PayPal CEO Unveils AI Reset, $1.5B Savings Plan at Bernstein Conference

Key Points

• PayPal CEO Enrique Lores laid out a broad reset focused on simplifying the company, modernizing its pre-cloud technology stack, and making PayPal more AI-native while shifting more attention back to consumers.
• PayPal reiterated a plan to cut at least $1.5 billion in gross run-rate costs over the next two to three years, with AI expected to contribute about 40% of those savings through automation, faster coding and process redesign.
• The company has reorganized into three core businesses — Checkout, consumer financial services and payment processing — and is now prioritizing sustainable profitability, stronger Venmo monetization, and added value services for Braintree and Checkout rather than pure volume growth.

PayPal NASDAQ: PYPL President and CEO Enrique Lores outlined a broad operational and technology reset for the payments company at Bernstein’s 46th Annual Strategic Decisions Conference, saying the company has substantial opportunities to simplify its structure, modernize its technology platform and reinvest savings into growth.

Lores, who said he was still within his first 90 days as CEO, described PayPal as a company with “a very unique and differentiated set of assets,” including global scale, technology assets and risk management capabilities. At the same time, he said the company needs to modernize parts of its technology infrastructure, become “AI-native” and rebalance its focus toward consumers after years of heavier emphasis on merchants.

“Reinforcing the consumer side of our two-sided network is going to be one of the key drivers that we will have for growth,” Lores said.

Cost Savings and AI Are Central to the Plan

Lores reiterated that PayPal sees an opportunity to reduce at least $1.5 billion in gross run-rate costs over the next two to three years. He said the savings would come from three areas: simplifying the company’s structure, improving operational efficiency and portfolio optimization, and using artificial intelligence across company processes.

According to Lores, AI-related efficiencies could account for close to 40% of the total savings program based on the company’s current assessment. He said PayPal has already started applying AI in customer support and technology development and is reviewing processes across the company to determine how they should be redesigned.

Lores also said PayPal’s technology platform was built before the cloud era and needs to be redesigned to better capture the value of cloud infrastructure. The company is also consolidating multiple platforms that perform similar activities. He said AI can help accelerate that work, including by generating code faster and modernizing applications more quickly.

As an example, Lores pointed to PayPal’s launch of a new buy now, pay later solution in several European countries, saying the company was able to move faster because it used AI to support the changes.

Company Reorganized Around Three Business Areas

Lores said PayPal has realigned around three large markets: Checkout, consumer financial services and payment processing. Checkout remains the company’s largest business and the source of most of its profit, while consumer financial services includes opportunities around PayPal and Venmo. Payment processing includes Braintree, where Lores said the company is growing with large corporations and sees potential to improve profitability through additional services.

He said the reorganization is intended to simplify decision-making and increase accountability. Previously, he said, PayPal operated as a “four-dimensional matrix,” which he described as too complex to manage efficiently.

“Now it is clear that the leader of the business has decision power across the board, and that person is both empowered but is also responsible and accountable for the results,” Lores said.

Checkout Strategy Shifts Toward Profitability

Asked about Checkout, Lores said PayPal is refining its strategy to focus more on transaction margin and sustainable profit growth rather than volume growth or market share gains for their own sake.

He said customer cohorts and verticals differ significantly in profitability, and PayPal intends to prioritize the customers and verticals where it can deliver and retain more value. Lores identified cross-border, complex transactions and financing-related use cases as areas where PayPal has advantages.

“Our plan is to build a business that will have sustainable profit growth in the long term,” Lores said.

On current spending trends, Lores said the company’s recent observations remain similar to what it reported during its latest earnings update. He noted a slowdown in travel, especially in Europe, and said Europe has shown slower overall activity. He also said May was stronger than April and in line with PayPal’s expectations. For Branded Checkout, he said the company expects the second quarter to be at the low end of the full-year guide while maintaining its full-year outlook.

Venmo, Braintree and Consumer Data Opportunities

Lores said PayPal plans to reinvest savings into technology, consumer demand generation and areas that are already growing profitably. He emphasized that PayPal’s two-sided network gives it access to both merchants and consumers, and said the company can create more value by using data responsibly to help merchants understand customer behavior.

He cited a conversation with a large European retailer that wanted help identifying consumers with a higher likelihood of buying and returning products, describing returns as a significant cost area for merchants. Lores said PayPal could provide insights while respecting privacy and applicable rules.

On Venmo, Lores said the business has made progress in growth and profitability per customer but remains an opportunity for further monetization. He said PayPal needs to expand Venmo’s financial services offerings, better segment customers and increase marketing investment. He also said some Venmo users, such as people paid for services like repairs or dog walking, may have financial needs that are not well covered.

For Braintree, Lores said the business is differentiated for large companies with complex payment environments. He said PayPal needs to improve Braintree’s “connect rate” for value-added services, noting that it remains low compared with competitors.

Stablecoins and Agentic Commerce

Lores also discussed PYUSD, saying stablecoins can play two roles for PayPal: supporting specific use cases and potentially contributing to a lower-cost payment network over the long term. He said use cases include large international business payments and consumer savings protection in countries with high inflation.

On agentic commerce, where AI agents may shop on behalf of consumers, Lores said PayPal is working with merchants to expose their product portfolios to large language models and agentic portals. He said PayPal is integrating Cymbio, a company it bought, to help build these capabilities. He added that identity could become even more important in an agentic environment, including verifying consumers, merchants and agents.

Looking ahead, Lores said his priorities for the next six months include completing structural changes, building detailed plans for each business and defining how PayPal can drive sustainable profit growth beyond 2027.

About PayPal NASDAQ: PYPL

PayPal Holdings, Inc operates a global digital payments platform that enables consumers and merchants to send and receive payments online, on mobile devices and at the point of sale. The company provides a broad set of payment solutions, including a digital wallet, merchant payment processing, checkout services, invoicing and fraud-management tools. PayPal's platform is designed to support e-commerce, in-person retail and person-to-person transfers, targeting both individual consumers and businesses of varying sizes.

Key products and services in PayPal's portfolio include the PayPal wallet and checkout ecosystem, the Venmo peer-to-peer mobile app, Braintree's developer-focused payment gateway, Xoom for international money transfers, and PayPal Credit and buy-now-pay-later options.

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