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

PayPal Holdings Inc forecast full-year profit above Wall Street estimates on Thursday and said Chief Executive Dan Schulman will retire at the end of 2023, after nearly eight and a half years at the payment firm's helm.

While macroeconomic pressures have begun to pressure American consumers, particularly those in the lower income bracket, PayPal's customers continue to spend undeterred by decades-high inflation.

Shares in the payments heavyweight were up 2% in extended trading after results.

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

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 company's 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.

PayPal earned a profit of $1.24 per share on an adjusted basis in the fourth quarter ended Dec. 31, beating analyst estimates of $1.20 per share.

"I would expect the stock to be up just because there was certainty that they will have a much worse quarter, they would miss on both the top and the bottom line," D.A. Davidson analyst Chris Brendler told Reuters.

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 company's growth showed signs of slowing through the past year.

Its revenue rose 9% on an FX-neutral basis to $7.4 billion.

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