PayPal Holdings, Inc. 10-Q

ITEM 1: FINANCIAL STATEMENTS PayPal Holdings, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (In millions, except par value) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 8,995 $ 6,662 Short-term investments 1,760 4,262 Accounts receivable, net 973 984 Loans and interest receivable, held for sale 1,404 541 Loans and interest receivable, net of allowances of $ 515 and $ 461 as of September 30, 2025 and December 31, 2024, respectively 6,396 6,422 Funds receivable and customer accounts 38,668 37,671 Prepaid expenses and other current assets 1,980 1,664 Total current assets 60,176 58,206 Long-term investments 3,601 4,583 Property and equipment, net 1,656 1,508 Goodwill 10,941 10,837 Intangible assets, net 226 326 Other assets 3,201 3,265 Total assets $ 79,801 $ 78,725 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 208 $ 227 Funds payable and amounts due to customers 40,668 39,671 Accrued expenses and other current liabilities 4,048 5,592 Total current liabilities 44,924 45,490 Other long-term liabilities 3,403 2,939 Long-term debt 11,276 9,879 Total liabilities 59,603 58,308 Commitments and contingencies (Note 13) Equity: Common stock, $ 0.0001 par value; 4,000 shares authorized; 941 and 993 shares outstanding as of September 30, 2025 and December 31, 2024, respectively — — Preferred stock, $ 0.0001 par value; 100 shares authorized, unissued — — Treasury stock at cost, 400 and 337 shares as of September 30, 2025 and December 31, 2024, respectively ( 31,624 ) ( 27,085 ) Additional paid-in-capital 21,359 20,705 Retained earnings 31,163 27,347 Accumulated other comprehensive income (loss) ( 700 ) ( 550 ) Total equity 20,198 20,417 Total liabilities and equity $ 79,801 $ 78,725 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions, except per share amounts) (Unaudited) Net revenues $ 8,417 $ 7,847 $ 24,496 $ 23,431 Operating expenses: Transaction expense 4,063 3,841 11,735 11,700 Transaction and credit losses 483 352 1,330 1,008 Customer support and operations 447 427 1,258 1,317 Sales and marketing 521 508 1,592 1,375 Technology and development 801 746 2,299 2,206 General and administrative 513 519 1,477 1,553 Restructuring and other 69 63 251 388 Total operating expenses 6,897 6,456 19,942 19,547 Operating income 1,520 1,391 4,554 3,884 Other income (expense), net 13 ( 80 ) 111 35 Income before income taxes 1,533 1,311 4,665 3,919 Income tax expense 285 301 869 893 Net income (loss) $ 1,248 $ 1,010 $ 3,796 $ 3,026 Net income (loss) per share: Basic $ 1.31 $ 1.00 $ 3.92 $ 2.91 Diluted $ 1.30 $ 0.99 $ 3.88 $ 2.89 Weighted average shares: Basic 950 1,015 968 1,040 Diluted 960 1,024 978 1,048 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) (Unaudited) Net income (loss) $ 1,248 $ 1,010 $ 3,796 $ 3,026 Other comprehensive income (loss), net of reclassification adjustments: Foreign currency translation adjustments (“CTA”), net ( 49 ) 275 185 7 Tax (expense) benefit on foreign CTA, net — — ( 4 ) — Net investment hedges CTA (losses) gains, net — ( 149 ) — 50 Tax benefit (expense) on net investment hedges CTA (losses) gains, net — 35 — ( 12 ) Unrealized gains (losses) on cash flow hedges, net 78 ( 148 ) ( 346 ) ( 49 ) Tax (expense) benefit on unrealized gains (losses) on cash flow hedges, net ( 3 ) 7 17 2 Unrealized gains (losses) on available-for-sale debt securities, net 18 60 ( 2 ) 158 Tax expense on unrealized gains (losses) on available-for-sale debt securities, net ( 5 ) ( 14 ) — ( 37 ) Other comprehensive income (loss), net of tax 39 66 ( 150 ) 119 Comprehensive income (loss) $ 1,287 $ 1,076 $ 3,646 $ 3,145 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Shares Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Equity (In millions) (Unaudited) Balances at December 31, 2024 993 $ ( 27,085 ) $ 20,705 $ ( 550 ) $ 27,347 $ 20,417 Adoption of crypto asset accounting standard — — — — 20 20 Net income — — — — 1,287 1,287 Foreign CTA, net — — — 109 — 109 Tax expense on foreign CTA, net — — — ( 7 ) — ( 7 ) Unrealized losses on cash flow hedges, net — — — ( 176 ) — ( 176 ) Tax benefit on unrealized losses on cash flow hedges, net — — — 9 — 9 Unrealized losses on available-for-sale debt securities, net — — — ( 9 ) — ( 9 ) Tax benefit on unrealized losses on available-for-sale debt securities, net — — — 2 — 2 Common stock and stock-based awards issued, net of shares withheld for employee taxes 5 — ( 171 ) — — ( 171 ) Common stock repurchased ( 19 ) ( 1,512 ) — — — ( 1,512 ) Stock-based compensation — — 285 — — 285 Balances at March 31, 2025 979 $ ( 28,597 ) $ 20,819 $ ( 622 ) $ 28,654 $ 20,254 Net income — — — — 1,261 1,261 Foreign CTA, net — — — 125 — 125 Tax expense on foreign CTA, net — — — 3 — 3 Unrealized losses on cash flow hedges, net — — — ( 248 ) — ( 248 ) Tax benefit on unrealized losses on cash flow hedges, net — — — 11 — 11 Unrealized losses on available-for-sale debt securities, net — — — ( 11 ) — ( 11 ) Tax benefit on unrealized losses on available-for-sale debt securities, net — — — 3 — 3 Common stock and stock-based awards issued, net of shares withheld for employee taxes 3 — ( 2 ) — — ( 2 ) Common stock repurchased ( 22 ) ( 1,514 ) — — — ( 1,514 ) Stock-based compensation — — 319 — — 319 Balances at June 30, 2025 960 $ ( 30,111 ) $ 21,136 $ ( 739 ) $ 29,915 $ 20,201 Net income — — — — 1,248 1,248 Foreign CTA, net — — — ( 49 ) — ( 49 ) Unrealized gains on cash flow hedges, net — — — 78 — 78 Tax expense on unrealized gains on cash flow hedges, net — — — ( 3 ) — ( 3 ) Unrealized gains on available-for-sale debt securities, net — — — 18 — 18 Tax expense on unrealized gains on available-for-sale debt securities, net — — — ( 5 ) — ( 5 ) Common stock and stock-based awards issued, net of shares withheld for employee taxes 2 — ( 66 ) — — ( 66 ) Common stock repurchased ( 21 ) ( 1,513 ) — — — ( 1,513 ) Stock-based compensation — — 289 — — 289 Balances at September 30, 2025 941 $ ( 31,624 ) $ 21,359 $ ( 700 ) $ 31,163 $ 20,198 7 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—(continued) Common Stock Shares Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Equity (In millions) (Unaudited) Balances at December 31, 2023 1,072 $ ( 21,045 ) $ 19,642 $ ( 746 ) $ 23,200 $ 21,051 Net income — — — — 888 888 Foreign CTA, net — — — ( 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, net — — — ( 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 — — — 3 — 3 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 3 — 13 — — 13 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 — — — — 1,010 1,010 Foreign CTA, net — — — 275 — 275 Net investment hedges CTA losses, net — — — ( 149 ) — ( 149 ) Tax benefit on net investment hedges CTA losses, net — — — 35 — 35 Unrealized losses on cash flow hedges, net — — — ( 148 ) — ( 148 ) Tax benefit on unrealized losses on cash flow hedges, net — — — 7 — 7 Unrealized gains on available-for-sale debt securities, net — — — 60 — 60 Tax expense on unrealized gains on available-for-sale debt securities, net — — — ( 14 ) — ( 14 ) Common stock and stock-based awards issued, net of shares withheld for employee taxes 2 — ( 47 ) — — ( 47 ) Common stock repurchased ( 28 ) ( 1,791 ) — — — ( 1,791 ) Treasury stock reissuance — 4 — — — 4 Stock-based compensation — — 310 — — 310 Balances at September 30, 2024 1,006 $ ( 25,851 ) $ 20,426 $ ( 627 ) $ 26,226 $ 20,174 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2025 2024 (In millions) (Unaudited) Cash flows from operating activities: Net income (loss) $ 3,796 $ 3,026 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Transaction and credit losses 1,330 1,008 Depreciation and amortization 729 783 Stock-based compensation 792 947 Deferred income taxes 93 8 Net (gains) losses on strategic investments ( 69 ) 226 Accretion of discounts on investments, net of amortization of premiums ( 77 ) ( 290 ) Adjustments to loans and interest receivable, held for sale 122 92 Other ( 245 ) ( 138 ) Originations of loans receivable, held for sale ( 24,040 ) ( 17,173 ) Proceeds from repayments and sales of loans receivable, originally classified as held for sale 23,160 17,159 Changes in assets and liabilities: Accounts receivable 11 31 Accounts payable ( 6 ) 24 Other assets and liabilities ( 1,564 ) ( 647 ) Net cash provided by operating activities 4,032 5,056 Cash flows from investing activities: Purchases of reverse repurchase agreements ( 201 ) ( 299 ) Maturities of reverse repurchase agreements 288 226 Purchases of property and equipment ( 658 ) ( 480 ) Proceeds from sales of property and equipment 3 — Purchases and originations of loans receivable ( 15,904 ) ( 15,374 ) Proceeds from repayments and sales of loans receivable, originally classified as held for investment 15,945 14,705 Purchases of investments ( 15,951 ) ( 20,819 ) Maturities and sales of investments 19,027 21,179 Funds receivable ( 1,232 ) 152 Collateral posted related to derivative instruments, net ( 207 ) ( 58 ) Other ( 15 ) — Net cash provided by (used in) investing activities 1,095 ( 768 ) Cash flows from financing activities: Borrowings from repurchase agreements 2,949 656 Repayments of repurchase agreements ( 2,949 ) ( 656 ) Proceeds from issuance of common stock 74 55 Purchases of treasury stock ( 4,551 ) ( 4,778 ) Tax withholdings related to net share settlements of equity awards ( 317 ) ( 271 ) Borrowings under financing arrangements 2,237 1,546 Repayments under financing arrangements ( 1,954 ) ( 411 ) Funds payable and amounts due to customers 663 ( 771 ) Collateral received related to derivative instruments and reverse repurchase agreements, net ( 155 ) ( 1 ) Other ( 6 ) ( 60 ) Net cash used in financing activities ( 4,009 ) ( 4,691 ) 9 Table of Contents PayPal Holdings, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued) Nine Months Ended September 30, 2025 2024 (In millions) (Unaudited) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 245 103 Net change in cash, cash equivalents, and restricted cash 1,363 ( 300 ) Cash, cash equivalents, and restricted cash at beginning of period 22,490 21,834 Cash, cash equivalents, and restricted cash at end of period $ 23,853 $ 21,534 Supplemental cash flow disclosures: Cash paid for interest $ 210 $ 168 Cash paid for income taxes, net $ 1,033 $ 975 The table below reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows: Cash and cash equivalents $ 8,995 $ 7,372 Short-term investments — 1 Funds receivable and customer accounts 14,858 14,161 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 23,853 $ 21,534 The accompanying notes are an integral part of these condensed consolidated financial statements. 