PayPal Holdings, Inc.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans, or intentions (such as those relating to future business, future results of operations or financial condition, new or planned features or services, mergers or acquisitions, or management strategies). These forward-looking statements can be identified by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue,” “strategy,” “future,” “opportunity,” “plan,” “project,” “forecast,” “outlook,” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), as supplemented in the risk factors set forth below in Part II, Item 1A, Risk Factors, of this Form 10-Q, as well as in our unaudited condensed consolidated financial statements, related notes, and the other information appearing in this report and our other filings with the Securities and Exchange Commission. We do not intend, and undertake no obligation except as required by law, to update any of our forward-looking statements after the date of this report to reflect actual results, new information, or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. You should read the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in conjunction with the unaudited condensed consolidated financial statements and the related notes that appear in this report. Unless otherwise expressly stated or the context otherwise requires, references to “we,” “our,” “us,” “the Company,” and “PayPal” refer to PayPal Holdings, Inc. and its consolidated subsidiaries.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans, or intentions (such as those relating to future business, future results of operations or financial condition, new or planned features or services, mergers or acquisitions, or management strategies). These forward-looking statements can be identified by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue,” “strategy,” “future,” “opportunity,” “plan,” “guidance,” “project,” “forecast,” “outlook,” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), as supplemented in the risk factors set forth below in Part II, Item 1A, Risk Factors, of this Form 10-Q, as well as in our unaudited condensed consolidated financial statements, related notes, and the other information appearing in this report and our other filings with the Securities and Exchange Commission. We do not intend, and undertake no obligation except as required by law, to update any of our forward-looking statements after the date of this report to reflect actual results, new information, or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. You should read the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in conjunction with the unaudited condensed consolidated financial statements and the related notes that appear in this report. Unless otherwise expressly stated or the context otherwise requires, references to “we,” “our,” “us,” “the Company,” and “PayPal” refer to PayPal Holdings, Inc. and its consolidated subsidiaries.

Previous wording

Cybersecurity and information security risks for global payments and technology companies like us have increased significantly in recent years. Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security incidents, and enable us to effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, we have experienced and expect to continue to experience cybersecurity incidents and remain subject to these risks. There can be no assurance that our security measures will provide sufficient protection or security to prevent breaches or attacks. For additional information regarding our cybersecurity and information security risks, see Part I, Item 1A, Risk Factors in our 2025 Form 10-K, as supplemented and, to the extent inconsistent, superseded below (if applicable) in Part II, Item 1A, Risk Factors of this Form 10-Q.

Current wording

Cybersecurity and information security risks for global payments and technology companies like us have increased significantly in recent years. Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security incidents, and enable us to effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, we have experienced and expect to continue to experience cybersecurity and data privacy incidents and remain subject to these risks. There can be no assurance that our security measures will provide sufficient protection or security to prevent breaches or attacks. For additional information regarding our cybersecurity and information security risks, see Part I, Item 1A, Risk Factors in our 2025 Form 10-K, as supplemented and, to the extent inconsistent, superseded below (if applicable) in Part II, Item 1A, Risk Factors of this Form 10-Q.

Previous wording

On April 29, 2026, the Company announced a strategic reorganization of its business and executive leadership team intended to accelerate execution of its long-term growth priorities, simplify its operating structure, streamline decision-making, and drive innovation. This strategic reorganization and business simplification program, which will focus on realigning our operating structure and accelerating the adoption of Artificial Intelligence and automation across the company, is expected to deliver at least $1.5 billion in gross annualized run-rate savings over the next two to three years. The Company expects to provide additional details regarding the structure of the program and anticipated phasing of savings realization in future periods as the program is developed and implemented.

