TLDR
- PayPal’s branded checkout service growth is expected to slow by at least two percentage points in Q4, potentially dropping from 5% to 3% or less
- Stock fell 2.7% to $61.20 on Wednesday, down 28% year-to-date as growth concerns persist
- CFO Jamie Miller reported macro pressures from September continued through October and November, with consumers spending less
- Company maintains Q4 guidance due to strength in Venmo, Buy Now Pay Later, debit cards, and processing business
- PayPal expects slower transaction margin and earnings per share growth in 2026 due to investments in agentic commerce partnerships
PayPal stock took a hit Wednesday after the company’s finance chief delivered concerning news about the payment platform’s core business. Shares dropped 2.7% to $61.20, extending what has been a brutal year for investors.
The stock is down 28% in 2025. That makes it one of the weaker performers in the fintech space.
At the UBS investor conference, CFO Jamie Miller pulled back the curtain on what’s happening with PayPal’s branded checkout service. The outlook wasn’t pretty.
Miller warned that the service could grow “at least a couple of points slower” in the fourth quarter compared to the third. That means online-only branded checkout volume, which expanded 5% in Q3, might drop to 3% or less.
The branded checkout service lets merchants process sales through PayPal. It’s a key revenue driver for the company.
But there’s more to the story than just one quarter. Miller pointed to persistent weakness that started in September and hasn’t let up.
“We continue to see consumers spending less… average order values down and just a shifting in that space,” Miller told investors. “And that has persisted.”
Other Businesses Pick Up the Slack
PayPal isn’t changing its Q4 guidance despite the branded checkout slowdown. That’s because other parts of the business are performing better.
Miller highlighted growth in Venmo, the peer-to-peer payment app that’s become popular with younger users. Buy Now, Pay Later services are also showing strength.
The company’s debit card offering and processing business have contributed to the balanced picture. “We’ve done that with a lot of operating discipline,” Miller said.
While PayPal struggled, competitors had a better day. Block, which runs Cash App and Square, climbed 2.3%.
Alphabet’s stock rose 1.7% while Apple dipped 0.3%. Both tech giants operate competing payment services through Google Pay and Apple Pay.
Investment Plans Could Slow 2026 Growth
Miller also addressed the company’s plans for agentic commerce, a technology that uses AI agents to help consumers shop. PayPal is working with several partners on this front.
“It is something where we’re leaning in with a lot of different partners right now, Perplexity, Open AI, Google and a few others,” Miller explained. The company expects to see momentum build in 2026.
But these investments come with a cost. Miller warned that spending on agentic commerce would lead to slower growth next year.
“What I would say is that we expect that the investments we’re going to make, mostly in transaction margin dollars, but some in OpEx, to bring slower growth to transaction margin dollar and earnings per share growth in ’26 versus what we had in ’25,” she said.
The growth will still be positive. Just at a much slower rate than 2025.
Operating expenses in 2026 are expected to grow at about the same rate as transaction margin dollars. That means some compression in profitability metrics.
Miller’s comments suggest PayPal is betting on AI-powered commerce to drive future growth. The company is partnering with major players like OpenAI and Google to develop these capabilities.
The macro environment continues to pressure consumer spending. Average order values are declining as shoppers pull back.
PayPal’s investments in agentic commerce partnerships with Perplexity, OpenAI, and Google are expected to begin showing momentum in 2026, though at the cost of slower earnings growth in the near term.
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