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

Welcome, Daniel Perlin, analyst, RBC Capital Markets; and Jamie Miller, Chief Financial Officer, PayPal Holdings.

All right. Well, good afternoon, everyone. Can you all hear me in the back? I feel like it's a little bit muted. There we go. So thank you all very much for being here today. I am delighted to have this keynote session. There's so many amazing things to talk about with PayPal. So Jamie, thank you so much for being here.

Thank you for having me.

It's also amazing to think that we've been doing this for 9 years. So we started from kind of nothing, and this is what it looks like 9 years hence. So in a lot of ways, I feel like we kind of created our own startup and this is some of the fruits of the labor. So -- and obviously, we have a pinnacle here with you with us today. So thanks so much for being here.

Happy to.

What I thought would be helpful is since you are new to PayPal, we'll say, relatively new. What were some of the things that drew you to it? You obviously had opportunities to go to a lot of places. You've had a successful career prior to coming to PayPal. So what are some of the things that you thought were key attributes that you wanted to be a part of this story?

Yes. Well, so I'm really excited to be at PayPal, and I'm really happy to be here to today. So thank you for that. What's interesting is I worked across almost every industry, it feels like, but not this one. And when I started looking at PayPal, what really struck me was, number one, just really formidable market position. I mean, trusted, scaled global brand across not only checkout, but you get into Venmo, you get into peer-to-peer payments, that whole space. Really impressive. And a lot of self-help opportunity in the story. The last couple of years, some level of underinvestment and just opportunity when you really looked at the total picture. And when you look at it, Alex Chriss is really awesome, and you probably have -- I know you've met them before because we've been together. But for those of you who haven't met Alex, just a true product thinker and really an amazing leader and has built a great, great team. And when you look at the valuation of the company, just an opportunity to have an impact and really feel like an owner. And I have to tell you, coming in, and now 7 months later, I would underscore all of that. The brand and market position are really impressive. And there's a lot here to work with. And then we'll talk about, I'm sure today, a lot of the opportunity and where we're investing and how we're really trying to move the needle. And then you look at the team and the culture, PayPal has an awesome culture. People want to win. So it's really exciting to spend the time.

I mean, it's amazing. It's been an amazing journey to get to this point and I feel like there's so many opportunities that are left ahead of you. But one of the things I wanted to start with as we kind of funneled this down is, the finance organization is kind of this pillar of the stability of the company that you're building out. And how that ties into the vision, kind of the holistic new strategy that you're bringing to bear. Maybe you could kind of outline that for the audience a little bit.

Sure. So coming into PayPal finance, first of all, awesome people. Really smart, really deep. But what was interesting to me is we'd run the company, and we'd really run finances just sort of one big finance group for total PayPal. And it really struck me early on that there was a huge opportunity to really deconstruct finance and push it into the business, push it into the product in a much deeper way than we had done before. And Alex, when he came in, had set a reorganization of the company in place that was really all around markets and customers. And so we realigned our finance group into our business units. And so we have business unit CFOs, leading into small business, large enterprise, consumer. And what that's really allowed us to do is be just nose-in partners to our business leaders. The data, the visibility, how we're leaning into pricing, how we're leaning into really understanding unit economics at a totally different level has been really game-changing for the company. In terms of not only looking at how to prioritize investments, but also how to measure and how to measure our cadence as we execute. So that's been a really huge part of it. The second piece has been newly implementing operating rhythms. And when Alex and I came in, one of the first things we did was really say, okay, how do we want to run this place? Around both business unit reviews, around our strategy process, around how we do OKRs or deep product reviews every month? And how we bring that back in the way of talent sessions. And so we built an operating rhythm and a structure that really ties all of that execution, top to bottom, together. And finance helps run that, and we're a critical part of the visibility and the metrics as you do that. And then the last piece, which I hope people have noticed, is we've really started trying to change our external information flow as well. And so you saw us do that in February with our first earnings call, where we announced the shift of stock-based comp now being in our non-GAAP. And we just think that brings better accountability for us in terms of how we operate and how we spend, but greater visibility, too, for investors. Most investors had already included it in the numbers when they analyzed us anyway, and it just is an easier way to help people. And we also started introducing more metrics that we're doing on a quarterly basis as well. And so our goal is we really drill into kind of, again, having this humming finance organization, is to make that even more routine and bring better visibility over time.

