- Key insight: New PayPal CEO Enrique Lores elaborated on his new strategy for the payments company through its quarterly earnings report and presentation.
- Supporting data: Paypal reported an 11% increase on total payment volume but a 14% decrease in net income year-over-year.
- Forward look: PayPal is reported to be cutting its workforce over the next 2-3 years as part of its cost savings and restructuring plan.
PayPal's first quarterly earnings report under the guidance of recently instated CEO Enrique Lores delivered mixed results as the company actively overhauls its business model.
The payments firm reported an 11% increase in total payment volume processed for the quarter, from $4.2 billion to $4.6 billion year-over-year.
The company also reported a net income of $1.1 billion, a 14% decrease year-over-year from $1.3 billion.
PayPal's net earnings per share came to $1.21, a year-over-year decrease of 6%. Wall Street estimates for normalized/adjusted EPS were aggregated to $1.27 per share, according to S&P Capital, which PayPal said it beat with an adjusted EPS of $1.34.
PayPal reiterated its full-year earnings guidance, but adjusted its outlook down slightly for the upcoming quarter.
"We expect the second quarter to reflect more pressure on a year-over-year basis, driven by the non recurrence of certain prior year items and the timing of anticipated cost savings and investment," Chief Financial & Operating Officer Jamie Miller said on the company earnings call. "Importantly, these are factors we anticipated, and we remain confident in our full-year 2026 guidance."
PayPal's stock value went down by nearly 10% in response to its earnings report as of midday Tuesday.
"The transformation is underway, with at least $1.5 billion [in] cost-savings plans being a critical piece of the new CEO's vision to establish PayPal as a technology company," said an analyst note from Keefe, Bruyette and Woods. "While the 1Q beat provides some near-term relief, the stock has sold off on skepticism based on the trends on the lower end of guidance."
Last week, ahead of the company earnings release, Lores announced a
Among speculation that Stripe is preliminarily interested in a
"We believe that the best approach is to invest in our three core businesses — PayPal, Venmo and Braintree — to drive profitable growth because in each of them we see the opportunity of making it happen," he said. "There are significant synergies across the three businesses that make them stronger together."
Multiple outlets reported on Tuesday that PayPal is planning to reduce its workforce by around 20% over the next two to three years as part of its cost savings initiatives. PayPal has 23,800 employees as of the end of 2025, so cuts of this proportion would total approximately 4,760.
PayPal declined to comment on the workforce reduction reports.
In the company earnings call on Tuesday, Miller told investors that the company is continuing to "eliminate duplication" as it restructures.
"During 2026 and into 2027, we will be transitioning teams, establishing new ways of working, and building systems and processes to run the business aligned with the structure we have announced," Miller said. "In parallel, we will be accelerating efforts to deploy AI and automation across our operations and technology platform, which we expect will both improve the customer experience and drive meaningful internal efficiencies."
Should workforce cuts be part of PayPal's cost savings program in the coming months, the payment company would be joining a growing list of fintechs that have announced layoffs in recent months.
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