PayPal focused on operational efficiencies in the first quarter as AI presented opportunities for the company to save money and improve workflows.
During the quarter, PayPal reduced its technology and development spend 12% year over year to $721 million, driven by an increased focus on cost control, according to the earnings presentation.
“It’s not about cost reduction, it’s just about doing things better,” Chief Executive Daniel Schulman said Monday during PayPal’s Q1 earnings call. “With the new advances of generative AI, we will also be able to accelerate our productivity initiatives. We expect AI will enable us to meaningfully lower our costs for years to come.”
BIG PICTURE: Tech companies, including Microsoft and Google, also announced AI initiatives during the quarter.
The technology, specifically generative AI, will be used at PayPal in the front office, back office, marketing, legal and engineering, Schulman said. “AI will have an impact and allow us to not just lower cost but have higher performance and do things … not just about tradeoffs.”
BY THE NUMBERS:
- Operating expenses increased 3% YoY to $6 billion;
- Net revenue grew 9% YoY to $7 billion; and
- Restructuring and other charges soared to $164 million, up from $36 million in the same period in 2022. The charges included $117 million related to stock-based compensation expenses and payroll taxes, according to the earnings presentation.
NOTEWORTHY: The PayPal board has formed a subcommittee to search for a successor for Schulman, who announced his retirement in February, according to the earnings call.
“We still plan to announce my replacement before yearend, and that process is well underway,” Schulman said.
FLASHBACK: In January, PayPal reduced its headcount with 2,000 job cuts based on economic uncertainty, Schulman said in PayPal’s Q4 earnings call.
He did not break out the team’s head count in Q1, however, the company has not announced any layoffs since January.
FUTURE LOOK: PayPal is working to add abilities for Venmo and PayPal users to pay each other to bring “more utility to both customer bases,” Schulman said during the call. Additionally, the company is piloting Venmo teen accounts, “which have been requested by both parents and teens for some time.”
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