $8.20B |
| 2027Q3E | $8.21B |
| 2027Q4E | $8.76B |
| 2028Q1E | $8.29B |
| 2028Q2E | $8.58B |
| 2028Q3E | $8.58B |
| 2028Q4E | $9.15B |
| 2029Q1E | $8.65B |
| 2029Q2E | $8.95B |
| 2029Q3E | $8.95B |
| 2029Q4E | $9.54B |
| 2030Q1E | $9.02B |
| 2030Q2E | $9.32B |
| 2030Q3E | $9.32B |
| 2030Q4E | $9.93B |
| 2031Q1E | $9.39B |
| 2031Q2E | $9.70B |
Assumptions & reasoning
- Units here are millions of dollars of total payment volume and price per unit is revenue per $1M of TPV, so 487,790 x $16,100 is the 1.61% take rate on $487.8B of deseasonalised volume. The engine reapplies the seasonal factor on top, which is why the units input is deseasonalised and the price input is the as-reported take rate.
- The 39.9% margin is transaction margin after volume-based expense and is ASSUMED, not disclosed. Volume-based expenses of $4,782M (transaction expense $4,385M plus transaction and credit losses $397M) are reported consolidated only; this model puts all of them on this line except the $74M credit loss the deck breaks out, which sits on the other line. The split is constrained to reconcile to the disclosed $3,900M of transaction margin dollars and must not be read as a company disclosure.
- Seasonality is derived, not disclosed: ratio-to-centred-moving-average over the 21 disclosed quarters in two windows, giving [0.974, 0.997, 0.987, 1.041] with a window-to-window spread of 0.005. It decomposes cleanly - TPV factors [0.974, 1.002, 0.997, 1.026] times take-rate factors [1.001, 0.994, 0.988, 1.018] reproduce them within 0.003 - so the December lift is roughly two thirds holiday volume and one third holiday mix.
- The Q4 factor has been decaying: 1.062 in 2021, then 1.043, 1.047, 1.048 and 1.026 in 2025, and almost all of the decay is in the take-rate half as PayPal spent on branded co-marketing and BNPL through the holiday. The risk in the published factor is therefore a Q4 overshoot rather than an undershoot; a creation judging that premium structurally gone would use 1.028 and give up about $110M of 2026 Q4 revenue.
- US TPV grew 14% and international TPV 0% currency-neutral in the basis quarter, and international revenue fell 3% currency-neutral. The growth in this line is domestic and PSP-weighted, which is exactly why the take rate keeps falling.
Revenues from other value added services
Growth pathThe other ten per cent, and the part that is not a payments business: partnership and referral fees, subscription and gateway fees, interest and fees on the loan book, and interest earned on the assets underlying customer balances. That last component alone was $281M of the $850M basis quarter and carries essentially no volume cost, which is why PayPal now reports transaction margin dollars both with and without it. It has turned from tailwind to headwind - the line grew 15-17% year over year through 2025 and grew 0.4% in the basis quarter, entirely because interest on balances fell from $318M to $281M while the rest grew about 8%. No operational unit exists to drive it, so it runs on a sequential growth rate.
