PayPal Holdings, Inc. (PYPL) Earnings Call Transcript & Summary

Welcome back to Evercore ISI's Payments and FinTech Innovators Forum. I'm David Togut, Payments and Financial Technology Analyst at Evercore ISI. Delighted to host Gabrielle Rabinovitch, acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer of PayPal. Gabrielle, thanks so much for being with us here today. We greatly appreciate it.

David, thank you so much for having me. It's great to be here.

Well, there's been a lot of uncertainty in this macro environment. That said, you mentioned on your Fourth Quarter Earnings Call that Q1 is off to a stronger start. Can you talk us through your approach to providing an outlook for this year?

You bet. So this continues to be an incredibly complex and dynamic environment. We feel great about Q4 and about our performance in Q4. And as we indicated on our call a few weeks ago, the early part of Q1 is off to a very good start, which positions us quite well to deliver a strong year ahead. That said, we're encouraged by what we've been seeing and the sort of more benign environment in which we've been operating. We are still only 2 months into the year, and we don't want to get ahead of ourselves right now. Both consumers and economies, globally, are still faced with a number of different headwinds. Clearly, our business is very much connected to discretionary e-comm, which continues to be under some pressure, given inflation in that environment. And in addition, we're continuing to see sort of ongoing normalization of online, offline spending, goods and services spending. And so predicting consumer demand in this environment certainly for a 12-month out-year period is a challenge. We try to take a prudent and cautious approach to setting our outlook. And we've been doing this for the past year, right, starting kind of early last year. We tried to take a much more cautious approach, and we're approaching Q1 and 2023 through the same lens. And so we're putting out targets that we have confidence in and where we have a lot of conviction in our ability to deliver on them even in such a dynamic environment. And so we think that's the right way to approach the year ahead. And we're going to take it quarter-by-quarter. And at the same time, we wanted to give you and our constituents a sense for our internal planning assumptions for the full year and what it would take for us to at least hit our non-GAAP operating margin and EPS targets. And so these targets, which -- full-year non-GAAP operating margin expectations are for expansion of -- we got 125 basis points. The EPS target on a non-GAAP basis is for about 18% growth. And these are built around a framework of mid-single-digit currency-neutral revenue growth as a baseline. And so we've designed a cost structure that will allow us to deliver on this EPS and op margin target in even a much more muted scenario for topline. And so clearly, there's upside potential. And our objective is to grow ahead of this baseline, but we're going to remain incredibly focused on the things within our control and on creating value and allowing us to operate more quickly, enable us to operate more efficiently and to be highly prioritized around our high-conviction areas.

Very clear. If we could just dig into the margin expansion a bit. On the fourth quarter call, you talked about $1.3 billion of cost takeout this year, and you had an extra $600 million that you are working on as well. In the bucket of the extra $600 million, what are the key components of that?

Sure. Absolutely. So in the middle of last year, we did talk about, identified $1.3 billion in savings for 2023. And then we updated that view when we reported results just a few weeks ago and said we identified an additional $600 million. A big piece of that is related to headcount actions. And so as you know, we did announce a set of headcount actions at the end of January that impacted about 7% of our full-time employee base. We take these actions very, very seriously. And at the same time, we want to be very focused on delivering against our productivity targets. And as you know, our business grew sort of exponentially and at unprecedented levels with unprecedented demand through the pandemic. And we supported that with a lot of expense growth. And we also started to pursue some areas which we no longer believe are core to what we need to be focused on in the go forward. And so a lot of what we did has been around headcount. And that relates to both the full-time headcount action, but we also have a component of alternative workforce or contingent workers, independent contractors that were also impacted by that action, that was not within the 7%, but is within that $600 million context. In addition to that, we're continuing to work through vendor rationalization, third-party spend. And that's going to be an ongoing focus of ours as we continue to find ways to operate more efficiently. And then finally, we're continuing to assess our real estate footprint and how we work together pre-pandemic versus post-pandemic, differently changes, in the way we're working as teams. And we want to be sure that we're optimizing our real estate portfolio and the kind of square footage that we take up in different geographies as we do that. And so really, the 600, predominantly headcount, but then these other activities also fall into that.

You also indicated on the call that you're building a mindset of continuous productivity enhancement as we go forward even beyond 2023.

