ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated Filer | ☐ | |||||||||
Non-accelerated Filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
Page | ||||||||
Part I | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 1B. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Part II | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Item 7. | ||||||||
Item 7A. | ||||||||
Item 8. | ||||||||
Item 9. | ||||||||
Item 9A. | ||||||||
Item 9B. | ||||||||
Item 9C. | ||||||||
Part III | ||||||||
Item 10. | ||||||||
Item 11. | ||||||||
Item 12. | ||||||||
Item 13. | ||||||||
Item 14. | ||||||||
Part IV | ||||||||
Item 15. | ||||||||
Item 16. |
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United States | Other Countries | Total | |||||||||||||||
(In millions) | |||||||||||||||||
Owned facilities | 1.0 | 0.1 | 1.1 | ||||||||||||||
Leased facilities | 2.2 | 2.0 | 4.2 | ||||||||||||||
Total facilities | 3.2 | 2.1 | 5.3 |
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Total number of shares purchased | Average price paid per share(1) | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs | ||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||
Balance as of September 30, 2022 | $ | 16,871 | |||||||||||||||||||||
October 1, 2022 through October 31, 2022 | 8.2 | $ | 85.81 | 8.2 | 16,167 | ||||||||||||||||||
November 1, 2022 through November 30, 2022 | 3.6 | $ | 85.42 | 3.6 | 15,861 | ||||||||||||||||||
December 1, 2022 through December 31, 2022 | — | $ | — | — | 15,861 | ||||||||||||||||||
Balance as of December 31, 2022 | 11.8 | 11.8 | $ | 15,861 |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Net revenues generated from the U.K. | 8 | % | 9 | % | 11 | % | |||||||||||
Net revenues generated from the EU | 17 | % | 19 | % | 19 | % |
December 31, 2022 | December 31, 2021 | ||||||||||
Gross loans and interest receivable due from customers in the U.K. | 29 | % | 40 | % | |||||||
Gross loans and interest receivable due from customers in the EU | 28 | % | 21 | % |
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Year Ended December 31, | Percent Increase/(Decrease) | ||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||||||||||||||||
Net revenues | $ | 27,518 | $ | 25,371 | $ | 21,454 | 8 | % | 18 | % | |||||||||||||||||||
Operating expenses | 23,681 | 21,109 | 18,165 | 12 | % | 16 | % | ||||||||||||||||||||||
Operating income | 3,837 | 4,262 | 3,289 | (10) | % | 30 | % | ||||||||||||||||||||||
Operating margin | 14 | % | 17 | % | 15 | % | ** | ** | |||||||||||||||||||||
Other income (expense), net | (471) | (163) | 1,776 | 189 | % | (109) | % | ||||||||||||||||||||||
Income tax expense (benefit) | 947 | (70) | 863 | ** | (108) | % | |||||||||||||||||||||||
Effective tax rate | 28 | % | (2) | % | 17 | % | ** | ** | |||||||||||||||||||||
Net income (loss) | $ | 2,419 | $ | 4,169 | $ | 4,202 | (42) | % | (1) | % | |||||||||||||||||||
Net income (loss) per diluted share | $ | 2.09 | $ | 3.52 | $ | 3.54 | (41) | % | (1) | % | |||||||||||||||||||
Net cash provided by operating activities(1) | $ | 5,813 | $ | 5,797 | $ | 6,219 | — | % | (7) | % |
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Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
(Unfavorable) favorable impact to net revenues (exclusive of hedging impact) | $ | (949) | $ | 440 | |||||||
Hedging impact | 462 | (190) | |||||||||
(Unfavorable) favorable impact to net revenues | (487) | 250 | |||||||||
Favorable (unfavorable) impact to operating expense | 492 | (181) | |||||||||
Net favorable impact to operating income | $ | 5 | $ | 69 |
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Year Ended December 31, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||||||||
Number of payment transactions per active account | 51.4 | 45.4 | 40.9 | 13 | % | 11 | % | ||||||||||||||||||||||
Percent of cross-border TPV | 13 | % | 16 | % | 17 | % | ** | ** |
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Year Ended December 31, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||
Transaction expense | $ | 12,173 | $ | 10,315 | $ | 7,934 | 18 | % | 30 | % | |||||||||||||||||||
Transaction and credit losses | 1,572 | 1,060 | 1,741 | 48 | % | (39) | % | ||||||||||||||||||||||
Customer support and operations | 2,120 | 2,075 | 1,778 | 2 | % | 17 | % | ||||||||||||||||||||||
Sales and marketing | 2,257 | 2,445 | 1,861 | (8) | % | 31 | % | ||||||||||||||||||||||
Technology and development | 3,253 | 3,038 | 2,642 | 7 | % | 15 | % | ||||||||||||||||||||||
General and administrative | 2,099 | 2,114 | 2,070 | (1) | % | 2 | % | ||||||||||||||||||||||
Restructuring and other charges | 207 | 62 | 139 | 234 | % | (55) | % | ||||||||||||||||||||||
Total operating expenses | $ | 23,681 | $ | 21,109 | $ | 18,165 | 12 | % | 16 | % | |||||||||||||||||||
Transaction expense rate(1) | 0.90 | % | 0.83 | % | 0.85 | % | ** | ** | |||||||||||||||||||||
Transaction and credit loss rate(2) | 0.12 | % | 0.09 | % | 0.19 | % | ** | ** |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Net charge-offs(1) | $ | 267 | $ | 219 | $ | 310 | |||||||||||
Reserve build (release)(2) | 135 | (312) | 296 | ||||||||||||||
Credit losses | $ | 402 | $ | (93) | $ | 606 |
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December 31, | |||||||||||
2022 | 2021 | ||||||||||
Percent of consumer loans and interest receivable current | 97.1 | % | 97.0 | % | |||||||
Percent of consumer loans and interest receivable > 90 days outstanding(1) | 1.4 | % | 1.5 | % | |||||||
Net charge-off rate(2) | 4.5 | % | 4.3 | % |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Percent of merchant loans, advances, and interest and fees receivable current | 90.7 | % | 91.8 | % | |||||||
Percent of merchant loans, advances, and interest and fees receivable > 90 days outstanding(1) | 3.7 | % | 3.1 | % | |||||||
Net charge-off rate (2) | 4.5 | % | 4.7 | % |
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Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Cash, cash equivalents, and investments(1)(2) | $ | 13,723 | $ | 12,981 |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities(1) | $ | 5,813 | $ | 5,797 | $ | 6,219 | |||||||||||
Investing activities(1) | (3,421) | (5,149) | (16,545) | ||||||||||||||
Financing activities(1) | (1,110) | (557) | 12,454 | ||||||||||||||
Effect of exchange rates on cash, cash equivalents, and restricted cash | (155) | (102) | 169 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 1,127 | $ | (11) | $ | 2,297 |
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Purchase Obligations | Operating Leases | Transition Tax | Long-term Debt | Total | |||||||||||||||||||||||||
Payments Due During the Year Ending December 31, | (In millions) | ||||||||||||||||||||||||||||
2023 | $ | 900 | $ | 170 | $ | 212 | $ | 739 | $ | 2,021 | |||||||||||||||||||
2024 | 708 | 157 | 284 | 1,568 | 2,717 | ||||||||||||||||||||||||
2025 | 374 | 116 | 354 | 1,280 | 2,124 | ||||||||||||||||||||||||
2026 | 329 | 105 | — | 1,522 | 1,956 | ||||||||||||||||||||||||
2027 | 20 | 92 | — | 729 | 841 | ||||||||||||||||||||||||
Thereafter | — | 150 | — | 9,215 | 9,365 | ||||||||||||||||||||||||
$ | 2,331 | $ | 790 | $ | 850 | $ | 15,053 | $ | 19,024 |
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1. Consolidated Financial Statements | Page Number | ||||
2. Financial Statement Schedule | |||||
All other schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. | |||||
The information required by this Item is set forth in the Index of Exhibits that precedes the signature page of this Annual Report. |
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As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions, except par value) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, net | |||||||||||
Loans and interest receivable, net of allowances of $ | |||||||||||
Funds receivable and customer accounts | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Long-term investments | |||||||||||
Property and equipment, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Funds payable and amounts due to customers | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Income taxes payable | |||||||||||
Total current liabilities | |||||||||||
Deferred tax liability and other long-term liabilities | |||||||||||
Long-term debt | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Equity: | |||||||||||
Common stock, $ | |||||||||||
Preferred stock, $ | |||||||||||
Treasury stock at cost, | ( | ( | |||||||||
Additional paid-in-capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ( | |||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions, except for per share amounts) | |||||||||||||||||
Net revenues | $ | $ | $ | ||||||||||||||
Operating expenses: | |||||||||||||||||
Transaction expense | |||||||||||||||||
Transaction and credit losses | |||||||||||||||||
Customer support and operations | |||||||||||||||||
Sales and marketing | |||||||||||||||||
Technology and development | |||||||||||||||||
General and administrative | |||||||||||||||||
Restructuring and other charges | |||||||||||||||||
Total operating expenses | |||||||||||||||||
Operating income | |||||||||||||||||
Other income (expense), net | ( | ( | |||||||||||||||
Income before income taxes | |||||||||||||||||
Income tax expense (benefit) | ( | ||||||||||||||||
Net income (loss) | $ | $ | $ | ||||||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic | $ | $ | $ | ||||||||||||||
Diluted | $ | $ | $ | ||||||||||||||
Weighted average shares: | |||||||||||||||||
Basic | |||||||||||||||||
Diluted |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Net income (loss) | $ | $ | $ | ||||||||||||||
Other comprehensive income (loss), net of reclassification adjustments: | |||||||||||||||||
Foreign currency translation adjustments (“CTA”) | ( | ( | ( | ||||||||||||||
Net investment hedges CTA (losses) gains, net | ( | ||||||||||||||||
Tax benefit on net investment hedges CTA losses, net | |||||||||||||||||
Unrealized (losses) gains on cash flow hedges, net | ( | ( | |||||||||||||||
Tax benefit (expense) on unrealized (losses) gains on cash flow hedges, net | ( | ||||||||||||||||
Unrealized (losses) gains on investments, net | ( | ( | |||||||||||||||
Tax benefit (expense) on unrealized (losses) gains on investments, net | ( | ||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||
Comprehensive income (loss) | $ | $ | $ |
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Common Stock Shares | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2019 | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||
— | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Foreign CTA | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Net investment hedge CTA gain | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Unrealized losses on cash flow hedges, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Tax benefit on unrealized losses on cash flow hedges, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Unrealized gains on investments, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Tax expense on unrealized gains on investments, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
Common stock repurchased | ( | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Foreign CTA | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Unrealized gains on cash flow hedges, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Tax expense on unrealized gains on cash flow hedges, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Unrealized losses on investments, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Tax benefit on unrealized losses on investments, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
Common stock repurchased | ( | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Change in noncontrolling interest | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Foreign CTA | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Net investment hedge CTA losses, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Tax benefit on net investment hedges CTA losses, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Unrealized losses on cash flow hedges, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Tax benefit on unrealized losses on cash flow hedges, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Unrealized losses on investments, net | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Tax benefit on unrealized losses on investments, net | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock and stock-based awards issued, net of shares withheld for employee taxes | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
Common stock repurchased | ( | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balances at December 31, 2022 | $ | ( | $ | $ | ( | $ | $ | $ |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | $ | $ | ||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||
Transaction and credit losses | |||||||||||||||||
Depreciation and amortization | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Deferred income taxes | ( | ( | |||||||||||||||
Net (gains) losses on strategic investments | ( | ( | |||||||||||||||
Other | |||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||
Accounts receivable | ( | ( | ( | ||||||||||||||
Transaction loss allowance for cash losses, net | ( | ( | ( | ||||||||||||||
Other current assets and non-current assets | ( | ( | |||||||||||||||
Accounts payable | ( | ( | ( | ||||||||||||||
Income taxes payable | ( | ||||||||||||||||
Other current liabilities and non-current liabilities | |||||||||||||||||
Net cash provided by operating activities | |||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchases of property and equipment | ( | ( | ( | ||||||||||||||
Proceeds from sales of property and equipment | |||||||||||||||||
Purchases and originations of loans receivable | ( | ( | ( | ||||||||||||||
Principal repayment of loans receivable | |||||||||||||||||
Purchases of investments | ( | ( | ( | ||||||||||||||
Maturities and sales of investments | |||||||||||||||||
Acquisitions, net of cash and restricted cash acquired | ( | ( | |||||||||||||||
Funds receivable | ( | ( | |||||||||||||||
Collateral posted related to derivative instruments, net | ( | ( | |||||||||||||||
Other investing activities | |||||||||||||||||
Net cash used in investing activities | ( | ( | ( | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from issuance of common stock | |||||||||||||||||
Purchases of treasury stock | ( | ( | ( | ||||||||||||||
Tax withholdings related to net share settlements of equity awards | ( | ( | ( | ||||||||||||||
Borrowings under financing arrangements | |||||||||||||||||
Repayments under financing arrangements | ( | ( | ( | ||||||||||||||
Funds payable and amounts due to customers | |||||||||||||||||
Collateral received related to derivative instruments, net | ( | ( | |||||||||||||||
Other financing activities | ( | ||||||||||||||||
Net cash (used in) provided by financing activities | ( | ( | |||||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ( | |||||||||||||||
Net change in cash, cash equivalents, and restricted cash | ( | ||||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | $ |
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Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Supplemental cash flow disclosures: | |||||||||||||||||
Cash paid for interest | $ | $ | $ | ||||||||||||||
Cash paid for income taxes, net | $ | $ | $ | ||||||||||||||
The table below reconciles cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the total of the same amounts shown in the consolidated statements of cash flows: | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Short-term and long-term investments | |||||||||||||||||
Funds receivable and customer accounts | |||||||||||||||||
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ | $ | $ |
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Year Ended December 31, 2021 | |||||||||||||||||
(In millions) | |||||||||||||||||
As Previously Reported (1) | Adjustments | Reclassified | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities(2) | $ | $ | ( | $ | |||||||||||||
Investing activities(3) | ( | ( | |||||||||||||||
Financing activities(4) | ( | ( | |||||||||||||||
Effect of exchange rates on cash, cash equivalents, and restricted cash | ( | ( | |||||||||||||||
Net decrease in cash, cash equivalents, and restricted cash | $ | ( | $ | $ | ( |
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Year Ended December 31, 2020 | |||||||||||||||||
(In millions) | |||||||||||||||||
As Previously Reported (1) | Adjustments | Reclassified | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities(2) | $ | $ | $ | ||||||||||||||
Investing activities(3) | ( | ( | ( | ||||||||||||||
Financing activities(4) | ( | ||||||||||||||||
Effect of exchange rates on cash, cash equivalents, and restricted cash | |||||||||||||||||
Net increase in cash, cash equivalents, and restricted cash | $ | $ | $ |
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![]() | 74 |
![]() | 75 |
![]() | 76 |
![]() | 77 |
![]() | 78 |
![]() | 79 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Primary geographical markets | |||||||||||||||||
U.S. | $ | $ | $ | ||||||||||||||
United Kingdom (“U.K.”) | |||||||||||||||||
Other countries(1) | |||||||||||||||||
Total net revenues(2) | $ | $ | $ | ||||||||||||||
Revenue category | |||||||||||||||||
Transaction revenues | $ | $ | $ | ||||||||||||||
Revenues from other value added services | |||||||||||||||||
Total net revenues(2) | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | $ | $ | ||||||||||||||
Denominator: | |||||||||||||||||
Weighted average shares of common stock—basic | |||||||||||||||||
Dilutive effect of equity incentive awards | |||||||||||||||||
Weighted average shares of common stock—diluted | |||||||||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic | $ | $ | $ | ||||||||||||||
Diluted | $ | $ | $ | ||||||||||||||
Common stock equivalents excluded from net income (loss) per diluted share because their effect would have been anti-dilutive or potentially dilutive |
![]() | 80 |
(In millions) | |||||
Goodwill | $ | ||||
Customer lists and user base | |||||
Marketing related | |||||
Developed technology | |||||
Total intangibles | $ | ||||
Loans and interest receivable, net | |||||
Cash and cash equivalents | |||||
Other net assets | |||||
Short-term and long-term debt | ( | ||||
Deferred tax liabilities, net | ( | ||||
Total purchase price | $ |
![]() | 81 |
(In millions) | |||||
Goodwill | $ | ||||
Customer lists and user base | |||||
Marketing related | |||||
Developed technology | |||||
Total intangibles | $ | ||||
Accounts receivable, net | |||||
Deferred tax liabilities, net | ( | ||||
Other net liabilities | ( | ||||
Total purchase price | $ |
![]() | 82 |
December 31, 2020 | Goodwill Acquired | Adjustments | December 31, 2021 | Goodwill Acquired | Adjustments | December 31, 2022 | |||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Total goodwill | $ | ( | $ | ( | $ |
December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life (Years) | ||||||||||||||||||||||||||||||||||||||||
(In millions, except years) | |||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Customer lists and user base | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Marketing related | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Developed technology | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
All other | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ |
Fiscal years: | (In millions) | ||||
2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
$ |
![]() | 83 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Lease expense | |||||||||||||||||
Operating lease expense | $ | $ | $ | ||||||||||||||
Sublease income | ( | ( | ( | ||||||||||||||
Lease expense, net | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
Operating cash flows from operating leases | $ | $ | $ | ||||||||||||||
ROU lease assets obtained in exchange for new operating lease liabilities | $ | $ | $ | ||||||||||||||
Other non-cash ROU lease asset activity | $ | ( | $ | ( | $ | ( |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions, except weighted-average figures) | |||||||||||
$ | $ | ||||||||||
Total operating lease liabilities | $ | $ | |||||||||
Weighted-average remaining lease term—operating leases | |||||||||||
Weighted-average discount rate—operating leases | % | % |
![]() | 84 |
Operating Leases | |||||
Fiscal years: | (In millions) | ||||
2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ | ||||
Less: present value discount | ( | ||||
Lease liability | $ |
![]() | 85 |
Bitcoin | $ | ||||
Ethereum | |||||
Other | |||||
Crypto asset safeguarding liability | $ | ||||
Crypto asset safeguarding asset | $ |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Property and equipment, net: | |||||||||||
Computer equipment and software | $ | $ | |||||||||
Internal use software and website development costs | |||||||||||
Land and buildings | |||||||||||
Leasehold improvements | |||||||||||
Furniture and fixtures | |||||||||||
Development in progress and other | |||||||||||
Total property and equipment, gross | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Total property and equipment, net | $ | $ |
![]() | 86 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Long-lived assets: | |||||||||||
U.S. | $ | $ | |||||||||
Other countries | |||||||||||
Total long-lived assets | $ | $ |
Unrealized Gains (Losses) on Cash Flow Hedges | Unrealized Gains (Losses) on Investments | Foreign Currency Translation Adjustment (“CTA”) | Net Investment Hedges CTA Gains (Losses) | Estimated Tax (Expense) Benefit | Total | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Less: Amount of gain reclassified from AOCI | |||||||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Ending balance | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( |
Unrealized Gains (Losses) on Cash Flow Hedges | Unrealized Gains (Losses) on Investments | Foreign CTA | Net Investment Hedges CTA Gains (Losses) | Estimated Tax (Expense) Benefit | Total | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||||||||
Less: Amount of loss reclassified from AOCI | ( | ( | |||||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Ending balance | $ | $ | ( | $ | ( | $ | $ | ( | $ | ( |
![]() | 87 |
Unrealized Gains (Losses) on Cash Flow Hedges | Unrealized Gains (Losses) on Investments | Foreign CTA | Net Investment Hedges CTA Gains (Losses) | Estimated Tax (Expense) Benefit | Total | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||||||||
Less: Amount of gain reclassified from AOCI | |||||||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | $ | ( | $ | $ | $ | ( |
Details about AOCI Components | Amount of Gains (Losses) Reclassified from AOCI | Affected Line Item in the Statements of Income (Loss) | ||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Gains (losses) on cash flow hedges—foreign currency exchange contracts | $ | $ | ( | $ | Net revenues | |||||||||||||||||||||
Unrealized gains (losses) on investments | Other income (expense), net | |||||||||||||||||||||||||
( | Income before income taxes | |||||||||||||||||||||||||
Income tax expense (benefit) | ||||||||||||||||||||||||||
Total reclassifications for the period | $ | $ | ( | $ | Net income (loss) |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Interest income | $ | $ | $ | ||||||||||||||
Interest expense | ( | ( | ( | ||||||||||||||
Net gains (losses) on strategic investments | ( | ||||||||||||||||
Other | ( | ( | ( | ||||||||||||||
Other income (expense), net | $ | ( | $ | ( | $ |
![]() | 88 |
December 31, 2022 | December 31, 2021 | ||||||||||
(In millions) | |||||||||||
Funds receivable and customer accounts: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Time deposits | |||||||||||
Available-for-sale debt securities | |||||||||||
Funds receivable | |||||||||||
Total funds receivable and customer accounts | $ | $ | |||||||||
Short-term investments: | |||||||||||
Time deposits | $ | $ | |||||||||
Available-for-sale debt securities | |||||||||||
Restricted cash | |||||||||||
Total short-term investments | $ | $ | |||||||||
Long-term investments: | |||||||||||
Time deposits | $ | $ | |||||||||
Available-for-sale debt securities | |||||||||||
Strategic investments | |||||||||||
Total long-term investments | $ | $ |
December 31, 2022(1) | |||||||||||||||||||||||
Gross Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Funds receivable and customer accounts: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Municipal securities | ( | ||||||||||||||||||||||
Commercial paper | ( | ||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | ( | ||||||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | ( | ||||||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Total available-for-sale debt securities(2) | $ | $ | $ | ( | $ |
![]() | 89 |
December 31, 2021(1) | |||||||||||||||||||||||
Gross Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Funds receivable and customer accounts: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Municipal securities | |||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | |||||||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | ( | ||||||||||||||||||||||
Foreign government and agency securities | ( | ||||||||||||||||||||||
Corporate debt securities | ( | ||||||||||||||||||||||
Asset-backed securities | ( | ||||||||||||||||||||||
Total available-for-sale debt securities(2) | $ | $ | $ | ( | $ |
![]() | 90 |
December 31, 2022(1) | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Funds receivable and customer accounts: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Municipal securities | ( | ( | |||||||||||||||||||||||||||||||||
Commercial paper | ( | ( | |||||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total available-for-sale debt securities | $ | $ | ( | $ | $ | ( | $ | $ | ( |
![]() | 91 |
December 31, 2021(1) | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Funds receivable and customer accounts: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | |||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Municipal securities | |||||||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | |||||||||||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||||||||||||||
U.S. government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Foreign government and agency securities | ( | ( | |||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | |||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Total available-for-sale debt securities | $ | $ | ( | $ | $ | $ | $ | ( |
December 31, 2022 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
(In millions) | |||||||||||
One year or less | $ | $ | |||||||||
After one year through five years | |||||||||||
After five years through ten years | |||||||||||
After ten years | |||||||||||
Total | $ | $ |
![]() | 92 |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Carrying amount, beginning of period | $ | $ | |||||||||
Adjustments related to non-marketable equity securities: | |||||||||||
Net additions(1) | |||||||||||
Gross unrealized gains | |||||||||||
Gross unrealized losses and impairments | ( | ||||||||||
Carrying amount, end of period | $ | $ |
December 31, 2022 | December 31, 2021 | ||||||||||
(In millions) | |||||||||||
Cumulative gross unrealized gains | $ | $ | |||||||||
Cumulative gross unrealized losses and impairments | $ | ( | $ | ( |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Net unrealized gains (losses) | $ | $ | ( |
![]() | 93 |
December 31, 2022 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents(1) | $ | $ | $ | |||||||||||||||||
Short-term investments(2): | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Commercial paper | ||||||||||||||||||||
Total short-term investments | ||||||||||||||||||||
Funds receivable and customer accounts(3): | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Municipal securities | ||||||||||||||||||||
Commercial paper | ||||||||||||||||||||
Total funds receivable and customer accounts | ||||||||||||||||||||
Derivatives | ||||||||||||||||||||
Crypto asset safeguarding asset | ||||||||||||||||||||
Long-term investments(2),(4): | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||
