What changed in this filing

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Item 1. Financial Statements

2024-10-29 compared with 2024-07-30 · 226 added, 173 removed, 1264 unchanged (24% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2024 December 31,

5 unchanged sentences

Loans and interest receivable, held for sale 471 563

Loans and interest receivable, net of allowances of $ 442 and $ 540 as of June 30, 2024 and December 31, 2023, respectively

Loans and interest receivable, net of allowances of $ 461 and $ 540 as of September 30, 2024 and December 31, 2023, respectively

Funds receivable and customer accounts 39,182 38,935

19 unchanged sentences

4,000 shares authorized;

1,032 and 1,072 shares outstanding as of June 30, 2024 and December 31, 2023, respectively

1,006 and 1,072 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.0001 par value;

100 shares authorized, unissued

Treasury stock at cost, 294 and 245 shares as of June 30, 2024 and December 31, 2023, respectively

Treasury stock at cost, 322 and 245 shares as of September 30, 2024 and December 31, 2023, respectively

( 25,851 ) ( 21,045 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

24 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Foreign currency translation adjustments (“CTA”) 275 ( 70 ) 7 ( 306 )

Net investment hedges CTA gains, net 100 169 199 196

Tax expense on net investment hedges CTA gains, net ( 24 ) ( 39 ) ( 47 ) ( 45 )

Unrealized gains (losses) on cash flow hedges, net 3 ( 23 ) 99 ( 134 )

Net investment hedges CTA (losses) gains, net

( 149 ) 35 50 231

Tax benefit (expense) on net investment hedges CTA (losses) gains, net

35 ( 8 ) ( 12 ) ( 53 )

Unrealized (losses) gains on cash flow hedges, net

( 148 ) 109 ( 49 ) ( 25 )

Tax benefit (expense) on unrealized (losses) gains on cash flow hedges, net

7 unchanged sentences

Shares Treasury Stock Additional Paid-In Capital Accumulated Other

Comprehensive Income (Loss) Retained Earnings Total

Comprehensive Income (Loss) Retained Earnings Total Equity

(In millions)

22 unchanged sentences

— — — ( 3 ) — ( 3 )

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 3 — 13 — — 13

Common stock and stock-based awards issued, net of shares withheld for employee taxes

3 — 13 — — 13

Common stock repurchased ( 24 ) ( 1,516 ) — — — ( 1,516 )

2 unchanged sentences

Balances at June 30, 2024 1,032 $ ( 24,064 ) $ 20,163 $ ( 693 ) $ 25,216 $ 20,622

Net income — — — — 1,010 1,010

Foreign CTA — — — 275 — 275

Net investment hedge CTA losses, net

— — — ( 149 ) — ( 149 )

Tax benefit on net investment hedges CTA losses, net

— — — 35 — 35

Unrealized losses on cash flow hedges, net

— — — ( 148 ) — ( 148 )

Tax benefit on unrealized losses on cash flow hedges, net

Unrealized gains on available-for-sale debt securities, net

— — — 60 — 60

Tax expense on unrealized gains on available-for-sale-debt securities, net

— — — ( 14 ) — ( 14 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes

2 — ( 47 ) — — ( 47 )

Common stock repurchased ( 28 ) ( 1,791 ) — — — ( 1,791 )

Treasury stock reissuance — 4 — — — 4

Stock-based compensation — — 310 — — 310

Balances at September 30, 2024 1,006 $ ( 25,851 ) $ 20,426 $ ( 627 ) $ 26,226 $ 20,174

PayPal Holdings, Inc.

1 unchanged sentence

Common Stock Shares Treasury Stock Additional Paid-In Capital Accumulated Other

Comprehensive Income (Loss) Retained Earnings Total

Comprehensive Income (Loss) Retained Earnings Total Equity

(In millions)

8 unchanged sentences

Tax expense on unrealized gains on available-for-sale debt securities, net — — — ( 41 ) — ( 41 )

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 5 — ( 157 ) — — ( 157 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes

5 — ( 157 ) — — ( 157 )

Common stock repurchased ( 19 ) ( 1,443 ) — — — ( 1,443 )

12 unchanged sentences

— — — ( 3 ) — ( 3 )

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 2 — 39 — — 39

Common stock and stock-based awards issued, net of shares withheld for employee taxes

2 — 39 — — 39

Common stock repurchased ( 22 ) ( 1,542 ) — — — ( 1,542 )

1 unchanged sentence

Balances at June 30, 2023 1,102 $ ( 19,064 ) $ 18,943 $ ( 996 ) $ 20,778 $ 19,661

Net income — — — — 1,020 1,020

Foreign CTA — — — ( 70 ) — ( 70 )

Net investment hedges CTA gains, net — — — 35 — 35

Tax expense on net investment hedges CTA gains, net — — — ( 8 ) — ( 8 )

Unrealized gains on cash flow hedges, net — — — 109 — 109

Tax expense on unrealized gains on cash flow hedges, net — — — ( 6 ) — ( 6 )

Unrealized gains on available-for-sale-debt securities, net

— — — 110 — 110

Tax expense on unrealized gains on available-for-sale-debt securities, net

— — — ( 26 ) — ( 26 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes

1 — ( 28 ) — — ( 28 )

Common stock repurchased ( 23 ) ( 1,449 ) — — — ( 1,449 )

Stock-based compensation — — 392 — — 392

Balances at September 30, 2023 1,080 $ ( 20,513 ) $ 19,307 $ ( 852 ) $ 21,798 $ 19,740

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

18 unchanged sentences

Cash flows from investing activities:

Purchases of reverse repurchase agreements ( 299 ) —

Maturities of reverse repurchase agreements 226 —

Purchases of property and equipment ( 480 ) ( 478 )

10 unchanged sentences

Cash flows from financing activities:

Borrowings from repurchase agreements 656 —

Repayments of repurchase agreements ( 656 ) —

Proceeds from issuance of common stock 55 82

4 unchanged sentences

Funds payable and amounts due to customers ( 771 ) ( 1,277 )

Collateral received related to derivative instruments, net 70 ( 175 )

Collateral received related to derivative instruments and reverse repurchase agreements, net ( 1 ) ( 65 )

Other ( 60 ) —

Net cash used in financing activities ( 4,691 ) ( 5,993 )

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued)

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

30 unchanged sentences

Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our condensed consolidated statements of income (loss).

