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

We have a cash pooling arrangement with a financial institution for cash management purposes. The arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the financial institution (“Aggregate Cash Deposits”). The arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the arrangement. As of ~~September 30, 2021,~~March 31, 2022, we had a total of ~~$6.7~~$4.5 billion in cash withdrawals offsetting our ~~$6.7~~$4.5 billion in Aggregate Cash Deposits held within the financial institution under the cash pooling arrangement.

~~Liquidity for loans receivable~~

Growth in our portfolio of loan receivables increases our liquidity needs and any inability to meet those liquidity needs could adversely affect our business. We continue to evaluate partnerships and third party sources of funding for our loans receivable portfolio. In June 2018, the Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may designate up to 35% of European customer balances held in our Luxembourg banking subsidiary to be used for European and U.S. credit activities. During the first quarter of 2021, an additional $700 million was approved to fund such credit activities. As of September 30, 2021, the cumulative amount approved by management to be designated for credit activities aggregated to $2.7 billion and represented approximately 27% of European customer balances that have been made available for our corporate use at that date as determined by applying financial regulations maintained by the CSSF. We may periodically seek to designate additional amounts of customer balances, if necessary, based on utilization of the approved funds and anticipated credit funding requirements. While our objective is to expand the availability of our credit products with capital from external sources, there can be no assurance that we will be successful in achieving that goal. Under certain exceptional circumstances, corporate liquidity could be called upon to meet our obligations related to our European customer balances.

Credit ratings

As of ~~September 30, 2021,~~March 31, 2022, we continue to be rated investment grade by Standard and Poor’s Financial Services, LLC, Fitch Ratings, Inc., and Moody’s Investors Services, Inc. We expect that these credit rating agencies will continue to monitor our performance, including our capital structure and results of operations. Our goal is to be rated investment grade, but as circumstances change, there are factors that could result in our credit ratings being downgraded or put on a watch list for possible downgrading. If that were to occur, it could increase our borrowing rates, including the interest rate on borrowings under our credit ~~agreement.~~agreements.

~~Risk~~CURRENT AND FUTURE CASH REQUIREMENTS

Our material cash requirements include funds to support current and potential: operating activities, credit products, customer protection programs, stock repurchases, strategic investments, acquisitions, other commitments, and capital expenditures and other future obligations.


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Credit products

Growth in our portfolio of loan receivables increases our liquidity needs and any inability to meet those liquidity needs could adversely affect our business. We continue to evaluate partnerships and third-party sources of funding for our loans receivable portfolio. In June 2018, the Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may designate up to 35% of European customer balances held in our Luxembourg banking subsidiary to be used for European and U.S. credit activities. As of March 31, 2022, the cumulative amount approved by management to be designated for credit activities aggregated to $2.7 billion and represented approximately 27% of European customer balances that have been made available for our corporate use at that date, as determined by applying financial regulations maintained by the CSSF. We may periodically seek to designate additional amounts of customer balances for our credit activities, as we deem necessary, based on utilization of the approved funds and anticipated credit funding requirements. While our objective is to expand the availability of our credit products with capital from external sources, there can be no assurance that we will be successful in achieving that goal. Under certain exceptional circumstances, corporate liquidity could be called upon to meet our obligations related to our European customer balances.

Customer protection programs

The risk of losses from our buyer and seller protection programs are specific to individual customers, merchants, and transactions, and may also be impacted by regional variations in, and changes or modifications to, the programs, including as a result of changes in regulatory requirements. For the periods presented in these condensed consolidated financial statements included in this report, our transaction loss ~~rates ranged between 0.09% and 0.13%~~rate was 0.10% of TPV. Historical loss rates may not be indicative of future results. The duration and severity of the impacts of the COVID-19 pandemic and related global economic conditions remain unknown. The negative impacts on macroeconomic conditions could increase the risk of merchant bankruptcy, insolvency, business failure, or other business interruption, which may result in an adverse impact on our transaction losses, particularly for merchants that sell goods or services in advance of the date of their delivery or use.

Stock repurchases ~~and acquisitions~~

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we repurchased approximately ~~$1.9~~$1.5 billion of our common stock in the open market under our stock repurchase program authorized in July 2018. As of ~~September 30, 2021,~~March 31, 2022, a total of approximately ~~$6.6~~$3.6 billion remained available for future repurchases of our common stock under our July 2018 stock repurchase program.

In October 2021, we completed the acquisition of Paidy, Inc. (“Paidy”) for approximately $2.7 billion, consisting of approximately $2.5 billion in cash, and approximately $175 million in assumed restricted stock and restricted stock units, subject to vesting conditions. Paidy is a two-sided payments platform that primarily provides buy now, pay later solutions (installment credit offerings) in Japan. With the acquisition of Paidy, we intend to expand our capabilities and relevance in Japan.

~~In the second quarter of 2021, we completed three acquisitions for $524 million in aggregate, consisting primarily of cash consideration.~~


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Other considerations

In 2020, we announced our commitment to invest $535 million to support racial equality. As of September 30, 2021, we have deployed substantially all of the commitment through charitable contributions, grants to small businesses, internal investments to support and strengthen diversity and inclusion initiatives, and an economic opportunity fund focused on bolstering our relationships with community banks and credit unions serving underrepresented minority communities, as well as investing directly into black- and minority-led startups and minority-focused investment funds, among other initiatives.

Our liquidity, access to capital, and borrowing costs could be adversely impacted by declines in our credit rating, our financial performance, and global credit market conditions, as well as a broad range of other factors including those related to the COVID-19 pandemic discussed in this Form 10-Q. In addition, our liquidity, access to capital, and borrowing costs could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. See Part I, Item 1A, Risk Factors of our ~~2020~~2021 Form 10-K, as supplemented and, to the extent inconsistent, superseded below in Part II, Item 1A, Risk Factors of this Form 10-Q, as well as “Note 13—Commitments and Contingencies” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional discussion of these and other risks that our business faces.

We believe that our existing cash, cash equivalents, and investments, cash expected to be generated from operations, and our expected access to capital markets, together with potential external funding through third party sources, will be sufficient to fund our operating activities, anticipated capital expenditures, and our credit products for the foreseeable future. Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to fund our operating activities, finance acquisitions, make strategic investments, repurchase shares under our stock repurchase program, or reduce our cost of capital.

~~CASH FLOWS~~

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

Nine Months Ended September 30,
2021 2020
(In millions)
Net cash provided by (used in):
Operating activities(1)
$ 4,577 $ 4,507
Investing activities(1)
(2,356) (13,284)
Financing activities(1)
(186) 10,130
Effect of exchange rates on cash, cash equivalents, and restricted cash (106) 26
Net increase in cash, cash equivalents, and restricted cash $ 1,929 $ 1,379

~~(1)~~ Prior period amounts have been revised to conform to the current period presentation. For additional information, see “Note 1—Overview and Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

~~Operating activities~~

We generated cash from operating activities of $4.6 billion in the nine months ended September 30, 2021 due primarily to operating income of $3.2 billion, as well as adjustments for non-cash expenses including stock-based compensation of $1.1 billion, depreciation and amortization of $939 million, and provision for transaction and credit losses of $710 million. Net income was also adjusted for net gains on our strategic investments of $336 million, changes in deferred income taxes of $175 million, changes in accounts receivable of $155 million, and changes in other assets and liabilities of $892 million, primarily related to actual cash transaction losses incurred during the period.

We generated cash from operating activities of $4.5 billion in the nine months ended September 30, 2020 due primarily to operating income of $2.3 billion, as well as adjustments for non-cash expenses including provision for transaction and credit losses of $1.4 billion, stock-based compensation of $999 million, and depreciation and amortization of $888 million. Net income was also adjusted for net gains on our strategic investments of $973 million, changes in income taxes payable of $115 million, and changes in other assets and liabilities of $220 million, primarily related to actual cash transaction losses of $816 million incurred during the period and an increase in other assets of $218 million, partially offset by an increase in accrued expenses and other liabilities of $814 million.

