PayPal (PYPL) 8-K PayPal Reports First Quarter 2024 Results

Exhibit 99.2

Reconciliation of GAAP operating expenses to non-GAAP operating expenses (New Methodology)

				Three Months Ended																																				Year Ended December 31,
(In Millions/Unaudited)	Note			Q4 2023			Q3 2023			Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021			Q1 2021			2023			2022			2021
GAAP operating expenses:
Transaction expense				$	3,958		$	3,603		$	3,541		$	3,283		$	3,324		$	2,988		$	3,044		$	2,817		$	2,952		$	2,564		$	2,524		$	2,275		$	14,385		$	12,173		$	10,315
Transaction and credit losses					396			446			398			442			388			367			448			369			350			268			169			273			1,682			1,572			1,060
Customer support and operations					465			474			492			488			541			509			536			534			532			504			521			518			1,919			2,120			2,075
Sales and marketing					466			442			465			436			524			544			595			594			666			549			628			602			1,809			2,257			2,445
Technology and development					770			739			743			721			822			801			815			815			796			755			746			741			2,973			3,253			3,038
General administrative					554			507			491			507			515			463			514			607			570			498			522			524			2,059			2,099			2,114
Restructuring and other					(311	)		39			24			164			25			56			90			36			2			1			1			58			(84	)		207			62
Total operating expenses				$	6,298		$	6,250		$	6,154		$	6,041		$	6,139		$	5,728		$	6,042		$	5,772		$	5,868		$	5,139		$	5,111		$	4,991		$	24,743		$	23,681		$	21,109
Non-GAAP operating expense adjustments:
Sales and marketing		(a	)		(41	)		(42	)		(42	)		(41	)		(55	)		(54	)		(53	)		(53	)		(51	)		(39	)		(39	)		(38	)		(166	)		(215	)		(167	)
Technology and development		(a	)		(6	)		(9	)		(9	)		(9	)		(58	)		(58	)		(59	)		(57	)		(58	)		(64	)		(63	)		(61	)		(33	)		(232	)		(246	)
General administrative		(a	)		(7	)		(7	)		(7	)		(7	)		(3	)		(7	)		(7	)		(7	)		(7	)		(7	)		(7	)		(7	)		(28	)		(24	)		(28	)
		(d	)		—			(4	)		—			—			—			—			—			—			—			—			—			—			(4	)		—			—
Restructuring and other		(b	)		(2	)		(3	)		—			(117	)		(8	)		(23	)		(71	)		(20	)		—			—			5			(32	)		(122	)		(122	)		(27	)
		(c	)		(2	)		(19	)		10			(47	)		(17	)		(33	)		(19	)		(16	)		(2	)		(1	)		(6	)		(26	)		(58	)		(85	)		(35	)
		(d	)		(21	)		—			—			—			—			—			—			—			—			—			—			—			(21	)		—			—
		(e	)		339			—			—			—			—			—			—			—			—			—			—			—			339			—			—
Total operating expenses				$	260		$	(84	)	$	(48	)	$	(221	)	$	(141	)	$	(175	)	$	(209	)	$	(153	)	$	(118	)	$	(111	)	$	(110	)	$	(164	)	$	(93	)	$	(678	)	$	(503	)
Non-GAAP operating expenses:
Transaction expense					3,958			3,603			3,541			3,283			3,324			2,988			3,044			2,817			2,952			2,564			2,524			2,275		$	14,385		$	12,173		$	10,315
Transaction and credit losses					396			446			398			442			388			367			448			369			350			268			169			273			1,682			1,572			1,060
Customer support and operations					465			474			492			488			541			509			536			534			532			504			521			518			1,919			2,120			2,075
Sales and marketing					425			400			423			395			469			490			542			541			615			510			589			564			1,643			2,042			2,278
Technology and development					764			730			734			712			764			743			756			758			738			691			683			680			2,940			3,021			2,792
General and administrative					547			496			484			500			512			456			507			600			563			491			515			517			2,027			2,075			2,086
Restructuring and other					3			17			34			—			—			—			—			—			—			—			—			—			54			—			—
Total operating expenses				$	6,558		$	6,166		$	6,106		$	5,820		$	5,998		$	5,553		$	5,833		$	5,619		$	5,750		$	5,028		$	5,001		$	4,827		$	24,650		$	23,003		$	20,606

(a) Amortization of acquired intangible assets.

(b) Restructuring.

(c) Right-of-use asset impairment and other charges associated with exiting certain leased properties as well as gains and losses associated with early lease terminations and owned property held for sale or sold.

(d) Fees related to credit externalization.

(e) Gain on divestiture of business, net of transaction costs.

