What changed in this filing

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Item 9A. Controls and Procedures

2025-02-04 compared with 2024-02-08 · 605 added, 574 removed, 1772 unchanged (40% of the section changed)

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Changes in Internal Controls over Financial Reporting.

There were no changes in our internal controls over financial reporting as defined in Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal controls over financial reporting as defined in the Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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An equity trading plan is a written document that preestablishes the amounts, prices, and dates (or formula for determining the amounts, prices, and dates) of future purchases or sales of the Company’s stock, including sales of shares acquired under the Company’s employee and director equity plans.

On December 7, 2023 , Jonathan Auerbach entered into an equity trading plan that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

Auerbach was serving as an executive officer of the Company at the time the trading plan was adopted .

The trading plan has a duration of March 7, 2024 to September 10, 2024 with approximately 85,839 shares (vested and net shares expected to vest over the duration of the trading plan) subject to sale under the plan.

On December 10, 2024 , Frank Keller , Executive Vice President, General Manager – Large Enterprise and Merchant Platform Group , entered into an equity trading plan that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

The trading plan has a duration of March 11, 2025 to December 5, 2025 with approximately 27,700 shares (vested and net shares expected to vest over the duration of the trading plan) subject to sale under the plan.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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Incorporated by reference from our Proxy Statement for our 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2024.

Insider Trading Policies and Procedures

The Company has insider trading policies and procedures that govern the purchase, sale, and other dispositions of its securities by directors, officers, employees, and contractors, as well as by the Company itself.

We believe these policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards.

See “Index of Exhibits” within this Annual Report on Form 10-K for our Insider Trading Policy.

EXECUTIVE COMPENSATION

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We have audited the accompanying consolidated balance sheets of PayPal Holdings, Inc.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income (loss), of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2024, listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Loans Receivable

As described in Notes 1 and 11 to the consolidated financial statements, as of December 31, 2023, the Company recorded total loans and interest receivable of $5,433 million, net of an allowance of $540 million.

The allowance for loans receivable is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the portfolio.

The loss models incorporate various portfolio attributes, as well as macroeconomic factors such as forecasted trends in unemployment, retail e-commerce sales, and household disposable income.

Allowance for Consumer Loans Receivable

As described in Notes 1 and 11 to the consolidated financial statements, the total allowance for loans and interest receivable was $461 million as of December 31, 2024, of which $341 million relates to consumer loans receivable.

The allowance for consumer loans receivable is primarily based on expectations of credit losses based on historical lifetime loss data and incorporates macroeconomic forecasts applied to the portfolio.

The consumer loss models incorporate various portfolio attributes including geographic region, loan term, delinquency, credit rating, vintage, and for the revolving credit portfolio, macroeconomic factors such as forecasted trends in household disposable income and retail e-commerce sales.

The forecasted macroeconomic factors are sourced externally, using a single scenario to reflect the economic conditions applicable to a particular period.

Management also includes qualitative adjustments that incorporate incremental information not captured in the expected credit loss models.

The principal considerations for our determination that performing procedures relating to the allowance for loans receivable is a critical audit matter are (i) the high degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence relating to certain models which apply macroeconomic forecasts to estimate expected credit losses;

The principal considerations for our determination that performing procedures relating to the allowance for consumer loans receivable is a critical audit matter are (i) a high degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence relating to certain consumer loss models, and for the revolving credit portfolio, forecasted macroeconomic factors related to household disposable income and retail e-commerce sales used to estimate expected credit losses;

and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the allowance for loans receivable, including controls over certain models which apply macroeconomic forecasts to estimate expected credit losses.

These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in testing management’s process for estimating the allowance for loans receivable.

Testing management’s process included (i) evaluating the appropriateness of the methodology and certain models;

These procedures included testing the effectiveness of controls relating to the allowance for consumer loans receivable, including controls over certain consumer loss models, and for the revolving credit portfolio, forecasted macroeconomic factors related to household disposable income and retail e-commerce sales used to estimate expected credit losses.

These procedures also included, among others (i) testing management’s process for determining the allowance for consumer loans receivable;

(ii) testing the completeness and accuracy of certain data used in the estimate;

and (iii) evaluating the reasonableness of management’s application of macroeconomic forecasts to estimate expected credit losses.

and (iii) the involvement of professionals with specialized skill and knowledge to assist in evaluating (a) the appropriateness of certain methodologies and consumer loss models used by management and (b) for the revolving credit portfolio, the reasonableness of forecasted macroeconomic factors related to household disposable income and retail e-commerce sales.

/s/ PricewaterhouseCoopers LLP

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Income before income taxes 5,329 5,411 3,366

Income tax expense (benefit) 1,165 947 ( 70 )

Income tax expense 1,182 1,165 947

Net income (loss) $ 4,147 $ 4,246 $ 2,419

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Net investment hedges CTA gains (losses), net

122 192 ( 25 )

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

Unrealized (losses) gains on cash flow hedges, net

( 29 ) ( 44 ) 6

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

Unrealized gains (losses) on cash flow hedges, net

203 ( 167 ) ( 88 )

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

Unrealized gains (losses) on available-for-sale debt securities, net

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Comprehensive Income

(Loss) Retained Earnings Noncontrolling Interest Total

(Loss) Retained Earnings Total

(In millions)

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Foreign CTA — — — ( 305 ) — ( 305 )

Unrealized gains on cash flow hedges, net — — — 522 — — 522

Tax expense on unrealized gains on cash flow hedges, net — — — ( 26 ) — — ( 26 )

Net investment hedge CTA losses, net

— — — ( 25 ) — ( 25 )

Tax benefit on net investment hedges CTA losses, net

Unrealized losses on cash flow hedges, net

— — — ( 88 ) — ( 88 )

Tax benefit on unrealized losses on cash flow hedges, net

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

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— — — 120 — 120

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes 11 — ( 881 ) — — — ( 881 )

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

9 — ( 195 ) — — ( 195 )

Common stock repurchased ( 41 ) ( 4,199 ) — — — ( 4,199 )

Stock-based compensation — — 1,313 — — 1,313

Change in noncontrolling interest — — — — ( 44 ) ( 44 )

Balances at December 31, 2022 1,136 $ ( 16,079 ) $ 18,327 $ ( 928 ) $ 18,954 $ 20,274

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Foreign CTA — — — ( 156 ) — ( 156 )

Net investment hedge CTA losses, net — — — ( 25 ) — — ( 25 )

Tax benefit on net investment hedges CTA losses, net — — — 6 — — 6

Net investment hedge CTA gains, net

— — — 192 — 192

Tax expense on net investment hedges CTA gains, net

— — — ( 44 ) — ( 44 )

Unrealized losses on cash flow hedges, net — — — ( 167 ) — ( 167 )

Tax benefit on unrealized losses on cash flow hedges, net — — — 8 — 8

Unrealized losses on available-for-sale debt securities, net — — — ( 504 ) — — ( 504 )

Tax benefit on unrealized losses on available-for-sale debt securities, net

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

— — — 457 — 457

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

— — — ( 108 ) — ( 108 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes 9 — ( 130 ) — — ( 130 )

Common stock repurchased ( 74 ) ( 5,046 ) — — — ( 5,046 )

Treasury stock reissuance

1 80 — — — 80

Stock-based compensation — — 1,445 — — 1,445

Other — — 1 — — — 1

Balances at December 31, 2023 1,072 $ ( 21,045 ) $ 19,642 $ ( 746 ) $ 23,200 $ 21,051

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Foreign CTA — — — ( 204 ) — ( 204 )

Net investment hedge CTA gains, net

— — — 192 — — 192

Net investment hedges CTA gains, net — — — 122 — 122

Tax expense on net investment hedges CTA gains, net

— — — ( 29 ) — ( 29 )

Unrealized losses on cash flow hedges, net — — — ( 167 ) — — ( 167 )

Tax benefit on unrealized losses on cash flow hedges, net — — — 8 — — 8

Unrealized gains on cash flow hedges, net

— — — 203 — 203

Tax expense on unrealized gains on cash flow hedges, net

— — — ( 10 ) — ( 10 )

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

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Net (gains) losses on strategic investments

285 ( 201 ) 304

Gain on divestiture of business, excluding transaction costs

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Cash flows from investing activities:

Purchases of reverse repurchase agreements ( 424 ) — —

Maturities of reverse repurchase agreements 337 — —

Purchases of property and equipment ( 683 ) ( 623 ) ( 706 )

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Maturities and sales of investments 26,962 24,295 23,411

Acquisitions, net of cash and restricted cash acquired — — ( 2,763 )

Proceeds from divestiture of business, net of cash divested

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Collateral posted related to derivative instruments, net 73 ( 56 ) ( 19 )

Other investing activities 86 187 —

Other 159 86 187

Net cash provided by (used in) investing activities 1,589 752 ( 3,328 )

Cash flows from financing activities:

Borrowings from repurchase agreements 656 — —

Repayments of repurchase agreements ( 656 ) — —

Proceeds from issuance of common stock 95 127 143

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Funds payable and amounts due to customers ( 1,954 ) 1,861 1,405

Collateral received related to derivative instruments, net ( 197 ) ( 6 ) 207

Other financing activities — 1 —

Collateral received related to derivative instruments and reverse repurchase agreements, net 156 ( 197 ) ( 6 )

Other ( 60 ) — 1

Net cash used in financing activities ( 8,276 ) ( 2,993 ) ( 1,203 )

PayPal Holdings, Inc.

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(In millions)

Net cash used in financing activities ( 2,993 ) ( 1,203 ) ( 557 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 207 ) 76 ( 155 )

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PayPal Holdings, Inc.

(“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015 and is a leading technology platform that enables digital payments and simplifies commerce experiences on behalf of merchants and consumers worldwide.

PayPal is committed to democratizing financial services to help improve the financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world.

Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world in the markets we serve, anytime, on any platform, and using any device when sending payments or getting paid, including person-to-person payments.

We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy, cybersecurity, and consumer protection.

(“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015.

At PayPal, our mission is to revolutionize commerce globally.

Our products are designed to enable digital payments and simplify commerce experiences for consumers and merchants to make selling, shopping, and sending and receiving money simple, personalized, secure, online or offline, including mobile.

Our two-sided platform serves millions of consumers and merchants worldwide.

We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including anti-money laundering, countering terrorist financing, privacy, cybersecurity, and consumer protection.

The laws and regulations applicable to us, including those enacted prior to the advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation.

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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 consolidated statements of income (loss).

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

Our investment balances are included in long-term investments on our 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”).

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As of December 31, 2024 and December 31, 2023, the carrying value of our investments in nonconsolidated VIEs was $ 187 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 consolidated balance sheets.

Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 246 million and $ 232 million as of December 31, 2023 and 2022, respectively.

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 both December 31, 2024 and 2023.

Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the year ended December 31, 2024.

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Non-marketable equity securities include investments that do not have a readily determinable fair value, as well as equity method investments.

The investments that do not have readily determinable fair value are measured at cost minus impairment, if any, and are adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”).

Non-marketable equity securities also include our investments where we have the ability to exercise significant influence, but not control, over the investee and account for these securities using the equity method of accounting.

Our investments that do not have a readily determinable fair value are measured at cost minus impairment, if any, and are adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”).

Non-marketable equity securities also include our investments where we have the ability to exercise significant influence, but not control, over the investee and these securities are accounted for using the equity method of accounting.

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 consolidated statements of income (loss).

We assess whether an impairment loss on our non-marketable, Measurement Alternative investments has occurred based on qualitative factors such as the companies’ financial condition and business outlook, industry performance, regulatory, economic or technological environment, and other relevant events and factors affecting the company.

We assess whether an impairment loss on our non-marketable equity securities accounted for under the Measurement Alternative has occurred based on qualitative factors such as the companies’ financial condition and business outlook, industry performance, regulatory, economic or technological environment, and other relevant events and factors affecting the company.

We assess whether an other-than-temporary impairment loss on our equity method investments has occurred due to declines in fair value or other market conditions.

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Loans and interest receivable, held for sale

In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to € 40 billion of United Kingdom (“U.K.”) and other European buy now, pay later loan receivables, consisting of eligible loans and interest receivable and a forward-flow arrangement for the sale of future originations of eligible loans over a 24 -month commitment period (together, “eligible consumer installment receivables”).

In June 2023, we entered into a multi-year agreement with a global investment firm to sell United Kingdom (“U.K.”) and other European buy now, pay later loan receivables, consisting of eligible loans and interest receivable and a forward-flow arrangement for the sale of future originations of eligible loans over a 24 -month commitment period (together, “eligible consumer installment receivables”).

In December 2024, this agreement was amended and restated to extend the commitment period to December 2026 and to increase the maximum balance of loans that can be sold at a time.

Following the sale, the global investment firm becomes the owner of the eligible consumer installment receivables sold and we no longer hold an ownership interest in these receivables.

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At the time of reclassification of eligible consumer installment receivables to loans and interest receivable, held for sale in May 2023, any previously recorded allowance for credit losses for loans and interest receivable outstanding was reversed, resulting in a decrease in transaction and credit losses on our consolidated statements of income (loss) for the year ended December 31, 2023.

Loans and interest receivable, held for sale as of December 31, 2023 represents installment consumer receivables that we originated and intend to sell to the global investment firm.

Loans and interest receivable, held for sale as of December 31, 2024 and 2023 represents installment consumer receivables that we originated and intend to sell to the global investment firm.

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 consolidated statements of income (loss).

Interest income on interest bearing held-for-sale loans is accrued and recognized based on the contractual rate of interest.

If PayPal no longer has intent to sell loans and interest receivable, held for sale, such loans would be reclassified to loans and interest receivable, held for investment.

When a loan is reclassified to held for investment, any amounts previously recorded in order to measure the loan at the lower of cost or fair value are reversed on our consolidated statements of income (loss) (recognized within restructuring and other) and the loan is recorded consistent with loans originated as held for investment.

If PayPal no longer intends to sell loans and interest receivable, held for sale, such loans would be reclassified to loans and interest receivable, held for investment.

Loans and interest receivable, net

Loans and interest receivable, net represents merchant receivables originated under our PayPal Working Capital (“PPWC”) product and PayPal Business Loan (“PPBL”) product and consumer loans originated under our PayPal Credit and installment credit products.

