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Most new corporate chiefs keep a low profile for a time, perhaps tweaking their predecessors’ strategies but announcing few major changes. Not so Alex Chriss. PayPal Holdings Inc.’s new CEO, who took over Sept. 27 from long-time chief Dan Schulman, took the opportunity of his new company’s third-quarter earnings call Wednesday afternoon to hammer home what he sees as important changes in direction, including a stress on profitable growth.
Among other plans, Chriss said he will reverse a decision Schulman announced in May to lay stress on PayPal’s so-called unbranded checkout service, which relies on PayPal’s captive processor, Braintree, and yields lower margins than the company’s traditional, branded checkout service. Investors hammered PayPal’s stock almost immediately after that May call.
Indeed, Chriss made it plain he will underscore profit growth in every niche of the company’s sprawling product line. Meanwhile, cost cutting will be a priority, the former Intuit Inc. executive said. “Our cost base remains too high and is slowing us down,” he told equity analysts during the call. “We will become leaner, more effective, and more efficient. We will be guided by margin-accretive revenue growth.”
Branded checkout, Chriss said, offers opportunities to leverage PayPal’s vast transaction data stores to enhance profitability. “The biggest surprise” he encountered on taking over, he said, “is the data, and how we can prioritize branded checkout. It drives conversion for our merchants, and we’re just scratching the surface there.” Branded checkout dollar volume growth slowed to 6% in the quarter year-over-year, compared to 7.5% in the third quarter last year.
Nor is Chriss wasting time with divestitures. PayPal said earlier this week its sale of its Happy Returns unit to United Parcel Service will close this quarter. PayPal acquired the company, which automates product returns, in 2021.
Another top priority, Chriss said, is to orchestrate ways to leverage PayPal’s vast stores of transaction data to raise conversion rates for the company’s 35 million merchant accounts—most of them small businesses. Part of that gambit, he said, is the rollout of a new checkout technology, PayPal Complete Pay.
Overall, Chriss said will seek greater automation within the company to further his goal, he told the analysts. “On the expense side, we have a lot of duplication and a lot of manual work. We have the opportunity to invest in automation.”
As if he hadn’t driven home how serious his intentions are for PayPal, Chriss ended the day’s presentation with a sweeping declaration. “We are future-proofing this business,” he noted. “We are playing to win.”
A 19-year veteran at Mountain View, Calif.-based Intuit, the 46-year-old Chriss took over at PayPal upon Schulman’s retirement. Since early 2019, Chriss had been executive vice president and general manager of Intuit’s small business and self-employed group, controlling more than half the company’s revenue, according to PayPal’s release in August announcing he was Schulman’s successor. Schulman said in February he expected to retire after having turned 65 the previous month.
For the quarter, PayPal registered $387.7 billion total payment volume, up 15% year-over-year, yielding net revenue of $7.4 billion, an 8% increase. GAAP operating income came to $1.2 billion, up 4%. The company generated 6.3 billion payment transactions, up 11%, with 56.6 transactions per active account over the previous 12 months, a 13% rise over the previous year. Active accounts slid slightly to 428 million from 432 million in 2022’s third quarter.
