2 unchanged sentences
CONDENSED CONSOLIDATED BALANCE SHEETS
+Added: September 30,
2022 December 31,
4 unchanged sentences
Accounts receivable, net 889 800
−Removed: Loans and interest receivable, net of allowances of $ 455 and $ 491 as of June 30, 2022 and December 31, 2021, respectively
+Added: Loans and interest receivable, net of allowances of $ 478 and $ 491 as of September 30, 2022 and December 31, 2021, respectively
Funds receivable and customer accounts 34,824 36,141
20 unchanged sentences
4,000 shares authorized;
−Removed: 1,156 and 1,168 shares outstanding as of June 30, 2022 and December 31, 2021, respectively
+Added: 1,147 and 1,168 shares outstanding as of September 30, 2022 and December 31, 2021, respectively
Preferred stock, $ 0.0001 par value;
100 shares authorized, unissued
−Removed: Treasury stock at cost, 151 and 132 shares as of June 30, 2022 and December 31, 2021, respectively
+Added: Treasury stock at cost, 161 and 132 shares as of September 30, 2022 and December 31, 2021, respectively
( 15,069 ) ( 11,880 )
7 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
13 unchanged sentences
Income before income taxes 1,578 1,165 2,256 3,393
−Removed: Income tax expense (benefit) 390 172 510 ( 53 )
+Added: Income tax expense 248 78 758 25
Net income (loss) $ 1,330 $ 1,087 $ 1,498 $ 3,368
8 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
42 unchanged sentences
Balances at June 30, 2022 1,156 $ ( 14,130 ) $ 17,758 $ ( 564 ) $ 16,703 $ 19,767
+Added: Net income — — — — 1,330 1,330
+Added: Foreign CTA — — — ( 206 ) — ( 206 )
+Added: Net investment hedge CTA gains, net — — — 97 — 97
+Added: Tax expense on net investment hedges CTA gains, net — — — ( 23 ) — ( 23 )
+Added: Unrealized gains on cash flow hedges, net — — — 138 — 138
+Added: Tax expense on unrealized gains on cash flow hedges, net — — — ( 7 ) — ( 7 )
+Added: Unrealized losses on investments, net — — — ( 157 ) — ( 157 )
+Added: Tax benefit on unrealized losses on investments, net — — — 41 — 41
+Added: Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 1 — ( 14 ) — — ( 14 )
+Added: Common stock repurchased ( 10 ) ( 939 ) — — — ( 939 )
+Added: Stock-based compensation — — 237 — — 237
+Added: Balances at September 30, 2022 1,147 $ ( 15,069 ) $ 17,981 $ ( 681 ) $ 18,033 $ 20,264
PayPal Holdings, Inc.
17 unchanged sentences
Foreign CTA — — — 31 — — 31
−Removed: Unrealized losses on cash flow hedges, net — — — 32 — — 32
−Removed: Unrealized gains on investments, net — — — ( 2 ) — — ( 2 )
+Added: Unrealized gains on cash flow hedges, net — — — 32 — — 32
+Added: Unrealized losses on investments, net — — — ( 2 ) — — ( 2 )
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 2 — 12 — — — 12
2 unchanged sentences
Balances at June 30, 2021 1,175 $ ( 10,030 ) $ 16,580 $ ( 292 ) $ 14,647 $ — $ 20,905
+Added: Net income — — — — 1,087 1,087
+Added: Foreign CTA — — — ( 29 ) — — ( 29 )
+Added: Unrealized gains on cash flow hedges, net — — — 204 — — 204
+Added: Tax expense on unrealized gains on cash flow hedges, net — — — ( 7 ) — — ( 7 )
+Added: Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes — — ( 37 ) — — — ( 37 )
+Added: Common stock repurchased ( 1 ) ( 350 ) — — — — ( 350 )
+Added: Stock-based compensation — — 317 — — — 317
+Added: Balances at September 30, 2021 1,174 $ ( 10,380 ) $ 16,860 $ ( 124 ) $ 15,734 $ — $ 22,090
The accompanying notes are an integral part of these condensed consolidated financial statements.
1 unchanged sentence
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(In millions)
32 unchanged sentences
Other financing activities 1 —
−Removed: Net cash provided by financing activities 750 630
+Added: Net cash used in financing activities ( 2,422 ) ( 186 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 253 ) ( 106 )
4 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued)
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(In millions)
36 unchanged sentences
In the first quarter of 2022, we terminated Paidy’s legacy debt structure and replaced it with a new credit agreement executed in February 2022.
−Removed: As a result, we no longer have any consolidated VIEs as of June 30, 2022.
+Added: As a result, we no longer have any consolidated VIEs as of September 30, 2022.
See “Note 12—Debt” for additional information.
−Removed: As of June 30, 2022 and December 31, 2021, the carrying value of our investments that are in nonconsolidated VIEs was $ 98 million and $ 74 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our condensed consolidated balance sheets.
−Removed: Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 231 million and $ 205 million as of June 30, 2022 and December 31, 2021, respectively.
+Added: As of September 30, 2022 and December 31, 2021, the carrying value of our investments in nonconsolidated VIEs was $ 116 million and $ 74 million, respectively, and is included in long-term investments on our condensed consolidated balance sheets as non-marketable equity securities applying the equity method of accounting.
+Added: Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 231 million and $ 205 million as of September 30, 2022 and December 31, 2021, respectively.
PayPal Holdings, Inc.
2 unchanged sentences
In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for all interim periods presented.
−Removed: Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three and six months ended June 30, 2022.
+Added: Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three and nine months ended September 30, 2022.
Use of estimates
3 unchanged sentences
We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances.
−Removed: These estimates may change as new events occur, and as additional information surrounding the continued impact of the novel coronavirus (“COVID-19”) pandemic becomes available.
−Removed: Actual results could differ from these estimates and any such differences may be material to our financial statements.
+Added: Actual results could differ materially from these estimates.
Recent accounting guidance
5 unchanged sentences
The amended guidance is effective for fiscal years beginning after December 15, 2022 and is required to be applied prospectively, except for the recognition and measurement of TDRs, which can be applied on a modified retrospective basis.
−Removed: We are evaluating the approach to, and impact of, adopting this new accounting guidance on our condensed consolidated financial statements.
+Added: We have concluded that our financial statements will not be materially impacted upon adoption.
+Added: We will adopt the guidance on January 1, 2023 on a prospective basis and expand certain disclosures as required.
In 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):
10 unchanged sentences
121 (“SAB 121”), which provides guidance for an entity to consider when it has obligations to safeguard customers’ crypto assets, whether directly or through an agent or another third party acting on its behalf.
−Removed: The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding safeguarding asset, regardless of its assessment as to who controls the crypto asset.
+Added: The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding safeguarding asset.
The crypto asset safeguarding liability and the corresponding safeguarding asset will be measured at the fair value of the crypto assets held for the platform users with the measurement of the safeguarding asset taking into account any potential loss events.
20 unchanged sentences
The following table presents our revenue disaggregated by primary geographical market and category:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
13 unchanged sentences
(1) No single country included in the other countries category generated more than 10% of total net revenues.
−Removed: (2) Total net revenues include $ 296 million and $ 62 million for the three months ended June 30, 2022 and 2021, respectively, and $ 483 million and $ 121 million for the six months ended June 30, 2022 and 2021, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .
+Added: (2) Total net revenues include $ 391 million and $ 168 million for the three months ended September 30, 2022 and 2021, respectively, and $ 874 million and $ 289 million for the nine months ended September 30, 2022 and 2021, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .
Such revenues relate to interest and fees earned on loans and interest receivable, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.
