What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-29 compared with 2024-10-29 · 397 added, 520 removed, 970 unchanged (49% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2025 December 31,

5 unchanged sentences

Loans and interest receivable, held for sale 714 541

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

Loans and interest receivable, net of allowances of $ 487 and $ 461 as of March 31, 2025 and December 31, 2024, respectively

Funds receivable and customer accounts 39,205 37,671

19 unchanged sentences

4,000 shares authorized;

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

979 and 993 shares outstanding as of March 31, 2025 and December 31, 2024, respectively

Preferred stock, $ 0.0001 par value;

100 shares authorized, unissued

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

Treasury stock at cost, 356 and 337 shares as of March 31, 2025 and December 31, 2024, respectively

( 28,597 ) ( 27,085 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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

2024 2023 2024 2023

(In millions, except per share data)

Three Months Ended March 31,

(In millions, except per share amounts)

Net revenues $ 7,791 $ 7,699

22 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

2 unchanged sentences

Foreign currency translation adjustments (“CTA”) 102 ( 143 )

Net investment hedges CTA (losses) gains, net

( 149 ) 35 50 231

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

35 ( 8 ) ( 12 ) ( 53 )

Net investment hedges CTA gains, net

Tax expense on net investment hedges CTA gains, net

Unrealized (losses) gains on cash flow hedges, net

( 148 ) 109 ( 49 ) ( 25 )

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

Unrealized gains on available-for-sale debt securities, net 60 110 158 298

Tax expense on unrealized gains on available-for-sale debt securities, net ( 14 ) ( 26 ) ( 37 ) ( 70 )

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

Tax benefit (expense) on unrealized (losses) gains on available-for-sale debt securities, net

Other comprehensive income (loss), net of tax ( 72 ) 87

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Shares Treasury Stock Additional Paid-In Capital Accumulated Other

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

Comprehensive Income (Loss) Retained Earnings Total Equity

1 unchanged sentence

Balances at December 31, 2024 993 $ ( 27,085 ) $ 20,705 $ ( 550 ) $ 27,347 $ 20,417

Net income — — — — 888 888

Foreign CTA — — — ( 143 ) — ( 143 )

Net investment hedges CTA gains, net — — — 99 — 99

Tax expense on net investment hedges CTA gains, net — — — ( 23 ) — ( 23 )

Unrealized gains on cash flow hedges, net — — — 96 — 96

Tax expense on unrealized gains on cash flow hedges, net — — — ( 5 ) — ( 5 )

Unrealized gains on available-for-sale debt securities, net — — — 83 — 83

Tax expense on unrealized gains on available-for-sale debt securities, net — — — ( 20 ) — ( 20 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes 6 — ( 193 ) — — ( 193 )

Common stock repurchased ( 25 ) ( 1,511 ) — — — ( 1,511 )

Treasury stock reissuance — 4 — — — 4

Stock-based compensation — — 376 — — 376

Balances at March 31, 2024 1,053 $ ( 22,552 ) $ 19,825 $ ( 659 ) $ 24,088 $ 20,702

Net income — — — — 1,128 1,128

Foreign CTA — — — ( 125 ) — ( 125 )

Net investment hedges CTA gains, net — — — 100 — 100

Tax expense on net investment hedges CTA gains, net — — — ( 24 ) — ( 24 )

Unrealized gains on cash flow hedges, net

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

— — — 15 — 15

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

— — — ( 3 ) — ( 3 )

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

Adoption of crypto asset accounting standard

— — — — 20 20

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

Treasury stock reissuance — 4 — — — 4

Stock-based compensation — — 325 — — 325

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

Net income — — — — 1,287 1,287

Foreign CTA — — — 102 — 102

Net investment hedge CTA losses, net

— — — ( 149 ) — ( 149 )

Tax benefit on net investment hedges CTA losses, net

— — — 35 — 35

Unrealized losses on cash flow hedges, net

1 unchanged sentence

Tax benefit on unrealized losses on cash flow hedges, net

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

— — — 60 — 60

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

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

— — — ( 9 ) — ( 9 )

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

Common stock and stock-based awards issued, net of shares withheld for employee taxes 5 — ( 171 ) — — ( 171 )

2 — ( 47 ) — — ( 47 )

Common stock repurchased ( 19 ) ( 1,512 ) — — — ( 1,512 )

Treasury stock reissuance — 4 — — — 4

Stock-based compensation — — 285 — — 285

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

PayPal Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—(continued)

Balances at March 31, 2025 979 $ ( 28,597 ) $ 20,819 $ ( 622 ) $ 28,654 $ 20,254

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

6 unchanged sentences

Tax expense on net investment hedges CTA gains, net — — — ( 23 ) — ( 23 )

Unrealized losses on cash flow hedges, net — — — ( 111 ) — ( 111 )

Tax benefit on unrealized losses on cash flow hedges, net — — — 6 — 6

Unrealized gains on available-for-sale debt securities, net — — — 175 — 175

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

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

5 — ( 157 ) — — ( 157 )

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

Stock-based compensation — — 359 — — 359

Balances at March 31, 2023 1,122 $ ( 17,522 ) $ 18,529 $ ( 898 ) $ 19,749 $ 19,858

— — — — 1,029 1,029

Foreign CTA — — — ( 216 ) — ( 216 )

Net investment hedges CTA gains, net — — — 169 — 169

Tax expense on net investment hedges CTA gains, net — — — ( 39 ) — ( 39 )

Unrealized losses on cash flow hedges, net

— — — ( 23 ) — ( 23 )

