We’re improving the onboarding and the reboarding as they come back into the app and start to now attach our Mastercard or debit experiences or Buy Now, Pay Later. We’re improving the post-purchase experience where we now have smart receipts or package tracking so that we can improve the engagement between our merchants and our consumers, and we now have an ongoing active use engagement. And then we’re leaning into demand generation and actually solving the biggest challenge that our merchants have, which is finding new customers as we think about our Advanced Offers Platform or creating shopper insights so that our merchants can start to engage and personalize their experience through our data and through the AI that we can lean through. So the way I think about it is we are looking at the entire end-to-end experience, and we’ll measure our success through the metrics that you have.
It’s going to turn into what does transaction margin look like? What are — what does active use look like from our ongoing users? So that’s how we think about it.
Operator: Your next question comes from the line of Michael Ng with Goldman Sachs.
Michael Ng: I wanted to ask a question about PayPal’s commitment to durable, high-quality profitable growth. How does that impact the pricing strategy in Braintree? What unprofitable is the system products will PayPal deemphasize? And how does that tie into your 2024 non-transaction OpEx outlook of flat?
James Chriss: Great. Thanks, Mike. Let me talk about Braintree and then I’ll have Jamie talk about potentially some of the other products and businesses. So let me take you back. Braintree, if you go back a few years ago, was really trying to establish itself in the market. It hasn’t delivered at scale, and there were gaps in the product. We’ve invested heavily in the product and have really focused on some of the largest U.S. enterprise customers, which now have proven the scale while we’ve gotten the product to parity. Then you look at what we just rolled out with innovations like Fastlane, I think we’ve now leapfrogged the competition. So what does that allow us to do? It allows us to be the one-stop shop for merchants, it allows us to provide a best-in-class experience on auth rates and give them the ability to have not only the best processing and unbranded, but also package that with PayPal and with all the other ways that customers want to pay, including Buy Now, Pay Later.
We now are shifting towards being able to have a price-to-value conversation with our merchants and being able to really start to think about how will we ramp up go to market for not only Braintree, but also PPCP. We also are now moving into markets that have higher margins. So international and small business with both Braintree and PPCP allow us to now, again, price to value and have different conversations. So that is how we think about it. We’re not focused on unprofitable growth when it comes to Braintree. We think we now have the product in market to be able to compete effectively and win.
Jamie Miller: Yes. And Mike, on the other part of your question, I guess what I’d say is we are just doing too many things. And our biggest opportunity is that we have to make decisions to stop things and to really focus and that gets into market competitiveness. It gets into pricing, it gets into really leaning into market opportunity and really stopping doing things that prevent us from doing the right thing in those spaces. So we are knee deep in that right now. And so when we talk about a year of transformation and execution, that’s exactly what we’re talking about.
Operator: Your next question comes from the line of Ramsey El-Assal with Barclays.
Ramsey El-Assal: I wanted to ask about how much leeway or opportunity you have to continue kind of taking out expenses while simultaneously executing on the growth strategy? How are you thinking about striking that balance sort of cost control versus growth? And I guess, how confident are you that you have room to do both?
Jamie Miller: Yes, I would say that is definitely an and, not an or. And that’s exactly what we’re doing with the workforce announcements we made a week ago and really taking that and putting that back into product into engineering and into marketing, we have got to invest deeply to grow this place. And it’s really important for us to just set the company up for the future. And to do that, the innovation muscle, the commercial muscle means that rightsizing our expense levels isn’t going to be something that we — that is a won and done. We know we have significant opportunity to continue to be more efficient, be that through automation, be that through driving deeper productivity. And as we harvest that, that just gives us more levers to invest that are — the right things for our profile as we go forward.
Operator: Your next question comes from the line of James Faucette with Morgan Stanley.
James Faucette: James, a quick clarification and I have a question for Alex. But you said that starting from the first quarter, you’ll be including stock-based compensation in your non-GAAP rather than excluding it. So does that mean that if we just imagine that we fast forward a few months, that the non-GAAP earnings would be reduced by roughly that $1.8 billion. Just looking for a little bit of clarification there. And then, Alex, you made an interesting comment in terms of like feeling things are too big organizationally. But I’m wondering how you’re feeling about the tech stack right now and the level of integration and where we’re at from that perspective in terms of your ability to drive the kinds of improvements and perhaps add functionality to improve the customer experience.
Jamie Miller: Yes, James, on your first question, you have it exactly right. So beginning in the first quarter, we’ll start including stock-based compensation expense in our non-GAAP and closer to that time, we’ll do the look back where we’ll provide the retrospective data so that we’ve got everything on a comparable basis. But yes, you’re thinking about that right.
James Chriss: And then, James, on your question around the tech stack. Look, I’ll be transparent. The company has gone through significant growth over the last few years and a lot of acquisitions. We have not invested enough in creating a single platform. That again slows us down when it comes to innovation, and it slows us down when it comes to being able to leverage the data across the ecosystem. We are investing heavily in that now and starting to see real improvement. I mentioned a couple of things on the call, but really being able to put out a reporting system that now sees across the entire ecosystem, being able to see a single view of the customer so that now we can provide innovations to customers but also actually be able to cross-sell and be able to say, “hey, this is a customer that has this risk profile and should be in these 2 or 3 different products”, is a huge win for us as we start to consolidate.
It also just accelerates our engineering velocity, being able to have a services-based engineering team that can build once and deploy across the entire ecosystem is the direction that we’re heading in. And so you started to see that. We — even the innovations that we just put out over the last couple of weeks weren’t really possible without us being investing heavily in the platform. But I also would say we have a ways to go. And so it’s a primary focus for me and the organization and will drive velocity and efficiency.
Operator: Your next question comes from the line of David Togut with Evercore ISI.
David Togut: A major regulatory change in payments just went through in Europe with Apple opening up its iOS and NFC chip for physical point-of-sale payments. What opportunity does this present to PayPal?
James Chriss: Yes. Thanks for the question, David. We are tracking this closely. Apple is a great partner of ours. And our customers that love PayPal on the online e-commerce side are demanding — being able to have an omnichannel and off-line solution as well. So we’ll be working closely on this. And when it is available, we will be ready to be able to deliver for our customers, both online and off-line.
Operator: Your next question comes from the line of Sanjay Sakhrani with KBW.
