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As digital payments systems have grown, so have the opportunities for bad actors to do—and pay for—bad things. PayPal, which hosts more than 20 billion transactions each year, uses AI to identify payments that enable criminal behavior. The goal is to “create a safer platform for our customers and a safer digital world for all,” company executive Aaron Karczmer told Fortune in an emailed statement. The technology detects purchases related to terrorist activities, drug sales, human trafficking, money laundering, and more. PayPal, which generated $27.5 billion in revenue last year, then works with law enforcement to investigate suspected crimes.

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WMAC-2022-49-Paypal

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Modern Boards 2022 PayPal

Fintech giant PayPal scored high on our rankings for age dispersion, board independence, and board expertise. John Donahoe, president and CEO of Nike, is PayPal's board chairman. The company counts current president and CEO Dan Schulman among its directors, as well as Ann Sarnof, CEO of WarnerMedia Studios &amp; Networks Group; Enrique Lores, CEO of HP; Gail McGovern, CEO of the American Red Cross; and the former CEOs of Freddie Mac and AT&amp;T. Belinda Johnson, former COO of Airbnb, and Rodney Atkins, a former IBM executive, are also board members. 
 
PayPal has in recent years increased its efforts to invest in underserved communities. The company has spent $510 million since 2020 to fund Black- and Latinx-owned financial institutions and to back early-stage VC funds led by Black and Latinx managers, with the goal of closing the racial wealth gap. 
 
Editor's note: This writeup has been corrected to include Nike CEO and president John Donahoe.

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CTW.1122. PayPal

Like so many other business leaders last winter, PayPal CEO Dan Schulman didn’t believe Vladimir Putin would actually send Russian forces into Ukraine. “I thought for sure there would be politics that would intervene,” Schulman recently told Fortune. So when infantry and tanks barreled across the border toward Kyiv on Feb. 24, Schulman and his team faced a distressing surprise, and a flood of tough tasks. 
 
Job one was making sure employees and customers’ balances were safe on both sides of the border. (Russia and Ukraine together accounted for about half of 1% of PayPal’s revenue in 2021.) The company quickly shut down its Russia operations. But far more urgent was the challenge of extending a lifeline to the swelling numbers of Ukrainians displaced by the war. Refugees would need humanitarian aid; and both those who left and those who stayed would need to access money even as their banks were shuttered, hacked, or destroyed. PayPal and its partners would have to quickly vet a swath of pop-up Ukraine-focused charities; verify the identities of those who said they were displaced; and put fraud protections in place for users who were now hundreds or thousands of miles from their homes. 
 
Experience and global reach made those tasks less daunting. PayPal has long-standing relationships with central banks and regulators worldwide, including in Ukraine. Its donation platform, PayPal Giving, had already been used by some 400 million customers and merchants before the war broke out. Under normal circumstances, building a person-to-person payment network that could reach hundreds of thousands of people would take nine months to a year; PayPal had one up and running in Ukraine in nine days. “I told the team, like, let’s move mountains,” Schulman recalls. 
 
PayPal has certainly moved an enormous amount of much needed money. Through late September, its customers used the platform to raise more than $600 million for relief efforts in Ukraine. PayPal has also helped Ukrainian citizens receive and send another $330 million in person-to-person payments and money transfers. And it has tallied almost 300,000 new Ukrainian account sign-ups since the war began. Someday those may become paying customers, but that’s a question for a more peaceful day: PayPal is waiving all money transfer and remittance fees for Ukrainian accounts through Dec. 31.

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F500-2021-134-PayPal

The momentum of customers embracing digital payments propelled PayPal up 48 spots on this year's list. In fact, 2020 was the strongest year in PayPal’s history so far, with 72.7 million net new accounts, total payment volume of $936 billion, revenue growth of 20.7%, and profit growth of 70.9%. For crypto converts, the company recently added a way for users to buy, sell, and hold crypto in their Venmo app.

Collectively, the ranked companies produced a three-year average shareholder return of 33%, vs. 19% for the S&P 500.

FGC-2021-PayPal_Honey_Macys_Coupons

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Future 50-2020-PayPal

The former subsidiary of eBay has definitely come into its own in its past five years of independence. Poised to reap the benefits of consumers’ growing reliance on digital payments, PayPal has excelled during the coronavirus pandemic, growing revenues nearly 20% in the first three quarters of the year—exceeding even its average three-year growth rate of 18%. Now one of the largest small-business lenders, PayPal is also expanding its offerings to include buying and selling cryptocurrency, both through its flagship product and its peer-to-peer payments app, Venmo.

