PayPal is looking to the future despite falling stock and looming layoffs. In its first-quarter earnings call, CEO Enrique Lores told investors that PayPal needs to “get back to the fundamentals,” including “being a technology company again.”
There was no need to read between the lines – PayPal offered an AI-powered twist.
Lores made that clear, telling analysts on a call this week that leading companies are finding ways to differentiate themselves by innovating, and now is the time for PayPal to act. This includes modernizing the technology platform, moving faster to become “cloud-native” and “aggressively applying artificial intelligence to our development processes,” Lores said. The latter will increase developer productivity and shorten time to market, he added.
It’s a surprising admission from PayPal that AI-powered coding is one area where the technology really excels.
Other consumer tech companies have rapidly adopted artificial intelligence in recent months to help with coding, with Spotify even announcing in February that its top developers I didn’t write a line of code from December. Meanwhile, the best development teams are trying to outdo each other by tokenmaxxing — a proxy to understand who in the company is experimenting with AI more often based on the number of AI traits they use.
PayPal is just now catching up, it seems.
Lores said the company has created a new “AI transformation and simplification” team to help with its AI agenda. Along with the planned layoffs, which Lores characterized as peeling layers from PayPal’s organizational structure, the addition of AI-powered processes is expected to save the company at least $1.5 billion over the next two to three years.
The company announced this last week reorganizes his workstreamlines the transaction into three segments: payment solutions and PayPal, consumer financial services (and Venmo), as well as payment services and cryptocurrency. In addition, Bloomberg reported on this On Tuesday, PayPal plans to cut about 20% of its workforce over the next two to three years as part of a cost-savings plan worth north of 4,500 jobs.
More savings will come from PayPal’s AI implementation plans, company executives said on the call. This includes bringing AI to areas outside of coding, such as customer service, support operations and risk management.
“I think the changes that artificial intelligence will allow us to drive will be very significant,” Lores said. “So we put together a group last week and reported to me that this AI transformation — by function, by process — is going to be responsible for this AI transformation. And that’s what we’ve done a lot of pilots in the company and we’ve seen what’s possible. It’s really about figuring out how we can redesign core processes… those are really significant savings that we’re seeing.”
Announcing an AI-driven push to cut costs while eliminating thousands of jobs underscores a key criticism of the technology — that it comes at a human cost
It should be noted that in this case PayPal already needed restructuring. The company may have posted first-quarter earnings of $8.4 billion, up 7% year-over-year, but guidance is forecasting a weak second quarter. causes the shares to lose value after earnings. This is after a long post-pandemic recession shares are down more than 80% It reached its 2021 high and halted PayPal’s growth.
Asked if spinning off Venmo into its own business means the company would be open to selling it, Lores said that’s what makes the most sense for now in terms of a turnaround plan. However, he said he was open to future deals, saying “my number one priority is to increase shareholder value” in response to an analyst’s question about the sale.
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