~~In the nine months ended September 30, 2021 and 2020, cash paid for income taxes, net was $436 million and $444 million, respectively.~~


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~~Investing activities~~

The net cash used in investing activities of $2.4 billion in the nine months ended September 30, 2021 was due primarily to purchases of investments of $30.9 billion, purchases of property and equipment of $695 million, changes in principal loans receivable, net of $643 million, and acquisitions (net of cash acquired) of $469 million. These cash outflows were partially offset by maturities and sales of investments of $30.4 billion.

The net cash used in investing activities of $13.3 billion in the nine months ended September 30, 2020 was due primarily to purchases of investments of $28.3 billion, acquisitions (net of cash acquired) of $3.6 billion, changes in funds receivable from customers of $1.1 billion, and purchases of property and equipment of $640 million. These cash outflows were partially offset by maturities and sales of investments of $19.7 billion, changes in principal loans receivable, net of $523 million, and proceeds from the sale of property and equipment of $120 million.

~~Financing activities~~

The net cash used in financing activities of $186 million in the nine months ended September 30, 2021 due primarily to the repurchase of $1.9 billion of our common stock under our stock repurchase program and tax withholdings related to net share settlement of equity awards of $1.0 billion, partially offset by changes in funds payable and amounts due to customers of $2.6 billion.

We generated cash from financing activities of $10.1 billion in the nine months ended September 30, 2020 due primarily to changes in funds payable and amounts due to customers of $7.9 billion and cash proceeds from the issuance of long-term debt in the form of fixed rate notes as well as proceeds from borrowings under our credit agreement of $7.0 billion. These cash inflows were partially offset by the repayment of outstanding borrowings under our credit agreement of $3.0 billion, the repurchase of $1.4 billion of our common stock under our stock repurchase programs, and tax withholdings related to net share settlement of equity awards of $463 million.

~~Effect of exchange rates on cash, cash equivalents, and restricted cash~~

Foreign currency exchange rates for the nine months ended September 30, 2021 and 2020 had a negative impact of $106 million and positive impact of $26 million, respectively, on cash, cash equivalents, and restricted cash due primarily to fluctuations in the exchange rate of the U.S. dollar to the Australian dollar.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

As of September 30, 2021, 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.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in market factors such as interest rates, foreign currency exchange rates, and equity investment risk. Management establishes and oversees the implementation of policies governing our investing, funding, and foreign currency derivative activities ~~in order~~intended to mitigate market risks. We monitor risk exposures on an ongoing basis.

INTEREST RATE RISK

We are exposed to interest-rate risk relating to our investment portfolio and from interest-rate sensitive assets underlying the customer balances we hold on our condensed consolidated balance sheets as customer accounts.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, approximately ~~47%~~41% and ~~30%~~40%, respectively, of our total cash, cash equivalents, and investment portfolio (excluding restricted cash and strategic investments) was held in cash and cash equivalents. The assets underlying the customer balances that we hold on our condensed consolidated balance sheets as customer accounts are maintained in interest and non-interest bearing bank deposits, time deposits, and available-for-sale debt securities. We seek to preserve principal while holding eligible liquid assets, as defined by applicable regulatory requirements and commercial law in certain jurisdictions where we operate, equal to at least 100% of the aggregate amount of all customer balances. We do not pay interest on amounts due to customers.


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If interest rates increased by 100 basis points, the fair value of our available-for-sale debt securities investment portfolio would have decreased by approximately ~~$243~~$284 million and ~~$173~~$272 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Changes in the fair value of our available-for-sale debt securities resulting from such interest rate changes are reported as a component of accumulated other comprehensive income (“AOCI”) and are realized only if we sell the securities prior to their scheduled maturities or the declines in fair values are due to expected credit loss.

~~We have~~As of March 31, 2022 and December 31, 2021, we had $9.0 billion in fixed rate debt with varying maturity dates. Since these notes bear interest at fixed rates, they do not result in any financial statement risk associated with changes in interest rates. However, the fair value of these notes fluctuates when interest rates ~~change. We~~change, increasing in periods of declining interest rates and declining in periods of increasing interest rates.

As of March 31, 2022 and December 31, 2021, we also ~~have a committed~~had revolving credit ~~facility~~facilities of ~~$5.0~~approximately $5.5 billion and $5.2 billion, respectively, available to us. We are obligated to pay interest on borrowings under ~~this facility~~these facilities as well as other customary fees, including an upfront fee and an unused commitment fee based on our debt rating. Borrowings under ~~this facility,~~these facilities, if any, bear interest at floating rates. As a result, we are exposed to the risk related to fluctuations in interest rate to the extent of our borrowings. As of ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had ~~no amount~~¥32.8 billion (approximately $269 million) and ¥11.3 billion (approximately $98 million), respectively, outstanding under ~~this~~these credit ~~facility.~~ facilities. A 100 basis points hypothetical adverse change in applicable market interest rates would not have resulted in a material impact to interest expense recorded in the period.

For additional information, see “Note 12—Debt” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Interest rates may also adversely impact our customers’ spending levels and ability and willingness to pay outstanding amounts owed to us. Higher interest rates often lead to larger payment obligations by customers of our credit products to us, or to lenders under mortgage, credit card, and other consumer and merchant loans, which may reduce our customers’ ability to remain current on their obligations to us and therefore lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our net income.

FOREIGN CURRENCY EXCHANGE RATE RISK

We have significant operations internationally that are denominated in foreign currencies, primarily the British ~~Pound,~~pound, Euro, Australian ~~Dollar,~~dollar, and Canadian ~~Dollar,~~dollar, subjecting us to foreign currency exchange rate risk, which may adversely impact our financial results. We transact business in various foreign currencies and have significant international revenues and costs. In addition, we charge our international subsidiaries for their use of intellectual property and technology and for certain corporate services. Our cash flows, results of operations, and certain of our intercompany balances that are exposed to foreign currency exchange rate fluctuations may differ materially from expectations, and we may record significant gains or losses due to foreign currency fluctuations and related hedging activities. We are generally a net receiver of foreign currencies and therefore benefit from a weakening of the United States (“U.S.”) dollar, and are adversely affected by a strengthening of the U.S. dollar, relative to foreign currencies. We considered the historical trends in foreign currency exchange rates and determined that it was reasonably possible that changes in exchange rates of 10% for all currencies could be experienced in the near term.

We have a foreign currency exchange exposure management program designed to identify material foreign currency exposures, manage these exposures, and reduce the potential effects of currency fluctuations on our consolidated cash flows and results of operations through the execution of foreign currency exchange contracts. These foreign currency exchange contracts are accounted for as derivative instruments; for additional details related to our foreign currency exchange contracts, please see “Note 10—Derivative Instruments” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

We use foreign currency exchange forward contracts to protect our forecasted U.S. dollar-equivalent earnings and our investment in a foreign subsidiary from adverse changes in foreign currency exchange rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign currency exchange rate movements. We designate these contracts as cash flow hedges of forecasted revenues denominated in foreign currencies and net investment hedges for accounting purposes. The derivative’s gain or loss is initially reported as a component of ~~accumulated other comprehensive income (“AOCI”).~~AOCI. Cash flow hedges are subsequently reclassified into ~~the financial statement line item in which the hedged item is recorded~~revenue in the same period the forecasted transaction affects earnings. The accumulated gains and losses associated with ~~the~~ net investment ~~hedge~~hedges will remain in AOCI until the foreign ~~subsidiary is~~subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings.

We considered the historical trends in foreign currency exchange rates and determined that it was reasonably possible that changes in exchange rates of 20% for all currencies could be experienced in the near term. If the U.S. dollar weakened by 20% at September 30, 2021 and December 31, 2020, the amount recorded in AOCI related to our foreign currency exchange forward contracts, before taxes, would have been approximately $1.0 billion and $1.1 billion lower, respectively. If the U.S. dollar strengthened by 20% at September 30, 2021 and December 31, 2020, the amount recorded in AOCI related to our foreign currency exchange forward contracts, before taxes, would have been approximately $1.0 billion and $1.1 billion higher, respectively.


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If the U.S. dollar weakened by 10% at March 31, 2022 and December 31, 2021, the amount recorded in AOCI related to our foreign currency exchange forward contracts, before taxes, would have been approximately $696 million and $512 million lower, respectively, before considering the offsetting impact of the underlying hedged item.

