PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person.
PayPal has kicked off the year with a better-than-expected profit result with shares rising 2.14%, signalling that its turnaround plan under new CEO Alex Chriss is gaining traction. Despite ongoing global uncertainty, the digital payments giant delivered solid first-quarter earnings, driven by strong transaction profitability and disciplined cost control. However, slowing growth in overall payment volumes led the company to keep its full-year guidance unchanged.
For the March quarter, adjusted earnings per share came in at USD 1.33, well ahead of the USD 1.16 consensus and up from USD 1.08 a year ago. The standout metric was transaction margin dollars—essentially what PayPal earns after processing costs—which rose 7% to USD 3.72 billion, beating estimates by USD 100 million. This shows that PayPal is becoming more efficient in monetising transactions, even in a softening volume environment.
Total payment volume rose 3.3% to USD 417 billion, slightly missing expectations, while the number of payment transactions fell 7.1%. Venmo, a key part of PayPal’s peer-to-peer ecosystem, held up well with a 9.6% lift in volume. Net revenue for the group grew a modest 1.2% to USD 7.79 billion, just below forecast.
Management reiterated full-year adjusted earnings guidance of USD 4.95 to USD 5.10 per share and expects to generate between USD 6 to USD 7 billion in free cash flow in 2025. While this conservative stance disappointed some investors, it reflects PayPal’s cautious view of the broader economic landscape, including potential impacts from trade tensions and weaker consumer spending trends.
The company’s strategy has shifted from growth-at-any-cost to profitable, sustainable expansion. Operating expenses fell 4.1%, and adjusted operating margin jumped to 20.7% from 18.2% a year ago—evidence that cost efficiencies are starting to flow through.
Looking ahead to the second quarter, PayPal forecasts adjusted EPS of USD 1.29 to USD 1.31, once again ahead of expectations. Transaction margin dollars are expected to grow by 4%–5%, suggesting further operational improvements despite modest revenue growth.
For investors, PayPal’s disciplined focus on profitability, improved margin performance, and significant share buybacks (USD 1.5 billion in Q1, with a full-year plan of USD 6 billion) are all encouraging signs. While challenges remain—especially around unbranded payment volumes and declining transaction counts—the company’s strong cash flow, large global user base, and margin-focused strategy keep its investment case intact within a fundamentals-based Value portfolio.
