What changed in this filing

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Item 1. Financial Statements

2026-07-28 compared with 2026-05-05 · 364 added, 209 removed, 1156 unchanged (33% of the section changed)

9 unchanged sentences

Loans and interest receivable, held for sale 1,914 1,726

Loans and interest receivable, net of allowances of $ 560 and $ 539 as of March 31, 2026 and December 31, 2025, respectively

Loans and interest receivable, net of allowances of $ 533 and $ 539 as of June 30, 2026 and December 31, 2025, respectively

Funds receivable and customer accounts 39,743 38,198

11 unchanged sentences

Funds payable and amounts due to customers 41,743 40,198

Short-term debt 2,505 1,596

Accrued expenses and other current liabilities 3,950 4,409

6 unchanged sentences

4,000 shares authorized;

892 and 920 shares outstanding as of March 31, 2026 and December 31, 2025, respectively

862 and 920 shares outstanding as of June 30, 2026 and December 31, 2025, respectively

Preferred stock, $ 0.0001 par value;

100 shares authorized, unissued

Treasury stock at cost, 457 and 423 shares as of March 31, 2026 and December 31, 2025, respectively

Treasury stock at cost, 490 and 423 shares as of June 30, 2026 and December 31, 2025, respectively

( 36,165 ) ( 33,138 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions, except per share amounts)

24 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

2 unchanged sentences

Foreign currency translation adjustments (“CTA”), net

7 125 ( 27 ) 234

Tax benefit (expense) on foreign CTA, net

Unrealized gains (losses) on cash flow hedges, net

19 ( 248 ) 211 ( 424 )

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

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

( 19 ) 11 ( 32 ) 20

Unrealized gains (losses) on available-for-sale debt securities, net 2 ( 11 ) ( 3 ) ( 20 )

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

14 unchanged sentences

Unrealized gains on cash flow hedges, net — — — 192 — 192

— — — 192 — 192

Tax expense on unrealized gains on cash flow hedges, net — — — ( 13 ) — ( 13 )

— — — ( 13 ) — ( 13 )

Unrealized losses on available-for-sale debt securities, net — — — ( 5 ) — ( 5 )

— — — ( 5 ) — ( 5 )

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

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

6 — ( 139 ) — — ( 139 )

Common stock repurchased ( 34 ) ( 1,513 ) — — — ( 1,513 )

3 unchanged sentences

Balances at March 31, 2026 892 $ ( 34,651 ) $ 21,735 $ ( 513 ) $ 33,453 $ 20,024

Net income — — — — 1,104 1,104

Foreign CTA, net

Tax benefit on foreign CTA, net

Unrealized gains on cash flow hedges, net

— — — 19 — 19

Tax expense on unrealized gains on cash flow hedges, net

— — — ( 19 ) — ( 19 )

Unrealized gains on available-for-sale debt securities, net — — — 2 — 2

Common stock and stock-based awards issued, net of shares withheld for employee taxes 3 — 15 — — 15

Common stock repurchased ( 33 ) ( 1,514 ) — — — ( 1,514 )

Cash dividends declared ($ 0.14 per share)

— — — — ( 125 ) ( 125 )

Stock-based compensation — — 306 — — 306

Balances at June 30, 2026 862 $ ( 36,165 ) $ 22,056 $ ( 503 ) $ 34,432 $ 19,820

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—(continued)

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

7 unchanged sentences

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 benefit on foreign CTA, net — — — 3 — 3

Unrealized losses on cash flow hedges, net

1 unchanged sentence

Tax benefit on unrealized losses on cash flow hedges, net

— — — 11 — 11

Unrealized losses on available-for-sale debt securities, net — — — ( 11 ) — ( 11 )

3 unchanged sentences

Stock-based compensation — — 319 — — 319

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

Balances at June 30, 2025 960 $ ( 30,111 ) $ 21,136 $ ( 739 ) $ 29,915 $ 20,201

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

31 unchanged sentences

Collateral posted related to derivative instruments, net 136 ( 316 )

Other — ( 15 )

Net cash used in investing activities

1 unchanged sentence

Cash flows from financing activities:

Borrowings from repurchase agreements — 405

Repayments of repurchase agreements — ( 405 )

Proceeds from issuance of common stock 60 74

Purchases of treasury stock ( 3,052 ) ( 3,051 )

6 unchanged sentences

Other ( 6 ) ( 6 )

Net cash (used in) provided by financing activities

Net cash used in financing activities ( 156 ) ( 2,180 )

2Q 2026 FORM 10-Q

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued)

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

27 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, 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 both March 31, 2026 and December 31, 2025, 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 $ 202 million, 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 March 31, 2026 and December 31, 2025.

As of June 30, 2026 and December 31, 2025, 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 June 30, 2026 and December 31, 2025, 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 $ 193 million and $ 202 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 June 30, 2026 and December 31, 2025.

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, 2025 (the “2025 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission on February 3, 2026.

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 months ended March 31, 2026.

Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three and six months ended June 30, 2026.

Use of estimates

30 unchanged sentences

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 $ 231 million and $ 238 million as of March 31, 2026 and December 31, 2025, respectively.

These contract assets are included in other assets in our condensed consolidated balance sheets and were $ 248 million and $ 238 million as of June 30, 2026 and December 31, 2025, respectively.

