We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can PayPal Beat Its Q2 FY26 Expectations Amid Tougher Trends?
Read MoreHide Full Article
Key Takeaways
PayPal reaffirmed 2026 guidance after Q1 revenues rose 7% and TPV increased 11%.
PayPal expects low revenue growth, lower TM$ and a high-single-digit non-GAAP EPS decline in Q2.
PayPal targets $1.5B in gross run-rate savings through simplification and broader AI adoption.
PayPal Holdings, Inc. (PYPL - Free Report) 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 - Free Report) 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 - Free Report) 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.
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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%.
View the Zacks #1 Rank List
Image: Bigstock
Can PayPal Beat Its Q2 FY26 Expectations Amid Tougher Trends?
Key Takeaways
PayPal Holdings, Inc. (PYPL - Free Report) 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 - Free Report) 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 - Free Report) 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.
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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%.
Image Source: Zacks Investment Research
PayPal currently carrier a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.