PayPal Credit consists of revolving credit products.

Loans and interest receivable, net represents consumer loans originated under our revolving credit products (PayPal Credit) and installment credit products and merchant receivables originated under our PayPal Working Capital (“PPWC”) product and PayPal Business Loan (“PPBL”) product.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In the U.S., PPWC, PPBL, and consumer interest-bearing installment products are provided under a program agreement we have with an independent chartered financial institution (“partner institution”).

The partner institution extends credit to merchants for the PPWC and PPBL products and to consumers for interest-bearing installment products and we purchase the related receivables originated by the partner institution.

For our merchant finance products outside the U.S., we extend working capital advances and loans in the U.K.

and rest of Europe through our U.K.

subsidiary and Luxembourg banking subsidiary, respectively, and working capital loans in Australia through an Australian subsidiary.

In the U.S., consumer interest-bearing installment products, PPWC, and PPBL are provided under a program agreement we have with an independent chartered financial institution (“partner institution”).

The partner institution extends credit to consumers for interest-bearing installment products and to merchants for the PPWC and PPBL products, and we purchase the related receivables originated by the partner institution.

In the U.S., we extend certain short-term, interest-free, installment loans to consumers through a U.S.

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subsidiary and Luxembourg banking subsidiary, respectively, and in Australia and Japan, through local subsidiaries.

As part of our arrangement with the partner institution in the U.S., we sell back a participation interest in the pool of receivables for the PPWC, PPBL, and consumer interest-bearing installment products.

For our merchant finance products outside the U.S., we extend working capital advances and loans in the U.K.

and rest of Europe through our U.K.

subsidiary and Luxembourg banking subsidiary, respectively, and working capital loans in Australia through an Australian subsidiary.

As part of our arrangement with the partner institution in the U.S., we sell back a participation interest in the pool of receivables for the consumer interest-bearing installment products, PPWC, and PPBL.

The partner institution has no recourse against us related to their participation interests for failure of debtors to pay when due.

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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.

Refer to “Note 11—Loans and Interest Receivable” for further information related to loan modifications.

Another partner institution is the exclusive issuer of the PayPal Credit consumer financing program in the U.S.

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The allowance for loans and interest receivable represents our estimate of current expected credit losses inherent in our portfolio of loans and interest receivables.

Increases to the allowance for loans receivable are reflected as a component of transaction and credit losses on our consolidated statements of income (loss).

Increases to the allowance for interest and fees receivable are reflected as a reduction of net revenues on our consolidated statements of income (loss), or as a reduction of deferred revenue when interest and fees are billed at the inception of a loan or advance.

Changes to the allowance for loans receivable are reflected as a component of transaction and credit losses on our consolidated statements of income (loss).

Changes to the allowance for interest and fees receivable are reflected within revenues from other value added services in net revenues on our consolidated statements of income (loss), or within deferred revenue in accrued expenses and other current liabilities on our consolidated balance sheets, when interest and fees are billed at the inception of a loan or advance.

The evaluation process to assess the adequacy of allowances is subject to numerous estimates and judgments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The allowance for consumer loans and interest receivable not classified as held for sale is primarily based on expectations of credit losses based on historical lifetime loss data and incorporates macroeconomic forecasts applied to the portfolio.

The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period.

For both 2024 and 2023, the reasonable and supportable forecast period for revolving products and installment products (not classified as held for sale) that we have included in our projected loss rates, which approximates the estimated life of the loans, was approximately 5 years and 7 months to 3.5 years, respectively.

Projected loss rates (inclusive of historical loss data and for the revolving credit portfolio, macroeconomic factors) are derived based on and applied to the principal amount of our consumer receivables.

We also include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses, such as expectations of macroeconomic conditions not captured in the loss models for our installment products (not classified as held for sale).

The allowance for current expected credit losses on interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination, among other factors.

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.

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.

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

In connection with the sale of our eligible consumer installment receivables and the reclassification of that portfolio as held for sale in 2023, we reversed the previously recorded allowances for credit losses associated with those loans and interest receivable balances.

Charge-offs and any adjustments to the fair value of loans and interest receivable, held for sale, are recorded in restructuring and other on our consolidated statement of income (loss).

The allowance for merchant loans, advances, and interest and fees receivable is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the 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 year ended December 31, 2024.

The merchant loss models incorporate various portfolio attributes including geographic region, first borrowing versus repeat borrowing, delinquency, internally developed risk ratings, and vintage, as well as macroeconomic factors such as forecasted trends in unemployment rates and retail e-commerce sales.

The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period.

The reasonable and supportable forecast period for merchant products that we have included in our projected loss rates for 2023 and 2022, which approximates the estimated life of the loans, is approximately 2.5 to 3.5 years.

The reasonable and supportable forecast period for merchant products that we have included in our projected loss rates for 2024 and 2023, which approximates the estimated life of the loans, was approximately 2.5 to 3.5 years.

Projected loss rates, inclusive of historical loss data and macroeconomic factors, are derived based on and applied to the principal amount of our merchant receivables.

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The allowance for consumer loans and interest receivable not classified as held for sale is primarily based on expectations of credit losses based on historical lifetime loss data.

The allowance for loans and interest receivable for our revolving credit product also incorporates macroeconomic forecasts applied to the portfolio.

In the second quarter of 2023, our expected credit loss models for our revolving consumer receivables were updated.

These changes did not have a material impact on our provision recorded in the year ended December 31, 2023.

The consumer loss models incorporate various portfolio attributes including geographic region, loan term, delinquency, credit rating, vintage, and for the revolving credit portfolio macroeconomic factors such as forecasted trends in household disposable income and retail e-commerce sales (and through the first quarter of 2023, unemployment rates).

The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period.

The reasonable and supportable forecast period for revolving products and installment products (not classified as held for sale) that we have included in our projected loss rates for 2023, which approximates the estimated life of the loans, is approximately 5 years and 7 months to 3.5 years, respectively.

In 2022, the reasonable and supportable forecast periods were consistent with 2023 except for revolving products, which had a reasonable and supportable forecast period of 2 years.

Projected loss rates, inclusive of historical loss data and, for the revolving credit portfolio macroeconomic factors, are derived based on and applied to the principal amount of our consumer receivables.

In connection with the sale of our eligible consumer installment receivables, and the reclassification of that portfolio as held for sale, we reversed the previously recorded allowances for credit losses associated with those loans and interest receivable balances.

Charge-offs and any adjustments to the fair value of loans and interest receivable, held for sale, are recorded in restructuring and other on our consolidated statement of income (loss).

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.

We charge off the receivables outstanding under our PPBL product when the repayments are 180 days past the contractual repayment date.

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.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Customer accounts

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dollar funds which are deposited at one or more third-party financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”) and are eligible for FDIC pass-through insurance (subject to applicable limits).

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may designate up to 50 % of European customer balances held in our Luxembourg banking subsidiary to fund European, U.K., and U.S.

The Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) has agreed that PayPal’s management may designate up to 50 % of European customer balances held in our Luxembourg banking subsidiary to fund European, U.K., and U.S.

credit activities.

As of December 31, 2023 and 2022, the total amount approved by management to be designated to fund credit activities was $ 3.0 billion and $ 3.8 billion, respectively, and represented approximately 39 % and 37 % of European customer balances made available for our corporate use as of those respective dates, as determined by applying financial regulations maintained by the CSSF.

As of December 31, 2024 and 2023, the cumulative amount approved by PayPal to be designated to fund credit activities was $ 2.0 billion and $ 3.0 billion, respectively, and represented approximately 26 % and 39 % of European customer balances made available for our corporate use as of those respective dates, as determined by applying financial regulations maintained by the CSSF.

At the time PayPal’s management designates the European customer balances held in our Luxembourg banking subsidiary to be used to extend credit, the balances are classified as cash and cash equivalents and no longer classified as customer accounts on our consolidated balance sheets.

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See “Note 8—Cash and Cash Equivalents, Funds Receivable and Customer Accounts, and Investments” for additional information related to customer accounts.

We present changes in funds receivable and customer accounts as cash flows from investing activities on our consolidated statements of cash flows based on the nature of the activity underlying our customer accounts.

Under applicable accounting standards, we are an agent when facilitating cryptocurrency transactions on behalf of our customers.

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Funds receivable and funds payable arise due to the time required to initiate collection from and clear transactions through external payment networks.

When customers fund their PayPal account using their bank account, credit card, debit card, or withdraw funds from their PayPal account to their bank account or through a debit card transaction, there is a clearing period before the cash is received or settled, usually one to three business days for U.S.

When customers fund their PayPal account using their bank account, credit card, or debit card, or withdraw funds from their PayPal account to their bank account or through a debit card transaction, there is a clearing period before the cash is received or settled, usually one to three business days for U.S.

transactions and generally up to five business days for international transactions.

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These funds are also classified as funds receivable and funds payable and arise due to the time required to initiate collection from and clear transactions through external payment networks.

We present changes in funds receivable and funds payable and amounts due to customers as cash flows from investing activities and financing activities, respectively, on our consolidated statements of cash flows based on the nature of the activity underlying our customer accounts.

Property and equipment

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Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets;

generally, one to four years for computer equipment and software, including capitalized software and website development costs, three years for furniture and fixtures, up to 30 years for buildings and building improvements, and the shorter of five years or the non-cancelable term of the lease for leasehold improvements.

generally, one to five years for computer equipment and software, including capitalized software and website development costs, three years for furniture and fixtures, up to 30 years for buildings and building improvements, and the shorter of five years or the non-cancelable term of the lease for leasehold improvements.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Direct costs incurred to develop software for internal use and website development costs, including those costs incurred in expanding and enhancing our payments platform, are capitalized and amortized generally over an estimated useful life of three years and are recorded as amortization within the financial statement captions aligned with the internal organizations that are the primary beneficiaries of such assets.

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Costs related to the maintenance of internal use software and website development costs are expensed as incurred.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We determine whether an arrangement is a lease for accounting purposes at contract inception.

Operating leases are recorded as right-of-use (“ROU”) assets which are included in other assets , and lease liabilities which are included in accrued expenses and other current liabilities and other long-term liabilities on our consolidated balance sheets.

ROU assets for finance leases are included in property and equipment, and lease liabilities for finance leases are included in accrued expenses and other current liabilities and other long-term liabilities on our consolidated balance sheets.

For sale-leaseback transactions, we evaluate the sale and the lease arrangement based on our conclusion as to whether control of the underlying asset has been transferred, and recognize the sale-leaseback as either a sale transaction or under the financing method.

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ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Our leases do not provide an implicit rate and therefore we use an incremental borrowing rate for specific terms on a collateralized basis using information available on the commencement date in determining the present value of lease payments.

A majority of our leases do not provide an implicit rate and therefore we use an incremental borrowing rate for specific terms on a collateralized basis using information available on the commencement date in determining the present value of lease payments.

The ROU asset calculation includes lease payments to be made and excludes lease incentives.

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Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Lease expense for finance leases is amortized on a straight-line basis over the lease term, and interest expense for finance lease liabilities is recognized based on the implicit rate or the incremental borrowing rate.

We have lease agreements with lease and non-lease components.

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When a decision has been made to exit a lease prior to the contractual term or to sublease that space, we evaluate the asset for impairment and recognize the associated impact to the ROU asset and related expense, if applicable.

The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level.

The evaluation is performed at the asset group level initially and where appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level.

Undiscounted cash flows expected to be generated by the related ROU assets are estimated over the ROU assets’ useful lives.

If the evaluation indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill and intangible assets

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No significant residual value is estimated for intangible assets.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable.

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The allowance is monitored regularly and is updated based on actual loss data.

The allowance is based on known facts and circumstances, internal factors including experience with similar cases, historical trends involving loss payment patterns, and the mix of transaction and loss types, as applicable.

Additions to the allowance are reflected as a component of transaction and credit losses on our consolidated statements of income (loss).

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For negative customer balances that are not expected to be cured or otherwise collected, we provide an allowance for expected losses.

The allowance represents expected losses based on historical trends involving collection and write-off patterns, internal factors including our experience with similar cases, other known facts and circumstances, and reasonable and supportable macroeconomic forecasts, as applicable.

Loss rates are derived using historical loss data for each delinquency bucket using a roll rate model that captures the losses and the likelihood that a negative customer balance will be written off as the delinquency age of such balance increases.

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Adjustments to the allowance for negative customer balances are recorded as a component of transaction and credit losses on our consolidated statements of income (loss).

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Derivative instruments

See “Note 10—Derivative Instruments” for information related to the derivative instruments.

Repurchase and reverse repurchase agreements

We enter into repurchase agreements as a form of secured borrowing and reverse repurchase agreements as a form of secured lending, primarily to provide additional liquidity and to deploy excess cash.

These agreements are accounted for as collateralized financing transactions.

Repurchase agreements and reverse repurchase agreements are reported in other current liabilities and other current assets, respectively, on our consolidated balance sheet and recorded at amortized cost.

Fair value measurements

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• Level 3 - Unobservable inputs that cannot be directly corroborated by observable market data and that typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

See “Note 9—Fair Value Measurement of Assets and Liabilities” for additional information related to our fair value measurements.

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Concentrations of risk

Our cash, cash equivalents, short-term investments, accounts receivable, loans and interest receivable, net, funds receivable and customer accounts, long-term investments, and long-term notes receivable, are potentially subject to concentration of credit risk.

Our cash, cash equivalents, short-term investments, accounts receivable, loans and interest receivable, net, funds receivable and customer accounts, long-term investments, and other assets, are potentially subject to concentration of credit risk.

Cash, cash equivalents, and customer accounts are placed with financial institutions that management believes are of high credit quality.

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and internationally.

Our loans and interest receivable are derived from merchant and consumer financing activities for customers located in the U.S.

Our loans and interest receivable are derived from consumer and merchant financing activities for customers located in the U.S.

and internationally.

Our long-term notes receivable is derived from deferred proceeds associated with the sale of our U.S.

consumer credit receivables portfolio to a partner institution in 2018.

Our long-term notes receivable and contract asset within other assets are associated with the sale of our U.S.

consumer credit receivables to a partner institution.

Transaction expense is derived from fees paid to payment processors and other financial institutions, located in the U.S.

and internationally, when we draw funds from a customer’s credit or debit card, bank account, or other funding source they have stored in their digital wallet.

