PayPal Holdings is reducing its global workforce by 9%, or 2,500 jobs, to right-size the digital payments company, which faces stiffer competition, especially with the new CEO, Alex Chriss.
The job cuts are in addition to the approximately 2,000 jobs, comprising about 7% of its global workforce, that PayPal announced on January 31, five months after the appointment of Chriss as the CEO.
Job Cuts Addressing a Challenging Macroeconomic Environment
Dan Schulman, the president and CEO at the time, stated that PayPal was reducing costs as part of a transformation in response to global changes and customer shifts amid a challenging macroeconomic environment.
In a memo to employees, Schulman mentioned the significant strides the company made in fortifying and reshaping the company to tackle the challenging economic conditions over the past year. Although substantial progress was made in adjusting our cost structure and concentrating on key strategic priorities, Schulman said the company still "has more work to do."
The Appointment of the New President and CEO, Chriss
Chriss, a former Intuit executive, was appointed as the new president and CEO of PayPal after an extensive search to replace Schulman, who had announced plans to retire. The news of additional job cuts at PayPal surfaced just five days after the company introduced a half-dozen new products and services, which, according to Chriss, aim to "revolutionize commerce."
Chriss, who assumed the position in September, informed employees through a letter that the job cuts would happen directly and by cutting open positions this year, and those affected would be notified by the end of the week.
Job Cuts' Goals and Paypal's Future Plans
According to Chris, the company must increase focus and efficiency and deploy automation to reduce complexity and duplication. The job cuts aim to right-size the business, allowing it to move with the speed needed to deliver for customers and drive profitable growth.
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Despite the announced cuts on Tuesday, Chriss assured that PayPal would continue to invest in areas driving growth, though specific details were not provided. He expressed confidence that the company will emerge even stronger from this period.
A Significant Move Incorporating Artificial Intelligence
PayPal unveiled a significant move into artificial intelligence features last week. This marks the first major announcement since Chriss took over as CEO in September from Intuit, the financial tech company known for TurboTax. The AI features include a quicker checkout experience, AI-driven merchant suggestions for customers, and a complete consumer app overhaul of the consumer app, which Chriss referred to as the start of PayPal's "next chapter."
Mizuho analyst Dan Dolev commented on the initiatives, expressing positivity about using AI to improve the checkout experience and offer benefits to consumers, but putting too much emphasis on Branded Checkout might be a potential long-term regret.
BTIG analysts Andrew Harte and Thomas Smith mentioned that the initiatives represent a positive move but not groundbreaking, as investors would have anticipated the company to be working on these actions already.
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