PayPal Holdings, Inc. Q1 FY2026 Earnings Call

Good morning, and welcome to PayPal's First Quarter 2026 Earnings Conference Call. My name is Sarah, and I will be your conference operator today. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winoker, PayPal's Chief Investor Relations Officer. Please go ahead.

Thanks, Sarah. Welcome to PayPal's First Quarter 2026 Earnings Call. I'm joined by CEO, Enrique Lores and Chief Financial and Operating Officer, Jamie Miller. Our remarks today include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from these statements. Our commentary is based on our best view of the world and our businesses as we see them today. As described in our earnings press release, SEC filings and on our website, those elements may change as the world changes. Over to you, Enrique.

Thank you, Steve, and thank you to everybody for joining us this morning. I'm stepping into this role at an important moment for PayPal. I appreciate the opportunity to serve as CEO and I'm confident we will accelerate the growth of the company while improving profitability and cash flow. That is why I'm here. At the same time, I'm also realistic that we need to make significant changes to address the strategic and operational issues the company has faced. Today, I will share what I have observed since joining the company, and the actions we are taking to move forward with focus and discipline. During my time on the Board, I developed a good understanding of PayPal's strengths, opportunities and areas for improvement. Over the past two months, I have listened to and learned from our customers, our team and our investors. This has helped to deepen my view of where we are, where we need to go and how we get there. I will begin with a few initial observations. First, our foundation is strong. The company has valuable assets in our brands, our risk and underwriting capabilities, our technology and most importantly, our team. Our scale and global reach set us apart and are difficult to replicate. And the hard-earned trust our customers place in us every day is a critical advantage. Second, we operate in markets defined by growth and changing traffic patterns. It is in this period that leading companies are trying ways to differentiate themselves by innovating, delivering new and superior solutions and driving to growth. PayPal needs to focus. Third, one of our core strengths is our two-sided network, serving both consumers and merchants. In recent years, PayPal has put more energy into the merchant side of the network. Strengthening the value we offer to the hundreds of millions of consumers who choose PayPal and Venmo is a key priority. By doing that, we increase the value of our platform for merchants and create a stronger foundation for sustainable growth. Fourth, due to years of underinvestment, we need to accelerate the modernization of our technology platform. Moving faster to become cloud-native and aggressively adopting AI in our development processes will help us significantly increase developer productivity and shorten time to market. Fifth, we need to simplify how we operate, streamline decision-making and clearly define accountability to strengthen execution. Finally, there is potential to significantly reduce the company's cost structure. 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. With this as context, we need to recommit to the fundamentals. 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. I expect that it will take a few months to completely define our new plan. But I think it is important to start sharing the direction we have taken and some of the actions we have underway. Let me start by sharing the framework we are using to define our strategy. We see three distinct, attractive and in many ways complementary market opportunities where focused investment and sharper execution can meaningfully improve our growth trajectory: checkout, consumer financial services and payment services. Each has clear near-term levers to improve the performance of our existing assets as well as clear medium-term growth opportunities. In every case, we have a strong right to win. I will take each in turn. Let me start with checkout. This is a large and growing market where we deliver meaningful value to consumers and merchants. Within checkout, we also see strong consumer demand for flexible payment options, including buy now, pay later solutions. This is becoming an important driver of consumer acquisition and is also delivering clear benefits to merchants through higher basket sizes. The second opportunity is in consumer financial services. Consumers are increasingly turning to digital platforms to handle everyday financial activities. This is also a large market opportunity — more than $200 billion annually in just our top six markets — and it is growing low double digits. What is most attractive about this market is not only size and growth but also the customer lifetime value opportunity we can tap into. The third opportunity is in payment processing and value-added services. The PSP space represents significant untapped value for us, driven by the continued shift to digital channels and the increasing complexity of global payments. We're aligning the organization to unlock these growth opportunities. Previously, our teams were organized primarily around the customers we serve — consumers, small businesses and large enterprises. That structure resulted in organizational complexity with multiple dependencies and handoffs that slow decision-making and weakened execution. Checkout, for example, tested across customer groups and markets, creating a multidimensional matrix for roadmap prioritization. The changes we announced