PayPal Holdings, Inc. (NASDAQ:PYPL) is set to release its fourth-quarter 2025 results on February 3, and investors are closely watching for signals about the company’s growth trajectory. With consensus estimates calling for moderate revenue and EPS growth, the PayPal Q4 earnings outlook highlights both opportunities and risks for the digital payments giant.

Strong Transaction Volume Supports PayPal Q4 Outlook

PayPal’s transformation into a full-scale commerce platform is a central factor shaping its Q4 earnings outlook. The company has leveraged data-driven tools to expand merchant adoption and drive customer loyalty. Analysts expect PayPal’s fourth-quarter performance to benefit from improving Total Payment Volume (TPV) and increased usage across its merchant and consumer base.

The Zacks Consensus Estimate forecasts TPV at $468.318 billion, up roughly 7% year-over-year. This growth reflects the company’s strong relationships with merchants and consumers, which are critical to sustaining long-term momentum. Transaction revenues are projected to reach $7.93 billion, a 4.5% rise from the prior year, while other value-added services could contribute $835.2 million in revenue, up 7.3% from the year-ago quarter.

Risks Weighing on the PayPal Q4 Earnings Outlook

Despite these positives, the PayPal Q4 earnings outlook faces notable headwinds. Competition from rivals like Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA) continues to intensify, putting pressure on PayPal’s growth in digital payments. Additionally, macroeconomic uncertainty and tariff policy developments could further impact results.

Foreign exchange risk also remains a factor, given the company’s extensive international operations. Appreciation or depreciation of the U.S. dollar could influence revenue when converted from foreign currencies. Furthermore, the branded checkout business is expected to grow only modestly, reflecting softer momentum compared with previous quarters.

Analysts also point to a slightly cautious signal from PayPal’s Earnings ESP metric. At -0.24% with a Zacks Rank #4 (Sell), the model does not predict a likely earnings beat this quarter, signaling that investors should temper expectations.

Expected Earnings and Margins

PayPal’s non-GAAP EPS for Q4 is expected between $1.27 and $1.31, with a consensus of $1.29, representing an 8.4% year-over-year increase. Transaction margin dollars are projected between $4.02 billion and $4.12 billion, up 2%-5% from last year. Excluding interest on customer balances, the company anticipates 4%-6% growth in transaction margin dollars.

The company is expected to reach 440.3 million active accounts, up from 434 million in the prior year, though the number of payment transactions may dip slightly to 6.607 billion from 6.619 billion previously. Transaction margins are anticipated to decline slightly to 46.3%, down from 47% year-over-year.

PayPal’s Strategic Positioning

Despite near-term challenges, PayPal’s strategy supports its long-term growth outlook. The company is evolving beyond payment processing into a holistic commerce platform. By integrating services, improving user experiences, and expanding merchant connections, PayPal strengthens the ecosystem for both consumers and merchants.

The firm is also controlling its cost structure, with non-transaction operating expenses expected to grow only in the low single-digit range. This disciplined approach allows PayPal to allocate resources toward strategic initiatives, such as expanding internationally and offering value-added services, further supporting the PayPal Q4 earnings outlook.

Valuation Perspective

PayPal shares have declined roughly 22% over the past three months, underperforming peers and the S&P 500. By contrast, Visa shares fell 1.9% and Mastercard rose 0.9% in the same period. While this underperformance may appear negative, PayPal stock is trading at a discounted forward P/E of 9.07X compared with the financial transaction services industry average of 19.14X, signaling potential long-term value.

The stock’s Value Score of A further indicates that, despite near-term volatility, PayPal may present an attractive entry point for long-term investors who are confident in the company’s strategic execution.

Bottom Line: PayPal Q4 Earnings Outlook Mixed

The PayPal Q4 earnings outlook is nuanced. While TPV growth, expanding merchant usage, and value-added services provide support, competitive pressures, softer branded checkout results, and foreign exchange risks weigh on near-term performance.

For investors, the takeaway is that PYPL’s long-term growth story remains intact, but the short-term earnings beat is not guaranteed. Given its strong fundamentals, strategic initiatives, and attractive valuation, PayPal may still be appealing for long-term investors, but caution is warranted around the upcoming quarterly results.

PayPal’s evolving platform, coupled with disciplined cost management and expanding merchant adoption, suggests the company can maintain growth over time. However, for the Q4 report, investors should prepare for mixed results and potential volatility.