PayPal just admitted it fell behind on AI, and now the company is restructuring around it. CEO Enrique Lores told investors on this week’s first-quarter earnings call that PayPal needs to “recommit to the fundamentals” and start “becoming a technology company again,” according to TechCrunch AI. The plan: modernize the platform, go cloud-native, and aggressively adopt AI across development, customer service, support, and risk management.
TechCrunch AI reports that Lores expects the AI push, paired with planned layoffs, to deliver at least $1.5 billion in cost savings over the next two to three years. Bloomberg has reported PayPal will cut roughly 20% of its workforce in that window, which translates to more than 4,500 jobs.
What PayPal is actually doing
Lores laid out a concrete operational shift, not a vague AI talking point:
- A new “AI transformation and simplification” team reporting directly to him
- A function-by-function, process-by-process redesign rather than scattered pilots
- A reorganization into three segments: checkout solutions and PayPal, consumer financial services and Venmo, and payment services and crypto
- Faster cloud-native migration to support the AI rollout
“This is not about adopting AI as a technology, where we have done many pilots in the company,” Lores said. “It’s really about understanding how can we redesign the key processes.”
Why this is striking
What stands out here is the admission itself. AI-assisted coding is one of the few areas where the technology has clearly delivered, and PayPal is openly playing catch-up. TechCrunch AI notes that Spotify said in February its top developers hadn’t written a line of code since December, while elite engineering teams now compete on “tokenmaxxing,” a rough measure of how heavily a team uses AI in daily work.
For a payments giant with global scale, conceding it hasn’t yet pulled AI deep into its dev pipeline is a real signal. It tells you how uneven enterprise adoption still is, even at companies with the budget and talent to move fast.
The human cost
The pitch comes with the uncomfortable part. PayPal is using AI efficiency gains to justify cutting thousands of roles, which is exactly the criticism the technology keeps drawing. The company was already due for restructuring, with the stock down more than 80% from its 2021 high, but the framing matters. Lores explicitly tied AI adoption to “removing layers” of the org chart.
First-quarter revenue hit $8.4 billion, up 7% year over year, but weak second-quarter guidance sent the stock down. When asked about Venmo, Lores said splitting it into its own segment fit the turnaround plan, while signaling openness to deals: “My number one priority is to maximize shareholder value.”
What to watch
Three things will tell you if this works.
- How quickly PayPal’s developer productivity metrics move once the new AI team starts shipping
- Whether AI in customer service and risk management actually trims operating costs without breaking the customer experience
- What happens to Venmo, because the new segmentation gives PayPal optionality to sell or spin it out
More details from the earnings call are available at the original source.