It has been about a month since the last earnings report for Paypal (PYPL). Shares have added about 10.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

PayPal Q3 Earnings Beat Estimates, Revenues Up Y/Y

PayPal Holdings reported third-quarter 2024 non-GAAP earnings of $1.20 per share, which surpassed the Zacks Consensus Estimate by 11.11% and jumped 22.4% year over year.

Net revenues of $7.847 billion increased 6% year-over-year, both on a forex-neutral basis and reported basis. However, the figure lagged the consensus mark by 0.20%.

Transaction margin of $3.7 billion grew more than 8% on a reported basis and more than 6% ex-interest on customer balances, driven by higher interest income, branded checkout, Venmo, Braintree, and tech-led risk/loss improvements.

PYPL’s Revenues Ride on Strong Payment Volume

The total payment volume was $422.641 billion for the reported quarter, up 9% year over year, both on a spot-rate basis and forex-neutral basis. The reported figure beat the Zacks Consensus Estimate by 0.31%.

Transaction revenues were $7.067 billion (90.1% of net revenues), up 6.2% year over year. Value-Added Services revenues were $780 million (9.9% of net revenues), up 2.1% year over year.

Revenues from the United States totaled $4.518 billion (58% of net revenues), up 6% on a year-over-year basis. International revenues were $3.329 billion (42% of net revenues), up 5% year over year on a reported basis and 6% on a forex-neutral basis.

PayPal witnessed year-over-year growth of 1% in total active accounts to 432 million in the reported quarter. The figure topped the Zacks Consensus Estimate by 0.48%.

The total number of payment transactions was 6.631 billion, up 6% on a year-over-year basis. The figure missed the consensus mark by 4.22%.

PYPL’s payment transactions per active account were 61.4 million, up 9% year over year.

PayPal’s operating expenses were $6.456 billion in the third quarter, up 3.3% year over year. As a percentage of net revenues, the figure declined 200 basis points (bps) on a year-over-year basis to 82.3%.

Transaction expense rate was 0.91% in the reported quarter compared with 0.93% reported in the year-ago quarter.

Transaction margin improved 120 bps to 46.6%.

The non-GAAP operating margin expanded 200 bps on a year-over-year basis to 19%.