Tax benefit on unrealized losses on cash flow hedges, net

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

— — — 13 — 13

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

— — — ( 3 ) — ( 3 )

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

2 — 39 — — 39

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

Stock-based compensation — — 375 — — 375

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

Net income — — — — 1,020 1,020

Foreign CTA — — — ( 70 ) — ( 70 )

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

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

Unrealized gains on cash flow hedges, net — — — 96 — 96

1 unchanged sentence

Unrealized gains on available-for-sale debt securities, net — — — 83 — 83

— — — 110 — 110

Tax expense on unrealized gains on available-for-sale debt securities, net — — — ( 20 ) — ( 20 )

— — — ( 26 ) — ( 26 )

Common stock and stock-based awards issued, net of shares withheld for employee taxes 6 — ( 193 ) — — ( 193 )

1 — ( 28 ) — — ( 28 )

Common stock repurchased ( 25 ) ( 1,511 ) — — — ( 1,511 )

Treasury stock reissuance — 4 — — — 4

Stock-based compensation — — 376 — — 376

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

Balances at March 31, 2024 1,053 $ ( 22,552 ) $ 19,825 $ ( 659 ) $ 24,088 $ 20,702

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

34 unchanged sentences

Repayments of repurchase agreements — ( 190 )

Proceeds from issuance of common stock 55 82

Purchases of treasury stock ( 1,500 ) ( 1,501 )

5 unchanged sentences

Other ( 2 ) —

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

Net cash provided by (used in) financing activities

994 ( 2,362 )

PayPal Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued)

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

17 unchanged sentences

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 personalizes commerce experiences on behalf of merchants and consumers worldwide.

PayPal’s mission is to revolutionize commerce globally by creating innovative experiences that are designed to make moving money, selling, and shopping simple, personalized, and secure.

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.

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.

New or changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of operations, and financial condition.

We monitor these areas closely and are focused on designing compliant solutions for our customers.

(“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.

SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting.

For such investments, our share of the investee’s results of operations is included in other income (expense), net on our condensed consolidated statements of income (loss).

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

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

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

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

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

As of September 30, 2024 and December 31, 2023, the carrying value of our investments in nonconsolidated VIEs was $ 195 million and $ 175 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our condensed consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct activities that would significantly impact their economic performance.

As of March 31, 2025 and December 31, 2024, the carrying value of our investments in nonconsolidated VIEs was $ 190 million and $ 187 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our condensed consolidated balance sheets.

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

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

Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 246 million as of both March 31, 2025 and December 31, 2024.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 4, 2025.

In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for all interim periods presented.

Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three and nine months ended September 30, 2024.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three months ended March 31, 2025.

Use of estimates

4 unchanged sentences

Actual results could materially differ from these estimates.

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, as well as all existing segment disclosures.

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

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

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

Accounting for and Disclosure of Crypto Assets .

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

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

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

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.

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

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recently issued accounting guidance

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

3 unchanged sentences

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 condensed consolidated financial statements.

We are evaluating the impact this amended guidance may have on the footnotes 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 annual periods beginning after December 15, 2026, and interim reporting periods within annual 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 condensed consolidated financial statements.

Recently adopted accounting guidance

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

Accounting for and Disclosure of Crypto Assets .

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

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

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

We adopted this guidance effective as of 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 on our condensed consolidated financial statements.

In January 2025, the SEC released Staff Accounting Bulletin (“SAB”) No.

122 rescinding SAB No.

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.

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.

We have adopted this guidance as of March 31, 2025 and derecognized the crypto asset safeguarding liability and corresponding safeguarding asset on our condensed consolidated balance sheet as of December 31, 2024.

Additionally, we derecognized the associated deferred tax asset and liability as of December 31, 2024.

The adoption of this guidance did not impact our condensed consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity or cash flows.

The following table presents the effects of the changes on the presentation of the balance sheet:

December 31, 2024

(In millions)

As Previously Reported (1)

Adjustments As Adjusted

Prepaid expenses and other current assets

$ 4,651 $ ( 2,886 ) $ 1,765

$ 81,611 $ ( 2,886 ) $ 78,725

Accrued expenses and other current liabilities

$ 8,478 $ ( 2,886 ) $ 5,592

Total liabilities

$ 61,194 $ ( 2,886 ) $ 58,308

(1) As reported in our 2024 Form 10-K filed with the SEC on February 4, 2025.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

5 unchanged sentences

transaction revenues and revenues from other value added services.

PayPal Holdings, Inc.

NOTES TO CONDENSED 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 condensed consolidated balance sheets and were $ 190 million and $ 207 million as of March 31, 2025 and December 31, 2024, 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.

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

2 unchanged sentences

Other countries (1)

3,329 3,161 9,896 9,131

Total net revenues (2)

6 unchanged sentences

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

(2) Total net revenues include $ 515 million and $ 433 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.5 billion and $ 1.3 billion for the nine months ended September 30, 2024 and 2023, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .

(2) Total net revenues include $ 573 million and $ 468 million for the three months ended March 31, 2025 and 2024, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .

Such revenues relate to interest and fees earned on loans and interest receivable, including loans and interest receivable, held for sale, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.

9 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions, except per share amounts)

8 unchanged sentences

NOTE 4— BUSINESS COMBINATIONS AND DIVESTITURES

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

There were no acquisitions accounted for as business combinations or divestitures completed in the three months ended March 31, 2025 and 2024.

