Q1 2025 Goldman Sachs Group Inc Earnings Call

Ill be your conference facilitator today, I would like to welcome everyone to the Goldman Sachs first quarter 2025 earnings conference call on behalf of Goldman Sachs I will begin the call with the following disclaimer. The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward looking statements and non.

Welcome to the Powell economies.

Operator: Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs First Quarter 2025 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the investor relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without consent. This call is being recorded today, April 14, 2025. I will now turn the call over to Chairman and Chief Executive Officer David Solomon and Chief Financial Officer Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

And economy, not limited by borders currency or geography.

Here the whole world is a playground.

Where everyone can shop globally from home.

Speaker Change: non-GAAP measures. This audiocast is copyrighted material of the Goldman Sachs Group, Inc, and may not be duplicated reproduced or rebroadcast without consent. This call's being recorded today April 14th 2025, I will now turn the call over to Chairman and Chief Executive Officer, David Solomon and Chiefs.

Yes.

Our shop locally around the globe.

[noise] Powell economy doesn't get stuck in the old ways of doing things.

And this.

It changes everything.

This is the creators economy.

The benchmark.

Speaker Change: Financial Officer, Dennis Coleman. Thank you Mr. Sullivan you may begin your conference.

Okay.

Entrepreneur with economies.

It moves with people wherever they go.

David Solomon: Thank you very much operator, good morning, everyone. Thank you all for joining us in the first quarter. We generated net revenues of $15 1 billion earnings per share of $14.12, an ROE of 16, 9% and an ROE of 18% and a highly dynamic environment, we produced very strong results.

David Solomon and Denis Coleman: Thank you very much, Operator. Good morning, everyone. Thank you all for joining us. In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, an ROE of 16.9%, and an ROTE of 18%. In a highly dynamic environment, we produced very strong results. This quarter was characterized by rapidly shifting sentiment, with the market backdrop ending in a very different place than where it started. Still, our leading global franchise, underpinned by our best-in-class talent, risk management, and execution capabilities, delivered for our clients. Our performance underscores the importance of having a scaled franchise with presence around the world. Being a leading global financial institution requires a deep expertise and diversification that can only come from long-term, consistent investment in our client franchise, a deep risk management culture, and our strong people. This is what brings clients to Goldman Sachs.

Letting them click in flight.

Speaker Change: Hey mom yeah.

Thanks.

Speaker Change: The pay thankfully everywhere in every way and get paid back every time, putting cash back and virtual wallet and leather one turning spending into savings.

Speaker Change: This quarter was characterized by rapidly shifting sentiment with the market backdrop, ending in a very different place than where it started.

Where buyers and sellers, both yet what they really want.

Speaker Change: Bill our leading global franchise underpinned by our best in class talent risk management and execution capabilities delivered for our clients.

Speaker Change: And trust is the currency here you don't just pay Paypal.

Speaker Change: The more you use it everywhere every day the better it gets.

Speaker Change: Our performance underscores the importance of having a scaled franchise presence around the world.

Speaker Change: It's an economy built for everyone.

Speaker Change: Being a leading global financial institution requires deep expertise and diversification that can only come from long term consistent investment of our client franchise.

Bringing people in communities together.

Speaker Change: A human approach to a complex world.

Speaker Change: Refreshing.

Thanks.

Speaker Change: It's time to revolutionize polymer for everyone everywhere.

Speaker Change: Deep risk management culture, and our strong people. This is what brings clients to Goldman Sachs.

Speaker Change: Global banking and markets ongoing policy uncertainty and market volatility drove many clients reposition their portfolios driving higher activity in our FIC and equities businesses.

Speaker Change: Yeah.

Speaker Change: Okay.

David Solomon and Denis Coleman: In Global Banking & Markets, ongoing policy uncertainty and market volatility drove many clients to reposition their portfolios, driving higher activity in our thickened equities businesses. I'm proud that we were able to support the intermediation and financing needs of our clients, all while keeping a keen eye on risk management. In these businesses, we have demonstrated our ability to deliver strong results in a broad array of market environments. We've consistently grown financing, and while intermediation activity across various asset classes can ebb and flow in any given quarter, our overall results have been remarkably resilient over time. In investment banking, the volatile backdrop led to more muted activity relative to the levels we had expected coming into the year. It is especially in environments like this that clients come to Goldman Sachs for help with their most important strategic decisions.

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Speaker Change: Right.

Speaker Change: Please welcome Chief Investor Relations Officer, Steve Winokur.

Speaker Change: I am proud that we were able to support the intermediation and financing needs of our clients all while keeping a keen eye on risk management.

Speaker Change: Good morning, everybody and welcome to Paypal at NASDAQ in New York City, it's great to see so many of you that I recognize and new faces in the room today and online we're excited to share more about the strong foundation.

Speaker Change: These businesses, we have demonstrated our ability to deliver strong results in a broad array of market environments, we've consistently grown financing and while intermediation activity across various asset classes can ebb and flow in any given quarter. Our overall results have been remarkably resilient over time.

Speaker Change: In place and the growth opportunities ahead for Paypal, just a few reminders before we start first materials. We're showing today are on our website as always and note that our remarks that we're making are forward looking as well as involving risks and uncertainties. Actual results may differ from these statements and our commentary is based on our <unk>.

Speaker Change: In investment banking, the volatile backdrop led to more muted activity relative to the levels, we had expected coming into the year.

Speaker Change: It is especially in environments like the clients come to Goldman Sachs for help.

Speaker Change: With their most important strategic decisions.

Speaker Change: We are the number one M&A advisor globally and have been for the last 20 years, we both our leadership position through decades of investment and our incredible teams.

Speaker Change: First view of the world and our businesses as we see them today.

David Solomon and Denis Coleman: We are the number one M&A advisor globally and have been for the last 20 years. We built our leadership position through decades of investment and our incredible teams in the Americas, Europe, and Asia. This allows us to help clients execute marquee transactions like Google's $32 billion acquisition of Wiz, the largest transaction in Israeli history, or the $24 billion take-private of Walgreens Boots Alliance, a firm with presence across the U.S., Europe, and Latin America. As we stand today, our client dialogues remain elevated, and our backlog is up for the fourth consecutive quarter. That being said, our ability to execute on these transactions will, of course, be dependent on market conditions. In Asset & Wealth Management, our clients continue to come to us for the quality of our advice and track record of investing acumen across asset classes, which is especially valued in turbulent markets.

As described in our press release SEC filings and on our website those elements may change as the world changes.

Speaker Change: In the Americas, Europe, and Asia. This allows us to help clients execute marquee transactions like Google $32 billion acquisition of with the largest transaction in Israeli history, or the 24 billion take private of Walgreens Boots Alliance affirm with presence across the U S Europe and Latin America.

So we're joined today by Alex Chriss, Jamie Miller, and many of our business leaders across the company, you'll be able to talk to them. If you didnt before after the presentation.

Speaker Change: And that's a part of the exciting element today. It is a very busy day you can see it in the agenda the presentations the Q&A session and the demos that we have for you over on the left side.

Speaker Change: As we stand today, our client dialogues remain elevated and our backlog is up for the fourth consecutive quarter.

Speaker Change: That being said our ability to execute on these transactions will of course be dependent on market conditions.

Alex: With that let me pass it over to Alex.

Speaker Change: And asset and wealth management, our clients continue to come to us for the quality of our advice.

Speaker Change: Okay.

Thank you.

Speaker Change: Track record of investing acumen across asset classes, which is especially valued in turbulent market.

Speaker Change: Thank you Steve.

Speaker Change: It's great to see you all welcome to Paypal Investor Day.

Speaker Change: This quarter, our assets under supervision rose to a record of $3. Two trillion. This represents a 29th consecutive quarter of long term fee based net inflows and we are making strong progress across our key growth opportunities in this business alternatives wealth management solutions and.

Speaker Change: I've been looking forward to this day for a while let me give you three reasons why.

David Solomon and Denis Coleman: This quarter, our assets under supervision rose to a record of $3.2 trillion. This represents our 29th consecutive quarter of long-term fee-based net inflows, and we are making strong progress across our key growth opportunities in this business: alternatives, Wealth Management, and Solutions. In alternatives, our long track record of performance continues to support our fundraising efforts. We raised another $19 billion in the quarter, bringing our total fundraising of alternatives since 2019 to $342 billion. We also recently launched multiple flagship funds across strategies, including infrastructure, growth equity, and private credit. In Wealth Management, we continue to scale our premier ultra-high net worth franchise. Total Wealth Management revenue grew 11% year over year to $2.2 billion, while client assets reached another record of $1.6 trillion. Supporting this platform, we have over 1,000 Private Wealth Advisors with an average tenure of more than 15 years.

Speaker Change: The first is our team.

Speaker Change: You're going to get a chance today to meet our incredible World class leadership team.

Speaker Change: Just as a reminder, everyone you see up on stage today has been at the company for less than 15 months, except for Frank Who's our old timer here, who is in her new role. So a brand new team that is here.

Speaker Change: In alternatives, our long track record of performance continues to support our fund raising them.

Speaker Change: We raised another 19 billion in the quarter, bringing our total fund raising of alternatives. Since 2019 to 342 billion. We also recently launched multiple multiple flagship funds across strategies, including infrastructure growth equity and private credit.

Speaker Change: For this specific purpose.

Speaker Change: The second is transparency when.

Speaker Change: When I got to the company and I did my listening tour with many of you.

Speaker Change: One thing that was I heard consistently was that you were looking for more transparency more understanding of the growth drivers of the company.

Speaker Change: Wealth management, we continue to scale, our Premier Ultra high net worth franchise total wealth management revenue grew 11% year over year to $2 2 billion, while client assets reached another record of $1 six trillion.

And I hope today is by the time you leave you will really understand how we measure our success and you will be able to hold us accountable going forward.

Speaker Change: And the third is transformation.

Speaker Change: If there's one takeaway that I want you to have as you leave today.

Speaker Change: Putting this platform we have over 1000 private wealth advisors with average tenure of more than 15 years, leveraging the firm's investment platform Global network and banking capabilities. They worked tirelessly to deliver unique and tailored solutions for our ultra high net worth clients.

Speaker Change: Is it that this is a new Paypal call at Paypal to Dot O call. It. The next chapter, but we are transforming from a payments company.

David Solomon and Denis Coleman: Leveraging the firm's investment platform, global network, and banking capabilities, they work tirelessly to deliver unique and tailored solutions to our ultra-high net worth clients. We recently received a number of accolades from Euromoney, including being named the world's best private bank for 2025. These awards are a recognition of our excellence and long-standing commitment to serving the needs of our ultra-high net worth client base. Across our businesses, our clear priority is to serve clients with excellence. To that end, we are always seeking ways to enhance the client experience while improving efficiency. As highlighted in our strategic update this January, we are investing to strengthen our franchise and operate more effectively at scale. This includes taking steps to unlock efficiencies in technology and automation.

Into E Commerce platform.

Speaker Change: We recently received a number of accolades from euromoney, including being named the world's best Private Bank for 2025. These awards are a recognition of our excellent long standing commitment to serving the needs of our ultra high net worth client base.

Speaker Change: I think you will see that transformation come to life today.

Speaker Change: Okay, so with that I want to ground us with what we accomplished in 2024.

Speaker Change: We set out and declared 24, a transition year and I'm very proud of what the team accomplished throughout this year.

Speaker Change: Across our businesses, our clear priority is to serve clients with excellence.

Speaker Change: We reignited profitable growth.

Speaker Change: To that end, we are always seeking ways to enhance the client experience, while improving efficiency as highlighted in our strategic update. This January we are investing to strengthen our franchise and operate more effectively at scale.

We reignited our active user growth, we've engaged users and we did it in a responsible manner, while continuing to operate in a very efficient way.

Speaker Change: We set the foundation and set the platform for our ability to now execute going forward I like to tell the team we earn the right to now deliver on the vision that we want going forward.

Speaker Change: This includes taking steps to unlock efficiencies in technology and automation.

Speaker Change: As an example, we are leveraging AI solutions scale and transform our engineering capabilities as well as the simplify and modernize our technology stack.

David Solomon and Denis Coleman: As an example, we are leveraging AI solutions to scale and transform our engineering capabilities, as well as to simplify and modernize our technology stack. Today, many of our people have access to generative AI-powered tools to help them serve clients more efficiently and increase productivity. These include a developer copilot coding assistant and a natural language GS AI assistant. We continue to believe in acceleration in AI adoption to allow for further efficiencies for our own business and for companies large and small. As it is utilized more broadly, productivity gains for the economy will be significant. Turning to the macroeconomic backdrop more broadly. As I said at the outset, we are entering the second quarter with a markedly different operating environment than earlier this year. Our economists' expectation for growth in the U.S. has fallen meaningfully from over 2% to 0.5%.

Speaker Change: So to start with that vision and to really dive into it let me take you back.

Speaker Change: Today, many of our people have access degenerative AI powered tools to help them serve clients more efficiently and increase productivity.

At the beginning of <unk>.

Speaker Change: 25 years ago.

Speaker Change: When Paypal was founded it was founded on a very very simple concept.

Speaker Change: These include a developer co pilot coding assistant in a natural language GSA AI assistant.

Speaker Change: It was very difficult then to move money.

Speaker Change: We continue to believe in acceleration in AI adoption will allow for further efficiencies for our own business and for companies large and small.

Speaker Change: From peer to peer or to make a purchase online and.

Speaker Change: Paypal had a very simple concept to just simplify money.

Speaker Change: As it is utilized more broadly productivity gains for the economy will be significant.

Speaker Change: After 25 years and we all stand here today standing on the shoulders of Giants. We have created the largest two sided open platform in the world.

Speaker Change: Turning to the macroeconomic backdrop more broadly as I said at the outset, we are entering the second quarter with a markedly different operated environment earlier this year.

Speaker Change: And what does that look like to look at the scale that we've created.

Speaker Change: Incredible assets, one seven trillion dollars in payment volume last year over 400 million active users over half of which transact with us on a monthly basis.

Speaker Change: Our economists expectation for growth in the U S has fallen meaningfully from over 2% two 5%.

Speaker Change: Prospect of a recession has increased with growing indications that economic activity is slowing down around the world.

David Solomon and Denis Coleman: The prospect of a recession has increased, with growing indications that economic activity is slowing down around the world. Our clients, including corporate CEOs and institutional investors, are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path forward and fears over the potentially escalating effects of a trade war have created material risks to the U.S. and global economy. We are encouraged by the administration's recent actions to pursue a more gradual policy process that allows for considered negotiations with many countries. However, how policies will evolve is still unknown. We are hopeful that feedback from companies large and small, institutional investors, and ultimately consumers will support an approach that will lead to greater economic certainty and long-term growth. In the meantime, markets will likely continue to be volatile until we have further clarity.

Speaker Change: We are the number one.

Speaker Change: Our clients, including corporate Ceos, and institutional investors are concerned by the significant near term and longer term uncertainty that has constrained our ability to make important decisions.

Branded checkout choice.

Speaker Change: Trusted by the vast majority of enterprises and merchants around the world.

Speaker Change: We have penetrated a very fragmented very difficult small business ecosystem with over 20 million small business merchants that rely on us to improve their conversion rate.

Speaker Change: This uncertainty around the path forward and fears over the potentially escalating effects of the trade war of created material risk to the U S and global economy.

Speaker Change: We are encouraged by the administration's recent actions to pursue a more gradual policy.

Speaker Change: And when you add all of that up we are sitting on a gold mine of data.

Speaker Change: <unk> that allows for considered negotiations with many countries, but how policies will evolve is still unknown. We are hopeful that feedback from companies large and small institutional investors and ultimately consumers will support an approach that will lead to greater economic certainty and long term growth in the meantime markets will likely continue.

Speaker Change: 6 billion voltage financial instruments.

Speaker Change: And hundreds of AI and machine learning algorithms that enable us to make risk predictions personalization choices and really focus on delighting our customers.

Speaker Change: So that is the foundation that has been created over the last 25 years.

Speaker Change: To be volatile until we have further clarity.

Speaker Change: The administration's focus on trade barriers and strengthening in the U S competitive position is commendable at the same time. It is important to recognize a few companies have benefited more from a post World War, two economic and financial order than the U S.

Speaker Change: But we are a customer obsessed organization, we are constantly talking to our consumers and to our merchants.

David Solomon and Denis Coleman: The administration's focus on trade barriers and strengthening the U.S. competitive position is commendable. At the same time, it is important to recognize that few companies have benefited more from a post-World War II economic and financial order than the U.S. This does not mean meaningful reform in certain areas is not warranted. Today, the U.S. is the largest, most dynamic, and resilient economy, with the dollar as the reserve currency. We have the broadest and deepest capital markets, which help fuel an unparalleled culture of innovation in sectors like technology and health care. These strengths, among others, give us the opportunity to think about how to attract and embed strategic manufacturing as an important driver of the 21st-century economy. As a country, it is vital that we continue to leverage our considerable strengths as the global trading system for goods and services adjusts and evolves.

Speaker Change: And asking them what are their greatest challenges.

Speaker Change: When we talk to them today, we recognize that there are significant changes upfront.

Speaker Change: This doesn't mean meaningful reform in certain areas does not warrant.

Speaker Change: Dave The U S is the largest most dynamic and resilient economy with the dollar as a reserve currency, we have the broadest and deepest capital markets, which helped fuel an unparalleled culture of innovation and sectors like technology and health care. These strengths among others give us the opportunity to think about how to attract and embed strategic manufacturing is an important dry.

Speaker Change: There are shifts.

Speaker Change: That are creating incredible opportunities for Paypal.

Speaker Change: To transform commerce again.

Speaker Change: Let me walk you through a few examples of what those look like.

Speaker Change: If I go online.

Speaker Change: As a consumer and I do a search.

Speaker Change: This is what shows up.

Speaker Change: River or the 20 <unk> century economy.

Speaker Change: How do I make a choice how do I know out of all of these choices, which is the one to trust, which is the best price, which is the one that I may get a reward or have some loyalty with.

Speaker Change: As a country. It is vital that we continue to leverage our contingent considerable strengths as the global trading system for goods and services adjust and evolve.

Speaker Change: On capital and regulation more broadly we appreciate the administration's strong focus on appropriately calibrating regulation for the financial services industry.

Speaker Change: And if I'm a merchant.

Speaker Change: How do I stand out.

David Solomon and Denis Coleman: On capital and regulation more broadly, we appreciate the administration's strong focus on appropriately calibrating regulation for the financial services industry. Following the recent nomination of Michelle Bowman as Vice Chairman of Supervision at the Federal Reserve, we will continue to actively engage on these matters and hope to see material progress across capital, leverage, liquidity, and supervision. As this quarter has shown, it's impossible to predict market outcomes. It has also demonstrated once again that in times of great uncertainty, clients turn to Goldman Sachs for execution and insight. Our leading franchises have never been better positioned to support our clients. I will now turn it over to Denis to cover the financial results for the quarter. Thank you, David. Good morning. Let's start with our results on page one of the presentation.

Speaker Change: And in fact, as a merchant I can't stand out we.

Speaker Change: Following the recent nomination of Michelle Bob Bowman, as Vice Chairman of supervision at the Federal Reserve. We will continue to actively engage on these matters and hope to see material progress across capital leverage liquidity and supervision.

Speaker Change: You have seen that when we talk to our merchants their cost per acquisition has over doubled.

Speaker Change: In the last 10 years they.

Speaker Change: They are throwing money, especially if they're a small business into the ether.

Speaker Change: Just hoping that they may show up on the third or fourth page of a search result.

Speaker Change: As this quarter has shown it is impossible to predict market outcome, but it has also demonstrated once again that in times of great uncertainty clients turn to Goldman Sachs for execution and insight and our leading franchises have never been better positioned to support our clients.

Speaker Change: And now on top of all of this you have a new paradigm is coming up.

Speaker Change: We have a gentle commerce.

Speaker Change: And which merchants have no connection to their customer no payment connection and no paradigm to be able to actually create a transaction. So all of these shifts when you bring it together.

Speaker Change: I will now turn it over to Dennis to cover the financial results for the quarter.

Dennis Coleman: Thank you David Good morning, let's.

Speaker Change: Let's start with our results on page one of the presentation.

Speaker Change: Create more and more challenges for consumers and more and more challenges for merchants.

Speaker Change: In the first quarter, we generated net revenues of $15 1 billion earnings per share of $14 12.

David Solomon and Denis Coleman: In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, and an ROE of 16.9%. We provide details on selected items in the bottom table, which in total reduced our EPS by $0.25 and ROE by 30 basis points. Let's turn to performance by segment, starting on page three. Global Banking & Markets produced revenues of $10.7 billion in the first quarter and generated an ROE of over 20%. Turning to page four, advisory revenues of $792 million were down versus a strong performance a year ago. We remained number one in the league tables for M&A advisory, with a lead of over $70 billion in announced volumes versus our next closest peer. Equity underwriting revenues of $370 million were flat year over year, while debt underwriting revenues of $752 million rose 8%, driven by asset-backed and investment-grade activity.

Speaker Change: And for US as the leader for the last 25 years, we see this as an opportunity for.

Speaker Change: And an ROE of 16, 9%.

Speaker Change: We provide details on selected items in the bottom table, which in total reduced our EPS by <unk> 25.

Speaker Change: For our next chapter.

Speaker Change: We see this as our opportunity to revolutionize commerce globally.

Speaker Change: And ROE by 30 basis points.

Speaker Change: In order to do that we need to transform who we are as a company.

Speaker Change: Let's turn to performance by segment starting on page three.

Speaker Change: Global banking and markets produced revenues of $10 7 billion in the first quarter and generated an Roe of over 20%.

Speaker Change: Let me walk you through what that transformation looks like.

Speaker Change: First we need to go from being the Paypal that you know and love just online to being available everywhere.

Speaker Change: Turning to page four advisory revenues of $792 million were down versus a strong performance a year ago. We remained number one in the league tables for M&A with a lead of over $70 billion in announced volumes versus our next closest peer.

Speaker Change: Online in store, a gentex everywhere, a consumer or a merchant wants to transact we need to be available when.

Speaker Change: We need to go from a one size fits all experience into ensuring that we can create personalized experiences leveraging the data leveraging the information that we have about each and every one of our customers and each and every one of our merchants to help them find each other.

Speaker Change: Equity underwriting revenues of $370 million were flat year over year, while debt underwriting revenues of $752 million rose, 8% driven by asset backed in investment grade activity.

Speaker Change: We ranked first in equity and equity related underwriting and ranked second in both high yield debt underwriting in leveraged lending.

Speaker Change: We need to go from that amazing static buy button.

David Solomon and Denis Coleman: We ranked first in equity and equity-related underwriting and ranked second in both high-yield debt underwriting and leveraged lending. Across investment banking, our deal backlog rose sequentially, driven by a notable increase in advisory. Fixed net revenues were $4.4 billion in the quarter. Intermediation results were driven by higher client activity in currencies and mortgages, offset by lower performance in credit, rates, and commodities versus a strong prior year. We produced record FICC financing revenues of $1 billion, driven by solid performance in mortgages and structured lending. We remain confident in our ability to prudently grow this business over time and always with an eye towards risk management. Equities net revenues were a record of $4.2 billion in the quarter. Equities intermediation revenues of $2.5 billion rose 28% year over year, primarily driven by strong performance in derivatives.

Speaker Change: Something that is now much more dynamic.

Speaker Change: Across investment banking, our backlog rose sequentially driven by a notable increase in advisory.

Speaker Change: A wallet that is not just a collection of instruments, but something that is giving the consumer the opportunity to make the smartest choice and put more money in their pocket when they need it the most.

Speaker Change: <unk> net revenues were $4 4 billion in the quarter Intermediation results were driven by higher client activity and currencies in mortgages offset by lower performance in credit rates and commodities versus a strong prior year.

Speaker Change: We need to go from just being a payments processor and now thinking about the end to end commerce journey how.

Speaker Change: How do we help our merchants find that next customer.

Speaker Change: All the way through to helping them in a post purchase environment and bring that customer back in.

Speaker Change: We produced record fixed financing revenues of $1 billion, driven by solid performance in mortgages and structured lending.

Speaker Change: There's an ongoing relationship.

Speaker Change: We remain confident in our ability to prudently grow this business over time and always with an eye towards risk management.

Speaker Change: And lastly, we need to go from our own collection internally of different independent platforms to ensuring that we are leveraging our data taking advantage of AI and working from a single platform going forward.

Speaker Change: Equities net revenues were a record $4 $2 billion in the quarter equities intermediation revenues of $2 5 billion rose, 28% year over year, primarily driven by strong performance in derivatives.

Speaker Change: So this is the transformation journey that you're on and what you will hear specifically throughout the rest of the morning.

Speaker Change: Record equities financing revenues of $1 6 billion were higher year over year on better portfolio financing results and record average prime balances for the quarter.

David Solomon and Denis Coleman: Record equities financing revenues of $1.6 billion were higher year over year on better portfolio financing results and record average prime balances for the quarter. Across fixed and equities, financing revenues of $2.7 billion rose 22% versus the prior year, reaching a new record for a fifth consecutive quarter. Let's turn to page five. Asset & Wealth Management revenues were $3.7 billion. Management and other fees were up 10% year over year to $2.7 billion on higher average assets under supervision and down slightly versus the fourth quarter, driven by other fees, which include placement fees that can vary from quarter to quarter. Incentive fees were $129 million, up year over year despite the difficult monetization environment during the quarter.

Speaker Change: Let me take you for a moment on a journey of what this looks like and as we go through this.

Speaker Change: Across FIC and equities financing revenues of $2 7 billion rose, 22% versus the prior year, reaching a new record for a fifth consecutive quarter.

Speaker Change: You will start to see our commerce platform come to life.

Speaker Change: This is not future years from now this is happening now.

Speaker Change: Let's turn to page five.

Speaker Change: This is a commerce API that we are already working with merchants on to start to create the experiences that I described and I want you to see what this looks like so let's start where many of our consumers start.

Speaker Change: Asset and wealth management revenues were $3 $7 billion.

Speaker Change: Management and other fees were up 10% year over year to $2 7 billion on higher average assets under supervision and down slightly versus the fourth quarter driven by other fees, which include placement fees. They can vary from quarter to quarter.

Speaker Change: Which is.

Speaker Change: Something that makes sense.

Speaker Change: Got invited to go camping.

Speaker Change: And it often happens with the incredible asset we have on a peer to peer platform.

Speaker Change: Incentive fees were $129 million up year over year, despite the difficult monetization environment during the quarter we.

Speaker Change: I get invited by my friends actually chip in to our camping pool. This is a new innovation that we just launched on Paypal called pools. So great I've now chipped in my $500 to go camping.

Operator: Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs First Quarter 2025 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the investor relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without consent. This call is being recorded today, April 14, 2025. I will now turn the call over to Chairman and Chief Executive Officer David Solomon and Chief Financial Officer Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Speaker Change: We expect to make progress on our target of $1 billion in annual incentive fees over the medium term supported by an estimated $4 1 billion of unrecognized incentive fees as of year end.

Unknown Attendee: Welcome to the Powell Economy An economy not limited by borders, currency or geography. Here, the whole world is a playground. Where everyone can shop globally from home. are shopped locally around the globe. The pal economy doesn't get stuck in the old ways of doing things. And this changes everything.

Rates and commodities versus a strong prior year.

David Solomon and Denis Coleman: We expect to make progress on our target of $1 billion in annual incentive fees over the medium term, supported by an estimated $4.1 billion of unrecognized incentive fees as of year-end. Private banking and lending revenues were $725 million, up 6% year over year on higher lending revenues. Sequentially, results were roughly flat, as NIM compression on deposits was offset by lending revenue growth. In aggregate, our more durable revenues of $3.4 billion across management and other fees and private banking and lending grew 9% versus the prior year. We continue to expect high single-digit annual growth in these lines over time. Revenues from equity investments and debt investments totaled $122 million, largely driven by net interest income in our debt portfolio.

We produced record fixed financing revenues of $1 billion, driven by solid performance in mortgages and structured lending.

Speaker Change: Unfortunately, I haven't gone camping in a long time, so I don't have any of the equipment to be able to do that so I now need to go make sure that I am prepared for this trip.

Speaker Change: Private banking and lending revenues were $725 million up 6% year over year on higher lending revenues.

We remain confident in our ability to prudently grow this business over time and always with an eye towards risk management.

Speaker Change: So I go online to my local sporting goods store.

Equities net revenues were a record $4 $2 billion in the quarter equities intermediation revenues of $2 5 billion rose, 28% year over year, primarily driven by strong performance in derivatives.

Speaker Change: <unk> results were roughly flat as NIM compression on deposits was offset by lending revenue growth.

Speaker Change: And this is what I see.

Speaker Change: We have.

Speaker Change: Hitting the name of the store, but this is an actual screen shot if I as a consumer just go to a sporting goods store.

Speaker Change: In aggregate are more durable revenues of $3 $4 billion across management and other fees and private banking and lending grew 9% versus the prior year. We continue to expect high single digit annual growth in these lines over time.

Record equities financing revenues of $1 6 billion.

Speaker Change: This is a terrible consumer experience.

Higher year over year on better portfolio financing results and record average prime balances for the quarter.

Unknown Attendee: This is The Creator's Economy. The Adventurous Economist, The Entrepreneur's Economist, It moves with people, wherever they go. Letting them tap, click, and swipe. To pay safely everywhere, in every way, and get paid back every time. Putting cash back in virtual wallets and leather ones. Turning spending into savings. Where buyers and sellers both get what they really want. and Trust is the currency.

This is an experience where I now have to go filter through and try to figure out what I need for my camping trip and as a merchant. This is a terrible friction filled experience as well.

Across FIC and equities financing revenues of $2 7 billion rose, 22% versus the prior year, reaching a new record for a fifth consecutive quarter.

Speaker Change: Revenues from equity investments and debt investments totaled $122 million largely driven by net interest income on our debt portfolio.

David Solomon: Thank you very much, Operator. Good morning, everyone. Thank you all for joining us. In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, an ROE of 16.9%, and an ROTE of 18%. In a highly dynamic environment, we produced very strong results. This quarter was characterized by rapidly shifting sentiment, with the market backdrop ending in a very different place than where it started. Still, our leading global franchise, underpinned by our best-in-class talent, risk management, and execution capabilities, delivered for our clients. Our performance underscores the importance of having a scaled franchise with presence around the world. Being a leading global financial institution requires a deep expertise and diversification that can only come from long-term, consistent investment in our client franchise, a deep risk management culture, and our strong people. This is what brings clients to Goldman Sachs.

Speaker Change: They want to get me to the right item at the right time and instead, they're just guessing as to what they may be interested in.

Within equity investments net gains in our private portfolio were more than offset by declines in our public portfolio amid the more challenging market backdrop during the quarter.

Let's turn to page five.

David Solomon and Denis Coleman: Within equity investments, net gains in our private portfolio were more than offset by declines in our public portfolio amid the more challenging market backdrop during the quarter. In the AWM segment, we generated a 21% pre-tax margin and roughly 10% ROE. Excluding the impact of historical principal investments and approximately $4 billion of attributed equity, our pre-tax margin would have been 2 percentage points higher and ROE 2.6 percentage points higher. Now moving to page six, total assets under supervision ended the quarter at a record $3.2 trillion. We had $29 billion of long-term net inflows across asset classes, representing our 29th consecutive quarter of long-term fee-based net inflows. Turning to page seven on alternatives. Alternative assets under supervision totaled $341 billion at the end of the first quarter, driving $523 million in management and other fees. Gross third-party alternatives fundraising was $19 billion in the quarter.

Asset and wealth management revenues were $3 7 billion.

Speaker Change: We think there's a better way.

Speaker Change: We think we can take the data the assets that we have and the two sided network that we have and create a better relationship. So let's imagine what were already starting to deliver.

Management and other fees were up 10% year over year to $2 7 billion on higher average assets under supervision and down slightly versus the fourth quarter driven by other fees, which include placement fees. They can vary from quarter to quarter.

Speaker Change: And the AWS segment, we generated 21% pretax margin and roughly 10% Roe.

Speaker Change: Excluding the impact of historical principal investments and approximately $4 billion of attributed equity our pre tax margin would have been two percentage points higher and row, two six percentage points higher.

Speaker Change: I should be able to go to a website and actually have it personalized for me.

Incentive fees were $129 million up year over year, despite the difficult monetization environment during the quarter.

Speaker Change: We should be able to leverage a commerce API that Paypal can provide to actually let the merchant know that I'm on a camping journey.

Unknown Attendee: Here, you don't just pay, you PayPal. The more you use it everywhere, every day, the better it gets. It's an economy built for everyone, bringing people and communities together. A human approach to a complex world. How refreshing.

Speaker Change: Now moving to page six.

We expect to make progress on our target of $1 billion in annual incentive fees over the medium term supported by an estimated $4 1 billion of unrecognized incentive fees as of year end.

Speaker Change: Total assets under supervision ended the quarter at a record $3 two trillion.

Speaker Change: On top of that we should be able to do things like create a consumer profile, we already have over 80 million.

Speaker Change: We had 29 billion of long term net inflows across asset classes, representing our 29th consecutive quarter of long term fee based net inflows.

Speaker Change: <unk> of.

Speaker Change: Consumers that start to share information like the journey that they're on.

Private banking and lending revenues were $725 million up 6% year over year on higher lending revenues.

Speaker Change: Turning to page seven on alternatives.

Speaker Change: The items that they are interested in their favorite colors their shoe size. So now the merchant can actually create.

Speaker Change: Alternative assets under supervision totaled 341 billion at the end of the first quarter driving $523 million in management and other fees.

Steve Winick: It's time to revolutionize commerce for everyone, Please welcome Chief Investor Relations Officer, Steve Winick. Good morning, everybody, and welcome to PayPal at NASDAQ in New York City. It's great to see so many of you that I recognize and new faces in the room today and online. We're excited to share more about the strong foundation in place and the growth opportunities ahead for PayPal.

<unk> results were roughly flat as NIM compression on deposits was offset by lending revenue growth.

Speaker Change: The exact customized personalized shopping adventure for them.

Speaker Change: <unk> third party alternative fundraising was $19 billion in the quarter.

David Solomon: In global banking and markets, ongoing policy uncertainty and market volatility drove many clients to reposition their portfolios, driving higher activity in our FICC and equities businesses. I'm proud that we were able to support the intermediation and financing needs of our clients, all while keeping a keen eye on risk management. In these businesses, we have demonstrated our ability to deliver strong results in a broad array of market environments. We've consistently grown financing, and while intermediation activity across various asset classes can ebb and flow in any given quarter, our overall results have been remarkably resilient over time. In investment banking, the volatile backdrop led to more muted activity relative to the levels we had expected coming into the year. It is especially in environments like this that clients come to Goldman Sachs for help with their most important strategic decisions.

In aggregate are more durable revenues of $3 $4 billion across management and other fees and private banking and lending grew 9% versus the prior year. We continue to expect high single digit annual growth in these lines over time.

Speaker Change: We continue to expect fundraising to be in line with recent years, though this outlook could be impacted by market conditions.

Speaker Change: I now get to see the boots that I need I get to see the color that I'm interested in I get to see that it's in my size.

David Solomon and Denis Coleman: We continue to expect fundraising to be in line with recent years, though this outlook could be impacted by market conditions. On page nine, firm-wide net interest income was $2.9 billion in the first quarter, up sequentially on a decline in funding costs. Our total loan portfolio at quarter end was $210 billion, up versus the fourth quarter, primarily reflecting an increase in other collateralized lending. Our provision for credit losses of $287 million primarily reflects net provisions related to the credit card portfolio, which were driven by net chargeovers, partially offset by releases following a seasonal paydown of card balances. Turning to expenses on page 10, total quarterly operating expenses were $9.1 billion, resulting in an efficiency ratio of 60.6%. Our compensation ratio net of provisions was 33%. Non-compensation expenses were $4.3 billion.

Speaker Change: On page nine firm wide net interest income was $2 9 billion in the first quarter up sequentially on a decline in funding costs.

Speaker Change: And I already know that I have paypal loaded up and ready to go so I can create a buy now experience right now.

Revenues from equity investments and debt investments totaled $122 million largely driven by net interest income on our debt portfolio.

Speaker Change: Our total loan portfolio at quarter end was 210 billion up versus the fourth quarter, primarily reflecting an increase in other collateralized lending.

Speaker Change: On top of that when I actually get to check out they know that I'm in Amazon Prime member.

Speaker Change: So they can offer free shipping and just reducing any friction to the purchase experience. This is an incredible personalized experience that by the time I get to the end I have now an end to end experience and loyalty already built in with this merchant. This is a very different experience than what exists today.

Within equity investments net gains in our private portfolio were more than offset by declines in our public portfolio amid the more challenging market backdrop during the quarter.

Speaker Change: Our provision for credit losses of $287 million, primarily reflects net provisions related to the credit card portfolio, which were driven by net charge offs, partially offset by releases following a seasonal pay down of card balances.

Steve Winick: Just a few reminders before we start. First, materials we're showing today are on our website, as always. And note that our remarks that we're making are forward-looking as well as involving risks and uncertainty. Actual results may differ from these statements, and our commentary is based on our best view of the world and our businesses as we see them today. As described in our press release, SEC filings, and on our website, those elements may change as the world changes.

And the AWS segment, we generated 21% pre tax margin and roughly 10% Roe.

Speaker Change: Turning to expenses on page 10.

Speaker Change: Total quarterly operating expenses were $9 1 billion <unk>.

Excluding the impact of historical principal investments and approximately $4 billion of attributed equity our pre tax margin would have been two percentage points higher and row, two six percentage points higher.

Speaker Change: So that's an online e-commerce experience, but what about in store.

Speaker Change: Resulting in an efficiency ratio of 66%.

Speaker Change: Right now.

Speaker Change: Our compensation ratio net of provisions was 33%.

David Solomon: We are the number one M&A advisor globally and have been for the last 20 years. We built our leadership position through decades of investment and our incredible teams in the Americas, Europe, and Asia. This allows us to help clients execute marquee transactions like Google's $32 billion acquisition of Wiz, the largest transaction in Israeli history, or the $24 billion take-private of Walgreens Boots Alliance, a firm with presence across the U.S., Europe, and Latin America. As we stand today, our client dialogues remain elevated, and our backlog is up for the fourth consecutive quarter. That being said, our ability to execute on these transactions will, of course, be dependent on market conditions. In Asset and Wealth Management, our clients continue to come to us for the quality of our advice and track record of investing acumen across asset classes, which is especially valued in turbulent markets.

Speaker Change: If I'm walking around there is no engagement from an in store experience.

Speaker Change: Non compensation expenses were $4 3 billion.

Now moving to page six.

Speaker Change: The best we've done over the last decade is to take my physical wallet and just put it on my phone. So now I have all my instruments, but it's still just on my phone there's no engagement, there's no better understanding and an offline environment.

Total assets under supervision ended the quarter at a record three two trillion.

David Solomon: David mentioned, we continue to execute on our three year efficiency plan that we laid out in January including making adjustments to our pyramid structure.

David Solomon and Denis Coleman: David mentioned we continue to execute on our three-year efficiency plan that we laid out in January, including making adjustments to our pyramid structure. Our effective tax rate for the quarter of 16.1% benefited from the impact of employee stock-based compensation. Excluding this impact, our effective tax rate would have been roughly 9.9 points higher. For the full year, we expect a tax rate of approximately 21%. Now on to slide 11. Our common equity tier one ratio was 14.8% at the end of the first quarter under the standardized approach, 110 basis points above our current capital requirements of 13.7%. In the quarter, we returned $5.3 billion to common shareholders, including record common stock repurchases of $4.4 billion and common stock dividends of $976 million. We will dynamically deploy capital to support our client franchise while also returning capital to shareholders.

We had 29 billion of long term net inflows across asset classes, representing our 29th consecutive quarter of long term fee based net inflows.

Steve Winick: So we're joined today by Alex Criss, Jamie Miller, and many of our business leaders across the company. You'll be able to talk to them if you didn't before or after the presentation. And that's part of the exciting element today.

David Solomon: Our effective tax rate for the quarter of 16, 1% benefited from the impact of employee stock based compensation excluding.

Turning to page seven on alternatives.

Speaker Change: Just being able to tap to pay.

Alternative assets under supervision totaled 341 billion at the end of the first quarter driving $523 million in management and other fees.

Speaker Change: Well, we think there's a better way.

David Solomon: Excluding this impact our effective tax rate would have been roughly nine nine points higher.

Speaker Change: We think we can engage with merchants and let them again no.

Steve Winick: It is a very busy day. You can see it in the agenda, the presentations, the Q&A session, and the demos that we have for you over on the left side.

David Solomon: For the full year, we expect a tax rate of approximately 21%.

Speaker Change: Who you are from a personalized experience and let them know that this is an opportunity.

Most third party alternative fundraising was $19 billion in the quarter.

David Solomon: Now onto slide 11.

David Solomon: Our common equity tier one ratio was 14, 8% at the end of the first quarter under the standardized approach a 110 basis points above our current capital requirements of 13, 7%.

We continue to expect fundraising to be in line with recent years, though this outlook could be impacted by market conditions.

Speaker Change: To provide a discount.

Steve Winick: With that, let me pass it over to Alex. Thank you. great to see you all.

Speaker Change: To provide some loyalty.

Speaker Change: To leverage the ability for me to be in the right environment of this sporting goods store and say, Hey, Youre right here right now why don't you come into the store, we know that you're on a camping journey.

On page nine firm wide net interest income was $2 9 billion in the first quarter up sequentially on a decline in funding costs.

David Solomon: In the quarter, we returned $5 3 billion to common shareholders, including record common stock repurchases of $4 4 billion and common stock dividends of $976 million.

Our total loan portfolio at quarter end was 210 billion up versus the fourth quarter, primarily reflecting an increase in other collateralized lending.

Alex Criss: Welcome to PayPal in You know, I've been looking forward to this day for a while. Let me give you three reasons why. The first is our You're going to get a chance today to meet our incredible world-class leadership team. Just as a reminder, everyone you see up on stage today has been at the company for less than 15 months. except for Frank, who's our old timer here, who's in a new role. So a brand new team that is here. for this specific purpose.

Speaker Change: Let me give you a discount because you are a new customer to us and the cost per acquisition that I would've paid to try to get to you I would rather just put in your pocket to have you check out with us right now.

David Solomon: This quarter, our assets under supervision rose to a record of $3.2 trillion. This represents our 29th consecutive quarter of long-term fee-based net inflows, and we are making strong progress across our key growth opportunities in this business: alternatives, Wealth Management, and Solutions. In alternatives, our long track record of performance continues to support our fundraising efforts. We raised another $19 billion in the quarter, bringing our total fundraising of alternatives since 2019 to $342 billion. We also recently launched multiple flagship funds across strategies, including infrastructure, growth equity, and private credit. In Wealth Management, we continue to scale our premier ultra-high net worth franchise. Total Wealth Management revenue grew 11% year over year to $2.2 billion, while client assets reached another record of $1.6 trillion. Supporting this platform, we have over 1,000 private wealth advisors with an average tenure of more than 15 years.

David Solomon: We will dynamically deploy capital to support our client franchise, while also returning capital to shareholders, we remain committed to paying our shareholders a sustainable and growing dividend.

Our provision for credit losses of $287 million, primarily reflects net provisions related to the credit card portfolio, which were driven by net charge offs, partially offset by releases following a seasonal pay down of card balances.

David Solomon and Denis Coleman: We remain committed to paying our shareholders a sustainable and growing dividend. Importantly, our board recently authorized a multi-year share repurchase program of up to $40 billion, providing us increased capital management flexibility. In conclusion, our performance once again reflects the diversification and strength of our leading client franchises, which enable us to deliver for our clients across a range of market backdrops. We're confident in our ability to continue to support our clients as they navigate this dynamic operating environment. With that, we will now open up the line for questions.

Speaker Change: On top of that I can actually have that loyalty, it's almost impossible for me to get a loyalty card into your wallet why not have it just show up into your Paypal wallet, it's activated its available and its automatic when you check out.

David Solomon: Accordingly, our board recently authorized a multi year share repurchase program of up to $40 billion, providing us increased capital management flexibility.

Turning to expenses on page 10.

David Solomon: In conclusion, our performance once again reflects the diversification and strength of our leading client franchises, which enable us to deliver for our clients across a range of market backdrops, we're confident in our ability to continue to support our clients as they navigate this dynamic operating environment.

Total quarterly operating expenses were $9 1 billion, resulting in an efficiency ratio of 66%.

Speaker Change: And then from a consumer standpoint, this smart wallet that we can create I now have rules.

Alex Criss: The second is transparency. When I got to the company and I did my listening tour with many of you, One thing that was I heard consistently was that you were looking for more transparency, more understanding of the growth drivers of the company. And my hope today is by the time you leave, you will really understand how we measure our success, and you will be able to hold us accountable going forward.

Speaker Change: That I can take advantage of so not only do I have.

Our compensation ratio net of provisions was 33%.

Speaker Change: The loyalty and the savings that is already built in.

Non compensation expenses were $4 3 billion.

Speaker Change: But I also have things like rules of my cash flow and the cash Crunch right now I've set up rules, so that if I'm, making a purchase that's over $500 I wanted to automatically leveraged buy now pay later.

David mentioned, we continue to execute on our three year efficiency plan that we laid out in January including making adjustments to our pyramid structure.

David Solomon: With that we will now open up the line questions.

David Solomon: Thank you, ladies and gentlemen, we will now take a moment to compile the Q&A roster.

Operator: Thank you, ladies and gentlemen. We will now take a moment to compile the Q&A roster. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you'd like to withdraw your question, press star then two on your telephone keypad. If you're asking a question and you are on a hands-free unit or a speakerphone, we would like to ask that you use your handset when asking your question. Please limit yourself to one question and one follow-up. We'll take our first question from Glenn Schorr with Evercore.

Our effective tax rate for the quarter of 16, 1% benefited from the impact of employee stock based compensation.

David Solomon: If you would like to ask a question. During this time simply press Star and then the number one on your telephone keypad, if you'd like to withdraw your question Press Star then two on your telephone keypad, if youre asking a question on your on our hands for unit or a speaker phone, we would like to ask that you use your handset when asking your question. Please.

Speaker Change: And we can make this happen right now and our smart wallet. So that by the time I go to check out and I do tap to pay buy now pay later is taken care of the payments are already set up and I'm not worried about it all I have is my tent I have my sleeping bag I'm ready for my camping trip.

Alex Criss: and the third is transformation. If there's one takeaway that I want you to have as you leave today, it is that this is a new paper. call it PayPal 2.0 call it the next chapter. But we are transforming from a payments company into a commerce platform. and I think you will see that transformation come to life.

Excluding this impact our effective tax rate would have been roughly nine nine points higher.

For the full year, we expect the tax rate of approximately 21%.

David Solomon: Leveraging the firm's investment platform, global network, and banking capabilities, they work tirelessly to deliver unique and tailored solutions to our ultra-high net worth clients. We recently received a number of accolades from Euromoney, including being named the world's best private bank for 2025. These awards are a recognition of our excellence and long-standing commitment to serving the needs of our ultra-high net worth client base. Across our businesses, our clear priority is to serve clients with excellence. To that end, we are always seeking ways to enhance the client experience while improving efficiency. As highlighted in our strategic update this January, we are investing to strengthen our franchise and operate more effectively at scale. This includes taking steps to unlock efficiencies in technology and automation.

Now onto slide 11 or.

Our common equity tier one ratio was 14, 8% at the end of the first quarter under the standardized approach a 110 basis points above our current capital requirements of 13, 7%.

David Solomon: It yourself to one question and one follow up.

Speaker Change: This again is a completely different offline experience.

Speaker Change: We'll take our first question from Glenn Schorr with Evercore.

And lastly, let's take it to what the future could look like.

In the quarter, we returned $5 3 billion to common shareholders, including record common stock repurchases of $4 4 billion and common stock dividends of $976 million.

Alex Criss: Okay, so with that, I want to ground us with what we accomplished in 2020. We set out and declared 24 a transition year, and I'm very proud of what the team accomplished throughout the year. We reignited profitable growth. We reignited our active user growth. We've engaged users and we did it in a responsible manner while continuing to operate in a very efficient. We set the foundation and set the platform for our ability to now execute going forward. I'd like to tell the team we earned the right to now deliver on the vision that we want going forward.

Glenn Schorr: Hi, Thanks, a lot.

Speaker Change: Right now.

Glenn Schorr: So obviously really good trading results, but you mentioned also on the financing side how good it was I'm curious on the amount of deleveraging that we've seen in April I'm, assuming that's pretty good for intermediation, but how do we think about that in terms of the short term impacts on financing.

Speaker Change: It's actually quite incredible.