We have an additional foreign currency exchange management program in which we use foreign currency exchange contracts to offset the foreign currency exchange risk on 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 currency exchange rate movements on our assets and liabilities. The foreign currency exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign currency exchange contracts.

Adverse changes in exchange rates of ~~20%~~10% for all currencies would have resulted in an adverse impact on income before income taxes of approximately ~~$952~~$184 million and ~~$353~~$196 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, without considering the offsetting effect of foreign currency exchange contracts. Foreign currency exchange contracts in place as of ~~September 30,~~March 31, 2022 would have positively impacted income before income taxes by approximately $191 million, resulting in a net positive impact of approximately $7 million. Foreign currency exchange contracts in place as of December 31, 2021 would have positively impacted income before income taxes by approximately $1.0 billion, resulting in a net positive impact of approximately $49 million. Foreign currency exchange contracts in place as of December 31, 2020 would have positively impacted income before income taxes by approximately $369$203 million, resulting in a net positive impact of approximately ~~$16~~$7 million. These reasonably possible adverse changes in exchange rates of ~~20%~~10% were applied to ~~total~~ monetary assets, monetary liabilities, and ~~liabilities~~available-for-sale debt securities denominated in currencies other than the functional currencies of our subsidiaries at the balance sheet dates to compute the adverse impact these changes would have had on our income before income taxes in the near term.

EQUITY INVESTMENT RISK

Our strategic investments are subject to a variety of market-related risks that could substantially reduce or increase the carrying value of the portfolio. As of ~~September 30, 2021~~both March 31, 2022 and December 31, ~~2020,~~2021, our strategic investments totaled ~~$3.5 billion and~~ $3.2 billion, ~~respectively,~~ which represented approximately ~~17%~~21% and 20% of our total cash, cash equivalents, and short-term and long-term investment portfolio at each of those respective dates. Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies. We are required to record all adjustments to the value of these strategic investments through our condensed consolidated statements of income. As such, we anticipate volatility to our net income in future periods due to changes in fair value related to our investments in marketable equity securities and changes in observable prices related to our non-marketable equity securities accounted for under the Measurement Alternative. These changes could be material based on market conditions. Additionally, the financial success of our investments in privately held companies is typically dependent on a liquidity event, such as a public offering, acquisition, private sale, or other favorable market event providing the ability to realize appreciation in the value of the investment. A hypothetical adverse change of 10% in the carrying value of our strategic investments as of ~~September 30, 2021,~~March 31, 2022, which could be experienced in the near term, would have resulted in a decrease of approximately ~~$348~~$319 million to the carrying value of the portfolio. We review our non-marketable equity investments accounted for under the Measurement Alternative for impairment when events and circumstances indicate a decline in fair value of such assets below carrying value. Our analysis includes a review of recent operating results and trends, recent purchases and sales of securities, and other publicly available data.

ITEM 4: CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Based on the evaluation of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~1934) required by Rules 13a-15(b)~~1934, as amended, or ~~15d-15(b) under~~ the ~~Securities~~ Exchange ~~Act of 1934,~~Act), our ~~Chief Executive Officer~~principal executive officer and our ~~Chief Financial Officer~~principal financial officer have concluded that as of March 31, 2022, the end of the period covered by this report, our disclosure controls and procedures were effective.

(b) Changes in internal ~~controls.~~controls over financial reporting. There were no changes in our internal ~~control~~controls over financial reporting as defined in the Exchange Act Rule 13a-15(f) that occurred during ~~the~~our most recently completed fiscal quarter ~~ended September 30, 2021~~ that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The information set forth under “Note 13—Commitments and Contingencies—Litigation and Regulatory Matters” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

ITEM 1A: RISK FACTORS

We are subject to various risks and uncertainties, which could materially affect our business, results of operations, financial condition, future results, and the trading price of our common stock. You should read carefully the following information together with the information appearing in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) on February 5, 3, 2022 (“2021 ~~(“2020~~ Form 10-K”). The following information supplements and, to the extent inconsistent, supersedes some of the information appearing in the Risk Factors section of our ~~2020~~2021 Form 10‑10‑K. These risk factors, as well as our condensed consolidated financial statements and notes thereto and the other information appearing in this report, should be reviewed carefully for important information regarding risks that affect us.

LEGAL, REGULATORY AND COMPLIANCE RISKS

Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.

~~Lending Regulation~~

PayPal’s U.S. consumer short-term installment loan product is subject to federal law, as well as state lending laws (some of which require licensure and/or state regulator notification), federal and state debt collection laws, as well as compliance with the Equal Credit Opportunity Act and Regulation B as implemented by the Consumer Financial Protection Bureau (“CFPB”) and other applicable laws and regulations. In addition, we hold a number of U.S. state lending licenses. Increased global regulatory focus on short-term installment products could result in laws or regulations requiring changes to our policies, procedures, operations, and product offerings. We could be subject to fines, other enforcement action, and litigation if we are found to violate any aspects of applicable law or regulations.

~~Cryptocurrency Regulation~~

The regulation of cryptocurrency is still an evolving area, and we expect that it could become subject to additional regulations and licensing requirements, including as a result of our cryptocurrency offerings expanding and the number of jurisdictions in which we provide these offerings increasing. The evolving regulatory landscape may require us to make product changes, restrict product offerings in certain jurisdictions, or implement additional and potentially costly controls. If we fail to comply with regulations, requirements, or prohibitions applicable to us, we could face regulatory or other enforcement actions and potential fines and other consequences.

In addition, financial and third party risks related to our cryptocurrency offerings, such as inappropriate access and theft of cryptocurrency assets held by our custodian, insufficient insurance coverage by the custodian to reimburse us for all such losses, the custodian’s failure to maintain effective controls over the custody and settlement services provided to us, the custodian’s inability to purchase or liquidate cryptocurrency holdings, and default on financial or performance obligations by counterparty financial institutions, could materially and adversely affect our financial performance and significantly harm our business.

~~Consumer Protection~~

Violations of federal and state consumer protection laws and regulations, including the Electronic Fund Transfer Act (“EFTA”) and Regulation E as implemented by the CFPB, could result in the assessment of significant actual damages or statutory damages or penalties (including treble damages in some instances) and plaintiffs’ attorneys’ fees. We are subject to, and have paid amounts in settlement of, lawsuits containing allegations that our business violated the EFTA and Regulation E or otherwise advance claims for relief relating to our business practices (e.g., that we improperly held consumer funds or otherwise improperly limited consumer accounts).


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The CFPB issued a final rule on prepaid accounts that came into effect on April 1, 2019. We have implemented certain changes to comply with the final rule and made substantial changes to the design of certain U.S. consumer accounts and their operability, which could lead to unintended customer confusion and dissatisfaction, discourage customers from opening new accounts, require us to reallocate resources, and increase our costs, which could negatively affect our business. In October 2021, the CFPB issued an order pursuant to its market-monitoring authority requiring the Company to provide extensive information on its payment products, including with respect to the collection, use of, and access to data and consumer protections, among other items.

PayPal principally offers its services in the European Economic Area (“EEA”) countries through a “passport” notification process through the Luxembourg regulator (in the case of PayPal (Europe)) to regulators in other EEA member states in accordance with EU regulations. Regulators in these countries could notify us of local consumer protection laws that apply to our business, in addition to Luxembourg consumer protection laws, and could also seek to persuade the local regulator to order PayPal to conduct its activities in the local country directly or through a branch office. These or similar actions by these regulators could increase the cost of, or delay, our ability to expand our business in Europe.