DISAGGREGATION OF REVENUE

5 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

2 unchanged sentences

Other countries (1)

3,634 3,579 7,105 6,907

Total net revenues (2)

6 unchanged sentences

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

(2) Total net revenues include $ 473 million and $ 573 million for the three months ended March 31, 2026 and 2025, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers .

(2) Total net revenues include $ 589 million and $ 506 million for the three months ended June 30, 2026 and 2025, respectively, and $ 1.1 billion for both the six months ended June 30, 2026 and 2025, 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.

7 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions, except per share amounts)

11 unchanged sentences

NOTE 4— BUSINESS COMBINATIONS

In the three months ended March 31, 2026, we completed an acquisition with a total purchase price of $ 134 million, consisting primarily of cash consideration, which was accounted for as a business combination.

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

In the first quarter of 2026, we completed an acquisition with a total purchase price of $ 134 million, consisting primarily of cash consideration, which was accounted for as a business combination.

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.

NOTE 5— GOODWILL AND INTANGIBLE ASSETS

The following table presents goodwill balances and adjustments to those balances during the three months ended March 31, 2026:

The following table presents goodwill balances and adjustments to those balances during the six months ended June 30, 2026:

2025 Goodwill Acquired Foreign CTA

1 unchanged sentence

Total goodwill $ 10,864 $ 104 $ ( 39 ) $ 10,929

The goodwill acquired during the three months ended March 31, 2026 was associated with one acquisition as described in “Note 4—Business Combinations.”

The goodwill acquired during the six months ended June 30, 2026 was associated with one acquisition as described in “Note 4—Business Combinations.”

INTANGIBLE ASSETS

The components of identifiable intangible assets were as follows:

March 31, 2026 December 31, 2025

Gross Carrying Amount Accumulated Amortization

Net Carrying Amount Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

June 30, 2026 December 31, 2025

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount

Accumulated Amortization Net Carrying Amount

(In millions)

6 unchanged sentences

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

Amortization expense for intangible assets was $ 32 million and $ 47 million for the three months ended March 31, 2026 and 2025, respectively.

Expected future intangible asset amortization as of March 31, 2026 was as follows:

Amortization expense for intangible assets was $ 33 million and $ 48 million for the three months ended June 30, 2026 and 2025, respectively.

Amortization expense for intangible assets was $ 65 million and $ 95 million for the six months ended June 30, 2026 and 2025, respectively.

Expected future intangible asset amortization as of June 30, 2026 was as follows:

Fiscal years:

14 unchanged sentences

The components of lease expense were as follows:

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

3 unchanged sentences

Total lease expense, net

Supplemental cash flow information related to leases during the three months ended March 31, 2026 and 2025 was as follows:

Three Months Ended March 31,

$ 47 $ 42 $ 89 $ 85

Supplemental cash flow information related to leases during the three and six months ended June 30, 2026 and 2025 were as follows:

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

2026 2025 2026 2025

(In millions)

3 unchanged sentences

ROU lease assets obtained in exchange for operating lease liabilities

$ 154 $ — $ 149 $ 5

Supplemental balance sheet information related to leases was as follows:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(In millions, except weighted-average figures)

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Future minimum lease payments for our leases as of March 31, 2026 were as follows:

Future minimum lease payments for our leases as of June 30, 2026 were as follows:

Operating leases Finance leases

9 unchanged sentences

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

As of March 31, 2026, we have an additional operating lease for an office, which will commence in the second quarter of 2026 or later with minimum lease payments aggregating to $ 284 million and a lease term of twelve years .

As of March 31, 2026, we did no t have any additional finance leases which have not yet commenced.

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 March 31, 2026:

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2026:

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)

4 unchanged sentences

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

( 88 ) — — — — ( 88 )

Net current period other comprehensive income (loss) 19 2 7 — ( 18 ) 10

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2025:

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

8 unchanged sentences

Ending balance $ ( 277 ) $ ( 6 ) $ ( 715 ) $ 313 $ ( 54 ) $ ( 739 )

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2026:

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

Net Investment Hedges CTA Gains (Losses)

Estimated Tax (Expense) Benefit Total

(In millions)

Beginning balance $ ( 110 ) $ 13 $ ( 832 ) $ 313 $ ( 42 ) $ ( 658 )

Other comprehensive income (loss) before reclassifications 124 ( 3 ) ( 27 ) — ( 26 ) 68

Amount of net gains (losses) reclassified from AOCI

( 87 ) — — — — ( 87 )

Net current period other comprehensive income (loss) 211 ( 3 ) ( 27 ) — ( 26 ) 155

Ending balance $ 101 $ 10 $ ( 859 ) $ 313 $ ( 68 ) $ ( 503 )

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2025:

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

Net Investment Hedges CTA Gains (Losses)

Estimated Tax (Expense) Benefit Total

(In millions)

Beginning balance $ 147 $ 14 $ ( 949 ) $ 313 $ ( 75 ) $ ( 550 )

Other comprehensive income (loss) before reclassifications ( 461 ) ( 18 ) 234 — 21 ( 224 )

Amount of net gains (losses) reclassified from AOCI

( 37 ) 2 — — — ( 35 )

Net current period other comprehensive income (loss) ( 424 ) ( 20 ) 234 — 21 ( 189 )

Ending balance $ ( 277 ) $ ( 6 ) $ ( 715 ) $ 313 $ ( 54 ) $ ( 739 )

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table provides details about reclassifications from AOCI for the periods presented below:

1 unchanged sentence

Affected Line Item in the Statements of Income (Loss)