Our investment balance is included in long-term investments on our condensed consolidated balance sheets.

Our investment balances are included as short-term and long-term investments on our condensed consolidated balance sheets.

We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”).

If we determine an investment is in a VIE, we then assess if we are the primary beneficiary, which would require consolidation.

As of June 30, 2024 and December 31, 2023, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct activities that would significantly impact their economic performance.

As of June 30, 2024 and December 31, 2023, the carrying value of our investments in nonconsolidated VIEs was $ 188 million and $ 175 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.

As of September 30, 2024 and December 31, 2023, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct activities that would significantly impact their economic performance.

As of September 30, 2024 and December 31, 2023, the carrying value of our investments in nonconsolidated VIEs was $ 195 million and $ 175 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.

The investments in nonconsolidated VIEs are primarily investments in funds that are limited partnerships or similar structures which are focused on increasing access to capital for underserved communities.

Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 246 million as of June 30, 2024 and December 31, 2023.

Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 246 million as of September 30, 2024 and December 31, 2023.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 8, 2024.

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.

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, 2024.

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, 2024.

PayPal Holdings, Inc.

10 unchanged sentences

The amended guidance requires incremental reportable segment disclosures, primarily about significant segment expenses.

The amendments also require entities with a single reportable segment to provide all disclosures required by these amendments, and all existing segment disclosures.

The amendments also require entities with a single reportable segment to provide all disclosures required by these amendments, as well as all existing segment disclosures.

The amendments will be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted.

We are evaluating the impact this amended guidance may have on the footnotes to our condensed consolidated financial statements.

We will adopt this guidance in the fourth quarter of 2024 and provide additional disclosures as required.

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60):

1 unchanged sentence

This amended guidance requires fair value measurement of certain crypto assets each reporting period with the changes in fair value reflected in net income.

The amendments also require disclosures of the name, fair value, units held, and cost bases for each significant crypto asset held and annual reconciliations of crypto asset holdings.

The amendments also require disclosures of the name, fair value, units held, and cost basis for each significant crypto asset held and annual reconciliations of crypto asset holdings.

The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted.

4 unchanged sentences

The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information.

This guidance requires disclosure of specific categories in the effective tax rate reconciliation and further information on reconciling items meeting a quantitative threshold.

This guidance requires disclosure of specific categories in the effective tax rate reconciliation and additional information on reconciling items meeting a quantitative threshold.

In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes.

19 unchanged sentences

The following table presents our revenue disaggregated by primary geographical market and category:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

12 unchanged sentences

(1) No single country included in the other countries category generated more than 10% of total net revenues.

(2) Total net revenues include $ 520 million and $ 452 million for the three months ended June 30, 2024 and 2023, respectively, and $ 988 million and $ 903 million for the six months ended June 30, 2024 and 2023, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .

(2) Total net revenues include $ 515 million and $ 433 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.5 billion and $ 1.3 billion for the nine months ended September 30, 2024 and 2023, 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, including loans and interest receivable, held for sale, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.

9 unchanged sentences

The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

NOTE 4— BUSINESS COMBINATIONS AND DIVESTITURES

There were no acquisitions accounted for as business combinations or divestitures completed in the three and six months ended June 30, 2024 and 2023.

There were no acquisitions accounted for as business combinations or divestitures completed in the three and nine months ended September 30, 2024 and 2023.

NOTE 5— GOODWILL AND INTANGIBLE ASSETS

The following table presents goodwill balances and adjustments to those balances during the six months ended June 30, 2024:

2023 Goodwill Acquired Adjustments June 30,

The following table presents goodwill balances and adjustments to those balances during the nine months ended September 30, 2024:

2023 Goodwill Acquired Adjustments September 30,

(In millions)

Total goodwill $ 11,026 $ — $ ( 30 ) $ 10,996

The adjustments to goodwill during the six months ended June 30, 2024 pertained to foreign currency translation adjustments.

The adjustments to goodwill during the nine months ended September 30, 2024 pertained to foreign currency translation adjustments.

INTANGIBLE ASSETS

The components of identifiable intangible assets were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Gross Carrying Amount Accumulated Amortization

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amortization expense for intangible assets was $ 52 million and $ 58 million for the three months ended June 30, 2024 and 2023, respectively.

Amortization expense for intangible assets was $ 108 million and $ 115 million for the six months ended June 30, 2024 and 2023, respectively.

Additionally, in the three months ended June 30, 2023, we retired approximately $ 8 million of fully amortized intangible assets, all of which were included in developed technology;

and in the six months ended June 30, 2023, we retired approximately $ 92 million of fully amortized intangible assets, of which $ 65 million and $ 27 million were included in customer lists and user base and developed technology, respectively.

Expected future intangible asset amortization as of June 30, 2024 was as follows (in millions):

Amortization expense for intangible assets was $ 51 million and $ 57 million for the three months ended September 30, 2024 and 2023, respectively.

