PayPal Holdings Inc (PYPL)

“the detailed work we've done, particularly over the last two to three months with Enrique has really given us a clear view that our plan will drive faster transaction margin dollar growth over time from diversified growth streams.”

“And then with respect to third quarter, we expect third quarter to be relatively consistent branded checkout growth at about 2%, pretty consistent with the first half, absent some monthly movement up or down.”

“We expect low single-digit revenue growth on a currency-neutral basis, slightly positive growth in transaction margin dollars, transaction margin dollars excluding interest on customer balances to be slightly positive to growing low single digits, high single-digit growth in non-transaction operating expenses, and non-GAAP earnings per share to decline within a low single-digit range.”

“We are on track to achieve at least $1.5 billion in gross run rate cost savings over the next two to three years.”

“all of that will drive an attractive double-digit earnings growth profile over time.”

“For example, PayPal will be soon launching an integrated consumer lending partnership with Amazon for Germany and Austria, and this is a good example of the type of investments we are going to be making.”

“Our financial services portfolio, including Credit and Buy Now Pay Later, is showing good momentum on pace to grow revenue at least twice as fast as the total company this year.”

“With respect to interest rates, we're not expecting or not planning, I should say, any rate changes this year.”

“Yes, Darrin, with respect to the second part of your question, we expect branded checkout growth to be low single digits in the second half.”

“Yes, Dan. When you look at branded checkout, we were really encouraged to see just further stabilization in the business as we moved through second quarter. And we do expect that to continue when we get into the second half.”

“As implied from our guidance for the third quarter and the full year, we also expect fourth quarter transaction margin dollar growth to be slightly positive.”

“We expect our cost savings initiatives to become more meaningful in the fourth quarter, which will benefit operating expense as the year progresses.”

“We have already identified actions to unlock approximately $400 million of new run rate gross savings by the end of this year, with a portion to be realized in the fourth quarter.”

“We now expect these investments to represent a modestly lower headwind to transaction margin dollars in 2026 than the three points we previously anticipated.”

“For online branded checkout, we now expect low single-digit TPV growth on a currency-neutral basis for the full year, reflecting a modest improvement from our prior expectations.”

“Our guidance continues to assume at least $6 billion of adjusted free cash flow and approximately $6 billion in share repurchases.”

“Approximately 7% to 8% growth in non-transaction operating expenses and non-GAAP EPS to increase to $5.38.”

“We now expect transaction margin dollars to increase to approximately $15.6 billion or $14.5 billion, excluding interest on customer balances.”

“While we are still finalizing our plans, this first phase of actions could result in a transformation related charge of approximately $120 million to $140 million during the second half of 2026.”

“non-GAAP earnings per share to decline by high single digits or approximately 9%.”

“Transaction margin dollars excluding interest to decline low single digits or approximately 2% and mid-single-digit growth in nontransaction operating expenses and non-GAAP earnings per share to decline by high single digits or approximately 9%.”

“Pulling all this together, for the second quarter, we expect low single-digit revenue growth on a currency-neutral basis, a low single-digit or approximately 3% decline in transaction margin dollars.”

“This year, our transaction margin dollar investments also ramped through the year and pressure will be more pronounced in the second quarter compared to the first.”

“Quarter-to-date, we are seeing trends at the low end of our full year guidance, and these are reflected in our second quarter guide.”

“We expect the second quarter to reflect more pressure on a year-over-year basis, driven by the nonrecurrence of certain prior year items and the timing of anticipated cost savings and investment, both of which I'll walk through in more detail shortly.”

“Importantly, these are factors we anticipated, and we remain confident in our full year 2026 guidance.”

“Compared to first quarter, as I mentioned, we are seeing some impacts on the travel vertical, but we are very focused on execution as we get into deeper into the second quarter, comps get easier and candidly, in the second half as well.”

“I guess, first, what I would say is we are reiterating our full year guidance. And so we continue to expect slightly positive to low single-digit branded checkout TPV growth.”

“Our guidance continues to assume approximately $6 billion in share repurchase and at least $6 billion of adjusted free cash flow.”

“non-GAAP earnings per share ranging from down low single digits to slightly positive.”

“approximately 3% growth in nontransaction operating expenses”

“For the full year, we are reiterating our guidance, and we continue to expect transaction margin dollars to decline slightly or be roughly flat, excluding interest on customer balances, approximately 3% growth in nontransaction operating expenses and non-GAAP earnings per share ranging from down low single digits to slightly positive.”

“We intend to follow that up with external reporting, including segments sometime next year.”

“Together, these represent 2 distinct waves of savings, the first from structural realignment and the second from accelerating AI adoption and automation to comprise the vast majority of the more than $1.5 billion cost savings program we will execute over the next 2 to 3 years.”

“In parallel, we will be accelerating efforts to deploy AI and automation across our operations and technology platform, which we expect will both improve the customer experience and drive meaningful internal efficiencies.”

“For online branded checkout specifically, our guidance continues to reflect slightly positive to low single-digit branded checkout TPV growth for the full year.”