NOTE 5— GOODWILL AND INTANGIBLE ASSETS

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

2023 Goodwill Acquired Adjustments September 30,

The following table presents goodwill balances and adjustments to those balances during the three months ended March 31, 2025:

2024 Goodwill Acquired Adjustments March 31,

(In millions)

Total goodwill $ 10,837 $ — $ 73 $ 10,910

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

The adjustments to goodwill during the three months ended March 31, 2025 pertained to foreign currency translation adjustments.

INTANGIBLE ASSETS

The components of identifiable intangible assets were as follows:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Gross Carrying Amount Accumulated Amortization

Net Carrying Amount Weighted Average Useful Life (Years) Gross Carrying Amount

Net Carrying Amount Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount Weighted Average Useful Life (Years)

(In millions, except years)

Net Carrying Amount

(In millions)

Intangible assets (1) :

1 unchanged sentence

Marketing related 63 ( 44 ) 19 60 ( 38 ) 22

Developed technology 1,012 ( 1,012 ) — 3 1,013 ( 999 ) 14 3

All other 183 ( 138 ) 45 182 ( 131 ) 51

Intangible assets, net $ 1,119 $ ( 823 ) $ 296 $ 1,096 $ ( 770 ) $ 326

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

Amortization expense for intangible assets was $ 47 million and $ 56 million for the three months ended March 31, 2025 and 2024, respectively.

Expected future intangible asset amortization as of March 31, 2025 was as follows (in millions):

Fiscal years:

2 unchanged sentences

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.

5 unchanged sentences

The components of lease expense were as follows:

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

Operating lease expense $ 41 $ 37

Finance lease expense - amortization of right-of-use (“ROU”) lease assets

Sublease income ( 2 ) ( 3 )

Total lease expense, net

$ 38 $ 37 $ 108 $ 113

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

2024 2023 2024 2023

Supplemental cash flow information related to leases during the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

(In millions)

2 unchanged sentences

Financing cash flows from finance leases $ 2 $ —

Right-of-use (“ROU”) lease assets obtained in exchange for new operating lease liabilities

$ 59 $ ( 23 ) $ 336 $ ( 1 )

ROU lease assets obtained in exchange for new operating lease liabilities

ROU lease assets obtained in exchange for new finance lease liabilities $ — $ 16

Other non-cash ROU lease asset activity (1)

$ — $ ( 15 ) $ — $ ( 40 )

(1) ROU lease asset impairment.

Refer to “Note 17—Restructuring and Other” for further details.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplemental balance sheet information related to leases was as follows:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions, except weighted-average figures)

7 unchanged sentences

Total lease liabilities $ 738 $ 21 $ 764 $ 23

Weighted-average remaining lease term 6.0 years 4.6 years 5.0 years —

Weighted-average remaining lease term 5.6 years 4.1 years 5.9 years 4.4 years

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

(1) ROU assets for operating leases are included in “ other assets ” and lease liabilities for operating leases are included in “ accrued expenses and other current liabilities ” and “ other long-term liabilities ” on our condensed consolidated balance sheets.

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

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

Future minimum lease payments for our leases as of March 31, 2025 were as follows:

Operating leases Finance leases

9 unchanged sentences

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

As of March 31, 2025, we have additional operating leases, primarily for offices and data centers, which will commence in the second quarter of 2025 or later with minimum lease payments aggregating to $ 42 million and lease terms ranging from three to ten years .

As of March 31, 2025, we did no t have any additional finance leases which have not yet commenced.

PayPal Holdings, Inc.

1 unchanged sentence

NOTE 7— OTHER FINANCIAL STATEMENT DETAILS

CRYPTO ASSET SAFEGUARDING LIABILITY AND CORRESPONDING SAFEGUARDING ASSET

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”).

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.

Our third-party custodians hold the crypto assets in a custodial account in PayPal’s name for the benefit of PayPal’s customers.

We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial account.

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

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

Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our customers, which is recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

We also recognize a corresponding safeguarding asset, which is recorded in prepaid expenses and other current assets on our condensed consolidated balance sheets.

The crypto asset safeguarding liability and corresponding safeguarding asset are measured and recorded at fair value on a recurring basis using quoted prices for the underlying crypto assets on the active exchange that we have identified as the principal market at the balance sheet date.

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

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

The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of September 30, 2024 and December 31, 2023:

September 30,

2024 December 31, 2023

(In millions)

Bitcoin $ 1,440 $ 741

Ethereum 634 412

Crypto asset safeguarding liability $ 2,167 $ 1,241

Crypto asset safeguarding asset $ 2,167 $ 1,241

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended March 31, 2025:

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

6 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 141 ) ( 8 ) 102 — 11 ( 36 )

Amount of net gain (loss) reclassified from accumulated other comprehensive income (loss) (“AOCI”)

( 12 ) — — — — ( 12 )

Net current period other comprehensive income (loss) ( 148 ) 60 275 ( 149 ) 28 66

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

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

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

Net Investment Hedges CTA Gains (Losses)

Estimated Tax (Expense) Benefit Total

(In millions)

Beginning balance $ ( 23 ) $ ( 403 ) $ ( 811 ) $ 195 $ 46 $ ( 996 )

Other comprehensive income (loss) before reclassifications 116 110 ( 70 ) 35 ( 40 ) 151

Amount of net gain (loss) reclassified from AOCI

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

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

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

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

Net Investment Hedges CTA Gains (Losses)

Estimated Tax (Expense) Benefit Total

(In millions)

Beginning balance $ ( 56 ) $ ( 134 ) $ ( 731 ) $ 191 $ ( 16 ) $ ( 746 )

Other comprehensive income (loss) before reclassifications ( 39 ) 117 7 50 ( 47 ) 88

Amount of net gain (loss) reclassified from AOCI

Amount of net gains (losses) reclassified from accumulated other comprehensive income (loss) (“AOCI”)

