PayPal Holdings Inc
For the period ended Mar 31, 2025. Filed Apr 29, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 29, 2025
PYPL$59.24+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0001633917-24-000110
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0001633917-25-000064
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 169 previous paragraphs and 146 current paragraphs.
78 unchanged; 52 reworded; 16 added; 38 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
At PayPal, our mission is to revolutionize commerce globally. Our products are designed to enable digital payments and simplify commerce experiences for consumers and merchants to make selling, shopping, and sending and receiving money simple, personalized, and secure, online or offline, including mobile. Our two-sided platform serves millions of consumers and merchants worldwide.
Current report
Net income increased $399 million, or 45%, in the three months ended March 31, 2025 compared to the same period of the prior year due to the previously discussed increase in operating income of $362 million and an increase in other income (expense), net of $32 million.
Current report
IMPACT OF FOREIGN EXCHANGE RATES
Current report
Transaction revenues remained consistent in the three months ended March 31, 2025 compared to the same period of the prior year driven primarily by a decline in revenues of approximately $200 million from our Braintree products and services resulting from a decline in TPV and the number of payment transactions, partially offset by an increase in revenues of approximately $170 million from our Venmo and PayPal products and services resulting from growth in TPV and the number of payment transactions.
Current report
Transaction revenues remained consistent while TPV increased 3% in the three months ended March 31, 2025 compared to the same period in the prior year due primarily to changes in volume mix with a higher proportion of TPV from payout products, which have lower pricing, as well as a decline in volume from large merchants on Braintree products and services as a result of our focus on profitable growth.
Current report
Revenues from other value added services increased $110 million, or 17% in the three months ended March 31, 2025 compared to the same period in the prior year due primarily to an approximately $70 million increase in interest and fee revenue earned from our loans receivable portfolio driven by consumer interest-bearing installment loans, merchant loans, and consumer revolving loans.
Current report
Transaction and credit losses increased $50 million, or 16%, in the three months ended March 31, 2025 compared to the same period of the prior year.
Current report
In response to changing portfolio performance and macroeconomic environment, we continue to monitor risk and evaluate and modify our acceptable risk parameters. Modifications to the acceptable risk parameters did not have a material impact on our consumer loans for the three months ended March 31, 2025.
Current report
In response to changing portfolio performance and macroeconomic environment, we continue to monitor risk and evaluate and modify our acceptable risk parameters. Modifications to the acceptable risk parameters did not have a material impact on our merchant loans for the three months ended March 31, 2025.
Current report
Customer support and operations expenses decreased $56 million, or 12%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline of approximately $40 million in employee-related costs associated with the prior year reduction in headcount, and to a lesser extent, a decline in software expenses.
Current report
Restructuring and other decreased $146 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline in restructuring charges as compared to the prior year.
Current report
During the first quarter of 2025, management initiated a workforce reduction to ensure compliance with a new regulation impacting operations in an international market. The associated restructuring charges during the three months ended March 31, 2025 were $39 million, and included employee severance and benefits costs, substantially all of which were accrued for as of March 31, 2025. We do not anticipate cost savings in conjunction with this reduction.
Current report
Other income (expense), net increased $32 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to net gains on strategic investments in the current period compared to net losses and impairments in the prior period, which contributed an increase of approximately $100 million year-over-year, partially offset by a decrease of approximately $40 million from a decline in interest income resulting from lower average cash balances year-over-year and an increase in interest expense due in part to incremental expense from the May 2024 debt issuance.
Current report
Net cash provided by operating activities declined $757 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to changes in working capital of approximately $790 million driven by a decline in liabilities, changes in stock-based compensation of approximately $120 million, and an impact of approximately $100 million from net gains on strategic investments, partially offset by an increase in operating income of approximately $360 million.
Current report
Net cash used in investing activities increased $4.6 billion in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline of approximately $2.7 billion in maturities and sales of investments, net of purchases, and changes related to funds receivable of approximately $1.6 billion.
Current report
Net cash provided by financing activities increased $3.4 billion in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to an increase of approximately $1.9 billion from changes related to funds payable and amounts due to customers, and an increase of approximately $1.7 billion in borrowings (including proceeds from the March 2025 debt issuance), net of repayments under financing arrangements.
Removed paragraphs (38)
Previous report
We are a leading technology platform that enables digital payments and personalizes commerce experiences on behalf of merchants and consumers worldwide. PayPal’s mission is to revolutionize commerce globally by creating innovative experiences that are designed to make moving money, selling, and shopping simple, personalized, and secure.
Previous report
** Not meaningful.
Previous report
Total operating expenses increased $206 million, or 3%, in the three months ended September 30, 2024 compared to the same period of the prior year due primarily to higher transaction expense partially offset by a reduction in transaction and credit losses.