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

3 unchanged sentences

Net gains (losses) on cash flow hedges—foreign exchange contracts ( 2 ) — ( 3 ) ( 1 ) Technology and development

Net gains (losses) on cash flow hedges—foreign exchange contracts ( 1 ) — ( 1 ) — General and administrative

Net gains (losses) on investments

— — — 1 Net revenues

Net gains (losses) on investments

— 1 — 1 Other income (expense), net

1 ( 69 ) ( 87 ) ( 35 ) Income before income taxes

3 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

8 unchanged sentences

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

The following table summarizes the assets underlying our cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments as of March 31, 2026 and December 31, 2025:

2026 December 31,

1 unchanged sentence

Cash and cash equivalents $ 8,306 $ 8,049

$ 6,977 $ 8,049

Funds receivable and customer accounts:

14 unchanged sentences

Total long-term investments $ 4,009 $ 4,330

(1) Includes $ 250 million and nil of available-for-sale debt securities with original maturities of three months or less as of March 31, 2026 and December 31, 2025, respectively.

(2) Includes $ 187 million and $ 374 million of available-for-sale debt securities with original maturities of three months or less as of March 31, 2026 and December 31, 2025, respectively.

(1) Includes $ 12 million and $ 374 million of available-for-sale debt securities with original maturities of three months or less as of June 30, 2026 and December 31, 2025, respectively.

2Q 2026 FORM 10-Q

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2026 and December 31, 2025, the estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

March 31, 2026 (1)

As of June 30, 2026 and December 31, 2025, the estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

June 30, 2026 (1)

Losses Estimated

(In millions)

Cash and cash equivalents:

government and agency securities $ 250 $ — $ — $ 250

Funds receivable and customer accounts:

51 unchanged sentences

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

Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 97 million and $ 101 million at March 31, 2026 and December 31, 2025, respectively, and were included in other current assets on our condensed consolidated balance sheets.

Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $ 107 million and $ 101 million at June 30, 2026 and December 31, 2025, respectively, and were included in other current assets on our condensed consolidated balance sheets.

2Q 2026 FORM 10-Q

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2026 and December 31, 2025, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:

March 31, 2026 (1)

As of June 30, 2026 and December 31, 2025, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within cash and cash equivalents, funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:

June 30, 2026 (1)

Less than 12 months 12 months or longer Total

3 unchanged sentences

(In millions)

Cash and cash equivalents:

government and agency securities $ 250 $ — $ — $ — $ 250 $ —

Funds receivable and customer accounts:

16 unchanged sentences

(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2025 (1)

25 unchanged sentences

(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

2 unchanged sentences

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

1 unchanged sentence

$ 5,458 $ 7,069 $ 10,737 $ 12,541

During the three months ended March 31, 2026 and 2025, we incurred gross realized gains and losses which were de minimis.

During the three and six months ended June 30, 2026 and 2025, we incurred gross realized gains and losses 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:

March 31, 2026

June 30, 2026

Amortized Cost Fair Value

6 unchanged sentences

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

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

STRATEGIC INVESTMENTS

1 unchanged sentence

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

Marketable equity securities totaled $ 106 million and $ 180 million as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026, we held marketable equity securities with a fair value of $ 94 million with a time-based contractual sale restriction, which is set to expire in May 2026.

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 $ 1.7 billion as of both March 31, 2026 and December 31, 2025.

As of both March 31, 2026 and December 31, 2025, we had non-marketable equity securities of $ 215 million for which we have the ability to exercise significant influence, but not control, over the investee.

We have non-marketable equity securities 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.

1 unchanged sentence

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).

The following table summarizes our strategic investments as of June 30, 2026 and December 31, 2025:

2026 December 31,

(In millions)

Marketable equity securities $ 106 $ 180

Non-marketable equity securities:

Equity Method 205 215

Measurement Alternative 1,424 1,509

Total non-marketable equity securities 1,629 1,724

Total strategic investments $ 1,735 $ 1,904

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Measurement Alternative adjustments

The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three and six months ended June 30, 2026 and 2025 were as follows:

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

2026 2025 2026 2025

(In millions)

2 unchanged sentences

Net additions (reductions) (1)

2 ( 76 ) 1 ( 54 )

Gross unrealized gains — 28 45 83

2 unchanged sentences

(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 March 31, 2026 and December 31, 2025, respectively:

2026 December 31,

2 unchanged sentences

Cumulative gross unrealized losses and impairments $ ( 479 ) $ ( 353 )

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at March 31, 2026 and 2025, respectively:

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

1 unchanged sentence

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 three months ended March 31, 2026 and 2025 include the purchase of investments of $ 25 million and $ 125 million, respectively, that have not yet settled.

Non-cash investing transactions that were not reflected in the condensed consolidated statement of cash flows for the six months ended June 30, 2026 and 2025 include the purchase of investments, net of maturities and sales, of $ 200 million and $ 29 million, respectively, that have not yet settled.

2Q 2026 FORM 10-Q

3 unchanged sentences

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

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:

March 31, 2026 Quoted Prices in

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:

June 30, 2026 Quoted Prices in

Active Markets for

4 unchanged sentences

Cash and cash equivalents (1)

government and agency securities $ 250 $ — $ 250

Money market fund $ 49 $ 49 $ —

Total cash and cash equivalents 298 48 250

Short-term investments (2) :

78 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2026 and December 31, 2025, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value (Level 3).