[Analyst 1]: Hi, thanks a lot. Obviously, really good trading results, but you mentioned also on the financing side how good it was. I'm curious on the amount of deleveraging that we've seen in April. I'm assuming that's pretty good for intermediation, but how do we think about that in terms of the short-term impacts on financing until we get a kind of a reload of leverage?

Go in and ask it hey, what do I need for camping trip. It will give me really good information.

We will dynamically deploy capital to support our client franchise, while also returning capital to shareholders, we remain committed to paying our shareholders a sustainable and growing dividend.

Speaker Change: But very generic information.

Speaker Change: And nothing that's actionable.

Speaker Change: As we start to evolve and we start to bring together. These L. L. EMS AI merchants and consumers there is going to need to be a commerce platform that stitches. All of this together a platform that consumers trust with their instruments and their data that can connect to merchants.

Accordingly, our board recently authorized a multiyear share repurchase program of up to $40 billion, providing us increased capital management flexibility.

Glenn Schorr: Until we get a kind of a.

Glenn Schorr: A reload of leverage.

In conclusion, our performance once again reflects the diversification and strength of our leading client franchises, which enable us to deliver for our clients across a range of market backdrops, we're confident in our ability to continue to support our clients as they navigate this dynamic operating environment with that we will now open up the line for questions.

Dennis Coleman: Good morning, Glenn It's Dennis I'll take that.

David Solomon and Denis Coleman: Good morning, Glen. It's Denis. I'll take that. I think when you think about the components of our overall financing, the reality is we continue to see significant demand across the client base for both our fixed and equity financing. I think what you're referencing, given the change in asset prices and market activity, is we did have a level of record average prime balances over the course of the first quarter. It's reasonable to expect that some of those balances come down as asset prices reset, and then you'll continue to support clients with their financing needs, but perhaps off of a lower base given the adjustment in market prices.

Glenn Schorr: I think when you think about the components of our overall financing.

David Solomon: As an example, we are leveraging AI solutions to scale and transform our engineering capabilities, as well as to simplify and modernize our technology stack. Today, many of our people have access to generative AI-powered tools to help them serve clients more efficiently and increase productivity. These include a developer copilot coding assistant and a natural language GS AI assistant. We continue to believe in acceleration in AI adoption to allow for further efficiencies for our own business and for companies large and small. As it is utilized more broadly, productivity gains for the economy will be significant. Turning to the macroeconomic backdrop more broadly. As I said at the outset, we are entering the second quarter with a markedly different operating environment than earlier this year. Our economists' expectation for growth in the U.S. has fallen meaningfully from over 2% to 0.5%.

Speaker Change: Of which we already have tens of millions and can then leverage the power of AI what could this look like.

Glenn Schorr: The reality is we continue to see significant demand across the client base for both our fixed and equity financing I think what you are referencing given change in and asset prices and market activity. So we did have a level of record average fine balances over the course.

Alex Criss: So to start with that vision and to really dive into it, let me take you back to the beginning. 25 years ago. When PayPal was founded, it was founded on a very, very simple concept. It was very difficult then to move money from peer to peer or to make a purchase online. PayPal had a very simple concept to just simplify my After 25 years, and we all stand here today standing on the shoulders of giants. We have created the largest two-sided open platform in the world. And what does that look like? To look at the scale that we've created?

Speaker Change: Again I go on my camping trip and I type in and how do we enable these llm's to start together the profile data that Paypal already has on our consumers.

Thank you, ladies and gentlemen, we will now take a moment to compile the Q&A roster.

Glenn Schorr: Of course of the first quarter, but it's reasonable to expect that some of those balances come down as asset prices reset and then you'll continue to support clients with their financing needs, but perhaps off of a lower base given the adjustment in market prices.

Speaker Change: How do we start to now make it so that we're able to lap the L. L. M bring up the right products at the right time with buy now opportunities because they already know exactly what the Paypal instruments are.

If you would like to ask a question. During this time simply press Star and then the number one on your telephone keypad, if you'd like to withdraw your question press.

Star then two on your telephone keypad, if youre asking a question on you were on a hands free unit or a speaker phone.

Glenn Schorr: Yeah.

Speaker Change: Updating your shopper profile, enabling you to be ready to check out.

Glenn Schorr: Is that is that.

Glenn Schorr: Is that material in terms of the impact when you're at record PB balances and then you have the amount of deleveraging that we saw in early April if it stays at this level is that.

[Analyst 1]: I mean, is that material in terms of the impact when you're at record PB balances and then you have the amount of deleveraging that we saw in early April? If it stays at this level, is that a major contributor to the growth in financing in the quarter?

Speaker Change: I'd like to ask that you use your handset when asking a question. Please limit yourself to one question and one follow up.

Speaker Change: And when you bring all of this together, whether it's in store, whether it's online or whether it's a gentex weed.

Speaker Change: We'll take our first question from Glenn Schorr with Evercore.

Speaker Change: We now have an incredible experience.

Alex Criss: Well, incredible assets $1.7 trillion in payment volume last Over 400 million active users, over half of which transact with us on a monthly basis. We are the number one. Branded Checkout Choice. Trusted by the vast majority of enterprises and merchants around the world. We have penetrated a very fragmented, very difficult small business ecosystem with over 20 million small business merchants that rely on us to improve their conversion. And when you add all of that up, we are sitting on a goldmine of Six billion vaulted financial and hundreds of AI and machine learning algorithms that enable us to make risk predictions, personalization choices and really focus on the lighting.

Glenn Schorr: A major contributor to the to the growth in financing order.

Glenn Schorr: Hi, Thanks, a lot.

Speaker Change: That has changed the game for commerce brought consumers and merchants together in a completely different way. This is just a small glimpse into the type of commerce, API and commerce experience that we're starting to create.

Glenn Schorr: So obviously really good trading results, but you mentioned also on the financing side how good it was I'm curious on the amount of deleveraging that we've seen in April I'm, assuming that's pretty good for intermediation, but how do we think about that in terms of the short term impacts on financing.

Glenn Schorr: I would not characterize it as material or major you have a number of things happening at the same time, you have deleveraging activity on behalf of plans changes in the overall level of balances, but you also have lots of different types of activity as clients reposition their portfolios.

David Solomon: The prospect of a recession has increased, with growing indications that economic activity is slowing down around the world. Our clients, including corporate CEOs and institutional investors, are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path forward and fears over the potentially escalating effects of a trade war have created material risks to the U.S. and global economy. We are encouraged by the administration's recent actions to pursue a more gradual policy process that allows for considered negotiations with many countries. However, how policies will evolve is still unknown. We are hopeful that feedback from companies large and small, institutional investors, and ultimately consumers will support an approach that will lead to greater economic certainty and long-term growth. In the meantime, markets will likely continue to be volatile until we have further clarity.

David Solomon and Denis Coleman: I would not characterize it as material or major. You have a number of things happening at the same time. You have deleveraging activity on behalf of clients, and you have changes in their overall level of balances, but you also have lots of different types of activity as clients reposition their portfolios and make sure that they adjust for their evolving views on the outlook.

Speaker Change: So when you pull back this is.

Speaker Change: The strategy that we're looking at how.

Speaker Change: How do we build a commerce platform powered by an API that our merchants have access to.

Glenn Schorr: And make sure that they adjust for their evolving views on the outlook.

Glenn Schorr: Until we get a kind of a reload of leverage.

Speaker Change: That enable our consumers to pay everywhere.

Speaker Change: Thank you we'll take our next question from Ebrahim <unk> with Bank of America.

Speaker Change: Pay the way they want.

Dennis: Good morning, Glenn It's Dennis I'll take that.

Speaker Change: And ensure that they're getting the most money and the most value the most rewards and the most loyalty with every purchase.

Operator: Thank you. We'll take our next question from Ibrahim Punawala with Bank of America.

Speaker Change: I think when you think about the components of our overall financing.

Ebrahim: Hey, good morning.

Speaker Change: The reality is we continued to see significant demand across the client base for both our fixed and equity financing I think what youre referencing given change in and asset prices and market activity. So we did have a level of record average prime balances over the.

Speaker Change: I wanted to follow up on Glenn's question I guess.

[Analyst 2]: Hey, good morning. I wanted to follow up on Glen's question. I guess, Denis, I think the view is the world in markets changed a little bit come April 2, and the risk from an investor standpoint is activity falling off the cliff. It's negative for financing. It could be negative for trading. I'm not sure if you have data in terms of the 10 days for April. If you can give us, if you can contextualize just how negative the last 10 days have been following a very strong Q1 and how we should think about just where clients are as we go back to debating good volatility versus bad volatility.

Speaker Change: And from a merchant perspective, we.

Speaker Change: Dennis I think the view is the word in markets changed a little bit come April 2nd and the risk from an investor standpoint is activities.

Speaker Change: We want to not only deliver an incredible payments opportunity.

Speaker Change: But we want to do what's most important to them, which has helped them drive the next customer the right customer.

Speaker Change: Of course of the first quarter.

Speaker Change: Going off the cliff, it's negative for financing it could be negative for trading so I am not sure. If you have data in terms of the tenders for April if you can give us if you can contextualize just how negative the last 10 days have been following a very strong <unk> and how we should think about just where clients are as you go back to debating good volatility.

Speaker Change: In the right ROI.

Speaker Change: But it's reasonable to expect that some of those balances come down as asset prices reset and then you'll continue to support clients with their financing needs, but perhaps off of a lower base given the adjustment in market prices.

Speaker Change: And then ensure that they're operating as smart as they can.

Speaker Change: And we want to do this online we want to do it in store and we want to do it for the future and an agent Tech World.

Alex Criss: So that is the foundation that has been created over the last 25 years. but we are a customer-obsessed organization. We are constantly talking to our consumers and to our merchants. and asking them, what are their greatest And when we talked to them today, we recognized that there are significant changes afront. There are shifts. that are creating incredible opportunities for PayPal. to transform commerce again. Let me walk you through a few examples of what those. If I go online... as a consumer, and I do assert. This is what shows up. How do I make a choice?

David Solomon: The administration's focus on trade barriers and strengthening the U.S. competitive position is commendable. At the same time, it is important to recognize that few companies have benefited more from a post-World War II economic and financial order than the U.S. This doesn't mean meaningful reform in certain areas is not warranted. Today, the U.S. is the largest, most dynamic, and resilient economy, with the dollar as the reserve currency. We have the broadest and deepest capital markets, which help fuel an unparalleled culture of innovation in sectors like technology and health care. These strengths, among others, give us the opportunity to think about how to attract and embed strategic manufacturing as an important driver of the 21st-century economy. As a country, it is vital that we continue to leverage our considerable strengths as the global trading system for goods and services adjusts and evolves.

Speaker Change: As we do this and as we move into this world, we open up additional addressable markets.

Yeah.

Speaker Change: I mean is that is that.

Speaker Change: Is that material in terms of the impact.

Speaker Change: We obviously have played very well in the online payment space, but are still scratching the surface of the opportunity, but we are now moving into offline commerce and we are moving into ads.

Speaker Change: He was as bad volatility.

Speaker Change: You're at record PB balances and then you have the amount of deleveraging that we saw in early April if it stays at this level is that.

Dennis Coleman: Yes, I'm going to start Dennis Dennis can jump in.

David Solomon and Denis Coleman: Yeah, I'm going to start. Denis can jump in, but I'd say a couple of things. First of all, obviously, no one can argue that April 2nd, a handful of things happened that shifted perspectives, but I would say there were things going on before April 2nd that were shifting perspectives that also led to more activity. There's no question, and we've talked about this publicly a bunch, that we started to see growth showing and slowing in late January and early February. We obviously saw significant moves in equity markets as people positioned for a different kind of trade policy during March, and we saw significant moves in the March period, which actually led to higher activity for us in a variety of ways. We're early in the quarter, but so far, the business is performing very well, and clients are very active.

I'd say a couple of things first of all.

Speaker Change: A major contributor to the to the growth in financing order.

Speaker Change: Obviously, no one can argue that April 2nd.

Speaker Change: Overall marketing budgets.

Speaker Change: Credit and continuing to expand the growth levers that we have as an organization to delight our customers.

Dennis Coleman: Sure.

Dennis Coleman: A handful of things happen that shifted perspective, but I would say there were things going on before April 2nd that we're shifting perspectives.

Speaker Change: I would not characterize it as material or major you have a number of things happening at the same time, you have deleveraging activity on behalf of plans changes in the overall level of balances, but you also have lots of different types of activity as clients reposition their portfolios and make sure that they adjust for their evolving views.

Speaker Change: And we're well on our journey as.

Dennis Coleman: That also led to more activity. So there is no question.

Speaker Change: As you will see for the rest of the day, we've hired an incredible team. We've declared this mission we are starting to build the platforms, which we will you will see come to life today and.

Dennis Coleman: And we've talked about this publicly a bunch that we started to see global growth showing a slowing in late January and early February. We obviously saw significant moves in equity markets as people position for a different kind of trade policy during March and we saw significant moves in the March period, which actually led to higher activity for us in a variety.

Alex Criss: How do I know, out of all of these choices, which is the one to trust? Which is the best price? Which is the one that I may get a reward or have some loyalty? And if I'm a merchant... How do I stand out? And in fact, as a merchant, I can't stand. We have seen that when we talk to our merchants, their cost for acquisition has over doubled. in the last 10 years. They are throwing money, especially if they're a small business, into the ether, just hoping that they may show up on the third or fourth page of a search.

Speaker Change: And we have built and brought in tremendous talent over the last year in AI and technology to ensure that we can deliver on this.

Speaker Change: On the outlook.

Speaker Change: Thank you we'll take our next question from Ebrahim <unk> with Bank of America.

David Solomon: On capital and regulation more broadly, we appreciate the administration's strong focus on appropriately calibrating regulation for the financial services industry. Following the recent nomination of Michelle Bowman as Vice Chairman of Supervision at the Federal Reserve, we will continue to actively engage on these matters and hope to see material progress across capital, leverage, liquidity, and supervision. As this quarter has shown, it's impossible to predict market outcomes. It has also demonstrated once again that in times of great uncertainty, clients turn to Goldman Sachs for execution and insight. Our leading franchises have never been better positioned to support our clients. I will now turn it over to Denis to cover the financial results for the quarter. Thank you, David. Good morning. Let's start with our results on page one of the presentation.

Speaker Change: And we are moving very quickly 24, as I said was a year that we needed to bring the company back into profitable growth, but as we look into 'twenty five and beyond we are realizing our commerce vision immediately so when you hit the total key what does this all look like.

Ebrahim: Hey, good morning.

Speaker Change: I wanted to follow up on Glenn's question I guess.

Dennis Coleman: The way we're early in the quarter, but so far the business is performing very well and clients are very active and so.

Speaker Change: Dennis I think the view is the word in markets changed a little bit come April 2nd and the risk from an investor standpoint is activities.

Dennis Coleman: I know there is a higher level of uncertainty, but at the same point.

David Solomon and Denis Coleman: I know there is a higher level of uncertainty, but at the same point, clients are active, people are shifting positions, and we still see significant activity levels. Denis, do you want to add to that at all? I think that captures the sentiment and where you're coming from, Ibrahim. We obviously have a diversified set of business activities, many of which work well together, some of which mitigate each other. I think the point is, given all the changes in the market and outlooks, our clients have been very active, and all the investments that we've made in our franchise with our clients, all the resources we deploy to them and on their behalf, has put us in a position to be active with them.

Speaker Change: Well, we've committed from our guidance to grow greater than 5% in transaction margin in 'twenty five.

Dennis Coleman: Clients are active people are shifting positions.

Speaker Change: Falling off the cliff, it's negative for financing it could be negative for trading so I'm not sure. If you have data in terms of the 10 days for April and if you can give us if you can contextualize just how negative the last 10 days have been falling are based on <unk> and how we should think about just where clients. How does he go back to debating good volatile.

Dennis Coleman: We still see significant activity levels with Dennis do you want to add to that at all so I think I think that captures the sentiment and where youre coming from Ebrahim. We obviously have a diversified set of business activities.

Speaker Change: As we look out into 'twenty seven we see high single dose high single digit growth for transaction margin and as we think about all the levers for growth that we have into the future and this transformation.

Alex Criss: And now, on top of all of this, you have new paradigms. We have a gen tech. in which merchants have no connection to their customer, no payment connection, and no paradigm to be able to actually create a transaction. So all of these shifts, when you bring it together, create more and more challenges for consumers and more and more challenges for merchants. And for us, As the leader for the last 25 years, we see this as an opportunity. for our next chapter. We see this as our opportunity to revolutionize commerce globally. In order to do that, we need to transform who we are as a company.

Dennis Coleman: Of which worked well together, which.

Speaker Change: Into a commerce platform.

Speaker Change: Mitigate each other I think the point is given all the changes in the market and.

Speaker Change: We believe and have our ambition that we will deliver double digit transaction margin growth into the future.

Speaker Change: <unk> was as bad volatility.

Dennis Coleman: Outlooks, our clients have been very active in all of the investments that we've made in our franchise with our clients all the resources, we deployed to them and on their behalf.

Speaker Change: And deliver it responsibly with 20% plus non-GAAP EPS growth.

Speaker Change: Yes, I'm going to start Dennis Dennis can jump in but I would say a couple of things first of all.

David Solomon: In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, and an ROE of 16.9%. We provide details on selected items in the bottom table, which in total reduced our EPS by $0.25 and ROE by 30 basis points. Let's turn to performance by segment, starting on page three. Global Banking and Markets produced revenues of $10.7 billion in the first quarter and generated an ROE of over 20%. Turning to page four, advisory revenues of $792 million were down versus a strong performance a year ago. We remained number one in the league tables for M&A advisory, with a lead of over $70 billion in announced volumes versus our next closest peer. Equity underwriting revenues of $370 million were flat year over year, while debt underwriting revenues of $752 million rose 8%, driven by asset-backed and investment-grade activity.

Speaker Change: So this is our <unk>.

Dennis Coleman: It's put us in a position to be to be active with them.

Speaker Change: Obviously, no one can argue that April 2nd.

Speaker Change: <unk>. This is what we look at as we look into the future. We're maniacally focused and what you will hear throughout the rest of the day is our strategic imperatives that I laid out at our last earnings call, our where our teams are focused and executing and they are all in line with the vision that I just laid out we will wind checkout.

Speaker Change: Got it and if I could follow up Dennis you mentioned executing on to create efficiency plan in the pyramid structure, just talk to US I think there was some headlines last month around I guess regular sort of method basis.

Speaker Change: A handful of things happened that shifted perspective, but I would say that where things going on before April 2nd that we're shifting perspectives.

[Analyst 2]: Got it. If I could follow up, Denis, you mentioned executing on the three-year efficiency plan and the pyramid structure. Just talk to us. I think there were some headlines last month around, I guess, regular sort of merit-based review of the headcount, like what we are doing on the expense side as we think about the 60% efficiency target and maybe some resiliency to earnings on the cost side that we could expect. Thanks.

Speaker Change: That also led to more activity, but there is no question.

Speaker Change: Have you over the head count like what we're doing on the expense side as we think about the 60% efficiency target and maybe some resiliency to wanting from on the cost side that we could expect.

Speaker Change: And we've talked about this publicly a bunch that we started to see global growth showing a slowing in late January and early February. We obviously saw significant moves in equity markets as people position for a different kind of trade policy during March and we saw significant moves in the March period, which actually led to higher activity for us in a variety.

Alex Criss: Let me walk you through what that transformation First, we need to go from being the PayPal that you know and love just online to being available everywhere. Online, in-store, agentic, everywhere a consumer or a merchant wants to transact, we need to be available. We need to go from a one size fits all experience into ensuring that we can create personalized experiences, leveraging the data, leveraging the information that we have about each and every one of our customers, and each and every one of our merchants to help them find We need to go from that amazing static buy button to having something that is now much more dynamic.

Speaker Change: We will scale, our omni experience, we will grow venmo.

Speaker Change: And we will accelerate our SMB penetration.

Speaker Change: Sure sure. Thanks, Ebrahim I appreciate the question, obviously, we went through.

Speaker Change: And as we do all of that we will get to a place where we will build on the foundation that we've created as an organization. The largest two sided open platform. We will ensure that we now move into these new addressable markets with velocity with innovation that delights our customers.

David Solomon and Denis Coleman: Sure. Thanks, Ibrahim. I appreciate the question. Obviously, we went through on our call in January this three-year efficiency program, which is something we're very committed to, and we're underway in terms of the execution thereunder. A lot of the focus of that is to free up capacity for us to make greater investments in technology. That program had aspects, as you referenced, that relate to pyramid structure. It also had management of non-compensation spend. We are looking at and managing all those line items very carefully. To your question on pyramid at headcount in particular, our expectation is that we will undergo our regular annual performance management process. I would expect that we'll record a severance charge in the second quarter of approximately $150 million in connection with a number of those actions.

Speaker Change: On our call in January the three year efficiency program, which.

Speaker Change: Wade or early in the quarter, but so far the business is performing very well and clients are very active and so.

Speaker Change: It's something we're very committed to and where we're underway in terms of the execution, they're under a lot of the focus of that is to free up capacity for us to make greater investments in technology, but that program had had aspects as you referenced that relate to a pyramid structure would also have management of non compensation spend.

Speaker Change: I know there is a higher level of uncertainty, but at the same point.

Speaker Change: Clients are active people are shifting positions.

Speaker Change: We will do it online we'll do it in store and we will do it in an agent took world.

Speaker Change: We still see significant activity levels I mean, Dennis do you want to add to that at all so I think I think that captures the sentiment and where youre coming from Ebrahim. We obviously have a diversified set of business activities.

Speaker Change: And we will deliver incredible results as we move forward not only in 25 or beyond.

David Solomon: We ranked first in equity and equity-related underwriting and ranked second in both high-yield debt underwriting and leveraged lending. Across investment banking, our backlog rose sequentially, driven by a notable increase in advisory. FICC net revenues were $4.4 billion in the quarter. Intermediation results were driven by higher client activity in currencies and mortgages, offset by lower performance in credit, rates, and commodities versus a strong prior year. We produced record FICC financing revenues of $1 billion, driven by solid performance in mortgages and structured lending. We remain confident in our ability to prudently grow this business over time and always with an eye towards risk management. Equities net revenues were a record of $4.2 billion in the quarter. Equities intermediation revenues of $2.5 billion rose 28% year over year, primarily driven by strong performance in derivatives.

Speaker Change: We are looking at and managing all of those line items very carefully.

Speaker Change: So with that I'd love to bring the team up and ensure that they are able to expose to you all the details and the how of this vision and we'll start with our Chief Technology Officer Srinivasan catastrophe.

Speaker Change: Your question on on pyramid that head count in particular.

Speaker Change: Many of which worked well together and so on which <unk>.

Alex Criss: a wallet that is not just a collection of instruments, but something that is giving the consumer the opportunity to make the smartest choice and put more money in their pocket when they need it. We need to go from just being a payments processor to now thinking about the end-to-end commerce journey. How do we help our merchants find that next customer? all the way through to helping them in a post-purchase environment and bring that customer back in as an ongoing relationship. And lastly, we need to go from our own collection internally, of different independent platforms, to ensuring that we are leveraging our data, taking advantage of AI, and working from a single platform going forward.

Speaker Change: Our expectations that we will undergo our regular annual performance management process.

Speaker Change: Mitigate each other I think the point is given all the changes in the market.

Speaker Change: And I would expect that we will record a severance charge in the second quarter of approximately $150 million in connection with a number of those actions.

Speaker Change: The outlooks are clients have been very active in all of the investments that we've made in our franchise with our clients all the resources, we deploy to them and on their behalf.

Speaker Change: [noise]. Thank you Alex what an exciting mission.

Speaker Change: <unk> has put us in a position to be to be active with them.

Speaker Change: Thank you we will take our next question from Christian Ballou with Autonomous research.

Srinivasan Catastrophe: As Alex shared we are on a journey to become the go to platform for shopping every man.

Speaker Change: Got it and if I could follow up Dennis you mentioned executing under create efficiency plan in the pyramid structure, just talk to US I think there was some headlines last month around I guess regular way sort of metal base.

Operator: Thank you. We'll take our next question from Christian Blue with Autonomous Research.

Christian Ballou: Good morning, David and Dennis maybe just staying on the topic of the markets businesses I wanted to talk about the competitive landscape.

Srinivasan Catastrophe: As we accelerate towards this vision one thing is clear.

[Analyst 2]: Good morning, David and Denis. Maybe just staying on the topic of the markets businesses, I wanted to talk about the competitive landscape. You know, you guys did very well in the quarter on an absolute basis, but it did lag peers in the quarter. I appreciate it's just one quarter. You do have a track record of share gains, but just curious what you're seeing currently on the competitive landscape in markets.

Srinivasan Catastrophe: Technology is key to unlocking the exciting future.

Speaker Change: And have you over the head count like what we're doing on the expense side as we think about the 60% efficiency target and maybe some resiliency to wanting from on the cost side that people would expect.

Speaker Change: You guys did very well in the quarter on an absolute basis, but it did lag it did like peers in the quarter and I. Appreciate it's just one quarter you do have a track record of share gains, but just curious what you're seeing.

Srinivasan Catastrophe: Today I'll walk you through four key investments in AI and technology that will the Delaware powerful experiences for our customers and merchants.

Alex Criss: So this is the transformation journey that you're on and what you will hear specifically throughout the rest of the morning. Let me take you for a moment on a journey of what this And as we go through this. you will start to see our commerce platform come to life. This is not future years from now. This is happening now. This is a commerce API that we are already working with merchants on to start to create the experiences that I described. And I want you to see what So let's start where many of our consumers. which is.

Speaker Change: Sure sure. Thanks, Ebrahim I appreciate the question, obviously, we went through.

Srinivasan Catastrophe: It starts with our scale.

David Solomon: Record equities financing revenues of $1.6 billion were higher year over year on better portfolio financing results and record average prime balances for the quarter. Across fixed and equities, financing revenues of $2.7 billion rose 22% versus the prior year, reaching a new record for a fifth consecutive quarter. Let's turn to page five. Asset and Wealth Management revenues were $3.7 billion. Management and other fees were up 10% year over year to $2.7 billion on higher average assets under supervision and down slightly versus the fourth quarter, driven by other fees, which include placement fees that can vary from quarter to quarter. Incentive fees were $129 million, up year over year despite the difficult monetization environment during the quarter.

Srinivasan Catastrophe: They are one of the largest most thoughtful datasets into both.

Christian Ballou: Currently on the competitive landscape in markets.

Speaker Change: On our call in January the three year efficiency program.

Srinivasan Catastrophe: We have put 30 million consumers and merchants across 200 markets.

Speaker Change: Yes, I think Christian we feel incredibly strongly about the way our business is positioned and the way it's performing.

Speaker Change: This is something we're very committed to and we're well underway in terms of the execution, they're under a lot of the focus of that is to free up capacity for us to make greater investments in technology, but that program had had aspects as you referenced that relate to a pyramid structure would also have management of non compensation spend.

David Solomon and Denis Coleman: Yeah, I think, Christian, we feel incredibly strongly about the way our business is positioned and the way it's performing. The comment you referenced, obviously, the way you look at these things, to go back and look at the first quarter last year, we had an extraordinary first quarter where we massively outperformed. We have a tougher comp. The strength of our position, we feel good about. The client feedback we get is extraordinary, particularly at times like this. I think we'll continue to execute very well along the continuous pattern that we've executed on as a leading provider in these activities. It feels that way.

Srinivasan Catastrophe: We process 157 trillion total payment volume every year.

Speaker Change: Comment you had referenced.

Speaker Change: Obviously the way the way the way you look at these things to go back and look at the first quarter of last year, we had an extraordinary first quarter, where we massively outperform and so we've got a tougher comp.

Srinivasan Catastrophe: That's approximately one fourth of the world's commerce.

Speaker Change: It will end up GDP up Australia every year.

Srinivasan Catastrophe: We also track 20 trillion customer interactions.

Speaker Change: But the strength of our position.

Speaker Change: We are looking at and managing all those line items very carefully.

Speaker Change: Feel good about that.

Srinivasan Catastrophe: This has created a valuable data Walt that is more than 500, Petabytes large that's 500 petabytes.

Speaker Change: Client feedback, we get is extraordinary particularly at times like this.

Speaker Change: To your question on on pyramid that head count in particular.

Speaker Change: And I think we'll continue to execute very well along the continuous pattern that we've executed on as you know is a leading provider in these activities and it feels that way.

Speaker Change: Our expectations that we will undergo our regular annual performance management process.

Alex Criss: something that makes sense. I got invited to go camping. And it often happens with the incredible asset we have on a peer-to-peer platform, I get invited by my friends to actually chip in to a camping pool. This is a new innovation that we just launched on PayPal called Pools. So great, I've now chipped in my $500 to go camping. Unfortunately, I haven't gone camping in a long So I don't have any of the equipment to be able to do that. So I now need to go make sure that I am prepared for this trip. So I go online to my local sporting goods.

Srinivasan Catastrophe: But it's not the quantity of hard data that sets us apart.

Srinivasan Catastrophe: The depth and breadth of our data that no other company can rival.

Speaker Change: And I would expect that we will record a severance charge in the second quarter of approximately $150 million.

Speaker Change: Okay. Thank you.

Speaker Change: On the buyback and.

Srinivasan Catastrophe: Data is crucial from merchants input.

David Solomon: We expect to make progress on our target of $1 billion in annual incentive fees over the medium term, supported by an estimated $4.1 billion of unrecognized incentive fees as of year-end. Private banking and lending revenues were $725 million, up 6% year over year on higher lending revenues. Sequentially, results were roughly flat, as NIM compression on deposits was offset by lending revenue growth. In aggregate, our more durable revenues of $3.4 billion across management and other fees and private banking and lending grew 9% versus the prior year. We continue to expect high single-digit annual growth in these lines over time. Revenues from equity investments and debt investments totaled $122 million, largely driven by net interest income in our debt portfolio.

[Analyst 2]: Okay, thank you. On the buyback, you know, impressive that you guys stepped it up fairly meaningfully in the quarter. What was the catalyst that drove the step up in the buyback? Was it the share price level, just excess capital? I'm just trying to understand if this level of buyback is sustainable going forward.

Speaker Change: <unk> impressive that you guys stepped it up fairly meaningfully in the quarter what was the catalyst that drove this.

Speaker Change: Connection with a number of those actions.

Srinivasan Catastrophe: In today's fragmented shopping environment.

Speaker Change: Thank you we will take our next question from Christian Ballou with Autonomous research.

Srinivasan Catastrophe: But they are limited to activity solely within their own brand obscuring a complete view of customer behavior.

Speaker Change: The step up in the buyback was at the share price level, just excess capital I'm just trying to understand if this level of buyback is sustainable going forward.

Speaker Change: Good morning, David and Dennis maybe just staying on the topic of the markets businesses I wanted to talk about the competitive landscape.

Srinivasan Catastrophe: Paypal Wasp and unmatched two sided network creates a rich tapestry of insights across millions of merchants.

Christian Obst: Sure. Thanks Christian Obst.

Christian Obst: Obviously, we did note that the level of buybacks for us in the first quarter was a record I think our philosophy with respect to capital deployment remains very consistent first and foremost, we're making available to capital to support the client activities that come into the firm obviously focused on a sustainably growing dividend and then we calibrate.

David Solomon and Denis Coleman: Sure. Thanks, Christian. Obviously, we did note that the level of buybacks for us in the first quarter was a record. I think our philosophy with respect to capital deployment remains very consistent. First and foremost, we're making available the capital to support the client activities that come into the firm, obviously focused on a sustainably growing dividend. We calibrate our share buybacks relative to how we want to manage the firm's overall capital position in light of the environment. As you've seen us over the last couple of years take a number of strategic measures to sort of reduce certain balance sheet exposures, ultimately, we have to get the capital out of the system. That'll help our long-term return profile. We had a lot of earnings generation.

Speaker Change: You guys had a better one in the quarter on an absolute basis, but it did lag you did like peers in the quarter and I. Appreciate it's just one quarter you do have a track record of share gains, but just curious what you're seeing.

Srinivasan Catastrophe: Unlucky in a holistic view after customer both beyond and much its typical view.

Alex Criss: And this is what I see. hidden the name of the store, but this is an actual screenshot. If I as a consumer just go to a sporting This is a terrible consumer. This is an experience where I now have to go filter through and try to figure out what I need for my campaign. And as a merchant, this is a terrible, friction-filled experience as well. They want to get me to the right item at the right time. And instead, they're just guessing as to what I may be. We think there's a better way. We think we can take the data, the assets that we have, and the two sided network that we have, and create a better relationship.

Srinivasan Catastrophe: This level of intelligence Ulster much and personalized.

Srinivasan Catastrophe: Delights, our customers, but rewarding shopping experiences, creating a powerful flywheel effect.

Speaker Change: Currently of the competitive landscape in markets.

Srinivasan Catastrophe: And we offer this trust not one merchant.

Speaker Change: Yes, I think Christian we feel incredibly strongly about the way our business is positioned and the way it's performing the comment you had referenced.

Christian Obst: Our share buybacks relative to how we want to manage the firm's overall capital position in light of the environment and as you've seen us over the last couple of years take a number of strategic measures to sort of reduce certain balance sheet exposures. Ultimately we have to get the capital out of the system.

Srinivasan Catastrophe: Tens of millions.

Oliver: Oliver we face a significant challenge.

Speaker Change: Obviously the way the way the way you look at these things to go back and look at the first quarter of last year, we had an extraordinary first quarter, where we massively outperform and so we've got a tougher comp.

Oliver: Today, our data is scattered across disparate systems.

David Solomon: Within equity investments, net gains in our private portfolio were more than offset by declines in our public portfolio amid the more challenging market backdrop during the quarter. In the Asset and Wealth Management segment, we generated a 21% pre-tax margin and roughly 10% ROE. Excluding the impact of historical principal investments and approximately $4 billion of attributed equity, our pre-tax margin would have been 2 percentage points higher and ROE 2.6 percentage points higher. Now moving to page six, total assets under supervision ended the quarter at a record $3.2 trillion. We had $29 billion of long-term net inflows across asset classes, representing our 29th consecutive quarter of long-term fee-based net inflows. Turning to page seven on alternatives. Alternative assets under supervision totaled $341 billion at the end of the first quarter, driving $523 million in management and other fees.

Speaker Change: This closest Don.

Christian Obst: That'll help our long term return profile. So we had a lot of earnings generation and we took the opportunity to buy back some of our stock while ensuring that we still entered the second quarter with a level of capital where we are operating above the wide end of our target operating range to make sure. We're in a position in this quarter.

Speaker Change: Unifying our technology is my number one priority.

Speaker Change: But the strength of our position we.

Speaker Change: Proud to share we have already started with four initiatives.

Speaker Change: We feel good about.

Speaker Change: The client feedback we get is extraordinary particularly at times like this.

David Solomon and Denis Coleman: We took the opportunity to buy back some of our stock while ensuring that we still entered the second quarter with a level of capital where we are operating above the wide end of our target operating range to make sure we're in a position in this quarter to support client activity and continue to continue first and foremost to support clients, but then also continue to return capital to shareholders.

Alex Criss: So let's imagine what we're already starting to deliver. I should be able to go to a website and actually have it personalized. We should be able to leverage a commerce API that PayPal can provide to actually let the merchant know that I'm on a camping journey. On top of that, we should be able to do things like create a consumer profile. We already have over 80 million. Profile. of consumers that start to share information like the journeys that they're on. the items that they're interested in, their favorite colors, their shoe size, so now the merchant can actually create the exact customized, personalized shopping adventure for them.

Speaker Change: One platform.

Speaker Change: One profile.

Speaker Change: And I think we'll continue to execute very well along the continuous pattern that we've executed on as you know it was <unk>.

Speaker Change: One process all powered by AI.

Speaker Change: So now I'll walk you through the initial dose and the possibly with a sense we are seeing.

Speaker Change: Leading provider in these activities and it feels that way.

Christian Obst: To support client activity and continue.

Speaker Change: Let's start with one platform.

Speaker Change: Okay. Thank you.

Speaker Change: Buyback.

Speaker Change: As we have grown over the years and acquired new products.

Christian Obst: First and foremost to support clients.

Speaker Change: <unk> impressive that you guys stepped it up fairly meaningfully in the quarter what was the catalyst that drove the.

Christian Obst: But then also continue to return capital to shareholders.

Speaker Change: Each product run on an independent platform for speed and agility.

Speaker Change: The step up in the buyback was at the share price level, just excess capital I'm just trying to understand if this level of buyback is sustainable going forward.

Speaker Change: Thank you we'll take our next question from Betsy <unk> with Morgan Stanley.

Speaker Change: They say if you want to go fast go alone if you want to go far go together.

Operator: Thank you. We'll take our next question from Betsy Graseck with Morgan Stanley.

Speaker Change: Hi, good morning.

Speaker Change: Our Pos so does well, partly yes, but actually accelerate towards our transformation, it's slowing us down into critical areas one our velocity.

Christian Obst: Yeah.

[Analyst 3]: Hi, good morning. Can you hear me okay?

Christian Obst: Can you hear me okay.

Speaker Change: Sure. Thanks Christian Obst.

Christian Obst: Good morning, Hello, Yes, good morning.

Speaker Change: Obviously, we did note that the level of buybacks for us in the first quarter was a record I think our philosophy with respect to capital deployment remains very consistent first and foremost, we're making available the capital to support the client activities that come into the firm obviously focused on a sustainably growing dividend and then we calibrate.

Speaker Change: Alright, good morning, guys.

David Solomon and Denis Coleman: Morning, Betsy.

[Analyst 3]: Hello?

David Solomon and Denis Coleman: Yep, good morning, Betsy.

Speaker Change: Thank you so on the capital question David earlier in the prepared remarks that you're talking about the regulatory changes that are being anticipated.

[Analyst 3]: Hi. All right, great.

David Solomon: Gross third-party alternatives fundraising was $19 billion in the quarter. We continue to expect fundraising to be in line with recent years, though this outlook could be impacted by market conditions. On page nine, firm-wide net interest income was $2.9 billion in the first quarter, up sequentially on a decline in funding costs. Our total loan portfolio at quarter end was $210 billion, up versus the fourth quarter, primarily reflecting an increase in other collateralized lending. Our provision for credit losses of $287 million primarily reflects net provisions related to the credit card portfolio, which were driven by net chargeovers, partially offset by releases following a seasonal paydown of card balances. Turning to expenses on page 10, total quarterly operating expenses were $9.1 billion, resulting in an efficiency ratio of 60.6%. Our compensation ratio net of provisions was 33%. Non-compensation expenses were $4.3 billion.

David Solomon and Denis Coleman: Good morning, Betsy.

Speaker Change: So are they similar capabilities are individually boat and maintained across each product.

[Analyst 3]: Thank you. On the capital question, David, earlier in the prepared remarks, you were talking about the regulatory changes that are being anticipated. The question I have for you is on the SLR ratio. I believe it's one of the ones you're tighter to. It would be helpful to understand how you're thinking about if the changes come through as being discussed, you know, take treasuries out of the denominator of the SLR. Is that something that would be a noticeable benefit for you? Is that something that you think you could lean into relatively quickly or give us a sense as to how you plan on using these improvements in capital as they come through? Thank you.

Alex Criss: I now get to see the boots that I need. I get to see the color that I'm interested in. I get to see that it's in my side. And I already know that I have PayPal loaded up and ready to go so I can create a buy now On top of that, when I actually get to check out, they know that I'm an Amazon Prime member. so they can offer free shipping and just reducing any friction to the purchase experience. This is an incredible personalized experience that by the time I get to the end, I have now an end-to-end experience and loyalty already built in.

Speaker Change: The other thing in a drain on resources.

Speaker Change: And I have for you is on the SLR ratio I believe it's one of the ones you are tighter to and it would be helpful to understand how you're thinking about if the if the changes come through I was being discussed take treasuries out of the denominator of the SLR.

Speaker Change: To our customer experience today, if you sign up for new Paypal products, you'll find waiting on body processes features and preferences.

Speaker Change: Our share buybacks relative to how we want to manage the firm's overall capital position in light of the environment and as you've seen us over the last couple of years take a number of strategic measures to sort of reduce certain balance sheet exposures. Ultimately we have to get the capital out of the system.

Speaker Change: Our not star, it's one platform a common chassis that.

Speaker Change: Is that something that would be a noticeable benefit for you is that something that you think you could lean into.

Speaker Change: That we ought to stay behind the scenes unseen by the consumer.

Speaker Change: Our core capabilities move up to the chassis, we can build once and use for all this allows us to bring best of breed services to market faster.

Speaker Change: That'll help our long term return profile. So we had a lot of earnings generation, we took the opportunity to buy back some of our stock while ensuring that we still entered the second quarter with a level of capital where we are operating above the wide end of our our target operating range to make sure. We're in a position in this quarter.

Speaker Change:

Speaker Change: Yeah relatively quickly or give us a sense as to how you plan on using these.

Speaker Change: Improvements in capital as they come through thank you.

Alex Criss: This is a very different experience than what existed. So that's an online e-commerce. But what about in-store? Right now. If I'm walking around, there is no engagement from an in-store. The best we've done over the last decade is to take my physical wallet and just put it on my phone. So now I have all my instruments, but it's still just on my phone. There's no engagement. There's no better understanding in an offline environment than just being able to tap. Well, we think there's a better way. We think we can engage with merchants and let them again know.

Speaker Change: Every customer no matter, which product they're using.

Speaker Change: Yeah. So so first of all Betsy I think you've got to look at this as a very holistic thing because there's a lot going on from a regulatory perspective in DRAM that I think will be a tailwind for the industry broadly and obviously it includes SLR reform to the degree. It comes it includes capital a form to the drill pumps and include supervisory form to the degree it comes.

Speaker Change: Likewise with Paypal open much and can access the full paypal ecosystem, regardless of which integration they choose.

David Solomon and Denis Coleman: Yeah. First of all, Betsy, I think you've got to look at this as a very holistic thing because there's a lot going on from a regulatory perspective and DREG that I think will be a tailwind for the industry broadly. Obviously, it includes SLR reform to the degree it comes. It includes capital reform to the degree it comes. It includes supervisory reform to the degree it comes. It's a big package of things. We are CET1 constrained, not SLR constrained at the moment. I do think for the system broadly, SLR relief would have a benefit to treasury markets. I think it's an important structural reform. Certainly, you've heard messages from both the Fed and from Treasury that this is a very, very high priority. We're certainly hopeful or optimistic, given the way they've been messaging around that, that there'll be activity on that.

Speaker Change: To support client activity and continue to continue first and foremost to support clients.

Speaker Change: Today, Paypal and zoom, our unified making it possible to send foreign remittances through the Paypal app, nor zoom logging required.

Speaker Change: Then also continue to return capital to shareholders.

David Solomon: David mentioned we continue to execute on our three-year efficiency plan that we laid out in January, including making adjustments to our pyramid structure. Our effective tax rate for the quarter of 16.1% benefited from the impact of employee stock-based compensation. Excluding this impact, our effective tax rate would have been roughly 9.9 points higher. For the full year, we expect a tax rate of approximately 21%. Now on to slide 11. Our common equity tier one ratio was 14.8% at the end of the first quarter under the standardized approach, 110 basis points above our current capital requirements of 13.7%. In the quarter, we returned $5.3 billion to common shareholders, including record common stock repurchases of $4.4 billion and common stock dividends of $976 million. We will dynamically deploy capital to support our client franchise while also returning capital to shareholders.

Speaker Change: And so it's a it's a big package of things we are CET, one constrained not SLR constraint.

Speaker Change: Thank you we'll take our next question from Betsy <unk> with Morgan Stanley.

Speaker Change: Zito is targeted for the first half of this year, followed by Venmo, Braintree and Paypal complete payments.

Speaker Change: At the moment.

Betsy: Hi, good morning.

Speaker Change: But I do think for the system broadly.

Speaker Change: Can you hear me okay.

Speaker Change: <unk> relief would have a benefits treasury markets I think it's an important structural reform and certainly you've heard messages from both the fed and treasury that this is a very very high priority and so we're certainly hopeful or optimistic given the way that the messaging around that but there'll be activity on that I think thats, probably good for the system I think.

Speaker Change: Let's talk about one profile.

Speaker Change: Good morning, Hello, Yes, good morning, Brian.

Speaker Change: Alright, good morning, guys.

Speaker Change: We are moving to a one single view of our customer today.

Speaker Change: Thank you so on the capital question David earlier in the prepared remarks, you were talking about the regulatory changes that are being anticipated.

Alex Criss: who you are from a personalized experience and let them know that this is an opportunity. to provide a disc to provide some loyalty. to leverage the ability for me to be in the right environment of this sporting goods store and say, hey, you're right here right now. Why don't you come into the store? We know that you're on a Let me give you a discount because you're a new customer to us and the cost for acquisition that I would have paid to try to get you, I would rather just put in your pocket to have you check out with us right now.

Today, we would capture a customer activity and preferences across each product, but one profile. We are combining these insights to reach our customers and our powerful delightful way.

Speaker Change: And the question I have for you is on the SLR ratio I believe it's one of the ones you're tighter too.

Speaker Change: Secondarily across capital more broadly whether it's it's it's Basel III CCAR on that transparency and continuity and stability around that process and also G. SIB.

David Solomon and Denis Coleman: I think that's broadly good for the system. I think secondarily across capital more broadly, whether it's Basel III, it's CCAR, and transparency and continuity and stability around that process, and also GSIV, we're certainly over the last decade that we're supposed to be scaling based on market cap growth and economic growth. I think there's room for material tailwinds around capital. Most importantly, we hold, all of the industry holds, large buffers. As we don't have consistency and transparency around these things, any improvement at a minimum would return capital into the system if you had better transparency. We're hopeful on that. On supervision, there are headwinds and costs and activities that we've had to deploy over the last few years to respond to what I'd say was an unusually high level of supervisory activity. We see already a different tone around some of that dialogue.

Speaker Change: This was illustrated analysis camping example.

Speaker Change: And it would be helpful to understand how you're thinking about if the if the changes come through as being discussed.

Speaker Change: And we have four additional experiences that bring this to life.

Speaker Change: First.

Speaker Change: Take treasuries out of the denominator of the SLR.

Speaker Change: Seamless interoperability across products.

Certainly over the last decade that was supposed to be scaling based on market cap growth.

Speaker Change: Is that something that would be a noticeable benefit for you is that something that you think you could lean into.

Speaker Change: You can now search accounts across venmo and Paypal this.

Speaker Change: And economic growth I think there is room for material tailwind around capital, but most importantly, we hold all of the industry. All large buffers, because we don't have consistency and transparency around phase things and any improvement at a minimum would return capital onto the system.

David Solomon: We remain committed to paying our shareholders a sustainable and growing dividend. Importantly, our board recently authorized a multi-year share repurchase program of up to $40 billion, providing us increased capital management flexibility. In conclusion, our performance once again reflects the diversification and strength of our leading client franchises, which enable us to deliver for our clients across a range of market backdrops. We're confident in our ability to continue to support our clients as they navigate this dynamic operating environment. With that, we will now open up the line for questions.

This is just the beginning of what we can unlock across products.

Alex Criss: On top of that, I can actually have that loyalty. It's almost impossible for me to get a loyalty card into your wallet. Why not have it just show up into your PayPal wallet? It's activated, it's available, and it's automatic when you check out. And then from a consumer standpoint, this smart wallet that we can create, I now have wool. that I can take advantage of. So not only do I have. The loyalty and the savings that is already built in. But I also have things like rules of my cash flow. I'm in a cash crunch right now.

Speaker Change:

Speaker Change: Second we cannot underwrite and more opportunities for customers, but less effort.

Speaker Change: Yeah relatively quickly or give us a sense as to how you plan on using these <unk>.

Speaker Change: Improvements in capital as they come through thank you.

Speaker Change: Yeah. So so first of all Betsy I think you've got to look at this as a very holistic thing because there's a lot going on.

Speaker Change: Yeah, you can see venmo users receive personalized offers based on their unified financial profile.

Speaker Change: If you had better transparency. So we're hopeful on that and then on supervision there are headwinds in costs and activities, but we have to deploy over the last few years to respond to what I would say was an unusually high level of supervisory activity, we see already.

Speaker Change: A regulatory perspective in DRAM.

Speaker Change: Additionally, we can create personalized shopping experiences.

Speaker Change: Think will be a tailwind for the industry broadly and obviously it includes SLR reform to the degree. It comes that includes capital are formed in the debate Hum and include supervisory form to the degree it comes and so it's a it's a big package of things we are CET, one constrained not SLR constraint at.

But our view of the customer size, an arby's, we can enable the much in to show the right shoes and stock and the right size.

A different tone around some of that dialogue and ultimately that allows us to deploy resources in different places many of which can support investment in growth as opposed to just regulatory response. So I continue to believe even in this environment that there will be progress on this we obviously don't know how.