Total long-term investments | ||||||||||||||||||||
Total financial assets | $ | $ | $ | |||||||||||||||||
Liabilities: | ||||||||||||||||||||
Derivatives | $ | $ | $ | |||||||||||||||||
Crypto asset safeguarding liability | ||||||||||||||||||||
Total financial liabilities | $ | $ | $ |
![]() | 94 |
December 31, 2021 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents(1) | $ | $ | $ | |||||||||||||||||
Short-term investments(2): | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Total short-term investments | ||||||||||||||||||||
Funds receivable and customer accounts(3): | — | |||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Municipal securities | ||||||||||||||||||||
Total funds receivable and customer accounts | ||||||||||||||||||||
Derivatives | ||||||||||||||||||||
Long-term investments(2), (4): | ||||||||||||||||||||
U.S. government and agency securities | ||||||||||||||||||||
Foreign government and agency securities | ||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||
Total long-term investments | ||||||||||||||||||||
Total financial assets | $ | $ | $ | |||||||||||||||||
Liabilities: | ||||||||||||||||||||
Derivatives | $ | $ | $ |
![]() | 95 |
December 31, 2022 | December 31, 2021 | ||||||||||
(In millions) | |||||||||||
Funds receivable and customer accounts | $ | $ | |||||||||
Short-term investments | $ | $ | |||||||||
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Funds receivable and customer accounts | $ | ( | $ | ( | |||||||
Short-term investments | $ | $ | ( | ||||||||
December 31, 2022 | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Non-marketable equity securities measured using the Measurement Alternative(1) | $ | $ | $ | |||||||||||||||||
Other assets(2) | ||||||||||||||||||||
Total | $ | $ | $ |
December 31, 2021 | Significant Other Observable Inputs (Level 2) | |||||||||||||
(In millions) | ||||||||||||||
Non-marketable equity securities measured using the Measurement Alternative(1) | $ | $ | ||||||||||||
Other assets(2) | ||||||||||||||
Total | $ | $ |
![]() | 96 |
![]() | 97 |
![]() | 98 |
Balance Sheet Location | As of December 31, | ||||||||||||||||
2022 | 2021 | ||||||||||||||||
Derivative Assets: | (In millions) | ||||||||||||||||
Foreign currency exchange contracts designated as hedging instruments | $ | $ | |||||||||||||||
Foreign currency exchange contracts designated as hedging instruments | |||||||||||||||||
Foreign currency exchange contracts not designated as hedging instruments | |||||||||||||||||
Total derivative assets | $ | $ | |||||||||||||||
Derivative Liabilities: | |||||||||||||||||
Foreign currency exchange contracts designated as hedging instruments | $ | $ | |||||||||||||||
Foreign currency exchange contracts designated as hedging instruments | |||||||||||||||||
Foreign currency exchange contracts not designated as hedging instruments | |||||||||||||||||
Total derivative liabilities | $ | $ |
December 31, 2022 | December 31, 2021 | |||||||||||||
(In millions) | ||||||||||||||
Cash collateral posted(1) | $ | $ | ||||||||||||
Cash collateral received(2) | $ | $ | ||||||||||||
![]() | 99 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Total amounts presented in the consolidated statements of income (loss) in which the effects of derivatives are recorded | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||
Gains (losses) on derivatives in cash flow hedging relationship: | |||||||||||||||||||||||||||||||||||
Amount of gains (losses) on foreign exchange contracts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||
Gains on derivatives in net investment hedging relationship: | |||||||||||||||||||||||||||||||||||
Amount of gains on foreign exchange contracts excluded from the assessment of effectiveness | |||||||||||||||||||||||||||||||||||
Gains (losses) on derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Amount of gains (losses) on foreign exchange contracts | ( | ||||||||||||||||||||||||||||||||||
Amount of losses on equity derivative contracts (1) | ( | ( | |||||||||||||||||||||||||||||||||
Total gains (losses) | $ | $ | $ | ( | $ | $ | $ | ( |
![]() | 100 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Unrealized gains (losses) on foreign exchange contracts designated as cash flow hedges | $ | $ | $ | ( | |||||||||||||
Unrealized (losses) gains on foreign exchange contracts designated as net investment hedges | ( | ||||||||||||||||
Total unrealized gains (losses) recognized from derivative contracts designated as hedging instruments in the consolidated statements of comprehensive income (loss) | $ | $ | $ | ( |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Foreign exchange contracts designated as hedging instruments | $ | $ | |||||||||
Foreign exchange contracts not designated as hedging instruments | |||||||||||
Total | $ | $ |
![]() | 101 |
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving Loans Amortized Cost Basis | Installment Loans Amortized Cost Basis | |||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | Total | Percent | ||||||||||||||||||||||||||||||||||||||||||||
Current | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
30 - 59 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
60 - 89 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
90 - 179 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total(1) | $ | $ | $ | $ | $ | $ | $ |
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving Loans Amortized Cost Basis | Installment Loans Amortized Cost Basis | |||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2018 | 2017 | Total | Percent | ||||||||||||||||||||||||||||||||||||||||||||
Current | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
30 - 59 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
60 - 89 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
90 - 179 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total(1) | $ | $ | $ | $ | $ | $ | $ |
December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Consumer Loans Receivable | Interest Receivable | Total Allowance(1) | Consumer Loans Receivable | Interest Receivable | Total Allowance(1) | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Provisions | |||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||
Recoveries | |||||||||||||||||||||||
Other(2) | ( | ( | ( | ||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ |
![]() | 102 |
![]() | 103 |
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | Total | Percent | ||||||||||||||||||||||||||||||||||||||
Current | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
30 - 59 Days | ||||||||||||||||||||||||||||||||||||||||||||
60 - 89 Days | ||||||||||||||||||||||||||||||||||||||||||||
90 - 179 Days | ||||||||||||||||||||||||||||||||||||||||||||
180+ Days | ||||||||||||||||||||||||||||||||||||||||||||
Total(1) | $ | $ | $ | $ | $ | $ |
December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2018 | 2017 | Total | Percent | ||||||||||||||||||||||||||||||||||||||
Current | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
30 - 59 Days | ||||||||||||||||||||||||||||||||||||||||||||
60 - 89 Days | ||||||||||||||||||||||||||||||||||||||||||||
90 - 179 Days | ||||||||||||||||||||||||||||||||||||||||||||
180+ Days | ||||||||||||||||||||||||||||||||||||||||||||
Total(1) | $ | $ | $ | $ | $ | $ |
December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Merchant Loans and Advances | Interest and Fees Receivable | Total Allowance | Merchant Loans and Advances | Interest and Fees Receivable | Total Allowance | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Provisions | ( | ( | ( | ||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||
Recoveries | |||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ |
![]() | 104 |
Year Ended December 31, 2021 | ||||||||||||||||||||
Number of Accounts (in thousands) | Outstanding Balances(1) (in millions) | Weighted Average Payment Term Extensions (in months) | ||||||||||||||||||
Loans and interest receivable | $ |
![]() | 105 |
As of December 31, | |||||||||||||||||||||||
Maturities | Effective Interest Rate | 2022 | 2021 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
September 2019 debt issuance of $ | |||||||||||||||||||||||
Fixed-rate | 9/26/2022 | $ | $ | ||||||||||||||||||||
Fixed-rate | 10/1/2024 | ||||||||||||||||||||||
Fixed-rate | 10/1/2026 | ||||||||||||||||||||||
Fixed-rate | 10/1/2029 | ||||||||||||||||||||||
May 2020 debt issuance of $ | |||||||||||||||||||||||
Fixed-rate | 6/1/2023 | ||||||||||||||||||||||
Fixed-rate | 6/1/2025 | ||||||||||||||||||||||
Fixed-rate | 6/1/2030 | ||||||||||||||||||||||
Fixed-rate | 6/1/2050 | ||||||||||||||||||||||
May 2022 debt issuance of $ | |||||||||||||||||||||||
Fixed-rate | 6/1/2027 | ||||||||||||||||||||||
Fixed-rate | 6/1/2032 | ||||||||||||||||||||||
Fixed-rate | 6/1/2052 | ||||||||||||||||||||||
Fixed-rate | 6/1/2062 | ||||||||||||||||||||||
Total term debt | $ | $ | |||||||||||||||||||||
Unamortized premium (discount) and issuance costs, net | ( | ( | |||||||||||||||||||||
Less: current portion of term debt(1) | ( | ( | |||||||||||||||||||||
Total carrying amount of term debt | $ | $ |
![]() | 106 |
![]() | 107 |
2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ |
![]() | 108 |
![]() | 109 |
![]() | 110 |
![]() | 111 |
![]() | 112 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Beginning balance | $ | $ | |||||||||
Provision | |||||||||||
Realized losses | ( | ( | |||||||||
Recoveries | |||||||||||
Ending balance | $ | $ |
![]() | 113 |
![]() | 114 |
Units | Weighted Average Grant-Date Fair Value (per share) | ||||||||||
(In thousands, except per share amounts) | |||||||||||
Outstanding at January 1, 2022 | $ | ||||||||||
Awarded and assumed(1) | $ | ||||||||||
Vested(1) | ( | $ | |||||||||
Forfeited/cancelled(2) | ( | $ | |||||||||
Outstanding at December 31, 2022 | $ | ||||||||||
Expected to vest |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
(In thousands, except per share amounts and years) | |||||||||||||||||||||||
Outstanding at January 1, 2022 | $ | ||||||||||||||||||||||
Assumed | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Forfeited/expired/cancelled | ( | $ | |||||||||||||||||||||
Outstanding at December 31, 2022 | $ | $ | |||||||||||||||||||||
Expected to vest | $ | $ | |||||||||||||||||||||
Options exercisable | $ | $ |
![]() | 115 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Customer support and operations | $ | $ | $ | ||||||||||||||
Sales and marketing | |||||||||||||||||
Technology and development | |||||||||||||||||
General and administrative | |||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | ||||||||||||||
Capitalized as part of internal use software and website development costs | $ | $ | $ | ||||||||||||||
Income tax benefit recognized for stock-based compensation arrangements | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
United States | $ | ( | $ | $ | |||||||||||||
International | |||||||||||||||||
Income before income taxes | $ | $ | $ |
![]() | 116 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Current: | |||||||||||||||||
Federal | $ | $ | $ | ||||||||||||||
State and local | |||||||||||||||||
Foreign | |||||||||||||||||
Total current portion of income tax expense | $ | $ | $ | ||||||||||||||
Deferred: | |||||||||||||||||
Federal | $ | ( | $ | ( | $ | ||||||||||||
State and local | ( | ( | ( | ||||||||||||||
Foreign | ( | ( | ( | ||||||||||||||
Total deferred portion of income tax expense (benefit) | ( | ( | |||||||||||||||
Income tax expense (benefit) | $ | $ | ( | $ |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Federal statutory rate | % | % | % | ||||||||||||||
Domestic income taxed at different rates | ( | % | ( | % | % | ||||||||||||
State taxes, net of federal benefit | % | % | % | ||||||||||||||
Foreign income taxed at different rates | ( | % | ( | % | ( | % | |||||||||||
Stock-based compensation expense | % | ( | % | ( | % | ||||||||||||
Tax credits | ( | % | ( | % | ( | % | |||||||||||
Change in valuation allowances | % | % | % | ||||||||||||||
Intra-group transfer of intellectual property | % | % | % | ||||||||||||||
Other | % | % | % | ||||||||||||||
Effective income tax rate | % | ( | % | % |
![]() | 117 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
(In millions) | |||||||||||
Deferred tax assets: | |||||||||||
Net operating loss and credit carryforwards | $ | $ | |||||||||
Accruals, allowances, and prepaids | |||||||||||
Lease liabilities | |||||||||||
Partnership investment | |||||||||||
Stock-based compensation | |||||||||||
Net unrealized losses | |||||||||||
Acquired intangibles | |||||||||||
Fixed assets and other intangibles | |||||||||||
Total deferred tax assets | |||||||||||
Valuation allowance | ( | ( | |||||||||
Net deferred tax assets | $ | $ | |||||||||
Deferred tax liabilities: | |||||||||||
Unremitted foreign earnings | $ | ( | $ | ( | |||||||
Acquired intangibles | ( | ||||||||||
ROU lease assets | ( | ( | |||||||||
Partnership investment | ( | ||||||||||
Net unrealized gains | ( | ( | |||||||||
Total deferred tax liabilities | ( | ( | |||||||||
Net deferred tax assets | $ | $ |
As of December 31, | |||||||||||||||||
2022 | 2021 | ||||||||||||||||
Balance Sheet Location | (In millions) | ||||||||||||||||
Total deferred tax assets (non-current) | Other assets | $ | $ | ||||||||||||||
Total deferred tax liabilities (non-current) | Deferred tax liability and other long-term liabilities | ( | ( | ||||||||||||||
Total net deferred tax assets | $ | $ |
![]() | 118 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
(In millions) | |||||||||||||||||
Gross amounts of unrecognized tax benefits as of the beginning of the period | $ | $ | $ | ||||||||||||||
Increases related to prior period tax positions | |||||||||||||||||
Decreases related to prior period tax positions | ( | ( | ( | ||||||||||||||
Increases related to current period tax positions | |||||||||||||||||
Settlements | ( | ( | ( | ||||||||||||||
Statute of limitation expirations | ( | ( | ( | ||||||||||||||
Gross amounts of unrecognized tax benefits as of the end of the period | $ | $ | $ |
![]() | 119 |
Employee Severance and Benefits and Other Associated Costs | |||||
(In millions) | |||||
Accrued liability as of January 1, 2022 | $ | ||||
Charges | |||||
Payments | ( | ||||
Accrued liability as of December 31, 2022 | $ |
![]() | 120 |
Balance at Beginning of Period | Charged/ (Credited) to Net Income | Charged to Other Accounts(1) | Charges Utilized/ (Write-offs) | Balance at End of Period | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Allowance for Transaction Losses and Negative Customer Balances | |||||||||||||||||||||||||||||
Year Ended December 31, 2020 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Year Ended December 31, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Year Ended December 31, 2022 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Allowance for Loans and Interest Receivable | |||||||||||||||||||||||||||||
Year Ended December 31, 2020 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Year Ended December 31, 2021 | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||
Year Ended December 31, 2022 | $ | $ | $ | $ | ( | $ |
![]() | 121 |
Incorporated by Reference | |||||||||||||||||
Exhibit Number | Exhibit Description | Filed with this Form 10-K | Form | Date Filed | |||||||||||||
Separation and Distribution Agreement by and between eBay Inc. and PayPal Holdings, Inc. | 10-12B/A | 6/26/2015 | |||||||||||||||
PayPal Holdings, Inc. Restated Certificate of Incorporation | 10-Q | 7/27/2017 | |||||||||||||||
PayPal Holdings, Inc. Amended and Restated Bylaws effective January 17, 2019 | 8-K | 1/18/2019 | |||||||||||||||
Description of Securities | 10-K | 2/6/2020 | |||||||||||||||
Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee | 8-K | 9/26/2019 | |||||||||||||||
Officer’s Certificate, dated as of September 26, 2019, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee | 8-K | 9/26/2019 | |||||||||||||||
Form of 2022 Note (included in Exhibit 4.03) | 8-K | 9/26/2019 | |||||||||||||||
Form of 2024 Note (included in Exhibit 4.03) | 8-K | 9/26/2019 | |||||||||||||||
Form of 2026 Note (included in Exhibit 4.03) | 8-K | 9/26/2019 | |||||||||||||||
Form of 2029 Note (included in Exhibit 4.03) | 8-K | 9/26/2019 | |||||||||||||||
Officer’s Certificate, dated as of May 18, 2020, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee | 8-K | 5/18/2020 | |||||||||||||||
Form of 2023 Note (included in Exhibit 4.08) | 8-K | 5/18/2020 | |||||||||||||||
Form of 2025 Note (included in Exhibit 4.08) | 8-K | 5/18/2020 | |||||||||||||||
Form of 2030 Note (included in Exhibit 4.08) | 8-K | 5/18/2020 | |||||||||||||||
Form of 2050 Note (included in Exhibit 4.08) | 8-K | 5/18/2020 | |||||||||||||||
Officer’s Certificate, dated as of May 23, 2022, pursuant to the Indenture, dated as of September 26, 2019, by and between PayPal Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee | 8-K | 5/23/2022 | |||||||||||||||
Form of 2027 Note (included in Exhibit 4.2) | 8-K | 5/23/2022 | |||||||||||||||
Form of 2032 Note (included in Exhibit 4.2) | 8-K | 5/23/2022 | |||||||||||||||
Form of 2052 Note (included in Exhibit 4.2) | 8-K | 5/23/2022 | |||||||||||||||
Form of 2062 Note (included in Exhibit 4.2) | 8-K | 5/23/2022 | |||||||||||||||
Tax Matters Agreement by and between eBay Inc. and PayPal Holdings, Inc. dated July 17, 2015 | 8-K | 7/20/2015 | |||||||||||||||
Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan Europe Limited, as the Administrative Agents | 8-K | 9/12/2019 | |||||||||||||||
364-Day Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent | 8-K | 9/12/2019 | |||||||||||||||
PayPal Employee Incentive Plan, as amended and restated | DEF 14A | 4/14/2016 | |||||||||||||||
PayPal Holdings, Inc. Amended and Restated 2015 Equity Incentive Award Plan | 8-K | 5/25/2018 | |||||||||||||||
PayPal Holdings, Inc. Amended and Restated Deferred Compensation Plan effective November 6, 2018 | 10-K | 2/7/2019 |
![]() | 122 |
Incorporated by Reference | |||||||||||||||||
Exhibit Number | Exhibit Description | Filed with this Form 10-K | Form | Date Filed | |||||||||||||
PayPal Holdings, Inc. Executive Change in Control and Severance Plan, as amended and restated, effective as of September 27, 2021 | 10-Q | 11/9/2021 | |||||||||||||||
Form of Indemnity Agreement between PayPal Holdings, Inc. and individual directors and officers | 10-12B/A | 5/14/2015 | |||||||||||||||
Form of Global Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan | 10-12B/A | 5/14/2015 | |||||||||||||||
Form of Global Performance Based Restricted Stock Unit Award Grant Notice and Performance Based Restricted Stock Unit Award Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as amended and restated | 10-Q | 4/27/2017 | |||||||||||||||
Form of Global Notice of Grant of Stock Option and Stock Option Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan | 10-12B/A | 5/14/2015 | |||||||||||||||
Form of Director Annual Award Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan | 10-12B/A | 5/14/2015 | |||||||||||||||
Form of Electing Director Quarterly Award Agreement under the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan | 10-12B/A | 5/14/2015 | |||||||||||||||
PayPal Holdings, Inc. Amended and Restated Employee Stock Purchase Plan | 8-K | 5/25/2018 | |||||||||||||||
Amendment to PayPal Holdings, Inc. Amended and Restated Employee Stock Purchase Plan | 10-Q | 11/9/2021 | |||||||||||||||
PayPal Holdings, Inc. 2022 Inducement Plan | 10-Q | 8/2/2022 | |||||||||||||||
Offer Letter dated September 29, 2014 between eBay Inc. and Daniel Schulman | 10-12B/A | 5/14/2015 | |||||||||||||||
Amendment dated December 31, 2014 to Offer Letter between eBay Inc. and Daniel Schulman | 10-12B/A | 5/14/2015 | |||||||||||||||
Letter dated April 7, 2015 from eBay Inc. to Louise Pentland | 10-K | 2/11/2016 | |||||||||||||||
Letter dated April 13, 2015 from eBay Inc. to Jonathan Auerbach | 10-K | 2/11/2016 | |||||||||||||||
Letter Agreement dated July 29, 2015 between John Rainey and PayPal Holdings, Inc. | 10-Q | 10/29/2015 | |||||||||||||||
Letter Agreement, dated April 17, 2016, between Aaron Karczmer and PayPal Holdings, Inc. | 10-Q | 4/27/2017 | |||||||||||||||
Letter Agreement effective February 20, 2019 between Mark Britto and PayPal Holdings, Inc. | 10-Q | 4/25/2019 | |||||||||||||||
Letter Agreement effective July 13, 2022, between Blake Jorgensen and PayPal Holdings, Inc. | 10-Q | 8/2/2022 | |||||||||||||||
Letter Agreement dated June 15, 2022 between Gabrielle Rabinovitch and PayPal Holdings, Inc. | 8-K | 6/17/2022 | |||||||||||||||
Letter Agreement dated September 27, 2022 between Gabrielle Rabinovitch and PayPal Holdings, Inc. | 8-K | 10/3/2022 | |||||||||||||||
Letter Agreement dated September 1, 2022 between John Kim and PayPal Holdings, Inc. | 10-Q | 11/3/2022 | |||||||||||||||
Independent Director Compensation Policy | 10-K | 2/5/2021 | |||||||||||||||
PayPal Holdings, Inc. Executive Change in Control and Severance Plan, as amended and restated | 10-Q | 7/29/2021 |
![]() | 123 |
Incorporated by Reference | |||||||||||||||||
Exhibit Number | Exhibit Description | Filed with this Form 10-K | Form | Date Filed | |||||||||||||
First Amendment, dated as of March 23, 2020, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan Europe Limited, as the Administrative Agents | 10-Q | 5/7/2020 | |||||||||||||||
First Amendment, dated as of March 23, 2020, to the 364-Day Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as the Administrative Agent | 10-Q | 5/7/2020 | |||||||||||||||
Joinder Agreement, dated as of March 25, 2020, among PayPal International Treasury Centre S.à r.l., PayPal Holdings, Inc., and J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, and JPMorgan Chase Bank, N.A., Toronto Branch, as the Administrative Agents, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and the Administrative Agents | 10-Q | 5/7/2020 | |||||||||||||||
Joinder Agreement, dated as of March 25, 2020, among PayPal (Europe) S.à r.l. et Cie, S.C.A., PayPal Holdings, Inc., and J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, and JPMorgan Chase Bank, N.A., Toronto Branch, as the Administrative Agents, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and the Administrative Agents | 10-Q | 5/7/2020 | |||||||||||||||
Joinder Agreement, dated as of March 27, 2020, among PayPal Pte. Ltd., PayPal Holdings, Inc., and J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, and JPMorgan Chase Bank, N.A., Toronto Branch, as the Administrative Agents, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and the Administrative Agents | 10-Q | 5/7/2020 | |||||||||||||||
Joinder Agreement, dated as of March 31, 2020, among PayPal Australia Pty Limited, PayPal Holdings, Inc., and J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, and JPMorgan Chase Bank, N.A., Toronto Branch, as the Administrative Agents, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and the Administrative Agents | 10-Q | 5/7/2020 | |||||||||||||||
Second Amendment, dated as of January 7, 2022, to the Credit Agreement, dated as of September 11, 2019, among PayPal Holdings, Inc., the Designated Borrowers party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan AG, as the Administrative Agents | 10-K | 2/3/2022 | |||||||||||||||
List of Subsidiaries | X | ||||||||||||||||
PricewaterhouseCoopers LLP consent | X | ||||||||||||||||
Power of Attorney (see signature page) | X | ||||||||||||||||
Certification of PayPal Holdings, Inc.’s Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||
Certification of PayPal Holdings, Inc.’s Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||
Certification of PayPal Holdings, Inc.’s Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 | X |
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Incorporated by Reference | |||||||||||||||||
Exhibit Number | Exhibit Description | Filed with this Form 10-K | Form | Date Filed | |||||||||||||
Certification of PayPal Holdings, Inc.’s Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||
101 | The following financial information related to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows; and (vi) the related Notes to Consolidated Financial Statements | X | |||||||||||||||
104 | Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101 | X |
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PayPal Holdings, Inc. | ||||||||||||||
By: | /s/ Daniel H. Schulman | |||||||||||||
Name: Title: | Daniel H. Schulman President, Chief Executive Officer and Director |
Principal Executive Officer: | Principal Financial Officer: | |||||||||||||
By: | /s/ Daniel H. Schulman | By: | /s/ Gabrielle Rabinovitch | |||||||||||
Daniel H. Schulman | Gabrielle Rabinovitch | |||||||||||||
President, Chief Executive Officer and Director | Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer | |||||||||||||
Principal Accounting Officer: | ||||||||||||||
By: | /s/ Jeffrey W. Karbowski | |||||||||||||
Jeffrey W. Karbowski | ||||||||||||||
Vice President, Chief Accounting Officer |
By: | /s/ Rodney C. Adkins | By: | /s/ Jonathan Christodoro | |||||||||||
Rodney C. Adkins | Jonathan Christodoro | |||||||||||||
Director | Director | |||||||||||||
By: | /s/ John J. Donahoe | By: | /s/ David W. Dorman | |||||||||||
John J. Donahoe | David W. Dorman | |||||||||||||
Director | Director | |||||||||||||
By: | /s/ Belinda Johnson | By: | /s/ Enrique Lores | |||||||||||
Belinda Johnson | Enrique Lores | |||||||||||||
Director | Director | |||||||||||||
By: | /s/ Gail J. McGovern | By: | /s/ Deborah M. Messemer | |||||||||||
Gail J. McGovern | Deborah M. Messemer | |||||||||||||
Director | Director | |||||||||||||
By: | /s/ David M. Moffett | By: | /s/ Ann M. Sarnoff | |||||||||||
David M. Moffett | Ann M. Sarnoff | |||||||||||||
Director | Director | |||||||||||||
By: | /s/ Frank D. Yeary | |||||||||||||
Frank D. Yeary | ||||||||||||||
Director | ||||||||||||||
Subsidiary | Jurisdiction of Organization | ||||
Bill Me Later, Inc. | Delaware, United States | ||||
Hyperwallet Systems Inc. | Canada | ||||
Paidy Inc. | Japan | ||||
PayPal (Europe) S.à r.l. et Cie, S.C.A. | Luxembourg | ||||
PayPal Australia Pty Limited | Australia | ||||
PayPal Canada Co. | Canada | ||||
PayPal do Brasil Instituição de Pagamentos Ltda. | Brazil | ||||
PayPal Global Holdings, Inc. | Delaware, United States | ||||
PayPal International Treasury Centre S.à r.l. | Luxembourg | ||||
PayPal Payment Holdings Pte. Ltd. | Singapore | ||||
PayPal Pte. Ltd. | Singapore | ||||
PayPal, Inc. | Delaware, United States | ||||
Swift Financial, LLC | Delaware, United States |
/s/ Daniel H. Schulman | |||||
Daniel H. Schulman | |||||
President, Chief Executive Officer and Director | |||||
(Principal Executive Officer) |
/s/ Gabrielle Rabinovitch | |||||
Gabrielle Rabinovitch | |||||
Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer | |||||
(Principal Financial Officer) |
/s/ Daniel H. Schulman | |||||
Daniel H. Schulman | |||||
President, Chief Executive Officer and Director | |||||
(Principal Executive Officer) |
/s/ Gabrielle Rabinovitch | |||||
Gabrielle Rabinovitch | |||||
Acting Chief Financial Officer and Senior Vice President, Investor Relations and Treasurer | |||||
(Principal Financial Officer) |
Audit Information |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Firm ID | 238 |
Auditor Location | San Jose, California |
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Loans and interest receivable, allowances | $ 598 | $ 491 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 4,000,000,000 | 4,000,000,000 |
Common stock, shares outstanding (in shares) | 1,136,000,000 | 1,168,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Treasury stock, shares (in shares) | 173,000,000 | 132,000,000 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 2,419 | $ 4,169 | $ 4,202 |
Other comprehensive income (loss), net of reclassification adjustments: | |||
Foreign currency translation adjustments (“CTA”) | (305) | (72) | (48) |
Net investment hedges CTA (losses) gains, net | (25) | 0 | 55 |
Tax benefit on net investment hedges CTA losses, net | 6 | 0 | 0 |
Unrealized (losses) gains on cash flow hedges, net | (88) | 522 | (329) |