Privacy and Protection of Customer Data

The legal and regulatory environment relating to ~~“privacy~~privacy and data protection ~~laws” (as defined in “Item 1. Business— Government Regulation” in our 2020 Form 10-K)~~laws continues to ~~develop and~~ evolve in ways we cannot predict, including with respect to technologies such as cloud computing, artificial intelligence, cryptocurrency, and blockchain technology. Any failure, or perceived failure, by us to comply with our privacy policies as communicated to ~~users~~customers or with privacy and data protection laws could result in proceedings or actions against us by data protection authorities, government entities, or others. Such proceedings or actions could subject us to significant fines, penalties, judgments, and negative publicity, ~~which may~~ require us to change our business practices, increase the costs and complexity of compliance, result in reputational harm, and materially harm our business. In addition, compliance with inconsistent privacy and data protection laws may restrict or limit our ability to provide products and services to our customers. ~~For further information regarding data protection and information security, see “Item 1. Business—Government Regulation” in our 2020 Form 10-K.~~

PayPal relies on a variety of compliance methods to transfer personal data of ~~European Economic Area (“EEA”)~~EEA individuals to the U.S., including Binding Corporate Rules ~~(“BCRs”)~~ for internal transfers of certain types of personal data and Standard Contractual Clauses (“SCCs”) as approved by the European Commission for transfers to and from third parties. ~~We continue to monitor and respond to changes in the requirements for cross-border transfers of data.~~ In June 2021, the European Commission imposed new SCC requirements which impose ~~new~~certain contract and operational requirements on PayPal, its merchants, and vendors in order to adhere to certain affirmative duties, including requirements related to government access transparency, enhanced data subject rights, and broader ~~third party~~third-party assessments to ensure safeguards necessary to protect personal data exported from PayPal’s EEA customers and/or employees to countries outside the EEA. To the extent PayPal relies on SCCs, ~~such engagements will require~~we may be required to incur additional costs and take additional steps to legitimize certain cross-border data transfers from the EEA, including new contractual arrangements under the updated requirements to avoid ~~limitation~~limitations on PayPal’s ability to process EEA data in ~~third countries.~~countries outside of the EEA.

Many jurisdictions in which we operate have adopted, or are in the process of adopting or amending data privacy legislation or regulations aimed at creating and enhancing individual privacy rights. In the ~~wake of the California Consumer Privacy Act (“CCPA”) passed in 2018, multiple US~~United States, numerous states have ~~proposed~~enacted or are in the process of enacting state level data privacy laws and regulations governing the collection, use, and retention of state residents’ personal information, and internationally, many of markets in which we operate have similarly enacted or are in the process of enacting or amending similar legislation to protect consumers in their states. California passed the Consumer Privacy Rights Act of 2020 (the “CPRA”, an amendment to the CCPA), Virginia has passed the Virginia Consumer Data Protection Act (signed into law March 2, 2021)privacy laws and ~~Colorado has passed the Colorado Privacy Act (signed into law July 7, 2021).~~regulations. The continued ~~increase~~proliferation of privacy laws in ~~state-level privacy laws~~the jurisdictions in which we operate is likely to result in a disparate array of privacy rules with unaligned or conflicting provisions, accountability requirements, individual rights, and ~~state~~ enforcement ~~powers. In the absence of federal legislation, the state-level privacy terrain is likely to become increasingly complex~~powers, and may ~~add~~subject us to increased regulatory scrutiny and business ~~cost~~costs, and lead to unintended consumer confusion.

~~Use of our payments services for illegal purposes could harm our business.~~

Our payment system is susceptible to potentially illegal or improper uses, including money laundering, terrorist financing, sanctions evasion, illegal online gambling, fraudulent sales of goods or services, illegal sales of prescription medications or controlled substances, piracy of software, movies, music, and other copyrighted or trademarked goods (in particular, digital goods), bank fraud, child pornography, human trafficking, prohibited sales of alcoholic beverages or tobacco products, securities fraud, pyramid or ponzi schemes, or the facilitation of other illegal or improper activity. The use of our payment system for illegal or improper uses has subjected us, and may subject us in the future, to claims, individual and class action lawsuits, and government and regulatory requests, inquiries, or investigations that could result in liability and harm our reputation. For example, government enforcement or regulatory authorities could seek to impose additional restrictions or liability on us arising from the use of our payment system for illegal activity and our failure to detect or prevent such use.


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Moreover, certain activity that may be legal in one jurisdiction may be illegal in another jurisdiction, and a merchant may be found responsible for intentionally or inadvertently importing or exporting illegal goods, resulting in liability for us. Owners of intellectual property rights or government authorities may seek to bring legal action against providers of payments solutions, including PayPal, that are peripherally involved in the sale of infringing or allegedly infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our business.


									6358

Table of Contents

BUSINESS AND OPERATIONS RISKS

The conflict between Russia and Ukraine and its related implications could materially and adversely affect our business, financial condition, and results of operations.

In February 2022, Russia commenced military hostilities against Ukraine. In March 2022, we suspended our transactional services in Russia. We have also expanded our services for Ukrainian customers. The potential effects of the conflict between Russia and Ukraine, individually or in the aggregate, could have the effect of heightening or exacerbating many of the risk factors described in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and may adversely affect our business, financial condition and results of operations. These effects could include, but are not limited to, geopolitical instability and uncertainty; adverse impacts on global and regional economic conditions and financial markets, including significant volatility in credit and capital markets; reduced economic activity; changes in laws and regulations affecting our business, including sanctions targeting Russia imposed by the U.S. and other countries, counter-sanctions imposed by Russia, and additional sanctions or counter-sanctions which may be enacted; and increased cybersecurity threats and concerns. The ultimate extent to which the conflict between Russia and Ukraine may negatively impact our business, financial condition, and results of operations will depend on future developments, which are highly uncertain, difficult to predict, and subject to change.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

REPURCHASES OF EQUITY SECURITIES

In July 2018, our Board of Directors authorized a stock repurchase program that provides for the repurchase of up to $10 billion of our common stock, with no expiration from the date of authorization. Our stock repurchase program is intended to offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, may also be used to make opportunistic repurchases of our common stock to reduce outstanding share count. Any share repurchases under our stock repurchase program may be made through open market transactions, block trades, privately negotiated transactions including accelerated share repurchase agreements or other means at times and in such amounts as management deems appropriate, and will be funded from our working capital or other financing alternatives. Moreover, any stock repurchases are subject to market conditions and other uncertainties and we cannot predict if or when any stock repurchases will be made. We may terminate our stock repurchase program at any time without prior notice.

The stock repurchase activity under our stock repurchase program during the three months ended ~~September 30, 2021~~March 31, 2022 is summarized below:

Total number of shares purchased
Average price
paid per share(1)
Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs
(In millions, except per share amounts)
Balance as of June 30, 2021 $ 6,910
July 1, 2021 through July 31, 2021 — $ — — 6,910
August 1, 2021 through August 31, 2021 1.3 $ 275.12 1.3 6,560��
September 1, 2021 through September 30, 2021 — $ — — 6,560
Balance as of September 30, 2021 1.3 1.3 $ 6,560


	Total number of shares purchased	Average price paid per share(1)		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
	(In millions, except per share amounts)
Balance as of January 1, 2022					$	5,060
January 1, 2022 through January 31, 2022	3.8	$	175.80	3.8	4,384
February 1, 2022 through February 28, 2022	3.3	$	121.96	3.3	3,985
March 1, 2022 through March 31, 2022	4.1	$	104.09	4.1	3,560
Balance as of March 31, 2022	11.2			11.2	$	3,560

(1) Average price paid per share for open market purchases includes broker commissions.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.


									59

Table of Contents

ITEM 5: OTHER INFORMATION

None.


									6460

Table of Contents

ITEM 6: EXHIBITS

INDEX TO EXHIBITS


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date Filed	Filed Herewith
~~10.01+~~10.01	Second Amendment, dated as of January 7, 2022, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan AG, as the Administrative Agents	10-K	2/3/2022
10.0 2 +	Form of Performance Based Restricted Stock Unit Award Agreement under the PayPal Holdings, Inc. Amended and Restated ~~Employee Stock Purchase~~2015 Equity Incentive Award Plan	-	-	X
~~10.02+~~10.0 3 +	Form of Restricted Stock Unit Award Agreement under the PayPal Holdings, Inc. ~~Executive Change in Control~~Amended and ~~Severance~~Restated 2015 Equity Incentive Award Plan ~~as amended~~	-	-	X
10.0 4 +	Form of Performance Based Restricted Stock Unit (AIP) Award Agreement under the PayPal Holdings, Inc. Amended and ~~restated~~Restated 2015 Equity Incentive Award Plan.	-	-	X
31.01	Certification of Registrant’s Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002	-	-	X
31.02	Certification of Registrant’s Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002	-	-	X
32.01*	Certification of Registrant’s Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002	-	-	X
32.02*	Certification of Registrant’s Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002	-	-	X
101	The following financial information related to the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the related Notes to Condensed Consolidated Financial Statements	-	-	X
104	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101	-	-	X

+ Indicates a management contract or compensatory plan or arrangement.

