PayPal to Undergo Transformation and Restructuring, Planning 20% Workforce Reduction
PayPal (PYPL) plans to reduce its workforce by 20% over the next two to three years. This layoff is part of the company's latest strategic deployment: accelerating the implementation of artificial intelligence and compressing operating costs. With a total of 23,800 employees as of the end of 2025, the scale of this layoff will reach 4,760 positions. Bloomberg News previously reported the layoff news.
PayPal CEO Enrique Lores told investors on Tuesday that the company has underinvested in technology platforms in the past and has fallen behind other fintech peers. He plans to cut redundant management layers and invest more resources in artificial intelligence research and development, striving to become a technology leader in the industry.
He stated: “PayPal needs to focus on its core business and return to the fundamentals of its business.”
Lores took the helm of PayPal in March of this year after former CEO Alex Chris was dismissed. He said that cost-cutting is to free up funds to increase investment in new technology research and development.
Lores said: “First, we will streamline the organizational structure, remove business duplication and redundant layers; second, we will accelerate the implementation of artificial intelligence and the layout of automated operations across all business lines.”
Affected by the news, PayPal’s stock price plummeted more than 8% on Tuesday, to $45.93.
Company management expects that this round of cost reduction measures will achieve at least $1.5 billion in annualized cost savings over the next two to three years. PayPal has not disclosed specifically in which business segments it will cut spending.
Management said that in the next two years, PayPal will comprehensively reorganize its team structure and build a new business operation system and process system.
PayPal’s board of directors hired former HP CEO Lores as its leader earlier this year due to dissatisfaction with the pace of change led by former CEO Chris. After the pandemic, PayPal’s core payment settlement business slowed down, and the company has been seeking diversified transformation.
Lores said that the primary core task at present is to consolidate the core online checkout payment business; at the same time, he is optimistic about the growth potential of the buy now, pay later (BNPL) business, and consumer demand for flexible installment payments continues to rise.
In addition, financial services, Venmo social payments, and payment processing businesses will also be key areas of focus.
PayPal’s first-quarter net profit fell to $1.11 billion, or $1.21 per share, compared to $1.29 billion, or $1.29 per share, in the same period last year.
Excluding one-time items, first-quarter adjusted earnings per share were $1.34, higher than analysts’ expectations of $1.27.
Lores was known for streamlining architecture and driving the company’s transformation to artificial intelligence and subscription businesses during his tenure at HP.
This round of layoffs and cost reductions is Lores’ second major reform measure since taking office. PayPal announced a business reorganization last week, integrating it into three major business units:
Checkout Payment Solutions and PayPal Core Business
Consumer Financial Services and Venmo
Payment Services and Cryptocurrency Business
PayPal said that this structural adjustment will strengthen management accountability and enable the company’s organizational structure to better seize growth opportunities in receiving silver payments, payment processing, and consumer finance.
The company’s first-quarter revenue increased from $7.79 billion in the same period last year to $8.35 billion, higher than analysts’ expectations of $8.05 billion.
Transaction profit, a closely watched profitability indicator, increased by 3% year-on-year to $3.8 billion; total payment transaction volume increased by 11% year-on-year to $464 billion.
For the current second quarter, PayPal expects adjusted earnings to decline by a high single-digit percentage, a decrease of approximately 9%; transaction profit is expected to decline by approximately 3%.