Yes. So you mentioned this a little bit. Like one of the first things that happened when the team -- the new team came on was you did this realignment around the business. Again, this was the enterprise, it was SMB, it was the consumer. You touched on that a little bit in terms of like how that has dovetailed into the financial organization. But like how is that, in your opinion, like going to change the overall perception? Go-to-market strategy? Anything that you would expound upon there would be great.

Yes. I think it's been really game-changing for us in terms of the conversations we have internally, the visibility and how we're aligning strategy. PayPal is really a company that works both with tens of millions of merchants and hundreds of millions of consumers. And so when you think about our commerce flywheel and what we can bring to merchants, it's really powerful. And running it as one company that sort of combines all those things is very different from saying, okay, large and mega enterprises, what do they need? What can we bring to them that really continues to differentiate our value prop? How do we invest against that? Small business, that's a space where, candidly, we just haven't invested that much over the last 5 years. And so there's a big opportunity for us to really reframe how we go to market, how we leverage our assets. And we're doing just that. And then the consumer side of it is part of what makes the whole thing work. And so having a leader that focuses simply on peer-to-peer payment, Venmo, how do we engage in the app? How do we bring more rewarding experiences and bring consumers back into that app? Bring them to the merchant so that we've got higher conversion. I mean, that whole process works better if that's all humming. But having people individually focused on how to drive those things, it really matters. And the team that Alex has built is really pretty impressive. You go across and you look at Frank Keller on large enterprise, Michelle Gill on SMB, Diego on consumer, and Suzan Kereere on Global Markets, it is pretty impressive. And it brings with it a team and a culture that candidly passes the ball, really helps each other, really likes each other. Super, super smart. So it's made it a lot of fun in terms of tackling a lot of the challenges that we've got.

Yes. No, it makes a lot of sense. I mean, it felt like for a long period of time, it was just kind of one larger, almost monolithic organization. But had so many great drop-down menus that it could have attached itself to, and it sounds like you finally have siloed it into the appropriate buckets. So that's great. There's been a lot of talk about '24 being a transition year. You've made that well known. I think Alex has also said that on numerous occasions. So we are well trained to hear that. But in the process of doing that, you're reshaping the company not just from what we just talked about in terms of alignment, but also in terms of profitable, durable growth. So maybe talk through some of the initiatives, key attributes that you want to try and tease out over time that will allow you to do that.

Yes, for sure. And so as you mentioned, we view 2024 as really a foundational year. And foundational in the sense of really investing in innovation, really pushing into both harvesting efficiency, but leaning into and investing against spaces that will help us put the foundation in place for growth in 2025 and after. And as we do that, branded checkout is really important to PayPal. And it's a place where we're investing heavily in innovation and experience. Profitable growth is a real priority for us as well. You've seen us make significant investment in the past couple of years and growing spaces like our unbranded business or payment processing business. And we are really shifting to how do we drive more holistic value props around not only unbranded, but our small business space and PPCP. Investing in the consumer experience around personalization, rewards. And I would say the last thing, and I mentioned, I touched on this a little bit is, is really looking at top to bottom, how do we execute? Where can we be more efficient? Where can we drive automation? And how do we really remix our OpEx spend to take that and invest against growth. But again, this is multiyear, but it starts right now.

Yes, that's great. So in terms of proof points that things are working. The first quarter transaction margin dollars performance was really good, right, it was up I think 4% year-over-year. Maybe tie that to what you've kind of level-set people for the full year in terms of maybe that trajectory, or why it was so good. And maybe what are some of the investments maybe that might keep that trajectory going. So..