8 unchanged sentences
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
11 unchanged sentences
NOTE 4— BUSINESS COMBINATIONS
−Removed: There were no acquisitions accounted for as business combinations or divestitures completed in the three and six months ended June 30, 2022.
−Removed: In the three and six months ended June 30, 2021, we completed three acquisitions accounted for as business combinations, discussed further below.
+Added: There were no acquisitions accounted for as business combinations or divestitures completed in the three and nine months ended September 30, 2022.
ACQUISITIONS COMPLETED IN 2021
15 unchanged sentences
Total purchase price $ 2,571
−Removed: The intangible assets acquired consist primarily of merchant contracts, trade name/trademarks, and developed technology with estimated useful lives of three to seven years .
+Added: The intangible assets acquired consist primarily of merchant contracts, trade names/trademarks, and developed technology with estimated useful lives of three to seven years .
Contractual gross loans and interest receivable acquired were $ 216 million.
4 unchanged sentences
In connection with the acquisition, we issued restricted stock and restricted stock units with an approximate grant date fair value of $ 161 million, which represents post-business combination expense.
−Removed: The equity granted is a combination of shares issued to certain former Paidy employees subject to a holdback arrangement and assumed Paidy employee equity grants, which vest over a period of up to approximately four years and are subject to continued employment.
+Added: The equity granted is a combination of shares issued to certain former Paidy employees subject to a holdback arrangement and assumed Paidy employee equity grants, which vest over a period of up to approximately four years subject to continued employment.
PayPal Holdings, Inc.
10 unchanged sentences
NOTE 5— GOODWILL AND INTANGIBLE ASSETS
−Removed: The following table presents goodwill balances and adjustments to those balances during the six months ended June 30, 2022:
−Removed: 2021 Goodwill Acquired Adjustments June 30,
+Added: The following table presents goodwill balances and adjustments to those balances during the nine months ended September 30, 2022:
+Added: 2021 Goodwill Acquired Adjustments September 30,
(In millions)
Total goodwill $ 11,454 $ — $ ( 401 ) $ 11,053
−Removed: The adjustments to goodwill during the six months ended June 30, 2022 pertained primarily to foreign currency translation adjustments.
+Added: The adjustments to goodwill during the nine months ended September 30, 2022 pertained to foreign currency translation adjustments.
INTANGIBLE ASSETS
The components of identifiable intangible assets were as follows:
−Removed: June 30, 2022 December 31, 2021
−Removed: Gross Carrying Amount
−Removed: Accumulated Amortization
+Added: September 30, 2022 December 31, 2021
+Added: Gross Carrying Amount Accumulated Amortization
Net Carrying Amount Weighted Average Useful Life (Years) Gross Carrying Amount
8 unchanged sentences
Intangible assets, net $ 3,538 $ ( 2,683 ) $ 855 $ 3,694 $ ( 2,362 ) $ 1,332
−Removed: Amortization expense for intangible assets was $ 120 million and $ 110 million for the three months ended June 30, 2022 and 2021, respectively.
−Removed: Amortization expense for intangible assets was $ 238 million and $ 216 million for the six months ended June 30, 2022 and 2021, respectively.
+Added: Amortization expense for intangible assets was $ 118 million and $ 110 million for the three months ended September 30, 2022 and 2021, respectively.
+Added: Amortization expense for intangible assets was $ 356 million and $ 326 million for the nine months ended September 30, 2022 and 2021, respectively.
PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: Expected future intangible asset amortization as of June 30, 2022 was as follows (in millions):
+Added: Expected future intangible asset amortization as of September 30, 2022 was as follows (in millions):
Fiscal years:
1 unchanged sentence
Thereafter 105
−Removed: Total $ 1,001
NOTE 6— LEASES
1 unchanged sentence
We use these properties for executive and administrative offices, data centers, product development offices, customer services and operations centers, and warehouses.
−Removed: While a majority of our lease agreements do not contain an explicit interest rate, we have certain lease agreements that are subject to changes based on the Consumer Price Index or another referenced index.
+Added: While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject to changes based on the Consumer Price Index or another referenced index.
In the event of changes to the relevant index, lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.
The short-term lease exemption has been adopted for all leases with a duration of less than 12 months.
−Removed: PayPal’s lease portfolio contains a small number of subleases.
+Added: PayPal’s lease portfolio includes a small number of subleases.
A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements.
−Removed: As of June 30, 2022, we had no finance leases.
+Added: As of September 30, 2022, we had no finance leases.
The components of lease expense were as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
5 unchanged sentences
Supplemental cash flow information related to leases was as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
2 unchanged sentences
Operating cash flows from operating leases $ 44 $ 42 $ 127 $ 126
−Removed: Right-of-use (“ROU”) lease assets obtained in exchange for operating lease liabilities $ ( 4 ) $ 10 $ 69 $ 11
+Added: Right-of-use (“ROU”) lease assets obtained in exchange for new operating lease liabilities $ 5 $ 47 $ 99 $ 79
+Added: Other non-cash ROU lease asset activity $ ( 11 ) $ — $ ( 36 ) $ ( 21 )
PayPal Holdings, Inc.
1 unchanged sentence
Supplemental balance sheet information related to leases was as follows:
+Added: September 30,
2022 December 31,
7 unchanged sentences
Weighted-average discount rate — operating leases
−Removed: Future minimum lease payments for our operating leases as of June 30, 2022 were as follows:
+Added: Future minimum lease payments for our operating leases as of September 30, 2022 were as follows:
Operating Leases
7 unchanged sentences
The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases.
−Removed: In the three and six months ended June 30, 2022, we incurred asset impairment charges of $ 19 million and $ 35 million, respectively, within restructuring and other charges on our condensed consolidated statements of income (loss).
−Removed: The impairments included a reduction to our ROU lease assets in the amount of $ 15 million and $ 25 million, respectively, which were attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased.
−Removed: In the three and six months ended June 30, 2021, we incurred asset impairment charges of nil and $ 26 million, respectively, within restructuring and other charges on our condensed consolidated statements of income (loss).
−Removed: The impairments included a reduction to our ROU lease assets in the amount of nil and $ 21 million, respectively, which was attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased.
−Removed: As of June 30, 2022, we have an additional operating lease for real estate, which will commence in the third quarter of 2022 or later with minimum lease payments aggregating to $ 3 million and a lease term of eight years .
+Added: In the three and nine months ended September 30, 2022, we incurred asset impairment charges of $ 29 million and $ 64 million, respectively, within restructuring and other charges on our condensed consolidated statements of income (loss).
+Added: The impairments in three and nine months ended September 30, 2022 included a reduction to our ROU lease assets in the amount of $ 11 million and $ 36 million, respectively, which were attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased.
+Added: In the three and nine months ended September 30, 2021, we incurred asset impairment charges of nil and $ 26 million, respectively, within restructuring and other charges on our condensed consolidated statements of income (loss).
+Added: The impairments in the three and nine months ended September 30, 2021 included a reduction to our ROU lease assets in the amount of nil and $ 21 million, respectively, which was attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased.
+Added: As of September 30, 2022, we have an additional operating lease for real estate, which will commence in the fourth quarter of 2022 or later with minimum lease payments aggregating to $ 3 million and a lease term of eight years .
PayPal Holdings, Inc.
7 unchanged sentences
We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial account.
−Removed: Given we currently utilize one third-party custodian, there is concentration risk in the event the custodian is not able to perform in accordance with our agreement.
+Added: Given that we currently utilize one third-party custodian, there is concentration risk in the event the custodian is not able to perform in accordance with our agreement.
Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our customers, which is recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheet.
2 unchanged sentences
The corresponding safeguarding asset may be adjusted for loss events (e.g., uninsured losses), as applicable.