“We continue to expect our targeted growth investments to represent approximately a 3-point headwind to transaction margin dollars growth in 2026, while driving durable long-term benefits in the years ahead.”

“With that as a backdrop, we are reiterating our guidance for the full year.”

“Driving higher attachment of value-added services continues to be a key focus to improving yield and monetization as we move through 2026.”

“We expect to see at least $1.5 billion of gross translate savings over the next 2 to 3 years.”

“Venmo is on track to exceed $2 billion in revenue ahead of plan.”

“we fully expect that this kind of investment level will be consistent as we go into the few years following.”

“This will be a global multiyear rollout and part of the incremental investment we talked about. It began, as I mentioned, fourth quarter for Venmo and PayPal U.K. But really, I'd say, midyear to second half is when PayPal Plus will come out for us.”

“This is the realization of the vision we presented at Investor Day last year, and we expect to add new merchants and expand volumes with our existing ones as a result.”

“creditor loan losses of about 2.5 bps, which is another 0.5 bp or so.”

“TL, in line with '25, so call that about 7.5 bps of TPV.”

“TEs, at a bit of a lower rate versus '25, so called out about 88 bps or so versus 89 this year.”

“OVAS, about flattish for the year, low single digit, by the way, in 1Q.”

“CapEx, about $1 billion or so.”

“Tax rate assumption, call it, 19% to 21%.”

“GAAP EPS of mid-single-digit decline.”

“Our guidance assumes approximately $6 billion in share repurchases and at least $6 billion of adjusted free cash flow.”

“approximately 3% growth in nontransaction operating expenses”

“For the full year, we expect TM dollars to decline slightly or roughly flat excluding interest and customer balances, approximately 3% growth in nontransaction operating expenses and non-GAAP EPS ranging from down low single digits to slightly positive.”

“our guidance reflects slightly positive to low single-digit branded checkout growth for the full year as we rebuild the momentum Jamie mentioned.”

“For 2026, we expect these targeted growth investments to represent approximately 3 points of headwind to TM dollar growth while driving durable long-term benefits in the years ahead.”

“For branded checkout, our focus is on narrowing the gap with the market over time.”

“Agentic won't materially impact 2026 growth.”

“PayPal mobile app use among online branded checkout users has increased from approximately 50% in January 2023 to more than 60% now, and we will drive that even higher by year-end.”

“our goal is to bring closer to half of our consumers to checkout-ready status by the end of 2026”

“These results give us the confidence to begin making targeted investments in the fourth quarter that amplify the impact of these and other initiatives throughout the portfolio.”

“Our guidance continues to project approximately $6 billion in share buyback and full-year adjusted free cash flow of approximately $6 to $7 billion, which excludes the timing impact of the origination and sale of pay later receivables.”

“We are raising our full-year non-GAAP earnings per share guidance to a range of $5.35 to $5.39, growing at 15% to 16%.”

“Excluding interest, we expect transaction margin dollars to grow between 6% to 7%.”

“For the full year, we are raising our transaction margin dollar guidance by $100 million at the low end and $50 million at the high end to a range of $15.45 to $15.55 billion, which represents 5% to 6% growth.”

“We expect to deliver fourth quarter non-GAAP earnings per share in the range of $1.27 to $1.31, up 7% to 10%.”

“Moving to OpEx, we are planning for low single-digit non-transaction OpEx in the quarter and expect about 3% growth for the full year.”

“Lastly, on TM, our fourth quarter guide assumes some deceleration in branded checkout growth relative to our third quarter average.”

“We expect to see year-over-year comparisons start to normalize more in the fourth quarter.”

“We expect to see ongoing improvement in the quarters ahead, supported by profitable frontbook business, our existing merchant base, and the attachment of value-added services.”

“In general, we continue to target about 70% to 80% of our free cash flow for capital return, with the vast majority going to buyback.”

“At Investor Day, we discussed growing Venmo revenue to more than $2 billion by 2027, and it's clear that the team's execution will allow us to deliver well beyond this over time.”

“All of this gives us confidence in the business's longer-term growth potential and ability to deliver high single-digit transaction margin dollar growth and non-GAAP EPS growth in the teens or better over the longer term.”

“With respect to 2026, there's a small impact to 2026 OpEx in terms of increasing the run rate.”

“Between the push into agentic and that, some of those investments are likely to be a near-term headwind to how fast transaction margin dollars or earnings grow next year.”

“Those investments may very well lead to some near-term headwinds in how fast transaction margin dollars and earnings grow in 2026.”

“We're big supporters of open banking, and we've looked at this end-to-end throughout the business, and the changes are just immaterial to us. We're not going to be impacted by this really at all.”

“The outcome of all this progress and momentum is that we drove 8% currency-neutral growth in Branded Experiences TPV this quarter, and we have confidence that we can continue to grow this moving forward.”

“It's very exciting to see this kind of traction so early, and we are on track to expand to the U.K. this year.”

“I think we're going to start to see this thing turn as we get through the next few quarters and into '26.”

