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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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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.

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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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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 2026 earnings conference call. My name is Sarah, 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, Sarah. Welcome to PayPal's 1st quarter 2026 earnings call. I'm joined by CEO Enrique Lores 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. Over to you, Enrique.

Thank you, Steve, and thank you to everybody for joining us this morning. I'm stepping into this role at an important moment for PayPal. I appreciate the opportunity to serve as CEO, and I'm confident we will accelerate the growth of the company while improving profitability and cash flow. That is why I'm here. At the same time, I'm also realistic that we need to make significant changes to improve the strategic and operational issues the company has faced.

Today, I will share what I have observed since joining the company, how we're shaping our strategic direction, and the actions we are taking to move forward with focus and discipline. During my time on the board, I developed a good understanding of PayPal's strengths, opportunities, and areas for improvement. Over the past two months, I have listened to and learned from our customers, our teams, and our investors.

This has helped to deepen my view of where we are, where we need to go, and how we get there. I will begin with a few initial observations. First, our foundation is strong. The company has valuable assets in our brands, our risk and underwriting capabilities, our technology, and most importantly, our team.

Our scale and global reach set us apart and are difficult to replicate. The hard-earned trust our customers place in us every day is a critical advantage. Second, we operate in markets defined by growth and rapid change. It is during this period that leading companies find ways to differentiate themselves by innovating, delivering new and superior solutions, and driving durable growth. This is where PayPal needs to focus. Third, one of our core strengths is our two-sided network, serving both consumers and merchants.

In recent years, PayPal has put more energy into the merchant side of the network. Strengthening the value we offer to the hundreds of millions of consumers who choose PayPal and Venmo is a key priority. Doing that, we increase the value of our platform for merchants and create a stronger foundation for sustainable growth.

Fourth, due to years of underinvestment, we need to accelerate the modernization of our technology platform. Moving faster to become cloud native and aggressively adopting AI in our development processes will help us significantly increase developer productivity and shorten time to market. Fifth, we need to simplify how we operate, streamline decision-making, and clearly define accountability to strengthen execution. Finally, there is potential to significantly reduce the company cost structure.

Simplifying the organization and accelerating the adoption of AI across the company will generate significant savings that can be reinvested in growth and used to respond to business headwinds, improving our overall financial profile over time. With this as a context, we need to recommit to the fundamentals. That includes becoming a technology company again, sharpening our focus on consumers, aligning the company around three strong businesses, and simplifying how we work with clear accountability and a stronger emphasis on execution.

I expect that it will take a few months to completely define our new plan, but I think it is important to start sharing the direction we are taking and some of the actions we have underway. Let me start by sharing the framework we are using to define our strategy.

We see three distinct, attractive, and in many ways complementary market opportunities where focused investment and sharper execution can meaningfully improve our growth trajectory: checkout, consumer financial services, and payment services. Each has clear near-term levers to improve the performance of our existing assets, as well as compares medium-term growth opportunities. In every case, we have a strong right to win.

I will take each in turn. Let me start with checkout. This is a large and growing market where we deliver meaningful value to consumers and merchants. Within checkout, we also see strong consumer demand for flexible payment options, including buy now, pay later solutions. This is becoming an important driver of consumer acquisition, while also delivering clear benefits to merchants through higher basket sizes.

The second opportunity is in consumer financial services. Consumers are increasingly turning to digital platforms to handle everyday financial activities.

This is also a large market opportunity, worth more than $200 billion annually in just our top six markets, and it is growing at low double digits. What is most attractive about this market is not only its size and growth, but also the customer lifetime value opportunity we can tap into. The third opportunity is in payment processing and value-added services.

The PSP space represents significant untapped value for us, driven by the continued shift to digital channels and the increasing complexity of global payments. We're aligning the organization to unlock these growth opportunities. Previously, our teams were organized primarily around the customers we serve: consumers, small businesses, and large enterprises.

That structure resulted in organizational complexity with multiple dependencies and handoffs that slowed decision-making and weakened execution. Checkout, for example, touched all customer groups and markets, creating a multidimensional matrix for roadmap prioritization.

The changes we announced last week will organize the company into three lines of business, each with a single leader. Checkout solutions and PayPal, consumer financial services and Venmo, and payment services and crypto. Importantly, we are bringing together the two sides of the network to maximize our competitive advantage.