Previous report
Net income decreased $10 million, or 1%, in the three months ended September 30, 2024 compared to the same period of the prior year due to the previously discussed increase in operating income of $223 million, partially offset by a decrease in other income (expense), net of $153 million driven primarily by net losses on strategic investments in the current period compared to net gains in the prior period and an increase in income tax expense of $80 million due primarily to higher income before taxes, changes in jurisdictional mix of income, and U.S. income taxed at different rates.
Previous report
NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Previous report
Net revenues increased $1.7 billion, or 8%, in the nine months ended September 30, 2024 compared to the same period of the prior year driven primarily by growth in TPV of 11%.
Previous report
Operating income increased $584 million, or 18%, in the nine months ended September 30, 2024 compared to the same period of the prior year due to net revenues growing more than operating expenses. Our operating margin was 17% and 15% in the nine months ended September 30, 2024 and 2023, respectively, reflecting the positive impact of operating efficiencies in our business and lower transaction and credit losses, partially offset by the negative impact of an increase in transaction expense.
Previous report
Net income increased $182 million, or 6%, in the nine months ended September 30, 2024 compared to the same period of the prior year due to the previously discussed increase in operating income of $584 million partially offset by a decrease of $283 million in other income (expense), net driven primarily by net losses on strategic investments in the current period compared to net gains in the prior period and an increase in income tax expense of $119 million due primarily to higher income before taxes, changes in jurisdictional mix of income, and U.S. income taxed at different rates.
Previous report
IMPACT OF FOREIGN CURRENCY EXCHANGE RATES
Previous report
Transaction revenues grew by $413 million, or 6%, and $1.7 billion, or 9%, in the three and nine months ended September 30, 2024 compared to the same periods of the prior year driven primarily by growth in TPV and the number of payment transactions from our Braintree products and services and, to a lesser extent, from our core PayPal and Venmo products and services. Transaction revenues for the nine months ended September 30, 2024 were also impacted unfavorably by lower net gains from hedging activities as compared to the same period of the prior year.
Previous report
Number of payment transactions
Previous report
TPV
Previous report
** Not meaningful
Previous report
Transaction revenues growth was lower than the growth in TPV in the three and nine months ended September 30, 2024 compared to the same periods in the prior year due primarily to unfavorable changes in mix from core PayPal products and services and unfavorable impact from foreign exchange fees. For the nine months ended September 30, 2024, these unfavorable impacts to transaction revenues growth were partially offset by favorable impact from Braintree products and services.
Previous report
Revenues from other value added services increased $16 million and $6 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year due primarily to an increase in interest earned on certain assets underlying customer account balances resulting primarily from higher interest rates and higher customer balances, partially offset by a decline in the revenue share earned from an independent chartered financial institution. Revenues from other value added services for the nine months ended September 30, 2024 were also impacted by lower interest and fee revenue on our loans receivable portfolio driven by a decrease in receivables related to PayPal Business Loan (“PPBL”) products.
Previous report
** Not meaningful.
Previous report
Transaction expense increased by $238 million, or 7%, and $1.3 billion, or 12%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to the increase in TPV of 9% and 11% for the three and nine months ended September 30, 2024, respectively, as well as unfavorable changes in product mix.
Previous report
The slight increase in the transaction expense rate for the nine months ended September 30, 2024 compared to the same period of the prior year was attributable to unfavorable changes in product mix with a higher proportion of TPV from unbranded card processing volume, which generally has higher expense rates than our other products and services, largely offset by favorable changes in regional mix, product mix, and certain third-party pricing incentives within our core PayPal products and services.
Previous report
For both the three months ended September 30, 2024 and 2023, approximately 37% of TPV was generated outside of the U.S. For both the nine months ended September 30, 2024 and 2023, approximately 36% of TPV was generated outside of the U.S.
Previous report
Transaction and credit losses decreased by $94 million, or 21%, and $278 million, or 22%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year.
Previous report
(3)Includes the reversal of allowance associated with reclassification of certain loans to held for sale.
Previous report
In response to declining performance, a number of risk mitigation strategies were implemented in the third quarter of 2023, which reduced originations for our U.S. interest-bearing installment product. In response to changing portfolio performance, we continue to evaluate and modify our acceptable risk parameters. Changes to such parameters in the second quarter of 2024, combined with enhanced risk monitoring, have resulted in an increase of U.S. interest-bearing installment loan originations back to historical levels.
Previous report
In response to declining performance, a number of risk mitigation strategies were implemented throughout 2023, which reduced originations for our PPBL product. In response to changing portfolio performance, we continue to evaluate and modify our acceptable risk parameters. Changes to such parameters, combined with enhanced risk monitoring, have resulted in an increase in PPBL originations in 2024.
Previous report
Customer support and operations expenses decreased by $47 million, or 10%, and $137 million, or 9%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to a decline in employee-related costs associated with headcount reduction. The decline in customer support and operations expenses in the nine months ended September 30, 2024 was also impacted by a reduction in other costs incurred related to delivery of our products, including warehouses, shipping, and payment devices and a decrease in contractors and consulting costs, partially offset by an increase in card issuance costs and customer onboarding and compliance costs.