35 1 — — — 36

1 unchanged sentence

Ending balance $ ( 29 ) $ 5 $ ( 833 ) $ 313 $ ( 78 ) $ ( 622 )

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

4 unchanged sentences

Other comprehensive income (loss) before reclassifications 96 41 ( 143 ) 99 ( 48 ) 45

Amount of net gain (loss) reclassified from AOCI

Amount of net gains (losses) reclassified from AOCI

— ( 42 ) — — — ( 42 )

4 unchanged sentences

Affected Line Item in the Statements of Income (Loss)

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

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

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

$ 35 $ — Net revenues

1 unchanged sentence

1 ( 42 ) Net revenues

Net gains (losses) on investments

— — — ( 2 ) Other income (expense), net

36 ( 42 ) Income before income taxes

1 unchanged sentence

Total reclassifications for the period $ 36 $ ( 42 ) Net income (loss)

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

OTHER INCOME (EXPENSE), NET

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

4 unchanged sentences

Other income (expense), net $ 73 $ 41

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

September 30,

2025 December 31,

20 unchanged sentences

Total long-term investments $ 4,613 $ 4,583

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

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

(1) Includes $ 971 million and nil of available-for-sale debt securities with original maturities of three months or less as of March 31, 2025 and December 31, 2024, respectively.

(2) Includes nil and $ 149 million of available-for-sale debt securities with original maturities of three months or less as of March 31, 2025 and December 31, 2024, respectively.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

September 30, 2024 (1)

As of March 31, 2025 and December 31, 2024, the estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

March 31, 2025 (1)

Losses Estimated

1 unchanged sentence

Cash and cash equivalents:

government and agency securities $ 599 $ — $ — $ 599

Commercial paper 372 — — 372

27 unchanged sentences

(In millions)

Cash and cash equivalents:

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

Commercial paper 349 — — 349

Funds receivable and customer accounts:

2 unchanged sentences

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

4 unchanged sentences

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

3 unchanged sentences

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)

3 unchanged sentences

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

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

Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 129 million and $ 140 million at March 31, 2025 and December 31, 2024, respectively, and were included in other current assets on our condensed consolidated balance sheets.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of September 30, 2024 and December 31, 2023, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:

September 30, 2024 (1)

As of March 31, 2025 and December 31, 2024, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:

March 31, 2025 (1)

Less than 12 months 12 months or longer Total

4 unchanged sentences

Cash and cash equivalents:

government and agency securities $ 599 $ — $ — $ — $ 599 $ —

Commercial paper 372 — — — 372 —

12 unchanged sentences

Long-term investments:

government and agency securities 235 — — — 235 —

Foreign government and agency securities — — 34 — 34 —

11 unchanged sentences

(In millions)

Cash and cash equivalents:

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

Funds receivable and customer accounts:

2 unchanged sentences

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 —

2 unchanged sentences

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 —

3 unchanged sentences

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 )

3 unchanged sentences

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

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

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

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

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

The table below presents cash inflows related to available-for-sale debt securities:

Three Months Ended March 31,

(In millions)

Proceeds from sales and maturities of available-for-sale debt securities

$ 5,472 $ 11,252

During the three months ended March 31, 2025, we incurred gross realized losses and gains which were de minimis.

During the three months ended March 31, 2024, we incurred gross realized losses of $ 42 million.

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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:

September 30, 2024

March 31, 2025

Amortized Cost Fair Value

6 unchanged sentences

Actual maturities may differ from contractual maturities as certain securities may be prepaid.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplemental cash flow information related to investments

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

Non-cash investing transactions that were not reflected in the condensed consolidated statement of cash flows for the three months ended March 31, 2025 and 2024 include the purchase of investments of $ 125 million and $ 413 million, respectively, that have not yet settled.

STRATEGIC INVESTMENTS

1 unchanged sentence

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

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

Marketable equity securities totaled $ 16 million and $ 23 million as of March 31, 2025 and December 31, 2024, respectively.

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

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

As of September 30, 2024 and December 31, 2023, we had non-marketable equity securities of $ 208 million and $ 182 million, respectively, for which we have the ability to exercise significant influence, but not control, over the investee.

The carrying value of our non-marketable equity securities totaled $ 1.6 billion and $ 1.5 billion as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, we had non-marketable equity securities of $ 203 million and $ 200 million, respectively, for which we have the ability to exercise significant influence, but not control, over the investee.

We account for these equity securities using the equity method of accounting.

2 unchanged sentences

Measurement Alternative adjustments

The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three and nine months ended September 30, 2024 and 2023 were as follows:

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

2024 2023 2024 2023

The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

(In millions)

6 unchanged sentences

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative held at September 30, 2024 and December 31, 2023, respectively:

September 30,

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 March 31, 2025 and December 31, 2024, respectively:

2025 December 31,

2 unchanged sentences

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at September 30, 2024 and 2023, respectively:

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

4 unchanged sentences

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

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

September 30, 2024 Quoted Prices in

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

March 31, 2025 Quoted Prices in

Active Markets for

4 unchanged sentences

Cash and cash equivalents (1)

government and agency securities $ 599 $ — $ 599

Commercial paper 372 — 372

Money market fund 14 14 —

Total cash and cash equivalents 985 14 971

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

14 unchanged sentences

Derivatives (4)

Crypto asset safeguarding asset (4)

2,167 — 2,167

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

8 unchanged sentences

$ 87 $ — $ 87

Crypto asset safeguarding liability (4)

2,167 — 2,167

Total financial liabilities $ 87 $ — $ 87

(1) Excludes cash of $ 6.5 billion not measured and recorded at fair value.

