PayPal announced sweeping layoffs this week, cutting 9% of its workforce or around 2,500 employees, despite posting steady revenue growth over the past year.

The cuts come as the pioneer in online payments faces intensifying competition from rivals like Apple, Zelle, and even big banks entering the payments space. With costs rising, PayPal’s new CEO Alex Chriss seems intent on right-sizing the company to boost efficiency.

Employees learned their fate starting Tuesday and continuing over the week, according to a letter Chriss sent staff that PayPal later made public.

The layoffs land almost precisely a year after PayPal eliminated over 2,000 positions in early 2023 to rein in expenses. This second major round of cuts signals how Chriss wants to streamline operations and direct resources to key growth areas.

Yet the belt-tightening unfolds even as PayPal delivered $7.42 billion in revenue last quarter, up 8% annually. Transactions over its platforms grew by double digits. Back in November, PayPal beat earnings expectations, causing shares to initially spike.

Chriss explained in the last earnings call that costs were too lofty and “slowing us down.” He telegraphed that more disciplined spending and strategic investments would be forthcoming. The extensive layoffs clearly underscore that philosophy.

The payments sector is also witnessing intensifying rivalry that promises to pressure margins. From Zelle to fast-growing fintechs, the battlefield is crowded. And mammoth corporations like Apple can leverage massive scale.

PayPal itself has branched into different services with initiatives like buy now, pay later financing. While showing some traction, these still represent a fraction of PayPal’s overall volume. The job cuts may reflect a refocusing on core competencies.

The layoffs promise to help PayPal trim expenses and direct resources toward the most promising opportunities. Yet cutting talent can also backfire by draining critical skills and institutional knowledge. PayPal will have to seamlessly manage the transition.