Yes. That's absolutely right. And so while I would certainly expect for you to start seeing the benefits from these cost actions come through in our non-transaction-related OpEx growth even in Q1. So we exited the year, Q4 was down 6% year-on-year in terms of non-transaction-related OpEx growth. So a nice decline there. We've pointed to expecting in 2023 to see high single-digit decline in non-transaction-related OpEx '23 over '22, and you'll start to see that in Q1. And so we obviously started to take some actions in the back half of last year. So as we begin to lap those in the back half of this year, you'll continue to see the declines, but not to the same extent. But even with that, even with exiting this year and showing high single-digit decline in non-transaction-related OpEx spend, we see a lot of opportunity to continue with these productivity actions. And part of this is just the maturation of our business and the ability to scale more efficiently. And so we have -- there are ways that we can operate going forward that will allow us to sustainably deliver operating margin expansion, and that's what we're really focused on. Where we have people, how we support those people, how we support them with different systems, sort of how we run the unbranded processing business, all of these are areas where we can operate more efficiently. And that's kind of what we're very, very focused on.

Very clear. For this year, how do you gauge growth potential from transaction revenue versus OVAS along with the underlying growth drivers?

Yes, absolutely. And so just in terms of the building blocks for our framework, branded checkout, given the scale that we have in that business, is going to be impacted by our expectations for overall e-commerce trends. And so we've talked about more muted expectations for 2023, talked about slightly positive growth in e-commerce for 2023 globally. And we do expect pressure on discretionary spend to persist, and that was sort of part of that baseline framework. And that's part of transaction revenue growth and would certainly continue to see a little bit of pressure from that. That said, Braintree and our unbranded volume growth has been a huge area of growth for us over the past few years, and we expect to continue to be a growth driver in 2023. We are lapping some big merchant wins in 2022. And so we do expect to see some deceleration in Braintree growth as we move through the year, as we anniversary those merchant wins. But even with that, we'd expect to see good support from Braintree within transaction revenue growth in 2023. I would say another piece of transaction revenue really relates to Venmo revenue growth. Again, we had a very high rate of revenue growth in Venmo last year. We are lapping some pricing benefits in Venmo specifically, so we would expect to see some decel there. In addition on Venmo, we are lapping some product introductions that led to some new areas of topline growth that did contribute to this very high rate of revenue growth for Venmo in 2022. And that too, we expect to create a little bit of decel. And so our baseline expectation really relates to sort of those major factors. On the OVAS side, what we've spoken about is that we're thinking kind of right now for planning practices that OVAS will grow in the high teens in 2023. That's coming off of a slightly higher growth than that in Q4. And of course, part of this depends on how credit performs. And so our OVAS business is driven by both our credit initiatives and credit products, that's both consumer and merchant. It's also driven, of course, by interest income on customers toward balance. And so we've had a nice tailwind from the interest rate environment. That will persist through the first half of the year. As we move into the back half, the lapping on that interest income benefit becomes more muted. And so we do it like the first half to benefit in a much greater way from the interest rate environment than the back half, just given how our book is positioned. And overall, right now, we're still thinking OVAS will grow in the high teens with an opportunity clearly to do a little better, depending on how the credit environment emerges.

Very clear. Can you help us think through how fast the Braintree growth this year impacts take rate and transaction margin?

Sure. Well, I think Braintree's growth probably impacted transaction margin a little more materially last year than it will this year just because of the slight deceleration we expect in the business this year. But certainly, the outstanding growth of Braintree is fantastic for the business. And it's really important for the health of our ecosystem and our platform. There are benefits that we expect to see from Braintree strength going forward as it relates to some of our share of checkout as well with some of these big LEs. That said, given the transaction expense dynamics of Braintree where it's predominantly card-funded, that does put pressure on our TE rate. And so that does put pressure overall on transaction margin. From a take rate standpoint, take rate in Braintree has been relatively stable. Now the take rate, of course, is lower than for PayPal just because of the merchant size, and so that does have an impact from a mix standpoint. So when Braintree grows faster than other pieces of the business, that will blend down take rate. But I think it's really important that within Braintree, when we looked at the like-for-like merchant take rate performance, that is very, very stable. The other piece of Braintree, of course, is that longer term, we're quite focused on continuing to expand Braintree into other geographies, both -- more in Europe, more in South America and in addition, sort of moving a little bit further down scale in terms of merchant size. Both of those initiatives will continue to help support stronger transaction margin contribution in the future periods than what we see in Braintree today, which is predominantly a U.S.-based business with some of the largest enterprises globally. The other piece of Braintree is that we're continuing to work on introduction of more value-added services. Most of these value-added services actually have margin dynamics that are more attractive than the base. And so in doing so and introducing some of these other value-added services, we actually help support stronger transaction margin performance overtime.