last week will organize the company into three lines of business, each with a single leader: Checkout Solutions and PayPal; Consumer Financial Services and Venmo; and Payment Services and Braintree. Importantly, we are bringing together the two sides of the network to maximize our competitive advantage. Simplifying our operating model and clarifying accountability means that each leader will own clear outcomes, and our teams will be able to focus on our most important growth priorities. We're also using these changes to simplify and delayer our organization. We have formed a new AI transformation and simplification team that will help us work more effectively and drive our enterprise-wide AI agenda. Let me now outline how we are thinking about the path forward across each of our businesses. Checkout Solutions and PayPal is primarily a checkout-focused business and is the highest priority for the company and me. It brings together our consumer and merchant ecosystems under one unified strategy. This structure will enable us to fully leverage our two-sided network and accelerate innovation across both sides of the platform. Our intent is not to chase transitory market share in any given quarter, but rather to focus on segments and verticals where we can deliver differentiated value to our customers. I have also emphasized that strengthening the consumer side of the network is key to increasing the value we deliver to merchants. Driving habituation through the adoption of our financial services offerings is an important step toward enhancing the consumer value proposition and reinforcing the power of our two-sided network. Our PayPal Plus loyalty program, which we introduced in the U.K. and will expand to additional markets, is another important step. Over the medium to long term, we have a number of compelling innovative initiatives underway. We will take a disciplined approach to prioritization, focusing resources on scenarios with greater potential to drive durable growth and shareholder value. Within this portfolio, we will be highly selective as we evaluate our growth set of initiatives, including digital wallet interoperability, biometric functionality and additional programs under consideration. Within Consumer Financial Services and Venmo, we have been making good progress in the last few years and have built a strong portfolio of related products, but awareness and adoption remained well below their full potential. Our focus is on becoming more central to our customers' financial lives, and our goal is to enable consumers to spend, save, invest and borrow seamlessly. Venmo will be a key component of our growth plans moving forward, supported by a strong brand and younger demographic. We are in a strong position to expand in this space, deepen engagement and increase customer lifetime value. Payment Services and Braintree unifies our processing and platform capability into a single scalable offering for merchants. We will bring together the company's unbranded processing capabilities, including Braintree, and value-added services, such as fraud management, authorization optimization and global payment infrastructure. These are designed to support businesses of all sizes with flexible, high-performance payment solutions. We are also well positioned to capture and monetize this growth. Stablecoin is also part of enabling faster, lower-cost transactions. 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. At the same time, we have much more opportunity to scale our offerings and accelerate growth in this space. Across the company, we need to modernize our technology platform to enable greater speed and interoperability across our offerings. As I said earlier, leveraging AI more extensively in our development processes will significantly help us with this effort. Supporting our growth plans is the opportunity to realize cost savings. First, we will remove duplicate application and layers from our organizational structure. Second, we will accelerate our AI adoption and automation across our operations. Combined, the savings will be significant. We expect to see at least $1.5 billion of gross run-rate savings over the next two to three years. Jamie will discuss more on this point later in the quarter. Let me touch briefly on some highlights from the quarter before Jamie takes you through our results in more detail. Our first quarter results show an improvement in branded checkout. Branded checkout TPV growth was 2% on a currency-neutral basis, up from 1% last quarter. We continue to see spend in key parts of the business, with Venmo and PSP delivering mid-teens TPV growth. Transaction margin dollars, excluding interest on customer balances, grew 3% with contributions from credit, Venmo and PSP. Non-GAAP earnings per share grew 1%. We also continue to generate robust free cash flow giving us ample room to invest and return capital to shareholders through buybacks and our dividend. On the operational side, our team accomplished a lot in the first quarter, from securing app presentment on key merchants to enabling interoperability for peer-to-peer payments between PayPal and Venmo. To close, I am confident in our ability to put this company on a more durable path to long-term growth and shareholder value creation. We have a strong foundation, and we are now organized to move with greater urgency. We have a well-defined framework. I will continue to define our strategy and prioritize our plan in line with it. I look forward to sharing more progress as we move ahead. And finally, I want to thank our teams for their continued focus and execution and our customers and shareholders for their trust. I will now turn it over to Jamie.