Operator: Thank you, ladies and gentlemen. We will now take a moment to compile the Q&A roster. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you'd like to withdraw your question, press star then two on your telephone keypad. If you're asking a question and you are on a hands-free unit or a speakerphone, we would like to ask that you use your handset when asking your question. Please limit yourself to one question and one follow-up. We'll take our first question from Glenn Schorr with Evercore.

Alex Criss: I've set up rules so that if I'm making a purchase that's over $500, I want it to automatically leverage Buy Now, Pay Later. And we can make this happen right now in our smart wallet so that by the time I go to checkout and I do tap to pay, Buy Now Pay Later is taken care of, the payments are already set up, and I'm not worried about it. All I have is my tent, I have my sleeping bag, I'm ready for my camp. This, again, is a completely different offline. And lastly, let's take it to what the future could look like.

Speaker Change: Lastly, we can improve our customer support interactions, but the veeva across products. We can credit why are customers, reaching out and in some cases reach out before they even need assistance.

David Solomon and Denis Coleman: Ultimately, that allows us to deploy resources in different places, many of which can support investment and growth as opposed to just regulatory response. I continue to believe, even in this environment, that there will be progress on this. We obviously don't know how this will unfold, but the messages I'm getting leave me optimistic that there will be progress, and that's very good for the industry as a whole.

Speaker Change: At the moment.

Speaker Change: But I do think for the system broadly.

Speaker Change: L. A relief would have a benefits treasury markets I think it's an important structural reform and certainly you've heard messages from both the fed and treasury that this is a very very high priority and so we're certainly hopeful or optimistic given the way that the messaging around that but there'll be activity on that and I think that's probably good for the system I think.

Speaker Change: Our valuable as they switch experience, thus far we know that when it comes to e-commerce.

Speaker Change: This one four but the message is I'm getting leave me optimistic that they will there will be progress and that's very good for the industry as a whole.

Speaker Change: Speed matters.

Speaker Change: We are modernizing our systems are on a journey to be plowed NATO to provide our customers and merchants, but the fastest yesterday.

Speaker Change: Okay. Thanks, Thanks, so much.

Speaker Change: Dennis one for you on our value at risk.

[Analyst 3]: Okay, thank you. Thanks so much. Denis, one for you on VAR, value at risk. This quarter was down broadly throughout the different categories, Q1Q, which I thought was interesting given the heightened volatility that we had across a variety of different markets. Can you remind us how volatility impacts VAR and how we should be thinking about VAR efficiency, which clearly went up dramatically? I just wanted to understand how to think about that on a go-forward basis. Thanks.

Speaker Change: Secondarily across capital more broadly whether it's it's it's Basel III, it's CCAR on that transparency and continuity and stability around that process.

Speaker Change: This quarter was down broadly throughout the different categories.

[Analyst]: Hi, thanks a lot. Obviously, really good trading results, but you mentioned also on the financing side how good it was. I'm curious on the amount of deleveraging that we've seen in April. I'm assuming that's pretty good for intermediation, but how do we think about that in terms of the short-term impacts on financing until we get a kind of a reload of leverage?

Speaker Change: This will be one of our most impactful modernization efforts to date.

Alex Criss: Right now, AI is actually quite incredible. If I go in and ask it, hey, what do I need for a camping trip, it will give me really good information. but very generic. and nothing that's actually... As we start to evolve and we start to bring together these LLMs, AI, merchants, and consumers, there is going to need to be a commerce platform that stitches all of this together. A platform that consumers trust with their instruments and their data that can connect to merchants, of which we already have tens of millions, and can then leverage the power of AI.

Speaker Change: Q on Q, which I thought was interesting given the heightened volatility that we had.

Speaker Change: Take a look at this map.

Speaker Change: So G SIB.

So they no matter, where you are in the world and they engage with Paypal that request travels back door systems in the U S and back again.

Speaker Change: Certainly over the last decade that was supposed to be scaling based on market cap growth.

Speaker Change: Across a variety of different markets.

Speaker Change: And economic growth I think theres room for material tailwind around capital, but most importantly, we hold all of the industry all large buffers.

Speaker Change: Can you remind us how volatility impacts are and how we should be thinking about them.

Speaker Change: This is probably most accurately in our furthest reagents.

Speaker Change: Our efficiency, which clearly went up dramatically and just wanted to understand.

Speaker Change: But our new Geo based strategy.

Speaker Change: We don't have consistency and transparency around these things and any improvement at a minimum would return capital onto the system if.

Speaker Change: We have moved our edge closer to the customer.

Speaker Change: How to think about that on a go forward basis. Thanks.

Speaker Change: Will Moore absence services.

Speaker Change: Sure. Thanks. Thanks, that's a good good questions, obviously, there's multiple components to bear across the various asset classes and a diversification effect as well over the course of the first quarter for our average daily bar, we had reduced exposures offset by elevated levels of volatility.

David Solomon: Good morning, Glen. It's Denis. I'll take that. I think when you think about the components of our overall financing, the reality is we continue to see significant demand across the client base for both our fixed and equity financing. I think what you're referencing, given the change in asset prices and market activity, is we did have a level of record average prime balances over the course of the first quarter. It's reasonable to expect that some of those balances come down as asset prices reset. You'll continue to support clients with their financing needs, but perhaps off of a lower base, given the adjustment in market prices.

Speaker Change: This journey unlocks our ability to scan as Paypal draws an area ripe for innovation.

Speaker Change: If you had better transparency. So we're hopeful on that and then on supervision there are headwinds in costs and activities, but we have to deploy over the last few years to respond to what I'd say it was an unusually high level of supervisory activity, we see already.

David Solomon and Denis Coleman: Sure. Thanks, Betsy. Good question. Obviously, there's multiple components to VAR across the various asset classes and then a diversification effect as well. Over the course of the first quarter for our average daily VAR, we had reduced exposures offset by elevated levels of volatility. You have both factors across asset classes that factor into the calculation. To your question, increased or persistent levels of volatility could have upward pressure on a VAR measure.

Alex Criss: What could this look like? Again, I go on my camping trip and I type it in, how do we enable these LLMs to start to gather the profile data that PayPal already has on our How do we start to now make it so that we're able to let the LLM bring up the right products at the right time with buy now opportunities, because they already know exactly what the PayPal instruments are? updating your shopper profile, enabling you to be ready to check out. And when you bring all of this together, whether it's in-store, whether it's online, or whether it's agendic.

Speaker Change: Tools and flexibility needed to rapidly build and deploy and the best performance No matter, where you are in the world.

Speaker Change: A different tone around some of that dialogue and ultimately that allows us to deploy resources in different places many of which can support investment in growth as opposed to just regulatory response. So I continue to believe even in this environment that there will be progress on this we obviously don't know how.

Speaker Change: So you obviously have both factors across asset classes that factor into the calculation, but to your question you know, obviously increased or persistent levels of volatility could have upward pressure on our bar measure.

Speaker Change: Historically, our journey to the cloud, what's the lift and shift of our current architecture from our data centers to the cloud.

Speaker Change: So fully realize the potential of cloud.

Speaker Change: We must modernize our applications and processes to be plowed NATO.

Speaker Change: Thank you we'll take our next question from Mike Mayo with Wells Fargo Securities.

[Analyst]: I mean, is that material in terms of the impact when you're at record PB balances and then you have the amount of deleveraging that we saw in early April? If it stays at this level, is that a major contributor to the growth in financing in the quarter?

Speaker Change: Over the past 18 months Braintree has moved completely coordinate though we have seen a 20% reductions and latency of services.

Speaker Change: This one four but the message is I'm getting leave me optimistic that they will there will be progress and that's very good for the industry as a whole.

Operator: Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities.

Speaker Change: Hi.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Okay. Thanks, so much.

[Analyst 4]: Hi. I guess it's good. You can have record buybacks and the CET1 ratio doesn't change much. On the other hand, I guess you bought that stock quite a bit higher at the current price. I know you're not market timing this or anything. I'm guessing that reflects your confidence in the amount of excess capital you'll have with the $40 billion new share buyback. I was just wondering if you could put a little more meat on the bones of the reasoning behind the $40 billion buyback. Specifically, this is a Reg FD call, so you can give material information. How much capital do you think could be freed up once you dispose of your principal investments? You've chopped a lot of wood there. I think that's $8.8 billion. After you, if and when you dispose of your credit cards. Thank you.

Speaker Change: Yes.

Speaker Change: You can have record buybacks in the CET one ratio doesn't change much.

Speaker Change: And total three times faster time to market.

Speaker Change: Tenants one for you on var value at risk.

Alex Criss: We now have an incredible experience. that has changed the game for commerce brought consumers and merchants together in a completely different way. This is just a small glimpse into the type of commerce API and commerce experience that we're starting. So when you pull back, this is. Strategy that we're looking at. How do we build a commerce platform powered by an API that our merchants have access to? that enable our consumers to pay everywhere, pay the way they want. and ensure that they're getting the most money and the most value, the most rewards and the most loyalty with every.

Speaker Change: I've ever had I guess, you bought back stock quite a bit higher at the current price.

Speaker Change: This quarter was down broadly throughout the different categories.

Speaker Change: Brenda to life, we can now deliver at concept to production in less than 30 days.

Speaker Change: And I know youre not market timing this or anything so.

Speaker Change: Q on Q, which I thought was interesting given the heightened volatility that we had.

David Solomon: I would not characterize it as material or major. You have a number of things happening at the same time. You have deleveraging activity on behalf of clients, and you have changes in their overall level of balances, but you also have lots of different types of activity as clients reposition their portfolios and make sure that they adjust for their evolving views on the outlook.

Speaker Change: This used to take three to four months.

Speaker Change: Im guessing that reflects your confidence in the amount of excess capital you'll have with the $40 billion new share buyback. So I was just wondering if you could put a little more meat on the bones of the reasoning behind the $40 billion buyback and specifically that's a reg FD costs, you'll give material information how much capital do you think could be.

Speaker Change: That's a really big deal.

Speaker Change: Across a variety of different markets.

Speaker Change: As we unify out a platform.

Can you remind us how volatility impacts are and how we should be thinking about them.

Speaker Change: And modernize our infrastructure.

Speaker Change: Also standardizing on one unified development process.

Speaker Change: Our efficiency, which clearly went up dramatically and just wanted to understand.

Speaker Change: Over the past six months, we have streamlined and complex development system to enable faster releases and accelerated speed to market.

Speaker Change: How to think about that on a go forward basis. Thanks.

Operator: Thank you. We'll take our next question from Ibrahim Punawala with Bank of America.

Speaker Change: Freed up once you dispose of your your private investments you've chopped a lot of weather I think that's $8 8 billion and after you if and when you dispose of your credit card. Thank you.

Speaker Change: Sure. Thanks. Thanks, that's a good question, obviously, there's multiple components to var across the various asset classes and a diversification effect as well over the course of the first quarter for our average daily bar, we had reduced exposures offset by elevated levels of volatility.

Speaker Change: They are top obligations have moved through this process and here are the results we are seeing.

[Analyst]: Hey, good morning. I wanted to follow up on Glen's question. I guess, Denis, I think the view is the world in markets changed a little bit come April 2nd, and the risk from an investor standpoint is activity falling off the cliff. It's negative for financing. It could be negative for trading. I'm not sure if you have data in terms of the 10 days for April. If you can give us, if you can contextualize just how negative the last 10 days have been following a very strong Q1 and how we should think about just where clients are as we go back to debating good volatility versus bad volatility.

Alex Criss: And from a merchant perspective, we want to not only deliver an incredible payments But we want to do what's most important to them, which is help them drive the next customer, the right in the right ROI. and then ensure that they're operating as smart. And we want to do this online, we want to do it in-store, and we want to do it for the future in an agenda. As we do this, and as we move into this world, we open up additional addressable markets. We obviously have played very well in the online payment space, but are still scratching the surface of the opportunity, but we are now moving into offline commerce, and we are moving into ads.

Speaker Change: 50% improvement in lead time time from concept to delivery.

Speaker Change: 40% increase in speed of build time.

Speaker Change: Okay I'll start Dennis can jump in.

Speaker Change: This has enabled our checkout app to move from weekly releases, two daily up to multiple times a day in.

David Solomon and Denis Coleman: Okay, I'll start. Denis can jump in. I appreciate the question. I hate to go back to Denis's message, but I think, and you and I have spoken about this over the years, our number one priority is to deploy capital in the business where we can get marginal returns. We've done that consistently over the last five years. We've grown our business. We've deployed capital. We've also been very clear that if we don't see places to deploy that capital and we have excess capital, we're going to consistently return it, including sustained growth of the dividend where we've made a lot of meaningful progress. We've grown the earnings of the firm materially, and that's generating a lot of capital. As Denis highlighted earlier, if we don't have a place to go in the business immediately, we have to return it. We can't market time.

Speaker Change: I hate Mike I appreciate the question I hate I hate to go back to the dentist is message, but I think.

Speaker Change: So you obviously have both factors across asset classes that factor into the calculation, but to your question you know, obviously increased or persistent levels of volatility could have upward pressure on our bar measure.

Speaker Change: And you and I have spoken about this over the years.

Speaker Change: In the next few months all developers will be on the same process.

Speaker Change: Our number one priority is to deploy capital in the business, where we can get marginal returns.

Speaker Change: But no development process is complete without AI.

Speaker Change: We've done that consistently over the last five years, we've grown our business we've deployed capital, but we've also been very clear that if we don't see places to deploy that capital and we have excess capital we're going to consistently return it including sustained growth in the dividend, where we've made a lot of meaningful progress.

Speaker Change: As we have streamlined our process, we have taken the opportunity to add a agents. These agents are developers create unit test cases in minutes it used to take two to three spreads.

Mike Mayo: Thank you we'll take our next question from Mike Mayo with Wells Fargo Securities.

Speaker Change: Hi.

Speaker Change:

Speaker Change: Yeah.

David Solomon: Yeah, I'm going to start. Denis can jump in, but I'd say a couple of things. First of all, obviously, no one can argue that April 2nd, a handful of things happened that shifted perspectives, but I would say there were things going on before April 2nd that were shifting perspectives that also led to more activity. There's no question, and we've talked about this publicly a bunch, that we started to see growth showing and slowing in late January and early February. We obviously saw significant moves in equity markets as people positioned for a different kind of trade policy during March, and we saw significant moves in the March period, which actually led to higher activity for us in a variety of ways. We're early in the quarter, but so far the business is performing very well, and clients are very active.

Speaker Change: I guess, it's good.

Speaker Change: You can have record buybacks in the CET one ratio doesn't change much.

Speaker Change: Growing the earnings of the firm materially and Thats generating a lot of capital and as Dennis highlighted earlier, if we don't have a place to go into business immediately we have to return it we can't market time, and so we will return it consistently.

Speaker Change: <unk> debt obligations to Java, 17, and five hours.

I've never had I guess, you bought back stock quite a bit higher at the current price.

Alex Criss: overall marketing budget. credit, and continuing to expand the growth levers that we have as an organization to delight our customers. And we're well on our journey. As you will see for the rest of the day, we've hired an incredible team. We've declared this mission. We are starting to build the platforms, which you will see come to life today. And we have built and brought in tremendous talent over the last year in AI and technology to ensure that we can deliver on that. And we are moving very quickly. 24, as I said, was a year that we needed to bring the company back into profitable growth.

Speaker Change: <unk> 30 hours.

Speaker Change: And reduce time spent on quoting pass by 10% to 30% without a power codexis tools.

Speaker Change: And I know youre not market tightening this or anything so.

Speaker Change: I'm guessing that reflects your confidence in the amount of excess capital you'll have with the $40 billion new share buyback. So I was just wondering if you could put a little more meat on the balance of the reasoning behind the $40 billion buyback and specifically that's a reg FD costs, you can give material information how much capital do you think could be.

Speaker Change: Next stop will also use a agents the update or C plus plus legacy code.

Speaker Change: We are confident that we're going to continue to have a big diverse strong earning business. We are confident that we will have capital available to deploy when there are opportunities, but if we don't we will continue to actively return it to shareholders will be some quarters, where the stock price is higher some quarters, where the stock price is lower but we're going to stick to that capital return philosophy.

David Solomon and Denis Coleman: We will return it consistently. We are confident that we're going to continue to have a big, diverse, strong earning business. We are confident that we will have capital available to deploy when there are opportunities. If we don't, we will continue to actively return it to shareholders. There'll be some quarters where the stock price is higher, some quarters where the stock price is lower. We're going to stick to that capital return philosophy. I think it serves us very, very well. I think we've proven over a long period of time, certainly over the 26 years that we've been public, that we are very good stewards of capital. If we can't deploy it in the business for incremental returns, we're going to return it and get it back.

Speaker Change: We are undergoing a battle of transformation internally without Paypal employees.

Speaker Change: This year, we are unleashing the power of AI tools, but every employee this is Eva Paypal safe secure encouraged Gen. AI assistant currently rolling out to all Paypal employees.

Speaker Change: Freed up once you dispose of your your private investments you've chopped a lot of weather I think that's $8 8 billion and after you if and when you dispose of your credit card. Thank you.

Speaker Change: I think it served us very very well I think we've proven over a long period of time certainly over the 26 years that we've been public that we are very good stewards of capital we can't deploy it in the business for incremental returns, we're going to return it and get it back.

Alex Criss: But as we look into 25 and beyond, we are realizing our commerce vision in the So when you hit the total key, what does this all look like? Well, we've committed from guidance to grow greater than 5% in transaction margin in 25. As we look out into 27, we see high single digit growth for transaction margin. And as we think about all the levers for growth that we have into the future, and this transformation, into a commerce platform. We believe and have our ambition that we will deliver double digit transaction margin growth into the future.

Speaker Change: He is connected to internal Paypal systems, combining the best of Gen AI with the data and tools in place need yes.

David Solomon: I know there is a higher level of uncertainty, but at the same point, clients are active, people are shifting positions, and we still see significant activity levels. I mean, Denis, do you want to add to that at all? I think that captures the sentiment and where you're coming from, Ibrahim. We obviously have a diversified set of business activities, many of which work well together, some of which mitigate each other. I think the point is, given all the changes in the market and outlooks, our clients have been very active, and all the investments that we've made in our franchise with our clients, all the resources we deploy to them and on their behalf, has put us in a position to be active with them.

Speaker Change: Okay I'll start Dennis can jump in I mean.

Mike Mayo: I hate Mike I appreciate the question I hate I hate to go back to the dentist is message, but I think.

Speaker Change: Yes. One example of how we are leveraging AI internally at Paypal.

Speaker Change: I understand that's going to add to that.

[Analyst 4]: Was Denis Coleman going to add to that?

Speaker Change: And you and I have spoken about this over the years.

Speaker Change: You don't have to do if you don't have anything to add but you can do you have any follow up question Mike.

Speaker Change: Good day.

Speaker Change: Our number one priority is to deploy capital in the business, where we can get marginal returns.

Speaker Change: Manually handles thousands of compliance cases annually.

David Solomon and Denis Coleman: You don't have to if you don't have anything to add, but you can. Do you have any follow-up question, Mike?

Speaker Change: Well, it's just a specific amount of capital that could be freed up.

Speaker Change: Analyzing the interactions between just two accounts and taken English to Gatwick base.

Speaker Change: We've done that consistently over the last five years, we've grown our business we've deployed capital, but we've also been very clear that if we don't see places to deploy that capital and we have excess capital we're going to consistently return it including sustained growth of the dividend, where we've made a lot of meaningful progress we've grown the earnings of the firm materially and that's generating a lot of cash.

[Analyst 4]: It's just the specific amount of capital that could be freed up if and when you dispose of your principal investments and your credit cards. It seems like that could be a pretty big number.

Speaker Change: When you dispose of your private investments in your credit cards or it seems like that could be a pretty big number.

Speaker Change: But AI, we can now analyze patents filed counterparty survey in minutes we.

Speaker Change: Oh, sorry, good morning, Mike I didn't I didn't I didn't get to that yeah, I didn't get to that benefit certainly not comment on that sure. So.

Speaker Change: We will in plans that are beyond human detection.

David Solomon and Denis Coleman: Sorry, Mike. I didn't get to that. Denis can certainly make comment on that.

Alex Criss: and deliver it responsibly with 20% plus non-gap. So this is our. Vision. This is what we look at as we look into the future. We are maniacally focused. And what you will hear throughout the rest of the day is our strategic imperatives that I laid out at our last earnings call are where our teams are focused and executing and they are all in line with the vision that I just laid out. We will win checkout. We will scale our Omni experience. We will grow Venmo. and we will accelerate our SMB penalty. And as we do all of that, we will get to a place where we will build on the foundation that we've created as an organization, the largest two sided open platform, we will ensure that we now move into these new addressable markets with velocity with innovation that delights our customers.

Speaker Change: From days to minutes.

Speaker Change: If you look at the at the HCI portfolio, we have approximately approximately $4 billion of attributed equity, maybe a tad underneath that and.

Speaker Change: These are examples of all AI is improving productivity across the entire organization.

[Analyst 4]: Sure. If you look at the HPI portfolio, we have approximately $4 billion of attributed equity, maybe a tad underneath that, and a reasonably similar amount across the card portfolio. That gives you some context for the aggregate magnitude.

And as Dennis highlighted earlier, if we don't have a place to go into business immediately we have to return it we can't market time, and so we'll return it consistently.

[Analyst]: Got it. If I could follow up, Denis, you mentioned executing on the three-year efficiency plan and the pyramid structure. Just talk to us. I think there were some headlines last month around, I guess, regular sort of merit-based review of the headcount, like what we are doing on the expense side as we think about the 60% efficiency target and maybe some resiliency to earnings on the cost side that we could expect. Thanks.

Speaker Change: Now, let's talk about what AI can do for our customers.

Speaker Change: In a reasonably similar amount across our portfolio.

Speaker Change: We are confident that we're going to continue to have a big diverse strong earning business. We are confident that we will have capital available to deploy when there are opportunities, but if we don't we will continue to actively return it to shareholders will be some quarters, where the stock price is higher some quarters, where the stock price is lower but we're going to stick to that capital return philosophy.

Speaker Change: It gives you some some some context for the aggregate magnitude.

Speaker Change: As you heard from Alex we have a strong customer back Michel at Paypal, we often ask ourselves what pain points out we are customer facing today that the world of AI can solve.

Speaker Change: Thank you we'll take our next question from Stephen <unk> with Wolfe Research.

Operator: Thank you. We'll take our next question from Steven Chuback with Wolfe Research.

Stephen <unk>: Hi, Good morning, David and Dennis Thanks for taking my questions.

Speaker Change: Consumer spend a lot of time optimizing the cashback under watch.

[Analyst 5]: Hi, good morning, David and Denis. Thanks for taking my questions. I had a two-parter on alternatives, David. I was hoping you could speak to a bigger picture, just the outlook for sponsor activity across the complex, given some of the headwinds to realization activity, as well as the heightened macro uncertainty you cited. Just drilling down to third-party alts disclosure, what contributed to that fee rate contraction on the credit side, given the step-down was meaningful? I know that's a high-priority growth area for you and the management team.

Speaker Change: Had a two parter on alternatives.

David Solomon: Sure. Thanks, Ibrahim. I appreciate the question. Obviously, we went through on our call in January this three-year efficiency program, which is something we're very committed to, and we're underway in terms of the execution thereunder. A lot of the focus of that is to free up capacity for us to make greater investments in technology. That program had aspects, as you referenced, that relate to pyramid structure. It also had management of non-compensation spend. We are looking at and managing all those line items very carefully. To your question on pyramid at headcount in particular, our expectation is that we will undergo our regular annual performance management process. I would expect that we'll record a severance charge in the second quarter of approximately $150 million in connection with a number of those actions.

Speaker Change: And I think it served us very very well I think we've proven over a long period of time certainly over the 26 years that we've been public that we are very good stewards of capital we can't deploy it in the business for incremental returns, we're going to return it get it back.

Speaker Change: But with so many systems do remember that often unsuccessful.

Speaker Change: And I was hoping you could speak to bigger picture to see outlook for sponsor activity across the complex given some of the headwinds to realization activity as well as the heightened macro uncertainty you sited then just drilling down to a third party also disclosure what contributed to that fee rate contraction on the credit side, just given the step down was meaning.

Speaker Change: So I guess des.

Speaker Change: Paul utilized to AI to collect all of the credit cards dumps and conditions and analyze the optimal kind of adoption, but each purchase category.

Alex Criss: We will do it online, we will do it in store, and we will do it in an agentic world, and we will deliver incredible results as we move forward, not only in 25, but beyond. So with that, I'd love to bring the team up and ensure that they are able to expose to you all the details and the how of this vision.

Speaker Change: I understand it's going to add to that.

Speaker Change: But those are modeling that we put into the test and it is what we found.

Speaker Change: Paul and I know Thats, a high priority growth area for you and the management team.

You don't have to do if you don't have anything to add but you can do you have any follow up question Mike.

Speaker Change: When we ran 10% of the eligible monthly transactions through the model it revealed that sharpest, what I've said.

Mike Mayo: Well, it's just the specific.

Speaker Change: Well first of all I'll.

Speaker Change: I'll comment on.

Speaker Change: Amount of capital that could be freed up.

Speaker Change: On the macro Steven.

David Solomon and Denis Coleman: First, I'll comment on the macro, Steven. The size of the sponsor community, the amount of capital that's deployed, the assets that they hold and they control, it's quite significant. We've been talking about this for the last few quarters. There's no question there's been a pickup in activity and monetization because there's enormous pressure from the LP community to increase DPI and start to bring this capital back. I think the macro environment will further put more pressure. That'll be balanced by the fact that in the macro environment, some of the valuation expectations and realizations have to come down. I can't time it on a quarter-to-quarter basis, but the way I describe it, this is an enormous pent-up backlog that will come through the pipe at some point in time. There's no firm better positioned to capitalize on that than Goldman Sachs.

Speaker Change: $10 million.

Speaker Change: If and when you dispose of your private investments and your credit cards or it seems like that could be a pretty big number Oh, yeah, Oh yeah.

Speaker Change: They let as a best friend adoption or the purchase.

Speaker Change: Size of the sponsor community the amount of capital deployed the assets that they hold them they control.

Srinivasan: And we'll start with our Chief Technology Officer, Srinivasan. Thank you, Alex. What an exciting wish. As Alex shared, we are on a journey to become the go-to platform for shopping everywhere. As we accelerate towards this vision, one thing is clear. Technology is key to unlocking the exciting Today, I'll walk you through four key investments in AI and technology that will deliver powerful experiences for our customers and merchants. It starts with our scale. We are one of the largest, most powerful data sets in the world. We have 430 million consumers and merchants across 200 markets. We process 1.7 trillion total payment volume every year.

Speaker Change: You can imagine that for all of our transactions the amount of money, we could be saving for our consumers is massive.

Speaker Change: It's quite significant we've been talking about this for you know for the last few quarters.

Mike Mayo: Good morning, Mike.

Mike Mayo: I didn't get to that yeah, I didn't get to that dentist can certainly comment on that sure.

Speaker Change: Theres no question Theres been a pickup in activity of monetization because there's enormous pressure from the LP community to increase DPI and start to bring this capital back I think the macro environment will further put more pressure that'll be balanced by the fact that in the macro environment some of the valuation.

Mike Mayo: Sure so.

Speaker Change: This is a great example of dynamic personalized commerce everywhere.

Mike Mayo: Look at the at the HPA portfolio, we have approximately approximately $4 billion of attributed equity maybe a tad underneath that.

Operator: Thank you. We'll take our next question from Christian Blue with Autonomous Research.

Speaker Change: And it's just the beginning of our wallach getting smarter with AI.

Mike Mayo: And a reasonably similar amount across our portfolio.

[Analyst]: Good morning, David and Denis. Maybe just staying on the topic of the markets businesses, I wanted to talk about the competitive landscape. You know, you guys did very well in the quarter on an absolute basis, but it did lag peers in the quarter. I appreciate it's just one quarter. You do have a track record of share gains, but just curious what you're seeing currently on the competitive landscape in markets.

Speaker Change: We also ask ourselves out of new and emerging AI. So I'd, just say I didn't take AI delight our customers.

Mike Mayo: It gives you some some some context for the aggregate.

Speaker Change: Expectations of realizations have to come down.

Mike Mayo: <unk>.

Speaker Change: I can't time, it on a quarter to quarter basis, but the way I would describe it this is an enormous task.

Speaker Change: Thank you we'll take our next question from Stephen <unk> with Wolfe Research.

Speaker Change: People are increasingly using gen.

Speaker Change: <unk> that will come through the pipe at some point in time.

Jen AI are shopping with such.

Speaker Change: Oliver today, there is no option the makeup by chase.

Stephen: Hi, Good morning, David and Dennis Thanks for taking my questions.

Speaker Change: And there is no firm better positioned to capitalize on that.

Speaker Change: We have already started development on an agent, but then the Paypal app.

Speaker Change: Goldman Sachs.

Stephen: I had a two parter on alternatives, David I was hoping you could speak to bigger picture just the outlook for sponsor activity across the complex given some of the headwinds to realization activity as well as the heightened macro uncertainty you cited and then just drilling down to a third party also disclosure what contributed.

Speaker Change: How that unfolds in the coming quarters will be activity.

Speaker Change: Customers can prompt the agent the research what they need for a campaign trap roster to reorder at recent budgets.

David Solomon and Denis Coleman: How that unfolds in the coming quarters will be activity. I think more certainty with respect to the policy landscape will be needed to really accelerate that. Steven, as you talk about fee rates coming through on the alternatives side, we have a number of different ways of feeding into our alternatives business, and they bring with them different levels of fees. To take two ends of the spectrum, as we've had some success growing our OCIO activities, a lot of those portfolios will include some component of alternatives. The fees in connection with that are a lot lower. We obviously have our own flagship funds that we launched. We gave some color on the types of asset classes that we're expecting to execute on over the near term. That brings a much higher level of fees.

Speaker Change: I think more certainty with respect to the policy landscape will be needed to really accelerate that.

David Solomon: Yeah, I think, Christian, we feel incredibly strongly about the way our business is positioned and the way it's performing. The comment you referenced, obviously, the way you look at these things, to go back and look at the first quarter last year, we had an extraordinary first quarter where we massively outperformed. We've got a tougher comp, but the strength of our position, we feel good about. The client feedback we get is extraordinary, particularly at times like this. I think we'll continue to execute very well along the continuous pattern that we've executed on as a leading provider in these activities. It feels that way.

Stephen <unk>: And Stephen as you talk about.

Speaker Change: But paypass profile and identity context, it can seamlessly place your auto.

Stephen <unk>: Rates coming through on the <unk> side.

Stephen <unk>: You'll have a number of different ways of feeding into our <unk> business and they bring with them different level of fees. So take two ends of the spectrum as.

Srinivasan: That's approximately one-fourth of the world's commerce. the equivalent of GDP of Australia every year. We also track 20 trillion customer interaction. This has created a valuable data vault that is more than 500 petabytes large, that's 500 petabytes. But it's not the quantity of our data that sets us apart. It's the depth and breadth of our data that no other company can rival. Data is crucial for much. in Today's Fragmented Shopping Environment. But they are limited to activity solely within their own brand, obscuring a complete view of customer behavior. PayPal's vast and unmatched two-sided network creates a rich tapestry of insights across millions of merchants.

Speaker Change: Likewise, our strategic partners good leverage Paypal agent go augment or context and to complete the purchase.

That fee rate contraction on the credit side, just given the step down was meaningful and I know thats a high priority growth area for you and the management team.

Stephen <unk>: We've had some success growing our OCI O activities a lot of those portfolios will include some some component of all and the fees in connection with that are a lot lower we obviously have sort of our own flagship funds. We launch we gave some color on the types of asset classes that we're expecting.

Speaker Change: To sum it up.

Stephen: Well first of all.

Speaker Change: One platform will standardize on increased out of velocity, a single complete picture of our customer profile followers to personalize their experiences that only paper can provide.

Stephen: I'll comment on.

Stephen: On the macro Steven.

Stephen: The size of the sponsor community amount of capital deployed the assets that they hold them they control it's quite significant.

Speaker Change: One process improves out productivity.

Stephen <unk>: Executing on over the near term that brings much higher level of fees. So.

Stephen: Talking about this for you know for the last few quarters.

[Analyst]: Okay, thank you. On the buyback, impressive that you guys stepped it up fairly meaningfully in the quarter. What was the catalyst that drove the step up in the buyback? Was it the share price level, just excess capital? I'm just trying to understand if this level of buyback is sustainable going forward.

Speaker Change: And what a nice to infrastructure.

Stephen: Theres no question Theres been a pickup in activity of monetization because there's enormous pressure from the LP community to increase DPI and start to bring this capital back I think the macro environment will further put more pressure that'll be balanced by the fact that in the macro environment. Some of the valuation expectations of realizations has to come.

Stephen <unk>: Overall, you see a 61 basis points disclosure, it's within a couple basis points of recent periods, but with the with the flagship launches I would expect that would improve over time.

Speaker Change: Increases performance.

David Solomon and Denis Coleman: Overall, you see a 61 basis point disclosure, which is a couple of basis points of recent periods. With the flagship launches, I'd expect that would improve over time.

And lastly, AI.

Speaker Change: The accelerant that activating our global workforce, and bringing innovation back because I caught off Paypal.

Speaker Change: No that's really helpful color and just for a quick follow up I was hoping to get some color on how youre thinking about potential risk to the <unk>.

Speaker Change: Look this is why I came to Paypal.

[Analyst 5]: That's really helpful color. Just for a quick follow-up, I was hoping to get some color on how you're thinking about potential risk to the deal backlog. Certainly encouraging to see a sequential increase in the fee backlog. As we think about some of the risks, whether it's international and cross-border or specific sectors that are particularly challenged, how you're framing or potentially handicapping the risk of some of these deals coming out of the backlog.

Speaker Change: My career Ive seen our technology can transform the lives of consumers and merchants.

David Solomon: Sure. Thanks, Christian. Obviously, we did note that the level of buybacks for us in the first quarter was a record. I think our philosophy with respect to capital deployment remains very consistent. First and foremost, we're making available the capital to support the client activities that come into the firm, obviously focused on a sustainably growing dividend. We calibrate our share buybacks relative to how we want to manage the firm's overall capital position in light of the environment. As you've seen us over the last couple of years take a number of strategic measures to reduce certain balance sheet exposures, ultimately, we have to get the capital out of the system. That'll help our long-term return profile. We had a lot of earnings generation.

Stephen: Down.

Stephen: I can't time, it on a quarter to quarter basis, but the way I would describe it this is an enormous.

<unk> backlog, certainly encouraging to see a sequential increase in the fee backlog, but as we think about some of the risk whether it's international and cross border or specific sectors that were particularly challenged.

Srinivasan: Unlocking a holistic view of the customer well beyond a merchant's typical view. This level of intelligence helps the merchant personalize that delights our customers. with rewarding shopping experiences, creating a powerful flywheel effect. And we offer this across not one merchant, but tens of millions. However, we face a significant challenge. Today, our data is scattered across disparate This slows us down. Unifying our technology is my number one priority. I'm proud to share, we have already started with four initiatives. OnePlatform. one profile, one process, all powered by AI. Today, I'll walk you through the initiatives and the positive results we are seeing.

Speaker Change: But the impact has always been limited to just one merchant.

Backlog that will come through the pipe at some point in time.

Speaker Change: At Paypal, we are outdoor English nice commerce for millions.

Stephen: There is no firm better positioned to capitalize on that.

Speaker Change: Golden Sachs.

Speaker Change: How you're framing or country handicapping the risk of some of these deals coming out of the backlog.

Speaker Change: And Paypal as their technology.

Speaker Change: How that unfolds in the coming quarters will be activity.

Speaker Change: Data security and customer trust to get it done.

Speaker Change: But I think more certainty with respect to the policy landscape will be needed to really accelerate that.

Speaker Change: And like I said, we are just getting started.

Speaker Change: Yeah. So I mean, there are a couple of things Stephen that I'd say first of all this is all of a counterintuitive, but when the landscape changes companies have to rethink their strategic positioning and interestingly when you look at dialogue dialogue dark presale now obviously increased dialogue take a while to turn into deals and play through.

David Solomon and Denis Coleman: Yeah. There are a couple of things, Steven, that I'd say. First of all, this is a little bit counterintuitive, but when the landscape changes, companies have to rethink their strategic positioning. Interestingly, when you look at dialogues, dialogues are increasing. Obviously, increased dialogues take a while to turn into deals and play through. Denis was quite clear. We had a notable increase in our backlog. Our backlog was up a lot during the quarter. Obviously, revenues lag the period of deal announcements. The backlog and the deal announcements are reflective of the second half of last year and the early part of this year. In a period of uncertainty, things will slow down. Again, it's a big, complex world. There's a lot of change going on. Dialogues are up.

Stephen: And Stephen as you talk about.

Speaker Change: Thank you, let me pass it to Diego.

Speaker Change: Fee rates coming through on the Alt side.

Diego: [noise]. Thank you Stephanie and good morning, everyone. It's great to be here with you today to share our consumer strategy, but before I get into our plans.

A number of different ways of feeding into our <unk> business.

Speaker Change: Bring with them different level of fees. So let's take two ends of the spectrum.

Speaker Change: We've had some success growing our CIO activities a lot of those portfolios will include some some component of alts and the fees in connection with that are a lot lower we obviously have sort of our own flagship funds. We launch we gave some color on the types of asset classes that we're expecting.

Speaker Change: <unk> Dennis was quite clear we had a notable increase in our backlog our backlog was up a lot during the quarter.

David Solomon: We took the opportunity to buy back some of our stock while ensuring that we still entered the second quarter with a level of capital where we are operating above the wide end of our target operating range to make sure we're in a position in this quarter to support client activity and continue to continue first and foremost to support clients, but then also continue to return capital to shareholders.

Diego: Really wanted to touch on four important points that you may not know about the consumer business.

Obviously revenues lag the period of deal announcements so the backlog in the deal announcements are reflective of the second half of last year and the early part of this year and a period of uncertainty things will slow down.

Diego: First of all.

Diego: We have two powerful and trusted brands and little companies, they're lucky if they have one well we have to.

Speaker Change: Execute on over the near term that bring us much higher level of fees. So.

Srinivasan: Let's start with OnePlot. As we have grown over the years and acquired new products, Each product ran on an independent platform for speed and agility. They say, if you want to go fast, go alone. If you want to go far, go together. Our past served us well for years, but as we accelerate towards our transformation, it's slowing us down in two critical areas. 1. Our Velocity Today, similar capabilities are individually built and maintained across each product, resulting in a drain on resources. to our customers' experience. Today, if you sign up for new PayPal products, you'll find varying on-body processes, features, and preferences.

Diego: And this really sets us apart Paypal and venmo automotive the most trusted and valued brands globally.

Speaker Change: Overall, you see a 61 basis points disclosure, it's within a couple of basis points of recent periods, but with the with the flagship launches I would expect that would improve over time.

Speaker Change: But again, the big complex World.

Speaker Change: There's a lot of change going on dialogues are up I do think for a period of time there'll be some uncertainty around how certain things that were close proceed forward.

Diego: Second.

Operator: Thank you. We'll take our next question from Betsy Graseck with Morgan Stanley.

Diego: We had this before we are a global leader, we have over 430 million customer accounts across more than 200 markets worldwide.

David Solomon and Denis Coleman: I do think for a period of time, there'll be some uncertainty around how certain things that were close proceed forward. I would expect a significant amount of M&A activity through the rest of the year. Obviously, if the landscape got more constrained, there's a risk of it slowing. We're continuing to be out with clients, doing the things that we do. I don't see anything at the moment that leads me to believe that it's a fundamental shift in that activity.

Speaker Change: No that's really helpful color and just for a quick follow up I was hoping to get some color on how youre thinking about potential risk deal backlog certainly encouraging to see a sequential increase in the fee backlog.

Speaker Change: But I would expect a significant amount of M&A activity through the rest of the year, but obviously, if the landscape up more constrained theres a risk of it slowing.

[Analyst]: Hi, good morning. Can you hear me okay?

Diego: Here's the thing nearly half.

David Solomon: Morning, Betsy.

[Analyst]: Hello?

David Solomon: Yep, good morning, Betsy.

[Analyst]: Hi. All right, great.

Diego: And outside of the U S.

David Solomon: Good morning, Betsy.

Speaker Change: But we're continuing to be out with clients doing the things that we do.

[Analyst]: Thank you. On the capital question, David, earlier in the prepared remarks, you were talking about the regulatory changes that are being anticipated. The question I have for you is on the SLR ratio. I believe it's one of the ones you're tighter to. It would be helpful to understand how you're thinking about if the changes come through as being discussed, take treasuries out of the denominator of the SLR. Is that something that would be a noticeable benefit for you? Is that something that you think you could lean into relatively quickly or give us a sense as to how you plan on using these improvements in capital as they come through? Thank you.

Diego: Third we have the largest installed base more than three times the size of our next largest competitor and what's very important is that we are platform agnostic.

Speaker Change: We think about some of the risk, whether it's international and cross border or specific sectors that are particularly challenged.

Speaker Change: See anything at the moment that leads me to believe that it is a fundamental shift.

Speaker Change: How you're framing or country handicapping the risk of some of these deals coming out of the backlog.

Speaker Change: And that in that activity.

Diego: And you know this very well this is critical because the next generation of customers really engaged through the apps you know like they say in real estate. It's location location location in our case is ops ops ops.

Speaker Change: Thank you we'll take our next question from Devin Ryan with citizens.

Speaker Change: Yeah. So I mean, there are couple of things Stephen that I'd say first of all those little bit counterintuitive, but when the landscape changes.

Operator: Thank you. We'll take our next question from Devin Ryan with Citizens.

Speaker Change: Great. Good morning, David Good morning, Dennis.

Srinivasan: Our NotStar is one platform, a common chest. that we orchestrate behind the scenes unseen by the consumer. When our core capabilities move up to the chassis, we can build once and use for all. This allows us to bring best of breed services to market faster for every customer, no matter which product they are using. Likewise, with PayPal open, merchants can access the full PayPal ecosystem, regardless of which integration they choose. Today, PayPal and Zoom are unified, making it possible to send foreign remittances through the PayPal app. No Zoom logging required. Zettel is targeted for the first half of this year, followed by Venmo, Braintree, and PayPal Complete Payments.

Speaker Change: Yeah.

[Analyst 6]: Great. Good morning, David. Good morning, Denis. I want to continue the conversation on the sponsors. On the sponsors, obviously, on the Asset & Wealth Management side of the business, fundraising for alternatives has been terrific. As you guys pointed out, LPs are waiting for capital. There is a lot of pressure on sponsors to return capital. The IRRs on maybe the prior vintage that are being realized probably aren't going to be great. I'm just curious, your conversations with sponsors and fundraising, is this an opportunity to further differentiate Goldman Sachs or any other color, given some of that tension between sponsors today in the market trying to return capital and what LPs are demanding?

Speaker Change: <unk> have to rethink their strategic positioning and interestingly when you look at dialogue dialogue briefing now obviously increased dialogue take a while to turn into deal and play through Dennis was quite clear we had a notable increase in our backlog our backlog was up a lot during the quarter.

Speaker Change: Wanted to continue the conversation I guess on the on the sponsors good morning.

Diego: And fourth and you can see here, we have the most comprehensive product suite in payments hands down.

Speaker Change: Pharma sponsors obviously.

Speaker Change: On the asset management side of the business fund raising for US has been terrific and then.

Diego: Now the strategy I will share with you.

Speaker Change: As you guys pointed out Lps are.

Diego: Really starts with and deals where we've always been.

Speaker Change: Waiting for capital so there's a lot of pressure on sponsors to return capital, but the IRR is on.

Speaker Change: Obviously revenues lag the period of deal announcements so the backlog in the deal announcements are reflective of the second half of last year and the early part of this year and a period of uncertainty things will slow down, but again, it's a big complex world.

Speaker Change: Alex says it also an evolution of our business to drive durable growth.

David Solomon: Yeah. First of all, Betsy, I think you've got to look at this as a very holistic thing because there's a lot going on from a regulatory perspective and DREG that I think will be a tailwind for the industry broadly. Obviously, it includes SLR reform to the degree it comes. It includes capital reform to the degree it comes. It includes supervisory reform to the degree it comes. It's a big package of things. We are CET1 constrained, not SLR constrained at the moment. I do think for the system broadly, SLR relief would have a benefit to treasury markets. I think it's an important structural reform. Certainly, you've heard messages from both the Fed and from Treasury that this is a very, very high priority. We're certainly hopeful or optimistic, given the way they've been messaging around that, that there'll be activity on that.

Speaker Change: The maybe the prior vintage that are being realized probably arent going to be great. So I'm, just curious kind of your conversations with sponsors.

Diego: Our two brands hubs.

Diego: Helps us appeal to the widest set of consumers.

Diego: And we have a winning strategy for each one of them.

Speaker Change: In fund raising is this an opportunity to further differentiate goldman or just any other color given some of the tension between.

Diego: So let's start with people.

Speaker Change: There's a lot of change going on dialogues are up I do think for a period of time there'll be some uncertainty around how certain things that were close proceed forward.

Diego: Branded checkout is the heart of Paypal.

Speaker Change: Sponsors today in the market trying to return of capital and what Lps are demanding.

Diego: And every business in the company has a critical role in driving it so on the consumer side.

Speaker Change: Yeah.

But I would expect a significant amount of M&A activity through the rest of the year, but obviously, if the landscape up more constrained theres a risk of it slowing.

Speaker Change: First of all.

Speaker Change: It's not clear to me that the returns from that vintage of it is realized over time are going to be better and worse I think it's I think it's early to say.

David Solomon and Denis Coleman: Yeah, first of all, it's not clear to me that the returns from that vintage, as it's realized over time, are going to be better or worse. I think it's early to say. The big thing that's changing or putting pressure on fundraising is the pace of capital return to the big capital allocators has been less than they expected. As a result, because they're getting less back, the new capital that they're deploying into new funds is slowing until they get more back. That is balanced by the fact that we are still in long-term secular growth with respect to private assets and private asset allocation overall. I continue to think that secular growth over the next 5, 10, 15 years is going to be meaningful as more people continue to shift to gain exposure to private assets. By the way, that's not just institutional capital.

Diego: It's all about selection consumer selection, how we drive consumers to select and demand Paypal a checkup.

Srinivasan: Let's talk about one profile. We are moving to a one single view of our customer. Today, we capture a customer's activity and preferences across each product. With one profile, we are combining these insights to reach our customers in a powerful, delightful way. This was illustrated in Alex's campaign example. And we have four additional experiences that bring this to life. Seamless interoperability across products. You can now search accounts across Venmo and Paypal. This is just the beginning of what we can unlock across products. Second, we can now underwrite and give more opportunities to customers with less effort.

Speaker Change: But the big thing that's changed and are putting pressure on fundraising as the pace the pace of capital return.

But we're continuing to be out with clients doing the things that we do and I don't see anything at the moment that leads me to believe that if a fundamental shift.

Diego: But it doesn't stop there I would've strategy also drives engagement across our ecosystem of products to increase monetization.

Speaker Change: Two the big capital Allocators has been less than I expected and so as a result, because theyre getting less back the new capital that they're deploying into new funds as slowing until they get more back that is balanced by the fact that we are still in long term secular growth with respect to private assets and private out asset allocation.

Speaker Change: And that in that activity.

David Solomon: I think that's broadly good for the system. I think secondarily across capital more broadly, whether it's Basel III, it's CCAR, and transparency and continuity and stability around that process, and also GSIV, we're certainly over the last decade that we're supposed to be scaling based on market cap growth and economic growth. I think there's room for material tailwinds around capital. Most importantly, we hold, all of the industry holds, large buffers. As we don't have consistency and transparency around these things, any improvement at a minimum would return capital into the system if you had better transparency. We're hopeful on that. On supervision, there are headwinds and costs and activities that we've had to deploy over the last few years to respond to what I'd say was an unusually high level of supervisory activity. We see already a different tone around some of that dialogue.

Speaker Change: Later, you will hear from my colleagues, Frank Michelle and Susana about how the checkout experience will also drive conversion and how we are going to scale merchant adoption.

Speaker Change: Thank you we'll take our next question from Devin Ryan with citizens.

Speaker Change: Great. Good morning, David Good morning, Dennis.

Speaker Change: Wanted to continue the conversation I guess on the on the sponsors good morning.

Speaker Change: Overall, and I continue to think that that secular growth over the next 510 15 years is going to be meaningful as more people continue to shift to gain exposure to private assets and by the way that's not just institutional capital I think youre going to see meaningfully more participation from individual investors and all sorts of forms and private capital.

Speaker Change: Now as we always do let's start with the consumer so.