Very clear. We do have a question coming in from an investor on Braintree. Can you talk about what capabilities have driven Braintree's strength and who you're taking share from?

Yes. So look, the environment in which Braintree competes is competitive, and it has been for quite some time. So the core competitors against Braintree really are your Adyens and your Stripes. But that said, we also compete against the legacy acquiring space as well. And so we take from all. We've had some very nice merchant wins recently. We've also had nice merchant wins at the -- in our unbranded processing business that sits below Braintree. So we've spoken a little bit about working with Shopify in France and taking that unbranded piece of business. That's actually not a Braintree customer. That's more of a PPCP customer, which is PayPal Complete Payments. It's an unbranded processing stack that sits right below Braintree in terms of enterprise size and sort of why they come to us? Part of it clearly is just our overall authorization rates continue to be best-in-class. Our loss rate is best in class. I mean, we sort of -- we learned loss rates on very hard transactions. We -- because we got our start processing eBay transactions, by definition, those are really hard transactions because eBay transactions are very idiosyncratic. There's no UPC code. There's no standardization. And a lot of times, the funding instrument is not card-based, which means that settlement takes longer. There's a higher risk of insufficient funds, higher risk of fraud, higher risk of account takeover than what we would find with just debit card and credit card processing. And so because of that legacy and having this sort of strong capability on managing loss, that's very attractive to a lot of merchants in terms of how we can help support their business. And so that's sort of critical and like table stakes is off rates, loss rates. Then on top of that, I think a lot of what we can offer on the payout side is quite compelling. Our payouts capability was meaningfully enhanced when we acquired Hyperwallet in 2018. That was -- that's been a very important value driver for us with certain merchants, in particular. And so being able to run sophisticated payouts, especially when you have sort of a situation with Uber, where Uber needs to manage payouts to many, many drivers, right, tens of thousands of drivers, if not more. Similarly, within an Airbnb, they need to manage payouts to hosts. And so our payouts capability is really critical to how we think about winning business in this space. And we just continue to add on other value-added services. Now not all of our value-added services are relevant for Braintree merchants because some of them are things around invoicing, and some that are more relevant for smaller merchants. But those pieces of the business are quite important. I'd also say our advantage on the branded side makes a difference with certain merchants. And so the fact that we have this very strong kind of customer -- consumer brand with both PayPal and with Venmo can help us advance ourselves with some very large merchants that are looking to do certain marketing programs, certain targeting exercises. And so that also is differentiating for us.

Understood. How do you gauge the velocity and magnitude of monetizing the Venmo button on Amazon, which you launched around Black Friday last year?

Yes. So we fully ramped in sort of the early to mid-November period. So it's still quite early in terms of our overall experiences. Overall, we're incredibly pleased with the ramp, with the execution, with how our teams are partnering. It's obviously a significant step forward in our relationship. And we're very excited to continue to add on to ways that we can work with Amazon and bring additional things to market with them. I'd say it's still early, but we're excited about continuing to build awareness among the Venmo user base, encouraging adoption and driving more habituation. We'll obviously have more to share as we move through a few more quarters. But I think one of the critical pieces of this relationship as well is how we think about the habituation of Venmo users to using Venmo for more commerce-oriented activities and how relationships like Amazon and what we're doing with Starbucks will allow people to start integrating Venmo as a way to pay in their daily lives.

Your first quarter 2023 guidance exceeds your growth expectations for 2023 as a whole. You've guided first quarter revenue growth at 9% FX neutral, and approximately 24% EPS growth. Can you remind us of the drivers impacting the quarterly growth cadence beyond the first quarter?

Yes, you bet. So as we mentioned in our Q4 earnings call, we're really pleased with the start to the year. The macro has been more benign than we had anticipated. We've seen a continuation of strong unbranded processing trends in our business. But in addition and what's very encouraging as well is we've seen strengthening on the branded side of our business, too. And so we spoke to that a few weeks ago, and that's getting us off to a great start for the year. We did guide 9% revenue growth on an FX-neutral basis for Q1. And we've -- as we've said, we expect to see some deceleration as we move through the year, and that's the base case. And so we'd expect as we move through the year and the back half revenue growth will be slightly slower than what we see in the first half. And that's due to some of the trends that we've discussed, which is really sort of some Braintree lapping, which will cause some slowing in Braintree growth. In addition, the benefits from interest income on customer store balance will benefit us more, the incrementality benefits us much more in the first half than in the back half. And so we do expect to see some decel there. That said, we're excited about what we're seeing in the business. And if we continue to see sort of a, I would say, a stronger environment, we believe that we're well positioned to benefit from that.