Amortization expense for intangible assets was $ 159 million and $ 172 million for the nine months ended September 30, 2024 and 2023, respectively.

Expected future intangible asset amortization as of September 30, 2024 was as follows (in millions):

Fiscal years:

10 unchanged sentences

The components of lease expense were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

$ 38 $ 37 $ 108 $ 113

(1) During the three and six months ended June 30, 2024, finance lease expense was de minimis.

(1) During the three and nine months ended September 30, 2024, finance lease expense was de minimis.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplemental cash flow information related to leases during the three and six months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Supplemental cash flow information related to leases during the three and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(In millions, except weighted-average figures)

11 unchanged sentences

(2) ROU assets for finance leases are included in “property and equipment, net” and lease liabilities for finance leases are included in “ accrued expenses and other current liabilities ” and “ other long-term liabilities ” on our condensed consolidated balance sheets.

Future minimum lease payments for our leases as of June 30, 2024 were as follows:

Future minimum lease payments for our leases as of September 30, 2024 were as follows:

Operating leases Finance leases

9 unchanged sentences

The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases.

As of June 30, 2024, we have additional operating leases, primarily for data centers, which will commence in the third quarter of 2024 or later with minimum lease payments aggregating to $ 4 million and lease terms ranging from one to five years .

As of June 30, 2024, we have additional finance leases for computer equipment, which will commence in the third quarter of 2024 or later with minimum lease payments aggregating to $ 21 million and lease terms of five 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.

As of June 30, 2024, we utilize two third-party custodians;

As of September 30, 2024, we utilize two third-party custodians;

as such, there is concentration risk in the event these custodians are not able to perform in accordance with our agreements.

3 unchanged sentences

The corresponding safeguarding asset may be adjusted for loss events, as applicable.

As of June 30, 2024 and December 31, 2023, the Company had not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.

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, 2024 and December 31, 2023:

As of September 30, 2024 and December 31, 2023, the Company had not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.

September 30,

2024 December 31, 2023

7 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2024:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended September 30, 2024:

Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities

10 unchanged sentences

Ending balance $ ( 105 ) $ 24 $ ( 724 ) $ 241 $ ( 63 ) $ ( 627 )

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2023:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended September 30, 2023:

Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities

5 unchanged sentences

Amount of net gain (loss) reclassified from AOCI

34 — — — — 34

Net current period other comprehensive income (loss) 109 110 ( 70 ) 35 ( 40 ) 144

Ending balance $ 86 $ ( 293 ) $ ( 881 ) $ 230 $ 6 $ ( 852 )

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2024:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2024:

Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2023:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2023:

Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities

11 unchanged sentences

Affected Line Item in the Statements of Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 unchanged sentences

The following table reconciles the components of other income (expense), net for the periods presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

8 unchanged sentences

NOTE 8— CASH AND CASH EQUIVALENTS, FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS, AND INVESTMENTS

The following table summarizes the assets underlying our cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments as of June 30, 2024 and December 31, 2023:

September 30,

2024 December 31,

13 unchanged sentences

Restricted cash 1 3

Strategic investments 100 —

Total short-term investments $ 4,647 $ 4,979

4 unchanged sentences

Total long-term investments $ 4,282 $ 3,273

(1) Includes $ 85 million and $ 777 million of available-for-sale debt securities with original maturities of three months or less as of June 30, 2024 and December 31, 2023, respectively.

(2) Includes $ 51 million and $ 399 million of available-for-sale debt securities with original maturities of three months or less as of June 30, 2024 and December 31, 2023, respectively.

(1) Includes $ 70 million and $ 777 million of available-for-sale debt securities with original maturities of three months or less as of September 30, 2024 and December 31, 2023, respectively.

(2) Includes $ 49 million and $ 399 million of available-for-sale debt securities with original maturities of three months or less as of September 30, 2024 and December 31, 2023, respectively.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of June 30, 2024 and December 31, 2023, the estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

June 30, 2024 (1)

As of September 30, 2024 and December 31, 2023, the estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

September 30, 2024 (1)

Losses Estimated

1 unchanged sentence

Cash and cash equivalents:

government and agency securities $ 85 $ — $ — $ 85

Commercial paper $ 70 $ — $ — $ 70

Funds receivable and customer accounts:

52 unchanged sentences

Refer to “Note 9 — Fair Value Measurement of Assets and Liabilities.”

Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 146 million and $ 101 million at June 30, 2024 and December 31, 2023, respectively, and were included in other current assets on our condensed consolidated balance sheets.

Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 159 million and $ 101 million at September 30, 2024 and December 31, 2023, respectively, and were included in other current assets on our condensed consolidated balance sheets.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of June 30, 2024 and December 31, 2023, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, 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:

June 30, 2024 (1)

As of September 30, 2024 and December 31, 2023, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, 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:

September 30, 2024 (1)

Less than 12 months 12 months or longer Total

3 unchanged sentences

(In millions)

Cash and cash equivalents:

Commercial paper $ 20 $ — $ — $ — $ 20 $ —

Funds receivable and customer accounts:

7 unchanged sentences

government and agency securities — — 333 ( 4 ) 333 ( 4 )

Foreign government and agency securities 55 — 118 ( 1 ) 173 ( 1 )

Corporate debt securities 386 — 174 ( 2 ) 560 ( 2 )

39 unchanged sentences

Unrealized losses have not been recognized into income as we neither intend to sell, nor anticipate that it is more likely than not that we will be required to sell, the securities before recovery of their amortized cost basis.

