Non-GAAP earnings were 31 cents per share on revenue of $2.26 billion.
Wall Street was looking for earnings of 29 cents per share on revenue of $2.27 billion, up 19 percent year-over-year.
The revenue miss was slight, but it caused PayPal's stock to take a hit, dropping nearly 7 percent in after hours trading.
In a prepared statement, PayPal president and CEO Dan Schulman said the company is entirely focused on accelerating its lead in the digital payments space.
"We are operating in a time when change is sweeping through the financial services industry driven by the rise of mobile technology and the acceleration of money becoming digital," he said. These two massive trends play directly to our strengths and we are leveraging this transformation to extend and accelerate our lead."
For full-year fiscal 2015, PayPal expects EPS of $1.23 to $1.27, versus the consensus of $1.25 per share.
Looking deeper into PayPal's results, the company says it now has 173 million active user accounts, up from 169 million the previous quarter. Transactions per active account increased 12 percent.
PayPal's total payment volume (TPV) rose 27 percent to $70 billion. Of that, 24 percent came from mobile. PayPal's P2P service Venmo processed $2.1 billion of transaction volume alone, an increase of 200 percent over last year.