“The biggest next inflection will be as we roll out multiprocessor, because many of our largest merchants really need, Adyen as an example, to be able to support Fastlane, which they've committed to do. So that will come out in the next couple of quarters.”

“We expect the full year run rate to be about 8 bps, so up from last year, but not as high as the second quarter.”

“The other thing is we expect slightly less contribution from credit just with tougher comps in the second half of last year.”

“In third quarter and in fourth quarter, about $125 million... that we expect to decel, which will impact transaction margin dollars.”

“We're mid-teens overall on global TPV, and we want to see that continue to increase over the next few quarters.”

“With respect to accelerated rate, what I would tell you is that we are laser-focused on branded checkout. And I think as we talk about all of this, that focus on execution, the focus on the strategic initiatives, we fully expect to see an accelerated rate of growth over the next few quarters and the next few years.”

“We fully expect to see an accelerated rate of growth over the next few quarters and the next few years.”

“We're obviously monitoring that. But we're very focused on our execution around our strategic initiatives. And bending the curve takes time, and we expect to accelerate as we move through the next couple of quarters and the next couple of years.”

“We plan the full year with branded checkout at mid-single digits. We are on track for that.”

“Our guidance continues to project approximately $6 billion in share buyback and full year free cash flow of approximately $6 billion to $7 billion.”

“We expect continued momentum in transaction revenue with lower growth in other value-added services revenue compared to the second quarter.”

“For the third quarter, we expect currency-neutral revenue growth at the lower end of mid-single digits or approximately 4% or so.”

“Adjusted free cash flow was negatively impacted by timing shifts in working capital, which we expect to reverse in the second half of the year.”

“And most importantly, we are now growing our Braintree TPV again and expect an acceleration in the back half of the year.”

“PayPal World is expected to go live beginning in the fall with partner wallets connecting to PayPal and Venmo.”

“We will continue to expand to more markets throughout the year and launch additional marketing to boost awareness and adoption.”

“Many of these efforts that are contributing to growth this year will continue to ramp into next year and add to our confidence that we are on track to achieve our growth outlook for branded checkout TPV.”

“The traction we are seeing across our initiatives continues to give us confidence that PayPal's growth will accelerate in line with our 3-year outlook.”

“So our expectation is if you look at branded checkout overall, it's this new branded experiences, it's the momentum that we've got in buy now, pay later, which we're seeing over 20% year-over-year growth... All of those coming together, we continue to see momentum on. And so as we exit this year, I expect that we're going to start to see real improvement in branded checkout overall and then as we move into '26.”

“The low end of our full year guide could absorb up to a couple of points of deceleration in e-commerce spending should that occur.”

“We are on track to launch NFC capabilities in Germany later this quarter and bring PayPal everywhere to the U.K. in Q3.”

“As we look at the year, we continue to expect mid-single digit OVAS growth.”

“Second quarter on revenue, we expect pretty similar profile to the first quarter and then a second half ramp, and overall continuing to contribute to that transaction margin growth for 2025.”

“But all in, we’re on track for a mid single-digit branded checkout TPV guide, what we gave earlier this year.”

“Our guidance continues to assume approximately $6 billion in share buybacks for the full year, and we continue to expect full year free cash flow of approximately $6 billion to $7 billion.”

“Excluding interest on customer balances, we expect transaction margin dollars to grow by at least 5% compared to 4.6% growth in 2024, and we expect to deliver full year non-GAAP EPS in the range of $4.95 to $5.10, representing about 8% growth at the midpoint.”

“We are planning for mid single-digit non-transaction opex growth in the quarter due to the timing of initiatives and marketing spend, and we expect to deliver non-GAAP EPS in the range of $1.29 to $1.31, or 9% growth at the midpoint.”

“We expect second quarter transaction margin dollars to be between $3.75 billion and $3.8 billion, which represents 4.5% growth at the midpoint.”

“We are not assuming that those higher activity levels persist for the entire quarter.”

“For the second quarter, we expect low to mid single-digit revenue growth on a currency neutral basis, which is impacted by the Braintree renegotiation efforts I discussed earlier.”

“We continue to expect this benefit to build over time as we drive more value-added services.”

“Shifting away from this volume pressures gross revenue but is accretive to transaction margin dollars and should result in more than one point of TM benefit this year.”

“I expect more demographic-relevant merchants to offer Pay with Venmo over the coming quarters.”

“We will continue to lean into BNPL throughout this year with targeted consumer awareness campaigns in the U.K. and Germany and continued investment in other priority global markets, including Australia, France, Italy and Spain.”

“Online branded checkout TPV, including PayPal and Pay with Venmo, grew nearly 6% this quarter, accounting for last year’s leap day. We’re proud of this growth and expect it to increase over time as more traffic flows through our upgraded experience.”

“However, given it is early in the year and because of the current level of macro uncertainty, we are maintaining our guidance for the full year at this time.”

“We put pretty strong growth numbers of 8% to 10% by 2027, and I think those three levers continue to give us confidence that we’re executing well and heading in that direction.”

