Welcome back to Evercore ISI's Payments and Fintech Innovators Forum. I'm David Togut, P ayments and Financial Technology Analyst at Evercore ISI. Delighted to host Gabrielle Rabinovitch, Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer of PayPal. Gabrielle, thanks so much for being with us here today. We greatly appreciate it.
David, thank you so much for having me. It's great to be here.
There's been a lot of uncertainty in this macro environment. That said, you mentioned on your 4th Quarter Earnings Call that Q1 is off to a stronger start. Can you talk us through your approach to providing an outlook for this year?
You bet. You know, this continues to be an incredibly complex and dynamic environment. We feel great about Q4 and about our performance in Q4. As we indicated on our call a few weeks ago, the early part of Q1 is off to a very good start, which positions us quite well to deliver a strong year ahead. You know, that said, while we're encouraged by what we've been seeing, and the sort of more benign environment in which we've been operating, we are still only two months into the year and we don't wanna get ahead of ourselves right now. Both, you know, consumers and economies globally are still faced with a number of different headwinds.
Clearly our business is very much connected to discretionary e-com, which continues to be under some pressure given inflation and that environment. In addition, we're continuing to see sort of ongoing normalization of online, offline spending, goods and services spending. Predicting consumer demand in this environment, certainly for a 12-month out year period is a challenge. We try to take a prudent and cautious approach, you know, to setting our outlook. We've been doing this for the past year, right? Starting kind of early last year, we tried to take a much more cautious approach and we're approaching Q1 and 2023 through the same lens.
We're putting out targets that we have confidence in and where we have a lot of conviction in our ability to deliver on them, even in such a dynamic environment. We think that's the right way to approach the year ahead. We're just gonna take it quarter by quarter. At the same time, we wanted to give you and our constituents a sense for our internal planning assumptions for the full year, and what it would take for us to at least hit our non-GAAP operating margin and EPS targets. These targets, which, you know, full GAAP full-year non-GAAP operating margin expectations are for expansion of about 125 basis points. The EPS target on a non-GAAP basis is for about 18% growth.
These are built around a framework of mid-single digit currency neutral revenue growth as a baseline. We've designed a cost structure that will allow us to deliver on this EPS and op margin target in even a much more muted scenario for top line. You know, our objective is to grow ahead of this baseline. You know, we're gonna remain incredibly focused on the things within our control, and on creating value and allowing us to, you know, operate more quickly, enable us to operate more efficiently and to be, you know, highly prioritized around our high conviction areas.
Very clear. If we could just dig into the margin expansion a bit. On the 4th quarter call, you talked about $1.3 billion of cost takeout this year, and you had an extra $600 million that you were working on as well. You know, in the bucket of the extra $600 million, you know, what are the key components of that?
Sure, absolutely. you know, in the middle of last year, we did talk about identifying $1.3 billion in savings for 2023, we updated that view when we reported results just a few weeks ago and said we'd identified an additional $600 million. A big piece of that is related to headcount actions. As you know, we did announce a set of headcount actions at the end of January that impacted about 7% of our full-time employee base. you know, we take these actions very, very seriously, and at the same time, we wanna be very focused on delivering against our, you know, productivity targets. As you know, our business grew sort of exponentially and at unprecedented levels with unprecedented demand through the pandemic.
We supported that with a lot of expense growth. We also started to pursue some areas which we no longer believe are core to what we need to be focused on in the go forward. A lot of what we did has been around headcount, and that relates to both the full-time headcount action, but we also have a component of alternative workforce or contingent workers, independent contractors that were also impacted by that action. That was not within the 7%, but is within that $600 million context. In addition to that, we're continuing to work through vendor rationalization, third party spend, and that's gonna be an ongoing focus of ours as we continue to find ways to operate more efficiently.
Finally, we're continuing to assess our real estate footprint and how we work together, pre-pandemic versus post-pandemic. There are certainly changes in the way we're working as teams, and we wanna be sure that we're optimizing our real estate portfolio and the kind of square footage that we take up in different geographies as we do that. Really, the 600 predominantly headcount, but then these other activities also fall into that.
You also indicated on the call that you're building a mindset of continuous productivity enhancement, you know, as we go forward, you know, even beyond 2023.
Yes, that's absolutely right. You know, while I would certainly expect for you to start seeing the benefits from these cost actions come through in our non-transaction related OpEx growth, even in Q1. You know, we exited the year, Q4 was down 6% year-on-year in terms of non-transaction related OpEx growth. So a nice decline there. We pointed to expecting in 2023 to see high single digit decline in non-transaction related OpEx 2023 over 2022, and you'll start to see that in Q1. You know, we obviously started to take some actions in the back half of last year.
