PayPal to Spin Off Venmo as Standalone Segment, Hires Digital Banking Lead

PayPal CEO Enrique Lores has this week told managers that he is reorganizing the firm's reporting lines to separate Venmo, the popular mobile payments app, from the company's other operations, CNBC has learned exclusively. Venmo will soon be its own standalone segment within PayPal, making it easier to track its progress or potentially sell the business to another company, said people with knowledge of the changes. PayPal is looking to recruit a digital banking executive to run the new Venmo segment, said the people, who weren't authorized to speak publicly. The other two segments will be a PayPal-branded business for merchants and consumers and a payment services unit that includes its Braintree unit and crypto operations, the people said. Lores, who spent six years as CEO of computer maker HP before stepping in as PayPal CEO in March, is betting that a sharper corporate structure can reignite growth at a company that has lost ground to Apple, Google and Stripe in the battle over e-commerce transactions. Lores replaced Alex Chriss, a former Intuit executive who struggled to revive a stock that had fallen roughly 80% from its pandemic-era peak. The structural changes come as the threat of a broad round of layoffs looms like those seen at payments rival Block. Earlier this year, PayPal managers were tasked by former CEO Chriss to come up with 15% headcount reductions, but that effort was left in limbo when Chriss was replaced, said one of the people. Venmo, with its nearly 100 million users, is viewed as arguably PayPal's most valuable standalone asset because of its growth prospects. Analysts have said it is a key target for potential acquirers and could attract a premium valuation. Amid the changes, two key executives, Diego Scotti, who ran the consumer group that included Venmo, and Michelle Gill, who oversaw a small business group that is being dissolved, are departing, the people said. Scotti and Gill didn't immediately respond to requests for comment. The firm will also stand up a new artificial intelligence transformation group led by Anshu Bhardwaj, a former Walmart tech executive, according to the people. A financial services unit that supports the other main business segments will be run by Scott Young, a former Goldman Sachs consumer banking manager, the people said. PayPal reports first-quarter results next week.