PayPal Holdings, Inc. PYPL delivered a solid first-quarter 2026, but now the attention has shifted to whether management can meet its second-quarter targets. Revenues rose 7% to $8.35 billion or 5% on a currency-neutral basis, in the first quarter, while total payment volume (TPV) climbed 11% to $464 billion. This enabled the company to reaffirm its 2026 guidance despite a more challenging backdrop.
The second quarter, however, is expected to be much tougher. PayPal expects low-single-digit currency-neutral revenue growth, a low-single-digit decline in transaction margin dollars (TM$) and a high-single-digit fall in non-GAAP EPS. The comparison is difficult because last year's second quarter benefited from a partner renewal, stronger credit performance, lower operating expenses and a favorable tax rate.
Management had also pointed to slowing momentum in key areas. From the start of the second quarter through May 5, 2026, branded checkout trends were at the low end of its full-year guidance. For online branded checkout, its 2026 guidance continues to reflect slightly positive to low single-digit branded checkout TPV growth. Compared to the first quarter of 2026, management has seen slower growth in the travel vertical as well as more muted growth in Europe.
Management is also betting that operational changes will strengthen execution over time. The company plans at least $1.5 billion in gross run-rate savings over the next two to three years through organizational simplification and wider AI adoption.
While these savings are expected to fund future growth initiatives, investors will likely focus first on whether PayPal can deliver its demanding second-quarter guidance before giving management the benefit of the doubt.
What XYZ & INTU Expect?
Block XYZ raised its 2026 adjusted EPS outlook to $3.85 from $3.66 after strong first-quarter growth at Cash App and Square. For the second quarter, XYZ expects gross profit of about $3.04 billion and adjusted EPS of 86 cents, supported by lending growth, payment volumes, AI-driven efficiency and planned cost reductions.
Intuit INTU raised its fiscal 2026 outlook after solid third-quarter results. The company now expects continued double-digit revenue growth, supported by TurboTax, Credit Karma, QuickBooks and AI-powered services. Management remains focused on operating leverage and margin expansion as INTU approaches its fourth-quarter results and the July 31 fiscal year-end period.
PYPL’s Price Performance, Valuation & Estimates
Shares of PayPal have declined 3.9% in the past three months against the broader industry and the S&P 500 Index rise.
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From a valuation standpoint, PayPal’s shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 8.59X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 17.09X.
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PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $5.32 in the past month. The consensus estimate for the metric indicates a year-over-year increase of 0.19%.
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PayPal currently carrier a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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