Revenue is almost entirely fee-based (98.8% in Q2 2026), with the efficiency ratio improving to 23.2% and operating income rising to $1.9 billion, despite net interest income turning negative at -$22 million.
PayPal Holdings, Inc. (PYPL) annual income statement — 13-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 |
|---|
| Net Interest Income | -9M | 76M | 280M | 133M | -130M | -175M | -121M | 82M | 91M | 78M | 0 | 0 | 0 | 0 |
| NII Growth % | -483.24% | -72.86% | 110.53% | 202.31% | 25.71% | -44.63% | -247.56% | -9.89% | 16.67% | - | - | - | - | - |
| Net Interest Margin % | -0.01% | 0.09% | 0.34% | 0.16% | -0.17% | -0.23% | -0.17% | 0.16% | 0.21% | 0.19% | 0% | 0% | 0% | 0% |
| Interest Income | 341M | 517M | 662M | 480M | 174M | 57M | 88M | 197M | 168M | 85M | 0 | 0 | 0 | 0 |
| Interest Expense | 350M | 441M | 382M | 347M | 304M | 232M | 209M | 115M | 77M | 7M | 0 | 0 | 0 | 0 |
| Loan Loss Provision | 18.16B | 17.27B | 16.76B | 15.72B | 13.44B | 11.14B | 9.47B | 8.05B | 6.78B | 5.42B | 4.43B | 3.42B | 2.82B | 2.34B |
| Non-Interest Income | 33.79B | 32.66B | 31.14B | 29.29B | 27.34B | 25.31B | 21.37B | 17.57B | 15.28B | 13.01B | 10.84B | 9.25B | 8.03B | 6.73B |
| Non-Interest Income % | 100.03% | 99.77% | 99.11% | 99.55% | 100.48% | 100.7% | 100.57% | 99.54% | 99.41% | 99.4% | 100% | 100% | 100% | 100% |
| Total Net Revenue | 33.78B | 32.73B | 31.41B | 29.42B | 27.21B | 25.14B | 21.25B | 17.66B | 15.37B | 13.09B | 10.84B | 9.25B | 8.03B | 6.73B |
| Revenue Growth % | 5.98% | 4.19% | 6.77% | 8.12% | 8.25% | 18.33% | 20.32% | 14.85% | 17.48% | 20.71% | 17.24% | 15.24% | 19.3% | - |
| Non-Interest Expense | 9.21B | 9.4B | 9.33B | 8.68B | 9.94B | 9.73B | 8.49B | 6.88B | 6.4B | 5.54B | 4.82B | 4.37B | 3.94B | 3.3B |
| Efficiency Ratio | 27.26% | 28.72% | 29.71% | 29.49% | 36.51% | 38.72% | 39.96% | 38.98% | 41.64% | 42.31% | 44.48% | 47.23% | 49.11% | 49.04% |
| Operating Income | 6.41B | 6.07B | 5.33B | 5.03B | 3.84B | 4.26B | 3.29B | 2.72B | 2.19B | 2.13B | 1.59B | 1.46B | 1.27B | 1.09B |
| Operating Margin % | 18.97% | 18.53% | 16.95% | 17.09% | 14.1% | 16.95% | 15.48% | 15.4% | 14.27% | 16.25% | 14.63% | 15.8% | 15.8% | 16.22% |
| Operating Income Growth % | - | 13.9% | 5.91% | 31.04% | -9.97% | 29.58% | 20.96% | 23.93% | 3.15% | 34.11% | 8.56% | 15.22% | 16.22% | - |
| Pretax Income | 5.86B | 6.29B | 5.33B | 5.41B | 3.37B | 4.1B | 5.07B | 3B | 2.38B | 2.2B | 1.63B | 1.49B | 1.26B | 1.08B |
| Pretax Margin % | 17.36% | 19.22% | 16.96% | 18.39% | 12.37% | 16.31% | 23.84% | 16.98% | 15.45% | 16.81% | 15.04% | 16.09% | 15.71% | 16.11% |
| Income Tax | 961M | 1.06B | 1.18B | 1.17B | 947M | -70M | 863M | 539M | 319M | 405M | 230M | 260M | 842M | 129M |
| Effective Tax Rate % | 16.39% | 16.83% | 22.18% | 21.53% | 28.13% | -1.71% | 17.04% | 17.98% | 13.43% | 18.41% | 14.1% | 17.47% | 66.77% | 11.9% |
| Net Income | 4.9B | 5.23B | 4.15B | 4.25B | 2.42B | 4.17B | 4.2B | 2.46B | 2.06B | 1.79B | 1.4B | 1.23B | 419M | 955M |
| Net Margin % | 14.51% | 15.99% | 13.2% | 14.43% | 8.89% | 16.58% | 19.78% | 13.93% | 13.38% | 13.72% | 12.92% | 13.28% | 5.22% | 14.2% |
| Net Income Growth % | 4.77% | 26.19% | -2.33% | 75.53% | -41.98% | -0.79% | 70.88% | 19.54% | 14.6% | 28.12% | 14.09% | 193.08% | -56.13% | - |
| Net Income (Continuing) | 4.9B | 5.23B | 4.15B | 4.25B | 2.42B | 4.17B | 4.2B | 2.46B | 2.06B | 1.79B | 1.4B | 1.23B | 419M | 955M |
| EPS (Diluted) | 5.44 | 5.41 | 3.99 | 3.84 | 2.09 | 3.52 | 3.54 | 2.07 | 1.71 | 1.47 | 1.15 | 1.00 | 0.34 | 0.80 |
| EPS Growth % | 13.03% | 35.59% | 3.91% | 83.73% | -40.63% | -0.56% | 71.01% | 21.05% | 16.33% | 27.83% | 15% | 194.12% | -57.5% | - |
| EPS (Basic) | - | 5.46 | 4.03 | 3.85 | 2.10 | 3.55 | 3.58 | 2.09 | 1.74 | 1.49 | 1.16 | 1.00 | 0.34 | 0.82 |
| Diluted Shares Outstanding | 901M | 968M | 1.04B | 1.11B | 1.16B | 1.19B | 1.19B | 1.19B | 1.2B | 1.22B | 1.22B | 1.23B | 1.22B | 1.19B |
Quick answers to the most common questions about buying PYPL stock.
