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PayPal's fresh bid for relevance
Notes from PayPal Investor Day 2025
Jevgenijs Kazanins
March 02, 2025 • Estimated Reading Time: 6 minutes
Hey!
On his very first earnings call as the CEO of PayPal $PYPL ( ▼ 5.32% ) , Alex Chriss raised a concern: “We are doing a lot of things, but are we focused enough with our resource allocation?” PayPal just held its investor day, and it was a great and insightful event. But one thing was missing - focus.
A few weeks ago, I wrote about my concerns that PayPal was trying to do too much. Turns out, they want to do even more. The new management hasn’t cut a single product or service - if anything, they are adding more. Even crypto is back.
Many stars need to align right for PayPal to achieve its targets. However, I think the complexity of PayPal’s strategy and the execution risk are already reflected in the stock price. So this is not what I want to write about. What excites me is the company’s longer-term ambition.
PayPal wants to become a commerce platform. They actually have to, as they are falling behind the competition in payments. It’s a long shot and will take years to materialize, but if they manage to pull this off…
Jevgenijs
p.s. if you have feedback just reply to this email or ping me on X/Twitter
All screenshots and quotes in this article are from PayPal Investor Day 2025
Let me first recap why I think PayPal is trying to do too much at the same. They want to reignite growth in branded checkout (the PayPal button) by improving the checkout experience, scaling BNPL lending, and expanding to the Venmo user base. They want to expand their reach into in-store commerce with PayPal and Venmo debit cards. And they want to “accelerate” the small business segment.
Thus, PayPal expects to re-accelerate branded checkout growth from 6% YoY in 2024 to 8-10% YoY by 2027. This requires rolling the new checkout experience to 80% of the customers globally, and growing Pay with Venmo at a CAGR of over 40% and BNPL lending volume at a CAGR of over 20% over the next three years.
Our goal is to nearly double the size of our pay later business over the next 3 years, to grow at more than a 20% CAGR…we will nearly triple pay with Venmo volume over the next 3 years. We expect to grow at more than a 40% CAGR over -- to over $22 billion
In the omnichannel push, PayPal expects Venmo debit card TPV to grow at a CAGR of over 20%, and PayPal debit card TPV to grow at a CAGR of 30%, reaching the total debit card TPV of $50 billion by 2027.
In the small business segment, PayPal is overhauling its go-to-market strategy and doubling down on distribution through the partner network, expanding to 550 actively managed partners (think Shopify, Big Commerce, WooCommerce, etc.). And they plan to double the lending origination volume.
What we've seen is that when we actively manage a partner relative to not actively managing them, a 20% increase in total payment volume. So we made the decision that in 2025, we're going to increase the number of actively managed partners by 2.5x.
But, wait, there is more…PayPal has also partnered with Verifone to bring Braintree into stores. And they want to expand Braintree’s geographical footprint in search of higher profit margins. PayPal has also added another distribution partner for its accelerated checkout solution, Fastlane. JPMorgan Payments will offer Fastlane to its customers in Europe.
In addition, we're laser-focused on geographic and vertical expansion. 70% of our business is currently concentrated in North America. Thus, we have a massive opportunity to grow internationally where we see higher margins. To do so, we're strengthening our localized capabilities and our localized go-to-market.
…and, finally, the company has resurrected its ambition to be “the first and best way to buy, send and spend crypto.” I actually didn’t know that PayPal users can pay merchants using their crypto balance (with PayPal seamlessly handling the conversion to fiat).
PayPal was the company that brought the world from offline to online. And now we are the ones taking it from online to on-chain.
As you can see, PayPal is trying to do a lot of things…just to deliver “high single-digit” growth in gross profit and “low teens” growth in EPS by 2027. I mean, in the same period, Visa is expected to grow non-GAAP EPS by 12-13%, and Fiserv is expected to grow non-GAAP EPS by 15-17%. So why take the risk with PayPal?