Previous report
We expect sales and marketing expenses to increase in the fourth quarter of 2024 as we continue to invest in brand advertising and marketing campaigns.
Previous report
Restructuring and other increased by $24 million and $161 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year.
Previous report
During the first quarter of 2024, management initiated a global workforce reduction intended to streamline operations, focus resources on core strategic priorities, and improve our cost structure. The associated restructuring charges during the three and nine months ended September 30, 2024 were $36 million and $294 million, respectively, and included employee severance and benefits costs and stock-based compensation expense, substantially all of which were accrued for as of September 30, 2024. The estimated reduction in annualized employee-related costs associated with the impacted workforce is approximately $575 million, including approximately $155 million in stock-based compensation. We expect to reinvest a portion of the reduction in annual costs associated with the impacted workforce to drive business priorities.
Previous report
For information on the associated restructuring liability, see “Note 17—Restructuring and Other” in the notes to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.
Previous report
We continue to review our real estate and facility capacity requirements due to our new and evolving work models. We incurred asset impairment charges of nil in the three and nine months ended September 30, 2024 and $18 million and $61 million in the three and nine months ended September 30, 2023, respectively, due to exiting certain leased properties, which resulted in a reduction of right-of-use lease assets and related leasehold improvements. In the nine months ended September 30, 2023, we recognized a gain of $17 million due to the sale of an owned property. We also incurred a loss of $12 million upon designation of an owned property as held for sale in the nine months ended September 30, 2023.
Previous report
Other income (expense), net decreased $153 million and $283 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to net losses on strategic investments in the current period compared to net gains in the prior period, partially offset by higher interest income resulting from an increase in cash balances and interest rates year-over-year.
Previous report
The net cash provided by operating activities of $5.1 billion in the nine months ended September 30, 2024 was due primarily to operating income of $3.9 billion, as well as adjustments for non-cash expenses, including provision for transaction and credit losses of $1.0 billion, stock-based compensation of $947 million, and depreciation and amortization of $783 million. Cash flows from operating activities was also impacted by proceeds from repayments and sales of loans receivable, originally classified as held for sale, of $17.2 billion and net losses from our strategic investments of $226 million. These inflows from operating activities were partially offset by originations of loans receivable, held for sale of $17.2 billion, changes in other assets and liabilities of $647 million, primarily related to actual cash transaction losses incurred during the period, and accretion of discounts on investments, net of amortization of premiums, of $290 million.
Previous report
The net cash provided by operating activities of $2.2 billion in the nine months ended September 30, 2023 was due primarily to operating income of $3.3 billion, as well as adjustments for non-cash expenses, including provision for transaction and credit losses of $1.3 billion, stock-based compensation of $1.1 billion, and depreciation and amortization of $809 million. Cash flows from operating activities was also impacted by originations of loans receivable, held for sale of $5.7 billion, changes in other assets and liabilities of $865 million, primarily related to actual cash transaction losses incurred during the period, changes in deferred income taxes of $439 million, accretion of discounts on investments, net of amortization of premiums, of $265 million, and net gains from our strategic investments of $205 million, partially offset by proceeds from repayments of loans receivable, originally classified as held for sale, of $3.7 billion.
Previous report
The net cash used in investing activities of $868 million in the nine months ended September 30, 2024 was due primarily to purchases of investments of $20.8 billion, purchases and originations of loans receivable of $15.4 billion, purchases of property and equipment of $480 million, and purchases of reverse repurchase agreements of $299 million, partially offset by maturities and sales of investments of $21.2 billion, proceeds from repayments and sales of loans receivable, originally classified as held for investment, of $14.7 billion, and maturities of reverse repurchase agreements of $226 million. From time to time, we enter into reverse repurchase agreements as a form of secured lending primarily to deploy excess cash.
Previous report
The net cash provided by investing activities of $1.3 billion in the nine months ended September 30, 2023 was due primarily to proceeds from repayments and sales of loans receivable, originally classified as held for investment, of $21.3 billion and maturities and sales of investments of $16.1 billion, partially offset by purchases and originations of loans receivable of $19.8 billion, purchases of investments of $15.0 billion, changes in funds receivable from customers of $1.0 billion, and purchases of property and equipment of $478 million.
Previous report
The net cash used in financing activities of $4.7 billion in the nine months ended September 30, 2024 was due primarily to the repurchase of $4.8 billion of our common stock under our stock repurchase program, changes in funds payable and amounts due to customers of $771 million, repayments of borrowings from repurchase agreements of $656 million, repayments of borrowings under financing arrangements of $411 million, and tax withholdings related to net share settlement of equity awards of $271 million. These cash outflows were partially offset by borrowings under financing arrangements of $1.5 billion (including proceeds from the issuance of fixed rate debt in May 2024) and borrowings from repurchase agreements of $656 million. From time to time, we enter into repurchase agreements as a form of secured borrowing primarily to address temporary liquidity needs.