Latest: $990M (2031Q2E)
| Period | Value |
|---|---|
| 2021Q2 | $441M |
| 2021Q3 | $575M |
| 2021Q4 | $541M |
| 2022Q1 | $485M |
| 2022Q2 | $534M |
| 2022Q3 | $612M |
| 2022Q4 | $681M |
| 2023Q1 | $676M |
| 2023Q2 | $731M |
| 2023Q3 | $764M |
| 2023Q4 | $743M |
| 2024Q1 | $665M |
| 2024Q2 | $732M |
| 2024Q3 | $780M |
| 2024Q4 | $778M |
| 2025Q1 | $775M |
| 2025Q2 | $847M |
| 2025Q3 | $895M |
| 2025Q4 | $857M |
| 2026Q1 | $852M |
| 2026Q2 | $850M |
| 2026Q3E | $855M |
| 2026Q4E | $860M |
| 2027Q1E | $866M |
| 2027Q2E | $872M |
| 2027Q3E | $878M |
| 2027Q4E | $884M |
| 2028Q1E | $890M |
| 2028Q2E | $897M |
| 2028Q3E | $904M |
| 2028Q4E | $911M |
| 2029Q1E | $918M |
| 2029Q2E | $925M |
| 2029Q3E | $933M |
| 2029Q4E | $940M |
| 2030Q1E | $948M |
| 2030Q2E | $956M |
| 2030Q3E | $964M |
| 2030Q4E | $973M |
| 2031Q1E | $981M |
| 2031Q2E | $990M |
Assumptions & reasoning
- This line is left ASEASONAL on evidence, not for want of looking. The same centred-moving-average method run over the same 21 quarters gives factors whose within-quarter spread reaches 0.073 against a largest mean deviation of 0.061, and the two windows disagree by 0.015 in Q4 - ten times the disagreement on the transaction line. A shape fitted across a period when the interest component swung from tailwind to headwind is fitting a rate cycle and calling it a season.
- Interest on customer balances was $281M of the $850M basis quarter, derived as transaction margin dollars $3,900M less the $3,619M reported ex-interest. It is a rates position with no operational driver in PayPal's disclosure, so it is left inside this line's growth rate rather than modelled as a separate rate path.
- The 91.3% margin is $850M less the $74M credit loss the deck reports separately, and is ASSUMED. Interest on balances carries no volume cost at all, which is what puts the margin this high; the terminal 88% assumes credit and BNPL grow faster than the fee lines and pull allocated credit loss up.
- $589M of basis-quarter revenue sits outside ASC 606 - interest and fees on loans, hedging gains and losses, and interest and gains on assets underlying customer balances - and most of it is in this line. PayPal also originated $12.5B of loans receivable held for sale in the quarter and sells them on, which is what adjusted free cash flow exists to strip out.
Where each case comes from
Bear case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bear column is what happens if they are taken at face value.
The take rate, quarter by quarter
- Jul 28, 2026 Transaction take rate -7bps, driven by higher investments in branded checkout and buy now pay later, lapping a prior year non-recurring benefit, and product mix
- Jul 28, 2026 Net revenues increased 5% to $8.7 billion; 3% currency-neutral. Transaction margin dollars increased 1% to $3.9 billion.
Bull case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bull column is what happens if they are taken at face value.
The savings programme and what funds it
- Jul 28, 2026 Refining the roadmap to deliver at least $1.5B in gross run-rate savings over the next two to three years through organizational simplification, operational optimization, and AI adoption
- Jul 28, 2026 On-track to at least $1.5B in gross run-rate savings over the next 2-3 years and ~$400M of run-rate savings achieved by year-end
- Jul 28, 2026 On a trailing 12-month basis, returned $6.0 billion to stockholders by repurchasing approximately 111 million shares of common stock
Lores case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Lores column is what happens if they are taken at face value.
The roadmap, in management's words
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $20.26B |
| Terminal-year revenue | $42.26B |
| Terminal-year EBITDA | $7.68B |
| Exit multiple, on ebitda | 7.5x |
| Terminal value | $57.62B |
| Discounted at 9.5% a year, terminal value becomes | $36.60B |
| Enterprise value | $56.86B |
| Net cash | $1.86B |
| Equity value | $58.72B |
| Shares | 0.88B |
| Fair value per share | $66.58 |
| Against the current price of $61.47 | +8% |
Exit at 7.5x terminal-year EBITDA, which is where PayPal trades today: EV of $52.5B (market cap $54.4B at $61.68 on 882M diluted shares, less $1.9B of net cash) against annualised basis-quarter EBITDA of $7.0B (non-GAAP operating income $1,507M plus D&A $246M, times four) is 7.49x. Holding it flat is deliberate - the model should earn its upside from cash, not from a re-rating, and this business has de-rated for four straight years. Discount at 9.5%: near net-cash and cash-generative, but transaction margin is compressing and the terminal value is most of the answer. Move the exit multiple before anything else; after that, the take-rate drift. The comparable set is qualitative on purpose. The volume-and-take-rate half looks like Block and the merchant acquirers, which is where a low-teens earnings multiple comes from, and the networks are not comparable because they toll volume they do not fund. No peer multiple was verified against a primary source in this pass, so none is asserted here.