Speaker Change: Pharma sponsors obviously on the asset management side of the business fund raising for auto has been terrific.

Speaker Change: So paypal value proposition resonates across all demographics, but we are maniacally focused on young families and individuals in their thirties, and forties, who have medium to high income. So this is a very important distinction.

Speaker Change: You guys pointed out you know Lps are.

Speaker Change: Waiting for capital So Theres a lot of the pressure on sponsors to return capital, but the IRR is on.

David Solomon and Denis Coleman: I think you're going to see meaningfully more participation from individual investors in all sorts of forms in private capital formation and potentially ultimately in retirement accounts, et cetera. I think we're in the early stages of continued secular growth. The track record matters a lot, and investment performance matters a lot. We, from an investment performance perspective, are very, very focused on performance. Performance matters. We have a good history, over 30 years, of performing in these strategies. I think that matters a lot. I think these are short-term phenomena against long-term strategic shifts. While there can be bumps or slowdowns, et cetera, I think the long-term direction of travel is really quite clear.

Srinivasan: Here you can see when more users receive personalized offers based on their unified financial profile. Additionally, we can create a personalized shopping experience. With our view of the customer size and hobbies, we can enable the merchant to show the right shoes and start in the right size. Lastly, we can improve our customer support interaction. With the view across products, we can predict why a customer is reaching out, and in some cases, reach out before they even need us. As valuable as these rich experiences are, we know that when it comes to commerce, Speed, Matt We are modernizing our systems, are on a journey to be cloud-native, to provide our customers and merchants with the fastest...

Speaker Change: And potentially ultimately in retirement accounts et cetera. So I think we're in the early stages of continued secular growth I think the track record matters, a lot and investment performance matters a lot from a from an investment performance perspective are very very focused on performance performance matters. We have a good history over 30 years of perform.

Speaker Change: They want convenience.

Speaker Change: The maybe the prior vintage that are being realized probably arent going to be great. So I'm, just curious kind of your conversations with sponsors and fund raising is this an opportunity that further differentiate goldman or just any other color given some of the tension between.

Speaker Change: And they want to make the most of their money.

Speaker Change: So for them, we won't be able to be the easiest the safest and the most rewarding way to pay to send them.

Speaker Change: And to save money.

Speaker Change: Which makes us.

Speaker Change: Sponsors today in the market trying to return on capital and what Lps are demanding.

Speaker Change: And these strategies I think that matters a lot.

Speaker Change: The smartest way to pay.

David Solomon: Ultimately, that allows us to deploy resources in different places, many of which can support investment and growth as opposed to just regulatory response. I continue to believe, even in this environment, that there will be progress on this. We obviously don't know how this will unfold, but the messages I'm getting leave me optimistic that there will be progress. That's very good for the industry as a whole.

Speaker Change: But I I think these are short term phenomenon against long term strategic shifts and while there can be bumps or slowdowns et cetera, I think the long term direction of travel is really quite clear.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Now there are three pillars that underpin how we drive selection and answer the question why Paypal.

Speaker Change: First of all.

Speaker Change: Not clear to me that the returns from that vintage of it is realized over time are going to be better and worse I think it's I think it's early to say.

Speaker Change: They everywhere.

Big thing Thats fits changing are putting pressure on fund raising as the pace the pace of capital return to.

Speaker Change: Pay your way and get the most value.

Speaker Change: Okay. That's excellent thanks, David and then just a quick follow up on debt underwriting it's been a really good story for Goldman. So just wanted to maybe just share a little bit about some of the cyclicality.

Speaker Change: Now, let me give you an overview so starting with pay everywhere consumers choose Paypal because they can use it for everything I would've strategy is to be top of mind. So either you or if you are omnichannel or you're sending P to P or even if you're doing crypto with us.

[Analyst 6]: Okay, that's excellent. Thanks, David. Just a quick follow-up on debt underwriting. It's been a really good story for Goldman Sachs. I'd just love to maybe hear a little bit about some of the, whether it's cyclicality in the business, some of the other puts and takes that are kind of driving results, and the outlook from here, just given that it does seem like you guys are taking some share there.

Speaker Change: Two the big capital Allocators has been less than they expected and so as a result, because theyre getting west back the new capital that they're deploying into new funds as slowing until they get more back that is balanced by the fact that we are still in long term secular growth with respect to private assets private out asset allocation.

[Analyst]: Okay, thank you. Thanks so much. Denis, one for you on VAR, value at risk. This quarter was down broadly throughout the different categories, Q on Q, which I thought was interesting given the heightened volatility that we had across a variety of different markets. Can you remind us how volatility impacts VAR and how we should be thinking about VAR efficiency, which clearly went up dramatically? I just wanted to understand how to think about that on a go-forward basis. Thanks.

Speaker Change: In the business.

Speaker Change: Some of the other puts and takes that are that are kind of driving results and then.

Speaker Change: Just the outlook from here just given that it does seem like you guys are taking some share there.

Srinivasan: This will be one of our most impactful modernization efforts to date. Take a look at this map. Today, no matter where you are in the world, when they engage with PayPal, the request travels back to our systems in the U.S. and back again. This is spelt most accurately in our furthest region. with our new geo-based strategy. We have moved our edge closer to the customer. Next, we will move on to apps and services. This journey unlocks our ability to scale, as PayPal grows, an area ripe for innovation. with the tools and flexibility needed to rapidly build and deploy and the best performance no matter where you are in the world.

Speaker Change: This is very critical because we know that the more you use our products the more they are checkout selection gross.

Speaker Change: Sure. Thank you. So obviously set owners a huge business for us and focus on it for very very long.

Speaker Change: Overall, and I continue to think that that secular growth over the next 510 15 years is going to be meaningful as more people continue to shift to gain exposure to private assets and by the way that's not just institutional capital I think youre going to see meaningfully more participation from individual investors and all sorts of forms and private capital formation.

David Solomon and Denis Coleman: Sure. Thank you. Obviously, debt underwriting is a huge business for us. We've been focused on it for a very, very long period of time. We gave our sort of market share positions at number two across the non-investment grade components and more like a four in certain of the investment grade categories. It's a big business for us. It's an important business for us. We have a track record, I think, importantly, of delivering, particularly when there are elevated times of uncertainty. We have a track record of being good risk takers in that business. When clients see an opportunity that an environment like this presents, and they need to turn to a trusted counterparty who has the capability and the risk appetite to step up and support them, I think we have a longstanding track record of doing that.

Speaker Change: That means that we're driving hobby tuition.

Speaker Change: Period of time, we gave our sort of market share positions at at number two.

Speaker Change: Second is pay your way.

Across the non investment grade components.

Speaker Change: There is a new frontier to beam E C.

Speaker Change: And more like a four uncertainty investment grade categories, It's a big business for us it's important.

Speaker Change: Yes check out has to be fast and you're going to hear a lot about today, we will be.

Speaker Change: And this for us and we have a track record I think importantly of delivering particularly when they are elevated times of uncertainty.

But we're also going beyond our focus is on innovation.

Speaker Change: And potentially ultimately in retirement accounts et cetera. So I think we're in the early stages of continued secular growth I think the track record matters, a lot and investment performance matters a lot from a from an investment performance perspective are very very focused on performance performance matters. We have a good history over 30 years of perform.

David Solomon: Sure. Thanks, Betsy. Good question. Obviously, there's multiple components to VAR across the various asset classes and then a diversification effect as well. Over the course of the first quarter for our average daily VAR, we had reduced exposures offset by elevated levels of volatility. You have both factors across asset classes that factor into the calculation. To your question, increased or persistent levels of volatility could have upward pressure on a VAR measure.

Speaker Change: We will make checkout seamless and frictionless end to end and it will go all the way to support our consumers post purchase.

Speaker Change: We have a track record of being good risk takers in that business.

Speaker Change: And when clients see an opportunity that an environment like this presents and they need to turn to a trusted counterparty, whereas the capability and the risk appetite to step up and support them I think we have a longstanding track record of doing that.

Speaker Change: And then.

Speaker Change: Is get the most value.

Speaker Change: We're going to turbocharge rewards purchasing power like never before.

Speaker Change: And these strategies I think that matters a lot.

Srinivasan: Historically, our journey to the cloud was a lift and shift of our current architecture from our data centers to the cloud. To fully realize the potential of cloud, we must modernize our applications and processes to be cloud-net. Over the past 18 months, Braintree has moved completely cloud native. We have seen a 20% reductions in latency of services. and two to three times faster time to market. To bring this to life, we can now deliver a concept to production. in less than 30 days. This used to take three to four months. That's a really big deal.

Speaker Change: Now what is really important is that if you look at this numbers ever start that we have in this page shows that every consumer products leads to checkout.

Speaker Change: But I I think these are short term phenomenon against long term strategic shifts and while there can be bumps or slowdowns et cetera, I think the long term direction of travel is really quite clear.

Speaker Change: The last several quarters have been more benign from a credit perspective, you've seen over the balance of activity more refinancing and orientation, where we've obviously had a very meaningful role to generate our market share positions, but should there be opportunities on the forward to do more transaction based.

David Solomon and Denis Coleman: The last several quarters have been more benign from a credit perspective. You've seen the balance of activity, more refinancing and orientation, where we've obviously had a very meaningful role to generate our market share positions. Should there be opportunities on the forward to do more transaction-based activity, I think the firm is well set up to do that as well.

Speaker Change: And that is a very important distinction for our strategy.

Operator: Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities.

Speaker Change: Okay. That's excellent thanks, David and then just a quick follow up on debt underwriting it's been a really good story for Goldman So just love to maybe just share a little bit about some of the cyclicality in the business.

Speaker Change: That's why is both about having an amazing checkout experience.

Speaker Change: Activity I think the firm is well set up to do that as well.

[Analyst]: Hi. I guess it's good. You can have record buybacks and the CET1 ratio doesn't change much. On the other hand, I guess you bought that stock quite a bit higher at the current price. I know you're not market timing this or anything. I'm guessing that reflects your confidence in the amount of excess capital you'll have with the $40 billion new share buyback. I was just wondering if you could put a little more meat on the bones of the reasoning behind the $40 billion buyback. Specifically, this is a reg FD call, so you can give material information. How much capital do you think could be freed up once you dispose of your private investments? You've chopped a lot of wood there. I think that's $8.8 billion. After you, if and when you dispose of your credit cards. Thank you.

Speaker Change: He social critical that we build and when nurture a consumer product ecosystem that drives engagement.

Matt O'connor: Thank you we'll take our next question from Matt O'connor with Deutsche Bank.

Speaker Change: The other puts and takes that are that are kind of driving results and then.

Operator: Thank you. We'll take our next question from Matt O'Connor with Deutsche Bank.

Speaker Change: That gives us more ways to monetize.

Matt O'connor: Good morning, a follow up on the capital discussion.

Speaker Change: The outlook from here just given that it does seem like you guys are taking some share there.

Speaker Change: And that keeps reinforcing selection.

[Analyst 7]: Good morning. A follow-up on the capital discussion. You seem to have managed the balance sheet really well this quarter, both on the RWAs and the leverage assets. Anything to call out on that? Because again, like the standardized RWAs barely went up, advanced went down. Usually, you see kind of the opposite where it goes up in the first quarter. Any balance sheet optimization that you did this quarter to call out?

Matt O'connor: You seem to have managed the balance sheet really well at quarter approach on the art of new ways to leverage assets anything to call out on that.

Speaker Change: So now let me give you more detail on the execution of the three pillars of our strategy.

Speaker Change: Sure. Thank you. So obviously that on or is a huge business for us and focus on it for very very long.

Srinivasan: as we unify our platform and modernize our infrastructure. We are also standardizing on one unified development process. Over the past six months, we have streamlined a complex development system to enable faster releases and accelerated speed to market. Today our top publications have moved to this process. And here are the results we have seen. 50% improvement in lead time, time from concept to delivery, 40% increase in speed of build time. This has enabled our checkout app to move from weekly releases to daily up to multiple times a day. In the next few months, all developers will be on the same process.

Speaker Change: Period of time, we gave our sort of market share positions at at number two.

Speaker Change: So let's start with pay everywhere, which includes cow omnichannel b to B and crypto will drive habituation.

Matt O'connor: Because again like a standard Ars articulated barely went up advanced went down.

Speaker Change: Across the non investment grade components.

Matt O'connor: And usually you see kind of the opposite where it goes up in the first quarter. So any balance sheet optimization that you did this quarter to call out.

Speaker Change: And more like a four uncertainty investment grade categories, It's a big business for us is important.

Speaker Change: So first of all.

Speaker Change: Alex said Paypal is omnichannel.

Speaker Change: This for us and we have a track record I think importantly of delivering particularly when they are elevated times of uncertainty.

Matt O'connor: Okay I appreciate the question and the observation we're proud of how we've managed all of those metrics, while delivering the type of performance and market shares that we have.

Speaker Change: Where consumers can now use us online and in store through debit tap to pay.

David Solomon and Denis Coleman: I appreciate the question and the observation. We're proud of how we've managed all of those metrics while delivering the type of performance and market shares that we have. I think the way I would phrase it is, we are accustomed to operating our financial resources in a very nimble fashion, given where we sit. I think our team collectively performed really well with what we refer to as keen eyes on risk management. We also have a keen eye on financial resource deployment. It is as you see it. It's a strong performance on a financial resource-adjusted basis.

Speaker Change: Got it and pay later products.

Speaker Change: We have a track record of being good risk takers in that business and when clients see an opportunity that an environment like this presents and they need to turn to a trusted counterparty, whereas the capability and the risk appetite to step up and support them. I think we have a longstanding track record of doing that the last several quarters have been more benign.

Matt O'connor: The way I would phrase it is we are accustomed to operating or financial resources in a very nimble fashion, given given where we sit and I think our team collectively performed really really well with what we refer to as <unk> on risk management. We also have a keen eye on financial resource deployment and so.

Speaker Change: Last year, we launched Paypal everywhere in the U S and we're seeing incredible results like an increase in checkout penetration among debit card users listened to this every time, we add for debit card actives, we had one incremental checkout Acton.

David Solomon: Okay, I'll start. Denis can jump in. I appreciate the question. I hate to go back to Denis's message, but I think, and you and I have spoken about this over the years, our number one priority is to deploy capital in the business where we can get marginal returns. We've done that consistently over the last five years. We've grown our business. We've deployed capital. We've also been very clear that if we don't see places to deploy that capital and we have excess capital, we're going to consistently return it, including sustained growth of the dividend where we've made a lot of meaningful progress. We've grown the earnings of the firm materially, and that's generating a lot of capital. As Denis highlighted earlier, if we don't have a place to go in the business immediately, we have to return it. We can't market time. We'll return it consistently.

Speaker Change: From a credit perspective, you've seen over the balance of activity more refinancing and orientation.

Speaker Change: And not only that but our T. P V on debit card has grown 100% year over year.

Matt O'connor: It is as you said, it's a strong performance on our on our financial resource adjusted basis.

Srinivasan: But no development process is complete without AI. As we have streamlined our process, we have taken the opportunity to add AI-AGI. These agents have helped developers create unit test cases in minutes, which used to take two to three sprints, update their applications to Java 17 in five hours. compared to 30 hours. and reduce time spent on coding tasks by 10 to 30 percent with our AI-powered code assistant. Next up, we'll also use AI agents to update our C++ legacy. We are undergoing a parallel transformation internally with our PayPal employees. This year, we are unleashing the power of AI tools for every employee.

Speaker Change: Obviously, you had a very meaningful role to generate our market share positions, but should there be opportunities on the forward to do more transaction based.

So paypal everywhere, it's expanding both checkout.

Matt O'connor: Okay, and then separately within the historical principal investment book.

Speaker Change: And share of wallet.

[Analyst 7]: Okay. Separately, within the historical principal investment book, you had about a $600 million drop in a somewhat tough quarter. What's your thought process on the pace from here? Just remind us of that target. I think it was by the end of next year, you're targeting around $2 billion. Just remind us if that's right and still stands. Thank you.

Speaker Change: Activity I think the firm is well set up to do that as well.

Speaker Change: This year, we will expand Paypal everywhere into more markets, starting with the launch of our NFC wallet in Germany, which is very very exciting.

Matt O'connor: You had about a $600 million dropped.

Matt O'connor: Somewhat tough quarter.

Speaker Change: Thank you we'll take our next question from Matt O'connor with Deutsche Bank.

Matt O'connor: What's your thought process on the pace from here and just remind us of the target I think it was by the end of next year, we are targeting around 2 billion and just remind us if that's right and still fans. Thank you.

Speaker Change: Next up.

Matt O'connor: Good morning, a follow up on the capital discussion.

Speaker Change: S B to B.

Speaker Change: Oh, where users can send money virtually anywhere and everywhere, it's a cornerstone of our consumer ecosystem and user acquisition strategy.

Matt O'connor: You seem to have managed the balance sheet really well with quarter of both on the <unk> leverage assets anything to call out on that because.

Matt O'connor: Sure I appreciate that obviously for the last several years, we have been reducing our historical principal investments what we call <unk>.

David Solomon: We are confident that we're going to continue to have a big, diverse, strong earning business. We are confident that we will have capital available to deploy when there are opportunities. If we don't, we will continue to actively return it to shareholders. There'll be some quarters where the stock price is higher, some quarters where the stock price is lower. We're going to stick to that capital return philosophy. I think it serves us very, very well. I think we've proven over a long period of time, certainly over the 26 years that we've been public, that we are very good stewards of capital. If we can't deploy it in the business for incremental returns, we're going to return it and get it back.

David Solomon and Denis Coleman: Sure. I appreciate that. Obviously, for the last several years, we have been reducing our historical principal investments, what we call HPI. Several years ago, the balance was around $30 billion. If you went to the beginning of just last year, we had $16 billion and change of HPIs. We now sit with $8 billion and change of HPI. We continue to meaningfully reduce those exposures. We expect by the end of 2026, we'll have sold down the vast majority of exposures versus where we began. We're committed to continuing to chip away at this. We have different sub-asset classes that comprise the HPI. Some are easier than others, but we have a plan to sell down. We're going to continue to execute on that.

Matt O'connor: Because again like a standardized articulated fairly went up advanced went down.

Speaker Change: 30% of our new users come from P to P.

Matt O'connor: Several years ago, the balance was around $30 billion. If you went to the beginning of just last year, we had $16 billion and change of <unk>. We now sit with eight and change billion of HP I. So we continue to meaningfully reduce those exposures and.

Matt O'connor: And usually you see kind of the opposite what goes up in the first quarter. So any balance sheet optimization that you did this quarter to call out.

Speaker Change: And over $10 billion of P to P funds I really spent through checkout.

Speaker Change: So not only that speed to be bringing new users it keeps them engaged.

Matt O'connor: Okay I appreciate the question and the observation we're proud of how we've managed all of those metrics, while delivering the type of performance and market shares that we have I think the way I would phrase. It is we are accustomed to operating or financial resources in a very nimble fashion, given given where we sit.

Srinivasan: This is Eva, PayPal's safe, secure, encouraged Gen AI assistant, currently rolling out to all PayPal employees. Eva is connected to internal PayPal. combining the best of Gen AI with the data and tools employees Here's one example of how we are leveraging AI internally at PayPal. Today, PayPal manually handles thousands of compliance cases annually. Analyzing interactions between just two accounts can take an investigator days. With AI, we can now analyze patterns five counterparties away in minutes. Revealing trends that are beyond human detection. from days to minutes. These are examples of how AI is improving productivity across the entire organization.

Speaker Change: We will continue to innovate on pizza be with new features soon we will let you send money instantly to bank accounts and mobile wallets.

Matt O'connor: We expect by the end of 2026, we will have sold down the vast majority of exposures versus where we began.

Matt O'connor: We're committed to continuing to chip away at this we have different sub asset classes that comprise the HDI some are easier than others, but we have a plan to sell down and we're going to continue to execute on that.

Speaker Change: Cash and digital currency like crypto nearly anywhere in the world.

Matt O'connor: Our team collectively performed really really well with what we refer to as <unk> on risk management. We also have a keen eye on financial.

[Analyst]: Was Denis going to add to that?

Speaker Change: This is something that only people can deliver.

Speaker Change: Thank you we'll take our next question from Erika Najarian with UBS.

David Solomon: You don't have to if you don't have anything to add, but you can. Do you have any follow-up question, Mike?

Speaker Change: And listen to these anyone even outside of our network will be able to receive payments with texts or messenger through Paypal.

Matt O'connor: Resource deployment and so.

Operator: Thank you. We'll take our next question from Erica Najarian with UBS.

Matt O'connor: It is as you see it it's a strong performance on our on our financial resource adjusted basis.

[Analyst]: It's just the specific amount of capital that could be freed up if and when you dispose of your private investments and your credit cards. It seems like that could be a pretty big number.

Erika Najarian: Good morning. So my first question is a follow up on capital So David given what you said.

[Analyst 8]: Good morning. My first question is a follow-up on capital. David, given what you've said about the landscape and sort of freeing capital from the industry, we have strong momentum in terms of the stress test, GSIV surcharge, recalibration, and then Betsy mentioned the SLR. The question for you is, you know, you are already one of the most optimized businesses in financial services. If we do redefine the definition of excess capital for the industry broadly and for Goldman Sachs specifically, how are you going to allocate that freed up capital? Where do your priorities go? I appreciate the whole stack in terms of clients first and buybacks. Within the clients first, within the business, are there any places where you would reallocate even more capital if you do free up or change the definition of excess capital?

Speaker Change: That's pretty exciting.

Speaker Change: Okay, and then separately within the historical principal investment book you.

Erika Najarian: The landscape and sort of free capital from the industry. We have strong momentum in terms of the stress test G. SIB surcharge Recalibration and then that she mentioned the SLR and the question for you is you know.

Speaker Change: And finally, let's talk about crypto.

David Solomon: Sorry, Mike. I didn't get to that. Denis can certainly make comment on that.

Matt O'connor: You had about a $600 million dropped.

Speaker Change: So Paypal was the company that brought the world offline to online.

Speaker Change: Somewhat tough quarter.

Speaker Change: What's your thought process on the pace from here and just remind us of the target I think it was by the end of next year Youre targeting round two door here and just remind us if that's right and still fans. Thank you.

[Analyst]: Sure. If you look at the HPI portfolio, we have approximately $4 billion of attributed equity, maybe a tad underneath that, and a reasonably similar amount across the card portfolio. That gives you some context for the aggregate magnitude.

Speaker Change: And now we are the ones, taking it from online to own chain.

Erika Najarian: You are already one of the most optimized businesses in financial services. If we do redefine the definition of excess capital for the industry broadly and for Goldman specifically, how are you going to allocate that freed up capital.

Speaker Change: We started by being a safe place to buy sell and whole crypto.

Srinivasan: Now let's talk about what AI can do for our customers. As you heard from Alex, we have a strong customer back mission at PayPal. often asked our What pain points are we, our customers facing today that the world of AI can solve? We know consumers spend a lot of time optimizing the cashback and reward. But with so many systems to remember, they are often unsatisfactory. To address this, PayPal utilized AI to collect all the credit cards' terms and conditions. and analyze the optimal credit option for each purchase category. With our AI model in hand, we put it to the test, and here is what we found.

Speaker Change: And we're seeing explosive growth as our consumers use it more and more for transfers and payments.

Speaker Change: Sure I appreciate that obviously for the last several years, we have been reducing our historical principal investments, which we call <unk>.

Erika Najarian: How does Europe, where do your priorities go I appreciate the whole the stack in terms of clients first and buybacks, but within the client's first within the business you know are.

Speaker Change: And we're very excited because paypal consumers can use crypto to pay millions of Paypal merchants right there in our route.

Speaker Change: Several years ago. The balance was around 30 billion. If you went to the beginning of just last year, we had $16 billion and change of <unk>. We now sit with eight and change billion of <unk>. So we continue to meaningfully reduce those exposures and.

Operator: Thank you. We'll take our next question from Steven Chuback with Wolfe Research.

[Analyst]: Hi, good morning, David and Denis. Thanks for taking my questions. I had a two-parter on alternatives, David. I was hoping you could speak to a bigger picture, just the outlook for sponsor activity across the complex, given some of the headwinds to realization activity, as well as the heightened macro uncertainty you cited. Just drilling down to third-party alts disclosure, what contributed to that fee rate contraction on the credit side, given the step-down was meaningful? I know that's a high-priority growth area for you and the management team.

Erika Najarian: Are there any places where you would reallocate even more capital if you do free up or or change in definition of excess capital.

Speaker Change: So we integrate buying sending and spending.

Speaker Change: We expect by the end of 2026, we'll have sold down the vast majority of exposures versus where we began.

Speaker Change: With a safety and trust only Paypal can provide.

Erika Najarian: I appreciate the question Erika and welcome to the team by the way.

Speaker Change: We're excited because we're building something truly differentiated so our consumers won't want to decrypt or anywhere else.

David Solomon and Denis Coleman: I appreciate the question, Erica. Welcome to the team, by the way. I'm happy to have you. I know you're asking for probably more granularity than we'll give. We have a zealous focus on finding opportunities to serve our clients, and when we need capital to serve them, making sure we have adequate capital to allocate there. Obviously, if you look at our business today, and let's put what's left of the consumer platform aside for the moment, when you look at our business today, the additional capital that gets allocated into the business broadly gets allocated into the banking and markets franchise. We are prepared, if there's opportunity there, to allocate meaningfully more. If there's not opportunity there, it's probably going to come back. That helps support the growth in our dividend, the sustainable growth in our dividend.

Erika Najarian: Happy to have you.

Speaker Change: We're committed to continuing to chip away at this we have different sub asset classes that comprised the HDI some are easier than others, but we have a plan to sell down and we're going to continue to execute on that.

Erika Najarian: Hi.

Speaker Change: Look I know, you're asking for probably more granularity than we'll give.

Speaker Change: Yeah.

Speaker Change: But we have a zealous focus on finding opportunities to serve our clients and when we need capital to serve them, making sure we have adequate capital to allocate there obviously a significant if you look at our business today and let's put the consume what's left of the consumer platform aside for the moment when you look at our business today the additional <unk>.

Speaker Change: Now lets switch and talk about our second pillar or the people the strategy pay your way.

Speaker Change: Thank you we'll take our next question from Erika Najarian with UBS.

Srinivasan: When we ran 10% of the eligible monthly transactions through the model, it revealed that shoppers could have saved $50 million. and they let AI select the best credit option for the purchase. If we can imagine that for all of our transactions, the amount of money we could be saving for our consumers is massive. This is a great example of dynamic, personalized commerce everywhere, and it's just the beginning of our wallet getting smarter with AI. We also asked ourselves, how can new and emerging AI, such as agentic AI, delight our customers? people are increasingly using Gen AI for Shopping Resort.

Speaker Change: Yeah.

Speaker Change: We're making checkout more frictionless for consumers.

David Solomon: First, I'll comment on the macro, Steven. The size of the sponsor community, the amount of capital that's deployed, the assets that they hold and they control, it's quite significant. We've been talking about this for the last few quarters. There's no question there's been a pickup in activity and monetization because there's enormous pressure from the LP community to increase DPI and start to bring this capital back. I think the macro environment will further put more pressure. That'll be balanced by the fact that in the macro environment, some of the valuation expectations and realizations have to come down. I can't time it on a quarter-to-quarter basis, but the way I describe it, this is an enormous pent-up backlog that will come through the pipe at some point in time. There's no firm better positioned to capitalize on that than Goldman Sachs.

Erika Najarian: Good morning. So my first question is a follow up on capital So David given what you've said about the landscape and sort of free capital from the industry. We have strong momentum in terms of the stress test G. SIB surcharge Recalibration and then that she mentioned the SLR and the question for you.

Speaker Change: New voltage experiences will make it easier than ever to set up Paypal for a seamless almost invisible checkout.

Speaker Change: Capital that gets allocated into the business broadly gets allocated into the banking markets franchise.

Speaker Change: And we will be launching a subscription management hub, so that customers can add and cancel their subscriptions.

Speaker Change: We are prepared if theres opportunity there allocate meaningfully more but if theres not opportunity there, it's probably going to come back that helps obviously support the growth in our dividend is sustainable growth in our dividend.

Speaker Change: All in one place.

Speaker Change: All of this because we know that when users choose us once on subscriptions and recurring payments that means they are choosing us every time at checkout.

Speaker Change: As you know.

Speaker Change: You are already one of the most optimized businesses in financial services. If we do redefine the definition of excess capital for the industry broadly and for Goldman specifically, how are you going to allocate that freed up capital.

Speaker Change: And it really is kind of our capital waterfall of in the business or if not return it I won't say over time.

Speaker Change: Yeah.

David Solomon and Denis Coleman: It really is kind of our capital waterfall of in the business or if not, return it. I will say over time, and this is all proportionate, as we scale our alternatives platform, we use capital to start up new funds, to start up new platforms. You could see some capital deployed there, but it's all going to be in the context of marginal in that business. That business is running as a much more capital-light business on a go-forward basis than it did historically. If we do see this capital reform from a regulatory perspective, and as I said earlier, I think there's a good chance of that happening, it is going to allow us to do two things.

Speaker Change: And the Paypal wallet will get smarter.

Speaker Change: And this is all proportionate as we scale our alternatives platform, we use capital to start up new funds to start up new platforms. So you could see some capital deployed there, but it's all going to be in the context.

Speaker Change: How does Europe, where do your priorities go I appreciate the whole the stack in terms of clients for some buybacks, but within the client's first within the business you know are.

Speaker Change: Soon all of your offers rewards and loyalty programs will start automatically and be applied automatically right. There in the App. So let me give you a few examples of what this might look like.

Srinivasan: However, today there is no option to make a purchase. We have already started development on an agent within the Paypal app. Customers can prompt the agent to research what they need for a campaign trip, or ask it to reorder a recent purchase. With PayPal's profile and identity context, you can seamlessly place your order. Likewise, our strategic partners could leverage PayPal Agents to augment their contacts and to complete the purchase. To sum it up. One platform will standardize and increase our velocity. A single complete picture of our customer profile powers the personalized experiences that only PayPal can provide.

Speaker Change: Are there any places where you would reallocate even more capital if you do free up or or change in definition of excess capital.

Speaker Change: Of margin on that business that business is running as a much more capital light business on a go forward basis than it did historically and so if we do see it as capital or for them from a regulatory perspective, and I as I said earlier I think there's a good chance of that happening.

Speaker Change: So consumers will automatically earn and burn merchant rewards at the point of sale. This will stock on top of their Paypal rewards.

David Solomon: How that unfolds in the coming quarters will be activity. I think more certainty with respect to the policy landscape will be needed to really accelerate that. Steven, as you talk about fee rates coming through on the alts side, we have a number of different ways of feeding into our alts business, and they bring with them different levels of fees. To take two ends of the spectrum, as we've had some success growing our OCIO activities, a lot of those portfolios will include some component of alts, and the fees in connection with that are a lot lower. We obviously have our own flagship funds that we launched. We gave some color on the types of asset classes that we're expecting to execute on over the near term. That brings a much higher level of fees.

Matt O'connor: I appreciate the question Erika and welcome to the team by the way I'm happy to have you.

Speaker Change: And their personal ice offers so they get the most out of beverage in section.

Speaker Change: <unk>.

Speaker Change: Hi.

Speaker Change: You know look I know, you're asking for probably more granularity than we'll give.

Speaker Change: It is going to allow us to do two things one.

Speaker Change: And users will then set preferences that automatically switch on features like buy now pay later right. There in the store. So they also get maximum flexibility.

Speaker Change: Probably returned more capital, but too.

Speaker Change: But we have a zealous focus on finding opportunities to serve our clients and when we need capital to serve them, making sure we have adequate capital to allocate there obviously a significant if you look at our business today and let's put the consume what's left of the consumer platform aside for the moment when you look at our business today the additional.

David Solomon and Denis Coleman: One, probably return more capital, but two, also, in the context of how we think about things, find some places where we can deploy a little bit more to support clients. We're going to watch it very carefully. The marginal, the excess capital that we're keeping, the cushion that we're keeping is high. I don't think that's a normalized thing. It's not just us. You can look across the industry that everybody's going to run with these excess capital cushions. When we get more, I think across the industry, there'll be a reset of what those cushions should be when people feel like they're in a position to be able to plan over multiple years of a capital cycle.

Speaker Change: Also.

Speaker Change: You know in the <unk>.

Speaker Change: The context of Av.

Speaker Change: How we think about things find some places where we could deploy a little bit more to support clients, but we're going to watch it we're going to watch it very carefully.

Speaker Change: And then.

Speaker Change: It's both purchase that builds loyalty with features that simplify and add value. This includes smarter receipts, making it easier to track packages managed returns and refunds.

Speaker Change: Marginal the excess capital that we are keeping a cushion that we're keeping is high.

Speaker Change: Capital that gets allocated into the business broadly gets allocated into the banking markets franchise.

Speaker Change: Think that's a normalized thing and it's not just that you can look across the industry that everybody is going to run with these excess capital questions. When we get or I think across the industry will be a reset of what those pushing should be when people feel like they are in a position to be able to plan over multiple years of capital like.

Srinivasan: One process improves our productivity. and a modernized infrastructure increases performance. and lastly, AI. the accelerant that is activating our global workforce and bringing innovation back to the core of PayPal. Look, this is why I came to PayPal. Throughout my career, I've seen how technology can transform the lives of consumers and merchants. But the impact has always been limited to just one merchant. At PayPal, we are out to revolutionize commerce for millions. and PayPal as the technology. data, security, and customer trust to get it done. And like I said, we are just getting started. Thank you.

Speaker Change: Personalized insights that make future shopping experiences better by remembering and that'll be important details from your preferences colors sizes styles et cetera.

Speaker Change: We are prepared if theres opportunity there allocate meaningfully more but if theres not opportunity there, it's probably going to come back that helps obviously support the growth in our dividend is sustainable growth in our dividend.

David Solomon: Overall, you see a 61 basis point disclosure, which is a couple of basis points of recent periods. With the flagship launches, I'd expect that would improve over time.

Speaker Change: And now the third and the final pillar of our people strategy get the most value.

Speaker Change: And it really is kind of our capital waterfall of in the business or not return it I won't say over time.

[Analyst]: That's really helpful color. Just for a quick follow-up, I was hoping to get some color on how you're thinking about potential risk to the deal backlog. Certainly encouraging to see a sequential increase in the fee backlog. As we think about some of the risks, whether it's international and cross-border or specific sectors that are particularly challenged, how you're framing or potentially handicapping the risk of some of these deals coming out of the backlog.

Speaker Change: Got it and my follow up question is less so there's been.

[Analyst 8]: Got it. My follow-up question is this. There have been increased questions from investors about how global investment banks like Goldman Sachs, how the standing is impacted by some of the policy volatility, if you will, in terms of your internationally sourced revenues. We had two different answers from your peers on Friday. Jamie was a little bit more pessimistic. Ted was a little bit more optimistic about the international revenue outlook going forward, given all of the global policy volatility. David and Denis, I wanted to get your thoughts on that, on whether or not what the U.S. is doing could impact some of that sourcing.

Speaker Change: We want our customers to keep coming back because of how much value Paypal unlocks for them.

Speaker Change: Increased questions from investors about how global investment banks like Goldman.

Speaker Change: And this is all proportionate as we scale our alternatives platform, we use capital to start up new funds to start up new platforms. So you could see some capital deployed there, but it's all going to be in the context.

Speaker Change: How the standing is impacted by some of the policy volatility if you will.

Speaker Change: So let's start with pay later.

In terms of your internationally sourced revenues and we had sort of two different answers from your peers on Friday.

Speaker Change: We want to be the best pay later period.

Speaker Change: Of margin on that business that business is running as a much more capital light business on a go forward basis than it did historically and so if we do see it as capital or for them from a regulatory perspective, and I know as I said earlier I think there's a good chance of that happening it is going to allow us to do two things one.

Speaker Change: And how by being the only ones who offer maximum availability affordability.

Speaker Change: Jamie was a little bit more pessimistic headwinds are a little bit more optimistic about the international revenue.

Speaker Change: Choice so.

David Solomon: Yeah. There are a couple of things, Steven, that I'd say. First of all, this is a little bit counterintuitive, but when the landscape changes, companies have to rethink their strategic positioning. Interestingly, when you look at dialogues, dialogues are increasing. Obviously, increased dialogues take a while to turn into deals and play through. Denis was quite clear. We had a notable increase in our backlog. Our backlog was up a lot during the quarter. Obviously, revenues lag the period of deal announcements. The backlog and the deal announcements are reflective of the second half of last year and the early part of this year. In a period of uncertainty, things will slow down. It's a big, complex world. There's a lot of change going on. Dialogues are up. I do think for a period of time there'll be some uncertainty around how certain things that were close proceed forward.

Speaker Change: So let me explain one by one.

Speaker Change: Outlook going forward, given all of the global policy volatility and David and Dennis I wanted to get your thoughts on that on whether or not what the U S is doing kind of impact.

Speaker Change: Although the NPL companies.

Deirdre: Let me pass it to Deirdre. Thank you, Srini, and good morning, everyone. It's great to be here with you today to share our consumer strategy, but before I get into our plans, I really want to touch on four important points that you may not know about the consumer business. First of all, we have two powerful and trusted brands. A lot of companies, they're lucky if they have one. Well, we have. and this really sets us apart. PayPal and Venmo are among the most trusted and valued brands globally. We heard this before. We are a global leader.

Speaker Change: Alex Feil spanning their networks, while Paypal scale is.

Speaker Change: <unk> returned more capital, but too.

Speaker Change: It's a clear advantage.

Speaker Change: Anywhere you Paypal you can't pay later.

David Solomon: Some of that.

Speaker Change: Also.

Speaker Change: Sourcing.

Speaker Change: You know in the <unk> and the <unk>.

Speaker Change: That's incredible.

Speaker Change: Well, what we're what we're hearing from clients Erika and I mean this is important is to be talking to clients. What we're hearing from clients.

Speaker Change: Text of.

Speaker Change: And you can manage your payments right there in the App.

Speaker Change: Of of how we think about things find some places where we can deploy a little bit more to support clients, but we're going to watch it we're going to watch it very carefully the marginal the excess capital that we are keeping a cushion that we're keeping is high I don't think that's a normalized thing and it's not just that you can look across the industry that everybody has.

David Solomon and Denis Coleman: What we're hearing from clients, Erica, and I mean, this is important to be talking to clients, what we're hearing from clients, particularly clients in Europe and other places around the world, is they don't like the level of uncertainty. They don't like the fact that certain constructs for how they interacted with the U.S. economic system and the global economic system are potentially changing. I would just say it's early to call heads or tails or direction of travel on how this will play out. We're listening to it carefully. At the same point, we run a huge scale global franchise all over the world. We have extraordinary expertise and leadership positions in activities all over the world. I don't see any decline in any way, shape, or form of clients' interest in dealing with Goldman Sachs in any part of the world.

Speaker Change: That's what I call maximum availability.

Speaker Change: Particularly clients in Europe, and other places around the world is they don't like the level of uncertainty and they don't like the fact that certain construct or how they interacted with the U S. Economic system of the global economic system or potentially changing I would just say it's early to call you know heads.

Speaker Change: Also our amazing products have no fee and no interest options.

Speaker Change: That's boxing affordability.

Speaker Change: And we give customers lots of options to choose from based on their needs.

Speaker Change: Along with these excess capital questions. When we get more I think across the industry will be a reset of what those pushing should be when people feel like they're in a position to be able to plan over multiple years of the capital cycle.

Speaker Change: Heads or tails of direction of travel on how this will play out or listening to it carefully at the same point, we run a huge scale global franchise all over the world, we have extraordinary expertise and leadership positions and activities all over the world and I don't see any decline in any way shape or form of clients clients.

Speaker Change: That's maximum choice.

Speaker Change: This used to be just a line now we're bringing this in stores too.

Speaker Change: And these products are going to show up in a very big way.

Deirdre: We have over 430 million customer accounts across more than 200 markets worldwide. And here's the thing, nearly half are outside of it. Third, we have the largest installed app base, more than three times the size of our next largest competitor. And what's very important is that we are platform agnostic. And you know this very well. This is critical because the next generation of customers will engage through the apps. You know, like they say, in real estate, it's location, location, location. In our case, it's apps, apps, apps. And fourth, and you can see it here, we have the most comprehensive product suite in payments, hands down.

Speaker Change: Got it and my follow up question is less so there has been increased.

David Solomon: I would expect a significant amount of M&A advisory activity through the rest of the year. Obviously, if the landscape got more constrained, there's a risk of it slowing. We're continuing to be out with clients, doing the things that we do. I don't see anything at the moment that leads me to believe that it's a fundamental shift in that activity.

Speaker Change: Our next.

Speaker Change: Increased questions from investors about how global investment banks like Goldman.

Speaker Change: I'm getting more value is rewards.

Speaker Change: Integrations with third party loyalty programs.

Speaker Change: Interest in dealing with Goldman Sachs in any part of the world, but I don't expect that to change on any significant basis, but certainly as we engage with clients.

Speaker Change: How the standing is impacted by some of the policy volatility. If you will in terms of your internationally sourced revenues and we had sort of two different answers from your peers on Friday.

Speaker Change: And a new Paypal rewards program, which will reward the entire customer relationship from sending b to b to.

David Solomon and Denis Coleman: I don't expect that to change on any significant basis. Certainly, as we engage with clients, we're hearing questions on these things. I think it's early to declare one way or another as to whether or not at the margin there's any effect from that. At the moment, all over the world, clients are extremely engaged with the firm.

Speaker Change: We're hearing questions.

Speaker Change: These things I think it's early to declare one way or another as to whether or not at the margin. There was any effect from that at the moment all over the world clients are extremely engaged with the firm.

Speaker Change: To check out.

Speaker Change: You've been buying crypto.

Speaker Change: Jamie was a little bit more pessimistic headwinds are a little bit more optimistic about the international revenue.

Speaker Change: Very exciting.

Operator: Thank you. We'll take our next question from Devin Ryan with Citizens.

Speaker Change: And now the last component of getting more value.

Speaker Change: Outlook going forward, given all of the global policy volatility and David and Dennis I wanted to get your thoughts on that on whether or not what the U S is doing kind of impact.

Speaker Change: Thank you we'll go next to Gerard Cassidy with RBC.

Speaker Change: Ads and offers maybe.

[Analyst]: Great. Good morning, David. Good morning, Denis. I want to continue the conversation on the sponsors. Morning. On the sponsors, obviously, on the asset management side of the business, fundraising for alts has been terrific. As you guys pointed out, LPs are waiting for capital. There is a lot of pressure on sponsors to return capital. The IRRs on maybe the prior vintage that are being realized probably aren't going to be great. I'm just curious, your conversations with sponsors and fundraising, is this an opportunity to further differentiate Goldman Sachs or any other color, given some of that tension between sponsors today in the market trying to return capital and what LPs are demanding?

Speaker Change: People ask is not just another ads business is the engine.

Operator: Thank you. We'll go next to Gerard Cassidy with RBC.

Gerard Cassidy: Hi, David.

Speaker Change: David.

Speaker Change: Dennis you mentioned in your <unk>.

Speaker Change: Our commerce platform that Alex described we're already seeing a 65% lift in checkout when users enrol in our save on that bench on offer.

[Analyst 5]: Hi, Denis. Hi, David. Denis, you mentioned in your answering your question about the HPI portfolio that you guys had just over $4 billion of CET1 capital, I think it was, that supports that portfolio. Can you remind us how will you bleed that capital back in releasing it back in or just releasing it, I should say? I know when the 8.8 goes to 0, it'll be completely released. Is there a linear way of releasing it, or does it all come at the end when the portfolio drops to about 0?

Speaker Change: Answering your question about the <unk> portfolio.

Speaker Change: Some of that.

Speaker Change: Sourcing.

Erika Najarian: Well, what we're what we're hearing from clients Erika and I mean this is important is to be talking to clients. What we're hearing from clients.

Speaker Change: You guys had just over $4 billion of CET, one capital I think it was it supports that portfolio can you remind us.

Deirdre: Now, the strategy I will share with you... really starts with and builds on where we've always been, but as Alex says, it's also an evolution of our business to drive durable growth. Our two brands. helps us appeal to the widest set of consumers. and we have a winning strategy for each one of them. So let's start with PayPal. Branded Checkout is the heart of PayPal. And every business in the company has a critical role in driving it. So on the consumer side. It's all about selection, consumer selection, how we drive consumers to select and demand PayPal at checkout.

Speaker Change: And we're just getting started we can serve consumers I don't know what one surfaces like I went up but also off site and our merchant and media partners.

Erika Najarian: Particularly clients in Europe, and other places around the world is they don't like the level of uncertainty.

Speaker Change: Do you believe the capital back in releasing it back and we're just releasing it I should say I know when the April eight goes to zero. It will be completely released but is there a linear wave released releasing or is it all come at the end when the portfolio drops to about zero.

Erika Najarian: And they don't like the fact that certain construct or how they interacted with the U S economic system and the global economic system or potentially changing I would just say it's early to call.

Speaker Change: So let me give you an example.

Speaker Change: Marching you're watching a show on your streaming platform your favorite streaming platform, but instead of another round of Mod you see an AD that's targeted to you with an offer that you actually want and the offer is already say for you in the Paypal App.

Erika Najarian: Heads or tails of direction of travel on how this will play out or listening to it carefully at the same point, we run a huge scale global franchise all over the world, we have extraordinary expertise and leadership positions and activities all over the world and I don't see any decline in any way shape or form of clients clients into.

Gerard Cassidy: So I appreciate the question Gerard.

Gerard Cassidy: As we have been selling down that portfolio over time, we do free up capital and we have been you know.

David Solomon and Denis Coleman: I appreciate the question, Gerard. As we have been selling down that portfolio over time, we do free up capital, and we have been returning a lot of that to shareholders. We do not need to wait till the end of the sell-down exercise to release that capital. In fact, you should expect that it'll be part of our capital management plan over the following quarters. As we have this broader discussion around quantums and capacity to continue to return capital to shareholders, that is one of the drivers that will have us continuing to look to do that.

Speaker Change: And you can check out with a single tap.

Speaker Change: We're building something only few others come built.

David Solomon: First of all, it's not clear to me that the returns from that vintage, as it's realized over time, are going to be better or worse. I think it's early to say. The big thing that's changing or putting pressure on fundraising is the pace of capital return to the big capital allocators has been less than they expected. As a result, because they're getting less back, the new capital that they're deploying into new funds is slowing until they get more back. That is balanced by the fact that we are still in long-term secular growth with respect to private assets and private asset allocation overall. I continue to think that secular growth over the next 5, 10, 15 years is going to be meaningful as more people continue to shift to gain exposure to private assets. By the way, that's not just institutional capital.

Gerard Cassidy: Returning a lot of that to shareholders. So we don't need to wait to the end of the sell down exercise two beliefs that capital back you should expect that it will be part of our capital management plan over the over the following quarters and as we have this broader discussion around quantum's and capacity to continue to return capital to shareholders.

Speaker Change: We're building the future of commerce.

Erika Najarian: And dealing with Goldman Sachs in any part of the World and I don't expect that to change.

Speaker Change: So there you have it that is the Paypal consumer strategy.

Deirdre: But it doesn't stop there. Our strategy also drives engagement across our ecosystem of products to increase monetization. Later, you're going to hear from my colleagues, Frank, Michelle, and Susan, about how the checkout experience will also drive conversion and how we are going to scale merchandise. Now, as we always do, let's start with the consumer. So PayPal's value proposition resonates across all demographics. But we are maniacally focused on young families and individuals in their 30s and 40s who have medium to high incomes. This is a very important. Day One Convenience. and they want to make the most of their money.

Erika Najarian: On any significant basis, but certainly as we engage with clients.

Speaker Change: Let me speak a little bit about what does all this mean for monetization.

Erika Najarian: We're hearing questions on these things I think it's early to declare one way or another as to whether or not at the margin. There was any effect from that at the moment all over the world clients are extremely engaged with the firm.

Speaker Change: Just look at those numbers.

Gerard Cassidy: That is one of the drivers that will have us continuing to look to do that.

When consumers are engaged across our many of our.

Speaker Change: Products, they're worth up to $94 per account compared to $5 for consumers, who only use b to b.

Speaker Change: Very good and then coming back David you've mentioned it a few times in your prepared remarks, but also in answering questions. Goldman is in a very unique position, having this global view of the world because of your size and your presence.

Speaker Change: Thank you we'll go next to Gerard Cassidy with RBC.

[Analyst 5]: Very good. Coming back, David, you've mentioned it a few times in your prepared remarks, but also in answering questions, Goldman Sachs is in a very unique position having this global view of the world because of your size and your presence. Can you give us any color on, you know, with the uncertainties going forward, are they more elevated here in the U.S. than when you talk to clients in Europe or Asia? If you had to live the land, where is the greatest uncertainty or the greatest worry when you talk to CEOs around the world?