As we begin to lap those in the back half of this year, you'll continue to see the declines, but not to the same extent. Even with that, even with exiting this year and showing high single-digit decline in non-transaction related OpEx spend, we see a lot of opportunity to continue with these productivity actions. Part of this is just the maturation of our business and the ability to scale more efficiently. We have, you know, there are ways that we can operate going forward that will allow us to sustainably deliver operating margin expansion, and that's what we're really focused on.
Where we have people, how we support those people, how we support them with different systems, sort of how we run the unbranded processing business, all of these are areas where we can operate more efficiently, and that's kind of what we're very focused on.
Very clear. For this year, how do you gauge growth potential from transaction revenue versus OVAS along with the underlying growth drivers?
Yeah, absolutely. Just in terms of the building blocks for our framework, branded checkout, given the scale that we have in that business, is gonna be impacted by our expectations for overall e-commerce trends. We've talked about more muted expectations for 2023, talked about slightly positive growth in e-commerce for 2023 globally. We do expect pressure on discretionary spend to persist, and that was sort of part of that baseline framework. That's part of transaction revenue growth and would certainly continue to see a little bit of pressure from that. That said, you know, Braintree and our unbranded volume growth has been a huge area of growth for us over the past few years, and we expect to continue to be a growth driver in 2023.
We are lapping some big merchant wins in 2022. We do expect to see some deceleration in Braintree growth as we move through the year as we anniversary those merchant wins. Even with that, we'd expect to see good support from Braintree within transaction revenue growth in 2023. I would say another piece of transaction revenue really relates to Venmo revenue growth. Again, we had a very high rate of revenue growth in Venmo last year. We are lapping some pricing benefits in Venmo specifically. We would expect to see some decel there.
In addition, on Venmo, we are lapping some product introductions that led to some new areas of top line growth that did contribute to this very high rate of revenue growth for Venmo in 2022, and that too we expect to create a little bit of decel. Our baseline expectation really relates to sort of those major factors. On the OVAS side, what we've spoken about is that we're thinking kind of right now for planning practices that OVAS will grow in the high teens in 2023. That's coming off of slightly higher growth than that in Q4. Of course, part of this depends on how credit performs. Our OVAS business is driven by both our credit initiatives and credit products. That's both consumer and merchant.
It's also driven, of course, by interest income on customer stored balance. We've had, you know, we've had a nice tailwind from the interest rate environment. That will persist through the first half of the year. As we move into the back half, the lapping on that interest income benefit becomes more muted. We do expect the first half to benefit in a much greater way from the interest rate environment than the back half, just given how our book is positioned. Overall, right now, we're still thinking OVAS will grow in the high teens with an opportunity clearly to do a little better depending on how the credit environment emerges.
Very clear. Can you help us think through how faster Braintree growth this year impacts take rate and transaction margin?
Sure. Well, I think, you know, Braintree's growth probably impacted transaction margin a little more materially last year than it will this year just because of the slight deceleration we expect in the business this year. But certainly, you know, the outstanding growth of Braintree is fantastic for the business, and it's really important for the health of our ecosystem and our platform. There are benefits that we expect to see from Braintree's strength going forward as it relates to some of our share of checkout as well with some of these big LEs. That said, given the transaction expense dynamics of Braintree, where it's predominantly card funded, that does put pressure on our take rate. That does put pressure overall on transaction margin. From a take rate standpoint, take rate in Braintree has been relatively stable.
The take rate, of course, is lower than for PayPal just because of the merchant size. That does have an impact from a mix standpoint. When Braintree grows faster than other pieces of business, that will blend down take rate. I think it's really important that within Braintree, when we looked at the like for like merchant take rate performance, that is very, very stable. The other piece of Braintree, of course, is that longer term, we're quite focused on continuing to expand Braintree into other geographies, both more in Europe, more in South America, in addition, sort of moving a little bit further down scale in terms of merchant size.
Both of those initiatives will continue to help support stronger transaction margin contribution in the future periods than what we see in Braintree today, which is predominantly a U.S.-based business with some of the largest enterprises globally. The other piece on Braintree is that we're continuing to work on introduction of more value-added services. Most of these value-added services actually have margin dynamics that are more attractive than the base. In doing so and introducing some of these other value-added services, we actually help support stronger transaction margin performance over time.