The decline in fair value is due primarily to changes in market interest rates, rather than credit losses.

The decline in fair value was due primarily to changes in market interest rates, rather than credit losses.

We will continue to monitor the performance of the investment portfolio and assess whether impairment due to expected credit losses has occurred.

During the three months ended June 30, 2024, we received $ 8.9 billion in proceeds from the sale and maturity of available-for-sale debt securities, incurring gross realized gains and losses which were de minimis.

During the six months ended June 30, 2024, we received $ 20.2 billion in proceeds from the sale and maturity of available-for-sale debt securities, incurring gross realized losses of $ 42 million and gains which were de minimis.

During the three months ended June 30, 2023, we received $ 5.0 billion in proceeds from the sale and maturity of available-for-sale debt securities, incurring gross realized gains and losses which were de minimis.

During the six months ended June 30, 2023, we received $ 11.4 billion in proceeds from the sale and maturity of available-for-sale debt securities, incurring gross realized losses of $ 25 million and gains which were de minimis.

During the three months ended September 30, 2024, we received $ 7.2 billion in proceeds from the sale and maturity of available-for-sale debt securities, and incurred gross realized gains and losses which were de minimis.

During the nine months ended September 30, 2024, we received $ 27.4 billion in proceeds from the sale and maturity of available-for-sale debt securities, and incurred gross realized losses of $ 43 million and gains which were de minimis.

During the three months ended September 30, 2023, we received $ 5.6 billion in proceeds from the sale and maturity of available-for-sale debt securities, and incurred gross realized gains and losses which were de minimis.

During the nine months ended September 30, 2023, we received $ 17.0 billion in proceeds from the sale and maturity of available-for-sale debt securities, and incurred gross realized losses of $ 25 million and gains which were de minimis.

Gross realized gains and losses were determined using the specific identification method.

2 unchanged sentences

Our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows:

June 30, 2024

September 30, 2024

Amortized Cost Fair Value

7 unchanged sentences

Supplemental cash flow information related to investments

Non-cash investing transactions that are not reflected in the condensed consolidated statement of cash flows for the six months ended June 30, 2024 include the purchase of investments, net of sale, not yet settled of $ 126 million.

Non-cash investing transactions that are not reflected in the condensed consolidated statement of cash flows for the nine months ended September 30, 2024 include the purchase of investments of $ 75 million that have not yet settled.

STRATEGIC INVESTMENTS

1 unchanged sentence

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).

Marketable equity securities totaled $ 15 million and $ 24 million as of June 30, 2024 and December 31, 2023, respectively.

Our non-marketable equity securities are recorded in long-term investments on our condensed consolidated balance sheets.

The carrying value of our non-marketable equity securities totaled $ 1.8 billion as of June 30, 2024 and December 31, 2023.

As of June 30, 2024 and December 31, 2023, we had non-marketable equity securities of $ 202 million and $ 182 million, respectively, for which we have the ability to exercise significant influence, but not control, over the investee.

Marketable equity securities totaled $ 17 million and $ 24 million as of September 30, 2024 and December 31, 2023, respectively.

Our non-marketable equity securities are recorded as short-term and long-term investments on our condensed consolidated balance sheets.

The carrying value of our non-marketable equity securities totaled $ 1.7 billion and $ 1.8 billion as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, we had non-marketable equity securities of $ 208 million and $ 182 million, respectively, for which 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.

2 unchanged sentences

Measurement Alternative adjustments

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, 2024 and 2023 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

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, 2024 and 2023 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, 2024 and December 31, 2023, respectively:

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, 2024 and December 31, 2023, respectively:

September 30,

2024 December 31,

3 unchanged sentences

Unrealized gains (losses) on strategic investments, excluding those accounted for using the equity method

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, 2024 and 2023, respectively:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

June 30, 2024 Quoted Prices in

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:

September 30, 2024 Quoted Prices in

Active Markets for

4 unchanged sentences

Cash and cash equivalents (1)

government and agency securities $ 85 $ — $ 85

Commercial paper $ 70 $ — $ 70

Short-term investments (2) :

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our marketable equity securities are valued using quoted prices for identical assets in active markets (Level 1).

Our financial assets classified within Level 1 are valued using quoted prices for identical assets in active markets.

There are no active markets for our crypto asset safeguarding liability or the corresponding safeguarding asset.

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A majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple observable inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices (Level 2).

As of June 30, 2024 and December 31, 2023, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value (Level 3).

As of September 30, 2024 and December 31, 2023, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs 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.

The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

Amortized Cost Fair Value Amortized Cost Fair Value

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Funds receivable and customer accounts $ 478 $ 474 $ 625 $ 618

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, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS

The following tables summarize our assets held as of June 30, 2024 and December 31, 2023 for which a non-recurring fair value measurement was recorded during the six months ended June 30, 2024 and the year ended December 31, 2023, respectively:

June 30, 2024 Significant Other

The following tables summarize our assets held as of September 30, 2024 and December 31, 2023 for which a non-recurring fair value measurement was recorded during the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively:

September 30, 2024 Significant Other

Observable Inputs

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Total $ 944 $ 565 $ 379

(1) Excludes non-marketable equity securities of $ 1.6 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the six months ended June 30, 2024.

(1) Excludes non-marketable equity securities of $ 1.0 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the nine months ended September 30, 2024.

PayPal Holdings, Inc.

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FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE

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.

Our notes receivable had a carrying value of approximately $ 513 million and fair value of approximately $ 472 million as of June 30, 2024.

Our financial instruments, including cash, restricted cash, time deposits, reverse repurchase agreements, 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.

