Revenue rose 7% to $8.35 billion and adjusted EPS climbed 1%, topping Wall Street estimates, but stock fell after the earnings call
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PayPal $PYPL reported first-quarter revenue of $8.353 billion, up 7% year-over-year, and adjusted earnings of $1.34 per share, up 1%, beating analyst expectations in the first earnings report under new CEO Enrique Lores. But the stock gave back early gains and was trading down about 10% shortly after markets opened.
Wall Street had penciled in earnings of $1.27 per share and revenue of $8.05 billion, per Investor's Business Daily. Payment volume processed from merchant customers reached $463.95 billion, an 11% increase that cleared the $446.8 billion consensus estimate.
Transaction margin dollars rose 3% to $3.810 billion. Active accounts reached 439 million, up 1% year-over-year, though the figure declined by 0.2 million from the prior quarter. The company also announced a $1.5 billion cost reduction program over the next two to three years.
GAAP net income fell 14% to $1.113 billion, and GAAP diluted EPS declined 6% to $1.21, partly reflecting an approximately $0.08 negative impact from PayPal's strategic investment portfolio and crypto assets. The company recorded $10 million in CEO exit costs tied to the separation agreement of Lores' predecessor, Alex Chriss.
During the quarter, the company bought back roughly 34 million shares at a total cost of $1.5 billion and declared a $0.14 per share cash dividend payable June 25, 2026.
For the second quarter, PayPal projected a high-single-digit decline in non-GAAP EPS of about 9% compared to $1.40 in the year-ago period, and a mid-single-digit decline in GAAP EPS versus $1.29. The company reiterated its full-year 2026 guidance, calling for a low-single-digit decline to slightly positive non-GAAP EPS against the prior year's $5.31, citing a "complex and dynamic operating environment."
"I'm energized by the opportunity to improve execution and accelerate PayPal's growth," Lores said in a statement. "We are taking deliberate steps to sharpen our strategy, simplify our organization, and improve both our growth trajectory and cost structure by focusing our investments where we believe they will have the greatest impact."
PayPal tapped Lores for the top job in February; his predecessor, Alex Chriss, had previously served as an executive at Intuit $INTU, according to Investor's Business Daily. The company has also unveiled a new organizational structure built around three distinct units: Checkout Solutions and PayPal; Consumer Financial Services and Venmo; and Payment Services and Crypto.
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