PayPal Holdings Inc. said it will cut 2,000 staffers as it contends with a macroeconomic slowdown that's weighed on the firm's business in recent quarters
The cuts, which will affect about 7% of employees, will take place in the coming weeks, chief executive officer Dan Schulman told employees in a memo.
"While we have made substantial progress in right-sizing our cost structure, and focused our resources in our core strategic priorities, we have more work to do" Schulman said.
PayPal's stock has been battered by the slowdown in growth in payments volume on its platform after the pandemic began to recede. In response, the company has vowed to reduce expenses-- including through job cuts and the shuttering of offices across the country.
Those move should have helped the company notch $900 million in savings last year and at least an additional $1.3 billion in 2023,Schulman has said. The 65-year- old CEO has been vocal about his plans to improve his firm's operating leverage -- or the ability to grow revenue faster than expenses.
PayPal shares jumped 1.9% to $81.14 at 3:55 p.m. in New York. The stock has climbed 14% this year, outpacing the 9% advance of the S&P 500 Information Technology Index.
PayPal -- like many other so-called pandemic darlings -- saw headcount swell when the virus forced government around the world to issue lockdown orders, spurring consumers to do more shopping online. Now, as those orders have lifted and supply chains remain under pressure, consumers have returned to in store shopping in droves.
PayPal is expected to report that payment's volume on its many platforms climbed to $1.4 trillion last year, according to analyst estimates compiled by Bloomberg. While that's a 9.6% increase from a year earlier, that would still mark the lowest level of growth in the firm's history as a public company, the data show.
"Over the fast year, we made significant progress in strengthening and reshaping our company to address the challenging macroeconomic environment while continuing to invest to meet our customers' needs," Schulman said. "We must continue to change as our world, our customers, and our competitive landscape evolve."
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PayPal Holdings Inc will lift merchant costs for its branded payment products while cutting those for behind-the-scenes processing of some visa and Mastercard transactions, a bold move in an increasingly competitive digital payments sector.
The strategic shift reflects PayPal's growing power in online transactions, which surged during the Covid-19 pandemic.
As consumers and businesses flocked to the company, a market leader during lockdown, its active accounts mounted to 377 million, more than twice as many as in 2015.
The company said the move reflected the value of its proprietary services, with consumers nearly three times as likely to complete a purchase when PayPal products are available at checkout, while users of the new buy-now-pay-later option spend an average of 15% more.
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