Current wording

In April 2026, the Company announced a strategic reorganization of its business and executive leadership team intended to accelerate execution of its long-term growth priorities, simplify its operating structure, streamline decision-making, and drive innovation. This strategic reorganization and business simplification program, which will focus on realigning our operating structure and accelerating the adoption of artificial intelligence and automation across the company, is expected to deliver at least $1.5 billion in gross annualized run-rate savings over the next two to three years. The Company intends to reinvest a significant portion of these savings back into its highest-priority growth initiatives. As part of this program, certain actions have been identified that are expected to be completed by the end of this year and which have the potential to generate approximately $400 million of run-rate gross savings, with a portion to be realized in the fourth quarter. The Company is still finalizing plans but this first phase of actions could result in a transformation related charge within the range of approximately $120 million to $140 million during the second half of 2026. The Company expects to provide additional details regarding the structure of the program and anticipated phasing of savings realization in future periods as the program is developed and implemented.

Previous wording

The following table provides a summary of our condensed consolidated financial results for the three months ended March 31, 2026 and 2025:

Current wording

The following table provides a summary of our condensed consolidated financial results for the three and six months ended June 30, 2026 and 2025:

Previous wording

The increase in operating expenses was due primarily to an increase in transaction expense.

Current wording

The increase in operating expenses was due primarily to an increase in transaction expense and, to a lesser extent, an increase in technology and development expense, partially offset by a decline in transaction and credit losses.

Previous wording

The decrease in net income was due to a decrease in operating income and a decrease in other income (expense), net, which was primarily attributable to net losses and impairments on strategic investments in the current period compared to net gains in the prior period, partially offset by a decrease in income tax expense driven by a lower level of pre-tax income and tax effects of stock-based compensation.

Current wording

The decrease in net income was due to a decrease in operating income and a decrease in other income (expense), net, which was primarily attributable to net losses and impairments on strategic investments in the current period compared to net gains in the prior period, partially offset by a decrease in income tax expense driven by a lower level of pre-tax income and U.S income taxed at different rates.

Previous wording

The increase in net revenues was driven primarily by growth in total payment volume (“TPV”) of 11% and growth in revenue earned from an independent chartered financial institution (“partner institution”), partially offset by the unfavorable impact of hedging activities.

Current wording

The increase in net revenues was driven primarily by growth in TPV of 10% and growth in revenue earned from an independent chartered financial institution (“partner institution”).

Previous wording

We have significant international operations that are denominated in foreign currencies, primarily the British pound, Euro, Australian dollar, Canadian dollar, and Indian rupee, 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 42% and 43% of our net revenues from customers domiciled outside of the U.S. in the three months ended March 31, 2026 and 2025, 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 2025 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, Canadian dollar, and Indian rupee, 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 42% and 43% of our net revenues from customers domiciled outside of the U.S. in the three and six months ended June 30, 2026 and 2025, 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 2025 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

In the three months ended March 31, 2026, year-over-year foreign exchange rate movements relative to the U.S. dollar had the following impact on our reported results:

Current wording

In the three and six months ended June 30, 2026, year-over-year foreign exchange rate movements relative to the U.S. dollar had the following impact on our reported results:

Previous wording

The components of our net revenues for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

The components of our net revenues for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

The increase in transaction revenues for the three months ended March 31, 2026 compared to the same period of the prior year was driven primarily by an increase of approximately $410 million, $140 million, and $70 million in revenue from Braintree, PayPal, and Venmo products and services, respectively, which was largely driven by growth in TPV and number of payment transactions, partially offset by approximately $120 million of unfavorable impact from hedging activities resulting from losses in the current period compared to gains in the prior period.

Current wording

The increase in transaction revenues for the three months ended June 30, 2026 compared to the same period of the prior year was primarily attributable to:

Previous wording

Transaction revenues growth was lower than the growth in TPV in the three months ended March 31, 2026 compared to the same period in the prior year due primarily to changes in product mix and unfavorable impact from foreign exchange hedging activities.

Current wording

Transaction revenues growth was lower than the growth in TPV in the three and six months ended June 30, 2026 compared to the same periods in the prior year due primarily to changes in product mix, higher co-marketing campaigns, lower foreign exchange fee revenue, and lower partner incentives.