All right. So transaction margin was up 4% in the first quarter, which we're really excited about. When you look at last year, it's a nice step-change in terms of the profile of that number. In terms of contributing to its growth in the first quarter, we did see higher interest income on customer balances. Really, we're getting a nice benefit continued from higher rates and the comps from last year. But we also saw really healthy growth and nice growth from branded checkout, and that was really the second-biggest contributor. If you move across, we still see a strong consumer. So P2P, Venmo, both of those products did very well in the first quarter. And we also saw lower transaction loss and lower credit loss as well. Now if you look across this, the transaction loss and the credit loss we don't necessarily expect that, that level of loss will continue as we go throughout the year. And then if you look at the last category, is really something we kind of call other products. But it's some of our acquisitions it's some of our deprecated products. We had a pretty significant negative offset in transaction margin last year from these products. We're seeing nice uplift there this year. And part of it's some decisions we've made around either reinvesting in product and some of it is we're just seeing the tail drop off in a healthy way. But that has given us some benefit there, too. But if I pull back and look at the full year, this is not going to be a linear process. You certainly have different elements happening in certain parts of the year. In particular, rates, we'll have tougher comps as we go through the year. So the impact of interest income we think will become much smaller by the time you hit the fourth quarter. The other piece of it is something like credit revenues is also going to be something that's going to pull back in terms of how it hits transaction margin as well this year with respect to credit losses ticking up to prepandemic levels. But we've also pulled back on some of our products late last year, which is driving similar revenue.

Okay. So it feels like not linear, but there's a lot of goodness behind it that it probably does have some consistency as we think about going forward. And as some of those kind of puts and takes kind of settle out, we'll have to see. But generally, a fantastic start to how that's running. And that kind of lends itself to, I think, Alex's comments recently about the second quarter, kind of EPS trending a little bit ahead of guidance. So why don't you unpack that for us? And certainly feel free to reconfirm anything here that -- or add to anything would be fine, too.

Sure. So second quarter, Alex had said last week that we expect it to be above the low double-digit EPS growth that we had guided in April, and that is what we see. And we see strength that is above that. And it's really a lot of the same trends that we saw in the first quarter, consistent transaction margin growth and for a lot of the same reasons, slightly different mixing on some of the things I talked about. Branded continues to be a healthy contributor there. And then on the OpEx side, we're seeing favorability in OpEx this quarter, too. And I think what you're seeing is really a couple of dynamics there. First is we had a significant workforce reduction in January and February, and we're seeing the benefits of that. At the same time, we haven't yet got to full run rate of some of the reinvestment back in, in engineering, product and marketing that we had laid out. The other piece, and we talked about this on our first quarter call, is that we have intentionally deferred first half marketing spend to the second half so that we can run both top of the funnel, bottom of the funnel marketing campaigns to really align with when some of our innovation comes to market. And so that's what we're seeing there. But we're pleased to see where we're going.

Okay. So that was another kind of extension of that question. So the deferment of some of the investments, it's not a signal of some sort of friction that you guys ran into in that you had to go about kind of pushing it out. It's more of a balancing act, it sounds like.

I think it's a balancing act. It's aligned with the innovation we have coming to market in the second half. And candidly, our entire leadership team is new in the last 8 months. And so there's a little bit of getting in below the surface and making sure that, when we lean in and spend, we're spending in a way that is smart, that we can execute through, and that has impact. And so we knew in January that we were putting deep funds against our Fastlane investment, against some of our consumer investment, against some of our different app improvements that we made. But I will also tell you, in the last couple of months, we've made deeper investments in the branded checkout engineering team. We have greenlit investments around PPCP and our go-to-market team and our inside sales team. Things like that, that as we've gotten deeper and we've seen spaces and needs to accelerate, we've left flexibility in the plan to be able to do that, too.

Okay. So first half versus second half aside, the philosophical viewpoint of balancing that profitable growth investments in order to sustain those kinds of growth rates. Maybe just confirm that point with us in terms of how you're thinking about that strategy throughout the rest of the year.

I think that's what you said is exactly right. That we view 2024 as a year to ensure we really build out the plan, that we get and we understand exactly what we need to do to accelerate 2025 and beyond, and we position the investments, we execute on the investments this year to enable that to happen.