“But when you look at the underlying profile of TM which really revolved around branded checkout, Braintree, Venmo, credit, I mean all of those things are things that we believe are durable it is clearly diverse and things that we fully expect to continue as we get into '25 and beyond.”

“I do think this will take a number of quarters for us to really scale this out across the merchant base.”

“As we get into 2025, it continues to grow in terms of its impact on TM which is really great to see.”

“Our total OpEx guide is up low single digits. I would say marketing is up low single digits plus in terms of how we look at it, heavily weighted towards the second quarter, as we really look at the profile throughout the year.”

“As we get into 2025, we will be increasing marketing slightly.”

“When you look at total all-in TM, we are expecting about $150 million of interest rate headwind on all-in TM there, too.”

“The first is we expect transaction loss to normalize as we get into the year. We had a full point benefit of that in '24 and -- or a full basis point benefit. And when we get into 2025, we expect about 0.5 basis point headwind.”

“So to your point, we do expect some impact from that to start to flow through. And we have embedded some of that in our guide, and we expect it to build over time.”

“For 2025, we expect the renegotiations to be about a 5-point revenue growth headwind. But the other important point here is that it's a 1-point accretive on the TM dollars growth in 2025.”

“But the revenue growth should build as we lap some of the larger agreements fluffing-off over time.”

“Yes. And with respect to forward trends on this, we do expect similar dynamics in the next few quarters, some volatility.”

“So from a 2025 guide perspective, we still expect branded checkout TPV to grow about mid-single digits and to have consistent growth from last year into this year with some acceleration with our initiatives, initiatives on top of that.”

“Our guidance also includes approximately $6 billion in share buyback, and we expect full-year free cash flow of approximately $6 billion to $7 billion.”

“As a result, we expect second quarter OpEx growth to be higher than in other periods.”

“We expect full year non-transaction operating expenses to increase in the low single-digit range.”

“In the first quarter, we expect minimal benefit from growth of interest on customer balances and then a headwind for the remainder of the year.”

“For 2025, our guidance includes about a $150 million or about a 1 point headwind due to interest rate cuts.”

“We expect transaction margin dollars to be between $3.6 billion and $3.65 billion, which represents 5% growth at the midpoint.”

“For the first quarter, we expect flat to low single-digit revenue growth on a currency-neutral basis, which is heavily impacted by the Braintree renegotiation efforts I discussed earlier.”

“Over the next few quarters, we will continue to work through renegotiations at which point we should reach a new baseline to drive faster volume and revenue growth.”

“We expect this benefit to build over time as we drive more value-added services.”

“Shifting away from this volume pressures gross revenue but is accretive to transaction margin dollars and will result in more than 1 point benefit this year.”

“We expect a handful of large Braintree merchant renegotiations to result in a headwind to revenue growth of about 5 points in 2025.”

“We plan to expand our PayPal Everywhere value proposition to several European markets this year, including launching NFC capabilities in Germany.”

“We expect an inflection point in adoption when we expand our go-to-market efforts and bring Fastlane to even more merchants through Adyen, Global Payments, and Pfizer this year.”

“For 2025, we expect another solid year of transaction margin dollar growth and strong free cash flow, which Jamie will discuss.”

“But after the two years, it should come down.”

“With respect to CapEx, we are seeing, over the next two years, an increase in the program to about $200 million to $300 million.”

“We now expect to see a higher proportion of OpEx in the fourth quarter than we've seen all year.”

“We expect that trend to continue through 2025 as we really shift from focusing on high portions of revenue to just more holistic, better margin contracts.”

“So we, at least as strong and grow from where we set the baseline in '24.”

“So we’re not standing still. I expect continued momentum on that 5% throughout the next quarter and into 2025.”

“Next year, we will expand our work together to give Prime members the option to link their Amazon and PayPal accounts so that consumers can receive Prime shipping benefits when they use PayPal, while shopping with Buy with Prime.”

“We can't wait to get Fastlane into the hands of more merchants, not only on Braintree and PPCP, but also through our partnerships with Fiserv, Adyen and Global Payments next year.”

“We plan to expand the PayPal Everywhere value proposition to Europe next year, incorporating learnings from our U.S. launch.”

“We expect the availability of NFC capabilities will help drive further adoption and use of PayPal.”

“But we expect that more visible impact on TPV and revenue over the next several quarters.”

“So we, at least as strong and grow from where we set the baseline in '24. So the team is focused. Our innovations will continue to roll out into the market, and I think we're in a healthy place.”

“And then if I pull to '25, I think the thing to think about is, when we look at '25, ex-interest income, we expect transaction margin dollars to grow at least as fast as 2024 on that same basis.”

“We continue to expect 2024 free cash flow of approximately $6 billion and continue to plan for $6 billion of share buyback this year.”

“We now expect full year non-transaction operating expenses to increase in the low-single digit range with ongoing cost efficiency helping to fund our strategic growth investments.”