Very clear. We do have a question coming in from an investor on Braintree. Can you talk about what capabilities have driven Braintree's strength and who you are taking share from?
Look, the environment in which Braintree competes is competitive, and it has been for quite some time. The core competitors against Braintree really are your Adyen and your Stripe. That said, we also compete against the legacy acquiring space as well. We take from all. We've had some very nice merchant wins recently. We've also had nice merchant wins in our unbranded processing business that sits below Braintree. We've spoken a little bit about working with Shopify in France and taking that unbranded piece of business. That's actually not a Braintree customer. That's more of a PPCP customer, which is PayPal Complete Payments. It's an unbranded processing stack that sits right below Braintree in terms of enterprise size. Sort of why did they come to us?
You know, part of it clearly is just our overall authorization rates continue to be best in class. Our loss rate's best in class. I mean, we sort of, you know, we learned loss rates on very hard transactions. You know, because we got our start processing eBay transactions, by definition, those are really hard transactions because eBay transactions are very idiosyncratic. There's no UPC code, there's no standardization, and a lot of times the funding instrument is not card-based, which means that settlement takes longer. There's a higher risk of insufficient funds, higher risk of fraud, higher risk of account takeover than what we would find with just debit card and credit card processing.
Because of that legacy and having this sort of strong capability on managing loss, that's very attractive to a lot of merchants in terms of how we can help support their business. That's sort of critical and, you know, like table stakes is auth rates, loss rates. On top of that, I think a lot of what we can offer on the payout side is quite compelling. Our payouts capability was meaningfully enhanced when we acquired Hyperwallet in 2018. That's been a very important value driver for us with certain merchants in particular. Being able to run sophisticated payouts, especially when you have sort of a situation with Uber, where Uber needs to manage payouts to, you know, many drivers, right? Tens of thousands of drivers, if not more.
Similarly with an Airbnb, they need to manage payouts to hosts. Our payouts capability is really critical to how we think about winning business in the space. We just continue to add on other value-added services. Now, not all of our value-added services are relevant for Braintree merchants because some of them are things around invoicing and some that are more relevant for smaller merchants. Those pieces of the business are quite important. I'd also say our advantage on the branded side makes a difference with certain merchants. The fact that we have this very strong kind of customer consumer brand with both PayPal and with Venmo can help us advance ourselves with some very large merchants that are looking to do certain marketing programs, certain targeting exercises. That also is differentiating for us.
Understood. How do you gauge the velocity and magnitude of monetizing the Venmo button on Amazon, which you launched around Black Friday last year?
Yeah. We fully ramped in sort of the early to mid-November period. It's still quite early in terms of our overall experiences. Overall, we're incredibly pleased with the ramp, with the execution, with how our teams are partnering. It's obviously a significant step forward in our relationship, and we're very excited to continue to add on to ways that we can work with Amazon and bring additional things to market with them. I'd say it's still early, but we're excited about continuing to build awareness among the Venmo user base, encouraging adoption and driving more habituation.
We'll obviously have more to share as we move through a few more quarters. I think one of the critical pieces of this relationship as well is how we think about the habituation of Venmo users to using Venmo for more commerce-oriented activities, and how relationships like Amazon and what we're doing with Starbucks will allow people to start integrating Venmo as a way to pay in their daily lives.
Your 1s t quarter 2023 guidance exceeds your growth expectation for 2023 as a whole. You've guided 1st quarter revenue growth at 9% FX-neutral, and approximately 24% EPS growth. Can you remind us of the drivers impacting the quarterly growth cadence beyond the first quarter?
Yeah, you bet. You know, as we mentioned in our Q4 earnings call, we're really pleased with the start to the year. The macro has been more benign than we'd anticipated. We've seen a continuation of strong unbranded processing trends in our business. In addition, what's very encouraging as well is we've seen strengthening on the branded side of our business too. We spoke to that a few weeks ago. That's, you know, getting us off to a great start for the year. We did guide 9% revenue growth on an FX-neutral basis for Q1. As we've said, we expect to see some deceleration as we move through the year, and that's the base case.
We'd expect as we move through the year and the back half revenue growth will be slightly slower than what we see in the first half. That's due to some of the trends that we've discussed, which is really sort of some Braintree lapping, which will cause some slowing in Braintree growth. In addition, the benefits from interest income on customers who are balanced will benefit us more. The incrementality benefits us much more in the first half than in the back half. So we do expect to see some decel there. That said, you know, we're excited about what we're seeing in the business, and if we continue to see sort of a stronger environment, we believe that we're well positioned to benefit from that.