Previous wording

The increase in revenues from other value added services for the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to an increase of approximately $90 million from revenue earned from a partner institution as well as approximately $40 million in interest and fee revenue earned from our loans receivable portfolios. Revenue from the partner institution is earned primarily through a revenue share arrangement based on the economic performance of the program related to our U.S. revolving consumer credit product and PayPal and Venmo branded credit cards, when such performance exceeds a minimum threshold. These factors favorably impacting revenues from other value added services were partially offset by lower revenues from interest earned on certain assets underlying customer account balances resulting from lower interest rates.

Current wording

•an increase of approximately $40 million from interest and fee revenue earned from our loans receivable portfolios; and

Previous wording

The increase in transaction expense for the three months ended March 31, 2026 compared to the same period in the prior year was primarily attributable to the increase in TPV of 11% and a higher proportion of TPV from our Braintree products and services, which generally have higher expense rates than our other products and services. The increase in transaction expense rate for the three months ended March 31, 2026 compared to the same period in the prior year was primarily attributable to the unfavorable changes in product mix, partially offset by the favorable impact of changes in merchant mix.

Current wording

The increase in transaction expense for the three and six months ended June 30, 2026 compared to the same periods in the prior year was primarily attributable to the increase in TPV of 10% in each respective period, and a higher proportion of TPV from our Braintree products and services, which generally have higher expense rates than our other products and services. The increase in transaction expense rate for the three and six months ended June 30, 2026 compared to the same periods in the prior year was primarily attributable to unfavorable changes in funding mix, partially offset by the favorable impact of changes in merchant mix.

Previous wording

The components of our transaction and credit losses for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

The components of our transaction and credit losses for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Transaction losses and the associated transaction loss rate in the three months ended March 31, 2026 remained consistent compared to the same period in the prior year. The increase due to TPV growth was offset by benefits realized from risk mitigation strategies and higher recoveries.

Current wording

Transaction losses and the associated transaction loss rate in the three and six months ended June 30, 2026 decreased compared to the same periods in the prior year due to lower fraud losses, benefits realized from risk mitigation strategies, and higher recoveries partially offset by an increase due to higher TPV.

Previous wording

The components of credit losses for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

The components of credit losses for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Credit losses in the three months ended March 31, 2026 and 2025 were primarily attributable to loan originations during the period.

Current wording

Credit losses in the three and six months ended June 30, 2026 and 2025 were primarily attributable to loan originations during the periods.

Previous wording

We have entered into forward flow arrangements with third-party investors to sell certain loans receivable portfolios. As of March 31, 2026 and 2025, loans and interest receivable, held for sale were $1.8 billion and $714 million, respectively.

Current wording

We have entered into forward flow arrangements with third-party investors to sell certain loans receivable portfolios. As of June 30, 2026 and 2025, loans and interest receivable, held for sale were $1.9 billion and $817 million, respectively.

Previous wording

The consumer loans and interest receivable balance as of both March 31, 2026 and 2025 was $5.4 billion, net of participation interest sold. The balance remained relatively consistent driven by growth in our revolving credit product portfolio in the United Kingdom (“U.K.”) of approximately $270 million as well as an increase in our interest-bearing installment credit product portfolio in the U.S. of approximately $190 million, offset by the impact of the reclassification of our U.S. short-term, non-interest bearing installment loans to held for sale in the third quarter of 2025 and the associated forward flow arrangement.

Current wording

The consumer loans and interest receivable balance as of June 30, 2026 and 2025 was $5.5 billion and $5.8 billion, respectively, net of participation interest sold, representing a decrease of 6%. The decline in consumer loans and interest receivable outstanding was primarily driven by the impact of the reclassification of our U.S. short-term, non-interest bearing installment loans to held for sale in the third quarter of 2025 and the associated forward flow arrangement and a decline of approximately $200 million in our installment credit product portfolio in Japan, partially offset by growth in our revolving credit product portfolio in the United Kingdom (“U.K.”) and our interest-bearing installment credit product portfolio in the U.S. of approximately $200 million and $180 million, respectively.