As of December 31, 2023 and 2022, one customer accounted for 15 % and 20 % of net accounts receivables, respectively.

As of December 31, 2024 and 2023, one partner institution accounted for 14 % and 15 % of net accounts receivables, respectively.

The same partner institution accounted for our long-term notes receivable and contract asset balance, which represented 17 % and 16 % of other assets at December 31, 2024 and 2023, respectively.

No customer accounted for more than 10% of net loans receivable as of December 31, 2024 and 2023.

At December 31, 2023 and 2022, one partner institution accounted for our long-term notes receivable balance, which represented 16 % and 18 % of other assets, respectively.

During the years ended December 31, 2024, 2023, and 2022, no customer accounted for more than 10% of net revenues.

During the years ended December 31, 2023 and 2022, one payment processor accounted for 60 % and 63 % of transaction expense, respectively.

During the year ended December 31, 2024, two payment processors accounted for 48 % of transaction expense.

During the years ended December 31, 2023 and 2022, one payment processor accounted for 60 % and 63 % of transaction expense, respectively.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue recognition

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Expenses related to our defined contribution savings plans are recorded when services are rendered by our employees.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-based compensation

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We account for Global Intangible Low-Taxed Income as a current-period expense when incurred.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other income (expense), net

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• realized and unrealized gains (losses) on strategic investments, and

• other, which primarily includes foreign currency exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities, forward points on derivative contracts designated as net investment hedges, and fair value changes on the derivative contracts not designated as hedging instruments.

• other, which primarily includes foreign exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities, forward points on derivative contracts designated as net investment hedges, and fair value changes on the derivative contracts not designated as hedging instruments.

Recent accounting guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

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 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 consolidated financial statements.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets .

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

We are required to apply these amendments as a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is adopted.

The adoption of this guidance is not expected to have a material impact on our consolidated financial statements based on our current crypto asset holdings and fair value.

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

We adopted this guidance effective January 1, 2025.

We have applied the amendments of this guidance as a cumulative-effect adjustment to retained earnings.

The adoption of this guidance did not have a significant impact.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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It also requires disaggregating individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

The amended guidance is effective for fiscal years beginning after December 15, 2024.

The amended guidance is effective for annual periods beginning after December 15, 2024.

The guidance can be applied either prospectively or retrospectively.

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

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

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements.

In addition, the guidance requires disclosure of selling expenses and its definition.

The new guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The guidance can be applied either prospectively or retrospectively.

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

In January 2025, the SEC released Staff Accounting Bulletin No.

122 (“SAB 122”) rescinding SAB 121, which required an entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding asset and required disclosures related to the entity’s safeguarding obligations.

SAB 122 is effective for annual periods beginning after December 15, 2024 and is required to be applied on a fully retrospective basis, with early adoption permitted.

Upon adoption we will no longer recognize the crypto asset safeguarding liability and corresponding safeguarding asset on our consolidated financial statements.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Recently adopted accounting guidance

In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326):

Financial Instruments – Credit Losses .

This amended guidance eliminated the accounting designation of a loan modification as a TDR and the measurement guidance for TDRs.

The amendments also enhanced existing disclosure requirements and introduced new requirements related to modifications of receivables due from borrowers experiencing financial difficulty.

Additionally, this guidance required entities to disclose gross charge-offs by year of origination for financing receivables, such as loans and interest receivable.

The amended guidance was effective for fiscal years beginning after December 15, 2022 and was required to be applied prospectively, except for the recognition and measurement of TDRs, which could be applied on a modified retrospective basis.

We adopted this guidance effective January 1, 2023 on a prospective basis.

Our financial statements were not materially impacted upon adoption.

For additional information, see “Note 11—Loans and Interest Receivable.”

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

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.

We adopted this guidance in the fourth quarter of 2024.

For additional information, see “Note 18—Segment Information.”

There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable.

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Our transaction revenues are also reduced by certain incentives provided to our customers.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our contracts with our customers are usually open-ended and can be terminated by either party without a termination penalty after the notice period has lapsed.

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We have concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume.

We do not have any capitalized contract costs and we do not carry any material contract balances.

We do not have any capitalized contract costs.

Our primary service comprises a single performance obligation to complete payments on our payments platform for our customers.

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We are also responsible for providing customer support.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

To promote engagement and acquire new users on our platform, we may provide incentives to merchants and consumers in various forms including discounts on fees, rebates, rewards, and coupons.

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Certain incentives paid to users that are not our customers are classified as sales and marketing expense.

We provide merchants and consumers with protection programs for certain transactions completed on our payments platform.

These programs are intended to protect both merchants and consumers from loss primarily due to fraud and counterparty performance.

We provide merchants and consumers with protection programs for certain purchase transactions completed on our payments platform.

These protection programs help protect both merchants and consumers from financial loss, resulting from, among other things, counterparty non-performance.

These protection programs do not provide a separate service to our customers and we estimate and record associated costs in transaction and credit losses during the period the payment transaction is completed.

REVENUES FROM OTHER VALUE ADDED SERVICES

We earn revenues from other value added services, which are comprised primarily of revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services that we provide to our merchants and consumers.

These contracts typically have one performance obligation which is provided and recognized over the term of the contract.

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Interest and fees earned on the portfolio of loans receivable are computed and recognized based on the effective interest method and are presented net of any required reserves and amortization of deferred origination costs.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We record a contract asset when we have a conditional right to consideration for services we have already transferred to our customer.

These contract assets are included in other assets in our consolidated balance sheets and were $ 207 million and $ 185 million as of December 31, 2024 and 2023, respectively.

DISAGGREGATION OF REVENUE

We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance.

Our CODM is our Chief Executive Officer, who regularly reviews our operating results on a consolidated basis.

We operate as one segment and have one reportable segment.

Based on the information provided to and reviewed by our CODM, we believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets and types of revenue categories (transaction revenues and revenues from other value added services).

We believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets and types of revenue categories (transaction revenues and revenues from other value added services).

Revenues recorded within these categories are earned from similar products and services for which the nature of associated fees and the related revenue recognition models are substantially similar.

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Transaction revenues

$ 28,842 $ 26,857 $ 25,206

Revenues from other value added services

2,955 2,914 2,312

Total net revenues (2)

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

(2) Total net revenues include $ 1.8 billion, $ 1.3 billion, and $ 425 million for the years ended December 31, 2023, 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, including loans and interest receivable held for sale, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.

(2) Total net revenues include $ 2.1 billion, $ 1.8 billion, and $ 1.3 billion for the years ended December 31, 2024, 2023, and 2022, 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

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

Net revenues are attributed to the country in which the party paying our fee is located.

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During periods when we report net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items would decrease the net loss per share.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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for approximately $ 466 million in cash, net of cash divested, and derecognized the assets held for sale, consisting primarily of $ 81 million of goodwill and $ 13 million of net intangible assets.

The sale of Happy Returns will help enable us to focus on our core business and priorities.

The sale of Happy Returns enabled us to focus on our core business and priorities.

A pre-tax gain of $ 339 million, net of transaction costs, was included in restructuring and other in the consolidated statements of income (loss) for the year ended December 31, 2023.

ACQUISITIONS COMPLETED IN 2021

During the year ended December 31, 2021, we completed five acquisitions reflecting 100 % of the equity interests of the acquired companies, for an aggregate purchase price of $ 3.1 billion.

We completed the acquisition of Paidy in October 2021 by acquiring all outstanding shares for total consideration of approximately $ 2.7 billion, consisting of approximately $ 2.6 billion in cash and approximately $ 161 million in assumed restricted stock and restricted stock units, subject to vesting conditions.

Paidy is a two-sided payments platform that primarily provides buy now, pay later solutions (installment credit offerings) in Japan.

With the acquisition of Paidy, we expanded our capabilities and relevance in Japan.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:

(In millions)

Goodwill $ 1,897

Customer lists and user base 512

Marketing related 83

Developed technology 47

Total intangibles $ 642

Loans and interest receivable, net 197

Cash and cash equivalents 102

Other net assets 87

Short-term and long-term debt ( 188 )

Deferred tax liabilities, net ( 166 )

Total purchase price $ 2,571

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.

The excess of the purchase consideration, including the fair value of our equity investment, over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is attributable to the workforce of Paidy and the synergies expected to arise from the acquisition, including continued customer acquisition.

Goodwill was not deductible for income tax purposes.

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.

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.

Other acquisitions

In 2021, we completed four other acquisitions accounted for as business combinations.

The total purchase price for these acquisitions was $ 542 million, consisting primarily of cash consideration.

The allocation of purchase consideration resulted in approximately $ 90 million of technology, customer, and marketing-related intangible assets with estimated useful lives ranging from approximately one to seven years , net assets of $ 17 million, and goodwill of approximately $ 435 million attributable to the workforce of the acquired companies and the synergies expected to arise from these acquisitions, including the integration of the acquired technology with our existing product offerings.

Goodwill was not considered deductible for income tax purposes.

OTHER INFORMATION

Prior to acquisition, we held minority interests in certain of the companies we acquired in 2021.

We remeasured these investments immediately before the completion of the respective acquisitions at a total acquisition-date fair value of $ 64 million, which resulted in an aggregate gain of $ 36 million recognized as other income (expense), net on our consolidated statements of income (loss).

The acquisition-date fair value was derived using the value paid less a control premium based on market analysis performed by a third party.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 5— GOODWILL AND INTANGIBLE ASSETS

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Total goodwill $ 11,209 $ — $ ( 183 ) $ 11,026 $ — $ ( 189 ) $ 10,837

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The adjustments to goodwill during 2024 pertained to foreign currency translation adjustments.

The adjustments to goodwill during 2023 pertained to foreign currency translation adjustments and a reduction in goodwill associated with the divestiture of Happy Returns.

For additional information, see “Note 4—Business Combinations and Divestitures.” The adjustments to goodwill during 2022 pertained primarily to foreign currency translation adjustments.

For additional information, see “Note 4—Business Combinations and Divestitures.”

INTANGIBLE ASSETS

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Amortization Net

Amount Weighted

(Years) Gross

Amount Accumulated

Amortization Net

Amount Weighted

(In millions, except years)

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Intangible assets, net $ 1,096 $ ( 770 ) $ 326 $ 1,245 $ ( 708 ) $ 537

(1) Excludes intangible assets which have been fully amortized, but are still in use.

In the year ended December 31, 2023, we recorded a reduction of approximately $ 36 million of gross intangible assets, with a net carrying amount of $ 13 million, associated with the divestiture of Happy Returns as described in “Note 4—Business Combinations and Divestitures.” In the year ended December 31, 2023, we retired approximately $ 141 million of fully amortized intangible assets, consisting primarily of $ 79 million in customer lists and user base and $ 62 million in developed technology.

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(In millions)

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 6— LEASES

PayPal enters into various leases, which are primarily real estate operating leases.

We use these properties for executive and administrative offices, data centers, product development offices, and customer services and operations centers.

We use these properties for executive and administrative offices, customer services and operations centers, product development offices, and data centers.

PayPal also enters into computer equipment finance leases.

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.

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A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements.

As of December 31, 2023, we had no finance leases.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of lease expense were as follows:

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(In millions)

Lease expense

Operating lease expense $ 159 $ 156 $ 171

Finance lease expense

Amortization of ROU lease assets

Total finance lease expense 8 — —

Sublease income ( 12 ) ( 9 ) ( 8 )

Lease expense, net $ 147 $ 163 $ 162

Total lease expense, net

$ 155 $ 147 $ 163

Supplemental cash flow information related to leases was as follows:

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Operating cash flows from operating leases $ 169 $ 174 $ 172

Financing cash flows from finance leases

ROU lease assets obtained in exchange for new operating lease liabilities

$ 343 $ ( 1 ) $ 131

ROU lease assets obtained in exchange for new finance lease liabilities

Other non-cash ROU lease asset activity (1)

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(In millions, except weighted-average figures)

Operating ROU lease assets $ 390 $ 574

Current operating lease liabilities 144 151

Operating lease liabilities 416 569

Total operating lease liabilities $ 560 $ 720

Weighted-average remaining lease term — operating leases

5.0 years 5.7 years

Weighted-average discount rate — operating leases

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future minimum lease payments for our operating leases as of December 31, 2023 were as follows:

Operating leases

Finance leases

Operating leases

Finance leases

ROU lease assets $ 599 $ 73 $ 390 $ —

Current lease liabilities 135 5 144 —

Long-term lease liabilities 629 18 416 —

Total lease liabilities $ 764 $ 23 $ 560 $ —

Weighted-average remaining lease term 5.9 years 4.4 years 5.0 years —

Weighted-average discount rate 4 % 5 % 4 % — %

Future minimum lease payments for our leases as of December 31, 2024 were as follows:

Operating Leases Finance Leases

Fiscal years:

(In millions)

2025 $ 164 $ 7

Thereafter 198 —

Total $ 877 $ 25

present value discount ( 113 ) ( 2 )

Lease liability $ 764 $ 23

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities.

Finance lease amounts include minimum lease payments under our non-cancelable finance leases primarily for computer equipment.

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

We recognize rent expense under such agreements on a straight-line basis.

Rent expense for the years ended December 31, 2023, 2022, and 2021 totaled $ 183 million, $ 202 million, and $ 192 million, respectively.

As of December 31, 2023, we have additional operating leases, primarily for data centers, which will commence in the first quarter of 2024 or later with minimum lease payments aggregating to $ 242 million and lease terms ranging from five to eight years .

NOTE 7— OTHER FINANCIAL STATEMENT DETAILS

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We allow our customers in certain markets to buy, hold, sell, convert, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout.

These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and PayPal USD stablecoin (collectively, “our customers’ crypto assets”).

These cryptocurrencies consist of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and PayPal USD stablecoin (collectively, “our customers’ crypto assets”).

We engage third parties, which are licensed trust companies, to provide certain custodial services, including holding our customers’ cryptographic key information, securing our customers’ crypto assets, and protecting them from loss or theft, including indemnification against certain types of losses such as theft.

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As of December 31, 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 agreement.

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

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 consolidated balance sheets.

