Alex Chriss
President and Chief Executive Officer at PayPal
Thank you, Ryan, and thank you to everyone for joining us this afternoon. It is a pleasure to speak with you all on today's call, my first as President and CEO of PayPal.
Before I dive in, I'd like to take a moment to thank my predecessor, Dan Schulman, for his diligence and professionalism and handing over the reins and helping me onboard quickly. Additionally, I'm very excited to welcome Jamie Miller to PayPal as the Company's next Chief Financial Officer. Jamie will officially be joining PayPal on November 6. Jamie is a world-class CFO who joins us with decades of experience in both senior finance and operations roles at a number of different Fortune 100 and private companies, including GE and Cargill, and was most recently, CFO of EY. Jamie is a vital addition to our team. Under Jamie's leadership, I have no doubt that we will drive the financial discipline, necessary efficiencies and operational excellence our Company requires. I look forward to introducing Jamie to you over the coming months and you will also hear from her, of course, on our next earnings call.
As excited as we are to welcome Jamie, I also want to take a moment to express my sincere thanks to Gabrielle for all of her hard work, dedication and passion as interim and then acting CFO. She has helped to drive the Company forward and has been instrumental in helping me get up to speed over the past couple of months. I truly appreciate her partnership as well as her commitment to PayPal and look forward to working with her during this next chapter of PayPal's journey.
Okay. Let's jump in. When I was asked by the Board to take on the CEO role, I was so energized by the possibilities of the impact PayPal can have on the world. I've dedicated the last 19 years of my career to fighting for the underdog, helping consumers and small businesses around the world, achieve their dreams interact with each other and build a better life. PayPal takes that mission to a whole new level. The assets, the data, the scale and the brand, the full foundation of what PayPal sits on today is unrivaled. And for me, that is the opportunity of a lifetime.
I am also walking in eyes wide open. There are clearly challenges to tackle. I am someone who speaks plainly and transparently. If we are doing things well, I will highlight them. If there are things we can do better and need to fix, then I will have no hesitation in calling those out too. Our innovation activity has accelerated. But we still have work to do on maximizing our impact for our customers and results. Competition and complexity have increased and the Company's focus has not been clear. We are doing a lot of things, but are refocused enough with our resource allocation.
Are we executing with excellence behind the most important work to provide customers with a compelling and differentiated value proposition? Are we partnering with customers in a way that brings them deep value, but also rewards the PayPal shareholder? These are questions I am maniacally focused on answering with the team and doing a better job of executing across the board. But let me be clear, notwithstanding those realities, this is a growth company with great prospects. Even within the first month on the job, I'm more energized and have more conviction and clarity than I expected over how we win. We have significant opportunities for growth and impact, the foundation is strong, and the value pools and growth vectors are there. We must simply execute better and with higher velocity, and we will.
I'd now like to share with you all my onboarding process, and what I've learned and observed so far, then I will describe changes you will see going forward, and lastly, I'll set expectations for what you will see from us over the next few quarters. While I've only been here a little over four weeks, I've been conducting in-depth conversations with internal and external stakeholders, including employees, customers, partners and investors, and diving into the business with our products and go-to-market teams. The feedback has been encouraging, exciting, revealing and very clear. There are two lenses I've had in synthesizing the input. First, how do we differentiate in solving the most critical customer problems. Second, what are our unique growth vectors and how do we accelerate our impact for customers and shareholders.
Before I run through my thoughts after 30 days, first, let me say, I've been surprised and delighted with how consistent and clear the answers to the previous questions have become. We are not searching for ideas for tremendous growth. Our assets and our position in the market are incredible. We know exactly what needs to be done. We simply must execute.
To give you some additional context, here are a few of my initial observations. On our employees. Our people are kind, caring, dynamic, innovative and engaged. They care deeply about our customers and one another, and are energized by our mission. My focus is to clearly define our mission, vision and purpose and unleash this team to execute a clearly defined and durable strategy. We will establish and refocus systems and processes to galvanize the entire organization behind our purpose and growth outcomes.
On our customers and innovation. I generally see our customers falling into three categories: consumers; small businesses; and large enterprises. When looking at our customers through this lens, each segment has unique assets and a multitude of growth opportunities. I've been encouraged by how much innovation our teams are delivering, but we have an opportunity to, a, focus our teams on what's most important to these customers, and, b, package our innovation in a way that is clear and differentiates us in the market. Let me give you some examples. For consumers, we have not only tremendous breadth, mind share and wallet share of our consumers, but these are active and engaged users. In the U.S. alone, over 70% of the adult population has use PayPal in the past five years. Let me say that again. Over 70% of adults in the U.S. have used PayPal in the past five years. And with the recent launch of our Venmo Teen Account, we are now seeing adoption of our core products and services across the entire addressable market in the U.S.