−Removed: The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of June 30, 2022 (in millions):
+Added: As of September 30, 2022, the Company has not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.
+Added: The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of September 30, 2022 (in millions):
Bitcoin $ 343
2 unchanged sentences
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
−Removed: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2022:
+Added: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended September 30, 2022:
Unrealized Gains on Cash Flow Hedges Unrealized Losses on Investments
2 unchanged sentences
Net Investment Hedges CTA Gains
−Removed: Estimated Tax (Expense) Benefit Total
+Added: Estimated Tax Benefit Total
(In millions)
6 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2021:
+Added: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended September 30, 2021:
Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Losses on Investments
−Removed: Net Investment Hedges CTA Gain
−Removed: Estimated Tax Benefit Total
+Added: Net Investment Hedges CTA Gains
+Added: Estimated Tax (Expense) Benefit Total
(In millions)
4 unchanged sentences
Ending balance $ 111 $ ( 6 ) $ ( 249 ) $ 24 $ ( 4 ) $ ( 124 )
−Removed: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2022:
+Added: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2022:
Unrealized Gains on Cash Flow Hedges Unrealized Losses on Investments
7 unchanged sentences
Ending balance $ 547 $ ( 701 ) $ ( 871 ) $ 277 $ 67 $ ( 681 )
−Removed: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2021:
+Added: The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2021:
Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Investments
−Removed: Net Investment Hedges CTA Gain
−Removed: Estimated Tax Expense Total
+Added: Net Investment Hedges CTA Gains
+Added: Estimated Tax (Expense) Benefit Total
(In millions)
9 unchanged sentences
Affected Line Item in the Statement of Income (Loss)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
4 unchanged sentences
156 ( 44 ) 310 ( 192 ) Income before income taxes
−Removed: — — — — Income tax expense (benefit)
+Added: — — — — Income tax expense
Total reclassifications for the period $ 156 $ ( 44 ) $ 310 $ ( 192 ) Net income (loss)
1 unchanged sentence
The following table reconciles the components of other income (expense), net for the periods presented below:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
8 unchanged sentences
NOTE 8— FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS
−Removed: The following table summarizes the assets underlying our funds receivable and customer accounts, short-term investments, and long-term investments as of June 30, 2022 and December 31, 2021:
+Added: The following table summarizes the assets underlying our funds receivable and customer accounts, short-term investments, and long-term investments as of September 30, 2022 and December 31, 2021:
+Added: September 30,
2022 December 31,
16 unchanged sentences
Total long-term investments $ 5,215 $ 6,797
−Removed: As of June 30, 2022 and December 31, 2021, the estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments was as follows:
−Removed: June 30, 2022 (1)
+Added: As of September 30, 2022 and December 31, 2021, the estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments was as follows:
+Added: September 30, 2022 (1)
Losses Estimated
34 unchanged sentences
Municipal securities 535 — — 535
−Removed: Commercial paper 1,607 — — 1,607
Short-term investments:
3 unchanged sentences
Asset-backed securities 278 — ( 1 ) 277
−Removed: Commercial paper 1,644 — — 1,644
Long-term investments:
10 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 50 million and $ 36 million at June 30, 2022 and December 31, 2021, respectively, and were included in other current assets on our condensed consolidated balance sheets.
−Removed: As of June 30, 2022 and December 31, 2021, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:
−Removed: June 30, 2022 (1)
+Added: Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 61 million and $ 36 million at September 30, 2022 and December 31, 2021, respectively, and were included in other current assets on our condensed consolidated balance sheets.
+Added: As of September 30, 2022 and December 31, 2021, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:
+Added: September 30, 2022 (1)
Less than 12 months 12 months or longer Total
37 unchanged sentences
Municipal securities 50 — — — 50 —
−Removed: Commercial paper 75 — — — 75 —
Short-term investments:
13 unchanged sentences
We will continue to monitor the performance of the investment portfolio and assess whether impairment due to expected credit losses has occurred.
−Removed: Amounts reclassified to earnings from unrealized gains and losses were not material for the three and six months ended June 30, 2022 and 2021.
+Added: Amounts reclassified to earnings from unrealized gains and losses were not material for the three and nine months ended September 30, 2022 and 2021.
Our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows:
−Removed: June 30, 2022
+Added: September 30, 2022
Amortized Cost Fair Value
8 unchanged sentences
Our marketable equity securities have readily determinable fair values and are recorded as long-term investments on our condensed consolidated balance sheets at fair value with changes in fair value recorded in other income (expense), net on our condensed consolidated statements of income (loss).
−Removed: Marketable equity securities totaled $ 926 million and $ 1.9 billion as of June 30, 2022 and December 31, 2021, respectively.
+Added: Marketable equity securities totaled $ 361 million and $ 1.9 billion as of September 30, 2022 and December 31, 2021, respectively, including the impact of the sale of marketable equity securities during the three months ended September 30, 2022.
PayPal Holdings, Inc.
1 unchanged sentence
Our non-marketable equity securities are recorded in long-term investments on our condensed consolidated balance sheets.
−Removed: As of June 30, 2022 and December 31, 2021, we had non-marketable equity securities of $ 104 million and $ 79 million, respectively, where we have the ability to exercise significant influence, but not control, over the investee.
+Added: As of September 30, 2022 and December 31, 2021, we had non-marketable equity securities of $ 122 million and $ 79 million, respectively, where we have the ability to exercise significant influence, but not control, over the investee.
We account for these equity securities using the equity method of accounting.
1 unchanged sentence
All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our condensed consolidated statements of income (loss).
−Removed: The carrying value of our non-marketable equity securities totaled $ 1.7 billion and $ 1.3 billion as of June 30, 2022 and December 31, 2021, respectively.
+Added: The carrying value of our non-marketable equity securities totaled $ 1.9 billion and $ 1.3 billion as of September 30, 2022 and December 31, 2021, respectively.
Measurement Alternative adjustments
−Removed: The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three and six months ended June 30, 2022 and 2021 were as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three and nine months ended September 30, 2022 and 2021 were as follows:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
6 unchanged sentences
(1) Net additions include purchases, reductions due to sales of securities, and reclassifications when Measurement Alternative is subsequently elected or no longer applies.
−Removed: The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative, held at June 30, 2022 and December 31, 2021, respectively:
−Removed: June 30, 2022 December 31, 2021
+Added: The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative, held at September 30, 2022 and December 31, 2021, respectively:
+Added: September 30,
+Added: 2022 December 31,
(In millions)
2 unchanged sentences
Unrealized gains (losses) on strategic investments, excluding those accounted for using the equity method
−Removed: The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at June 30, 2022 and 2021, respectively:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at September 30, 2022 and 2021, respectively:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
5 unchanged sentences
FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS
−Removed: The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021:
−Removed: June 30, 2022 Quoted Prices in
+Added: The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:
+Added: September 30, 2022 Quoted Prices in
Active Markets for
53 unchanged sentences
Asset-backed securities 277 — 277
−Removed: Commercial paper 1,644 — 1,644
Total short-term investments 3,604 — 3,604
6 unchanged sentences
Municipal securities 535 — 535
−Removed: Commercial paper 1,672 — 1,672
Total funds receivable and customer accounts 18,958 — 18,958
14 unchanged sentences
Our marketable equity securities are valued using quoted prices for identical assets in active markets (Level 1).
−Removed: There are no active markets for our crypto asset safeguarding liability and the corresponding safeguarding asset.
+Added: There are no active markets for our crypto asset safeguarding liability or the corresponding safeguarding asset.
Accordingly, we have valued the asset and liability using quoted prices on the active exchange that has been identified as the principal market for the underlying crypto assets (Level 2).
All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2).
−Removed: PayPal Holdings, Inc.
