PayPal Earnings Beat, But Slower Spending And Checkout Use Weigh On Results

PayPal Holdings Inc PYPL stock tanked Tuesday after it reported first-quarter 2025 results.

The company reported:

• Quarterly revenue growth was 1% year-over-year to $7.79 billion, missing the analyst consensus estimate of $7.84 billion. 
• Adjusted EPS was $1.33, beating the analyst consensus estimate of $1.16.
• Total payment volumes increased 3% year-over-year to $417.2 billion in the quarter.
• Payment transactions were down 7% to $6 billion
• Payment transactions per active account decreased 1% on a trailing 12-month basis to $59.4.
• Total active accounts increased by 2% to 436 million. Sequentially, active accounts increased by 0.3%, or 1.5 million.
• The operating margin increased 447 basis points to 19.6%, and the adjusted operating margin increased 257 bps to 20.7%.
• Operating cash flow was $1.2 billion, and free cash flow was $1 billion. 

PayPal held $15.8 billion in cash and equivalents as of March 31, with $12.6 billion in debt.

CEO Alex Chriss said the quarter marked the company’s fifth consecutive quarter of profitable growth, with progress across branded checkout, PSP, omnichannel, and Venmo.

Outlook: PayPal expects a second-quarter adjusted EPS of $1.29-$1.31, compared to $1.19 for the previous year’s period, and the analyst consensus estimate is $1.21.

PayPal reiterated full-year 2025 adjusted EPS of $4.95-$5.10, compared to $4.65 Y/Y. Current analysts estimate an EPS of $5.01.

Mizuho analyst Dan Dolev told Bloomberg he expects that sign of progress to help PayPal shares rebound. He said maintaining the full-year guidance demonstrated the firm’s strength.

Morgan Stanley told CNBC that investor sentiment remained bearish due to the potential impact of tariffs, competitive pressure from Apple Inc AAPL, and the risk of a long-term slowdown in branded checkout growth.

Jefferies told CNBC that PayPal’s China cross-border exposure is an emerging risk tied to potential new tariffs and changes to the de minimis exemption.

Price Action: At the last check on Tuesday, PayPal stock was down 2.62% at $63.23 premarket.

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