Thanks, Enrique. The team and I are energized by the focus, clarity and disciplined prioritization you are already bringing to PayPal. We have a strong market position and a solid foundation and I'm confident we're set up to move faster from here. Turning to the financials in more detail on Slide 7. PayPal delivered a solid quarter with both transaction margin dollars and non-GAAP earnings per share coming in moderately better than our guide. Total payment volume accelerated to 11% at spot and 8% currency neutral in the first quarter, reaching over $460 billion. Online branded checkout volume growth improved slightly from the fourth quarter, while enterprise payments and Venmo both accelerated into the mid-teens. First quarter revenue grew 7% on a spot and 5% on a currency-neutral basis. TM dollars, excluding interest on customer balances, grew 3% in the first quarter. The drivers of our TM dollar growth were broad-based, led by credit performance, Venmo monetization, PSP profitability and loss improvement across multiple products. Growth in these areas more than offset the headwind from investments we are making to strengthen our branded checkout position and drive higher engagement, habituation and incremental activity over time. First quarter non-GAAP earnings per share increased 1% to $1.34. And compared to our guidance, non-GAAP EPS benefited from stronger transaction margin dollar growth with some offset from higher non-transaction operating expense. We expect the second quarter to reflect more pressure on a year-over-year basis, driven by the nonrecurrence of certain prior-year items and the timing of anticipated cost savings and investment, both of which I'll walk through in more detail shortly. Importantly, these are factors we anticipated, and we remain confident in our full-year 2026 guidance. Adjusted free cash flow, which excludes the timing impact from the origination and sale of Paylater receivables, was $1.7 billion or nearly $6.8 billion on a trailing 12-month basis. Turning to Slide 8. We continue to drive deeper, more active relationships with our customers. Monthly active accounts increased 1% to 225 million. Transactions per active account, excluding PSP, improved sequentially to 6% growth. Moving to Slide 9. Total payment volume in the first quarter grew 11% at spot and 8% on a currency-neutral basis to $464 billion. Working our way down the page, branded experience TPV, which includes online checkout, PayPal and Venmo debit as well as tap to pay, grew 5% compared to 4% in the fourth quarter. While debit card and tap-to-pay spend represent a small portion of branded experience in volume today, they continue to grow rapidly, up 60% year-over-year. Venmo TPV continues to reach new highs, accelerating sequentially to 14% growth year-over-year and marking the sixth consecutive quarter of double-digit growth. Online branded checkout volume growth improved slightly compared to last quarter, up 2% on a currency-neutral basis. Compared to the fourth quarter, we saw a slight improvement in the U.S. with softer performance continuing in Europe. Pay with Venmo and buy now pay later continue to outpace the market, taking share from other payment methods and growing 34% and 23%, respectively. P2P and other consumer volume growth remains healthy, up 10% in the first quarter and reflecting the debit card and Venmo momentum I just mentioned. Turning to PSP. Volume growth accelerated to 11% from 7% in the second half of 2025. Within PSP, enterprise payments again showed notable strength with volume growth accelerating to the mid-teens from a combination of growth in profitable front book business, high retention and growth alongside our existing merchant base. Driving higher attachment of value-added services continues to be a key focus to improving yield and monetization as we move through 2026. Moving to more financial detail on Slide 10. Transaction revenue grew 7% on a spot basis to $7.5 billion. Other value-added services revenue grew 10% to $852 million, driven by strong contribution from consumer and merchant credits, partially offset by lower interest rates. Transaction take rate declined by 6 basis points to 1.62%. Excluding the impact of foreign exchange hedges, transaction take rate declined about 4 basis points. This outcome was driven by a combination of factors, including branded co-marketing investments and rewards as well as higher growth in Venmo and enterprise payments. TM dollars ex interest on customer balances grew 3%. Within volume-based expenses, transaction expense as a percentage of TPV was 90 basis points, increasing slightly year-over-year from a mix shift to enterprise payments. Transaction loss as a percentage of TPV improved slightly year-over-year to 6 basis points; this reflects our team's ongoing work to continue to improve and strengthen onboarding, fraud prevention and risk management capabilities. Nontransaction-related OpEx increased 8%, and this higher increase relative to our guide was driven by our decision to pull forward a combination of technologies, marketing and product investments, which will continue into the second quarter, making our OpEx profile more first-half weighted this year. As a result of higher investments, non-GAAP operating income was down 5% in the quarter to $1.5 billion. Moving to capital allocation. In the first quarter, we completed $1.5 billion in share repurchases, bringing our trailing 