−Removed: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
A majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices.
1 unchanged sentence
Certain foreign currency contracts designated as cash flow hedges may have a duration of up to 18 months.
−Removed: As of June 30, 2022 and December 31, 2021, we did not have any assets or liabilities requiring measurement at fair value without observable market values that would require a high level of judgment to determine fair value (Level 3).
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
+Added: As of September 30, 2022 and December 31, 2021, we did not have any assets or liabilities requiring measurement at fair value without observable market values that would require a high level of judgment to determine fair value (Level 3).
We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries under the fair value option.
Election of the fair value option allows us to recognize any gains and losses from fair value changes on such investments in other income (expense), net on the condensed consolidated statements of income (loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding foreign exchange gains and losses relating to customer liabilities.
−Removed: The following table summarizes the estimated fair value of our available-for-sale debt securities under the fair value option as of June 30, 2022 and December 31, 2021:
+Added: The following table summarizes the estimated fair value of our available-for-sale debt securities under the fair value option as of September 30, 2022 and December 31, 2021:
+Added: September 30,
2022 December 31,
2 unchanged sentences
Short-term investments $ — $ 13
−Removed: The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the three and six months ended June 30, 2022 and 2021:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the three and nine months ended September 30, 2022 and 2021:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
3 unchanged sentences
ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS
−Removed: The following tables summarize our assets held as of June 30, 2022 and December 31, 2021 for which a non-recurring fair value measurement was recorded during the six months ended June 30, 2022 and the year ended December 31, 2021, respectively:
+Added: The following tables summarize our assets held as of September 30, 2022 and December 31, 2021 for which a non-recurring fair value measurement was recorded during the nine months ended September 30, 2022 and the year ended December 31, 2021, respectively:
+Added: September 30,
2022 Significant Other
2 unchanged sentences
Non-marketable equity investments measured using the Measurement Alternative (1)
+Added: $ 1,054 $ 1,054
Other assets (2)
Total $ 1,182 $ 1,182
−Removed: (1) Excludes non-marketable equity investments of $ 846 million accounted for under the Measurement Alternative for which no observable price changes occurred during the six months ended June 30, 2022.
−Removed: (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the six months ended June 30, 2022.
+Added: (1) Excludes non-marketable equity investments of $ 711 million accounted for under the Measurement Alternative for which no observable price changes occurred during the nine months ended September 30, 2022.
+Added: (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the nine months ended September 30, 2022.
See “Note 6—Leases” for additional information.
−Removed: PayPal Holdings, Inc.
−Removed: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2021 Significant Other
7 unchanged sentences
See “Note 6—Leases” for additional information.
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
We measure the non-marketable equity investments accounted for under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer.
1 unchanged sentence
FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE
−Removed: Our financial instruments, including cash, restricted cash, time deposits, loans and interest receivable, net, certain customer accounts, notes receivable, and long-term debt related to borrowings on our credit facilities, are carried at amortized cost, which approximates their fair value.
−Removed: Our long-term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 10.3 billion and fair value of approximately $ 9.7 billion as of June 30, 2022.
+Added: Our financial instruments, including cash, restricted cash, time deposits, loans and interest receivable, net, certain customer accounts, and long-term debt related to borrowings on our credit facilities, are carried at amortized cost, which approximates their fair value.
+Added: Our notes receivable had a carrying value of approximately $ 404 million and fair value of approximately $ 337 million as of September 30, 2022.
+Added: Our notes receivable had a carrying value of approximately $ 381 million and fair value of approximately $ 424 million as of December 31, 2021.
+Added: Our long-term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 10.3 billion and fair value of approximately $ 9.2 billion as of September 30, 2022.
Our fixed rate notes had a carrying value of approximately $ 9.0 billion and fair value of approximately $ 9.3 billion as of December 31, 2021.
23 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: As of June 30, 2022, we estimated that $ 372 million of net derivative gains related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.
−Removed: During the three and six months ended June 30, 2022 and 2021, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.
+Added: As of September 30, 2022, we estimated that $ 504 million of net derivative gains related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.
+Added: During the three and nine months ended September 30, 2022 and 2021, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.
If we elect to discontinue our cash flow hedges and it is probable that the original forecasted transaction will occur, we continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects earnings, at which point we also reclassify it into earnings.
3 unchanged sentences
These derivatives are designated as net investment hedges and accordingly, the gain and loss on the portion of the derivative included in the assessment of hedge effectiveness is recorded in AOCI as part of foreign currency translation.
−Removed: We exclude the forward points from the assessment of hedge effectiveness and recognize them in other income (expense), net on a straight-line basis over the life of the hedge.
+Added: We exclude forward points from the assessment of hedge effectiveness and recognize them in other income (expense), net on a straight-line basis over the life of the hedge.
The accumulated gains and losses associated with these instruments will remain in AOCI until the foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings.
−Removed: The cash flow associated with derivatives designated as a net investment hedge are classified in cash flows from investing activities on our condensed consolidated statements of cash flows.
+Added: The cash flows associated with derivatives designated as a net investment hedge are classified in cash flows from investing activities on our condensed consolidated statements of cash flows.
We have no t reclassified any gains or losses related to the net investment hedges from AOCI into earnings during any of the periods presented.
7 unchanged sentences
FAIR VALUE OF DERIVATIVE CONTRACTS
−Removed: The fair value of our outstanding derivative instruments as of June 30, 2022 and December 31, 2021 was as follows:
−Removed: Balance Sheet Location June 30,
+Added: The fair value of our outstanding derivative instruments as of September 30, 2022 and December 31, 2021 was as follows:
+Added: Balance Sheet Location September 30,
2022 December 31,
7 unchanged sentences
Foreign currency exchange contracts designated as hedging instruments Other current liabilities $ 39 $ 27
−Removed: Foreign currency exchange contracts designated as hedging instruments Other long-term liabilities 1 —
Foreign currency exchange contracts not designated as hedging instruments Other current liabilities 148 103
3 unchanged sentences
However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheets.
−Removed: Rights of set-off associated with our foreign currency exchange contracts represented a potential offset to both assets and liabilities of $ 80 million as of June 30, 2022 and $ 102 million as of December 31, 2021.
+Added: Rights of set-off associated with our foreign currency exchange contracts represented a potential offset to both assets and liabilities of $ 74 million as of September 30, 2022 and $ 102 million as of December 31, 2021.
We have entered into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds.
The following table provides the collateral posted and received:
+Added: September 30,
2022 December 31,
8 unchanged sentences
The following table provides the location in the condensed consolidated statements of income (loss) and amount of recognized gains or losses related to our derivative instruments:
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
(In millions)
6 unchanged sentences
Gains (losses) on derivatives not designated as hedging instruments:
−Removed: Amount of gains (losses) on foreign currency exchange contracts — 147 — ( 43 )
+Added: Amount of gains on foreign currency exchange contracts — 52 — 111
+Added: Amount of losses on equity derivative contracts (1)
+Added: — ( 174 ) — —
Total gains (losses) $ 156 $ ( 95 ) $ ( 44 ) $ 111
−Removed: Six Months Ended June 30,
+Added: (1) During the three months ended September 30, 2022, equity derivative contracts were entered into and matured which related to the sale of marketable equity securities related to a strategic investment.
+Added: Nine Months Ended September 30,
(In millions)
6 unchanged sentences
Gains (losses) on derivatives not designated as hedging instruments:
−Removed: Amount of gains (losses) on foreign exchange contracts — 108 — ( 2 )
+Added: Amount of gains on foreign exchange contracts — 160 — 109
+Added: Amount of losses on equity derivative contracts (1)
+Added: — ( 174 ) — —
Total gains (losses) $ 310 $ 39 $ ( 192 ) $ 109
+Added: (1) During the nine months ended September 30, 2022, equity derivative contracts were entered into and matured which related to the sale of marketable equity securities related to a strategic investment.
