PayPal beats profit targets, maintains annual earnings forecast amid US trade uncertainty

(Reuters) -PayPal (PYPL) on Tuesday beat Wall Street estimates for first-quarter earnings and maintained its annual profit forecast, even as several businesses have pulled their outlook amid economic uncertainty triggered by erratic U.S. trade policies.

The company's results show that consumers are continuing to spend despite worries that U.S. President Donald Trump's trade war could lead to a recession.

"PayPal had a great start to the year and our strategy is working. This is our fifth consecutive quarter of profitable growth," CEO Alex Chriss said.

Since Chriss took the helm in late 2023, PayPal has narrowed its focus and concentrated on high-margin businesses instead of aggressive growth.

Excluding one-time costs, PayPal earned $1.33 per share in the first quarter, topping analysts' expectations of $1.16, according to estimates compiled by LSEG.

Revenue rose 1% to $7.79 billion, while total payment volume (TPV) climbed 4%.

PayPal's operating expenses fell 4% to $6.26 billion.

The company is focusing on expense management, as PayPal seeks to fund investments through savings from deploying automation and artificial intelligence.

PayPal sees annual adjusted profit between $4.95 and $5.10 per share.

Investor worries around growth in the firm's branded checkout offerings, which include PayPal and Venmo, have heavily pressured the stock.

Additionally, concerns about market share loss due to increasing competition from Big Tech rivals Apple and Alphabet's Google have created a potential overhang.

In February, PayPal unveiled plans to accelerate branded checkout growth to between 8% and 10% by 2027.

PayPal is rolling out a new checkout experience and focusing on monetizing its Venmo app to accelerate branded growth.

In the first quarter, PayPal's branded checkout TPV grew 6% excluding leap day, compared with a 5% rise a year ago.

PayPal has also forged lucrative partnerships and introduced new products, including its Fastlane guest checkout feature, to shield its dominant position.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shinjini Ganguli)