Dan Schulman, PayPal (PYPL:NASDAQ) CEO to Retire

PayPal (PYPL:NASDAQ) shares edged lower in Thursday extended trading after the online payments group posted better than expected fourth quarter earnings. However, the results were clouded by the retirement of CEO Daniel Schulman.

PayPal posted December quarter earnings figures that were largely ahead of Street forecasts, as revenues rose 9% to $7.4 billion, generating an adjusted bottom line of $1.24 per share, a tally that was 4 cents ahead of the consensus estimate.

Looking into the first three months of the year, however, PayPal said revenues would likely ease from the prior quarter to around $6.97 billion, with earnings in the region of $1.08 to $1.10 per share, but declined to provide a full-year revenue growth target.

PayPal’s mixed report contrasts somewhat to the upbeat spending outlooks from American Express (AXP:NYSE), Visa (V:NYSE) and Mastercard (MA:NYSE) – all of which noted resilient consumer spending powered in part by the ongoing travel boom in their fourth quarter earnings reports.

Retailers, however, have been cautioned that a pullback in consumer spending into the first few weeks of the year is notable, while inflation remains elevated broader economic sentiment continues to wane.

PayPal shares jumped by about 130% since the 2015 spinoff. But the company has lost roughly three-quarters of its value since the stock’s peak in July 2021.

The company was a beneficiary of the boom in e-commerce during the early months of the Covid-19 pandemic. PayPal posted record payments volume and profit in 2020. The run-up in PayPal’s stock during that time resulted in Mr. Schulman receiving a stock award in 2021 that was valued at about $31.3 million at the time.

As shoppers returned to stores in 2021, PayPal’s business started to suffer. Its stock sold off sharply after it forecast slower growth in consecutive quarters. Shareholders also balked at news that PayPal was considering a $40 billion-plus takeover of Pinterest (PINS:NYSE), and PayPal backed off from the potential deal. By the end of 2022, PayPal’s stock had fallen to $71, down 77% from its all-time high.

In late January, PayPal said it would lay off 2,000 employees, which equates to 7% of the company’s workforce. Schulman said in a statement at the time that PayPal was addressing the “challenging macroeconomic environment.”

PayPal said that CEO Dan Schulman will retire and leave the online payments company at the end of 2023.

Schulman, who became PayPal CEO after the split from eBay in 2015, notified the company of his decision to retire at the end of December. He will remain a member of PayPal’s board of directors, which is hiring a search firm to find a successor.

Schulman, who has lead the group since 2014, said he’ll step down as CEO at the end of the year, saying in a statement that he wants to “devote more time to my passions outside the workplace”. He will, however, continue to serve on the group’s board of directors.

“It’s still difficult to accurately assess how the year ahead will play out in terms of e-commerce growth – If you ask 20 experts, you get 20 different opinions,” Schulman told investors on a conference call late Thursday. “Our baseline assumption is that discretionary spend will remain under pressure, and global e-commerce growth will be slightly positive year over year.”

“I’m proud of what we have accomplished at PayPal and of the incredibly talented and committed people I work with every day,” Schulman said in a statement. “Together, we have reimagined financial services and e-commerce, and worked to improve the financial health of our customers.”

PayPal’s board hasn’t yet chosen a successor. Mr. Schulman said he would help with the leadership transition and remain on the board.