Speaker Change: I'm Dennis on David.

Speaker Change: That's pretty exciting and remarkable but what's even more exciting is that if you look at the penetration.

Speaker Change: Dennis you mentioned in your in answering your question about the <unk> portfolio.

Speaker Change: All of these products beyond P to P and check out is still so low.

Speaker Change: You guys had to just over $4 billion of CET, one capital I think it was it supports that portfolio can you remind us how will you bleed the capital back in <unk>.

Speaker Change: Can you give us any color on you know with the uncertainties going forward is it are they more elevated here in the United States. Then when you talk to clients in Europe or Asia. If you had to live the land where is the greatest uncertainty or the greatest worry when you talk to Ceos around the world.

Speaker Change: We have tremendous opportunity to keep driving growth and that's our strategy.

David Solomon: I think you're going to see meaningfully more participation from individual investors in all sorts of forms in private capital formation and potentially ultimately in retirement accounts, et cetera. I think we're in the early stages of continued secular growth. The track record matters a lot, and investment performance matters a lot. We, from an investment performance perspective, are very, very focused on performance. Performance matters. We have a good history, over 30 years, of performing in these strategies. I think that matters a lot. I think these are short-term phenomena against long-term strategic shifts. While there can be bumps or slowdowns, et cetera, I think the long-term direction of travel is really quite clear.

Speaker Change: Leasing it back and we're just releasing it I should say I know when the April eight goes to zero.

Speaker Change: This is not just a theory.

Speaker Change: We already have great momentum.

Speaker Change: In our business, our cohort or power users grew by 10%.

Speaker Change: Completely released but is there a linear with release are really seeing it or is it will come up again, when the portfolio drops to about zero.

Deirdre: So for them, we want PayPal to be the easiest, the safest, and the most rewarding way to pay, to send, and to save. which makes us. the smartest way to pay. Now, there are three pillars that underpin how we drive selection and answer the question, why PayPal? They're everywhere. Pay your way and get the most value. Now, let me give you an overview. So starting with pay everywhere, consumers choose PayPal, because they can use it for everything. And what a strategy is to be top of mind. So either you if you are omnichannel, or you're sending P2P, or even if you're doing crypto with us.

Speaker Change: Last year.

Speaker Change: So Gerard is that I mean, it's a good question and I would I would say the level of uncertainty is up significantly and it's partially up because growth was slowing down before we got to the implementation of trade policy and the implementation of trade policy reset.

Speaker Change: And our inactive users declined 4%, we're driving engagement, which means our strategy is.

David Solomon and Denis Coleman: It is a good question. I would say the level of uncertainty is up significantly. It is partially up because growth was slowing down before we got to the implementation of trade policy. The implementation of trade policy reset the prospect of forward growth pretty significantly all over the world. I would say that when you get outside of the U.S., and I listen to CEOs, I hear a greater sense of short-term concern. Everyone would like less uncertainty and more clarity on forward policy. That is what we are hearing from clients. They want to understand where the policy will settle out so that they can make capital decisions, investment decisions, planning decisions when you are talking to CEOs. When you are talking to investors, investors invest by predicting the future. They would obviously like less uncertainty so they can have a better window into predicting the future.

Gerard: So I appreciate the question Gerard.

He is working.

Gerard: As we have been selling down that portfolio over time, we do free up capital and we have been.

Speaker Change: Okay.

Speaker Change: Switch gears now and talk about venmo.

Speaker Change: Few ops are more deeply ingrained in the lives of young people then venmo, how many times do you hear or even say yourself Venmo me what all of them are you Brian.

Gerard: Returning a lot of that to shareholders. So we don't need to wait till the end of the sell down exercise to believes that capital back to you should expect that it'll be part of our capital management plan over the over the following quarters and as we have this broader discussion around quantum's and capacity to continue to return capital to shareholders.

Speaker Change: <unk>.

Speaker Change: The prospect of forward growth pretty significantly all over the world.

Speaker Change: I would say that when you get outside of the U S and I listened to Ceos.

[Analyst]: Okay, that's excellent. Thanks, David. Just a quick follow-up on debt underwriting. It's been a really good story for Goldman Sachs. I'd just love to maybe hear a little bit about some of the, whether it's cyclicality in the business, some of the other puts and takes that are kind of driving results, and the outlook from here, just given that it does seem like you guys are taking some share there.

Speaker Change: I hear a greater sense of short term concern, but everyone would like less uncertainty and more clarity on forward policy and that's what we're hearing from clients. They want to understand where the policy will settle out so that they can make capital decisions investment decisions planning decisions when youre talking to Ceos when.

Speaker Change: Yeah.

Speaker Change: The name is the category.

Speaker Change: And what's exciting is that we're building something even bigger than it would be to be up we are evolving been more to become.

Gerard: <unk> that is one of the drivers that will have us continuing to look to do that.

Speaker Change: The next generations go to money movement up.

Gerard: Very good and then coming back David you've mentioned it a few times in your.

Deirdre: This is very critical, because we know that the more you use our products, the more there are checkout selections. That means that we're driving habituation. Second, is pay your way. There is a new frontier to being. Yes, check-out has to be fast, and you're going to hear a lot of that today. but we're also going beyond. Our focus is on innovation. We will make checkout seamless and frictionless end-to-end, and it will go all the way to support our consumers post-purchase. is get the most value. We are going to turbocharge rewards and purchasing power like never before.

Speaker Change: So what do we mean by that less digging into the venmo strategy to bring this to life.

Speaker Change: We're talking to investors investors invest by predicting the future and they'd obviously like less uncertainty. So they can have a better window into predicting the future.

Speaker Change: <unk> remarks, but also in answering questions Goldman is in a very unique position, having this global view of the world because of your size and your presence.

David Solomon: Sure. Thank you. Obviously, debt underwriting is a huge business for us. We've been focused on it for a very, very long period of time. We gave our sort of market share positions at number two across the non-investment grade components and more like a four in certain of the investment grade categories. It's a big business for us. It's an important business for us. We have a track record, I think, importantly, of delivering, particularly when there are elevated times of uncertainty. We have a track record of being good risk takers in that business. When clients see an opportunity that an environment like this presents, and they need to turn to a trusted counterparty who has the capability and the risk appetite to step up and support them, I think we have a longstanding track record of doing that.

Speaker Change: As we do with Paypal, let's start with the consumer.

Speaker Change: Our user base is already off one is that he has a higher penetration of mid to high income consumers than our competitors.

Speaker Change: Can you give us any color on you know with the uncertainties going forward is it are they more.

My guess is over time this level of uncertainty will come down.

David Solomon and Denis Coleman: My guess is over time, this level of uncertainty will come down. My general message to people is to go slow and take a pause here until we have more clarity around a lot of these issues.

Speaker Change: And my.

Speaker Change: My General My General message to people is to go slow.

Speaker Change: Elevated here in the United States, then when you talk to clients in Europe or Asia. If you had to live the land where is the greatest uncertainty or the greatest worry when you talk to Ceos around the world.

Speaker Change: These coupled with the engagement that we have you know we're up gives us a clear advantage to monetize these higher spending levels.

Speaker Change: You know I would take a pause here until we have more clarity around a lot of these issues.

Speaker Change: We serve a lot of different customers across the U S. But when we wake up every morning thinking about is how we deliver on the needs of young.

Speaker Change: Thank you we'll take our next question from Jim Mitchell with Seaport Global Securities.

Speaker Change: So Gerard is it I mean, it's a good question and I would I would say the level of uncertainty.

Operator: Thank you. We'll take our next question from Jim Mitchell with Seaport Global Securities.

Jim Mitchell: Hey, good morning.

Speaker Change: We've seen.

Speaker Change: Is up significantly and it's partially up because growth was slowing down before we got to the implementation of trade policy and implementation of trade policy reset the Crosby prospect of forward growth pretty significantly all over the world.

Speaker Change: Very strong results in equities across the industry at or near record levels, but <unk>.

[Analyst 6]: Hey, good morning. We've seen very strong results in equities across the industry at or near record levels, but the industry performance in FICC has been a lot more muted. In your opinion, is that FICC is already operating at a high level, or do you see opportunities for aspects of that business to improve from here? Just trying to frame the outlook on FICC.

Speaker Change: Urban affluence.

Speaker Change: You know them. They are recent college graduates who are young professionals. They are working hard but they're also living their lives having fun with their friends, they're splitting rent rides and restaurant us they are spending in the neighborhoods where they leave.

Speaker Change: The industry performance in FIC has been a lot more muted.

Deirdre: Now what is really important is that if you look at these numbers, every stat that we have in this page shows that every consumer product leads to checkout. And that is a very important discussion. for our strategy. That's why it's both about having an amazing checkout experience, but it's also critical that we build and we nurture a consumer product ecosystem that drives engagement, that gives us more ways to monetize. and that keeps reinforcing. So now let me give you more detail on the execution of the three pillars of our strategy. So let's start with pay everywhere, which includes how omni-channel, P2P, and crypto will drive habitability.

David Solomon: The last several quarters have been more benign from a credit perspective. You've seen the balance of activity, more refinancing and orientation, where we've obviously had a very meaningful role to generate our market share positions. Should there be opportunities on the forward to do more transaction-based activity, I think the firm is well set up to do that as well.

Speaker Change: In your opinion is that sick or is that that FIC is already operating at a high level or do you see opportunities for aspects of that business to improve from here just trying to frame the outlook on sick.

Speaker Change: I would say that when you get outside of the U S and I listened to Ceos.

Speaker Change: And they work.

Speaker Change: And they want money to move as fast as they move instant F for less mobile first.

Speaker Change: I hear a greater sense of short term concern, but everyone would like less uncertainty and more clarity on forward policy and that's what we're hearing from clients. They want to understand where the policy will settle out so that they can make capital decisions investment decisions planning decisions when you're talking to Ceos when you're talking.

Speaker Change: I think I think you've seen the most notable sort of period on period growth across the equity line, particularly <unk>.

David Solomon and Denis Coleman: I think you've seen the most notable sort of period-on-period growth across the equity line, particularly equity intermediation type activities. FICC obviously is not a uniform asset class. It has multiple subcomponents to it, and you can have different sort of behavioral patterns across the subcomponents of FICC. The FICC business and the FICC markets are absolutely enormous, and the clients that participate across the components of FICC are some of the largest clients in the world. We expect there to continue to be good opportunities to drive activity with clients across both FICC and equities. I'd also just caution you, Jim, you know, we had an extraordinary first quarter in 2024. When you look at year-over-year comparisons, and by the way, there's a lot of activity in the first quarter of 2024, year-over-year comparisons sometimes can cloud.

Speaker Change: All in one place.

Operator: Thank you. We'll take our next question from Matt O'Connor with Deutsche Bank.

Speaker Change: Now so let me now take you through the five steps of our strategy designed to serve the needs of these customers and the recent unintentional sequence.

Speaker Change: Equity intermediation type activities.

[Analyst]: Good morning. A follow-up on the capital discussion. You seem to have managed the balance sheet really well this quarter, both on the RWAs and the leverage assets. Anything to call out on that? Because again, like the standardized RWAs barely went up, advanced went down. Usually, you see kind of the opposite where it goes up in the first quarter. Any balance sheet optimization that you did this quarter to call out?

Speaker Change: Thick, obviously is not a uniform asset classes multiple sub components to it and you get to a different sort of behavioral patterns.

Speaker Change: Investors investors invest by predicting the future and then obviously like less uncertainty. So they can have a better window into predicting the future.

Speaker Change: To this strategy so.

Speaker Change: Across the sub components effect, but the fact of the fixed the fixed business in the tech markets are absolutely enormous.

Speaker Change: Let's start with being the best B to B, which is obviously, where the money comes in we are the leaders on Ptv today.

Speaker Change: Lyons will participate across the components effect or some of the largest clients in the world. We expect they'll continue to be good opportunities to drive activity with clients across both FIC and equities and I'd also I'd also just caution you Jim.

Speaker Change: My guess is over time this level of uncertainty will come down.

Speaker Change: And we will continue to innovate to expand that lead.

Speaker Change: And my my General My General message to people is to go slow.

Deirdre: So first, as Alex said, PayPal is omnichannel. Our consumers can now use us online and in-store through debit, tap-to-pay, credit, and pay-later products. Last year, we launched PayPal everywhere in the U.S., and we're seeing incredible results, like an increase in checkout penetration among debit card users. Listen to this. Every time we add four debit card actives, we add one incremental checkout. And not only that, but our TPB on debit card has grown 100% year over year. So PayPal everywhere is expanding both checkout. and Sherwood. This year we will expand PayPal everywhere into more markets, starting with the launch of our NFC wallet in Germany, which is very, very exciting.

Speaker Change: So let me give you some examples.

Alex Feil: Last year, we scale our group's feature Alex mentioned this for Paypal, we did this for venmo.

Speaker Change: It would take a pause here until we have more clarity around a lot of these issues.

David Solomon: I appreciate the question and the observation. We're proud of how we've managed all of those metrics while delivering the type of performance and market shares that we have. I think the way I would phrase it is, we are accustomed to operating our financial resources in a very nimble fashion, given where we sit. I think our team collectively performed really well with what we refer to as keen eyes on risk management. We also have a keen eye on financial resource deployment. It is as you see it. It's a strong performance on a financial resource-adjusted basis.

Speaker Change: We had an extraordinary first quarter in 2024, when you look at year over year comparison.

Alex Feil: So for your next ski holiday with your friends you are planning one already now you can save money asset group and split the costs.

Speaker Change: By the way not that there was a lot of activity in the first quarter of 2024, you know year over year comparison.

Speaker Change: Thank you we'll take our next question from Jim Mitchell with Seaport Global Securities.

Speaker Change: You know sometimes can cloud when you look at the growth in assets and resources over the last five years against the FIC business the growth has been pretty meaningful.

Jim Mitchell: Hey, good morning.

Alex Feil: So far our users have created 400000 groups in 2024.

Speaker Change: We've seen.

Speaker Change: Very strong results in equities across the industry at or near record levels, but.

David Solomon and Denis Coleman: When you look at the growth in assets and resources over the last five years against the FICC business, the growth has been pretty meaningful.

Alex Feil: In October we launched schedule sense, making money movement even easier.

Speaker Change: The industry performance in FIC has been a lot more muted.

Speaker Change: Sure Yeah, no no I appreciate that but just maybe thinking through what areas might be.

[Analyst 6]: Sure, yeah. I appreciate that. Maybe thinking through what areas might be underperforming right now, if any, that could improve in a better environment versus the different components which are doing well and which are underperforming, if possible.

Alex Feil: <unk> for high value use cases like rent payments.

Speaker Change: In your opinion is that thick or is that that FIC is already operating at a high level or do you see opportunities for aspects of that business to improve from here just trying to frame the outlook on sick.

Underperforming right now if any that could could improve in a better environment versus just maybe the different components, which are doing well and what youre doing are underperforming if possible.

Alex Feil: And this year, we will bring even more advancements to search and discovery, making the experience even better.

Alex Feil: I guess another amazing thing we are building the base of the future our teen base has exploded by nearly 150% year over year.

[Analyst]: Okay. Separately, within the historical principal investment book, you had about a $600 million drop in a somewhat tough quarter. What's your thought process on the pace from here? Just remind us of that target. I think it was by the end of next year, you're targeting around $2 billion. Just remind us if that's right and still stands. Thank you.

Well I mean, it wouldn't surprise you yes. It wasn't surprised you for example that theres enormous activity and volumes and currencies at the moment.

Speaker Change: I think I think <unk> seen the most notable sort of period on period growth across the equity line, particularly.

David Solomon and Denis Coleman: It wouldn't surprise you, for example, that there's enormous activity and volumes in currencies at the moment, given this shift in the way people are thinking about and looking at the dollar. Activity levels there are extraordinarily high, record activity levels. One of the things that I just highlight about these businesses is these are big, broad, deep, diverse global businesses. One lever can be up, one lever can be down. When you look at the performance over a period of time, when you look at that market's performance over the last five or six years, it's relatively steady with a little bit of growth.

Speaker Change: Given this shift in the way people are thinking about and looking at the dollar until activity levels. There are extraordinarily high record record activity levels.

Alex Feil: Pretty exciting and remarkable.

Speaker Change: Equity intermediation type activities.

Deirdre: Next up. is peer-to-peer Our users can send money virtually anywhere and everywhere. It's a cornerstone of our consumer ecosystem and user acquisition strategy. 30% of our new users come from P2P. and over 10 billion dollars of P2P funds are re-spent through checks. So not only does B2B bring in new users, it keeps them engaged. We will continue to innovate on P2P with new features. Soon, we will let you send money instantly to bank accounts and mobile wallets. or some cash and digital currency like crypto nearly anywhere in the world. This is something that only PayPal can deliver.

Alex Feil: Then.

Speaker Change: Thick, obviously is not a uniform asset class as multiple sub components to it and you're going to have a different sort of behavioral patterns.

Speaker Change: We are going to enable our customers to use their P to be funds to shop Omnichannel.

Speaker Change: One of the things that again I just highlight about these businesses. These are big broad deep diverse global businesses and one level can be up one one lever can be up unlevered can be down, but when you look at the performance over a period of time when you look at that market's performance over the last five or six years. It's.

David Solomon: Sure. I appreciate that. Obviously, for the last several years, we have been reducing our historical principal investments, what we call HPI. Several years ago, the balance was around $30 billion. If you went to the beginning of just last year, we had $16 billion and change of HPIs. We now sit with $8 billion and change of HPI. We continue to meaningfully reduce those exposures. We expect by the end of 2026, we'll have sold down the vast majority of exposures versus where we began. We're committed to continuing to chip away at this. We have different subasset classes that comprise the HPI. Some are easier than others, but we have a plan to sell down. We're going to continue to execute on that.

Speaker Change: Venmo processes over 18 billion in P to be flows monthly that's an incredible number.

Speaker Change: Cross the sub components effect, but the fact of the fixed the fixed business in the tech markets are absolutely enormous.

Speaker Change: Lines that participate across the components affect our some of our largest clients in the world. We expect they'll continue to be good opportunities to drive activity with clients across both FIC and equities and I'd also I'd also just caution you Jim.

Speaker Change: This gives us the opportunity to convert these funds into monetize spending.

We're going to do this through pay with Venmo, which is already an incredible experience. You can then shop online and make purchases like booking a tripling jetblue or ordering on dash.

Speaker Change: <unk> study with a little bit of growth.

Speaker Change: Thank you we'll take our next question from Saul Martinez with HSBC.

Speaker Change: We had an extraordinary first quarter in 2024, when you look at year over year comparison.

Operator: Thank you. We'll take our next question from Saul Martinez with HSBC.

Speaker Change: Okay.

Speaker Change: And then we're going to do this through the venmo debit card with tap to pay for offline spending.

Saul Martinez: Hi, Good morning, Thank you for taking my question.

By the way not to lose a lot of activity in the first quarter of 2024, you know year over year comparison.

Speaker Change: I hate to beat a dead horse here on capital, but I did want to follow up on Betsy and Matt's questions.

[Analyst 5]: Hi, good morning. Thank you for taking my question. I hate to be the dead horse here on capital, but I did want to follow up on Betsy and Matt's questions and what they mean for RWA progression. RWA is up slightly this quarter. Your peers had much bigger increases. Markets RWA is down, VAR is down. If I look at RWA density on a standardized basis, it came down quite a bit. It is at its lowest level, I think, that I can see in recent history. Is there anything unusual in terms of RWA progression or VARs or exposures? How do we just rethink about RWA density and RWA progression from here? It obviously does matter in terms of forecasting CET1 ratios and the level of excess capital over time.

Speaker Change: Sometimes can cloud when you look at the growth in assets and resources over the last five years against the FIC business the growth has been pretty meaningful.

Speaker Change: You can think about local restaurants shops and more which.

Speaker Change: What's very exciting is that both of these products are in high growth mode.

Saul Martinez: And what.

Speaker Change: What would they mean for <unk> progression.

Speaker Change: Next.

Speaker Change: Sure Yeah, no no I appreciate that but just maybe thinking through what areas might be.

Speaker Change: We want to drive even more spending on venmo.

Saul Martinez: <unk> is up slightly this quarter your peers had much bigger increases.

Deirdre: And, listen to this, anyone, even outside of our network, will be able to receive payments with text or messenger through PayPal. That's pretty exciting. And finally, let's talk about crypto. So PayPal was the company that brought the world offline to online. And now we are the ones taking it from online to on-chain. We started by being a safe place to buy, sell, and hold crypto. and we're seeing explosive growth as our consumers use it more and more for transfers and payments. And we're very excited because PayPal consumers can use crypto to pay in millions of PayPal merchants right there in our apps.

Operator: Thank you. We'll take our next question from Erika Najarian with UBS.

Speaker Change: So capitalizing.

Speaker Change: Underperforming right now if any that could could improve in a better environment versus just maybe the different components, which are doing well and what youre doing are underperforming if possible.

Speaker Change: Markets are adobe always down the large down.

Speaker Change: On our incredible engagement that's already there we are going to integrate experiences right. They are in the App I didn't know where feed.

[Analyst]: Good morning. My first question is a follow-up on capital. David, given what you've said about the landscape and sort of freeing capital from the industry, we have strong momentum in terms of the stress test, GSIB surcharge, recalibration, and then Betsy mentioned the Supplementary Leverage Ratio. The question for you is, you know, you are already one of the most optimized businesses in financial services. If we do redefine the definition of excess capital for the industry broadly and for Goldman Sachs specifically, how are you going to allocate that freed up capital? Where do your priorities go? I appreciate the whole stack in terms of clients first and buybacks. Within the clients first, within the business, are there any places where you would reallocate even more capital if you do free up or change the definition of excess capital?

Speaker Change: At our <unk> density on a standardized basis, it came down quite a bit.

Speaker Change: At its lowest level I think.

Speaker Change: So imagine you use venmo already for example to buy tickets to go to a concert with your friends.

Speaker Change: That I can see in recent history. So just was there anything unusual in terms of.

Speaker Change: Well I mean, it wouldn't surprise you yes. It wasn't surprised you for example that there's enormous activity and volumes in currencies at the moment.

<unk> progression or larger or exposures and how do we just we think about.

Speaker Change: So you wouldn't see that your friends are doing that so then you can buy it because right next to them right. They are without leaving the venmo app.

Speaker Change: Given the shift in the way people are thinking about and looking at the dollar.

Speaker Change: Timothy levels, there are extraordinarily high record record activity levels.

Speaker Change: <unk> density and <unk> progression from here because it obviously does matter in terms of forecasting CET one ratios and.

Speaker Change: Think about it this is not just booking tickets for concert it could be a book and Reits get restaurant reservations and even book a new local yoga class, which is going to be a great tool for small businesses.

Speaker Change: One of the things that again I just highlight about these businesses. These are big broad deep diverse global businesses and one level can be up one one lever can be up one lever can be down, but when you look at the performance over a period of time when you look at that market performance over the last five or six years. It's.

And the level of excess capital over time.

Speaker Change: Oh.

Speaker Change: Sure. So you know again I.

Speaker Change: The best part is we are connecting consumers to merchants and merchants to consumers in a big way.

David Solomon and Denis Coleman: Sure. You know, again, you're not beating a dead horse, but I think what we would say is we look at that very, very carefully when we set our own business planning. We use our own form of RWA projections, and we think about our own capacity to step in and support client activities. We are meaningfully focused on those exposures that have high density versus low density. You can see us sort of moving out of certain exposures that have high capital density. A best example would be some of the historical principal investments. We are feeding other activities. I can stay in the same segment for the moment, like private wealth lending, which have a lower level of capital density and have an attractive recurring revenue component to them and also brings forth other types of activities with those clients. We look across the entirety of the firm.

Speaker Change: Beating a dead horse, but I think what we would say as we look at that very very carefully when we set our own business planning, we use our own form of <unk> projections, and we think about our own capacity to.

Speaker Change: That is the magic.

Speaker Change: Obama.

Speaker Change: <unk> study with a little bit of growth.

Speaker Change: To step in and support client activities and we are meaning meaningfully focused on those exposures that have high density versus low density you can see us sort of moving out of certain exposures that have high capital density. Best example would be some of the historical principal investments and we are fees.

Speaker Change: And then.

Deirdre: So we integrate buying, sending, and spending. All with a safety and trust, Only Paper Company. We're excited because we're building something truly differentiated. So our consumers won't want to do crypto anywhere else. Now, let's switch and talk about our second pillar of the PayPal strategy, pay your way. We're making checkout more frictionless for consumers. New vaulted experiences will make it easier than ever to set up PayPal for a seamless, almost invisible checkout. And we will be launching a subscription management hub so that customers can add and cancel their subscription. All in one. All of this because we know that when users choose us once on subscriptions and recurring payments, that means they are choosing us every time I check.

Speaker Change: We are going to drive even more funds in.

Speaker Change: Thank you we'll take our next question from Saul Martinez with HSBC.

Speaker Change: With our newest strategy customers will want to bring their money into venmo and.

David Solomon: I appreciate the question, Erica. Welcome to the team, by the way. I'm happy to have you. I know you're asking for probably more granularity than we'll give. We have a zealous focus on finding opportunities to serve our clients. When we need capital to serve them, making sure we have adequate capital to allocate there. Obviously, if you look at our business today, and let's put what's left of the consumer platform aside for the moment, when you look at our business today, the additional capital that gets allocated into the business broadly gets allocated into the banking and markets franchise. We are prepared, if there's opportunity there, to allocate meaningfully more. If there's not opportunity there, it's probably going to come back. That helps support the growth in our dividend, the sustainable growth in our dividend.

Saul Martinez: Hi, Good morning, Thank you for taking my question.

Speaker Change: I hate to beat a dead horse here on capital, but I did want to follow up on Betsy and Matt's questions.

Speaker Change: And we will make it easier and more compelling than ever no matter, where they keep on their money.

Saul Martinez: And what.

Speaker Change: Adding other activities I can stay in the same segment for the moment like private wealth lending, which have a lower level of capital density and have an attractive recurring.

Speaker Change: So whether that's through direct deposit gig economy payouts or investment platforms.

Saul Martinez: What what they mean for our Adobe way progression.

Saul Martinez: R W.

Speaker Change: And with enhanced money management tools and rewards.

Saul Martinez: Slightly this quarter your peers had much bigger increases.

Speaker Change: We will not even more reasons to bring more funds with venmo.

Speaker Change: Our revenue components that would also brings forth other types of activities with those clients. So we look across the entirety of the firm we looked across each in each and every segment and we look at which of our client base activities are more or less capital consumptive.

Saul Martinez: Markets are in WNS down the large down if I look at our <unk> density on a standardized basis it came down quite a bit.

Speaker Change: And finally in the sequence.

Saul Martinez: And a slowest level I think.

David Solomon and Denis Coleman: We look across each and every segment. We look at which of our client-based activities are more or less capital consumptive. We try and make sure that we're supporting the clients with the products that they demand from us and doing it in as capital-efficient fashion as we can.

Speaker Change: <unk> rewards, we are going to reward our customers for their whole relationship with venmo.

Saul Martinez: That I can see in recent history. So just is there anything unusual in terms of.

Speaker Change: We try and make sure that we're supporting our clients with the products that they demand from us and doing and that is capital efficient fashion as we can.

<unk> progression or larger or exposures and how do we just we think about <unk>.

Speaker Change: We believe that we keep the customers coming back is by building a relationship one that is facing given them more value for everything they do with us.

Okay.

Speaker Change: Well, maybe just a follow up with a very picky techie question on <unk>.

Saul Martinez: W. A density and <unk> progression from here because it obviously does matter in terms of forecasting CET one ratios.

[Analyst 5]: Okay, that's helpful. Maybe just a follow-up with a very ticky-tacky question on tax rates. I think you mentioned 21%. I think the previous guidance was 20%, if I'm not mistaken, despite this quarter being, you know, having benefited from some discrete items. I guess going forward, tax rates should be roughly in the 23% range for the rest of the year, if my math's right. I mean, just any color on how to think about your tax rate going forward for the rest of the year and what it looks like on a more normalized basis.

Speaker Change: On tax rate.

Speaker Change: So that's our five step than more strategy.

Speaker Change: I think you mentioned, 21% I think the previous guidance was 20% if I'm not mistaken.

David Solomon: It really is kind of our capital waterfall of in the business or if not, return it. I will say over time, and this is all proportionate, as we scale our alternatives platform, we use capital to start up new funds, to start up new platforms. You could see some capital deployed there. It's all going to be in the context of marginal in that business. That business is running as a much more capital-light business on a go-forward basis than it did historically. If we do see this capital reform from a regulatory perspective, and as I said earlier, I think there's a good chance of that happening, it is going to allow us to do two things. One, probably return more capital, two, also, in the context of how we think about things, find some places where we can deploy a little bit more to support clients.

Speaker Change: And let me share a city with Paypal, what this means for our opportunity to monetize and why we're confident.

Saul Martinez: And the level of excess capital over time.

Saul Martinez: Yes.

Deirdre: and the PayPal wallet will get smarter. Soon, all of your offers, rewards, and loyalty programs will stack automatically and be applied automatically right there in the app. So let me give you a few examples of what this might look like. So consumers will automatically earn and burn merchant rewards at the point of sale. This will stack on top of their PayPal rewards and their personalized. so they get the most out of every. And users will then set preferences that automatically switch on features like buy now, pay later, right there in the store. So they also get maximum flexibility.

Speaker Change: Despite this quarter being.

Saul Martinez: Sure. So you know again I.

Having a benefit from some.

Speaker Change: But our strategy is going to work.

Saul Martinez: Beating a dead horse, but I think what we would say as we look at that very very carefully when we set our own business planning, we use our own form of <unk> projections, and we think about our own capacity to.

Speaker Change: Discrete items, but I guess going forward tax rate should be roughly in the 23% range for the rest of the year, if my math right.

Speaker Change: B to B is our killer use case to get people engage with our ecosystem.

Speaker Change: Any color on kind of.

Speaker Change: When we get them to start spending with us in store and online the ARPA rockets up to $67.

Saul Martinez: To step in and support client activities and we are meeting meaningfully focused on those exposures that have high density versus low density you can see us sort of moving out of certain exposures that have high capital density. Best example would be some of the historical principal investments.

Speaker Change: Your tax rate going forward for the rest of the year end.

Speaker Change: But it looks like.

Speaker Change: On a more normalized basis.

Speaker Change: I'm going to even higher to more than 100.

Sure our our guidance to take into account everything that we know about the first quarter and our outlook for this year or is that you should expect the tax rate around 21% for the full year.

Speaker Change: When they also start to bring fun thing.

David Solomon and Denis Coleman: Sure. Our guidance to take into account everything that we know about the first quarter and our outlook for this year is that you should expect the tax rate around 21% for the full year.

Speaker Change: And why would already having a lot of engagement on P to P.

Speaker Change: Look at those numbers, so penetration, we still have so much opportunity to drive more penetration.

Saul Martinez: We are feeding other activities I can stay in the same segment for the moment like private wealth lending, which have a lower level of capital density and have an attractive recurring.

Thank you we'll take our next question from Dan Fannon with Jefferies.

Speaker Change: Across our ecosystem.

Operator: Thank you. We'll take our next question from Dan Fannon with Jefferies.

Speaker Change: We are very excited about where we're going with venmo and the opportunity.

Speaker Change: Thanks, Good morning, just a follow up on the outlook for the fee rate within asset and wealth.

Saul Martinez: Revenue component to them. It also brings forth other types of activities with those clients. So we look across the entirety of the firm we looked across each in each and every segment and we look at which of our client based activities are more or less capital consumptive.

Deirdre: And then. It's post-purchase that builds loyalty with features that simplify and add value. This includes smarter receipts, making it easier to track packages, manage returns and refunds, and personalized insights that make future shopping experiences better by remembering a lot of important details from your preferences, colors, sizes, styles. And now the third and the final pillar of our PayPal strategy, get the most value. We want our customers to keep coming back because of how much value PayPal unlocks. So let's start with Bayley. We want to be the best pay later, period. And how? By being the only ones who offer maximum availability, affordability, and choice.

[Analyst 5]: Thanks. Good morning. Just a follow-up on the outlook for the fee rate within Asset & Wealth Management. You talked about the OCIO wins, and obviously, you continue to grow in alternatives. As you think about on a longer-term basis, should this mix shift be higher, or do you think those will offset each other? In the quarter, were there any placement fees in the context of the management fee as you reported it?

David Solomon: We're going to watch it very carefully. The marginal, the excess capital that we're keeping, the cushion that we're keeping is high. I don't think that's a normalized thing. It's not just us. You can look across the industry that everybody's going to run with these excess capital cushions. When we get more, I think across the industry, there'll be a reset of what those cushions should be when people feel like they're in a position to be able to plan over multiple years of a capital cycle.

Speaker Change: You talked about the OCI or wins, and obviously, you're continuing to grow and also as you think about on a longer term basis should this.

Speaker Change: But we're also excited that we're not just talking about something that he will come whereas already talking about the results we're already seeing.

Speaker Change: Mix ship to be higher or do you think those will offset each other and then also in the quarter were there any placement fees in the context of the management fee as we reported it.

Speaker Change: At 24% increase in users monetize beyond P to be in 2024.

Saul Martinez: And we try and make sure that we're supporting the clients with the products that they demand from us and doing it as capital efficient fashion as we can.

Speaker Change: 12% growth in ARPA year over year.

Saul Martinez: Okay.

Speaker Change: Sure a couple of things we did comment that.

Speaker Change: Helpful. Maybe just a follow up with a very picky question.

Speaker Change: And 50% growth in pay with Venmo merchants. This is really strong progress.

David Solomon and Denis Coleman: Sure. A couple of things. We did comment that, you know, placement fees were down sequentially versus the fourth quarter. That was one of the components in the other fee line. To take a step back, you have an aggregation represented in the effective fee of the alternatives business, but we don't manage the business to the average effective fee. We actually have multiple different strategies, and we have demand from different client subcomponents for those strategies. We're focused on building, you know, our different fund strategies in response to client demand, but not necessarily trying to boil it all down to one effective fee.

Placement fees were down sequentially.

Saul Martinez: On tax rate.

Speaker Change: I think you mentioned, 21% I think the previous guidance was 20% if I'm not mistaken.

Speaker Change: Versus the fourth quarter that was one of the components and the other in the other fee line.

Speaker Change: So what does this mean for venmo financial performance. The Formula is simple, we're getting more consumers engaging at higher levels with our monetize products ultimately our plant will enable us to grow venmo revenue to more than 2 billion by 2027.

[Analyst]: Got it. My follow-up question is this. There have been increased questions from investors about how global investment banks like Goldman Sachs, how the standing is impacted by some of the policy volatility, if you will, in terms of your internationally sourced revenues. We had sort of two different answers from your peers on Friday. Jamie was a little bit more pessimistic. Ted was a little bit more optimistic about the international revenue outlook going forward, given all of the global policy volatility. David and Denis, I wanted to get your thoughts on that, on whether or not what the U.S. is doing could impact some of that sourcing.

Speaker Change: Wow.

Speaker Change: To take a step back you have an aggregation represented in the effective fee of the alts business, we don't manage the business to the average effective fee.

Despite this quarter being.

Saul Martinez: Having had benefited from some.

Saul Martinez: Discrete items, but I guess going forward tax rate should be roughly in the 23% range for the rest of the year. If my math is right.

Speaker Change: We actually have multiple different strategies.

Speaker Change: And we have demand from different client sub components for those strategies and so we're focused on building our.

Saul Martinez: Any color on kind of.

Saul Martinez: Think about your tax rate going forward for the rest of the year and.

Speaker Change: So let me conclude by saying very simply we're focusing on three key outcomes.

Speaker Change: Our different fund strategies in response to client demand.

Saul Martinez: What it looks like.

Speaker Change: But not necessarily trying to boil it all down to one effective fee.

Speaker Change: Going back to the beginning driving selection rate first and foremost.

Saul Martinez: On a more normalized basis.

Saul Martinez: Sure our our guidance to take into account everything that we know about the first quarter and our outlook for this year is that you should expect the tax rate around 21% for the full year.

Deirdre: So let me explain one by one. other BMPL companies. are still spawning their networks, while PayPal's scale... It's as clear as that. almost anywhere you PayPal, you can pay later. That's incredible. And you can manage your payments right there in the app. That's what I call maximum availability. Also, our amazing products have no fee and no interest option. That's maximum affordability. and we give customers lots of options to choose from based on their needs. That's maximum choice. This used to be just online, now we're bringing this in stores. And these products are going to show up in a very big way.

Speaker Change: Understood. Thank you.

Speaker Change: Two accelerating or increasing our per user monetization.

[Analyst 5]: Understood. Thank you.

The two side of our strategy.

Speaker Change: Thank you.

Speaker Change: At this time that we will close our Q&A portion, ladies and gentlemen. This concludes the Goldman Sachs first quarter 2025 earnings Conference call. Thank you for your participation you may now disconnect.

Speaker Change: And third accelerating new revenue sources.

Operator: Thank you. At this time, that will close our Q&A portion. Ladies and gentlemen, this concludes the Goldman Sachs first quarter 2025 earnings conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Thank you we'll take our next question from Dan Fannon with Jefferies.

Speaker Change: Our strategy is clear.

David Solomon: What we're hearing from clients, Erica, and this is important to be talking to clients, what we're hearing from clients, particularly clients in Europe and other places around the world, is they don't like the level of uncertainty. They don't like the fact that certain constructs for how they interacted with the U.S. economic system and the global economic system are potentially changing. I would just say it's early to call heads or tails or direction of travel on how this will play out. We're listening to it carefully. At the same point, we run a huge scale global franchise all over the world. We have extraordinary expertise and leadership positions in activities all over the world. I don't see any decline in any way, shape, or form of clients' interest in dealing with Goldman Sachs in any part of the world.

Speaker Change: Is designed to drive durable growth.

Dan Fannon: Thanks, Good morning, just a follow up on the outlook for the fee rate within asset and wealth.

Speaker Change: And what's most important.

Speaker Change: We are on our way.

Speaker Change: So thank you and let me now hand, it over to Steve that are going to take US forward. Thank you very much.

Dan Fannon: You talked about the OCI or wins, and obviously, you're continuing to grow and also as you think about on a longer term basis should this.

Speaker Change: [noise] like Diego.

Dan Fannon: Mix ship to be higher or do you think those will offset each other and then also in the quarter were there any placement fees in the context of the management fee as we reported it.

Speaker Change: Diego shiny Alex that was fantastic exciting love hearing the words durable growth for me anyway before we go over to Frank Michel and Susan We're gonna take roughly a 15 minute break right now please be back in your seats than if you go over to the marketplace area, you'll see a number of Paypal merchants.

Dan Fannon: Sure.

Dan Fannon: The things we did comment that.

Dan Fannon: Placement fees were down sequentially.

Dan Fannon: Versus the fourth quarter that was one of the components and the other in the other fee line.

Speaker Change: Such as flat push granola, which is great southern swell. So enjoy yourselves is that coffee et cetera, and we'll see you back in 15 minutes. Thank you.

Dan Fannon: To take a step back do you have an aggregation represented in the effective fee of the alts business, but we don't manage the business to the average effective fee.

Deirdre: on getting more value is reward. integrations with third-party loyalty programs, and a new PayPal rewards program, which will reward the entire customer relationship. from Sending P2P. Checkout, and even buying. Very exciting. And now, the last component of getting more value. ads and offers. PayPal ads is not just another ads business, it's the engine to our commerce platform that Alex described. We're already seeing a 65% lift in checkout when users enroll in our Save On Advertisement Offer. And we're just getting started. We can serve consumers on our own surfaces, like our app, but also off-site at our merchant and media partners.

Speaker Change: [noise] Brooklyn has its own flavor has its own brand. It's one five and we want to bring that to people beyond the four walls in pittsboro a lot of other commercially available granola as they don't really have a strong spice.

David Solomon: I don't expect that to change on any significant basis. Certainly, as we engage with clients, we're hearing questions on these things. I think it's early to declare one way or another as to whether or not at the margin there's any effect from that. At the moment, all over the world, clients are extremely engaged with the firm.

Dan Fannon: We actually have multiple different strategies.

Dan Fannon: And we have demand from different client sub components for those strategies and so we're focused on building our.

Dan Fannon: Different fund strategies in response to client demand.

Dan Fannon: But not necessarily trying to boil it all down to one effective fee.

Speaker Change: Can they really have a lot of distinct flavors I want people to feel that granola is special and that is taking it sounds like one of the great things about having Paypal and venmo as a payment option is that it really reduces friction at the time of the sale.

Dan Fannon: Understood. Thank you.

Operator: Thank you. We'll go next to Gerard Cassidy with RBC.

[Analyst]: Hi, Denis. Hi, David. Denis, you mentioned in your answering your question about the HPI portfolio that you guys had just over $4 billion of CET1 capital, I think it was, that supports that portfolio. Can you remind us how will you bleed that capital back in releasing it back in or just releasing it, I should say? I know when the 8.8 goes to 0, it'll be completely released. Is there a linear way of releasing it, or does it all come at the end when the portfolio drops to about 0?

Dan Fannon: Thank you.

Speaker Change: At this time that will close our Q&A portion, ladies and gentlemen. This concludes the Goldman Sachs first quarter 2025 earnings Conference call. Thank you for your participation you may now disconnect.

Speaker Change: Whether it's from my wholesale business, sending invoices or my corporate customers, who want a P to P Powell and even my subscription consumers, who are ordering to my website or my pop up markets Paypal and venmo are super flexible and be really easy interface. My venmo business profile is great, particularly because it allows me to operate really seamlessly.

Deirdre: So let me give you an example. Imagine you're watching a show on your streaming platform, your favorite streaming platform, but instead of another random ad, you see an ad that's targeted to you with an offer that you actually want, and the offer is already saved for you in the PayPal app. and you can check out with a single tap. We're building something only few others can build. We're building the future of Google. So there you have it, that is the PayPal consumer strategy. Let me speak a little bit about what does all this mean for monetization.

Speaker Change: [music].

Speaker Change: I'm out in the market I can just jump back and forth between my personal venmo and my business Venmo profile. There's so many different ways that customers can pay it's simple it's easy and it's secure.

David Solomon: I appreciate the question, Gerard. As we have been selling down that portfolio over time, we do free up capital, and we have been returning a lot of that to shareholders. We don't need to wait till the end of the sell-down exercise to release that capital. In fact, you should expect that it'll be part of our capital management plan over the following quarters. As we have this broader discussion around quantums and capacity to continue to return capital to shareholders, that is one of the drivers that will have us continuing to look to do that.

Speaker Change: Proud as taking the leap.

Speaker Change: Turning business is hard, but I'm exceptionally proud of and I was able to put out into the world that brings people joy.

Speaker Change: And now please welcome Paypal as general manager of large enterprise Frank Keller.

Speaker Change: [noise] will it come back I Hope you are all well coffee Nathan So you don't fall asleep.

Deirdre: Just look at those numbers. When consumers are engaged across our many products, they're worth up to $94 per account, compared to $5 for consumers who only use. That's pretty exciting and remarkable. But what's even more exciting is that if you look at the penetration... of these products beyond P2P and checkout is still so low. We have tremendous opportunity to keep driving growth, and that's our strategy. And this is not just a theory. We already have great momentum. in our business. Our cohort of power users grew by 10% last year. And our inactive users declined 4%.

Speaker Change: I'm Super excited to be here I am here to discuss the merchant side I'll cover three things first how we have the re imagined our checkout experiences to drive growth.

[Analyst]: Very good. Coming back, David, you've mentioned it a few times in your prepared remarks, but also in answering questions, Goldman Sachs is in a very unique position having this global view of the world because of your size and your presence. Can you give us any color on, with the uncertainties going forward, are they more elevated here in the U.S. than when you talk to clients in Europe or Asia? If you had to live the land, where is the greatest uncertainty or the greatest worry when you talk to CEOs around the world?

Speaker Change: Secondly, how we drive profitable growth in our enterprise processing business also known as brain tree and third and finally, how we support our merchants as we look into the future.

Speaker Change: So paypal is not only the smartest way to pay.

Speaker Change: But it's also for merchants the smartest way to get paid.

Speaker Change: And that's why Paypal checkout is at the core of our flywheel.

Speaker Change: <unk> already talked about this this is our branded checkout growth formula.

Speaker Change: As you see the checkout experience is at the center connecting the merchant and the consumer side.

David Solomon: It is a good question. I would say the level of uncertainty is up significantly. It is partially up because growth was slowing down before we got to the implementation of trade policy. The implementation of trade policy reset the prospect of forward growth pretty significantly all over the world. I would say that when you get outside of the U.S., and I listen to CEOs, I hear a greater sense of short-term concern. Everyone would like less uncertainty and more clarity on forward policy. That is what we are hearing from clients. They want to understand where the policy will settle out so that they can make capital decisions, investment decisions, planning decisions when you are talking to CEOs. When you are talking to investors, investors invest by predicting the future. They would obviously like less uncertainty so they can have a better window into predicting the future.

Deirdre: We're driving engagement, which means our strategy is working. OK. Let's switch gears now and talk about Venmo. Few ups are more deeply ingrained in the lives of young people than Venmo. How many times do you hear or even say to yourself, Venmo me or I'll Venmo you? The name is the Category. And what's exciting is that we're building something even bigger than a P2P app. We are evolving Venmo to become... The next generations go to money movement up. So what do we mean by that? Let's dig into the Venmo strategy to bring this. As we did with PayPal, let's start with the consumer.

Speaker Change: So for consumers it needs to be fast it needs to be easy and it needs to be personalized.

Speaker Change: For merchants.

Speaker Change: It needs to drive conversion.

Speaker Change: Last year, we've been laser focused on re imagining our checkout experiences. So let me tell you what we have accomplished.

Speaker Change: As you see here that essentially three core checkout experiences vault at one time and guest so vaulted is our best performing experience. It is ideal for repeat purchases think of rideshare food delivery et cetera.

Speaker Change: Then there's one time it provides the full flexibility every time you pay like in traditional retail and our marketplaces and then Theres guest checkout.

Speaker Change: That has a lot of friction.

Deirdre: Our user base is already afloat. It has a higher penetration of mid- to high-income consumers than our competitors. This couple with the engagement that we have in our app gives us a clear advantage to monetize this high spending level. We serve a lot of different customers across the U.S. But what we wake up every morning thinking about is how we deliver on the needs of young, urban Africans. You know them. They are recent college graduates or young professionals. They are working hard, but they're also living their lives, having fun with their friends. They are splitting rent, rides, and restaurant tabs.

Speaker Change: But it's almost 40% of global ecommerce.

David Solomon: My guess is over time this level of uncertainty will come down. My general message to people is to go slow and take a pause here until we have more clarity around a lot of these issues.

Speaker Change: Often used in low frequency scenarios. This is why we've innovated with fast lane by Paypal I wanted double click into each.

Speaker Change: What is a voltage payment.

Speaker Change: <unk>.

Speaker Change: That you opened a new rideshare account.

Speaker Change: During set up you need to choose a default payment method, so when you're right.

Operator: Thank you. We'll take our next question from Jim Mitchell with Seaport Global Securities.

Speaker Change: You're focusing on getting from a to b and the payment actually automatically happens in the back.

[Analyst]: Hey, good morning. We've seen very strong results in equities across the industry at or near record levels. The industry performance in FICC has been a lot more muted. In your opinion, is that FICC is already operating at a high level, or do you see opportunities for aspects of that business to improve from here? Just trying to frame the outlook on FICC.

Speaker Change: This is when Paypal vault it.

Speaker Change: We're having an outstanding conversion rate of 95%.

Speaker Change: And that is because of our wallet and so powerful we.

We have multiple payment methods, so payments rarely fail.

Deirdre: They are spending in the neighborhoods where they live and they work. and they want money to move as fast as they move. Instant, effortless, mobile first. all in one. Now, so let me now take you through the five steps. of our strategy designed to serve the needs of these customers. And there is an intentional sequence. to this strategy. So let's start with being the best P2P, which is obviously where the money comes in. We are the leaders on P2P today, and we will continue to innovate to expand that. So let me give you some examples.

Speaker Change: But we had an opportunity to do even better during sign up logging and how fast it is.

Speaker Change: Yeah.

David Solomon: I think you've seen the most notable sort of period-on-period growth across the equity line, particularly equity intermediation type activities. FICC obviously is not a uniform asset class. It has multiple subcomponents to it, and you can have different sort of behavioral patterns across the subcomponents of FICC. The FICC business and the FICC markets are absolutely enormous, and the clients that participate across the components of FICC are some of the largest clients in the world. We expect there to continue to be good opportunities to drive activity with clients across both FICC and equities. I'd also just caution you, Jim, you know, we had an extraordinary first quarter in 2024. When you look at year-over-year comparisons, and by the way, there's a lot of activity in the first quarter of 2024, year-over-year comparisons sometimes can cloud.

