PayPal begins cutting staff as push to reduce costs ramps up
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NEW YORK • 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.
It laid off dozens 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. It said in a statement: "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."
Spending on PayPal's platforms climbed just 15 per cent in the first quarter to US$323 billion (S$442 billion), the smallest rise 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. The firm ended last year with 30,900 staff, a 33 per cent rise from pre-pandemic levels.
The firm said last month it was working to improve operating leverage - the ability to grow revenue faster than expenses. CEO Dan Schulman said the firm 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 it to put that work on hold. "We are now coming back to this work with renewed focus, energy and purpose," he vowed then.
PayPal warned in a regulatory filing 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 that were linked to severance and employee benefits, it said.
It now expects to incur an added US$100 million in restructuring charges this year though the job cuts will help it save about US$260 million a year, it said.
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