Very clear. On the fourth quarter call, you underscored investments this year and high conviction growth initiatives to defend and grow PayPal's market share in branded checkout, which addresses the #1 question I receive on PayPal stock. So let's dig into each of these and how significant each are. The first is password-less, one-click native in-app checkout. The second is next generation of advanced checkout using PayPal data and AI. And the third is in the first half of this year ramping PPCP, which you referenced a little earlier, PayPal Commerce Platform, providing your unbranded offering to small and midsized businesses either directly or through channel partners.

Yes, absolutely. And so really, all of these initiatives and our core focus right now is continuing to advance our Checkout business. And so that is our core, and we're going to continue to prioritize that. Obviously, we're prioritizing some other pieces of the business, too, as it relates to our digital wallets, but really focusing on branded checkout experiences both on the unbranded processing side and how we can surface our button there, but also, much more importantly, how consumers are seeing us across our wide swath of merchants, is critical to our ongoing success. Maybe to take a step back, we've started to provide some more disclosures on our branded checkout growth. And so what we reported for 2022, and it's in our investor update is that global branded checkout volumes grew 5% ex-FX. And that's on top of 23% in 2021 and 38% in 2020. And so we're proud of these results. Based on the work that we do, we believe we gained share during the pandemic, so in the sort of 2021 and 2020 years and then that we held share last year. And holding share at scale is something that we're also proud of. That said, we obviously want -- we want to do more. In Q4, our global branded checkout volumes ex-FX were also up in the mid-singles. And so we did comment on there being some periods during the holidays that were a little softer than we expected. Overall, we think we performed pretty well, and we think sort of now that people are getting more reports from retailers and more indications of Q4 growth that our business really held up. That said, we're intensely focused on making improvements here, and early efforts are really showing promise. We're putting significant resources behind the modernization of our experiences to defend our share, but also to grow our market share in branded checkout. And so this is a top priority. And we're working to modernize and unify the checkout flows across our base. And so this is about upgrading our merchant base to our most advanced checkout flows. We called out during the call that approximately 1/3 of our top 100 merchants are on our latest checkout integrations by the end of 2022. We also indicated that our target, which is an ambitious target, but a target is 50% penetration of the top 100 merchants by the end of this year. When we get merchants on to our latest checkout experiences, we see strong results. And this is across all experiences, mobile, mobile web, desktop. We see a lift in conversion from 3% to 10% in just in terms of our checkout conversion. We see the same with our mobile SDK. And so when we're onboarding new merchants, mobile SDK is now a requirement. And on the existing base, we're looking to move people onto our mobile SDK as rapidly as possible. Mobile SDK is probably more relevant for some smaller merchants, the SMB stack, channel partner merchants with a very large LE, we're looking to do sort of broader integrations. But the mobile SDK is very important. As a PayPal consumer, I have the experience as I'm sure you do, which is that a lot of times when I'm trying to use PayPal to checkout, I'm actually navigated out of the merchant site into a PayPal site, and then I need to wait. There's latency, there's friction, and at times, there are issues with connectivity. And so really in integrating -- and when a merchant integrates the mobile SDK, what it means is that, that experience stays native to that merchant. So there's -- you're never -- the consumers are never navigated out. It really -- it increases the speed. It eliminates a lot of friction, and it's a great experience. And it drives conversion and increase volume for those merchants. In addition to that, some of the accelerated checkout work is important, too, because that's work that allows shipping information, customer information, to be stored and then ported across multiple merchants, which again, is a way to save time, eliminate friction for consumers. Another piece that you mentioned really is around authentication. And so we're doing more and more on password-less login and using biometrics and really allowing our customers to engage with us rapidly, seamlessly. And this is really important on mobile. And so as we think about how we continue to advance ourselves on mobile, allowing for password-less login and checkout is something that we think will be very important to continuing to advance our initiatives there. And so seamless checkout is important to us. And as we think about how we move forward with mobile experiences is something we're going to continue to work on. Some of these experiences on password-less will -- I think consumers will see in a bigger way in Q2. We've worked on some of them. In Q4, we launched some of these experiences. We're doing more in Q1. But I think in Q2 is when people will see it in a more meaningful way when they're using our products. And then, of course, we've talked a lot about just improving presentment of our button and doing everything we can to move our button up and make it more visible and make sure our merchants understand what the benefit to them is from doing that. And so that's just another focus of ours on checkout. You also referenced PPCP, which I know I referenced as well several minutes ago. And this is really a piece of our unbranded processing business that is targeted to a smaller merchant than what we do on the Braintree side. The customers are predominantly channel partners. So channel partners being your Shopifys, your Magentos, your big commerce entities and then in addition to that, the sort of SMB stack, overall. This is an area where we haven't had as optimized a solution for these businesses as we would have liked. We had PayPal Pro, which had some of the functionality of Braintree book, not all of it. And so what PPCP really does is gives these merchants sort of all of the features that they would get in -- with a Braintree-like solution, but it's scalable, and it's more standardized. We don't do as much bespoke work on it as we would do for a Braintree merchant that's much larger and needs a little bit more customization. And it gives them all the benefits of things like Buy Now, Pay Later upstream presentment. It gives them all the benefits of the different funding instruments that we offer. And so it's a way that we can move forward in this space in a pretty aggressive way. And so our go-to-market strategy is moving forward there, and we're excited about what we can do in terms of continuing to build out our set of merchants in that space.