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As of December 31, 2024 and 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.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 December 31, 2024 and 2023:

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Crypto asset safeguarding asset $ 2,886 $ 1,241

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

PROPERTY AND EQUIPMENT, NET

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Total property and equipment, net $ 1,508 $ 1,488

Depreciation and amortization expense was $ 846 million, $ 846 million, and $ 822 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Depreciation and amortization expense was $ 825 million in 2024 and $ 846 million for both 2023 and 2022.

Net changes in accounts payable on our consolidated statements of cash flows includes non-cash investing activities associated with property and equipment;

the impact of which was an increase of $ 7 million in 2023 and a decrease of $ 36 million and $ 27 million in 2022 and 2021, respectively.

the impact of which was an increase of $ 14 million and $ 7 million in 2024 and 2023, respectively, and a decrease of $ 36 million in 2022.

Geographical information

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The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2024:

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

Foreign Currency Translation Adjustment ( “ CTA ”)

Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities Foreign Currency Translation Adjustment ( “ CTA ”)

Net Investment

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Other comprehensive income (loss) before reclassifications 251 108 ( 204 ) 122 ( 73 ) 204

Amount of gain (loss) reclassified from AOCI

Amount of net gains (losses) reclassified from AOCI

48 ( 40 ) — — — 8

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Other comprehensive income (loss) before reclassifications ( 56 ) 434 ( 156 ) 192 ( 144 ) 270

Amount of gain reclassified from AOCI

Amount of net gains (losses) reclassified from AOCI

111 ( 23 ) — — — 88

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Other comprehensive income (loss) before reclassifications 374 ( 499 ) ( 305 ) ( 25 ) 130 ( 325 )

Amount of loss reclassified from AOCI

Amount of net gains (losses) reclassified from AOCI

462 5 — — — 467

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(In millions)

Gains (losses) on cash flow hedges — foreign currency exchange contracts

Net gains (losses) on cash flow hedges — foreign exchange contracts

$ 48 $ 111 $ 462 Net revenues

Losses on available-for-sale debt securities

Net gains (losses) on investments

( 40 ) ( 21 ) — Net revenues

Losses (gains) on available-for-sale debt securities

Net gains (losses) on investments

— ( 2 ) 5 Other income (expense), net

8 88 467 Income before income taxes

— — — Income tax expense (benefit)

— — — Income tax expense

Total reclassifications for the period $ 8 $ 88 $ 467 Net income (loss)

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Total long-term investments $ 4,583 $ 3,273

(1) Includes $ 777 million and $ 780 million of available-for-sale debt securities with original maturities of three months or less as of December 31, 2023 and 2022, respectively.

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

(2) Includes $ 149 million and $ 399 million of available-for-sale debt securities with original maturities of three months or less as of December 31, 2024 and 2023, respectively.

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(In millions)

Cash and cash equivalents:

government and agency securities $ 428 $ — $ — $ 428

Commercial paper 349 — — 349

Funds receivable and customer accounts:

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Corporate debt securities 405 — — 405

Asset-backed securities 1,421 4 ( 2 ) 1,423

Mortgage-backed and asset-backed securities

4,039 13 ( 5 ) 4,047

Municipal securities 503 1 — 504

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Corporate debt securities 1,751 — ( 2 ) 1,749

Asset-backed securities 719 3 ( 4 ) 718

Mortgage-backed and asset-backed securities

Commercial paper 1,281 1 — 1,282

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Corporate debt securities 1,601 3 ( 2 ) 1,602

Asset-backed securities 759 2 — 761

Mortgage-backed and asset-backed securities

1,042 1 ( 1 ) 1,042

Total available-for-sale debt securities (2)

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government and agency securities $ 428 $ — $ — $ 428

Corporate debt securities 100 — — 100

Commercial paper 349 — — 349

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(In millions)

Cash and cash equivalents:

Commercial paper $ 349 $ — $ — $ — $ 349 $ —

Funds receivable and customer accounts:

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Corporate debt securities 105 — 50 — 155 —

Asset-backed securities 253 — 473 ( 2 ) 726 ( 2 )

Mortgage-backed and asset-backed securities

1,673 ( 5 ) 2 — 1,675 ( 5 )

Municipal securities 29 — 36 — 65 —

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government and agency securities — — 186 ( 2 ) 186 ( 2 )

Foreign government and agency securities — — 347 ( 6 ) 347 ( 6 )

Corporate debt securities 618 ( 2 ) 90 — 708 ( 2 )

Asset-backed securities 131 — 144 ( 4 ) 275 ( 4 )

Mortgage-backed and asset-backed securities

250 — 18 — 268 —

Commercial paper 218 — — — 218 —

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Corporate debt securities 347 ( 1 ) 9 ( 1 ) 356 ( 2 )

Asset-backed securities 109 — 195 — 304 —

Mortgage-backed and asset-backed securities

610 ( 1 ) — — 610 ( 1 )

Total available-for-sale debt securities $ 5,636 $ ( 10 ) $ 942 $ ( 5 ) $ 6,578 $ ( 15 )

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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 year ended December 31, 2023, we received $ 4.5 billion in proceeds from the sale of available-for-sale debt securities and incurred gross realized losses of $ 26 million and de minimis gross realized gains, which were determined using the specific identification method.

Amounts reclassified to earnings from unrealized gains and losses were not material for the year ended December 31, 2022 and 2021.

During the years ended December 31, 2024 and 2023, we received $ 33.5 billion and $ 30.3 billion in proceeds from the sales and maturities of available-for-sale debt securities and incurred gross realized losses of $ 44 million and $ 26 million, respectively, and de minimis gross realized gains, which were determined using the specific identification method.

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:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Supplemental cash flow information related to investments

Non-cash investing transactions that are not reflected in the consolidated statement of cash flows for the year ended December 31, 2024 include the purchase of investments of $ 150 million that have not yet settled.

STRATEGIC INVESTMENTS

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Our marketable equity securities have readily determinable fair values and are recorded as long-term investments on our consolidated balance sheets at fair value with changes in fair value recorded in other income (expense), net on our consolidated statements of income (loss).

Marketable equity securities totaled $ 24 million and $ 323 million as of December 31, 2023 and 2022, respectively, including the impact of the sale of marketable equity securities during the year ended December 31, 2023.

Marketable equity securities totaled $ 23 million and $ 24 million as of December 31, 2024 and 2023, respectively.

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

The carrying value of our non-marketable equity securities totaled $ 1.8 billion as of December 31, 2023 and 2022.

The carrying value of our non-marketable equity securities totaled $ 1.5 billion and $ 1.8 billion as of December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, we had non-marketable equity securities of $ 200 million and $ 182 million, respectively, for which we have the ability to exercise significant influence, but not control, over the investee.

8 unchanged sentences

Adjustments related to non-marketable equity securities:

Net additions (1)

Net (sales) additions (1)

Gross unrealized gains 20 32

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Carrying amount, end of period $ 1,336 $ 1,631

(1) Net additions include purchases, reductions due to sales of securities, and reclassifications when the Measurement Alternative is subsequently elected or no longer applies.

(1) Net (sales) additions include purchases, reductions due to sales of securities, and reclassifications when the Measurement Alternative is subsequently elected or no longer applies.

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 December 31, 2024 and 2023, respectively:

3 unchanged sentences

Cumulative gross unrealized losses and impairments $ ( 562 ) $ ( 283 )

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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Cash and cash equivalents (1) :

government and agency securities $ 428 $ — $ 428

Commercial paper 349 — 349

Money market fund

Total cash and cash equivalents

$ 14 $ 14 $ —

Short-term investments (2) :

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Corporate debt securities 1,749 — 1,749

Asset-backed securities 718 — 718

Mortgage-backed and asset-backed securities

Commercial paper 1,282 — 1,282

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Corporate debt securities 667 — 667

Asset-backed securities 1,423 — 1,423

Mortgage-backed and asset-backed securities

4,047 — 4,047

Municipal securities 504 — 504

8 unchanged sentences

Corporate debt securities 1,602 — 1,602

Asset-backed securities 761 — 761

Mortgage-backed and asset-backed securities

1,042 — 1,042

Marketable equity securities 23 23 —

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(3) Excludes cash, time deposits, and funds receivable of $ 23.0 billion underlying funds receivable and customer accounts not measured and recorded at fair value.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other long-term liabilities,” respectively, on our consolidated balance sheets.

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(5) Excludes non-marketable equity securities of $ 1.5 billion measured using the Measurement Alternative or equity method accounting.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2023 Quoted Prices in

5 unchanged sentences

government and agency securities $ 428 $ — $ 428

Corporate debt securities 100 — 100

Commercial paper 349 — 349

18 unchanged sentences

Crypto asset safeguarding asset (4)

1,241 — 1,241

Long-term investments (2), (5) :

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Crypto asset safeguarding liability (4)

1,241 — 1,241

Total financial liabilities $ 1,372 $ — $ 1,372

(1) Excludes cash of $ 8.1 billion not measured and recorded at fair value.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Excludes restricted cash of $ 3 million and time deposits of $ 173 million not measured and recorded at fair value.

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(5) Excludes non-marketable equity securities of $ 1.8 billion measured using the Measurement Alternative or equity method accounting.

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

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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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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).

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.

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 December 31, 2024 and 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).

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December 31, 2024 December 31, 2023

Amortized Cost

Amortized Cost Fair Value Amortized Cost Fair Value

(In millions)

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Funds receivable and customer accounts $ ( 29 ) $ 13

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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Non-marketable equity securities measured using the Measurement Alternative (1)

Other assets (2)

Total $ 1,017 $ 672 $ 345

(1) Excludes non-marketable equity securities of $ 1.2 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2023.

(2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2023.

See “Note 6—Leases” for additional information.

(1) Excludes non-marketable equity securities of $ 860 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2024.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2023 Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3)

(In millions)

Non-marketable equity securities measured using the Measurement Alternative (1)

Loans and interest receivable, held for sale (1)

$ 563 $ — $ 563

Non-marketable equity securities measured using the Measurement Alternative (2)

Other assets (3)

Total $ 1,115 $ 243 $ 872

(1) Excludes non-marketable equity securities of $ 565 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2022.

(1) As of December 31, 2023, loans and interest receivable, held for sale were valued using a price-based model.

The price was the significant unobservable input and was determined based upon certain loan and risk classifications of the portfolio.

Low, high and weighted average prices were all $ 0.99 , measured in relation to $ 1.00 par.

(2) Excludes non-marketable equity securities of $ 1.2 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2023.

(3) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2023.

See “Note 6—Leases” for additional information.

The fair value of loans and interest receivables held for sale is classified within Level 3 as we estimate fair value using significant unobservable inputs.

The significant unobservable input is the price at which the Company expects to sell the loans based upon our agreement with the global investment firm to purchase these loans.

The price is determined based upon certain loan and risk classifications of the portfolio.

The following table presents the valuation techniques covering the majority of Level 3 non-recurring fair value measurements and the most significant unobservable inputs used in those measurements as of December 31, 2023:

(In millions) Methodology Input Low (1)

Weighted Average (1)(2)

Loans and interest receivable, held for sale $ 563 Price-based Price $ 0.99 $ 0.99 $ 0.99

(1) Prices are measured in relation to $ 1.00 par.

(2) Weighted average is calculated based on the fair value of the loans.

Beginning with the first quarter of 2024, we measure loans and interest receivable, held for sale using observable inputs, such as the most recent executed prices for comparable loans sold to the global investment firm.

Accordingly, loans and interest receivable, held for sale are classified within Level 2 in the fair value hierarchy.

Refer to “Note 11—Loans and Interest Receivable” for additional information on loans and interest receivable, held for sale.

We measure the non-marketable equity securities 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.

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The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value using significant unobservable inputs such as when we remeasure due to impairment and use discount rates, forecasted cash flows, and market data of comparable companies, among others.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable.

1 unchanged sentence

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 $ 474 million as of December 31, 2023.

Our notes receivable had a carrying value of approximately $ 441 million and fair value of approximately $ 396 million as of December 31, 2022.

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

Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $ 10.5 billion and fair value of approximately $ 9.8 billion as of December 31, 2024.

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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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SUMMARY OF DERIVATIVE INSTRUMENTS

Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates.

Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign exchange rates.

Our derivatives expose us to credit risk to the extent that our counterparties may be unable to meet the terms of the arrangement.

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We do not use any derivative instruments for trading or speculative purposes.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash flow hedges

We have significant international revenues and expenses denominated in foreign currencies, which subjects us to foreign currency exchange risk.

We have a foreign currency exposure management program in which we designate certain foreign currency exchange contracts, generally with maturities of 12 months or less, to reduce the volatility of cash flows primarily related to forecasted revenues and expenses denominated in certain foreign currencies.

The objective of these foreign currency exchange contracts is to help mitigate the risk that the U.S.

We have significant international revenues and expenses denominated in foreign currencies, which subjects us to foreign exchange risk.

We have a foreign currency exposure management program in which we designate certain foreign exchange contracts, generally with maturities of 12 months or less, to reduce the volatility of cash flows primarily related to forecasted revenues and expenses denominated in certain foreign currencies.

The objective of these foreign exchange contracts is to help mitigate the risk that the U.S.

dollar-equivalent cash flows are adversely affected by changes in the applicable U.S.

1 unchanged sentence

These derivative instruments are designated as cash flow hedges and accordingly, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into revenue or applicable expense line item in the consolidated statements of income (loss) in the same period the forecasted transaction affects earnings.

We evaluate the effectiveness of our foreign currency exchange contracts on a quarterly basis by comparing the critical terms of the derivative instruments with the critical terms of the forecasted cash flows of the hedged item;

We evaluate the effectiveness of our foreign exchange contracts on a quarterly basis by comparing the critical terms of the derivative instruments with the critical terms of the forecasted cash flows of the hedged item;

if the critical terms are the same, we conclude the hedge will be perfectly effective.

2 unchanged sentences

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

As of December 31, 2023, we estimated that $ 57 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.

As of December 31, 2024, we estimated that $ 147 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 years ended December 31, 2024, 2023, and 2022, 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.

1 unchanged sentence

Gains and losses on derivatives held after we discontinue our cash flow hedges and on derivative instruments that are not designated as cash flow hedges are recorded in the same financial statement line item to which the derivative relates.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net investment hedges

We use forward foreign currency exchange contracts to reduce the foreign currency exchange risk related to our investment in certain foreign subsidiaries.