Additionally, we've innovated with unique products and experiences for consumers that each on their own provide tremendous customer benefit. For example, our PayPal Cashback Mastercard provides 3% cashback on PayPal purchases as well as cashback on all other purchases. Customers with this card make on average 56 more purchases with PayPal in the year after they adopt the product than they did the year before. Over 25 million consumers have used PayPal Rewards in the past 12 months, and we've put more than $200 million back in our customers' pockets, with cashback and savings during that time. But even more interesting, through our Rewards product, we have an active database of over 300 million SKUs of inventory from our merchant partners. These data points can help us use AI to power a robust shopping recommendation engine to provide more relevant rewards and savings back to our customers.
We've just begun and already rolled-out passkeys to more than 10 million consumers globally to reduce friction in the sign-in experience. We've added additional security features by providing fraud alerts for all your cards in the PayPal Wallet. We're gaining ubiquity both online and in-person as our PayPal and Venmo branded credit and debit cards can now be added in the Apple and Google Wallets. And we've launched the first regulated stablecoin by a global payments company in PYUSD, connecting our PayPal and Venmo ecosystems together and creating one of the most robust peer-to-peer networks in the world.
Individually, these are each incredible innovations. But we have not yet brought them altogether into a cohesive, integrated and seamless customer experience and value proposition. As I've said at the beginning, we have brand awareness and reach consumers in most markets around the world. They know PayPal and they are rooting for us. It is our responsibility to now put together these innovations into a world-class seamless experience. And that is exactly what we're going to do. As an example, we have refocused our consumer product and go-to-market team to relaunch a brand new end-to-end consumer experience with checkout at the center, that will bring value to consumers with every single purchase. We will make it abundantly clear why choose PayPal. This is the first core priority I've asked the teams to focus on.
Next, for small businesses. The core customer problem we can solve is helping them get more customers. From a breadth and depth perspective, we again have tremendous reach. We serve approximately 35 million merchant accounts and the vast majorities are SMBs. We have recently launched our new PayPal Complete Payments solution in the market. This solution helps small businesses sell globally and accept a range of payments including PayPal, Venmo and PayPal Pay Later products to help drive checkout. We provide SMBs the tools to transact globally and are innovating for them with critical services, such as package tracking. Package tracking is now live with over 5,000 merchants on BigCommerce, WooCommerce and UltraCart. Early results show merchants are experiencing an 80% decrease in item not received disputes, 40% higher dispute wins and 65% faster funds release. This is a good start.
But what really gets me excited is how all of our profile and payment data comes together to empower each of our merchants to improve their conversion rates via our next-generation checkout, while making our consumers checkout experiences more efficient. We just rolled this product out to a handful of pilot merchants. And with the breadth of our consumer coverage, we are able to identify the majority of consumers that visit a merchant's site. That means we can auto fill payment information for consumers and streamline guest checkout for our merchants.
To serve small businesses with our best-in-class product, we must get PayPal Complete Payments to scale globally. This is the second core priority I've asked our product and go-to-market teams to rally behind. And you will see us with a concerted push to dramatically improve the end-to-end PayPal Complete Payments product rollout and adoption in the next couple of quarters. Once we've accomplished this, we will have earned the right to expand additional offerings to small businesses. As someone with deep experience scaling products and services for the small business segment, we have the right to play and win in a number of meaningful and durable businesses that will solve core customer problems and delight our users.
Lastly, for our enterprise customers. We have proven that we can win in the market and take share with Braintree, serving the largest enterprises, such as Adobe, Booking.com, DoorDash, Ticketmaster and Uber. In the last 12 months, we processed over $450 billion in volume out of an estimated $4 trillion to $5 trillion of global large enterprise e-commerce. That's approximately 10% flowing through us. We now have a beachhead to build upon. We will address additional customer needs, such as payouts, fraud management, charge-back automation, and FX. These value-added services not only address specific customer pain points, but also help PayPal drive additional margin. To be clear, our focus here will be continuing to improve performance, provide additional services and expand margin revenue.
