This worsening economic climate has caused many companies to make tough decisions, including job cuts, to stay afloat. This time, it’s PayPal, as on Tuesday, the payment firm announced plans to lay off around 2,000 employees, roughly 7% of its total workforce. PayPal CEO, Dan Schulman, attributed the layoffs to the “challenging macroeconomic environment” and stated that the company has made progress in focusing resources on core priorities and rightsizing its cost structure.
“We will treat our departing colleagues with the utmost respect and empathy, provide them with generous packages, engage in consultation where required and support them with their transitions. I want to express my personal appreciation for the meaningful contributions they have made to PayPal,” said Schulman.
Positive financial results despite layoffs
With this recent round of layoffs, PayPal joins a growing list of tech companies, including Google, Microsoft and Amazon. However, despite the difficult decision to lay off employees, PayPal reported positive results in its recent earnings call, with a year-on-year increase in revenue and income of 11% and 7%, respectively. This even outpaces Wall Street’s expectations, indicating that PayPal’s financials are healthy.
However, the company’s shares slipped after its Q4 revenue estimate fell short of analysts’ expectations. Nevertheless, PayPal has raised its EPS guidance for the full fiscal year, stating that it has benefited from “ongoing productivity initiatives.”
Acting CFO Gabrielle Rabinovich spoke about the company’s projections for 2023 during a call with analysts after the earnings report. She stated, “We’re operating in an environment where we think we’re going to continue to have inflationary pressures, where real wage growth is going to continue to be negative for a period of time, where discretionary spending will be under pressure.
We’re navigating that environment as best we can, and we’ve taken into consideration that range of outcomes on volume growth and revenue growth as it relates to what we think we can deliver from an operating margin and EPS standpoint.”