We use forward foreign exchange contracts to reduce the foreign exchange risk related to our investment in certain foreign subsidiaries.

These derivatives are designated as net investment hedges and accordingly, the gains and losses on the portion of the derivatives included in the assessment of hedge effectiveness is recorded in AOCI as part of foreign currency translation.

3 unchanged sentences

We have no t reclassified any gains or losses related to net investment hedges from AOCI into earnings for any of the periods presented.

Foreign currency exchange contracts not designated as hedging instruments

We have a foreign currency exposure management program in which we use foreign currency exchange contracts to offset the foreign currency exchange risk of our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries.

These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on our assets and liabilities.

The gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities are recorded in other income (expense), net, which are offset by the gains and losses on these foreign currency exchange contracts.

Foreign exchange contracts not designated as hedging instruments

We have a foreign currency exposure management program in which we use foreign exchange contracts to offset the foreign exchange risk of our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries.

These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate, the impact of foreign exchange rate movements on our assets and liabilities.

The cash flows associated with our non-designated derivatives used to hedge foreign currency denominated monetary assets and liabilities are classified in cash flows from operating activities on our consolidated statements of cash flows.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FAIR VALUE OF DERIVATIVE CONTRACTS

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(In millions)

Foreign currency exchange contracts designated as hedging instruments Other current assets $ 7 $ 167

Foreign currency exchange contracts designated as hedging instruments Other assets (non-current) 77 15

Foreign currency exchange contracts not designated as hedging instruments Other current assets 57 62

Foreign exchange contracts designated as hedging instruments

Other current assets $ 157 $ 7

Foreign exchange contracts designated as hedging instruments

Other assets (non-current) — 77

Foreign exchange contracts not designated as hedging instruments

Other current assets 86 57

Total derivative assets $ 243 $ 141

Derivative Liabilities:

Foreign currency exchange contracts designated as hedging instruments Other current liabilities $ 64 $ 68

Foreign currency exchange contracts designated as hedging instruments Other long-term liabilities — 133

Foreign currency exchange contracts not designated as hedging instruments Other current liabilities 67 97

Foreign exchange contracts designated as hedging instruments

Other current liabilities $ 10 $ 64

Foreign exchange contracts not designated as hedging instruments

Other current liabilities 27 67

Total derivative liabilities $ 37 $ 131

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 consolidated balance sheets.

Rights of set-off associated with our foreign currency exchange contracts represented a potential offset to both assets and liabilities of $ 38 million as of December 31, 2023 and $ 70 million as of December 31, 2022.

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:

2023 December 31,

(In millions)

Cash collateral posted (1)

Cash collateral received (2)

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

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

EFFECT OF DERIVATIVE CONTRACTS ON CONSOLIDATED FINANCIAL STATEMENTS

7 unchanged sentences

Gains (losses) on derivatives in cash flow hedging relationship:

Amount of gains (losses) on foreign exchange contracts reclassified from AOCI 111 — 462 — ( 190 ) —

Gains on derivatives in net investment hedging relationship:

Amount of gains on foreign exchange contracts excluded from the assessment of effectiveness

Amount of net gains (losses) on foreign exchange contracts reclassified from AOCI

48 — 111 — 462 —

Gains (losses) on derivatives in net investment hedging relationship:

Amount of net gains (losses) on foreign exchange contracts excluded from the assessment of effectiveness

— 67 — 100 — 84

Gains (losses) on derivatives not designated as hedging instruments:

Amount of (losses) gains on foreign exchange contracts

Amount of net gains (losses) on foreign exchange contracts

— 111 — ( 263 ) — 118

1 unchanged sentence

— — — 44 — ( 174 )

Total gains (losses) $ 111 $ ( 119 ) $ 462 $ 28 $ ( 190 ) $ 144

Total net gains (losses)

$ 48 $ 178 $ 111 $ ( 119 ) $ 462 $ 28

(1) During the years ended December 31, 2023 and 2022, equity derivative contracts were entered into and matured in association with the sale of marketable equity securities related to strategic investments.

6 unchanged sentences

(In millions)

Unrealized (losses) gains on foreign exchange contracts designated as cash flow hedges

Unrealized net gains (losses) on foreign exchange contracts designated as cash flow hedges

$ 251 $ ( 56 ) $ 374

Unrealized gains (losses) on foreign exchange contracts designated as net investment hedges

Total net unrealized gains recognized from derivative contracts designated as hedging instruments in the consolidated statements of comprehensive income (loss)

Unrealized net gains (losses) on foreign exchange contracts designated as net investment hedges

122 192 ( 25 )

Total unrealized net gains (losses) recognized from derivative contracts designated as hedging instruments in the consolidated statements of comprehensive income (loss)

$ 373 $ 136 $ 349

NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS

8 unchanged sentences

Total $ 17,259 $ 20,792

MASTER NETTING AGREEMENTS - RIGHTS OF SET-OFF

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 consolidated balance sheets.

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 consolidated balance sheets.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables present the derivative assets, derivative liabilities, repurchase agreements, and reverse repurchase agreements not offset on the consolidated balance sheet but available for offset in the event of default.

The tables also present the cash and non-cash collateral received or pledged relating to these positions.

The amount of collateral presented is limited to the amount presented on our consolidated balance sheet;

therefore, instances of over-collateralization are excluded from the table below.

Amounts not Offset on the Consolidated Balance Sheet

Amounts Presented on the Consolidated Balance Sheet

Financial Instruments (1)

Collateral Received (2)

(In millions)

As of December 31, 2024

Derivative assets (3)

$ 243 $ 23 $ 169 $ 51

Reverse repurchase agreements (4)

$ 330 $ 23 $ 256 $ 51

As of December 31, 2023

Derivative assets (3)

$ 141 $ 38 $ 4 $ 99

Reverse repurchase agreements (4)

$ 141 $ 38 $ 4 $ 99

Amounts not Offset on the Consolidated Balance Sheet

Amounts Presented on the Consolidated Balance Sheet

Financial Instruments (1)

Collateral Pledged (2)

(In millions)

As of December 31, 2024

Derivative liabilities (3)

$ 37 $ 23 $ 7 $ 7

Repurchase agreements

Total liabilities

$ 37 $ 23 $ 7 $ 7

As of December 31, 2023

Derivative liabilities (3)

$ 131 $ 38 $ 54 $ 39

Repurchase agreements

Total liabilities

$ 131 $ 38 $ 54 $ 39

(1) For derivative positions, this includes any derivative fair value that could be offset in the event of counterparty default.

For repurchase or reverse repurchase positions this includes any payable or receivable, respectively, that could be offset in the event of counterparty default.

(2) Includes cash and the fair value of securities exchanged with the counterparty.

For reverse repurchase agreements, these securities are not included in the consolidated balance sheet unless the counterparty defaults.

(3) We received cash collateral from derivative counterparties totaling $ 162 million and $ 6 million as of December 31, 2024 and 2023, respectively, and securities from derivative counterparties with a fair value of $ 30 million and nil as of December 31, 2024 and 2023, respectively.

We posted $ 7 million and $ 80 million of cash collateral as of December 31, 2024 and 2023, respectively.

(4) PayPal is permitted by contract to sell or repledge collateral relating to its reverse repurchase agreements.

The fair value of this collateral was $ 96 million and nil as of December 31, 2024 and 2023, respectively.

We have no t sold or repledged as of both December 31, 2024 and 2023.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 11— LOANS AND INTEREST RECEIVABLE

LOANS AND INTEREST RECEIVABLE, HELD FOR SALE

In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to € 40 billion of our eligible consumer installment receivables portfolio, including a forward-flow arrangement for the sale of future originations.

In June 2023, we entered into a multi-year agreement with a global investment firm to sell our eligible consumer installment receivables portfolio, including a forward-flow arrangement for the sale of future originations.

In December 2024, this agreement was amended and restated to extend the commitment period to December 2026 and to increase the maximum balance of loans that can be sold at a time.

See “Note 1—Overview and Summary of Significant Accounting Policies” for additional information.

During the year ended December 31, 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 December 31, 2023, the total outstanding balance in our held for sale portfolio was $ 563 million.

During the year ended December 31, 2023, we sold $ 5.5 billion of loans and interest receivable in connection with this agreement.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

See “Note 1—Overview and Summary of Significant Accounting Policies” for additional information.

As of December 31, 2024 and 2023, loans and interest receivable, held for sale was $ 541 million and $ 563 million, respectively.

During the years ended December 31, 2024 and 2023, we sold $ 20.8 billion and $ 5.5 billion of loans and interest receivable, respectively, in connection with the above mentioned agreement.

LOANS AND INTEREST RECEIVABLE, NET

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

During the years ended December 31, 2023 and 2022, we purchased approximately $ 670 million and $ 381 million, respectively, in consumer receivables.

During the years ended December 31, 2024 and 2023, we purchased approximately $ 690 million and $ 670 million in consumer receivables, respectively.

As of December 31, 2024 and 2023, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.4 billion and $ 4.8 billion, respectively, net of the participation interest sold to the partner institution of $ 23 million and $ 14 million, respectively.

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We use delinquency status and trends to assist in making (or, for interest-bearing installment loans in the U.S., to assist the partner 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consumer receivables delinquency and allowance

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$ 138 $ 39 $ 133 $ 14 $ — $ — $ 324

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2023

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$ 2,313 $ 2,160 $ 305 $ 2 $ — $ — $ 4,780 100 %

(1) Excludes receivables from other consumer credit products of $ 11 million at December 31, 2022.

Gross charge-offs for the year ended December 31, 2023

$ 125 $ 101 $ 140 $ 5 $ — $ — $ 371

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the years ended December 31, 2024 and 2023:

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(1) Beginning balances, provisions and charge-offs include amounts related to loans and interest receivable prior to their reclassification to loan and interest receivable, held for sale.

(2) Excludes allowances from other consumer credit products of $ 3 million at December 31, 2022.

(2) Includes amounts related to foreign currency remeasurement.

The provision for the year ended December 31, 2023 for our consumer receivable portfolio was primarily attributable to growth in installment loans in the U.S.

and Japan and U.K.

revolving loans as well as a deterioration in credit quality of installment loans in the U.S.

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.

The increase in charge-offs for the year ended December 31, 2023 compared to the same period in the prior year was due to the expansion of our installment products, growth of revolving credit products, and credit deterioration of our U.S.

interest-bearing installment credit products.

The provision for current expected credit losses relating to our consumer receivable portfolio is recognized in transaction and credit losses on our consolidated statements of income (loss).

The provision for interest receivable for interest earned on our consumer receivable portfolio is recognized in revenues from other value added services as a reduction to revenue.

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

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.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The allowance for credit losses at December 31, 2024 for our consumer receivable portfolio was $ 348 million, a decrease from $ 380 million at December 31, 2023.

The decrease in allowance for credit losses was related to the improvement in credit quality of interest-bearing installment loans in the U.S.

offset by the growth of interest-bearing installment loans in the U.S., revolving loans in the U.K., and installment loans in Japan.

Merchant receivables

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For PPBL, we receive fixed periodic payments over the contractual term of the loan, which generally ranges from 3 to 12 months.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We actively monitor receivables with repayment periods greater than the original expected or contractual repayment period, as well as the credit quality of our merchant loans and advances that we extend or purchase, so that we can evaluate, quantify, and manage our credit risk exposure.

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We use delinquency status and trends to assist in making (or, in the U.S., to assist the partner institution in making) ongoing credit decisions, to adjust our internal models, to plan our collection strategies, and in determining our allowance for these loans, advances, and interest and fees receivable.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Merchant receivables delinquency and allowance

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(In millions, except percentages)

2024 2023 2022 2021 2020 Prior

Total Percent

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$ 1,007 $ 134 $ 8 $ 26 $ 18 $ 1,193 100 %

Gross charge-offs for the year ended December 31, 2023

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

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable, for the years ended December 31, 2024 and 2023:

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Ending balance $ 107 $ 6 $ 113 $ 148 $ 12 $ 160

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The provision for the year ended December 31, 2023 was primarily attributable to a deterioration in credit quality of loans outstanding.

Qualitative adjustments were made to account for limitations in our current expected credit loss models due to uncertainty around the financial health of our borrowers, including the effectiveness of loan modification programs made available to merchants, as described further below.

The increase in the charge-offs for the year ended December 31, 2023 compared to the prior year was due to the expansion of acceptable risk parameters in 2022, which resulted in deterioration of the overall credit quality of loans outstanding.

We charge off the receivables outstanding under our PPBL product when the repayments are 180 days past the contractual repayment date.

Bankrupt accounts 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 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 consolidated balance sheets.

Loan modifications for merchants experiencing financial difficulty

In certain instances, we may modify the merchant loans, advances, and interest and fees receivable for which we determine 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 enable us to potentially mitigate losses.

Modifications during the year ended December 31, 2023 were term extensions.

These modifications increased the term, while moving the delinquency status to current.

The following table details merchant loans, advances, and interest and fees receivable as of December 31, 2023 that were modified through a term extension to a merchant experiencing financial difficulty during the year ended December 31, 2023, and the financial effect of those modifications:

Year Ended December 31, 2023

Merchant loans, advances, and interest and fees receivables:

Amortized cost basis (in millions) $ 103

Modifications as % of merchant loans, advances, and interest and fees receivables 9 %

Weighted average term extension (months) 24

We closely monitor the performance of the merchant loans, advances, and interest and fees receivable that were modified to extend the term to understand the effectiveness of these modification efforts.

The following table depicts the performance of merchant loans, advances, and interest and fees receivable as of December 31, 2023 that have been modified during the year ended December 31, 2023:

December 31, 2023

(In millions)

Merchant loans, advances, and interest and fees receivables:

30 - 59 days past due 9

60 - 89 days past due 7

90 - 179 days past due 12

A merchant is considered in payment default after a modification when the merchant’s payment is 60 days past their expected or contractual repayment date.

Merchant loans, advances, and interest and fees receivable modified to extend the term since January 1, 2023 that subsequently defaulted were not material during the year ended December 31, 2023.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Allowances for merchant loans, advances, and interest and fees receivable modified due to merchants experiencing financial difficulties are assessed separately from other loans and advances within our portfolio and are determined by estimating current expected credit losses utilizing the modified term.