“We're also planning for some normalization and transaction losses as we roll out new products.”

“Beginning in the fourth quarter, we expect minimal benefit from growth and interest on customer balances and then a headwind beginning in 2025 due to interest rate cuts.”

“2024's full year non-transaction OpEx growth rate, which we now expect to increase in the low-single digit range is a reasonable way to think about the OpEx profile for the business next year.”

“Due to this timing, we expect fourth quarter non-GAAP EPS to decrease by a low to mid-single digit percentage.”

“We expect higher non-transaction OpEx growth in the fourth quarter as we have intentionally concentrated more of our discretionary investment spend, particularly in marketing during the back half of the year and in the holiday season.”

“As a result of these efforts, we expect lower Braintree volume and revenue growth in the fourth quarter and through 2025 before reaccelerating from the reset baseline.”

“For the fourth quarter, we expect revenue to grow by a low-single digit percentage.”

“But more importantly, we expect margin accretion to emerge over the next few years as well and part of that is these renegotiations.”

“Clearly, Fastlane will take time to ramp. And as we get through fourth quarter and through 2025, it will take time to ramp and see in the numbers.”

“It may be a little bit uneven and not linear, but that trend of a little bit more normalization into the business, but improving margin profiles is something we fully expect to continue.”

“I would say generally we are seeing a stronger branded baseline and we're having increasing confidence in the slope of our Braintree profitability efforts.”

“The early feedback we've heard from our merchants and sales team gives us increasing confidence that Fastlane will accelerate PayPal's ability to capture the roughly 60% share of e-commerce purchases made without a branded mark.”

“We really not built any Fastlane upside into guidance.”

“And I think as you look at the second half, what we saw play out in the second quarter, I expect to continue.”

“The other side, I'll just mention this quickly while around the topic, is that we've got a higher tax rate in the second half than we have in the first half.”

“In the second half, when you think about the EPS guide side of it, more than half of that 4Q pressure is the ramping of those growth investments.”

“Having said that, we're planning for some normalization in the second half.”

“When we think about the second half, there is really a couple of things to think about there. I'd say first is that our first half tailwinds around interest income, you know, will begin to decline.”

“But on the branded checkout side of things, we expect the second half to be consistent with the first.”

“Our investment spending will ramp as the year progresses to support our highest priority growth initiatives that go-to-market of new products, partnerships, and innovation, as well as reinvigorated marketing and brand campaigns for both PayPal and Venmo.”

“We continue to expect non-transaction operating expenses to increase slightly with ongoing efficiency funding our strategic growth investments.”

“We were also planning prudently and forecasting less favorability with some normalization in transaction and credit losses.”

“Offsetting some of these improvements, we expect a much smaller tailwind from growth and interest on customer balances, which represented an approximately 3 percentage point tailwind to transaction margin dollar growth in the first half.”

“Related to this, we expect lower volume and revenue growth as we move through the second half of the year.”

“Expect to see more from us in the coming quarters to enable and incentivize our customers to use PayPal online and in person.”

“We are also looking forward to launching even more ways for consumers to use PayPal anytime, anyplace with NFC technology starting in Europe.”

“In the second quarter, we launched push provisioning of the Venmo debit card to Apple and Google wallets and continued to enable Pay with Venmo with more merchants and partners, including eBay and StubHub, which we expect will continue to fuel this growth.”

“We will be ramping our redesigned branded checkout experiences to all eligible consumers in the US in the coming weeks and months.”

“As our network builds with more merchants and consumers, we expect benefits to scale over time because we will be able to recognize even more shoppers.”

“Given the strength across PayPal, we are raising our full year guidance for growth in transaction margin dollars and earnings per share, and increasing our investment in strategic growth initiatives that we are driving.”

“We are working with many of our large enterprises who want access to this before the holidays as well.”

“If I think about over the next year or 2 years, where we are going to expect all of our merchants to be on the latest and greatest integration, which includes Fastlane. And we will then move to deprecate our old integrations.”

“So the plan is, back half of the year, get as many merchants on so that they can win the holiday season. This will still take time. Not everyone will get on for this holiday season, and we expect that will continue into 2025.”

“So by 2025, we would expect roughly half of that impact to be offset, and then more over time.”

“But I guess what I'd say in terms of impact is the date that's being debated right now is the May 14 implementation date. And if that were to be implemented, it would be approximately a 3 percentage point impact to EPS growth for the year, but that is before mitigation.”

“But by and large, we expect branded revenue trends to be pretty consistent with last year as we look at that.”

“And I guess the other comment I might make is that, when you think about take rate for us, we saw a decent drop last year. We do expect take rate will come down again this year, but not nearly to the same extent.”

“This is a network effect. As we gain more and more users coming through, as these users now become returning users over and over again, those rates should continue to improve.”

“We continue to expect free cash flow for 2024 to be approximately $5 billion and for at least $5 billion in share buybacks.”

“For the full year, we expect other value-added services revenue to be roughly flat year-over-year.”

