PayPal plans job cuts as its new CEO pursues turnaround strategy

PAYPAL plans to cut costs and jobs as new chief executive officer Enrique Lores seeks to turn around the payments company that’s faced stiff competition in recent years.

PayPal is seeking to realise at least US$1.5 billion in savings over the next two to three years, according to a statement on Tuesday. The company also reported first-quarter adjusted earnings per share of US$1.34, beating the average analyst estimate of US$1.27.

Lores, who took over as CEO in March, has been starting to put his stamp on the company that’s been struggling in recent years.

Last week, PayPal said it reorganised its business lines and tapped executives Frank Keller, Alexis Sowa and Jeff Pomeroy for top roles as president of checkout solutions, interim head of consumer financial services and interim lead of payment services, respectively.

In a presentation on Tuesday, Lores said that in his first two months on the job, he learned of the “opportunity to simplify operations” and saw the “potential to reduce cost structure.” He also added that the firm will seek to reinvest in modernising its technology.

“We are taking deliberate steps to sharpen our strategy, simplify our organisation, and improve both our growth trajectory and cost structure by focusing our investments where we believe they will have the greatest impact,” Lores said in the statement. “I am confident in our ability to put the company on a more durable path to long-term growth.”

Some of PayPal’s fintech rivals have also been cutting jobs.

Coinbase Global said on Tuesday it plans to reduce its workforce by about 14 per cent, or about 700 employees. Earlier this year, Block said it would eliminate 4,000 workers, or nearly half of its staff. 

San Jose, California-based PayPal reiterated its full-year earnings guidance. PayPal expects adjusted earnings per share to post a “low-single-digit decline to slightly positive” percentage change from last year’s US$5.31, according to the presentation.

SEE ALSO

Oracle anchors Apac AI growth through Singapore but layoff concerns loom

Companies cannot fire workers to replace them with AI, China courts rule

Meta, Amazon, Wall Street: Global giants slashing headcounts worldwide

JLL Singapore cuts over 20 jobs or 1% of workforce; Knight Frank Singapore also lays off staff

Meta, Microsoft plan cuts, buyouts that may affect 23,000 jobs

Coinbase to cut 14% of workforce, citing volatile markets and AI

More

Transaction margin dollars — which represents how much the company earns from processing transactions after expenses — is still expected to show a “slight decline” from last year.

For the first three months of the year, transaction margin dollars rose 3 per cent to US$3.81 billion, beating the US$3.67 billion consensus of Wall Street analyst estimates.

PayPal has struggled despite its storied history as a financial-technology company. It was an early entrant in the world of digital payments, but the firm has since struggled amid fierce competition in the space from companies including Stripe, Adyen NV, Apple Pay and Klarna Group.

Former CEO Alex Chriss attempted to prioritise innovation during his nearly 2 1/2-year tenure at PayPal, but chief financial officer Jamie Miller said execution had “not been what it needs to be.”

A bright spot in the first quarter was the consumer-facing business Venmo, which saw total payment volume rise 14 per cent. PayPal’s online branded checkout volume, however, has lagged, increasing by 2 per cent in the same period. BLOOMBERG