PayPal forecasts strong full-year profit, says CEO to retire

(Reuters) -PayPal Holdings Inc forecast full-year profit above Wall Street estimates on Thursday, as the payment firms customers undeterred by decades-high inflation continue to spend, and said Chief Executive Dan Schulman will retire at the end of the year.

While macroeconomic pressures have begun to pressure American consumers, particularly those in the lower income bracket, they have so far remained resilient against a challenging economy.

Shares in the payments heavyweight rose 6% in extended trading after results.

Executives at major U.S. banks, including Bank of Americas chief said earlier in January that overall spending continues to tread largely positive waters, but the pace of growth has begun to slow.

The sentiment was also echoed in the quarterly results of major U.S. card firms – Visa and American Express, which touted the resilience of their core American customers.

PayPal said it expects full-year adjusted profit of roughly $4.87 on a per share basis. Analysts on average had expected $4.75 per share, according to Refinitiv IBES data.

The companys upbeat forecast also comes alongside its previously announced commitment of lowering expenses in the backdrop of its key e-commerce segment feeling the pinch of a slowdown.

Last week, PayPal said it will lay off 7% of its workforce, or about 2,000 employees, joining a string of fintech firms which have slashed jobs to cut costs in an increasingly tumultuous operating environment.

PayPal was one of the biggest winners during the COVID pandemic when people locked at home used its platform while shopping online. However, the companys growth showed signs of slowing through the past year as countries around the world lifted restrictions and macroeconomic conditions deteriorated.

Its revenue rose 9% on an FX-neutral basis to $7.4 billion in the fourth quarter ended Dec. 31.

PayPal earned a profit of $1.24 per share on an adjusted basis in the quarter, versus $1.11 per share in the year-ago quarter.

(Reporting by Manya Saini and Jaiveer Shekhawat in Bengaluru; Editing by Shailesh Kuber)