NEW YORK (BLOOMBERG) - PayPal Holdings began laying off employees who worked in risk management and operations this week as the firm sought to shore up profits after growth in spending on its platform stagnated in recent quarters.
The company laid off dozens of staff who worked in Chicago, Omaha, Nebraska and Chandler, Arizona, according to people familiar with the matter. PayPal this month also announced plans to permanently lay off more than 80 people at its headquarters in San Jose, California, according to filings with that state.
"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," PayPal said in a statement.
Spending on PayPal's platforms climbed just 15 per cent in the first quarter to US$323 billion (S$443 billion), the smallest increase in at least five years, when supply chain disruptions hindered e-commerce purchases and more consumers returned to in-store shopping as the pandemic eased. The firm's former parent company, eBay, has also been rapidly moving payments away from PayPal's platform.
PayPal's headcount has climbed in recent years and the firm ended last year with 30,900 employees, a 33 per cent increased from pre-pandemic levels.
The company said last month it was working to improve operating leverage - or the ability to grow revenue faster than expenses. Chief executive officer Dan Schulman said the company had started to simplify its operating model before the pandemic, but the explosion in volumes on its platform in the early days of the outbreak forced the company to put that work on hold.
"We are now coming back to this work with renewed focus, energy and purpose," Mr Schulman vowed at the time.
PayPal warned in a regulatory filing that it incurred US$20 million in costs tied to its restructuring in the first three months of the year after it initiated a "strategic reduction of the existing global workforce". Most of the costs were linked to severance and other employee benefits, PayPal said.
The company now expects to incur an additional US$100 million in restructuring charges this year, though the job cuts will ultimately help the firm save about US$260 million a year in employee-related costs, PayPal said.