10 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1— OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OVERVIEW AND ORGANIZATION PayPal Holdings, Inc. (“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 Basis of presentation and principles of consolidation The accompanying condensed consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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, 2025 and December 31, 2024, no VIEs qualified for consolidation as the structures of these entities do not provide us with both the ability to direct activities that would significantly impact their economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. As of September 30, 2025 and December 31, 2024, the carrying value of our investments in nonconsolidated VIEs that are primarily investments in funds that are limited partnerships or similar structures which are focused on increasing access to capital for underserved communities was $ 199 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. Our maximum exposure to loss related to these nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $ 246 million as of both September 30, 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, 2025. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and credit losses, income taxes, loss contingencies, revenue recognition, and the evaluation of strategic investments for impairment. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. Actual results could materially differ from these estimates. 11 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments and are primarily comprised of bank deposits, PayPal USD stablecoin (“PYUSD”), money market funds and debt securities with original maturities of three months or less when purchased. PYUSD is a stablecoin pegged to the U.S. dollar and fully backed by U.S. dollar deposits, U.S. treasuries, and similar cash equivalents. Each token of PYUSD held by PayPal represents a contractual right to redeem with the third-party issuer of PYUSD for one U.S. dollar. 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 . The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate reconciliation and additional information on reconciling items meeting a quantitative threshold. In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. 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 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 notes to our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, the guidance requires disclosure of selling expenses and its definition. The new guidance is effective for 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. In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amended guidance modernizes the accounting for costs related to internal-use software to more closely align with current software development methods. The guidance removes references to project stages and clarifies when we are required to start capitalizing eligible costs. The new guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are evaluating the impact this amended guidance may have on 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. 12 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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. SAB No. 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 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 our condensed consolidated balance sheet: December 31, 2024 (In millions) As Previously Reported (1) Adjustments As Adjusted Total assets (2) $ 81,611 $ ( 2,886 ) $ 78,725 Total liabilities (2) $ 61,194 $ ( 2,886 ) $ 58,308 (1) As reported in our 2024 Form 10-K filed with the SEC on February 4, 2025. (2) Financial statement lines impacted within total assets and total liabilities were “prepaid expenses and other current assets” and “accrued expenses and other current liabilities”, respectively. There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable. We do not believe any of these new accounting pronouncements have had, or will have, a material impact on our condensed consolidated financial statements or disclosures. NOTE 2— REVENUE We enable our customers to send and receive payments. We earn revenue primarily by completing payment transactions for our customers on our payments platform and from other value added services. Our revenues are classified into two categories: transaction revenues and revenues from other value added services. 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 $ 203 million and $ 207 million as of September 30, 2025 and December 31, 2024, respectively. DISAGGREGATION OF REVENUE 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. 13 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The following table presents our revenue disaggregated by primary geographical market and category: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Primary geographical markets U.S. $ 4,753 $ 4,518 $ 13,925 $ 13,535 Other countries (1) 3,664 3,329 10,571 9,896 Total net revenues (2) $ 8,417 $ 7,847 $ 24,496 $ 23,431 Revenue category Transaction revenues $ 7,522 $ 7,067 $ 21,979 $ 21,254 Revenues from other value added services 895 780 2,517 2,177 Total net revenues (2) $ 8,417 $ 7,847 $ 24,496 $ 23,431 (1) No single country included in the other countries category generated more than 10% of total net revenues. (2) Total net revenues include $ 542 million and $ 515 million for the three months ended September 30, 2025 and 2024, respectively, and $ 1.6 billion and $ 1.5 billion for the nine months ended September 30, 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, hedging gains or losses, and interest earned and gains or losses on certain assets underlying customer balances. Net revenues are attributed to the country in which the party paying our fee is located. NOTE 3— NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The dilutive effect of outstanding equity incentive awards is reflected in diluted net income (loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares. During periods when we report net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items would decrease the net loss per share. 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, 2025 2024 2025 2024 (In millions, except per share amounts) Numerator: Net income (loss) $ 1,248 $ 1,010 $ 3,796 $ 3,026 Denominator: Weighted average shares of common stock - basic 950 1,015 968 1,040 Dilutive effect of equity incentive awards 10 9 10 8 Weighted average shares of common stock - diluted 960 1,024 978 1,048 Net income (loss) per share: Basic $ 1.31 $ 1.00 $ 3.92 $ 2.91 Diluted $ 1.30 $ 0.99 $ 3.88 $ 2.89 Common stock equivalents excluded from net income (loss) per diluted share because their effect would have been anti-dilutive or potentially dilutive 12 8 9 12 14 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 4— BUSINESS COMBINATIONS AND DIVESTITURES In the second quarter of 2025, we completed an acquisition with a total purchase price of $ 19 million, consisting of cash consideration, which was accounted for as a business combination. There were no acquisitions accounted for as business combinations in the nine months ended September 30, 2024. There were no divestitures completed in the nine months ended September 30, 2025 and 2024. NOTE 5— GOODWILL AND INTANGIBLE ASSETS GOODWILL The following table presents goodwill balances and adjustments to those balances during the nine months ended September 30, 2025: December 31, 2024 Goodwill Acquired Adjustments September 30, 2025 (In millions) Total goodwill $ 10,837 $ 7 $ 97 $ 10,941 The adjustments to goodwill during the nine months ended September 30, 2025 pertained to foreign currency translation adjustments. INTANGIBLE ASSETS The components of identifiable intangible assets were as follows: September 30, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In millions) Intangible assets (1) : Customer lists and user base $ 880 $ ( 708 ) $ 172 $ 854 $ ( 601 ) $ 253 Marketing related 63 ( 50 ) 13 60 ( 38 ) 22 Developed technologies 9 ( 1 ) 8 — — — All other 187 ( 154 ) 33 182 ( 131 ) 51 Intangible assets, net $ 1,139 $ ( 913 ) $ 226 $ 1,096 $ ( 770 ) $ 326 (1) Excludes intangible assets which have been fully amortized, but are still in use. Amortization expense for intangible assets was $ 47 million and $ 51 million for the three months ended September 30, 2025 and 2024, respectively. Amortization expense for intangible assets was $ 142 million and $ 159 million for the nine months ended September 30, 2025 and 2024, respectively. Expected future intangible asset amortization as of September 30, 2025 was as follows (in millions): Fiscal years: Remaining 2025 $ 27 2026 95 2027 59 2028 45 Total $ 226 15 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 6— LEASES PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, customer services and operations centers, product development offices, and data centers. PayPal also enters into computer equipment finance leases. While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. The short-term lease exemption has been adopted for all leases with a duration of less than 12 months. PayPal’s lease portfolio includes a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements. The components of lease expense were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Operating lease expense $ 41 $ 41 $ 122 $ 117 Finance lease expense - amortization of right-of-use (“ROU”) lease assets 4 3 12 4 Sublease income ( 2 ) ( 3 ) ( 6 ) ( 9 ) Total lease expense, net $ 43 $ 41 $ 128 $ 112 Supplemental cash flow information related to leases during the three and nine months ended September 30, 2025 and 2024 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 $ 42 $ 135 $ 127 Financing cash flows from finance leases $ — $ 40 $ 6 $ 60 ROU lease assets obtained in exchange for new operating lease liabilities $ 52 $ 59 $ 57 $ 336 ROU lease assets obtained in exchange for new finance lease liabilities $ — $ 27 $ — $ 82 Supplemental balance sheet information related to leases was as follows: September 30, 2025 December 31, 2024 (In millions, except weighted-average figures) Operating leases Finance leases Operating leases Finance leases ROU lease assets $ 566 $ 60 $ 599 $ 73 Current lease liabilities 144 5 135 5 Long-term lease liabilities 575 12 629 18 Total lease liabilities $ 719 $ 17 $ 764 $ 23 Weighted-average remaining lease term 5.5 years 3.6 years 5.9 years 4.4 years Weighted-average discount rate 4 % 5 % 4 % 5 % 16 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Future minimum lease payments for our leases as of September 30, 2025 were as follows: Operating leases Finance leases Fiscal years: (In millions) Remaining 2025 $ 33 $ 2 2026 181 6 2027 167 6 2028 113 4 2029 96 — Thereafter 231 — Total $ 821 $ 18 Less: present value discount ( 102 ) ( 1 ) Lease liability $ 719 $ 17 Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities. Finance lease amounts include minimum lease payments under our non-cancelable finance leases primarily for computer equipment. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases. NOTE 7— OTHER FINANCIAL STATEMENT DETAILS 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, 2025: Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities Foreign Currency Translation Adjustment (“CTA”) Net Investment Hedges CTA Gains (Losses) Estimated Tax (Expense) Benefit Total (In millions) Beginning balance $ ( 277 ) $ ( 6 ) $ ( 715 ) $ 313 $ ( 54 ) $ ( 739 ) Other comprehensive income (loss) before reclassifications 29 17 ( 49 ) — ( 8 ) ( 11 ) Less: Amount of net gains (losses) reclassified from accumulated other comprehensive income (loss) (“AOCI”) ( 49 ) ( 1 ) — — — ( 50 ) Net current period other comprehensive income (loss) 78 18 ( 49 ) — ( 8 ) 39 Ending balance $ ( 199 ) $ 12 $ ( 764 ) $ 313 $ ( 62 ) $ ( 700 ) 17 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended September 30, 2024: Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities Foreign CTA Net Investment Hedges CTA Gains (Losses) Estimated Tax (Expense) Benefit Total (In millions) Beginning balance $ 43 $ ( 36 ) $ ( 999 ) $ 390 $ ( 91 ) $ ( 693 ) Other comprehensive income (loss) before reclassifications ( 160 ) 60 275 ( 149 ) 28 54 Less: Amount of net gains (losses) reclassified from 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 nine months ended September 30, 2025: Unrealized Gains (Losses) on Cash Flow Hedges Unrealized Gains (Losses) on Available-for-sale Debt Securities Foreign CTA Net Investment Hedges CTA Gains (Losses) Estimated Tax (Expense) Benefit Total (In millions) Beginning balance $ 147 $ 14 $ ( 949 ) $ 313 $ ( 75 ) $ ( 550 ) Other comprehensive income (loss) before reclassifications ( 430 ) ( 1 ) 185 — 13 ( 233 ) Less: Amount of net gains (losses) reclassified from AOCI ( 84 ) 1 — — — ( 83 ) Net current period other comprehensive income (loss) ( 346 ) ( 2 ) 185 — 13 ( 150 ) Ending balance $ ( 199 ) $ 12 $ ( 764 ) $ 313 $ ( 62 ) $ ( 700 ) 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 Foreign CTA 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 Less: Amount of net gains (losses) reclassified from AOCI 10 ( 41 ) — — — ( 31 ) Net current period other comprehensive income (loss) ( 49 ) 158 7 50 ( 47 ) 119 Ending balance $ ( 105 ) $ 24 $ ( 724 ) $ 241 $ ( 63 ) $ ( 627 ) 18 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The following table provides details about reclassifications from AOCI for the periods presented below: Details about AOCI Components Amount of Gains (Losses) Reclassified from AOCI Affected Line Item in the Statements of Income (Loss) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Net gains (losses) on cash flow hedges — foreign exchange contracts $ ( 49 ) $ ( 12 ) $ ( 84 ) $ 10 Net revenues Net gains (losses) on investments ( 1 ) — — ( 41 ) Net revenues Net gains (losses) on investments — — 1 — Other income (expense), net ( 50 ) ( 12 ) ( 83 ) ( 31 ) Income before income taxes — — — — Income tax expense Total reclassifications for the period $ ( 50 ) $ ( 12 ) $ ( 83 ) $ ( 31 ) Net income (loss) 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, 2025 2024 2025 2024 (In millions) Interest income $ 119 $ 183 $ 399 $ 514 Interest expense ( 113 ) ( 106 ) ( 330 ) ( 285 ) Net gains (losses) on strategic investments 10 ( 171 ) 69 ( 226 ) Other ( 3 ) 14 ( 27 ) 32 Other income (expense), net $ 13 $ ( 80 ) $ 111 $ 35 19 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 (In millions) Cash and cash equivalents (1) $ 8,995 $ 6,662 Funds receivable and customer accounts: Cash and cash equivalents (2) $ 14,858 $ 15,828 Time deposits 75 15 Available-for-sale debt securities 15,118 14,551 Funds receivable 8,617 7,277 Total funds receivable and customer accounts $ 38,668 $ 37,671 Short-term investments: Time deposits $ 97 $ 107 Available-for-sale debt securities 1,663 4,154 Restricted cash — 1 Total short-term investments $ 1,760 $ 4,262 Long-term investments: Time deposits $ 7 $ 22 Available-for-sale debt securities 1,997 3,002 Strategic investments 1,597 1,559 Total long-term investments $ 3,601 $ 4,583 (1) Includes $ 525 million and nil of available-for-sale debt securities with original maturities of three months or less as of September 30, 2025 and December 31, 2024, respectively. (2) Includes $ 220 million and $ 149 million of available-for-sale debt securities with original maturities of three months or less as of September 30, 2025 and December 31, 2024, respectively. 20 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of September 30, 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: September 30, 2025 (1) Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash and cash equivalents: U.S. government and agency securities $ 525 $ — $ — $ 525 Funds receivable and customer accounts: U.S. government and agency securities 3,743 1 ( 1 ) 3,743 Foreign government and agency securities 82 — — 82 Corporate debt securities 2,437 5 ( 1 ) 2,441 Mortgage-backed and asset-backed securities 4,470 6 ( 2 ) 4,474 Municipal securities 137 — — 137 Commercial paper 3,719 1 — 3,720 Short-term investments: U.S. government and agency securities 30 — — 30 Foreign government and agency securities 120 — — 120 Corporate debt securities 1,013 1 ( 1 ) 1,013 Mortgage-backed and asset-backed securities 499 1 — 500 Long-term investments: U.S. government and agency securities 245 — — 245 Foreign government and agency securities 50 — — 50 Corporate debt securities 797 2 ( 1 ) 798 Mortgage-backed and asset-backed securities 903 1 — 904 Total available-for-sale debt securities (2) $ 18,770 $ 18 $ ( 6 ) $ 18,782 (1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9 — Fair Value Measurement of Assets and Liabilities.” 21 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) December 31, 2024 (1) Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Funds receivable and customer accounts: U.S. government and agency securities $ 5,709 $ 4 $ ( 2 ) $ 5,711 Foreign government and agency securities 77 — — 77 Corporate debt securities 405 — — 405 Mortgage-backed and asset-backed securities 4,039 13 ( 5 ) 4,047 Municipal securities 503 1 — 504 Commercial paper 3,391 1 — 3,392 Short-term investments: U.S. government and agency securities 188 — ( 2 ) 186 Foreign government and agency securities 84 — — 84 Corporate debt securities 1,751 — ( 2 ) 1,749 Mortgage-backed and asset-backed securities 848 5 — 853 Commercial paper 1,281 1 — 1,282 Long-term investments: U.S. government and agency securities 235 — — 235 Foreign government and agency securities 124 — ( 1 ) 123 Corporate debt securities 1,601 3 ( 2 ) 1,602 Mortgage-backed and asset-backed securities 1,042 1 ( 1 ) 1,042 Total available-for-sale debt securities (2) $ 21,278 $ 29 $ ( 15 ) $ 21,292 (1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. 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 $ 121 million and $ 140 million at September 30, 2025 and December 31, 2024, respectively, and were included in other current assets on our condensed consolidated balance sheets. 22 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of September 30, 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: September 30, 2025 (1) Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (In millions) Cash and cash equivalents: U.S. government and agency securities $ 400 $ — $ — $ — $ 400 $ — Funds receivable and customer accounts: U.S. government and agency securities 1,697 ( 1 ) — — 1,697 ( 1 ) Foreign government and agency securities 57 — — — 57 — Corporate debt securities 409 ( 1 ) — — 409 ( 1 ) Mortgage-backed and asset-backed securities 1,619 ( 2 ) 100 — 1,719 ( 2 ) Commercial paper 325 — — — 325 — Short-term investments: Foreign government and agency securities — — 20 — 20 — Corporate debt securities 206 ( 1 ) — — 206 ( 1 ) Mortgage-backed and asset-backed securities 247 — 2 — 249 — Long-term investments: U.S. government and agency securities 245 — — — 245 — Foreign government and agency securities 25 — — — 25 — Corporate debt securities 90 ( 1 ) 10 — 100 ( 1 ) Mortgage-backed and asset-backed securities 399 — — — 399 — Total available-for-sale debt securities $ 5,719 $ ( 6 ) $ 132 $ — $ 5,851 $ ( 6 ) (1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position. 23 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) December 31, 2024 (1) Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (In millions) Funds receivable and customer accounts: U.S. government and agency securities $ 1,314 $ ( 1 ) $ 517 $ ( 1 ) $ 1,831 $ ( 2 ) Foreign government and agency securities 57 — — — 57 — Corporate debt securities 105 — 50 — 155 — Mortgage-backed and asset-backed securities 1,673 ( 5 ) 2 — 1,675 ( 5 ) Municipal securities 29 — 36 — 65 — Commercial paper 275 — — — 275 — Short-term investments: U.S. government and agency securities — — 186 ( 2 ) 186 ( 2 ) Corporate debt securities 618 ( 2 ) 90 — 708 ( 2 ) Mortgage-backed and asset-backed securities 250 — 18 — 268 — Commercial paper 218 — — — 218 — Long-term investments: U.S. government and agency securities 50 — — — 50 — Foreign government and agency securities 90 — 34 ( 1 ) 124 ( 1 ) Corporate debt securities 347 ( 1 ) 9 ( 1 ) 356 ( 2 ) Mortgage-backed and asset-backed securities 610 ( 1 ) — — 610 ( 1 ) Total available-for-sale debt securities $ 5,636 $ ( 10 ) $ 942 $ ( 5 ) $ 6,578 $ ( 15 ) (1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position. Unrealized losses have not been recognized into income as we neither intend to sell, nor anticipate that it is more likely than not that we will be required to sell, the securities before recovery of their amortized cost basis. The decline in fair value was due primarily to changes in market interest rates, rather than credit losses. We will continue to monitor the performance of the investment portfolio and assess whether impairment due to expected credit losses has occurred. The table below presents cash inflows related to available-for-sale debt securities: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Proceeds from sales and maturities of available-for-sale debt securities $ 7,380 $ 7,170 $ 19,921 $ 27,407 During the three and nine months ended September 30, 2025 and the three months ended September 30, 2024, we incurred gross realized gains and losses which were de minimis. During the nine months ended September 30, 2024, we incurred gross realized losses of $ 43 million and gains which were de minimis. Gross realized gains and losses were determined using the specific identification method. Our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows: September 30, 2025 Amortized Cost Fair Value (In millions) One year or less $ 9,386 $ 9,388 After one year through five years 3,949 3,956 After five years through ten years 2,471 2,473 After ten years 2,964 2,965 Total $ 18,770 $ 18,782 