PayPal Investor Day Review

Table of Contents

• a. CTO Srini Venkatesan

• b. GM of Consumer Diego Scotti

• c. GM of Large Enterprise Frank Keller

• d. GM of Small and Medium Businesses (SMB) Michell …

• e. CFO Jamie Miller on the Financial Outlook:

• f. Conclusion:

PayPal’s investor day was eventful. The team walked us through its progress in modernizing the company and strengthening its foundation. It then offered its vision of the future (with financial targets). I split this review into each executive’s presentation, with notes from Alex Chriss’s keynote included throughout.

a. CTO Srini Venkatesan

Venkatesan’s part of the event focused on unifying PayPal’s disparate platforms. The company has unmatched account, volume and data scale in the world of payments. They want to take these strengths and build on the transactional, payment-centric niche to morph into more of a “commerce platform” for its customers. To do this, they need to unify product silos to aggregate all of that lucrative, broad-ranging data and truly unleash its potential. Data means personalization and more engaging experiences, as well as better customer outreach and targeting. It means acting based on what you know your customers want – rather than what you think they want. Under old leadership, its foundation began to show structural cracks as their plumbing became archaically disorganized and velocity of innovation slowed.

It takes time to fix gigantic messes like this was, but progress is being made. The company has fully integrated PayPal and Xoom platforms, with Zettle making great strides and Venmo work now beginning. Once Venmo is finished, it will handle Braintree and PayPal Complete Payments Platform (PPCP) by the end of this year. 

This is what will enable the company to match the pace of product iterating and innovating delivered by modern, well-run companies. It also will mean pocketed operating expenses (OpEx), as PayPal halts running and maintaining redundant systems on multiple platforms. It’s a massive piece of PayPal's ambitious financial targets that I’ll outline later in this piece.

The end result of all this work will be “PayPal Open.” This will collect data across all of its product pillars and allow them to seamlessly work with one another. Access to “PayPal Open” will come via the “PayPal Commerce API.” This is what will enable deep experience personalization and things like real-time checkout customization at large scale. It’s how merchants can access everything within PayPal open – such as its 80 million customers opted into data sharing to target. Companies can seamlessly plug into this single integration to unlock hundreds of ecosystem connections. This means more optimal payment orchestration and a vast sum of context to guide better, more custom, increasingly data-driven interactions. 

The overarching unification will mean Braintree clients get faster access to checkout updates across PayPal and Venmo; it will mean PayPal and Venmo accounts are finally searchable across both apps; it will mean more data to more effectively underwrite and raise pre-approval rates; it will mean Zettle can directly support pay later and Venmo checkout from in-store settings. It will help everywhere and allow PayPal to finally leverage the power of its broad ecosystem. As you can see below, easier cross-selling (which this unlocks) has a great impact on transaction profit dollars per merchant:

PayPal is also evolving from a single-region infrastructure to a cloud-native, localized approach across the globe. Previously, it routed all transactions through its U.S.-based data centers and then all the way back to the transaction location. This meant material latency disadvantages the farther away from the U.S. a transaction had to travel. By finally embracing a more modern approach and migrating its apps to the cloud, it has enjoyed 20% lower transaction latency (and 2-3x faster product time to market) for Braintree specifically. That work just wrapped up, with focus now moving to migrating all PayPal apps to the cloud.

Next, as another part of this “one everything” evolution, PayPal is consolidating all developer processes. It has spent half a year streamlining and combining all of these workflows, which has led to a 40% boost to app build speed and a 20% boost to app build success rate. This has also freed PayPal to move from weekly to daily checkout updates. 

In other news, PayPal debuted an internal chatbot for its developers. It’s reducing overall coding tasks by 10%-30%, greatly helping to update legacy C++ code and expediting product work. This will increasingly handle account-to-account interactions and quicken data pattern uncovering from days to minutes. These patterns augment its transaction optimization offering. They help improve fraud and authorization rates, as well as surface more relevant offers and checkout customizations for customers. In terms of how AI can help here, PayPal ran a simulation with 10% of a transaction pool to show the new technology saved $50 million in added perks and cashback. Using AI models, PayPal can more effectively push customers to the most rewarding purchase options amid a sea of seemingly identical choices.