Simplifying our operating model and clarifying accountability means that each leader will own clear outcomes, and our teams will be able to focus on our most important growth priorities. We're also using these changes to simplify and delayer our organization. We have formed a new AI transformation and simplification team that will help us work more effectively and drive our enterprise-wide AI agenda. Let me now outline how we are thinking about the path forward across each of our businesses.

Checkout solutions, PayPal is primarily a checkout-focused business and is the highest priority for the company and me. It brings together our consumer and merchant ecosystems under one unified strategy. This structure will enable us to fully leverage our two-sided network and accelerate innovation across both sides of the platform.

Our intent is not to chase transitory share in any given quarter, but rather to focus on segments and verticals where we can deliver differentiated value to our customers. I have also emphasized that strengthening the consumer side of the network is key to increasing the value we deliver to merchants. Driving habituation through the adoption of our financial services offerings is an important step toward enhancing the consumer value proposition and reinforcing the power of our two-sided network.

Our PayPal+ loyalty program, which we introduced in the U.K. and will expand to additional markets, is another important step. Over the medium to long term, we have a number of compelling innovative initiatives underway. We will take a disciplined approach to prioritization, focusing resources on areas with the greatest potential to drive durable growth and shareholder value.

Within this portfolio, we will be highly selective as we evaluate our broad set of initiatives, including digital wallet interoperability, biometric functionality, and additional programs under consideration. Within Consumer Financial Services and Venmo, we have been making good progress in the last few years and have built a strong portfolio of related products. Awareness and adoption remain well below their full potential.

Our focus is on becoming more central to our customers' financial lives, and our goal is to enable consumers to send, spend, save, invest, and borrow seamlessly.

Venmo will be a key component of our growth plans moving forward, supported by its strong brand and younger demographic. We are in a strong position to expand in this space, deepen engagement, and increase customer lifetime value. Payment services and crypto unifies our processing and platform capabilities into a single scalable offering for merchants.

We will bring together the company's unbranded processing capabilities, including Braintree, and value-added services such as fraud management, authorization optimization, and global payment infrastructure. They are designed to support businesses of all sizes with flexible, high-performance payment solutions.

We are also well positioned to capture and monetize this growth. Stablecoin is also part of this, enabling faster, lower cost transactions. We have made good progress with PYUSD, which became the largest federally regulated stablecoin in December, and we recently expanded its availability to 70 markets globally.

At the same time, we have much more opportunity to scale our offerings and accelerate growth in this space. Across the company, we need to modernize our technology platform to enable greater speed and interoperability across our offerings. As I said earlier, leveraging AI more extensively in our development processes will significantly help us with this effort. Supporting our growth plans is the opportunity to realize cost savings.

First, we will remove duplication and layers from our organizational structure. Second, we will accelerate our AI adoption and automation across our operations. Combined, the savings will be significant. We expect to see at least $1.5 billion of gross run rate savings over the next two to three years. Jamie will discuss more on this point later in the call.

Let me touch briefly on some highlights from the quarter before Jamie takes you through our results in more detail. Our first quarter results show some improvement in branded checkout. Branded checkout TPV growth was 2% on a currency neutral basis, up from 1% last quarter. We continue to see strength in key parts of the business, with Venmo and PSP delivering mid-teens TPV growth.

Transaction margin dollars, excluding interest on customer balances, grew 3%, with contributions from credit, Venmo, and PSP. Non-GAAP earnings per share grew 1%. We also continue to generate robust free cash flow, giving us ample room to invest and return capital to shareholders through buybacks and our dividend.

On the operational side, our team accomplished a lot in the first quarter. From securing apps in presentment on key merchants to enabling interoperability for peer-to-peer payments between PayPal and Venmo.

To close, I am confident in our ability to put this company on a more durable path to long-term growth and shareholder value creation. We have a strong foundation, and we are now organized to move with greater urgency.

We have a well-defined framework, and we will continue to define our strategy and prioritize our plans in line with it. I look forward to sharing more progress as we move ahead. Finally, I want to thank our teams for their continued focus and execution, and our customers and shareholders for their trust. I will now turn it over to Jamie.

Thanks, Enrique. The team and I are energized by the focus, clarity, and disciplined prioritization you are already bringing to PayPal. We have a strong market position and a solid foundation, and I'm confident we're set up to move faster from here.