Previous report
The net cash used in financing activities of $6.0 billion in the nine months ended September 30, 2023 was due primarily to the repurchase of $4.4 billion of our common stock under our stock repurchase program, changes in funds payable and amounts due to customers of $1.3 billion, repayments of borrowings under financing arrangements of $942 million (including principal repayment of fixed rate debt that matured in June 2023 and repayment of borrowings under our Paidy credit agreement), and tax withholdings related to net share settlement of equity awards of $225 million. These cash outflows were partially offset by borrowings under financing arrangements of $829 million, including proceeds from the issuance of fixed rate debt in June 2023 and borrowings under our Paidy credit agreement.
Previous report
In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provided for an unsecured revolving credit facility of ¥60.0 billion, which was modified in September 2022 to increase the borrowing capacity by ¥30.0 billion for a total borrowing capacity of ¥90.0 billion (approximately $633 million as of September 30, 2024). As of September 30, 2024 and December 31, 2023, ¥90.0 billion (approximately $633 million) and ¥50.0 billion (approximately $355 million), respectively, was outstanding under the Paidy Credit Agreement. At September 30, 2024, no borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement.
Previous report
We have a cash pooling arrangement with a financial institution for cash management purposes. The arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the financial institution (“Aggregate Cash Deposits”). The arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the arrangement. As of September 30, 2024, we had a total of $2.2 billion in cash withdrawals offsetting our $2.2 billion in Aggregate Cash Deposits held within the financial institution under the cash pooling arrangement.
Reworded paragraphs (52)
Previous wording
We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy, cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation. New or changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for our customers.
Current wording
We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including anti-money laundering, countering terrorist financing, privacy, cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the advent of digital payments, continue to evolve through legislative and regulatory action and judicial interpretation. New or changing laws and regulations, including changes to their interpretation and implementation, as well as increased penalties and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for our customers.
Previous wording
The broader implications of the macroeconomic environment, including uncertainty around international conflicts such as the Russia and Ukraine conflict, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown. A deterioration in macroeconomic conditions could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, foreign currency exchange fluctuations, or other business interruption, which may adversely impact our business. If these conditions continue or worsen, they could adversely impact our future financial and operating results.
Current wording
A deterioration in macroeconomic conditions resulting from uncertainties and effects from tariffs, higher inflation rates, international conflicts, and higher interest rates could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, foreign exchange fluctuations, or other business interruption, which may adversely impact our business. We are unable to reasonably estimate the total potential impact on our financial results that may ultimately result from such changes in the macroeconomic environment.
Previous wording
The following table provides a summary of our condensed consolidated financial results for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following table provides a summary of our consolidated financial results for the three months ended March 31, 2025 and 2024:
Previous wording
Net revenues increased $429 million, or 6%, in the three months ended September 30, 2024 compared to the same period of the prior year driven primarily by growth in total payment volume (“TPV”, as defined below under “Key Metrics”) of 9%.
Current wording
Net revenues increased $92 million, or 1%, in the three months ended March 31, 2025 compared to the same period of the prior year driven primarily by growth in total payment volume (“TPV”) of 3% and an increase in interest and fee revenue earned on our loans receivable portfolio, partially offset by changes in TPV mix, which resulted in lower transaction revenue.
Previous wording
Total operating expenses increased $1.1 billion, or 6%, in the nine months ended September 30, 2024 compared to the same period of the prior year due primarily to an increase in transaction expense and, to a lesser extent, restructuring and other partially offset by a reduction in transaction and credit losses and customer support and operations expenses.
Current wording
Total operating expenses decreased $270 million, or 4%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to a decline in transaction expense and restructuring and other expenses.
Previous wording
Operating income increased $223 million, or 19%, in the three months ended September 30, 2024 compared to the same period of the prior year due to net revenues growing more than operating expenses. Our operating margin was 18% and 16% in the three months ended September 30, 2024 and 2023, respectively, reflecting the positive impact of lower transaction and credit losses.
Current wording
Operating income increased $362 million, or 31%, in the three months ended March 31, 2025 compared to the same period of the prior year due to the increase in net revenues and decline in operating expenses. Our operating margin was 20% and 15% in the three months ended March 31, 2025 and 2024, respectively, reflecting the positive impact of lower transaction expense and restructuring and other expenses.
Previous wording
We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, subjecting us to foreign currency exchange risk which may adversely impact our financial results. The strengthening or weakening of the United States (“U.S.”) dollar versus foreign currencies in which we conduct our international operations impacts the translation of our net revenues and expenses generated in these foreign currencies into the U.S. dollar. We generated approximately 42% of our net revenues from customers domiciled outside of the U.S. in both the three and nine months ended September 30, 2024 compared to 43% and 42% in the three and nine months ended September 30, 2023, respectively. Because we generate substantial net revenues internationally, we are subject to the risks of doing business outside of the U.S. See Part I, Item 1A, Risk Factors in our 2023 Form 10-K, as supplemented and, to the extent inconsistent, superseded (if applicable) below in Part II, Item 1A, Risk Factors of this Form 10-Q.
