PayPal Holdings, Inc.

Previous 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.

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, during the third quarter of 2026 management implemented a global workforce reduction to simplify our operations by removing organizational layers across the Company and increasing spans of control (the “3Q 2026 Plan”) resulting in restructuring charges of $152 million in the three months ended September 30, 2026. We expect the 3Q 2026 Plan to generate annualized employee-related cost savings of approximately $340 million.

Previous 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:

Current wording

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

Previous wording

The increase in net revenues was driven primarily by growth in total payment volume (“TPV”) of 10% and favorable impact from hedging activities.

Current wording

The increase in net revenues was driven primarily by growth in total payment volume (“TPV”) of 6% and favorable impact from hedging activities.

Previous 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.

Current wording

The increase in operating expenses was due primarily to an increase in transaction expense and restructuring and other expenses, partially offset by a decline in transaction and credit losses.

Previous wording

Our operating margin declined, reflecting the unfavorable impact of a higher transaction expense growth rate, partially offset by the decline in transaction and credit losses.

Current wording

Our operating margin declined, reflecting the unfavorable impact of transaction expense growth and the increase in restructuring and other expenses, partially offset by the decline in transaction and credit losses.

Previous 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”).

Current wording

The increase in net revenues was driven primarily by growth in TPV of 9%.

Previous wording

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

Current wording

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

Previous wording

Our operating margin declined, reflecting the unfavorable impact of a higher transaction expense growth rate.

Current wording

Our operating margin declined, reflecting the unfavorable impact of transaction expense growth.

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 U.S income taxed at different rates.

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. This decline was 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, which was partially offset by the tax effects of stock-based compensation and other discrete tax items.

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 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.

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% of our net revenues from customers domiciled outside of the U.S. in both the three and nine months ended September 30, 2026. We generated approximately 44% and 43% of our net revenues from customers domiciled outside of the U.S. in the three and nine months ended September 30, 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 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:

Current wording

In the three and nine months ended September 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 and six months ended June 30, 2026 and 2025 were as follows:

Current wording

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

Previous wording

•an increase of approximately $810 million and $130 million in revenue from Braintree and Venmo products and services, respectively, which was largely driven by growth in TPV and number of payment transactions;

Current wording

•an increase of approximately $270 million and $100 million in revenue from Braintree and Venmo products and services, respectively, which was largely driven by growth in TPV and number of payment transactions; and

Previous wording

•approximately $80 million of favorable impact from hedging activities resulting from net gains in the current period compared to net losses in the prior period;

Current wording

•approximately $70 million of favorable impact from hedging activities resulting from net gains in the current period compared to net losses in the prior period;

Previous wording

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

Current wording

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

Previous wording

•an increase of approximately $400 million in revenue from Braintree products and services, which was largely driven by growth in TPV and number of payment transactions;

Current wording

•an increase of approximately $1.1 billion and $230 million in revenue from Braintree and Venmo products and services, respectively, which was largely driven by growth in TPV and number of payment transactions;

Previous wording

•partially offset by a decline in revenue from PayPal products and services of approximately $130 million primarily attributable to higher co-marketing campaigns with large merchants, which are recorded as reductions to revenues, and lower foreign exchange fee revenue.

Current wording

•partially offset by a decline in revenue from PayPal products and services of approximately $230 million attributable to higher co-marketing campaigns and incentives with large merchants, which are recorded as reductions to revenues, and lower foreign exchange fee revenue.

Previous 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.

Current wording

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

Previous wording

Revenues from other value added services for the three months ended June 30, 2026 remained relatively consistent compared to the same period in the prior year due to:

Current wording

The decrease in revenues from other value added services for the three months ended September 30, 2026 compared to the same period in the prior year was primarily due to:

Previous wording

•offset by approximately $40 million lower revenues from interest earned on certain assets underlying customer account balances resulting from lower interest rates on higher average cash and investment balances.

Current wording

•lower revenues from interest earned on certain assets underlying customer account balances resulting from lower interest rates on higher average cash and investment balances;

Previous wording

•an increase of approximately $80 million from interest and fee revenue earned from our loans receivable portfolios;

Current wording

•partially offset by an increase from interest and fee revenue earned from our loans receivable portfolios.

Previous wording

The increase in revenues from other value added services for the six months ended June 30, 2026 compared to the same period in the prior year was primarily attributable to:

Current wording

The increase in revenues from other value added services for the nine months ended September 30, 2026 compared to the same period in the prior year was primarily attributable to:

Previous wording

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

Current wording

•an increase of approximately $110 million from interest and fee revenue earned from our loans receivable portfolios; and

Previous wording

•partially offset by approximately $60 million lower revenues from interest earned on certain assets underlying customer account balances resulting from lower interest rates on higher average cash and investment balances; and

Current wording

•partially offset by approximately $90 million lower revenues from interest earned on certain assets underlying customer account balances resulting from lower interest rates on higher average cash and investment balances; and

Previous 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.

