PayPal Holdings Inc. (NASDAQ:PYPL) shares fell Tuesday after the company reported first-quarter 2026 results that topped Wall Street expectations but showed signs of margin pressure and slowing engagement.

Details

The parent of Venmo posted revenue of $8.353 billion, up 7% from a year earlier and above analysts' estimate of $8.046 billion. Adjusted earnings were $1.34 per share, beating the consensus estimate of $1.27.

Total payment volume rose 11% year over year to $464.0 billion, while payment transactions increased 7% to 6.5 billion. On a trailing 12-month basis, transactions per active account slipped 1% to 58.7.

Active accounts rose 1% to 439 million, though they declined slightly on a sequential basis by 0.2 million accounts.

Operating margin narrowed 182 basis points to 17.8%, while adjusted operating margin fell 229 basis points to 18.4%.

The company generated $1.1 billion in operating cash flow, $0.9 billion in free cash flow and $1.7 billion in adjusted free cash flow during the quarter. Cash, cash equivalents and investments totaled $13.5 billion as of March 31, 2026, while debt stood at $11.6 billion.

PayPal's board declared a dividend of 14 cents per share, payable June 25 to shareholders of record as of June 4. The company also returned $1.5 billion to shareholders by repurchasing about 34 million shares.

Outlook

PayPal said it is cutting costs and restructuring operations under new CEO Enrique Lores, targeting at least $1.5 billion in savings over the next two to three years, including job reductions and organizational changes aimed at improving efficiency and growth, Bloomberg reported on Monday.

For the second quarter, PayPal expects adjusted earnings to decline by a high-single-digit percentage, or about 9%. The company reiterated its full-year 2026 outlook for adjusted earnings ranging from a low-single-digit decline to slightly positive growth.

PYPL Price Action: PayPal Holdings shares were down 10.18% at $45.26 during premarket trading on Tuesday, according to Benzinga Pro data.

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