Speaker Change: So let me take you through these.

Speaker Change: When a merchant presents a user with payment options.

Speaker Change: They don't know what to prioritize Alex called it they are getting.

Speaker Change: So this is where we've developed the payment ready signal.

Speaker Change: Its arms merchants with the information they need.

Speaker Change: To prioritize our customers their Paypal venmo pay later users.

As an example that you see here.

Speaker Change: With a payment ready signal it moved from initially third place.

Speaker Change: Up to the top of the stack for a recognized Paypal customer.

Deirdre: Last year, we scaled our groups feature. Alex mentioned this for PayPal. We did this for Venmo. So for your next ski holiday with your friends, if you're planning one already, now you can save money as a group and split the cost. So far, our users have created 400,000 groups in 2020. In October, we launched Schedule Sense, making money movement even easier. particularly for high-value use cases like renting. And this year, we will bring even more advancements to search and discovery, making the experience even better. And here's another amazing thing. We are building the base of the future.

Speaker Change: Secondly, we took the friction out of logging.

Speaker Change: With biometrics.

Logging is painful.

Speaker Change: Specially on mobile.

Speaker Change: Nobody enjoys typing end user names remembering passwords.

David Solomon: When you look at the growth in assets and resources over the last five years against the FICC business, the growth has been pretty meaningful.

Speaker Change: So biometrics eliminate the hassle and make it easy.

Speaker Change: As you see in this example.

[Analyst]: Sure, yeah. I appreciate that. Maybe thinking through what areas might be underperforming right now, if any, that could improve in a better environment versus just the different components which are doing well and which are underperforming, if possible.

Speaker Change: Login success rates after new experience are significantly higher than 96% and on top.

Speaker Change: It's even more secure.

Speaker Change: Our new logging experience is fundamentally better, especially on mobile.

David Solomon: It wouldn't surprise you, for example, that there's enormous activity and volumes in currencies at the moment, given this shift in the way people are thinking about and looking at the dollar. Activity levels there are extraordinarily high, record activity levels. One of the things that I just highlight about these businesses, these are big, broad, deep, diverse global businesses. One lever can be up, one lever can be down. When you look at the performance over a period of time, when you look at that market's performance over the last five or six years, it's relatively steady with a little bit of growth.

Speaker Change: And third.

Deirdre: Our team base has exploded by nearly 150% year-over-year. Pretty exciting and remarkable. We are going to enable our customers to use their P2P funds. to shop Omnichannel. Venmo processes over 18 billion in P2P flows monthly. That's an incredible number. This gives us the opportunity to convert these funds into monetized spending. We're gonna do this through Pay with Venmo. is already an incredible experience. You can then shop online, make purchases like booking a trip on JetBlue or ordering on DoorDash. And then we're going to do this through the Venmo debit card with Tap2Pay for offline spending.

Speaker Change: We have dramatically increased the speed of our checkout experiences.

Speaker Change: Last year, we have completely rebuilt our 20 plus year old checkout codebase make.

Speaker Change: Making it faster and better and as a result latency is down by over 40%.

Speaker Change: But we're not stopping there as <unk> mentioned, we're moving to the cloud, which will further increase the checkout speed for our global customers.

And let me tell you we're very pleased with the results of our early adopters.

Speaker Change: And if you take it altogether consumers have less friction when they select and logging into Paypal.

Operator: Thank you. We'll take our next question from Saul Martinez with HSBC.

Merchants get higher converting customers and Paypal is getting a bigger share so I call that a win win win.

[Analyst]: Hi, good morning. Thank you for taking my question. I hate to be the dead horse here on capital, but I did want to follow up on Betsy and Matt's questions and what they mean for RWA progression. RWA is up slightly this quarter. Your peers had much bigger increases. Markets RWA is down, VAR is down. If I look at RWA density on a standardized basis, it came down quite a bit. It's at its lowest level, I think, that I can see in recent history. Is there anything unusual in terms of RWA progression or VARs or exposures? How do we just rethink about RWA density and RWA progression from here? It obviously does matter in terms of forecasting CET1 ratios and the level of excess capital over time.

Deirdre: You can think about local restaurants, shops, and more. What is very exciting is that both of these products are in high growth mode. We want to drive even more spending on them. So capitalize. on our incredible engagement that's already there. We are going to integrate experiences right there in the app and in our. So imagine you use Venmo already, for example, to buy tickets to go to a concert with your friends. So you're going to see that your friends are doing that, so then you can buy tickets right next to them, right there, without leaving the Venmo app.

Speaker Change: With that lets look at one time check out there.

Speaker Change: This is when a consumer actively select Paypal for every purchase like in classical retail.

Speaker Change: It gives the consumer flexibility, especially on high order values.

Speaker Change: S. They might want to pay overtime utilize credit maximize that point.

Speaker Change: Buying an airline ticket.

Speaker Change: When merchants offer our trusted brands at checkout.

Speaker Change: They see a 33% conversion lift.

Speaker Change: And we again here saw further opportunity to make checkout, even better to.

Speaker Change: To make it more modern and streamlined.

Speaker Change: Yeah.

Speaker Change: We have completely redesigned.

Deirdre: I think about it, this is not just booking tickets for concerts, it could be booking rides, get restaurant reservations, and even book a new local yoga class. which is going to be a great tool for a small business. The best part is we are connecting consumers to merchants and merchants to consumers in a big way. That is the magic of Venmo. And then. We are going to drive even more funds. With our new strategy, customers will want to bring their money into Venmo. And we will make it easier and more compelling than ever, no matter where they keep and earn their money.

Speaker Change: The patient to make it slick and take out the cognitive load for consumers the new design.

Speaker Change: It's the consumer through three simple decisions they need to make during checkout.

David Solomon: Sure. I'm not beating a dead horse, but I think what we would say is we look at that very, very carefully when we set our own business planning. We use our own form of RWA projections, and we think about our own capacity to step in and support client activities. We are meaningfully focused on those exposures that have high density versus low density. You can see us sort of moving out of certain exposures that have high capital density. A best example would be some of the historical principal investments. We are feeding other activities. I can stay in the same segment for the moment, like private wealth lending, which have a lower level of capital density and have an attractive recurring revenue component to them and also brings forth other types of activities with those clients. We look across the entirety of the firm.

Speaker Change: When to pay now or later.

Speaker Change: How to pay with Paypal balance bank account debit or credit card and last the shipping details.

Speaker Change: And let me tell you it works beautifully.

Speaker Change: Especially on mobile we've seen over 100 basis points conversion lift.

Speaker Change: That's a big deal.

Speaker Change: And now this is actually different we went one step further we made the design modular so that the experience can adapt to the individual needs of a consumer.

Deirdre: So whether that's through direct deposit, gig economy payouts, or investment platforms. and with enhanced money management tools and rewards. We will add even more reasons to bring more funds with them. And finally, in the sequence... is rewards. We are going to reward our customers for their whole relationship with them. We believe that we keep customers coming back is by building a relationship, one that is based in giving them more value for everything they do with us. So that's our five-step Venmo strategy. And let me share, as I did with PayPal, what this means for our opportunity to monetize and why we're confident.

Speaker Change: With that consumers not only get a slick checkout they receive a personalized shopping experience.

Speaker Change: And as you can see here in this pay later example, we can now show consumer that they're clearly being preapproved.

David Solomon: We look across each and every segment, and we look at which of our client-based activities are more or less capital consumptive. We try and make sure that we're supporting the clients with the products that they demand from us and doing it in as capital-efficient fashion as we can.

Speaker Change: This drove a 20% lift in pay later usage.

Speaker Change: And it doubled.

Speaker Change: The first time pay later users.

[Analyst]: Okay, that's helpful. Maybe just a follow-up with a very ticky-tacky question on tax rates. I think you mentioned 21%. I think the previous guidance was 20%, if I'm not mistaken, despite this quarter having benefited from some discrete items. I guess going forward, tax rates should be roughly in the 23% range for the rest of the year, if my math's right. Just any color on how to think about your tax rate going forward for the rest of the year and what it looks like on a more normalized basis.

Speaker Change: So let's move over.

Speaker Change: And talk how we have innovated guest checkout.

Speaker Change: When we step back we saw an immense opportunity to bring more consumers into the Paypal ecosystem.

Speaker Change: And ultimately the branded checkout flywheel.

Deirdre: that our strategy is going to work. P2P is our killer use case to get people engaged with our ecosystem. That's where we get them to start spending with us in-store and online. They are ARPA rockets up to $67. and goes even higher to more than 100 when they also start to bring funds. and what we're already having a lot of engagement on P2P. Look at those numbers of penetration. We still have so much opportunity to drive more penetration across our economy. We are very excited about where we're going with Venmo and the opportunity. But we're also excited that we're not just talking about something that it will come.

Speaker Change: As mentioned data entry is a key challenge for consumers and it's painful for merchants.

Speaker Change: Staggering 50, 454% of consumers drop out of the guest checkout.

Speaker Change: Directly impacting merchant's bottom line.

Speaker Change: To seize that opportunity and to streamline guest checkout for consumers and for our merchants.

David Solomon: Sure. Our guidance to take into account everything that we know about the first quarter and our outlook for this year is that you should expect the tax rate around 21% for the full year.

Speaker Change: We have built fast lane by Paypal.

Speaker Change: And we're well positioned to do so thanks to our trusted brand Halo.

Speaker Change: And fast lane is showing excellent results.

Operator: Thank you. We'll take our next question from Dan Fannon with Jefferies.

Speaker Change: Consumers are opting in in fact, we already have in our network more than 170 million accounts in the U S that are fast lane ready.

[Analyst]: Thanks. Good morning. Just a follow-up on the outlook for the fee rate within Asset and Wealth Management. You talked about the OCIO wins, and obviously, you continue to grow in alts. As you think about on a longer-term basis, should this mix shift be higher, or do you think those will offset each other? In the quarter, were there any placement fees in the context of the management fee as you reported it?

Speaker Change: And merchants are seeing significant conversion lift over 50% in the guest checkout.

Deirdre: We're already talking about the results. We're already. A 24% increase in users monetized beyond P2P in 2021. 12% growth in ARPA year over year, and 50% growth in pay with Venmo merchants. This is really strong progress. So, what does this mean for Venmo's financial performance? The formula is simple. We're getting more consumers engaging at higher levels with our monetized products. Ultimately, our plan will enable us to grow Venmo revenue to more than two billion by 2020. So let me conclude by saying very simply, we're focusing on three key outcomes. Going back to the beginning, driving selection rate, first and foremost.

Speaker Change: So for Paypal, it's a meaningful opportunity to increase our overall share of checkout and.

Speaker Change: And we're now focused on rapidly scaling the merchant side with partners like the commerce audience Fiserv and more.

David Solomon: Sure. A couple of things. We did comment that, you know, placement fees were down sequentially versus the fourth quarter. That was one of the components in the other fee line. To take a step back, you have an aggregation represented in the effective fee of the alts business, but we don't manage the business to the average effective fee. We actually have multiple different strategies, and we have demand from different client subcomponents for those strategies. We are focused on building, you know, our different fund strategies in response to client demand, but not necessarily trying to boil it all down to one effective fee.

Speaker Change: Now this is important.

Speaker Change: Fast lane fuels, our branded flywheel with a second opportunity to bring consumers into our ecosystem.

Speaker Change: Let me tell you we're watching fast lane user cohorts extremely carefully.

Speaker Change: And what we're seeing.

Speaker Change: It's interesting.

Speaker Change: 25% are new to Paypal and over 50% are inactive meaning they have a paypal account there are no longer using.

Speaker Change: So it becomes a great channel for us to engage new or lapsed users with branded checkout.

Speaker Change: So as you see fast lane as part of our holistic approach to growing Paypal branded checkout.

Deirdre: to accelerating or increasing our per-user monetization. That's the two sides of our strategy. and third, accelerating new revenue. Our strategy is clear. is designed to drive durable growth. and what's most important. We are an hour away. So thank you, and let me now hand it over to Steve, that is gonna take us forward.

[Analyst]: Understood. Thank you.

Operator: Thank you. At this time, that will close our Q&A portion. Ladies and gentlemen, this concludes the Goldman Sachs first quarter 2025 earnings conference call. Thank you for your participation. You may now disconnect.

Speaker Change: As these experiences are now delivering results for our customers and for Paypal.

Speaker Change: We're now focused on bringing our new checkout experiences to a global scale.

Speaker Change: Today, we've already scaled to more than 30% coverage in the U S.

Speaker Change: And soon we'll start rolling out.

Steve Winick: Thank you very much. Thank you. That was great. Thanks, Diego, Srini, Alex. That was fantastic, exciting. Love hearing the words durable growth for me anyway. Before we go over to Frank, Michelle, and Susan, we're gonna take roughly a 15-minute break right now.

Speaker Change: So the U K to Germany, followed by the rest of the world.

Speaker Change: As we continue to drive results for our customers, we will phase out old experiences.

Speaker Change: And that is important so that our consumers around the world get a consistent modern and fast checkout experience wherever they shop and you'll hear more about merchant option from Susan later.

Unknown Attendee: Please be back in your seats then. If you go over to the Marketplace area, you'll see a number of PayPal merchants, such as Flatbush Granola, which is great, Sun and Swell. So enjoy yourselves with that, coffee, et cetera, and we'll see you back in 15 minutes. Thank you.

Speaker Change: Okay.

Speaker Change: So I know you're all interested in understanding our growth expectations for branded checkout.

Unknown Attendee: Thank you for all of your Sundays and for making this happen. Brooklyn has its own flavor, has its own brand, its own vibe, and we want to bring that to people beyond the four walls of this borough. A lot of other commercially available granolas, they don't really have a strong spice hand or really have a lot of distinct flavors. I want people to feel that granola is special and that it's taking them someplace. One of the great things about having PayPal and Venmo as payment options is that it really reduces friction at the time of the sale.

Speaker Change: Our plan is to accelerate <unk> growth to between eight and 10% by 2027.

Speaker Change: We will measure success by growing our new experienced share to over 80%.

Speaker Change: Growing pay later usage by more than 20% and growing pay with venmo by more than 40% as you heard in Diego section.

Speaker Change: So to summarize we have a rigorous plan to drive checkout growth.

Speaker Change: We're reigniting consumer selection we.

Unknown Attendee: Whether it's for my wholesale business, sending invoices, or my corporate customers who want to pay through PayPal, and even my subscription consumers who are ordering through my website or at my pop-up markets, PayPal and Venmo are always super flexible and a really easy interface. My Venmo business profile is great, particularly because it allows me to operate really seamlessly when I'm out in the market. I can just jump back and forth between my personal Venmo and my business Venmo profile. There are so many different ways that customers can pay. It's simple, it's easy, and it's secure.

Speaker Change: We have re imagined checkout experiences and innovated with fast lane and those are highly performing to exceed merchant and consumer needs.

Speaker Change: And now we are laser focused on scaling them across our global merchant base.

Speaker Change: When we talk to merchants.

Speaker Change: They are impressed by our new experiences.

Speaker Change: Which opened stores for having much more holistic conversations about how we help them driving their business.

Joe: And with that I'd like to turn to the second part, which is our enterprise payments business, Joe I'll know S. Braintree.

Unknown Attendee: I'm most proud of taking the leap.

Frank Keller: Starting a business is hard, but I'm exceptionally proud that I was able to put out something into the world that brings people joy. And now, please welcome PayPal's General Manager of Large Enterprise, Frank Keller.

Speaker Change: I'm proud of that.

Speaker Change: We've made significant progress last year.

Speaker Change: By building this business, bringing this business back to profitability.

Speaker Change: And I'm excited to tell you more about how we grow from here.

Speaker Change: Let me tell you we have a leading enterprise payments platform, it's scaled if process over $570 billion last year with leading authorization rates.

Frank Keller: Welcome back. I hope you are all well caffeinated so you don't fall asleep. I'm super excited to be here. I am here to discuss the merch. I'll cover three things. First, how we have reimagined our checkout experiences to drive growth. Secondly, how we drive profitable growth in our enterprise processing business, also known as Braintree. And third, and finally, how we support our merchants as we look into the future. So PayPal is not only the smartest way to pay. But it's also, for merchants, the smartest way to get. And that's why PayPal Checkout is at the core of our flyway.

Speaker Change: We're global we're serving some of the largest brands around the world and we have a strong suite of value added services, which is for Paypal massively untapped opportunity.

Speaker Change: For those of you in the room, who are not familiar with the platform I want to quickly walk you through so there's payment processing.

Speaker Change: There's this processing debit and credit cards. These are alternative and local payment methods and of course, our own checkout options. We have a suite of value added services that are powered by the data from our network.

Speaker Change: And we have orchestration, which is critical to our open platform strategy.

Frank Keller: Diego already talked about this. This is our branded checkout growth formula. As you see, the checkout experience is at the center, connecting the merchant and the consumer side. So for consumers, it needs to be fast. needs to be easy, and it needs to be personal. And for merchants, it needs to drive conversion. Last year, we've been laser focused on reimagining our checkout experience. So let me tell you what we have accomplished. As you see here, there are essentially three core checkout accounts. vaulted one time. So Vaulted is our best performing experience. It is ideal for repeat purchases.

Speaker Change: I want to explore with you our growth strategy that will drive accelerated and profitable growth.

Speaker Change: I wanted to take you through the three pillars expansion of our processing, how we're scaling our high margin value added services and.

Speaker Change: And how are scaling our open architecture approach.

Speaker Change: Let me start with a major leap for our payments business.

Speaker Change: We're going to expand our total addressable market into omni channel processing.

Speaker Change: We've announced this morning that we've enabled at this with a strategic partnership with Verifone, a global leader in point of sale.

Speaker Change: With that we will be able to serve omnichannel merchants around the world with a cost effective and highly scalable approach.

Frank Keller: Think of ride share, food delivery, et cetera. Then there's one time. It provides the full flexibility every time you pay, like in traditional retail and on marketplaces. And then there's guest checks. That has a lot of frequency. But it's almost 40% of global e-commerce. often used in low frequency scenarios. This is why we've innovated with Fastlane by PayPal. I want to double click in What is a voltage? Imagine that you open a new right chair. During setup, you need to choose a default payment method. So when you write. You're focusing on getting from A to B, and the payment actually automatically happens in the back.

Speaker Change: And I'm Super excited to unlock this opportunity.

Speaker Change: As it means many new possibilities for Paypal to seamlessly connect the online and the physical world.

Speaker Change: In addition.

Speaker Change: We're laser focused on geographic and vertical expansion.

Speaker Change: 70% of our business is currently concentrated in North America.

Speaker Change: Thus, we have a massive opportunity to grow internationally, where we see higher margins to do so we're strengthening our localized capabilities and outlook, let's go to market.

Speaker Change: We also see an opportunity to grow faster through vertically segmented approach with.

Speaker Change: With tailored offerings that address the unique needs of each vertical.

Frank Keller: This is when PayPal is vaulted. We're having an outstanding conversion rate of 95%. And that is because our wallet is so powerful. We have multiple payment methods, so payments rarely fail. But we had an opportunity to do even better during sign up, login, and how fast. So, let me take you through. When a merchant presents a user with payment options. They don't know what to prioritize. Alex called it their guess. So this is where we've developed the payment-ready signature. It arms merchants with the information they need. prioritize our customers, their PayPal Venmo or pay later users.

Speaker Change: All the way from product to sales.

Speaker Change: The second pillar is about unlocking the margin opportunity of our strong suite of value added services.

Speaker Change: Powered by the data off our two sided network.

Speaker Change: To give you a couple of examples. So you we have payouts think of gig economy.

Speaker Change: This is what we pay out to SMB sellers are solar printers and over 200 markets in many currencies.

Speaker Change: This is also fueling our network more than half of those funds actually go straight into Paypal or venmo wallets and Michelle later will talk more about our SMB strategy.

Speaker Change: There's risk fraud and payment optimization services powered by AI and ml models that are trained on our global transactions across our network, which is saving our merchants dollars and time.

Frank Keller: As an example that you see here. With the payment ready signal, it moved from initially third place. up to the top of the stack for recognized PayPal customers. Secondly, we took the friction out of log n with biometrics. Logging is painful, especially on mobile. Nobody enjoys typing in usernames, remembering passwords. So biometrics eliminate the hassle and make it easy. as you see in this example. Login success rates of the new experience are significantly higher. they're 96%. And on top It's even more secure. Our new login experience is fundamentally better, especially on mobile. and Thurke. We've dramatically increased the speed of our checkout.

Speaker Change: And then we've just external line, our FX services for our cross border merchants to remove the complexity and headache, while also saving them cost.

Speaker Change: And we're now focused on scaling them effectively across our customer base.

Speaker Change: To enhance the margin profile of our payments business.

Speaker Change: And lastly, there's orchestration.

Speaker Change: Which is at the core of our open architecture approach.

Speaker Change: It allows our merchants to expand globally and quickly enable new use cases without.

Speaker Change: The tech and organizational burden of doing everything themselves.

Speaker Change: Which means merchants need to connect only once to us.

Speaker Change: And to get access to the whole global ecosystem.

Speaker Change: What do you actually might not know.

Frank Keller: Last year, we've completely rebuilt our 20-plus-year-old checkout code. making it faster and better. And as a result, latency is down by over 40%. But we're not stopping there. As Srini mentioned, we're moving to the cloud, which will further increase the checkout speed for our global customers. And let me tell you, we're very pleased with the results of our early adoption. And if you take it all together, consumers have less friction when they select and log in into PayPal. Merchants get higher converting customers, and PayPal is getting a bigger share. So I call that a win, win, win.

Speaker Change: Is we're already a leading scaled orchestrator.

Speaker Change: We have orchestrated over $66 billion last year.

Speaker Change: We already have more than 100 connections to partners across PSP fraud loyalty connect with commerce.

Speaker Change: And finally, our open architecture strategy will also enable partners to grow with us.

Speaker Change: So with all of that we expect our enterprise payments business to grow transaction margin two fold by 2027.

Speaker Change: While also growing volumes at e-commerce levels.

Speaker Change: To summarize I want to leave you with three things about our enterprise payments business.

Frank Keller: With that, let's look at one time check. This is when a consumer actively selects PayPal for every purchase, like in classical It gives the consumer flexibility, especially on high order values. as they might want to pay over time, utilize credit, maximize that point, like when buying an airline ticket. When merchants offer our trusted brand at checkout, they see a 33% conversion. And we, again here, saw further opportunity to make checkout even better. to make it more modern, and. We have completely redesigned. the paysheet to make it slick and take out the cognitive load for The New Design.

Speaker Change: We will grow by expanding our total addressable market into omnichannel targeted geographies and verticals.

Speaker Change: We're laser focused on unlocking our margin rich opportunity with value added services.

Speaker Change: And third we're building an open architecture, which gives merchants access to the full ecosystem through our platform connection.

Speaker Change: Let's look at large enterprises as large enterprises adopt more and more services they become more profitable.

So we create compounding results as you see here.

Speaker Change: Merchants typically enter.

Speaker Change: Our ecosystem through branded checkout.

Speaker Change: Then they adopt processing and moved to platform integration, which allows US then to add higher margin value added services and new innovations.

Frank Keller: guides the consumer through three simple decisions they need to make during When to pay, now or later? How to Pay with PayPal Balance, Bank Account, Debit or Credit Card, and last, the Shipping And let me tell you, it works beautifully. especially We've seen over 100 basis points conversion lift. That's a big deal. And now, this is actually the We went one step further. We made the design modular so that the experience can adapt to the individual need of a consumer. With that, consumers not only get a slick checkout, they receive a personalized shopping experience. And as you can see here, in this pay later example, we can now show a consumer that they're clearly being pre-approved.

Speaker Change: As you can see down there.

Speaker Change: We have a lot of upside.

Speaker Change: But listen.

To achieve this we must fundamentally change how we go to market.

So let me show you the future.

Speaker Change: This morning, we have announced Paypal open our one platform for all business.

Speaker Change: Paypal open brings our legacy acquisition and.

Speaker Change: And product brands under one roof.

Speaker Change: The value proposition is structured in three core needs, which we actually hear from every merchant.

Speaker Change: We had large me its small its power my payments drive my growth and helped me operating smarter.

Speaker Change: And an important role of Paypal open is also that it provides merchants access to our latest innovations.

Speaker Change: So dovetailing into what allies already said I have one more thing to talk about.

Frank Keller: This drove a 20% lift in pay later. and a double. the first time pay later. So let's move over. and talk how we have innovated. When we step back, we saw an immense opportunity to bring more consumers into the PayPal ecosystem. and ultimately the branded checkout flywheel. As mentioned, data entry is a key challenge for consumers, and it's painful for merchants. Staggering 54, 54% of consumers drop out of the guest. directly impacting merchants bottom to seize that opportunity and to streamline guest checkout for consumers and for merchants. We have built Fastlane by And we're well positioned to do so, thanks to our trusted brand handler.

Speaker Change: Which is the Paypal commerce API.

Speaker Change: 70% of consumers expect personalized experiences.

Speaker Change: But it's really hard to do and get it right.

Speaker Change: It's super hard to know what the consumer wants, especially when you have only limited information as a merchant.

Speaker Change: This is where we are uniquely positioned to help.

Speaker Change: Consumers have always entrusted us with their financial information.

Speaker Change: So it's no leap of faith that they also entrust us with their shopping preferences.

Speaker Change: In fact in the U S. We already have the permission.

Speaker Change: Of 80 million consumers to do so.

Speaker Change: And with the Paypal Commerce, API, we provide merchants with relevant product recommendations and deals to personalize their experiences.

Frank Keller: And Fastlane is showing excellent results. Consumers are opting in. In fact, we already have in our network more than 170 million accounts in the U.S. that are fast and ready. and Merchants are seeing a significant conversion lift over 50% in their guest So for PayPal, it's a meaningful opportunity to increase our overall share of checkout. And we're now focused on rapidly scaling the merchant side with partners like BigCommerce, Ardian, Fiserv, and more. Now, this is important. Fastlane fuels our branded flywheel with a second opportunity to bring consumers into our economy. Let me tell you, we're watching Fastlane user cohorts extremely carefully.

Speaker Change: We will start testing this innovation with strategic partners later this year.

Speaker Change: Merchants will get access.

Speaker Change: Through Paypal open.

Speaker Change: So as I wrap.

Speaker Change: I wanted to leave you with three takeaways.

Speaker Change: We're raising the bar on branded checkout, we have an end to end plan to accelerate growth on new experiences are delightful for consumers and drive conversion and outcomes for merchants.

Speaker Change: We're laser focused on scaling them globally.

Speaker Change: And to drive consumer selection.

Speaker Change: We are growing our enterprise payments business profitably.

Speaker Change: And we're accelerating growth by expanding into omnichannel targeted geographies and verticals.

Frank Keller: And what we're seeing is interesting. 25% are new to PayPal. And over 50% are inactive, meaning they have a PayPal account they're no longer using. So it becomes a great channel for us to engage new or elapsed users with branded. So as you see, Fastlane is part of our holistic approach to growing PayPal branded check-in. As these experiences are now delivering results for customers and for PayPal. We're now focused on bringing our new checkout experiences to a global. Today, we've already scaled to more than 30% coverage in the U.S. and soon we'll start rolling out.

Speaker Change: And we're accelerating our value added services adoption and finally.

Speaker Change: Paypal open gifts merchants of all sizes access to the full power of Paypal incurred.

Speaker Change: Including new innovations like the Commerce API.

So much of what I've talked about is not only relevant for large enterprises.

But also for small businesses, thus I want to hand, it over to Michelle who will walk you through our SMB strategy.

Michelle: [noise], Thanks, very much Frank Frank talked about how we're gonna add completely overhaul and dramatically improve the checkout experience is very large enterprises I'm going to talk to you about how we're actually going to make that basketball personal.

Frank Keller: to the UK, to Germany, followed by the rest of the world. As we continue to drive results for our customers, we will phase out our old experience. And that is important so that our consumers around the world get a consistent, modern, and fast checkout experience wherever they shop. and you will hear more about Merchandise Option from Susan. So I know you're all interested in understanding our growth expectations for brand. Our plan is to accelerate TPV growth to between 8 and 10% by 2027. We will measure success by growing our new experience share to over 80%.

Michelle: So before I do that I'm gonna Contextualize for you what our small business.

Michelle: The son looks like.

Michelle: So first we have a masseuse SMB merchant base.

Michelle: We've got over 20 million merchant accounts across 200, and I guess globally.

Michelle: We also have no chance that span both good and services businesses their online and offline.

Michelle: And today less than 20% of our act is exclusively e-commerce businesses.

Michelle: This business is select us because of our trusted brand our solution that grow with them.

Michelle: If you look at it today over 400 million cans hilarious.

Frank Keller: growing pay later usage by more than 20% and growing pay with Venmo by more than 40% as you heard in GIGO. So, to summarize. We have a rigorous plan to drive checkout. We're reigniting consumer selection. We have reimagined our checkout experiences and innovated with Fastlane. And those are highly performing to exceed merchant and consumer needs. And now we're laser focused on scaling them across our global merchant base. When we talk to merchants They are impressed by our news. which opens doors for having much more holistic conversations about how we help them driving their business. And with that, I'd like to turn to the second part, which is our enterprise payments business, which you all know as I'm proud that we've made significant progress last by building this business, bringing this business back to profitability.

Michelle: Paypal.

Michelle: And one of the three most trusted financial services brands globally, we have a high net promoter scores and our merchant and say that we're a universally accepted recognized and have hung them all all things that they.

Michelle: They start with us in PDP.

Michelle: Moving onto branded checkout. They often then adapt for stack and as their names change they might adopt envoy Fang our point of sale as you can see as their business grows so does our involvement and engagement with Paypal.

Michelle: And.

Michelle: I'm proud exercise very clear value for them.

Michelle: When merchants about Paypal and their checkout page ACF, 46% increase in conversion.

Michelle: When you mentioned and the NPL, we see that it increases their average order value by 62%.

Michelle: And that's as you adopt Paypal working capital typically see a 36% increase.

Frank Keller: And I am excited to tell you more about how we grow from here. Let me tell you, we have a leading enterprise payment. It's scaled, we've processed over $570 billion last year with leading authorization rates. We're global, we're serving some of the largest brands around the world. And we have a strong suite of value added services, which is for PayPal, massively untapped. For those of you in the room who are not familiar with the platform, I want to quickly walk So there's payment profit. This is processing debit and credit cards. These are alternative and local payment methods.

Total payment volume subsequent to that first round.

Michelle: We don't stop there are not just focused on the revenue side, but also focused on keeping costs down and what we see is that merchants adopt things like package tracking they see an 80% right.

Michelle: This means.

Michelle: But in 2020, two and 'twenty three we lost focus on our hands.

Michelle: We went to market with a sub optimal go to market and pouch.

Michelle: We lacked product innovation.

Michelle: And our products were not integrated.

Michelle: Making it difficult on our small businesses.

Michelle: And so we saw a decline in our business, but we've been on a mission to turn that around over the last year. So now I'm going to walk you through what we've been doing.

Frank Keller: And of course, our own checkout options. We have a suite of value-added services that are powered by the data from our network. And we have orchestration, which is critical to our open platform strategy. I want to explore with you our growth strategy that will drive accelerated and profitable growth. I want to take you through the three pillars. expansion of our processing, how we are scaling our high-margin value-added services. and Howard Scaling, our open architecture. Let me start with a major leap for our We're going to expand our total addressable market into omni-channel processes. We've announced this morning that we've enabled this with a strategic partnership with Verifone, a global leader in point of sale.

Michelle: And 'twenty 'twenty four we hadn't been here, we meaningfully in fact, and that's S and now we're on the path to be the end of spend from one platform for small businesses.

Michelle: First we focus on our go to market strategy second our product innovation and stern, our customer engagement I mean walking through Internet is separately kind of like that.

Speaker Change: Frank talked about this a little bit as well we've gone to market historically with capabilities now our aim is to go to market with solutions.

Michelle: We had a set of proliferating brands, which we you heard we unified and can pay Pal open.

Michelle: I'm proud of the innovation, we went to market practice by pride at they were often sell survey we were focused in serving a customer need and working customer back and coming to market with that solution.

Frank Keller: With that, we will be able to serve omni-channel merchants around the world with a cost-effective and highly scalable approach. And I'm super excited to unlock this opportunity, as it means many new possibilities for PayPal to seamlessly connect the online and the physical world. In addition... were laser focused on geographic and vertical expansion. 70% of our business is currently concentrated in North America. Thus, we have a massive opportunity to grow internationally, where we see higher margins. To do so we're strengthening our localized capabilities and our localized We also see an opportunity to grow faster through vertically segmented.

Speaker Change: And we've really been focused on payments and payment adjacent and now as you heard from Alex and rank with things like the commerce API, we're much more focused on growth and lastly customer engagement.

Michelle: It's been really a transactional.

Speaker Change: This past year, we decided to do a lot more proactive outreach and create delightful experience as far our merchants.

Speaker Change: And rather than go into market with a one size fit all we create a personalized AI driven experiences that facilitated a much more customized approach to our merchants.

Speaker Change: All of this under one umbrella that we now call Paypal open the way Avalanche free enough power the future of commerce for Smbs.

Speaker Change: Through this transformation and we can't wait to have our merchant easily discover as be eager to use us and absolutely my math.

Frank Keller: with tailored offerings that address the unique needs of each vertical, all the way from product The second pillar is about unlocking the margin of... of our strong suite of value at the that are powered by the data of our two-sided network. I want to give you a couple examples so we have payouts. Think of gig economy. This is where we pay out to SMB sellers or solopreneurs in over 200 markets in many currencies. This is also fueling our network. More than half of those funds actually go straight into PayPal or Venmo wallets. And Michelle later will talk more about our S&P.

Speaker Change: We will do that enabled by our brand our network, our data and our relationships.

Speaker Change: So what do we mean by overhauling our T T N strategy and having merchants desk address well first and foremost many of them I mentioned theta as like I don't know what to do next I don't know how to find your solution. How can you make it easier for me.

Speaker Change: And they said that things may forecast and for our partners. We've been focused on making our solutions very easily ingestible and covering them and co creating solutions with them.

Speaker Change: And of course, you've heard about our brand. So let me walk you through each of those.

Frank Keller: There's risk, fraud and payment optimization services that are powered by AI and ML models that are trained on our global transactions across the network, which is saving our merchants dollars and time. And then we've just externalized our FX services for our cross-border merchants to remove the complexity and headache while also saving them. And we're now focused on scaling them effectively across our customer base. to enhance the margin profile of our payments. And lastly, there's orchestration. which is at the core of our open architecture approach. It allows our merchants to expand globally and quickly enable new use cases without the tech and organizational burden of doing everything Which means?

Speaker Change: This should look familiar Frank just talked about that we had a Saturn proliferating brands. We also went to market with a really industrial internet strategy.

Speaker Change: Why did we decide to do.

Speaker Change: We brought together all our brands there's Paypal open thing, it's not just a rebranding it's not like we're just saying hey, let's throw everything under one roof and put it all together and somehow magically antenna work instead of screening talk to you about the way that we're actually bringing all of these brands together architecturally that is the key.

Critical thing that now a merchant can enter through any inhaler and have access to the rest of our platform. We are aiming to make it interoperable and bring together solutions that make sense for them, where they can have a self guided carry their journey I'm hearing on the Paypal brand umbrella and so yes.

Frank Keller: Merchants need to connect only once, to us. and to get access to the whole global. What you actually might not know. is we're already a leading scaled We have orchestrated over $66 billion last year. We already have more than 100 connections to partners across PSP, fraud, loyalty, connected commerce. And finally, our open architecture strategy will also enable partners. to grow with us. So with all of that, we expect our enterprise payments business to grow transaction margin twofold by 2027 while also growing volumes at e-commerce level. To summarize, I want to leave you with three things about our Enterprise Payments We will grow by expanding our total addressable market into omni-channel targeted geographies and verticals.

Speaker Change: We announced that new brand and we're very excited to launch it but more importantly, the work that we've done over the past 13 14 months to get up here and really allow us to get to this point is what's been incredible.

Speaker Change: Merchant Onboarding historically, we had.

Speaker Change: 35 screens for merchant onboard that is incredibly friction Paul we have now moved to seven screens.

Speaker Change: Not only have we done that but we also introduced an intense questionnaire you may say well you just eliminate that a whole lot of friction in that new introduced and then Ted a question why would you do that well, we actually gave her the choice of whether or not they wanted to go through that and kind of question and what we have seen isn't merchants to go through the enhanced questionnaire acts.

Speaker Change: <unk> performed much better on the other side and so that self selection is also helping us better understand that merchant and also really driving higher quality merchants, we've already seen two times product activation through that entire questionnaire as well as one and a half times increase in average.

Frank Keller: We're laser focused on unlocking our margin rich opportunity with value added services. And third, we're building an open architecture, which gives merchants access to the full ecosystem. through our platform. Let's look at large enterprises. As large enterprises adopt more and more services, they become more profitable. So we create compounding results, as you see here. Merchants typically enter to our ecosystem through branded checkout. Then they adopt processing and move to platform integration. which allows us then to add higher margin value added services and new innovation. As you can see down there... We have a lot of upside.

Speaker Change: But we're just getting started.

Speaker Change: We're not just going to stop at that we're introducing personalized recommendations, China or you buy experiences and a fully serviced about dashboard.

Speaker Change: And next up our partner and go to market strategy.

Speaker Change: What we've seen is that when we actively manage and paranoia relative to not actively managing them a 20% increase in total payment volume. So we made the decision that in 2020 five we're going to increase the number of actively managed partners I, two and a half times.

Speaker Change: That will allow us to with a greater number of partners really fine curated co solution opportunities to bring to market. The suite of capabilities that we've historically independently house in a way that makes sense for their merchants to drive loyalty.

Frank Keller: To achieve this, we must fundamentally change how we go to work. So, let me show you the... This morning we have announced PayPal Open, our one platform for all business. PayPal Open brings our legacy acquisition and product brands under one roof. The value proposition is structured in three core needs, which we actually hear from every merchant. be it large, be it small. It's power my payments, drive my growth and help me operating smarter. And an important role of PayPal Open is also that it provides merchants. to our latest innovation. So dovetailing into what Alex already said, I have one more thing to talk.

Speaker Change: To them and for their merchants to them and ultimately that loyalty will inure to the benefit of Paypal.

Speaker Change: Alright, so I'm, telling you about how our merchants are gonna very easily discover us and our partners and now I wanted to talk to you about why our merchants are going to be so eager to use us.

Speaker Change: So having gone from a lack of innovation and we are now here having been in over the last year and having an amazing roadmap for the air Satcom of product innovation.

Speaker Change: And the reason this is so important for small businesses as the preponderance of small businesses use upwards of 15 tools to manage their businesses the Hilton and choice. They do this because they have to because many of the tools are desperate and they have to cobble them together.

Frank Keller: which is the PayPal.com 70% of consumers expect personalized. But it's really hard to do and get it right. It's super hard to know what a consumer wants, especially when you have only limited information as a merchant. This is where we are uniquely positioned. Consumers have always entrusted us with their financial information. So it's no leap of faith that they also entrust us with a shopping preference. In fact, in the U.S., we already have the permission of 80 million consumers to do And with the PayPal Commerce API, we provide merchants with relevant product recommendations and deals to personalize their experience.

Speaker Change: Aim is to reduce that friction.

Speaker Change: And bring more of these tools together under our roof.

Speaker Change: Even with all of that the preponderance of small business is upwards of 30% fail in the first year. So our goal is how small businesses survive.

Speaker Change: More importantly, with our growth solutions help them thrive.

Speaker Change: Yeah.

Speaker Change: So with that.

Speaker Change: You'll remember back to when we introduced Paypal complete payments.

Speaker Change: That was the way in which small businesses, we're going to adapt our payment solution.

Speaker Change: And again really integrated architecture that we brought together be in a position to adapt brand and full stack and all of the complementary solutions that went with it.

Speaker Change: 'twenty 'twenty four we were able to roll this out to 37 markets and that doesn't mean, Oh just changed the language that means customizing all of the alternative payment methods for that particular market and having successful launches in each of those markets that gave our merchants industry, leading conversion rates low latency and high.

Frank Keller: We will start testing this innovation with strategic partners later this year. and merchants will get through PayPal. So as a rep. I want to leave you with three takeaways. We're raising the bar on branded checkout. We have an end-to-end plan to accelerate growth. Our new experiences are delightful for consumers and drive conversion and outcomes for markets. or a laser focus on scaling them globally? and to drive consumer selection. We are growing our enterprise payments business profitably. And we're accelerating growth by expanding into omnichannel targeted geographies and verticals. and we're accelerating value-added services adoption. And finally, PayPal Open gives merchants of all sizes access to the full power of PayPal.

Speaker Change: Arthur as Asian rates.

Speaker Change: And now all of the merchants that are on Paypal complete payments can easily access fast lane and our most minor and check out what we saw as an added benefit of people moving to this better stack with also an increase by 33% incremental product adoption.

Speaker Change: And 'twenty if any bad the thing we're really excited about is we're going to tap into a brand new market baby they'll pay.

Speaker Change: I mean, bill pay and tapping into a two trillion dollar market. This is an exciting not just for our merchants, but also for Paypal and that it opens up a brand new network. So let me talk about our existing merchants.

Speaker Change: Today, our existing merchants receive about $200 million and the Paypal ecosystem 80 per cent of which means without being respect through Paypal.

Michelle: including new innovations like the commerce. So, much of what I've talked about is not only relevant for large enterprises. but also for small business. Thus, I want to hand it over to Michelle, who will walk you through our S&P thread.

Speaker Change: This is an opportunity and a reason for these merchants to not have to transfer money to four or five different places, but be in a position to spend that money through the Paypal ecosystem.

Speaker Change: So that is benefit what benefit too.

Speaker Change: They now get to invite their vendors their suppliers to join them Paypal ecosystem, making it faster for that with vendors and suppliers to get paid and ultimately bringing them into the ecosystem in such a way that in the future you can imagine these transactions could just be mentored a ledger rather than even.

Michelle: Thanks very much, Frank. Frank talked about how we're going to completely overhaul and dramatically improve the checkout experiences for large I'm going to talk to you about how we're actually going to make that ingestible for a small. So before I do that, I'm going to contextualize for you what our small business ecosystem looks like. So first, we have a massive SMB merger. We've got over 20 million merchant accounts across 200 markets globally. We also have merchants that span both goods and services businesses. They're online and offline. And today, less than 20% of our actives are exclusively ecommerce.

Speaker Change: Any money transfer takes place.

Speaker Change: And by the end of 'twenty or 'twenty five we hope to power all of this through Py USD. So.

Speaker Change: So lots of innovation coming in 25 again to simplify the lives of our merchants.

Speaker Change: Also in 'twenty, four and we spent a lot of time on our merchant lending business.

Speaker Change: Merchant love IMAX that lending products, but sadly they weren't available to as many merchants as we had hoped. So we spent 2024 with our credit team, bringing in a lot of third party data to allow us to expand the number of merchants that we can lend to responsibly and in so doing.

Michelle: These businesses select us because of our trusted brand, our solutions that grow with them. If you look at it today, over 400 million consumers trust PayPal. We have one of the three most trusted financial services brands globally. We have a high net promoter scores, and our merchants say that we're universally accepted, recognized, and dependable, all things that they They start with us in P2P. They then move on to branded checkout. They often then adopt full stack. And as their needs change, they might adopt invoicing or point of sale. As you can see, as their business grows, so does their involvement and engagement with PayPal.

Speaker Change: We've already seen eligibility go up by 43%.

Speaker Change: That's pretty incredible.

Speaker Change: We also put the application and the ability to get loans and more places leading to a two times adoption by first time users.

Speaker Change: We have many more plans to expand on this in 2020 five we're planning to introduce microloans to facilitate access for even smaller merchants as well as long as for up to a million dollars to facilitate loans for larger merchants, we're really excited about what's to come.

Speaker Change: All of this will ultimately mean to two times increase in our business.

Speaker Change: And next step.

Speaker Change: Frank and Alex talked about Commerce API.

Michelle: and our products drive very clear value for them. When merchants put PayPal on their checkout page, they see a 46% increase. When merchants add BNPL, we see that it increases their average order value by 62%. And merchants who adopt PayPal working capital typically see a 36% increase in their total payment volume subsequent to that first But we don't stop there. We're not just focused on the revenue side. We're also focused on keeping costs down. And what we see is that when merchants adopt things like package tracking, they see an 80% reduction in dispute. But in 2022 and 2023, we lost focus on our We went to market with a suboptimal go to market approach.

Speaker Change: So the commerce API, it's amazing if you're a large enterprise right you can just and yesterday you can put it in here flows et cetera.

Speaker Change: Raw and small business is to now make that something that is very tangible for small businesses to use right now complicated they can ingest it in much the same way and use it to personalize their offers Frank already talked about this 69% of consumers prefer personalized experiences.

Speaker Change: We cannot leave the small businesses out in the cold without the same resource and that's the large enterprises have and so our goal is to make it really easy for them to get access to these same types of resources being able to offer.

Speaker Change: <unk> purchases as well as personalized offers and much the same way that a large enterprise.

Speaker Change: Alright, so talking about discover and talk to you about their eagerness to us because of our innovations and now I'm gonna have to about why these merchants are going to absolutely love us.

Michelle: We lacked product innovation. and our products were not integrated, making it difficult on our small business. And so we saw a decline in our business. But we've been on a mission to turn that around over the last year. So now I'm going to walk you through what we've been doing. In 2024, we had a big year. We meaningfully inflected the business. And now we're on the path to be the indispensable platform for small business. First, we focused on our go-to-market strategy. Second, our product innovation. And third, our customer engagement. Let me walk you through each of those separately.

Speaker Change: And it really has to do with us, creating engaging experience as that not only make their life easier that help them grow.

Speaker Change: Okay. So the two places that we spent a lot of time in terms of engagement, where the web surface.

Speaker Change: And you'll understand why in a minute.

Speaker Change: We have 250 million people that come to the web surface.

Speaker Change: That's 25 million users that visit us here that we activated 1.5 million products historically that used to just be a transaction history like here's what happened and then you can't really do anything with that other than CEA history. Today that offer you insight on your conversion rates you operate them.

Michelle: Go to market. Frank talked about this a little bit as well. We've gone to market historically with capabilities. Now our aim is to go to market with solutions. We had a set of proliferating brands, which we, you heard, we unified into PayPal Open. On product innovation, we went to market product by product, they were often self serving, we weren't focused in serving a customer need and working customer back and coming to market with us. And we've really been focused on payment and payment adjacent. And now, as you heard from Alex and Frank, with things like the Commerce API, we're much more focused on growth.

Speaker Change: Your ex stamped loans or cash flow and our goal is to make that better and better and so the objective here is provide you insight not just so much going on but had to change outcomes.

Speaker Change: Next up our App.

Speaker Change: I guess.

Speaker Change: Yes, 5 million App users and historically, if you were a consumer and a merchant it was really hard to switch between the two now leave me, it's super seamless to switch between the two.

Speaker Change: And you can action your business through your App, how do we know that this is working and we've already seen 300000 invoices Cree and then through the App in 'twenty 'twenty, four and guess what if you create an invoice and send it via Paypal, we've seen 79% of those invoices get paid the same day.

Michelle: And lastly, customer engagement. We've been really transactional. This past year, we decided to do a lot more proactive outreach and create delightful experiences for our merchants. And rather than going to market with a one size fit all, we created personalized AI driven experiences that facilitated a much more customized approach to our merchants. All of this under one large umbrella that we now call PayPal Open, the way in which we're going to power the future of commerce for us. Through this transformation, we can't wait to have our merchants easily discover us, be eager to use us, and absolutely love us.

So there's a lot of benefit to having these surfaces be incredibly engaging.

Speaker Change: Yeah.

Speaker Change: Not only are we changing the surfaces, but we're also changing our customer service model as I mentioned at the very beginning we've historically been very reactive last year. We ran a number of pilots to have much more proactive outreach, what we saw with that proactive route which is a 4% increase in total payment volume and a 6% increase in Pat.

Speaker Change: We also know that with active account management, we see 50% less churn and at 17 point increase and revenue growth and so our goal is we obviously can't touch every merchant with the Humana that would be impractical them based on our 20 million merchant abbey size, but in.

Michelle: We will do this enabled by our brand, our network, our data, and our relationship. So what do we mean by overhauling our GTM strategy, and having merchants discover us? Well, first and foremost, many of our merchants say to us, like, I don't know what to do next. I don't know how to find your solution. How can you make it easier for Those are the things we focused on. For our partners, we've been focused on making our solutions very easily ingestible and covering them and co-creating solutions with them. And of course, you heard about our brand.