Tax benefit (expense) on unrealized (losses) gains on cash flow hedges, net | 4 | (26) | 4 |
Unrealized (losses) gains on investments, net | (504) | (98) | 9 |
Tax benefit (expense) on unrealized (losses) gains on investments, net | 120 | 22 | (2) |
Other comprehensive income (loss), net of tax | (792) | 348 | (311) |
Comprehensive income (loss) | $ 1,627 | $ 4,517 | $ 3,891 |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OVERVIEW AND ORGANIZATION PayPal Holdings, Inc. (“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015 and is a leading technology platform that enables digital payments and simplifies commerce experiences on behalf of merchants and consumers worldwide. PayPal is committed to democratizing financial services to help improve the financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world. Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world in the markets we serve, anytime, on any platform, and using any device when sending payments or getting paid, including person-to-person payments. 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. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The noncontrolling interest reported in a prior period was a component of equity on our consolidated balance sheets and represented the equity interests not owned by PayPal, and was recorded for consolidated entities we controlled and of which we owned less than 100%. Noncontrolling interest was not presented separately on our consolidated statements of income (loss) as the amount was de minimis. Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is included in other income (expense), net on our consolidated statements of income (loss). Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our consolidated statements of income (loss). Our investment balance is included in long-term investments on our consolidated balance sheets. We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is in a VIE, we then assess if we are the primary beneficiary, which would require consolidation. As of December 31, 2021, we had consolidated two VIEs that provided financing for and held loans receivable of Paidy, Inc. (“Paidy”). We were the primary beneficiary of the VIEs as we performed the servicing and collection for the loans receivable, which were the activities that most significantly impacted the VIE’s economic performance, and we had the obligation to absorb the losses and/or the right to receive the benefits of the VIE that could potentially be significant to these entities. The financial results of these VIEs were included in our consolidated financial statements. As of December 31, 2021, the carrying value of the assets and liabilities of our consolidated VIEs was included as short-term investments of $87 million, loans and interest receivable, net of $21 million, and long-term debt of $98 million. Cash of $87 million, included in short-term investments, was restricted to settle the debt obligations. In the first quarter of 2022, we terminated Paidy’s legacy debt structure and replaced it with a new credit agreement executed in February 2022. As a result, we no longer have any consolidated VIEs as of December 31, 2022. See “Note 12—Debt” for additional information. As of December 31, 2022 and December 31, 2021, the carrying value of our investments in nonconsolidated VIEs was $128 million and $74 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our consolidated balance sheets. Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $232 million and $205 million as of December 31, 2022 and 2021, respectively. In the opinion of management, these consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements for all periods presented. Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the year ended December 31, 2022. Reclassifications Beginning with the fourth quarter of 2022, we reclassified certain cash flows related to our collateral security arrangements for derivative instruments from cash flows from operating activities to cash flows from investing activities and cash flows from financing activities within the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current period presentation. The current period presentation classifies all changes in collateral posted and collateral received related to derivative instruments on our consolidated statements of cash flows as cash flows from investing activities and cash flows from financing activities, respectively. We believe that the current period presentation provides a more meaningful representation of the nature of the cash flows and allows for greater transparency as the cash flows related to the derivatives impact operating cash flows upon settlement exclusive of the offsetting cash flows from collateral. The following tables present the effects of the changes on the presentation of these cash flows to the previously reported consolidated statements of cash flows:
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “Other current assets and non-current assets” and “Other current liabilities and non-current liabilities,” which decreased by $336 million and $207 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “other current assets and non-current assets” and “other current liabilities and non-current liabilities,” which increased by $327 million and $38 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.” Use of estimates The preparation of consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and credit losses, income taxes, loss contingencies, revenue recognition, the valuation of goodwill and intangible assets, and the valuation of strategic investments. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. Actual results could materially differ from these estimates. Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less when purchased and are comprised of primarily bank deposits, government and agency securities, and commercial paper. Investments Short-term investments include time deposits and available-for-sale debt securities with original maturities of greater than three months but less than one year when purchased or maturities of one year or less on the reporting date. Long-term investments include time deposits and available-for-sale debt securities with maturities exceeding one year on the reporting date, as well as our strategic investments. Our available-for-sale debt securities are reported at fair value using the specific identification method. Unrealized gains and losses are reported as a component of other comprehensive income (loss), net of related estimated tax provisions or benefits. We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries, underlying funds receivable and customer accounts, short-term investments, and long-term investments, under the fair value option as further discussed in “Note 9—Fair Value Measurement of Assets and Liabilities.” The changes in fair value related to initial measurement and subsequent changes in fair value are included in earnings as a component of other income (expense), net. Our strategic investments consist of marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies. Marketable equity securities have readily determinable fair values with changes in fair value recorded in other income (expense), net. Non-marketable equity securities include investments that do not have a readily determinable fair value, as well as equity method investments. The investments that do not have readily determinable fair value are measured at cost minus impairment, if any, and are adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”). Non-marketable equity securities also include our investments where we have the ability to exercise significant influence, but not control, over the investee and account for these securities using the equity method of accounting. All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our consolidated statements of income (loss). We assess whether an impairment loss on our non-marketable, measurement alternative investments has occurred based on qualitative factors such as the companies’ financial condition and business outlook, industry performance, regulatory, economic or technological environment, and other relevant events and factors affecting the company. We assess whether an other-than-temporary impairment loss on our equity method investments has occurred due to declines in fair value or other market conditions. When indicators of impairment exist, we estimate the fair value of our non-marketable equity securities using the market approach and/or the income approach. Estimating fair value requires judgment and use of estimates such as discount rates, forecasted cash flows, and market data of comparable companies, among others. If any impairment is identified for non-marketable equity securities or impairment is considered other-than-temporary for our equity method investments, we write down the investment to its fair value and record the corresponding charge through other income (expense), net in our consolidated statements of income (loss). Our available-for-sale debt securities in an unrealized loss position are written down to fair value through a charge to other income (expense), net in our consolidated statements of income (loss) if we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis. For the remaining available-for-sale debt securities in an unrealized loss position, if we identify that the decline in fair value has resulted from credit losses, taking into consideration changes to the rating of the security by rating agencies, implied yields versus benchmark yields, and the extent to which fair value is less than amortized cost, among other factors, we estimate the present value of cash flows expected to be collected. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any portion of impairment not related to credit losses is recognized in other comprehensive income (loss). Loans and interest receivable, net Loans and interest receivable, net represents merchant receivables originated under our PayPal Working Capital (“PPWC”) product and PayPal Business Loan (“PPBL”) product and consumer loans originated under our PayPal Credit and installment credit products. PayPal Credit consists of revolving credit products. In the U.S., PPWC, PPBL, and consumer interest-bearing installment products are provided under a program agreement we have with an independent chartered financial institution (“partner institution”). The partner institution extends credit to merchants for the PPWC and PPBL products and to consumers for interest-bearing installment products and we purchase the related receivables originated by the partner institution. For our merchant finance products outside the U.S., we extend working capital advances and loans in Europe through our Luxembourg banking subsidiary, and working capital loans in Australia through an Australian subsidiary. In the U.S., we extend certain short-term, interest-free, installment loans to consumers through a U.S. subsidiary. For our international consumer credit products, we extend credit in Europe through our Luxembourg banking subsidiary, and in Australia and Japan, through local subsidiaries. As part of our arrangement with the partner institution in the U.S., we sell back a participation interest in the pool of receivables for the PPWC, PPBL, and consumer interest-bearing installment products. The partner institution has no recourse against us related to their participation interests for failure of debtors to pay when due. The participation interests held by the partner institution have the same priority to the interests held by us and are subject to the same credit, prepayment, and interest rate risk associated with this pool of receivables. All risks of loss are shared pro rata based on participation interests held among all participating stakeholders. We account for the asset transfer as a sale and derecognize the portion of the participation interests for which control has been surrendered. For this arrangement, gains or losses on the sale of the participation interests are not material as the carrying amount of the participation interest sold approximates the fair value at time of transfer. In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a modification of the loan or advance and the related interest or fee receivable for which it is probable that, without modification, we would be unable to collect all amounts due, therefore resulting in a troubled debt restructuring (“TDR”). Refer to “Note 11—Loans and Interest Receivable” for further information related to TDRs. Loans, advances, and interest and fees receivable are reported at their outstanding balances, net of any participation interests sold and unamortized deferred origination costs. We maintain the servicing rights for the entire pool of consumer and merchant receivables outstanding and receive a market-based service fee for servicing the assets underlying the participation interest sold. We offer both revolving and installment credit products to our consumers. The terms of our consumer relationships require us to submit monthly bills to the consumer detailing loan repayment requirements. The terms also allow us to charge the consumer interest and fees in certain circumstances. Due to the relatively small dollar amount of individual loans and interest receivable, we do not require collateral on these balances. Another partner institution is the exclusive issuer of the PayPal Credit consumer financing program in the U.S. We do not hold an ownership interest in the receivables generated through the program and therefore, do not record these receivables on our consolidated financial statements. PayPal earns a revenue share on the portfolio of consumer receivables owned by the partner institution, which is recorded in revenues from other value added services on our consolidated statements of income (loss). Allowance for loans and interest receivable The allowance for loans and interest receivable represents our estimate of current expected credit losses inherent in our portfolio of loans and interest receivables. Increases to the allowance for loans receivable are reflected as a component of transaction and credit losses on our consolidated statements of income (loss). Increases to the allowance for interest and fees receivable are reflected as a reduction of net revenues on our consolidated statements of income (loss), or as a reduction of deferred revenue when interest and fees are billed at the inception of a loan or advance. The evaluation process to assess the adequacy of allowances is subject to numerous estimates and judgments. The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2020. The allowance for merchant loans, advances, and interest and fees receivable is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the portfolio. In the third quarter of 2022, our expected credit loss models for our merchant receivables were updated. These changes did not have a material impact on our provision recorded in the year ended December 31, 2022. The merchant loss models incorporate various portfolio attributes including geographic region, first borrowing versus repeat borrowing, delinquency, internally developed risk ratings, and vintage, as well as macroeconomic factors such as forecasted trends in unemployment and retail e-commerce sales (and through the second quarter of 2022, benchmark credit card charge-off rates.) The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. The reasonable and supportable forecast period for merchant products that we have included in our projected loss rates for 2022 and 2021, which approximates the estimated life of the loans, is approximately 2.5 to 3.5 years. Projected loss rates, inclusive of historical loss data and macroeconomic factors, are applied to the principal amount of our merchant receivables. We also include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses. The allowance for current expected credit losses on interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination, among other factors. The allowance for consumer loans and interest receivable is primarily based on expectations of credit losses based on historical lifetime loss data. The allowance for loans and interest receivable for our revolving credit product also incorporates macroeconomic forecasts applied to the portfolio. The consumer loss models incorporate various portfolio attributes including geographic region, loan term, delinquency, credit rating, vintage, and for the revolving credit portfolio macroeconomic factors such as forecasted trends in unemployment and household disposable income. The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. The reasonable and supportable forecast period for revolving products and installment products that we have included in our projected loss rates for 2022, which approximates the estimated life of the loans, is approximately 2 years and approximately 7 months to 3.5 years, respectively. In 2021, the reasonable and supportable forecast periods were consistent with 2022 except for installment products, which had an estimated life of 7 months to 2.5 years. Projected loss rates, inclusive of historical loss data and, for the revolving credit portfolio macroeconomic factors, are derived based on and applied to the principal amount of our consumer receivables. We also include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses, such as expectations of macroeconomic conditions not captured in the loss models for our installment products. The allowance for current expected credit losses on interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination, among other factors. Customer accounts We hold all customer balances, both in the U.S. and internationally, as direct claims against us which are reflected on our consolidated balance sheets as a liability classified as amounts due to customers. Certain jurisdictions where PayPal operates require us to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to at least 100% of the aggregate amount of all customer balances. Therefore, we restrict the use of the assets underlying the customer balances to meet these regulatory requirements and separately classify the assets as customer accounts in our consolidated balance sheets. We classify the assets underlying the customer balances as current based on their purpose and availability to fulfill our direct obligation under amounts due to customers. Customer funds for which PayPal is an agent and custodian on behalf of our customers are not reflected on our consolidated balance sheets. These funds include U.S. dollar funds which are deposited at one or more third-party financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”) and are eligible for FDIC pass-through insurance (subject to applicable limits). Under applicable accounting standards, we are an agent when facilitating cryptocurrency transactions on behalf of our customers. Cryptocurrencies held on behalf of our customers are not PayPal’s assets and therefore, are not reflected as cryptocurrency assets on our consolidated balance sheets; however, we recognize a crypto asset safeguarding liability with a corresponding safeguarding asset to reflect our obligation to safeguard the cryptocurrencies held on behalf of our customers. In June 2018, the Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may designate up to 35% of European customer balances held in our Luxembourg banking subsidiary to fund European and U.S. credit activities. In August 2022, the CSSF approved PayPal’s management designating up to 50% of such balances to fund our credit activities through the end of February 2023. During the year ended December 31, 2022, an additional $1.1 billion was approved to fund our credit activities. As of December 31, 2022, the cumulative amount approved by management to be designated to fund credit activities aggregated to $3.8 billion and represented approximately 37% of European customer balances made available for our corporate use at that date as determined by applying financial regulations maintained by the CSSF. At the time PayPal’s management designates the European customer balances held in our Luxembourg banking subsidiary to be used to extend credit, the balances are classified as cash and cash equivalents and no longer classified as customer accounts on our consolidated balance sheets. The remaining assets underlying the customer balances remain separately classified as customer accounts on our consolidated balance sheets. We identify these customer accounts separately from corporate funds and maintain them in interest and non-interest bearing bank deposits, time deposits, and available-for-sale debt securities. Customer balances deposited with our partners on a short-term basis in advance of customer transactions and used to fulfill our direct obligation under amounts due to customers are classified as cash and cash equivalents within our customer accounts classification on our consolidated balance sheets. See “Note 8—Funds Receivable and Customer Accounts and Investments” for additional information related to customer accounts. We present changes in funds receivable and customer accounts as cash flows from investing activities in our consolidated statements of cash flows based on the nature of the activity underlying our customer accounts. Funds receivable and funds payable Funds receivable and funds payable arise due to the time required to initiate collection from and clear transactions through external payment networks. When customers fund their PayPal account using their bank account, credit card, debit card, or withdraw funds from their PayPal account to their bank account or through a debit card transaction, there is a clearing period before the cash is received or settled, usually to business days for U.S. transactions and generally up to business days for international transactions. In addition, a portion of our customers’ funds are settled directly to their bank account. These funds are also classified as funds receivable and funds payable and arise due to the time required to initiate collection from and clear transactions through external payment networks. Property and equipment Property and equipment consists primarily of computer equipment, software and website development costs, land and buildings, leasehold improvements, and furniture and fixtures. Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets; generally, to four years for computer equipment and software, including capitalized software and website development costs, three years for furniture and fixtures, up to 30 years for buildings and building improvements, and the shorter of five years or the non-cancelable term of the lease for leasehold improvements. Direct costs incurred to develop software for internal use and website development costs, including those costs incurred in expanding and enhancing our payments platform, are capitalized and amortized generally over an estimated useful life of three years and are recorded as amortization within the financial statement captions aligned with the internal organizations that are the primary beneficiaries of such assets. We capitalized $511 million and $462 million of internally developed software and website development costs for the years ended December 31, 2022 and 2021, respectively. Amortization expense for these capitalized costs was $426 million, $366 million, and $322 million for the years ended December 31, 2022, 2021, and 2020, respectively. Costs related to the maintenance of internal use software and website development costs are expensed as incurred. Leases We determine whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included in other assets, and lease liabilities, which are included in accrued expenses and other current liabilities and deferred tax liability and other long-term liabilities on our consolidated balance sheets. For sale-leaseback transactions, we evaluate the sale and the lease arrangement based on our conclusion as to whether control of the underlying asset has been transferred, and recognize the sale-leaseback as either a sale transaction or under the financing method. The financing method requires the asset to remain on our consolidated balance sheets throughout the term of the lease and the proceeds to be recognized as a financing obligation. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Our leases do not provide an implicit rate and therefore we use an incremental borrowing rate for specific terms on a collateralized basis using information available on the commencement date in determining the present value of lease payments. The ROU asset calculation includes lease payments to be made and excludes lease incentives. The ROU asset and lease liability may include amounts attributed to options to extend or terminate the lease when it is reasonably certain we will exercise that option. When we reach a decision to exercise a lease renewal or termination option, we recognize the associated impact to the ROU asset and lease liability. Lease expense for operating leases is recognized on a straight-line basis over the lease term. We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable. When a decision has been made to exit a lease prior to the contractual term or to sublease that space, we evaluate the asset for impairment and recognize the associated impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash flows expected to be generated by the related ROU assets are estimated over the ROU assets’ useful lives. If the evaluation indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques. We have lease agreements with lease and non-lease components. We have elected to apply the practical expedient and account for the lease and non-lease components as a single lease component for all leases, where applicable. In addition, we have elected to apply the practical expedients related to lease classification, hindsight, and land easement. We apply a single portfolio approach to account for the ROU assets and lease liabilities. Goodwill and intangible assets Goodwill is tested for impairment, at a minimum, on an annual basis at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The fair value of the reporting unit may be estimated using income and market approaches. The discounted cash flow method, a form of the income approach, uses expected future operating results and a market participant discount rate. The market approach uses comparable company prices and other relevant information generated by market transactions (either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to historical and expected future operating results of the reporting unit. Failure to achieve these expected results, changes in the discount rate, or market pricing metrics may cause a future impairment of goodwill at the reporting unit level. We conducted our annual impairment test of goodwill as of August 31, 2022 and 2021. We determined that no adjustment to the carrying value of goodwill of our reporting unit was required. As of December 31, 2022, we determined that no events occurred, or circumstances changed from August 31, 2022 through December 31, 2022 that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Intangible assets consist of acquired customer list and user base intangible assets, marketing related intangibles, developed technology, and other intangible assets. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from to seven years. No significant residual value is estimated for intangible assets. Impairment of long-lived assets We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future undiscounted cash flow the asset is expected to generate. Allowance for transaction losses We are exposed to transaction losses due to credit card and other payment misuse as well as nonperformance from sellers who accept payments through PayPal. We establish an allowance for estimated losses arising from completing customer transactions, such as chargebacks for unauthorized credit card use and merchant-related chargebacks due to non-delivery or unsatisfactory delivery of purchased items, purchase protection program claims, and account takeovers. This allowance represents an accumulation of the estimated amounts of probable transaction losses as of the reporting date, including those which we have not yet identified. The allowance is monitored regularly and is updated based on actual loss data. The allowance is based on known facts and circumstances, internal factors including experience with similar cases, historical trends involving loss payment patterns, and the mix of transaction and loss types, as applicable. Additions to the allowance are reflected as a component of transaction and credit losses on our consolidated statements of income (loss). The allowance for transaction losses is included in accrued expenses and other current liabilities on our consolidated balance sheets. Allowance for negative customer balances Negative customer balances occur primarily when there are insufficient funds in a customer’s PayPal account to cover charges applied for Automated Clearing House returns, debit card transactions, and merchant-related chargebacks due to non-delivery or unsatisfactory delivery of purchased items, which are generally within the scope of our protection programs. Negative customer balances can be cured by the customer by adding funds to their account, receiving payments, or through back-up funding sources. We also utilize third-party collection agencies. For negative customer balances that are not expected to be cured or otherwise collected, we provide an allowance for expected losses. The allowance represents expected losses based on historical trends involving collection and write-off patterns, internal factors including our experience with similar cases, other known facts and circumstances, and reasonable and supportable macroeconomic forecasts, as applicable. Loss rates are derived using historical loss data for each delinquency bucket using a roll rate model that captures the losses and the likelihood that a negative customer balance will be written off as the delinquency age of such balance increases. The loss rates are then applied to the outstanding negative customer balances. Once the quantitative calculation is performed, we review the adequacy of the allowance and determine if qualitative adjustments need to be considered. We write-off negative customer balances in the month in which the balance becomes outstanding for 120 days. Write-offs that are recovered are recorded as a reduction to our allowance for negative customer balances. Negative customer balances are included in other current assets, net of the allowance on our consolidated balance sheets. Adjustments to the allowance for negative customer balances are recorded as a component of transaction and credit losses on our consolidated statements of income (loss). Derivative instruments See “Note 10—Derivative Instruments” for information related to the derivative instruments. Fair value measurements We measure certain financial assets and liabilities at fair value on a recurring basis and certain financial and non-financial assets and liabilities at fair value on a non-recurring basis when a change in fair value or impairment is evidenced. Fair value is defined as the price received to sell an asset or paid to transfer a liability in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is estimated by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The categorization within the following three-level fair value hierarchy for our recurring and non-recurring fair value measurements is based upon the lowest level of input that is available and significant to the fair value measurement: •Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities. •Level 2 - Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be market-corroborated. •Level 3 - Unobservable inputs that cannot be directly corroborated by observable market data and that typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. See “Note 9—Fair Value Measurement of Assets and Liabilities” for additional information related to our fair value measurements. Crypto asset safeguarding liability and corresponding safeguarding asset See “Note 7—Other Financial Statement Details” for information related to our crypto asset safeguarding liability and corresponding safeguarding asset. Concentrations of risk Our cash, cash equivalents, short-term investments, accounts receivable, loans and interest receivable, net, funds receivable and customer accounts, long-term investments, and long-term notes receivable, are potentially subject to concentration of credit risk. Cash, cash equivalents, and customer accounts are placed with financial institutions that management believes are of high credit quality. In addition, funds receivable are generated primarily with financial institutions which management believes are of high credit quality. We invest our cash, cash equivalents, and customer accounts primarily in highly liquid, highly rated instruments which are uninsured. We have corporate deposit balances with financial services institutions which exceed the FDIC insurance limit of $250,000. As part of our cash management process, we perform periodic evaluations of the relative credit standing of these financial institutions. Our accounts receivable are derived from revenue earned from customers located in the U.S. and internationally. Our loans and interest receivable are derived from merchant and consumer financing activities for customers located in the U.S. and internationally. Our long-term notes receivable is derived from deferred proceeds associated with the sale of our U.S. consumer credit receivables portfolio to a partner institution in 2018. As of December 31, 2022 and 2021, one customer accounted for 20% and 25% of net accounts receivables, respectively. No customer accounted for more than 10% of net loans receivable as of December 31, 2022 and 2021. At December 31, 2022 and 2021, one partner institution accounted for our long-term notes receivable balance, which represented 18% and 22% of other assets, respectively. During the years ended December 31, 2022, 2021, and 2020, no customer accounted for more than 10% of net revenues. During the years ended December 31, 2022, 2021, and 2020, we earned approximately 2%, 6%, and 13% of revenue, respectively, from customers on eBay’s Marketplaces platform. No other source of revenue represented more than 10% of our revenue. Revenue recognition See “Note 2—Revenue” for information related to our revenue recognition. Advertising expense We expense the cost of producing advertisements at the time production occurs and expense the cost of communicating advertisements in the period during which the advertising space or airtime is used as sales and marketing expense. Online advertising expenses are recognized based on the terms of the individual agreements, which are generally over the greater of the ratio of the number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis over the term of the contract. Advertising expense totaled $518 million, $740 million, and $654 million for the years ended December 31, 2022, 2021, and 2020, respectively. Defined contribution savings plans We have a defined contribution savings plan in the U.S. which qualifies under Section 401(k) of the Internal Revenue Code (“Code”). Our non-U.S. employees are covered by other savings plans. Expenses related to our defined contribution savings plans are recorded when services are rendered by our employees. Stock-based compensation We determine compensation expense associated with restricted stock units, performance based restricted stock units, and restricted stock awards based on the estimated fair value of our common stock on the date of grant. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for the years ended December 31, 2022, 2021, and 2020 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behavior of our employees as well as trends of actual forfeitures. Foreign currency Many of our foreign subsidiaries have designated the local currency of their respective countries as their functional currency. Assets and liabilities of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Revenues and expenses of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from these translations are recorded as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains and losses from the remeasurement of foreign currency transactions into the functional currency are recognized as other income (expense), net in our consolidated statements of income (loss). Income taxes We account for income taxes using an asset and liability approach which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence. We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. We account for Global Intangible Low-Taxed Income as a current-period expense when incurred. Other income (expense), net Other income (expense), net includes: (i) interest income, which consists of interest earned on corporate cash and cash equivalents and short-term and long-term investments, (ii) interest expense, which consists of interest expense, fees, and amortization of debt discount on our long-term debt (including current portion) and credit facilities, (iii) realized and unrealized gains (losses) on strategic investments, which includes changes in fair value related to our marketable equity securities and observable price changes and impairments on our non-marketable equity securities, and (iv) other, which primarily includes foreign currency exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities, and fair value changes on the derivative contracts not designated as hedging instruments. Recent accounting guidance In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses. This amended guidance will eliminate the accounting designation of a loan modification as a TDR, including eliminating the measurement guidance for TDRs. The amendments also enhance existing disclosure requirements and introduce new requirements related to modifications of receivables due from borrowers experiencing financial difficulty. Additionally, this guidance requires entities to disclose gross write-offs by year of origination for financing receivables, such as loans and interest receivable. The amended guidance is effective for fiscal years beginning after December 15, 2022 and is required to be applied prospectively, except for the recognition and measurement of TDRs, which can be applied on a modified retrospective basis. We have concluded that our financial statements were not materially impacted upon adoption. We adopted this guidance effective January 1, 2023 on a prospective basis and will provide additional disclosures as required. Recently adopted accounting guidance In March 2022, the SEC released Staff Accounting Bulletin No. 121 (“SAB 121”), which provides guidance for an entity to consider when it has obligations to safeguard customers’ crypto assets, whether directly or through an agent or another third party acting on its behalf. The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding safeguarding asset. The crypto asset safeguarding liability and the corresponding safeguarding asset will be measured at the fair value of the crypto assets held for the platform users with the measurement of the safeguarding asset taking into account any potential loss events. SAB 121 also requires disclosures related to the entity’s safeguarding obligations for crypto assets held for its platform users. SAB 121 was effective in the first interim or annual financial statements ending after June 15, 2022 with retrospective application as of the beginning of the fiscal year. We adopted this guidance for the quarter ended June 30, 2022 with retrospective application as of January 1, 2022. As of June 30, 2022, we recorded $596 million for both the crypto asset safeguarding liability and corresponding safeguarding asset, which were classified as accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively, on our condensed consolidated balance sheet. For additional information, see “Note 7—Other Financial Statement Details.” There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable. We do not believe any of these new accounting pronouncements have had, or will have, a material impact on our consolidated financial statements or disclosures.
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REVENUE |
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REVENUE | REVENUE We enable our customers to send and receive payments. We earn revenue primarily by completing payment transactions for our customers on our payments platform and from other value added services. Our revenues are classified into two categories: transaction revenues and revenues from other value added services. TRANSACTION REVENUES We earn transaction revenues primarily from fees paid by our customers to receive payments on our platform. These fees may have a fixed and variable component. The variable component is generally a percentage of the value of the payment amount and is known at the time the transaction is processed. For a portion of our transactions, the variable component of the fee is eligible for reimbursement when the underlying transaction is approved for a refund. We estimate the amount of fee refunds that will be processed each quarter and record a provision against our transaction revenues. The volume of activity processed on our payments platform, which results in transaction revenue, is referred to as Total Payment Volume (“TPV”). We earn additional fees from merchants and consumers on transactions where we perform currency conversion, when we enable cross-border transactions (i.e., transactions where the merchant and consumer are in different countries), to facilitate the instant transfer of funds for our customers from their PayPal or Venmo account to their bank account or debit card, to facilitate the purchase and sale of cryptocurrencies, as contractual compensation from sellers that violate our contractual terms (for example, through fraud or counterfeiting), and other miscellaneous fees. Our transaction revenues are also reduced by certain incentives provided to our customers. Our contracts with our customers are usually open-ended and can be terminated by either party without a termination penalty after the notice period has lapsed. Therefore, our contracts are defined at the transaction level and do not extend beyond the service already provided. Our contracts generally renew automatically without any significant material rights. Some of our contracts include tiered pricing, which are based primarily on volume. The fee charged per transaction is adjusted up or down if the volume processed for a specified period is different from prior period defined volumes. We have concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume. We do not have any capitalized contract costs and we do not carry any material contract balances. Our primary service comprises a single performance obligation to complete payments on our payments platform for our customers. Using our risk assessment tools, we perform a transaction risk assessment on individual transactions to determine whether a transaction should be authorized for completion on our payments platform. When we authorize a transaction, we become obligated to our customer to complete the payment transaction. We recognize fees charged to our customers primarily on a gross basis as transaction revenue when we are the principal in respect of completing a payment transaction. As a principal to the transaction, we control the service of completing payments on our payments platform. We bear primary responsibility for the fulfillment of the payment service, contract directly with our customers, control the product specifications, and define the value proposal from our services. Further, we have full discretion in determining the fee charged to our customers, which is independent of the costs we incur in instances where we may utilize payment processors or other financial institutions to perform services on our behalf. We therefore bear full margin risk when completing a payment transaction. These fees paid to payment processors and other financial institutions are recognized as transaction expense. We are also responsible for providing customer support. To promote engagement and acquire new users on our platform, we may provide incentives to merchants and consumers in various forms including discounts on fees, rebates, rewards, and coupons. Evaluating whether an incentive is a payment to a customer requires judgment. Incentives that are determined to be consideration payable to a customer or paid on behalf of a customer are recognized as a reduction of revenue. Certain incentives paid to users that are not our customers are classified as sales and marketing expense. We provide merchants and consumers with protection programs for certain transactions completed on our payments platform. These programs are intended to protect both merchants and consumers from loss primarily due to fraud and counterparty performance. These protection programs do not provide a separate service to our customers and we estimate and record associated costs in transaction and credit losses during the period the payment transaction is completed. REVENUES FROM OTHER VALUE ADDED SERVICES We earn revenues from other value added services, which are comprised primarily of revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services that we provide to our merchants and consumers. These contracts typically have one performance obligation which is provided and recognized over the term of the contract. The transaction price is generally fixed and known at the end of each reporting period; however, for some agreements, it may be necessary to estimate the transaction price using the expected value method. Revenue earned from other value added services is recorded on a net basis when we are considered the agent with respect to processing transactions. We also earn revenues from interest and fees earned on our portfolio of loans receivable and interest earned on certain assets underlying customer balances. Interest and fees earned on the portfolio of loans receivable are computed and recognized based on the effective interest method and are presented net of any required reserves and amortization of deferred origination costs. DISAGGREGATION OF REVENUE We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our Chief Executive Officer, who regularly reviews our operating results on a consolidated basis. We operate as one segment and have one reportable segment. Based on the information provided to and reviewed by our CODM, we believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets and types of revenue categories (transaction revenues and revenues from other value added services). Revenues recorded within these categories are earned from similar products and services for which the nature of associated fees and the related revenue recognition models are substantially the same. The following table presents our revenue disaggregated by primary geographical market and category:
(1) No single country included in the other countries category generated more than 10% of total revenue. (2) Total net revenues include $1.3 billion, $425 million, and $597 million for the years ended December 31, 2022, 2021, and 2020, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers. Such revenues relate to interest and fees earned on loans and interest receivable, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances. Net revenues are attributed to the country in which the party paying our PayPal fee is located.
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NET INCOME (LOSS) PER SHARE |
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NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The dilutive effect of outstanding equity incentive awards is reflected in diluted net income (loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares. During periods when we report net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items would decrease the net loss per share. The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
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BUSINESS COMBINATIONS |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS There were no acquisitions accounted for as business combinations or divestitures completed in 2022. ACQUISITIONS COMPLETED IN 2021 During the year ended December 31, 2021, we completed five acquisitions reflecting 100% of the equity interests of the acquired companies, for an aggregate purchase price of $3.1 billion. Paidy We completed the acquisition of Paidy in October 2021 by acquiring all outstanding shares for total consideration of approximately $2.7 billion, consisting of approximately $2.6 billion in cash and approximately $161 million in assumed restricted stock and restricted stock units, subject to vesting conditions. Paidy is a two-sided payments platform that primarily provides buy now, pay later solutions (installment credit offerings) in Japan. With the acquisition of Paidy, we expanded our capabilities and relevance in Japan. The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
The intangible assets acquired consist primarily of merchant contracts, trade names/trademarks, and developed technology with estimated useful lives of to seven years. Contractual gross loans and interest receivable acquired were $216 million. We expect to collect substantially all of these receivables. The excess of the purchase consideration, including the fair value of our equity investment, over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is attributable to the workforce of Paidy and the synergies expected to arise from the acquisition, including continued customer acquisition. Goodwill was not deductible for income tax purposes. In connection with the acquisition, we issued restricted stock and restricted stock units with an approximate grant date fair value of $161 million, which represents post-business combination expense. The equity granted is a combination of shares issued to certain former Paidy employees subject to a holdback arrangement and assumed Paidy employee equity grants, which vest over a period of up to approximately four years subject to continued employment. Other acquisitions In 2021, we completed four other acquisitions accounted for as business combinations. The total purchase price for these acquisitions was $542 million, consisting primarily of cash consideration. The allocation of purchase consideration resulted in approximately $90 million of technology, customer, and marketing-related intangible assets with estimated useful lives ranging from approximately to seven years, net assets of $17 million, and goodwill of approximately $435 million attributable to the workforce of the acquired companies and the synergies expected to arise from these acquisitions, including the integration of the acquired technology with our existing product offerings. Goodwill was not considered deductible for income tax purposes. ACQUISITIONS COMPLETED IN 2020 During the year ended December 31, 2020, we completed one acquisition reflecting 100% of the equity interests of the acquired company, for a purchase price of $3.6 billion. Honey Science Corporation We completed our acquisition of Honey Science Corporation (“Honey”) in January 2020 by acquiring all outstanding shares for total consideration of approximately $4.0 billion, consisting of approximately $3.6 billion in cash and approximately $400 million in assumed restricted stock, restricted stock units, and stock options, subject to vesting conditions. Honey was acquired to enhance our value proposition by allowing us to further simplify and personalize shopping experiences for consumers while driving conversion and increasing consumer engagement and sales for merchants. The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
The intangible assets acquired consist primarily of customer contracts, trade name/trademarks, and developed technology with estimated useful lives of three years. The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is attributable to the workforce of Honey and the synergies expected to arise from the acquisition through continued customer acquisition, cross selling initiatives, and product enhancements. Goodwill was not deductible for income tax purposes. In connection with the acquisition, we assumed restricted stock, restricted stock units, and options with an approximate grant date fair value of $400 million, which represents post-business combination expense. The equity granted was a combination of shares issued to certain former Honey employees subject to a holdback arrangement and assumed Honey employee grants, which vest over a period of up to four years and are subject to continued employment. OTHER INFORMATIONPrior to acquisition, we held minority interests in certain of the companies we acquired in 2021. We remeasured these investments immediately before the completion of the respective acquisitions at a total acquisition-date fair value of $64 million, which resulted in an aggregate gain of $36 million recognized as other income (expense), net in our consolidated statements of income (loss). The acquisition-date fair value was derived using the value paid less a control premium based on market analysis performed by a third party.
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GOODWILL AND INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS GOODWILL The following table presents goodwill balances and adjustments to those balances during the years ended December 31, 2022 and 2021:
The goodwill acquired during 2021 was attributable to the five acquisitions completed within 2021 as described in “Note 4—Business Combinations.” The adjustments to goodwill during 2022 and 2021 pertained primarily to foreign currency translation adjustments. INTANGIBLE ASSETS The components of identifiable intangible assets were as follows:
Amortization expense for intangible assets was $471 million, $443 million, and $451 million for the years ended December 31, 2022, 2021, and 2020, respectively. Expected future intangible asset amortization as of December 31, 2022 was as follows:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, data centers, product development offices, customer services and operations centers, and warehouses. While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. The short-term lease exemption has been adopted for all leases with a duration of less than 12 months. PayPal’s lease portfolio includes a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements. As of December 31, 2022, we had no finance leases. The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
Supplemental balance sheet information related to leases was as follows:
Future minimum lease payments for our operating leases as of December 31, 2022 were as follows:
Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases. We recognize rent expense under such agreements on a straight-line basis. Rent expense for the years ended December 31, 2022, 2021, and 2020 totaled $202 million, $192 million, and $172 million, respectively. In the first quarter of 2020, we entered into a sale-leaseback arrangement as the seller-lessee for a data center as the buyer-lessor obtained control of the facility. We sold the data center and simultaneously entered into an operating lease agreement with the purchaser for the right to use the facility for 8 years. The Company received proceeds of approximately $119 million, net of selling costs, which resulted in a de minimis net gain on the sale transaction. In the years ended December 31, 2022, 2021 and 2020, we incurred asset impairment charges of $81 million, $26 million, and $30 million, respectively, within restructuring and other charges on our consolidated statements of income (loss). The impairments included a reduction to our ROU lease assets in the amount of $52 million, $21 million, and $23 million, respectively, which were attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased. As of December 31, 2022, we entered into an additional operating lease for real estate, which will commence in the second quarter of 2023 or later with minimum lease payments aggregating to $12 million and a lease term of 6 years.
