PayPal’s Turnaround Quarter: Lores Raises Guidance as BNPL Volume Jumps 26%

A Beat-and-Raise Quarter After a Rough Year

PayPal reported second-quarter 2026 results on July 28, 2026, and the numbers marked a clear inflection from the stock’s brutal 2025-into-2026 slide. Net revenue reached $8.7 billion, up 5% year-over-year on a spot basis (3% currency-neutral), while total payment volume hit $486 billion, up 9% currency-neutral, according to BigGo Finance’s summary of the earnings call. Non-GAAP earnings per share came in at $1.38 for the quarter, and management used the results to raise full-year guidance: non-GAAP EPS guidance moved up to $5.38, and full-year transaction margin dollars guidance rose to approximately $15.6 billion. Adjusted free cash flow for the quarter was $1.8 billion.

The most closely watched line item was buy-now-pay-later (BNPL) volume, which grew 26% year-over-year — a sharp acceleration that management is using as its clearest proof point that the company’s post-branded-checkout strategy is working. Branded checkout itself, the metric whose deceleration triggered the ouster of PayPal’s previous CEO, grew a modest 2% on a currency-neutral basis in the quarter — not a return to the double-digit growth PayPal once posted, but a stabilization after quarters of much sharper deceleration.

CEO Enrique Lores — who took over as PayPal’s chief executive on March 1, 2026 after PayPal’s board replaced Alex Chriss, citing execution concerns over branded checkout — struck a confident tone on the earnings call: “This is a very real business today that is creating significant contributions, and we expect that to only expand.” CFO Jamie Miller added that “the detailed work we’ve done has really given us a clear view that our plan will drive faster Transaction Margin Dollars growth over time.” Lores previously served as CEO of HP Inc. and had been PayPal’s board chair before taking the top operating role, giving him an unusually direct hand in both setting and executing the turnaround strategy he inherited.

The Amazon Deal Signals Where PayPal Is Betting Next

The most concrete evidence of the new strategy landed alongside the earnings release: PayPal and Amazon jointly announced that PayPal Ratenzahlung, PayPal’s German-market installment-payments brand, will launch on Amazon.de and the Amazon app in Germany and Austria starting August 2026. The program lets eligible shoppers split purchases between €30 and €10,000 into fixed monthly payments over terms of 3, 6, 12, or 24 months — with 36- and 48-month terms available exclusively to Amazon customers, a longer repayment window than PayPal offers through its standard installment product elsewhere. The effective annual interest rate is 11.49%, with fixed borrowing rates of 10.86% to 10.91% depending on the term length selected.

Carola Wahl, PayPal’s Managing Director for Germany, Austria and Switzerland, called it “an important milestone in expanding our Pay Later offerings,” while Amazon’s DACH country manager Rocco Bräuniger framed it around consumer flexibility: “customers can decide to pay over time with clear terms.” On the earnings call, Lores confirmed the tie-up directly, telling investors “PayPal will be soon launching an integrated consumer lending partnership with Amazon for Germany and Austria” — treating the deal as a headline proof point of the BNPL strategy rather than a minor product footnote. Landing a lending partnership on Amazon’s own storefront in two European markets is a meaningfully different distribution strategy than PayPal’s historical approach of competing for standalone checkout share — instead of asking merchants to add a “Pay with PayPal” button, PayPal is embedding its lending product directly inside the world’s largest online retailer’s checkout flow.

The strategic logic mirrors PayPal’s broader Q2 messaging: rather than fight to reverse branded checkout’s decline head-on, management is redirecting growth investment toward the parts of the business — BNPL, Venmo, and enterprise partnerships — where PayPal still has genuine competitive advantages. Venmo’s debit card monthly active accounts grew more than 50% year-over-year in the quarter, and “Pay with Venmo” checkout usage grew 44%, according to the same BigGo Finance summary, suggesting the diversification strategy is showing early traction beyond the headline BNPL number.

What This Means for Merchants, Investors, and Competing BNPL Players

1. Merchants should treat PayPal’s BNPL push as a distribution opportunity, not just a checkout option

With PayPal actively landing exclusive multi-year lending partnerships with platforms as large as Amazon, merchants elsewhere should evaluate whether integrating PayPal’s installment options could meaningfully lift average order value the way it evidently has for at least one large retail partner referenced in PayPal’s own earnings commentary. The 36- and 48-month terms carved out specifically for the Amazon deal suggest PayPal is willing to negotiate materially better terms for large-scale distribution partners than for smaller merchants.

2. Investors should watch transaction margin dollars, not branded checkout, as the real health metric going forward

Branded checkout’s 2% currency-neutral growth is not the number management wants scrutinized — the ~$15.6 billion full-year transaction margin dollars guidance is. Since PayPal’s board fired a CEO over branded checkout deceleration, the fact that Lores’s team is actively steering the narrative toward transaction margin and BNPL volume signals where the company expects (and needs) the next 12-18 months of investor scrutiny to focus.

3. Competing BNPL providers should expect PayPal to compete on distribution deals, not just consumer marketing

Klarna, Affirm, and other BNPL players have historically competed by winning direct merchant integrations one at a time. PayPal’s Amazon tie-up shows a willingness to negotiate exclusive, longer-term-length products for the largest possible single distribution partner — a strategy that could pressure competitors to offer similarly customized terms to match scale players rather than compete purely on brand recognition with consumers.

4. Regional fintech operators should track the 11.49% effective APR as a pricing benchmark

For markets adjacent to Germany and Austria, PayPal’s published effective annual rate on the Amazon-linked installment product offers a concrete, publicly disclosed pricing reference point for what a major BNPL provider considers viable at scale on a top-tier e-commerce platform — useful context for any fintech evaluating comparable installment-lending pricing in its own market.

Five Months In, the Turnaround Thesis Gets Its First Real Test

PayPal’s the second quarter of 2026 results do not erase the company’s rough 2025 — branded checkout is still growing in the low single digits, not the double digits that once defined PayPal’s core business — but they are the first quarter under Lores where the numbers matched the turnaround narrative rather than complicating it. Raising full-year guidance five months into a new CEO’s tenure is a deliberate signal of confidence, not a routine update, and pairing that guidance raise with a concrete, high-profile distribution deal alongside Amazon gives investors something more tangible than a strategy slide to evaluate. The next two quarters will determine whether the Amazon partnership and the broader BNPL acceleration represent a genuine structural shift in PayPal’s growth mix, or a favorable one-off that flatters an otherwise still-decelerating core checkout business.

Frequently Asked Questions

Sources & Further Reading

• PayPal the second quarter of 2026 Earnings Call: Raises Full-Year Profit Outlook, BNPL Volume Surges 26% — BigGo Finance
• PayPal and Amazon Launch Buy Now, Pay Later for Customers in Germany and Austria — PayPal Newsroom
• PayPal Replaces Alex Chriss with HP’s Enrique Lores as CEO — American Banker