PayPal Holdings, Inc.

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 Winokur, 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 Loris 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. Okay.

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 improve the strategic and operational issues the company has faced. Today, I will share what I have observed since joining the company, how we are shaping our strategic direction 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 teams, 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 rapid change. It is during this period that leading companies find ways to differentiate themselves by innovating, delivering new and superior solutions, and driving durable growth. This is where 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. 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 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 a 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 are taking and some of the actions we have underway. Let me start by sharing the framework we are using to define our strategy. We see 3D Think attractive and in many ways complementary market opportunities where focused investment and sharper execution can meaningfully improve our growth trajectory. Checkouts, consumer financial services, and payment services. Each has clear near-term levels to improve the performance of our existing assets, as well as convey medium-term growth opportunities. And 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 checkouts, we also see strong consumer demand for flexible payment options, including buy now related solutions. This is becoming an important driver of consumer acquisition while 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 activity. This is also a large market opportunity worth more than $200 billion annually in just our top six markets. And it is growing at low double digits. What is most attractive about this market is not only size and growth, but also the customer's 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 rely on organizations 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 slowed decision making and weakened execution. Check out, for example, touch on customer groups and markets, creating a multi-dimensional matrix for roadmap prioritization. The changes we announced last week will organize the company into three kinds of business, each with a single leader. Checkout, solutions and PayPal, consumer financial services and Venmo, and payment services and crypto. And 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 learn clear outcomes and our teams will be able to focus on our most important growth priority. Others are using these changes to simplify and de-layer our organization. And 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 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. And our PayPal Plus loyalty program, which we introduced in the UK 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 areas with the greatest potential to drive durable growth and shareholder value. Within this portfolio, we will be highly selective as we evaluate our broad 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 remain 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 send, spend, save, invest and borrow seamlessly. Venmo will be a key component of our growth plans moving forward. supported by strong brands and younger demographics. We are in a strong position to expand in this space, deepen engagement and increase customer lifetime value. Payment services and crypto unifies our processing and platform capabilities into a single scalable offering for merchants. We will bring together the company's unbranded processing capabilities, including Brain3, and value-added services such as fraud management, authorization optimization, and global payment infrastructure. They 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 this, enabling faster, lower-cost transactions. We have made good progress with DYUSD, 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 these states. 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. we will remove duplication 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 front-rate savings over the next two to three years. Jamie, We'll discuss more on this point later in the call. 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 some improvement in branded checkout. Branded checkout TPV growth was 2% on a currency-neutral basis, up from 1% last quarter. We continue to see strength in key parts of the business with Venmo and TSP delivering mid-teens TPD growth. Transaction margin dollars excluding interest on customer balances grew 3% with contributions from credit, Venmo and TSP. Non-gap 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 apps in 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 and we will continue to define our strategy and prioritize our plans in line with it. I look forward to sharing more progress as we move ahead. And finally, I want to thank our team for their continued focus and execution, and our customers and shareholders for their trust. I will now turn it over to Jamie.