A：PayPal's second quarter 2026 highlights include revenue growth of 5%, transaction margin dollars growth of 1%, and exceeding expectations. Excluding interest on customer balances, core dollars grew 3%, with continued strength in Venmo and a 2% increase in check-out total payment volume. Earnings per share from loan gap exceeded guidance, declining 1% year over year to 130 8 cents, and the outlook improved with the addition of new initiatives and cost-saving measures.

A：The five important changes PayPal is focusing on for its multi-year transformation are: identifying a business model beyond checkout with a focus on financial services, becoming the largest driver of future transaction margin growth; expanding into financial services to increase the addressable market and create new opportunities for long-term growth; accelerating the momentum of B2B and service provider businesses; rebuilding the consumer side of the network through technology, data, and local capabilities; and simplifying the operating model to improve execution.

A：The next generation innovations such as egante payments and digital identity are expected to become increasingly meaningful contributors to PayPal's business. These areas are seen as fundamental reshapers of the industry, and investing in them is crucial for PayPal to position itself to help define the future of financial transactions.

A：The strategy for PayPal's checkout solutions involves focusing on the consumer at the center of the strategy to strengthen the network, improve the merchant value proposition, and drive long-term growth. By developing a deeper understanding of how consumers engage across the platform, PayPal aims to create the greatest value for consumers, merchants, and PayPal itself. This is achieved by prioritizing the highest value consumer segments, enhancing service quality, and expanding financial services to deepen customer relationships and increase value for both consumers and merchants.

A：Monthly active accounts increased by 1%, to 228 million transactions per active account, excluding Psp. Branded experiences TPV grew by 7%, and while debit card and tap to pay spend, which represent a small portion of branded experiences volume, grew greater than 60% year over year.

A：The transaction take rate declined by 7 basis points to 1.61%, primarily driven by branded co-marketing investments and mix dynamics, including faster Venmo growth.

A：Higher non-transactional operating expenses are driven by investments in platform and cloud modernization, risk capabilities to improve loss performance, and targeted investments to support high priority growth initiatives. These investments are important for the company's growth strategy and to maintain momentum during transformation.

A：The new expectation for the full year TPV growth is low single digits on a currency-neutral basis, which is a modest improvement from prior expectations.

A：The company plans to reinvest a significant portion of the savings into high priority growth initiatives and is raising its full year guidance for non-GAAP transaction margin dollars and earnings per share. The reinvestment is expected to improve operating leverage and the financial profile over time.

A：The savings from the cost out program are expected to be reinvested over the next few years back into areas that support the strategy, particularly in PayPal and Venmo to build the right consumer platforms and marketing to deepen consumer value propositions, leading to stronger operating coverages.

A：Growth in Venmo and Psp in Brain 3 will be accelerated by investing on the product side and the go-to-market side.

A：To re-energize the consumer side of the PayPal network, investments are being made in marketing data capabilities and data processing capabilities to reinforce the company's position in that segment of the network.

A：The company continues to believe in the significant synergies across the three businesses. Specific growth plans have been developed for each area, and there are synergies at the customer level and in the expansion of growth for each business. The company is confident in its ability to grow and expand each business and is also open to considering other opportunities to maximize shareholder value. The board and management team are responsible for objectively evaluating opportunities presented to them.

A：The company does not comment on market speculations but acknowledges that its board and management team are open and have a clear responsibility to evaluate opportunities that create more value. The focus remains on executing the company's own strategic plan, given the confidence in creating value for shareholders.

A：The branded checkout business has shown stabilization at the 2% level and is expected to continue that trend in the second half. Sequential growth in the U.S. was noted, driven by strong buy now pay later momentum and the success of investments, including a benefit from the World Cup. Internationally, there has been a focus on bringing innovations to Europe, upgrading the experience, and investing in buy now pay later and other elements of consumer value. There is also an increased competitive intensity in the market.

A：The five key differences in the new plan include a focus on financial services and expanding into that market, doubling down on growth in existing businesses, focusing on the consumer side of the network, especially high-value customers, changing how the company is run to improve execution and accountability, and modernizing the technology platform to accelerate innovation and embrace AI.

A：The focus on financial services, which already contributes close to 20% of the company's transaction margin and is growing double digits, supports the company's growth by accelerating that growth and by being a significant part of the company's current and future performance.

A：The specific strategies for the consumer side of the network involve offering what high-value customers demand, which not only adds value to them but also to merchants. The company plans to improve the customer experience, deploy new offerings, especially around mobile point of sale (MPL), and make loyalty programs more relevant over time.

A：The role of technology modernization in the company's strategy is to help accelerate innovation over time, embrace AI in technology development, and make the company faster and more efficient. This modernization will support the company's ongoing transformation and growth initiatives.

A：The key metrics to track to understand the company's progress in the new plan include those related to the businesses and areas of investment, such as increasing digital merchant transactions, the growth of credit cards, and the customer lifetime value, among others. For specific segments like Venmo, growth and revenue per account will be important metrics, while for Psp, focus will be on growth and the advantage of value-added services.

A：The company expects branded checkout growth to be low single digits in the second half, with investments ramping up. There are encouraging signs in partnerships and integrated strategies with major merchants. The company is redeploying funds that do not meet ROI hurdles and is being prudent in its guidance, which reflects in their expectations.

A：The growth acceleration in BPL this quarter was due to the work done across various areas such as expanding the portfolio of offerings, improving and expanding geographical coverage, particularly in Europe, and enhancing distribution through partnerships with platforms. A specific example of customer growth was a leading fashion retailer where a new BPL agreement led to a shift from a decline in business to nearly 10% growth in Q2.

A：To maintain growth momentum, BPL plans to continue expanding its portfolio, focus more on marketing and the go-to-market strategy, and continue to expand capabilities. Specific actions include enhancing the portfolio and promoting modern integrations and upgrades to the most modern versions of PayPal.

A：Successful implementations of BPL's solutions in large merchants and platforms include a leading global social commerce platform where the described approach led to 50% growth in volume and transaction margin. Another example is an expansion with a leading global marketplace resulting in a 9% increase in PTV growth and the addition of 500 new, monthly active customers.

A：The percentage of merchants using new payment pages has been increasing, with 60% of merchants now using them. This indicates solid progress in the evolution toward modern solutions.

A：BPL is not expecting or planning any more rate changes for the remainder of the year. The company faced headwinds from rate cuts that occurred late last year, which continue to impact guidance. For the third quarter, BPL expects branded checkout growth to be relatively consistent at about 2%, similar to the movement in the first half of the year.