It appears PayPal Holdings will remain intact, at least for now, if the company’s new CEO can make it pay off. Or it may be that he has no buyers.
Shortly after Enrique Lores was appointed to the top post at the digital payment player in February, media reports spiraled with speculation that parts of PayPal, or the whole company, might be sold. In particular, the peer-to-peer unit, Venmo, was seen as ripe for lopping off.
But Lores didn’t seem overly interested Tuesday in selling off any of PayPal’s major units when he spoke to analysts during his first earnings webcast. That is, as long as he can make them deliver profitable growth and returns for shareholders, he said.
“What is important is that we believe that there are significant synergies across the three businesses that make them stronger together,” Lores told analysts in discussing first-quarter results.
Still, Lores said the company would be “rigorous,” or even “ruthless,” in prioritizing which other small businesses and initiatives to continue.
“In the coming quarters, we need to decide in which ones we double down on, and we increase investment to increase our ability to execute and our chances to be successful, and in which ones we are going to be divesting, stopping or doing something different,” Lores said.
That plan comes despite the company announcing late last month that it would reorganize to put the company’s three top brands, PayPal, Venmo and Braintree, in three separate business units. The three new units formed on April 29 are checkout solutions and PayPal; consumer financial services and Venmo; and payments services, including Braintree, and crypto.
Lores, who took over from Alex Chriss in March, is the third CEO in as many years tasked with jump-starting growth at the San Jose, California-based digital payment pioneer that preceded what is now a slew of competitors.
“We argue that PayPal has reached a point at which a lack of historical innovation has structurally impaired its competitive edge,” analysts at the investment firm William Blair told their clients in a note Tuesday. “New leadership will struggle to improve branded performance, in our opinion, and any notion of breaking up the company will fade as investors realize there are no buyers for disparate and incongruous businesses.”
The company’s first-quarter net income slid 14% to $1.11 billion as revenue rose by 7% to $8.35 billion. Payments volume climbed 11% to $464 billion, according to the Tuesday earnings report. PayPal’s legacy branded checkout unit continues to be a drag on revenue growth, multiple analysts wrote Tuesday in client notes.
Part of Lores’ plan to revive the company turns on updating the nearly three-decade-old technology systems across the business. In meeting with merchant clients in Europe, Lores said he found that the company’s services had fallen short partly because it has not modernized its systems, so that is a key part of his strategy now, he said.
The company’s “highest priority” is improving the company’s legacy PayPal checkout system in order to make sure the company is optimizing the benefits of its unique two-sided network, Lores said.
That network includes merchant accounts on one side and consumer accounts on the other – a position that Chriss also sought to capitalize on by revving up the company’s role at the center of commerce.
Nonetheless, Lores also contended that the company hasn’t focused enough on the consumer side of that equation so he plans to attempt to “rebalance” the company’s investments to better service consumers. He didn’t delve into specifics on how PayPal will accomplish that goal, but he did suggest that the company will try to sell consumers more financial services.
To fund its company-wide investments, PayPal also plans to undertake cost-cutting, and increase its use of artificial intelligence. Ultimately, the company expects $1.5 billion in cost savings that will be reinvested as part of the business restructuring.
“We clearly have an opportunity to reduce our cost structure, and this is what we're doing,” Lores said.
The company’s “structural realignment” will be part of a multi-year transformation for the company, Chief Financial Officer Jamie Miller said on the webcast.
That plan could include cutting about 20% of PayPal employees over the next two to three years, according to a report Tuesday from The Wall Street Journal, which cited an unnamed source. PayPal executives didn’t elaborate on such a workforce reduction during the earnings webcast. The company had about 24,000 employees at the end of 2025, according to its annual report.
The plan is reminiscent of the transformation promised by Chriss as well. He also pursued significant cost reductions and tech upgrades, with a $300 million initiative last year to overhaul the company’s technology infrastructure.
The new commitments made by Lores didn’t appear to spark much hope for the company from investors. On the contrary, PayPal’s stock dropped about 6% Tuesday after the earnings report.