24 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Actual maturities may differ from contractual maturities as certain securities may be prepaid. Supplemental cash flow information related to investments Non-cash investing transactions that were not reflected in the condensed consolidated statement of cash flows for the nine months ended September 30, 2025 and 2024 include the purchase of investments of $ 127 million and $ 75 million, respectively, that have not yet settled. STRATEGIC INVESTMENTS Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies. Our marketable equity securities have readily determinable fair values and are recorded as long-term investments on our condensed consolidated balance sheets at fair value with changes in fair value recorded in other income (expense), net on our condensed consolidated statements of income (loss). Marketable equity securities totaled $ 15 million and $ 23 million as of September 30, 2025 and December 31, 2024, respectively. Our non-marketable equity securities are recorded as long-term investments on our condensed consolidated balance sheets. The carrying value of our non-marketable equity securities totaled $ 1.6 billion and $ 1.5 billion as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, we had non-marketable equity securities of $ 213 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. The remaining non-marketable equity securities do not have a readily determinable fair value and we measure these equity investments at cost minus impairment, if any, and adjust for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”). All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our condensed consolidated statements of income (loss). 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, 2025 and 2024 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Carrying amount, beginning of period $ 1,359 $ 1,635 $ 1,336 $ 1,631 Adjustments related to non-marketable equity securities: Net additions (reductions) (1) 6 20 ( 48 ) 85 Gross unrealized gains 15 2 98 5 Gross unrealized losses and impairments ( 11 ) ( 175 ) ( 17 ) ( 239 ) Carrying amount, end of period $ 1,369 $ 1,482 $ 1,369 $ 1,482 (1) Net additions (reductions) include purchases, reductions due to sales of securities, and reclassifications when the Measurement Alternative is subsequently elected or no longer applies. The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative held at September 30, 2025 and December 31, 2024, respectively: September 30, 2025 December 31, 2024 (In millions) Cumulative gross unrealized gains $ 990 $ 1,187 Cumulative gross unrealized losses and impairments $ ( 457 ) $ ( 562 ) 25 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 2025 and 2024, respectively: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Net unrealized gains (losses) $ 4 $ ( 171 ) $ 72 $ ( 242 ) 26 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 9— FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES 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, 2025 and December 31, 2024: September 30, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) (In millions) Assets: Cash and cash equivalents (1) U.S. government and agency securities $ 525 $ — $ 525 Money market fund 4 4 — Total cash and cash equivalents 529 4 525 Short-term investments (2),(5) : U.S. government and agency securities 30 — 30 Foreign government and agency securities 120 — 120 Corporate debt securities 1,013 — 1,013 Mortgage-backed and asset-backed securities 500 — 500 Total short-term investments 1,663 — 1,663 Funds receivable and customer accounts (3) : U.S. government and agency securities 3,743 — 3,743 Foreign government and agency securities 475 — 475 Corporate debt securities 2,754 — 2,754 Mortgage-backed and asset-backed securities 4,474 — 4,474 Municipal securities 137 — 137 Commercial paper 3,755 — 3,755 Total funds receivable and customer accounts 15,338 — 15,338 Derivatives (4) 48 — 48 Long-term investments (2),(5) : U.S. government and agency securities 245 — 245 Foreign government and agency securities 50 — 50 Corporate debt securities 798 — 798 Mortgage-backed and asset-backed securities 904 — 904 Marketable equity securities 15 15 — Total long-term investments 2,012 15 1,997 Total financial assets $ 19,590 $ 19 $ 19,571 Liabilities: Derivatives (4) $ 229 $ — $ 229 Total financial liabilities $ 229 $ — $ 229 (1) Excludes cash and cash equivalents of $ 8.5 billion not measured and recorded at fair value. (2) Excludes time deposits of $ 104 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $ 23.3 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. (5) Excludes non-marketable equity securities of $ 1.6 billion measured using the Measurement Alternative or equity method accounting. 27 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) (In millions) Assets: Cash and cash equivalents (1) Money market fund $ 14 $ 14 $ — Short-term investments (2) : U.S. government and agency securities 186 — 186 Foreign government and agency securities 84 — 84 Corporate debt securities 1,749 — 1,749 Mortgage-backed and asset-backed securities 853 — 853 Commercial paper 1,282 — 1,282 Total short-term investments 4,154 — 4,154 Funds receivable and customer accounts (3) : U.S. government and agency securities 5,711 — 5,711 Foreign government and agency securities 379 — 379 Corporate debt securities 667 — 667 Mortgage-backed and asset-backed securities 4,047 — 4,047 Municipal securities 504 — 504 Commercial paper 3,392 — 3,392 Total funds receivable and customer accounts 14,700 — 14,700 Derivatives (4) 243 — 243 Long-term investments (2), (5) : U.S. government and agency securities 235 — 235 Foreign government and agency securities 123 — 123 Corporate debt securities 1,602 — 1,602 Mortgage-backed and asset-backed securities 1,042 — 1,042 Marketable equity securities 23 23 — Total long-term investments 3,025 23 3,002 Total financial assets $ 22,136 $ 37 $ 22,099 Liabilities: Derivatives (4) $ 37 $ — $ 37 Total financial liabilities $ 37 $ — $ 37 (1) Excludes cash and cash equivalents of $ 6.6 billion not measured and recorded at fair value. (2) Excludes restricted cash of $ 1 million and time deposits of $ 129 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $ 23.0 billion underlying funds receivable and customer accounts not measured and recorded at fair value. (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. (5) Excludes non-marketable equity securities of $ 1.5 billion measured using the Measurement Alternative or equity method accounting. Our financial assets classified within Level 1 are valued using quoted prices for identical assets in active markets. All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2). A majority of our derivative instruments are valued using pricing models that take into account the contractual terms as well as multiple observable inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices (Level 2). 28 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of September 30, 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, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value (In millions) (In millions) Funds receivable and customer accounts $ 741 $ 741 $ 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, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Funds receivable and customer accounts $ ( 7 ) $ 23 $ 85 $ 8 ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS The following tables summarize our assets held as of September 30, 2025 and December 31, 2024 for which a non-recurring fair value measurement was recorded during the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively: September 30, 2025 Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) (In millions) Loans and interest receivable, held for sale $ 1,404 $ 1,396 $ 8 Non-marketable equity securities measured using the Measurement Alternative (1) 242 236 6 Total $ 1,646 $ 1,632 $ 14 (1) Excludes non-marketable equity securities of $ 1.1 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the nine months ended September 30, 2025. December 31, 2024 Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) (In millions) Loans and interest receivable, held for sale $ 541 $ 541 $ — Non-marketable equity securities measured using the Measurement Alternative (1) 476 131 345 Total $ 1,017 $ 672 $ 345 (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. 29 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) We measure loans and interest receivable, held for sale that are comparable to loans receivable sold to third-party investors using observable inputs, such as the most recent executed prices. These loans and interest receivable, held for sale are classified within Level 2 in the fair value hierarchy. Certain loans and interest receivable, held for sale are valued using significant unobservable inputs, such as adjustments to recently executed prices. These loans and interest receivable, held for sale are classified within Level 3 in the fair value hierarchy. Refer to “Note 11—Loans and Interest Receivable” for additional information on loans and interest receivable, held for sale. We measure the non-marketable equity securities accounted for under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer. Non-marketable equity securities that have been remeasured during the period based on observable price changes are classified within Level 2 in the fair value hierarchy because we estimate the fair value based on valuation methods which only include significant inputs that are observable, such as the observable transaction price at the transaction date. 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. FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE Our financial instruments, including cash and certain cash equivalents, 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 $ 10.8 billion and fair value of approximately $ 10.4 billion as of September 30, 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 and certain cash equivalents would be classified as Level 1; restricted cash, time deposits, reverse repurchase agreements, certain customer accounts, and term debt (including current portion) would be classified as Level 2; and the remaining financial instruments would be classified as Level 3 in the fair value hierarchy. 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 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. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions and by entering into collateral security arrangements. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We do not use any derivative instruments for trading or speculative purposes. Cash flow hedges 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 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 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. 30 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of September 30, 2025, we estimated that $ 199 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, 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. Gains and losses on derivatives held after we discontinue our cash flow hedges and on derivative instruments that are not designated as cash flow hedges are recorded in the same financial statement line to which the derivative relates. Net investment hedges 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. The cash flows associated with derivatives designated as a net investment hedge are classified in cash flows from investing activities on our condensed consolidated statements of cash flows. We have no t reclassified any gains or losses related to 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. FAIR VALUE OF DERIVATIVE CONTRACTS The fair value of our outstanding derivative instruments as of September 30, 2025 and December 31, 2024 was as follows: Balance Sheet Location September 30, 2025 December 31, 2024 (In millions) Derivative Assets: Foreign exchange contracts designated as hedging instruments Other current assets $ 10 $ 157 Foreign exchange contracts not designated as hedging instruments Other current assets 38 86 Total derivative assets $ 48 $ 243 Derivative Liabilities: Foreign exchange contracts designated as hedging instruments Other current liabilities $ 209 $ 10 Foreign exchange contracts not designated as hedging instruments Other current liabilities 20 27 Total derivative liabilities $ 229 $ 37 31 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 2025 2024 (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 $ 8,417 $ 13 $ 7,847 $ ( 80 ) Gains (losses) on derivatives in cash flow hedging relationship: Amount of net gains (losses) on foreign exchange contracts reclassified from AOCI ( 49 ) — ( 12 ) — Gains (losses) on derivatives in net investment hedging relationship: Amount of net gains (losses) on foreign exchange contracts excluded from the assessment of effectiveness — — — 20 Gains (losses) on derivatives not designated as hedging instruments: Amount of net gains (losses) on foreign exchange contracts — 62 — ( 177 ) Total net gains (losses) $ ( 49 ) $ 62 $ ( 12 ) $ ( 157 ) Nine Months Ended September 30, 2025 2024 (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 $ 24,496 $ 111 $ 23,431 $ 35 Gains (losses) on derivatives in cash flow hedging relationship: Amount of net gains (losses) on foreign exchange contracts reclassified from AOCI ( 84 ) — 10 — Gains (losses) on derivatives in net investment hedging relationship: Amount of net gains (losses) on foreign exchange contracts excluded from the assessment of effectiveness — — — 61 Gains (losses) on derivatives not designated as hedging instruments: Amount of net gains (losses) on foreign exchange contracts — ( 173 ) — ( 172 ) Total net gains (losses) $ ( 84 ) $ ( 173 ) $ 10 $ ( 111 ) 32 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 2025 2024 2025 2024 (In millions) Unrealized net gains (losses) on foreign exchange contracts designated as cash flow hedges $ 29 $ ( 160 ) $ ( 430 ) $ ( 39 ) Unrealized net gains (losses) on foreign exchange contracts designated as net investment hedges — ( 149 ) — 50 Total unrealized net gains (losses) recognized from derivative contracts designated as hedging instruments in the condensed consolidated statements of comprehensive income (loss) $ 29 $ ( 309 ) $ ( 430 ) $ 11 NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS Derivative transactions are measured in terms of the notional amount; however, this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments. The notional amount is generally not exchanged, but is used only as the underlying basis on which the value of foreign currency exchange payments under these contracts is determined. The following table provides the notional amounts of our outstanding derivative instruments: September 30, 2025 December 31, 2024 (In millions) Foreign exchange contracts designated as hedging instruments $ 6,122 $ 3,942 Foreign exchange contracts not designated as hedging instruments 11,735 13,317 Total $ 17,857 $ 17,259 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. 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 tables present the derivative assets, derivative liabilities, and reverse repurchase agreements not offset on the condensed consolidated balance sheets 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 sheets; therefore, instances of over-collateralization are excluded from the table below. 33 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Amounts Not Offset on the Condensed Consolidated Balance Sheet Amounts Presented on the Condensed Consolidated Balance Sheet Financial Instruments (1) Collateral Received (2) Net Amounts (In millions) As of September 30, 2025 Derivative assets (3) $ 48 $ 26 $ 6 $ 16 Reverse repurchase agreements (4) — — — — Total assets $ 48 $ 26 $ 6 $ 16 As of December 31, 2024 Derivative assets (3) $ 243 $ 23 $ 169 $ 51 Reverse repurchase agreements (4) 87 — 87 — Total assets $ 330 $ 23 $ 256 $ 51 Amounts Not Offset on the Condensed Consolidated Balance Sheet Amounts Presented on the Condensed Consolidated Balance Sheet Financial Instruments (1) Collateral Pledged (2) Net Amounts (In millions) As of September 30, 2025 Derivative liabilities (3) $ 229 $ 26 $ 195 $ 8 As of December 31, 2024 Derivative liabilities (3) $ 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 reverse repurchase positions, this includes any receivable 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 condensed consolidated balance sheet unless the counterparty defaults. (3) We received cash collateral from derivative counterparties totaling $ 7 million and $ 162 million as of September 30, 2025 and December 31, 2024, respectively, and securities from derivative counterparties with a fair value of $ 35 million and $ 30 million as of September 30, 2025 and December 31, 2024, respectively. We posted $ 214 million and $ 7 million of cash collateral as of September 30, 2025 and December 31, 2024, respectively, and securities to derivative counterparties with a fair value of $ 50 million and nil as of September 30, 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 nil and $ 96 million as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, we have not sold or repledged collateral relating to reverse repurchase agreements. NOTE 11— LOANS AND INTEREST RECEIVABLE We classify our loans and interest receivable based on management intent. When PayPal has the intent to sell the loans to third-party investors they are classified as loans and interest receivable, held for sale on our condensed consolidated balance sheets and 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). In connection with the sale of certain portfolios to third-party investors and the reclassification and measurement of those portfolios as held for sale, we reverse the previously recorded allowances for credit losses associated with those loans and interest receivable balances. We receive a market-based service fee for servicing the loans sold. When PayPal has the intent and ability to hold the loans for the foreseeable future they are classified as loans and interest receivable, net on our condensed consolidated balance sheets and are reported at their outstanding balances, net of any participation interests sold, unamortized deferred origination fees and costs, and allowance for credit losses. 34 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) LOANS AND INTEREST RECEIVABLE, HELD FOR SALE As of September 30, 2025 and December 31, 2024, loans and interest receivable, held for sale was $ 1.4 billion and $ 541 million, respectively, and include both loans reclassified to held for sale and loans originated as held for sale. During the nine months ended September 30, 2025 we reclassified approximately $ 574 million of loans and interest receivable, net to loans and interest receivable, held for sale. During the nine months ended September 30, 2025, we derecognized loans with an unpaid balance of $ 18.3 billion and had net proceeds of $ 18.2 billion from loans and interest receivable sold. During the nine months ended September 30, 2024, we derecognized loans with an unpaid balance of $ 14.8 billion and had net proceeds of $ 14.7 billion, from loans and interest receivable sold. LOANS AND INTEREST RECEIVABLE, NET Consumer receivables We offer revolving and installment credit products as a funding option for consumers in certain checkout transactions on our payments platform. Our revolving credit product consists of PayPal Credit in the United Kingdom (“U.K.”), which is made available to consumers as a funding source in their PayPal wallet once they are approved for credit. Additionally, we offer installment credit products at the time of checkout in various markets, including the U.S., several markets across Europe, Australia, and Japan. We offer non interest-bearing installment credit products in these markets as well as interest-bearing installment credit products in the U.S. and Germany. We purchase receivables related to interest-bearing installment loans extended to U.S. 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, 2025 and 2024, we purchased approximately $ 934 million and $ 390 million in consumer receivables, respectively. As of September 30, 2025 and December 31, 2024, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.2 billion and $ 5.4 billion, respectively, net of the participation interest sold to the partner institution of $ 28 million and $ 23 million, respectively. We closely monitor the credit quality of our consumer receivables to evaluate and manage our related exposure to credit risk. Credit risk management begins with initial underwriting and continues through the full repayment of a loan. To assess a consumer who requests a loan, we use, among other indicators, internally developed risk models using detailed information from external sources, such as credit bureaus where available, and internal data, including the consumer’s prior repayment history with our credit products where available. We use delinquency status and trends to assist in making (or, for interest-bearing installment loans in the U.S., to assist the partner institution in making) new and ongoing credit decisions, to adjust our models, to plan our collection practices and strategies, and in determining our allowance for consumer loans and interest receivable. 35 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Consumer receivables delinquency and allowance The following tables present the delinquency status and gross charge-offs of consumer loans and interest receivable by year of origination. The amounts are based on the number of days past the billing date for revolving loans or contractual repayment date for installment loans. The “current” category represents balances that are within 29 days of the billing date or contractual repayment date, as applicable. September 30, 2025 (In millions, except percentages) Revolving Loans Amortized Cost Basis Installment Loans Amortized Cost Basis 2025 2024 2023 2022 2021 Total Percent Consumer loans and interest receivable: Current $ 2,611 $ 1,701 $ 495 $ 171 $ 6 $ — $ 4,984 96.3 % 30 - 59 Days 28 28 6 2 — — 64 1.2 % 60 - 89 Days 19 20 7 3 — — 49 1.0 % 90 - 179 Days 38 29 8 3 — — 78 1.5 % Total $ 2,696 $ 1,778 $ 516 $ 179 $ 6 $ — $ 5,175 100 % Gross charge-offs for the nine months ended September 30, 2025 $ 103 $ 18 $ 96 $ 10 $ 1 $ — $ 228 December 31, 2024 (In millions, except percentages) Revolving Loans Amortized Cost Basis Installment Loans Amortized Cost Basis 2024 2023 2022 2021 2020 Total Percent Consumer loans and interest receivable: Current $ 2,404 $ 2,427 $ 353 $ 43 $ — $ — $ 5,227 96.6 % 30 - 59 Days 25 28 4 — — — 57 1.1 % 60 - 89 Days 16 19 4 1 — — 40 0.7 % 90 - 179 Days 38 40 9 2 — — 89 1.6 % Total $ 2,483 $ 2,514 $ 370 $ 46 $ — $ — $ 5,413 100 % Gross charge-offs for the year ended December 31, 2024 $ 138 $ 39 $ 133 $ 14 $ — $ — $ 324 36 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The following table summarizes the activity in the allowance for consumer loans and interest receivable for the nine months ended September 30, 2025 and 2024: September 30, 2025 September 30, 2024 Consumer Loans Receivable Interest Receivable Total Allowance (1) Consumer Loans Receivable Interest Receivable Total Allowance (In millions) 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 ( 23 ) — ( 23 ) — — — Provisions 181 10 191 175 5 180 Charge-offs ( 215 ) ( 13 ) ( 228 ) ( 230 ) ( 18 ) ( 248 ) Recoveries 46 — 46 35 — 35 Other (2) 18 — 18 9 1 10 Ending balance $ 348 $ 4 $ 352 $ 346 $ 11 $ 357 (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 during the period. (2) Includes amounts related to foreign currency remeasurement. The allowance for credit losses at September 30, 2025 for our consumer receivable portfolio remained consistent with the allowance for credit losses at December 31, 2024. In the second quarter of 2025, we updated our expected credit loss model for our revolving loans in the U.K. to reflect the utilization of average weekly earnings as a macroeconomic factor and no longer consider household disposable income and retail e-commerce sales. Additionally, we updated our expected credit loss model for certain portfolios to utilize multiple economic scenarios rather than the single scenario previously utilized. These changes did not have a material impact on our allowance for credit losses in the period. Merchant receivables We offer access to merchant finance products for certain small and medium-sized businesses through our PayPal Working Capital (“PPWC”) and PayPal Business Loan (“PPBL”) products, which we collectively refer to as our merchant finance offerings. We purchase receivables related to credit extended to U.S. merchants by a partner institution and are responsible for the servicing functions related to that portfolio. During the nine months ended September 30, 2025 and 2024, we purchased approximately $ 1.6 billion and $ 1.2 billion in merchant receivables, respectively. As of September 30, 2025 and December 31, 2024, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $ 1.7 billion and $ 1.5 billion, net of the participation interest sold to the partner institution of $ 62 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. Loans and advances are repaid through a fixed percentage of the merchant’s future payment volume that PayPal processes. Through our PPBL product, we provide merchants access to short-term business financing for a fixed fee based on an evaluation of the applying business as well as the business owner. PPBL repayments are collected through periodic payments until the balance has been satisfied. The interest or fee is fixed at the time the loan or advance is extended and is recognized as deferred revenue in accrued expenses and other current liabilities on our condensed consolidated balance sheets. The fixed interest or fee is amortized into revenues from other value added services based on the amount repaid over the repayment period. We estimate the repayment period for PPWC based on the merchant’s payment processing history with PayPal. For PPWC, there is a general requirement that at least 10 % of the original amount of the loan or advance plus the fixed fee must be repaid every 90 days. We calculate the repayment rate of the merchant’s future payment volume so that repayment of the loan or advance and fixed fee is expected to generally occur within 9 to 12 months from the date of the loan or advance. On a monthly basis, we recalculate the repayment period based on the repayment activity on the receivable. As such, actual repayment periods are dependent on actual merchant payment processing volumes. For PPBL, we receive fixed periodic payments over the contractual term of the loan, which generally ranges from 3 to 12 months. 37 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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. To assess a merchant seeking a loan or advance, we use, among other indicators, risk models developed internally which utilize information obtained from multiple internal and external data sources to predict the likelihood of timely and satisfactory repayment by the merchant of the loan or advance amount and the related interest or fee. Primary drivers of the models include the merchant’s annual payment volume, payment processing history with PayPal, prior repayment history with PayPal’s credit products where available, information sourced from consumer and business credit bureau reports, and other information obtained during the application process. 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. Merchant receivables delinquency and allowance The following tables present the delinquency status and gross charge-offs of merchant loans, advances, and interest and fees receivable by year of origination. The amounts are based on the number of days past the expected or contractual repayment date for amounts outstanding. The “current” category represents balances that are within 29 days of the expected repayment date or contractual repayment date, as applicable. September 30, 2025 (In millions, except percentages) 2025 2024 2023 2022 2021 Prior Total Percent Merchant loans, advances, and interest and fees receivable: Current $ 1,425 $ 125 $ 7 $ 5 $ 1 $ 3 $ 1,566 90.2 % 30 - 59 Days 43 27 3 1 — — 74 4.3 % 60 - 89 Days 19 13 1 1 — — 34 2.0 % 90 - 179 Days 23 25 3 1 — — 52 3.0 % 180+ Days 1 6 2 1 — — 10 0.5 % Total $ 1,511 $ 196 $ 16 $ 9 $ 1 $ 3 $ 1,736 100.0 % Gross charge-offs for the nine months ended September 30, 2025 $ 6 $ 69 $ 17 $ 3 $ — $ 2 $ 97 December 31, 2024 (In millions, except percentages) 2024 2023 2022 2021 2020 Prior Total Percent Merchant loans, advances, and interest and fees receivable: Current $ 1,274 $ 28 $ 13 $ 1 $ 8 $ 4 $ 1,328 90.4 % 30 - 59 Days 55 10 3 — — 1 69 4.7 % 60 - 89 Days 23 6 2 — — — 31 2.1 % 90 - 179 Days 21 11 4 — — — 36 2.4 % 180+ Days 1 4 1 — — — 6 0.4 % Total $ 1,374 $ 59 $ 23 $ 1 $ 8 $ 5 $ 1,470 100 % Gross charge-offs for the year ended December 31, 2024 $ 10 $ 96 $ 42 $ — $ 8 $ — $ 156 38 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 2025 and 2024: September 30, 2025 September 30, 2024 Merchant Loans and Advances Interest and Fees Receivable Total Allowance Merchant Loans and Advances Interest and Fees Receivable Total Allowance (In millions) Beginning balance $ 107 $ 6 $ 113 $ 148 $ 12 $ 160 Provisions 114 13 127 50 — 50 Charge-offs ( 90 ) ( 7 ) ( 97 ) ( 120 ) ( 7 ) ( 127 ) Recoveries 17 — 17 21 — 21 Other (1) 3 — 3 — — — Ending balance $ 151 $ 12 $ 163 $ 99 $ 5 $ 104 (1) Includes amounts related to foreign currency remeasurement. The allowance for credit losses at September 30, 2025 for our merchant receivable portfolio was $ 163 million, an increase from $ 113 million at December 31, 2024. The increase in allowance for credit losses was related to a decline in credit quality of merchant loans outstanding primarily from modifications in acceptable risk parameters in 2024, which included broadened eligibility. In the second quarter of 2025, we updated our expected credit loss model for all portfolios to utilize multiple economic scenarios rather than the single scenario previously utilized. These changes did not have a material impact on our allowance for credit losses in the period. NOTE 12— DEBT NOTES 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 $ 606 million as of September 30, 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, and possible acquisitions of businesses, assets, or strategic investments. 39 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of September 30, 2025 and December 31, 2024, we had an outstanding aggregate principal amount of $ 10.9 billion and $ 10.6 billion, respectively, related to the Notes. The following table summarizes the Notes outstanding: Maturities Effective Interest Rate September 30, 2025 December 31, 2024 (in millions) September 2019 debt issuance: Fixed-rate 2.650 % notes 10/1/2026 2.78 % $ 1,250 $ 1,250 Fixed-rate 2.850 % notes 10/1/2029 2.96 % 1,500 1,500 May 2020 debt issuance: Fixed-rate 1.650 % notes 6/1/2025 1.78 % — 1,000 Fixed-rate 2.300 % notes 6/1/2030 2.39 % 1,000 1,000 Fixed-rate 3.250 % notes 6/1/2050 3.33 % 1,000 1,000 May 2022 debt issuance: Fixed-rate 3.900 % notes 6/1/2027 4.06 % 500 500 Fixed-rate 4.400 % notes 6/1/2032 4.53 % 1,000 1,000 Fixed-rate 5.050 % notes 6/1/2052 5.14 % 1,000 1,000 Fixed-rate 5.250 % notes 6/1/2062 5.34 % 500 500 June 2023 debt issuance (1) : ¥ 30 billion fixed-rate 0.813 % notes 6/9/2025 0.89 % — 191 ¥ 23 billion fixed-rate 0.972 % notes 6/9/2026 1.06 % 155 147 ¥ 37 billion fixed-rate 1.240 % notes 6/9/2028 1.31 % 249 236 May 2024 debt issuance: Fixed-rate 5.150 % notes 6/1/2034 5.35 % 850 850 Fixed-rate 5.500 % notes 6/1/2054 5.66 % 400 400 March 2025 debt issuance: Floating-rate notes 3/6/2028 5.22 % 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 $ 10,904 $ 10,574 Unamortized premium (discount) and issuance costs, net ( 79 ) ( 78 ) Less: current portion of term debt (2) ( 155 ) ( 1,191 ) Total carrying amount of term debt $ 10,670 $ 9,305 (1) Principal amounts represent the U.S. dollar equivalent as of September 30, 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 $ 107 million and $ 315 million for the three and nine months ended September 30, 2025, respectively. The interest expense recorded for the Notes, including amortization of the debt discount and debt issuance costs, was $ 100 million and $ 274 million for the three and nine months ended September 30, 2024, respectively. 