+Added: The cash flows associated with the equity derivative contracts were classified in cash flows from investing activities on our condensed consolidated statements of cash flows.
PayPal Holdings, Inc.
1 unchanged sentence
The following table provides the amount of pre-tax unrealized gains or losses included in the assessment of hedge effectiveness related to our derivative instruments designated as hedging instruments that are recognized in other comprehensive income (loss):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
−Removed: Unrealized gains (losses) on foreign exchange contracts designated as cash flow hedges $ 320 $ ( 57 ) $ 364 $ 82
+Added: Unrealized gains on foreign exchange contracts designated as cash flow hedges $ 294 $ 160 $ 658 $ 242
Unrealized gains on foreign exchange contracts designated as net investment hedges 97 — 253 —
−Removed: Total unrealized gains (losses) recognized from derivative contracts designated as hedging instruments in the condensed consolidated statements of comprehensive income (loss) $ 455 $ ( 57 ) $ 520 $ 82
+Added: Total unrealized gains recognized from derivative contracts designated as hedging instruments in the condensed consolidated statements of comprehensive income (loss) $ 391 $ 160 $ 911 $ 242
NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS
3 unchanged sentences
The following table provides the notional amounts of our outstanding derivatives:
+Added: September 30,
2022 December 31,
10 unchanged sentences
The majority of the installment loans allow consumers to pay for purchases over periods of 12 months or less.
−Removed: As of June 30, 2022 and December 31, 2021, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 4.5 billion and $ 3.8 billion, respectively.
+Added: Beginning in June 2022, we purchase receivables related to long-term installment loans extended to U.S.
+Added: consumers by an independent chartered financial institution and are responsible for servicing functions related to that portfolio.
+Added: During the nine months ended September 30, 2022, we purchased approximately $ 106 million in credit receivables.
+Added: As of September 30, 2022 and December 31, 2021, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 4.4 billion and $ 3.8 billion, respectively, net of the participation interest sold to the independent chartered financial institution of $ 5 million and nil , respectively.
We closely monitor the credit quality of our consumer receivables to evaluate and manage our related exposure to credit risk.
1 unchanged sentence
To assess a consumer who requests a loan, we use, among other indicators, internally developed risk models using detailed information from external sources, such as credit bureaus where available, and internal data, including the consumer’s prior repayment history with our credit products where available.
−Removed: We use delinquency status and trends to assist in making new and ongoing credit decisions, to adjust our models, to plan our collection practices and strategies, and in determining our allowance for consumer loans and interest receivable.
+Added: We use delinquency status and trends to assist in making (or, for long-term installment loans in the U.S., to assist the independent chartered financial institution in making) new and ongoing credit decisions, to adjust our models, to plan our collection practices and strategies, and in determining our allowance for consumer loans and interest receivable.
PayPal Holdings, Inc.
3 unchanged sentences
The “current” category represents balances that are within 29 days of the billing date or contractual repayment date, as applicable.
−Removed: June 30, 2022
+Added: September 30, 2022
(In millions, except percentages)
7 unchanged sentences
$ 1,641 $ 2,625 $ 178 $ — $ — $ — $ 4,444 100 %
−Removed: (1) Excludes receivables from other consumer credit products of $ 36 million at June 30, 2022.
+Added: (1) Excludes receivables from other consumer credit products of $ 30 million at September 30, 2022.
December 31, 2021
9 unchanged sentences
(1) Excludes receivables from other consumer credit products of $ 44 million at December 31, 2021.
−Removed: The following table summarizes the activity in the allowance for consumer loans and interest receivable for the six months ended June 30, 2022 and 2021:
−Removed: June 30, 2022 June 30, 2021
+Added: The following table summarizes the activity in the allowance for consumer loans and interest receivable for the nine months ended September 30, 2022 and 2021:
+Added: September 30, 2022 September 30, 2021
Consumer Loans Receivable Interest Receivable Total Allowance (1)
7 unchanged sentences
Ending balance $ 265 $ 24 $ 289 $ 194 $ 40 $ 234
−Removed: (1) Excludes allowances from other consumer credit products of $ 3 million and $ 4 million at June 30, 2022 and 2021, respectively.
+Added: (1) Excludes allowances from other consumer credit products of $ 2 million and $ 3 million at September 30, 2022 and 2021, respectively.
(2) Includes amounts related to foreign currency remeasurement.
−Removed: The provision for the six months ended June 30, 2022 was primarily attributable to originations in the consumer receivable portfolio.
−Removed: Qualitative adjustments were made to account for limitations in our current expected credit loss models due to uncertainty with respect to macroeconomic conditions and around the financial health of our borrowers.
+Added: The provision for the nine months ended September 30, 2022 was primarily attributable to originations in the consumer receivable portfolio.
+Added: Qualitative adjustments were made to account for limitations in our current expected credit loss models due to uncertainty with respect to macroeconomic conditions and the financial health of our borrowers.
PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: The increase in charge-offs for the six months ended June 30, 2022 compared to the same period in the prior year was due to growth in the consumer portfolio driven primarily by the expansion of our short-term installment products.
+Added: The increase in charge-offs for the nine months ended September 30, 2022 compared to the same period in the prior year was due to the expansion of our short-term installment products.
The provision for current expected credit losses relating to our consumer receivable portfolio is recognized in transaction and credit losses on our condensed consolidated statements of income (loss).
8 unchanged sentences
merchants by WebBank and are responsible for servicing functions related to that portfolio.
−Removed: During the six months ended June 30, 2022 and 2021, we purchased approximately $ 1.4 billion and $ 780 million in credit receivables, respectively.
−Removed: As of June 30, 2022 and December 31, 2021, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 1.7 billion and $ 1.4 billion, respectively, net of the participation interest sold to WebBank of $ 76 million and $ 63 million, respectively.
+Added: During the nine months ended September 30, 2022 and 2021, we purchased approximately $ 2.3 billion and $ 1.3 billion in credit receivables, respectively.
+Added: As of September 30, 2022 and December 31, 2021, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 2.0 billion and $ 1.4 billion, respectively, net of the participation interest sold to WebBank of $ 91 million and $ 63 million, respectively.
Through our PPWC product, merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant.
17 unchanged sentences
Merchant receivables delinquency and allowance
−Removed: The following tables present the delinquency status of the merchant loans, advances, and interest and fees receivable by year of origination.
+Added: The following tables present the delinquency status of merchant loans, advances, and interest and fees receivable by year of origination.
The amounts are based on the number of days past the expected or contractual repayment date for amounts outstanding.
The “current” category represents balances that are within 29 days of the expected repayment date or contractual repayment date, as applicable.
−Removed: June 30, 2022
+Added: September 30, 2022
(In millions, except percentages)
15 unchanged sentences
$ 1,144 $ 164 $ 132 $ 6 $ — $ 1,446 100 %
−Removed: (1) Balances include the impact of modification programs offered by the Company as a part of our COVID-19 payment relief initiatives (as discussed further below).
−Removed: The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable for the six months ended June 30, 2022 and 2021:
−Removed: June 30, 2022 June 30, 2021
+Added: (1) Balances include the impact of modification programs offered by the Company as a part of our novel coronavirus (“COVID-19”) pandemic payment relief initiatives (as discussed further below).