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OTHER FINANCIAL STATEMENT DETAILS |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER FINANCIAL STATEMENT DETAILS | OTHER FINANCIAL STATEMENT DETAILS CRYPTO ASSET SAFEGUARDING LIABILITY AND CORRESPONDING SAFEGUARDING ASSET We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin (collectively, “our customers’ crypto assets”). We engage third parties, which are licensed trust companies, to provide certain custodial services, including holding our customers’ cryptographic key information, securing our customers’ crypto assets, and protecting them from loss or theft, including indemnification against certain types of losses such as theft. Our third-party custodian holds the crypto assets in a custodial account in PayPal’s name for the benefit of PayPal’s customers. We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial account. Given that we currently utilize one third-party custodian, there is concentration risk in the event the custodian is not able to perform in accordance with our agreement. Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our customers, which is recorded in accrued expenses and other current liabilities on our consolidated balance sheet. We also recognize a corresponding safeguarding asset which is recorded in prepaid expenses and other current assets on our consolidated balance sheet. The crypto asset safeguarding liability and corresponding safeguarding asset are measured and recorded at fair value on a recurring basis using prices available in the market we determine to be the principal market at the balance sheet date. The corresponding safeguarding asset may be adjusted for loss events, as applicable. As of December 31, 2022, the Company has not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value. The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of December 31, 2022 (in millions):
PROPERTY AND EQUIPMENT, NET
Depreciation and amortization expense was $846 million, $822 million, and $738 million for the years ended December 31, 2022, 2021, and 2020, respectively. Net changes in accounts payable on our consolidated statements of cash flows includes non-cash investing activities associated with property and equipment; the impact of which was a decrease of $36 million and $27 million in 2022 and 2021, respectively, and an increase of $17 million in 2020. Geographical information The following table summarizes long-lived assets based on geography, which consist of property and equipment, net and operating lease ROU assets:
Long-lived assets attributed to the U.S. and other countries are based upon the country in which the asset is located or owned. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2022:
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2021:
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2020:
The following table provides details about reclassifications out of AOCI for the periods presented below:
OTHER INCOME (EXPENSE), NET The following table reconciles the components of other income (expense), net for the periods presented below:
Refer to “Note 1—Overview and Summary of Significant Accounting Policies” for details on the composition of these balances.
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FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS | FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS The following table summarizes the assets underlying our funds receivable and customer accounts, short-term investments, and long-term investments as of December 31, 2022 and 2021:
As of December 31, 2022 and 2021, the estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments was as follows:
(1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.”
(1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.” Gross amortized cost and estimated fair value balances exclude accrued interest receivable on available-for-sale debt securities, which totaled $65 million and $36 million at December 31, 2022 and 2021, respectively, and were included in on our consolidated balance sheets. As of December 31, 2022 and 2021, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:
(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.
(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position. Unrealized losses have not been recognized into income as we neither intend to sell, nor anticipate that it is more likely than not that we will be required to sell, the securities before recovery of their amortized cost basis. The decline in fair value is due primarily to changes in market interest rates, rather than credit losses. We will continue to monitor the performance of the investment portfolio and assess whether impairment due to expected credit losses has occurred. Amounts reclassified to earnings from unrealized gains and losses were not material for the years ended December 31, 2022 and 2021. Our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows:
STRATEGIC INVESTMENTS Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies. Our marketable equity securities have readily determinable fair values and are recorded as long-term investments on our consolidated balance sheets at fair value with changes in fair value recorded in other income (expense), net on our consolidated statements of income (loss). Marketable equity securities totaled $323 million and $1.9 billion as of December 31, 2022 and 2021, respectively, including the impact of the sale of marketable equity securities during the year ended December 31, 2022. Our non-marketable equity securities are recorded in long-term investments on our consolidated balance sheets. As of December 31, 2022 and 2021, we had non-marketable equity securities of $136 million and $79 million, respectively, where we have the ability to exercise significant influence, but not control, over the investee. We account for these equity securities using the equity method of accounting. The remaining non-marketable equity securities do not have a readily determinable fair value and we measure these equity investments at cost minus impairment, if any, and adjust for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our consolidated statements of income (loss). The carrying value of our non-marketable equity securities totaled $1.8 billion and $1.3 billion as of December 31, 2022 and 2021, respectively. Measurement Alternative adjustments The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the years ended December 31, 2022 and 2021 were as follows:
(1) Net additions include purchases, reductions due to sales of securities, and reclassifications when Measurement Alternative is subsequently elected or no longer applies. The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative, held at December 31, 2022 and 2021, respectively:
Unrealized gains (losses) on strategic investments, excluding those accounted for using the equity method The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at December 31, 2022 and 2021, respectively:
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FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES | FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021:
(1) Excludes cash of $6.8 billion not measured and recorded at fair value. (2) Excludes restricted cash of $17 million and time deposits of $537 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $18.8 billion underlying funds receivable and customer accounts not measured and recorded at fair value. (4) Excludes non-marketable equity securities of $1.8 billion measured using the Measurement Alternative or equity method accounting.
(1) Excludes cash of $4.8 billion not measured and recorded at fair value. (2) Excludes restricted cash of $109 million and time deposits of $635 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $17.2 billion underlying funds receivable and customer accounts not measured and recorded at fair value. (4) Excludes non-marketable equity securities of $1.3 billion measured using the Measurement Alternative or equity method accounting. Our marketable equity securities are valued using quoted prices for identical assets in active markets (Level 1). There are no active markets for our crypto asset safeguarding liability or the corresponding safeguarding asset. Accordingly, we have valued the asset and liability using quoted prices on the active exchange that has been identified as the principal market for the underlying crypto assets (Level 2). All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2). A majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices. Our derivative instruments are primarily short-term in nature, generally one month to one year in duration. Certain foreign currency contracts designated as cash flow hedges may have a duration of up to 18 months. As of December 31, 2022 and 2021, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis without observable market values that would require a high level of judgment to determine fair value (Level 3). We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries under the fair value option. Election of the fair value option allows us to recognize any gains and losses from fair value changes on such investments in other income (expense), net on the consolidated statements of income (loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding foreign exchange gains and losses relating to customer liabilities. The following table summarizes the estimated fair value of our available-for-sale debt securities under the fair value option as of December 31, 2022 and 2021:
The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the years ended December 31, 2022 and 2021:
ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS The following tables summarize our assets held as of December 31, 2022 and 2021 for which a non-recurring fair value measurement was recorded during the years ended December 31, 2022 and 2021, respectively:
(1) Excludes non-marketable equity securities of $700 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2022. (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2022. See “Note 6—Leases” for additional information.
(1) Excludes non-marketable equity securities of $657 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2021. (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2021. See “Note 6—Leases” for additional information. We measure the non-marketable equity securities accounted for under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer. Non-marketable equity securities that have been remeasured during the period based on observable price changes are classified within Level 2 in the fair value hierarchy because we estimate the fair value based on valuation methods which only include significant inputs that are observable, such as the observable transaction price at the transaction date. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3 as we estimate fair value using significant unobservable inputs such as discount rates, forecasted cash flows, and market data of comparable companies, among others. We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable. Impairment losses on ROU lease assets related to office operating leases are calculated initially using estimated rental income per square foot derived from observable market data, and the impaired asset is classified within Level 2 in the fair value hierarchy. FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE Our financial instruments, including cash, restricted cash, time deposits, loans and interest receivable, net, certain customer accounts, and long-term debt related to borrowings on our credit facilities are carried at amortized cost, which approximates their fair value. Our notes receivable had a carrying value of approximately $441 million and fair value of approximately $396 million as of December 31, 2022. Our notes receivable had a carrying value of approximately $381 million and fair value of approximately $424 million as of December 31, 2021. Our long-term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $10.3 billion and fair value of approximately $9.5 billion as of December 31, 2022. Our fixed rate notes had a carrying value of approximately $9.0 billion and fair value of approximately $9.3 billion as of December 31, 2021. If these financial instruments were measured at fair value in the financial statements, cash would be classified as Level 1; restricted cash, time deposits, certain customer accounts, and long-term debt (including current portion) would be classified as Level 2; and the remaining financial instruments would be classified as Level 3 in the fair value hierarchy.
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DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS SUMMARY OF DERIVATIVE INSTRUMENTS Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. Our derivatives expose us to credit risk to the extent that our counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions and by entering into collateral security arrangements. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We do not use any derivative instruments for trading or speculative purposes. Cash flow hedges We have significant international revenues and costs denominated in foreign currencies, which subjects us to foreign currency exchange risk. We have a foreign currency exposure management program in which we designate certain foreign currency exchange contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenues denominated in foreign currencies. The objective of these foreign currency exchange contracts is to help mitigate the risk that the U.S. dollar-equivalent cash flows are adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. These derivative instruments are designated as cash flow hedges and accordingly, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into revenue in the same period the forecasted transaction affects earnings. We evaluate the effectiveness of our foreign currency exchange contracts on a quarterly basis by comparing the critical terms of the derivative instruments with the critical terms of the forecasted cash flows of the hedged item; if the critical terms are the same, we conclude the hedge will be perfectly effective. We do not exclude any component of the changes in fair value of the derivative instruments from the assessment of hedge effectiveness. We report cash flows arising from derivative instruments consistent with the classification of cash flows from the underlying hedged items that these derivatives are hedging. Accordingly, the cash flows associated with derivatives designated as cash flow hedges are classified in cash flows from operating activities on our consolidated statements of cash flows. As of December 31, 2022, we estimated that $110 million of net derivative gains related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months. During the years ended December 31, 2022, 2021, and 2020, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction. If we elect to discontinue our cash flow hedges and it is probable that the original forecasted transaction will occur, we continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects earnings, at which point we also reclassify it into earnings. Gains and losses on derivatives held after we discontinue our cash flow hedges and on derivative instruments that are not designated as cash flow hedges are recorded in the same financial statement line item to which the derivative relates. Net investment hedges We use forward foreign currency exchange contracts to reduce the foreign currency exchange risk related to our investment in certain foreign subsidiaries. These derivatives are designated as net investment hedges and accordingly, the gains and losses on the portion of the derivatives included in the assessment of hedge effectiveness is recorded in AOCI as part of foreign currency translation. We exclude forward points from the assessment of hedge effectiveness and recognize them in other income (expense), net on a straight-line basis over the life of the hedge. The accumulated gains and losses associated with these instruments will remain in AOCI until the foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings. The cash flows associated with derivatives designated as a net investment hedge are classified in cash flows from investing activities on our consolidated statements of cash flows. We have not reclassified any gains or losses related to net investment hedges from AOCI into earnings during any of the periods presented. Foreign currency exchange contracts not designated as hedging instruments We have a foreign currency exposure management program in which we use foreign currency exchange contracts to offset the foreign currency exchange risk of our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries. These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on our assets and liabilities. The gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities are recorded in other income (expense), net, which are offset by the gains and losses on these foreign currency exchange contracts. The cash flows associated with our non-designated derivatives used to hedge foreign currency denominated monetary assets and liabilities are classified in cash flows from operating activities on our consolidated statements of cash flows. FAIR VALUE OF DERIVATIVE CONTRACTS The fair value of our outstanding derivative instruments as of December 31, 2022 and 2021 was as follows:
MASTER NETTING AGREEMENTS - RIGHTS OF SET-OFF Under master netting agreements with certain counterparties to our foreign currency exchange contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our consolidated balance sheets. Rights of set-off associated with our foreign currency exchange contracts represented a potential offset to both assets and liabilities of $70 million as of December 31, 2022 and $102 million as of December 31, 2021. We have entered into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The following table provides the collateral exchanged posted and received:
(1) Right to reclaim cash collateral related to our derivative liabilities recognized in other current assets on our consolidated balance sheets. (2) Obligation to return counterparty cash collateral related to our derivative assets recognized in other current liabilities on our consolidated balance sheets. EFFECT OF DERIVATIVE CONTRACTS ON CONSOLIDATED FINANCIAL STATEMENTS The following table provides the location in the consolidated statements of income (loss) and amount of recognized gains or losses related to our derivative instruments:
(1) During the years ended December 31, 2022 and December 31, 2020, equity derivative contracts were entered into and matured which related to the sale of marketable equity securities related to a strategic investment. The cash flows associated with the equity derivative contracts were classified in cash flows from investing activities on our consolidated statements of cash flows. The following table provides the amount of pre-tax unrealized gains or losses included in the assessment of hedge effectiveness related to our derivative instruments designated as hedging instruments that are recognized in other comprehensive income (loss):
NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS Derivative transactions are measured in terms of the notional amount; however, this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments. The notional amount is generally not exchanged, but is used only as the underlying basis on which the value of foreign currency exchange payments under these contracts is determined. The following table provides the notional amounts of our outstanding derivatives:
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND INTEREST RECEIVABLE | LOANS AND INTEREST RECEIVABLE CONSUMER RECEIVABLES We offer revolving and installment credit products as a funding option for consumers in certain checkout transactions on our payments platform. Our revolving credit product consists of PayPal Credit in the U.K. Once a consumer is approved for credit, it is made available to them as a funding source in their PayPal wallet. Additionally, we offer installment credit products at the time of checkout in various markets, including the U.S., several markets across Europe, Australia, and Japan. The majority of the installment loans allow consumers to pay for purchases over periods of 12 months or less. Beginning in June 2022, we purchase receivables related to interest-bearing installment loans extended to U.S. consumers by a partner institution and are responsible for servicing functions related to that portfolio. During the year ended December 31, 2022, we purchased approximately $381 million in consumer receivables. As of December 31, 2022 and 2021, the outstanding balance of consumer receivables, which consisted of revolving and installment loans and interest receivable, was $5.9 billion and $3.8 billion, respectively, net of the participation interest sold to the partner institution of $17 million and nil, respectively. See “Note 1—Overview and Summary of Significant Accounting Policies” for additional information on this participation arrangement. We closely monitor the credit quality of our consumer receivables to evaluate and manage our related exposure to credit risk. Credit risk management begins with initial underwriting and continues through the full repayment of a loan. To assess a consumer who requests a loan, we use, among other indicators, internally developed risk models using detailed information from external sources, such as credit bureaus where available, and internal data, including the consumer’s prior repayment history with our credit products where available. We use delinquency status and trends to assist in making (or, for interest-bearing installment loans in the U.S., to assist the partner institution in making) new and ongoing credit decisions, to adjust our models, to plan our collection practices and strategies, and in determining our allowance for consumer loans and interest receivable. The following tables present the delinquency status of consumer loans and interest receivable by year of origination. The amounts are based on the number of days past the billing date for revolving loans or contractual repayment date for installment loans. The “current” category represents balances that are within 29 days of the billing date or contractual repayment date, as applicable.
(1) Excludes receivables from other consumer credit products of $11 million at December 31, 2022.
(1) Excludes receivables from other consumer credit products of $44 million at December 31, 2021. The following table summarizes the activity in the allowance for consumer loans and interest receivable for the years ended December 31, 2022 and 2021:
(1) Excludes allowances from other consumer credit products of $3 million and $4 million at December 31, 2022 and 2021, respectively. (2) Includes amounts related to foreign currency remeasurement and, for the year ended December 31, 2021, initial allowance for purchased credit deteriorated (“PCD”) loans acquired during the period. A portion of the Paidy loan portfolio acquired was determined to be purchase credit deteriorated as the loans were 30 days or more past due. As such, we recorded current expected credit losses on the PCD loans. The provision for the year ended December 31, 2022 was primarily attributable to growth in the consumer receivable portfolio. Qualitative adjustments were made to account for limitations in our current expected credit loss models due to uncertainty with respect to macroeconomic conditions and the financial health of our borrowers. The increase in charge-offs for the year ended December 31, 2022 compared to the same period in the prior year was due to the expansion of our short-term installment products. The provision for current expected credit losses relating to our consumer receivable portfolio is recognized in transaction and credit losses on our consolidated statements of income (loss). The provision for interest receivable for interest earned on our consumer receivable portfolio is recognized in revenues from other value added services as a reduction to revenue. Loans receivable continue to accrue interest until they are charged off. We charge off consumer receivable balances in the month in which a customer’s balance becomes 180 days past the billing date or contractual repayment date, except for the U.S. consumer interest-bearing installment receivables, which are charged off 120 days past the contractual repayment date. Bankrupt accounts are charged off within 60 days after receipt of notification of bankruptcy. Charge-offs are recorded as a reduction to our allowance for loans and interest receivable and subsequent recoveries, if any, are recorded as an increase to the allowance for loans and interest receivable. MERCHANT RECEIVABLES We offer access to merchant finance products for certain small and medium-sized businesses through our PPWC and PPBL products, which we collectively refer to as our merchant finance offerings. We purchase receivables related to credit extended to U.S. merchants by a partner institution and are responsible for servicing functions related to that portfolio. During the years ended December 31, 2022 and 2021, we purchased approximately $3.2 billion and $1.8 billion in merchant receivables, respectively. As of December 31, 2022 and 2021, the total outstanding balance in our pool of merchant loans, advances, and interest and fees receivable was $2.1 billion and $1.4 billion, respectively, net of the participation interest sold to the partner institution of $97 million and $63 million, respectively. See “Note 1—Overview and Summary of Significant Accounting Policies” for additional information on this participation arrangement. Through our PPWC product, merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the loan or advance based on the overall credit assessment of the merchant. Loans and advances are repaid through a fixed percentage of the merchant’s future payment volume that PayPal processes. Through our PPBL product, we provide merchants access to short-term business financing for a fixed fee based on an evaluation of the applying business as well as the business owner. PPBL repayments are collected through periodic payments until the balance has been satisfied. The interest or fee is fixed at the time the loan or advance is extended and is recognized as deferred revenue in accrued expenses and other current liabilities on our consolidated balance sheets. The fixed interest or fee is amortized into revenues from other value added services based on the amount repaid over the repayment period. We estimate the repayment period for PPWC based on the merchant’s payment processing history with PayPal. For PPWC, there is a general requirement that at least 10% of the original amount of the loan or advance plus the fixed fee must be repaid every 90 days. We calculate the repayment rate of the merchant’s future payment volume so that repayment of the loan or advance and fixed fee is expected to generally occur within 9 to 12 months from the date of the loan or advance. On a monthly basis, we recalculate the repayment period based on the repayment activity on the receivable. As such, actual repayment periods are dependent on actual merchant payment processing volumes. For PPBL, we receive fixed periodic payments over the contractual term of the loan, which generally ranges from 3 to 12 months. We actively monitor receivables with repayment periods greater than the original expected or contractual repayment period, as well as the credit quality of our merchant loans and advances that we extend or purchase so that we can evaluate, quantify, and manage our credit risk exposure. To assess a merchant seeking a loan or advance, we use, among other indicators, risk models developed internally which utilize information obtained from multiple internal and external data sources to predict the likelihood of timely and satisfactory repayment by the merchant of the loan or advance amount and the related interest or fee. Primary drivers of the models include the merchant’s annual payment volume, payment processing history with PayPal, prior repayment history with PayPal’s credit products where available, information sourced from consumer and business credit bureau reports, and other information obtained during the application process. We use delinquency status and trends to assist in making (or, in the U.S., to assist the partner institution in making) ongoing credit decisions, to adjust our internal models, to plan our collection strategies, and in determining our allowance for these loans, advances, and interest and fees receivable. Merchant receivables delinquency and allowance The following tables present the delinquency status of merchant loans, advances, and interest and fees receivable by year of origination. The amounts are based on the number of days past the expected or contractual repayment date for amounts outstanding. The “current” category represents balances that are within 29 days of the expected repayment date or contractual repayment date, as applicable.