* The certifications furnished in Exhibits 32.01 and 32.02 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates them by reference.


									6561

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PayPal Holdings, Inc.
		Principal Executive Officer:

Date:	~~November 8, 2021~~April 28, 2022	By:	/s/ Daniel H. Schulman
			Daniel H. Schulman
			President and Chief Executive Officer

		Principal Financial Officer:

Date:	~~November 8, 2021~~April 28, 2022	By:	/s/ John D. Rainey
			John D. Rainey
			Chief Financial Officer and Executive Vice President, Global Customer Operations

		Principal Accounting Officer:

Date:	~~November 8, 2021~~April 28, 2022	By:	/s/ Jeffrey W. Karbowski
			Jeffrey W. Karbowski
			Vice President, Chief Accounting Officer


									6662


Delaware			47-2989869
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
2211 North First Street	San Jose,	California	95131
(Address of Principal Executive Offices)			(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	PYPL	NASDAQ Global Select Market


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


			Page Number
Part I.	Financial Information		4
	Item 1.	Condensed Consolidated Balance Sheets	4
		Condensed Consolidated Statements of Income	5
		Condensed Consolidated Statements of Comprehensive Income	6
		Condensed Consolidated Statements of Stockholders’ Equity	7
		Condensed Consolidated Statements of Cash Flows	98
		Notes to Condensed Consolidated Financial Statements	109
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4140
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5855
	Item 4.	Controls and Procedures	6057
Part II.	Other Information		6158
	Item 1.	Legal Proceedings	6158
	Item 1A.	Risk Factors	6158
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6459
	Item 3.	Defaults Upon Senior Securities	6459
	Item 4.	Mine Safety Disclosures	6459
	Item 5.	Other Information	6460
	Item 6.	Exhibits	6561
Signatures			6662


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions, except par value)					(In millions, except par value)
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	7,782	$	4,794	Cash and cash equivalents	$	4,861	$	5,197
Short-term investments	Short-term investments	5,510		8,289		Short-term investments	3,104		4,303
Accounts receivable, net	Accounts receivable, net	736		577		Accounts receivable, net	850		800
Loans and interest receivable, net of allowances of $489 and $838 as of September 30, 2021 and December 31, 2020, respectively		3,713		2,769
Loans and interest receivable, net of allowances of $476 and $491 as of March 31, 2022 and December 31, 2021, respectively						Loans and interest receivable, net of allowances of $476 and $491 as of March 31, 2022 and December 31, 2021, respectively	5,223		4,846

Funds receivable and customer accounts	Funds receivable and customer accounts	35,104		33,418		Funds receivable and customer accounts	37,046		36,141
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,285		1,148		Prepaid expenses and other current assets	1,298		1,287
Total current assets	Total current assets	54,130		50,995		Total current assets	52,382		52,574
Long-term investments	Long-term investments	6,753		6,089		Long-term investments	7,145		6,797
Property and equipment, net	Property and equipment, net	1,900		1,807		Property and equipment, net	1,861		1,909
Goodwill	Goodwill	9,550		9,135		Goodwill	11,370		11,454
Intangible assets, net	Intangible assets, net	808		1,048		Intangible assets, net	1,185		1,332
Other assets	Other assets	1,393		1,305		Other assets	1,862		1,737
Total assets	Total assets	$	74,534	$	70,379	Total assets	$	75,805	$	75,803
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	186	$	252	Accounts payable	$	140	$	197

Funds payable and amounts due to customers	Funds payable and amounts due to customers	37,804		35,418		Funds payable and amounts due to customers	39,746		38,841
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	3,554		2,648		Accrued expenses and other current liabilities	3,828		3,755
Income taxes payable	Income taxes payable	151		129		Income taxes payable	253		236
Total current liabilities	Total current liabilities	41,695		38,447		Total current liabilities	43,967		43,029
Deferred tax liability and other long-term liabilities	Deferred tax liability and other long-term liabilities	2,800		2,930		Deferred tax liability and other long-term liabilities	3,013		2,998
Long-term debt	Long-term debt	7,949		8,939		Long-term debt	8,222		8,049
Total liabilities	Total liabilities	52,444		50,316		Total liabilities	55,202		54,076
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)	0		0		Commitments and contingencies (Note 13)	0		0
Equity:	Equity:					Equity:
Common stock, $0.0001 par value; 4,000 shares authorized; 1,174 and 1,172 shares outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Common stock, $0.0001 par value; 4,000 shares authorized; 1,161 and 1,168 shares outstanding as of March 31, 2022 and December 31, 2021, respectively						Common stock, $0.0001 par value; 4,000 shares authorized; 1,161 and 1,168 shares outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Preferred stock, $0.0001 par value; 100 shares authorized, unissued	Preferred stock, $0.0001 par value; 100 shares authorized, unissued	—		—		Preferred stock, $0.0001 par value; 100 shares authorized, unissued	—		—
Treasury stock at cost, 124 and 117 shares as of September 30, 2021 and December 31, 2020, respectively		(10,380)		(8,507)
Treasury stock at cost, 143 and 132 shares as of March 31, 2022 and December 31, 2021, respectively						Treasury stock at cost, 143 and 132 shares as of March 31, 2022 and December 31, 2021, respectively	(13,380)		(11,880)
Additional paid-in-capital	Additional paid-in-capital	16,860		16,644		Additional paid-in-capital	17,383		17,208
Retained earnings	Retained earnings	15,734		12,366		Retained earnings	17,044		16,535
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(124)		(484)		Accumulated other comprehensive income (loss)	(444)		(136)
Total PayPal stockholders’ equity		22,090		20,019
Noncontrolling interest		—		44

Total equity	Total equity	22,090		20,063		Total equity	20,603		21,727
Total liabilities and equity	Total liabilities and equity	$	74,534	$	70,379	Total liabilities and equity	$	75,805	$	75,803


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions, except per share data)									(In millions, except per share data)
		(Unaudited)									(Unaudited)
Net revenues	Net revenues	$	6,182	$	5,459	$	18,453	$	15,338	Net revenues	$	6,483	$	6,033
Operating expenses:	Operating expenses:									Operating expenses:
Transaction expense	Transaction expense	2,564		2,022		7,363		5,604		Transaction expense	2,817		2,275
Transaction and credit losses	Transaction and credit losses	268		344		710		1,375		Transaction and credit losses	369		273
Customer support and operations	Customer support and operations	504		449		1,543		1,271		Customer support and operations	534		518
Sales and marketing	Sales and marketing	549		471		1,779		1,256		Sales and marketing	594		602
Technology and development	Technology and development	755		674		2,242		1,910		Technology and development	815		741
General and administrative	General and administrative	498		503		1,544		1,501		General and administrative	607		524
Restructuring and other charges	Restructuring and other charges	1		19		60		95		Restructuring and other charges	36		58
Total operating expenses	Total operating expenses	5,139		4,482		15,241		13,012		Total operating expenses	5,772		4,991
Operating income	Operating income	1,043		977		3,212		2,326		Operating income	711		1,042
Other income (expense), net	Other income (expense), net	122		167		181		880		Other income (expense), net	(82)		(170)
Income before income taxes	Income before income taxes	1,165		1,144		3,393		3,206		Income before income taxes	629		872
Income tax expense		78		123		25		571
Income tax expense (benefit)										Income tax expense (benefit)	120		(225)
Net income	Net income	$	1,087	$	1,021	$	3,368	$	2,635	Net income	$	509	$	1,097

Net income per share:	Net income per share:									Net income per share:
Basic	Basic	$	0.93	$	0.87	$	2.87	$	2.25	Basic	$	0.44	$	0.94
Diluted	Diluted	$	0.92	$	0.86	$	2.84	$	2.22	Diluted	$	0.43	$	0.92

Weighted average shares:	Weighted average shares:									Weighted average shares:
Basic	Basic	1,174		1,172		1,174		1,173		Basic	1,163		1,173
Diluted	Diluted	1,187		1,190		1,187		1,186		Diluted	1,172		1,190


