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(Sharecast News) - Shares in PayPal Holdings fell sharply on Tuesday, despite the US payments giant posting an uplift in quarterly earnings and unveiling plans to cut costs by at least $1.5bn.
Net revenues came in at $8.35bn in the first three months of the year, an increase of 5% on a constant currency basis, and ahead of consensus for $8.05bn. Total payment volume jumped 11% at $464bn while payment transactions increased 7%.
Earnings per diluted share rose 1% to $1.33, also above estimates for $1.27.
PayPal has seen competition spike in recent years as big tech names including Apple and Google-owner Alphabet entered the payments sector alongside newer names such as Klarna.
However, Enrique Lores, who took over as chief executive in March, said he was "energised by the opportunity to improve execution and accelerate PayPal's growth".
He continued: "The company has valuable assets in our brands, technology and team - and there is significant potential ahead of us. We are taking deliberate steps to sharpen our strategy, simplify our organisation and improve both our growth trajectory and cost structure by focusing our investments where we believe they will have the greatest impact."
In particular, PayPal confirmed it would target "at least $1.5bn of gross run-rate savings over the next two-to-three years", by simplifying the company's structure and accelerating AI adoption and automation across the business.
Bloomberg reported that PayPal planned to lay off around 20% of its workforce during the period, citing a person familiar with the matter. PayPal currently employs around 23,800 people.
However, investors were underwhelmed by the update and shares in the Nasdaq-listed stock fell as markets opened, tumbling 10% despite having initially gained in pre-market trading.
PayPal also maintained its cautious outlook for the full year, with guidance for a mid-single digit decline in EPS unchanged. PayPal said the guidance was "building on a solid start to the year while reflecting a complex and dynamic operating environment".
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