(1) Balances include the impact of modification programs offered by the Company as a part of our novel coronavirus (“COVID-19”) pandemic payment relief initiatives (as discussed further below). The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable, for the years ended December 31, 2022 and 2021:
The provision for the year ended December 31, 2022 was primarily attributable to originations in the merchant portfolio and a slight deterioration in credit quality of loans outstanding. Qualitative adjustments were made to account for uncertainty around the effectiveness of loan modification programs made available to merchants in previous years, as described further below. The decrease in the charge-offs for the year ended December 31, 2022 compared to the prior year was due to the charge-off of accounts in 2021 that experienced financial difficulties as a result of the COVID-19 pandemic. For merchant loans and advances, the determination of delinquency is based on the current expected or contractual repayment period of the loan or advance and fixed interest or fee payment as compared to the original expected or contractual repayment period. We charge off the receivables outstanding under our PPBL product when the repayments are 180 days past the contractual repayment date. We charge off the receivables outstanding under our PPWC product when the repayments are 180 days past our expectation of repayments and the merchant has not made a payment in the last 60 days, or when the repayments are 360 days past due regardless of whether the merchant has made a payment in the last 60 days. Bankrupt accounts are charged off within 60 days of receiving notification of bankruptcy. The provision for credit losses on merchant loans and advances is recognized in transaction and credit losses on our consolidated statements of income (loss), and the provision for interest and fees receivable is recognized as a reduction of deferred revenue in accrued expenses and other current liabilities on our consolidated balance sheets. Charge-offs are recorded as a reduction to our allowance for loans and interest receivable and subsequent recoveries, if any, are recorded as an increase to the allowance for loans and interest receivable. Troubled debt restructurings In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a modification of the loan or advance and the related interest or fee receivable for which it is probable that, without modification, we would be unable to collect all amounts due. These modifications are intended to provide merchants with financial relief, and help enable us to mitigate losses. These modifications include an increase in term by approximately 1 to 5.5 years while moving the delinquency status to current. The fee on certain of these loans or advances remains unchanged over the extended term. Alternatively, certain loans and advances have been modified to replace the initial fixed fee structure at the time the loan or advance was extended with a fixed annual percentage rate applied over the amended remaining term, which will continue to accrue interest at the fixed rate until the earlier of maturity or charge-off. These modifications had a de minimis impact on our consolidated statements of income (loss) in the years ended December 31, 2022 and 2021. Allowances for TDRs are assessed separately from other loans and advances within our portfolio and are determined by estimating current expected credit losses utilizing the modified term and interest rate assumptions. Historical loss estimates are utilized in addition to macroeconomic assumptions to determine expected credit loss rates. Further, we may include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses. During the year ended December 31, 2022, merchant loans, advances, and interest and fees receivables which have been modified as TDRs were de minimis. The following table shows merchant loans, advances and interest and fees receivables which were modified as TDRs in the year ended December 31, 2021:
(1) Balances are as of modification date. A merchant is considered in payment default after a modification when the merchant’s payment becomes 60 days past their expected or contractual repayment date. For loans or advances that have defaulted after being modified, the increased estimate of current expected credit loss is factored into overall expected credit losses. In the years ended December 31, 2022 and 2021, the amount of merchant loans, advances, and interest and fees receivables classified as TDRs that have subsequently defaulted on payments was de minimis.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT FIXED RATE NOTES In May 2022, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $3.0 billion. Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2022. In May 2020, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $4.0 billion. Interest on these notes is payable on June 1 and December 1 of each year, beginning on December 1, 2020. In September 2019, we issued fixed rate notes with varying maturity dates for an aggregate principal amount of $5.0 billion. Interest on these notes is payable in arrears semiannually (payable on April 1 and October 1). The notes issued from the May 2022, May 2020, and September 2019 debt issuances are senior unsecured obligations and are collectively referred to as the “Notes.” We may redeem the Notes in whole, at any time, or in part, from time to time, prior to maturity, at their redemption prices. Upon the occurrence of both a change of control of the Company and a downgrade of the Notes below an investment grade rating, we will be required to offer to repurchase each series of Notes at a price equal to 101% of the then outstanding principal amounts, plus accrued and unpaid interest. The Notes are subject to covenants, including limitations on our ability to create liens on our assets, enter into sale and leaseback transactions, and merge or consolidate with another entity, in each case subject to certain exceptions, limitations, and qualifications. Proceeds from the issuance of these Notes may be used for general corporate purposes, which may include funding the repayment or redemption of outstanding debt, share repurchases, ongoing operations, capital expenditures, acquisitions of businesses, assets, or strategic investments. In May 2022, we repurchased certain Notes under the September 2019 and May 2020 debt issuances prior to maturity through tender offers. In addition, in June 2022, we redeemed the outstanding balance of the notes maturing in September 2022 through a make-whole redemption. We repurchased and redeemed $1.6 billion of outstanding Notes, as described above, which resulted in de minimis debt extinguishment net gains that were recorded as interest expense within other income (expense), net on our consolidated statements of income (loss). As of December 31, 2022 and 2021, we had an outstanding aggregate principal amount of $10.4 billion and $9.0 billion, respectively, related to the Notes. The following table summarizes the Notes:
(1) The current portion of term debt is included within accrued expenses and other current liabilities on our consolidated balance sheets. The effective interest rates for the Notes include interest on the Notes, amortization of debt issuance costs, and amortization of the debt discount. The interest expense recorded for the Notes, including amortization of the debt discount, debt issuance costs, and debt extinguishment net gains, was $290 million, $224 million, and $190 million for the years ended December 31, 2022, 2021, and 2020, respectively. CREDIT FACILITIES Five-year revolving credit facility In September 2019, we entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $5.0 billion, five-year revolving credit facility that includes a $150 million letter of credit sub-facility and a $500 million swingline sub-facility, with available borrowings under the revolving credit facility reduced by the amount of any letters of credit and swingline borrowings outstanding from time to time. Loans borrowed under the Credit Agreement are available in U.S. dollar, Euro, British pound, Canadian dollar, and Australian dollar, and in each case subject to the sub-limits and other limitations provided in the Credit Agreement. We may also, subject to the agreement of the applicable lenders and satisfaction of specified conditions, increase the commitments under the revolving credit facility by up to $2.0 billion. Subject to specific conditions, we may designate one or more of our subsidiaries as additional borrowers under the Credit Agreement, provided PayPal Holdings, Inc. guarantees the portion of borrowings made available and other obligations of any such subsidiaries under the Credit Agreement. As of December 31, 2022, certain subsidiaries were designated as additional borrowers. Funds borrowed under the Credit Agreement may be used for working capital, capital expenditures, acquisitions, and other purposes not in contravention with the Credit Agreement. We are obligated to pay interest on loans under the Credit Agreement and other customary fees for a credit facility of this size and type, including an upfront fee and an unused commitment fee based on our debt rating. Loans under the Credit Agreement bear interest at either (i) the applicable eurocurrency rate plus a margin (based on our public debt ratings) ranging from 0.875% to 1.375%, (ii) the applicable overnight rate plus a margin (based on our public debt ratings) ranging from 0.875% to 1.375%, (iii) a formula based on the prime rate, the federal funds effective rate, or London Interbank Offered Rate plus a margin (based on our public debt ratings) ranging from zero to 0.375%, or (iv) a formula based on the Euro Short-Term Rate (“ESTR”) or the Sterling Overnight Index Average (“SONIA”) rate plus a margin (based on our public debt ratings) ranging from 0.875% to 1.375%. In January 2022, an amendment to the agreement was signed which provides for the additional borrowing rate option of utilizing SONIA or ESTR rates. The Credit Agreement will terminate and all amounts owed thereunder will be due and payable in September 2024, unless the commitments are terminated earlier. The Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and the incurrence of subsidiary indebtedness, in each case subject to certain exceptions. The financial covenant requires us to meet a quarterly financial test with respect to a maximum consolidated leverage ratio. In March 2020, we drew down $3.0 billion under the Credit Agreement. In May 2020, we repaid the $3.0 billion using proceeds from the May 2020 debt issuance. As of December 31, 2022, no borrowings or letters of credit were outstanding under the Credit Agreement. Accordingly, at December 31, 2022, $5.0 billion of borrowing capacity was available for the purposes permitted by the Credit Agreement, subject to customary conditions to borrowing. The total interest expense and fees we recorded related to the Credit Agreement was approximately $16 million for the year ended December 31, 2020. Paidy credit agreement In February 2022, we entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provides for an unsecured revolving credit facility of ¥60.0 billion. In September 2022, the Paidy Credit Agreement was modified to increase the borrowing capacity by ¥30.0 billion for a total borrowing capacity of ¥90.0 billion (approximately $686 million as of December 31, 2022.) Borrowings under the Paidy Credit Agreement are for use by Paidy for working capital, capital expenditures, and other permitted purposes. Loans under the Paidy Credit Agreement bear interest at the Tokyo Interbank Offered Rate plus a margin (based on our public debt rating) ranging from 0.40% to 0.60%. The Paidy Credit Agreement will terminate and all amounts owed thereunder will be due and payable in February 2027, unless the commitments are terminated earlier. The Paidy Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default, and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and subsidiary indebtedness, in each case subject to certain exceptions. The financial covenant requires us to meet a quarterly financial test with respect to a maximum consolidated leverage ratio. In the year ended December 31, 2022, ¥64.3 billion (approximately $491 million) was drawn down under the Paidy Credit Agreement, which was recorded in long-term debt on our consolidated balance sheet. Accordingly, at December 31, 2022, ¥25.7 billion (approximately $195 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions to borrowing. During the year ended December 31, 2022, the total interest expense and fees we recorded related to the Paidy Credit Agreement were de minimis. Prior credit agreement In October 2021, we assumed a credit agreement through our acquisition of Paidy (the “Prior Credit Agreement”), which provided for a secured revolving credit facility of ¥22.8 billion (approximately $198 million at acquisition). As of December 31, 2021, ¥11.3 billion (approximately $98 million) was outstanding under the Prior Credit Agreement, which was recorded in long-term debt on our consolidated balance sheet. In the first quarter of 2022, we terminated the Prior Credit Agreement and repaid all outstanding borrowings. The total interest expense and fees we recorded related to the Prior Credit Agreement were de minimis for the year ended December 31, 2022. Other available facilities We also maintain uncommitted credit facilities in various regions throughout the world, which had a borrowing capacity of approximately $80 million and $90 million in the aggregate, as of December 31, 2022 and 2021, respectively. This available credit includes facilities where we can withdraw and utilize the funds at our discretion for general corporate purposes. Interest rate terms for these facilities vary by region and reflect prevailing market rates for companies with strong credit ratings. As of December 31, 2022, the majority of the borrowing capacity under these credit facilities was available, subject to customary conditions to borrowing. FUTURE PRINCIPAL PAYMENTS As of December 31, 2022, the future principal payments associated with our term debt were as follows (in millions):
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COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES COMMITMENTS As of December 31, 2022 and 2021, approximately $4.9 billion and $4.1 billion, respectively, of unused credit was available to PayPal Credit account holders in the U.K. While this amount represents the total unused credit available, we have not experienced, and do not anticipate, that all our PayPal Credit account holders will access their entire available credit at any given point in time. In addition, the individual lines of credit that make up this unused credit are subject to periodic review and termination based on, among other things, account usage and customer creditworthiness. LITIGATION AND REGULATORY MATTERS Overview We are involved in legal and regulatory proceedings on an ongoing basis. Many of these proceedings are in early stages and may seek an indeterminate amount of damages or penalties or may require us to change or adopt certain business practices. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial statements at that time. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For those proceedings in which an unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) are not material. If we cannot estimate the probable or reasonably possible loss or range of losses arising from a legal proceeding, we have disclosed that fact. In assessing the materiality of a legal proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to change our business practices in a manner that could have a material adverse impact on our business. With respect to the matters disclosed in this Note 13, we are unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies. Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable and reasonably estimable were not material for the year ended December 31, 2022. Except as otherwise noted for the proceedings described in this Note 13, we have concluded, based on currently available information, that reasonably possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals are also not material. Determining legal reserves or possible losses from such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. We may be exposed to losses in excess of the amount recorded, and such amounts could be material. If any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our business, financial position, results of operations, or cash flows. Regulatory proceedings We routinely report to the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) on payments we have rejected or blocked pursuant to legal requirements under OFAC sanctions regulations. Between January 2013 and January 2022, we voluntarily disclosed to OFAC transactions that were inadvertently processed and identified as possible violations of OFAC sanctions regulations and responded to subpoenas and information requests related to certain of these transactions. In January 2023, OFAC notified us that it had completed its review of these matters and closed them with the issuance of a cautionary letter with no monetary penalties or sanctions. PayPal Australia Pty Limited (“PPAU”) self-reported a potential violation to the Australian Transaction Reports and Analysis Centre (“AUSTRAC”) on May 22, 2019. This self-reported matter relates to PPAU incorrectly filing required international funds transfer instructions (“IFTIs”) over a period of time under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (“AML/CTF Act”). On September 23, 2019, PPAU received a notice from AUSTRAC requiring that PPAU appoint an external auditor (a partner of a firm which is not our independent auditor) to review certain aspects of PPAU’s compliance with its obligations under the AML/CTF Act. The external auditor was appointed on November 1, 2019. As required under the terms of AUSTRAC’s notice, as amended, PPAU issued to AUSTRAC the external auditor’s interim reports on December 31, 2019, March 13, 2020, May 6, 2020, and July 7, 2020 and a final report on August 31, 2020. AUSTRAC has notified PPAU that its enforcement team is investigating the matters reported upon by the external auditor in its August 31, 2020 final report. AUSTRAC continues to engage with PPAU regarding the transaction categories it considers reportable under the AML/CTF Act as IFTIs. PPAU is continuing to cooperate with AUSTRAC in all respects, including remediation activities, ongoing regular engagement with AUSTRAC, and responding to notices and requests for information and documents. We cannot estimate the potential impact, if any, on our business or financial statements at this time. In the event an adverse outcome arises from any associated enforcement proceeding, or other further matter initiated by AUSTRAC, including in relation to AUSTRAC’s determination of reportable IFTIs, then this could result in enforceable undertakings, injunctions, damage awards, fines or penalties, or require us to change our business practices in a manner that could result in a material loss, require significant management time, result in the diversion of significant operational resources, or otherwise harm our business. We have received Civil Investigative Demands (“CIDs”) from the Consumer Financial Protection Bureau (“CFPB”) related to Venmo’s unauthorized funds transfers and collections processes, and related matters, including treatment of consumers who request payments but accidentally designate an unintended recipient. The CIDs request the production of documents and answers to written questions. We are cooperating with the CFPB in connection with these CIDs. We previously received a CID from the CFPB related to the marketing and use of PayPal Credit in connection with certain merchants that provide educational services (the “CFPB PayPal Credit Matter”). The CID requested the production of documents, written reports, and answers to written questions. We have been informed by the CFPB that this matter has been formally closed without action. We are responding to subpoenas and requests for information received from the U.S. Securities and Exchange Commission (“SEC”) Enforcement Division relating to whether the interchange rates paid to the bank that issues debit cards bearing our licensed brands were consistent with Regulation II of the Board of Governors of the Federal Reserve System, and to the reporting of marketing fees earned from the PayPal-branded card programs (the “SEC Debit Card Program Matter”). We are cooperating with the SEC Enforcement Division in connection with this investigation. In February 2022, we received a CID from the Federal Trade Commission (“FTC”) related to PayPal’s practices relating to commercial customers that submit charges on behalf of other merchants or sellers, and related activities. The CID requests the production of documents and answers to written questions. We are cooperating with the FTC in connection with this CID. In January 2023, we received notice of an administrative proceeding and a related request for information from the German Federal Cartel Office (“FCO”) related to terms in PayPal (Europe) S.à.r.l. et Cie, S.C.A.’s contractual terms with merchants in Germany prohibiting surcharging and requiring parity presentation of PayPal relative to other payment methods. We are cooperating with the FCO in connection with this proceeding. Legal proceedings On August 20, 2021, a putative securities class action captioned Kang v. PayPal Holdings, Inc., et al., Case No. 21-cv-06468, was filed in the U.S. District Court for the Northern District of California (the “Kang Securities Action”). The Kang Securities Action asserts claims relating to our disclosure of the CFPB PayPal Credit Matter and the SEC Debit Card Program Matter in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. The Kang Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 9, 2017 and July 28, 2021 (the “Class Period”), and asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its Chief Executive Officer, and former Chief Financial Officer. The complaint alleges that certain public statements made by the Company during the Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at artificially inflated prices) by the defendants’ failure to disclose that, among other things, PayPal’s business practices with respect to PayPal Credit and regarding interchange rates paid to its bank partner related to its bank-issued co-branded debit cards were non-compliant with applicable laws and/or regulations. The Kang Securities Action seeks unspecified compensatory damages on behalf of the putative class members. On November 2, 2021, the court appointed a Lead Plaintiff, and on January 25, 2022, the Lead Plaintiff filed an amended complaint. The amended complaint alleges a class period between April 27, 2016 and July 28, 2021 (the “Amended Class Period”), and in addition to the Company, its Chief Executive Officer, and former Chief Financial Officer, also names other Company executives as defendants. The amended complaint alleges that various statements made by the defendants during the Amended Class Period were rendered materially false and misleading, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by PayPal’s alleged violations of the 2015 consent order with the CFPB, federal consumer financial laws, and Regulation II. On August 8, 2022, the court granted Defendants’ motion to dismiss the amended complaint in its entirety, and granted Lead Plaintiff’s request for leave to file a further amended complaint. On September 16, 2022, Lead Plaintiff filed a Second Amended Complaint (the “SAC”), which asserts the same claims against the same Defendants based on the same alleged conduct as the prior complaint. Defendants moved to dismiss the SAC on November 3, 2022, and briefing is ongoing. On December 16, 2021 and January 19, 2022, two related putative shareholder derivative actions captioned Pang v. Daniel Schulman, et al., Case No. 21-cv-09720, and Lalor v. Daniel Schulman, et al., Case No. 22-cv-00370, respectively, were filed in the U.S. District Court for the Northern District of California (the “California Derivative Actions”), purportedly on behalf of the Company. On August 2, 2022, a related putative shareholder derivative action captioned Jefferson v. Daniel Schulman, et al., No. 2022-0684, was filed in the Court of Chancery for the State of Delaware (the “Delaware Derivative Action,” and collectively with the California Derivative Actions, the “Derivative Actions”), purportedly on behalf of the Company. The Derivative Actions are based on the same alleged facts and circumstances as the Kang Securities Action, and name certain of our officers, including our Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants. The Derivative Actions allege claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of the Securities Exchange Act of 1934, and seek to recover damages on behalf of the Company. On February 1, 2022, the court entered an order consolidating the two California Derivative Actions and staying them until all motions to dismiss in the Kang Securities Action are resolved. On October 4, 2022, a putative securities class action captioned Defined Benefit Plan of the Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund v. PayPal Holdings, Inc., et al., Case No. 22-cv-5864, was filed in the U.S. District Court for the District of New Jersey. On January 11, 2023, the Court appointed Caisse de dépôt et placement du Québec as lead plaintiff and renamed the action In re PayPal Holdings, Inc. Securities Litigation (“PPH Securities Action”). The PPH Securities Action asserts claims relating to our public statements with respect to net new active accounts (“NNA”) results and guidance, and the detection of illegitimately created accounts. The PPH Securities Action purports to be brought on behalf of purchasers of the Company’s stock between February 3, 2021 and February 1, 2022 (the “Class Period”), and asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, its Chief Executive Officer, and former Chief Financial Officer. The complaint alleges that certain public statements made by the Company during the Class Period were rendered materially false and misleading (which, allegedly, caused the Company’s stock to trade at artificially inflated prices) by the defendants’ failure to disclose that, among other things, the Company’s incentive campaigns were susceptible to fraud and led to the creation of illegitimate accounts, which allegedly affected the Company’s NNA results and guidance. The PPH Securities Action seeks unspecified compensatory damages on behalf of the putative class members. On November 2, 2022, a putative shareholder derivative action captioned Shah v. Daniel Schulman, et al., Case No. 22-cv-1445, was filed in the U.S. District Court for the District of Delaware (the “Shah Action”), purportedly on behalf of the Company. The Shah Action is based on the same alleged facts and circumstances as the PPH Securities Action, and names certain of our officers, including our Chief Executive Officer and former Chief Financial Officer, and members of our Board of Directors, as defendants. The Shah Action alleges claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of the Securities Exchange Act of 1934, and seeks to recover damages on behalf of the Company. General matters Other third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to patent disputes and expect that we will increasingly be subject to additional patent infringement claims involving various aspects of our business as our products and services continue to expand in scope and complexity. Such claims may be brought directly or indirectly against our companies and/or against our customers (who may be entitled to contractual indemnification under their contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions, particularly in cases where we are introducing new products or services in connection with such acquisitions. We have in the past been forced to litigate such claims, and we believe that additional lawsuits alleging such claims will be filed against us. Intellectual property claims, whether meritorious or not, are time-consuming and costly to defend and resolve, could require expensive changes in our methods of doing business, or could require us to enter into costly royalty or licensing agreements on unfavorable terms or make substantial payments to settle claims or to satisfy damages awarded by courts. From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business, including suits by our customers (individually or as class actions) or regulators alleging, among other things, improper disclosure of our prices, rules, or policies, that our practices, prices, rules, policies, or customer/user agreements violate applicable law, or that we have acted unfairly or not acted in conformity with such prices, rules, policies, or agreements. In addition to these types of disputes and regulatory inquiries, our operations are also subject to regulatory and legal review and challenges that may reflect the increasing global regulatory focus to which the payments industry is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on our business and customers and may lead to increased costs and decreased transaction volume and revenue. Further, the number and significance of these disputes and inquiries are increasing as our business has grown and expanded in scale and scope, including the number of active accounts and payments transactions on our platform, the range and increasing complexity of the products and services that we offer, and our geographical operations. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, settlement payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines, penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, or otherwise harm our business. INDEMNIFICATION PROVISIONS Our agreements with eBay governing our separation from eBay provide for specific indemnity and liability obligations for both eBay and us. Disputes between eBay and us have arisen and others may arise in the future, and an adverse outcome in such matters could materially and adversely impact our business, results of operations, and financial condition. In addition, the indemnity rights we have against eBay under the agreements may not be sufficient to protect us, and our indemnity obligations to eBay may be significant. In the ordinary course of business, we include indemnification provisions in certain of our agreements with parties with whom we have commercial relationships. Under these contracts, we generally indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with claims by any third party with respect to our domain names, trademarks, logos, and other branding elements to the extent that such marks are related to the subject agreement. We have provided an indemnity for other types of third-party claims, which may include indemnities related to intellectual property rights, confidentiality, willful misconduct, data privacy obligations, and certain breach of contract claims, among others. We have also provided an indemnity to our payments processors in the event of card association fines against the processor arising out of conduct by us or our customers. It is not possible to determine the maximum potential loss under these indemnification provisions due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular situation. PayPal has participated in the U.S. Government’s Paycheck Protection Program administered by the U.S. Small Business Administration. Loans made under this program are funded by an independent chartered financial institution that we partner with. We receive a fee for providing services in connection with these loans and retain operational and audit risk related to those activities. We have agreed, under certain circumstances, to indemnify the chartered financial institution and its assignee of a portion of these loans in connection with the services provided for loans made under this program. To date, no significant costs have been incurred, either individually or collectively, in connection with our indemnification provisions. OFF-BALANCE SHEET ARRANGEMENTS As of December 31, 2022 and 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources. PROTECTION PROGRAMS We provide merchants and consumers with protection programs for certain transactions completed on our payments platform. These programs are intended to protect both merchants and consumers from loss primarily due to fraud and counterparty performance. Our Purchase Protection Program provides protection to consumers for qualifying purchases by reimbursing the consumer for the full amount of the purchase if a purchased item does not arrive or does not match the seller’s description. Our Seller Protection Programs provide protection to merchants against claims that a transaction was not authorized by the buyer or claims that an item was not received by covering the seller for the full amount of the payment on eligible sales. These protection programs are considered assurance-type warranties under applicable accounting standards for which we estimate and record associated costs in transaction and credit losses during the period the payment transaction is completed. At December 31, 2022 and 2021, the allowance for transaction losses was $66 million and $121 million, respectively. The allowance for negative customer balances was $212 million and $234 million at December 31, 2022 and 2021, respectively. The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the years ended December 31, 2022 and 2021:
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Equity [Abstract] | |
STOCK REPURCHASE PROGRAMS | STOCK REPURCHASE PROGRAMS In April 2017, our Board of Directors authorized a stock repurchase program that provided for the repurchase of up to $5 billion of our common stock, with no expiration from the date of authorization. In July 2018, our Board of Directors authorized an additional stock repurchase program that provides for the repurchase of up to $10 billion of our common stock, with no expiration from the date of authorization. This program became effective in the first quarter of 2020 upon completion of the April 2017 stock repurchase program. In June 2022, our Board of Directors authorized an additional stock repurchase program that provides for the repurchase of up to $15 billion of our common stock, with no expiration from the date of authorization. Our stock repurchase programs are intended to offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, may also be used to make opportunistic repurchases of our common stock to reduce outstanding share count. Any share repurchases under our stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions, including accelerated share repurchase agreements, or other means at times and in such amounts as management deems appropriate and will be funded from our working capital or other financing alternatives. Moreover, any stock repurchases are subject to market conditions and other uncertainties, and we cannot predict if or when any stock repurchases will be made. We may terminate our stock repurchase programs at any time without prior notice. During the year ended December 31, 2022, we repurchased approximately 41 million shares of our common stock for approximately $4.2 billion at an average cost of $103.47. These shares were purchased in the open market under our stock repurchase program authorized in July 2018. As of December 31, 2022, a total of approximately $861 million and $15.0 billion remained available for future repurchases of our common stock under our July 2018 and June 2022 stock repurchase programs, respectively. During the year ended December 31, 2021, we repurchased approximately 15 million shares of our common stock for approximately $3.4 billion at an average cost of $219.75. These shares were purchased in the open market under our stock repurchase program authorized in July 2018. As of December 31, 2021, a total of approximately $5.1 billion remained available for future repurchases of our common stock under our July 2018 stock repurchase program. During the year ended December 31, 2020, we repurchased approximately 12 million shares of our common stock for approximately $1.6 billion at an average cost of $136.19. These shares were purchased in the open market under our stock repurchase programs authorized in April 2017 and July 2018. As of December 31, 2020, a total of approximately $8.4 billion remained available for future repurchases of our common stock under our July 2018 stock repurchase program. Shares of common stock repurchased for the periods presented were recorded as treasury stock for the purposes of calculating net income (loss) per share and were accounted for under the cost method. No repurchased shares of common stock have been retired.