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F500-2020-182-PayPal-Holdings

The online payments company is available in more than 200 markets around the world and owns mobile payment service Venmo.

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03.CTW20.Paypal

Last fall, the digital payment company spent tens of millions of dollars to raise its workers’ wages and lower the costs of their benefits. This spring, as the pandemic led to tens of millions of layoffs, CEO Dan Schulman (at left in photo, with PayPal employees in Omaha) pledged that all PayPal jobs would be safe from COVID-related cuts. The company also played a major role in bolstering other people’s security: It helped some customers get faster access to their coronavirus stimulus payments, by waiving the 1% fees it usually charges to rapidly cash payroll and government checks. 
 
In a crisis, “if you put your employees first and you put your customers first, then nobody forgets that, and you come out of this in a really strong position,” <a href="https://fortune.com/2020/04/20/paypal-ceo-dan-schulman-coronavirus-digital-payments-venmo-money/">Schulman told Fortune </a>in April. PayPal’s subsequent performance has borne out his argument. The company in July reported its strongest quarter ever as an independent company: Second-quarter revenue jumped 22% from a year earlier, to $5.3 billion, with profit nearly doubled, to $1.5 billion.

Collectively, the ranked companies produced a three-year average shareholder return of 19%, vs. 11% for the S&P 500.

Fastest Growing Companies-2020-78-PayPal

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PayPal is a leading global payments platform that enables individuals and businesses to send, receive, and manage money online and in person. The company offers a suite of digital payment solutions, including online checkout, mobile payments, peer-to-peer transfers, and merchant services, serving both small businesses and large enterprises. PayPal owns Venmo, a widely used peer-to-peer payment app, and provides risk management, analytics, and financing tools to help businesses grow. The company has embraced blockchain technology, launching its own stablecoin in 2023.

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PayPal Holdings (PYPL): Company Profile, Stock Price, News, Rankings

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PayPal Holdings

paypal holdings

Good morning, and welcome to PayPal's First Quarter twenty twenty five Earnings Conference Call. My name is Polly, and I will be your conference operator today. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winoker, PayPal's Chief Investor Relations Officer. Please go ahead.

Thanks, Polly. Welcome to PayPal's first quarter earnings call. I'm joined by CEO, Alex Kris and Chief Financial and Operating Officer, Jamie Miller. Our remarks today include forward looking statements that involve risks and uncertainties. Actual results may differ materially from these statements.

Our commentary is based on our best view of the world and our businesses as we see them today, As described in our earnings press release, SEC filings and on our website, those elements may change as the world changes. Now over to you, Alex.

Thanks, Steve. We had a strong first quarter as we begin to execute on the strategy we laid out during our recent Investor Day. PayPal is transforming from a payments company to a commerce platform. This includes expanding to be available everywhere, whether it's online, in store or agentic. This means moving from a one size fits all experience to personalized experiences that leverage the vast data at our fingertips.

We are developing a dynamic smart wallet that will allow consumers to make the smartest choice in how to pay and get rewarded. With this transformation, we are shifting from being purely a payments processor to an end to end strategic commerce partner for our merchants. And underpinning this is our work to converge into a single PayPal platform that unlocks the full potential of PayPal's two sided network in support of both consumers and merchants. This strategy is durable and positions us to win in the months and years ahead. Turning to Q1, we have so much to be proud of.

Let me share just a few highlights. Our strategy is designed to improve PayPal's profitability over time. In Q1, we delivered our fifth consecutive quarter of profitable growth with transaction margin dollars growing by 8% excluding the impact from last year's leap day. That growth was driven by multiple sources across our strategic initiatives including omni channel commerce, both online branded checkout and offline branded payment methods, Venmo and PSP. As a result of this focus on profitability, non GAAP earnings per share increased 23% year over year.

Additionally, PayPal and Venmo are being used by more people more often. Both total active accounts and monthly active accounts grew a healthy 2% in the quarter. Transactions per active account ex PSP grew 4%, reflecting improved engagement and transaction growth in online branded checkout and Venmo. As we expand our offerings from online to everywhere, the best way to see the traction we're gaining is through Branded Experiences TPV. Branded Experiences comprises volume from PayPal and Venmo online checkout as well as branded in store payment methods like debit and tap to pay.