Speaker Change: Sad to really power personalized experiences through AI for these markets. Let me walk you through what that's going to look like.

Speaker Change: Alright. So today you come to Paypal you want to start your business. The first question you ask is how do I start selling <unk>.

Speaker Change: Next question you ask is how can I ask a nice pricing in my local area.

Speaker Change: Next up what vendors should I use.

Speaker Change: You want to know what geography should I expand into next and lastly, how should I optimize my cashflow imagine all of these questions being answered by your AI Personalised powered insights tool that can help you because if you're a beauty business. We can help you know if the margins are rich.

Michelle: So let me walk you through. This should look familiar. Frank just talked about this. We had a set of proliferating brands. We also went to market with a really disjointed strategy. What did we decide to do? We brought together all our brands. This PayPal Open thing, it's not just a rebranding. It's not like we're just saying, hey, let's throw everything under one roof and put it all together and somehow magically it's going to work. Instead, Srini talked to you about the way that we're actually bringing all of these brands together architecturally. That is the critical thing, that now a merchant can enter through any door and have access to the rest of our platform.

Speaker Change: Or if you're in Italy, and he wanted to move to Germany versus France, and we can give you that advice that is where we're moving towards and that is what we're really excited about.

Speaker Change: Alright, so we've gotten our merchants to discover us use us and love US what does this all translate into ultimately growth in access as well as reduction in churn.

Michelle: We are aiming to make it interoperable and bring together solutions that make sense for them, where they can have a self-guided curated journey under the PayPal Open umbrella. And so yes, today, we announced that new brand, and we're very excited to launch it. But more importantly, the work that we've done over the past 13-14 months to get us here and really allow us to get to this point is what's been incredible. Merchant Onboarding. Historically, we had 35 screens for a merchandise on board. That is incredibly friction. We have now moved to seven. Not only have we done that, but we also introduced an intense question.

Speaker Change: And monetization through products from our chat as well as average revenue per product, the amalgam of which translate into revenue growth for Paypal.

Speaker Change: So as I talked to you about at the very beginning the preponderance of our merchant start with us in P to P. As you can see as they adopt incremental products and as they grow the potential for them to grow with Paypal and for the air revenue to grow as their product adoption grows is incredibly meaningful at range.

Speaker Change: Yes, all the way from 12 times to 67 times and as you can see our product penetration and a lot of these products is very de minimis and hence the opportunity in front of Alaska is massive.

Michelle: You might say, well, you just eliminated a whole lot of friction. And then you introduced an intent questionnaire. Why would you do that? Well, we actually gave merchants the choice of whether or not they wanted to go through the intent questionnaire. And what we have seen is merchants who go through the intent questionnaire actually perform much better on the other side. And so that self selection is also helping us better understand that merchant and also really driving higher quality. We've already seen two times product activation through that intent questionnaire, as well as one and a half times increase in average margin per merchant.

Speaker Change: Let me bring it all back.

Speaker Change: So our goal is to deliver AI powered growth for small businesses.

Speaker Change: We're building on a massive scale brand trust global reach and vertical exposure as.

Speaker Change: As I mentioned in 'twenty 'twenty, four we really refocused to better serve our F&B needs. We improved our go to market, we have improved our servicing and we re accelerating innovation to keep earnings merchant relationships, where literally transforming to be the indispensable partner that helps F N b's fueled our growth.

Susan: With that I'll turn it over to Susan.

Michelle: But we're just getting started. We're not just going to stop at that. We're introducing personalized recommendations, try-before-you-buy experiences, and a fully serviceable dashboard. And next up, our partner go to market strategy. What we've seen is that when we actively manage a partner relative to not actively managing them, a 20% increase in total payment volume. So we made the decision that in 2025, we're going to increase the number of actively managed partners by two and a That will allow us to, with a greater number of partners, really find curated co-solution opportunities to bring to market the suite of capabilities that we've historically independently housed in a way that makes sense for their market.

Susan: [noise]. Thank you Michelle.

Susan: Good morning.

Susan: I'm, Susan Carey and I have the pleasure of leading an organization we call global markets, we need Paypal business in the market.

Susan: We are responsible for the end to end relationship with our customers around the world.

Susan: So here's what I'm going to do today.

Susan: I'm going to bring to life, how we go to market with everything you've had this morning.

Susan: This is the plan to unlock extraordinary growth across Paypal around the world.

Susan: So let's get started.

Susan: So you're all very familiar with Paypal next generation Commerce flywheel.

Susan: The role of global markets is to power that flywheel around the world.

Michelle: to drive loyalty to them and for their merchants to them. And ultimately, that loyalty will enter to the benefit of PayPal. All right, so I've told you about how our merchants are going to very easily discover us and our partners. And now I want to talk to you about why our merchants are going to be so eager to use us. So having gone from a lack of innovation, we are now here having innovated over the last year and having an amazing roadmap for the years to come of product innovation. And the reason this is so important for small businesses is the preponderance of small businesses use upwards of 15 tools to manage their businesses.

Susan: We are the force multiplier, we bring merchants partners and consumer value together we.

Susan: We nurture and grow these relationships and we scale our products and services to markets around the world.

Susan: So before we talk about the opportunities that lie ahead of us.

Susan: Let me answer you in the foundations of our business.

Speaker Change: So Alex outlined much about us scale built over many years.

Susan: That scale is substantial.

Susan: We have scale, yes, but it is the strength of our diversity that actually drives the growth you see on our platform.

Michelle: They don't do this by choice. They do this because they have to because many of the tools are disparate, and they have to cobble them together. Our aim is to reduce that friction for them and bring more of these tools together under a roof. And even with all of that, the preponderance of small businesses, upwards of 50% fail in the first year. So our goal is help small businesses thrive, and more importantly, with our growth solutions, help them thrive. So with that. You remember back to when we introduced PayPal complete That was the way in which small businesses were going to adopt our payment solution.

Susan: We serve merchants across a range of verticals from retail and travel through to new high growth industries like gaming and digital goods.

Susan: We have a growing presence of consumers and merchants outside the U S. I know volumes are equally diversified by business line.

Susan: We have the privilege to serve nearly 90% of fortune 500 companies around the world.

Susan: They range from digital and commerce platforms to streaming and content and service providers to marketplaces and omni channel retailers.

Michelle: And again, through an integrated architecture that we brought together, be in a position to adopt branded, full stack, and all of the complimentary solutions that went. In 2024, we were able to roll this out to 37 markets. And that doesn't mean Oh, just change the language. That means customizing all of the alternative payment methods for that particular market and having successful launches in each of those markets. That gave our merchants industry leading conversion rates, low latency and high authorization. And now all of the merchants that are on PayPal Complete Payments can easily access Fastlane and our most modern checkouts.

Susan: So.

Susan: How do we build this franchise to drive growth.

Susan: Let's go back to the gross formula.

Susan: You heard from my colleagues earlier on the first two components.

Susan: Selection inexperience.

Susan: I wanted to dive into much an adoption and help you understand how paypal is reach relevance and impact work across all markets to fuel growth.

Susan: So let me start with wheat.

Susan: Digital commerce, well it's complex.

Susan: In early stage markets, the customer needs, often sensors on being able to accept and send payments securely and affordably across borders.

Michelle: What we saw as an added benefit of people moving to this better stack was also an increase by 33% of incremental products. In 2025, the thing we're really excited about is we're going to tap into a brand new market, B2B BillPay. B2B BillPay is tapping into a $2 trillion market. This is exciting, not just for our merchants, but also for PayPal in that it opens up a brand new network. So let me talk about our existing Today, our existing merchants receive about $200 billion in the PayPal economy. 80% of which leaves without being re-spent through paper.

Susan: These customers find tremendous value in our most established checkout wallets and power products.

Susan: Now in market that are further along that digital evolution consumers expect everything in real time and more personalization.

Susan: In these markets, we help our merchants to deliver against their needs at scale through Omnichannel AI enabled experiences.

Susan: T and rewards.

Susan: And as customers and markets advance through this evolution, we activate many more parts of the flywheel.

Michelle: This is an opportunity and a reason for these merchants to not have to transfer money to four or five different places, but be in a position to spend that money through the PayPal ecosystem. So that is benefit one. Benefit two, they now get to invite their vendors, their suppliers, to join the PayPal ecosystem, making it faster for those vendors and suppliers to get paid, and ultimately bringing them into the ecosystem in such a way that in the future, you could imagine these transactions could just be ledger to ledger, rather than even having any money transfer take place.

Susan: Crucially here.

Susan: Every market is losing.

Susan: All advancing and it is this movement that is our opportunity.

Speaker Change: Its opportunity to become much more relevant to our customers and in turn deliver much higher up.

Let's look at the accumulative effect of that revenue across markets.

Speaker Change: Opex celebration is most pronounced in the U S, where we offer our most advanced capabilities.

Michelle: And by the end of 2025, we hope to power all of this through PYUS. So lots of innovation coming in 25. Again, to simplify the lives of our Also in 24 we spent a lot of time on our merchant lending business. Our merchants love our merchant lending products. But sadly, they weren't available to as many merchants as we had hoped. So we spent 2024 with our credit team, bringing in a lot of third party data to allow us to expand the number of merchants that we could lend to responsibly. And in so doing, we've already seen eligibility go up by 43%.

Speaker Change: When a large enterprise adopt two products, we generate seven times more revenue.

Speaker Change: That number jumped to 12 times when they adopt three products.

Speaker Change: And as markets continue to evolve we are much better positioned to serve and monetize which in turn drives higher revenue per merchant.

Speaker Change: And you know what excites us the most.

Speaker Change: Is that number at the beginning.

Speaker Change: More than half of our merchants use only one product today.

Speaker Change: That means the opportunity well.

Michelle: That's pretty incredible. We also put the application and the ability to get loans in more places, leading to a two times adoption by first time We have many more plans to expand on this in 2025. We're planning to introduce microloans to facilitate access for even smaller merchants, as well as loans for up to $1 million to facilitate loans for larger merchants. We're really excited about what's to come. All of this will ultimately lead to two times increase in our And next up. Frank and Alex talked about the Commerce API. So the Commerce API is amazing if you're a large enterprise, right?

Speaker Change: It's right there in front of us.

Speaker Change: No link it back to our growth Formula Let me show you, how higher adoption shiels branded checkout growth.

Speaker Change: Merchants predominantly start their journey on us using one or two core products.

Speaker Change: Branded and unbranded processing.

Speaker Change: As they add more across the flywheel payouts foreign exchange services buy now pay later engagement grows it was almost nine times.

Speaker Change: And that story is very consistent when you look at our consumer growth as well as they use more of their products overall Paypal branded usage goes up five times.

Michelle: You can just ingest it, you can put it into your flows, et cetera. Our role in small business is to now make this something that is very tangible for small businesses. right? Not complicated. They can ingest it in much the same way and use it to personalize their offers. Frank already talked about this. 69% of consumers prefer personalized experiences. We cannot leave the small businesses out in the cold without the same resources that the large enterprises have. And so our goal is to make it really easy for them to get access to these same types of resources, be able to offer repeat purchases, as well as personalized offers, in much the same way that a large enterprise.

Speaker Change: Why well.

Speaker Change: I know you've heard it. This morning, it's the flywheel consumers are getting much more value and that value with better experiences drives more habituation.

Speaker Change: This is the formula for branded checkout goes in action.

Speaker Change: It's higher consumer engagement.

Speaker Change: Proof product experiences and scaled merchant adoption.

Speaker Change: So if that's the formula.

Speaker Change: What's the potential.

Speaker Change: Now as Alex outlined we're in a leading position to target this untapped opportunity.

Speaker Change: And here's what it looks like at the market level, our business is much more robust in online commerce.

Michelle: All right, so I've talked to you about Discover, I've talked to you about their eagerness to use because of our innovations, and now I'm going to talk to you about why these merchants are going to absolutely love us. And it really has to do with us creating engaging experiences that not only make their lives easier, but help them. Okay, so the two places that we spent a lot of time in terms of engagement were the web surface and the app. And you'll understand why in a minute. We have 250 million people that come to the web surface.

Speaker Change: There's still significant addressable opportunity even here, there's 60 billion and opportunity to go get in the U S alone and if you add up all of international there's another 40 billion to go get.

Speaker Change: And so whether by business line and by geography, we are still so early in offline commerce ads on credit.

Michelle: That's 25 million users that visit. Through that, we activated 1.5 million products. Historically, that used to just be a transaction history, like here's what happened. You couldn't really do anything with that, other than see a history. Today, that offers you insights on your conversion rates, your auth rates, your ex-stamp loans, your cash flow. And our goal is to make that better and better. And so the objective here is provide you insights, not just on what's going on, but how to change out. Next up, our app. Our app gets 5 million users. And historically, if you were a consumer and a merchant, it was really hard to switch between the two.

Speaker Change: All we need to do.

Speaker Change: Is execute.

Speaker Change: Now to that point, we've made significant changes in our operating model.

Speaker Change: To execute at scale and at pace.

Speaker Change: The starting point for us.

Speaker Change: What's to organize around the customer.

Speaker Change: We appointed regional and country General managers, who now have end to end accountability for the customer in their local market context.

Speaker Change: We streamlined roles, we changed the way self practices work, we equip the teams with new tools, we structured around the customer.

Speaker Change: And as Michelle pointed out.

Speaker Change: We've expanded coverage, we now cover 95% of our largest customers and our largest partners and we cover 80%.

Michelle: Now we've made it super seamless to switch between the two. And you can action your business through your app. How do we know that this is working? We've already seen 300,000 invoices created through the app in 2024. And guess what, if you create an invoice and send it via PayPal, we've seen 79% of those invoices get paid same day. So there's a lot of benefit to having these services be incredibly Not only are we changing the surfaces, but we're also changing our customer service. As I mentioned at the very beginning, we've historically been very reactive.

Speaker Change: Oh the F N B book.

Speaker Change: These changes are translating into very clear momentum.

Speaker Change: And we see positive results from this transformation in multiple markets.

Speaker Change: So talked about P. P. C. P. It is a great example of our ability to scale.

Speaker Change: Double digit growth in the U S U K and Germany.

Speaker Change: Very similar success with working capital.

Diego: B N P O N P to P. As you heard from Diego massive success in the U S, Germany, France, Italy, Spain.

Michelle: Last year, we ran a number of pilots to have much more proactive outreach. What we saw with that proactive outreach is a four percent increase in total payment volume and a six percent increase in product. We also know that with active account management, we see 50% less churn and a 17 point increase in revenue. And so our goal is, we obviously can't touch every merchant with a human, that would be impractical, based on our 20 million merchant base size, but instead to really power personalized experiences through AI for these merchants. Let me walk you through what that's going to look like.

Diego: Yes, we have the same work to do in the U K and Australia.

Diego: And if you go to our Braintree business reset.

Diego: Well revenue is up 20% in the U S and Germany.

Diego: And if you're following.

Diego: That's 343 for Germany.

Diego: Now we need to scale these.

Diego: Promising, but it's still early gross baths.

Diego: And we have three clear priorities to make that happen.

Michelle: All right, so today you come to PayPal, you want to start your business. The first question you ask is, how do I start selling? Next question you ask is, how can I optimize pricing in my local area? Next up, what vendor should I use? Then, you want to know, what geography should I expand to next? And lastly, how should I optimize my cash? Imagine all of these questions being answered by your AI personalized powered insight tool that can help you. Because if you're a beauty business, we can help you know if the merchants are richer if you're in Italy, if you want to move to Germany versus France, and we can give you that advice.

Diego: We're expanding reach.

Diego: We're expanding relevance and.

And we're accelerating impact.

Diego: So I'll start with the first priority.

Diego: Expand right now.

Diego: Now to expand reach we need to make more products and services available to our customers around the world.

Diego: He is.

Diego: Our roadmap.

Speaker Change: And this is the roadmap that will bring Perry T. Two markets globally over the next three years.

Speaker Change: Aligned with where our market sell locally and what the needs of our customers are in each of those contacts.

Michelle: That is where we're moving toward. And that is what we're really excited about. All right, so we've gotten our merchants to discover us, use us, and love us. What does this all translate? Ultimately, growth in actives as well as reduction in churn. and monetization through products per merchant, as well as average revenue per product, the amalgam of which translates into revenue growth for PayPal. So as I talked to you about at the very beginning, The preponderance of our merchants start with us in P2P. As you can see, as they adopt incremental products and as they grow, the potential for them to grow with PayPal and for their revenue to grow as their product adoption grows is incredibly meaningful.

Speaker Change: In the U S and most of our top 10 markets, we will enrich consume makes senses with omni channel with credit with rewards.

Speaker Change: And for merchants, we will help them unlock growth and.

Speaker Change: And efficiencies by expanding our branded offerings and accelerating the rollout of products that fuels, a flywheel like egencia checkout omni channel and value added services.

Speaker Change: In markets outside the top 10, we will focus on enabling our core merchant and consumer offerings to meet the local needs.

Speaker Change: So this is what.

Speaker Change: Expanded reach looks like.

Speaker Change: So how do we take our customers on this journey with us.

Michelle: It ranges all the way from 12 times to 67 times. And as you can see, our product penetration on a lot of these products is very de minimis. And hence, the opportunity in front of us is mass. Let me bring it all back. So our goal is to deliver AI-powered growth for small business. We're building on a massive scale, brand trust, global reach, and vertical expansion. As I mentioned, in 2024, we really refocused to better serve our SMB needs. We improved our go-to-market, we improved our servicing, and we re-accelerated innovation to deepen these merchant relations.

Speaker Change: Well, we use our playbook.

Speaker Change: We lead with our trusted brand and history of strong partnerships.

Speaker Change: We support a much it's at every level from C suite to operating teams.

Speaker Change: We leverage vertical specific expertise to align on shared goals and outcomes from that.

Speaker Change: And we partner and track success collaboratively.

Speaker Change: This playbook helps us move faster execute with rigor and we can do this over and over again around the world.

Speaker Change: Let me bring this to life with one of our merchant partners.

Michelle: We are literally transforming to be the indispensable partner that helps SMBs fuel their growth.

Speaker Change: Uh huh.

Speaker Change: You see like many of our customers meta started with us with abandon checkout experience many years ago.

Susan Careri: And with that, I'll turn it over to. Thank you, Michelle. Good morning. I am Susan Careri, and I have the pleasure of leading an organization we call Global Markets. We lead PayPal's business in the markets. We are responsible for the end-to-end relationship with our customers around the world. So here's what I'm going to do today. I'm going to bring to life how we go to market with everything you've heard this This is the plan to unlock extraordinary growth across PayPal around the world. So let's get started. So you're all very familiar with PayPal's Next Generation Commerce Library.

Speaker Change: This gave them and I'll shed customers, a trusted way to pay and get paid on their marketplace.

Speaker Change: Over time, we've expanded our relationship across more of their surfaces like Instagram to include processing payouts foreign exchange and office.

Speaker Change: More product.

Speaker Change: Optimized experiences all of that drives higher conversions.

Speaker Change: It increased their margins and its increasing hours.

Speaker Change: This is a page right out of our playbook.

Speaker Change: Right out of our playbook, we operate a strategic who are partners.

We have shared goals.

Speaker Change: We innovate together.

Let me give you. Another example.

Susan Careri: The role of global markets is to power that sliver around the world. We are the fourth multiplier. We bring merchants, partners, and consumer value together. We nurture and grow these relationships. and we scale our products and services to markets around the world. So before we talk about the opportunities that lie ahead Let me anchor you in the foundations of our business. So Alex outlined much about our scale, built over many years. That scale is substantial. We have scale. Yes. but it is the strength of our diversity that actually drives the growth you see on our platform.

This one's from Japan.

Speaker Change: Before it.

Speaker Change: They're trusted name in the used car marketplace.

Speaker Change: In 2018, they started with branded checkout in Latam.

Speaker Change: The Caribbean and Africa.

Speaker Change: We now connect them to consumers in over 170 market.

Speaker Change: And we help them scale they added more products, they optimize their user experiences and they're drawing branded checkout.

Speaker Change: Our share has grown by more than 500%.

And we've increased margin six times.

Speaker Change: So we expand reach by scaling product.

Speaker Change: We expand reached by deepening relationships like those of meta and before wood.

Susan Careri: We serve merchants across a range of verticals, from retail and travel, through to new high-growth industries like gaming and digital goods. We have a growing presence of consumers and merchants outside the U.S., and our volumes are equally diversified by business lines. We have the privilege to serve nearly 90% of Fortune 500 companies around the world. They range from digital and commerce platforms, to streaming and content service providers, to marketplaces, and omnichannel retailers. So How do we build this franchise to drive growth? Let's go back to the growth form. You heard from my colleagues earlier on the first two components.

Speaker Change: We also expand reach by focusing on key verticals.

Speaker Change: We're accelerating our progress in professional services in food and delivery real money gaming and in digital goods.

Speaker Change: These represent very large addressable times, they're also very high yielding and it requires a level of specialization that we are uniquely positioned to deliver.

Speaker Change: Let's take the real money gaming, we win here, because we offer global paying and paths hi, all states fast money movement.

Speaker Change: And the industry's best risk management and controls.

So these are some of the ways, we're expanding reach.

Speaker Change: I'll talk about our second priority.

Speaker Change: Which is scaling relevance through partners.

Speaker Change: Here, we take a very platform approach to partnerships and.

Susan Careri: Selection and Experience. I want to dive into merchant adoption and help you understand how PayPals reach relevant and impact work across our markets to fuel growth. So let me start with Reid. Digital commerce, well, it's complex. In early stage markets, the customer needs often centers on being able to accept and send payments securely and affordably across borders. These customers find tremendous value in our most established checkout, wallet, and payout products. Now, in markets that are further along that digital evolution, consumers expect everything in real time and more personalization. In these markets, we help our merchants deliver against their needs at scale through omni-channel, AI-enabled experiences.

Speaker Change: And we do that in three ways.

The first is distribution.

Speaker Change: We love with industry leaders that extend our reach for services and help us get to market faster with our latest innovations and just this morning, we announced a new partnership with J P. Morgan payments that will offer fast lane for merchant clients in the UK and Europe.

Speaker Change: The second is integrating experiences that complement our flywheel.

And a great example, that Alex mentioned earlier is Amazon by with time later this year, we will launch Paypal as a payment method for buy with prime and allow consumers to use their prime benefits when checking out at their favorite merchants.

Speaker Change: And the last is embedding our products and services into our partner ecosystems.

Speaker Change: Here, Paypal axes, and embedded service and we seamlessly powered payments what ever the customer maybe.

Susan Careri: Loyalty and Reward. And as customers and markets advance through this evolution, we activate many more parts of the flight. Crucially here, every market is moving. They're all advancing. And it is this movement that is our opportunity. It's our opportunity to become much more relevant to our customers and in turn, deliver much higher up. Let's look at the accumulative effect of that revenue across markets. Alpha Acceleration is most pronounced in the U.S. where we offer our most advanced capabilities. When a large enterprise adopts two products, we generate seven times more revenue. That number jumps to 12 times when they adopt three products.

Speaker Change: Expanding reach and scaling relevance none of this works without an exceptional product experience.

Speaker Change: And as you heard from Frank earlier, Frictionless checkout, whether it leads to lower conversion.

Speaker Change: Our new checkout experience addresses latency, London success rates and gives our customers more options.

Speaker Change: We're seeing really encouraging results in conversion rates we.

Speaker Change: We've seen consistent improvement in every vertical with increases in the mid teens for life events in single digit improvement in travel streaming and delivery services.

Our aim is to have 80% of our customers using the latest checkout experiences by the end of 'twenty seven.

Speaker Change: So to conclude.

The mission and priorities for global markets, a clear and compelling.

Susan Careri: And as markets continue to evolve, we are in a much better position. to serve and monetize, which in turn drives higher revenue per month. And you know what excites us? It's that number. More than half of our merchants use only one product today. That means the opportunity. Well, it's right there in front. Now linking back to our growth formula, let me show you how higher adoption fuels branded checkout growth. Merchants predominantly start their journey on us using one or two core products. Branded and unbranded As they add more across the firewall, payouts, foreign exchange services, buy now, pay later, engagement grows.

Speaker Change: We're committed to powering Paypal commerce flywheel across our market.

Speaker Change: I have personally never been more convinced about the size and abundance of opportunity for Paypal in both the immediate and the longer term.

Speaker Change: We have the team.

Speaker Change: The operating model.

Speaker Change: The strategy in place to execute.

Speaker Change: And to win.

Thank you.

Speaker Change: Turn it back to Steve.

Speaker Change: [noise] Susan Frank Michelle. Thank you so much for those insights on our customers our products and services fantastic.

Speaker Change: We're going to take a quick break right now for 10 minutes and then you can come back and please be in your seats by 11 o'clock for Jamie and our Q&A session. Thanks, everybody.

Speaker Change: [noise] [noise] Hudson and finally saw healthy sustainable snacks, all plant based gluten free delicious, but then packaged in plastic packaging.

Susan Careri: It grows almost nine times. And that story is very consistent when you look at our consumer growth as well. As they use more of their products, overall, PayPal branded usage goes up five Why? Well, I know you've heard it this morning. It's the flywheel. Consumers are getting much more value. And that value with better experiences drives more habits. This is the formula for branded checkout growth in action. It's higher consumer engagement. Improved Product Experiences and Scaled Merchant Adoption. So if that's the formula. Now, as Alex outlined, we're in a leading position to target this untapped opportunity.

Speaker Change: We've been using Paypal checkout on our website for years, when we learned about Paypal working capital than traditional financing is a very long and painful process. They have a tough time understanding the entrepreneur, especially in the early stages. They look at things through a different lens, but with Paypal. It was super fast supply and we received the response really.

Speaker Change: He quickly are.

Speaker Change: Our first Paypal working capital loan was for $100000 and then recently, we took out another $100000. We used both of our Paypal launch for inventory.

Think that entrepreneurs moving quickly E access to cash without long cycles.

Speaker Change: With banks and Dr. Christian I think that that's one of the reasons why tape out was great. It's quick it's easy and you just get back to doing what you do best.

Speaker Change: The impact that we hope to have as for other companies to begin to realize they can build actually brand without plastic and ultimately pass on or knowledge to the broader industry.

Susan Careri: And here's what it looks like at the market level. Our business is much more robust in online commerce. But there's still significant addressable opportunity even here. There's $60 billion in opportunity to go get in the US alone. And if you add up all of international, there's another $40 billion to go get. And so whether by business line and by geography. We are still so early in offline commerce, ads, and credit. All we need to do is act. Now, to that point, we've made significant changes in our operating. to execute at scale and at. The starting point for us.

Speaker Change: Please welcome Paypal, Chief financial and operating Officer, Jamie Miller.

Speaker Change: [noise] good morning.

Speaker Change: These objectives guide, how we will make decisions to maximize shareholder value, making it clear for our teams housekeeping merchants and consumers at the center of everything we do can drive a great financial algorithm for Paypal.

Speaker Change: Our goal is to first grow volume faster than e-commerce.

Speaker Change: To lead with innovation grow accounts and engagement and to increase the penetration of our omni solutions and to accelerate branded checkout.

Speaker Change: Second it's to drive a high single digit T. M dollar growth by 2027, with an ambition for 10% plus longer term.

Susan Careri: was to organize around the customer. We appointed regional and country general managers who now have end-to-end accountability for the customer in their local market. We streamlined roles, we changed the way sales practices work. We equip the teams with new tools, we've structured around the customer. And as Michelle pointed out, we've expanded coverage. We now cover 95% of our largest customers and our largest partners, and we cover 80%. of Athens. These changes are translating into very clear momentum. and we see positive results from this transformation in multiple markets. Michelle talked about PPCP. It's a great example of our ability to scale.

Speaker Change: We are prioritizing durable high quality growth and that's supported by the key initiatives that I'll walk you through in a bit.

Speaker Change: We have a longer term ambitions to unlock new growth and high margin opportunities and third we will invest in innovation and leverage our cost base, we operate in a competitive environment and it is critical that we stay on offense and we still have room to be much more efficient and use our savings to fund reinvestment Andrew.

Speaker Change: <unk> operating margin expansion.

Speaker Change: Fourth we'll deliver low teens, plus non-GAAP earnings per share growth by 2027 with ambition for 20% plus longer term and finally, our goal is to grow free cash flow in line with earnings while maintaining disciplined capital allocation.

Susan Careri: Double-Digit Growth in the US, UK, and Germany. Very similar success with working capital. BNPL and P2P, as you heard from Diego. Massive success in the US, Germany, France, Italy, Spain. And yes, we have the same work to do in the UK and Australia. And if you go to our Braintree Business Reset. Well, revenue is up 20% in the U.S. and Germany. and if you're following. That's 3-4-3 for Germany. Now, we need to scale the Promising, but still early, Grossbets. and we have three clear priorities to make that happen. We're expanding reach. We're expanding relevance. and we're accelerating impact.

Speaker Change: One year in we're proud that we've returned the company to profitable growth. We have a lot more ahead, but in our first year. We grew revenue to $32 billion, we positively inflected T M dollars growth growing T M, 5% extra interest accelerating 800 basis.

Speaker Change: Points over two years, we bought back $6 billion of stock and we delivered 21% earnings growth.

Speaker Change: And underlying our financial results, we're making progress in key areas, we've accelerated our pace of innovation, we've brought energy back into the brands. We've returned total actives and Paypal consumer MAA is back to growth and we just became much more disciplined across the organization.

Speaker Change: Braintree is back to profitable growth and we've reduced costs and reinvested hundreds of millions back into product technology and marketing.

Speaker Change: Looking ahead, we have a diversified portfolio to drive growth and what you see on this slide is a more simple and relevant T. P. P breakout than in the past, it's a better way of how we think about the product portfolio today, our customer needs and our use cases.

Susan Careri: So I'll start with the first priority. Expand. Now, to expand reach, we need to make more products and services available to our customers around the world. Here's our roadmap. And this is a roadmap that will bring Parity to markets globally over the next three years, aligned with where our markets are locally, and what the needs of our customers are in each of those contexts. In the U.S. and most of our top 10 markets, we will enrich consumer experiences with omni-channel, with credit, with reward. And for merchants, we will help them unlock growth and efficiencies by expanding our branded offerings and accelerating the rollout of products that fuel the flywheel, like Agentic Checkout, Omnichannel, and Value Added Services.

Speaker Change: And we're making progress across each of these areas. So the first online branded checkout includes Paypal branded checkout ebay and pay with Venmo and it's about 30% of our T. P V.

Speaker Change: We have a clear plan and execution milestones to accelerate and I'll talk about that more in a bit.

Speaker Change: P to P and other consumer includes Paypal P to P. Venmo P to P and our branded debit cards.

Speaker Change: We're making product led improvements both venmo and Paypal P to P volume accelerated last year.

Speaker Change: Venmo exited the fourth quarter at 10% volume growth accelerating by two points.

Susan Careri: In markets outside the top 10, we will focus on enabling our core merchants and consumer offerings to meet the local needs. So this is what. Expanded Reach, Look. So how do we take our customers on this journey with us? Well, we use our playbook. We lead with our trusted brand and history of strong partners. We support our marches at every level, from C-suite to operating. We leverage vertical specific expertise to align on shared goals and outcomes for our merchants. And we partner and track success collaboratively. This playbook helps us move faster, execute with rigor, and we can do this over and over again around the world.

Speaker Change: Paypal P to P accelerated for the sixth consecutive quarter to 6% and we've launched more in person capabilities.

Speaker Change: And payment service provider the third line spans both large enterprise and SMB processing and value added services, we're driving higher margins and deeper merchant relationships and we've made deliberate healthy choices within brain tree to shift from unprofitable volume moving into higher F&B processing with P. P.

Speaker Change: C P and driving more attachment of bass like payouts and new solutions around FX and risk as a service.

Speaker Change: And then second from the bottom you'll see branded experiences which includes branded checkout online above plus our offline debit and the goal of sharing that is to help you follow our progress as we seek to form deeper consumer relationships and habituation across online and offline and that's a trend that we expect to access.

Susan Careri: Let me bring this to life with one of our merchant partners, Meta. You see, like many of our customers, Meta started with us with a branded checkout experience many years This gave them, and our shared customers, a trusted way to pay and get paid on their market. Over time, we've expanded our relationship across more of their services, like Instagram, to include processing, payouts, foreign exchange, and offering. more product. Optimized Experiences. All of that drives higher conversion. It increased their margins and it's increasing ours. This is a page right out of our playbook. right out of our playbook.

Speaker Change: <unk> in 2025, and beyond moving to overall ecosystem health and opportunities to improve engagement, we're making progress across our consumer base, but there's still so much more opportunity ahead branded checkout MAA is went from stable to growing up 3% last year, and we added 3 million more than monthly.

Speaker Change: Active accounts using debit or buy now pay later transactions.

Speaker Change: Transactions per active are growing and our goal is to drive more consumer engagement and a higher Paypal selection rate and accelerate our G. P V.

Speaker Change: We have a clear set of financial objectives as we execute in 2025 growth has accelerated and we expect T. M dollars ex interest to grow 6% at the midpoint of our guide, which is more than 100 basis points of acceleration compared to last year.

Susan Careri: We operate as strategic thought partners, we have shared goals, and we innovate together. Let me give you another example. This one's from Japan. be forward. their trusted name in the youth car market. In 2018, they started with branded checkout in LATAM. the Caribbean, and Africa. We now connect them to consumers in over 170 markets. And we've helped them scale. They added more products, they optimize their user experiences, and they're growing brand at checkout. Our share has grown by more than 500%. and we've increased margin. So, we expand reach by scaling products. We expand reach by deepening relationships like those of META and BFORWARD.

Speaker Change: We're guiding to high single digit earnings per share growth at the midpoint and that includes headwinds from higher taxes, and lower interest rates and we are well positioned to drive attractive double digit earnings growth into the future.

Speaker Change: Yeah.

Speaker Change: We have a clear set of strategic initiatives to drive durable profitable growth to win checkout, our new modern flow improves conversion and delivers a better experience to increase habituation and capture more share of wallet and this has a halo effect across everything you see on this slide.

Speaker Change: We have momentum behind buy now pay later, SMB and consumer engagement and.

Speaker Change: And with omni we are increasingly the way for consumers to pay for any transaction.

Speaker Change: For P. S. P. We have significant opportunity to improve and to grow profitably.

Speaker Change: And also notable nextgen initiatives that are small today, but we expect to deliver value over the medium to long term and this includes personalization adds our commerce platform and crypto.

Susan Careri: We also expand reach by focusing on key verticals. We're accelerating our progress in professional services, in food and delivery, real money gaming, and in digital goods. These represent very large addressable TAMs. They're also very high yielding, and they require the level of specialization that we are uniquely positioned to deliver. Let's take real money gaming. We win here because we offer global pay-in and pay-outs, high auth rates, fast money movement, and the industry's best risk management and control. So these are some of the ways we're expanding. I'll talk about a second priority. which is scaling relevance through partners.

Speaker Change: In each of the initiatives I just highlighted plays an important role we expect to accelerate T. M dollars growth ex interest moving from 5% in 2024% to 6% at the midpoint of our 2025 guide to a range of 7% to 9% by 2027.

Speaker Change: Longer term, we have a goal to drive 10% plus growth.

Speaker Change: It's ambitious but it's what we want our teams to strive for.

Speaker Change: Scaling nexgen growth sectors, AI personalization adds and crypto all of that is part of what can help us get there.

Speaker Change: I wanted to take a minute and walk you through some of the specific goals and waste free to for you to track our progress underpinning each of the initiatives.

Susan Careri: Here, we take a very platform approach to partners. And we do that in three ways. The first is distribution. We leverage industry leaders that extend our reach for core services and help us get to market faster with our latest innovations. And just this morning, we announced a new partnership with J.P. Morgan Payments that will offer Fast Lane for our merchants clients in the UK and Europe. The second is integrating experiences that complement our flight. And a great example that Alex mentioned earlier is Amazon by Later this year, we will launch PayPal as a payment method for Buy With Prime and allow our consumers to use their Prime benefits when checking out at their favorite places.

Speaker Change: And starting with checkout, which is at the center of everything we do.

Speaker Change: Our new products partnerships and campaigns are all aimed at accelerating checkout, we want to be the easiest the fastest the safest solution and it is essential we deliver more value to customers and that means higher conversion for merchants and making things even more flexible and rewarding for our consumer.

Speaker Change: Yes.

This chart shows our path from 6% volume growth last year to at least 8% to 10% by 2027.

Speaker Change: Our strategy is underpinned by three key building blocks first modernizing checkout solutions to drive higher selection rates.

Speaker Change: Taking our latest branded checkout experience from about 30% coverage in the U S today to more than 80% globally by 2027.

Susan Careri: And the last is embedding our products and services into our partner ecosystem. Here, PayPal acts as an embedded service, and we seamlessly power payments wherever the customer is. Expanding Reach. Scaling Relevance, none of this works without an exceptional product experience. And as you heard from Frank earlier, friction at checkout, well, it leads to lower conversion. Our new checkout experience addresses latency, log-in success rates, and gives our customers more... We're seeing really encouraging results in conversion. We've seen consistent improvement in every vertical, with increases in the mid-teens for live events and single-digit improvement in travel, streaming, and delivery services.

Speaker Change: Our goal is for these experiences to deliver more than one point of conversion improvement to merchants, but the real opportunity is how this impacts selection rate better experiences less breakage more retention all lead to stickier more engage consumers and a higher share of wallet leaning in to pay later.

Speaker Change: Our goal is to nearly double the size of our pay later business over the next three years to grow at more than a 20% CAGR to nearly $60 billion and.

Speaker Change: And accomplishing this through a combination of product and geographic expansion in our go to market focus on key merchants verticals and end marketing.

Speaker Change: Capitalizing on pay with Venmo, we will nearly triple pay with venmo volume over the next three years, we expect to grow at more than a 40% CAGR over $22 billion and.

Speaker Change: And we're starting to hit our stride. The venmo team is winning in key mobile first verticals and compared to a year ago. Our execution has improved teams are focused and we're accelerating.

Susan Careri: Our aim is to have 80% of our customers using the latest checkout experiences by the end of 27. So, to conclude. The mission and priorities for global markets are clear and compelling. We're committed to powering PayPal's Commerce Flywheel across our market. I have personally never been more convinced about the size and abundance of opportunity for PayPal in both the immediate and the longer term. We have the team. The Operating Model. the strategy in place to and Chouin. Thank you. I'll turn it back. Susan, Frank, Michelle, thank you so much for those insights on our customers, our products and services.

Speaker Change: We have more work to do but I'm really excited about our progress.

Speaker Change: We're expanding beyond e-commerce to become truly omnichannel within P to P and other consumer T. P V. We accelerated four points to 7% growth in 2024, and we expect to maintain this momentum growing to at least 10% by 2027.

Speaker Change: We have improved our core app experiences in P to P and mobile payments, we've launched more ways to pay in person and we ran our Paypal everywhere campaign in September which is reshaping how consumers think about Paypal debit penetration remains a huge opportunity and we're driving adoption we've added more than.

Speaker Change: 3 million first time users, we're bringing card and NFC capabilities to several European markets later this year.

Steve Winick: Fantastic. We're gonna take a quick break right now for 10 minutes and then you can come back and please be in your seats by 11 o'clock for Jamie and our Q&A session. Thanks everybody. Thank you. At Sudentswell, we sell healthy, sustainable snacks, all plant-based, gluten-free, delicious, but then packaged in plastic-free compostable packaging. We've been using PayPal Checkout on our website for years when we learned about PayPal Working Capital Loans. Traditional financing is a very long and painful process. They have a tough time understanding the entrepreneur, especially in the early stages. They look at things through a different lens.

Speaker Change: And within Venmo, and Peter P. We're bringing in more users driving product attachment and increasing engagement.

Speaker Change: In all our areas that help us drive revenue growth and we're focused on improving the overall profitability of our PSP business and we're doing this through pricing to value and aligning our sales teams and incentives to profitable growth.

Speaker Change: Braintree T. P V growth is lower in 2025, as we shift away from unprofitable volume, but T. M dollars have accelerated and we'll be in a position to reaccelerate TPB later this year.

Speaker Change: Growth is a combination of new verticals international expansion and more offerings to Smbs, we're rolling out new value added services, including across FX risk and payouts.

Unknown Attendee: But with PayPal, it was super fast to apply, and we received a response really quickly. Our first PayPal working capital loan was for $100,000. And then recently, we took out another $100,000. We used both of our PayPal loans for inventory. I think that entrepreneurs who are moving quickly need access to cash without long cycles of dealing with banks and bureaucracies. I think that that's one of the reasons why PayPal is great. It's quick, it's easy, and you just get back to doing what you do best. The impact that we hope to have is for other companies to begin to realize they can build a snack food brand without plastic, and ultimately pass on our knowledge to the broader industry.

Speaker Change: To drive more value and we expect PSP to contribute more than a point to T. M dollars growth this year with more benefit over time.

Speaker Change: We continue to have a sharp focus on containing costs, while reallocating to healthier levels of technology and marketing.

Speaker Change: By the end of 2025, we will have remixed more than $400 million into marketing and tech compared to two years ago.

Speaker Change: Our head count was down around 10% each of the last two years and we will continue to balance investment and efficiency and we see further opportunity for efficiency over time shifting the allocation of spend more into key areas like tech and marketing and our goal is to drive down opex as a percentage of <unk>.

Jamie Miller: Please welcome PayPal's Chief Financial and Operating Officer, Jamie Miller.

Jamie Miller: These objectives guide how we will make decisions to maximize shareholder value, making it clear for our teams how keeping merchants and consumers at the center of everything we do can drive a great financial algorithm for PayPal. Our goal is to first grow volume faster than e-commerce. to lead with innovation, grow accounts and engagement and to increase the penetration of our Omni solutions and to accelerate branded checkout. Second, it's to drive a high single digit TM dollar growth by 2027 with an ambition for 10% plus longer term. We are prioritizing durable, high quality growth, and that's supported by the key initiatives that I'll walk you through in a bit.

Speaker Change: Revenue as we leverage our cost structure.

Speaker Change: Now I'll take you through our financial outlook as you've heard consistently we are focused on accelerating profitable growth moving from 5% T. M dollars growth excluding interest in 24 to a range of 7% to 9% by 2027 dry.

Speaker Change: Driving expense leverage operating margin expansion and share buyback combines for low teens plus EPS growth.

Speaker Change: And that includes headwinds from lower interest rates and tax rate inflation and as I mentioned earlier, our long term ambition is higher we believe the opportunity in front of US is significant and we want our teams ambition to be 20% plus EPS growth over time.

Jamie Miller: We have longer term ambitions to unlock new growth and high margin opportunities. And third, we'll invest in innovation and leverage our cost base. We operate in a competitive environment, and it is critical that we stay on offense. And we still have room to be much more efficient, and use our savings to fund reinvestment and drive operating margin expansion. Fourth, we'll deliver low teens plus non gap earnings per share growth by 2027 with ambition for 20% less longer term. And finally, our goal is to grow free cash flow in line with earnings while maintaining disciplined capital allocation.

Speaker Change: We have a strong balance sheet, we have $15 billion of cash and equivalents and we're targeting a balance sheet light model for credit we have more opportunity to externalized parts of the credit portfolio we.

Speaker Change: We generate a significant amount of free cash flow, we expect $6 billion to $7 billion of free cash flow in 2025, and we expect capex to be in the range of two to three points of revenue over the medium term as we modernize more of our tech infrastructure and data center architecture really positioning our teams.

Speaker Change: To move faster better serve customers and unlock data for personalization.

Jamie Miller: One year in, we're proud that we've returned the company to profitable growth. We have a lot more ahead. But in our first year, we grew revenue to $32 billion. We positively inflected TM dollars growth, growing TM 5% x interest, accelerating 800 basis points over two years. We bought back $6 billion of stock, and we delivered 21% earnings growth. In underlying our financial results, we're making progress in key areas. We've accelerated our pace of innovation. We've brought energy back into the brands. We've returned total actives and PayPal consumer MAAs back to growth. And we just became much more disciplined across the organization.

Speaker Change: Our number one priority is to invest in future growth and we'll be disciplined in our approach will maintain flexibility for selective M&A, but it's critical that we execute on what is already in front of us.

Speaker Change: Over time, we expect M&A to also silver role, but we need to earn that right and we will continue to return capital. This year. We have another 6 billion planned via share buyback and we're targeting buybacks at about 70% to 80% of free cash flow over the medium term as we continue to evaluate other ways to return.

Speaker Change: Capital, So I'll wrap up by again, showing you our financial objectives. We believe we are well positioned to drive long term shareholder value. We have trusted brands. We have the largest two sided network in the developed world and our product and innovation engine that's accelerating.

Jamie Miller: Braintree is back to profitable growth. And we reduced costs and reinvested hundreds of millions back into product, technology and marketing. Looking ahead, we have a diversified portfolio to drive growth. And what you see on this slide is a more simple and relevant TPV breakout than in the past. It's a better way of how we think about the product portfolio today, our customer needs and our use cases. And we're making progress across each of these areas. So the first online branded checkout includes PayPal branded checkout, eBay, and pay with Venmo. And it's about 30% of our TPV.

Speaker Change: We have multiple ways to win and I'm excited about our future ahead and with that I'll turn it back over to Steve.

Speaker Change: [noise] I'm going to invite all the speakers back up here to answer any questions. You may have before lunch and the demos again that we have as you can see behind me, they're getting the stage ready I will ask this please raise your hand, if you ever.

Speaker Change: Question, Lizzie Alison or Ryan are distributed or bring you the microphone and I'd ask two things as you usually here for me on our earnings calls right.

Speaker Change: One is when you start actually please state your name and firm for the webcast, but then importantly, really please try to limit yourself to one question to start we will try and circle back to everyone wants as many people have had a chance to ask questions as possible. So with that please welcome back on the stage Alec.

Jamie Miller: We have a clear plan and execution milestones to accelerate. And I'll talk about that more in a bit. P2P and Other Consumer includes PayPal P2P, Venmo P2P, and our branded debit cards. We're making product led improvements both Venmo and PayPal P2P volume accelerated last year. Venmo exited the fourth quarter at 10% volume growth, accelerating by two points. PayPal P2P accelerated for the sixth consecutive quarter to 6%, and we've launched more in-person capabilities. And payment service provider, the third line spans both large enterprise and SMB processing and value added services. We're driving higher margins and deeper merchant relationships.

Speaker Change: Jamie <unk> Diego, Frank Michelle and Susan and soon as you're up we will get started.

Speaker Change: [noise], Okay. So while we have a lot of a lot of folks Ramsey why don't we actually start with you.

Speaker Change: Ramsey herself from Barclays. Thank you so much terrific to have a lot of great information I wanted to ask I saw a couple of churn today that had sort of escalators as customers are stakeholders, who maybe had involvement with one product can you kind of take a step back and talk about how do you speed up that sort of escalation or graduation of your clients or you are.

Jamie Miller: And we've made deliberate healthy choices within Braintree to shift from unprofitable volume, moving into higher SMB processing with PPCP, and driving more attachment of VAST like payouts and new solutions around FX and risk as a And then second from the bottom, you'll see branded experiences, which includes branded checkout online above, plus our offline debit. And the goal of sharing that is to help you follow our progress, as we seek to form deeper consumer relationships and habituation across online and offline. And that's a trend that we expect to accelerate in 2025 and beyond. Moving to overall ecosystem health and opportunities to improve engagement, we're making progress across our consumer base.

Speaker Change: Stakeholders from one sort of stage to the other kind of broad question. Yeah. Let me, let me actually Susan I think I'll turn that over to you and have you think through that.

Susan: So I think we've created a playbook that it makes sense to us now.

We start by working customer back what problems are they trying to solve the meta set of problems are quite aligned with how we think about the future anyway. They want to grow their ads business. If we use them as an example, and then we lean into the places where we collectively can add value to help.

Susan: Accelerate momentum and growth. We then with our largest clients often go into either a set of co creation, where we're looking to either embed or externalized aspects of their assets into hours to help effectively create differentiated experiences but for mid to longer tail of customers. We there.

Jamie Miller: But there's still so much more opportunity ahead. Branded checkout MAAs went from stable to growing up 3% last year. And we added 3 million more monthly active accounts using debit or buy now pay later. Transactions per active are growing. And our goal is to drive more consumer engagement and a higher PayPal selection rate and accelerate our TPV. We have a clear set of financial objectives as we execute in 2025. Growth has accelerated, and we expect TM dollars X interest to grow 6% at the midpoint of our guide, which is more than 100 basis points of acceleration compared to last year.

Susan: Then take the set of platform, yes, it's that use here, particularly on consumer where we have several points of difference and we take them embed them and let them serve them to their end customers as they will.