Very clear. On the 4 th quarter call, you underscored investments this year in high conviction growth initiatives to defend and grow PayPal's market share in branded checkout. Which addresses the number one question I receive on PayPal stock. Let's dig into each of these and how significant each are. The first is passwordless 1-click native in-app checkout. The second is next generation of advanced checkout using PayPal data and AI. The third is in the first half of this year, ramping PPCP, which you referenced a little earlier, PayPal Commerce Platform, providing your unbranded offering to small and mid-sized businesses either directly or through channel partners.
Yeah, absolutely. Really, all of these initiatives and our core focus right now is continuing to advance our checkout business. You know, that is our core, and we're gonna continue to, you know, prioritize that. Obviously, we're prioritizing some other pieces of business too, as it relates to our digital wallets, but really focusing on branded checkout experiences, both on the unbranded processing side and how we can surface our button there, but also, much more importantly, how consumers are seeing us across our, you know, wide swath of merchants is critical to our, you know, ongoing success. Maybe to take a step back, you know, we've started to provide some more disclosures on our branded checkout growth.
What we reported for 2022, and it's in our investor update, is that global branded checkout volumes grew 5% ex-FX. That's on top of 23% in 2021 and 38% in 2020. We're proud of these results. Based on the work that we do, we believe we gained share during the pandemic, so in the sort of 2021 and 2020 years, we held share last year. Holding share at scale is something that we're also proud of. That said, we obviously wanna do more. In Q4, our global branded checkout volumes ex-FX were also up in the mid-singles.
We did comment on there being some periods during the holidays that were a little softer than we expected. Overall, we think we performed pretty well, and we think sort of now that people are getting more reports from retailers and more indications of Q4 growth, that our business really held up. That said, we're intensely focused on making improvements here, and early efforts are really showing promise. We're putting significant resources behind the modernization of our experiences to defend our share, but also to grow our market share in branded checkout. This is a top priority, and we're working to modernize and unify the checkout flows across our base. This is about upgrading our merchant base to our most advanced checkout flows.
We called out during the call that approximately one-third of our top 100 merchants are on our latest checkout integrations by the end of 2022. We also indicated that our target, which is an ambitious target, but a target, is 50% penetration of the top 100 merchants by the end of this year. When we get merchants onto our latest checkout experiences, we see strong results. This is across all experiences, mobile web, desktop. We see a lift in conversion from 3%-10% in just in terms of our checkout conversion. We see the same with our mobile SDK. When we're onboarding new merchants, mobile SDK is now a requirement, and on the existing base, we're looking to move people onto our mobile SDK as rapidly as possible.
Mobile SDK is probably more relevant for some smaller merchants, the SMB stack, channel partner merchants. With a very large LE, we're looking to do sort of broader integrations. The mobile SDK is very important. You know, as a PayPal consumer, I, you know, I have the experiences I'm sure you do, which is that a lot of times when I'm trying to use PayPal to check out, I'm actually navigated out of the merchant site into a PayPal site, and then I need to wait. There's latency, there's friction, and at times there are issues with connectivity. Really in integrating and when a merchant integrates the mobile SDK, what it means is that that experience stays native to that merchant. The consumers are never navigated out.
It really, it increases the speed, it eliminates a lot of friction, and it's a great experience, and it drives conversion and increased volume for those merchants. In addition to that, some of the accelerated checkout work is important too, because that's work that allows, you know, shipping information, customer information to be stored and then ported across multiple merchants, which again, is a way to save time, eliminate friction for consumers. Another piece that you mentioned really is around authentication. We're doing more and more on passwordless login and using biometrics and really allowing our customers to engage with us rapidly, seamlessly, and this is really important on mobile.
As we think about how we continue to advance ourselves on mobile, allowing for password-less login and checkout is something that we think will be very important to continuing to advance our initiatives there. Seamless checkout is important to us. As we think about how we move forward with mobile experiences, it's something we're gonna continue to work on. Some of these experiences on passwordless, I think consumers will see in a bigger way in Q2. We've worked on some of them in Q4. We launched some of these experiences. We're doing more in Q1, but I think in Q2 is when people will see it in a more meaningful way when they're using our products.
