SAN JOSE, California, May 5, 2026, 05:03 PDT
PayPal topped first-quarter expectations on Tuesday, sending shares up more than 2% in premarket trading and handing new CEO Enrique Lores some early momentum. Revenue increased 7% to $8.35 billion, better than the $8.05 billion LSEG average estimate. Adjusted earnings hit $1.34 per share, also beating the $1.27 analysts anticipated. The payments firm is still contending with sluggish user growth and stiffer wallet competition.
PayPal needed a win this quarter. The payment giant came in with sentiment already sour after a shaky Q4, a new chief executive, and renewed doubts swirling around its mainstay checkout button’s growth potential. Heading into the results, analysts polled by Barchart had been bracing for a 4.5% year-over-year dip in first-quarter EPS, while sales were only expected to nudge up 3.4%.
Lores is now aiming to convince investors there’s room to sharpen up PayPal’s top brands — PayPal checkout and Venmo. The company just rolled out a three-division setup: Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto. Each group gets its own new leadership.
The company reported total payment volume climbed 11% to $464.0 billion, or 8% once adjusted for currency effects—excluding foreign-exchange shifts. Active accounts ticked up 1% to 439 million. Payment transactions hit 6.5 billion, a 7% gain.
Profit numbers told a messier story. GAAP net income dropped 14% to $1.11 billion, while GAAP earnings per diluted share slipped 6% to $1.21. The company cited an $0.08 drag linked to its strategic investment portfolio and crypto assets held for investment. On the non-GAAP side, transaction margin dollars—revenue left after transaction expenses and credit losses—improved 3% to $3.81 billion.
Lores said PayPal is moving to “sharpen our strategy” and boost growth as well as cut costs, noting the company is “executing with urgency.” According to the presentation, PayPal expects at least $1.5 billion in gross run-rate savings over the next two to three years. The plan is to channel that money back into technology, branded checkout, and Venmo. StockTwits
Branded checkout—the key, higher-margin segment where customers opt for PayPal or Venmo—continues to lag. Reuters noted branded checkout payment volume climbed just 2% in the quarter, a slim uptick for the business investors are watching closely for signs of a turnaround.
PayPal is contending with the same mixed signals in consumer spending that have hit the wider payments sector, but its rivals are now more sharply defined: Apple and Google, moving aggressively into digital wallets, have chipped away at the head start PayPal gained during the pandemic’s online payment boom. Reuters points out that PayPal shares are still down more than 80% from the highs seen in mid-2021.
Payments experts see potential in the reorganization—though they stress it hinges on better product execution. “PayPal still has a stable of strong assets,” said James Wester, co-head of payments and research director for technology and infrastructure at Javelin Strategy & Research, speaking to Digital Transactions News. Those assets, he said, don’t always translate to clear value for merchants or consumers. Stewart Watterson, strategic adviser at Datos Insights, described the new setup as giving each business “a clear identity.” Digital Transactions
Venmo now stands as PayPal’s consumer finance play, potentially sharpening how investors value the brand. PayPal described its Consumer Financial Services & Venmo segment as an effort to build off Venmo’s growth, widening it into a more comprehensive platform. Braintree, small-business payments, value-added services, and crypto—those all get grouped under Payment Services & Crypto, the company added.
The outlook for the next quarter isn’t looking any brighter. PayPal is projecting second-quarter non-GAAP EPS to drop by roughly 9%—a high-single-digit decline. On top of that, transaction margin dollars are expected to slip about 3%, or a low-single-digit percentage. The company kept its full-year non-GAAP EPS guidance steady: a low-single-digit decrease, possibly edging into slightly positive territory.
So far, investors are looking at a mixed picture in the early days of the Lores era: PayPal turned in a top-line beat, payment volume held up, and cost-cutting is ramping, but there’s still no convincing sign that branded checkout growth is coming back. Before the numbers hit, Millennial Dividends over at Seeking Alpha stuck with a “sell” call, pointing to slowdowns in active accounts, tighter take rates, and few clear near-term drivers—concerns that Tuesday’s update didn’t really clear up. seekingalpha.com