“We expect earnings growth to be more muted in the second half of the year due primarily to less benefit from interest income on customer balances, normalization in transaction and loan loss performance as we progress through the year and the expected timing of investment actions.”

“While the performance of the core business has been relatively consistent, we expect that a few of these tailwinds are likely to be less meaningful as we move through the year. Specifically, we expect to see lower year-over-year benefit from interest on customer balances and lower year-over-year improvement on transaction and loan loss performance.”

“We are activating those plans, and we expect to see tangible progress throughout 2024 and beyond.”

“In the coming months, we will continue to move to more passwordless authentication processes, like biometrics, and launch a redesigned mobile checkout experience, which we believe will result in higher conversion rates.”

“Yes, and Sanjay, on the interest rate question, we do expect that the interest income on customer balances will have a strong growth this year, but really it will be more first half-focused. The second half, we do expect a series of rate cuts that is assumed in our macroeconomic scenario that underpins our guide, and that's why the second half should be much lighter on that front.”

“And then offsetting that, we really see also that some of our smaller product lines in the aggregate will be a drag on TM. This will be to a much lower extent than last year.”

“And we do expect some headwinds to our credit revenue, which as I think, as I mentioned in the script on the call, with loss rate normalization happening to pre-pandemic levels and that trend is starting to work.”

“We expect some benefit in our interest income on customer balances, but really, that should be much smaller than what we saw last year.”

“Let me set the context and I'll see if Jamie wants to pile on. Our branded checkout performance was 6% for the year. It's been pretty consistent. And for what we're looking going into next year, we're expecting it to be consistent as well.”

“Second, we continue to take an active and prudent approach to managing our credit exposure. We are carrying lower credit receivables after tightening originations last year. And for our off-balance sheet originations, we are planning for ongoing normalization and loss rates, which will impact the revenue share that we earn.”

“First, while we are still seeing benefit from the higher interest rate environment, we expect that this tailwind will be much less significant in 2024.”

“These areas take time to scale, but we're laser-focused on them and expect to make steady progress this year.”

“our 2024 guidance includes minimal contribution from the innovations we recently announced.”

“Later this month, we will close on the next tranche of our back book sale of credit receivables.”

“And you will see us with a concerted push to dramatically improve the end-to-end PayPal Complete Payments product rollout and adoption in the next couple of quarters.”

“As you mentioned, we're in early stages with Amazon. That is going well and we expect that both from a customer demand perspective as well as a merchant demand perspective, we will continue to drive acceptance ubiquity for Venmo.”

“That said, we did see a decline in our Q3 transaction margin dollars. We do expect them to decline again in Q4, but to a lesser extent. So, I really view Q3 as the low point and we'd expect to see an improvement in the profile in Q4.”

“Overall, I'd say we're seeing very healthy trends in our checkout business. We're heading into the heart of Q4, and we really see no meaningful shifts in our performance or our demand environment.”

“To date in Q4, branded trends have stabilized and are tracking in line with the first half of the year.”

“In addition, we now expect free cash flow for 2023 to be at least $4.6 billion.”

“We're slightly increasing our expectations for full year 2023 non-GAAP EPS, which we now expect to be approximately $4.98, representing 21% growth from last year.”

“Relative to the 100 basis points of expansion previously expected, we now expect approximately 75 basis points of margin expansion.”

“For 2023, we now expect revenue to grow approximately 8.5% on a currency-neutral basis and approximately 7.5% at spot.”

“In addition, we expect our non-GAAP operating margin to contract from the fourth quarter last year.”

“Our guidance contemplates a sequential improvement in transaction margin dollar performance. That said, on a year-over-year basis, we now expect transaction margin dollars to decline.”

“In addition, we expect non-GAAP EPS in Q4 to be approximately $1.36, representing 10% growth relative to 2022.”

“We now expect fourth quarter revenue to grow between 7% and 8% on a currency neutral basis or approximately 6% to 7% at spot.”

“This sale, which is expected to close in the current quarter, will enable us to put even more focus on our core business and priorities.”

“For the full year, we continue to expect to allocate approximately $5 billion to our share repurchase program.”

“In parallel, the leadership team and I are refreshing our strategic priorities and focus areas for 2024, and we'll be sharing them with you in our next earnings call in February.”

“In addition, we're on track to meet our expense guidance for the year and are committed to delivering at least 100 basis points of non-GAAP operating margin improvement.”

“We are reiterating our guidance for non-GAAP EPS and operating margin expansion for the full year.”

“In the back half of the year, of course, we begin to lap some of the cost savings that we began to take out last year. And so the decline in other OpEx declines a bit, and so we'll be in sort of the high single digits then”

“As Dan said, we're on track for a 10% decline in our other OpEx for the year.”

“We still expect that to decline consistent with what we talked about by 10%.”

“We've taken steps to improve performance. We significantly tightened originations. Today, the book is down about 30% in total receivables, and we expect this pressure to continue through the back half of the year, but then really to abate as we move into next year.”

“We expect to exit the year in a much stronger position from a TM trajectory than where we are right now.”

