(Reuters) - PayPal forecast fourth-quarter revenue below estimates on Tuesday as the digital payments company focuses more on its higher-margin businesses to boost profitability instead of aggressive expansion.

Efficiency has been a focal point for PayPal as CEO Alex Chriss, who took the helm last year, stresses on cost discipline, resulting in job cuts and increased investments in automation and artificial intelligence.

The strategy shift has also led the company to moderate growth in low-margin units such as Braintree, which provides payments technology to businesses, and instead focus on lucrative segments like branded checkout.

"We are making solid progress in our transformation as we bring new innovations to market, forge important partnerships with leading commerce players, and drive awareness and engagement through new marketing campaigns," CEO Chriss said.

PayPal expects revenue in the fourth quarter to grow by a "low single-digit" percentage compared with the 5.4% range analysts polled by LSEG had expected.

Third-quarter revenue jumped 6% to $7.85 billion but missed estimate of $7.89 billion. Still, strong spending trends allowed PayPal to lift its 2024 profit forecast for the third time this year.

It expects earnings per share, excluding one-time costs, to grow in the "high-teens" percentage range in 2024 - an increase from its prior forecast of "low to mid-teens".

Adjusted profit grew 14% to $1.23 billion in the third quarter. On a per-share basis, PayPal earned $1.20 versus 98 cents a year ago.

COMPETITIVE PRESSURES PERSIST

Rivals, including Zelle and tech giants such as Apple and Alphabet, have eroded PayPal's dominance in a fast-evolving payments industry.

To maintain its competitive edge, PayPal is pursuing new partnerships and expanding existing ones with companies in the retail and payments sector such as Fiserv, Adyen, Amazon, Global Payments and Shopify.

These partnerships, along with the "one-click" checkout feature called Fastlane that PayPal introduced in January, have resulted in a 36% surge in its shares this year, outperforming the S&P 500 index.

Analysts, however, said these are longer-term initiatives and may take some time to move the needle.

The company's operating margins, on an adjusted basis, expanded 194 basis points to 18.8% in the third quarter.

The metric has been under scrutiny over the past year as investors assess the sustainability and overall health of PayPal's business.

(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Arun Koyyur)