Historical loss estimates are utilized in addition to macroeconomic assumptions to determine current expected credit losses.

Further, we may include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses.

The allowance for credit losses at December 31, 2024 for our merchant receivable portfolio was $ 113 million, a decrease from $ 160 million at December 31, 2023.

The decrease in allowance for credit losses was related to the improvement in credit quality of the PPBL portfolio.

NOTE 12— DEBT

FIXED RATE NOTES

In May 2024, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 1.3 billion.

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

In June 2023, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of ¥ 90 billion (approximately $ 574 million as of December 31, 2024).

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In September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 5.0 billion.

Interest on these notes is payable in arrears semiannually (payable on April 1 and October 1).

The notes issued from the 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.

Interest on these notes is payable on April 1 and October 1.

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.” Interest on the Notes is payable in arrears semiannually.

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.

Upon the occurrence of both a change of control of the Company and a downgrade of the Notes below an investment grade rating, we will be required to offer to repurchase each series of Notes at a price equal to 101 % of the then outstanding principal amounts, plus accrued and unpaid interest.

The Notes are subject to covenants, including limitations on our ability to create liens on our assets, enter into sale and leaseback transactions, and merge or consolidate with another entity, in each case subject to certain exceptions, limitations, and qualifications.

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, acquisitions of businesses, assets, or strategic investments.

In May 2022, we repurchased certain notes under the September 2019 and May 2020 debt issuances prior to maturity through tender offers.

In addition, in June 2022, we redeemed the outstanding balance of the notes maturing in September 2022 through a make-whole redemption.

We repurchased and redeemed $ 1.6 billion of outstanding notes, as described above, which resulted in de minimis debt extinguishment net gains that were recorded as interest expense within other income (expense), net on our consolidated statements of income (loss) for the year ended December 31, 2022.

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, assets, or strategic investments.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2023 and 2022, we had an outstanding aggregate principal amount of $ 10.6 billion and $ 10.4 billion, respectively, related to the Notes.

The following table summarizes the Notes:

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

The following table summarizes the Notes outstanding:

As of December 31,

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6/1/2050 3.33 % 1,000 1,000

Fixed-rate 3.250 % notes

6/1/2050 3.33 % 1,000 1,000

May 2022 debt issuance:

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6/9/2028 1.31 % 236 262

May 2024 debt issuance:

Fixed-rate 5.150 % notes

6/1/2034 5.35 % 850 —

Fixed-rate 5.500 % notes

6/1/2054 5.66 % 400 —

Total term debt

$ 10,574 $ 10,638

Unamortized premium (discount) and issuance costs, net ( 78 ) ( 68 )

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CREDIT FACILITIES

Five-year revolving credit facility

In June 2023, we entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $ 5.0 billion, five-year revolving credit facility and terminated the facility entered into in September 2019.

Revolving credit facility

In June 2023, we entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $ 5.0 billion, five-year revolving credit facility.

The Credit Agreement includes a $ 150 million letter of credit sub-facility and a $ 600 million swingline sub-facility, with available borrowings under the revolving credit facility reduced by the amount of any letters of credit and swingline borrowings outstanding from time to time.

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

As of December 31, 2023, no borrowings or letters of credit were outstanding under the Credit Agreement.

As of December 31, 2024 and 2023, no borrowings or letters of credit were outstanding under the Credit Agreement.

Accordingly, at December 31, 2024, $ 5.0 billion of borrowing capacity was available for the purposes permitted by the Credit Agreement, subject to customary conditions to borrowing.

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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 $ 574 million as of December 31, 2024).

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 %.

The Paidy Credit Agreement will terminate and all amounts owed thereunder will be due and payable in February 2027, unless the commitments are terminated earlier.

The Paidy Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders.

The negative covenants include restrictions regarding the incurrence of liens and subsidiary indebtedness, in each case subject to certain exceptions.

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

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2024 and 2023, ¥ 90.0 billion (approximately $ 574 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 consolidated balance sheets.

At December 31, 2023, ¥ 40.0 billion (approximately $ 283 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions to borrowing.

At December 31, 2024, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.

During the years ended December 31, 2024, 2023, and 2022, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

Other available facilities

As of December 31, 2023, we had a short-term borrowing of $ 359 million due to a bank overdraft, which was recorded in accrued expenses and other liabilities on our consolidated balance sheet.

The weighted average interest rate on the borrowing was 7.92 %.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2024 and 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 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 year ended December 31, 2024.

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

We also maintain uncommitted credit facilities in various regions throughout the world, which had a borrowing capacity of approximately $ 80 million in the aggregate, as of December 31, 2024 and 2023.

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Interest rate terms for these facilities vary by region and reflect prevailing market rates for companies with strong credit ratings.

As of December 31, 2023, the majority of the borrowing capacity under these credit facilities was available, subject to customary conditions to borrowing.

As of December 31, 2024, substantially all of the borrowing capacity under these credit facilities was available, subject to customary conditions to borrowing.

FUTURE PRINCIPAL PAYMENTS

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NOTE 13— COMMITMENTS AND CONTINGENCIES

As of December 31, 2023 and 2022, approximately $ 6.2 billion and $ 4.9 billion, respectively, 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 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.

LITIGATION AND REGULATORY MATTERS

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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.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material for the year ended December 31, 2024.

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If any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our business, financial position, results of operations, or cash flows.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Regulatory proceedings

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The enforceable undertaking requires PPAU to appoint an external auditor.

The external auditor was appointed on June 22, 2023 and will assess and report on the appropriateness, sustainability and efficacy of the actions to be taken under the AAP.

The external auditor’s final report to PPAU and AUSTRAC is due on or before April 16, 2024.

The external auditor was appointed on June 22, 2023 to assess and report on the appropriateness, sustainability and efficacy of the actions to be taken under the AAP.

PPAU provided the external auditor’s final report to AUSTRAC on April 16, 2024.

The successful completion of the enforceable undertaking is subject to AUSTRAC’s ultimate review and decision based on the external auditor’s final report.

We cannot predict the outcome of the external auditor’s final report or AUSTRAC’s decision.

We cannot predict the outcome of AUSTRAC’s decision.

Any failure to comply with the enforceable undertaking could result in penalties or require us to change our business practices.

We have received Civil Investigative Demands (“CIDs”) from the Consumer Financial Protection Bureau (“CFPB”) related to Venmo’s unauthorized funds transfers and collections processes, and related matters, including treatment of consumers who request payments but accidentally designate an unintended recipient.

The CIDs request the production of documents and answers to written questions.

We are cooperating with the CFPB in connection with these CIDs.

In February 2022, we received a CID from the Federal Trade Commission (“FTC”) related to PayPal’s practices relating to commercial customers that submit charges on behalf of other merchants or sellers, and related activities.

In February 2022, we received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) related to PayPal’s practices relating to commercial customers that submit charges on behalf of other merchants or sellers, and related activities.

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

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We are cooperating with the FCO in connection with this proceeding.

In October 2023, we received a CID from the CFPB related to investigation and error-resolution obligations under Regulation E, the presentment of transactions to linked bank accounts, and related matters.

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

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

On November 1, 2023, we received a subpoena from the U.S.

We have received CIDs from the Consumer Financial Protection Bureau (“CFPB”) related to investigation and error-resolution obligations under Regulation E, the presentment of transactions to linked bank accounts, and related matters.

The CIDs request the production of documents and answers to written questions.

We are cooperating with the CFPB in connection with these CIDs.

In November 2023, we received a subpoena from the U.S.

SEC Division of Enforcement relating to PayPal USD stablecoin.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

On December 16, 2021 and January 19, 2022, two related putative shareholder derivative actions captioned Pang v.

Daniel Schulman, et al.

21-cv-09720, and Lalor v.

Daniel Schulman, et al.

22-cv-00370, respectively, were filed in the U.S.

District Court for the Northern District of California (the “California Derivative Actions”), purportedly on behalf of the Company.

On August 2, 2022, a related putative shareholder derivative action captioned Jefferson v.

Daniel Schulman, et al.

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.

The Derivative Actions are based on the same alleged facts and circumstances as the putative securities class action captioned Kang v.

PayPal Holdings, Inc., et al.

21-cv-06468, that was filed in the U.S.

District Court for the Northern District of California (the “Kang Securities Action”), and name certain of our officers, including our former 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 (“Exchange Act”), and seek to recover damages on behalf of the Company.

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.

On June 29, 2023, following the final dismissal of the Kang Securities Action, the Court ordered a stipulation dismissing the California Derivative Actions, without prejudice, and on July 7, 2023, the Court ordered a stipulation dismissing the Delaware Derivative Action, without prejudice.

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.

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The PPH 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.

The PPH 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 alleged violations of Sections 10(b) of the Exchange Act against the Company, as well as its former Chief Executive Officer, former Chief Strategy, Growth and Data Officer, and former Chief Financial Officer (collectively, the “Individual Defendants,” and together with the Company, “Defendants”), and for alleged violations of Sections 20(a) and 20A of the Exchange Act against the Individual Defendants.

The complaint alleges that certain public statements made by the Defendants 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.

The PPH 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 alleged violations of Section 10(b) of the Exchange Act against the Company, as well as its former Chief Executive Officer, former Chief Strategy, Growth and Data Officer, and former Chief Financial Officer (collectively, the “Individual Defendants,” and together with the Company, “Defendants”), and for alleged violations of Sections 20(a) and 20A of the Exchange Act against the Individual Defendants.

The complaint alleges that certain public statements made by Defendants 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.

The PPH Securities Action seeks unspecified compensatory damages on behalf of the putative class members.

Defendants have filed a motion to dismiss the PPH Securities Action, which is fully briefed and pending before the court.

Defendants have filed a motion to dismiss the PPH Securities Action.

On January 29, 2025, the Court dismissed all of the claims without prejudice.

The lead plaintiff has until March 17, 2025 to file an amended complaint.

On November 2, 2022, a putative shareholder derivative action captioned Shah v.

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District Court for the District of New Jersey (the “Nelson Action”) purportedly on behalf of the Company.

The Shah and Nelson Actions are based on the same alleged facts and circumstances as the PPH Securities Action, and name certain of our officers, including our former Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants.

The Shah and Nelson Actions allege claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement and violations of the Exchange Act, and seek to recover damages on behalf of the Company.

On January 31, 2025, a putative shareholder derivative action captioned Spathias v.

Daniel Schulman, et al.

25-cv-1007, was filed in the U.S.

District Court for the Northern District of California (the “Spathias Action,” and collectively, the “Derivative Actions”).

The Derivative Actions are based on the same alleged facts and circumstances as the PPH Securities Action, and name certain of our officers, including our former 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, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement and violations of the Exchange Act, and seek to recover damages on behalf of the Company.

The Shah and Nelson Actions have been stayed pending further developments in the PPH Securities Action.

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On July 14, 2023, the court denied Defendants’ motion to dismiss the complaint.

Trial is scheduled to begin in April 2025.

Trial is scheduled to begin in October 2025.

PayPal Holdings, Inc.

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Intellectual property claims, whether meritorious or not, are time-consuming and costly to defend and resolve, could require expensive changes in our methods of doing business, or could require us to enter into costly royalty or licensing agreements on unfavorable terms or make substantial payments to settle claims or to satisfy damages awarded by courts.

From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business, including suits by our customers (individually or as class actions) or regulators alleging, among other things, improper disclosure of our prices, rules, or policies, that our practices, prices, rules, policies, or customer/user agreements violate applicable law, or that we have acted unfairly or not acted in conformity with such prices, rules, policies, or agreements.

In addition to these types of disputes and regulatory inquiries, our operations are also subject to regulatory and legal review and challenges that may reflect the increasing global regulatory focus to which the payments industry is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on our business and customers and may lead to increased costs and decreased transaction volume and revenue.

From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business, including suits by our consumers (individually or as class actions), merchants or regulators alleging, among other things, improper disclosure of our prices, rules, or policies, that our practices, prices, rules, policies, or user, product, business or merchant agreements violate applicable law, or that we have acted unfairly or not acted in conformity with such prices, rules, policies, or agreements.

In addition to these types of disputes and regulatory inquiries, our operations are also subject to regulatory and legal review and challenges that may reflect the increasing global regulatory focus to which the payments industry is subject and, when taken together with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on our business and customers and may lead to increased costs and decreased transaction volume and revenue.

Further, the number and significance of these disputes and inquiries are increasing as our business has grown and expanded in scale and scope, including the number of active accounts and payments transactions on our platform, the range and increasing complexity of the products and services that we offer, and our geographical operations.

Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, settlement payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines, penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, or otherwise harm our business.

Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, settlement payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines, penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require us to change our products, services or business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, or otherwise harm our business.

INDEMNIFICATION PROVISIONS

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Under these contracts, we generally indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with claims by any third party with respect to our domain names, trademarks, logos, and other branding elements to the extent that such marks are related to the subject agreement.

We have provided an indemnity for other types of third-party claims, which may include indemnities related to intellectual property rights, confidentiality, willful misconduct, data privacy obligations, and certain breach of contract claims, among others.

We have also provided an indemnity to our payments processors in the event of card association fines against the processor arising out of conduct by us or our customers.

These indemnification provisions generally include indemnity for other types of third-party claims, which may be related to intellectual property rights, confidentiality, willful misconduct, data privacy obligations, and certain breach of contract claims, among others.

These indemnification provisions generally also include indemnity to our payments processors in the event of card association fines against the processor arising out of conduct by us or our customers.

It is not possible to determine the maximum potential loss under these indemnification provisions due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular situation.

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Small Business Administration.

Loans made under this program are funded by an independent chartered financial institution that we partner with.

We receive a fee for providing services in connection with these loans and retain operational and audit risk related to those activities.

Loans made under this program were funded by an independent chartered financial institution that we partnered with.

We received a fee for providing services in connection with these loans and retained operational and audit risk related to those activities.

We have agreed, under certain circumstances, to indemnify the chartered financial institution and its assignee of a portion of these loans in connection with the services provided for loans made under this program.

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

As of December 31, 2023, the current outstanding balances of the loans sold was $ 2.2 billion.