Of course, you know, we've talked a lot about just improving presentment of our button and doing everything we can to move our button up and make it more visible and make sure our merchants understand what the benefit to them is from doing that. That's just another focus that of ours on checkout. You also referenced PPCP, which I know I referenced as well several minutes ago. This is really a piece of our unbranded processing business that is targeted to a smaller merchant than what we do on the Braintree side. The customers are predominantly channel partners, so channel partners being your Shopifys, your Magentos, your BigCommerce entities. In addition to that, the sort of SMB stack overall.
This is an area where we haven't had as optimized a solution for these businesses as we would have liked. We had PayPal Pro, which had some of the functionality of Braintree, but not all of it. What PPCP really does is gives these merchants sort of, like, all of the features that they would get in a Braintree-like solution. But it's scalable and it's more standardized, and we don't do as much bespoke work on it as we would do for a Braintree merchant that's much larger and needs a little bit more customization. It gives them all the benefits of things like buy now, pay later, upstream presentment. It gives them all the benefits of the different funding instruments that we offer.
It's a way that we can move forward in this space, in a pretty aggressive way. Our go-to-market strategy is moving forward there, and we're excited about what we can do in terms of continuing to build out, our set of merchants in that space.
A lot of initiatives, a lot to look forward to as the year unfolds. Just shifting gears, how are you proceeding in your process to externalize the credit receivables associated with your pay later business? Would this agreement ultimately be structured as a revenue sharing agreement flowing through OVAS, similar to the sale of your consumer credit portfolio to Synchrony?
Yes. You know, Just to take a step back, in 2017, we announced that we were selling the U.S. revolve credit receivables to Synchrony. The deal closed in 2018. The book itself was a very sizable book at the time of the announcement and even larger at the time of sale. We netted a little over, call it $7,500,000 or $7 billion in proceeds when we sold that book. The U.S. revolve book, it has traditional credit economics, so interest is paid monthly, there are late fees. The revenue impact on selling that book actually was material for our business.
You know, at the time that we announced the deal, we talked about a 3.5% hit to top line as a result of moving forward with that transaction. It's been a fantastic transaction for us, but, you know, it did have an impact on the PNL. What we're doing right now in terms of externalizing our global pay later portfolio is something different. The product is different and the transaction is gonna be something different. I would expect us to see execution from us on this program probably in the back half of the year. What we're looking at is externalizing part of our pay later portfolio. You know, most of this portfolio does not generate credit economics.
Actually, you know, the book is five Markets in Europe. So we have buy now, pay later in the U.K., Germany, France, Italy and Spain. Only in Germany do we have sort of a longer term installment product which does generate interest income, outside of that, and late fees. Outside of that, no interest income, no late fees on that book at any time. In addition, in Germany, we actually have a snooze product. We're selling, it's a Pay in 30 product, a monthly product, but people can pay for additional time to pay off that loan. So in any event, the characteristics of the pay later portfolio are very different from the revolve book, which means the transaction is gonna be something different.
What we're particularly excited about is finding a long-term partner for sustainable funding so we can continue to scale this book very nicely. How it will look in terms of the PNL and the overall impact is that the top line impact, again, sort of very, very de minimis only because we don't see credit economics on this book. We actually get all the benefits from global pay later, even with externalization, because, you know, the biggest piece of why we run this program is for the customer attachment, the customer engagement, the increased TPV, increased conversion, share of checkout benefits, and all of those stay with us even when we use a partner for the balance sheet.
We think it's sort of appropriate as we think about growing the business into the future, to have a partner that can grow with us and that we don't continue to allocate more and more of our free cash flow to funding a credit business when we can get all the benefits without having to have that sitting on our balance sheet. Going down the PNL, another feature of this will be that we because through deconsolidation, we will no longer be provisioning for these loans. The impact on our loan loss line will be eliminated, for the portion of the book that we move into this program.
That said, again, because we don't generate interest income or late fees on the vast majority of the book, it's sort of helpful to think about the program and selling these loans similar to sort of like a zero coupon bond where you're selling at a discount to par. There is a discount on the book, and the discount is based upon expectation for charge off rates. As we show strong performance in the book, you know, we will have an opportunity potentially to manage this program. The discount will come through on our operating income, our operating margin will be slightly impaired by virtue of running this program. We of course, would be able to reinvest the proceeds that we generate from selling the loans to generate interest income.
That would hit OI&E. What we said for 2023, when you sort of net that all together, the sale of the loans impact negatively affecting our operating income, but the benefit of interest income benefiting OI&E is that we'd expect to see a few cents of dilution for 2023 by virtue of starting this program, and then that will get annualized into 2024. The overall impact to our PNL is actually quite minimal, and the benefit we get is really de-risking our balance sheet and having this free cash flow for other things, other capital allocation, potentially.