Our notes receivable had a carrying value of approximately $ 521 million and fair value of approximately $ 506 million as of September 30, 2024.

Our notes receivable had a carrying value of approximately $ 513 million and fair value of approximately $ 474 million as of December 31, 2023.

Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 11.7 billion and fair value of approximately $ 10.9 billion as of June 30, 2024.

Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 11.8 billion and fair value of approximately $ 10.2 billion as of September 30, 2024.

Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 10.6 billion and fair value of approximately $ 10.0 billion as of December 31, 2023.

If these financial instruments were measured at fair value in the financial statements, cash would be classified as Level 1;

restricted cash, time deposits, certain customer accounts, and term debt (including current portion) would be classified as Level 2;

restricted cash, time deposits, reverse repurchase agreements, certain customer accounts, and term debt (including current portion) would be classified as Level 2;

and the remaining financial instruments would be classified as Level 3 in the fair value hierarchy.

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Accordingly, the cash flows associated with derivatives designated as cash flow hedges are classified in cash flows from operating activities on our condensed consolidated statements of cash flows.

As of June 30, 2024, we estimated that $ 43 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.

During the three and six months ended June 30, 2024 and 2023, 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.

As of September 30, 2024, we estimated that $ 106 million of net derivative losses related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.

During the three and nine months ended September 30, 2024 and 2023, 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.

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FAIR VALUE OF DERIVATIVE CONTRACTS

The fair value of our outstanding derivative instruments as of June 30, 2024 and December 31, 2023 was as follows:

Balance Sheet Location June 30,

The fair value of our outstanding derivative instruments as of September 30, 2024 and December 31, 2023 was as follows:

Balance Sheet Location September 30,

2024 December 31,

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MASTER NETTING AGREEMENTS - RIGHTS OF SET-OFF

Under master netting agreements with certain counterparties to our foreign currency exchange contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other.

However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheets.

Rights of set-off associated with our foreign currency exchange contracts represented a potential offset to both assets and liabilities of $ 30 million as of June 30, 2024 and $ 38 million as of December 31, 2023.

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.

Under master netting agreements with certain counterparties to our derivative contracts, repurchase agreements, and reverse repurchase agreements, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other.

PayPal has not elected to offset for balance sheet presentation and we present the derivative assets, derivative liabilities, repurchase agreements and reverse repurchase agreements on a gross basis on our condensed consolidated balance sheets.

Rights of set-off associated with our derivative contracts represented a potential offset to both assets and liabilities of $ 19 million as of September 30, 2024 and $ 38 million as of December 31, 2023.

We have entered into collateral security arrangements with certain counterparties that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds.

Receivables related to cash collateral posted and payables related to cash collateral received are recognized in other current assets and other current liabilities, respectively, on our condensed consolidated balance sheets.

The following table provides the collateral posted and received:

September 30,

2024 December 31,

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Cash collateral received $ 5 $ 6

(1) Right to reclaim cash collateral related to our derivative liabilities recognized in other current assets on our condensed consolidated balance sheets.

(2) Obligation to return counterparty cash collateral related to our derivative assets recognized in other current liabilities on our condensed consolidated balance sheets.

Non-cash collateral received (1)

(1) Non-cash collateral is related to reverse repurchase agreements and is not included in the condensed consolidated balance sheet unless the counterparty defaults.

PayPal Holdings, Inc.

2 unchanged sentences

The following tables provide the location in the condensed consolidated statements of income (loss) and amount of recognized gains or losses related to our derivative instruments:

Three Months Ended June 30,

Three Months Ended September 30,

(In millions)

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$ ( 12 ) $ ( 157 ) $ 7 $ 74

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

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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):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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The following table provides the notional amounts of our outstanding derivatives:

September 30,

2024 December 31,

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Loans and interest receivable, held for sale are recorded at the lower of cost or fair value, determined on an aggregate basis, with valuation changes and any associated charge-offs recorded in restructuring and other on our condensed consolidated statements of income (loss).

During the six months ended June 30, 2023, we reclassified approximately $ 1.2 billion of eligible consumer installment receivables from loans and interest receivable, net to loans and interest receivable, held for sale.

As of June 30, 2024 and December 31, 2023, loans and interest receivable, held for sale was $ 369 million and $ 563 million, respectively.

During the six months ended June 30, 2024, we sold $ 9.6 billion of loans and interest receivable in connection with this agreement.

During the nine months ended September 30, 2023, we reclassified approximately $ 1.2 billion of eligible consumer installment receivables from loans and interest receivable, net to loans and interest receivable, held for sale.

As of September 30, 2024 and December 31, 2023, loans and interest receivable, held for sale was $ 471 million and $ 563 million, respectively.

During the nine months ended September 30, 2024, we sold $ 14.7 billion of loans and interest receivable in connection with this agreement.

PayPal Holdings, Inc.

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consumers by an independent chartered financial institution (“partner institution”) and are responsible for the servicing functions related to that portfolio.

During the six months ended June 30, 2024 and 2023, we purchased approximately $ 217 million and $ 514 million in consumer receivables, respectively.

As of June 30, 2024 and December 31, 2023, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 4.6 billion and $ 4.8 billion, respectively, net of the participation interest sold to the partner institution of $ 14 million for both periods.

During the nine months ended September 30, 2024 and 2023, we purchased approximately $ 390 million and $ 643 million in consumer receivables, respectively.

As of September 30, 2024 and December 31, 2023, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.1 billion and $ 4.8 billion, respectively, net of the participation interest sold to the partner institution of $ 16 million and $ 14 million, respectively.

