PayPal is showing progress on some metrics as a standalone company, but Wall Street is preoccupied with its deal prospects following recent news

PayPal's CEO said the company's "transformation is well underway."

As investors consider a potential acquisition of PayPal Holdings, the company is offering an update on how it's been performing on a standalone basis.

PayPal (PYPL) saw 2% growth in its branded-checkout business during the second quarter, consistent with the growth rate from the first quarter. The company billed this as a stabilization of the segment, which includes the core PayPal checkout button.

Shares of PayPal were up fractionally in premarket action on Tuesday. A BofA analyst noted heading into the report that PayPal's near-term stock performance would likely "remain more dependent on deal-related developments and investor perceptions regarding the value of the company's assets and long term earnings power."

Reuters reported earlier this month that Stripe and private-equity firm Advent International had submitted a bid for PayPal, though the company didn't discuss this in its earnings press release. The stock rose 17% in the session following that report.

Growth has become more challenging in an increasingly competitive payment-technology market. PayPal has to compete with the likes of Apple Pay, which saw growing adoption during the COVID-19 pandemic era. Furthermore, many browsers make it easy to store and deploy payment credentials, eating into what had traditionally been a main selling point of PayPal's service.

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The company has responded by increasing its diversification efforts. It noted a more than 60% uplift in volume from debit cards and tap-to-pay options, while buy-now-pay-later volume rose 26%. PayPal owns the Venmo brand and disclosed more than 50% growth in the number of monthly active accounts for its Venmo debit card.

From a product standpoint, PayPal has pushed passkey verification, which it said has lessened friction customers experience at checkout.

PayPal disclosed 1% growth in transaction-margin dollars, a measure of payment-activity profitability, though that growth amounted to 3% when excluding interest on customer balances. The company expects "slightly positive to low-single-digit" growth on the metric in the third quarter, also when excluding those interest amounts.

Adjusted earnings per share for the second quarter amounted to $1.38, above the $1.28 consensus view. The company expects about $5.38 for the full year, up from $5.31 a year before. PayPal's prior guidance called for a "low-single-digit decline to slightly positive" performance.

"Our transformation is well underway, and we're executing with discipline on our priorities to deliver durable, profitable growth over the long term," CEO Enrique Lores said in a release.

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-Emily Bary