As of June 30, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

Amortized Cost Fair Value Amortized Cost Fair Value

1 unchanged sentence

Funds receivable and customer accounts $ 685 $ 684 $ 621 $ 620

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 months ended March 31, 2026 and 2025:

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

1 unchanged sentence

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

The following tables summarize our assets held as of March 31, 2026 and December 31, 2025 for which a non-recurring fair value measurement was recorded during the three months ended March 31, 2026 and the year ended December 31, 2025, respectively:

March 31, 2026 Significant Other

The following tables summarize our assets held as of June 30, 2026 and December 31, 2025 for which a non-recurring fair value measurement was recorded during the six months ended June 30, 2026 and the year ended December 31, 2025, respectively:

June 30, 2026 Significant Other

Observable Inputs

4 unchanged sentences

Total $ 1,666 $ 1,259 $ 407

(1) Excludes non-marketable equity securities of $ 1.3 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the three months ended March 31, 2026.

(1) Excludes non-marketable equity securities of $ 1.2 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the six months ended June 30, 2026.

December 31, 2025 Significant Other

7 unchanged sentences

(1) Excludes non-marketable equity securities of $ 819 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2025.

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.

2Q 2026 FORM 10-Q

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

The significant unobservable input is the price at which the Company expects to sell the loans and is determined based upon certain loan and risk classifications of the portfolio.

The following table presents the valuation techniques covering the majority of Level 3 non-recurring fair value measurements and the most significant unobservable inputs used in those measurements as of June 30, 2026:

(In millions) Methodology Input Low (1)

Weighted Average (1)(2)

Loans and interest receivable, held for sale $ 253 Price-based Price $ 0.01 $ 1.00 $ 0.89

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

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

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

4 unchanged sentences

Our financial instruments, including cash, PayPal USD stablecoin (“PYUSD”), time deposits, certain loans and interest receivable, held for sale, loans and interest receivable, net, notes receivable, commercial paper, and 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 $ 10.1 billion as of March 31, 2026.

Our term debt (including current portion) had a carrying value of approximately $ 12.6 billion and fair value of approximately $ 11.9 billion as of June 30, 2026.

Our term debt (including current portion) had a carrying value of approximately $ 10.8 billion and fair value of approximately $ 10.3 billion as of December 31, 2025.

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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.

In addition, we monitor the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis.

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

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Cash flow hedges

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

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2026, we estimated that $ 82 million of net derivative gains related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.

During the three months ended March 31, 2026 and 2025, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.

As of June 30, 2026, we estimated that $ 101 million of net derivative gains related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months.

During the three and six months ended June 30, 2026 and 2025, 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 will continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects earnings, at which point we will also reclassify it into earnings.

3 unchanged sentences

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.

4 unchanged sentences

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.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

FAIR VALUE OF DERIVATIVE CONTRACTS

The fair value of our outstanding derivative instruments as of March 31, 2026 and December 31, 2025 was as follows:

Balance Sheet Location March 31,

The fair value of our outstanding derivative instruments as of June 30, 2026 and December 31, 2025 was as follows:

Balance Sheet Location June 30,

2026 December 31,

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Total derivative liabilities $ 52 $ 158

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 for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

(In millions)

Net revenues Customer support and operations Technology and development General and administrative Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the gains (losses) on derivatives are recorded $ 8,682 $ 462 $ 849 $ 503 $ ( 117 )

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

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

6 ( 2 ) ( 2 ) ( 1 ) —

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

Amount of net gains (losses) on foreign exchange contracts

— — — — ( 42 )

Total net gains (losses)

$ 6 $ ( 2 ) $ ( 2 ) $ ( 1 ) $ ( 42 )

2Q 2026 FORM 10-Q

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

EFFECT OF DERIVATIVE CONTRACTS ON CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31,

Three Months Ended June 30,

(In millions)

Net revenues Customer support and operations Technology and development Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the effects of cash flow hedges are recorded

Net revenues Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the gains (losses) on derivatives are recorded $ 8,288 $ 25

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

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

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

Amount of net gains (losses) on foreign exchange contracts

Total net gains (losses)

$ ( 70 ) $ ( 152 )

Six Months Ended June 30,

(In millions)

Net revenues Customer support and operations Technology and development General and administrative Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the gains (losses) on derivatives are recorded

$ 17,035 $ 908 $ 1,642 $ 994 $ ( 212 )

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

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$ ( 80 ) $ ( 3 ) $ ( 3 ) $ ( 1 ) $ 11

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

Net revenues Customer support and operations Technology and development Other income (expense), net

Total amounts presented in the condensed consolidated statements of income (loss) in which the effects of cash flow hedges are recorded

Total amounts presented in the condensed consolidated statements of income (loss) in which the gains (losses) on derivatives are recorded

$ 16,079 $ 811 $ 1,498 $ 98

4 unchanged sentences

Amount of net gains (losses) on foreign exchange contracts

— — — ( 235 )

Total net gains (losses)

$ ( 35 ) $ ( 1 ) $ ( 1 ) $ ( 235 )

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

1 unchanged sentence

$ 20 $ ( 318 ) $ 124 $ ( 461 )

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS

13 unchanged sentences

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.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables present the derivative assets and derivative liabilities not offset on the condensed consolidated balance sheets but available for offset in the event of default.