Previous wording

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, 2026.

Current wording

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 and six months ended June 30, 2026.

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, and fees receivable outstanding, net of participation interest sold, as of March 31, 2026 and 2025 was $1.9 billion and $1.6 billion, respectively, reflecting an increase of 18%. The increase was due primarily to growth of approximately $180 million in our PayPal Business Loans product portfolio in the U.S. and growth in our PayPal Working Capital product portfolio of approximately $100 million, primarily in Germany.

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 fees receivable outstanding, net of participation interest sold, as of June 30, 2026 and 2025 was $1.9 billion and $1.7 billion, respectively, reflecting an increase of 14%. The increase was due primarily to growth of approximately $140 million in our PayPal Business Loans product portfolio in the U.S. and growth in our PayPal Working Capital product portfolio of approximately $100 million, primarily in Germany.

Previous wording

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, 2026.

Current wording

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 and six months ended June 30, 2026.

Previous wording

The increase in customer support and operations expenses in the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to an increase in employee-related and contractor and consulting costs.

Current wording

The increase in customer support and operations expenses in the three and six months ended June 30, 2026 compared to the same periods in the prior year was due primarily to an increase in employee-related costs of approximately $40 million and $60 million, respectively. The increase in customer support and operations expenses in the six months ended June 30, 2026 compared to the same period in the prior year was also attributable to higher contractor and consulting costs.

Previous wording

The increase in sales and marketing expenses in the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to higher spend on marketing and brand advertising, predominantly for Venmo, partially offset by lower amortization expense for acquired intangible assets.

Current wording

The decrease in sales and marketing expenses in the three months ended June 30, 2026 compared to the same period in the prior year was due primarily to declines in marketing and brand advertising spend and amortization expense for acquired intangible assets, partially offset by an increase in employee-related costs. The decrease in sales and marketing expenses in the six months ended June 30, 2026 compared to the same period in the prior year was due primarily to a decline in amortization expense for acquired intangible assets, partially offset by an increase in employee-related costs and higher spend on marketing and brand advertising, predominantly for Venmo.

Previous wording

The increase in technology and development expenses in the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to increases in employee-related costs, software maintenance costs, depreciation and amortization expense, and contractor and consulting costs.

Current wording

The increase in technology and development expenses in the three and six months ended June 30, 2026 compared to the same periods in the prior year was due primarily to increases in employee-related costs, depreciation and amortization expense from internally developed software, and cloud computing costs utilized in delivering our products and services.

Previous wording

The decrease in general and administrative expenses in the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to a decline in indirect tax expense and professional services expense, partially offset by an increase in employee-related costs.

Current wording

The increase in general and administrative expenses in the three and six months ended June 30, 2026 compared to the same periods in the prior year was due primarily to an increase in indirect tax expense. The increase in general and administrative expenses in the six months ended June 30, 2026 compared to the same period in the prior year was also attributable to an increase in employee-related costs.

Previous wording

During the second quarter of 2025, management undertook a large-scale initiative (the “2Q 2025 Plan”) to reengineer our existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize our workforce. The 2Q 2025 Plan is a transformative unified program designed to streamline operations and includes exiting certain data centers to migrate to more efficient cloud-based solutions. The 2Q 2025 Plan is expected to be executed over a period of 18 to 42 months with the workforce component expected to be substantially completed in 2026 and the technology infrastructure component expected to be substantially completed in 2028. The associated restructuring charges during the three months ended March 31, 2026 were $11 million, consisting of $2 million in employee severance and benefits costs and $9 million in other restructuring costs.