A lot of initiatives, a lot to look forward to as the year unfolds. Just shifting gears, how are you proceeding in your process to externalize the credit receivables associated with your pay later business? Would this agreement ultimately be structured as a revenue-sharing agreement blowing through OVAS similar to the sale of your consumer credit portfolio to Synchrony?

Yes. So just to take a step back, in 2017, we announced that we were selling the U.S. revolved credit receivables to Synchrony. The deal closed in 2018. The book itself was a very sizable book at the time of the announcement and even larger at the time of sale. And so we netted a little over, call it, $7.5 billion or $7 billion in proceeds when we sold that book. And the U.S. revolved book has traditional credit economics. So interest is paid monthly. There are late fees. And so the revenue impact on selling that book actually was material for our business. And at the time that we announced the deal, we talked about a 3.5% hit to topline as a result of moving forward with that transaction. It's been a fantastic transaction for us, but it did have an impact on the P&L. But what we're doing right now in terms of externalizing our global pay later portfolio is something different. And so the product is different, and the transaction is going to be something different. I would expect us to see execution from us on this program probably in the back half of the year. And what we're looking at is externalizing part of our pay later portfolio. And so most of this portfolio does not generate credit economics. Actually, the book is 5 markets in Europe. And so we have Buy Now, Pay Later in the U.K., Germany, France, Italy and Spain. Only in Germany do we have sort of a longer-term installment product, which does generate interest income outside of that and late fees outside of that. No interest income, no late fees on that book at any time. In addition in Germany, we actually have a snooze product we're selling. It's a pay in 30 product, a monthly product, but people can pay for additional time to pay off that loan. And so in any event, the characteristics of the pay later portfolio are very different from the revolved book, which means the transaction is going to be something different. And so what we're particularly excited about is finding a long-term partner for sustainable funding so we can continue to scale this book very nicely. How it will look in terms of the P&L and the overall impact is that the topline impact, again, sort of very, very de minimis, only because there -- we don't see credit economics on this book. We actually get all the benefits from global pay later even with externalization because the biggest piece of why we run this program is for the customer attachment, the customer engagement, the increased TPV, increased conversion, share of checkout benefits. And all those stay with us even when we use a partner for the balance sheet. And so we think it's sort of appropriate as we think about growing the business into the future to have a partner that can grow with us and that we don't continue to allocate more and more of our free cash flow to funding a credit business when we can get all the benefits without having to have that sitting on our balance sheet. But going down the P&L, another feature of this will be that we -- through de-consolidation, we will no longer be provisioning for these loans. And so the impact on our loan loss line will be eliminated for the portion of the book that we move into this program. That said, again, because we don't generate interest income or late fees on the vast majority of the book, it's sort of helpful to think about the program and selling these loans similar to sort of like a 0 coupon bond where you're selling at a discount to par. And so there is a discount on the book, and the discount is based upon expectations for charge-off rates. And so as we show strong performance in the book, we will have opportunity potentially to manage this program. But the discount will come through on our operating income. And so our operating margin will be slightly impaired by virtue of running this program. And then we, of course, would be able to reinvest the proceeds that we generate from selling the loans to generate interest income. And so -- and that would hit OI&E. And so what we said for 2023, when you sort of net that all together, the sale of the loans impact negatively affecting our operating income, but the benefit of interest income benefiting OI&E is that we'd expect to see a few cents of dilution for 2023 by virtue of starting this program, and then that will get annualized into 2024. And so the overall impact to our P&L is actually quite minimal. And the benefit we get is really derisking our balance sheet and having this free cash flow for other things, other capital allocation potentially.