40 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) CREDIT FACILITIES 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 $ 606 million as of September 30, 2025). As of September 30, 2025 and December 31, 2024, ¥ 90.0 billion (approximately $ 606 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 September 30, 2025, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement. During the three and nine months ended September 30, 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, 2025, the future principal payments associated with our term debt were as follows (in millions): 2026 $ 1,405 2027 500 2028 1,149 2029 1,500 Thereafter 6,350 Total $ 10,904 Other than as provided above, there were no significant changes to the information disclosed in our 2024 Form 10-K. NOTE 13— COMMITMENTS AND CONTINGENCIES LITIGATION AND REGULATORY MATTERS Overview We are involved in legal and regulatory proceedings on an ongoing basis. Certain of these proceedings are in early stages and may seek an indeterminate amount of damages or penalties or may require us to change or adopt certain business practices. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial statements at that time. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For those proceedings in which an unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) are not material. If we cannot estimate the probable or reasonably possible loss or range of losses arising from a legal proceeding, we have disclosed that fact. In assessing the materiality of a legal proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to change our business practices in a manner that could have a material adverse impact on our business. 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. 41 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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, 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. Determining legal reserves or possible losses from such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. We may be exposed to losses in excess of the amount recorded, and such amounts could be material. If any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our business, financial position, results of operations, or cash flows. Regulatory proceedings In February 2022, we received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) related to PayPal’s practices relating to commercial customers that submit charges on behalf of other merchants or sellers, and related activities. In August 2025, we received an additional CID investigating whether deceptive schemes and other unlawful activities by merchants using PayPal’s platform were facilitated or furthered by the Company’s onboarding, due diligence, and other practices. The CIDs request the production of documents and answers to written questions, as well as other information. We are cooperating with the FTC in connection with these CIDs. In January 2023, we received notice of an administrative proceeding and a related request for information from the German Federal Cartel Office (“FCO”) related to terms in PayPal (Europe) S.à.r.l. et Cie, S.C.A.’s contractual terms with merchants in Germany prohibiting surcharging and requiring parity presentation of PayPal relative to other payment methods. We are cooperating with the FCO in connection with this proceeding. We have received CIDs from the Consumer Financial Protection Bureau (“CFPB”) related to investigation and error-resolution obligations under Regulation E, the presentment of transactions to linked bank accounts, and related matters. The CIDs request the production of documents and answers to written questions. We are cooperating with the CFPB in connection with these CIDs. In August 2024, we received a CID from the CFPB related to PayPal Credit. The CID also relates to backup payment options in a digital wallet to pay for goods or services. The CID requests the production of documents and answers to written questions. We are cooperating with the CFPB in connection with this CID. Legal proceedings On October 4, 2022, a putative securities class action captioned Defined Benefit Plan of the Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund v. PayPal Holdings, Inc., et al. , Case No. 22-cv-5864, was filed in the U.S. District Court for the District of New Jersey. On January 11, 2023, the Court appointed Caisse de dépôt et placement du Québec as lead plaintiff and renamed the action In re PayPal Holdings, Inc. Securities Litigation (“PPH Securities Action”). On March 13, 2023, the lead plaintiff filed an amended and consolidated complaint. The PPH Securities Action asserts claims relating to our public statements with respect to net new active accounts (“NNA”) results and guidance, and the detection of illegitimately created accounts. The PPH Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 3, 2021 and February 1, 2022 (the “Class Period”), and asserts claims for alleged violations of Section 10(b) of the Exchange Act against the Company, as well as its former Chief Executive Officer, former Chief Strategy, Growth and Data Officer, and former Chief Financial Officer (collectively, the “Individual Defendants,” and together with the Company, “Defendants”), and for alleged violations of Sections 20(a) and 20A of the Exchange Act against the Individual Defendants. The complaint alleges that certain public statements made by Defendants during the Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at artificially inflated prices) by the Defendants’ failure to disclose that, among other things, the Company’s incentive campaigns were susceptible to fraud and led to the creation of illegitimate accounts, which allegedly affected the Company’s NNA results and guidance. The PPH Securities Action seeks unspecified compensatory damages on behalf of the putative class members. Defendants 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. Defendants have filed a motion to dismiss the amended complaint. 42 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) On November 2, 2022, a putative shareholder derivative action captioned Shah v. Daniel Schulman, et al. , Case No. 22-cv-1445, was filed in the U.S. District Court for the District of Delaware (the “Shah Action”), purportedly on behalf of the Company. On April 4, 2023, a putative shareholder derivative action captioned Nelson v. Daniel Schulman, et. al. , Case No. 23-cv-01913, was filed in the U.S. District Court for the District of New Jersey (the “Nelson Action”) purportedly on behalf of the Company. On January 31, 2025, a putative shareholder derivative action captioned Spathias v. Daniel Schulman, et al. , Case No. 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. PayPal, Inc., and PayPal Holdings, Inc. , Case No. 1CCV-22-0001610, was filed in the Circuit Court of the First Circuit of the State of Hawai‘i (the “Hawai‘i Action”). The Hawai‘i Action asserts claims for unfair and deceptive acts and practices under Hawai‘i Revised Statutes Sections 480-2(a) and 481A-3(a). Plaintiff seeks injunctive relief as well as unspecified penalties and other monetary relief. On July 14, 2023, the court denied Defendants’ motion to dismiss the complaint. We expect to reach a final settlement in this matter in the fourth quarter of 2025. General matters Other third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to patent disputes and expect that we will increasingly be subject to additional patent infringement claims involving various aspects of our business as our products and services continue to expand in scope and complexity. Such claims may be brought directly or indirectly against our companies and/or against our customers (who may be entitled to contractual indemnification under their contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions, particularly in cases where we are introducing new products or services in connection with such acquisitions. We have in the past been forced to litigate such claims, and we believe that additional lawsuits alleging such claims will be filed against us. Intellectual property claims, whether meritorious or not, are time-consuming and costly to defend and resolve, could require expensive changes in our methods of doing business, or could require us to enter into costly royalty or licensing agreements on unfavorable terms or make substantial payments to settle claims or to satisfy damages awarded by courts. From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business, including suits by our consumers (individually or as class actions), merchants or regulators alleging, among other things, improper disclosure of our prices, rules, or policies, that our practices, prices, rules, policies, or user, product, business or merchant agreements violate applicable law, or that we have acted unfairly or not acted in conformity with such prices, rules, policies, or agreements. In addition to these types of disputes and regulatory inquiries, our operations are also subject to regulatory and legal review and challenges that may reflect the increasing global regulatory focus to which the payments industry is subject and, when taken together with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on our business and customers and may lead to increased costs and decreased transaction volume and revenue. Further, the number and significance of these disputes and inquiries are increasing as our business has grown and expanded in scale and scope, including the number of active accounts and payments transactions on our platform, the range and increasing complexity of the products and services that we offer, and our geographical operations. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, settlement payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines, penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require us to change our 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. 43 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) INDEMNIFICATION PROVISIONS Our agreements with eBay governing our separation from eBay provide for specific indemnity and liability obligations for both eBay and us. Disputes between eBay and us have arisen and others may arise in the future, and an adverse outcome in such matters could materially and adversely impact our business, results of operations, and financial condition. In addition, the indemnity rights we have against eBay under the agreements may not be sufficient to protect us, and our indemnity obligations to eBay may be significant. In the ordinary course of business, we include indemnification provisions in certain of our agreements with parties with whom we have commercial relationships. 