12-month total to $6 billion. We ended the quarter with $13.5 billion in cash and cash equivalents and investments and $11.6 billion in debt. Moving to guidance on Slide 11 for the second quarter and for the full year 2026. While first quarter was a solid start to the year, it's early. The macro and geopolitical environment remains complex and we operate in a dynamic, highly competitive industry. The company is also in the midst of a significant multiyear transformation during which we are taking steps including the business realignment discussed today to better organize around our key market opportunities and drive stronger execution. With that as a backdrop, we are reiterating our guidance for the full year. We see a significant opportunity to enhance customer lifetime value by driving consumer engagement through a combination of scaling new experiences, improving presentment and increasing consumer selection with rewards and loyalty. We continue to expect our targeted growth investments to represent approximately a three-point headwind to transaction margin dollars growth in 2026, while driving durable long-term benefits in the years ahead. We have conviction in the impact these initiatives can drive in the future, but it will take time to keep scaling our programs and experiences. For online branded checkout specifically, our guidance continues to reflect slightly positive to low single-digit branded checkout TPV growth for the full year. Quarter-to-date, we are seeing trends at the low end of our full-year guidance, and these are reflected in our second quarter guide. Compared to the first quarter, we have seen slower growth in the travel vertical as well as more muted growth in Europe. As Enrique discussed, we see significant opportunity to further improve productivity and reallocate resources to our highest returning initiatives. And while we've made real progress over the past few years, there is meaningfully more we can do. We are realigning the organization to sharpen strategic focus, eliminate duplication and remove layers, enabling faster decision-making and clearer accountability. In parallel, we will be accelerating efforts to deploy AI and automation across our operations and technology platform, which we expect will both improve the customer experience and drive meaningful internal efficiencies. These efficiencies will come from organizational realignment, process redesign through AI and automation, procurement and vendor rationalization and optimizing our local footprint. Together, these represent two distinct waves of savings: the first from structural realignment and the second from accelerating AI adoption and automation to comprise the vast majority of the more than $1.5 billion cost savings program we will execute over the next two to three years. A portion of this opportunity was already contemplated in the 2026 guidance we provided last quarter. Looking ahead, we expect to deploy these cost savings to reinvest in growth and respond to business headwinds and improve our overall financial profile over time. During 2026 and into 2027, we will be transitioning teams, establishing new ways of working and building systems and processes to run the business aligned with the structure we have announced. In the coming months, as we launch the full scope of this program, we plan to share more details on the expected cadence of savings and our reinvestment framework for the years ahead. We intend to follow that up with external reporting, including segments, sometime next year. Turning to more specifics for the second quarter. Let me start by noting that the second quarter has the most demanding year-over-year comparison this year. You may recall that last year second quarter had 1.5 points of transaction margin dollar benefit from the renewal and expansion of a relationship with a key payment partner as well as very strong credit performance. This year, our transaction margin dollar investments also ramped through the year and pressure will be more pronounced in the second quarter compared to the first. In 2Q of last year, nontransaction OpEx also benefited from discrete items within general and administrative expense, including a nonrecurring decline in indirect tax expense. The 2Q tax rate was below the full year average. Pulling all this together, for the second quarter, we expect low single-digit revenue growth on a currency-neutral basis, a low single-digit or approximately 3% decline in transaction margin dollars. Transaction margin dollars excluding interest to decline low single digits or approximately 2% and mid-single-digit growth in nontransaction operating expenses and non-GAAP earnings per share to decline by high single digits or approximately 9%. For the full year, we are reiterating our guidance, and we continue to expect transaction margin dollars to decline slightly or be roughly flat, excluding interest on customer balances, approximately 3% growth in nontransaction operating expenses and non-GAAP earnings per share ranging from down low single digits to slightly positive. Our guidance continues to assume approximately $6 billion in share repurchase and at least $6 billion of adjusted free cash flow. I'd like to wrap up by thanking the PayPal team for their continued focus and dedication. We have a solid foundation to keep building on as we drive value creation by executing on PayPal transformation. With that, Steve, let's go to Q&A.