Current wording
We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, and Canadian dollar, subjecting us to foreign exchange risk which may adversely impact our financial results. The strengthening or weakening of the United States (“U.S.”) dollar versus foreign currencies in which we conduct our international operations impacts the translation of our net revenues and expenses generated in these foreign currencies into the U.S. dollar. We generated approximately 43% and 42% of our net revenues from customers domiciled outside of the U.S. in the three months ended March 31, 2025 and 2024, respectively. Because we generate substantial net revenues internationally, we are subject to the risks of doing business outside of the U.S. See Part I, Item 1A, Risk Factors in our 2024 Form 10-K, as supplemented and, to the extent inconsistent, superseded (if applicable) below in Part II, Item 1A, Risk Factors of this Form 10-Q.
Previous wording
We calculate the year-over-year impact of foreign currency exchange movements on our business using prior period foreign currency exchange rates applied to current period transactional currency amounts. While changes in foreign currency exchange rates affect our reported results, we have a foreign currency exchange exposure management program in which we use foreign currency exchange contracts, designated as cash flow hedges, intended to reduce the impact on earnings from foreign currency exchange rate movements. Gains and losses from these foreign currency exchange contracts are recognized as a component of transaction revenues or operating expenses (as applicable) in the same period the forecasted transactions impact earnings.
Current wording
We calculate the year-over-year impact of foreign exchange rate movements on our business using prior period foreign exchange rates applied to current period transactional currency amounts. While changes in foreign exchange rates affect our reported results, we have a foreign currency exposure management program in which we use foreign exchange contracts, designated as cash flow hedges, intended to reduce the impact on earnings from foreign exchange rate movements. Gains and losses from these foreign exchange contracts are recognized as a component of transaction revenues or operating expenses (as applicable) in the same period the forecasted transactions impact earnings.
Previous wording
In the three and nine months ended September 30, 2024, year-over-year foreign currency exchange rate movements relative to the U.S. dollar had the following impact on our reported results:
Current wording
In the three months ended March 31, 2025, year-over-year foreign exchange rate movements relative to the U.S. dollar had the following impact on our reported results:
Previous wording
While we enter into foreign currency exchange contracts to help reduce the impact on earnings from foreign currency exchange rate movements, it is impossible to predict or eliminate the total effects of this exposure.
Current wording
While we enter into foreign exchange contracts to help reduce the impact on earnings from foreign exchange rate movements, it is impossible to eliminate the total effects of this exposure.
Previous wording
We also use foreign currency exchange contracts, designated as net investment hedges, to reduce the foreign currency exchange risk related to our investment in certain foreign subsidiaries. Gains and losses associated with these instruments will remain in accumulated other comprehensive income (loss) until the underlying foreign subsidiaries are sold or substantially liquidated.
Current wording
Prior to 2025, we used foreign exchange contracts, designated as net investment hedges, to reduce the foreign exchange risk related to our investment in certain foreign subsidiaries. Gains and losses associated with these instruments will remain in accumulated other comprehensive income (loss) until the underlying foreign subsidiaries are sold or substantially liquidated.
Previous wording
Given that we also have foreign currency exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries, we have an additional foreign currency exchange exposure management program in which we use foreign currency exchange contracts to help offset the impact of foreign currency exchange rate movements on our assets and liabilities. The foreign currency exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign currency exchange contracts. These foreign currency exchange contracts reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on our assets and liabilities.
Current wording
Given that we also have foreign exchange risk on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries, we have an additional balance sheet foreign currency exposure management program in which we use foreign exchange contracts to help offset the impact of foreign exchange rate movements on our assets and liabilities. The foreign exchange gains and losses on our assets and liabilities are recorded in other income (expense), net, and are offset by the gains and losses on the foreign exchange contracts. These foreign exchange contracts reduce, but do not entirely eliminate, the impact of foreign exchange rate movements on our assets and liabilities.
Previous wording
Additionally, in connection with transactions occurring in multiple currencies on our payments platform, we generally set our foreign currency exchange rates daily and may face financial exposure if we incorrectly set our foreign currency exchange rates or as a result of fluctuations in foreign currency exchange rates between the times that we set our foreign currency exchange rates and when transactions occur. While we have processes in place to mitigate these risks, it is impossible to eliminate the total effects of any possible exposure associated with setting rates on our platform.
Current wording
Additionally, in connection with transactions occurring in multiple currencies on our payments platform, we generally set our foreign exchange rates daily and may face financial exposure if we incorrectly set our foreign exchange rates or as a result of fluctuations in foreign exchange rates between the times that we set our foreign exchange rates and when transactions occur. While we have processes in place to mitigate these risks, it is impossible to eliminate the total effects of any possible exposure associated with setting foreign exchange rates on our payments platform.