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. 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 has participated in the U.S. Government’s Paycheck Protection Program administered by the U.S. Small Business Administration. Loans made under this program were funded by an independent chartered financial institution that we partnered with. We received a fee for providing services in connection with these loans and retained operational and audit risk related to those activities. We have agreed, under certain circumstances, to indemnify the chartered financial institution and its assignee of a portion of these loans in connection with the services provided for loans made under this program. As part of agreements to sell certain loans receivable portfolios, in certain circumstances such as breaches in loan warranties, we may be required to indemnify the third-party investors that purchased the loans or repurchase the loans. The estimate of the maximum potential amount of future payments we may be required to make is equal to the current outstanding balances of the loans sold; however, the maximum potential amount of the indemnification is not, in our view, representative of the expected future exposure. As of September 30, 2025 and December 31, 2024, the current outstanding balances of the loans sold was $ 3.4 billion and $ 2.9 billion, respectively. The term of the indemnification obligations align to the maturities of the loans sold. To date, no significant costs have been incurred, either individually or collectively, in connection with our indemnification provisions. OFF-BALANCE SHEET ARRANGEMENTS As of September 30, 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 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 associated costs within the allowance for transaction losses. Our protection programs may result in negative customer balances when there are insufficient funds in a customer’s PayPal account to cover charges applied for merchant-related chargebacks within the scope of our protection programs. Negative customer balances can also occur from bank returns and reversals due to insufficient funding sources. The allowance for negative customer balances represents our estimate of current expected credit losses on negative customer balances. 44 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) At September 30, 2025 and December 31, 2024, the allowance for transaction losses was $ 85 million and $ 86 million, respectively. The allowance for negative customer balances was $ 334 million and $ 256 million at September 30, 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 and nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Beginning balance $ 352 $ 270 $ 342 $ 282 Provision (1) 397 264 1,058 783 Realized losses and charge-offs ( 371 ) ( 281 ) ( 1,090 ) ( 876 ) Recoveries (2) 41 53 109 117 Ending balance $ 419 $ 306 $ 419 $ 306 (1) Changes in estimates for the prior period provision related to the allowance for transaction losses are not material and are aggregated with current period provision. (2) Recoveries are only relevant for the allowance for negative customer balances. NOTE 14— STOCK REPURCHASE PROGRAMS During the nine months ended September 30, 2025, we repurchased approximately 63 million shares of our common stock for approximately $ 4.5 billion at an average cost of $ 71.78 , excluding excise tax. These shares were purchased in the open market under our stock repurchase program authorized in June 2022. As of September 30, 2025, a total of approximately $ 355 million and $ 15.0 billion remained available for future repurchases of our common stock under our June 2022 and February 2025 stock repurchase programs, respectively. For the nine months ended September 30, 2025 and 2024, we recorded $ 38 million and $ 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 settlement. NOTE 15— STOCK-BASED PLANS In June 2025, our stockholders approved the authorization of an additional 15 million shares to the Amended and Restated PayPal Holdings, Inc. 2015 Equity Incentive Award Plan. STOCK-BASED COMPENSATION EXPENSE 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 following table summarizes the impact of stock-based compensation expense on our results of operations for the three and nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Customer support and operations $ 52 $ 50 $ 156 $ 173 Sales and marketing 32 30 99 108 Technology and development 124 111 371 366 General and administrative 70 81 225 257 Restructuring and other — 28 — 88 Total stock-based compensation expense $ 278 $ 300 $ 851 $ 992 Capitalized as part of internal use software and website development costs $ 33 $ 32 $ 101 $ 77 45 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 16— INCOME TAXES Our effective tax rate for both the three and nine months ended September 30, 2025 was 19 %. Our effective tax rate for both the three and nine months ended September 30, 2024 was 23 %. 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. The Organization for Economic Co-operation and Development (“OECD”) has published model rules, which include the implementation of a global minimum tax rate of 15%, commonly referred to as Pillar Two. Certain countries in which we do business have enacted legislation that became effective as of January 1, 2025. Our effective tax rate for the three and nine months ended September 30, 2025 includes the impact of Pillar Two minimum taxes in these jurisdictions. On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted into law in the U.S., with certain provisions of the Act effective in 2025 and other provisions becoming effective in 2026 and beyond. The provisions of the Act effective in 2025 were not material and have been reflected in our results, as applicable. Gross unrecognized tax benefits were approximately $ 2.5 billion and $ 2.3 billion as of September 30, 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. It is reasonably possible that within the next twelve months, we may receive additional tax adjustments by various tax authorities or possibly reach resolution of audits in one or more jurisdictions. These adjustments or settlements could result in changes to our unrecognized tax benefits related to positions on prior year tax filings. Given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. NOTE 17— RESTRUCTURING AND OTHER RESTRUCTURING The restructuring charges associated with the following plans were recorded in “restructuring and other” on our condensed consolidated statements of income. Accrued restructuring liabilities were included in “accrued expenses and other current liabilities” on our condensed consolidated balance sheets. Q2 2025 Plan During the second quarter of 2025, management undertook a large-scale initiative (the “Q2 2025 Plan”) to reengineer our existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize our workforce. The Q2 2025 Plan is a transformative unified program designed to streamline operations and includes exiting certain data centers to migrate to more efficient cloud based solutions. The plan is expected to be executed over a period of 18 to 42 months with the workforce component to be substantially completed in 2027 and the technology infrastructure component to be substantially completed in 2028. The associated restructuring charges for the three and nine months ended September 30, 2025 were de minimis and $ 96 million, respectively, and included employee severance and benefits costs. In connection with this restructuring, we expect to incur employee severance and benefits costs of approximately $ 90 million to $ 100 million, asset impairment and accelerated depreciation charges of approximately $ 40 million to $ 60 million, and other restructuring costs of approximately $ 110 million to $ 140 million over the term of the Q2 2025 Plan. Other restructuring costs relate to process re-engineering and one-time migration to cloud solutions and consist of contractor costs, consulting fees, and prepaid software and maintenance costs without future economic benefit. The timing of activities and cost estimates continue to be developed and are subject to change. 46 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The following table summarizes the restructuring reserve activity during the nine months ended September 30, 2025: Employee Severance and Benefits Costs (In millions) Accrued liability as of January 1, 2025 $ — Charges 96 Payments ( 15 ) Accrued liability as of September 30, 2025 $ 81 Q1 2025 Plan 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 nine months ended September 30, 2025 were $ 36 million and included employee severance and benefits costs, which was completed in the third quarter of 2025. The following table summarizes the restructuring reserve activity during the nine months ended September 30, 2025: Employee Severance and Benefits Costs (In millions) Accrued liability as of January 1, 2025 $ — Charges 36 Payments ( 36 ) Accrued liability as of September 30, 2025 $ — Q1 2024 Plan 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, which were substantially completed in the fourth quarter of 2024. OTHER During the three and nine months ended September 30, 2025, approximately $ 70 million and $ 122 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, 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. 47 Table of Contents PayPal Holdings, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (In millions) Net revenues $ 8,417 $ 7,847 $ 24,496 $ 23,431 Less (add): Transaction expense 4,063 3,841 11,735 11,700 Transaction losses 397 264 1,058 783 Credit losses 86 88 272 225 Customer support and operations (1) 447 427 1,258 1,317 Sales and marketing (1) 521 508 1,592 1,375 Technology and development (1) 801 746 2,299 2,206 General and administrative (1) 513 519 1,477 1,553 Restructuring and other 69 63 251 388 Other income (expense), net ( 13 ) 80 ( 111 ) ( 35 ) Income tax expense 285 301 869 893 Segment net income (loss) $ 1,248 $ 1,010 $ 3,796 $ 3,026 (1) Includes depreciation and amortization expense. For the three and nine months ended September 30, 2025, total depreciation and amortization expense was $ 245 million and $ 729 million, respectively. For the three and nine months ended September 30, 2024, total depreciation and amortization expense was $ 255 million and $ 783 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”. NOTE 19— SUBSEQUENT EVENTS On October 27, 2025, the Company’s Board of Directors declared a cash dividend of $ 0.14 per share on our common stock, totaling approximately $ 130 million. The dividend will be payable on December 10, 2025, to stockholders of record of our common stock as of the close of business on November 19, 2025. 48 Table of Contents