Before we open the lines for Q&A, I'd like to ask everyone to limit themselves to one question so we can get to as many of your fellow analysts as possible. Sarah, please open the line.

Your first question comes from Harshita Rawat with Bernstein.

I want to ask about branded checkout, Enrique, Jamie, can you maybe talk about the market dynamics in Europe, and also over time, what can we expect to see as execution improves and kind of the realistic growth versus e-commerce we should expect?

I'll talk a little bit about the market dynamics in Europe and then Enrique, perhaps you want to talk about over time the execution focus we have. When you look at branded checkout, I would say that we're operating in a dynamic environment. When you look at the consumer generally, while it's remained strong, we are seeing some skewing in the middle income, which candidly in the U.S. was one of our bigger improvement points in that cohort. When you look internationally, what we are really seeing is a little bit more pressure from higher oil prices, certainly gas prices, but more importantly, travel in Europe was something that we saw slightly at the end of the quarter, but really more this quarter. And when you look across Europe, I would say, generally speaking, we've got areas growing quite well, but we're still under pressure in places like the U.K. With respect to Germany, I would say this quarter we continue to see moderation there like we had seen in the fourth quarter — still growing, but at a slower rate. And generally, pretty consistent combination of macro softness, competitive intensity and some natural normalization in a long-time market leader. But having said that, I think what's important — and this is where I'll maybe hand off to Enrique — we began investing, taking all of the things we were doing with respect to branded checkout over the past couple of years and really bringing those to Europe midyear last year and leaning into those investments. And as Enrique has come in, I think his country-to-country level focus has been really important and I think will be a real acceleration for that. Enrique, maybe you want to unpack that a little bit.

Yes. I think in Europe, we have an opportunity to improve execution by improving our focus in the countries. During the last eight weeks, I have been twice in the U.K., once in Germany to understand what the situation is and to work with the team to see what improvements we need to make. And as Jamie was saying, there is a combination of macro effects but also local competition. But we have enough tools on our side to be able to compete and to be able to grow. And this is what we are going to be doing. Overall, answering your other question about branded checkout, we are taking a lot of actions to change the trajectory of the business. Of course, we need to continue with investments we started a quarter ago to improve presentment and improve selection. We have especially focused on the top 50 customers and we are starting to see progress there. We also need to continue to improve the experience of our customers so they get a better experience when they check out with PayPal. We have other opportunities that we started to mention in the prepared remarks that I think in the future are going to be very meaningful. We have been more focused on the merchant side of the network than on the consumer side, and we need to rebalance that focus and rebalance that investment. For example, the loyalty program, which was launched in the U.K., is going to be an element of that. There are other things that we need to do in that space. There are also specific verticals, high-value verticals where we can have a more differentiated value proposition, especially when combined with financial services. And this combined with an improvement in execution — by really understanding what our priorities are and simplifying how we make decisions — we think the combination of all that will have a significant impact on the business going forward.

Your next question comes from Timothy Chiodo with UBS.

Great. I want to see if we could talk a little bit more about the $1.5 billion of gross run-rate cost savings that you outlined today. And Jamie, I appreciate that you mentioned over the coming months, you'll be giving more detail around the cadence and reporting around the progress there. But one area of the expense base that often comes up in investor discussions is the customer support line item — it's roughly $1.7 billion or so — and I fully appreciate and I think investors do as well that there are many countries, lots of compliance, lots of support, people answering the phone and local language. There's a lot of complexity there. But I was hoping you could maybe bring to life a little bit more of some of the tasks or roles or some of the activities within that bucket that might be more applicable to this cost savings initiative. And in general, any other broader thoughts around kind of areas of low-hanging fruit that you see for the $1.5 billion.

