Alex Chriss, the CEO of payment company Paypal, announced to the staff on Tuesday that an additional 9% of the workforce, approximately 2,500 positions, will be cut.
The development follows PayPal’s decision to reduce its headcount by around 2,000 in January of the previous year.
Paypal Further Reduces Workforce
In a letter, the newly appointed CEO explained that the company’s decision to cut its workforce, including direct cuts and the elimination of open roles, is part of an effort to “right-size” the organization. Affected staff members are expected to be informed by the end of the week.
In November, Chriss outlined his strategy to steer the company towards more profitable growth by simplifying operations and implementing stricter cost control measures. This strategy involved assembling a new management team to facilitate these changes.
In his first significant public presentation last week, Chriss detailed what he described as the “biggest changes in a decade” for the company. These changes include enhancements like speeding up checkouts through biometric authentication and generating automatic transaction receipts to encourage repeat purchases.
Gus Galá, an analyst with Monness, Crespi, Hardt & Co., responded positively to the recent workforce reduction announcement. Galá commented in a note to clients on Tuesday that the move is the first step to driving profitable growth.
PayPal is Looking to Increase Profitability
As of the end of 2022, the San Jose, California-based PayPal had a global workforce of approximately 29,900 employees. Of these, 44% were based in the Americas, including 11,800 in the U.S., per the company’s annual filing with the Securities and Exchange Commission the previous year.
The company’s workforce distribution also included 43% in Asia-Pacific and 13% in Europe and the Middle East.
About a year ago, PayPal announced the elimination of roughly 2,000 jobs, representing about 7% of its workforce. Alex Chriss, who succeeded Dan Schulman as CEO in September, has demonstrated a readiness to downsize the company to enhance profitability. This was evidenced in October when PayPal sold its Happy Returns business to UPS for $465 million in cash two years after acquiring it.
During a November webcast with investment analysts, Chriss did not dismiss the possibility of further divestitures. In that third-quarter earnings discussion, he outlined his strategy for reviving profitable growth and acknowledged the challenges ahead, stating that he took on the role with “eyes wide open.”
Moreover, some analysts have pointed out that PayPal is losing market share to Apple, which has increasingly become a significant player in the payment sector through its digital wallet services.