PayPal plans to cut about 2,500 jobs, or 9% of its workforce, the company’s new CEO, Alex Chriss, said in a letter to staff, according to news reports from multiple media organizations.
Chriss is trying to jump-start profitable expansion at the payments pioneer after it failed to meet growth goals in recent years. In a corporate announcement posted online Tuesday, he said he had determined a workforce reduction was necessary.
“Today, I am writing to share the difficult news that we will be reducing our global workforce by approximately 9% through both direct reductions and the elimination of open roles over the course of the year,” the CEO said in the web post. “We are doing this to right-size our business, allowing us to move with the speed needed to deliver for our customers and drive profitable growth.”
He added: “Specifically, across our organization, we need to drive more focus and efficiency, deploy automation, and consolidate our technology to reduce complexity and duplication.”
At the end of 2022, the San Jose, California-based company employed about 29,900 people globally, with 44% of those workers in the Americas, including 11,800 located in the U.S., according to the company’s annual filing with the Securities and Exchange Commission lasear. PayPal also had 43% of its workforce in the Asia-Pacific region and 13% in Europe and the Middle East.
“We submit this is a promising first step to driving profitable growth,” Gus Galá, an analyst with the financial firm Monness, Crespi, Hardt, said in a note to clients Tuesday.
Almost exactly a year ago, the company said it would eliminate about 2,000 jobs, about 7% of its workforce at that time.
Chriss, who took the top post from long-time leader Dan Schulman in September, has already shown that he’s willing to shrink the company in a bid to bolster profits. PayPal sold its Happy Returns business to shipper UPS for $465 million in cash in October, just two years after it acquired the business.
In a November webcast with investment analysts, Chriss didn’t rule out additional divestitures. In that third-quarter earnings discussion with investment analysts, Chriss spelled out plans for reviving profitable growth at the company and said he walked into the role with “eyes wide open.” “There are clearly challenges to tackle,” he said at that time.
Some analysts have noted that the company appears to be losing market share to tech titan Apple, which has become an increasingly large player in the payments arena by way of its digital wallet.
Chriss explained in November that he plans to redirect the company toward more profitable growth by streamlining the business and tightening cost controls. He’s also assembled a new management team to drive change at the company.
In his first major public pitch, Chriss last week explained how the company is embarking on its “biggest changes in a decade.” Some of those included speeding up check-outs by using biometrics to sign consumers into its payment system and automatically generating receipts for transactions that promote follow-on purchases.
Following that presentation, analysts expressed their skepticism. “While the focus on using AI to enhance the checkout experience and boost offers to consumers is positive, we believe doubling down on Branded Checkout may prove a long-term regret,” Mizuho Securities analysts said in a Jan. 25 note.