(2) Excludes restricted cash of $ 1 million and time deposits of $ 201 million not measured and recorded at fair value.

(2) Excludes time deposits of $ 131 million not measured and recorded at fair value.

(3) Excludes cash, time deposits, and funds receivable of $ 23.7 billion underlying funds receivable and customer accounts not measured and recorded at fair value.

(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 condensed consolidated balance sheets.

Crypto safeguarding asset and associated liability are recorded within “prepaid expenses and other current assets” and “accrued expenses and other current liabilities,” respectively, on our condensed consolidated balance sheets.

(5) Excludes non-marketable equity securities of $ 1.6 billion measured using the Measurement Alternative or equity method accounting.

8 unchanged sentences

Cash and cash equivalents (1)

government and agency securities $ 428 $ — $ 428

Commercial paper 349 — 349

Money market fund $ 14 $ 14 $ —

Total cash and cash equivalents 937 160 777

Short-term investments (2) :

2 unchanged sentences

Corporate debt securities 1,749 — 1,749

Asset-backed securities 718 — 718

Mortgage-backed and asset-backed securities

Commercial paper 1,282 — 1,282

4 unchanged sentences

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

2 unchanged sentences

Derivatives (4)

Crypto asset safeguarding asset (4)

1,241 — 1,241

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

2 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 —

3 unchanged sentences

$ 37 $ — $ 37

Crypto asset safeguarding liability (4)

1,241 — 1,241

Total financial liabilities $ 37 $ — $ 37

3 unchanged sentences

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

PayPal Holdings, Inc.

NOTES TO CONDENSED 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.

Accordingly, we have valued the asset and liability using quoted prices on the active exchange that we have identified as the principal market for the underlying crypto assets (Level 2).

All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2).

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

As of March 31, 2025 and December 31, 2024, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value (Level 3).

We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries under the fair value option.

Election of the fair value option allows us to recognize any gains and losses from fair value changes on such investments in other income (expense), net on the condensed consolidated statements of income (loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding foreign exchange gains and losses relating to customer liabilities.

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

September 30, 2024 December 31, 2023

The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

Amortized Cost Fair Value Amortized Cost Fair Value

1 unchanged sentence

Funds receivable and customer accounts $ 687 $ 683 $ 566 $ 564

The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the three and nine months ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

1 unchanged sentence

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

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

September 30, 2024 Significant Other

The following tables summarize our assets held as of March 31, 2025 and December 31, 2024 for which a non-recurring fair value measurement was recorded during the three months ended March 31, 2025 and the year ended December 31, 2024, respectively:

March 31, 2025 Significant Other

Observable Inputs

4 unchanged sentences

Total $ 812 $ 812 $ —

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

(1) Excludes non-marketable equity securities of $ 1.3 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the three months ended March 31, 2025.

PayPal Holdings, Inc.

6 unchanged sentences

$ 541 $ 541 $ —

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

Other assets (3)

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

Total $ 1,017 $ 672 $ 345

(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.

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.

(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.

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.

3 unchanged sentences

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.

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.

Impairment losses on ROU lease assets related to office operating leases are calculated using estimated rental income per square foot derived from observable market data, and the impaired asset is classified within Level 2 in the fair value hierarchy.

FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE

Our financial instruments, including cash, restricted cash, time deposits, reverse repurchase agreements, loans and interest receivable, net, certain customer accounts, and long-term debt related to borrowings on our credit facilities, are carried at amortized cost, which approximates their fair value.

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

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

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

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

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) had a carrying value of approximately $ 12.0 billion and fair value of approximately $ 11.3 billion as of March 31, 2025.

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

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

1 unchanged sentence

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 10— DERIVATIVE INSTRUMENTS

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.

2 unchanged sentences

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

PayPal Holdings, Inc.

NOTES TO CONDENSED 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.

dollar/foreign currency exchange rate.

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 condensed 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;

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 the applicable expense line item in the condensed consolidated statements of income (loss) in the same period the forecasted transaction affects earnings.

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.

We do not exclude any component of the changes in fair value of the derivative instruments from the assessment of hedge effectiveness.

We report cash flows arising from derivative instruments consistent with the classification of cash flows from the underlying hedged items that these derivatives are hedging.

We report cash flows arising from derivative instruments consistent with the classification of cash flows from the underlying items that these derivatives are hedging.

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

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

During the three and nine months ended September 30, 2024 and 2023, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.

As of March 31, 2025, we estimated that $ 29 million of net derivative losses related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.

During the three months ended March 31, 2025 and 2024, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.

If we elect to discontinue our cash flow hedges and it is probable that the original forecasted transaction will occur, we continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects earnings, at which point we also reclassify it into earnings.

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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.

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.

We exclude forward points from the assessment of hedge effectiveness and recognize them in other income (expense), net on a straight-line basis over the life of the hedge.

Prior to 2025, we used foreign exchange contracts to reduce the foreign exchange risk related to our investment in certain foreign subsidiaries.

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

We excluded forward points from the assessment of hedge effectiveness and recognized them in other income (expense), net on a straight-line basis over the life of the hedge.

The accumulated gains and losses associated with these instruments will remain in AOCI until the foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings.

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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 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 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 exchange contracts.

