PayPal forms crypto unit, targets stablecoin growth after $486.4B quarter

PayPal processed $486.4 billion in total payment volume during Q2 2026, up 10 percent year over year, and confirmed a reorganization that gives crypto its own division within a three-business operating model.

"We believe that executing the transformation strategy I have outlined will create significant value for our shareholders," Enrique Lores, CEO at PayPal, said on the earnings call. "That remains our focus."

Revenue rose 5 percent to $8.68 billion, beating the $8.47 billion consensus. Non-GAAP earnings came in at $1.38 per share versus estimates of $1.28. Transaction margin dollars increased 1 percent to $3.9 billion, and adjusted free cash flow reached $1.83 billion. The company raised full-year adjusted EPS guidance to approximately $5.38 per share and lifted transaction margin dollar guidance to roughly $15.6 billion.

PYUSD supply stood near $2.8 billion in mid-July, down from more than $4 billion in March, even as PayPal expanded the stablecoin to 70 markets and made it native on Polygon through issuer Paxos. The company needs to show how PYUSD contributes to revenue and merchant retention before investors can measure the financial value of the strategy.

The new Payment Services & Crypto division sits alongside Checkout Solutions & PayPal and Consumer Financial Services & Venmo. It combines PYUSD with Braintree, small-business processing and value-added merchant services. PayPal listed stablecoins as one of three areas it is expanding into under an "innovating with discipline" heading, next to agentic commerce and identity and biometrics.

PYUSD supply falls even as distribution widens

PYUSD's circulating supply stood near $2.7 billion in early August, according to DefiLlama, about 4.9 percent lower over the previous month. The decline shows that wider distribution has not produced uninterrupted supply growth. On-chain supply is not the same as PayPal revenue or customer adoption — tokens can be minted or redeemed as demand changes across exchanges, wallets and decentralized finance platforms.

PayPal expanded PYUSD access to 70 markets in March. Eligible users can buy, hold, send and receive the stablecoin through PayPal, while some can earn rewards. Paxos issues PYUSD under a national trust charter supervised by the Office of the Comptroller of the Currency.

PYUSD became native on Polygon on July 9 through the network's Open Money Stack, combining wallets, fiat ramps, compliance tools and blockchain settlement for cross-border payment and payout services. PayPal and MoonPay also launched PYUSDx, allowing developers to create application-specific stablecoins backed by PYUSD.

The stablecoin faces entrenched competition. Tether's USDT and Circle's USDC together hold 93.5 percent of fiat-backed stablecoin supply, according to CoinGecko research. PYUSD's share remains small despite PayPal's distribution network and the YouTube integration that pays US-based creators in PYUSD since December.

Cost savings target and acquisition speculation

Lores is targeting at least $1.5 billion in gross run-rate savings over the next two to three years, with about $400 million expected by year-end. The plan runs to 2029 across three drivers: a simplified structure, operational and portfolio optimization, and accelerated AI adoption, which PayPal expects to deliver around 40 percent of the savings.

The earnings release comes weeks after reports that Stripe and private equity firm Advent International submitted a bid for PayPal. The company did not comment on market speculation during its earnings release. PayPal shares gained about 4 percent on earnings day and have risen roughly 31 percent over the past month.

The company recorded $81 million in net losses on strategic investments and crypto assets held for investment during the quarter, added back in the reconciliation to non-GAAP net income. PayPal said the combined portfolio reduced GAAP earnings by about $0.07 per share.

The next measurable checkpoints will be PayPal's third-quarter results, any separate disclosure on Payment Services & Crypto, and monthly PYUSD reserve and supply data. New merchant integrations would show whether the stablecoin is gaining use beyond trading and incentive-driven DeFi activity. For PayPal, the stablecoin strategy represents a bet that a regulated dollar token issued by a major payments company can carve out a meaningful share of a market dominated by Tether and Circle.

This article is for informational purposes only and does not constitute investment advice.