Yes. So maybe I'll talk a little bit about the cost components of how we're tackling it and a little bit around the AI benefit. And then Enrique, you might want to chime in as well. When we look at the at-least $1.5 billion in cost, we really see this coming in a couple of different phases. The first is really around structural realignment. And you've heard us announce our organization last week, but this is about duplication. It is about layers, it is about org structure, but really focusing and aligning our teams for top-to-bottom execution and improving our execution speed, candidly. But with that also comes a lot of opportunity for cost reduction and remixing there. The second piece, which I think is really a little bit more along the lines of your question on customer support, is aggressive deployment of AI with respect to customer experience, how we touch customers and service and support and operations. And equally with respect to risk and the modernization of our risk platform and how we deploy AI as we do that. AI has really across-the-board opportunity, particularly in customer support, but candidly, across the company. I think we've made really good inroads. We're seeing good engineering productivity. We're seeing different elements of acceleration in different functions. But I think the full top-to-bottom acceleration is going to be really important. And to your point, as we really lay this out, I think there's two things to note. Number one, we do plan to reinvest savings for growth. So a lot of what Enrique has talked about with respect to the company's strategy and not just branded checkout where we're leaning into the consumer value prop more but really building out financial services with Venmo, really leading into PSP and deeper ways to grow — that reinvestment piece is an important element of this. But as you said, we'll lay out more of this in the coming weeks.

And I think the changes that AI will enable us to do are going to be very significant. This is why we created a group last week reporting to me that is going to be in charge of driving function-by-function, process-by-process this AI transformation. This is not about adopting AI as a technology — we have done many pilots in the company, and we have seen what is possible. It's really about understanding how we can redesign the key processes once the organization adopts AI. This is what we have seen that really will drive savings. In the near term, it will help us to move faster, and it will help us to bring and to deliver a better customer experience. The two key areas where we see the biggest opportunity in the short term are technology development — and as I mentioned before, this is going to really help us to accelerate some of the improvements and modernization we need to do in our platform — and customer support, as you were saying, Tim. This is a large cost for us today, and with AI we believe we can both reduce cost and also improve the experience that we provide to customers. The fact that we support multiple languages and multiple businesses just highlights the opportunity of really reducing the cost by automating and doing it in an even better way for our customers.

Your next question comes from James Faucette with Morgan Stanley.

I wanted to follow up on that question and not only how we should think about reinvestment and the other side of capital return, but how you're going to decide how to apportion savings to one or the other. In particular, what are the proof points that you're going to be looking at — whether it be ongoing engagement, growth in customers? Just help us think through the KPIs and how you're going to make sure that you allocate capital most efficiently. I know you have big ambitions for both, but nuance there is, I think, important this morning.

This is a great question, and you will see us doing much more work and be reviewing that with all of you in the coming quarters. What we have designed so far is the strategic framework we see for the company. We have outlined that we see three big growth opportunities where we think we can both grow revenue and operating profit, and we are aligning the company and the strategies of the company to make that happen. As we do that, we will identify what are the best opportunities — opportunities that will drive the best return. We are going to be rigorous, even ruthless, in the prioritization we apply because the company today has multiple attractive initiatives. We also have several small businesses. In the coming quarters, we need to decide in which ones we double down and increase investment to improve our ability to execute and our chances to be successful, and in which ones we are going to reduce investment or stop. This is the process that between now and the next quarter we will be executing. As we do that, we also will identify the key KPIs per business so you can track the progress we are making. We are just starting what we call the transformation process. This is going to take some time; it's not something that will happen immediately. But the combination of the assets that we have, the ability to invest and the rigor we are going to apply make us confident that we will be able to really improve the performance of the company over time.

Your next question comes from Darrin Peller with Wolfe Research.

Thanks. Enrique, can you just walk through your thought process on your review of your assets in the company in a sense of which assets you actually absolutely feel like you must keep as part of the go-forward entity? If there are assets you would consider selling, where you stand on Venmo. Is that potentially something that the company would consider selling for the right price? And then your thought process on synergies or dissynergies of keeping assets together, whether it's Venmo with the rest of the business or Braintree with the rest of the business? If you could just walk through your thought process on that, that would be great.

So let me start by saying that our number-one priority, my number-one priority, is to maximize shareholder value. At this point, I believe that the best approach is to invest in our three core businesses — PayPal, Venmo and Braintree — to drive profitable growth. Because in each of them, we see the opportunity to make it happen. To do that, as we explained before, we are going to be simplifying the priorities for each of them, identifying the core areas where we need to invest. At the same time, we need to modernize the technology platform that will help all three of them, and we need to simplify how we work and drive cost reductions to fund these investments. I think what is important is that we believe there are significant synergies across the three businesses that make them stronger together. For example, we see customer synergies in driving cross-selling and helping each business to penetrate and grow with different customers. We also see synergies in the technology and offering space. As we develop some of the financial services options that we have been discussing, they will benefit PayPal and Venmo, and we also see strong synergies in key capabilities like risk management and identity. So at this point, our plan is to grow profitably the three businesses because this is what we think will create the maximum value for shareholders. On top of these three businesses, there are many other initiatives in the company that we are going to be rigorously prioritizing to make sure that we keep those in the plan where we see the highest opportunities for success and use savings to fund the activities we stay focused on.