		Common Stock Shares	Treasury Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interest		Total Equity			Common Stock Shares	Treasury Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Total Equity
																									Total Equity
		(In millions)														(In millions)
		(Unaudited)														(Unaudited)
Balances at December 31, 2020		1,172	$	(8,507)	$	16,644	$	(484)	$	12,366	$	44	$	20,063
Balances at December 31, 2021															Balances at December 31, 2021	1,168	$	(11,880)	$	17,208	$	(136)	$	16,535		$	21,727

Net income	Net income	—	—		—		—		1,097		—		1,097		Net income	—	—		—		—		509			509
Foreign CTA	Foreign CTA	—	—		—		(53)		—		—		(53)		Foreign CTA	—	—		—		(95)		—			(95)
Net investment hedges CTA gains, net															Net investment hedges CTA gains, net	—	—		—		21		—			21
Tax expense on net investment hedges CTA gains, net															Tax expense on net investment hedges CTA gains, net	—	—		—		(5)		—			(5)
Unrealized losses on cash flow hedges, net															Unrealized losses on cash flow hedges, net	—	—		—		(3)		—			(3)

Unrealized gains on cash flow hedges, net		—	—		—		198		—		—		198
Tax expense on unrealized gains on cash flow hedges, net		—	—		—		(3)		—		—		(3)
Unrealized losses on investments, net	Unrealized losses on investments, net	—	—		—		(15)		—		—		(15)		Unrealized losses on investments, net	—	—		—		(293)		—			(293)
Tax benefit on unrealized losses on investments, net	Tax benefit on unrealized losses on investments, net	—	—		—		4		—		—		4		Tax benefit on unrealized losses on investments, net	—	—		—		67		—			67
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes	Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes	7	—		(870)		—		—		—		(870)		Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes	4	—		(273)		—		—			(273)
Common stock repurchased	Common stock repurchased	(5)	(1,323)		—		—		—		—		(1,323)		Common stock repurchased	(11)	(1,500)		—		—		—			(1,500)
Stock-based compensation	Stock-based compensation	—	—		387		—		—		—		387		Stock-based compensation	—	—		447		—		—			447
Change in noncontrolling interest		—	—		—		—		—		(44)		(44)
Balances at March 31, 2021		1,174	$	(9,830)	$	16,161	$	(353)	$	13,463	$	—	$	19,441
Net income		—	—		—		—		1,184		—		1,184
Foreign CTA		—	—		—		31		—		—		31
Other															Other	—	—		1		—		—			1

Unrealized gains on cash flow hedges, net		—	—		—		32		—		—		32

Unrealized losses on investments, net		—	—		—		(2)		—		—		(2)

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes		2	—		12		—		—		—		12
Common stock repurchased		(1)	(200)		—		—		—		—		(200)
Stock-based compensation		—	—		407		—		—		—		407
Balances at June 30, 2021		1,175	$	(10,030)	$	16,580	$	(292)	$	14,647	$	—	$	20,905
Net income		—	—		—		—		1,087		—		1,087
Foreign CTA		—	—		—		(29)		—		—		(29)
Unrealized gains on cash flow hedges, net		—	—		—		204		—		—		204
Tax expense on unrealized gains on cash flow hedges, net		—	—		—		(7)		—		—		(7)
Balances at March 31, 2022															Balances at March 31, 2022	1,161	$	(13,380)	$	17,383	$	(444)	$	17,044		$	20,603

Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes		—	—		(37)		—		—		—		(37)
Common stock repurchased		(1)	(350)		—		—		—		—		(350)
Stock-based compensation		—	—		317		—		—		—		317
Balances at September 30, 2021		1,174	$	(10,380)	$	16,860	$	(124)	$	15,734	$	—	$	22,090


	Nine Months Ended September 30, 2020
	(In millions)

	As Previously Reported (1)		Adjustments		Reclassified

Net cash provided by (used in):
Operating activities(2)	$	4,607	$	(100)	$	4,507
Investing activities(3)	(13,266)		(18)		(13,284)
Financing activities(4)	10,012		118		10,130
Effect of exchange rates on cash, cash equivalents, and restricted cash	26		—		26
Net increase in cash, cash equivalents, and restricted cash	$	1,379	$	—	$	1,379


	(In millions)
Goodwill	$	1,918
Customer lists and user base	512
Marketing related	83
Developed technology	47
Total intangibles	$	642
Loans and interest receivable, net	197
Cash and cash equivalents	101
Other net assets	87
Short-term and long-term debt	(188)
Deferred tax liabilities, net	(186)
Total purchase price	$	2,571


	~~(In millions)~~
~~Goodwill~~	$	~~2,962~~
~~Customer lists and user base~~	~~115~~
~~Marketing related~~	30
~~Developed technology~~	~~572~~
~~Total intangibles~~	$	~~717~~
~~Accounts receivable, net~~	50
~~Deferred tax liabilities, net~~	~~(58)~~
~~Other net liabilities~~	~~(36)~~
~~Total purchase price~~	$	~~3,635~~


	December 31, 2020		Goodwill Acquired		Adjustments		September 30, 2021
	(In millions)
Total goodwill	$	9,135	$	424	$	(9)	$	9,550


	December 31, 2021		Goodwill Acquired		Adjustments		March 31, 2022
	(In millions)
Total goodwill	$	11,454	$	—	$	(84)	$	11,370


Fiscal years:	Fiscal years:			Fiscal years:
Remaining 2021		$	93
2022		363
Remaining 2022				Remaining 2022	$	348
2023	2023	126		2023	226
2024	2024	109		2024	207
2025	2025	84		2025	169
2026				2026	111
Thereafter	Thereafter	33		Thereafter	124
Total	Total	$	808	Total	$	1,185


	March 31, 2022			December 31, 2021
	(In millions, except weighted-average figures)
Operating ROU lease assets	$	693		$	659
Other current operating lease liabilities	155			142
Operating lease liabilities	651			620
Total operating lease liabilities	$	806		$	762
Weighted-average remaining lease term—operating leases	5.9 years			6.1 years
Weighted-average discount rate—operating leases	3		%	3		%


	Operating Leases
Fiscal years:	(In millions)
Remaining 2022	$	131
2023	175
2024	156
2025	116
2026	98
Thereafter	202
Total	$	878
Less: present value discount	(72)
Lease liability	$	806


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Losses on Investments		Foreign Currency Translation Adjustment (“CTA”)		Net Investment Hedges CTA Gains		Estimated Tax (Expense) Benefit		Total
	(In millions)
Beginning balance	$	199	$	(87)	$	(270)	$	24	$	(2)	$	(136)
Other comprehensive income (loss) before reclassifications	44		(293)		(95)		21		62		(261)
Less: Amount of gain reclassified from accumulated other comprehensive income (“AOCI”)	47		—		—		—		—		47
Net current period other comprehensive income (loss)	(3)		(293)		(95)		21		62		(308)
Ending balance	$	196	$	(380)	$	(365)	$	45	$	60	$	(444)


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Investments		Foreign CTA		Net Investment Hedges CTA Gains		Estimated Tax Benefit		Total
	(In millions)
Beginning balance	$	(323)	$	11	$	(198)	$	24	$	2	$	(484)
Other comprehensive income (loss) before reclassifications	139		(15)		(53)		—		1		72
Less: Amount of loss reclassified from AOCI	(59)		—		—		—		—		(59)
Net current period other comprehensive income (loss)	198		(15)		(53)		—		1		131
Ending balance	$	(125)	$	(4)	$	(251)	$	24	$	3	$	(353)


Details about AOCI Components	Amount of Gains (Losses) Reclassified from AOCI				Affected Line Item in the Statement of Income
	Three Months Ended March 31,
	2022		2021
	(In millions)
Gains (losses) on cash flow hedges—foreign exchange contracts	$	47	$	(59)		Net revenues
Unrealized gains (losses) on investments	—		—			Other income (expense), net
	$	47	$	(59)		Income before income taxes
	—		—			Income tax expense
Total reclassifications for the period	$	47	$	(59)		Net income


