PayPal says it's 'becoming a technology company again', that means AI

PayPal Chief Executive Enrique Lores told investors during the first-quarter earnings call that the company needs to recommit to the fundamentals, including becoming a technology company again. Lores said leading companies find ways to differentiate themselves by innovating and that now is the time for PayPal to take action by modernizing its tech platform, moving faster to become cloud-native and aggressively adopting AI in development processes. The company has formed a new AI transformation and simplification team. Combined with the planned layoffs, which Lores characterized as removing layers from its organizational structure, the addition of AI-enabled processes is expected to bring at least 1.5 billion dollars in cost savings over the next two to three years. PayPal announced it is reorganizing its business into three segments: checkout solutions and PayPal, consumer financial services and Venmo, and payment services and crypto. Bloomberg reported that PayPal plans to cut around 20 percent of its workforce over the next two to three years, equating to more than 4,500 jobs. Lores said more cost savings will come from bringing AI into areas beyond coding, such as customer service, support operations and risk management. He said the company created a group reporting to him to drive the AI transformation by redesigning key processes. PayPal beat on its first-quarter earnings with revenue of 8.4 billion dollars, up 7 percent year-over-year. It forecast weak guidance for the second quarter, sending the stock tumbling after earnings, and the stock has fallen more than 80 percent from its 2021 high. Lores said separating Venmo into its own business made the most sense for now in terms of the turnaround plan. His number one priority is to maximize shareholder value.