• Transaction Margin Growth: 8% growth excluding last year's leap day.
• Non-GAAP Earnings Per Share: Increased 23% year-over-year.
• Total Active Accounts: Grew by 2% in the quarter.
• Branded Experiences TPV: Grew 8% excluding last year's leap day.
• Venmo Revenue Growth: 20% increase driven by online and in-store payments.
• Free Cash Flow: $1 billion generated in the first quarter.
• Non-GAAP Operating Margin: Increased to 20.7%, up 260 basis points.
• Share Repurchases: $1.5 billion completed in the quarter.
• Cash and Investments: Ended the quarter with $15.8 billion.
• Debt: $12.6 billion in debt at the end of the quarter.

• Warning! GuruFocus has detected 5 Warning Sign with PYPL.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PayPal Holdings Inc (NASDAQ:PYPL) delivered its fifth consecutive quarter of profitable growth, with transaction margin dollars growing by 8%, excluding the impact from last year's leap day.
• Non-GAAP earnings per share increased 23% year-over-year, reflecting strong profitability.
• Branded experiences TPV grew 8% in Q1, highlighting the success of omnichannel initiatives and increased consumer engagement.
• Venmo achieved 20% revenue growth, driven by increased merchant availability and consumer adoption.
• PayPal Holdings Inc (NASDAQ:PYPL) is expanding its offerings with innovations like a dynamic smart wallet and agentic commerce, positioning itself as a strategic commerce partner for merchants.

Negative Points

• Despite a strong start to the year, PayPal Holdings Inc (NASDAQ:PYPL) is maintaining its full-year guidance due to macroeconomic uncertainties.
• Transaction take rate declined by 6 basis points to 1.68%, influenced by product and merchant mix.
• The PSP volume growth slowed to 2% compared to 6% in the previous quarter, as the company prioritizes profitable growth over volume.
• There is potential impact from geopolitical factors, such as tariffs, which could affect global economic activity and consumer spending.
• The competitive landscape in key markets like the UK remains challenging, requiring continued investment in product improvements and marketing.

Q & A Highlights

Q: How is the macroeconomic environment affecting PayPal's priorities, particularly regarding consumer and SMB health? A: Alex Chriss, CEO, stated that while they are closely monitoring the macroeconomic environment, they have not reordered priorities. PayPal sees opportunities in Buy Now, Pay Later (BNPL) and Venmo, emphasizing rewarding consumer payment methods. Jamie Miller, CFO, added that core credit portfolios show stable or improving charge-off rates, indicating healthy consumer and merchant conditions.

Q: Can you provide insights into the traction of the branded experience TPV strategy? A: Alex Chriss highlighted that the branded experience strategy is gaining traction, with PayPal and Venmo debit cards driving habituation. Branded experiences TPV grew 8%, and PayPal debit card TPV increased over 100% in Q1, indicating strong consumer engagement and strategy effectiveness.

Q: What impact do you expect from the elimination of the de minimis tariff exemption for China? A: Jamie Miller explained that PayPal's exposure to Chinese merchants selling into the US is less than 2% of branded checkout TPV. The company is globally diversified, which positions it well to capture shifts in spending due to tariff changes.

Q: What are the key assumptions in PayPal's outlook, particularly regarding macroeconomic factors and branded growth expectations? A: Jamie Miller noted that PayPal is prudently guiding for the year, maintaining full-year guidance despite a strong start. The outlook assumes a potential 2-3 point deceleration in e-commerce trends in the second half, with mid-single-digit branded checkout TPV growth expected.

Q: How is PayPal's new checkout experience rollout progressing, and what impact is it having? A: Alex Chriss mentioned that the new checkout experience is being rapidly adopted, with over 45% of US transactions now using it. The rollout in Europe is expected to accelerate, contributing to branded checkout growth. Jamie Miller added that the conversion uplift from the redesign is holding steady at 100 basis points.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.