+ Improvement in customer engagement. In 1Q23, the number of payment transactions per active account grew by 13% YoY to 53.1x on an annualized basis (up from 47x in 1Q22). PayPal is increasing customer engagement through product innovations and partnerships, including the roll-out of Venmo payment option for person-to-business (P2B) transactions on Amazon. PayPal has also partnered with Apple to allow merchants to use their iPhone as a mobile point of sale (POS) terminal without the need for any additional hardware.
+ Focused on improving profitability. In 1Q23, PayPal’s non-transaction expenses (general and administrative, and technology) fell by 10% YoY due to cost controls resulting in adj. operating margin of 23% (vs. 21% in 1Q22). For FY23e, PayPal has outlined a total of US$1.9bn in cost cuts, mostly through job cuts and real estate consolidation. In 1Q23, PayPal laid off 2,000 employees (7% of its workforce) citing challenging macro-economic environment.
– Active accounts decline sequentially. In 1Q23, active accounts grew by 1% YoY to 433mn but decreased by 2mn compared with 4Q22. The drop was mainly driven by higher churn from lower usage accounts and the management’s decision to focus on driving more engagement with existing customers. Notably, PayPal indicated that it expects no net new additions in FY23e during 4Q22 earnings call.