Reconciliation of GAAP operating income to non-GAAP operating income, and GAAP operating margin to non-GAAP operating margin (New Methodology)

	Three Months Ended																																				Year Ended December 31,
(In Millions, Except Percentages/Unaudited)	Q4 2023			Q3 2023			Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021			Q1 2021			2023			2022			2021
GAAP net revenues	$	8,026		$	7,418		$	7,287		$	7,040		$	7,383		$	6,846		$	6,806		$	6,483		$	6,918		$	6,182		$	6,238		$	6,033		$	29,771		$	27,518		$	25,371
GAAP operating income		1,728			1,168			1,133			999			1,244			1,118			764			711			1,050			1,043			1,127			1,042			5,028			3,837			4,262
Amortization of acquired intangible assets		54			58			58			57			116			119			119			117			116			110			109			106			227			471			441
Restructuring		2			3			—			117			8			23			71			20			—			—			(5	)		32			122			122			27
Other		(316	)		23			(10	)		47			17			33			19			16			2			1			6			26			(256	)		85			35
Total non-GAAP operating income adjustments		(260	)		84			48			221			141			175			209			153			118			111			110			164			93			678			503
Non-GAAP operating income	$	1,468		$	1,252		$	1,181		$	1,220		$	1,385		$	1,293		$	973		$	864		$	1,168		$	1,154		$	1,237		$	1,206		$	5,121		$	4,515		$	4,765
GAAP operating margin		21.5	%		15.7	%		15.5	%		14.2	%		16.8	%		16.3	%		11.2	%		11.0	%		15.2	%		16.9	%		18.1	%		17.3	%		16.9	%		13.9	%		16.8	%
Non-GAAP operating margin		18.3	%		16.9	%		16.2	%		17.3	%		18.8	%		18.9	%		14.3	%		13.3	%		16.9	%		18.7	%		19.8	%		20.0	%		17.2	%		16.4	%		18.8	%

Reconciliation of GAAP net income (loss) to non-GAAP net income, GAAP diluted EPS to non-GAAP diluted EPS, and GAAP effective tax rate to non-GAAP effective tax rate (New Methodology)

	Three Months Ended																																				Year Ended December 31,
(In Millions, Except Percentages and Per Share Amount/Unaudited)	Q4 2023			Q3 2023			Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021			Q1 2021			2023			2022			2021
GAAP income before income taxes	$	1,793		$	1,241		$	1,303		$	1,074		$	1,110		$	1,578		$	49		$	629		$	706		$	1,165		$	1,356		$	872		$	5,411		$	3,366		$	4,099
GAAP income tax expense (benefit)		391			221			274			279			189			248			390			120			(95	)		78			172			(225	)		1,165			947			(70	)
GAAP net income (loss)		1,402			1,020			1,029			795			921			1,330			(341	)		509			801			1,087			1,184			1,097			4,246			2,419			4,169
Non-GAAP adjustments to net income (loss):
Non-GAAP operating income adjustments (see table above)		(260	)		84			48			221			141			175			209			153			118			111			110			164			93			678			503
(Gains) losses on strategic investments		4			(24	)		(133	)		(48	)		141			(495	)		672			(14	)		290			(173	)		(283	)		120			(201	)		304			(46	)
Other certain significant gains, losses, or charges		21			—			—			18			(21	)		—			431			—			—			43			(7	)		—			39			410			36
Tax effect of non-GAAP adjustments		66			(3	)		27			(27	)		(47	)		44			(185	)		(41	)		(96	)		1			31			(45	)		63			(229	)		(109	)
Non-GAAP net income	$	1,233		$	1,077		$	971		$	959		$	1,135		$	1,054		$	786		$	607		$	1,113		$	1,069		$	1,035		$	1,336		$	4,240		$	3,582		$	4,553
Shares used in diluted share calculation:
GAAP		1,084			1,098			1,114			1,134			1,144			1,157			1,158			1,172			1,183			1,187			1,186			1,190			1,107			1,158			1,186
Non-GAAP		1,084			1,098			1,114			1,134			1,144			1,157			1,160			1,172			1,183			1,187			1,186			1,190			1,107			1,158			1,186
Net income (loss) per diluted share:
GAAP	$	1.29		$	0.93		$	0.92		$	0.70		$	0.81		$	1.15		$	(0.29	)	$	0.43		$	0.68		$	0.92		$	1.00		$	0.92		$	3.84		$	2.09		$	3.52
Non-GAAP	$	1.14		$	0.98		$	0.87		$	0.85		$	0.99		$	0.91		$	0.68		$	0.52		$	0.94		$	0.90		$	0.87		$	1.12		$	3.83		$	3.09		$	3.84
GAAP effective tax rate		22	%		18	%		21	%		26	%		17	%		16	%		796	%		19	%		(13	)%		7	%		13	%		(26	)%		22	%		28	%		(2	)%
Tax effect of non-GAAP adjustments to net income		(2	)%		(1	)%		(1	)%		(3	)%		1	%		—	%		(781	)%		2	%		13	%		(4	)%		—	%		10	%		(2	)%		(10	)%		2	%
Non-GAAP effective tax rate		20	%		17	%		20	%		23	%		18	%		16	%		15	%		21	%		—	%		3	%		13	%		(16	)%		20	%		18	%		—	%