PayPal is losing its chief financial officer to retail behemoth Walmart following a difficult end to 2021.
San Jose, California-based PayPal said in a press release Tuesday that Chief Financial Officer John Rainey would remain at the company through late next month before departing to join Bentonville, Arkansas-based Walmart. Rainey, who was also executive vice president of global customer operations, had been at PayPal for nearly seven years. Walmart said Rainey will start on June 6.
PayPal said it would temporarily replace Rainey, after he leaves, with Gabrielle Rabinovitch, who is senior vice president for corporate finance and investor relations, while the company searches for a permanent successor. Meanwhile, the global customer operations team Rainey oversaw will join the risk, legal and customer operations group led by Executive Vice President Aaron Karczmer, the release said.
The poaching of Rainey by Walmart follows a disappointing fourth-quarter earnings report at PayPal and the company's decision to abandon a goal of collecting 750 million user accounts by 2025. At that time, the company also announced a significant strategic shift to concentrate more on engaging existing PayPal customers and less on luring new ones. The company also said it was forced to jettison about 4.5 million accounts last year that were created by "bad actors" in the course of providing incentives to attract new users.
PayPal’s CFO exit wasn't a surprise following "a period of overpromising and under-delivering, and given the shares -65% decline from the peak," Mizuho Securities analyst Dan Dolev said in a note to clients Wednesday. "The most glaring mishap was perhaps guiding to 750mn accounts by 2025, only to walk it back several months later," Dolev said.
Another analyst also noted that Rainey's departure follows upheaval at the company and its Venmo unit. "The timing of the CFO departure is unfortunate, given the material pivot (PayPal) is undergoing with regard to its increased focus on engagement, coupled with the revamping of its (PayPal) and Venmo Apps," RBC Capital Markets analyst Daniel Perlin said in a note to clients Wednesday. "Nevertheless, the opportunity presented to John Rainey is hard to dispute and thus his departure is not likely indicative of something more concerning."
Rainey's exit also comes just days after the publication Insider reported PayPal cut a security research and development group as part of plans for an "internal restructuring," citing a person with direct knowledge of the changes aimed at reduced spending. A spokesperson for PayPal confirmed a three-person emerging technologies research team was cut, but said that was unrelated to Rainey’s move.
"PayPal is constantly evaluating how we work to ensure we are prepared to meet the needs of our customers and operate with the best structure and processes to support our strategic business priorities as we continue to grow and evolve," the spokesperson said.
Top executives frequently leave companies at the beginning of a new year after they've received their bonuses for the prior year, and may be more prone to seek new roles if they don't expect the company's growth to increase their compensation in the future.
Dolev noted the peculiarity of PayPal not providing an update for the company’s first-quarter results in light of the CFO departure, calling it a "worrisome development." The company said previously that it will report quarterly results on April 27.
Perlin echoed those concerns. "The fact that management did not use this opportunity to reiterate guidance, in the face of such a material event, does call into question if a reset could be necessary." He didn't elaborate on what that reset might be.