PYPL · Q1 FY2026
PayPal Holdings, Inc. Q1 FY2026 earnings analysis
By SageNoodle ResearchNeutral
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $8.35B | $7.79B (yr ago) | Beat |
| EPS | $1.21 | $1.29 (yr ago) | Miss |
| Free Cash Flow | $0.90B | $0.96B (yr ago) | Miss |
| Gross Margin | Not meaningful | Not meaningful (yr ago) | Miss |
| Operating Margin | 17.8% pre-tax margin | 19.6% pre-tax margin (yr ago) | Miss |
What changed
Revenue increased 7.2% year over year to $8.35 billion, but EPS declined 6.2% to $1.21 as pre-tax margin contracted 1.8 percentage points to 17.8%. Free cash flow also fell to $0.90 billion from $0.96 billion, leaving the quarter better on growth but weaker on profitability and cash conversion.
Impact on the investment thesis
We establish fair value at $59.51 per share rather than moving a prior estimate because this is SageNoodle's first coverage. The quarter supports a modest premium to PayPal's current 10.0x trailing P/E, but the decline in EPS, margin and free cash flow does not justify a more substantial rerating.