Susan: We've also changed the way we work right. If you look across the organization. We now have teams that are embedded in each of the key local markets and those are full stack teams. We have consumer teams small business teams enterprise teams. We also have access to local and so all of that combined allows us.

Jamie Miller: We're guiding to high single-digit earnings per share growth at the midpoint, and that includes headwinds from higher taxes and lower interest rates, and we are well-positioned to drive attractive double-digit earnings growth into the future. We have a clear set of strategic initiatives to drive durable, profitable growth. To win checkout, our new modern flow improves conversion and delivers a better experience to increase habituation and capture more share of wallets. And this has a halo effect across everything you see on this slide. We have momentum behind buy now pay later, SMB and consumer engagement. And with Omni, we are increasingly the way for consumers to pay for any transaction.

Susan: To move much faster and not just in the ideation, but ultimately in the implementation and the curation and management of growth. It's an effective playbook, we know how to scale for mid tier we're excited about the opportunity we have with our very largest partners because through them. We're also innovating.

Susan: And creating new solutions that we've taken to the market.

Susan: I don't think I can overstate how different the mindset is now and how it's driving behavior.

Susan: So before we were organized around individual teams with individual teams with individual goals in individual products that they were responsible for even on the consumer side. We have individual product teams that if you looked at the Paypal App itself, you can almost tell where the lines of our organization existed.

Jamie Miller: For PSP, we have significant opportunity to improve and to grow profitably. And also notable next gen initiatives that are small today, but we expect to deliver value over the medium to long term. And this includes personalization, ads, our commerce platform, and crypto. And each of the initiatives I just highlighted plays an important role. We expect to accelerate TM dollars growth x interest moving from 5% in 2024 to 6% at the midpoint of our 2025 guide to a range of 7 to 9% by 2027. Longer term, we have a goal to drive 10% plus growth. It's ambitious, but it's what we want our teams to strive for.

Susan: Because you would have one team that was focused on the debit card and was arguing you can almost tell was arguing with the rest of the team to figure out where the relevancy of the debit card would be versus now the mindset of we have a suite of products, that's where customer back understand how we show up whether it's for a merchant or a consumer and a whole list.

Susan: And so that's where you're seeing our attach rates starting to go up and that's why we've got confidence in bringing this together.

Susan: Harsha.

Harsha: Hi, good morning. Thank you her she's done all the Bernstein.

Harsha: So Alex Jamie I wanted to follow up on the 6% you kind of 8% to 10% branded T. P. The acceleration you discussed a number of initiatives the modern experiences, which would drive that how do you factor in the competitive dynamics with respect to Apple pay coming online shop. The other by not be later kind of factoring.

Jamie Miller: Scaling next gen growth vectors, AI, personalization, ads and crypto, all of that is part of what can help us get there. I want to take a minute and walk you through some of the specific goals and ways for you to track our progress, underpinning each of the initiatives. And starting with checkout, which is at the center of everything we do. Our new products, partnerships and campaigns are all aimed at accelerating checkout. We want to be the easiest, the fastest, the safest solution, and it is essential we deliver more value to customers. And that means higher conversion for merchants and making things even more flexible and rewarding for consumers.

Speaker Change: Into your outlook. Thank you yeah. It's a great question and obviously, we spend a lot of time, a benchmarking ourselves versus competition. The first thing I'd say is we have to have a best in class experience for consumers and that's what you saw today, which is and I've been very consistent if you go back a year ago.

Speaker Change: That branded checkout experience, particularly on mobile as Frank walked through today was entering your email enter in your password it was very clunky.

Jamie Miller: This chart shows our path from 6% volume growth last year to at least 8% to 10% by 2027. Our strategy is underpinned by three key building blocks. First, modernizing checkout solutions to drive higher selection rates. taking our latest branded checkout experience from about 30% coverage in the US today to more than 80% globally by 2027. Our goal is for these experiences to deliver more than one point of conversion improvement to merchant. But the real opportunity is how this impacts selection rates. Better experiences, less breakage, more retention, all lead to stickier, more engaged consumers and a higher share of wallets.

Speaker Change: And our ability to now leapfrog competition and ensure that we have the best in class consumer experience is step one.

Speaker Change: That is insufficient.

Speaker Change: I think if we were here three or four years from now I'm talking about a frictionless checkout experience we.

Speaker Change: As an industry have failed.

Speaker Change: This has to now turning to E. Commerce experience. This has to turn into experience, where you as a customer or getting a personalized checkout experience. Just like you saw on screen today, where I go into my store I go to check out and I am getting at or in our case a button that is speaking to me it knows me.

Speaker Change: Me, it's personalized to me, it's giving me the right reward it's understand the loyalty that I have with this merchant that to me is a completely different experience and I think we are the only ones with a two sided ecosystem with access to merchants at scale with access to 80 million plus shopper profiles and access to hundreds of millions of consumers on an open.

Jamie Miller: Leaning into pay later, our goal is to nearly double the size of our pay later business over the next three years, to grow at more than a 20% CAGR to nearly $60 billion. And accomplishing this through a combination of product and geographic expansion and a go-to-market focus on key merchants, verticals, and marketing. Capitalizing on pay with Venmo, we will nearly triple pay with Venmo volume over the next three years. We expect to grow at more than a 40% CAGR, over $22 billion. And we're starting to hit our stride. The Venmo team is winning in KeyMobile First Verticals.

Speaker Change: An agnostic platform to be able to deliver that next version of commerce. So we need to keep looking at competition, we need to get to a best in class on the current experience, but we are focused on innovating for the future and being the leaders in the next version of Commerce.

Speaker Change: Oh.

Speaker Change: Hey, Thanks, Steve is Tien Tsin Huang from JP Morgan I, just want to ask to accelerate branded checkout can you do it at the same economics that you have today is there still a price to value exercise to go through because you make the case that you're doing a lot of work on the consumer gives him a lot of choice things like that I'm sure. If you unbundle that there was an interesting exercise there, but I'm curious just about that.

Jamie Miller: And compared to a year ago, our execution has improved, teams are focused, and we're accelerating. We have more work to do, but I'm really excited about our progress. We're expanding beyond e-commerce to become truly omnichannel. Within P2P and other consumer TPV, we accelerated four points to 7% growth in 2024. And we expect to maintain this momentum growing to at least 10% by 2027. We have improved our core app experiences in P2P and mobile payments. We've launched more ways to pay in person, and we ran our PayPal Everywhere campaign in September, which is reshaping how consumers think about PayPal.

Speaker Change: Economic and take rate and all that kind of thing.

Speaker Change: The way I think about it is again, if we change the game and how we engage with our merchants branded checkout gets for far more valuable for our merchants as well so you're already starting to see things like habituation with buying out pay later by the increase in now bringing buy now pay later into the experience. The uplifted gifts for merchants is also economics for us.

Speaker Change: As well.

Speaker Change: But what we're starting to see is we're having merchant conversations that I'm, having many of these personally with Ceos of some of our largest merchants is we are now able to bring them new customers and so the people theyre, bringing into the conversation or Theyre cmo's are the people talking about customer acquisition and so we're tapping.

Jamie Miller: Debit penetration remains a huge opportunity, and we're driving adoption. We've added more than three million first time users. We're bringing card and NFC capabilities to several European markets later this year. And within Venmo and P2P, we're bringing in more users, driving product attachment and increasing engagement, and all our areas that help us drive revenue growth. And we're focused on improving the overall profitability of our PSP business. And we're doing this through pricing to value and aligning our sales teams and incentives to profitable growth. Braintree TPV growth is lower in 2025 as we shift away from unprofitable volume, but TM dollars have accelerated, and we'll be in a position to reaccelerate TPV later this year.

Speaker Change: Into economics in the relationship that's beyond just their payments person or their checkout person and so I just think again, it's it's it's the biggest mindset shift that I ask you all at the beginning and I will continue to have to ask you all to go through now which is the evolution of a payments company that is just focused on.

Speaker Change: On creating a frictionless checkout experience, which we are still the number one player in into E. Commerce company and I think it just taps us into much broader addressable markets.

Jamie Miller: Growth is a combination of new verticals, international expansion, and more offerings to SMBs. We're rolling out new value added services, including across FX, risk and payout. to drive more value. And we expect PSP to contribute more than a point to TM dollars growth this year with more benefit over time. We continue to have a sharp focus on containing costs while reallocating to healthier levels of technology and marketing. By the end of 2025, we will have remixed more than $400 million into marketing and tech compared to two years ago. Our headcount was down around 10% each of the last two years, and we will continue to balance investment and efficiency.

Speaker Change: Yeah, and when it to add to what Alex said I mean, a lot of what we're doing around branded checkout driving debit driving buy now pay later driving pay with Venmo. These are all high margin products. In addition to the habituation and other halo effect, they bring the branded and we see that Halo effect in the cohorts and in the numbers and so when you look at take rate some of.

Speaker Change: Those do carry lower take rates, but they're margin accretive and so margin it will be accelerating over the time as we do this but at the same time, you know take rate may shift based on product mix and things like that.

Speaker Change: Alright, Hey, listen you might go into Dan <unk> from Wolfe.

Dan: I gave you your intro.

Speaker Change: Oh, it's Darren Peller from Wolfe, Thanks to you guys.

Speaker Change: Guys I, just want to understand a little bit more you've had great data on the checkout experience getting better and you have such a great runway there and how many monthly active users you have.

Jamie Miller: And we see further opportunity for efficiency over time, shifting the allocation of spend more into key areas like tech and marketing. And our goal is to drive down OPEX as a percentage of revenue as we leverage our cost structure. Now I'll take you through our financial outlook. As you've heard consistently, we are focused on accelerating profitable growth, moving from 5% TM dollars growth excluding interest in 24 to a range of seven to 9% by 2027. Driving expense leverage, operating margin expansion, and share buyback combines for low teens plus EPS growth. And that includes headwinds from lower interest rates and tax rate inflation.

Speaker Change: <unk> is really a differentiator, but how do we help us understand the steps youre going to take to convince the consumer really light a fire under a consumer to say from Huron I'm going to use pay with venmo I'm going to use Paypal when maybe they didn't before beyond just the checkout experience getting better something has to really I think ignite them.

Speaker Change: I hope us understand the steps marketing loyalty anything else would be helpful to get and where does that 34 transactions per month or per year rather.

Speaker Change: Where is that going to go over the next few years. Thanks guys.

Speaker Change: Let me go back to the point about the shift on the on the other.

Speaker Change: Mindset, because we are moving from a value proposition there was only about checkout button to a value proposition about baseball, which means we won't people to stay won't consumers to stay in our ecosystem. Because there is a much larger equation of value from them when they do more with pay.

Jamie Miller: And as I mentioned earlier, our long term ambition is higher. We believe the opportunity in front of us is significant and we want our team's ambition to be 20% plus EPS growth over time. We have a strong balance sheet. We have $15 billion of cash and equivalents. And we're targeting a balance sheet light model for credit. We have more opportunity to externalize parts of the credit portfolio. We generate a significant amount of free cash flow. We expect six to seven billion dollars of free cash flow in 2025. And we expect CapEx to be in the range of two to three points of revenue over the medium term as we modernize more of our tech infrastructure and data center architecture, really positioning our teams to move faster, better serve customers and unlock data for personalization.

Speaker Change: So starts with checkout.

Speaker Change: As we were saying before now we are connecting the rest of the products from the ecosystem to check out like never like never before from debit to pay later to pay with venmo, even crypto now and that he is going to create not only habituation, but on top of that we also are going to build a reward.

Speaker Change: Words that I'm going to give you really a lot of reasons for you to stay on that ecosystem I said it very quickly during the presentation, but we are thinking on rewards and because we are the only ones that can do it that will really connect Paypal a first party rewards not only on just a payments, but the whole ecosystem. So you really get.

Jamie Miller: Our number one priority is to invest in future growth, and we'll be disciplined in our approach. We'll maintain flexibility for selective M&A, but it's critical that we execute on what is already in front of us. Over time, we expect M&A to also silver roll, but we need to earn that right, and we will continue to return capital. This year, we have another $6 billion planned via share buyback. And we're targeting buybacks at about 70% to 80% of free cash flow over the medium term as we continue to evaluate other ways to return capital. So I'll wrap up by, again, showing you our financial objectives.

Speaker Change: More for doing more with us and then merchant rewards as well that would be merchant funded connecting also through our smart wallet with the rewards program from our merchants. So when you put all of this together youre going to get so much value as a consumer that is going to be really compelling for you to stay to stay with us on doubled.

Speaker Change: And you saw up to what we did last September.

Speaker Change: Our marketing is also changing to number one help you think differently about Paypal is not just for some purchases or just for online purchases is for all purchases and that is a massive.

Jamie Miller: We believe we are well positioned to drive long-term shareholder value. We have trusted brands. We have the largest two-sided network in the developed world, and a product and innovation engine that's accelerating. We have multiple ways to win, and I'm excited about our future ahead. And with that, I'll turn it back over to Steve. I'm going to invite all the speakers back up here to answer any questions you may have before lunch and the demos again that we have. As you can see behind me, they're getting the stage ready. I will ask this, please raise your hands if you have a question, Lizzie, Allison, or Ryan are distributed.

Speaker Change: Change for the way the consumer thinks about people, which in combination with the other things is going to allow us to allow us to keep you super engaged with our brand.

Speaker Change: Just just to just to add on to.

Speaker Change: I want to take it was saying I think the fact that we have both sides of the ecosystem gives us an opportunity to create completely differentiated experiences.

Speaker Change: We are consumer obsessed.

Speaker Change: And merchant obsessed.

Speaker Change: There are other players out there in other platforms that actually looked at while driving customers just intermediate the customer from the merchant because they actually want to own that relationship.

Speaker Change: We don't have to play that game, we actually clean if you look at that Commerce API, we can provide the merchant with the information to to personalize the experience for that consumer and drive loyalty into the consumers' wallet because the consumer is engaging with us on a daily basis and so when you think about a loyalty.

Steve Winick: I'll bring you the microphone. And I'd ask two things as you usually hear from me on our earnings calls, right? One is when you start, actually, please state your name and firm for the webcast. But then importantly, really, please try to limit yourself to one question to start. We will try and circle back to everyone once as many people have had a chance to ask questions as possible. So with that, please welcome back on the stage, Alex, Jamie, Srini, Diego, Frank, Michelle and Susan. And as soon as you're up, we will get started. Okay, so, wow, we have a lot of folks.

Speaker Change: Spirits, I mean, everyone to think back too.

Speaker Change: The Ninety's when you had a thick wallet with a whole bunch of loyalty cards sitting in there.

Speaker Change: <unk> have gone away as you've now moved to a phone.

Speaker Change: But that also means that your relationship with your local merchant your relationship with that loyalty platform has gone away as well.

Speaker Change: I think we have an opportunity to bring that back so does that consumer understands that hey, this is where I make my purchases all the time and this is where I want my rewards and my loyalty to be in the merchant gets to have a deeper relationship with those consumers and I think we have a very very unique opportunity to create that flywheel.

Unknown Attendee: Ramsey, why don't we actually start with you? Randy LaSalle from Barclays. Thank you so much. A terrific day, a lot of great information. I wanted to ask, I saw a couple of charts today that had sort of escalators of customers or stakeholders who maybe had involvement with one product. Can you kind of take a step back and talk about how do you speed up that sort of escalation or graduation of your clients or your stakeholders from one sort of stage to the other? It's kind of a broad question. Yeah, let me let me actually, Susan, I think I turn that over to you and have you think through that.

Speaker Change: Okay, let's come back to the front row, Allison do you mind, let's get Brian from Deutsche I know some folks have flown in for today and I appreciate that we all do.

Bryan Keane: Thanks, Steve Bryan Keane Deutsche Bank, just back to thinking about unbranded and Braintree and the platform. It was really important one of the great things you've done so far Alex is fixed you know the profitability that that the pricing there when we think about the platform going forward and you go maybe head to head against against strong competitor.

Unknown Attendee: So, I think we've created a playbook that makes sense to us now. We start by working customer back. What problems are they trying to solve? The meta set of problems are quite aligned with how we think about the future anyway. They want to grow their ads business, if we use them as an example. And then we lean into the places where we collectively can add value to help accelerate momentum and growth. We then, with our largest clients, often go into either a set of co-creations where we're looking to either embed or externalize aspects of their assets into ours to help effectively create differentiated experiences.

Speaker Change: There's like stripe and add in how does the platform able to grow at e-commerce levels at profitable levels.

Bryan Keane: Versus the competition what gets you there what's the differentiator drivers yeah.

Speaker Change: So we've reset some of those relationships as Susan said and what we haven't capitalized on really from a transaction margin growth perspective, as I said is selling all of these value added services into them. So that is something where right now Super focused on then secondly, our front book, we're building out now in Omnichannel.

Unknown Attendee: But for mid to longer tail of customers, we then take the set of platforms, the assets that you hear, particularly on consumer, where we have several points of difference and we take them, embed them and let them serve them to their end customers as they will. We've also changed the way we work, right? If you look across the organization, we now have teams that are embedded in each of the key local markets. And those are full stack teams. We have consumer teams, small business teams, enterprise teams. We also have access to local eng. So all of that combined allows us to move much faster, not just in the ideation, but ultimately in the implementation and the curation and management of growth.

Speaker Change: Front book as I said, and we're also going to be focused on geographies outside of North America, especially in Europe, where we see more margin well underpenetrated. We're strengthening that also from a platform capability perspective, and we're going a very targeted after verticals, where we are underpenetrated.

Speaker Change: So I think Jamie said it as we expect I expect actually towards the end of the year really seeing a significant growth coming from the front book So that we're growing at e-commerce levels.

Speaker Change: You know you always hear a very consistent it's sort of how I think about competition and how I think about playing in in and very competitive ecosystems. First you have to have a best in class product like that's just.

Unknown Attendee: It's an effective playbook. We know how to scale for mid-tier. We're excited about the opportunity we have with our very largest partners, because through them, we're also innovating and creating new solutions that we take into the market. I don't think I can overstate how different the mindset is now and how it's driving So before we were organized around individual teams, with individual teams with individual goals and individual products. Even on the consumer side, we have individual product teams, that if you looked at the PayPal app itself, you could almost tell where the lines of our organization are.

Speaker Change: The right to play.

Speaker Change: We have to make sure that we have an incredible processing product with which we do and now incredible value added services that we can go head to head with and I believe we can win in a profitable way, but I'd much prefer a competitive battles, where we leverage our unique assets to play sort of unfair games and the conversations.

Speaker Change: We are having with merchants now when we're able to bring our consumer ecosystem to bear something that competition cannot bring.

Speaker Change: We have 400 million consumers and when I sit down with the CEO of a merchant.

Speaker Change: And I ask them, what their biggest challenges I have yet to have one of them say it's basis points on processing.

Unknown Attendee: because you would have one team that was focused on the debit card and was arguing, you could almost tell, was arguing with the rest of the team to figure out where the relevancy of the debit card was. versus now the mindset of we have a suite of products, let's work customer back, understand how we show up, whether it's for a merchant or a consumer in a holistic And so that's where you're seeing our attach rates starting to go up, and that's why we've got. Harshita. Hi, good morning. Thank you. Harshita Rawat, Bernstein. So Alex, Jamie, I want to follow up on the 6% to kind of 8% to 10% branded TPV acceleration.

Speaker Change: They say I need more customers.

Speaker Change: I need to drive more habituated customers to my products.

Speaker Change: And when we say great well I have this incredible asset called Venmo do you want <unk>.

Speaker Change: Affluence demographics how.

Speaker Change: How can we work together to be able to drive those customers to your platform.

Speaker Change: It's a completely different conversation. So we have to have best in class products, which we do.

Speaker Change: And we're going to leverage the assets that we have that are unique to compete in an unfair way.

Speaker Change: I also do want to grab the mic back I see James we'll go to James from Morgan Stanley over on the on there and then Steve.

Unknown Attendee: You discussed a number of initiatives, the modern experiences, which will drive that. How do you factor in the competitive dynamics with respect to Apple Pay coming online, ShopPay, other buy-not-pay later kind of factoring into your outlook? Thank you. Yeah, it's a great question. Obviously, we spend a lot of time benchmarking ourselves versus competition. The first thing I'd say is, we have to have a best-in-class experience for consumers. And that's what you saw today, which is, and I've been very consistent, if you go back a year ago, that branded checkout experience, particularly on mobile, as Frank walked through today, was enter in your email, enter in your password, it was very And our ability to now leapfrog competition and ensure that we have the best in class consumer experience is step But that is in.

Speaker Change: Steve James Fawcett of Morgan Stanley Chris.

Speaker Change: Kristina asked and build a little bit on on your last answer here.

Speaker Change: The vision that you present for engagement with consumers and how it can benefit merchants et cetera is really compelling at the same time, though.

Speaker Change: You're really asking for merchants and consumers to share a lot of data that historically, they haven't been willing to do or at least it's been a bit of a hurdle for them and so I'm. Just wondering as you can you expand on those conversations with merchants and how you can convince them like if I'm going to Nike to share.

Speaker Change: Sure the chute shoe size that I wear so that if I end up at another merchant's website et cetera that they feel comfortable with that and as part of that conversation something that's has been an important in the past, but wasn't really brought up today is like how does that then work with them on some of the third party NFC wallets et cetera, so it kind of tying.

Unknown Attendee: I think if we are here three, four years from now talking about a frictionless checkout experience, we as an industry This has to now turn into a commerce experience. This has to turn into experience where you as a customer are getting a personalized checkout experience, just like you saw on screen today, where I go into my store, I go to checkout, and I'm getting, in our case, a button that is speaking to me. It knows me, it's personalized to me, it's giving me the right reward, it's understanding the loyalty that I have with this merchant.

Speaker Change: All of those ecosystems, together would love to get a little more detail, how you're thinking about that thanks, Chris Yeah. So so first the data is our customers' data.

Speaker Change: Right and they have entrusted us for decades now to make sure that their data is safe and secure and that we have built up a reputation that stands for privacy.

Speaker Change: So step one is we've had to build over time and and.

Speaker Change: And consistency a great relationship with our consumers second where we work customer back on what is most important to them and you heard multiple times throughout today that what customers are looking for is a personalized experience, but if you think about even just where the examples that I shared at the beginning showing up at a store and having to create.

Unknown Attendee: That, to me, is a completely different experience, and I think we are the only ones with a two-sided ecosystem, with access to merchants at scale, with access to 80 million plus shopper profiles, and access to hundreds of millions of consumers on an open, agnostic platform to be able to deliver that next version of commerce. So we need to keep looking at competition, we need to get to best in class on the current experience, but we are focused on innovating for the future and being the leaders in the next version of commerce. Thanks, Steve. This is Tengjun Huang from JPMorgan.

Speaker Change: Filters I mean, we've all experienced the.

Speaker Change: The opportunity of going shopping online and finding the right product and by the time you get to filter down to your exact size it's out of stock.

Speaker Change: So we can understand how frustrating that is.

Speaker Change: To be able to as a consumer no when I show up I'm getting a personalized experience with just the things that are right for me.

Unknown Attendee: I just want to ask to accelerate branded checkout. Can you do it at the same economics that you have today? Is there still a price to value exercise to go through? Because you make the case that you're doing a lot of work on the consumer, giving them a lot of choice, things like that. I'm sure if you unbundle that, there's an interesting exercise there, but I'm curious just about economics and take rate and ARPA, that kind of thing. The way I think about it is, again, if we change the game in how we engage with our merchants, branded checkout gets far more valuable for our market.

Speaker Change: Is a value to me.

Speaker Change: And I trust Paypal to be able to share that with merchants now we are not sharing in taking specific merchant information from one merchant to the other but we are enabling the shopper to build their own profile and so that's where we start and that is again the advantage that we have as the only player that has a two sided ecosystem.

Speaker Change: As we get into an Omnichannel world.

Unknown Attendee: So you're already starting to see things like habituation with buy now, pay later, or the increase in now bringing buy now, pay later into the experience. The uplift it gives for merchants is also economics for us. But what we're starting to see as we're having merchant conversations, and I'm having many of these personally, with CEOs of some of our largest merchants, is we are now able to bring them new And so the people they're bringing into the conversation are their CMOs, are the people talking about customer acquisition. And so we're tapping into economics in the relationship that's beyond just their payments person or their checkout.

Speaker Change: We believe we'll be able to share that same information that shopper profile should exist no matter, where you are online in store a gentex that as your profile that is your data that is your information and we should be able to enable that on a device online anywhere you are and you've seen us start to occur.

Speaker Change: Relationships like the one we announced this morning with Verifone wearing out we are now able to connect on online and and an in store ecosystem. So I think we're just we're just getting started there.

Speaker Change: Okay. So I promised to go into the back of the room I'm going to reach as far back as I can I think I see dental and the back then deliver here at Mizuho a great analyst day. Thanks, a lot very ambitious very good targets as you were doing the planes like can you maybe lay out from here until 'twenty seven what you were thinking what can go wrong and then.

Unknown Attendee: And so I just think, again, it's the biggest mindset shift that I asked you all at the beginning, and I will continue to ask you all to go through now, which is the evolution of a payments company that is just focused on creating a frictionless checkout experience, which we are still the number one player in, into a commerce company. And I think it just taps us into much broader addressable Yeah, and to add to what Alex said, I mean, a lot of what we're doing around branded checkout, driving debit, driving buy now pay later, driving pay with Venmo, these are all high margin products, in addition to the habituation and other halo effect they bring to branded.

The alternative is what would drive upside to those two sides of the coin Yeah. Let me, let me start and then Jamie if you want to.

Speaker Change: You're always better at what could go wrong.

Speaker Change: Yeah.

Speaker Change: [laughter].

Speaker Change: Yeah.

Speaker Change: We've been let me just start with philosophy wise, because I think we've been consistent in the last year of being I think very prudent when we put our guidance out.

Speaker Change: We want to make sure that our say do ratio was very high and our credibility is very high so as we went through even presenting twenty-five which you've already seen our ambition for 27, and then our longer term ambition.

Unknown Attendee: And we see that halo effect in the cohorts and in the numbers. And so when you look at take rate, some of those do carry lower take rates, but they're margin accretive. And so margin will be accelerating over the time as we do this, but at the same time, you know, take rate may shift based on product. All right, hey Lizzie, do you mind going to Dan from Wolf? I gave you your intro. Oh, it's Darren Beller from all. Thanks, Steve. Guys, I just want to understand a little bit more. We've had great data on the checkout experience getting better, and you have such a great runway there.

Speaker Change: Internally, we work very hard to make sure that we've got line of sight.

Speaker Change: And growth algorithms of what we can get there now we're also cautious in.

Speaker Change: If we don't see it yet we're not going to put it in.

Speaker Change: And so again, that's just a philosophy of how we're building.

Speaker Change:

Speaker Change: Of how we think about guidance, how we think about long term, yeah, I know and I would echo that I think we've been very thoughtful about how we've put together and constructed our view on our plan over the next three years.

Unknown Attendee: And how many monthly active users you have is really a differentiator. But how do we help us understand the steps you're going to take to convince the consumer, really light the fire under a consumer to say, from here on, I'm going to use pay with Venmo. I'm going to use PayPal when maybe they didn't before. Beyond just the checkout experience getting better, something has to really, I think, ignite them. Help us understand the steps, marketing, loyalty, anything else that would be helpful to get. And where does that 34 transactions per month or per year, rather, where is that going to go over the next few years?

Speaker Change: Number one I'd say, we have multiple ways to win and he probably felt that and saw that as you move through this in terms of the massive opportunity in venmo you know the the significant opportunities we have to really scale offline and have that come back into branded you know how strongly and deeply we feel about our branded path here and driving that through multiple vectors. So I think my.

Speaker Change: People ways to win and we did plan I'm, assuming a consistent consumer environment. So consistent to last year. Obviously, you read the news like I do there's always something happening every minute in the last few weeks to follow on that front.

Unknown Attendee: Thanks. Let me go back to the point about this shift on the mindset because we are moving from a value proposition that was only about checkout, meaning a button, to a value proposition about PayPal, which means we want people to stay, we want consumers to stay in our ecosystem because there is a much larger equation of value from them when they do more with PayPal. So starts with checkout. As we were saying before, now we are connecting the rest of the products in the ecosystem to checkout like never before, from debit to pay later, to pay with Venmo, even crypto.

Alex Feil: And I would say the other thing that we've been very very focused on internally over the last year is really getting our execution muscle humming and Alex talked about this being tightly integrated in and really having people on the field playing their role the way we need them to play it and that is something that we've been accelerating every day, but that's something over the next few years that you know we're at.

Speaker Change: We're really seeking to drive and make better and better and better.

Speaker Change: Okay, great to Frontload Battlefront route we'll try to go back and forth great. Thank you Tim Tri Ed at UBS.

Speaker Change: For the branded checkout disclosure, so now pay with Venmo has been moved into that its a small part of the base, but its a nice portion of the growth for branded checkout. So I was hoping you could talk a little bit about the plan for better merchant acceptance or further merchant acceptance of pay with venmo that button, what's changed what was different in the past the hurdles and then Jamie.

Unknown Attendee: And that is going to create not only habituation, but on top of that, we're also going to build rewards that are going to give you really a lot of reasons for you to stay on that ecosystem. And I said it very quickly during the presentation, but we are thinking on rewards and because we are the only ones that can do it, that will really connect PayPal first party rewards, not only on just payments, but the whole ecosystem. So you really get more for doing more with us. And then merchant rewards as well, that will be merchant funded, connecting also through our smart wallet with the rewards program from our merchants.

Speaker Change: Alluded to it but theres a different unit economic there. So if you could talk a little bit about the varying gross and net take rate for pay with venmo relative to Paypal branded checkout. So Tim maybe I'll start with the last time, we talked in December which is the product is so awesome really there's so many features of venmo and different things we've added over the last year.

Unknown Attendee: So when you put all of this together, you're going to get so much value as a consumer, that it's going to be really compelling for you to stay with us. On top of that, and you saw what we did last September, our marketing is also changing to number one, help you think differently about PayPal. It's not just for some purchases, or just for online purchases, it's for all purchases. And that is a massive change for the way the consumer thinks about PayPal, which in combination with the other things, is going to allow us to keep you super engaged with our work.

Speaker Change: That if you guys haven't used them. Please use them because theyre really delighted that pay with venmo is one of those and it is the easiest most simple like delightful experience, but what's the life of me is that it has also carries with it a nice high margin and it's very consistent with our branded checkout margins there too. So yeah, Glenn you want to talk about right yeah.

Speaker Change: We've been very disciplined and methodical you you heard me talk about the five steps, we actually talk about the steps because if we get all the IP to be volume that gets spent through debit or bay with them. What is the first step for monetization and you saw how low our penetration is right now, but also is focusing again manav.

Unknown Attendee: Just to just to add on to and pile on to what Diego was saying, I think the fact that we have both sides of the ecosystem gives us an opportunity to create completely different We are. Consumer Obsessed, and Merchants of the Future. I think there are other players out there and other platforms that actually looked at while driving customers disintermediate the customer from the because they actually want to own that. We don't have to play that game. We actually can, if you look at that commerce API, we can provide the merchant with the information to personalize the experience for that consumer and drive loyalty into the consumer's wallet because the consumer is engaging with us on a daily basis.

Speaker Change: Likely on this design target that we have this young urban affluence. So when you look at pay with Venmo.

A great example is <unk>, which was launched with a you know Jud Jetblue. For example, some people said to me, it's like Wow I was surprised about that because I thought I thought maybe a pay with venmo Venmo wasn't journal about small transactions than in any other markets. They are seen neighborhoods and it's just like yeah. It's Dod but also you have this incredibly young active.

Speaker Change: Affluent audience that they also want to spend on everything else. So when you look at our travel and entertainment. When you look at our game units. For example, a category that is very very active so we see that happening and you're going to see a lot more because there's pent up demand about what audience that really wants to use their balance sheet. So it's very exciting and let me just.

Unknown Attendee: And so when you think about a loyalty experience, I mean, everyone think back to the 90s when you had a thick wallet with a whole bunch of loyalty cards sitting Those have gone away as you've now moved to a phone. But that also means that your relationship with your local merchant, your relationship with that loyalty platform has gone away as well. I think we have an opportunity to bring that back. So that consumer understands that, hey, this is where I make my purchases all the time. And this is where I want my rewards and my loyalty to be.

Speaker Change: Hammer home a point I made a little earlier, which is a year ago. Our go to market team for venmo was on a different floor a different building.

And they were working as hard as they could.

But it's like having a startup competing with everybody else that's out there.

Between Susan and Michelle and the rest of the team. We now have one go to market team, that's able to talk to the largest number of merchants in the world and say do you want maybe the most valuable demographic.

Unknown Attendee: And the merchant gets to have a deeper relationship with And I think we have a very, very unique opportunity to create that. Okay, let's come back to the front row. Allison, do you mind? Let's get Brian from Deutsche. I know some folks have flown in for today. And I appreciate that we all Thanks, Steve. Brian Keene, Deutsche Bank. Just back to thinking about unbranded and Braintree and the platform, it was really important. One of the great things you've done so far, Alex, is fixed the profitability, the pricing there. When we think about the platform going forward, and you go maybe head to head against strong competitors like Stripe and Adyen, how does the platform able to grow at e-commerce levels, at profitable levels, versus the competition?

Speaker Change: Anywhere in the venmo demographic.

Speaker Change: It's a much different conversation.

Speaker Change: Okay I Wanna pit. This side, then Ryan I mean have you search for somebody in the back there that we might be missing about Andrew when I go to Andrew Alright. Thank so much industry from Citi I wanted to dig in on the modern checkout experience expansion expected over the next couple of years going from 30 to 80, obviously, a big driver of the branded checkout growth acceleration.

Speaker Change: What are the biggest unlocks to sort of get that penetration and then Conversely, you know if there are hurdles where would you expect to see them just curious in terms of both sides sort of.

Speaker Change: Pros and cons in terms of the growth there. Thanks, so much.

Unknown Attendee: What gets you there? What's the differentiator drivers? So we've reset some of those relationships, as Susan said. And what we haven't capitalized on, really from a transaction margin growth perspective, as I said, is selling all these value-added services. So that is something we're right now super focused on. Then secondly, our front book, we're building out now an omni-channel front book, as I said, and we're also going to be focused, A, on geographies outside of North America, especially in Europe, where we see more margin, where we're under-penetrated, we're strengthening that also from a platform capability perspective, and we're going very targeted after verticals where we have under-penetrated.

I I shared from a 30% in the U S. We talked in the past about modern integrations. So on those smarter and integrations. We can just basically ramp the core features meaning the new design without the merchants to do anything. So that's what we're doing right now is scaling very fast we actually see higher.

Speaker Change: Because we have a higher share of modern integrations in in international than in the U S.

Speaker Change: That gave it gives them the baseline now additional features that I talked about they would need to do work, but its relatively light lift. So now we're coming to some of these very old legacy integrations, where we're right now going to market and we're basically the pitch goes like that we show them the old experienced put a side by side with the new X.

Unknown Attendee: So I think Jamie said it as we expect, I expect actually towards the end of the year, really seeing significant growth coming from the front book so that we're growing at e-commerce. You know, you all will hear a very consistent, it's sort of how I think about competition and how I think about playing in very competitive. First, you have to have a best in class product. Like that's just the right We have to make sure that we have an incredible processing product, which we do, and now incredible value-added services that we could go head-to-head with, and I believe we can win.

Speaker Change: And it almost sounds by itself because it's so much faster and then you you show about the additional capabilities that you can do bringing the customers everything that Alex talked about that we're shifting from should we do it to how do we sequence. All these things that we wanted to do it together and that's the big unlock the fundamental thing is this.

Speaker Change: Product seemed to work they need to drive conversion and we do synthetic analysis by merchant, giving them the data that they see what it would do for them. So it works for consumers. It works for merchants, we bring a holistic conversation to it which makes it an easier and Susan this working through all the big ones. Michelle is working through all the platforms, which is a big unlock.

Unknown Attendee: But I much prefer competitive battles where we leverage our unique assets to play sort of unfair And the conversations we're having with merchants now when we're able to bring our consumer ecosystem to bear is something that competition cannot. We have 400 million. And when I sit down with the CEO of a merchant... and I asked them what their biggest challenge is. I have yet to have one of them say it's basis points on they say I need more. I need to drive more habituated customers to my product. And when we say great, well, I have this incredible asset called Venmo.

Speaker Change: For the S N b space just to just to hammer. It home. We have 15 years of legacy integrations hundreds of different patterns, we have not been able to provide a value proposition as a reason for a merchant to upgrades we do now.

Speaker Change: It's very clear as Frank just said and the conversations we're having with small businesses with platforms with enterprises. It is a completely different conversation because we can show them the data and show them the experience.

Speaker Change: We will get and we have confidence that we will get to the numbers that we shared and then we will deprecate the old experiences, we're not going to live in a world, where we have 15 years and hundreds of integrations, we need to be on the best and.

Unknown Attendee: Do you want young, affluent, demographic? How can we work together to be able to drive those customers to your platform? It's a completely different So we have to have best-in-class products, which we do. and we're going to leverage the assets that we have that are unique to compete in an unfair way. Allison, you want to grab the mic back? I see James. We'll go to James from Morgan Stanley over on the end there. Thanks, Steve. James Fossett, Morgan Stanley. Chris, I want to ask and build a little bit on your last answer here. The vision that you present for engagement with consumers and how that can benefit merchants, etc.

Speaker Change: In the most recent integration because that saves us cost and it provides a U a ubiquitous consistent experience for consumers as well.

Speaker Change: Great. We are running out of time I was trying to get another one and Ryan you have something in the back.

Speaker Change: Jason Kupferberg from Bank of America. Thanks for all the info today I wanted to follow up on branded checkout. When do we start this path towards acceleration, we're talking about 300 basis points two years from now when does it start as it late this year or is it first half of next year talk about cadence and then just in terms of geographic mix Orange.

Speaker Change: Standing right now U S is growing a little slower than international so does the bulk of the acceleration in the next couple of years come from the U S. Thanks.

Unknown Attendee: is really compelling. At the same time, though, you're really asking for merchants and consumers to share a lot of data that historically they haven't been willing to do, or at least it's been a bit of a hurdle for them. And so I'm just wondering, can you expand on those conversations with merchants and how you can convince them, like if I'm going to Nike to share the shoe size that I wear so that if I end up at another merchant's website, et cetera, that they feel comfortable with that. And as part of that conversation, something that's has been an important in the past, but wasn't really brought up today is like, how does that then work within some of the third-party NFC wallets, et cetera.

Speaker Change: So let me talk about that and maybe two parts. The first is really thinking about margin dollar growth over the next couple of years, and then I'll pivot and talk a little bit about the U S. From a margin dollars perspective, you know our guidance. This year assumes 100 basis points of a shift in margin and certainly all the things I talked about or a part of that answer.

Speaker Change: Significant part of that you know branded checkout you know we're already at 30% penetration in the U S. On the merchant experiences all the work Diego who has done around offline debit marketing that's stuff youre going to see us continue and be very focused on it as we move through 'twenty five so what I'd say to that is it'll be a gradation.

Unknown Attendee: So it kind of tying all those ecosystems together. I'd love to get a little more detail how you're thinking about that. Thanks Chris. Yeah. So, so first the data is our. Right, and they have entrusted us for decades now, to make sure that their data is safe and secure. And that we have built up a reputation that stands So step one is we've had to build over time and Consistency, a great relationship with our Second, we work customer back on what is most important to them. And you heard multiple times throughout today that what customers are looking for is a personalized experience.

Speaker Change: Asian over the period of time is how to think about transaction margin when we come over to branded checkout. The U S side of it we are very very focused on U S growth with branded checkout. It is something that has the full weight of the organization behind it. We are very very strong market positions internationally, we expect growth there to and to continue taking.

Speaker Change: Sure, but that the U S is a big big focus there and you know Frank talked about.

Speaker Change: The merchant experience as being a key part of that the other piece of it.

Speaker Change: And I really want to make sure. We make this link is all of the things that we're doing offline that habituation really does come back into more MAA as better Halo effect higher branded checkout and using the funds flow that works through the products. Its also on pay with venmo and how venmo Habituates. The thing so all of that comes into play there.

Unknown Attendee: If you think about even just the examples that I shared at the beginning, showing up at a store and having to create filters, I mean, we've all experienced the opportunity of going shopping online and finding the right product. And by the time you get the filter down to your exact size, it's out of stock. and we'd understand how frustrating. To be able to, as a consumer, know when I show up that I'm getting a personalized experience with just the things that are right for me, is a value And I trust PayPal to be able to share that.

Speaker Change: So we are actually out of time I'm going to have to call. It there for now and the webcast. So thanks very much everybody. We appreciate your time everybody.

Speaker Change: [noise].

Unknown Attendee: Now, we are not sharing and taking specific merchant information from one merchant to the other. But we are enabling the shopper to build their own profile. And so that's where we start. And that is, again, the advantage that we have as the only player that has a two-sided. As we get into an omni-channel world, we believe we'll be able to share that same information, that shopper profile should exist no matter where you are. Online, in-store, agentic, that is your profile, that is your data, that is your information, and we should be able to enable that on a device, online, anywhere you are.

Unknown Attendee: And you've seen us start to create relationships, like the one we announced this morning with Verifone, where we are now able to connect an online and an in-store ecosystem. So I think we're just getting started. Okay, so I promise to go into the back of the room. I'm going to reach as far back as I can. I think I see Dan Dolev in the back. Dan Dolev here at Mizuho. A great analyst day. Thanks a lot. Very ambitious, very good targets. As you were doing the plans, like, can you maybe lay out from here until 27 what you were thinking?

Unknown Attendee: What can go wrong? And then the alternative is what would drive upside to those two sides of the coin? Yeah, let me let me start. And then, Jamie, if you want to. You're always better at what could go wrong. Let me just start with philosophy-wise, because I think we've been consistent in the last year of being, I think, very prudent when we put a guidance out. We want to make sure that our say-do ratio is very high and our credibility. So as we went through even presenting 25, which you've already seen our ambition for 27 and then our longer term ambition.

Unknown Attendee: Internally, we work very hard to make sure that we've got line of sight and growth algorithms of what we can get there. Now, we're also cautious in If we don't see it yet, we're not going to put it in. And so again, that's just a philosophy of how we're building. of how we think about guidance, how we think about long-term. Yeah, I know, and I would echo that. I think we've been very thoughtful about how we've put together and constructed our view on our plan over the next three years. Number one, I'd say we have multiple ways to win, and you probably felt that and saw that as you moved through this.

Unknown Attendee: In terms of the massive opportunity at Venmo, you know, the significant opportunities we have to really scale offline and have that come back into branded, you know, how strongly and deeply we feel about, you know, our branded path here and driving that through multiple vectors. So I think multiple ways to win. We did plan assuming a consistent consumer environment, so consistent to last year. Obviously, you read the news like I do, there's always something happening every minute in the last few weeks to follow on that front. And I would say the other thing that we've been very, very focused on internally over the last year is really getting our execution muscle humming.

Unknown Attendee: And Alex talked about this and being tightly integrated and really having people on the field play in their role the way we need them to play it. And that is something that we've been accelerating every day but that's something over the next few years that, you know, we're really seeking to drive and make better and better and better. Great. Front row, back to the front row. We'll try to go back and forth. Great. Thank you, Tim Chioda, UBS. For the branded checkout disclosure, so now Pay With Venmo has been moved into that. It's a small part of the base, but it's a nice portion of the growth for branded checkout.

Unknown Attendee: So I was hoping you could talk a little bit about the plan for better merchant acceptance or further merchant acceptance of Pay With Venmo, that button. What's changed? What was different in the past, the hurdles? And then Jamie, you kind of alluded to it, but there's a different unit economic there. So if you could talk a little bit about the varying gross and net take rate for Pay With Venmo relative to PayPal branded checkout. So Tim, maybe I'll start with the last time we talked in December, which is the product is so awesome. Really, there's so many features of Venmo and different things we've added over the last year that if you guys haven't used them, please use them because they're really delighters.

Unknown Attendee: But Pay With Venmo is one of those. And it is the easiest, most simple, like delightful experience. But what delights me is that it also carries with it a nice high margin. And it's very consistent with our branded checkout margins there, too. So Diego, you want to talk about it? Yeah. And listen, we've been very disciplined and methodical. You heard me talk about the five steps. We actually talk about steps because if we get all that P2P volume to get spent through debit and Pay With Venmo is the first step for monetization. And you saw how low our penetration is right now.

Unknown Attendee: But also you have this incredibly young, active, affluent audience that they also want to spend on everything else. So when you look at travel and entertainment, when you look at, you know, gaming is, for example, a category that is very, very active. So we see that happening. And you're going to see a lot more because this depends on demand of our audience that really wants to use their balances to spend. So it's very exciting. And let me just hammer home a point I made a little earlier, which is a year ago, our go-to-market team for Venmo was on a different floor in a different building.

Unknown Attendee: and they were working as hard as they could. But it's like having a startup competing with everybody else. Between Susan and Michelle and the rest of the team, we now have one go to market team that's able to talk to the largest number of merchants in the world and say, do you want maybe the most valuable demographic anywhere? in the Venmo demographic. It's a much different. Okay, I want to pit this side, then Ryan, I'm going to have you search for somebody in the back there that we might be missing. But Andrew, you want to go to Andrew?

Unknown Attendee: Hi, thanks so much. Andrew Schmidt from Citi. I wanted to dig in on the modern checkout experience expansion expected over the next couple years going from 30 to 80. Obviously, a big driver of the brand and checkout growth acceleration. What are the biggest unlocks to sort of get that penetration? And then conversely, you know, if there are hurdles, where would you expect to see them? Just curious in terms of both sides, sort of the pros and cons in terms of the growth there. Thanks so much. I shared 30% in the US. We talked in the past about modern integrations.

Unknown Attendee: So on those modern integrations, we can just basically ramp the core features, meaning the new design without the merchants to do anything. So that's what we're doing right now scaling very fast. We actually see a higher potential because we have a higher share of modern integrations in international than in the US. that gives them the baseline. Now, additional features that I talked about, they would need to do work, but it's relatively light lift. So now we're coming to some of these very old legacy integrations, where we're right now going to market. And we're basically the pitch goes like that, we show them the old experience, we put a side by side with the new experience, and almost sells by itself, because it's so much faster.

Unknown Attendee: And then you show about the additional capabilities that you can do bringing the customers, everything that Alex talked about, that we're shifting from should we do it to how do we sequence all these things that we want to do together. And that's the big unlock. The fundamental thing is, these products need to work, they need to drive conversion, and we do synthetic analysis by merchants, giving them the data that they see what it would do for them. So it works for consumers, it works for merchants, we bring a holistic conversation to it, which makes it then easier.

Unknown Attendee: And Susan is working through all the big ones, Michelle is working through all the platforms, which is a big unlock for the S&P. Just to hammer it home, we have 15 years of legacy integrations, hundreds of different patterns. We have not been able to provide a value proposition as a reason for a merchant. We do now. It was very clear, as Frank just said, and the conversations we're having with small businesses, with platforms, with enterprises, it is a completely different conversation, because we can show them the data and show them the We will get, and we have confidence that we will get to the numbers that we shared, and then we will deprecate the old.

Unknown Attendee: We're not going to live in a world where we have 15 years and hundreds of integrations. We need to be on the best. and the most recent integration, because that saves us costs and it provides a ubiquitous, consistent experience. We are running out of time. Let's try to get another one in. Ryan, do you have somebody in the back? So let me talk about that in maybe two parts. The first is really thinking about margin dollar growth over the next couple of years. And then I'll pivot and talk a little bit about the US. From a margin dollars perspective, you know, our guidance this year assumes 100 basis points of shift in margin.

Unknown Attendee: And certainly all the things I talked about are a part of that and a significant part of that. You know, branded checkout, you know, we're already at 30% penetration in the US on the merchant experiences. All the work Diego has done around offline, debit, marketing, that stuff, you're gonna see us continue and be very focused on as we move through 25. So what I'd say to that is it'll be a gradation over the period of time is how to think about transaction margin. When we come over to branded checkout, the US side of it, we are very, very focused on US growth with branded checkout.

Unknown Attendee: It is something that has the full weight of the organization behind it. We have very, very strong market positions internationally. We expect growth there too, and to continue taking share, but the US is a big, big focus there. And, you know, Frank talked about the merchant experience as being a key part of that. The other piece of it, and I really wanna make sure we make this link, is all of the things that we're doing offline, that habituation really does come back into more MAAs, better halo effect, higher branded checkout use, and the funds flow that works through the product.

It's also on pay with Venmo and how Venmo habituates. So all of that comes into play there. So we are actually out of time. I'm going to have to call it there for now on the webcast. So thanks very much, everybody. Appreciate your time. Thanks, everybody.