“We continue to expect to see that strengthen as we go through the year as many of our initiatives are really taking hold in the last quarter.”

“We also continue to expect to deliver non-GAAP earnings per share of approximately $4.95, representing 20% growth from 2022.”

“We expect revenue growth in the back half of the year to be in line with this performance, if not slightly ahead, given the momentum we're seeing in the business.”

“For the full year, we now expect to allocate approximately $5 billion to our buyback program.”

“So while the timing of accounting treatment will affect the quarterly profile of our free cash flow, there is no change to our outlook for the year, and we continue to expect to generate approximately $5 billion in free cash flow.”

“with more than 25 additional channel partners scheduled to be live by the end of the year.”

“Our goal is to continually close the gap in our log-in and checkout experiences every quarter and to be equal to or better than any competitor within the next year.”

“That in connection with our share buybacks enables us to target low to mid-teens EPS growth for the remainder of 2023, even as we begin to lap the increases we enjoyed on our interest income.”

“And we are beginning to see clear signs that our initiatives will yield notable traction against that objective over the next several quarters.”

“As we look ahead to the rest of 2023 and into 2024, we expect to drive meaningful productivity improvements.”

“We expect to increase our non-GAAP operating margin for the full year by at least 100 basis points.”

“And for the year, we anticipate our revenue growth to be between 9% and 10% on a currency-neutral basis.”

“As we mentioned last quarter, we expect our revenue growth in the second half of the year to be roughly the same as and given recent trends, maybe a bit better than the first half.”

“We expect branded checkout volumes will strengthen throughout the back half of the year, supported by traction from our key strategic initiatives.”

“So I've got a lot of confidence that we'll continue to see branded share of checkout be strong.”

“Buy Now, Pay Later, we're taking share there, and we are intending to continue to take share there.”

“We're now, fully live with PPCP here in the U.S. We'll expand to EU and to Australia next quarter.”

“Later this year, we will add the ability for a Venmo user to pay a PayPal user and vice versa, bringing more utility to both customer bases.”

“Going forward, we will primarily focus on enabling unbranded processing and our latest branded checkout experiences through Braintree and PayPal Complete Payments.”

“We do expect all these strategies to start to play out and start to help turn the overall TM profile, but I would expect it's going to take a number of quarters before we see what we would call an inflexion point.”

“But to your point, as we move through the year, we do continue to expect to see a continuation of the TM dynamic that's put out in Q1.”

“We expect delinquencies to worsen through Q2 peak in this quarter and improve throughout the remainder of the year based upon the origination strategy.”

“Our passwordless login improved by 10 full points last year. We intend to grow that again this year, whether that be through pass keys or other ID or forms of biometrics.”

“And if anybody thought costs were going up, they'll go down again next year as well.”

“Many of them will go into place by the fourth quarter, and I expect to see the majority of those things start to take effect in 2024.”

“The back half, we actually have some lapping dynamics and some nuances that will result in much more modest operating margin expansion for 2H overall.”

“Look, we did expect Braintree and we do expect Braintree to moderate its growth, lapping some big deals last year.”

“And as long as we continue to see those trends, we think now it is very different than what we thought coming in that the back half growth is going to be equal to our first half growth.”

“I think if you look at second quarter coming down, third quarter and then fourth quarter, we're lapping some onetime events in Q2 and Q3. That put pressure of about 1 point to 1.5 points on our growth.”

“Additionally, based on the expected contribution of unbranded processing volumes to our growth, we now expect at least 100 basis points of operating margin expansion in 2023.”

“As Dan indicated, assuming that current macro conditions continue, we now expect our back half revenue growth to be roughly in line with our performance in the first half of the year.”

“For the full year, we continue to expect to generate approximately $5 billion in free cash flow and to repurchase roughly $4 billion of our shares.”

“While we do anticipate ongoing mix shift, we believe that this performance will improve as we execute against the strategies that Dan outlined to drive increased profitability across our unbranded processing volume and accelerated growth of our branded franchise.”

“As we have discussed, later this year, we plan to externalize a significant portion of this portfolio, reducing our balance sheet exposure as securing a long-term partner to support sustainable and healthy growth.”

“Consequently, we anticipate our full year revenues to be stronger than we expected, with the back half of the year being roughly similar in growth to the front half.”

“And despite an increasingly competitive environment, we are confident that in total, we continue to hold share across our core markets.”

“By the end of Q1, we will have completed a full payment stack replatforming, leveraging a modern architecture and the latest software engineering methods.”

“we are confident that our 2023 cost structure enables us to continue to fully invest in our high conviction growth initiatives.”

“So we expect to see unbranded, as a whole, that margin structure move up.”

“In our mobile SDK, Buy Now, Pay Later will also be included in that in the second half, which is also something that our merchants are really asking for in terms of seamless integration of that.”

“we're going to probably take about 20% of our TPV through PPCP with integrations through Shopify, Adobe, TikTok, and move that to our most advanced checkout flows.”

“So just in terms of the shape of the year, I would expect a little bit of decel as we move into the back half.”

