PayPal says it’s ‘becoming a technology company again’ — that means AI
Source: TechCrunch
PayPal’s New Technology Focus
PayPal is looking toward the future despite its falling stock and looming layoffs. In its first‑quarter earnings call, CEO Enrique Lores told investors that PayPal needs to “recommit to the fundamentals,” which includes “becoming a technology company again.” Lores said the company will differentiate itself by innovating, modernizing its tech platform, moving faster to become “cloud‑native,” and “aggressively adopting AI in our development processes.” The goal is to increase developer productivity and shorten time‑to‑market.
AI Adoption and Cost Savings
PayPal has admitted it has yet to fully embrace AI in‑house, even as AI‑assisted coding becomes a breakout area for many tech firms. For context, Spotify announced in February that its top developers “haven’t written a line of code since December” thanks to AI (TechCrunch).
Top dev teams are also competing by “token‑maxxing” — a proxy for how often a company experiments with AI based on the number of AI tokens used (TechCrunch).
Lores said PayPal has formed a new “AI transformation and simplification” team to drive its enterprise AI agenda. Combined with planned layoffs, the AI‑enabled processes are expected to generate at least $1.5 billion in cost savings over the next two to three years.
Beyond coding, PayPal plans to embed AI in customer service, support operations, and risk management. As Lores put it:
“The changes that AI will enable us to do are … going to be very significant. … It’s really about understanding how we can redesign the key processes … this is what we have seen that really will drive significant savings.”
Organizational Reorganization and Workforce Reductions
The company announced a reorganization that streamlines operations into three segments:
- Checkout solutions and PayPal
- Consumer financial services (including Venmo)
- Payment services and crypto
Details are available in the PayPal press release.
Bloomberg reported that PayPal plans to cut around 20 % of its workforce—over 4,500 jobs—over the next two to three years as part of its cost‑savings plan (Bloomberg).
Financial Performance and Outlook
PayPal beat first‑quarter earnings expectations with revenue of $8.4 billion, up 7 % year‑over‑year. However, the company forecast weaker guidance for the second quarter, sending the stock tumbling (MarketWatch).
The stock has declined over 80 % from its 2021 high, reflecting a prolonged post‑pandemic slowdown (Seeking Alpha).
Potential Future of Venmo
When asked if separating Venmo into its own business signaled a possible sale, Lores said the move makes sense for the current turnaround plan but left the door open for future deals, emphasizing that “my number one priority is to maximize shareholder value.”