In Q1, Branded Experiences TPV grew 8% excluding last year's Leap Day. That's a full two points higher than Branded Experiences growth for the full year of 2024, highlighting the growing contribution of our omnichannel initiatives. It's still early days, but we are very proud of this progress. Within Branded Experiences, we're continuing to accelerate the rollout of our upgraded online branded checkout flows. This includes our simplified and modernized pay sheet design with streamlined login and reduced latency.

Since the beginning of the year, we've driven a 25 jump to more than 45% of U. S. Checkout traffic. This shows we can execute and we anticipate an even faster rollout for Europe starting in the second quarter. And finally, Venmo had another standout quarter.

We hit an important inflection point for Venmo monetization with 20% revenue growth, driven by our push to make Venmo one of the best ways to pay online and in store. These are only a few examples of the strength we're seeing in the execution of our strategy. We're feeling the excitement of our innovations in the market and the engagement from our consumers and merchant partners and we're just getting started. As you can hear, I'm encouraged by the momentum we are driving. We had a great start to the year and expect a solid second quarter, which would result in the first half coming in above our prior expectations.

However, given it is early in the year and because of the current level of macro uncertainty, we are maintaining our guidance for the full year at this time. Jamie will provide more color on our results and guidance in her remarks. Let me now go into the details of the progress we're making on our strategic growth drivers. Starting with Win Checkout. Online branded checkout TPV, including PayPal and Pay with Venmo, grew nearly 6% this quarter, accounting for last year's Leap Day.

We're proud of this growth and expect it to increase over time as more traffic flows through our upgraded experience. One of the main benefits of our upgraded experience is the modernized pay sheet, which improves the presentment of our full suite of payment options. This contributes to a personalized experience where consumers can more easily pay their own way, whether now with balance, cards, crypto or buy now pay later. What we're seeing is that as we improve the presentment of BNPL and checkout, it's being selected more often. In Q1, BNPL volume grew more than 20% and monthly active accounts grew 18% year over year, highlighting the effectiveness of the new design and the strength of our value proposition.

As a reminder, BNPL users spend 33% more on average and conduct 17% more transactions. BNPL is featured in our latest marketing efforts with Will Ferrell about PayPal's flexible online checkout and we are focused on winning in key markets. We will continue to lean into BNPL throughout this year with targeted consumer awareness campaigns in The U. K. And Germany and continued investment in other priority global markets including Australia, France, Italy and Spain.

Pay with Venmo is resonating well with consumers and merchants and it's growing rapidly with TPV increasing more than 50%. Monthly active accounts grew 30% as we increased merchant availability. For example, in January, JetBlue became the first airline to accept Venmo for bookings. We're seeing strong selection from Venmo's valuable demographic at major brands such as Domino's, Instacart and TikTok shop. I expect more demographic relevant merchants to offer Pay with Venmo over the coming quarters.

Let's move to the progress we are making to become omnichannel, serving our customers everywhere they want to shop with PayPal and Venmo. As I noted earlier, Branded Experiences TPV grew 8% in the quarter excluding last year's Leap Day. This growth reflects our strategy to deliver flexible and rewarding experiences that connects consumers to the things and experiences they want and love wherever they shop. Today, our PayPal and Venmo debit cards are enabling our customers to use their balance to shop anywhere cards are accepted. Adoption is strong and growing with approximately two million first time PayPal and Venmo debit card users in the quarter, an increase of nearly 90% from last year.

Debit card TPV grew approximately 64% in the first quarter. Venmo debit card monthly active accounts grew nearly 40% and penetration has increased to 6% of Venmo MAAs. We are focused on getting these products into the hands of even more of our customers because they allow them to choose PayPal and Venmo as their way to pay more often. In the first quarter, users who adopted the PayPal debit card transacted nearly six times more and generated more than two times the average revenue per account compared to those who used online branded checkout only. There is also a halo effect where debit card users choose PayPal more often in online branded checkout.

Our omni channel strategy is showing early success in The U. S. And we are excited to replicate it internationally. We are on track to launch NFC capabilities in Germany later this quarter and bring PayPal everywhere to The U. K.

In Q3. Moving to our PSP business, which remains a key driver of transaction margin dollar growth. We continue to build deeper relationships with the world's largest brands and sell our strong suite of value added services. That is a massive untapped and margin rich opportunity. I'll share two examples.