For fiscal year 2025, PayPal Holdings, Inc. (PYPL) reported total revenue of $32.73B. This represents a 386.6% increase compared to $6.73B in 2013.
PayPal Holdings, Inc. (PYPL) is profitable, generating $5.23B in net income for the fiscal year ending 2025 with a net profit margin of 15.8%.
PayPal Holdings, Inc. (PYPL) reported an operating income of $6.07B, resulting in an operating profit margin of 18.3%. This margin reflects the operational efficiency of the business before interest and taxes.
PayPal Holdings, Inc. (PYPL) generated $15.46B in gross profit for the year, representing a gross profit margin of 46.6%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Branded checkout erosion
Metrics are mathematically derived from official filings.
Interest Income Fades to Irrelevance
Net interest income has dwindled from $80 million in Q1 2024 to negative $22 million in Q2 2026, reflecting a strategic shift away from interest-earning assets. According to recent financial statements, this line now contributes negligibly to total revenue, which is almost entirely fee-based.
The collapse in NII, from $80 million to effectively zero, suggests PayPal is not operating as a traditional lender but rather as a payments facilitator. The negative NII in Q2 2026 may indicate interest expense exceeding interest income on customer balances, a trend that warrants monitoring. Investors should focus on fee income as the primary revenue driver, as NII is no longer a meaningful earnings component.
Efficiency Gains Offset Margin Pressure
The efficiency ratio improved from 29.8% in Q1 2024 to 23.2% in Q2 2026, indicating disciplined cost management. As reported in quarterly filings, operating income rose to $1.9 billion despite flat revenue, suggesting operating leverage is being realized.
The 660 basis point improvement in efficiency ratio over ten quarters demonstrates that management's cost-cutting initiatives are taking effect. However, this improvement may be partly due to revenue growth rather than absolute expense reduction. The stable gross margin around 46% suggests that while transaction costs remain high, operating expenses are being controlled. Investors should monitor whether these efficiency gains are sustainable or if they come at the expense of future growth investments.
Provision Expense Signals Credit Normalization
Provision for credit losses has risen from $4.2 billion in Q1 2024 to $4.7 billion in Q2 2026, a 12% increase. Based on reported figures, this growth aligns with revenue expansion, suggesting credit quality remains stable relative to the balance sheet.
The provision expense as a percentage of revenue has remained relatively constant, around 54%, indicating that credit costs are scaling with business volume. This stability suggests that PayPal's credit products, such as BNPL and merchant advances, are not experiencing significant deterioration. However, the absolute increase in provisions warrants monitoring, especially if economic conditions weaken. The provision coverage ratio appears adequate, but investors should watch for any acceleration in charge-offs.
Fee Income Dominates Revenue Mix
Non-interest income consistently represents over 98% of total revenue, with Q2 2026 at 98.8%. As disclosed in financial statements, this fee-based model provides predictable cash flows but exposes PayPal to transaction volume fluctuations.
The overwhelming reliance on fee income underscores PayPal's position as a payments processor rather than a traditional bank. This structure offers high scalability but also makes revenue highly sensitive to e-commerce spending and competitive pressures. The slight increase in fee percentage from 97.8% to 98.8% over the period suggests a deliberate shift away from interest income. Investors should assess the quality of these fees, particularly the mix between high-margin branded checkout and lower-margin Braintree processing.
Q2 2026 Marks Margin Inflection
Q2 2026 stands out with operating income of $1.9 billion and an efficiency ratio of 23.2%, the best in ten quarters. According to recent earnings reports, this quarter reflects the culmination of cost discipline and revenue stabilization.
The sequential improvement in operating income from $1.5 billion in Q1 2026 to $1.9 billion in Q2 2026, despite flat revenue, indicates a significant step-change in profitability. This inflection suggests that management's transformation plan is yielding tangible results, with operating leverage becoming evident. However, the sustainability of this margin expansion is uncertain, as it may be driven by one-time cost savings. Investors should watch if this efficiency level can be maintained in subsequent quarters.
Earnings Quality Questioned by SBC
Stock-based compensation likely remains a significant gap between GAAP and non-GAAP earnings, potentially inflating reported profitability. As noted in company disclosures, SBC has historically been a major adjustment, and its continued use may mask true cash generation.
While non-GAAP EPS of $1.38 in Q2 2026 beat estimates, the reliance on SBC adjustments raises questions about earnings quality. If SBC is not fully expensed, reported net income may overstate economic profitability. Additionally, the negative NII and high provision expenses suggest that core operations are not as profitable as headline numbers imply. Investors should scrutinize the cash flow statement to assess the actual cash generation capability of the business.