Previous wording
We regularly review our processes for calculating these key metrics, and from time to time we may make adjustments to improve the accuracy or relevance of our metrics. For example, we continuously apply models, processes, and practices designed to detect and prevent fraudulent account creation on our platforms, and work to improve and enhance those capabilities. When we detect a significant volume of illegitimate activity, we generally remove the activity identified from our key metrics. Although such adjustments may impact key metrics reported in prior periods, we generally do not update previously reported key metrics to reflect these subsequent adjustments unless the retrospective impact of process improvements or enhancements is determined by management to be material.
Current wording
Our key metrics are calculated using internal company data based on the activity we measure on our payments platform and compiled from multiple systems, including systems that are internally developed or acquired through business combinations. While the measurement of our key metrics is based on what we believe to be reasonable methodologies and estimates, there are inherent challenges and limitations in measuring our key metrics globally at scale. The methodologies used to calculate our key metrics require significant judgment. We regularly review our processes for calculating these key metrics, and from time to time we may make adjustments to improve the accuracy or relevance of our metrics. For example, we continuously apply models, processes, and practices designed to detect and prevent fraudulent account creation on our platforms, and work to improve and enhance those capabilities. When we detect a significant volume of illegitimate activity, we generally remove the activity identified from our key metrics. Although such adjustments may impact key metrics reported in prior periods, we generally do not update previously reported key metrics to reflect these subsequent adjustments unless the retrospective impact of process improvements or enhancements is determined by management to be material.
Previous wording
•Revenues from other value added services: Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our merchants and consumers. We also earn revenues from interest and fees earned on our portfolio of loans receivable and interest earned on certain assets underlying customer balances.
Current wording
•Revenues from other value added services: Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our consumers and merchants. We also earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain assets underlying customer balances.
Previous wording
The components of our net revenues for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
The components of our net revenues for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
As a result of ongoing negotiations with merchants, we expect lower volume and transaction revenue growth in the fourth quarter of 2024 and into 2025 from our Braintree products and services.
Current wording
As a result of our stronger focus on profitable growth and ongoing negotiations with merchants, we expect lower volume and transaction revenue growth from our Braintree offerings in 2025.
Previous wording
The graphs below present the respective key metrics (in millions) for the three and nine months ended September 30, 2024 and 2023:
Current wording
The graphs below present the respective key metrics (in millions) for the three months ended March 31, 2025 and 2024:
Previous wording
We had active accounts of 432 million and 428 million as of September 30, 2024 and 2023, respectively. Our total number of payment transactions was 6.6 billion and 6.3 billion for the three months ended September 30, 2024 and 2023, respectively, an increase of 6%. Our total number of payment transactions was 19.7 billion for the nine months ended September 30, 2024, compared to 18.2 billion in the nine months ended September 30, 2023, an increase of 8%. TPV was $423 billion and $388 billion for the three months ended September 30, 2024 and 2023, respectively, an increase of 9%. TPV was $1.2 trillion for the nine months ended September 30, 2024 compared to $1.1 trillion in the nine months ended September 30, 2023, an increase of 11%.
Current wording
We had active accounts of 436 million and 427 million as of March 31, 2025 and 2024, respectively, an increase of 2%. Our total number of payment transactions was 6.0 billion and 6.5 billion for the three months ended March 31, 2025 and 2024, respectively, a decrease of 7%. TPV was $417 billion and $404 billion for the three months ended March 31, 2025 and 2024, respectively, an increase of 3%.
Previous wording
Transaction expense for the three and nine months ended September 30, 2024 and 2023 was as follows (in millions):
Current wording
Transaction expense for the three months ended March 31, 2025 and 2024 was as follows (in millions):
Previous wording
The decrease in the transaction expense rate for the three months ended September 30, 2024 compared to the same period of the prior year was primarily attributable to favorable changes in regional mix, product mix, and certain third-party pricing incentives within our core PayPal products and services as well as favorable changes in merchant mix associated with our unbranded card processing volume.
Current wording
Transaction expense decreased $213 million, or 5%, in the three months ended March 31, 2025 compared to the same period of the prior year. The decline in transaction expense and the associated transaction expense rate was primarily attributable to favorable changes in merchant mix as well as a volume decline within our Braintree products and services, which generally have a higher expense rate than other products and services.
Previous wording
Our transaction expense rate is impacted by changes in product mix, merchant mix, regional mix, funding mix, and fees paid to payment processors and other financial institutions. The cost of funding a transaction with a credit or debit card is generally higher than the cost of funding a transaction from a bank or through internal sources such as a PayPal or Venmo account balance or our consumer credit products.
