PayPal Turns To AI As Layoff Plan Targets $1.5B In Savings

PayPal told investors it wants to rebuild around faster technology work, AI tools and a leaner structure after weak guidance hit the stock.

Good to Know

• PayPal reported Q1 revenue of $8.4 billion, up 7% year over year.
• Bloomberg reported planned cuts of about 20% over two to three years, or more than 4,500 jobs.
• CEO Enrique Lores said AI and fewer layers should help deliver at least $1.5 billion in savings.

PayPal Rebuild Puts AI At The Center

PayPal is framing its turnaround around a simple message: fewer layers, faster teams and more AI across the company.

CEO Enrique Lores told analysts that PayPal must “recommit to the fundamentals,” including “becoming a technology company again.” He said the company needs to modernize its tech platform, become more cloud-native and use AI more aggressively in development work:

“I think the changes that AI will enable us to do are … going to be very significant.”

PayPal has already created an “AI transformation and simplification” team that reports to Lores. The group will look at each function and process, not just coding. Customer service, support operations and risk management all sit in the AI plan. Lores said:

“This is why we created a group last week, reporting to me, that is going to be in charge of driving — function by function, process by process — this AI transformation. And this is not about adopting AI as a technology, where we have done many pilots in the company, and we have seen what is possible. It’s really about understanding how can we redesign the key processes … this is what we have seen that really will drive significant savings.”

The cost plan also includes job cuts. Bloomberg reported that PayPal plans to cut around 20% of its workforce over two to three years, equal to more than 4,500 roles. Lores described the layoffs as part of removing layers from the company structure.

The timing is rough for employees, especially as PayPal links savings to AI adoption. Other tech companies have moved faster with AI coding tools, while PayPal now appears to be trying to catch up.

Last week, PayPal also reorganized into three business lines: checkout solutions and PayPal, consumer financial services and Venmo, and payment services and crypto.

PayPal still beat Q1 expectations with $8.4 billion in revenue, up 7%. However, weak second-quarter guidance pushed the stock lower. The shares have now fallen more than 80% from their 2021 high.

Venmo also drew investor attention. Asked whether PayPal could sell the unit, Lores said the current setup fits the turnaround plan. Still, he added that “my number one priority is to maximize shareholder value.”