Okay. That's great. Topic du jour is always branded checkout, right? And this is a huge topic on investors' minds as well as mine. So let's talk about how you're planning on accelerating that growth from these levels that we've seen. What are some of those investments that you're making, the tuning of the products? And then long term like expectations for where you expect it to land?

So branded, as we talked about, it's an important product to PayPal. And branded grew 6% TPV last year. We expect it to be roughly similar this year. It was 7% in the first quarter. So we're really pleased with the product and it's really well accepted globally. And if you look at PayPal, PayPal is a brand that operates on trust, we operate on a global scale, and you see that come through in the branded checkout product. Having said that, we've always been very, very strong online. In the last few years, we haven't made as deep of investments against our mobile product experience. And that is exactly where we're focused right now in terms of driving real product investment. Really removing friction from the process. Removing latency, so dropping latency by about 50%. Really having seamless checkout flows for the consumer. Building back in some of the personalization, some of the rewards, some of the cash back. So again, bringing consumers more into the app, but then letting them have a really strong experience once they get there. And doing all that brings higher conversion for merchants and it keeps that branded product strong. So that is what we're laser-focused on right now. And those experiences have begun to start hitting. And what you'll see in the early second half is when all of that will start to hit the market in terms of that consumer experience.

Okay. What's been the feedback from those merchants that have kind of started to see that adoption curve happen with you guys so far?

I think merchants are really excited to see PayPal innovate again. They really are. And it's not just around branded. It is also around a product what we call Fastlane and really looking at the whole merchant value prop holistically. How do we help merchants bring more customers, bring more sales, get more conversion when they get it? But they're very excited to see the whole suite of products.

Yes. But let's talk a little bit about Fastlane because here again, I think it's also kind of a name that people are starting to kind of pinpoint more frequently. It's something we can kind of channel-check and so we're getting excited about that. But it is definitely gaining some momentum. And I think you've said in the past, you might even be considering like being a little more price-aggressive in order to gain some share there. But maybe let's take a step back and talk about what that product is designed to do from an enhancement perspective. And then maybe your pricing philosophy around it as well.

Sure. So Fastlane is super interesting. So when a consumer goes through a checkout process, if they don't select a branded mark, which is about 40% of the time, then they typically go through some form of guest checkout. So 60% of flows don't pick the branded marks. And what that leaves is a real opportunity for drop off for consumers. And I think we've all experienced it, you're filling in a lot of forms, you're doing a lot of things, whether it's on your phone, it can be really clunky. The whole experience is really a much lower conversion experience for merchants. And that's really the opportunity for Fastlane, is to really look at that space and say, how do you bring different recognition, different vaulted credential capability, and really shift the conversion uplift profile for merchants? And so -- and that's exactly what Fastlane is designed to do. When you look at -- we got the product in alpha and beta testing right now, and a couple of stats which we're pretty excited about. One is, when an unrecognized so a non-PayPal user comes into the experience, 40% of them are selecting to be vaulted into PayPal, which to us is a real recognition of our brand and the trust and security that, that brings. The second piece is once they're in the Fastlane experience, they convert at about an 80% rate, meaning the conversion of that purchase. That's compared to about a 40% to 50% rate. So that's a double-digit uplift on conversion for a merchant. I mean, that's just -- it's real money, for example. And so it's very exciting. But it also gives us the ability that, once they're in that ecosystem, for us to then circle back and remarket and to go back and engage that consumer in a different way. So we're really excited about it. We're really seeing some nice strong results in early testing. This should be out for GA in the second half. And we're really focused then on holiday season and how do we help merchants be onboarded, get integrated and get ready for that holiday season for as many as we can before we hit '25 in doing that. And on the pricing side of it, I think there's a balance right now. It's probably too early to talk about exactly how we're doing that. Rest assured, we have loads of conversations going on with merchants. We're very focused on incentivizing people to get up and running right now. But then the flip side of it is this value and the value prop we're bringing, we will price to that.

