May 5 - PayPal posted first-quarter results that topped Wall Street forecasts, driven by steadier-than-expected consumer spending that bolstered transaction volumes at the digital payments company.
Revenue for the three months ended March 31 climbed 7% to $8.35 billion, ahead of the analysts' mean projection of $8.05 billion. On a currency-neutral basis, total payment volumes rose 8% year-over-year to about $464 billion. The company also reported adjusted earnings of $1.34 per share for the quarter, above the $1.27 per-share estimate.
PayPal highlighted growth in its higher-margin online branded checkout segment, where total payment volumes - a measure of transactions in which consumers deliberately select PayPal or Venmo at checkout - increased 2% in the quarter. The firm benefited from spending resilience among higher-income households even as many consumers continued to face inflationary pressures and broader economic uncertainty that have been intensified by the Middle East conflict.
Recent quarterly results at major card networks - Visa, Mastercard and American Express - similarly signaled sustained consumer spending trends last month, reinforcing the backdrop for PayPal's volumes.
Leadership and structural changes
PayPal is navigating a more competitive payments landscape following entries from large technology firms such as Apple and Google. The company, which scaled rapidly during the pandemic, has seen growth moderate since that period and its shares remain more than 80% below their mid-2021 peak.
Since the CEO transition in March, incoming chief executive Enrique Lores is preparing to lead his first earnings call later on Tuesday. Management has announced a reorganization that will split the business into three operating units, including a standalone division focused on Venmo.
As part of its operational changes, PayPal outlined plans to realize approximately $1.5 billion in savings over the next two to three years through streamlining and by employing artificial intelligence to improve efficiency.
What the results show
- Top-line and adjusted earnings exceeded analyst expectations for the quarter.
- Total payment volumes rose 8% year-over-year on a currency-neutral basis to about $464 billion.
- Higher-margin online branded checkout volumes grew 2% in the period.
These results reflect a combination of resilient consumer demand in certain household segments and PayPal's effort to reposition its business amid intensified competition and moderated growth since the pandemic surge.