We recently scaled our optimized debit routing with Wayfair and Upwork. This service routes eligible debit cards through lower networks, which helps merchants reduce their transaction fees. Regal Cinemas has adopted our fraud protection advanced service, which allows merchants to leverage PayPal's decades of fraud intelligence and advanced machine learning to improve their risk decisions and capture even more revenue. Let me give you an example of how this focus on adoption of value added services can improve the end to end relationship and margin profile of our largest customers. Recently, we expanded our relationship with a long time Braintree merchant.

By focusing on price to value and processing, attachment of advanced risk capabilities and leading edge branded solutions like Payment Ready API, we were able to improve merchant performance and profitability. We took this merchant from unprofitable to profitable, improving their transaction margin nearly 20 percentage points over the course of a year. These are the kinds of conversations we're having that drive value for our customers and for PayPal. Because of the quality of our value added services, we expect these types of improvements to continue over the next few years. For small businesses, we continue to migrate volume onto PayPal Complete payments.

Today, nearly half of SMB processing and checkout volume is on this platform, which is steady progress from last quarter. Bringing more SMBs into the stack enables them to easily access our latest online branded checkout and new products like Fastlane and we've seen incremental product adoption increase by 33% as a result. Next, PayPal is leveraging our two sided ecosystem in ways we've never before to innovate and build the future of commerce. Whether it's AI, personalization, ads or crypto, we are providing our customers with the most advanced ways to engage in a shopping experience. These initiatives are in the early stages, but unlock significant growth potential for us in the years ahead.

Take AI for instance. At Investor Day, I told you we were leaning into agentic commerce. I asked you to imagine what a future would look like where AI agents could bring up the right products at the right time and complete your purchase. Thanks to Rapid Developments, that future is here. Just a few weeks ago, we launched the industry's first remote MCP server and enabled the leading AI agent frameworks to seamlessly integrate with PayPal APIs.

Now any business can create agentic experiences that allow customers to pay, track shipments, manage invoices and more, all powered by PayPal and all within an AI client. As we speak, developers are gathering at our San Jose headquarters for our annual Developer Days. Every major player in AI is represented, providing demos and engaging with our developer community. The future of commerce will have a strong agentic presence and we're excited about leading the charge. PayPal Ads is continuing to lay the foundation for a robust and highly differentiated ads business that will create more personalized shopping experiences.

We're leveraging our extensive cross merchant transaction data and customer insights to develop a platform that improves discovery for consumers and helps merchants reach more shoppers. We recently expanded PayPal ads internationally with our launch in The U. K. And today, are launching off-site ads, which are ads informed by our insights placed outside of the PayPal platform. This will allow PayPal to help brands find the right user at the right time and it is built with the privacy in mind.

We are working to rapidly accelerate advertiser onboarding as we continue to grow ads. Crypto is another area we're making strides. We're moving quickly to bring the benefits of crypto and stablecoins to our customers and the industry. Last week, we introduced the ability to earn rewards for holding PYUSD. This will increase the adoption and use of digital currencies for everyday commerce from sending money internationally to making purchases and more.

We've also strengthened our relationships with major crypto players like Coinbase, so people can more easily access and use PYUSD. As I close my remarks, I want to again highlight how proud I am of our team and the focused execution and innovation we are driving. To reinforce this point, let me bring together Venmo's strength in the first quarter as an example. We've leaned into Venmo and the investment is starting to pay off. The Venmo user base continued to expand and we're growing monthly active accounts mid single digits.

Pay with Venmo TPV grew more than 50% and MAA's grew 30%. Venmo debit card MAA's grew nearly 40% and penetration has increased to 6% of Venmo MAA's. That's up from 4% a year ago. When you add it all up, the Venmo business grew revenue by 20%. That's sequential double digit growth and the highest rate we've achieved in years.

Our execution muscle is growing stronger by the day and we're just getting started. To recap, we had a great first quarter. We are confident in our ability to execute the strategy we laid out as we entered the year. With our clear strategy, strong balance sheet, high free cash flow conversion and traction and execution, we have a solid foundation that allows us to navigate uncertain times and invest in our long term growth. With that, over to Jamie.

Thanks, Alex. Moving to Slide five. PayPal delivered a strong quarter to start the year. Our results reflect another positive step forward with multiple drivers contributing to an acceleration in profitable growth. We are improving our speed and focus across the organization, working hard to transform the company while improving our value proposition for consumers and merchants.

