PayPal, Block and Shopify have all reported earnings in recent days. Here's a look at what those three companies are saying about the economy, generative AI and their product plans.
PayPal: Controlling what it can
The economy
PayPal CEO Daniel Schulman said the company had a good start to the year but is also focusing on the things it can control given macroeconomic uncertainty. See first quarter results.
Schulman said:
“Even with the strong start, there remain many challenging issues to navigate as we look forward. Both the macroeconomic and geopolitical environments are complex and difficult to predict.
In these times, the strong message I'm giving the PayPal team is to focus on the things we can control. We know that job number one is to invest and innovate to improve our value proposition to our merchants and consumers.”
Generative AI
PayPal is looking internally to leverage generative AI. Schulman said:
“With the new advances of generative AI, we will also be able to accelerate our productivity initiatives. We expect AI will enable us to meaningfully lower our costs for years to come. Furthermore, we believe that AI, combined with our unique scale and sets of data, will drive not only efficiencies, but will also drive a differentiated and unique set of value propositions for our merchants and consumers.
This is not just about efficiencies. By the way, it's not about cost reduction. It's about doing things better. There's no question that AI is going to impact almost every function inside of PayPal, whether it be our front office, back office, marketing, legal, engineering, you name it. AI will have an impact and allow us to not just lower cost but have higher performance and do things that are not about trade-offs. It's about doing both in there.”
The other thing that the teams are doing and doing extremely well is they're improving processes.
Venmo meet PayPal
Schulman added that PayPal and Venmo will be connected as part of product updates this year. He said:
“Later this year, we will add the ability for a Venmo user to pay a PayPal user and vice versa, bringing more utility to both customer bases. We are currently piloting the upcoming launch of Venmo teen accounts, which have been requested by both parents and teens for some time.”
Block: Macro challenges, Regulation, Global financial system shifts
The economy
Block Chairman and President Jack Dorsey laid out the landscape.
“There are three macro challenges affecting all businesses now and over the long-term. Number one, constant state of global crisis. Number two, regulatory fragmentation. Number three, global financial system shifts. The world seems to be moving from one global crisis to the next and suffering from an overwhelming amount of information, which is causing people and organizations of all sizes to be distracted and reactive to the moment. From COVID to inflation, to the war in Ukraine, to bank failures, the number of things we all need to pay attention to grows unbounded.”
Dorsey said the company has more than 30 products focused on specific verticals (see Block results). "We see a lot of growth upmarket because we provide flexibility," said Dorsey. "Our solutions addressing key verticals of restaurants, retail and beauty allow us to serve much more complex sellers with very specific needs, which again goes back to that flexibility point and the strength of our ecosystem. And the developer platform continues to be stronger and stronger as we move forward."
Regulation
Dorsey said:
“Regulators around the world are coming up with slightly or entirely different answers to problems facing their citizens. Instead of having global standards, we end up with rules which are different for every market, effectively slowing the pace of development. While this might be a good thing for each market and makes it very challenging to grow a global internet business, especially for smaller companies. Part of our job will be to help our customers navigate this complexity by taking it on ourselves.”
The future of money
Dorsey said:
“There have been numerous challenges to the global financial system, and it's experiencing some significant shifts, from new global reserve currency candidates, centralization of banks through failure of smaller ones, to adoption of central bank digital currencies with entirely new capabilities. These all affect our core business and are all trends we need to navigate carefully.”
Generative AI
Dorsey said that Block is focused on artificial intelligence and staying ahead of the curve. "More and more effort in the world will shift to creative endeavors as AI continues to automate mechanical tasks away and we believe we are well positioned for that shift with our strategy for artists on title," said Dorsey.
Shopify: Expanding into enterprise retail, shedding logistics
Shopify President Harley Finkelstein said the company is "leaning into our partner model ecosystem" with the sale of its logistics business to Flexport. The company also cut headcount.
"We also realized that in order to adapt and stay at the forefront of commerce, Shopify must operate with even greater speed and efficiency. So, we are making changes and refocusing the priorities that we believe will get Shopify to the size and the shape necessary to unlock the next era of growth and innovation," he said.
Shopify expanded its merchant base across all geographies and merchant sizes.
Targeting large retailers
The company said it had success selling its enterprise retail product, Commerce Components by Shopify (CCS). CCS is a composable stack where retailers can use Shopify components they want and integrate them with existing systems. The move makes Shopify checkout and storefronts available to large retailers.
"There is a perception shift happening in the marketplace as enterprises begin to realize that they are now able to combine Shopify's cutting-edge commerce solutions with their existing infrastructure, all while optimizing their operating expenses," said Finkelstein. Shopify has added large retailers such as Tim Hortons, Ted Baker and Zulily, which is owned by QVC.
In addition, Shopify inked partnerships with IBM Consulting and Cognizant to expand its reach.
Shopify is also thinking globally as 15% of its total GMV was cross-border. Market Pro has been scaling as Shopify handles international commerce headaches such as taxes on the back end for businesses.
For its core business, Shopify is driving usage of the Shop App and Point-of-Sale offerings.
Generative AI
Finkelstein said Shopify has "one of the best chances of using AI to help our customers."
He said:
"How do we integrate it into the tools that help us build and ship better products to our merchants. You're already seeing that in certain areas of Shopify. For example, the task of writing product descriptions is now made meaningfully easier by injecting AI into that process. And what does that -- the end result of that is merchants spend less time running product descriptions and more time making beautiful products and communicating and engaging with their customers."
Shop at AI is also an effort to create "the coolest shopping concierge on the planet, whereby you as a consumer can use Shop at AI and you can browse through hundreds of millions of products," said Finkelstein.
More importantly, Shopify is looking to AI to drive experiences and the products delivered to merchants.
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