Yes. The product works, I've tried it. King Arthur Flour. I went on there and get some gluten-free flour. So it...

Vermont company.

Yes, exactly. It was great. I had to check it out. So what's always interesting is this notion of competition, Apple Pay, Shopify, it always comes up. Everyone looks across different growth rates to try and figure out who's gaining share. But you also talk a lot about 60% of e-commerce really falling into this marketplace where they're at the merchants in the landing page. And so maybe talk about that white space and how you're attacking that. And then also maybe the more, I would say, highlighted competitors in many instances around Apple Pay and others that maybe you're also going to fight against.

Yes. Well, so -- and that's really, candidly, a lot of what Fastlane is designed to focus on, which is that non-branded space, that is the 60% of users who don't opt into some form of mark. And the investment around Fastlane is designed to do that. What's interesting to me are that the conversations, when you look across our mega merchants, our large merchants, they all have different needs in terms of what they want out of their checkout process. Some really want to lean into conversion across the white space there. Some really want to have better streamlining of their branded checkout space. Some want to move more into some of the buy now, pay later products. They're all looking at their process flows and just have different pressure points around what's important to them. And that to me is what's been interesting, as we've gotten into go-to-market around Fastlane, is to really understand which arts of our innovation suite right now are the ones we're leaning into with different merchants in different ways.

Yes. No, that makes sense. The improvement of profitability is obviously top of mind, but you've also talked about like including PSP in the growth and how do you do that mix. And so we're trying to think about this price-to-value concept that you've talked a lot about as you came in and started to look across the portfolio. What are some of those levers that you feel like you see within that portfolio that you might be able to pull? Why do you feel like there wouldn't be fall off in certain areas? And again, like the right to win in those markets and price at those levels, what do you see when you look across the company?

Yes. Well, our payment processing business is a great business. And it's great because we've made significant investments in performance the last couple of years. We've also made significant investments to grow the business over the past couple of years. And in doing that, we really price to win. But with the performance levels we have now, we are in a position to price to value in ways that we haven't been before. I mean, this product, the Braintree product, in particular, has highest auth rates, highest availability, highest performance. It's really best-in-class compared to our peers out there. And when you look at our value-added services, we have a suite of value-added services that is alongside of that. But I'll also tell you, we have a significant opportunity to continue to build that out. We also have significant opportunity to price differently when we do it. When you look at how we have priced compared to our peers, we haven't always priced to value. We've given a lot of things away for free. And candidly, we're just in a different position right now, which is really exciting, honestly. And so how we've entered this year is really working with our teams to say, profitable growth matters. We shifted our incentive structures, which are all around transaction margin dollars and operating income dollars now. In the conversations with our merchants, are different conversations. It's not about product. It is about, okay, how do we help you grow? Here's the ways we can help you do that. Which then you get into a much different conversation around pricing when you do that. And I would say, by and large, those conversations are really healthy. They are partnership-based. And we're already seeing, and we'll see it in the second quarter, some uplift from those efforts.

Okay. No, that's wonderful. On the SMB side, if we think about that for a moment, PayPal Complete Payments is really the idea of kind of consolidating all these various pieces under more of a platform kind of go-to-market strategy and the growth that you can ultimately get out of that. Again, you said you've under-invested in the SMB space over the years. Maybe talk about some of those investments that you're now putting in place today. And again, what are the expectations that you have set for yourself?

