PayPal raises profit forecasts following series of job cuts

US payments giant cut almost 300 Irish staff so far this year as part of plans to reduce its global workforce by 9%

The firm returned $1.5bn (€1.4bn) to stockholders via share repurchases int the three months to June. (Photo by Justin Sullivan/Getty Images)

Paypal raised its full-year profit forecast for the second time this year on the back of strong consumer activity and holiday spending, while cost-cutting measures, including those enacted in Ireland earlier this year, led to improved margins for the payments giant.

The company now predicts adjusted earnings per share will increase in the “low-to-mid-teens” this year, up from a previous forecast of “mid-to-high single-digit” growth. 

Total payment volumes increased by 11% to $417bn (€386bn) in the three months ending in June, while net revenue climbed 9% to $7.9bn (€7.3bn) on a currency-neutral basis.

PayPal's strong performance follows a series of widespread cost-cutting measures, which saw almost 300 jobs cut from the company's Irish operations. 

In February this year, the payments giant cut 205 jobs as part of efforts to reduce its global workforce by 9%. 

Four months later, the company cut a further 85 Irish staff, with chief executive of PayPal, Alex Chriss saying the decisions were made to "right-size" the company.

In March of last year, PayPal cut 62 jobs from its Irish operations and announced plans to close its offices in Dundalk.

"PayPal delivered a strong second quarter and first half, and I’m confident we’re on the right track," said Mr Chriss. 

"We delivered our best transaction margin dollar growth since 2021, and we are making steady progress on our strategic transformation while investing in innovation and operating more efficiently.”

"Given the strength of our business, we are raising our 2024 guidance and increasing share repurchases. We are operating from a position of strength, delivering for our customers, and focusing on long-term profitable growth.”

The company, which established itself in Ireland over 20 years ago, added that despite the number of cuts targeting Irish staff, it remained "committed to Ireland and its role as a critical hub for the company’s global operations.”

The firm returned $1.5bn (€1.4bn) to stockholders via share repurchases in the three months to June.

PayPal's operating margins expanded 231 basis points on an adjusted basis, to 18.5% in the three months to June. Its margins have been central to investor anxiety over the past year after post-pandemic growth slowed.

The entry of Big Tech giants such as Apple and Google parent Alphabet into the digital payments space in recent years has heightened competition, hurting PayPal's market share. As a result, while PayPal's unbranded businesses have grown, weakness in its branded businesses such as Venmo has weighed on the stock.

Soon after being appointed to chief executive last year, Mr Chriss detailed plans to increase revenue outside of purely transaction-related volumes and pledged to make the fintech leaner, leading to his aggressive restructuring and cost-cutting measures introduced this year.

PayPal also said it expects revenue between July to September to grow by a "mid-single-digit percentage."