PayPal begins cutting staff
PayPal Holdings Inc. began laying off staff who worked in risk management and operations this week as the company tries to sustain profits after spending growth on its platform has stagnated over the past few quarters.
The company fired dozens of employees who worked in Chicago, Omaha, Nebraska and Chandler, Arizona, according to people familiar with the matter, who asked not to be identified by discussing private information.
PayPal this month also announced plans to permanently lay off more than 80 people at its San Jose, California headquarters, according to filings with that state.
“PayPal constantly evaluates how we work to make sure we are prepared to meet our customers’ needs and operate with the best structure and processes to support our strategic business priorities as we continue to grow and evolve,” said PayPal in a Note.
Spending on PayPal platforms only climbed 15% in the first quarter to $ 323 billion, the smallest increase in at least five years as supply chain disruptions prevented e-commerce purchases and more consumers. returned to in-store shopping as the pandemic eased.
The company’s former parent company, EBay Inc., also quickly moved payments from the PayPal platform.
PayPal’s staff has increased in recent years, and the company closed last year with 30,900 employees, a 33% increase from pre-pandemic levels.
The company said last month that it was working on improving operating leverage or the ability to grow revenue faster than expenses.
Chief Executive Dan Schulman said the company had begun simplifying its operating model prior to the pandemic, but the explosion in volumes on its platform in the early days of the outbreak forced the company to suspend that work.
“We are returning to this work with renewed focus, energy and purpose,” Schulman promised at the time.
PayPal warned in a regulatory filing that it incurred $ 20 million in costs related 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 related to severance pay and other employee benefits, PayPal said.
The company now plans to incur an additional $ 100 million in restructuring expenses this year, though the job cuts will ultimately help the company save about $ 260 million annually in employee-related costs, PayPal said. .
“We are continuing to review the needs of our facilities due to our new business models,” PayPal said in the filing.
“The strategic actions and cash payments associated with this plan are expected to be substantially completed by the fourth quarter of 2022.”