Digital payments pioneer PayPal Holdings has begun a “large-scale initiative” to update its “existing technology infrastructure” at an estimated cost of as much as $300 million, the company said.
The effort is expected to occur over 18 to 42 months and resulted in a $95 million charge during the second quarter, including for employee severance and benefits costs, according to a PayPal quarterly filing Tuesday with the Securities and Exchange Commission. The workforce reductions associated with the plan are expected to be completed by 2027, the filing said.
It’s a major “existential” technology upgrade for a company that’s considered the “grand-daddy” of the fintech industry, TD Cowen analyst Bryan Bergin said in an interview. It’s a part of providing the technology support for their new initiatives and re-accelerating growth, he said, referring to plans laid out at a February meeting with investors and analysts by PayPal CEO Alex Chriss and other executives.
“Large organizations need modern technology, and that’s a component of this,” Bergin explained in a Thursday interview. “So a lot of this has to do with making sure they are on the most modern technology, and it is also about consolidating disparate systems behind the scenes.”