![]() While execution is much different than planning, it's clear that PayPal is prioritizing cutting costs and increasing profits in the coming years. It also believes its initiatives will allow for $1.3 billion in savings in 2023. The company has also reduced its workforce and plans to shift its real estate footprint by hiring employees in lower-cost locations.Īs a result, the fintech leader believes it can realize its $900 million savings target across operating and transaction expenses in 2022. Chief Executive Officer Dan Schulman talked about leveraging its scale to drive cost reductions across its supplier base. In its second-quarter earnings call, management was very clear about plans to cut operating costs. How does PayPal plan to fix its problems?Īlthough investors should closely watch the company's expense and profit situation in the coming quarters, I think PayPal will bounce back. The company's transaction and credit losses also rose 165% year over year to $448 million due to an ongoing insolvency proceeding and fraud schemes related to its Venmo service offering. ![]() To boot, management mentioned a shifting funding mix - specifically more normalized debit card usage compared to last year - for the increased transaction expense as well. Braintree, which PayPal acquired in 2013, generally has higher expenses than the fintech's other services. Management traced the rise to Braintree, a mobile card payment system for e-commerce businesses. The company's transaction expense grew 21% year over year to $3 billion, equal to 45% of total sales. Two of PayPal's operating expenses, transaction costs and transaction and credit losses, experienced significant upticks from a year ago.
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