+Added: The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable for the nine months ended September 30, 2022 and 2021:
+Added: September 30, 2022 September 30, 2021
Merchant Loans and Advances Interest and Fees Receivable Total Allowance Merchant Loans and Advances Interest and Fees Receivable Total Allowance
5 unchanged sentences
Ending balance $ 175 $ 12 $ 187 $ 239 $ 13 $ 252
−Removed: The provision for the six months ended June 30, 2022 was primarily attributable to originations in the merchant portfolio mostly offset by improvements in the credit quality of our merchant portfolio.
+Added: The provision for the nine months ended September 30, 2022 was primarily attributable to originations in the merchant portfolio.
Qualitative adjustments were made to account for historical loss rates and uncertainty around the effectiveness of loan modification programs made available to merchants, as described further below.
−Removed: The decrease in the charge-offs for the six months ended June 30, 2022 compared to the same period in the prior year was due to the charge-off of accounts that experienced financial difficulties as a result of the COVID-19 pandemic in the prior period and improved credit quality of our merchant loan portfolio due to modifications in the acceptable risk parameters, which included stricter eligibility requirements.
+Added: The decrease in the charge-offs for the nine months ended September 30, 2022 compared to the same period in the prior year was due to the charge-off of accounts that experienced financial difficulties as a result of the COVID-19 pandemic in the prior period and improved credit quality of our merchant loan portfolio due to modifications in the acceptable risk parameters, which included stricter eligibility requirements.
PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
+Added: In the third quarter of 2022, our expected credit loss models for the merchant receivables were updated.
+Added: The expected credit loss models utilize certain macroeconomic factors such as forecasted trends in unemployment and retail sales, and no longer consider benchmark credit card charge-off rates.
+Added: These changes did not have a material impact on our provision recorded in the period.
For merchant loans and advances, the determination of delinquency is based on the current expected or contractual repayment period of the loan or advance and fixed interest or fee payment as compared to the original expected or contractual repayment period.
5 unchanged sentences
Troubled debt restructurings
−Removed: In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a modification of the loan or advance and the related interest or fee receivable for which it is probable that, without modification, we will be unable to collect all amounts due.
+Added: In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a modification of the loan or advance and the related interest or fee receivable for which it is probable that, without modification, we would be unable to collect all amounts due.
These modifications are intended to provide merchants with financial relief, and help enable us to mitigate losses.
2 unchanged sentences
Alternatively, certain loans and advances have been modified to replace the initial fixed fee structure at the time the loan or advance was extended with a fixed annual percentage rate applied over the amended remaining term, which will continue to accrue interest at the fixed rate until the earlier of maturity or charge-off.
−Removed: These modifications had a de minimis impact on our condensed consolidated statements of income (loss) in the six months ended June 30, 2022 and 2021.
+Added: These modifications had a de minimis impact on our condensed consolidated statements of income (loss) in the nine months ended September 30, 2022 and 2021.
Allowances for TDRs are assessed separately from other loans and advances within our portfolio and are determined by estimating current expected credit losses utilizing the modified term and interest rate assumptions.
1 unchanged sentence
Further, we may include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses.
−Removed: During the three and six months ended June 30, 2022, the merchant loans, advances and interest and fees receivables which have been modified as TDRs were de minimis.
−Removed: The following table shows the merchant loans, advances and interest and fees receivables which were modified as TDRs in the three and six months ended June 30, 2021:
−Removed: Three Months Ended June 30, 2021
+Added: During the three and nine months ended September 30, 2022, merchant loans, advances, and interest and fees receivables which have been modified as TDRs were de minimis.
+Added: The following table shows merchant loans, advances and interest and fees receivables which were modified as TDRs in the three and nine months ended September 30, 2021:
+Added: Three Months Ended September 30, 2021
Number of Accounts
−Removed: (in thousands) Outstanding Balances (1)
+Added: (in thousands) (1)
+Added: Outstanding Balances (2)
(in millions)
1 unchanged sentence
Loans and interest receivable — $ 4 34
−Removed: Six Months Ended June 30, 2021
+Added: (1) “—” Denotes less than five hundred accounts.
+Added: (2) Balances are as of modification date.
+Added: Nine Months Ended September 30, 2021
Number of Accounts
4 unchanged sentences
(1) Balances are as of modification date.
−Removed: A merchant is considered in payment default after a modification when the merchant’s payment becomes 60 days past their expected or contractual repayment date.
−Removed: For loans or advances that have defaulted after being modified, the increased estimate of current expected credit loss is factored into overall expected credit losses.
−Removed: In the three and six months ended June 30, 2022 and 2021, the amount of merchant loans, advances and interest and fees receivables classified as TDRs that have subsequently defaulted on payments was de minimis.
PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
+Added: A merchant is considered in payment default after a modification when the merchant’s payment becomes 60 days past their expected or contractual repayment date.
+Added: For loans or advances that have defaulted after being modified, the increased estimate of current expected credit loss is factored into overall expected credit losses.
+Added: In the three and nine months ended September 30, 2022 and 2021, the amount of merchant loans, advances, and interest and fees receivables classified as TDRs that have subsequently defaulted on payments was de minimis.
NOTE 12— DEBT
FIXED RATE NOTES
−Removed: On May 23, 2022, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 3.0 billion.
+Added: In May 2022, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 3.0 billion.
Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2022.
3 unchanged sentences
Proceeds from the issuance of these notes may be used for general corporate purposes, which may include funding the repayment or redemption of outstanding debt, share repurchases, ongoing operations, capital expenditures, and possible acquisitions of businesses or assets or strategic investments.
−Removed: On May 18, 2020 and September 26, 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 4.0 billion and $ 5.0 billion, respectively.
+Added: In May 2020 and September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 4.0 billion and $ 5.0 billion, respectively.
The notes issued from the May 2022, May 2020, and September 2019 debt issuances are senior unsecured obligations and are collectively referred to as the “Notes.”
4 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: As of June 30, 2022 and December 31, 2021, we had an outstanding aggregate principal amount of $ 10.4 billion and $ 9.0 billion, respectively, related to the Notes.
+Added: As of September 30, 2022 and December 31, 2021, we had an outstanding aggregate principal amount of $ 10.4 billion and $ 9.0 billion, respectively, related to the Notes.
The following table summarizes the Notes:
−Removed: Maturities Effective Interest Rate June 30,
+Added: Maturities Effective Interest Rate September 30,
2022 December 31,
34 unchanged sentences
The effective interest rates for the Notes include interest on the Notes, amortization of debt issuance costs, and amortization of the debt discount.
−Removed: The interest expense recorded for the Notes, including amortization of the debt discount, debt issuance costs, and debt extinguishment net gains, was $ 67 million and $ 123 million for the three and six months ended June 30, 2022, respectively.
−Removed: The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 56 million and $ 112 million for the three and six months ended June 30, 2021, respectively.
+Added: The interest expense recorded for the Notes, including amortization of the debt discount, debt issuance costs, and debt extinguishment net gains, was $ 83 million and $ 206 million for the three and nine months ended September 30, 2022, respectively.
+Added: The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 56 million and $ 168 million for the three and nine months ended September 30, 2021, respectively.
CREDIT FACILITIES
Paidy credit agreement
−Removed: In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provides for an unsecured revolving credit facility of ¥ 60.0 billion (approximately $ 439 million as of June 30, 2022).
−Removed: Borrowings under the Paidy Credit Agreement are for use by Paidy for working capital, capital expenditures, and other permitted purposes.
+Added: In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provides for an unsecured revolving credit facility of ¥ 60.0 billion.
+Added: In September 2022, the Paidy Credit Agreement was modified to increase the borrowing capacity by ¥ 30.0 billion for a total borrowing capacity of ¥ 90.0 billion (approximately $ 623 million as of September 30, 2022.) Borrowings under the Paidy Credit Agreement are for use by Paidy for working capital, capital expenditures, and other permitted purposes.
