MW PayPal's stock is up after earnings, as Wall Street sees proof of progress

By Emily Bary

A Mizuho analyst was impressed by PayPal's performance on several closely watched metrics, including transaction margin dollars, which measures the profitability of payment volume

PayPal Holdings Inc. kept its revenue outlook intact on Tuesday, in what Mizuho analyst Dan Dolev called a "sign of strength" in an uncertain economy.

Shares (PYPL) were rising 2% late in Tuesday's session, reflecting relief over the outlook as well as the view that PayPal is taking strides as it continues its turnaround effort.

PayPal "appears to be gradually making progress on key initiatives highlighted at the recent Investor Day," Barclays analyst Ramsey El-Assal said in a note to clients. "For example, the company is continuing its price to value shift in unbranded," and that could be seen by the fact that PayPal's growth in transaction margin dollars outpaced overall volume and revenue growth.

The company posted $3.7 billion of transaction margin dollars, a measure of the company's ability to process payment volume profitably. That was above the $3.6 billion to $3.65 billion in PayPal's past guidance, and it was up 7% from a year before.

PayPal grew branded checkout volume 6% in the period, when adjusting for the fact that the prior year's quarter had an extra day. The growth was above Wall Street's "bogey," according to Dolev.

See also: PayPal has some big new growth targets. Can it hit its marks?

PayPal is in the middle of a turnaround under Chief Executive Alex Chriss, who's in his second year leading the payment-technology company. Some of his goals have been to drive profitable growth at PayPal - which he said just happened for the fifth quarter in a row with the latest results - and to improve trends with branded checkout.

PayPal processes branded volume through things like the core PayPal checkout button, and it also processes unbranded volume in a more behind-the-scenes capacity. Since branded volume is more profitable, it's been a major watch point for investors, especially as that area of the business directly competes with services like Apple Pay that gained steam following the pandemic.

In Chriss's view, "our strategy is working," he said in PayPal's release.

"We are transforming into the leading commerce platform connecting consumers and merchants globally," he added. "Our foundation is solid and we have multiple ways to win."

Volume from Venmo grew 20% in the first quarter, marking an acceleration. Meanwhile, PayPal saw more than 60% growth in volume from its debit card business.

In the first quarter, PayPal posted $7.8 billion in net revenue, up 1% from a year before, along with $1.33 in adjusted earnings per share, up 23% from a year prior. Analysts were expecting $7.8 billion and $1.16, respectively.

-Emily Bary

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April 29, 2025 15:28 ET (19:28 GMT)

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