We closely monitor the credit quality of our consumer receivables to evaluate and manage our related exposure to credit risk.

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The “current” category represents balances that are within 29 days of the billing date or contractual repayment date, as applicable.

June 30, 2024

September 30, 2024

(In millions, except percentages)

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Total $ 2,533 $ 1,986 $ 509 $ 85 $ — $ — $ 5,113 100 %

Gross charge-offs for the six months ended June 30, 2024

Gross charge-offs for the nine months ended September 30, 2024

$ 104 $ 11 $ 119 $ 13 $ 1 $ — $ 248

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$ 125 $ 101 $ 140 $ 5 $ — $ — $ 371

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the six months ended June 30, 2024 and 2023:

June 30, 2024 June 30, 2023

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the nine months ended September 30, 2024 and 2023:

September 30, 2024 September 30, 2023

Consumer Loans Receivable Interest Receivable Total Allowance

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(2) Includes amounts related to foreign currency remeasurement.

The provision for the six months ended June 30, 2024 for our consumer receivable portfolio was primarily attributable to loan originations during the period for installment loans in Japan and revolving loans in the U.K.

Qualitative adjustments were made to account for limitations in our current expected credit loss models due to uncertain macroeconomic conditions and financial health of our borrowers.

The provision for the nine months ended September 30, 2024 for our consumer receivable portfolio was primarily attributable to loan originations during the period for installment loans in Japan and revolving loans in the U.K.

Charge-offs for the nine months ended September 30, 2024 were lower than the same period of the prior year due to improvement of the credit quality of the portfolio.

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).

1 unchanged sentence

Loans receivable continue to accrue interest until they are charged off.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

We charge off consumer receivable balances in the month in which a customer’s balance becomes 180 days past the billing date or contractual repayment date, except for the U.S.

consumer interest-bearing installment receivables, which are charged off 120 days past the contractual repayment date.

Bankrupt accounts are charged off within 60 days after receipt of notification of bankruptcy.

Accounts in bankruptcy are charged off within 60 days after receipt of notification of bankruptcy.

Charge-offs are recorded as a reduction to our allowance for loans and interest receivable and subsequent recoveries, if any, are recorded as an increase to the allowance for loans and interest receivable.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Merchant receivables

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merchants by a partner institution and are responsible for the servicing functions related to that portfolio.

During the six months ended June 30, 2024 and 2023, we purchased approximately $ 774 million and $ 975 million in merchant receivables, respectively.

As of June 30, 2024 and December 31, 2023, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 1.2 billion, net of the participation interest sold to the partner institution of $ 43 million and $ 44 million, respectively.

During the nine months ended September 30, 2024 and 2023, we purchased approximately $ 1.2 billion and $ 1.3 billion in merchant receivables, respectively.

As of September 30, 2024 and December 31, 2023, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 1.4 billion, and $ 1.2 billion, net of the participation interest sold to the partner institution of $ 47 million and $ 44 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.

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The “current” category represents balances that are within 29 days of the expected repayment date or contractual repayment date, as applicable.

June 30, 2024

September 30, 2024

(In millions, except percentages)

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Total $ 1,184 $ 111 $ 35 $ 2 $ 12 $ 7 $ 1,351 100 %

Gross charge-offs for the six months ended June 30, 2024

Gross charge-offs for the nine months ended September 30, 2024

$ 4 $ 78 $ 37 $ 2 $ 5 $ 1 $ 127

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$ 38 $ 228 $ 14 $ 16 $ 4 $ 300

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, 2024 and 2023:

June 30, 2024 June 30, 2023

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, 2024 and 2023:

September 30, 2024 September 30, 2023

Merchant Loans and Advances Interest and Fees Receivable Total Allowance Merchant Loans and Advances Interest and Fees Receivable Total Allowance

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The provision for the six months ended June 30, 2024 was primarily attributable to loan originations during the period partially offset by improvement in credit quality of the PPBL portfolio.

Qualitative adjustments were made due to uncertainty around the financial health of our borrowers, including the effectiveness of loan modification programs made available to merchants.

The decrease in charge-offs for the six months ended June 30, 2024 compared to the same period of the prior year was due to the decrease in originations in the second half of 2023 and improvement in credit quality of the PPBL portfolio.

The provision for the nine months ended September 30, 2024 was primarily attributable to loan originations during the period partially offset by improvement in credit quality of the PPBL portfolio.

In the third quarter of 2024, we updated our expected credit loss model for our PPWC portfolio to reflect its current risk characteristics.

These changes did not have a material impact on our provision recorded in the period.

The decrease in charge-offs for the nine months ended September 30, 2024 compared to the same period of the prior year was due to the decrease in originations in the second half of 2023 and improvement in credit quality of the PPBL portfolio.

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.

1 unchanged sentence

We charge off the receivables outstanding under our PPWC product when the repayments are 180 days past our expectation of repayments and the merchant has not made a payment in the last 60 days, or when the repayments are 360 days past due regardless of whether the merchant has made a payment in the last 60 days.

Bankrupt accounts are charged off within 60 days after receipt of notification of bankruptcy.

Accounts in bankruptcy are charged off within 60 days after receipt of notification of bankruptcy.

The provision for credit losses on merchant loans and advances is recognized in transaction and credit losses on our condensed consolidated statements of income (loss), and the provision for interest and fees receivable is recognized as a reduction of deferred revenue in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

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Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2024.

In June 2023, May 2022, May 2020, and September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of ¥ 90 billion (approximately $ 559 million as of June 30, 2024), $ 3.0 billion, $ 4.0 billion and $ 5.0 billion, respectively.