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 condensed consolidated statements of cash flows.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

FAIR VALUE OF DERIVATIVE CONTRACTS

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

Balance Sheet Location September 30,

The fair value of our outstanding derivative instruments as of March 31, 2025 and December 31, 2024 was as follows:

Balance Sheet Location March 31,

2025 December 31,

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Derivative Assets:

Foreign currency exchange contracts designated as hedging instruments Other current assets $ 42 $ 7

Foreign currency exchange contracts designated as hedging instruments Other assets (non-current) 152 77

Foreign currency exchange contracts not designated as hedging instruments Other current assets 20 57

Foreign exchange contracts designated as hedging instruments

Other current assets $ 43 $ 157

Foreign exchange contracts not designated as hedging instruments

Other current assets 13 86

Total derivative assets $ 56 $ 243

Derivative Liabilities:

Foreign currency exchange contracts designated as hedging instruments Other current liabilities $ 111 $ 64

Foreign currency exchange contracts not designated as hedging instruments Other current liabilities 50 67

Foreign exchange contracts designated as hedging instruments

Other current liabilities $ 71 $ 10

Foreign exchange contracts not designated as hedging instruments

Other current liabilities 16 27

Total derivative liabilities $ 87 $ 37

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 condensed consolidated balance sheets.

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

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

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

The following table provides the collateral posted and received:

September 30,

2024 December 31,

(In millions)

Cash collateral posted $ 138 $ 80

Cash collateral received $ 5 $ 6

Non-cash collateral received (1)

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

EFFECT OF DERIVATIVE CONTRACTS ON CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended September 30,

(In millions)

Net revenues Other income (expense), net Net revenues Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the effects of cash flow hedges and net investment hedges are recorded $ 7,847 $ ( 80 ) $ 7,418 $ 73

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

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

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

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

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

Amount of net gains (losses) on foreign currency exchange contracts

— ( 177 ) — 54

Total net gains (losses)

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

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

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$ 35 $ ( 83 ) $ — $ 41

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table provides the amount of pre-tax unrealized gains or losses included in the assessment of hedge effectiveness related to our derivative instruments designated as hedging instruments that are recognized in other comprehensive income (loss):

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

2024 2023 2024 2023

Three Months Ended March 31,

(In millions)

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

( 149 ) 35 50 231

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

$ ( 141 ) $ 195

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS

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

September 30,

2025 December 31,

3 unchanged sentences

Total $ 15,756 $ 17,259

MASTER NETTING AGREEMENTS - RIGHTS OF SET-OFF

The following tables present the derivative assets, derivative liabilities, repurchase agreements, and reverse repurchase agreements not offset on the condensed 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 condensed consolidated balance sheet;

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

Amounts Not Offset on the Condensed Consolidated Balance Sheet

Amounts Presented on the Condensed Consolidated Balance Sheet

Financial Instruments (1)

Collateral Received (2)

(In millions)

As of March 31, 2025

Derivative assets (3)

$ 56 $ 23 $ 29 $ 4

Reverse repurchase agreements (4)

$ 256 $ 23 $ 229 $ 4

As of December 31, 2024

Derivative assets (3)

$ 243 $ 23 $ 169 $ 51

Reverse repurchase agreements (4)

$ 330 $ 23 $ 256 $ 51

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts Not Offset on the Condensed Consolidated Balance Sheet

Amounts Presented on the Condensed Consolidated Balance Sheet

Financial Instruments (1)

Collateral Pledged (2)

(In millions)

As of March 31, 2025

Derivative liabilities (3)

$ 87 $ 24 $ 55 $ 8

Repurchase agreements

Total liabilities

$ 87 $ 24 $ 55 $ 8

As of December 31, 2024

Derivative liabilities (3)

$ 37 $ 23 $ 7 $ 7

Repurchase agreements

Total liabilities

$ 37 $ 23 $ 7 $ 7

(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 $ 27 million and $ 162 million as of March 31, 2025 and December 31, 2024, respectively, and securities from derivative counterparties with a fair value of $ 10 million and $ 30 million as of March 31, 2025 and December 31, 2024, respectively.

We posted $ 60 million and $ 7 million of cash collateral as of March 31, 2025 and December 31, 2024, 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 $ 203 million and $ 96 million as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, we have no t sold or repledged collateral relating to reverse repurchase agreements.

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.

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

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

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

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2025 and December 31, 2024, loans and interest receivable, held for sale was $ 714 million and $ 541 million, respectively.

During the three months ended March 31, 2025 and 2024, we sold $ 5.3 billion and $ 4.8 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 an independent chartered financial institution (“partner institution”) and are responsible for the servicing functions related to that portfolio.

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

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

During the three months ended March 31, 2025 and 2024, we purchased approximately $ 277 million and $ 25 million in consumer receivables, respectively.

The outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.4 billion for both March 31, 2025 and December 31, 2024, net of the participation interest sold to the partner institution of $ 24 million and $ 23 million, respectively.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

September 30, 2024

March 31, 2025

(In millions, except percentages)

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Total $ 2,508 $ 1,636 $ 945 $ 303 $ 31 $ — $ 5,423 100 %

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

Gross charge-offs for the three months ended March 31, 2025

$ 33 $ 1 $ 35 $ 7 $ — $ — $ 76

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2024

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$ 138 $ 39 $ 133 $ 14 $ — $ — $ 324

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

September 30, 2024 September 30, 2023

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the three months ended March 31, 2025 and 2024:

March 31, 2025 March 31, 2024

Consumer Loans Receivable Interest Receivable Total Allowance

2 unchanged sentences

Beginning balance $ 341 $ 7 $ 348 $ 357 $ 23 $ 380

Changes in allowance due to reclassification of loans and interest receivable to or from held for sale — — — ( 33 ) — ( 33 )

Provisions 55 3 58 44 5 49

3 unchanged sentences

Ending balance $ 347 $ 5 $ 352 $ 313 $ 21 $ 334

(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.