Current wording

During the second quarter of 2025, management undertook a large-scale initiative (the “2Q 2025 Plan”) to reengineer our existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize our workforce. The 2Q 2025 Plan is a transformative unified program designed to streamline operations and includes exiting certain data centers to migrate to more efficient cloud-based solutions. The 2Q 2025 Plan is expected to be executed over a period of 18 to 42 months with the workforce component completed in the second quarter of 2026 and the technology infrastructure component expected to be substantially completed in 2028. The associated restructuring charges during the three and six months ended June 30, 2026 were $2 million and $13 million, respectively, consisting of employee severance and benefits costs and other restructuring costs. The associated restructuring charges for both the three and six months ended June 30, 2025 were $95 million and included employee severance and benefits costs.

Previous wording

In connection with this restructuring, we expect to incur employee severance and benefits costs of approximately $100 million, asset impairment and accelerated depreciation charges of approximately $40 million to $60 million, and other restructuring costs of approximately $110 million to $140 million over the term of the 2Q 2025 Plan. Other restructuring costs relate to process re-engineering and one-time migration to cloud solutions and consist of contractor costs, consulting fees, and prepaid software and maintenance costs without future economic benefit. We expect annualized cost savings of approximately $280 million associated with the impacted workforce and operational costs for our technology infrastructure. We expect that we will begin to realize these cost savings upon the completion of the components of the 2Q 2025 Plan, and also expect to reinvest a portion of the reduction in annual costs to drive business priorities. The timing of activities, cost, and savings estimates continue to be developed and are subject to change.

Current wording

In connection with this restructuring, we expect to incur employee severance and benefits costs of approximately $85 million, asset impairment and accelerated depreciation charges of approximately $40 million to $60 million, and other restructuring costs of approximately $110 million to $140 million over the term of the 2Q 2025 Plan. Other restructuring costs relate to process re-engineering and one-time migration to cloud solutions and consist of contractor costs, consulting fees, and prepaid software and maintenance costs without future economic benefit. We expect annualized cost savings of approximately $260 million associated with the impacted workforce and operational costs for our technology infrastructure. We expect that we will begin to realize these cost savings upon the completion of the components of the 2Q 2025 Plan, and also expect to reinvest a portion of the reduction in annual costs to drive business priorities. The timing of activities, cost, and savings estimates continue to be developed and are subject to change.

Previous wording

During the first quarter of 2025, management initiated a workforce reduction to ensure compliance with a new regulation impacting operations in an international market. The associated restructuring charges during the three months ended March 31, 2025 were $39 million and included employee severance and benefits costs, which were completed in the third quarter of 2025.

Current wording

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

Previous wording

During the three months ended March 31, 2026 and 2025, approximately $61 million and $25 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

Current wording

During the three and six months ended June 30, 2026, approximately $65 million and $126 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value. During the three and six months ended June 30, 2025, approximately $27 million and $52 million, respectively, of losses were recorded in restructuring and other, which included net loss on sale of loans and interest receivable previously held for sale and fair value adjustments to measure loans and interest receivable, held for sale, at the lower of cost or fair value.

Previous wording

The decrease in other income (expense), net in the three months ended March 31, 2026 compared to the same period in the prior year was due primarily to net losses and impairments on strategic investments in the current period compared to net gains in the prior period, which contributed a decrease of approximately $150 million.

Current wording

The decrease in other income (expense), net in the three and six months ended June 30, 2026 compared to the same periods in the prior year was due primarily to:

Previous wording

Our effective income tax rate was 20% for both the three months ended March 31, 2026 and 2025. Our effective tax rate remained consistent compared to the same period in the prior year and was impacted by offsetting factors including: foreign and U.S. income taxed at different rates and discrete tax adjustments, including tax effects of stock-based compensation.

Current wording

Our effective income tax rate was 18% and 19% for the six months ended June 30, 2026 and 2025, respectively. Our effective tax rate decreased compared to the same period in the prior year primarily due to U.S. income taxed at different rates, partially offset by discrete tax adjustments, including tax effects of stock-based compensation.

