PayPal Holdings Inc. said restructuring costs tied to trimming its global workforce totaled $71 million in the second quarter.
The PayPal job cuts will ultimately save the payments giant about $260 million this year. That includes approximately $100 million in stock-based compensation, according to a regulatory filing Wednesday, Aug. 3. PayPal is looking to the staff cutbacks as a way to reduce expenses and satisfy investors, who have punished the firm’s shares in recent quarters.
Earlier this year, “management initiated a strategic reduction of the existing global workforce intended to streamline and optimize our global operations to enhance operating efficiency,” PayPal said in the filing. “As part of this effort, we are focusing on reducing redundant operations and simplifying our organizational structure.”
In all, the San Jose, California-based company recorded $90 million in total restructuring and other charges for the quarter. The remaining amount came from PayPal’s efforts to shutter offices. It says it continues “to review our facility needs due to our new and evolving work models.”
The firm expects PayPal job cuts and other activities to cost it an additional $15 million in restructuring charges this year.
PayPal has been in the midst of a series of management changes. It announced Tuesday, Aug. 2, that Blake Jorgensen will take over as chief financial officer after John Rainey left to join Walmart Inc. earlier this year. The company said it is also conducting an external search for a new chief product officer following the departure of Mark Britto later this year.
Jorgensen joins PayPal from Electronics Arts Inc., where he was both chief operating officer and CFO. He is also a former CFO of Levi Strauss & Co. and Yahoo! Inc.
PayPal has faced pressures in recent quarters from supply-chain disruptions and once-in-a-generation levels of inflation that hindered ecommerce spending. And EBay Inc., PayPal’s former parent company, has been rapidly moving payments away from its platform. Payments volume climbed 9% to $339.8 billion, missing the $344.3 billion average of analyst estimates Bloomberg compiled. It’s also the smallest increase in at least two years.
PayPal said earlier this year it was pivoting away from a previous strategy of trying to add millions of new users. Instead, it is seeking to encourage existing customers to use its app more frequently.
The firm showed progress on that front: Transactions per active account climbed 12% to 48.7 in the quarter. It continues to expect to add roughly 10 million new users this year.
The company now expects total payments volume for the year to climb 16%, compared with an earlier range of 15% to 17%, according to the statement.
“We are advancing our priorities and sustainably improving our cost structure,” interim CFO Gabrielle Rabinovitch said in the statement. “We are focused on creating value for our shareholders and strengthening our position as a leading global digital payments platform.”
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