“I'd also say, given the interest rate environment and how we're currently positioned in our book, we'd expect the incremental benefit from the higher interest rate environment to benefit us more in the first half than the back half as we lap some of those benefits from last year.”

“We're assuming, as we think about the year ahead that we hold or slightly grow our share globally.”

“Finally, in 2023, we expect to generate approximately $5 billion in free cash flow.”

“Foreign exchange rates, we expect an approximate 1-point headwind to full year revenue growth.”

“Our revenue guidance for the first quarter contemplates an approximate 150 basis point headwind from FX.”

“That said, our objective is to grow revenue ahead of this baseline.”

“in 2023, we plan to deliver meaningful non-GAAP operating margin expansion and a significantly stronger non-GAAP earnings profile.”

“In 2021, approximately 20% of our top 100 merchants were on our latest checkout experiences. At the end of 2022, one third of our top 100 were in our latest checkout integration. And in 2023, we are targeting to be approximately 50%.”

“The launch of PPCP, or PayPal Complete Payments, will meaningfully expand our unbranded total addressable market by as much as $750 billion, and enables us to drive incremental share with higher margins than our Braintree Enterprise service.”

“the third and final point is that our actual revenue expectations are well higher than that planning assumption.”

“I think baseline ecommerce growth will be subdued. But I fully expect that we will outpace it.”

“We are firmly committed to executing on the operational initiatives we discussed last quarter and are highly confident that we will deliver on our 2023 framework.”

“We're also on track to build upon our operating margin performance in Q3 to deliver a non-GAAP operating margin expansion in the fourth quarter on both a year-over-year and sequential basis.”

“And given our commitment, and focus on driving continued operational efficiency and earnings leverage, we plan to deliver no less than 15% non-GAAP EPS growth next year.”

“We remain on track to drive over $900 million in cost savings across our operating and transaction expenses this year, and at least $1.3 billion in cost savings next year.”

“And right now, we are not planning that that comes back for any reason, as we look into 2023.”

“The other thing is, we did expect quite a number of live to site implementations on Braintree in the fourth quarter, almost a full point of growth that are being pushed into next year.”

“As we said, in our remarks, we expect in the fourth quarter, that's going to be flat, and probably slightly negative, as we look ahead, and then as you look into 2023, we see no reason why it will come off of those levels of being flat, to slightly negative.”

“Finally, from a capital allocation standpoint, we plan to take a similarly aggressive approach to share repurchases in 2023 as we have this year.”

“First, that our overall volumes will continue to grow faster than ecommerce across our core markets, and that we will continue to take market share.”

“In addition, we're raising non-GAAP EPS to $4.07 to $4.09 for the year.”

“We also expect to deliver non-GAAP operating margin of at least 21% this year.”

“Our guidance contemplates holiday ecommerce ramping through November.”

“We expect this trend to continue in Q4 and into 2023.”

“We do expect we will continue to grow at or above the rate of ecommerce growth.”

“We added 2.9 million NNAs in Q3 and we expect to add another 3 million to 4 million NNAs in Q4.”

“And we are planning similar levels in 2023.”

“We further anticipate that in 2023, we will deliver at least 100 basis points of operating margin expansion.”

“I think you're going to continue to see TPA increase as the year unfolds. And you can hold me to that next quarter.”

“we remain on track to generate more than $5 billion in free cash flow this year.”

“Given our desire to return capital to shareholders and the confidence we have in our business, we will continue to be opportunistic with the pace and quantum of our share repurchases.”

“Our goal is to get to 3 seconds of latency.”

“we'll continue to expect to grow significantly faster than the rate of e-commerce going forward, both on branded by the way and unbranded as well.”

“In addition, I'd say even with those savings, we would expect transaction expense to grow next year.”

“We expect third quarter revenue growth to accelerate 2 points to 12% on a currency-neutral basis and that we will exit the year with revenue growth of approximately 14% in the fourth quarter.”

“We guided last quarter to a range of 11% to 13% revenue growth, and given today's environment, we think it's important to be conservative. Accordingly, I would point you to the lower end of that range on a currency-neutral basis.”

“Overall, this year, we plan to return 75% to 80% of free cash flow to shareholders in the form of share repurchases.”

“We expect FX to continue to be a headwind as we move through the back half of 2022.”

“An external search to replace Mark is well underway, and we expect to announce his replacement in the near future.”

“we expect to share a financial and strategic update, including capital allocation, at an Investor Day in early 2023.”

“We expect the pace of our share repurchases to remain aggressive as we believe there's currently a unique and attractive opportunity to return capital to our shareholders.”

“As we said last quarter, NNAs for Q2 will represent our low watermark for the year. We are reiterating our full year guidance of approximately 10 million NNAs.”

“We anticipate this reduction in our cost structure will result in at least $1.3 billion of cost savings in 2023, which will result in operating margin expansion next year.”

“we're assessing opportunities for additional strategic credit externalization. And we'll update you on our progress as we move through the back half of the year.”