By Niket Nishant and Manya Saini

(Reuters) -PayPal forecast fourth-quarter revenue below estimates on Tuesday as the digital payments company shifts its focus from aggressive growth to high-margin businesses, sending its shares down 5%.

Efficiency became a priority for the company under CEO Alex Chriss, who since taking the helm last year has been pushing for cost discipline through job cuts and higher spending on automation and artificial intelligence.

"Change takes time and we still have a lot of work ahead, but the team is making steady progress on top of an already solid foundation," CFO Jamie Miller said on a post-earnings call with analysts.

PayPal is moderating growth in low-margin units such as Braintree that provides payments technology to businesses, while focusing on lucrative segments like branded checkout.

The company expects fourth-quarter revenue to grow by a "low single-digit" percentage compared with the 5.4% increase expected by analysts polled by the LSEG.

"This is deliberate action and a continuation of the strategy we have adopted throughout the year where we have accepted a lower near-term Braintree revenue profile in exchange for better margins," Miller said.

Third-quarter revenue jumped 6% to $7.85 billion but missed estimate of $7.89 billion. Still, PayPal raised 2024 profit forecast for the third time this year, benefiting from higher consumer spending in a sign of U.S. economic resilience.

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 compared with 98 cents a year ago.

At $79.25, the company's stock was set for its biggest intraday decline since February if losses hold through the session.

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"The results today were actually decent. Investors are just trying to take a measured approach," said Darrin Peller, an analyst at Wolfe Research.

In the run-up to the earnings report, PayPal's stock had surged 36% this year, outperforming the S&P 500 index, as the company pursues new partnerships and expands existing ones in the retail and payments sector.

It also introduced a "one-click" checkout feature, called Fastlane, in January.

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

PayPal's operating margins, on an adjusted basis, expanded 194 basis points to 18.8% in the third quarter. Investors have been keeping a close eye on the metric to assess the sustainability and health of PayPal's business.