6 unchanged sentences

(In millions)

As of March 31, 2026

As of June 30, 2026

Derivative assets (3)

3 unchanged sentences

$ 20 $ 13 $ 2 $ 5

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts Not Offset on the Condensed Consolidated Balance Sheets

2 unchanged sentences

(In millions)

As of March 31, 2026

As of June 30, 2026

Derivative liabilities (3)

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

(3) We received cash collateral from derivative counterparties totaling $ 110 million and $ 2 million as of March 31, 2026 and December 31, 2025, respectively, and securities from derivative counterparties with a fair value of $ 61 million and $ 90 million as of March 31, 2026 and December 31, 2025, respectively.

We posted $ 46 million and $ 156 million of cash collateral as of March 31, 2026 and December 31, 2025, respectively, and securities to derivative counterparties with a fair value of $ 77 million and $ 91 million as of March 31, 2026 and December 31, 2025, respectively.

(3) We received cash collateral from derivative counterparties totaling $ 120 million and $ 2 million as of June 30, 2026 and December 31, 2025, respectively, and securities from derivative counterparties with a fair value of $ 75 million and $ 90 million as of June 30, 2026 and December 31, 2025, respectively.

We posted $ 20 million and $ 156 million of cash collateral as of June 30, 2026 and December 31, 2025, respectively, and securities to derivative counterparties with a fair value of $ 56 million and $ 91 million as of June 30, 2026 and December 31, 2025, respectively.

NOTE 11— LOANS AND INTEREST RECEIVABLE

LOANS AND INTEREST RECEIVABLE, HELD FOR SALE

As of March 31, 2026 and December 31, 2025, loans and interest receivable, held for sale was $ 1.8 billion and $ 1.7 billion, respectively, and include both loans reclassified to held for sale and loans originated as held for sale.

During the three months ended March 31, 2026, we derecognized loans with an unpaid balance of $ 7.5 billion and had net proceeds of $ 7.4 billion from loans and interest receivable sold.

During the three months ended March 31, 2025, we derecognized loans with both an unpaid balance and net proceeds of $ 5.3 billion from loans and interest receivable sold.

As of June 30, 2026 and December 31, 2025, loans and interest receivable, held for sale was $ 1.9 billion and $ 1.7 billion, respectively.

During the six months ended June 30, 2026, we derecognized loans with an unpaid balance of $ 15.9 billion and had net proceeds of $ 15.8 billion from loans and interest receivable sold.

During the six months ended June 30, 2025, we derecognized loans with both an unpaid balance and net proceeds of $ 11.6 billion from loans and interest receivable sold.

LOANS AND INTEREST RECEIVABLE, NET

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

During the three months ended March 31, 2026 and 2025, we purchased approximately $ 369 million and $ 277 million in consumer receivables, respectively.

As of March 31, 2026 and December 31, 2025, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.4 billion and $ 5.5 billion, respectively, net of the participation interest sold to the partner institution of $ 33 million for both March 31, 2026 and December 31, 2025.

During the six months ended June 30, 2026 and 2025, we purchased approximately $ 783 million and $ 602 million in consumer receivables, respectively.

For both June 30, 2026 and December 31, 2025, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $ 5.5 billion, net of the participation interest sold to the partner institution of $ 36 million and $ 33 million as of June 30, 2026 and December 31, 2025, respectively.

2Q 2026 FORM 10-Q

5 unchanged sentences

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

March 31, 2026

June 30, 2026

(In millions, except percentages)

8 unchanged sentences

Total $ 2,913 $ 1,583 $ 736 $ 206 $ 42 $ — $ 5,480 100 %

Gross charge-offs for the three months ended March 31, 2026

Gross charge-offs for the six months ended June 30, 2026

$ 75 $ 1 $ 69 $ 11 $ — $ — $ 156

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the three months ended March 31, 2026 and 2025:

March 31, 2026 March 31, 2025

The following table summarizes the activity in the allowance for consumer loans and interest receivable for the six months ended June 30, 2026 and 2025:

June 30, 2026 June 30, 2025

Consumer Loans Receivable Interest Receivable Total Allowance

8 unchanged sentences

(1) Includes amounts related to foreign currency remeasurement.

The allowance for credit losses at March 31, 2026 for our consumer receivable portfolio remained relatively consistent with the allowance for credit losses at December 31, 2025.

The allowance for credit losses at June 30, 2026 for our consumer receivable portfolio remained relatively consistent with the allowance for credit losses at December 31, 2025.

In the first quarter of 2026, we updated our expected credit loss model for interest bearing installment loans in the U.S.

5 unchanged sentences

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

During the three months ended March 31, 2026 and 2025, we purchased approximately $ 570 million and $ 494 million in merchant receivables, respectively.

As of March 31, 2026 and December 31, 2025, the total outstanding balance in our pool of merchant loans, advances, and fees receivable was $ 1.9 billion and $ 1.8 billion, respectively, net of the participation interest sold to the partner institution of $ 66 million and $ 65 million, respectively.

During the six months ended June 30, 2026 and 2025, we purchased approximately $ 1.2 billion and $ 1.0 billion in merchant receivables, respectively.

As of June 30, 2026 and December 31, 2025, the total outstanding balance in our pool of merchant loans, advances, and fees receivable was $ 1.9 billion and $ 1.8 billion, respectively, net of the participation interest sold to the partner institution of $ 67 million and $ 65 million, respectively.

