PayPal is accelerating an AI-focused restructuring effort as the company works to reduce costs, modernize its technology infrastructure, and respond to slowing growth and investor pressure.
CEO Positions AI As Core Of Turnaround Plan
During the company’s first-quarter earnings call, CEO Enrique Lores told investors that PayPal needed to “become a technology company again” by recommitting to core operational fundamentals.
Lores said the company plans to modernize its platform, increase cloud-native operations, and expand the use of AI across software development and business processes.
He said PayPal expects AI-assisted development tools to improve engineering productivity and shorten product release timelines.
Company Admits Slower Internal AI Adoption
The remarks highlighted that PayPal is only now expanding its internal AI deployment at a time when many technology companies have already integrated AI-assisted coding into daily operations.
Lores said the company recently formed a new “AI transformation and simplification” group that reports directly to him and will oversee AI adoption across departments and workflows.
He described the initiative as broader than isolated AI pilots, saying the goal is to redesign major internal processes function by function.
Layoffs And AI Push Linked To Cost Savings Goals
The company said the restructuring effort, combined with workforce reductions and organizational simplification, is expected to generate at least $1.5 billion in savings over the next two to three years.
According to a report from Bloomberg, PayPal plans to reduce its workforce by around 20% over that period, affecting more than 4,500 employees.
The company also announced a business reorganization last week that divides operations into three segments: checkout solutions and PayPal, consumer financial services and Venmo, and payment services and crypto.
Lores said AI tools are expected to support additional operational areas including customer service, support operations, and risk management.
Weak Outlook Pressures Company Despite Revenue Growth
PayPal reported first-quarter revenue of $8.4 billion, up 7% year over year, and exceeded earnings expectations.
However, the company issued weaker-than-expected guidance for the second quarter, contributing to a decline in its stock price.
PayPal’s shares remain down more than 80% from their 2021 peak following a prolonged slowdown after the pandemic-era growth surge.
Venmo Structure Raises Questions About Future Deals
When asked whether separating Venmo into its own operating segment could lead to a sale, Lores said the current structure best supports PayPal’s turnaround strategy.
He added that his primary focus remains maximizing shareholder value, while leaving open the possibility of future transactions.
Featured image credits: Wikimedia Commons
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