(1) Includes amounts related to foreign currency remeasurement.

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

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

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

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.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

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

The allowance for credit losses at March 31, 2025 for our consumer receivable portfolio remained consistent with the allowance for credit losses at December 31, 2024.

Merchant receivables

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

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

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

During the three months ended March 31, 2025 and 2024, we purchased approximately $ 494 million and $ 419 million in merchant receivables, respectively.

As of March 31, 2025 and December 31, 2024, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 1.6 billion and $ 1.5 billion, net of the participation interest sold to the partner institution of $ 56 million and $ 53 million, respectively.

Through our PPWC product, merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant.

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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 CONDENSED 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.

2 unchanged sentences

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Merchant receivables delinquency and allowance

2 unchanged sentences

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

September 30, 2024

March 31, 2025

(In millions, except percentages)

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Total $ 707 $ 802 $ 38 $ 16 $ 1 $ 11 $ 1,575 100 %

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

Gross charge-offs for the three months ended March 31, 2025

$ — $ 16 $ 8 $ 1 $ — $ — $ 25

1 unchanged sentence

(In millions, except percentages)

2022 2021 2020 2019 Total Percent

2023 2022 2021 2020 Prior Total Percent

Merchant loans, advances, and interest and fees receivable:

7 unchanged sentences

$ 10 $ 96 $ 42 $ — $ 8 $ — $ 156

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

September 30, 2024 September 30, 2023

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable for the three months ended March 31, 2025 and 2024:

March 31, 2025 March 31, 2024

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

5 unchanged sentences

Ending balance $ 128 $ 7 $ 135 $ 123 $ 8 $ 131

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

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

For merchant loans and advances, the determination of delinquency is based on the current expected or contractual repayment period of the loan or advance and fixed interest or fee payment as compared to the original expected or contractual repayment period.

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.

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

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

The allowance for credit losses at March 31, 2025 for our merchant receivable portfolio was $ 135 million, an increase from $ 113 million at December 31, 2024.

The increase in allowance for credit losses was related to portfolio growth.

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

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

In March 2025, we issued fixed and floating rate notes with varying maturity dates for an aggregate principal amount of $ 1.5 billion, consisting of $ 450 million aggregate principal amount of floating rate notes due 2028 (the “2028 Floating Rate Notes”), $ 450 million aggregate principal amount of 4.450 % notes due 2028 (the “2028 Notes”) and $ 600 million aggregate principal amount of 5.100 % notes due 2035 (the “2035 Notes”).

Interest on the 2028 Floating Rate Notes is payable on March 6, June 6, September 6 and December 6 of each year, beginning on June 6, 2025.

The 2028 Floating Rate Notes bear interest at a floating rate equal to the compounded secured overnight financing rate, reset quarterly, plus 0.670 % per annum.

Interest on the 2028 Notes is payable on March 6 and September 6 of each year, beginning on September 6, 2025.

Interest on the 2035 Notes is payable on April 1 and October 1 of each year, beginning on October 1, 2025.

In May 2024, June 2023, May 2022, May 2020, and September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $ 1.3 billion, ¥ 90 billion (approximately $ 601 million as of March 31, 2025), $ 3.0 billion, $ 4.0 billion and $ 5.0 billion, respectively.

The notes issued from the March 2025, 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.” Except for the June 2023 debt issuance and 2028 Floating Rate Notes, we may redeem the Notes in whole at any time or in part 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.

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

As of March 31, 2025 and December 31, 2024, we had an outstanding aggregate principal amount of $ 12.1 billion and $ 10.6 billion, respectively, related to the Notes.

The following table summarizes the Notes outstanding:

Maturities Effective Interest Rate September 30,

Maturities Effective Interest Rate March 31,

2025 December 31,

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10/1/2029 2.96 % 1,500 1,500

Fixed-rate 2.850 % notes

10/1/2029 2.96 % 1,500 1,500

May 2020 debt issuance:

26 unchanged sentences

6/1/2054 5.66 % 400 400

March 2025 debt issuance:

Floating-rate notes

3/6/2028 5.19 % 450 —

Fixed-rate 4.450 % notes

3/6/2028 4.66 % 450 —

Fixed-rate 5.100 % notes

4/1/2035 5.20 % 600 —

Total term debt $ 12,101 $ 10,574

4 unchanged sentences

(1) Principal amounts represent the U.S.

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

dollar equivalent as of March 31, 2025 and December 31, 2024, respectively.

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

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

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

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

The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 98 million and $ 84 million for the three months ended March 31, 2025 and 2024, respectively.

PayPal Holdings, Inc.

2 unchanged sentences

Paidy credit agreement

In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provided for an unsecured revolving credit facility of ¥ 60.0 billion, which was modified in September 2022 to increase the borrowing capacity by ¥ 30.0 billion for a total borrowing capacity of ¥ 90.0 billion (approximately $ 633 million as of September 30, 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.

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

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

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

Other available facilities

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

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

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

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

As of March 31, 2025 and December 31, 2024, ¥ 90.0 billion (approximately $ 601 million) and ¥ 90.0 billion (approximately $ 574 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in long-term debt on our condensed consolidated balance sheets.

At March 31, 2025, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.

During the three months ended March 31, 2025 and 2024, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

FUTURE PRINCIPAL PAYMENTS

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

As of March 31, 2025, the future principal payments associated with our term debt were as follows (in millions):

Remaining 2025

2 unchanged sentences

Other than as provided above, there were no significant changes to the information disclosed in our 2024 Form 10-K.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 13— COMMITMENTS AND CONTINGENCIES

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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.

