Underwhelming margins at PayPal have been worrying analysts in recent quarters. The company's low-margin business products have grown strongly, while growth in its branded products has slowed due to increased pressure from competitors like Apple (AAPL.O).
PayPal's adjusted operating margin for the quarter came in at 21.4%, missing its forecast of 22%.
Even as signs of inflation cooling emerge, macroeconomic pressures have squeezed household budgets this year, particularly among the lower-income bracket, weighing on shoppers' purchasing power.
U.S. card giants - Mastercard(MA.N) and American Express (AXP.N) - who are similarly dependent on consumer strength have also given muted outlooks for the rest of the year amid persistent worries of a looming economic slowdown.
PayPal also expects its adjusted profit per share in the current quarter to be in a range of $1.22 and $1.24 compared with analysts' estimates of $1.22.
In a bright spot, PayPal's total payment volume surged 11% in the second quarter to $376.5 billion, benefiting from resilient consumer spending trends.
Banking on the continued steady use of its platform, PayPal said it expects third-quarter revenue at about $7.4 billion, above analysts' average estimate of $7.32 billion, according to Refinitiv data.
The company's revenue jumped to $7.3 billion in the second quarter ended June 30, compared with $6.8 billion a year earlier.
The firm earned $1.16 per share on an adjusted basis, in line with Wall Street expectations.
In May, PayPal cut its forecast for annual adjusted operating margin, a move that eclipsed its profit forecast raise.
