PayPal reported stronger-than-expected first-quarter earnings, driven by its continued emphasis on profitability, even as revenue slightly missed market expectations. The company posted adjusted earnings per share of $1.33, surpassing analyst projections of $1.16. However, revenue came in at $7.79 billion, just shy of the $7.85 billion estimate. Sales rose by only 1% from $7.7 billion a year ago, a modest increase that reflects PayPal’s strategic shift away from low-margin revenue streams in favor of higher-margin, more profitable business lines.
A key highlight in the report was the 7% growth in transaction margin dollars, a core metric used to gauge profitability, which reached $3.7 billion. This marks the fifth consecutive quarter of margin growth under CEO Alex Chriss. Meanwhile, total payment volume reached $417.2 billion, falling slightly below analysts’ projections of nearly $418 billion. The company also reported a 2% year-over-year increase in active accounts, reaching 436 million.
CEO Alex Chriss pointed to the growing adoption of PayPal’s revamped branded checkout experience, now used in over 45% of U.S. transactions, with further expansion planned for European markets. Debit card momentum was another positive indicator, as nearly two million first-time users signed up for PayPal and Venmo debit cards during the quarter—an increase of nearly 90% compared to the same period last year.
Venmo continues to evolve into a meaningful revenue driver. Revenue grew 20% year over year, while total payment volume rose 10% to $75.9 billion. Use of Pay with Venmo grew by 50%, and monthly active users of the Venmo debit card jumped approximately 40%. Major businesses such as DoorDash, Starbucks, and Ticketmaster now accept Venmo, signaling broader commercial integration.
Despite positive signals, analysts remain cautious due to potential external pressures, including increased competition from Apple and Shopify and risks linked to cross-border commerce with China. PayPal’s CFO Jamie Miller responded by downplaying the potential impact, noting that less than 2% of branded checkout payment volume involves Chinese merchants shipping to the U.S. She emphasized the company’s globally diversified merchant and regional base as a strength.
Looking ahead, PayPal provided optimistic guidance for Q2, forecasting adjusted earnings per share between $1.29 and $1.31, exceeding the average analyst estimate. Transaction margin dollars are expected to rise 4% to 5%. However, full-year guidance remains unchanged due to ongoing global macroeconomic uncertainty. PayPal projects annual earnings per share between $4.95 and $5.10 and anticipates free cash flow between $6 billion and $7 billion. Year to date, PayPal shares have declined 24%, while the Nasdaq is down 10%.
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