Excluding interest on customer balances, transaction margin dollars grew 7% or 8% ex leap day accelerating from last quarter. We outperformed the TM dollars and EPS guidance we provided in February with upside driven by a combination of sources including PSP profitability, Venmo, credit and transaction expense improvement and a more favorable tax rate. Non GAAP earnings per share were $1.33 in the quarter, up 23%. And PayPal generated $1,000,000,000 of free cash flow in the first quarter, bringing trailing twelve month free cash flow to $6,000,000,000 Adjusted free cash flow, which excludes the net timing impact between originating and selling European buy now pay later receivables was $1,400,000,000 in the first quarter and $6,200,000,000 over the past twelve months. Turning to Slide six, total active accounts increased by about $1,500,000 from the fourth quarter and over $8,000,000 versus the prior year's first quarter to $436,000,000 Monthly active accounts continue to show steady progress, up 2% year over year to $224,000,000 with contributions from PayPal consumer accounts and Venmo.

Transactions per active account excluding PSP processing grew 4%. Moving to Slide seven, total payment volume grew 3% at spot and 4% on a currency neutral basis to $417,000,000,000 As we highlighted at our Investor Day in February, this slide now includes a simpler and more relevant TPV breakout. This view reflects how we think about our product portfolio today, the go forward strategy and our customer needs. Looking across these categories, we are encouraged to see signs that both consumers and merchants are expanding how and where they use PayPal. Winning checkout remains our most critical priority and our teams remain laser focused on advancing the many initiatives that reinforce our checkout business.

In the first quarter, online branded checkout volumes grew more than 4% on a currency neutral basis. And excluding last year's Leap Day, which contributed over a point to growth, online branded checkout volumes increased nearly 6%. Branded experiences TPV, which includes online checkout, PayPal and Venmo debit, as well as tap to pay grew 8% ex leap day accelerating from the prior year. We're excited about this momentum as we work to drive greater awareness that both PayPal and Venmo are ways to pay anytime and any place. Ultimately, our goal is to form deeper consumer relationships driving habituation across online and offline channels.

Turning to PSP, which spans both large enterprise and SMB processing as well as parts of our vast portfolio like payouts, invoicing and point of sale solutions, volume grew 2% compared to 6% in the fourth quarter. As we've discussed throughout the past year, the shape of this growth is intentional. We are prioritizing healthy quality growth within our Braintree business and have made deliberate choices to shift away from unprofitable volume. Shifting away from this volume pressures gross revenue, but is accretive to transaction margin dollars and should result in more than one point of TM benefit this year. We continue to expect this benefit to build over time as we drive more value added services.

Moving to more financial detail on Slide eight. Transaction revenue was flat on a spot basis or up 1% on a currency neutral basis to $7,000,000,000 driven primarily by branded checkout, Venmo and SMB processing. This growth was offset by the shift away from unprofitable Braintree volume that I just mentioned. Importantly, other value added services revenue grew 17% to $775,000,000 driven primarily by healthy performance in consumer and merchant credit. We ended the quarter with $6,500,000,000 in net loan receivables, up 1% sequentially, and we continue to be pleased with the quality, the diversification and the performance of our credit portfolio.

We take a prudent approach to managing the portfolio's exposure and our goal is to sustain a balance sheet light business model while providing our customers with more ways to manage their cash flow spending and borrowing needs. Transaction take rate declined by six basis points to 1.68%, driven largely by product and merchant mix. The two largest drivers of this change were momentum in payouts and shifting away from unprofitable volume on Braintree, some of which carries a higher growth take rate due to card funding. There was also impact from faster growth of large enterprise volume within branded checkout, adoption of the PayPal debit card and growth of Venmo and PayPal P2P. These are positive trends for our business, demonstrating the relevance and importance of PayPal to consumers and merchants around the globe as well as the progress we are making to improve profitability.

Our focus on profitable growth and the progress we are making across our strategic growth drivers is most clearly demonstrated by the acceleration in transaction margin dollar growth that we have delivered over the past year. Branded checkout, PSP and value added services, credit and Venmo were all meaningful contributors to transaction margin dollar growth in the quarter. These drivers also include improvement in transaction expense. Transaction margin rate increased by more than two seventy basis points year over year reflecting our focus on price to value and profitable growth. Non transaction related OpEx increased 2% as we continue to actively manage our cost structure while reinvesting in key growth initiatives.