Your next question comes from Sanjay Sakhrani with KBW.

Enrique, thank you for all your commentary. Obviously, you've had a very unique window as the new CEO, having been on the board. I'm just wondering if you could drill down specifically on how you intend to do things differently from sort of the previous administrations to affect the change. And then, Jamie, just one question because I'm getting a lot of these questions on the trend line that you saw that you mentioned trending at the low end of the range and some of the choppiness. I guess if the higher fuel prices persist, do you feel like there's risk to the second half relative to what you've incorporated in the second quarter?

Sure. Let me start with the first part of your question, and then Jamie will take the second part. I think what we're going to do starts from the development and the analysis that we have done on where the company is today — what is working and what areas need to be changed. From a strengths perspective, I would say that the company has very unique and high-quality assets: the combination of scale, the technologies we have, key capabilities around risk management and underwriting, the value of the brands and the global presence are very unique assets that are difficult to replicate. At the same time, we operate in markets with high growth and we have very relevant presence in these markets. But we also have seen areas where we need to make changes. We need to accelerate the modernization of our technology stack so we can continue to deliver compelling solutions to our customers. We need to rebalance the focus we have in our two-sided network between merchants and consumers. During the last year, we have paid much more attention to merchants, and we need to rebalance that and increase our investment in consumers. We also need to simplify how the company works and remove complexity that the core model brings. On top of that, we clearly have an opportunity to reduce our cost structure, and this is what we are doing. Based on that, we have built a transformation plan that we are going to be executing. The plan starts by identifying the highest opportunities in the three markets where we operate and investing significantly behind them. Second, we identify the different priorities for each market opportunity: on the PayPal side, continuing to grow and improve the performance of the checkout business; on Venmo, growing our attach rate to financial services and improving ARPU; and on the processing business, maintaining growth while continuing to add value-added services. Third, we will simplify priorities and define where to focus and where to reduce focus. Fourth, we will accelerate the process to modernize our technology stack module by module to address gaps we have identified. Fifth, complete the reorganization of the company to simplify how we work and align priorities to the segments identified. And finally, complete the execution of the cost program announced today. It's a very aggressive transformation plan. We think that by executing that, we will be able to significantly improve the performance of the company, and we have started the process now as we mentioned in the call today.

Great. And then, Sanjay, with respect to your question on what we're seeing with consumer and some of the impact on growth, first, what I would say is we are reiterating our full-year guidance. And so we continue to expect slightly positive to low single-digit branded checkout TPV growth. That's what we've seen so far this year. Compared to first quarter, as I mentioned, we are seeing some impacts on the travel vertical, but we are very focused on execution as we get deeper into the second quarter. Comps get easier and candidly in the second half as well. We're laser-focused on our initiatives and really driving improvement there. We've been prudent, I think, in how we've set our branded checkout guide and our expectation for lower growth this year than last year, and we're confident with where we are today.

Your next question comes from Jason Kupferberg with Wells Fargo.

Enrique, I wanted to talk about current product strategy in checkout. I know you guys have the fully optimized button now. Wondering if you are planning any big changes there? Do you just feel like there's room to improve the execution of the rollout of the current product? And if we can get an update on the progress of the rollout that would be great. And I would just love your take on how long it might take to actually fully roll out that fully optimized version of the new checkout button because it seems like that's key to ultimately getting some structural reacceleration in branded volume.

Thank you. In the short term, it's all about continued execution of the plans that we had until now. We have continued to make progress using the same metric we reported in the last couple of quarters. Today, 45% of non-volatile customers are already experiencing the new simplified version. So we have continued to make progress quarter-over-quarter and the plan is to continue that in the coming quarters. But it's not only about that. What we have learned is this is one element of the many that we need to do. When we combine our new checkout process with financial services and BNPL, we see also significant improvement and significant acceleration of growth. When we see better marketing and when customers find it more attractive to use our button, we see also improvement. So we need to continue to build end-to-end plans to make sure that we improve across the board. This is what you're going to see us doing. Execution is going to be critical for us. It's not only about what we bring to market; it's about how we maximize the value from it by having all the different functions and groups of the company focused on it.

