- Key insights: PayPal is replacing CEO Alex Chriss with HP CEO and PayPal board chair Enrique Lores.
- What’s at stake: Branded checkout, a key performance metric for PayPal, has underperformed in recent quarters, with growth diving sharply in the fourth quarter.
- Forward look: PayPal says the new CEO’s experience leading technology transformations at HP will contribute to his work at PayPal.
PayPal’s inability to improve performance in e-commerce merchant payments that carry PayPal’s brand has caused a management shakeup, as the company will replace CEO Alex Chriss with HP CEO Enrique Lores, effective March 1.
Lores has been the chair of PayPal’s board for 18 months and has been on PayPal’s board for five years. At HP, he led the company through a technology transition, including expanding the business beyond its traditional PC and printing roots into services, subscriptions and AI. PayPal announced the change prior to Tuesday’s earnings announcement, which showed a sharp decline in branded checkout, which accounts for about half of PayPal’s profits, the company said during its earnings call.
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“While some progress has been made in a number of areas over the last two years, the pace of change and execution was not in line with the Board’s expectations,” newly appointed board chair David Dorman said in a release.
PayPal’s earnings
For the quarter ending December 31, PayPal reported earnings per share of $1.23, up 3% from the prior year; and full year EPS of $5.31, up 14% from 2024. Net revenue for the quarter was $8.67 billion, up 4% from the prior year, and full year revenue of $33.2 billion, up 4%.The earnings fell short of analyst expectations. S&P Capital IQ’s EPS estimate for the fourth quarter was $1.29, and $5.36 for the full year. S&P’s full year estimates were $$8.78 billion for the quarter and revenue of $33.3 billion.
The reported earnings also missed PayPal’s October projections of $5.39 for the year. On Tuesday, PayPal projected full-year 2026 adjusted profit to decline in the low-single digit percentage, or increase slightly.
“The results and guidance are much weaker than what were already low buy-side expectations,” Jeffries analyst said in a research note, adding PayPal’s outlook implies no improvement in branded checkout performance.
“All told, given the disappointing results/guidance and unexpected management change, we’re not surprised to see shares down materially,” JPMorganChase said in a research note. “The results add fuel to the bear thesis that PayPal will struggle to maintain share in the market.”
Jamie Miller, PayPal’s chief financial officer, will serve as interim CEO until Lores takes over on March 1.
“Our execution is not where it needs to be, we are taking steps to reflect that reality,” Miller said during Tuesday’s earnings call.
In the fourth quarter, branded checkout grew one percent, down from 5% in the third quarter.
For the past few years, branded checkout has delivered mid-single digital growth, according to PayPal. “The 4 point deceleration was more than we expected,” Miller said.
Miller attributed the slowdown partially to broader weakness in the retail sector and the “K-shaped” economy that caused stress for the lower to mid-income consumers that are the core of PayPal’s customer base. PayPal also noted international pressure–particularly in Germany–PayPal’s largest non-U.S. market.
“But we had operational and deployment issues,” Miller said, noting PayPal faces competition to attract merchants, and these merchants need more help from PayPal with support and product installation and management. “So while the challenges in the macro environment are real, we haven’t executed as well as we need to and product deployment was slower than we had planned.”
Why branded checkout matters to PayPal
One of PayPal’s primary goals is to grow its branded checkout volume, a key metric for investors. The company’s stock is down more than 40% over the past 12 months as investors look for signs that the company’s branded checkout performance is improving.
Under Chriss, who was PayPal’s CEO for about three years, the company leaned heavily on AI and other improvements in payment technology to improve user experience and appeal to merchants.”We had reimagined a product that had been stagnant for years but we were too optimistic about how quickly we could drive change and user adoption. But the results are not what we expected and we’re not where we want to be,” Miller said.
PayPal’s recent moves to boost branded checkout include a
The payment company in January also reached a deal to
Miller said PayPal would improve its ability to improve biometric authentication, loyalty marketing and buy now/pay later messaging, among other moves, to improve branded checkout. She also noted PayPal’s investments in artificial intelligence, saying the benefits are long-term. PayPal’s recent AI collaborations include support for ChatGPT Checkout, which lets users make purchases using PayPal’s digital wallet. PayPal also processes payments for merchants using OpenAI’s Instant Checkout. Lores did not appear at Tuesday’s earnings call.
“We will further strengthen the culture of innovation necessary to deliver long-term transformation and balance this with near-term delivery, executing with greater speed and precision, and holding ourselves accountable for consistent delivery quarter on quarter, to further assert PayPal’s industry leadership position,” Lores said in a release.
“The payments industry is changing faster than ever, driven by new technologies, evolving regulations, an increasingly competitive landscape, and the rapid acceleration of AI that is reshaping commerce daily. PayPal sits at the center of this change, and I look forward to leading the team to accelerate the delivery of new innovations and to shape the future of digital payments and commerce.”
During Tuesday’s call, Miller said Lores’ track record in leading technology transformations at a large organization will aid PayPal’s execution in bringing new products to market. Under analyst questioning on Lores’ input as a present PayPal board member and chair, Miller acknowledged Lores’ input into current strategy, and also said,
“Having been on our board for five years, Enrique brings a level of depth and context which should shorten the typical cycle of having a new CEO coming on board.” In a release, PayPal’s board said it would “like to thank Alex Chriss for his contributions over the past two and a half years, including the role he has played to monetize Venmo and grow the BNPL business.
He has led with a customer-first mindset and made progress in modernizing the PayPal platform.”Chriss did not appear at Tuesday’s earnings call. A PayPal release quoted Chriss saying, “I am proud to have had the opportunity to lead such a great company and work with such a talented team. Now is the right time to make a transition to a seasoned leader who can take the company through its next phase of transformation. I have enjoyed a great working relationship with Enrique, and I am certain he is the right person to meet that challenge.”