PayPal to cut 20% of staff in AI-focused restructuring

PayPal is initiating a major corporate restructuring as it attempts to reverse a long-term market decline. CEO Enrique Lores announced that the company must “recommit to the fundamentals” and focus on “becoming a technology company again” by aggressively adopting artificial intelligence. As part of this strategy, the company plans to significantly reduce its headcount. According to a report by Bloomberg on Tuesday, PayPal plans to cut around 20% of its workforce over the next two to three years, a reduction that equates to north of 4,500 jobs.

The company is betting that deep AI integration will streamline its operations and lower expenses. PayPal expects its AI adoption to drive at least $1.5 billion in cost savings over the next two to three years. These measures come as the company works to recover from a prolonged downturn, with its stock having fallen over 80% from its 2021 high. Although PayPal reported first-quarter revenue of $8.4 billion—representing a year-over-year growth of up 7%—the firm remains under intense pressure to improve its operational efficiency.

To manage this transition, PayPal created a new “AI transformation and simplification” team last week. Lores noted that the company is “aggressively adopting AI in our development processes” to increase developer productivity and shorten time to market. While other consumer technology companies have rapidly integrated AI into coding—with Spotify declaring in February that its developers stopped writing code in December—PayPal is now positioning itself to catch up. This shift occurs as engineering teams increasingly use “tokenmaxxing”—a proxy for measuring AI experimentation based on the volume of AI tokens used—to benchmark their development pace.

The restructuring also involves a broader organizational overhaul. Last week, PayPal announced a business reorganization to streamline its operations into three distinct segments: checkout solutions and PayPal, consumer financial services (which includes Venmo), and payment services and crypto. Lores emphasized that the new AI team will focus on redesigning key processes function by function, rather than just running isolated technology pilots, in order to maximize shareholder value.

Why it matters

PayPal is attempting an AI-powered turnaround to address falling stock and growth issues, involving significant layoffs and organizational restructuring.