PayPal says it’s ‘becoming a technology company again’ — that means AI

PayPal is looking toward the future, despite its falling stock and looming layoffs. In its first-quarter earnings call, CEO Enrique Lores told investors that PayPal needs to “recommit to the fundamentals,” which included “becoming a technology company again.”

There was no need to read between the lines — PayPal was pitching an AI-powered turnaround.

An AI-led transformation

Lores told analysts that leading companies differentiate themselves through innovation and that now is the time for PayPal to take action. This includes modernizing its tech platform, moving faster to become “cloud-native,” and “aggressively adopting AI in our development processes,” he said. According to Lores, this would increase developer productivity and shorten time to market.

The remarks amount to a notable acknowledgment that PayPal has yet to fully embrace AI internally, even as AI-assisted coding has emerged as one of the technology’s most successful applications. Other consumer tech companies have rapidly adopted AI tools to support software development, with some executives publicly highlighting the impact on developer workflows.

PayPal is now moving to catch up. Lores said the company has formed a new “AI transformation and simplification” team to lead its enterprise AI agenda.

$1.5 billion in targeted savings

Combined with planned layoffs — which Lores described as removing layers from the organizational structure — the adoption of AI-enabled processes is expected to deliver at least $1.5 billion in cost savings over the next two to three years.

Last week, PayPal announced it was reorganizing its business into three segments:

• Checkout solutions and PayPal
• Consumer financial services (including Venmo)
• Payment services and crypto

Bloomberg also reported that PayPal plans to cut around 20% of its workforce over the next two to three years as part of its cost-savings plan, equating to more than 4,500 jobs.

Executives said additional savings will come from expanding AI beyond coding into areas such as customer service, support operations, and risk management.

“I think the changes that AI will enable us to do are … going to be very significant,” Lores said. “This is why we created a group last week, reporting to me, that is going to be in charge of driving — function by function, process by process — this AI transformation. And this is not about adopting AI as a technology, where we have done many pilots in the company, and we have seen what is possible. It’s really about understanding how can we redesign the key processes … this is what we have seen that really will drive significant savings.”

The AI-driven push to cut costs while eliminating thousands of jobs underscores a common criticism of the technology — that efficiency gains can come with a human cost.

Financial pressure and turnaround strategy

PayPal reported first-quarter revenue of $8.4 billion, up 7% year-over-year, beating expectations. However, it issued weak guidance for the second quarter, sending the stock tumbling after earnings. The company’s shares remain down more than 80% from their 2021 high following a prolonged post-pandemic decline that has slowed its growth.

When asked whether separating Venmo into its own business could open the door to a potential sale, Lores said that, for now, the structure makes the most sense for the turnaround plan. However, he signaled openness to future deals, saying, “my number one priority is to maximize shareholder value,” in response to an analyst’s question about a sale.