Loans under the Paidy Credit Agreement bear interest at the Tokyo Interbank Offered Rate plus a margin (based on our public debt rating) ranging from 0.40 % to 0.60 %.
5 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: In the six months ended June 30, 2022, ¥ 37.8 billion (approximately $ 277 million) was drawn down under the Paidy Credit Agreement, which was recorded in long-term debt on our condensed consolidated balance sheet.
−Removed: Accordingly, at June 30, 2022, ¥ 22.2 billion (approximately $ 162 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions to borrowing.
−Removed: During the three and six months ended June 30, 2022, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.
+Added: In the nine months ended September 30, 2022, ¥ 45.8 billion (approximately $ 317 million) was drawn down under the Paidy Credit Agreement, which was recorded in long-term debt on our condensed consolidated balance sheet.
+Added: Accordingly, at September 30, 2022, ¥ 44.2 billion (approximately $ 306 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions to borrowing.
+Added: During the three and nine months ended September 30, 2022, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.
Prior credit agreement
3 unchanged sentences
In the first quarter of 2022, we terminated the Prior Credit Agreement and repaid all outstanding borrowings.
−Removed: The total interest expense and fees we recorded related to the Prior Credit Agreement were de minimis for the six months ended June 30, 2022.
+Added: The total interest expense and fees we recorded related to the Prior Credit Agreement were de minimis for the nine months ended September 30, 2022.
FUTURE PRINCIPAL PAYMENTS
−Removed: As of June 30, 2022, the future principal payments associated with our term debt were as follows (in millions):
+Added: As of September 30, 2022, the future principal payments associated with our term debt were as follows (in millions):
Remaining 2022 $ —
2 unchanged sentences
Other than as provided above, there were no significant changes to the information disclosed in our 2021 Form 10-K.
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 13— COMMITMENTS AND CONTINGENCIES
−Removed: As of June 30, 2022 and December 31, 2021, approximately $ 4.3 billion and $ 4.1 billion, respectively, of unused credit was available to PayPal Credit account holders in the U.K.
+Added: As of both September 30, 2022 and December 31, 2021, approximately $ 4.1 billion of unused credit was available to PayPal Credit account holders in the U.K.
While this amount represents the total unused credit available, we have not experienced, and do not anticipate, that all of our PayPal Credit account holders will access their entire available credit at any given point in time.
In addition, the individual lines of credit that make up this unused credit are subject to periodic review and termination based on, among other things, account usage and customer creditworthiness.
−Removed: PayPal Holdings, Inc.
−Removed: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
LITIGATION AND REGULATORY MATTERS
8 unchanged sentences
With respect to the matters disclosed in this Note 13, we are unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.
−Removed: Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material as of June 30, 2022.
+Added: Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material as of September 30, 2022.
Except as otherwise noted for the proceedings described in this Note 13, we have concluded, based on currently available information, that reasonably possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals are also not material.
9 unchanged sentences
Such self-reported transactions could result in claims or actions against us, including litigation, injunctions, damage awards, fines or penalties, or require us to change our business practices in a manner that could result in a material loss, require significant management time, result in the diversion of significant operational resources, or otherwise harm our business.
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
PayPal Australia Pty Limited (“PPAU”) self-reported a potential violation to the Australian Transaction Reports and Analysis Centre (“AUSTRAC”) on May 22, 2019.
6 unchanged sentences
PPAU is continuing to cooperate with AUSTRAC in all respects, including remediation activities, ongoing regular engagement with AUSTRAC, and responding to notices and requests for information and documents.
−Removed: PayPal Holdings, Inc.
−Removed: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
We cannot estimate the potential impact, if any, on our business or financial statements at this time.
12 unchanged sentences
We are cooperating with the FTC in connection with this CID.
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Legal proceedings
2 unchanged sentences
21-cv-06468, was filed in the U.S.
−Removed: District Court for the Northern District of California (the “Securities Action”).
−Removed: The Securities Action asserts claims relating to our disclosure of the CFPB PayPal Credit Matter and the SEC Debit Card Program Matter in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021.
−Removed: The Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 9, 2017 and July 28, 2021 (the “Class Period”), and asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its Chief Executive Officer, and former Chief Financial Officer.
+Added: District Court for the Northern District of California (the “Kang Securities Action”).
+Added: The Kang Securities Action asserts claims relating to our disclosure of the CFPB PayPal Credit Matter and the SEC Debit Card Program Matter in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021.
+Added: The Kang Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 9, 2017 and July 28, 2021 (the “Class Period”), and asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its Chief Executive Officer, and former Chief Financial Officer.
The complaint alleges that certain public statements made by the Company during the Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at artificially inflated prices) by the defendants’ failure to disclose that, among other things, PayPal’s business practices with respect to PayPal Credit and regarding interchange rates paid to its bank partner related to its bank-issued co-branded debit cards were non-compliant with applicable laws and/or regulations.
−Removed: The Securities Action seeks unspecified compensatory damages on behalf of the putative class members.
+Added: The Kang Securities Action seeks unspecified compensatory damages on behalf of the putative class members.
On November 2, 2021, the court appointed a Lead Plaintiff, and on January 25, 2022, the Lead Plaintiff filed an amended complaint.
1 unchanged sentence
The amended complaint alleges that various statements made by the defendants during the Amended Class Period were rendered materially false and misleading, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by PayPal’s alleged violations of the 2015 consent order with the CFPB, federal consumer financial laws, and Regulation II.
−Removed: Defendants’ motion to dismiss the amended complaint was filed on April 18, 2022.
−Removed: The motion is fully briefed and the hearing on the motion is scheduled for August 5, 2022.
−Removed: PayPal Holdings, Inc.
−Removed: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
+Added: On August 8, 2022, the court granted Defendants’ motion to dismiss the amended complaint in its entirety, and granted Lead Plaintiff’s request for leave to file a further amended complaint.
+Added: On September 16, 2022, Lead Plaintiff filed a Second Amended Complaint (the “SAC”), which asserts the same claims against the same Defendants based on the same alleged conduct as the prior complaint.
+Added: Defendants’ motion to dismiss the SAC is due on November 3, 2022, and briefing is ongoing.
On December 16, 2021 and January 19, 2022, two related putative shareholder derivative actions captioned Pang v.
3 unchanged sentences
22-cv-00370, respectively, were filed in the U.S.
−Removed: District Court for the Northern District of California (the “Derivative Actions”), purportedly on behalf of the Company.
−Removed: The Derivative Actions are based on the same alleged facts and circumstances as the Securities Action, and name certain of our officers, including our Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants.
+Added: District Court for the Northern District of California (the “California Derivative Actions”), purportedly on behalf of the Company.
+Added: On August 2, 2022, a related putative shareholder derivative action captioned Jefferson v.
+Added: Daniel Schulman, et al.
+Added: 2022-0684, was filed in the Court of Chancery for the State of Delaware (the “Delaware Derivative Action,” and collectively with the California Derivative Actions, the “Derivative Actions”), purportedly on behalf of the Company.
+Added: The Derivative Actions are based on the same alleged facts and circumstances as the Kang Securities Action, and name certain of our officers, including our Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants.
The Derivative Actions allege claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of the Securities Exchange Act of 1934, and seek to recover damages on behalf of the Company.
−Removed: On February 1, 2022, the court entered an order consolidating the Derivative Actions and staying them until all motions to dismiss in the Securities Action are resolved.
+Added: On February 1, 2022, the court entered an order consolidating the two California Derivative Actions and staying them until all motions to dismiss in the Kang Securities Action are resolved.
+Added: On October 4, 2022, a putative securities class action captioned Defined Benefit Plan of the Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund v.
+Added: PayPal Holdings, Inc., et al.