Current wording

The increase in transaction expense for the three and nine months ended September 30, 2026 compared to the same periods in the prior year was primarily attributable to the increase in TPV of 6% and 9%, respectively, 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 decrease in transaction expense rate for the three months ended September 30, 2026 compared to the same period in the prior year was primarily attributable to favorable changes in product mix and certain third-party pricing incentives within our PayPal products and services. The transaction expense rate in the nine months ended September 30, 2026 remained flat compared to the same period in the prior year due to an increase in the proportion of TPV attributable to Venmo and Braintree products and services from which the favorability of lower expense rates within Venmo products and services was offset by higher expense rates from Braintree products and services.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Transaction losses and the associated transaction loss rate in the three and nine months ended September 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 and six months ended June 30, 2026 and 2025 were as follows:

Current wording

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

Previous wording

(2)Reserve build (release) 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. Additionally, it includes the release of reserves as a result of the reclassification of certain loans and interest receivable to held for sale.

Previous wording

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

Current wording

Credit losses in the three and nine months ended September 30, 2026 and 2025 were primarily attributable to loan originations during the periods, partially offset by the release of reserves as a result of the reclassification of certain loans and interest receivable to held for sale.

Previous 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.

Current wording

As of September 30, 2026 and 2025, loans and interest receivable, held for sale were $3.7 billion and $1.4 billion, respectively. Loans and interest receivable, held for sale includes certain loans receivable portfolios where we have entered into forward flow arrangements with third-party investors. Additionally, in the third quarter of 2026, we reclassified $1.5 billion of Japan installment loan receivables to held for sale.

Previous 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.

Current wording

The consumer loans and interest receivable balance as of September 30, 2026 and 2025 was $4.2 billion and $5.2 billion, respectively, net of participation interest sold, representing a decrease of 19%. The decline in consumer loans and interest receivable outstanding was primarily driven by the impact of the reclassification of certain Japan installment loans to held for sale in the third quarter of 2026, 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 $270 million and $170 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 and six months ended June 30, 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 nine months ended September 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 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.

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 September 30, 2026 and 2025 was $1.9 billion and $1.7 billion, respectively, reflecting an increase of 9%. The increase was due primarily to growth of approximately $100 million in our PayPal Business Loans product portfolio in the U.S. and growth of approximately $50 million in our PayPal Working Capital product portfolio 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 and six months ended June 30, 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 nine months ended September 30, 2026.

Previous 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.

Current wording

The decrease in customer support and operations expenses in the three months ended September 30, 2026 compared to the same period in the prior year was due primarily to a decline in other operating charges, partially offset by an increase in employee-related costs and customer onboarding costs. The increase in customer support and operations expenses in the nine months ended September 30, 2026 compared to the same period in the prior year was primarily attributable to an increase in employee-related costs of approximately $70 million.

Previous 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.

Current wording

The decrease in sales and marketing expenses in the three and nine months ended September 30, 2026 compared to the same periods in the prior year was due primarily to a decline in amortization expense for acquired intangible assets, partially offset by an increase in marketing-related expenses. Sales and marketing expenses in the nine months ended September 30, 2026 compared to the same period in the prior year was also impacted by an increase in employee-related costs.

Previous 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.

Current wording

The increase in technology and development expenses in the three months ended September 30, 2026 compared to the same period in the prior year was due primarily to increases in depreciation and amortization expense from internally developed software, cloud computing costs utilized in delivering our products and services, and higher software maintenance costs, partially offset by lower contractor and consulting costs. The increase in technology and development expenses in the nine months ended September 30, 2026 compared to the same period in the prior year was due primarily to increases in employee-related costs of approximately $60 million, depreciation and amortization expense from internally developed software of approximately $60 million, cloud computing costs utilized in delivering our products and services of approximately $40 million, and higher software maintenance costs of approximately $40 million.

Previous 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.

Current wording

General and administrative expenses in the three months ended September 30, 2026 was relatively consistent when compared to the same period in the prior year due primarily to an increase in employee-related costs, offset by a decline in indirect tax expense. The increase in general and administrative expenses in the nine months ended September 30, 2026 compared to the same period in the prior year was primarily attributable to an increase in employee-related costs and costs associated with enterprise software services, partially offset by lower contractor and consulting costs.

Previous wording

In the three and six months ended June 30, 2026, we recorded $44 million in restructuring charges associated with the strategic reorganization announced in April 2026. These charges were primarily employee severance and benefits costs including stock-based compensation.

Current wording

In the three and nine months ended September 30, 2026, we recorded $17 million and $61 million in restructuring charges associated with the strategic reorganization announced in April 2026. These charges were primarily employee severance and benefits costs, which included stock-based compensation, and consulting costs.