Current wording
Our transaction expense rate is impacted by changes in product mix, merchant mix, regional mix, funding mix, and fees paid to payment processors and other financial institutions. The cost of funding a transaction with a credit or debit card is generally higher than the cost of funding a transaction from a bank or through internal sources such as a PayPal or Venmo account balance or our consumer credit products. The cost of funding a transaction is also impacted by the geographic region or country in which a transaction occurs, as we generally pay lower rates for transactions funded with credit or debit cards outside the U.S. For the three months ended March 31, 2025 and 2024, approximately 35% and 36% of TPV, respectively, was generated outside of the U.S.
Previous wording
The components of our transaction and credit losses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
The components of our transaction and credit losses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
Transaction losses were $264 million in the three months ended September 30, 2024 compared to $329 million in the three months ended September 30, 2023, a decrease of $65 million, or 20%. Transaction losses were $783 million in the nine months ended September 30, 2024 compared to $915 million in the nine months ended September 30, 2023, a decrease of $132 million, or 14%. Transaction loss rate (transaction losses divided by TPV) was 0.06% for the three and nine months ended September 30, 2024, compared to 0.08% for the three and nine months ended September 30, 2023. The decrease in transaction losses and the associated transaction loss rate in the three and nine months ended September 30, 2024 compared to the same periods of the prior year was primarily due to higher recoveries and lower losses resulting from fewer fraud events in the current period.
Current wording
Transaction losses were $278 million in the three months ended March 31, 2025 compared to $260 million in the three months ended March 31, 2024, an increase of $18 million, or 7%. Transaction loss rate (transaction losses divided by TPV) was 0.07% for the three months ended March 31, 2025, compared to 0.06% for the three months ended March 31, 2024. The increase in transaction losses and the associated transaction loss rate in the three months ended March 31, 2025 compared to the same period of the prior year was primarily due to an increase in losses from our PayPal products and services driven by fraud incidents.
Previous wording
Credit losses decreased by $29 million and $146 million in the three and nine months ended September 30, 2024 compared to the same periods of the prior year. The components of credit losses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
Credit losses increased $32 million in the three months ended March 31, 2025 compared to the same period of the prior year. The components of credit losses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
(2)Reserve (release) build represents change in allowance for principal receivables excluding foreign currency remeasurement.
Current wording
(2)Reserve build (release) represents change in allowance for principal receivables excluding foreign currency remeasurement.
Previous wording
The provision in the three and nine months ended September 30, 2024 was attributable to loan originations during the period partially offset by improvement in credit quality of loans outstanding. The provision in the three and nine months ended September 30, 2023 was attributable to loan originations during the period and a deterioration in the credit quality of loans outstanding.
Current wording
Credit losses in the three months ended March 31, 2025 were attributable to loan originations during the period. Credit losses in the three months ended March 31, 2024 were attributable to loan originations partially offset by improvement in the credit quality of loans outstanding.
Previous wording
In June 2023, we entered into a multi-year agreement with a global investment firm to sell up to €40 billion of United Kingdom (“U.K.”) and other European buy now, pay later loan receivables, consisting of eligible loans and interest receivables, including a forward-flow arrangement for the sale of future originations of eligible loans over a 24-month commitment period (collectively, “eligible consumer installment receivables”). As of September 30, 2024 and 2023, loans and interest receivable, held for sale was $471 million and $2.2 billion, respectively, representing the portion of our installment consumer receivables that we intend to sell.
Current wording
In June 2023, we entered into a multi-year agreement with a global investment firm to sell United Kingdom (“U.K.”) and other European buy now, pay later loan receivables, consisting of eligible loans and interest receivables, including a forward-flow arrangement for the sale of future originations of eligible loans over a 24-month commitment period (collectively, “eligible consumer installment receivables”). In December 2024, this agreement was amended and restated to extend the commitment period to December 2026 and to increase the maximum balance of loans that can be sold at a time. As of March 31, 2025 and 2024, loans and interest receivable, held for sale was $714 million and $307 million, respectively.
Previous wording
The consumer loans and interest receivable balance as of September 30, 2024 and 2023 was $5.1 billion and $4.2 billion, respectively, net of participation interest sold, representing an increase of 21%. The increase was driven primarily by growth in our installment credit products in Japan and our revolving credit product in the U.K., partially offset by a decline in our installment credit products in Germany due to the forward flow arrangement with the global investment firm as well as a decrease in our interest-bearing installment credit product in the U.S.
Current wording
The consumer loans and interest receivable balance as of March 31, 2025 and 2024 was $5.4 billion and $4.5 billion, respectively, net of participation interest sold, representing an increase of 21%. The increase was driven primarily by growth of approximately $500 million and $300 million in our installment credit products driven by growth in Japan and the U.S., respectively, as well as growth of approximately $230 million in our revolving credit product in the U.K., partially offset by a decline of approximately $100 million in our installment credit products in Germany due to the forward-flow arrangement with the global investment firm.