Finally, Venkatesan spoke about using all of the agentic AI work from industry leaders to embed shopping agents in its apps and flows, as well as partner surfaces. This also relies on a solid foundation and complete ability to leverage all company data so that recommendations and tasks are completed in a desired manner. PayPal needs to walk before it can run and it’s still somewhat in walk mode.

b. GM of Consumer Diego Scotti

PayPal:

Scotti’s talk focused on how the firm wins consumers within PayPal and Venmo. Starting with PayPal, there are three things he’s fixated on to drive differentiation and market share. 

First is “Pay Everywhere” to drive habituation. The debit card is a big piece of this, as it drives a 24% boost to omni-channel checkout market share post adoption. To Scotti, “Pay Everywhere” also entails letting consumers buy and sell more of the things they want to, like crypto. And? For accounts that sell crypto for dollars, more than 25% of them are using those funds for PayPal checkout. Login frequency also doubles on average after a customer transacts crypto for the first time. These important byproducts led to 136% Y/Y trading growth and 280% transfer volume growth in 2024. It’s important to remember that this growth was off of a small base and 2024 was a great year for this asset class. Still notable.

The next theme is “Pay Your Way” to drive more convenience. Whether it’s automating recurring payments, which 20% of its active accounts use, or adding options in its digital wallet to raise total payment volume (TPV) per account by 240%, more choice is good for consumers and for PayPal. Peer-to-peer (P2P) updates are an important aspect of this mission as well. PayPal delivered 13% Y/Y transaction growth in 2024 and has accelerated that growth for 6 straight quarters. Better, more interoperable search and products like Venmo Pools (pool funds to pay for a trip or a gift) are working. P2P is very low margin, but is its best product for top-of-funnel growth. It generates nearly ⅓ of its user growth and also led to $10 billion in incremental funds re-spent on checkout in 2024. 

• PayPal will soon allow customers to send money out of the network with phone numbers (similar to Zelle). 

• To rival Rocket Money and Experian, PayPal will introduce a subscription management hub. 

Lastly, PayPal wants to deliver the most value. It continues to focus on raising prevalence and convenience of vaulted payments to optimize conversion rates, and is also working hard to make its “wallet smarter.” This gets back to the idea of PayPal’s open ecosystem and deep partner integrations allowing it to combine rewards across various vendors. This means PayPal can present offers with higher overall perks to motivate usage. These benefits are automatically earned and aggregated within the PayPal app. To give an idea of how powerful this value proposition can become over time, rewards earners deliver 160% more TPV on average. For more signs of PayPal offers driving traction:

• The average consumer using a PayPal personalized offer or interacting with a merchant advertisement delivered a 65% TPV boost. 

• Merchant offer redemption through PayPal’s platform also rose by 106% Y/Y in 2024.

Happier shoppers; happier merchants; happier PayPal. Again, this is the power of fortifying that aforementioned foundation, opening up its ecosystem and unleashing diverse customer data. Targeting gets more precise, placements get more valuable, deals get more compelling and everyone is better off. Another part of making the digital wallet smarter is allowing customers to set pay later preferences to be automatically implemented across channels. If they want to pay monthly for any purchase over $500, they can easily express that desire and let PayPal handle it.

• When customers use any of its pay later options, average TPV rises by 33% and transaction frequency rises by 17%.

Finally, PayPal hopes to keep adding more value via post-purchase interactions. These include its smart receipts (which contain more merchant promotions for cross-selling), package tracking and more. TPV rises by another 80% for customers using one of these products.

As PayPal layers on P2P, online checkout, debit, pay later and post-purchase, the impact to average revenue per account (ARPA) is quite profound. The chart below depicts that and also shows how untapped the opportunity still is across these categories (even within its existing user base). 

All in all, checkout progress helped it deliver 10% power user growth in Q4 to far outpace the rest of the business.

Venmo:

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