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains on Investments		Foreign CTA		Net Investment Hedge CTA Gain (Loss)		Estimated Tax Expense		Total
	(In millions)
Beginning balance	$	6	$	2	$	(150)	$	(31)	$	—	$	(173)
Other comprehensive income (loss) before reclassifications	(53)		10		(111)		55		(2)		(101)
Less: Amount of gain reclassified from AOCI	58		—		—		—		—		58
Net current period other comprehensive income (loss)	(111)		10		(111)		55		(2)		(159)
Ending balance	$	(105)	$	12	$	(261)	$	24	$	(2)	$	(332)


		September 30, 2021(1)									March 31, 2022(1)
		Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
		(In millions)									(In millions)
Funds receivable and customer accounts:	Funds receivable and customer accounts:									Funds receivable and customer accounts:
U.S. government and agency securities	U.S. government and agency securities	$	9,171	$	1	$	(4)	$	9,168	U.S. government and agency securities	$	9,592	$	—	$	(146)	$	9,446
Foreign government and agency securities	Foreign government and agency securities	1,556		—		(1)		1,555		Foreign government and agency securities	2,005		—		(37)		1,968
Corporate debt securities	Corporate debt securities	3,924		2		(2)		3,924		Corporate debt securities	4,665		—		(62)		4,603
Asset-backed securities	Asset-backed securities	1,220		—		—		1,220		Asset-backed securities	1,170		—		(14)		1,156
Municipal securities	Municipal securities	50		—		—		50		Municipal securities	60		—		(1)		59
Short-term investments:	Short-term investments:									Short-term investments:
U.S. government and agency securities	U.S. government and agency securities	639		—		—		639		U.S. government and agency securities	405		—		—		405
Foreign government and agency securities	Foreign government and agency securities	602		—		—		602		Foreign government and agency securities	371		—		(2)		369
Corporate debt securities	Corporate debt securities	2,293		—		—		2,293		Corporate debt securities	1,513		—		(3)		1,510
Asset-backed securities	Asset-backed securities	181		—		—		181		Asset-backed securities	482		—		(3)		479
Long-term investments:	Long-term investments:									Long-term investments:
U.S. government and agency securities	U.S. government and agency securities	582		—		—		582		U.S. government and agency securities	568		—		(25)		543
Foreign government and agency securities	Foreign government and agency securities	911		—		(1)		910		Foreign government and agency securities	719		—		(24)		695
Corporate debt securities	Corporate debt securities	1,397		1		(2)		1,396		Corporate debt securities	1,425		—		(49)		1,376
Asset-backed securities	Asset-backed securities	337		—		—		337		Asset-backed securities	1,321		—		(14)		1,307
Total available-for-sale debt securities(2)	Total available-for-sale debt securities(2)	$	22,863	$	4	$	(10)	$	22,857	Total available-for-sale debt securities(2)	$	24,296	$	—	$	(380)	$	23,916


		December 31, 2020(1)									December 31, 2021(1)
		Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
		(In millions)									(In millions)
Funds receivable and customer accounts:	Funds receivable and customer accounts:									Funds receivable and customer accounts:
U.S. government and agency securities	U.S. government and agency securities	$	7,929	$	4	$	—	$	7,933	U.S. government and agency securities	$	8,655	$	—	$	(31)	$	8,624
Foreign government and agency securities	Foreign government and agency securities	1,504		2		—		1,506		Foreign government and agency securities	1,923		—		(9)		1,914
Corporate debt securities	Corporate debt securities	2,011		—		—		2,011		Corporate debt securities	3,402		—		(15)		3,387
Asset-backed securities										Asset-backed securities	1,552		—		(3)		1,549
Municipal securities	Municipal securities	637		—		—		637		Municipal securities	535		—		—		535
Short-term investments:	Short-term investments:									Short-term investments:
U.S. government and agency securities	U.S. government and agency securities	1,510		—		—		1,510		U.S. government and agency securities	537		—		—		537
Foreign government and agency securities	Foreign government and agency securities	277		—		—		277		Foreign government and agency securities	505		—		(1)		504
Corporate debt securities	Corporate debt securities	4,900		2		—		4,902		Corporate debt securities	2,273		—		—		2,273
Asset-backed securities										Asset-backed securities	278		—		(1)		277
Long-term investments:	Long-term investments:									Long-term investments:
U.S. government and agency securities	U.S. government and agency securities	28		—		—		28		U.S. government and agency securities	568		—		(6)		562
Foreign government and agency securities	Foreign government and agency securities	1,305		—		(1)		1,304		Foreign government and agency securities	752		—		(6)		746
Corporate debt securities	Corporate debt securities	1,255		4		—		1,259		Corporate debt securities	1,435		—		(11)		1,424
Asset-backed securities	Asset-backed securities	228		—		—		228		Asset-backed securities	817		—		(4)		813
Total available-for-sale debt securities(2)	Total available-for-sale debt securities(2)	$	21,584	$	12	$	(1)	$	21,595	Total available-for-sale debt securities(2)	$	23,232	$	—	$	(87)	$	23,145


		September 30, 2021(1)													March 31, 2022(1)
		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
		(In millions)													(In millions)
Funds receivable and customer accounts:	Funds receivable and customer accounts:													Funds receivable and customer accounts:
U.S. government and agency securities	U.S. government and agency securities	$	5,436	$	(4)	$	—	$	—	$	5,436	$	(4)	U.S. government and agency securities	$	7,857	$	(131)	$	385	$	(15)	$	8,242	$	(146)
Foreign government and agency securities	Foreign government and agency securities	893		(1)		—		—		893		(1)		Foreign government and agency securities	1,777		(33)		151		(4)		1,928		(37)
Corporate debt securities	Corporate debt securities	1,336		(2)		—		—		1,336		(2)		Corporate debt securities	1,741		(62)		—		—		1,741		(62)
Asset-backed securities	Asset-backed securities	665		—		—		—		665		—		Asset-backed securities	1,130		(14)		—		—		1,130		(14)
Municipal securities														Municipal securities	49		(1)		—		—		49		(1)
Short-term investments:	Short-term investments:													Short-term investments:
U.S. government and agency securities	U.S. government and agency securities	441		—		—		—		441		—		U.S. government and agency securities	231		—		—		—		231		—
Foreign government and agency securities	Foreign government and agency securities	332		—		—		—		332		—		Foreign government and agency securities	359		(2)		10		—		369		(2)
Corporate debt securities	Corporate debt securities	234		—		—		—		234		—		Corporate debt securities	380		(3)		—		—		380		(3)
Asset-backed securities	Asset-backed securities	34		—		—		—		34		—		Asset-backed securities	428		(3)		—		—		428		(3)
Long-term investments:	Long-term investments:													Long-term investments:
U.S. government and agency securities	U.S. government and agency securities	426		—		—		—		426		—		U.S. government and agency securities	543		(25)		—		—		543		(25)
Foreign government and agency securities	Foreign government and agency securities	612		(1)		—		—		612		(1)		Foreign government and agency securities	555		(18)		139		(6)		694		(24)
Corporate debt securities	Corporate debt securities	799		(2)		—		—		799		(2)		Corporate debt securities	1,196		(45)		171		(4)		1,367		(49)
Asset-backed securities	Asset-backed securities	242		—		—		—		242		—		Asset-backed securities	959		(14)		—		—		959		(14)
Total available-for-sale debt securities	Total available-for-sale debt securities	$	11,450	$	(10)	$	—	$	—	$	11,450	$	(10)	Total available-for-sale debt securities	$	17,205	$	(351)	$	856	$	(29)	$	18,061	$	(380)


		September 30, 2021					March 31, 2022
		Amortized Cost		Fair Value			Amortized Cost		Fair Value
		(In millions)					(In millions)
One year or less	One year or less	$	12,198	$	12,198	One year or less	$	10,306	$	10,273
After one year through five years	After one year through five years	9,873		9,866		After one year through five years	12,065		11,731
After five years through ten years	After five years through ten years	746		746		After five years through ten years	1,834		1,822
After ten years	After ten years	46		47		After ten years	91		90
Total	Total	$	22,863	$	22,857	Total	$	24,296	$	23,916


		September 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
		(In millions)							(In millions)
Assets:	Assets:							Assets:
Cash and cash equivalents(1)	Cash and cash equivalents(1)	$	271	$	—	$	271	Cash and cash equivalents(1)	$	480	$	—	$	480
Short-term investments(2):	Short-term investments(2):							Short-term investments(2):