Previous wording

(1)Excludes assets related to funds receivable and customer accounts of $39.5 billion and $38.2 billion at March 31, 2026 and December 31, 2025, respectively.

Current wording

(1)Excludes assets related to funds receivable and customer accounts of $39.7 billion and $38.2 billion at June 30, 2026 and December 31, 2025, respectively.

Previous wording

(2)Excludes total strategic investments of $1.8 billion and $1.9 billion at March 31, 2026 and December 31, 2025, respectively.

Current wording

(2)Excludes total strategic investments of $1.7 billion and $1.9 billion at June 30, 2026 and December 31, 2025, respectively.

Previous wording

Cash, cash equivalents, and investments held by our foreign subsidiaries were $6.7 billion and $7.5 billion at March 31, 2026 and December 31, 2025, or 57% and 58% of our total cash, cash equivalents, and investments as of those respective dates. At December 31, 2025, all of our cash, cash equivalents, and investments held by foreign subsidiaries were subject to U.S. taxation under Subpart F, Net Controlled Foreign Corporation Tested Income formally known as Global Intangible Low Taxed Income, or the one-time transition tax under the Tax Cuts and Jobs Act of 2017. Subsequent repatriations to the U.S. will not be taxable from a U.S. federal tax perspective except for any tax on foreign exchange gains and losses; however, they may be subject to state income or foreign withholding tax.

Current wording

Cash, cash equivalents, and investments held by our foreign subsidiaries were $6.9 billion and $7.5 billion at June 30, 2026 and December 31, 2025, or 51% and 58% of our total cash, cash equivalents, and investments as of those respective dates. At December 31, 2025, all of our cash, cash equivalents, and investments held by foreign subsidiaries were subject to U.S. taxation under Subpart F, Net Controlled Foreign Corporation Tested Income formally known as Global Intangible Low Taxed Income, or the one-time transition tax under the Tax Cuts and Jobs Act of 2017. Subsequent repatriations to the U.S. will not be taxable from a U.S. federal tax perspective except for any tax on foreign exchange gains and losses; however, they may be subject to state income or foreign withholding tax.

Previous wording

Net cash provided by operating activities remained relatively consistent in the three months ended March 31, 2026 compared to the same period of the prior year due primarily to the impact of changes in deferred income taxes of approximately $280 million and changes in other current and non-current liabilities of approximately $160 million, mostly offset by the impact of changes in other current and non-current assets of approximately $190 million, net losses on strategic investments of approximately $150 million, and changes in accounts receivable of approximately $100 million.

Current wording

Net cash provided by operating activities increased $1.1 billion in the six months ended June 30, 2026 compared to the same period of the prior year due primarily to the impact of:

Previous wording

In the three months ended March 31, 2026 and 2025, cash paid for income taxes, net was $7 million and $95 million, respectively.

Current wording

In the six months ended June 30, 2026 and 2025, cash paid for income taxes, net was $225 million and $837 million, respectively. The difference between our cash paid for income taxes in the periods presented primarily relates to the final transition tax installment payment paid in the previous period.

Previous wording

Net cash used in investing activities decreased $1.5 billion in the three months ended March 31, 2026 compared to the same period of the prior year due primarily to the positive impact of changes in funds receivable of approximately $2.4 billion, partially offset by a decrease of approximately $900 million in maturities and sales, net of purchases of investments.

Current wording

•a decrease of approximately $3.4 billion in maturities and sales, net of purchases of investments, partially offset by

Previous wording

Net cash used in financing activities increased $1.6 billion in the three months ended March 31, 2026 compared to the same period of the prior year due primarily to an increase of approximately $930 million in repayments of borrowings under financing arrangements, a decrease of approximately $560 million in borrowings under financing arrangements, and the negative impact of changes related to funds payable and amounts due to customers of approximately $320 million, partially offset by an increase of $240 million in collateral received related to derivative instruments, net.

Current wording

•the positive impact of changes related to funds payable and amounts due to customers of approximately $410 million.