Thank you for that, Gabrielle. Last year, PayPal substantially increased its share repurchase to $4.2 billion or 82% of free cash flow. This year, do you see scope for share repurchase to increase depending on stock price?
Yeah. you know, historically, we talked about returning about 30%-40% of free cash flow to shareholders in the form of share repurchase. Last year, of course, we meaningfully leaned into share repurchase, and we stepped that up, to, as you mentioned, 82% of our free cash flow was returned, to shareholders in the form of share repurchase. What we said for this year is we expect to generate about $5 billion of free cash flow, and we expect today to be returning about 75% of that to shareholders in the form of repurchase. For now, our expectation is that will be relatively ratable. we'll assess as we move through the year. That's sort of the current plan, and that's what we're targeting.
Understood. You mentioned your 2023 free cash flow guide of $5 billion, which is similar to $5.1 billion last year. What are the headwinds this year that would keep free cash flow flattish to down in light of your target to increase non-GAAP EPS growth by 18%?
Yeah. The biggest headwind this year is really expectations around cash taxes. That's the piece that drives sort of very flat expectations right now in terms of our free cash flow last year versus this year. Again, this is also built on this framework that we've articulated, which contemplates sort of, you know, a much more cautious outlook. To the extent that we see the business environment improve and we do better, that would certainly benefit our free cash flow as well.
Understood. Rising interest rates are a unique tailwind to PayPal. Can you share your expectations for how interest rates will impact both OVAS and OI&E in fiscal 23 and remind us of the company's philosophy on investing customer stored balance?
Yeah. As I mentioned, our current expectations are for high teens OVAS growth for the full year 2023, with one of the major drivers of that being interest income. We earn interest income on our stored balances, and this has been a tailwind for us as we moved through last year, and now as we're moving through this year. We do begin to lap the major benefits in the back half, and so we'll expect to see that growth come in. You know, this is certainly a tailwind for our business. We provide some disclosures in our K's and Q's on duration of the book and how the book is invested.
We do, we don't move with fed funds. This is something where there is real duration on the book, can be kind of 6-9 months on average. We typically wait for things to roll before we reinvest. We don't realize losses on our book to invest into higher yields. We just sort of let the book roll pretty naturally, but we are getting a really nice incremental lift from interest rates in the business. Similarly, OI&E also will benefit this year from the interest rate environment. Historically, as you've seen, you know, OI&E has been a bit of a headwind for us. It's overall been a net expense for several years. That's in part because of the low interest environment.
It's also because of our debt service. This year, we're expecting OI&E to be a tailwind, and that would be a sort of a shift for us. Right now, we're early in the year, but based upon current expectations, we could see potentially $75 million of income in FY 2023, relative, which is a major shift versus what we saw last year.
Got it. Just in closing, Gabrielle, what do you see as PayPal's most underappreciated strengths?
Yeah. I mean, it's a, it's a great question. You know, we have a incredible business. We have incredibly profitable business, and we have an incredible business that generates a tremendous amount of free cash flow. We're a diversified platform, and we have amongst the largest scale in payments globally. We, we believe firmly that when we focus and we put all our resources to our core objectives, there is just a tremendous amount that we can accomplish. We think we can advance ourselves in really any environment, but actually sort of, you know, in this environment, we think it particularly plays to our strengths, in part just because we can continue to invest very meaningfully in our business.
Even while generating these cost savings, we see a lot of opportunity to advance ourselves and to continue to support our high conviction areas. In our business, you know, basis points really matter. We know, you know, small improvements generate big returns in our business. Now that we're putting sort of all of our focus and attention back to our core, after several years where we were sort of ambitious about other areas of our business and potentially got somewhat distracted with different geographies, different markets, pieces of our business that might have had a very long duration to when we would have realized operating income on those businesses and potentially would never contribute meaningfully to our total profitability.
We're now sort of incredibly focused in our key areas, and you're starting to see some of this innovation at scale, which we're really pleased about. I think what's underappreciated is how much scale matters in our industry and kind of how we can continue to move forward in this environment and continue to take share. It's, you know, we have a big year ahead, but I think we're encouraged by the start we're getting, and we look forward to continuing to demonstrate that as we move through the year.
Understood. Gabrielle, thanks so much for being with us here today. Greatly appreciate your time, your insights, your participation, in our conference. A lot of exciting things, in the year ahead to watch for at PayPal.
Thanks so much, David.