And lastly, on our Company as a whole. Let me touch briefly on our evolution to operating as a platform company. Our ability to seamlessly delight customers end-to-end is a function of the quality of our technology and data platforms, which are very strong. But we have a significant and important opportunity to further become a platform company that builds company-wide capabilities, accelerates at scale and drives efficiencies across the organization. Fully unlocking this will accelerate innovation, velocity in the market and value.
Further, our data and scale are key strengths. Our machine learning capabilities combine hundreds of risk and fraud models with dozens of real-time analytics engines and petabytes of payments data to generate insights by learning users' behaviors, relationships, interests and spending habits. This scale gives us a very unique advantage in the market. Our ability to create meaningful profiles with the help of AI is exceptionally promising. You will see us using our data and the advances in generative AI in responsible ways to further connect our merchants and consumers together in a tight flywheel. This is essential. We must build products and customer experiences that are strengthened by our unique two-sided network. Harnessing an end-to-end data platform will help us drive network effects throughout our business.
In order to maximize this opportunity, it will require technology consolidation and automation across the Company. Simply put, our cost base remains too high, it is actually slowing us down. As such, I am in the process of evaluating our most profitable growth priorities and aligning our resources to those priorities. We will become leaner, more efficient and more effective, driving greater velocity, innovation and impact for customers.
To recap my observations and focus areas, our assets and breadth are unrivaled. Our innovation is accelerating and will drive impact. But we must focus and execute. The weight of the organization will be squarely behind, one, reinventing our consumer experience to drive a clear and durable value proposition with checkout at the center; two, improving and scaling PayPal Complete Payments for small businesses globally; and three, driving margin expansion in Braintree and other products for large enterprises. Additionally, we will invest in our Company-wide platform, driving efficiency and acceleration of innovation, while rightsizing our expenses.
Now, I'd like to share what you can expect from me in terms of how we will communicate to all of you and the principles to which we will adhere. You will see this starting with our next earnings call in terms of how we report our numbers and what we view as important metrics to our shareholders. I believe in the last several years, it has been difficult to model our Company consistently, because the Company itself hasn't provided consistent metrics to allow you to do so. That is going to change.
For our next earnings call, we will unpack for you the following. First, we will be clear what our operating principles are and how these principles drive the growth opportunities we pursue and, in turn, drive capital allocation, technology allocation and talent allocation decisions across our business. Second, we will be clear about what metrics matter the most to us and how we are managing the business. I can tell you right now what I care about most is high-quality customer growth and profitable revenue growth. Going forward, PayPal will be focused on generating real profit for the Company. I can't emphasize that last statement enough. It is key to how I believe this Company should be run, and it is how you should expect us to measure our performance. Unprofitable growth is counterproductive to the long-term prospects of this or any other growth-oriented company.
Third, as a management team, we will be guided by margin-accretive revenue growth. Over time, I believe we have a tremendous opportunity to grow revenue outside of purely transaction-related volume as we continue to serve our customers' core needs. We are taking a closer look at how best to report our financial performance and which KPIs we will be focused on going forward. Once we complete this review, we will consistently use the same metrics. And it will be easy for you to model the business, judge our performance and hold us accountable. Next, I want all stakeholders to be able to understand in a simple way how we do what we do and how we make money doing it. This includes our customers as they are the lifeblood of our existence.
Lastly, I am laser-focused on operating leverage and making sure we manage our cost base with relentless attention and commitment. As I've said before, I believe our cost base and complex structure is slowing us down. We have opportunities to accelerate our revenue growth, while reducing our expenses, helping further drive operating leverage.
In terms of the timeline from here. I can tell you that we are already hard at work, determining a comprehensive plan for 2024 and ensuring we are prepared to delivering. There are teams stacked against the focus areas I mentioned earlier, and they are deep in execution mode. Our core execution and fast-twitch operating muscles are building by the day. In parallel, the leadership team and I are refreshing our strategic priorities and focus areas for 2024, and we'll be sharing them with you in our next earnings call in February. I will unpack for you then the clarity of our strategic focus, our focused growth priorities and how we will achieve durable profitable growth, adjustments we will make to drive efficiencies across the organization, and guide what you can expect us to deliver in 2024.
It is clear to me that the things we need to do better aren't all going to be achieved overnight. And, of course, business, like life, is not a straight line. However, I can tell you one thing for sure. We are going to move at lightning speed to get there as quickly as possible.
With that, I'd like to hand the call over to Gabrielle to take you through the Q3 results, and then we would be happy to take some questions.