In June 2023, May 2022, May 2020, and September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of ¥ 90 billion (approximately $ 633 million as of September 30, 2024), $ 3.0 billion, $ 4.0 billion and $ 5.0 billion, respectively.

The notes issued from the May 2024, June 2023, May 2022, May 2020, and September 2019 debt issuances are senior unsecured obligations and are collectively referred to as the “Notes.” We may redeem the Notes in whole, at any time, or in part (except for the June 2023 notes), from time to time, prior to maturity, at their redemption prices.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of June 30, 2024 and December 31, 2023, we had an outstanding aggregate principal amount of $ 11.8 billion and $ 10.6 billion, respectively, related to the Notes.

As of September 30, 2024 and December 31, 2023, we had an outstanding aggregate principal amount of $ 11.9 billion and $ 10.6 billion, respectively, related to the Notes.

The following table summarizes the Notes outstanding:

Maturities Effective Interest Rate June 30,

Maturities Effective Interest Rate September 30,

2024 December 31,

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(1) Principal amounts represent the U.S.

dollar equivalent as of June 30, 2024 and December 31, 2023, respectively.

dollar equivalent as of September 30, 2024 and December 31, 2023, respectively.

(2) The current portion of term debt is included within “accrued expenses and other current liabilities” on our condensed consolidated balance sheets.

The effective interest rates for the Notes include interest on the Notes, amortization of debt issuance costs, and amortization of the debt discount.

The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 90 million and $ 174 million for the three and six months ended June 30, 2024, respectively.

The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 83 million and $ 166 million for the three and six months ended June 30, 2023, respectively.

The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 100 million and $ 274 million for the three and nine months ended September 30, 2024, respectively.

The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 84 million and $ 250 million for the three and nine months ended September 30, 2023, respectively.

PayPal Holdings, Inc.

2 unchanged sentences

Paidy credit agreement

In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provided for an unsecured revolving credit facility of ¥ 60.0 billion, which was modified in September 2022 to increase the borrowing capacity by ¥ 30.0 billion for a total borrowing capacity of ¥ 90.0 billion (approximately $ 559 million as of June 30, 2024).

Borrowings under the Paidy Credit Agreement are for use by Paidy for working capital, capital expenditures, and other permitted purposes.

4 unchanged sentences

The financial covenant requires us to meet a quarterly financial test with respect to a maximum consolidated leverage ratio.

As of June 30, 2024 and December 31, 2023, ¥ 70.0 billion (approximately $ 435 million) and ¥ 50.0 billion (approximately $ 355 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in long-term debt on our condensed consolidated balance sheets.

At June 30, 2024, ¥ 20.0 billion (approximately $ 124 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions to borrowing.

During the three and six months ended June 30, 2024 and 2023, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

As of September 30, 2024 and December 31, 2023, ¥ 90.0 billion (approximately $ 633 million) and ¥ 50.0 billion (approximately $ 355 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in long-term debt on our condensed consolidated balance sheets.

At September 30, 2024, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.

During the three and nine months ended September 30, 2024 and 2023, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

Other available facilities

As of June 30, 2024 and December 31, 2023, we had short-term borrowings of nil and $ 359 million, respectively, due to bank overdrafts, which were recorded in accrued expenses and other liabilities on our condensed consolidated balance sheets.

As of September 30, 2024 and December 31, 2023, we had short-term borrowings of nil and $ 359 million, respectively, due to bank overdrafts, which were recorded in accrued expenses and other liabilities on our condensed consolidated balance sheets.

The weighted average interest rate on the borrowing was 7.92 % as of December 31, 2023.

We repaid $ 400 million of borrowings due to bank overdrafts during the six months ended June 30, 2024.

We repaid $ 400 million of borrowings due to bank overdrafts during the nine months ended September 30, 2024.

The total interest expense and fees we recorded related to the borrowings were de minimis.

FUTURE PRINCIPAL PAYMENTS

As of June 30, 2024, the future principal payments associated with our term debt were as follows (in millions):

As of September 30, 2024, the future principal payments associated with our term debt were as follows (in millions):

Remaining 2024 $ 1,250

15 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.

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, 2024.

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, 2024.

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.

33 unchanged sentences

We are cooperating with the SEC in connection with this request.

In August 2024, we received a CID from the CFPB related to PayPal Credit.

The CID also relates to backup payment options in a digital wallet to pay for goods or services.

The CID requests the production of documents and answers to written questions.

We are cooperating with the CFPB in connection with this CID.

Legal proceedings

61 unchanged sentences

however, the maximum potential amount of the indemnification is not, in our view, representative of the expected future exposure.

As of June 30, 2024, the outstanding balances of the loans sold was $ 2.5 billion.

As of September 30, 2024, the outstanding balances of the loans sold was $ 2.7 billion.

The terms of the indemnification align to the maturities of the loans sold.

1 unchanged sentence

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2024 and December 31, 2023, 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.

As of September 30, 2024 and December 31, 2023, 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

4 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.

At June 30, 2024 and December 31, 2023, the allowance for transaction losses was $ 59 million and $ 64 million, respectively.

The allowance for negative customer balances was $ 211 million and $ 218 million at June 30, 2024 and December 31, 2023, respectively.

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, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

At September 30, 2024 and December 31, 2023, the allowance for transaction losses was $ 89 million and $ 64 million, respectively.

The allowance for negative customer balances was $ 217 million and $ 218 million at September 30, 2024 and December 31, 2023, respectively.

