PayPal chief executive Enrique Lores used the company's first quarter 2026 earnings call to set out a sharper, leaner blueprint for the payments giant, pledging to extract more than US$1.5 billion of run-rate cost over the next two to three years while reorganising the company around just three lines of business.
"There is potential to significantly reduce the company cost structure," Lores told analysts. "Simplifying the organization and accelerating the adoption of AI across the company will generate significant savings that can be reinvested in growth and used to respond to business headwinds, improving our overall financial profile over time."
The reorganisation, announced ahead of the call, splits PayPal into Checkout Solutions and PayPal, Consumer Financial Services and Venmo, and Payment Services and Crypto, each with a single leader and clear accountability. Lores argued the legacy customer-aligned matrix had been throttling speed, telling the call that "checkout, for example, touched all customer groups and markets, creating a multi-dimensional matrix for roadmap prioritization."
The new chief, who spent two decades inside Hewlett Packard's enterprise business before joining PayPal, repeatedly returned to a Silicon Valley refrain. "We need to recommit to the fundamentals," Lores said. "That includes becoming a technology company again, sharpening our focus on consumers, aligning the company around three strong businesses, and simplifying how we work with clear accountability and a stronger emphasis on execution."
The headline numbers gave him room to manoeuvre. Total payment volume grew 11% on a spot basis to US$464 billion, with Venmo TPV accelerating to 14% growth, the unit's sixth consecutive quarter of double-digit gains. Pay with Venmo and buy now, pay later kept outpacing the market at 34% and 23% growth respectively, while debit card and tap-to-pay spend inside branded experiences jumped 60% year-on-year. PSP volume, the legacy Braintree pipe, accelerated to 11% growth from 7% in the second half of 2025.
The weak spot remained online branded checkout, where currency-neutral volume crept up just 2% from 1% the prior quarter. "Quarter-to-date, we are seeing trends at the low end of our full year guidance," chief financial officer Jamie Miller cautioned, citing softer travel spend and "more muted growth in Europe."
Miller backed up the cost-cutting plan with hard numbers. "We expect to see at least US$1.5 billion of gross run rate savings over the next two to three years," she said, adding that the savings will arrive in two waves. "The first from structural realignment, and the second from accelerating AI adoption and automation." Operating expense growth of 8% in the quarter reflected pulled-forward technology, marketing and product investments designed to feed into those savings later in the year.
Lores spent significant time on PayPal's stablecoin push, a business he insisted will sit alongside the company's PSP rails. "Stablecoin is also part of this, enabling faster, lower-cost transactions," he said. "We have made good progress with PYUSD, which became the largest federally regulated stablecoin in December, and we recently expanded its availability to 70 markets globally."
Financials at a glance: non-GAAP earnings per share of US$1.34, up 1%; transaction revenue of US$7.5 billion; transaction take rate down four basis points ex-FX hedges to 1.62%; adjusted free cash flow of US$1.7 billion in the quarter and US$6.8 billion over the trailing year. PayPal completed US$1.5 billion of buybacks in the quarter, taking the trailing twelve-month total to US$6 billion, and ended Q1 with US$13.5 billion of cash and US$11.6 billion of debt.
With full-year guidance reiterated, the message from Lores was that this is a turnaround in motion rather than a one-quarter pivot. "It will take a few months to completely define our new plan," he warned, "but I think it is important to start sharing the direction we are taking and some of the actions we have underway."