PayPal shares drop 9% after Q1 earnings beat but warn of profit decline ahead

PayPal reported Q1 2026 earnings that beat expectations with adjusted EPS of $1.34 and revenue up 7% to $8.35 billion. However, the company forecast a 9% decline in non-GAAP EPS and a 3% drop in transaction margin dollars, signaling margin pressure. Operating income and margins fell, reflecting profitability challenges despite revenue growth. Management plans to simplify operations and focus investments on long-term growth and efficiency improvements.