Yes. So PayPal Complete Payments is our fully integrated stack. It is a single integration. It is a complete payments solution for small- and medium-sized businesses. And if you look first at the state of play in that business, I would say, again, we hadn't invested a ton in that business. And you really saw it in terms of we have made product deprecation decisions, we have made pricing decisions. We didn't have some of the features our customers sorely wanted. And it was really, candidly, hurting the business. And PPCP is a product that came on over the past couple of years, but really the growth has started to scale really within the last year. And it's a great product for small and medium-sized businesses. It is up in 34-plus countries, it's enabled across 40 platforms. And it is something that, when our SMB customers or merchants are on it, they've got -- they've got on average use 4 products from us. They've got 2x the average revenue per account when they use it. And it's a product that, as we look more deeply as to how to roll it out, how to drive go-to-market, how to reduce churn, it's a real opportunity for PayPal to re-win with our small business customers. Having said that, we're really focused right now on the execution around that, which means looking at our onboarding flows. How do we remove friction? How do we bring just a more streamlined risk management process to that? How do we win with our developers with no code, low code solutions? Really getting integrations to be something that can be hours and days and minutes as opposed to longer than that. And I would say, lastly, making sure that we reduce churn as we do it and really eliminate some of these other friction points that I was talking about earlier. But the SMB space, and Michelle Gill is really awesome, is a space that PPCP is going to play a big part of.

Yes. How far along do you feel like you are in terms of penetration? Like you mentioned 34 countries. And so you've rolled it out, but I feel like it hasn't been -- like if we were to look at that in comparison to like a GTV or GPV number or TPV number in this example, it would be much lower, right, as a percent. So like where...

That's right. it's 7% right now. Yes. And I mentioned that it's really just started in the last year in terms of getting traction. But it also really illustrates the opportunity we have with SMB when you look at that. But yes.

Okay. the approach of kind of putting capital to work here. Obviously, lots of stuff going on, on the internal investment side. It does also feel like this is another year where share repurchases is going to be an important aspect of the business. So maybe just talk about how you're thinking about that capital allocation. Would you place bets in kind of tuck-in M&A? Internal investment is clearly key. But how do you think about laying the groundwork?

Yes. So internal investment is clearly key. We would agree with that. But then if you look at PayPal, PayPal, one of the strengths of PayPal is we have a very strong free cash flow, very strong balance sheet. $17 billion of cash on the balance sheet. And we've committed this year to doing greater than $5 billion in buybacks this year. So really more than 100% of our free cash flow will go to buybacks this year. Part of it is that strong capital position. But part of it, too, is as we've got a new management team coming in, we know that we feel like we need to earn the right to really do inorganic at scale. So when we look at it, could you see a tuck-in smaller? Could you see an aqui-hire, something like that? Maybe. But it's not a primary focus right now. Our focus on capital allocation this year is really around organic and buybacks. And then of course we remain committed to our investment grade credit rating.

Yes, absolutely, absolutely. So on the consumer side, we talked a little bit on the enterprise. We've talked a little bit about SMB. But on the consumer side, you are launching or at least discussing launching kind of more of this new app function and feature to create kind of a habitual nature for the consumer. And I certainly appreciate the benefits of that when it actually occurs. But you're also tying into that all this new data that you have to do more rewards, personalizing it. So like tell us where we are on that journey. It feels early. But like take the vision of what you're trying to do and explain that, but also kind of connected dots in terms of how you, sitting at the financial organization, is going to get us there.

Yes. And the consumer app side of it, and we were talking about this a little bit before. When you start to focus on how do you engage consumers, how do you really bring consumers into the PayPal ecosystem, the app is a big part of that and it really matters in that. And so over the last 3 months, you've seen us launch our new app experiences. And if you open up that app today, what you're going to see is a completely refreshed look and design. It's much more intuitive in terms of how you can navigate, seeing your balances, seeing your flows, seeing how you've transacted. But the other thing that you're starting to see is a lot more personalization and a lot more rewards. And so as you just go to the bottom of that screen, I was just looking at this yesterday, like the bottom of my screen says, Lyft 5% cash back or rewards, Walmart, other elements where, if you click and save those rewards, then the next time you're purchasing something from Lyft or Walmart or McDonald's or whoever this is, you've got 5%, 4%, 8%, some form of savings on your purchase. But the other side of it is, you'll also start to see more personalization. So as you scroll down, they might know that you like blue blazers and blue Oxford shirts. And you're going to see an ad for a retailer that's going to pull you right to that retailer's website. So this idea of getting not only consumers pulled into the app, saving them money, giving them really relevant and personalized ways to then go to retailer sites also helps the merchants, too, right? it Helps bring them consumers directly at a lower price point in terms of acquisition than what might have otherwise happened. So it's -- those experiences are already out there. What we're excited about is, as we go even deeper, how we can bring that even further upstream.