This includes marketing to support the rollout of new products and initiatives. Non GAAP operating income grew 16% in the quarter to $1,600,000,000 and non GAAP operating margin increased about two sixty basis points to 20.7%. In the quarter, we completed $1,500,000,000 in share repurchases, bringing share repurchases over the past four quarters to $6,000,000,000 Finally, we ended the quarter with $15,800,000,000 in cash, cash equivalents and investments and $12,600,000,000 in debt. Moving to guidance on Slide nine for the second quarter and the full year of 2025. Our teams are focused on execution and capturing the opportunity in front of us.

We are confident that our scale, diversification and balance sheet enable us to keep advancing our strategic growth drivers through different operating environments. As we continue making progress on PayPal's transformation, we have multiple growth levers and are well positioned to help merchants and consumers navigate the environment. Importantly, with a strong first quarter behind us and a good start to the second, we believe we are on pace to outperform our original expectations for the first half of twenty twenty five. At the same time, given uncertainty in the environment and the potential for a wide range of outcomes, we are appropriately cautious. Consumer spending and the labor market have proven resilient, but it remains to be seen how tariffs and other trading friction will impact global economic activity, consumer spending and supply chains over time.

As Alex mentioned, despite our strong start to the year, we're maintaining our full year guidance. And this guidance now implicitly builds some incremental flexibility into the second half of the year for macroeconomic uncertainty. Throughout different macro environments, we will remain focused on making the right long term decisions for the business, striking an appropriate balance between investment and productivity. For the second quarter, we expect low to mid single digit revenue growth on a currency neutral basis, which is impacted by the Braintree renegotiation efforts I discussed earlier. We've seen a good start to April and are watching trends closely.

Tariff related concerns and news flow have likely resulted in some spend being pulled forward for certain verticals in The U. S. We are not assuming that those higher activity levels persist for the entire quarter. We expect second quarter transaction margin dollars to be between $3,750,000,000 and $3,800,000,000 which represents 4.5% growth at the midpoint. Excluding interest on customer balances, we expect transaction margin dollars to increase by approximately 6.5% in the midpoint.

We are planning for mid single digit non transaction OpEx growth in the quarter due to the timing of initiatives and marketing spend. And we expect to deliver non GAAP EPS in the range of $1.29 to $1.31 or 9% growth at the midpoint. For the full year, we are maintaining our guidance as I mentioned earlier and I'll just highlight a couple of lines. Excluding interest on customer balances, we expect transaction margin dollars to grow by at least 5% compared to 4.6% growth in 2024. And we expect to deliver full year non GAAP EPS in the range of $4.95 to $5.1 representing about 8% growth in the midpoint.

This includes negative impact from lower interest rates and compared to our prior guidance, a smaller headwind from our expected non GAAP effective tax rate. Our guidance continues to assume approximately $6,000,000,000 in share buyback for the full year and we continue to expect full year free cash flow of approximately 6,000,000,000 to $7,000,000,000 I'd like to wrap up by thanking the PayPal team for their continued focus dedication. We have a solid foundation to build on as we execute on the second year of PayPal's transformation. With that, back to you, Alex.

Thanks, Jamie. To summarize, we had a great start to the year and our strategy is taking hold. We've built a solid foundation and have multiple ways to win. A huge thank you to the PayPal team for their focus on delivering for our customers and our business. Steve, let's go to Q and A.

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask just one question so we can get to as many people as possible. Paulie, please open the line.

And your first question comes from the line of Tien Tsin Huang from JPMorgan. Your line is open.

Hi, thanks for the progress report here. Lots to talk about. Just wanted to maybe ask the obligatory macro question, if you don't mind. I'd love to hear a little bit more on how you characterize consumer and SMB health overall. And I know you touched upon a little bit, but is the macro or the geopolitical stuff that's going on in the world, is that changing enough for you to reorder some of your priorities?

It does sound like you're leaning harder into BNPL and Venmo. But yes, just a broader macro question. You.

Tien Tsin, thanks for the question. I wouldn't say we're reordering any priorities and I don't think we've we're obviously watching it very closely to see what plays out. But things have been pretty consistent so far. Obviously, we think there's an opportunity. You mentioned buy now, pay later.