As of December 31, 2024 and 2023, the current outstanding balances of the loans sold was $ 2.9 billion and $ 2.2 billion, respectively.

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

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PROTECTION PROGRAMS

We provide merchants and consumers with protection programs for certain transactions completed on our payments platform.

These programs are intended to protect both merchants and consumers from loss primarily due to fraud and counterparty performance.

Our Purchase Protection Program provides protection to consumers for qualifying purchases by reimbursing the consumer for the full amount of the purchase if a purchased item does not arrive or does not match the seller’s description.

Our Seller Protection Programs provide protection to merchants against claims that a transaction was not authorized by the buyer or claims that an item was not received by covering the seller for the full amount of the payment on eligible sales.

In addition to the protections afforded by applicable law, we provide consumers and merchants with protection programs for certain purchase transactions completed on our payments platform.

Our protection programs help protect both consumers and merchants from financial loss resulting from, among other things, counterparty non-performance.

These programs are designed to promote confidence on the part of both consumers, who will be reimbursed in certain circumstances, such as not receiving their purchased item in the condition significantly as described, as well as merchants, who will receive payment in certain circumstances, such as establishing proof of shipment or delivery of an item to the customer.

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.

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This program became effective in the first quarter of 2023 upon completion of the July 2018 stock repurchase program.

In February 2025, 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.

Our stock repurchase programs are intended to offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, may also be used to make opportunistic repurchases of our common stock to reduce outstanding share count.

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We may terminate our stock repurchase programs at any time without prior notice.

During the year ended December 31, 2023, we repurchased approximately 74 million shares of our common stock for approximately $ 5.0 billion at an average cost of $ 67.72 .

These shares were purchased in the open market under our stock repurchase programs authorized in July 2018 and June 2022.

During the year ended December 31, 2024, we repurchased approximately 92 million shares of our common stock for approximately $ 6.0 billion at an average cost of $ 65.55 , excluding excise tax.

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

As of December 31, 2024, a total of approximately $ 4.9 billion remained available for future repurchases of our common stock under our June 2022 stock repurchase program.

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

During the year ended December 31, 2023, we recorded $ 44 million in excise tax within treasury stock on our consolidated balance sheets.

During the years ended December 31, 2024 and 2023, we recorded $ 50 million and $ 44 million in excise tax within treasury stock on our consolidated balance sheets, respectively.

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

During the year ended December 31, 2023, we repurchased approximately 74 million shares of our common stock for approximately $ 5.0 billion at an average cost of $ 67.72 , excluding excise tax.

These shares were purchased in the open market under our stock repurchase programs authorized in July 2018 and June 2022.

As of December 31, 2023, a total of approximately $ 10.9 billion remained available for future repurchases of our common stock under our June 2022 stock repurchase program.

During the year ended December 31, 2022, we repurchased approximately 41 million shares of our common stock for approximately $ 4.2 billion at an average cost of $ 103.47 .

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As of December 31, 2022, a total of approximately $ 861 million and $ 15.0 billion remained available for future repurchases of our common stock under our July 2018 and June 2022 stock repurchase programs, respectively.

During the year ended December 31, 2021, we repurchased approximately 15 million shares of our common stock for approximately $ 3.4 billion at an average cost of $ 219.75 .

These shares were purchased in the open market under our stock repurchase program authorized in July 2018.

As of December 31, 2021, a total of approximately $ 5.1 billion remained available for future repurchases of our common stock under our July 2018 stock repurchase program.

Shares of common stock repurchased for the periods presented were recorded as treasury stock for the purposes of calculating net income (loss) per share and were accounted for under the cost method.

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NOTE 15— STOCK-BASED AND EMPLOYEE SAVINGS PLANS

EQUITY INCENTIVE PLANS

EQUITY INCENTIVE PLAN

Under the terms of the Amended and Restated PayPal Holdings, Inc.

2015 Equity Incentive Award Plan (the “Plan”), equity awards, including restricted stock units (“RSUs”), restricted stock awards, performance based restricted stock units (“PBRSUs”), stock options, deferred stock units, and stock payments, may be granted to our directors, officers, and employees.

In May 2023, our stockholders approved an additional authorization of 34.6 million shares to the Plan, and in June 2023, the Company filed a post-effective amendment to the registration statement for the PayPal Holdings, Inc.

2022 Inducement Plan (“Inducement Plan”), which enabled 2.6 million shares previously issuable under the Inducement Plan to be included in the 34.6 million additional shares issuable under the Plan.

At December 31, 2023, approximately 72 million shares were authorized under the Plan and approximately 45 million shares were available for future grant, and no shares were available for future grant under the Inducement Plan.

In May 2024, our stockholders approved the authorization of an additional 20 million shares to the Plan.

At December 31, 2024, approximately 76 million shares were authorized under the Plan and approximately 46 million shares were available for future grant.

Shares issued as a result of stock option exercises and the release of stock awards were funded primarily with the issuance of new shares of common stock.

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The cost of RSUs granted is determined using the fair market value of PayPal’s common stock on the date of grant.

Certain of our executives and non-executives are eligible to receive PBRSUs, which are equity awards that may be earned based on an initial target number.

The final number of PBRSUs may vest and settle depending on the Company’s performance against pre-established performance metrics over a predefined performance period.

PBRSUs granted under the Plan generally have one to three-year performance periods with cliff vesting following the completion of the performance period, subject to the Compensation Committee’s approval of the level of achievement against the pre-established performance targets.

Over the performance period, the number of PBRSUs that may be issued and related stock-based compensation expense that is recognized is adjusted upward or downward based upon the probability of achieving the approved performance targets against the performance metrics.

Depending on the probability of achieving the pre-established performance targets, the number of PBRSUs issued could range from 0 % to 200 % of the target amount.

Certain of our executives and non-executives are eligible to receive PBRSUs, which are equity awards that may be earned based upon the Company’s performance relative to pre-established market or performance targets over performance periods of one to three years .

We estimate the fair value of market-based PBRSU awards at the date of grant using a Monte Carlo valuation methodology that incorporates into the valuation the possibility that the market condition might not be satisfied.

The total estimated fair value is amortized over each award’s performance period regardless of whether the condition is satisfied.

The number of shares that vest at the end of each performance period will vary based on the performance against specified market conditions.

PBRSUs that are subject to a performance condition may vest and settle depending on the Company’s performance against pre-established performance metrics over a predefined performance period.

PBRSUs with only a performance condition generally are cliff vested following the completion of the performance period, subject to the Compensation Committee’s approval of the level of achievement against the pre-established performance targets.

Over the performance period, the number of PBRSUs with only a performance condition that may be issued, and related stock-based compensation expense that is recognized, is adjusted upward or downward based upon the probability of achieving the approved performance targets.

Depending on the probability of achieving the pre-established performance targets, the number of PBRSUs with only a performance condition issued could range from 0 % to 200 % of the target amount.

All stock options under the Plan were assumed in connection with acquisitions on the same terms and conditions (including vesting) applicable to such acquired companies’ equity awards.

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As of December 31, 2024, approximately 42 million shares were reserved for future issuance under the ESPP.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

RSU, PBRSU, AND RESTRICTED STOCK ACTIVITY

The following table summarizes RSU, PBRSU, and restricted stock activity under the Plan and the Inducement Plan as of December 31, 2023 and changes during the year ended December 31, 2023:

The following table summarizes RSU, PBRSU, and restricted stock activity under the Plan as of December 31, 2024 and changes during the year ended December 31, 2024:

Units Weighted Average Grant-Date

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(1) Includes approximately 1.1 million of additional PBRSUs issued during 2024 due to the achievement of company performance metrics on awards granted in previous years.

During the years ended December 31, 2023, 2022, and 2021, the aggregate intrinsic value of RSUs and PBRSUs vested under the Plan was $ 752 million, $ 935 million, and $ 3.4 billion, respectively.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In the year ended December 31, 2023, the Company granted 2.3 million PBRSUs with a one-year performance period (fiscal 2023), which which will become fully vested following the completion of the performance period in February 2024 ( one year from the annual incentive award cycle grant date), and 1.8 million PBRSUs with a three-year performance period.

In the year ended December 31, 2022, the Company granted 1.5 million PBRSUs with a one-year performance period (fiscal 2022), of which 1.0 million were subsequently cancelled due to the change in method of payout of the Company portion of our Annual Incentive Plan from equity to cash for certain employees.

As such, 0.5 million PBRSUs became fully vested following the completion of the performance period in February 2023 ( one year from the annual incentive award cycle grant date).

In the year ended December 31, 2022, the Company also granted 1.1 million PBRSUs with a three-year performance period.

During the years ended December 31, 2024, 2023, and 2022, the aggregate intrinsic value of RSUs and PBRSUs vested under the Plan was $ 1.1 billion, $ 752 million, and $ 935 million, respectively.

In the year ended December 31, 2024, the Company granted 1.9 million PBRSUs with a three-year performance period.

In the year ended December 31, 2023, the Company granted 2.3 million PBRSUs with a one-year performance period (fiscal 2023), which became fully vested following the completion of the performance period in February 2024 ( one year from the annual incentive award cycle grant date), and 1.8 million PBRSUs with a three-year performance period.

STOCK OPTION ACTIVITY

The following table summarizes stock option activity of our employees under the Plan for the year ended December 31, 2024:

Shares Weighted

Price Weighted

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Outstanding at January 1, 2024 72 $ 15.18

Assumed — $ —

Exercised ( 34 ) $ 16.50

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Options exercisable 36 $ 13.90 2.92 $ 2,659

No options were granted or assumed during the year ended December 31, 2023.

The weighted average grant date fair value of options assumed from acquisitions during the years ended December 31, 2022 and 2021 was $ 147.92 and $ 237.26 , respectively.

(1) “—” Denotes shares of less than a thousand.

No options were granted or assumed during the years ended December 31, 2024 and 2023.

The weighted average grant date fair value of options assumed from acquisitions during the year ended December 31, 2022 was $ 147.92 .

The aggregate intrinsic value was calculated as the difference between the exercise price of the underlying options and the quoted price of our common stock at December 31, 2024.

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STOCK-BASED COMPENSATION EXPENSE

Stock-based compensation expense for the Plan and the Inducement Plan is measured based on estimated fair value at the time of grant, and recognized over the award’s vesting period.

T he impact on our results of operations of recording stock-based compensation expense under the equity incentive plans for the years ended December 31, 2023, 2022, and 2021 was as follows:

Stock-based compensation expense for the Plan is measured based on their estimated fair value at the time of grant, and recognized over the award’s vesting period.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

T he impact on our results of operations of recording stock-based compensation expense under the Plan for the years ended December 31, 2024, 2023, and 2022 was as follows:

Year Ended December 31,

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General and administrative 339 434 383

Restructuring and other

Total stock-based compensation expense $ 1,293 $ 1,530 $ 1,315

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$ 205 $ 136 $ 182

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2024, there was approximately $ 1.3 billion of unearned stock-based compensation that is expected to be recognized over a weighted average period of 1.83 years.

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Income before income taxes $ 5,329 $ 5,411 $ 3,366

The income tax expense (benefit) was composed of the following:

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The income tax expense was composed of the following:

Year Ended December 31,

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Foreign 502 657 966

Total current portion of income tax expense $ 1,833 $ 1,758 $ 412

Total current portion of income tax expense (benefit)

$ 951 $ 1,833 $ 1,758

Federal $ 278 $ ( 490 ) $ ( 563 )

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Total deferred portion of income tax expense (benefit) 231 ( 668 ) ( 811 )

Income tax expense (benefit) $ 1,165 $ 947 $ ( 70 )

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income tax expense

$ 1,182 $ 1,165 $ 947

The following is a reconciliation of the difference between the effective income tax rate and the federal statutory rate:

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Effective income tax rate 22.2 % 21.5 % 28.1 %

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the year in which the differences are expected to reverse.

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If not utilized, a portion of these losses will begin to expire in 2025.

As of December 31, 2023, our California research and development tax credit carryforwards for income tax purposes were approximately $ 264 million, which may be carried forward indefinitely.

It is more likely than not that most of these net operating loss and tax credit carryforwards will not be realized;

It is more likely than not that most of these net operating loss carryforwards will not be realized;

therefore, we have recorded a valuation allowance against them.

Repatriation of our foreign earnings for use in the United States is generally not expected to result in a significant amount of income taxes;

As of December 31, 2024, our California research and development tax credit carryforwards for income tax purposes were approximately $ 270 million, which may be carried forward indefinitely.

Repatriation of our foreign earnings for use in the U.S.

is generally not expected to result in a significant amount of income taxes;

as a result, the corresponding deferred tax liability we have accrued is not material.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We benefit from agreements concluded in certain jurisdictions, most significantly Singapore.

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We review our compliance on an annual basis to ensure we continue to meet our obligations under this agreement.

Before taking into consideration the effects of the U.S.

Tax Cuts and Jobs Act and other indirect tax impacts, this agreement resulted in tax savings of approximately $ 441 million, $ 510 million, and $ 327 million in 2023, 2022, and 2021, respectively.

The benefit of this agreement on our net income (loss) per share (diluted) was approximately $ 0.40 , $ 0.44 , and $ 0.28 in 2023, 2022, and 2021, respectively.

This agreement resulted in tax savings of approximately $ 473 million, $ 441 million, and $ 510 million in 2024, 2023, and 2022, respectively.

Excluding the effect of U.S.

and foreign tax legislation the benefit of this agreement on our net income (loss) per share (diluted) was approximately $ 0.46 , $ 0.40 , and $ 0.44 in 2024, 2023, and 2022, respectively.

These results may further vary based on our overall tax profile.

The Organization for Economic Co-operation and Development (“OECD”) has published model rules, which include the implementation of a global minimum tax rate of 15%, commonly referred to as Pillar Two.

Certain countries in which we do business have enacted implementing legislation effective January 1, 2024.

Based on the Company’s analysis of such enacted legislation for jurisdictions in which we operate, there was not a material impact to the Company’s 2024 income tax provision.

PayPal Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table reflects changes in unrecognized tax benefits for the periods presented below:

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The material jurisdictions in which we are subject to examination by tax authorities for tax years after 2012 primarily include the U.S.

(Federal and California), Germany, India, Israel, and Singapore.

(Federal and California), India, Israel, and Singapore.