Your next question comes from Tien-Tsin Huang with JPMorgan.

I want to ask about modernizing the tech platform and becoming a tech company again. Does this include platform consolidation, specifically? I'm asking because modernizing the tech stack brings with it a lot of risks. I know you appreciate that, Enrique, given where you're coming from. So what's your assessment on the risk of modernizing, why it hasn't been done already and how integrated or distinct the technology stacks across the three businesses are if you can detail that as well that would be great. Thank you.

So the process is we have started to modernize the tech platform module by module. As we do that, we will do the right integration or complete integration in some cases across the three businesses. As you said, all these changes have some risk. But on the other side, we have a very competent team, and this is a process that has already started. One of the key differences will be that we are going to be investing to make that happen. This is why the cost-structure savings that we have announced today are going to be so critical. They will help us to make these investments possible because we think it's critical for us to do that for the company to continue to succeed and to continue to grow.

Your next question comes from Darrin Peller with RBC Capital Markets.

Enrique, I wanted to turn back a minute to the commentary on the consumer side, from multiple parts of the prepared remarks and through answering some questions. It sounds like there was a deficiency relative to the merchant side of the network in being focused on the consumer side. What I'm wondering is, as you were on your listening tour really talking with merchants, do you feel like they were telling you that they didn't have conviction that you had that level of engagement with the consumer, and therefore, you feel like you need to make bigger investments there? Or is there another angle to that?

I think it's a combination of what I heard from merchants, but also what I saw happening in the countries and on the front line. It's not so much that we will focus less on merchants. It's about how we improve the value proposition we offer to consumers and how we communicate that and make it more visible. If consumers perceive a stronger value proposition, they will transact with PayPal when they buy something from merchants. What I observed over the last few quarters is we launched a lot of great innovation to market, but we haven't had enough effort and investment in-country to make it real. We moved to launch the product before really maximizing the value that we got from what we were launching. Let me use an example: In Germany, a few months ago, we launched a great solution leveraging NFC. It had great initial reception, but then we didn't invest enough for it to be adopted broadly by consumers. If consumers had adopted it more broadly, the impact on merchants would have been very positive, but we didn't have the effort, focus, team or investment to make it happen. This is the type of thing you will see us doing. This is what we mean by rebalancing the focus we put on the two-sided network.

Sarah, We have time for one last question.

Our last question will come from Bryan Keane with Citi.

Enrique, when you think about the merchant specifically in your conversations, how aggressive will you guys be in sunsetting platforms, enforcing them onto the new technology in order to help reduce friction? That's question one. The second part is a lot of investors are asking about the price. Is the price too high? Can you lower price for PayPal in order to drive faster branded volumes?

Yes. In the last two months, I have had many conversations with merchants, and one of the key things I have learned is that with all of them, we have opportunities to improve our solution and to complete our solution addressing specific needs. Whether this is a merchant in the travel space that needs help in cross-border selling or a retail merchant that needs help with customers that buy and return and where we can help to reduce returns because of the data we have, we have many opportunities to improve the value of our products and replicate that across multiple merchants. To do that, we need to complete the modernization of our technology platform as we have been saying. Merchants will have to move to the new platforms, and we will do that in a way that minimizes the work and effort required from them whenever possible. To continue to improve the solution, we will have to drive migration to the new platforms. The key message is the opportunity we see, the opportunity merchants are telling us we have, and the fact that by doing that we will have an opportunity to offer additional services that will help our margin and compensate potential price pressure in the more commoditized business. The answer is about adding incremental value-added services, which is what we are going to be doing during the coming quarters.

Enrique, any final thoughts?

Well, first of all, thank you, everybody, for your questions. As we've discussed today, we have strong assets, a clear opportunity and a path forward that is grounded in improving our execution. Our focus now is to deliver, and I really look forward to continuing to update all of you in the coming quarters, especially as we report our second quarter results in late July. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.