We think with our strong position there and strong product, there's obviously an opportunity to continue to lean in. I think from a consumer standpoint, we've been building over the last few quarters to really be the most rewarding way for consumers to pay. And we think that's an opportunity for us to continue to get our message out, our rewards coming back on debit card, the rewards we just put out on crypto. These are things that put more money in the pockets of consumers, and that's a positive thing and an opportunity for us. On small business, again, know that cash flow is the most critical part for small businesses.

We haven't seen a big impact yet. But as they think about money in, money out and access to capital, we know that we have tremendous strength when it comes to providing capital to our small business customers, and we think we can be a place for them to come in times of need. But I'd say we're still early and we haven't seen any big shifts yet, but we feel confident in our position if those things happen.

Yes. And Tien Tsin, I would just add that when you look just at the core credit portfolios as a monitor of some of your question around consumer health or merchant health, we monitor that very closely. Charge off rates are stable and in some cases improving. And in particular with respect to the consumer portfolios, we've actually delinquencies over the last thirty days improve. And also as it relates to just broader consumer trend, the April, we saw an uplift as well in terms of TPV and a lot of folks have referenced that as pull in.

But when you look at just general consumer health coming into what could be a more uncertain time, it's looking pretty healthy and pretty good. And then with respect to SMB, good continued consistent performance there too. And on the merchant lending side, as we monitor that, honestly pretty consistent with what I'd say about consumer charge offs also improving. And obviously, we're monitoring the whole thing very, very carefully, but it looks pretty steady right now.

Your next question comes from the line of Dan Dole from Mizuho. Your line is open.

Hey guys. Great results here. Really appreciate it. Can you give us like a sense of it looks like the branded experience TPV strategy is doing really well. Can you give us maybe a sense of like how much traction you're getting there and what you're doing to get those nice results?

Dan, let start. So good to hear from you. We've got this is the strategy that we've laid out really coming to life. So first, we have a branded checkout strategy that is really about driving habituation everywhere that the customer wants to pay. We have such strong brands in both PayPal and Venmo, and our customers are asking to be able to leverage that trust, the safety, the brand, the rewards in every purchase that they make.

And so we've been focused on not only improving that online experience that we've talked about, and I'm sure we'll talk about more, making it available for them exactly how they want to pay, whether that's immediately or with a pay later scenario with buy now, later, but then also offline. And you mentioned branded experiences. This really is enabling our PayPal debit card or our Venmo debit card to be accessible to our consumers. We saw PayPal debit card TPV growth over 100% in Q1, And that really is driving habituation. This is driving our consumers to actually start to come back, move online and start to pay with PayPal wherever they see it.

So the strategy is working. TPV up eight percent overall in Branded Experiences. And this really is the metric that we are focused on and we hope you're focused on as well because, again, it is really all about the strategy that we've laid out.

Your next question comes from the line of Ramsey El Assal from Barclays. Your line is open.

Hi. Thank you very much for taking my question this morning. I wanted to ask about the de minimis tariff exemption for China. I think that's scheduled to be eliminated on May 2. Do you expect an impact from that?

I guess and if so, if you could help us dimensionalize the impact, I would appreciate it.

Yes, good morning. So obviously, the whole situation around tariffs is really changing daily and there's multiple scenarios that could unfold. And maybe I'd first start by saying, I think we come into this from a position We are globally diversified. Our merchant base, our region base, it's just very, very global and diverse.

And we're well positioned to capture shifts in spending as they happen. And the other thing I would just add is in particular in The U. S, we are about 50 between retail and services, so diversification there as well. But when you talk about de minimis, the way I'd size that for you are Chinese merchants selling into The U. S.

Is less than 2% of our branded checkout TPV. And this includes both direct China to U. S. Cross border transactions and volume from Chinese merchants with U. S.

Entities, but where they're shipping from China. So from that perspective, that's probably how I'd size it there.

Your next question comes from the line of Darrin Peller from Wolfe Research. Your line is open.

Hey guys, thanks. Maybe just go a little further, if you don't mind, into what's embedded in your outlook around KPIs and modeling assumptions. Totally understand not changing guidance despite the beat. But if you could help us with assumptions on the macro front of what you're embedding in your outlook, especially around cross border in China and just what we should think about being included, as well as even just give us a little more color on branded growth expectations. What are you seeing specifically in April right now from a branded growth rate standpoint?

And then branded versus unbranded growth as the year progresses would be really helpful. Thanks guys.

PayPal Holdings (PYPL) Q1 2025 Earnings Call Transcript

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