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material as of September 30, 2024.

PayPal Holdings, Inc.

NOTES TO CONDENSED 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 as of March 31, 2025.

Except as otherwise noted for the proceedings described in this Note 13, we have concluded, based on currently available information, that reasonably possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals are also not material.

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We cannot predict the outcome of AUSTRAC’s decision.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

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

SEC Division of Enforcement relating to PayPal USD stablecoin.

The subpoena requests the production of documents.

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

The subpoena requested the production of documents.

In February 2025, the SEC communicated it was closing this inquiry without enforcement action.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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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.

On March 17, 2025, the lead plaintiff filed 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.

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 Derivative Actions have been stayed pending further developments in the PPH Securities Action.

On December 20, 2022, a civil lawsuit captioned State of Hawai‘i, by its Office of Consumer Protection, v.

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Trial is scheduled to begin in October 2025.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

General matters

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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 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.

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.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

PayPal has participated in the U.S.

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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.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As part of the agreement to sell a portion of our consumer installment receivables portfolio, in certain circumstances such as breaches in loan warranties, we may be required to indemnify the global investment firm that purchased the loans or repurchase the loans.

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

As of March 31, 2025 and December 31, 2024, the current outstanding balances of the loans sold was $ 2.8 billion and $ 2.9 billion, respectively.

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

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OFF-BALANCE SHEET ARRANGEMENTS

As of September 30, 2024 and December 31, 2023, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

As of March 31, 2025 and December 31, 2024, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

PROTECTION PROGRAMS

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.

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

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

The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three and nine months ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

At March 31, 2025 and December 31, 2024, the allowance for transaction losses was $ 60 million and $ 86 million, respectively.

The allowance for negative customer balances was $ 245 million and $ 256 million at March 31, 2025 and December 31, 2024, respectively.

The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in millions)

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NOTE 14— STOCK REPURCHASE PROGRAMS

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

During the three months ended March 31, 2025, we repurchased approximately 19 million shares of our common stock for approximately $ 1.5 billion at an average cost of $ 77.56 , excluding excise tax.

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

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

As of March 31, 2025, a total of approximately $ 3.4 billion and $ 15.0 billion remained available for future repurchases of our common stock under our June 2022 and February 2025 stock repurchase programs, respectively.

During the three months ended March 31, 2025 and 2024, we recorded $ 12 million and $ 10 million in excise tax within treasury stock on our condensed consolidated balance sheets, respectively.

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

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

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

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

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

NOTE 15— STOCK-BASED PLANS

In May 2024, our stockholders approved the authorization of an additional 20 million shares to the Amended and Restated PayPal Holdings, Inc.

2015 Equity Incentive Award Plan.

STOCK-BASED COMPENSATION EXPENSE

Stock-based compensation expense for our equity incentive plans are measured based on their estimated fair value at the time of grant and recognized over the award’s vesting period.

The impact on our results of operations of recording stock-based compensation expense under our equity incentive plans for the three and nine months ended September 30, 2024 and 2023 was as follows:

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

2024 2023 2024 2023

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

The impact on our results of operations of recording stock-based compensation expense for the three months ended March 31, 2025 and 2024 was as follows:

Three Months Ended March 31,

(In millions)

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NOTE 16— INCOME TAXES

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

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

Our effective tax rate for the three months ended March 31, 2025 and 2024 was 20 % and 27 %, respectively.

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

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

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

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 enacted legislation that became effective as of January 1, 2025.

Our effective tax rate for the three months ended March 31, 2025 includes the impact of Pillar Two minimum taxes in these jurisdictions.

Gross unrecognized tax benefits were approximately $ 2.4 billion and $ 2.3 billion as of March 31, 2025 and December 31, 2024, respectively.

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

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

We also continue to accrue unrecognized tax benefits for certain recurring tax positions.

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.

NOTE 17— RESTRUCTURING AND OTHER

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

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

RESTRUCTURING

During the first quarter of 2025, management initiated a workforce reduction to ensure compliance with a new regulation impacting operations in an international market.

The associated restructuring charges during the three months ended March 31, 2025 were $ 39 million, and included employee severance and benefits costs, substantially all of which were accrued for as of March 31, 2025.

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

The following table summarizes the restructuring reserve activity during the three months ended March 31, 2025:

Employee Severance and Benefits Costs

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Accrued liability as of January 1, 2025

Payments ( 182 )

Accrued liability as of September 30, 2024 (2)

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

Accrued liability as of March 31, 2025 (1)

(1) Accrued restructuring liability is included in “accrued expenses and other current liabilities” on our condensed 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 during the three and nine months ended September 30, 2023 were $ 3 million and $ 120 million, respectively.

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

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

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

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

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

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

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

The associated restructuring charges during the three months ended March 31, 2024 were $ 175 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.

During the three months ended March 31, 2025 and 2024, approximately $ 25 million and $ 37 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

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:

Three Months Ended March 31,

(In millions)

Net revenues $ 7,791 $ 7,699

Transaction expense 3,704 3,917

Transaction losses 278 260

Credit losses 93 61

Customer support and operations (1)

Sales and marketing (1)

Technology and development (1)

General and administrative (1)

Restructuring and other 66 212

Other income (expense), net ( 73 ) ( 41 )

Income tax expense 316 321

Segment net income (loss) $ 1,287 $ 888

(1) Includes depreciation and amortization expense.

For the three months ended March 31, 2025 and 2024, total depreciation and amortization expense was $ 245 million and $ 265 million, respectively.

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”.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements