What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-29 · 125 added, 186 removed, 186 unchanged (63% of the section changed)

10 unchanged sentences

BUSINESS ENVIRONMENT

We are 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.

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, and secure, online or offline, including mobile.

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

Regulatory environment

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.

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

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

7 unchanged sentences

MACROECONOMIC ENVIRONMENT

The broader implications of the macroeconomic environment, including uncertainty around international conflicts such as the Russia and Ukraine conflict, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown.

A deterioration in macroeconomic conditions could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, foreign currency exchange fluctuations, or other business interruption, which may adversely impact our business.

If these conditions continue or worsen, they could adversely impact our future financial and operating results.

A deterioration in macroeconomic conditions resulting from uncertainties and effects from tariffs, higher inflation rates, international conflicts, and higher interest rates could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, foreign exchange fluctuations, or other business interruption, which may adversely impact our business.

We are unable to reasonably estimate the total potential impact on our financial results that may ultimately result from such changes in the macroeconomic environment.

OVERVIEW OF RESULTS OF OPERATIONS

The following table provides a summary of our condensed consolidated financial results for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Percent Increase/(Decrease) Nine Months Ended September 30, Percent Increase/(Decrease)

2024 2023 2024 2023

The following table provides a summary of our consolidated financial results for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, Percent Increase/(Decrease)

(In millions, except percentages and per share data)

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** Not meaningful.

THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Net revenues increased $429 million, or 6%, in the three months ended September 30, 2024 compared to the same period of the prior year driven primarily by growth in total payment volume (“TPV”, as defined below under “Key Metrics”) of 9%.

Total operating expenses increased $206 million, or 3%, in the three months ended September 30, 2024 compared to the same period of the prior year due primarily to higher transaction expense partially offset by a reduction in transaction and credit losses.

Operating income increased $223 million, or 19%, in the three months ended September 30, 2024 compared to the same period of the prior year due to net revenues growing more than operating expenses.

Our operating margin was 18% and 16% in the three months ended September 30, 2024 and 2023, respectively, reflecting the positive impact of lower transaction and credit losses.

Net income decreased $10 million, or 1%, in the three months ended September 30, 2024 compared to the same period of the prior year due to the previously discussed increase in operating income of $223 million, partially offset by a decrease in other income (expense), net of $153 million driven primarily by net losses on strategic investments in the current period compared to net gains in the prior period and an increase in income tax expense of $80 million due primarily to higher income before taxes, changes in jurisdictional mix of income, and U.S.

income taxed at different rates.

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Net revenues increased $1.7 billion, or 8%, in the nine months ended September 30, 2024 compared to the same period of the prior year driven primarily by growth in TPV of 11%.

Total operating expenses increased $1.1 billion, or 6%, in the nine months ended September 30, 2024 compared to the same period of the prior year due primarily to an increase in transaction expense and, to a lesser extent, restructuring and other partially offset by a reduction in transaction and credit losses and customer support and operations expenses.

Operating income increased $584 million, or 18%, in the nine months ended September 30, 2024 compared to the same period of the prior year due to net revenues growing more than operating expenses.

Our operating margin was 17% and 15% in the nine months ended September 30, 2024 and 2023, respectively, reflecting the positive impact of operating efficiencies in our business and lower transaction and credit losses, partially offset by the negative impact of an increase in transaction expense.

Net income increased $182 million, or 6%, in the nine months ended September 30, 2024 compared to the same period of the prior year due to the previously discussed increase in operating income of $584 million partially offset by a decrease of $283 million in other income (expense), net driven primarily by net losses on strategic investments in the current period compared to net gains in the prior period and an increase in income tax expense of $119 million due primarily to higher income before taxes, changes in jurisdictional mix of income, and U.S.

income taxed at different rates.

IMPACT OF FOREIGN CURRENCY EXCHANGE RATES

We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, subjecting us to foreign currency exchange risk which may adversely impact our financial results.

THREE MONTHS ENDED MARCH 31, 2025 AND 2024

Net revenues increased $92 million, or 1%, in the three months ended March 31, 2025 compared to the same period of the prior year driven primarily by growth in total payment volume (“TPV”) of 3% and an increase in interest and fee revenue earned on our loans receivable portfolio, partially offset by changes in TPV mix, which resulted in lower transaction revenue.

Total operating expenses decreased $270 million, or 4%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline in transaction expense and restructuring and other expenses.

Operating income increased $362 million, or 31%, in the three months ended March 31, 2025 compared to the same period of the prior year due to the increase in net revenues and decline in operating expenses.

Our operating margin was 20% and 15% in the three months ended March 31, 2025 and 2024, respectively, reflecting the positive impact of lower transaction expense and restructuring and other expenses.

Net income increased $399 million, or 45%, in the three months ended March 31, 2025 compared to the same period of the prior year due to the previously discussed increase in operating income of $362 million and an increase in other income (expense), net of $32 million.

IMPACT OF FOREIGN EXCHANGE RATES

We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, subjecting us to foreign exchange risk which may adversely impact our financial results.

The strengthening or weakening of the United States (“U.S.”) dollar versus foreign currencies in which we conduct our international operations impacts the translation of our net revenues and expenses generated in these foreign currencies into the U.S.

We generated approximately 42% of our net revenues from customers domiciled outside of the U.S.

in both the three and nine months ended September 30, 2024 compared to 43% and 42% in the three and nine months ended September 30, 2023, respectively.

We generated approximately 43% and 42% of our net revenues from customers domiciled outside of the U.S.

in the three months ended March 31, 2025 and 2024, respectively.

Because we generate substantial net revenues internationally, we are subject to the risks of doing business outside of the U.S.

See Part I, Item 1A, Risk Factors in our 2024 Form 10-K, as supplemented and, to the extent inconsistent, superseded (if applicable) below in Part II, Item 1A, Risk Factors of this Form 10-Q.

We calculate the year-over-year impact of foreign currency exchange movements on our business using prior period foreign currency exchange rates applied to current period transactional currency amounts.

While changes in foreign currency exchange rates affect our reported results, we have a foreign currency exchange exposure management program in which we use foreign currency exchange contracts, designated as cash flow hedges, intended to reduce the impact on earnings from foreign currency exchange rate movements.

Gains and losses from these foreign currency exchange contracts are recognized as a component of transaction revenues or operating expenses (as applicable) in the same period the forecasted transactions impact earnings.

In the three and nine months ended September 30, 2024, year-over-year foreign currency exchange rate movements relative to the U.S.

We calculate the year-over-year impact of foreign exchange rate movements on our business using prior period foreign exchange rates applied to current period transactional currency amounts.

While changes in foreign exchange rates affect our reported results, we have a foreign currency exposure management program in which we use foreign exchange contracts, designated as cash flow hedges, intended to reduce the impact on earnings from foreign exchange rate movements.

Gains and losses from these foreign exchange contracts are recognized as a component of transaction revenues or operating expenses (as applicable) in the same period the forecasted transactions impact earnings.

In the three months ended March 31, 2025, year-over-year foreign exchange rate movements relative to the U.S.

dollar had the following impact on our reported results:

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In millions)

Favorable impact to net revenues (exclusive of hedging impact)

Unfavorable impact to net revenues (exclusive of hedging impact)

Hedging impact 35

Favorable impact to net revenues

(Unfavorable) favorable impact to operating expense

Net (unfavorable) favorable impact to operating income

While we enter into foreign currency exchange contracts to help reduce the impact on earnings from foreign currency exchange rate movements, it is impossible to predict or eliminate the total effects of this exposure.

We also use foreign currency exchange contracts, designated as net investment hedges, to reduce the foreign currency exchange risk related to our investment in certain foreign subsidiaries.

Unfavorable impact to net revenues

Favorable impact to operating expense

Net unfavorable impact to operating income

While we enter into foreign exchange contracts to help reduce the impact on earnings from foreign exchange rate movements, it is impossible to eliminate the total effects of this exposure.

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

Gains and losses associated with these instruments will remain in accumulated other comprehensive income (loss) until the underlying foreign subsidiaries are sold or substantially liquidated.

Given that we also have foreign currency exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries, we have an additional foreign currency exchange exposure management program in which we use foreign currency exchange contracts to help offset the impact of foreign currency exchange rate movements on our assets and liabilities.

The foreign currency exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign currency exchange contracts.

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

Additionally, in connection with transactions occurring in multiple currencies on our payments platform, we generally set our foreign currency exchange rates daily and may face financial exposure if we incorrectly set our foreign currency exchange rates or as a result of fluctuations in foreign currency exchange rates between the times that we set our foreign currency exchange rates and when transactions occur.

While we have processes in place to mitigate these risks, it is impossible to eliminate the total effects of any possible exposure associated with setting rates on our platform.

Given that we also have foreign exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries, we have an additional balance sheet foreign currency exposure management program in which we use foreign exchange contracts to help offset the impact of foreign exchange rate movements on our assets and liabilities.

The foreign exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign exchange contracts.

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

Additionally, in connection with transactions occurring in multiple currencies on our payments platform, we generally set our foreign exchange rates daily and may face financial exposure if we incorrectly set our foreign exchange rates or as a result of fluctuations in foreign exchange rates between the times that we set our foreign exchange rates and when transactions occur.

While we have processes in place to mitigate these risks, it is impossible to eliminate the total effects of any possible exposure associated with setting foreign exchange rates on our payments platform.

KEY METRICS AND FINANCIAL RESULTS

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Our key metrics are calculated using internal company data based on the activity we measure on our payments platform and compiled from multiple systems, including systems that are internally developed or acquired through business combinations.

While the measurement of our key metrics is based on what we believe to be reasonable methodologies and estimates, there are inherent challenges and limitations in measuring our key metrics globally at our scale.

The methodologies used to calculate our key metrics require significant judgment.

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• Revenues from other value added services :

Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our merchants and consumers.

Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our consumers and merchants.

We also earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain assets underlying customer balances.

Net revenue analysis

The components of our net revenues for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

The components of our net revenues for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Transaction revenues

Transaction revenues grew by $413 million, or 6%, and $1.7 billion, or 9%, in the three and nine months ended September 30, 2024 compared to the same periods of the prior year driven primarily by growth in TPV and the number of payment transactions from our Braintree products and services and, to a lesser extent, from our core PayPal and Venmo products and services.

Transaction revenues for the nine months ended September 30, 2024 were also impacted unfavorably by lower net gains from hedging activities as compared to the same period of the prior year.

As a result of ongoing negotiations with merchants, we expect lower volume and transaction revenue growth in the fourth quarter of 2024 and into 2025 from our Braintree products and services.

The graphs below present the respective key metrics (in millions) for the three and nine months ended September 30, 2024 and 2023:

Transaction revenues remained consistent in the three months ended March 31, 2025 compared to the same period of the prior year driven primarily by a decline in revenues of approximately $200 million from our Braintree products and services resulting from a decline in TPV and the number of payment transactions, partially offset by an increase in revenues of approximately $170 million from our Venmo and PayPal products and services resulting from growth in TPV and the number of payment transactions.

As a result of our stronger focus on profitable growth and ongoing negotiations with merchants, we expect lower volume and transaction revenue growth from our Braintree offerings in 2025.

The graphs below present the respective key metrics (in millions) for the three months ended March 31, 2025 and 2024:

*Reflects active accounts at the end of the applicable period.

Number of payment transactions

The following table provides a summary of related metrics:

Three Months Ended September 30, Percent Increase/(Decrease) Nine Months Ended

September 30, Percent Increase/(Decrease)

2024 2023 2024 2023

Three Months Ended March 31, Percent Increase/(Decrease)

Number of payment transactions per active account 59.4 60.0 (1) %

Percent of cross-border TPV (1)

12 % 12 % ** 12 % 12 % **

(1) Cross-border TPV occurs primarily between two PayPal accounts in different countries and includes transactions initiated through our Xoom product.

** Not meaningful.

We had active accounts of 432 million and 428 million as of September 30, 2024 and 2023, respectively.

Our total number of payment transactions was 6.6 billion and 6.3 billion for the three months ended September 30, 2024 and 2023, respectively, an increase of 6%.

Our total number of payment transactions was 19.7 billion for the nine months ended September 30, 2024, compared to 18.2 billion in the nine months ended September 30, 2023, an increase of 8%.

TPV was $423 billion and $388 billion for the three months ended September 30, 2024 and 2023, respectively, an increase of 9%.

TPV was $1.2 trillion for the nine months ended September 30, 2024 compared to $1.1 trillion in the nine months ended September 30, 2023, an increase of 11%.

Transaction revenues growth was lower than the growth in TPV in the three and nine months ended September 30, 2024 compared to the same periods in the prior year due primarily to unfavorable changes in mix from core PayPal products and services and unfavorable impact from foreign exchange fees.

For the nine months ended September 30, 2024, these unfavorable impacts to transaction revenues growth were partially offset by favorable impact from Braintree products and services.

We had active accounts of 436 million and 427 million as of March 31, 2025 and 2024, respectively, an increase of 2%.

Our total number of payment transactions was 6.0 billion and 6.5 billion for the three months ended March 31, 2025 and 2024, respectively, a decrease of 7%.

TPV was $417 billion and $404 billion for the three months ended March 31, 2025 and 2024, respectively, an increase of 3%.

Transaction revenues remained consistent while TPV increased 3% in the three months ended March 31, 2025 compared to the same period in the prior year due primarily to changes in volume mix with a higher proportion of TPV from payout products, which have lower pricing, as well as a decline in volume from large merchants on Braintree products and services as a result of our focus on profitable growth.

Revenues from other value added services

Revenues from other value added services increased $16 million and $6 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year due primarily to an increase in interest earned on certain assets underlying customer account balances resulting primarily from higher interest rates and higher customer balances, partially offset by a decline in the revenue share earned from an independent chartered financial institution.

Revenues from other value added services for the nine months ended September 30, 2024 were also impacted by lower interest and fee revenue on our loans receivable portfolio driven by a decrease in receivables related to PayPal Business Loan (“PPBL”) products.

Revenues from other value added services increased $110 million, or 17% in the three months ended March 31, 2025 compared to the same period in the prior year due primarily to an approximately $70 million increase in interest and fee revenue earned from our loans receivable portfolio driven by consumer interest-bearing installment loans, merchant loans, and consumer revolving loans.

OPERATING EXPENSES

The following table summarizes our operating expenses and related metrics we use to assess the trends in each:

Three Months Ended September 30, Percent Increase/(Decrease) Nine Months Ended September 30, Percent Increase/(Decrease)

2024 2023 2024 2023

Three Months Ended March 31, Percent Increase/(Decrease)

(In millions, except percentages)

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Transaction expense

Transaction expense for the three and nine months ended September 30, 2024 and 2023 was as follows (in millions):

Transaction expense increased by $238 million, or 7%, and $1.3 billion, or 12%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to the increase in TPV of 9% and 11% for the three and nine months ended September 30, 2024, respectively, as well as unfavorable changes in product mix.

The decrease in the transaction expense rate for the three months ended September 30, 2024 compared to the same period of the prior year was primarily attributable to favorable changes in regional mix, product mix, and certain third-party pricing incentives within our core PayPal products and services as well as favorable changes in merchant mix associated with our unbranded card processing volume.

The slight increase in the transaction expense rate for the nine months ended September 30, 2024 compared to the same period of the prior year was attributable to unfavorable changes in product mix with a higher proportion of TPV from unbranded card processing volume, which generally has higher expense rates than our other products and services, largely offset by favorable changes in regional mix, product mix, and certain third-party pricing incentives within our core PayPal products and services.

For both the three months ended September 30, 2024 and 2023, approximately 37% of TPV was generated outside of the U.S.

For both the nine months ended September 30, 2024 and 2023, approximately 36% of TPV was generated outside of the U.S.

Transaction expense for the three months ended March 31, 2025 and 2024 was as follows (in millions):

Transaction expense decreased $213 million, or 5%, in the three months ended March 31, 2025 compared to the same period of the prior year.

The decline in transaction expense and the associated transaction expense rate was primarily attributable to favorable changes in merchant mix as well as a volume decline within our Braintree products and services, which generally have a higher expense rate than other products and services.

Our transaction expense rate is impacted by changes in product mix, merchant mix, regional mix, funding mix, and fees paid to payment processors and other financial institutions.

The cost of funding a transaction with a credit or debit card is generally higher than the cost of funding a transaction from a bank or through internal sources such as a PayPal or Venmo account balance or our consumer credit products.

The cost of funding a transaction is also impacted by the geographic region or country in which a transaction occurs, as we generally pay lower rates for transactions funded with credit or debit cards outside the U.S.

For the three months ended March 31, 2025 and 2024, approximately 35% and 36% of TPV, respectively, was generated outside of the U.S.

Transaction and credit losses

The components of our transaction and credit losses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

Transaction and credit losses decreased by $94 million, or 21%, and $278 million, or 22%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year.

Transaction losses were $264 million in the three months ended September 30, 2024 compared to $329 million in the three months ended September 30, 2023, a decrease of $65 million, or 20%.

Transaction losses were $783 million in the nine months ended September 30, 2024 compared to $915 million in the nine months ended September 30, 2023, a decrease of $132 million, or 14%.

Transaction loss rate (transaction losses divided by TPV) was 0.06% for the three and nine months ended September 30, 2024, compared to 0.08% for the three and nine months ended September 30, 2023.

The decrease in transaction losses and the associated transaction loss rate in the three and nine months ended September 30, 2024 compared to the same periods of the prior year was primarily due to higher recoveries and lower losses resulting from fewer fraud events in the current period.

Credit losses decreased by $29 million and $146 million in the three and nine months ended September 30, 2024 compared to the same periods of the prior year.

The components of credit losses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

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

2024 2023 2024 2023 (3)

The components of our transaction and credit losses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Transaction and credit losses increased $50 million, or 16%, in the three months ended March 31, 2025 compared to the same period of the prior year.

Transaction losses were $278 million in the three months ended March 31, 2025 compared to $260 million in the three months ended March 31, 2024, an increase of $18 million, or 7%.

Transaction loss rate (transaction losses divided by TPV) was 0.07% for the three months ended March 31, 2025, compared to 0.06% for the three months ended March 31, 2024.

The increase in transaction losses and the associated transaction loss rate in the three months ended March 31, 2025 compared to the same period of the prior year was primarily due to an increase in losses from our PayPal products and services driven by fraud incidents.

Credit losses increased $32 million in the three months ended March 31, 2025 compared to the same period of the prior year.

The components of credit losses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Three Months Ended March 31,

Net charge-offs (1)

$ 81 $ 163 $ 295 $ 407

Reserve (release) build (2)

7 (46) (70) (36)

Reserve build (release) (2)

Credit losses $ 93 $ 61

(1) Net charge-offs includes principal charge-offs partially offset by recoveries for consumer and merchant receivables.

(2) Reserve (release) build represents change in allowance for principal receivables excluding foreign currency remeasurement.

(3) Includes the reversal of allowance associated with reclassification of certain loans to held for sale.

The provision in the three and nine months ended September 30, 2024 was attributable to loan originations during the period partially offset by improvement in credit quality of loans outstanding.

The provision in the three and nine months ended September 30, 2023 was attributable to loan originations during the period and a deterioration in the credit quality of loans outstanding.

(2) Reserve build (release) represents change in allowance for principal receivables excluding foreign currency remeasurement.

Credit losses in the three months ended March 31, 2025 were attributable to loan originations during the period.

Credit losses in the three months ended March 31, 2024 were attributable to loan originations partially offset by improvement in the credit quality of loans outstanding.

Consumer loan portfolio

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

As of September 30, 2024 and 2023, loans and interest receivable, held for sale was $471 million and $2.2 billion, respectively, representing the portion of our installment consumer receivables that we intend to sell.

The consumer loans and interest receivable balance as of September 30, 2024 and 2023 was $5.1 billion and $4.2 billion, respectively, net of participation interest sold, representing an increase of 21%.

The increase was driven primarily by growth in our installment credit products in Japan and our revolving credit product in the U.K., partially offset by a decline in our installment credit products in Germany due to the forward flow arrangement with the global investment firm as well as a decrease in our interest-bearing installment credit product in the U.S.

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

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

As of March 31, 2025 and 2024, loans and interest receivable, held for sale was $714 million and $307 million, respectively.

The consumer loans and interest receivable balance as of March 31, 2025 and 2024 was $5.4 billion and $4.5 billion, respectively, net of participation interest sold, representing an increase of 21%.

The increase was driven primarily by growth of approximately $500 million and $300 million in our installment credit products driven by growth in Japan and the U.S., respectively, as well as growth of approximately $230 million in our revolving credit product in the U.K., partially offset by a decline of approximately $100 million in our installment credit products in Germany due to the forward-flow arrangement with the global investment firm.

The following table provides information regarding the credit quality of our consumer loans and interest receivable balance:

September 30,

Percent of consumer loans and interest receivable current

3 unchanged sentences

(1) Represents percentage of balances which are 90 days past the billing date or contractual repayment date, as applicable.

(2) Net charge-off rate is the annualized ratio of net credit losses during the three months ended September 30, 2024 and 2023, excluding fraud losses, on consumer loans as a percentage of the average daily amount of consumer loans and interest receivable balance during the same period.

The decline in net charge-off rate for consumer receivables at September 30, 2024 as compared to September 30, 2023 was due primarily to the improvement in credit quality of the U.S.

(2) Net charge-off rate is the annualized ratio of net credit losses during the three months ended March 31, 2025 and 2024, excluding fraud losses, on consumer loans as a percentage of the average daily amount of consumer loans and interest receivable balance during the same period.

The decline in net charge-off rate for consumer receivables at March 31, 2025 as compared to March 31, 2024 was due primarily to the improvement in credit quality of the U.S.

interest-bearing installment products.

In response to declining performance, a number of risk mitigation strategies were implemented in the third quarter of 2023, which reduced originations for our U.S.

interest-bearing installment product.

In response to changing portfolio performance, we continue to evaluate and modify our acceptable risk parameters.

Changes to such parameters in the second quarter of 2024, combined with enhanced risk monitoring, have resulted in an increase of U.S.

interest-bearing installment loan originations back to historical levels.

In response to changing portfolio performance and macroeconomic environment, we continue to monitor risk and evaluate and modify our acceptable risk parameters.

Modifications to the acceptable risk parameters did not have a material impact on our consumer loans for the three months ended March 31, 2025.

Merchant loan portfolio

We offer access to merchant finance products for certain small and medium-sized businesses, which we refer to as our merchant finance offerings.

Total merchant loans, advances, interest, and fees receivable outstanding, net of participation interest sold, as of September 30, 2024 and 2023 was $1.4 billion, reflecting a slight decline of 4% attributable to slowed originations related to our PPBL product in the U.S.

mostly offset by an increase in our PayPal Working Capital product portfolio across countries.

Total merchant loans, advances, and interest and fees receivable outstanding, net of participation interest sold, as of March 31, 2025 and 2024 was $1.6 billion and $1.2 billion, respectively, reflecting an increase of 32%.

The increase was due primarily to growth of approximately $230 million in our PPWC product portfolio, primarily from the U.S., Germany and the U.K., as well as growth of approximately $160 million in our PayPal Business Loans (“PPBL”) product in the U.S.

The following table provides information regarding the credit quality of our merchant loans, advances, and interest and fees receivable balance:

September 30,

Percent of merchant loans, advances, and interest and fees receivable current 90.0 % 88.7 %

2 unchanged sentences

(1) Represents percentage of balances which are 90 days past the original expected or contractual repayment period, as applicable.

(2) Net charge-off rate is the annualized ratio of net credit losses during the three months ended September 30, 2024 and 2023, excluding fraud losses, on merchant loans and advances as a percentage of the average daily amount of merchant loans, advances, and interest and fees receivable balance during the same period.

The increase in the percent of current merchant receivables and decrease in percent of merchant receivables greater than 90 days outstanding and the net charge-off rate for merchant receivables at September 30, 2024 as compared to September 30, 2023 was due primarily to the improvement in the credit quality of the PPBL portfolio.

In response to declining performance, a number of risk mitigation strategies were implemented throughout 2023, which reduced originations for our PPBL product.

In response to changing portfolio performance, we continue to evaluate and modify our acceptable risk parameters.

Changes to such parameters, combined with enhanced risk monitoring, have resulted in an increase in PPBL originations in 2024.

(2) Net charge-off rate is the annualized ratio of net credit losses during the three months ended March 31, 2025 and 2024, excluding fraud losses, on merchant loans and advances as a percentage of the average daily amount of merchant loans, advances, and interest and fees receivable balance during the same period.

The decrease in net charge-off rate for merchant receivables at March 31, 2025 as compared to March 31, 2024 was due primarily to the improvement in the credit quality of the PPBL portfolio and a significant decline in our outstanding merchant receivables in the prior period which increased the net charge-off rate presented as a percentage of our outstanding loan balance.

In response to changing portfolio performance and macroeconomic environment, we continue to monitor risk and evaluate and modify our acceptable risk parameters.

Modifications to the acceptable risk parameters did not have a material impact on our merchant loans for the three months ended March 31, 2025.

For additional information, see “Note 11—Loans and Interest Receivable” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Customer support and operations

Customer support and operations expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

Customer support and operations expenses decreased by $47 million, or 10%, and $137 million, or 9%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to a decline in employee-related costs associated with headcount reduction.

The decline in customer support and operations expenses in the nine months ended September 30, 2024 was also impacted by a reduction in other costs incurred related to delivery of our products, including warehouses, shipping, and payment devices and a decrease in contractors and consulting costs, partially offset by an increase in card issuance costs and customer onboarding and compliance costs.

Customer support and operations expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Customer support and operations expenses decreased $56 million, or 12%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline of approximately $40 million in employee-related costs associated with the prior year reduction in headcount, and to a lesser extent, a decline in software expenses.

Sales and marketing

Sales and marketing expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

Sales and marketing expenses increased by $66 million, or 15%, and $32 million, or 2%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year primarily attributable to higher spend on marketing and brand advertising, including the launch of our PayPal Everywhere advertising campaign, partially offset by a decline in employee-related costs.

The increase in the nine months ended September 30, 2024 was also attributable to higher revenue share to our partners.

We expect sales and marketing expenses to increase in the fourth quarter of 2024 as we continue to invest in brand advertising and marketing campaigns.

Sales and marketing expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Sales and marketing expenses increased $67 million, or 16%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to higher spend of approximately $90 million on marketing and brand advertising, including our PayPal Everywhere advertising campaign, partially offset by lower employee-related costs.

Technology and development

Technology and development expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

Technology and development expenses remained consistent in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year.

The slight increase in technology and development expenses in the three months ended September 30, 2024 was primarily due to an increase in contractor and consultant costs offset by a decline in employee-related costs associated with headcount reduction.

The slight increase in technology and development expenses in the nine months ended September 30, 2024 was driven by increases in cloud computing services utilized in delivering our products and services, amortization expense associated with internally developed software, and software maintenance costs offset by a decline in employee-related costs associated with headcount reduction.

Technology and development expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Technology and development expenses decreased $11 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to lower employee-related costs associated with the prior year reduction in headcount and a decline in depreciation and amortization expense, partially offset by an increase in contractor and consultant costs and higher costs from cloud computing services utilized in delivering our products and services.

General and administrative

General and administrative expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

General and administrative expenses increased by $12 million, or 2%, and $48 million, or 3%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to an increase in indirect tax expense and professional services expense.

The increase in general and administrative expenses in the nine months ended September 30, 2024 was also attributable to a contingency reserve, partially offset by declines in facilities expense and depreciation expense.

General and administrative expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):

General and administrative expenses increased $39 million, or 8%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to an increase in indirect tax expense and professional services expense, partially offset by lower employee-related costs.

Restructuring and other

Restructuring and other for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):

Restructuring and other increased by $24 million and $161 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year.

Restructuring and other for the three months ended March 31, 2025 and 2024 were as follows (in millions):

Restructuring and other decreased $146 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline in restructuring charges as compared to the prior year.

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.

We do not anticipate cost savings in conjunction with this reduction.

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.

The estimated reduction in annualized employee-related costs associated with the impacted workforce is approximately $575 million, including approximately $155 million in stock-based compensation.

We expect to reinvest a portion of the reduction in annual costs associated with the impacted workforce to drive business priorities.

For information on the associated restructuring liability, see “Note 17—Restructuring and Other” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

During the first quarter of 2023, management initiated a global workforce reduction intended to focus resources on core strategic priorities, and improve 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 certain leased properties, which resulted in a reduction of right-of-use lease assets and related leasehold improvements.

In the nine months ended September 30, 2023, we recognized a gain of $17 million due to the sale of an owned property.

We also incurred a loss of $12 million upon designation of an owned property as 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.

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, which were substantially completed in 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.

Other income (expense), net

Other income (expense), net decreased $153 million and $283 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to net losses on strategic investments in the current period compared to net gains in the prior period, partially offset by higher interest income resulting from an increase in cash balances and interest rates year-over-year.

Other income (expense), net increased $32 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to net gains on strategic investments in the current period compared to net losses and impairments in the prior period, which contributed an increase of approximately $100 million year-over-year, partially offset by a decrease of approximately $40 million from a decline in interest income resulting from lower average cash balances year-over-year and an increase in interest expense due in part to incremental expense from the May 2024 debt issuance.

Income tax expense

Our effective income tax rate was 23% and 18% for the three months ended September 30, 2024 and 2023, respectively, and 23% and 21% for the nine months ended September 30, 2024 and 2023, respectively.

The increases in our effective income tax rate for the three and nine months ended September 30, 2024 compared to the same periods of the prior year were due primarily to changes in jurisdictional mix of income and U.S.

income taxed at different rates.

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

The decrease in our effective income tax rate for the three months ended March 31, 2025 compared to the same period of the prior year was due primarily to discrete tax adjustments including tax effects of stock-based compensation.

LIQUIDITY AND CAPITAL RESOURCES

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Cash, cash equivalents, and investments

The following table summarizes our cash, cash equivalents, and investments as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

The following table summarizes our cash, cash equivalents, and investments as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

(In millions)

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$ 14,192 $ 13,846

(1) Excludes assets related to funds receivable and customer accounts of $39.2 billion and $38.9 billion at September 30, 2024 and December 31, 2023, respectively.

(2) Excludes total restricted cash of $1 million and $3 million at September 30, 2024 and December 31, 2023, respectively, and strategic investments of $1.7 billion and $1.8 billion at September 30, 2024 and December 31, 2023, respectively.

Cash, cash equivalents, and investments held by our foreign subsidiaries were $6.9 billion and $10.0 billion at September 30, 2024 and December 31, 2023, or 48% and 64% of our total cash, cash equivalents, and investments as of those respective dates.

(1) Excludes assets related to funds receivable and customer accounts of $39.2 billion and $37.7 billion at March 31, 2025 and December 31, 2024, respectively.

(2) Excludes total restricted cash of nil and $1 million at March 31, 2025 and December 31, 2024, respectively, and strategic investments of $1.6 billion at both March 31, 2025 and December 31, 2024.

Cash, cash equivalents, and investments held by our foreign subsidiaries were $9.1 billion and $8.5 billion at March 31, 2025 and December 31, 2024, or 64% and 62% of our total cash, cash equivalents, and investments as of those respective dates.

At December 31, 2024, all of our cash, cash equivalents, and investments held by foreign subsidiaries were subject to U.S.

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will not be taxable from a U.S.

federal tax perspective, but may be subject to state income or foreign withholding tax.

federal tax perspective except for any tax on foreign exchange gains and losses;

however, they may be subject to state income or foreign withholding tax.

A significant aspect of our global cash management activities involves meeting our customers’ requirements to access their cash while simultaneously meeting our regulatory financial ratio commitments in various jurisdictions.

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The following table summarizes our condensed consolidated statements of cash flows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

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Effect of exchange rates on cash, cash equivalents, and restricted cash 94 (94)

Net decrease in cash, cash equivalents, and restricted cash

Net change in cash, cash equivalents, and restricted cash

$ (1,409) $ 441

Operating activities

The net cash provided by operating activities of $5.1 billion in the nine months ended September 30, 2024 was due primarily to operating income of $3.9 billion, as well as adjustments for non-cash expenses, including provision for transaction and credit losses of $1.0 billion, stock-based compensation of $947 million, and depreciation and amortization of $783 million.

Cash flows from operating activities was also impacted by proceeds from repayments and sales of loans receivable, originally classified as held for sale, of $17.2 billion and net losses from our strategic investments of $226 million.

These inflows from operating activities were partially offset by originations of loans receivable, held for sale of $17.2 billion, changes in other assets and liabilities of $647 million, primarily related to actual cash transaction losses incurred during the period, and accretion of discounts on investments, net of amortization of premiums, of $290 million.

The net cash provided by operating activities of $2.2 billion in the nine months ended September 30, 2023 was due primarily to operating income of $3.3 billion, as well as adjustments for non-cash expenses, including provision for transaction and credit losses of $1.3 billion, stock-based compensation of $1.1 billion, and depreciation and amortization of $809 million.

Cash flows from operating activities was also impacted by originations of loans receivable, held for sale of $5.7 billion, changes in other assets and liabilities of $865 million, primarily related to actual cash transaction losses incurred during the period, changes in deferred income taxes of $439 million, accretion of discounts on investments, net of amortization of premiums, of $265 million, and net gains from our strategic investments of $205 million, partially offset by proceeds from repayments of loans receivable, originally classified as held for sale, of $3.7 billion.

In the nine months ended September 30, 2024 and 2023, cash paid for income taxes, net was $975 million and $1.1 billion, respectively.

Net cash provided by operating activities declined $757 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to changes in working capital of approximately $790 million driven by a decline in liabilities, changes in stock-based compensation of approximately $120 million, and an impact of approximately $100 million from net gains on strategic investments, partially offset by an increase in operating income of approximately $360 million.

In the three months ended March 31, 2025 and 2024, cash paid for income taxes, net was $95 million and $83 million, respectively.

Investing activities

The net cash used in investing activities of $868 million in the nine months ended September 30, 2024 was due primarily to purchases of investments of $20.8 billion, purchases and originations of loans receivable of $15.4 billion, purchases of property and equipment of $480 million, and purchases of reverse repurchase agreements of $299 million, partially offset by maturities and sales of investments of $21.2 billion, proceeds from repayments and sales of loans receivable, originally classified as held for investment, of $14.7 billion, and maturities of reverse repurchase agreements of $226 million.

From time to time, we enter into reverse repurchase agreements as a form of secured lending primarily to deploy excess cash.

The net cash provided by investing activities of $1.3 billion in the nine months ended September 30, 2023 was due primarily to proceeds from repayments and sales of loans receivable, originally classified as held for investment, of $21.3 billion and maturities and sales of investments of $16.1 billion, partially offset by purchases and originations of loans receivable of $19.8 billion, purchases of investments of $15.0 billion, changes in funds receivable from customers of $1.0 billion, and purchases of property and equipment of $478 million.

Net cash used in investing activities increased $4.6 billion in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline of approximately $2.7 billion in maturities and sales of investments, net of purchases, and changes related to funds receivable of approximately $1.6 billion.

Financing activities

The net cash used in financing activities of $4.7 billion in the nine months ended September 30, 2024 was due primarily to the repurchase of $4.8 billion of our common stock under our stock repurchase program, changes in funds payable and amounts due to customers of $771 million, repayments of borrowings from repurchase agreements of $656 million, repayments of borrowings under financing arrangements of $411 million, and tax withholdings related to net share settlement of equity awards of $271 million.

These cash outflows were partially offset by borrowings under financing arrangements of $1.5 billion (including proceeds from the issuance of fixed rate debt in May 2024) and borrowings from repurchase agreements of $656 million.

From time to time, we enter into repurchase agreements as a form of secured borrowing primarily to address temporary liquidity needs.

The net cash used in financing activities of $6.0 billion in the nine months ended September 30, 2023 was due primarily to the repurchase of $4.4 billion of our common stock under our stock repurchase program, changes in funds payable and amounts due to customers of $1.3 billion, repayments of borrowings under financing arrangements of $942 million (including principal repayment of fixed rate debt that matured in June 2023 and repayment of borrowings under our Paidy credit agreement), and tax withholdings related to net share settlement of equity awards of $225 million.

These cash outflows were partially offset by borrowings under financing arrangements of $829 million, including proceeds from the issuance of fixed rate debt in June 2023 and borrowings under our Paidy credit agreement.

Net cash provided by financing activities increased $3.4 billion in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to an increase of approximately $1.9 billion from changes related to funds payable and amounts due to customers, and an increase of approximately $1.7 billion in borrowings (including proceeds from the March 2025 debt issuance), net of repayments under financing arrangements.

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Foreign currency exchange rates for the nine months ended September 30, 2024 and 2023 had a positive impact of $103 million and a negative impact of $95 million, respectively, on cash, cash equivalents, and restricted cash.

The positive impact on cash, cash equivalents, and restricted cash in the nine months ended September 30, 2024 was due primarily to the favorable impact of fluctuations in the exchange rate of the U.S.

dollar to the British pound.

The negative impact on cash, cash equivalents and restricted cash in the nine months ended September 30, 2023 was due primarily to the unfavorable impact of fluctuations in the exchange rate of the U.S.

dollar to the Australian dollar, and to a lesser extent, the Chinese yuan and Japanese yen.

Foreign currency exchange rates had a positive impact of $94 million and a negative impact of $94 million on cash, cash equivalents, and restricted cash for the three months ended March 31, 2025 and 2024, respectively.

The positive impact on cash, cash equivalents, and restricted cash in the three months ended March 31, 2025 was due primarily to favorable fluctuations in the exchange rate of the U.S.

dollar to the British pound and, to a lesser extent, the Euro and Australian dollar.

The negative impact on cash, cash equivalents, and restricted cash in the three months ended March 31, 2024 was due primarily to the unfavorable impact of fluctuations in the exchange rate of the U.S.

dollar to the Australian dollar, and to a lesser extent, the British pound and Euro.

Available credit and debt

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

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 acquisitions of businesses, assets, or strategic investments.

As of September 30, 2024, we had an aggregate principal amount of $11.9 billion in fixed rate debt outstanding with varying maturity dates.

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).

As of September 30, 2024 and December 31, 2023, ¥90.0 billion (approximately $633 million) and ¥50.0 billion (approximately $355 million), respectively, was outstanding under the Paidy Credit Agreement.

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

In March 2025, we issued fixed rate and floating rate notes with varying maturity dates for an aggregate principal amount of $1.5 billion.

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.

As of March 31, 2025, we had an aggregate principal amount of $12.1 billion in debt outstanding with varying maturity dates.

Other than as described above, there were no significant changes to the available credit and debt disclosed in our 2024 Form 10‑K.

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Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to fund our operating activities, finance acquisitions, make strategic investments, repurchase shares under our stock repurchase program, or reduce our cost of capital.

We have a cash pooling arrangement with a financial institution for cash management purposes.

The arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the financial institution (“Aggregate Cash Deposits”).

The arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit.

The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the arrangement.

As of September 30, 2024, we had a total of $2.2 billion in cash withdrawals offsetting our $2.2 billion in Aggregate Cash Deposits held within the financial institution under the cash pooling arrangement.

Credit ratings

As of September 30, 2024, we continue to be rated investment grade by Standard and Poor’s Financial Services, LLC, Fitch Ratings, Inc., and Moody’s Investors Services, Inc.

As of March 31, 2025, we continue to be rated investment grade by Standard and Poor’s Financial Services, LLC, Fitch Ratings, Inc., and Moody’s Investors Services, Inc.

We expect that these credit rating agencies will continue to monitor our performance, including our capital structure and results of operations.

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credit activities.

As of September 30, 2024, the cumulative amount approved by PayPal to be designated to fund credit activities aggregated to $2.0 billion and represented approximately 27% of European customer balances made available for our corporate use at that date, as determined by applying financial regulations maintained by the CSSF.

As of March 31, 2025 and December 31, 2024, the cumulative amount approved by PayPal to be designated to fund credit activities was $2.0 billion as of those respective dates and represented approximately 26% of European customer balances made available for our corporate use as of those respective dates, as determined by applying financial regulations maintained by the CSSF.

We may periodically seek to change the designation of amounts of European customer balances for our credit activities, as we deem necessary, based on utilization of the approved funds and anticipated credit funding requirements.

Under certain exceptional circumstances, corporate liquidity could be called upon to meet our obligations related to our European customer balances.

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.

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

In June 2023, we entered into a multi-year agreement with a global investment firm to sell our eligible consumer installment receivables portfolio.

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.

During the three months ended March 31, 2025 and 2024, we sold $5.3 billion and $4.8 billion, respectively, of loans and interest receivable in connection with this agreement.

See “Note 11—Loans and Interest Receivable” in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information.

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Stock repurchases

During the nine months ended September 30, 2024, we repurchased approximately $4.8 billion of our common stock 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.

During the three months ended March 31, 2025, we repurchased approximately $1.5 billion of our common stock in the open market under our stock repurchase program authorized in June 2022.

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.

Other considerations

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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 2. Management’s Discussion and Analysis