How PayPal Budgets and Forecasts Revenue
Breaking Down the FP&A Playbook of a $2 Trillion Payments Giant
There have been countless books and articles written about PayPal—the “mafia,” the stars who came out of it, and the company’s relentless growth. But what’s never covered? How PayPal actually built its forecasting machine. Because at a payments giant handling over $2 trillion in annual transactions, forecasting isn’t just a finance function—it’s a survival skill.
At PayPal, forecasting wasn't just about predicting numbers—it was about understanding how money moves at scale. Erica Gessert, who ran FP&A at PayPal for eight years, shared a behind-the-scenes look at how the company approached budgeting and forecasting revenue as it scaled.
What makes PayPal unique is that it operates at the intersection of payments, technology, and macroeconomics. Unlike a traditional SaaS business with predictable subscription revenue, PayPal's financials are driven by transaction volume, consumer spending behavior, and economic cycles. This complexity forced the FP&A team to develop sophisticated models that could adapt in real time to changing market conditions.
In this piece, we’ll break down PayPal’s budgeting and forecasting playbook, focusing on three key areas:
The Foundation of Revenue Forecasting: How PayPal built models around Total Payment Volume (TPV) and why even the best predictive models had their limits.
Usage-Based Forecasting: How segmenting users based on behavioral drivers created a more accurate forecast.
The Impact of Seasonality & Calendar Days: How business days, holidays, and the infamous “five golden days” of Black Friday through Cyber Monday shaped financial projections.
PayPal’s experience offers valuable lessons for any finance leader managing growth, uncertainty, and the balance between top-down targets and bottom-up execution. It’s a masterclass in harnessing the chaos of a usage based model.
I. The Foundation: TPV (Total Payment Volume)
At the core of PayPal’s financial forecasting was Total Payment Volume (TPV)—the total dollar value of transactions flowing through the platform. Unlike a SaaS business where revenue is largely locked in through subscriptions, PayPal’s revenue was a direct function of consumer spending behavior, merchant adoption, and macroeconomic conditions.