+Added: 22-cv-5864, was filed in the U.S.
+Added: District Court for the District of New Jersey (the “MJT Securities Action”).
+Added: The MJT Securities Action asserts claims relating to our public statements with respect to net new active accounts (“NNA”) results and guidance, and the detection of illegitimately created accounts.
+Added: The MJT Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 3, 2021 and February 1, 2022 (the “Class Period”), and asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its Chief Executive Officer, and former Chief Financial Officer.
+Added: The complaint alleges that certain public statements made by the Company during the Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at artificially inflated prices) by the defendants’ failure to disclose that, among other things, the Company’s incentive campaigns were susceptible to fraud and led to the creation of illegitimate accounts, which allegedly affected the Company’s NNA results and guidance.
+Added: The MJT Securities Action seeks unspecified compensatory damages on behalf of the putative class members.
+Added: Motions for investors seeking appointment as lead plaintiff are due on December 5, 2022.
+Added: PayPal Holdings, Inc.
+Added: NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
+Added: On November 2, 2022, a putative shareholder derivative action captioned Shah v.
+Added: Daniel Schulman, et al., Case No.
+Added: 22-cv-1445, was filed in the U.S.
+Added: District Court for the District of Delaware, (the “Shah Action”), purportedly on behalf of the Company.
+Added: The Shah Action is based on the same alleged facts and circumstances as the MJT Securities Action, and names certain of our officers, including our Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants.
+Added: The Shah Action alleges claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of the Securities Exchange Act of 1934, and seeks to recover damages on behalf of the Company.
General matters
28 unchanged sentences
OFF-BALANCE SHEET ARRANGEMENTS
−Removed: As of June 30, 2022 and December 31, 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.
+Added: As of September 30, 2022 and December 31, 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.
PROTECTION PROGRAMS
5 unchanged sentences
These protection programs are considered assurance-type warranties under applicable accounting standards for which we estimate and record associated costs in transaction and credit losses during the period the payment transaction is completed.
−Removed: At June 30, 2022 and December 31, 2021, the allowance for transaction losses was $ 158 million and $ 121 million, respectively.
−Removed: The allowance for negative customer balances was $ 220 million and $ 234 million at June 30, 2022 and December 31, 2021, respectively.
−Removed: The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three and six months ended June 30, 2022 and 2021:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: At September 30, 2022 and December 31, 2021, the allowance for transaction losses was $ 71 million and $ 121 million, respectively.
+Added: The allowance for negative customer balances was $ 217 million and $ 234 million at September 30, 2022 and December 31, 2021, respectively.
+Added: The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three and nine months ended September 30, 2022 and 2021:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
8 unchanged sentences
NOTE 14— STOCK REPURCHASE PROGRAMS
−Removed: During the six months ended June 30, 2022, we repurchased approximately 19 million shares of our common stock for approximately $ 2.3 billion at an average cost of $ 119.69 .
+Added: During the nine months ended September 30, 2022, we repurchased approximately 29 million shares of our common stock for approximately $ 3.2 billion at an average cost of $ 110.75 .
These shares were purchased in the open market under our stock repurchase program authorized in July 2018.
In June 2022, our Board of Directors authorized an additional stock repurchase program that provides for the repurchase of up to $ 15.0 billion of our common stock, with no expiration from the date of authorization.
−Removed: As of June 30, 2022, a total of approximately $ 2.8 billion and $ 15.0 billion remained available for future repurchases of our common stock under our July 2018 and June 2022 stock repurchase programs, respectively.
+Added: As of September 30, 2022, a total of approximately $ 1.9 billion and $ 15.0 billion remained available for future repurchases of our common stock under our July 2018 and June 2022 stock repurchase programs, respectively.
NOTE 15— STOCK-BASED PLANS
1 unchanged sentence
Stock-based compensation expense for our equity incentive plans are measured based on their estimated fair value at the time of grant, and recognized over the award’s vesting period.
−Removed: The impact on our results of operations of recording stock-based compensation expense under our equity incentive plans for the three and six months ended June 30, 2022 and 2021 was as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The impact on our results of operations of recording stock-based compensation expense under our equity incentive plans for the three and nine months ended September 30, 2022 and 2021 was as follows:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
7 unchanged sentences
NOTE 16— INCOME TAXES
−Removed: Our effective tax rate for the three and six months ended June 30, 2022 was 796 % and 75 %, respectively.
−Removed: Our effective tax rate for the three and six months ended June 30, 2021 was 13 % and ( 2 )%, respectively.
+Added: Our effective tax rate for the three and nine months ended September 30, 2022 was 16 % and 34 %, respectively.
+Added: Our effective tax rate for the three and nine months ended September 30, 2021 was 7 % and 1 %, respectively.
The difference between our effective tax rate and the U.S.
−Removed: federal statutory rate of 21% in the current periods was primarily due to tax expense related to the intra-group transfer of intellectual property.
+Added: federal statutory rate of 21% in the current periods was primarily the result of foreign income taxed at different rates, and for the nine months ended September 30, 2022, tax expense related to the intra-group transfer of intellectual property.
The difference between our effective tax rate and the U.S.
−Removed: federal statutory rate of 21% for the three and six months ended June 30, 2021 was primarily the result of foreign income taxed at different rates and discrete tax adjustments including tax benefits related to stock-based compensation.
+Added: federal statutory rate of 21% for the three and nine months ended September 30, 2021 was primarily the result of foreign income taxed at different rates and discrete tax adjustments, including tax benefits related to stock-based compensation.
NOTE 17— RESTRUCTURING AND OTHER CHARGES
1 unchanged sentence
As part of this effort, we are focusing on reducing redundant operations and simplifying our organizational structure.
−Removed: The associated restructuring charges during the three and six months ended June 30, 2022 were $ 71 million and $ 91 million, respectively.
+Added: The associated restructuring charges during the three and nine months ended September 30, 2022 were $ 23 million and $ 114 million, respectively.
We primarily incurred employee severance and benefits costs, as well as associated consulting costs under the 2022 strategic reduction.
2 unchanged sentences
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
−Removed: The following table summarizes the restructuring reserve activity during the six months ended June 30, 2022:
+Added: The following table summarizes the restructuring reserve activity during the nine months ended September 30, 2022:
Employee Severance and Benefits and Other Associated Costs
2 unchanged sentences
Payments ( 78 )
−Removed: Accrued liability as of June 30, 2022
+Added: Accrued liability as of September 30, 2022
During the first quarter of 2020, management approved a strategic reduction of the existing global workforce as part of a multiphase process to reorganize our workforce concurrently with the redesign of our operating structure, which spanned multiple quarters.
−Removed: The associated restructuring charges during the three and six months ended June 30, 2021 were de minimis and $ 27 million, respectively.
+Added: The associated restructuring charges during the three and nine months ended September 30, 2021 were nil and $ 27 million, respectively.
We primarily incurred employee severance and benefits costs, as well as associated consulting costs under the 2020 strategic reduction, which was substantially completed in 2021.
Additionally, we are continuing to review our facility needs due to our new and evolving work models.
−Removed: We incurred asset impairment charges of $ 19 million and $ 35 million in the three and six months ended June 30, 2022, respectively, and nil and $ 26 million in the three and six months ended June 30, 2021, respectively, due to exiting of certain leased properties which resulted in a reduction of ROU lease assets and related leasehold improvements.
+Added: We incurred asset impairment charges of $ 29 million and $ 64 million in the three and nine months ended September 30, 2022, respectively, and nil and $ 26 million in the three and nine months ended September 30, 2021, respectively, due to exiting of certain leased properties which resulted in a reduction of ROU lease assets and related leasehold improvements.
See “Note 6—Leases” for additional information.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.