PayPal announced on Tuesday it will lay off about 2,000 employees, or 9% of its total workforce, as part of a strategic restructuring plan to cope with the challenging macroeconomic environment and the increasing competition in the fintech industry.
The company’s CEO, Alex Chriss said in a press release that the decision was not easy, but necessary to improve the company’s operating leverage and focus on its core priorities.
“Change can be difficult – particularly when it includes valued colleagues and friends departing,” Chriss said.
“We will face this head-on together, drawing on the unparalleled scale of our global platform, the strategic investments we have made to strengthen our core capabilities, and the trust and loyalty of our customers.”
The company said it will incur restructuring charges of about $29 million in the first quarter of 2024, and expects to generate annual savings of about $100 million from the workforce reduction.
PayPal’s announcement comes amid a tough market scenario for the fintech sector, which has been hit by the inflationary pressures, the regulatory uncertainties, and the emergence of new rivals.
According to Bloomberg, PayPal’s stock price has fallen by more than 20% since the beginning of 2023, and the company has faced several analyst downgrades in recent months.
In its fourth-quarter earnings report, which will be released on February 9, PayPal is expected to report a revenue growth of 15% year-over-year, down from 25% in the previous quarter.
The company has also lowered its guidance for the full fiscal year 2023, citing the negative impact of the macroeconomic headwinds and the currency fluctuations on its volume and revenue growth.
Despite the challenges, PayPal remains optimistic about its long-term prospects, as it continues to invest in new products and services, such as cryptocurrency, buy now pay later, and digital wallets, to expand its customer base and diversify its revenue streams.
The company claims to have more than 400 million active accounts worldwide, and processed more than $1 trillion in payment volume in 2023.
“We are confident that our strategic actions will position us for sustained growth and profitability in the future,” Chriss said.