We believe that adequate amounts have been reserved for any adjustments that may ultimately result from our open examinations.

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

It is reasonably possible that within the next twelve months, we will receive additional tax adjustments by various tax authorities or possibly reach resolution of these audits in one or more jurisdictions.

These adjustments or settlements could result in changes to our contingencies related to positions on prior year tax filings.

Given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

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.

It is reasonably possible that within the next twelve months, we may receive additional tax adjustments by various tax authorities or possibly reach resolution of audits in one or more jurisdictions.

These adjustments or settlements could result in changes to our unrecognized tax benefits related to positions on prior year tax filings.

Given the number of years remaining subject to examination and the number of matters being examined, we were unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

In connection with our separation from eBay in 2015, we entered into various agreements that govern the relationship between the parties going forward, including a tax matters agreement.

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RESTRUCTURING

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 in 2023 were $ 122 million.

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

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 year ended December 31, 2024 were $ 307 million, and included employee severance and benefits costs and stock-based compensation expense, all of which were substantially completed by the fourth quarter of 2024.

The following table summarizes the restructuring reserve activity during the year ended December 31, 2024:

Employee Severance and Benefits and Other Associated Costs

Employee Severance and Benefits Costs

(In millions)

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Accrued liability as of December 31, 2024

(1) Excludes stock-based compensation expense of $ 100 million.

(2) Accrued restructuring liability is included in “accrued expenses and other current liabilities” on our consolidated balance sheets.

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 in 2023 were $ 122 million.

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

During the first quarter of 2022, management initiated a strategic reduction of the existing global workforce intended to streamline and optimize our global operations to enhance operating efficiency.

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The strategic actions associated with this plan were substantially completed by the fourth quarter of 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.

The associated restructuring charges in 2021 were $ 27 million.

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.

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 $ 61 million, $ 81 million, and $ 26 million in 2023, 2022, and 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.

In the year ended December 31, 2023, we recognized a gain of $ 17 million due to the sale of an owned property.

We also incurred a loss of $ 14 million related to another owned property, which was previously held for sale in the year ended December 31, 2023.

During the year ended December 31, 2023, approximately $ 74 million of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale (inclusive of transaction costs) and 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 2024 and $ 61 million and $ 81 million in 2023 and 2022, respectively, due to exiting 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 incurred a loss of $ 14 million related to another owned property held for sale in the year ended December 31, 2023.

During the years ended December 31, 2024 and 2023, approximately $ 129 million and $ 74 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 (inclusive of transactions costs) and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

In the fourth quarter of 2023, we completed the sale of Happy Returns and recorded a pre-tax gain of $ 339 million, net of transaction costs, in restructuring and other.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 18— SUBSEQUENT EVENTS

In January 2024, management initiated a global workforce reduction intended to streamline operations, focus resources on core strategic priorities, and improve our cost structure.

We estimate this reduction will impact approximately 8 % of our employees and result in approximately $ 120 million of restructuring charges, primarily related to employee severance and benefits costs.

The actions associated with this plan are expected to be substantially completed by the first quarter of 2024.

In addition to this workforce reduction, as a part of this overall strategy, we have also committed to reassess our previous hiring plans with a focus on identifying additional efficiency opportunities, such as the deployment of more automation.

This additional commitment to rationalize growth in employee headcount may not directly result in restructuring charges.

NOTE 18— SEGMENT INFORMATION

Our chief operating decision maker (“CODM”), our Chief Executive Officer, manages the business and evaluates operating performance based on consolidated net income.

Our CODM uses consolidated net income to monitor budget versus actual results.

We operate as one segment and have one reportable segment that constitutes consolidated results.

The following table sets forth our segment information for revenue, segment profit (loss), and significant expenses:

Year Ended December 31,

2024 2023 2022

(In millions, except for per share amounts)

Net revenues $ 31,797 $ 29,771 $ 27,518

Transaction expense 15,697 14,385 12,173

Transaction losses

1,114 1,192 1,170

Credit losses

Customer support and operations (1)

1,768 1,919 2,120

Sales and marketing (1)

2,001 1,809 2,257

Technology and development (1)

2,979 2,973 3,253

General and administrative (1)

2,147 2,059 2,099

Restructuring and other 438 ( 84 ) 207

Other income (expense), net ( 4 ) ( 383 ) 471

Income tax expense 1,182 1,165 947

Segment net income (loss)

$ 4,147 $ 4,246 $ 2,419

(1) Includes depreciation and amortization expense.

Total depreciation and amortization expense was $ 1.0 billion, $ 1.1 billion, and $ 1.3 billion for the years ended December 31, 2024, 2023, and 2022.

There are no reconciling items or adjustments between segment net revenues, net income, total assets and consolidated net revenues, net income, and total assets.

For disclosure of geographical information, please refer to “Note 2—Revenue” and “Note 7—Other Financial Statement Details”.

FINANCIAL STATEMENT SCHEDULE

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(Credited) to

Net Income Charged to

Net Income Charges

(Write-offs) Balance at

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Officer’s Certificate, dated as of September 26, 2019, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc.

and Wells Fargo Bank, National Association, as Trustee 8-K 9/26/2019

Form of 2022 Note (included in Exhibit 4.03) 8-K 9/26/2019

Form of 2024 Note (included in Exhibit 4.03) 8-K 9/26/2019

Form of 2026 Note (included in Exhibit 4.03) 8-K 9/26/2019

Form of 2029 Note (included in Exhibit 4.03) 8-K 9/26/2019

and Wells Fargo Bank, National Association, as Trustee, containing Forms of 2024 Note, 2026 Note, and 2029 Note

8-K 9/26/2019

Officer’s Certificate, dated as of May 18, 2020, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc.

and Wells Fargo Bank, National Association, as Trustee 8-K 5/18/2020

Form of 2025 Note (included in Exhibit 4.08) 8-K 5/18/2020

Form of 2030 Note (included in Exhibit 4.08) 8-K 5/18/2020

Form of 2050 Note (included in Exhibit 4.08) 8-K 5/18/2020

and Wells Fargo Bank, National Association, as Trustee, containing Forms of 2025 Note, 2030 Note, and 2050 Note

8-K 5/18/2020

Officer’s Certificate, dated as of May 23, 2022, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc.

and Wells Fargo Bank, National Association, as Trustee 8-K 5/23/2022

Form of 2027 Note (included in Exhibit 4.2) 8-K 5/23/2022

Form of 2032 Note (included in Exhibit 4.2) 8-K 5/23/2022

Form of 2052 Note (included in Exhibit 4.2) 8-K 5/23/2022

Form of 2062 Note (included in Exhibit 4.2) 8-K 5/23/2022

Officer's Certificate pursuant to the Indenture, dated as of June 9, 2023

Form of Note for 0.813% Notes due 2025 (included in Exhibit 4.17) 8-K

Form of Note for 0.972% Notes due 2026 (included in Exhibit 4.18)

Form of Note for 1.240% Notes due 2026 (included in Exhibit 4.18)

and Wells Fargo Bank, National Association, as Trustee, containing Forms of 2027 Note, 2032 Note, 2052 Note, and 2062 Note

8-K 5/23/2022

Officer’s Certificate pursuant to the Indenture, dated as of June 9, 2023, containing Forms of Note for 0.813% Notes due 2025, 0.972% Notes due 2026, and 1.240% Notes due 2026

Officer’s Certificate pursuant to the Indenture, dated as of May 28, 2024, containing Forms of Note for 5.150% Notes due 2034 and 5.500% Notes due 2054

Tax Matters Agreement by and between eBay Inc.

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PayPal Holdings, Inc.

Amended and Restated 2015 Equity Incentive Award Plan 8-K 5/31/2023

2015 Equity Incentive Award Plan, as Amended and Restated

8-K 5/28/2024

PayPal Holdings, Inc.

Amended and Restated Deferred Compensation Plan effective November 6, 2018 10-K 2/7/2019

Incorporated by Reference

Number Exhibit Description Filed with this Form 10-K Form Date Filed

PayPal Holdings, Inc.

Executive Change in Control and Severance Plan, as amended and restated, effective as of September 27, 2021

10-Q 11/9/2021

Executive Change in Control and Severance Plan, as amended and restated, effective as of July 24, 2024

Form of Indemnity Agreement between PayPal Holdings, Inc.

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2015 Equity Incentive Award Plan, as amended and restated 10-Q 4/30/2024

Incorporated by Reference

Number Exhibit Description Filed with this Form 10-K Form Date Filed

Form of Global Notice of Grant of Stock Option and Stock Option Agreement under the PayPal Holdings, Inc.

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2022 Inducement Plan 10-Q 8/3/2022

Offer Letter dated September 29, 2014 between eBay Inc.

and Daniel Schulman 10-12B/A 5/14/2015

Amendment dated December 31, 2014 to Offer Letter between eBay Inc.

and Daniel Schulman 10-12B/A 5/14/2015

Letter dated April 13, 2015 from eBay Inc.

to Jonathan Auerbach 10-K 2/11/2016

Letter Agreement, dated April 17, 2016, between Aaron Karczmer and PayPal Holdings, Inc.

10-Q 4/27/2017

Letter Agreement effective July 13, 2022, between Blake Jorgensen and PayPal Holdings, Inc.

10-Q 8/2/2022

Letter Agreement dated June 15, 2022 between Gabrielle Rabinovitch and PayPal Holdings, Inc.

8-K 6/17/2022

Letter Agreement dated September 27, 2022 between Gabrielle Rabinovitch and PayPal Holdings, Inc.

8-K 10/3/2022

Letter Agreement dated September 1, 2022 between John Kim and PayPal Holdings, Inc.

10-Q 11/3/2022

Letter Agreement by and between PayPal Holdings, Inc.

2 unchanged sentences

and Jamie Miller

10.25+ ^

Transition Agreement by and between PayPal, Inc.

and Gabrielle Rabinovitch, dated December 21, 2023

Credit Agreement, dated as of June 7, 2023, among PayPal Holdings, Inc.

1 unchanged sentence

Morgan Securities Australia Limited, as the Administrative Agents 8-K

Incorporated by Reference

Number Exhibit Description Filed with this Form 10-K Form Date Filed

Receivables Purchase Agreement, dated as of June 16, 2023 in the form as amended and restated as of October 13, 2023 by and between PayPal (Europe) S.à r.l.

et Cie, SCA (as Seller and Receivables Manager), Alps Partners S.à r.l.

Deed of Amendment in relation to Receivables Purchase Agreement dated as of December 12, 2024 and Amended and Restated Receivables Purchase Agreement dated as of June 16, 2023 (as amended and restated as of December 12, 2024), by and between PayPal (Europe) S.à r.l.

et Cie, SCA (as Seller and Receivables Manager), PayPal UK Ltd (as Receivables Manager), Alps Partners S.à r.l.

(as Purchaser), BNY Mellon Corporate Trustee Services Limited (as Security Agent), Avega S.à r.l.

1 unchanged sentence

(as Class C Lender)

10-Q 11/2/2023

Receivables Management Agreement, dated as of June 16, 2023 in the form as amended and restated as of October 13, 2023 by and between PayPal (Europe) S.à r.l.

3 unchanged sentences

(as Class C Lender) 10-Q 11/2/2023

Deed of Amendment in relation to Receivables Purchase Agreement and the Receivables Management Agreement dated as of December 12, 2023, by and between PayPal (Europe) S.à r.l.

et Cie, SCA (as Receivables Manager and Seller), PayPal UK Ltd (as Receivables Manager), Alps Partners S.à r.l.

(as Purchaser), BNY Mellon Corporate Trustee Services Limited (as Security Agent), Avega S.à r.l.

(as Back-Up Receivables Manager Facilitator) and Alps Partners (Holding) S.à r.l.

(as Class C Lender)

Deed of Amendment in relation to Receivables Management Agreement dated as of July 8, 2024, by and between PayPal (Europe) S.à r.l.

et Cie, SCA (as Receivables Manager and Seller), PayPal UK Ltd (as Receivables Manager), Alps Partners S.à r.l.

(as Purchaser), BNY Mellon Corporate Trustee Services Limited (as Security Agent), Avega S.à r.l.

(as Back-Up Receivables Manager Facilitator) and Alps Partners (Holding) S.à r.l.

(as Class C Lender)

Offer Letter, dated October 23, 2023, by and between PayPal Holdings, Inc.

2 unchanged sentences

and Diego Scotti

10-K 2/8/2024

Incorporated by Reference

Number Exhibit Description Filed with this Form 10-K Form Date Filed

Offer Letter, dated December 4, 2023, by and between PayPal Holdings, Inc.

and Suzan Kereere

10-K 2/8/2024

Offer Letter, dated May 28, 2024, by and between PayPal Holdings, Inc.

and Christopher Natali 8-K

Letter agreement by and between PayPal Holdings, Inc.

and Aaron Webster, dated February 5, 2024 10-Q

Independent Director Compensation Policy X

PayPal Holdings, Inc.

Insider Trading Policy

List of Subsidiaries X

21 unchanged sentences

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alex Chriss, Jamie Miller, Bimal Patel, Brian Y.

Yamasaki and Hasitha Verma, and each or any one of them, each with the power of substitution, his or her attorney-in-fact, to sign any amendments to this report, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Yamasaki and Christopher Natali, and each or any one of them, each with the power of substitution, his or her attorney-in-fact, to sign any amendments to this report, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 4, 2025.

Principal Executive Officer:

Principal Financial Officer and Principal Accounting Officer:

Principal Financial Officer:

/s/ Alex Chriss

2 unchanged sentences

Executive Vice President, Chief Financial Officer

Principal Accounting Officer:

/s/ Christopher Natali

Christopher Natali

Vice President, Chief Accounting Officer

Additional Directors

3 unchanged sentences

Director Director

Donahoe David W.

/s/ Carmine Di Sibio

Carmine Di Sibio

Director Director

/s/ Belinda Johnson By:

/s/ Enrique Lores

Belinda Johnson Enrique Lores

/s/ Enrique Lores By:

Enrique Lores Gail J.

Director Director

/s/ Deborah M.

McGovern Deborah M.

Messemer David M.

Director Director

Moffett Ann M.

Sarnoff Frank D.

Director Director

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-K

Item 9A. Controls and Procedures