Read the other way round: at $61.47 the market is paying 6.6x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Transaction revenues | Revenues from other value added services | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $7.85B | $855M | $8.70B | +3% | $1.75B | $213M | $1.24B | +18 | $1.22B |
| 2026 Q4E | $8.37B | $860M | $9.23B | +6% | $1.82B | $230M | $1.29B | +20 | $1.23B |
| 2027 Q1E | $7.92B | $866M | $8.79B | +5% | $1.75B | $223M | $1.23B | +19 | $1.15B |
| 2027 Q2E | $8.20B | $872M | $9.08B | +5% | $1.78B | $233M | $1.25B | +18 | $1.14B |
| 2027 Q3E | $8.21B | $878M | $9.09B | +4% | $1.77B | $237M | $1.24B | +18 | $1.11B |
| 2027 Q4E | $8.76B | $884M | $9.64B | +4% | $1.85B | $254M | $1.29B | +18 | $1.13B |
| 2028 Q1E | $8.29B | $890M | $9.18B | +4% | $1.77B | $244M | $1.24B | +18 | $1.06B |
| 2028 Q2E | $8.58B | $897M | $9.47B | +4% | $1.81B | $254M | $1.26B | +18 | $1.05B |
| 2028 Q3E | $8.58B | $904M | $9.49B | +4% | $1.81B | $257M | $1.25B | +18 | $1.02B |
| 2028 Q4E | $9.15B | $911M | $10.06B | +4% | $1.88B | $274M | $1.30B | +17 | $1.04B |
| 2029 Q1E | $8.65B | $918M | $9.57B | +4% | $1.81B | $262M | $1.25B | +17 | $975M |
| 2029 Q2E | $8.95B | $925M | $9.87B | +4% | $1.85B | $272M | $1.27B | +17 | $970M |
| 2029 Q3E | $8.95B | $933M | $9.88B | +4% | $1.84B | $274M | $1.27B | +17 | $946M |
| 2029 Q4E | $9.54B | $940M | $10.48B | +4% | $1.92B | $292M | $1.32B | +17 | $960M |
| 2030 Q1E | $9.02B | $948M | $9.97B | +4% | $1.85B | $279M | $1.27B | +17 | $904M |
| 2030 Q2E | $9.32B | $956M | $10.28B | +4% | $1.89B | $289M | $1.30B | +17 | $901M |
| 2030 Q3E | $9.32B | $964M | $10.29B | +4% | $1.89B | $290M | $1.29B | +17 | $879M |
| 2030 Q4E | $9.93B | $973M | $10.91B | +4% | $1.97B | $308M | $1.34B | +16 | $893M |
| 2031 Q1E | $9.39B | $981M | $10.37B | +4% | $1.89B | $294M | $1.30B | +17 | $842M |
| 2031 Q2E | $9.70B | $990M | $10.69B | +4% | $1.94B | $304M | $1.32B | +16 | $840M |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-27 | all | $66.58 | Initial model. Two verticals on the only revenue split PayPal publishes, 21 quarters of disclosed history, basis the June 2026 quarter at $8,682M. The transaction line runs as TPV x take rate with derived seasonality; the other-services line runs aseasonal on sequential growth. Base prints FY2026 revenue of $34.97B and transaction margin dollars of $15.71B against the guided ~$15.6B. |