Thank you for that, Gabrielle. Last year, PayPal substantially increased its share repurchase to $4.2 billion or 82% of free cash flow. This year, do you see scope for share repurchase to increase depending on stock price?

Yes. So historically, we talked about returning about 30% to 40% of free cash flow to shareholders in the form of share repurchase. Last year, of course, we meaningfully leaned into share repurchase, and we stepped that up to, as you mentioned, 82% of our free cash flow was returned to shareholders in the form of share repurchase. What we said for this year is we expect to generate about $5 billion of free cash flow. And we expect today to be returning about 75% of that to shareholders in the form of repurchase. For now, our expectation is that we'll be relatively ratable. And so we'll assess as we move through the year, but that's sort of the current plan, and that's what we're targeting.

Understood. You mentioned your 2023 free cash flow guide of $5 billion, which is similar to $5.1 billion last year. What are the headwinds this year that would keep free cash flow flattish to down in light of your target to increase non EPS -- non-GAAP EPS growth by 18%?

Yes. So the biggest headwind this year is really expectations around cash taxes. And so that's the piece that drives sort of very flat expectations right now in terms of our free cash flow last year versus this year. Again, this is also built on this framework that we've articulated, which contemplates sort of a much more cautious outlook. To the extent that we see the business environment improve and we do better, that would certainly benefit our free cash flow as well.

Understood. Rising interest rates are a unique tailwind to PayPal. Can you share your expectations for how interest rates will impact, both OVAS and OI&E in fiscal '23 and remind us of the company's philosophy on investing customer stored balance?

Yes. So as I mentioned, our current expectations are for high teens OVAS growth in -- for the full-year 2023 with one of the major drivers of that being interest income. We earn interest income on our store balances, and this has been a tailwind for us as we've moved through last year and now it's moving to this year. We do begin to lap the major benefits in the back half, and so we'll expect to see that growth come in. But this is certainly a tailwind for our business. We provide some disclosures in our Ks and Qs on duration of the book and how the book is invested. We do -- we don't move with Fed funds. And so this is something where there is real duration on the book. It can be kind of 6 to 9 months on average. And we typically wait for things to roll before we reinvest, and so we don't realize losses on our book to invest into higher yields. We just sort of let the book roll pretty naturally, but we are getting a really nice incremental lift from interest rates in the business. Similarly, OI&E also will benefit this year from the interest rate environment. Historically, as you've seen, OI&E has been a bit of a headwind for us, and it's overall been a net expense for several years. And that's in part because of the low interest environment. It's also because of our debt service. And so this year, we're expecting OI&E to be a tailwind, and that would be sort of a shift for us. Right now, we're early in the year, but based upon current expectations, we could see potentially $75 million of income in FY '23 relative -- which is a major shift versus what we saw last year.

Got it. Just in closing, Gabrielle, what do you see as PayPal's most underappreciated strengths?

Yes. I mean, it's a great question. We have an incredible business. We have incredibly profitable business, and we have an incredible business that generates a tremendous amount of free cash flow. We're a diversified platform, and we have amongst the largest scale in payments globally. And so we believe firmly that when we focus and we put all our resources to our core objectives, there is just a tremendous amount that we can accomplish. And we think we can advance ourselves in really any environment. But actually sort of in this environment, we think it particularly plays to our strengths, in part just because we can continue to invest very meaningfully in our business. Even while generating these cost savings, we see a lot of opportunity to advance ourselves and to continue to support our high conviction areas. And then our business, basis points really matter. And so we know small improvements generate big returns in our business. And now that we're putting sort of all of our focus and attention back to our core after several years where we were sort of ambitious about other areas of our business and potentially got somewhat distracted with different geographies, different markets, pieces of our business that might have had a very long duration to when we would have realized operating income on those businesses and potentially would never contribute meaningfully to our total profitability, we're now sort of incredibly focused in our key areas. And you're starting to see some of this innovation at scale, which we're really pleased about. And so I think what's underappreciated is how much scale matters in our industry and kind of how we can continue to move forward in this environment and continue to take share. And so it's -- we have a big year ahead, but I think we're encouraged by the start we're getting. And we look forward to continuing to demonstrate that as we move through the year.

Understood. Gabrielle, thanks so much for being with us here today. Greatly appreciate your time, your insights, your participation in our conference and a lot of exciting things in the year ahead to watch for PayPal.

Thanks so much, David.