The Same Week, Four Earnings Reports, One Real Story: Who’s Actually Making More Money
UPS, PayPal, Shopify, and Amazon all reported earnings within days of each other in late July and early August. Line them up and a single question cuts through all four: when a company moves more volume through its network, does it actually keep more of the money that volume generates? The answer split the group in half.
PayPal Moved More and Kept Less of It
PayPal's total payment volume grew 10% to $486.4 billion in Q2. Revenue grew only 5% to $8.68 billion. That gap shows up directly in the company's own disclosed transaction margin, which fell from 46.4% to 44.9% year over year, and its transaction take rate, which declined 7 basis points to 1.61%. GAAP operating income fell 5%. Non-GAAP operating income fell 8%, with margin contracting 248 basis points to 17.4%. Active accounts ended the quarter at 439 million, essentially flat and down 200,000 from March.
The mechanism is straightforward. Venmo and Braintree, PayPal's lower-margin businesses, both grew total payment volume in the mid-teens. Branded checkout, PayPal's highest-margin business, is guided to grow in the low single digits for the full year. When the cheap-to-process volume grows faster than the profitable volume, total payment volume goes up while the money PayPal actually keeps per dollar processed goes down. New CEO Enrique Lores is now chasing at least $1.5 billion in cost savings specifically to offset that math.
UPS Ran the Opposite Play
UPS moved 3.3% fewer packages a day in the US and charged 9.3% more for each one. Domestic revenue rose 6% to $14.93 billion. Domestic operating profit rose 21% to $1.19 billion, with margin reaching 8%, more than double what it was in Q1. Small and mid-sized business customers grew from 32.0% to 34.5% of domestic volume, the exact mix shift CEO Carol Tomé has been engineering since UPS began deliberately walking away from lower-margin Amazon volume.
The market shrugged anyway. Shares fell roughly 6%, partly because GAAP EPS of $0.71 looked weak against $1.76 adjusted, a gap driven by $891 million in after-tax separation costs from the Driver Choice Program, and partly because Q3 domestic revenue is guided flat with volume down mid-single digits once the seasonal and Amazon comparisons hit.
Shopify Did What PayPal Couldn't
Shopify's GMV grew 32% to $115.6 billion. Revenue grew faster, at 34%. That's the one metric in this comparison that runs backward from PayPal's problem: Shopify made more money per dollar of volume moving through its platform, not less. Operating income reached $488 million, up from $291 million a year earlier. Shopify Payments now processes 68% of GMV, and B2B GMV grew 76%.
Shopify also disclosed, on its own terms and without independent audit, that AI-driven traffic and orders roughly tripled year over year, and that catalog-fed AI search traffic converts at close to twice the rate of scraped data. Those numbers came directly from the company with no third-party verification available yet.
Amazon Crossed $200 Billion, and the Real Number Is Buried
Amazon cleared $200 billion in quarterly revenue for the first time. AWS grew 36.7% to $42.2 billion, generating $16.6 billion in segment operating income, its fastest growth rate in 18 quarters. AWS revenue landed at almost exactly the same dollar figure as Amazon's entire International segment, meaning the cloud business is now roughly the size of everything Amazon sells outside North America combined. Advertising grew 26%, continuing to outpace the core marketplace.
Two of the Four Biggest Bottom Lines Weren't Really the Business
Amazon reported $62.6 billion in net income for the quarter. Of that, $53.4 billion was non-operating income, primarily unrealized gains tied to Amazon's investment in Anthropic. Shopify reported $1.5 billion in net income, and $1.06 billion of that was after-tax equity investment gains, not operating profit.
Strip those out and Amazon's operating income was $27.5 billion, up 43% year over year. Shopify's operating income was $488 million. The headline net income figures both companies led with in their press releases were mostly paper gains from AI-adjacent bets, not cash generated by selling things or processing payments.
Amazon's cash flow statement shows the other side of that same bet. Trailing twelve-month free cash flow moved from an $18.2 billion inflow a year ago to a $7.6 billion outflow, driven by a 64% increase in capital spending to $169 billion, almost entirely AI infrastructure. The paper gain on the Anthropic stake and the cash burn funding AI infrastructure are the same underlying bet, paid for two different ways. Only one side of it has actually settled into cash so far.
