PayPal Q1 Beats, Guides Down 9%; UK Regulators Probe Payment Giants
V•PayPal’s Q1 revenue rose to $8.35B with adjusted EPS of $1.34 and payment volume up 11%, yet Q2 EPS guidance is down 9% and full-year earnings are expected flat to slightly lower versus $5.31 in 2025. UK regulators launched an antitrust probe into PayPal, Visa and Mastercard's payment networks.
1. Q1 Results and Guidance
PayPal reported revenue of $8.35B in Q1, ahead of the $8.05B forecast, with adjusted EPS of $1.34 versus $1.27 and total payment volume hitting $464B, marking an 11% year-on-year increase. Despite this, guidance forecasts a 9% drop in non-GAAP EPS for Q2 and flat to slightly lower full-year earnings compared to $5.31 in 2025.
2. 2026 Cost Load and Restructuring
New CEO Enrique Lores began a strategic reset on March 1, shifting most 2026 costs upfront by reorganizing teams and deploying AI, aiming to deliver benefits from 2027. His plan includes splitting the business into three segments—Checkout, Consumer Financial Services, and Payment Services & Crypto—and targeting $1.5B in cost savings over two to three years with a 20% workforce reduction.
3. Share Buybacks Provide Tailwind
In Q1, PayPal repurchased 34M shares for $1.5B, bringing year-to-date buybacks to $6B and leaving $13.5B in cash against $11.6B in debt. Continued aggressive buybacks could reduce share count by around 15% over the next two years, underpinning EPS growth despite flat revenue forecasts.
4. UK Regulatory Probe
UK regulators have opened an investigation into PayPal, Visa and Mastercard over potential competition concerns in payment networks. This probe adds regulatory risk for all three firms, with potential implications for fee structures and market practices.