U.S. government and agency securities	U.S. government and agency securities	639		—		639		U.S. government and agency securities	405		—		405
Foreign government and agency securities	Foreign government and agency securities	1,258		—		1,258		Foreign government and agency securities	381		—		381
Corporate debt securities	Corporate debt securities	2,293		—		2,293		Corporate debt securities	1,510		—		1,510
Asset-backed securities	Asset-backed securities	181		—		181		Asset-backed securities	479		—		479

Total short-term investments	Total short-term investments	4,371		—		4,371		Total short-term investments	2,775		—		2,775
Funds receivable and customer accounts(3):	Funds receivable and customer accounts(3):							Funds receivable and customer accounts(3):
Cash and cash equivalents	Cash and cash equivalents	486		—		486		Cash and cash equivalents	362		—		362
U.S. government and agency securities	U.S. government and agency securities	9,168		—		9,168		U.S. government and agency securities	9,446		—		9,446
Foreign government and agency securities	Foreign government and agency securities	3,233		—		3,233		Foreign government and agency securities	3,461		—		3,461
Corporate debt securities	Corporate debt securities	3,936		—		3,936		Corporate debt securities	4,794		—		4,794
Asset-backed securities	Asset-backed securities	1,220		—		1,220		Asset-backed securities	1,156		—		1,156
Municipal securities	Municipal securities	50		—		50		Municipal securities	59		—		59
Total funds receivable and customer accounts	Total funds receivable and customer accounts	18,093		—		18,093		Total funds receivable and customer accounts	19,278		—		19,278
Derivatives	Derivatives	348		—		348		Derivatives	351		—		351
Long-term investments(2),(4):	Long-term investments(2),(4):							Long-term investments(2),(4):
U.S. government and agency securities	U.S. government and agency securities	582		—		582		U.S. government and agency securities	543		—		543
Foreign government and agency securities	Foreign government and agency securities	910		—		910		Foreign government and agency securities	695		—		695
Corporate debt securities	Corporate debt securities	1,396		—		1,396		Corporate debt securities	1,376		—		1,376
Asset-backed securities	Asset-backed securities	337		—		337		Asset-backed securities	1,307		—		1,307
Marketable equity securities	Marketable equity securities	2,219		2,219		—		Marketable equity securities	1,628		1,628		—
Total long-term investments	Total long-term investments	5,444		2,219		3,225		Total long-term investments	5,549		1,628		3,921
Total financial assets	Total financial assets	$	28,527	$	2,219	$	26,308	Total financial assets	$	28,433	$	1,628	$	26,805
Liabilities:	Liabilities:							Liabilities:
Derivatives	Derivatives	$	158	$	—	$	158	Derivatives	$	134	$	—	$	134


		Balance Sheet Location	September 30, 2021		December 31, 2020			Balance Sheet Location	March 31, 2022		December 31, 2021
			(In millions)						(In millions)
Derivative Assets:	Derivative Assets:						Derivative Assets:
Foreign currency exchange contracts designated as hedging instruments	Foreign currency exchange contracts designated as hedging instruments	Other current assets	$	140	$	—	Foreign currency exchange contracts designated as hedging instruments	Other current assets	$	220	$	205
Foreign currency exchange contracts designated as hedging instruments	Foreign currency exchange contracts designated as hedging instruments	Other assets (non-current)	29		—		Foreign currency exchange contracts designated as hedging instruments	Other assets (non-current)	45		21
Foreign currency exchange contracts not designated as hedging instruments	Foreign currency exchange contracts not designated as hedging instruments	Other current assets	179		42		Foreign currency exchange contracts not designated as hedging instruments	Other current assets	86		78
Total derivative assets	Total derivative assets		$	348	$	42	Total derivative assets		$	351	$	304

Derivative Liabilities:	Derivative Liabilities:						Derivative Liabilities:
Foreign currency exchange contracts designated as hedging instruments	Foreign currency exchange contracts designated as hedging instruments	Other current liabilities	$	57	$	287	Foreign currency exchange contracts designated as hedging instruments	Other current liabilities	$	35	$	27
Foreign currency exchange contracts designated as hedging instruments	Foreign currency exchange contracts designated as hedging instruments	Other long-term liabilities	1		35		Foreign currency exchange contracts designated as hedging instruments	Other long-term liabilities	5		—
Foreign currency exchange contracts not designated as hedging instruments	Foreign currency exchange contracts not designated as hedging instruments	Other current liabilities	100		88		Foreign currency exchange contracts not designated as hedging instruments	Other current liabilities	94		103
Total derivative liabilities	Total derivative liabilities		$	158	$	410	Total derivative liabilities		$	134	$	130


	September 30, 2021				December 31, 2020
	Amortized Cost Basis Revolving		Percent		Amortized Cost Basis Revolving		Percent
	(In millions, except percentages)
Current	$	2,706	96.8	%	$	2,124	97.9	%
30-59 days	28		1.0	%	15		0.7	%
60-89 days	20		0.7	%	11		0.5	%
90-179 days	41		1.5	%	19		0.9	%
Total consumer loans and interest receivable(1), (2), (3)	$	2,795	100.0	%	$	2,169	100.0	%


March 31, 2022
(In millions, except percentages)

Installment Loans Amortized Cost Basis
	Revolving Loans Amortized Cost Basis		2022		2021		2020		2019		2018		Total		Percent
Current	$	1,744	$	1,773	$	470	$	—	$	—	$	—	$	3,987	96.9%
30 - 59 Days	21		13		6		—		—		—		40		1.0%
60 - 89 Days	13		1		15		—		—		—		29		0.7%
90 - 179 Days	26		—		33		—		—		—		59		1.4%
Total(1)	$	1,804	$	1,787	$	524	$	—	$	—	$	—	$	4,115	100%


	March 31, 2022						March 31, 2021
	Consumer Loans Receivable		Interest Receivable		Total Allowance(1)		Consumer Loans Receivable		Interest Receivable		Total Allowance(1)
	(In millions)
Beginning balance	$	243	$	43	$	286	$	299	$	53	$	352
Provisions	43		6		49		6		2		8
Charge-offs	(42)		(9)		(51)		(20)		(4)		(24)
Recoveries	3		—		3		5		—		5
Other(2)	(6)		(1)		(7)		2		1		3
Ending balance	$	241	$	39	$	280	$	292	$	52	$	344


	September 30, 2021						September 30, 2020
	Consumer Loans Receivable		Interest Receivable		Total Allowance(1)		Consumer Loans Receivable		Interest Receivable		Total Allowance(1)
	(In millions)
Beginning balance	$	299	$	53	$	352	$	49	$	8	$	57
Adjustment for adoption of credit losses accounting standard	—		—		—		24		4		28
Provisions	(52)		—		(52)		227		47		274
Charge-offs	(78)		(13)		(91)		(57)		(10)		(67)
Recoveries(2)	25		—		25		21		—		21
Other(3)	—		—		—		7		1		8
Ending balance	$	194	$	40	$	234	$	271	$	50	$	321


	March 31, 2022						March 31, 2021
	Merchant Loans and Advances		Interest and Fees Receivable		Total Allowance		Merchant Loans and Advances		Interest and Fees Receivable		Total Allowance
	(In millions)
Beginning balance	$	192	$	9	$	201	$	440	$	43	$	483
Provisions	5		1		6		(15)		(2)		(17)
Charge-offs	(21)		(2)		(23)		(71)		(6)		(77)
Recoveries	9		—		9		8		—		8
Ending balance	$	185	$	8	$	193	$	362	$	35	$	397


	Three Months Ended September 30, 2021
	Number of Accounts (in thousands)(1)	Outstanding Balances(2) (in millions)		Weighted Average Payment Term Extensions (in months)
Loans and interest receivable	—	$	4	34


	Nine Months Ended September 30, 2021
	Number of Accounts (in thousands)	Outstanding Balances(1) (in millions)		Weighted Average Payment Term Extensions (in months)
Loans and interest receivable	3	$	43	36


	Three Months Ended March 31, 2021
	Number of Accounts (in thousands)	Outstanding Balances(1) (in millions)		Weighted Average Payment Term Extensions (in months)
Loans and interest receivable	2	$	31	36