Merchant receivables delinquency and allowance

2 unchanged sentences

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

March 31, 2026

June 30, 2026

(In millions, except percentages)

7 unchanged sentences

Total $ 1,390 $ 461 $ 41 $ 6 $ 2 $ 1,900 100 %

Gross charge-offs for the three months ended March 31, 2026

Gross charge-offs for the six months ended June 30, 2026

$ — $ 61 $ 20 $ 3 $ — $ 84

14 unchanged sentences

$ 25 $ 87 $ 19 $ 4 $ — $ 2 $ 137

The following table summarizes the activity in the allowance for merchant loans, advances, and fees receivable for the three months ended March 31, 2026 and 2025:

March 31, 2026 March 31, 2025

The following table summarizes the activity in the allowance for merchant loans, advances, and fees receivable for the six months ended June 30, 2026 and 2025:

June 30, 2026 June 30, 2025

Merchant Loans and Advances Fees Receivable

9 unchanged sentences

(1) Includes amounts related to foreign currency remeasurement.

The allowance for credit losses at March 31, 2026 for our merchant receivable portfolio remained relatively consistent with the allowance for credit losses at December 31, 2025.

The allowance for credit losses at June 30, 2026 for our merchant receivable portfolio remained relatively consistent with the allowance for credit losses at December 31, 2025.

NOTE 12— DEBT

In May 2026, we issued fixed-rate notes with varying maturity dates for an aggregate principal amount of $ 2.0 billion, consisting of $ 650 million aggregate principal amount of 4.550 % notes due 2028, $ 850 million aggregate principal amount of 4.950 % notes due 2031, and $ 500 million aggregate principal amount of 5.550 % notes due 2036.

Interest on the notes is payable on June 1 and December 1, beginning on December 1, 2026.

The notes are senior unsecured obligations and are collectively referred to as the “Notes.” We may redeem the Notes in whole at any time or in part 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.

2Q 2026 FORM 10-Q

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12— DEBT

The following table summarizes total long-term debt:

Maturities Effective Interest Rate March 31,

Maturities Effective Interest Rate June 30,

2026 December 31,

35 unchanged sentences

4/1/2035 5.20 % 600 600

May 2026 debt issuance:

Fixed-rate 4.550 % notes

6/1/2028 4.87 % 650 —

Fixed-rate 4.950 % notes

6/1/2031 5.11 % 850 —

Fixed-rate 5.550 % notes

6/1/2036 5.66 % 500 —

Total term debt

6 unchanged sentences

(1) Principal amounts represent the U.S.

dollar equivalent as of March 31, 2026 and December 31, 2025, respectively.

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

As of March 31, 2026, the future principal payments associated with our long-term debt was as follows (in millions):

dollar equivalent as of June 30, 2026 and December 31, 2025, respectively.

(2) The current portion of term debt is included within “short-term debt” on our condensed consolidated balance sheets.

As of June 30, 2026, the future principal payments associated with our long-term debt was as follows (in millions):

Remaining 2026

5 unchanged sentences

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 $ 106 million and $ 98 million for the three months ended March 31, 2026 and 2025, respectively.

The interest expense recorded for the notes, including amortization of the debt discount and debt issuance costs, was $ 119 million and $ 225 million for the three and six months ended June 30, 2026, respectively.

The interest expense recorded for the notes, including amortization of the debt discount and debt issuance costs, was $ 110 million and $ 208 million for the three and six months ended June 30, 2025, respectively.

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 $ 563 million as of March 31, 2026).

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

As of March 31, 2026 and December 31, 2025, ¥ 90.0 billion (approximately $ 563 million) and ¥ 90.0 billion (approximately $ 575 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in accrued expenses and other current liabilities and long-term debt, respectively, on our condensed consolidated balance sheets.

The weighted average interest rate on the borrowing was 1.42 % as of March 31, 2026.

At March 31, 2026, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.

During the three months ended March 31, 2026 and 2025, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

As of June 30, 2026 and December 31, 2025, ¥ 90.0 billion (approximately $ 556 million) and ¥ 90.0 billion (approximately $ 575 million) was drawn down under the Paidy Credit Agreement, respectively, which was recorded in short-term debt and long-term debt, respectively, on our condensed consolidated balance sheets.

The weighted average interest rate on the borrowing was 1.49 % as of June 30, 2026.

At June 30, 2026, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.

During the three and six months ended June 30, 2026 and 2025, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis.

COMMERCIAL PAPER

There was $ 200 million outstanding in Commercial Paper Notes as of both March 31, 2026 and December 31, 2025, which was recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

The weighted average interest rate on the commercial paper borrowings was 3.99 % and 4.07 % as of March 31, 2026 and December 31, 2025, respectively.

There was $ 200 million outstanding in commercial paper notes as of both June 30, 2026 and December 31, 2025, which was recorded in short-term debt on our condensed consolidated balance sheets.

The weighted average interest rate on the commercial paper borrowings was 4.06 % and 4.07 % as of June 30, 2026 and December 31, 2025, respectively.

The maturities of the commercial paper notes may vary, but may not exceed 397 days from the date of issuance.

14 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material as of March 31, 2026.

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material as of June 30, 2026.

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.

56 unchanged sentences

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

On February 17, 2026, a putative securities class action captioned Goodman v.

PayPal Holdings, Inc.

5:26-cv-01381-NW, was filed in the U.S.

District Court for the Northern District of California (the “Goodman Securities Action”).

On March 5, 2026, before the Company entered an appearance, the plaintiff filed a notice of voluntary dismissal.

On March 31, 2026, the court closed the matter.

On February 24, 2026, a putative securities class action captioned Darcy v.

5 unchanged sentences

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

On April 2, 2026, a putative securities class action captioned Norfolk County Retirement System v.