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, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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NOTE 14— STOCK REPURCHASE PROGRAMS

During the six months ended June 30, 2024, we repurchased approximately 49 million shares of our common stock for approximately $ 3.0 billion at an average cost of $ 61.30 , excluding excise tax.

During the nine months ended September 30, 2024, we repurchased approximately 77 million shares of our common stock for approximately $ 4.8 billion at an average cost of $ 62.29 , excluding excise tax.

These shares were purchased in the open market under our stock repurchase program authorized in June 2022.

As of June 30, 2024, a total of approximately $ 7.9 billion remained available for future repurchases of our common stock under our June 2022 stock repurchase program.

As of September 30, 2024, a total of approximately $ 6.1 billion remained available for future repurchases of our common stock under our June 2022 stock repurchase program.

PayPal Holdings, Inc.

2 unchanged sentences

Beginning in the first quarter of 2023, we have reflected the applicable excise tax in treasury stock on our condensed consolidated balance sheets.

During the six months ended June 30, 2024, we recorded $ 25 million in excise tax within treasury stock on our condensed consolidated balance sheets.

During the nine months ended September 30, 2024, we recorded $ 40 million in excise tax within treasury stock on our condensed consolidated balance sheets.

The payable associated with the excise tax is a non-cash financing activity which is not reflected on the condensed consolidated statement of cash flows until settled.

4 unchanged sentences

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.

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, 2024 and 2023 was as follows:

Three Months Ended June 30, Six Months Ended June 30,

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, 2024 and 2023 was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

8 unchanged sentences

NOTE 16— INCOME TAXES

Our effective tax rate for the three and six months ended June 30, 2024 was 19 % and 23 %, respectively.

Our effective tax rate for the three and six months ended June 30, 2023 was 21 % and 23 %, respectively.

Our effective tax rate for both the three and nine months ended September 30, 2024 was 23 %.

Our effective tax rate for the three and nine months ended September 30, 2023 was 18 % and 21 %, respectively.

The difference between our effective tax rate and the U.S.

federal statutory rate of 21% in the periods presented was primarily the result of foreign income taxed at different rates and discrete tax adjustments, including tax expense related to stock-based compensation.

Gross unrecognized tax benefits were approximately $ 2.2 billion as of June 30, 2024 and December 31, 2023.

federal statutory rate of 21% in the periods presented was primarily the result of foreign income taxed at different rates, tax expense related to stock-based compensation and other discrete tax adjustments.

Gross unrecognized tax benefits were approximately $ 2.3 billion and $ 2.2 billion as of September 30, 2024 and December 31, 2023, respectively.

Due to various factors, including uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of these unrecognized tax benefits is highly uncertain.

4 unchanged sentences

During the first quarter of 2024, management initiated a global workforce reduction intended to streamline operations, focus resources on core strategic priorities, and improve our cost structure.

The associated restructuring charges during the three and six months ended June 30, 2024 were $ 83 million and $ 258 million, respectively, and included employee severance and benefits costs and stock-based compensation expense, substantially all of which were accrued for as of June 30, 2024.

The associated restructuring charges during the three and nine months ended September 30, 2024 were $ 36 million and $ 294 million, respectively, and included employee severance and benefits costs and stock-based compensation expense, substantially all of which were accrued for as of September 30, 2024.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the restructuring reserve activity during the six months ended June 30, 2024:

The following table summarizes the restructuring reserve activity during the nine months ended September 30, 2024:

Employee Severance and Benefits Costs

2 unchanged sentences

Payments ( 182 )

Accrued liability as of June 30, 2024 (2)

Accrued liability as of September 30, 2024 (2)

(1) Excludes stock-based compensation expense of $ 88 million.

1 unchanged sentence

During the first quarter of 2023, management initiated a global workforce reduction intended to focus resources on core strategic priorities, and improve our cost structure and operating efficiency.

The associated restructuring charges during the three and six months ended June 30, 2023 were nil and $ 117 million, respectively.

The associated restructuring charges during the three and nine months ended September 30, 2023 were $ 3 million and $ 120 million, respectively.

We primarily incurred employee severance and benefits costs, which were substantially completed by the fourth quarter of 2023.

We continue to review our real estate and facility capacity requirements due to our new and evolving work models.

We incurred asset impairment charges of nil in the three and six months ended June 30, 2024 and $ 4 million and $ 43 million in the three and six months ended June 30, 2023, respectively, due to exiting of certain leased properties, which resulted in a reduction of ROU lease assets and related leasehold improvements.

We recognized a gain of $ 14 million due to the sale of an owned property in the three and six months ended June 30, 2023.

We also incurred a loss of $ 8 million upon designation of an owned property as held for sale in the six months ended June 30, 2023.

During the three and six months ended June 30, 2024, approximately $ 27 million and $ 64 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments in order to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

During the three and six months ended June 30, 2023, approximately $ 34 million of losses were recorded in restructuring and other, which included fair value adjustments in order to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

We incurred asset impairment charges of nil in the three and nine months ended September 30, 2024 and $ 18 million and $ 61 million in the three and nine months ended September 30, 2023, respectively, due to exiting of certain leased properties, which resulted in a reduction of ROU lease assets and related leasehold improvements.

Additionally, we recognized a gain of $ 17 million due to the sale of an owned property and we also incurred a loss of $ 12 million related to another owned property held for sale in the nine months ended September 30, 2023.

During the three and nine months ended September 30, 2024, approximately $ 28 million and $ 92 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

During the three and nine months ended September 30, 2023, approximately $ 15 million and $ 49 million, respectively, of losses were recorded in restructuring and other, which included fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

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.

What changed 10-Q

Item 1. Financial Statements