Previous wording
We offer access to merchant finance products for certain small and medium-sized businesses, which we refer to as our merchant finance offerings. Total merchant loans, advances, interest, and fees receivable outstanding, net of participation interest sold, as of September 30, 2024 and 2023 was $1.4 billion, reflecting a slight decline of 4% attributable to slowed originations related to our PPBL product in the U.S. mostly offset by an increase in our PayPal Working Capital product portfolio across countries.
Current wording
We offer access to merchant finance products for certain small and medium-sized businesses, which we refer to as our merchant finance offerings. Total merchant loans, advances, and interest and fees receivable outstanding, net of participation interest sold, as of March 31, 2025 and 2024 was $1.6 billion and $1.2 billion, respectively, reflecting an increase of 32%. The increase was due primarily to growth of approximately $230 million in our PPWC product portfolio, primarily from the U.S., Germany and the U.K., as well as growth of approximately $160 million in our PayPal Business Loans (“PPBL”) product in the U.S.
Previous wording
The increase in the percent of current merchant receivables and decrease in percent of merchant receivables greater than 90 days outstanding and the net charge-off rate for merchant receivables at September 30, 2024 as compared to September 30, 2023 was due primarily to the improvement in the credit quality of the PPBL portfolio.
Current wording
The decrease in net charge-off rate for merchant receivables at March 31, 2025 as compared to March 31, 2024 was due primarily to the improvement in the credit quality of the PPBL portfolio and a significant decline in our outstanding merchant receivables in the prior period which increased the net charge-off rate presented as a percentage of our outstanding loan balance.
Previous wording
Customer support and operations expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
Customer support and operations expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
Sales and marketing expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
Sales and marketing expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
Sales and marketing expenses increased by $66 million, or 15%, and $32 million, or 2%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year primarily attributable to higher spend on marketing and brand advertising, including the launch of our PayPal Everywhere advertising campaign, partially offset by a decline in employee-related costs. The increase in the nine months ended September 30, 2024 was also attributable to higher revenue share to our partners.
Current wording
Sales and marketing expenses increased $67 million, or 16%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to higher spend of approximately $90 million on marketing and brand advertising, including our PayPal Everywhere advertising campaign, partially offset by lower employee-related costs.
Previous wording
Technology and development expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
Technology and development expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
Technology and development expenses remained consistent in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year. The slight increase in technology and development expenses in the three months ended September 30, 2024 was primarily due to an increase in contractor and consultant costs offset by a decline in employee-related costs associated with headcount reduction. The slight increase in technology and development expenses in the nine months ended September 30, 2024 was driven by increases in cloud computing services utilized in delivering our products and services, amortization expense associated with internally developed software, and software maintenance costs offset by a decline in employee-related costs associated with headcount reduction.
Current wording
Technology and development expenses decreased $11 million in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to lower employee-related costs associated with the prior year reduction in headcount and a decline in depreciation and amortization expense, partially offset by an increase in contractor and consultant costs and higher costs from cloud computing services utilized in delivering our products and services.
Previous wording
General and administrative expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
General and administrative expenses for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
General and administrative expenses increased by $12 million, or 2%, and $48 million, or 3%, in the three and nine months ended September 30, 2024, respectively, compared to the same periods of the prior year due primarily to an increase in indirect tax expense and professional services expense. The increase in general and administrative expenses in the nine months ended September 30, 2024 was also attributable to a contingency reserve, partially offset by declines in facilities expense and depreciation expense.
Current wording
General and administrative expenses increased $39 million, or 8%, in the three months ended March 31, 2025 compared to the same period of the prior year due primarily to an increase in indirect tax expense and professional services expense, partially offset by lower employee-related costs.
Previous wording
Restructuring and other for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Current wording
Restructuring and other for the three months ended March 31, 2025 and 2024 were as follows (in millions):
Previous wording
During the first quarter of 2023, management initiated a global workforce reduction intended to focus resources on core strategic priorities, and improve cost structure and operating efficiency. The associated restructuring charges during the three and nine months ended September 30, 2023 were $3 million and $120 million, respectively. We primarily incurred employee severance and benefits costs, which were substantially completed by the fourth quarter of 2023.
Current wording
During the first quarter of 2024, management initiated a global workforce reduction intended to streamline operations, focus resources on core strategic priorities, and improve our cost structure. The associated restructuring charges during the three months ended March 31, 2024 were $175 million and included employee severance and benefits costs and stock-based compensation expense, which were substantially completed in the fourth quarter of 2024.
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Previous report — wording carried elsewhere
Our key metrics are calculated using internal company data based on the activity we measure on our payments platform and compiled from multiple systems, including systems that are internally developed or acquired through business combinations. While the measurement of our key metrics is based on what we believe to be reasonable methodologies and estimates, there are inherent challenges and limitations in measuring our key metrics globally at our scale. The methodologies used to calculate our key metrics require significant judgment.