PayPal Holdings, Inc.

5:26-cv-02849, was filed in the U.S.

District Court for the Northern District of California (the “Norfolk Securities Action”).

The Norfolk Securities Action generally asserts the same claims and allegations made in the Darcy Securities Action, but expands the Darcy Class Period to February 8, 2024 to February 2, 2026 and includes additional alleged misstatements from the earlier time period.

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

2Q 2026 FORM 10-Q

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

On May 21, 2026, the Norfolk Securities Action was consolidated with the Darcy Securities Action under the caption In re PayPal Branded Checkout Securities Litigation , Case No.

3:26-cv-01589 (the “Branded Checkout Securities Action”), and the Court appointed the Wayne County Employees’ Retirement System, Macomb County Intermediate Retirees Medical Benefits Trust, Macomb County Retirement Health Care Fund, Macomb County Employees’ Retirement System, and Norfolk County Retirement System as lead plaintiffs.

On March 11, 2026, a putative shareholder derivative action captioned Goncalves v.

Chriss et al.

5:26-cv-02145-SVK, was filed in the U.S.

3:26-cv-02145, was filed in the U.S.

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

The Goncalves Action is based on the same alleged facts and circumstances as the Darcy Securities Action.

The Goncalves Action names certain of our current and former officers, as well as members of our Board of Directors, as defendants.

The Goncalves Action alleges claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, contribution, and violations of the Securities Exchange Act of 1934, and seeks, on behalf of the Company, an award of damages and an order directing the Company to reform its corporate governance and internal procedures.

On April 2, 2026, a putative securities class action captioned Norfolk County Retirement System v.

PayPal Holdings, Inc.

5:26-cv-02849-VKD, was filed in the U.S.

District Court for the Northern District of California (the “Norfolk Securities Action”).

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

On May 6, 2026, a putative shareholder derivative action captioned LR Trust v.

Chriss et al.

3:26-cv-04132, was filed in the U.S.

District Court for the Northern District of California (the “LR Trust Action”), purportedly on behalf of the Company.

On May 11, 2026, a putative shareholder derivative action captioned Stan v.

Chriss et al.

5:26-cv-04330, was filed in the U.S.

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

On May 17, 2026, a putative shareholder derivative action captioned Lovoi v.

Adkins et al.

3:26-cv-04650, was filed in the U.S.

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

On June 3, 2026, a putative shareholder derivative action captioned Haliburton v.

Chriss et al.

1:26-cv-00655, was filed in the U.S.

District Court for the District of Delaware (the “Haliburton Action,” and collectively with the Goncalves Action, LR Trust Action, Stan Action, and Lovoi Action, the “Branded Checkout Derivative Actions”), purportedly on behalf of the Company.

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

The Branded Checkout Derivative Actions allege claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement, abuse of control, insider trading, contribution, and violations of the Exchange Act, and seek, on behalf of the Company, an award of damages and an order directing the Company to reform its corporate governance and internal procedures.

On July 10, 2026, the Goncalves Action, the LR Trust Action, the Stan Action, and the Lovoi Action were consolidated in the U.S.

District Court for the Northern District of California under the caption In re PayPal Holdings, Inc.

Stockholder Derivative Litigation , Case No.

3:26-cv-02145.

General matters

4 unchanged sentences

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.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

6 unchanged sentences

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.

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In the ordinary course of business, we include indemnification provisions in certain of our agreements with parties with whom we have commercial relationships.

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

As of March 31, 2026 and December 31, 2025, the current outstanding balances of the loans sold was $ 3.4 billion and $ 3.8 billion, respectively.

As of June 30, 2026 and December 31, 2025, the current outstanding balances of the loans sold was $ 3.9 billion and $ 3.8 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.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2026 and December 31, 2025, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

As of June 30, 2026 and December 31, 2025, 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

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The allowance for negative customer balances represents our estimate of current expected credit losses on negative customer balances.

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

At March 31, 2026 and December 31, 2025, the allowance for transaction losses was $ 26 million and $ 73 million, respectively.

The allowance for negative customer balances was $ 284 million and $ 271 million at March 31, 2026 and December 31, 2025, respectively.

The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

At June 30, 2026 and December 31, 2025, the allowance for transaction losses was $ 92 million and $ 73 million, respectively.

The allowance for negative customer balances was $ 221 million and $ 271 million at June 30, 2026 and December 31, 2025, respectively.

The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

(in millions)

1 unchanged sentence

Provision (1)

323 383 599 661

Realized losses and charge-offs ( 373 ) ( 371 ) ( 732 ) ( 719 )

5 unchanged sentences

STOCK REPURCHASE PROGRAM

During the three months ended March 31, 2026, we repurchased approximately 34 million shares of our common stock for approximately $ 1.5 billion at an average cost of $ 44.60 , excluding excise tax.

During the six months ended June 30, 2026, we repurchased approximately 67 million shares of our common stock for approximately $ 3.0 billion at an average cost of $ 44.99 , excluding excise tax.

These shares were purchased in the open market under our stock repurchase program authorized in February 2025.

As of March 31, 2026, a total of approximately $ 12.4 billion remained available for future repurchases of our common stock under our February 2025 stock repurchase program.

As of June 30, 2026, a total of approximately $ 10.9 billion remained available for future repurchases of our common stock under our February 2025 stock repurchase program.

DIVIDEND PROGRAM

In February 2026, 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 was paid on March 25, 2026, to stockholders of record of our common stock as of the close of business on March 4, 2026.

