PayPal's latest quarter leaves questions about its future earnings and operating model

PayPal gave investors a first-quarter report with plenty of growth on the surface, but the stock reaction showed that the market was looking deeper than revenue and payment volume.

Shares of PayPal Holdings closed at $46.49 on May 5, down $3.90, or 7.74%, according to Yahoo Finance data. The stock slipped another 9 cents, or 0.19%, to $46.40 in after-hours trading.

The move came after PayPal reported higher revenue, stronger total payment volume, and growth in transaction margin dollars. The bigger question for investors is whether new leadership can turn that activity into better earnings growth and a more efficient operating model.

PayPal earnings show growth in key areas

PayPal reported net revenue of $8.35 billion for the first quarter ended March 31, up 7% from $7.79 billion a year earlier. Total payment volume rose 11% to $464 billion, while payment transactions increased 7% to 6.5 billion, according to the company's earnings release filed with the Securities and Exchange Commission.

The company also reported 439 million active accounts, up 1% from a year earlier. Payment transactions per active account on a trailing 12-month basis fell 1% to 58.7, though PayPal said transactions per active account excluding payment service provider transactions increased 6%.

Those numbers suggest PayPal still has scale, but the quarter also showed why investors remain focused on the company's cost structure and margin profile. GAAP operating income fell 3% to $1.49 billion, while non-GAAP operating income declined 5% to $1.54 billion.

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PayPal by the numbers

• Net revenue rose 7% to $8.35 billion.
• Total payment volume increased 11% to $464 billion.
• Transaction margin dollars rose 3% to $3.81 billion.
• GAAP EPS fell 6% to $1.21.
• Non-GAAP EPS increased 1% to $1.34.
• GAAP operating margin contracted 182 basis points to 17.8%.
• Non-GAAP operating margin contracted 229 basis points to 18.4%.
• Free cash flow fell 6% to $903 million.
• Adjusted free cash flow rose 25% to $1.72 billion.
• PayPal repurchased about 34 million shares for $1.5 billion during the quarter.

New leadership is trying to simplify PayPal

The quarter was also PayPal's first major earnings update under CEO Enrique Lores, who said the company is taking steps to sharpen its strategy, simplify the organization, improve growth, and focus investments where they can have the greatest impact.

That message followed PayPal's April 29 announcement that it would reorganize into three business units: Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto. PayPal said the structure is intended to accelerate execution, streamline decision-making, and drive innovation.

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The company also named Frank Keller president of Checkout Solutions & PayPal, Alexis Sowa interim lead of Consumer Financial Services & Venmo, and Jeff Pomeroy interim lead of Payment Services & Crypto. PayPal also appointed Anshu Bhardwaj as chief AI transformation & simplification officer and Antonio Lucio as chief marketing & corporate affairs officer.

The reorganization gives PayPal a cleaner structure as it tries to sharpen its focus on checkout, Venmo, merchant processing, and crypto-related services. The challenge is that investors may need more than a new structure before giving the company credit for a durable turnaround.

Guidance keeps pressure on PayPal reset

PayPal reiterated its full-year 2026 guidance, but its second-quarter outlook left investors with less room to ignore near-term pressure. The company expects second-quarter GAAP EPS to decline in the mid-single digits, while non-GAAP EPS is expected to fall by a high-single-digit percentage, or about 9%.

For the full year, PayPal still expects GAAP EPS to decline in the mid-single digits. It also expects non-GAAP EPS to range from a low-single-digit decline to slightly positive growth.

That guidance makes PayPal's story more complicated than a first-quarter revenue beat. The company is still moving large amounts of payment volume across a global platform, and its balance sheet supported another $1.5 billion of share repurchases in the quarter.

Investors now need to see whether Lores can convert PayPal's scale into better execution, stronger margins, and a clearer path for earnings growth. Until then, PayPal's latest quarter may leave the market focused less on what improved and more on what still needs to change.

Related: PayPal turns Canva designs into payment machines

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This story was originally published May 6, 2026 at 1:17 PM.