Turning to the financials in more detail on slide seven, PayPal delivered a solid quarter with both transaction margin dollars and non-GAAP earnings per share coming in moderately better than our guide. Total payment volume accelerated to 11% at spot and 8% currency neutral in the first quarter, reaching over $460 billion.

Online branded checkout volume growth improved slightly from the fourth quarter, while enterprise payments and Venmo both accelerated into the mid-teens. First quarter revenue grew 7% on a spot and 5% on a currency neutral basis.

TM dollars, excluding interest on customer balance, grew 3% in the first quarter. The drivers of our TM dollar growth were broad-based, led by credit performance, Venmo monetization, PSP profitability, and loss improvement across multiple products. Growth in these areas more than offset the headwind from investments we are making to strengthen our branded checkout position and drive higher engagement, habituation, and incremental activity over time.

First quarter non-GAAP earnings per share increased 1% to $1.34. Compared to our guidance, non-GAAP EPS benefited from stronger transaction margin dollar growth with some offset from higher non-transaction operating expense.

We expect the second quarter to reflect more pressure on a year-over-year basis, driven by the non-recurrence of certain prior year items and the timing of anticipated cost savings and investment, both of which I'll walk through in more detail shortly.

Importantly, these are factors we anticipated, and we remain confident in our full year 2026 guidance. Adjusted free cash flow, which excludes the timing impact from the origination and sale of pay later receivables, was $1.7 billion or nearly $6.8 billion on a trailing twelve-month basis.

Turning to slide eight, we continue to drive deeper, more active relationships with our customers. Monthly active accounts increased 1% to $225 million. Transactions per active account, excluding PSP, improved sequentially to 6% growth. Moving to slide nine, total payment volume in the first quarter grew 11% at spot and 8% on a currency neutral basis to $464 billion.

Working our way down the page, branded experiences TPV, which includes online checkout, PayPal and Venmo debit, as well as tap-to-pay, grew 5% compared to 4% in the fourth quarter. Debit card and tap-to-pay spend represent a small portion of branded experiences volume today, they continue to grow rapidly, up 60% year-over-year.

Venmo TPV continues to reach new highs, accelerating sequentially to 14% growth year-over-year and marking the sixth consecutive quarter of double-digit growth. Online branded checkout volume growth improved slightly compared to last quarter, up 2% on a currency neutral basis.

Compared to the fourth quarter, we saw a slight improvement in the U.S., with softer performance continuing in Europe. Pay with Venmo and buy now, pay later continue to outpace the market, taking share from other payment methods and growing 34% and 23% respectively.

P2P and other consumer volume growth remains healthy, up 10% in the first quarter and reflecting the debit card and Venmo momentum I just mentioned. Turning to PSP, volume growth accelerated to 11% from 7% in the second half of 2025. Within PSP, enterprise payments again showed notable strength with volume growth accelerating to the mid-teens from a combination of growth in profitable front book business, high retention, and growth alongside our existing merchant base.

Driving higher attachment of value-added services continues to be a key focus to improving yield and monetization as we move through 2026. Moving to more financial detail on slide 10, transaction revenue grew 7% on a spot basis to $7.5 billion.

Other value-added services revenue grew 10% to $852 million, driven by strong contribution from consumer and merchant credit, partially offset by lower interest rates. Transaction take rate declined by 6 basis points to 1.62%. Excluding the impact of foreign exchange hedges, transaction take rate declined about 4 basis points.

This output was driven by a combination of factors, including branded co-marketing investments and rewards, as well as higher growth in Venmo and enterprise payments. TM dollars ex interest on customer balances grew 3%. Within volume-based expenses, transaction expense as a percentage of TPV was 90 basis points, increasing slightly year-over-year from mix shift to enterprise payments.

Transaction loss as a percentage of TPV improved slightly year-over-year to 6 basis points. This reflects our team's ongoing work to continue to improve and strengthen onboarding, fraud prevention, and risk management capabilities.

Non-transaction related OpEx increased 8%. This higher increase relative to our guide was driven by our decision to pull forward a combination of technology, marketing, and product investments, which will continue into the second quarter, making our OpEx profile more first half weighted this year. As a result of higher investments, non-GAAP operating income was down 5% in the quarter to $1.5 billion.

