PayPal (PYPL.O) has raised its full-year profit forecast beyond Wall Street expectations, signaling that its strategic pivot toward profitability is yielding results. Under the leadership of CEO Alex Chriss, the digital payments leader is focusing on high-margin segments like Venmo and U.S. checkout services to drive sustainable growth, moving away from a sole emphasis on revenue expansion.

The company reported a robust 20% revenue increase for Venmo in the second quarter, with the peer-to-peer payment platform achieving its strongest payment volume growth in three years. This performance reflects PayPal’s efforts to revitalize key business units that struggled post the pandemic-driven e-commerce surge, amid rising competition from players like Apple Pay and Google Pay.

PayPal now projects an adjusted annual profit of $5.15 to $5.30 per share for 2025, surpassing its previous guidance of $4.95 to $5.10 and analyst expectations of $5.10, per LSEG data. However, the company’s third-quarter profit forecast of $1.18 to $1.22 per share aligns closely with Wall Street’s midpoint estimate of $1.20, leading to a 1.2% dip in pre-market share prices.

A key driver of PayPal’s improved outlook is a 7% rise in transaction margin dollars, reaching $3.8 billion, fueled by higher-margin volumes in branded checkout products and cost efficiencies in unbranded processing. The company also reported a 132-basis-point increase in adjusted operating margins to 19.8%, addressing investor concerns about profitability in a competitive landscape.

Despite challenges from Big Tech rivals, PayPal maintains that its market share remains resilient, leveraging its early-mover advantage in digital payments. The company processed $443.5 billion in total payment volume in the second quarter, a 6% increase, supported by steady U.S. consumer spending despite inflationary pressures and looming trade policy changes. Analysts note that early purchases to avoid anticipated tariff-related price hikes have further bolstered transaction volumes.

For the second quarter ending June 30, PayPal’s adjusted profit reached $1.40 per share, up from $1.19 the previous year, with net revenue climbing 5% to $8.3 billion. These results highlight the company’s ability to navigate economic uncertainties while advancing its profitability-focused strategy.