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED AND EMPLOYEE SAVINGS PLANS | STOCK-BASED AND EMPLOYEE SAVINGS PLANS EQUITY INCENTIVE PLANS Under the terms of the Amended and Restated PayPal Holdings, Inc. 2015 Equity Incentive Award Plan (the “Plan”), equity awards, including restricted stock units (“RSUs”), restricted stock awards, performance based restricted stock units (“PBRSUs”), stock options, deferred stock units, and stock payments, may be granted to our directors, officers, and employees. At December 31, 2022, 47 million shares were authorized under the Plan and approximately 31 million shares were available for future grant. Shares issued as a result of stock option exercises and the release of stock awards were funded primarily with the issuance of new shares of common stock. In 2022, the Company adopted a plan for which equity-based incentive awards may be granted to new employees (the “Inducement Plan”). Grants under the Inducement Plan are in addition to the Plan mentioned above. As of December 31, 2022, 5 million shares were authorized under the Inducement Plan and approximately 3 million shares were available for future grant. RSUs are granted to eligible employees under the Plan. RSUs issued prior to January 1, 2022 generally vest in equal annual installments over a period of three years. RSUs issued on or after January 1, 2022 generally vest over three years at a rate of 33% after one year, then in equal quarterly installments thereafter. RSUs are subject to an employee’s continuing service to us, and do not have an expiration date. The cost of RSUs granted is determined using the fair market value of PayPal’s common stock on the date of grant. Certain of our executives and non-executives are eligible to receive PBRSUs, which are equity awards that may be earned based on an initial target number. The final number of PBRSUs may vest and settle depending on the Company’s performance against pre-established performance metrics over a predefined performance period. PBRSUs granted under the Plan generally have to three-year performance periods with cliff vesting following the completion of the performance period, subject to the Compensation Committee’s approval of the level of achievement against the pre-established performance targets. Over the performance period, the number of PBRSUs that may be issued and related stock-based compensation expense that is recognized is adjusted upward or downward based upon the probability of achieving the approved performance targets against the performance metrics. Depending on the probability of achieving the pre-established performance targets, the number of PBRSUs issued could range from 0% to 200% of the target amount. All stock options under the Plan were assumed in connection with acquisitions on the same terms and conditions (including vesting) applicable to such acquired companies’ equity awards. The cost of stock options was determined using the Black-Scholes option pricing model. EMPLOYEE STOCK PURCHASE PLAN Under the terms of the Employee Stock Purchase Plan (“ESPP”), shares of our common stock may be purchased over an offering period with a maximum duration of two years at 85% of the lower of the fair market value on the first day of the applicable offering period or on the last business day of each six-month purchase period within the offering period. Employees may contribute between 2% and 10% of their gross compensation during an offering period to purchase shares, but not more than the statutory limitation of $25,000 per year. All company stock purchased through the ESPP is considered outstanding and is included in the weighted-average outstanding shares for purposes of computing basic and diluted net income (loss) per share. For the years ended December 31, 2022, 2021, and 2020, our employees purchased 1.9 million, 1.4 million, and 1.7 million shares under the ESPP at an average per share price of $73.20, $114.36, and $80.36, respectively. As of December 31, 2022, approximately 46 million shares were reserved for future issuance under the ESPP. RSU, PBRSU, AND RESTRICTED STOCK ACTIVITY The following table summarizes RSU, PBRSU, and restricted stock activity under the Plan and the Inducement Plan as of December 31, 2022 and changes during the year ended December 31, 2022:
(1) Includes approximately 0.5 million of additional PBRSUs issued during 2022 due to the achievement of company performance metrics on awards granted in previous years. (2) Includes approximately 1.0 million of PBRSUs cancelled during 2022 resulting from a change in the method of payout of the Company portion of our Annual Incentive Plan from equity to cash for certain employees. During the years ended December 31, 2022, 2021, and 2020, the aggregate intrinsic value of RSUs and PBRSUs vested under the Plan was $935 million, $3.4 billion, and $1.7 billion, respectively. In the year ended December 31, 2022, the Company granted 1.5 million PBRSUs with a one-year performance period (fiscal 2022) of which 1.0 million were subsequently cancelled due to the change in method of payout as mentioned above. As such, 0.5 million will become fully vested following the completion of the performance period in February 2023 (one year from the annual incentive award cycle grant date). In the year ended December 31, 2022, the Company also granted 1.1 million PBRSUs with a three-year performance period. In the year ended December 31, 2021, the Company granted 0.7 million PBRSUs with a one-year performance period (fiscal 2021), which became fully vested following the completion of the performance period in February 2022 (one year from the annual incentive award cycle grant date), and 0.5 million PBRSUs with a three-year performance period. STOCK OPTION ACTIVITY The following table summarizes stock option activity of our employees under the Plan for the year ended December 31, 2022:
The weighted average grant date fair value of options assumed from acquisitions during the years ended December 31, 2022, 2021, and 2020 was $147.92, $237.26 and $108.61, respectively. The aggregate intrinsic value was calculated as the difference between the exercise price of the underlying options and the quoted price of our common stock at December 31, 2022. During the years ended December 31, 2022, 2021, and 2020, the aggregate intrinsic value of options exercised under the Plan was $16 million, $81 million, and $66 million, respectively, determined as of the date of option exercise. At December 31, 2022, substantially all outstanding options were in-the-money. STOCK-BASED COMPENSATION EXPENSE Stock-based compensation expense for the Plan and the Inducement Plan is measured based on estimated fair value at the time of grant, and recognized over the award’s vesting period. The impact on our results of operations of recording stock-based compensation expense under the Plan for the years ended December 31, 2022, 2021, and 2020 was as follows:
As of December 31, 2022, there was approximately $1.4 billion of unearned stock-based compensation estimated to be expensed primarily from 2023 through 2025. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase, or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards, change the mix of equity awards we grant, or assume unvested equity awards in connection with acquisitions. EMPLOYEE SAVINGS PLANS Under the terms of the PayPal Holdings, Inc. Deferred Compensation Plan, which also qualifies under Section 401(k) of the Code, participating U.S. employees may contribute up to 50% of their eligible compensation, but not more than statutory limits. Under the PayPal plan, eligible employees received one dollar for each dollar contributed, up to 4% of each employee’s eligible salary, subject to a maximum employer contribution per employee of $12,200 in 2022 and $11,600 in both 2021 and 2020. Our non-U.S. employees are covered by other savings plans. For the years ended December 31, 2022, 2021, and 2020, the matching contribution expense for our U.S. and international savings plans was approximately $83 million, $81 million, and $72 million, respectively.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The components of income before income taxes are as follows:
The income tax expense (benefit) is composed of the following:
The following is a reconciliation of the difference between the effective income tax rate and the federal statutory rate:
For the year ended December 31, 2022, the difference between the effective income tax rate of 28.1% and the U.S. federal statutory rate of 21% to income before income taxes was primarily the result of tax expense related to the intra-group transfer of intellectual property and non-deductible stock-based compensation, partially offset by foreign income taxed at different rates. For the year ended December 31, 2021, the difference between the effective income tax rate of (1.7)% and the U.S. federal statutory rate of 21% to income before income taxes was primarily the result of foreign income taxed at different rates and stock-based compensation deductions. For the year ended December 31, 2020, the difference between the effective income tax rate of 17.0% and the U.S. federal statutory rate of 21% to income before income taxes was primarily the result of foreign income taxed at different rates, partially offset by tax expense related to the intra-group transfer of intellectual property. Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the year in which the differences are expected to reverse. Significant deferred tax assets and liabilities consist of the following:
The following table shows the deferred tax assets and liabilities within our consolidated balance sheets:
As of December 31, 2022, our federal, state, and foreign net operating loss carryforwards for income tax purposes were approximately $6 million, $156 million, and $634 million, respectively. The federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the Code. If not utilized, the federal net operating loss carryforwards will begin to expire in 2025, and the state net operating loss carryforwards will begin to expire in 2023. Approximately $197 million of the foreign net operating loss carryforwards will begin to expire in 2024, $191 million will begin to expire in 2034, and $246 million may be carried forward indefinitely. As of December 31, 2022, our federal and state tax credit carryforwards for income tax purposes were approximately $24 million and $374 million, respectively. If not utilized, the federal tax credits will begin to expire in 2029. Approximately $49 million of the state tax credits will begin to expire from 2023 through 2028, $8 million will begin to expire in 2038, and $317 million may be carried forward indefinitely. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. We have elected the tax law ordering approach to assess the realizability of our net operating losses. During the years ended December 31, 2022 and 2021, we increased our valuation allowance by $67 million and $108 million, respectively, and during the year ended December 31, 2020, we decreased our valuation allowance by $18 million. At December 31, 2022, 2021, and 2020, we maintained a valuation allowance with respect to our net deferred tax assets in certain states, operating losses in certain state and foreign jurisdictions, and certain federal and state tax credits that we believe are not likely to be realized. At December 31, 2022, none of our approximately $11.0 billion of unremitted foreign earnings are considered to be indefinitely reinvested. We have accrued $42 million of deferred U.S. state income and foreign withholding taxes on the $11.0 billion of undistributed foreign earnings. We benefit from agreements concluded in certain jurisdictions, most significantly Singapore. In December 2019, a new agreement was concluded in Singapore. The new agreement took effect January 1, 2021 and will be in effect from 2021 through 2030. This agreement results in significantly lower rates of taxation on certain classes of income and requires various thresholds of investment and employment in those jurisdictions. We review our compliance on an annual basis to ensure we continue to meet our obligations under this agreement. This agreement resulted in tax savings of approximately $510 million, $327 million, and $596 million in 2022, 2021, and 2020, respectively. The benefit of this agreement on our net income (loss) per share (diluted) was approximately $0.44, $0.28, and $0.50 in 2022, 2021, and 2020, respectively. The following table reflects changes in unrecognized tax benefits for the periods presented below:
If the remaining balance of unrecognized tax benefits were realized in a future period, it would result in a tax benefit of $1.2 billion. For the years ended December 31, 2022, 2021, and 2020, we recognized net interest and penalties of $119 million, $6 million, and $40 million, respectively, related to uncertain tax positions in income tax expense. This expense is reflected in the “Other” line of our effective income tax rate schedule. The amount of interest and penalties accrued as of December 31, 2022 and 2021 was approximately $342 million and $212 million, respectively. We are subject to taxation in the U.S. and various state and foreign jurisdictions. We are currently under examination by certain tax authorities for the 2010 to 2021 tax years. The material jurisdictions in which we are subject to examination by tax authorities for tax years after 2009 primarily include the U.S. (Federal and California), Australia, Germany, India, Israel, and Singapore. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from our open examinations. Although the timing of the resolution of these audits is uncertain, we do not expect the total amount of unrecognized tax benefits as of December 31, 2022 will materially change in the next 12 months. However, given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. In connection with our separation from eBay in 2015, we entered into various agreements that govern the relationship between the parties going forward, including a tax matters agreement. Under the tax matters agreement, eBay is generally responsible for all additional taxes (and will be entitled to all related refunds of taxes) imposed on eBay and its subsidiaries (including subsidiaries that were transferred to PayPal pursuant to the separation) arising after the separation date with respect to the taxable periods (or portions thereof) ended on or prior to July 17, 2015, except for those taxes for which PayPal has reflected an unrecognized tax benefit in its financial statements on the separation date.
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RESTRUCTURING AND OTHER CHARGES |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND OTHER CHARGES | RESTRUCTURING AND OTHER CHARGES During the first quarter of 2022, management initiated a strategic reduction of the existing global workforce intended to streamline and optimize our global operations to enhance operating efficiency. This effort focused on reducing redundant operations and simplifying our organizational structure. The associated restructuring charges in 2022 were $121 million. We primarily incurred employee severance and benefits costs, as well as associated consulting costs under the 2022 strategic reduction. The strategic actions associated with this plan were substantially completed by the fourth quarter of 2022. The following table summarizes the restructuring reserve activity during the year ended December 31, 2022:
During the first quarter of 2020, management approved a strategic reduction of the existing global workforce as part of a multiphase process to reorganize our workforce concurrently with the redesign of our operating structure, which spanned multiple quarters. The associated restructuring charges in 2021 and 2020 were $27 million, and $109 million, respectively. We primarily incurred employee severance and benefits costs, as well as associated consulting costs under the 2020 strategic reduction, which was substantially completed in 2021. Additionally, we are continuing to review our real estate and facility capacity requirements due to our new and evolving work models. We incurred asset impairment charges of $81 million, $26 million, and $30 million in 2022, 2021, and 2020, respectively, due to exiting of certain leased properties which resulted in a reduction of ROU lease assets and related leasehold improvements. See “Note 6—Leases” for additional information.
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SUBSEQUENT EVENTS |
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Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSIn January 2023, management initiated a global workforce reduction intended to focus resources on core strategic priorities, and improve our cost structure and operating efficiency. We estimate that this reduction will impact approximately 7% of our employees and will result in approximately $100 million of restructuring charges, primarily related to employee severance and benefits costs. The actions associated with this plan are expected to be substantially completed by the first quarter of 2023. |
Schedule II—VALUATION AND QUALIFYING ACCOUNTS |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II—VALUATION AND QUALIFYING ACCOUNTS | FINANCIAL STATEMENT SCHEDULE The Financial Statement Schedule II—VALUATION AND QUALIFYING ACCOUNTS is filed as part of this Annual Report on Form 10-K.
(1) The amount is related to the impact of the adjustment recorded for adoption of the current expected credit loss standard.
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OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The noncontrolling interest reported in a prior period was a component of equity on our consolidated balance sheets and represented the equity interests not owned by PayPal, and was recorded for consolidated entities we controlled and of which we owned less than 100%. Noncontrolling interest was not presented separately on our consolidated statements of income (loss) as the amount was de minimis. Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is included in other income (expense), net on our consolidated statements of income (loss). Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our consolidated statements of income (loss). Our investment balance is included in long-term investments on our consolidated balance sheets. We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is in a VIE, we then assess if we are the primary beneficiary, which would require consolidation. As of December 31, 2021, we had consolidated two VIEs that provided financing for and held loans receivable of Paidy, Inc. (“Paidy”). We were the primary beneficiary of the VIEs as we performed the servicing and collection for the loans receivable, which were the activities that most significantly impacted the VIE’s economic performance, and we had the obligation to absorb the losses and/or the right to receive the benefits of the VIE that could potentially be significant to these entities. The financial results of these VIEs were included in our consolidated financial statements. As of December 31, 2021, the carrying value of the assets and liabilities of our consolidated VIEs was included as short-term investments of $87 million, loans and interest receivable, net of $21 million, and long-term debt of $98 million. Cash of $87 million, included in short-term investments, was restricted to settle the debt obligations. In the first quarter of 2022, we terminated Paidy’s legacy debt structure and replaced it with a new credit agreement executed in February 2022. As a result, we no longer have any consolidated VIEs as of December 31, 2022. See “Note 12—Debt” for additional information. As of December 31, 2022 and December 31, 2021, the carrying value of our investments in nonconsolidated VIEs was $128 million and $74 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our consolidated balance sheets. Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $232 million and $205 million as of December 31, 2022 and 2021, respectively. In the opinion of management, these consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements for all periods presented. Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the year ended December 31, 2022.
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Reclassifications | Reclassifications Beginning with the fourth quarter of 2022, we reclassified certain cash flows related to our collateral security arrangements for derivative instruments from cash flows from operating activities to cash flows from investing activities and cash flows from financing activities within the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current period presentation. The current period presentation classifies all changes in collateral posted and collateral received related to derivative instruments on our consolidated statements of cash flows as cash flows from investing activities and cash flows from financing activities, respectively. We believe that the current period presentation provides a more meaningful representation of the nature of the cash flows and allows for greater transparency as the cash flows related to the derivatives impact operating cash flows upon settlement exclusive of the offsetting cash flows from collateral. The following tables present the effects of the changes on the presentation of these cash flows to the previously reported consolidated statements of cash flows:
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “Other current assets and non-current assets” and “Other current liabilities and non-current liabilities,” which decreased by $336 million and $207 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “other current assets and non-current assets” and “other current liabilities and non-current liabilities,” which increased by $327 million and $38 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”
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Principles of consolidation | Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The noncontrolling interest reported in a prior period was a component of equity on our consolidated balance sheets and represented the equity interests not owned by PayPal, and was recorded for consolidated entities we controlled and of which we owned less than 100%. Noncontrolling interest was not presented separately on our consolidated statements of income (loss) as the amount was de minimis. Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is included in other income (expense), net on our consolidated statements of income (loss). Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our consolidated statements of income (loss). Our investment balance is included in long-term investments on our consolidated balance sheets. We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is in a VIE, we then assess if we are the primary beneficiary, which would require consolidation. As of December 31, 2021, we had consolidated two VIEs that provided financing for and held loans receivable of Paidy, Inc. (“Paidy”). We were the primary beneficiary of the VIEs as we performed the servicing and collection for the loans receivable, which were the activities that most significantly impacted the VIE’s economic performance, and we had the obligation to absorb the losses and/or the right to receive the benefits of the VIE that could potentially be significant to these entities. The financial results of these VIEs were included in our consolidated financial statements. As of December 31, 2021, the carrying value of the assets and liabilities of our consolidated VIEs was included as short-term investments of $87 million, loans and interest receivable, net of $21 million, and long-term debt of $98 million. Cash of $87 million, included in short-term investments, was restricted to settle the debt obligations. In the first quarter of 2022, we terminated Paidy’s legacy debt structure and replaced it with a new credit agreement executed in February 2022. As a result, we no longer have any consolidated VIEs as of December 31, 2022. See “Note 12—Debt” for additional information. As of December 31, 2022 and December 31, 2021, the carrying value of our investments in nonconsolidated VIEs was $128 million and $74 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our consolidated balance sheets. Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $232 million and $205 million as of December 31, 2022 and 2021, respectively. In the opinion of management, these consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements for all periods presented. Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the year ended December 31, 2022.
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Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and credit losses, income taxes, loss contingencies, revenue recognition, the valuation of goodwill and intangible assets, and the valuation of strategic investments. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. Actual results could materially differ from these estimates.
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Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less when purchased and are comprised of primarily bank deposits, government and agency securities, and commercial paper.
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Investments | Investments Short-term investments include time deposits and available-for-sale debt securities with original maturities of greater than three months but less than one year when purchased or maturities of one year or less on the reporting date. Long-term investments include time deposits and available-for-sale debt securities with maturities exceeding one year on the reporting date, as well as our strategic investments. Our available-for-sale debt securities are reported at fair value using the specific identification method. Unrealized gains and losses are reported as a component of other comprehensive income (loss), net of related estimated tax provisions or benefits. We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries, underlying funds receivable and customer accounts, short-term investments, and long-term investments, under the fair value option as further discussed in “Note 9—Fair Value Measurement of Assets and Liabilities.” The changes in fair value related to initial measurement and subsequent changes in fair value are included in earnings as a component of other income (expense), net. Our strategic investments consist of marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies. Marketable equity securities have readily determinable fair values with changes in fair value recorded in other income (expense), net. Non-marketable equity securities include investments that do not have a readily determinable fair value, as well as equity method investments. The investments that do not have readily determinable fair value are measured at cost minus impairment, if any, and are adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”). Non-marketable equity securities also include our investments where we have the ability to exercise significant influence, but not control, over the investee and account for these securities using the equity method of accounting. All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our consolidated statements of income (loss). We assess whether an impairment loss on our non-marketable, measurement alternative investments has occurred based on qualitative factors such as the companies’ financial condition and business outlook, industry performance, regulatory, economic or technological environment, and other relevant events and factors affecting the company. We assess whether an other-than-temporary impairment loss on our equity method investments has occurred due to declines in fair value or other market conditions. When indicators of impairment exist, we estimate the fair value of our non-marketable equity securities using the market approach and/or the income approach. Estimating fair value requires judgment and use of estimates such as discount rates, forecasted cash flows, and market data of comparable companies, among others. If any impairment is identified for non-marketable equity securities or impairment is considered other-than-temporary for our equity method investments, we write down the investment to its fair value and record the corresponding charge through other income (expense), net in our consolidated statements of income (loss). Our available-for-sale debt securities in an unrealized loss position are written down to fair value through a charge to other income (expense), net in our consolidated statements of income (loss) if we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis. For the remaining available-for-sale debt securities in an unrealized loss position, if we identify that the decline in fair value has resulted from credit losses, taking into consideration changes to the rating of the security by rating agencies, implied yields versus benchmark yields, and the extent to which fair value is less than amortized cost, among other factors, we estimate the present value of cash flows expected to be collected. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any portion of impairment not related to credit losses is recognized in other comprehensive income (loss).
