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Here's our initial take on PayPal's (NASDAQ: PYPL) fiscal 2025 first-quarter financial report.
Key Metrics
| Metric | Q1 2024 | Q1 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $7.7 billion | $7.8 billion | 1% | Missed |
| Earnings per share (adjusted) | $1.08 | $1.33 | 23% | Beat |
| Total payment volume (TPV) | $403.9 billion | $417.2 billion | 3% | n/a |
| Active Accounts | 427 million | 436 million | 2% | n/a |
PayPal's Turnaround Is Progressing Nicely
PayPal posted generally strong numbers in the first quarter. Total payment volume increased by 4% year over year to more than $417 billion, and revenue slightly increased as well. Thanks to efficiency improvements throughout the business and generally strong profitability, PayPal's adjusted earnings soared by 23% year over year. And although PayPal's active account growth of 2% might not sound too impressive, consider that a year ago, the company reported a year-over-year decline.
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In addition, PayPal's business grew in some of the key ways management aims to use as long-term revenue drivers. For example, Venmo revenue growth accelerated to 20% during the quarter, and debit card payment volume increased by more than 60%.
PayPal maintained its full-year guidance for earnings and transaction margin and reaffirmed its expectation of $6 billion to $7 billion of free cash flow and about $6 billion in share buybacks (of which $1.5 billion was completed in the first quarter).
Immediate Market Reaction
Although PayPal beat expectations on the bottom line, revenue was slightly below the analyst consensus, as you can see from the table above. When combined with the economic uncertainty surrounding PayPal's business for the rest of 2025 (more on that in a bit), the stock is down a bit after the report.
As of 8:20 a.m. EDT, PayPal was down by about 3.5% -- not a massive decline but it shows that investors aren't exactly blown away by the company's numbers.
What to Watch
PayPal's results for the rest of 2025 will largely depend on the health of the global economy. Management even suggested that it would have increased full-year guidance due to a strong start to the year, but left it alone due to economic uncertainty.
So while it's obviously important for investors to keep track of the company's turnaround initiatives and how they're working out, it's also important to watch consumer spending trends. After all, PayPal can make all of the innovative improvements it wants, but if consumers aren't spending money, the numbers aren't going to look great.