Yes, I didn't to interrupt. But as I was thinking about that, in the prior incarnation of the app, like was it not really pulling that flywheel effect or that feedback loop as much? And now that you guys have had a chance to get in there and tune it, you're really seeing the benefits of having kind of this dual-sided market?

That's exactly right. If you go into the prior version of the app, it was very much what had you done and it was very transactional. And you'd go in, you'd see your transactions. And it wasn't nearly as intuitive around your experience. And we're actually seeing that in the numbers. I mean, weekly logins are up. We're seeing that, when a consumer saves an offer, they're twice as likely to actually use the offer in their purchases. So we are seeing that experience, too.

That's great. And it definitely -- it should drive that habituation, right? So repeat users. One of the stats that's just like astonishing to me. Venmo, right, you got 60 million active users. So that's not the one. It's that $18 billion of volume comes in and then it's like pretty much gone within, I don't know, how many days you said. It was like 80% of it goes out within like 10 days. So that's a problem, but it's also a fantastic opportunity. So maybe talk about what that dynamic is that causes this consumer behavior to react that way. And then how you're planning on monetizing that, and I wouldn't say trap the cash, but keeping the cash inside of an ecosystem where you can actually monetize it.

Yes. And it's interesting because on one hand, you want the flows in. And then to me, I think there's a real debate about whether you want the flows to stay or if you actually want the flows to perpetuate, right? And really to have engaged the Venmo user in a different way, but on a daily, weekly basis. You mentioned more than 60 million users every month. That's what we see. But with respect to Venmo, we are very focused on pulling people in, whether that's through direct deposit, more funds in and giving them more ways to transact through the app. And one of the ways we've been doing that over the last year is really scaling up Pay with Venmo. So when you go out to dinner with your friends and -- or you go shopping and you want to pay with Venmo, you can do that. Somebody reimburses you, you can pay with Venmo right there. That's one way of doing it. The other way is really omnichannel. So really upping debit cards on Venmo really so that people can put them in their tap to pay. They can use Venmo in a different way that makes the app, again, habituated around what they're doing and how they're using it. But the Venmo piece of it, I think, is a story that's just starting. It's been a product we've had for almost a decade. And it's one that we haven't invested in, in -- I guess, more than a decade but invested in really at all. It's sort of organically grown in really this awesome way. But it's one that, as we brought in John Anderson, who came in from Plaid, and he's been with us a month, this is -- he is knee-deep right now in terms of the growth strategy around all the things you're talking about with respect to funds flow.

When you look at the client portfolio of Venmo and we look across at maybe one of your competitors within Venmo, they have an enormously high penetration rate. And I think yours is high single digits, if I'm not mistaken. So is there any reason to think you couldn't get to 20%, 30%, 40% penetration rate within that base?

We are very focused right now on really building out Venmo in a way that gets to high penetration, high usage and high transactions, but also, candidly, keeps the secret sauce of what has always been so special about Venmo, which is the social nature of the platform.

Yes. Okay. You recently talked about building out this advertising platform, which I think totally makes sense. But I think it requires a little bit of vetting. So what exactly is the strategy there? Here again, is that part of the data asset opportunity that you want to be able to bring to bear and then utilize it across your platform in this two-sided way? Or is there something else that you've also envisioned?

Well, I think it's both, honestly. You can imagine hundreds of millions of consumers in the past couple of years. We have a tremendous amount of data. We also have tens of millions of merchants that we work with. And so merchants want to acquire new customers. Customers want the best products at the best price. And so you look at our data and the -- how we can build customer profiles and really leverage that in a different way. It not only brings different value props to our different constituent populations. It also brings an opportunity to leverage that data to drive ad flows for different ways. And you look at how merchants are looking to acquire customers now. If they can acquire with a very targeted ad that they know has -- they only pay for the reward or the ad or the offer if it's actually consumed. I mean, these are really powerful ways that they can drive, again, higher consumers, higher uplift. And so Mark Grether, we just hired him. He literally started 2 weeks ago. He's got deep experience in the ad space more than 20 years. Really built out Uber's ad business over the last couple of years. And this is his mission, to build this out for us.

