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Two months into the job, PayPal Holdings Inc. president and chief executive Enrique Lores appears to harbor no illusions about the sprawling payments company’s position. “We need to make significant changes,” he said early Tuesday as he opened the company’s March-quarter earnings call.
That imperative, he said, stems from several causes, though the one he touched on first is “years of underinvestment,” a weakness he said he is acting to remedy. “We need to accelerate the modernization of our tech stack,” he said. “We have a fairly aggressive modernization plan.”
One current project is AI, a technology which former HP CEO Lores sees “significantly” reducing costs across the board” for PayPal. Another is to refocus on payments technology, particularly in such areas as checkout. “We need to become a technology company again,” he said, while cautioning equity analysts on the call that “it will take a few months to completely define our new plan.”
Lores’s emphasis on technology comes as PayPal has struggled recently to exact the kinds of returns it was expecting from its investments in services such as branded checkout, where PayPal earns higher returns. Now, green shoots appear to be emerging, if tentatively. “The online branded checkout outlook is slightly positive,” noted chief financial officer Jamie Miller, who joined Lores on the call, though Lores cautioned that the company’s focus should shift somewhat back to consumers. “In the last year, we have paid attention to merchants,” he noted. “We need to rebalance that.”
PayPal has also stumbled in following up on initial investments it has made in technology, Lores said. “We have launched great innovations in countries, but have not invested enough to make it real,” he noted. That underinvestment, he told the analysts, will not continue on his watch. “Our focus now is to deliver,” he said. “The opportunity is clearly there.” Lores took office as CEO March 1, succeeding Alex Chriss, a former Intuit executive who left PayPal after two-and-a-half hears in the job.
Despite its stumbles, PayPal posted $464 billion in total payment volume for the March quarter, an 11% increase over the same quarter last year, on a 7% rise in payment transactions, to 6.5 billon. Payment transactions per active account on a trailing 12-month basis dipped 1% to 58.7. Active accounts also grew 1%, 439 million. The popular Venmo peer-to-peer payment platform grew its payment voliume 14%, to $86.2 billion.
The company saw net revenue rise 7%, to $8.4 billion, while its operating income on a GAAP basis slipped 3% to $1.5 billon. On a non-GAAP basis, operating income fell 5% to $1.5 billon.
