PayPal Holdings (NASDAQ:PYPL) delivered respectable FY25 Q1 results—beating EPS estimates but falling slightly short on revenue. Encouragingly, margins continue to improve, with transaction margin holding steady and operating margin inching up to 20%, a key milestone in management’s focus on profitable growth.
However, the underlying data shared during the call raises questions about why financial performance isn’t stronger. PayPal highlighted impressive growth in its key offerings: Venmo’s Total Payment Volume (TPV) rose 50% year-over-year with revenue up 20%, debit card usage grew by 38% in new users with those users showing double the transaction volume and nearly a 20% increase in average revenue per account, and Buy Now Pay Later (BNPL) TPV also climbed over 20%. These are significant indicators of product engagement and ecosystem strength.
Yet, despite these strong user and engagement metrics, Q1 revenue saw minimal year-over-year growth. This disconnect suggests either that base figures in prior periods were low (making growth rates look larger than they are), or that the business is in an early ramp-up phase where the financial impact from these metrics has yet to materialize.
Time will tell. PayPal and CEO Alex Chriss are delivering on the promise of profitable growth, but over a year into his tenure, shifting some focus back to top-line growth will become increasingly important.
For more details, key highlights, and commentary, check out the high-level earnings summary.