Just listening to you talk about all these new hires. A lot of them are really short term, they just came on. So we know of some of the bigger ones. But how much of this organization has actually kind of been a breath of fresh air, all new people coming in from other technology companies or otherwise, since you've joined, even?

It's a real mix, honestly. PayPal has awesome talent. And you take even my finance team. I think I've brought in three people. But the rest have all been people that are on the team, we pulled up from the team and really just leveraged people in a broader way. And I'd say the same, honestly, is true for our operations teams, our product teams, our engineering teams. I pull off some of the names, and in particular because I think they're actually really important hires. Take John Anderson as an example. We haven't invested in Venmo. And so we really need somebody who can come in with a fresh perspective around how to build out a consumer brand in a different way, and he's a great example of that. But what I didn't mention are people like Frank Keller and Mike Sutter and Adam Beardmore and different people that are just doing amazing work driving our innovation every day on the products that we were talking about before.

When you think about kind of U.S.-based versus international-based businesses, how do you draw distinction maybe between what you're seeing in those markets today? If there's any major differences that we should be mindful of.

So the thing about PayPal that I think often gets forgotten is how global we are and how scaled we are. And one of our hallmarks is our ability to seamlessly transact cross-border. And it's one of the reasons why we're chosen by merchants like Temu or Shein or others to really scale their business because they know when they come into PayPal, they've got a brand around safety and security, around data with consumers, that consumers trust us in terms of how we handle that. But they also know we've got infrastructure that can really handle the regulatory, the cross-border in ways that really no one else can. And so U.S., whether it's U.S., Europe, APAC, all of those are very, very seamless for PayPal. So our growth can be different cross-border depending on where we are, but very, very strong.

In the last couple of minutes we have. When you're thinking about the long-term kind of trajectory and vision of the company, understanding that this is a big transition year. And we've just rattled off, I don't know, 15 different initiatives, many of which are still under-monetized and have yet to really come to bear. Is '25 the year where we're really going to start to bear fruit, like tangible fruit from these efforts? Or do you think it has to be longer than that, just based on the pace of play inside?

We are putting tremendous amount of pressure on ourselves to ensure that '25, this begins to bear fruit. But it's like any transition story. I mean, this stuff takes time. And it's not a matter of months, it's a matter of quarters and years. And it's things that, as you invest, it layers on top of each other and it builds, and then you can build and scale even more. So we're really focused on '25 and beyond, but as I said before and in one of our earlier earnings calls, we haven't layered the benefits of any of our innovations into our guidance for this year, but really by design because we want to lay the groundwork to make sure that, that happens very soon after.

Yes. And I guess just the last thing to that point. You've given yourself, I think, the right kind of level-setting expectations to not have to put the upside in to the extent that, that's successful. When you think about the opportunity for there to be better results or things that might be more challenging, those kinds of puts and takes. Is it company-specific? Is it macro? Like how do you -- how would you kind of finish that thought?

I think that puts and takes, well, let me talk about macro for a minute, which is the consumer, what we've seen so far, it's been very resilient. And the environment today feels a lot like it did last year. Having said that, there's a healthy debate all the time about what's going to happen with rates and housing and all of these different things. So I kind of set that aside. To me, this is one of the -- maybe we get back to where we started. One of the reasons that attracted me to PayPal is there is a lot of self-help here and a lot of investment that we can control to really drive product, to drive growth, to drive better profile around expense and losses. And that's what we're targeted and focused on doing.

That's great. That's great. Jamie, there are so many great things that seem to be happening at the organization right now, and I know it's a transition year, but it does look like it's going to bear fruit. And you've already got some really great proof points for doing that. So thank you so much for sharing your thoughts with us today, and thanks for supporting us here.

Thanks for having me.

Yes, absolutely. Thank you.