The following table summarizes our dividend activities for the six months ended June 30, 2026:

Record Date Payment Date Dividend Per Share Total $ Value (in millions)

June 4, 2026 June 25, 2026 $ 0.14 $ 125

March 4, 2026 March 25, 2026 $ 0.14 $ 130

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 15— STOCK-BASED PLANS

In May 2026, our stockholders approved the PayPal Holdings, Inc.

2026 Equity Incentive Award Plan (the “2026 Plan”) to replace the PayPal Holdings, Inc.

2015 Equity Incentive Award Plan, as amended and restated (the “2015 Plan”) as the source of equity awards granted on or after May 19, 2026, and no additional equity awards will be granted under the 2015 Plan following that date.

The 2026 Plan authorizes the issuance of up to 39.1 million shares of our common stock, plus up to 44.6 million shares of our common stock underlying awards granted under the 2015 Plan that expire or are terminated, are settled in cash without the delivery of shares, or otherwise become available for grant in accordance with the terms of the 2015 Plan on or after May 19, 2026.

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 months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following table summarizes the impact of stock-based compensation expense on our results of operations for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

(In millions)

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General and administrative 67 83 141 155

Restructuring and other 19 — 19 —

Total stock-based compensation expense $ 301 $ 306 $ 585 $ 573

Capitalized as part of internal use software and website development costs $ 31 $ 33 $ 62 $ 68

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 16— INCOME TAXES

Our effective tax rate for both the three months ended March 31, 2026 and 2025 was 20 %.

Our effective tax rate for the three and six months ended June 30, 2026 was 16 % and 18 %, respectively.

Our effective tax rate for the three and six months ended June 30, 2025 was 18 % and 19 %, respectively.

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

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income taxed at different rates as well as discrete tax adjustments including tax effects of stock-based compensation.

Gross unrecognized tax benefits were approximately $ 2.5 billion as of both March 31, 2026 and December 31, 2025.

Gross unrecognized tax benefits were approximately $ 2.5 billion as of both June 30, 2026 and December 31, 2025.

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

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Accrued restructuring liabilities were included in “accrued expenses and other current liabilities” on our condensed consolidated balance sheets.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In the three and six months ended June 30, 2026, we recorded $ 44 million in restructuring charges associated with the strategic reorganization announced in April 2026.

These charges were primarily employee severance and benefits costs including stock-based compensation.

During the second quarter of 2025, management undertook a large-scale initiative (the “2Q 2025 Plan”) to reengineer our existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize our workforce.

The 2Q 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 2Q 2025 Plan is expected to be executed over a period of 18 to 42 months with the workforce component expected to be substantially completed in 2026 and the technology infrastructure component expected to be substantially completed in 2028.

The following table summarizes the associated restructuring charges:

Three Months Ended

March 31, 2026 Total Plan Costs Incurred to Date

The 2Q 2025 Plan is expected to be executed over a period of 18 to 42 months with the workforce component completed in the second quarter of 2026 and the technology infrastructure component expected to be substantially completed in 2028.

The following table summarizes the associated restructuring charges (reversals):

Three Months Ended June 30, Six Months Ended June 30, Total Plan Costs Incurred to Date

2026 2025 2026 2025

(In millions)

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Other restructuring costs (1)

$ 2 $ 95 $ 13 $ 95 $ 115

(1) 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.

1 unchanged sentence

The timing of activities and cost estimates continue to be developed and are subject to change.

1Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the restructuring reserve activity during the three months ended March 31, 2026:

The following table summarizes the restructuring reserve activity during the six months ended June 30, 2026:

Employee Severance and Benefits Costs Other Restructuring Costs

2 unchanged sentences

$ 52 $ 6 $ 58

Charges (reversals) ( 11 ) 24 13

Payments ( 31 ) ( 10 ) ( 41 )

Accrued liability as of March 31, 2026

Accrued liability as of June 30, 2026

$ 10 $ 20 $ 30

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

The associated restructuring charges during the three months ended March 31, 2025 were $ 39 million and included employee severance and benefits costs, which was completed in the third quarter of 2025.

During the three months ended March 31, 2026 and 2025, approximately $ 61 million and $ 25 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.

The associated restructuring charges during the six months ended June 30, 2025 were $ 36 million and included employee severance and benefits costs, which was completed in the third quarter of 2025.

During the three and six months ended June 30, 2026, approximately $ 65 million and $ 126 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 six months ended June 30, 2025, approximately $ 27 million and $ 52 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.

2Q 2026 FORM 10-Q

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 18— SEGMENT INFORMATION

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The following table sets forth our segment information for revenue, segment profit (loss), and significant expenses:

Three Months Ended March 31,

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

2026 2025 2026 2025

(In millions)

4 unchanged sentences

Customer support and operations (1)

462 413 908 811

Sales and marketing (1)

546 583 1,064 1,071

Technology and development (1)

849 767 1,642 1,498

General and administrative (1)

503 461 994 964

Restructuring and other 113 116 187 182

3 unchanged sentences

(1) Includes depreciation and amortization expense.

For the three months ended March 31, 2026 and 2025, total depreciation and amortization expense was $ 238 million and $ 245 million, respectively.

For the three and six months ended June 30, 2026, total depreciation and amortization expense was $ 246 million and $ 484 million, respectively.

For the three and six months ended June 30, 2025, total depreciation and amortization expense was $ 239 million and $ 484 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.

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements