PYPL, Paypal Holdings, Inc.
Our products are designed to enable digital payments and simplify commerce experiences for consumers and merchants to make selling, shopping, and sending and receiving money simple, personalized, and secure, whether online or in-person.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, drawn from its own SEC filings. The lens to bring to the numbers below, not the answer.
- What it is
- Revenue is Transaction Revenue (90%) and Revenues From Other Value Added Services (10%).
- What moves the needle
- Pricing power, the surest mark of a moat. What decides it: whether it can raise prices with inflation and not lose the customer, whether the brand still earns its place on the shelf, and whether volume holds when a cheaper rival appears. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has run in the teens (median 15%, above 15% in 6 of 10 years). Owner earnings agree: roughly 19% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
No model wrote a word of this. Every line is arithmetic on the company's filings, shown in full in the sections below; the judgment is yours.
Where the money comes from
read the 10-K →Transaction Revenue is 90% of revenue, so this is largely a single-line business.
- Transaction Revenue90%$29.8B
- Revenues From Other Value Added Services10%$3.4B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $10.8B | $13.1B | $15.5B | $17.8B | $21.5B | $25.4B | $27.5B | $29.8B | $31.8B | $33.2B | $33.7B |
| Operating marginOp. mgn | 14.6% | 16.2% | 14.2% | 15.3% | 15.3% | 16.8% | 13.9% | 16.9% | 16.7% | 18.3% | 17.9% |
| Net incomeNet inc. | $1.4B | $1.8B | $2.1B | $2.5B | $4.2B | $4.2B | $2.4B | $4.2B | $4.1B | $5.2B | $5.1B |
| EPS (diluted)EPS | $1.15 | $1.47 | $1.71 | $2.07 | $3.54 | $3.52 | $2.09 | $3.84 | $3.99 | $5.41 | $5.50 |
| Owner earningsOwner earn. | $2.5B | $1.9B | $4.7B | $3.4B | $5.4B | $4.9B | $5.1B | $4.2B | $6.8B | $5.6B | $5.5B |
| ROICROIC | 10% | 13% | 19% | 15% | 11% | 17% | 12% | 18% | 18% | 23% | 22% |
| Cash & investmentsCash+inv | $5.0B | $5.7B | $9.1B | $10.8B | $13.1B | $9.5B | $10.9B | $14.1B | $10.9B | $10.4B | $9.3B |
| Net debt / (cash)Net debt | ($5.0B) | ($5.7B) | ($7.1B) | ($5.8B) | ($4.1B) | ($1.5B) | ($451M) | ($4.4B) | ($1.0B) | ($435M) | $67M |
| Dividends / shareDiv/sh | — | — | — | — | — | — | — | $0.00 | $0.00 | $0.13 | — |
| Book value / shareBVPS | $12.08 | $13.10 | $12.79 | $14.21 | $16.87 | $18.32 | $17.51 | $19.02 | $19.65 | $20.93 | $21.77 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 13.8×ComfortableOperating income $6.1B ÷ interest expense $441M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ConservativeTotal debt $10.0B ÷ operating income $6.1B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash +$435MNet cashCash $8.0B + ST investments $2.4B − debt $10.0B
Cash and short-term investments exceed every dollar of debt by $435M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Not enough data
The filing data didn't include the inputs for this check.
Is it a good business?
- HighNOPAT $5.0B ÷ invested capital $22.2B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $5.6B = operating cash $6.4B − capex $852M
What an owner could take out without starving the business. That's 17% of revenue. Treating stock comp as the real expense it is (less $1.0B of SBC) leaves $4.6B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $6.4B ÷ net income $5.2B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $6.2B ÷ Owner Earnings $5.6B
Of $5.6B Owner Earnings, $6.2B (111%) went back to shareholders, $130M dividends, $6.1B buybacks. Net of $1.0B stock comp, the real buyback was about $5.0B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.88×MaintainingCapex $852M ÷ depreciation $963M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 6 of 8 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 15% (FY2016) → 18% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 43%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Owner earnings growth +12%/yr
Free cash to owners grew about 12% a year over the record.
- Worst year 2022 · 13.9% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −2.5%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record paid
Paid a dividend in 1 of the years on record.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $51.8B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$7.5B · 14%
- Dividends$130M · 0%
- Buybacks$33.2B · 64%
- Retained (debt / cash)$10.9B · 21%
It reinvested $7.5B (14%) back into the business and returned $33.4B (64%) to owners, $130M in dividends, $33.2B in buybacks.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio221:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$1.0B
The slice of the business handed to employees in shares this year, 3% of revenue, equal to 17% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
4 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $33.2B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.29×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt PassDebt ≤ working capital · $10.0B vs $13.3B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · 1 of 10 yrs
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +159%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $5.41/share and book value $20.93/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Paypal Holdings, Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $5.5B on 920M diluted shares; net debt $67M. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationMD&A
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“In 2025 and 2024, we generated approximately 43% of our net revenues from customers domiciled outside of the U.S. compared to 42% in 2023.”
From the recordRevenue exposed (TTM)$33.7B - Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“The global payments industry is highly competitive, dynamic, innovative, and subject to regulatory scrutiny and oversight.”
From the recordOperating margin17.9% (TTM), near a 10-yr high - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders.”
From the recordBalance sheet (TTM)+$435M net cash · interest covered 13.8× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Legal proceedings On October 4, 2022, a putative securities class action captioned Defined Benefit Plan of the Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund v.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Net cash used in financing activities decreased $2.3 billion in 2025 compared to 2024 due primarily to changes related to funds payable and amounts due to customers of approximately $2.1 billion, and an increase of approximately $600 million in borrowings under financing arrangements, net of repayme…”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Our transaction and credit losses fluctuate depending on many factors, including TPV, product mix, current and projected macroeconomic conditions such as unemployment rates, retail e-commerce sales and average weekly earnings, merchant insolvency events, changes to and usage of our customer protecti…”
- “The increase in 2025 was driven primarily by an increase of approximately $740 million and $340 million in revenue from PayPal and Venmo products and services, respectively, which was largely driven by growth in TPV and number of payment transactions, and an increase of approximately $150 million in…”
- “Net income increased $1.1 billion, or 26%, in 2025 compared to 2024 due to the previously discussed increase in operating income of $740 million, an increase of $223 million in other income (expense), net, and a decline in income tax expense of $123 million driven primarily by discrete tax adjustmen…”
- “Technology and development expenses increased $124 million, or 4%, in 2025 compared to 2024 due primarily to increases in contractor and consultants costs of approximately $80 million, costs from cloud computing services utilized in delivering our products and services of approximately $70 million, …”
- “Our transaction and credit losses fluctuate depending on many factors, including TPV, product mix, current and projected macroeconomic conditions such as unemployment rates, retail e-commerce sales and average weekly earnings, merchant insolvency events, changes to and usage of our customer protecti…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Business services
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| UBERUber Technologies, Inc. | $52.0B | — | 10.7% | 18% | 19% |
| VVisa Inc. | $40.0B | — | 60.0% | 43% | 54% |
| PYPLPaypal Holdings, Inc. | $33.2B | — | 18.3% | 23% | 17% |
| MAMastercard Inc | $32.8B | — | 57.6% | 94% | 52% |
| DASHDoordash, Inc. | $13.7B | — | 5.3% | 13% | 16% |
| EBAYEbay Inc. | $11.1B | 71% | 20.5% | 19% | 13% |
| GPNGlobal Payments Inc. | $7.7B | 73% | 22.8% | 4% | 26% |
| MSCIMsci Inc. | $3.1B | 91% | 54.7% | 45% | 49% |