Moving to capital allocation. In the first quarter, we completed $1.5 billion in share repurchases, bringing our trailing 12-month total to $6 billion. We ended the quarter with $13.5 billion in cash and cash equivalents and investments, and $11.6 billion in debt. Moving to guidance on slide 11 for the second quarter and for the full year 2026. While first quarter was a solid start to the year, it's early.

The macro and geopolitical environment remain complex, and we operate in a dynamic, highly competitive industry. The company is also in the midst of a significant multi-year transformation during which we are taking steps, including the business realignment discussed today to better organize around our key market opportunities and drive stronger execution. With that as a backdrop, we are reiterating our guidance for the full year.

We see a significant opportunity to enhance customer lifetime value by driving consumer engagement through a combination of scaling new experiences, improving presentment, and increasing consumer selection with rewards and loyalty. We continue to expect our targeted growth investments to represent approximately a three-point headwind to transaction margin dollars growth in 2026, while driving durable long-term benefits in the years ahead.

We have conviction in the impact these initiatives can drive in the future, but it will take time to keep scaling our programs and experiences. For online branded checkout specifically, our guidance continues to reflect slightly positive to low single-digit branded checkout TPV growth for the full year. Quarter-to-date, we are seeing trends at the low end of our full year guidance, and these are reflected in our second quarter guide.

Compared to the first quarter, we have seen slower growth in the travel vertical, as well as more muted growth in Europe. As Enrique discussed, we see significant opportunity to further improve productivity and reallocate resources to our highest returning initiatives. While we've made real progress over the past few years, there is meaningfully more we can do.

We are realigning the organization to sharpen strategic focus, eliminate duplication, and remove layers, enabling faster decision-making and clearer accountability. In parallel, we will be accelerating efforts to deploy AI and automation across our operations and technology platform, which we expect will both improve the customer experience and drive meaningful internal efficiencies.

These efficiencies will come from organizational realignment, process redesign through AI and automation, procurement and vendor rationalization, and optimizing our local footprint. Together, these represent two distinct waves of savings, the first from structural realignment, and the second from accelerating AI adoption and automation to comprise the vast majority of the more than $1.5 billion cost savings program we will execute over the next two to three years.

A portion of this opportunity was already contemplated in the 2026 guidance we provided last quarter.

Looking ahead, we expect to deploy these cost savings to reinvest in growth and respond to business headwinds, improving our overall financial profile over time. During 2026 and into 2027, we will be transitioning teams, establishing new ways of working, and building systems and processes to run the business aligned with the structure we have announced.

In the coming months, as we launch the full scope of this program, we plan to share more details on the expected cadence of savings and our reinvestment framework for the years ahead. We intend to follow that up with external reporting, including segments sometime next year. Turning to more specifics for the second quarter, let me start by noting that the second quarter has the most demanding year-over-year comparison this year.

You may recall that last year, second quarter had a point and a half of transaction margin dollar benefit from the renewal and expansion of a relationship with a key payment partner, as well as very strong credit performance. This year, our transaction margin dollar investments also ramp through the year, and pressure will be more pronounced in the second quarter compared to the first.

In 2Q of last year, non-transaction OpEx also benefited from discrete items within general and administrative expense, including a non-recurring decline in indirect tax expense. The 2Q tax rate was below the full-year average.

Pulling all this together, for the second quarter, we expect low single-digit revenue growth on a currency-neutral basis, a low single-digit or approximately 3% decline in transaction margin dollars, transaction margin dollars excluding interest to decline low single digits or approximately 2%, mid-single-digit growth in non-transaction OpEx, and non-GAAP EPS to decline by high single digits or approximately 9%.

For the full year, we are reiterating our guidance. We continue to expect transaction margin dollars to decline slightly or be roughly flat, excluding interest on customer balances, approximately 3% growth in non-transaction operating expenses, and non-GAAP EPS ranging from down low single digits to slightly positive. Our guidance continues to assume approximately $6 billion in share repurchase and at least $6 billion of adjusted free cash flow.

I'd like to wrap up by thanking the PayPal team for their continued focus and dedication. We have a solid foundation to keep building on as we drive value creation by executing on PayPal's transformation. With that, Steve, let's go to Q&A.

Before we open the lines for Q&A, I'd like to ask everyone to limit themselves to one question so we can get to as many of your fellow analysts as possible. Sarah, please open the line.

PayPal Holdings (PYPL) Q1 2026 Earnings Call Transcript

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