PayPal Q1 Beats Estimates, Shares Fall on Guidance

PayPal Holdings Inc. reported first-quarter results that exceeded Wall Street expectations on Tuesday, but its shares fell nearly 10 percent in after-hours trading amid weak forward guidance and details of a sweeping turnaround plan under new Chief Executive Enrique Lores.

The San Jose, California-based payments company posted revenue of $8.4 billion for the quarter ended March 31, a 7 percent increase from the prior year that topped analyst estimates of about $8.1 billion. Adjusted earnings per share came in at $1.34, beating forecasts of $1.27. Total payment volume rose 11 percent to $464 billion, while transaction margin dollars, a key profitability measure, increased 3 percent to $3.8 billion. Net income, however, declined 14 percent to $1.1 billion, or $1.21 per share.

Lores, who assumed the role in March after serving as CEO of HP Inc., outlined an aggressive strategy to reposition PayPal as a technology company. Speaking on the earnings call, he said, "We need to recommit to the fundamentals. That includes becoming a technology company again." The plan targets at least $1.5 billion in gross run-rate cost savings over the next two to three years through organizational...