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Loans and interest receivable, net and Allowance for loans and interest receivable | Loans and interest receivable, net Loans and interest receivable, net represents merchant receivables originated under our PayPal Working Capital (“PPWC”) product and PayPal Business Loan (“PPBL”) product and consumer loans originated under our PayPal Credit and installment credit products. PayPal Credit consists of revolving credit products. In the U.S., PPWC, PPBL, and consumer interest-bearing installment products are provided under a program agreement we have with an independent chartered financial institution (“partner institution”). The partner institution extends credit to merchants for the PPWC and PPBL products and to consumers for interest-bearing installment products and we purchase the related receivables originated by the partner institution. For our merchant finance products outside the U.S., we extend working capital advances and loans in Europe through our Luxembourg banking subsidiary, and working capital loans in Australia through an Australian subsidiary. In the U.S., we extend certain short-term, interest-free, installment loans to consumers through a U.S. subsidiary. For our international consumer credit products, we extend credit in Europe through our Luxembourg banking subsidiary, and in Australia and Japan, through local subsidiaries. As part of our arrangement with the partner institution in the U.S., we sell back a participation interest in the pool of receivables for the PPWC, PPBL, and consumer interest-bearing installment products. The partner institution has no recourse against us related to their participation interests for failure of debtors to pay when due. The participation interests held by the partner institution have the same priority to the interests held by us and are subject to the same credit, prepayment, and interest rate risk associated with this pool of receivables. All risks of loss are shared pro rata based on participation interests held among all participating stakeholders. We account for the asset transfer as a sale and derecognize the portion of the participation interests for which control has been surrendered. For this arrangement, gains or losses on the sale of the participation interests are not material as the carrying amount of the participation interest sold approximates the fair value at time of transfer. In certain instances where a merchant is able to demonstrate that it is experiencing financial difficulty, there may be a modification of the loan or advance and the related interest or fee receivable for which it is probable that, without modification, we would be unable to collect all amounts due, therefore resulting in a troubled debt restructuring (“TDR”). Refer to “Note 11—Loans and Interest Receivable” for further information related to TDRs. Loans, advances, and interest and fees receivable are reported at their outstanding balances, net of any participation interests sold and unamortized deferred origination costs. We maintain the servicing rights for the entire pool of consumer and merchant receivables outstanding and receive a market-based service fee for servicing the assets underlying the participation interest sold. We offer both revolving and installment credit products to our consumers. The terms of our consumer relationships require us to submit monthly bills to the consumer detailing loan repayment requirements. The terms also allow us to charge the consumer interest and fees in certain circumstances. Due to the relatively small dollar amount of individual loans and interest receivable, we do not require collateral on these balances. Another partner institution is the exclusive issuer of the PayPal Credit consumer financing program in the U.S. We do not hold an ownership interest in the receivables generated through the program and therefore, do not record these receivables on our consolidated financial statements. PayPal earns a revenue share on the portfolio of consumer receivables owned by the partner institution, which is recorded in revenues from other value added services on our consolidated statements of income (loss). Allowance for loans and interest receivable The allowance for loans and interest receivable represents our estimate of current expected credit losses inherent in our portfolio of loans and interest receivables. Increases to the allowance for loans receivable are reflected as a component of transaction and credit losses on our consolidated statements of income (loss). Increases to the allowance for interest and fees receivable are reflected as a reduction of net revenues on our consolidated statements of income (loss), or as a reduction of deferred revenue when interest and fees are billed at the inception of a loan or advance. The evaluation process to assess the adequacy of allowances is subject to numerous estimates and judgments. The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2020. The allowance for merchant loans, advances, and interest and fees receivable is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the portfolio. In the third quarter of 2022, our expected credit loss models for our merchant receivables were updated. These changes did not have a material impact on our provision recorded in the year ended December 31, 2022. The merchant loss models incorporate various portfolio attributes including geographic region, first borrowing versus repeat borrowing, delinquency, internally developed risk ratings, and vintage, as well as macroeconomic factors such as forecasted trends in unemployment and retail e-commerce sales (and through the second quarter of 2022, benchmark credit card charge-off rates.) The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. The reasonable and supportable forecast period for merchant products that we have included in our projected loss rates for 2022 and 2021, which approximates the estimated life of the loans, is approximately 2.5 to 3.5 years. Projected loss rates, inclusive of historical loss data and macroeconomic factors, are applied to the principal amount of our merchant receivables. We also include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses. The allowance for current expected credit losses on interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination, among other factors. The allowance for consumer loans and interest receivable is primarily based on expectations of credit losses based on historical lifetime loss data. The allowance for loans and interest receivable for our revolving credit product also incorporates macroeconomic forecasts applied to the portfolio. The consumer loss models incorporate various portfolio attributes including geographic region, loan term, delinquency, credit rating, vintage, and for the revolving credit portfolio macroeconomic factors such as forecasted trends in unemployment and household disposable income. The forecasted macroeconomic factors are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. The reasonable and supportable forecast period for revolving products and installment products that we have included in our projected loss rates for 2022, which approximates the estimated life of the loans, is approximately 2 years and approximately 7 months to 3.5 years, respectively. In 2021, the reasonable and supportable forecast periods were consistent with 2022 except for installment products, which had an estimated life of 7 months to 2.5 years. Projected loss rates, inclusive of historical loss data and, for the revolving credit portfolio macroeconomic factors, are derived based on and applied to the principal amount of our consumer receivables. We also include qualitative adjustments that incorporate incremental information not captured in the quantitative estimates of our current expected credit losses, such as expectations of macroeconomic conditions not captured in the loss models for our installment products. The allowance for current expected credit losses on interest and fees receivable is determined primarily by applying loss curves to each portfolio by geography, delinquency, and period of origination, among other factors.
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Customer accounts | Customer accounts We hold all customer balances, both in the U.S. and internationally, as direct claims against us which are reflected on our consolidated balance sheets as a liability classified as amounts due to customers. Certain jurisdictions where PayPal operates require us to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to at least 100% of the aggregate amount of all customer balances. Therefore, we restrict the use of the assets underlying the customer balances to meet these regulatory requirements and separately classify the assets as customer accounts in our consolidated balance sheets. We classify the assets underlying the customer balances as current based on their purpose and availability to fulfill our direct obligation under amounts due to customers. Customer funds for which PayPal is an agent and custodian on behalf of our customers are not reflected on our consolidated balance sheets. These funds include U.S. dollar funds which are deposited at one or more third-party financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”) and are eligible for FDIC pass-through insurance (subject to applicable limits). Under applicable accounting standards, we are an agent when facilitating cryptocurrency transactions on behalf of our customers. Cryptocurrencies held on behalf of our customers are not PayPal’s assets and therefore, are not reflected as cryptocurrency assets on our consolidated balance sheets; however, we recognize a crypto asset safeguarding liability with a corresponding safeguarding asset to reflect our obligation to safeguard the cryptocurrencies held on behalf of our customers. In June 2018, the Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”) agreed that PayPal’s management may designate up to 35% of European customer balances held in our Luxembourg banking subsidiary to fund European and U.S. credit activities. In August 2022, the CSSF approved PayPal’s management designating up to 50% of such balances to fund our credit activities through the end of February 2023. During the year ended December 31, 2022, an additional $1.1 billion was approved to fund our credit activities. As of December 31, 2022, the cumulative amount approved by management to be designated to fund credit activities aggregated to $3.8 billion and represented approximately 37% of European customer balances made available for our corporate use at that date as determined by applying financial regulations maintained by the CSSF. At the time PayPal’s management designates the European customer balances held in our Luxembourg banking subsidiary to be used to extend credit, the balances are classified as cash and cash equivalents and no longer classified as customer accounts on our consolidated balance sheets. The remaining assets underlying the customer balances remain separately classified as customer accounts on our consolidated balance sheets. We identify these customer accounts separately from corporate funds and maintain them in interest and non-interest bearing bank deposits, time deposits, and available-for-sale debt securities. Customer balances deposited with our partners on a short-term basis in advance of customer transactions and used to fulfill our direct obligation under amounts due to customers are classified as cash and cash equivalents within our customer accounts classification on our consolidated balance sheets. See “Note 8—Funds Receivable and Customer Accounts and Investments” for additional information related to customer accounts. We present changes in funds receivable and customer accounts as cash flows from investing activities in our consolidated statements of cash flows based on the nature of the activity underlying our customer accounts.
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Funds receivable and funds payable | Funds receivable and funds payableFunds receivable and funds payable arise due to the time required to initiate collection from and clear transactions through external payment networks. When customers fund their PayPal account using their bank account, credit card, debit card, or withdraw funds from their PayPal account to their bank account or through a debit card transaction, there is a clearing period before the cash is received or settled, usually | to business days for U.S. transactions and generally up to business days for international transactions. In addition, a portion of our customers’ funds are settled directly to their bank account. These funds are also classified as funds receivable and funds payable and arise due to the time required to initiate collection from and clear transactions through external payment networks.||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Property and equipment Property and equipment consists primarily of computer equipment, software and website development costs, land and buildings, leasehold improvements, and furniture and fixtures. Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets; generally, to four years for computer equipment and software, including capitalized software and website development costs, three years for furniture and fixtures, up to 30 years for buildings and building improvements, and the shorter of five years or the non-cancelable term of the lease for leasehold improvements. Direct costs incurred to develop software for internal use and website development costs, including those costs incurred in expanding and enhancing our payments platform, are capitalized and amortized generally over an estimated useful life of three years and are recorded as amortization within the financial statement captions aligned with the internal organizations that are the primary beneficiaries of such assets. We capitalized $511 million and $462 million of internally developed software and website development costs for the years ended December 31, 2022 and 2021, respectively. Amortization expense for these capitalized costs was $426 million, $366 million, and $322 million for the years ended December 31, 2022, 2021, and 2020, respectively. Costs related to the maintenance of internal use software and website development costs are expensed as incurred.
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Leases | Leases We determine whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included in other assets, and lease liabilities, which are included in accrued expenses and other current liabilities and deferred tax liability and other long-term liabilities on our consolidated balance sheets. For sale-leaseback transactions, we evaluate the sale and the lease arrangement based on our conclusion as to whether control of the underlying asset has been transferred, and recognize the sale-leaseback as either a sale transaction or under the financing method. The financing method requires the asset to remain on our consolidated balance sheets throughout the term of the lease and the proceeds to be recognized as a financing obligation. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Our leases do not provide an implicit rate and therefore we use an incremental borrowing rate for specific terms on a collateralized basis using information available on the commencement date in determining the present value of lease payments. The ROU asset calculation includes lease payments to be made and excludes lease incentives. The ROU asset and lease liability may include amounts attributed to options to extend or terminate the lease when it is reasonably certain we will exercise that option. When we reach a decision to exercise a lease renewal or termination option, we recognize the associated impact to the ROU asset and lease liability. Lease expense for operating leases is recognized on a straight-line basis over the lease term. We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable. When a decision has been made to exit a lease prior to the contractual term or to sublease that space, we evaluate the asset for impairment and recognize the associated impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash flows expected to be generated by the related ROU assets are estimated over the ROU assets’ useful lives. If the evaluation indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques. We have lease agreements with lease and non-lease components. We have elected to apply the practical expedient and account for the lease and non-lease components as a single lease component for all leases, where applicable. In addition, we have elected to apply the practical expedients related to lease classification, hindsight, and land easement. We apply a single portfolio approach to account for the ROU assets and lease liabilities.
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Goodwill and intangible assets and impairment of long-lived assets | Goodwill and intangible assets Goodwill is tested for impairment, at a minimum, on an annual basis at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The fair value of the reporting unit may be estimated using income and market approaches. The discounted cash flow method, a form of the income approach, uses expected future operating results and a market participant discount rate. The market approach uses comparable company prices and other relevant information generated by market transactions (either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to historical and expected future operating results of the reporting unit. Failure to achieve these expected results, changes in the discount rate, or market pricing metrics may cause a future impairment of goodwill at the reporting unit level. We conducted our annual impairment test of goodwill as of August 31, 2022 and 2021. We determined that no adjustment to the carrying value of goodwill of our reporting unit was required. As of December 31, 2022, we determined that no events occurred, or circumstances changed from August 31, 2022 through December 31, 2022 that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Intangible assets consist of acquired customer list and user base intangible assets, marketing related intangibles, developed technology, and other intangible assets. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from to seven years. No significant residual value is estimated for intangible assets. Impairment of long-lived assets We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future undiscounted cash flow the asset is expected to generate.
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Allowance for transaction losses and negative customer balances | Allowance for transaction losses We are exposed to transaction losses due to credit card and other payment misuse as well as nonperformance from sellers who accept payments through PayPal. We establish an allowance for estimated losses arising from completing customer transactions, such as chargebacks for unauthorized credit card use and merchant-related chargebacks due to non-delivery or unsatisfactory delivery of purchased items, purchase protection program claims, and account takeovers. This allowance represents an accumulation of the estimated amounts of probable transaction losses as of the reporting date, including those which we have not yet identified. The allowance is monitored regularly and is updated based on actual loss data. The allowance is based on known facts and circumstances, internal factors including experience with similar cases, historical trends involving loss payment patterns, and the mix of transaction and loss types, as applicable. Additions to the allowance are reflected as a component of transaction and credit losses on our consolidated statements of income (loss). The allowance for transaction losses is included in accrued expenses and other current liabilities on our consolidated balance sheets. Allowance for negative customer balancesNegative customer balances occur primarily when there are insufficient funds in a customer’s PayPal account to cover charges applied for Automated Clearing House returns, debit card transactions, and merchant-related chargebacks due to non-delivery or unsatisfactory delivery of purchased items, which are generally within the scope of our protection programs. Negative customer balances can be cured by the customer by adding funds to their account, receiving payments, or through back-up funding sources. We also utilize third-party collection agencies. For negative customer balances that are not expected to be cured or otherwise collected, we provide an allowance for expected losses. The allowance represents expected losses based on historical trends involving collection and write-off patterns, internal factors including our experience with similar cases, other known facts and circumstances, and reasonable and supportable macroeconomic forecasts, as applicable. Loss rates are derived using historical loss data for each delinquency bucket using a roll rate model that captures the losses and the likelihood that a negative customer balance will be written off as the delinquency age of such balance increases. The loss rates are then applied to the outstanding negative customer balances. Once the quantitative calculation is performed, we review the adequacy of the allowance and determine if qualitative adjustments need to be considered. We write-off negative customer balances in the month in which the balance becomes outstanding for 120 days. Write-offs that are recovered are recorded as a reduction to our allowance for negative customer balances. Negative customer balances are included in other current assets, net of the allowance on our consolidated balance sheets. Adjustments to the allowance for negative customer balances are recorded as a component of transaction and credit losses on our consolidated statements of income (loss).
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Fair value of financial instruments | Fair value measurements We measure certain financial assets and liabilities at fair value on a recurring basis and certain financial and non-financial assets and liabilities at fair value on a non-recurring basis when a change in fair value or impairment is evidenced. Fair value is defined as the price received to sell an asset or paid to transfer a liability in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is estimated by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The categorization within the following three-level fair value hierarchy for our recurring and non-recurring fair value measurements is based upon the lowest level of input that is available and significant to the fair value measurement: •Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities. •Level 2 - Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be market-corroborated. •Level 3 - Unobservable inputs that cannot be directly corroborated by observable market data and that typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. See “Note 9—Fair Value Measurement of Assets and Liabilities” for additional information related to our fair value measurements.
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Concentrations of risk | Concentrations of riskOur cash, cash equivalents, short-term investments, accounts receivable, loans and interest receivable, net, funds receivable and customer accounts, long-term investments, and long-term notes receivable, are potentially subject to concentration of credit risk. Cash, cash equivalents, and customer accounts are placed with financial institutions that management believes are of high credit quality. In addition, funds receivable are generated primarily with financial institutions which management believes are of high credit quality. We invest our cash, cash equivalents, and customer accounts primarily in highly liquid, highly rated instruments which are uninsured. We have corporate deposit balances with financial services institutions which exceed the FDIC insurance limit of $250,000. As part of our cash management process, we perform periodic evaluations of the relative credit standing of these financial institutions. Our accounts receivable are derived from revenue earned from customers located in the U.S. and internationally. Our loans and interest receivable are derived from merchant and consumer financing activities for customers located in the U.S. and internationally. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising expense | Advertising expenseWe expense the cost of producing advertisements at the time production occurs and expense the cost of communicating advertisements in the period during which the advertising space or airtime is used as sales and marketing expense. Online advertising expenses are recognized based on the terms of the individual agreements, which are generally over the greater of the ratio of the number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis over the term of the contract. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined contribution savings plans | Defined contribution savings plans We have a defined contribution savings plan in the U.S. which qualifies under Section 401(k) of the Internal Revenue Code (“Code”). Our non-U.S. employees are covered by other savings plans. Expenses related to our defined contribution savings plans are recorded when services are rendered by our employees.
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Stock-based compensation | Stock-based compensation We determine compensation expense associated with restricted stock units, performance based restricted stock units, and restricted stock awards based on the estimated fair value of our common stock on the date of grant. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for the years ended December 31, 2022, 2021, and 2020 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behavior of our employees as well as trends of actual forfeitures.
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Foreign currency | Foreign currency Many of our foreign subsidiaries have designated the local currency of their respective countries as their functional currency. Assets and liabilities of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Revenues and expenses of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from these translations are recorded as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains and losses from the remeasurement of foreign currency transactions into the functional currency are recognized as other income (expense), net in our consolidated statements of income (loss).
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Income taxes | Income taxes We account for income taxes using an asset and liability approach which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence. We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. We account for Global Intangible Low-Taxed Income as a current-period expense when incurred.
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Other income (expense), net | Other income (expense), netOther income (expense), net includes: (i) interest income, which consists of interest earned on corporate cash and cash equivalents and short-term and long-term investments, (ii) interest expense, which consists of interest expense, fees, and amortization of debt discount on our long-term debt (including current portion) and credit facilities, (iii) realized and unrealized gains (losses) on strategic investments, which includes changes in fair value related to our marketable equity securities and observable price changes and impairments on our non-marketable equity securities, and (iv) other, which primarily includes foreign currency exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities, and fair value changes on the derivative contracts not designated as hedging instruments. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent accounting guidance | Recent accounting guidance In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses. This amended guidance will eliminate the accounting designation of a loan modification as a TDR, including eliminating the measurement guidance for TDRs. The amendments also enhance existing disclosure requirements and introduce new requirements related to modifications of receivables due from borrowers experiencing financial difficulty. Additionally, this guidance requires entities to disclose gross write-offs by year of origination for financing receivables, such as loans and interest receivable. The amended guidance is effective for fiscal years beginning after December 15, 2022 and is required to be applied prospectively, except for the recognition and measurement of TDRs, which can be applied on a modified retrospective basis. We have concluded that our financial statements were not materially impacted upon adoption. We adopted this guidance effective January 1, 2023 on a prospective basis and will provide additional disclosures as required. Recently adopted accounting guidance In March 2022, the SEC released Staff Accounting Bulletin No. 121 (“SAB 121”), which provides guidance for an entity to consider when it has obligations to safeguard customers’ crypto assets, whether directly or through an agent or another third party acting on its behalf. The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding safeguarding asset. The crypto asset safeguarding liability and the corresponding safeguarding asset will be measured at the fair value of the crypto assets held for the platform users with the measurement of the safeguarding asset taking into account any potential loss events. SAB 121 also requires disclosures related to the entity’s safeguarding obligations for crypto assets held for its platform users. SAB 121 was effective in the first interim or annual financial statements ending after June 15, 2022 with retrospective application as of the beginning of the fiscal year. We adopted this guidance for the quarter ended June 30, 2022 with retrospective application as of January 1, 2022. As of June 30, 2022, we recorded $596 million for both the crypto asset safeguarding liability and corresponding safeguarding asset, which were classified as accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively, on our condensed consolidated balance sheet. For additional information, see “Note 7—Other Financial Statement Details.” There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable. We do not believe any of these new accounting pronouncements have had, or will have, a material impact on our consolidated financial statements or disclosures.
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OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reclassifications | The following tables present the effects of the changes on the presentation of these cash flows to the previously reported consolidated statements of cash flows:
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “Other current assets and non-current assets” and “Other current liabilities and non-current liabilities,” which decreased by $336 million and $207 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”
(1) As reported in our 2021 Form 10-K filed with the SEC on February 3, 2022. (2) Financial statement lines impacted in operating activities were “other current assets and non-current assets” and “other current liabilities and non-current liabilities,” which increased by $327 million and $38 million, respectively, to arrive at the reclassified amounts. (3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.” (4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”
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REVENUE (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue | The following table presents our revenue disaggregated by primary geographical market and category:
(1) No single country included in the other countries category generated more than 10% of total revenue. (2) Total net revenues include $1.3 billion, $425 million, and $597 million for the years ended December 31, 2022, 2021, and 2020, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers. Such revenues relate to interest and fees earned on loans and interest receivable, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.
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NET INCOME (LOSS) PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
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BUSINESS COMBINATIONS (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocation of purchase consideration to fair value of assets acquired and liabilities assumed | The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill balances and adjustments | The following table presents goodwill balances and adjustments to those balances during the years ended December 31, 2022 and 2021:
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Schedule of components of identifiable intangible assets | The components of identifiable intangible assets were as follows:
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Schedule of expected future intangible asset amortization | Expected future intangible asset amortization as of December 31, 2022 was as follows:
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of lease expense, supplemental cash and noncash and balance sheet information | The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
Supplemental balance sheet information related to leases was as follows:
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Schedule of future minimum lease payments for operating leases | Future minimum lease payments for our operating leases as of December 31, 2022 were as follows:
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OTHER FINANCIAL STATEMENT DETAILS (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of crypto asset safeguarding asset and liability | The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of December 31, 2022 (in millions):
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Schedule of property and equipment, net | PROPERTY AND EQUIPMENT, NET
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Schedule of long-lived assets, by geographical areas | The following table summarizes long-lived assets based on geography, which consist of property and equipment, net and operating lease ROU assets:
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Schedule of changes in accumulated other comprehensive income (loss) | The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2022:
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2021:
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the year ended December 31, 2020:
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Reclassifications out of accumulated other comprehensive income | The following table provides details about reclassifications out of AOCI for the periods presented below:
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Schedule of other income (expense), net | The following table reconciles the components of other income (expense), net for the periods presented below:
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FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets underlying funds receivable and customer accounts, short-term and long-term investments | The following table summarizes the assets underlying our funds receivable and customer accounts, short-term investments, and long-term investments as of December 31, 2022 and 2021:
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Schedule of estimated fair value of available-for-sale debt securities | As of December 31, 2022 and 2021, the estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments was as follows:
(1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.”
(1) “—” Denotes gross unrealized gain or unrealized loss of less than $1 million in a given position. (2) Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.”
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Schedule of gross unrealized losses and estimated fair value of available-for-sale debt securities in a continuous loss position | As of December 31, 2022 and 2021, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses was not deemed necessary in the current period, aggregated by the length of time those individual securities have been in a continuous loss position, was as follows:
(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.
(1) “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.
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The estimated fair values of investments classified as available for sale included within funds receivable, customer accounts, short-term investments, and long-term investments by date of contractual maturity | Our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows:
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Schedule of adjustments to the carrying value of equity investments and summary of cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative | The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the years ended December 31, 2022 and 2021 were as follows:
(1) Net additions include purchases, reductions due to sales of securities, and reclassifications when Measurement Alternative is subsequently elected or no longer applies. The following table summarizes the cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative, held at December 31, 2022 and 2021, respectively:
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Schedule of unrealized gains (losses) on strategic investments, excluding those accounted for using the equity method | The following table summarizes the net unrealized gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method, held at December 31, 2022 and 2021, respectively:
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FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial assets and liabilities measured at fair value on a recurring basis | The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021:
(1) Excludes cash of $6.8 billion not measured and recorded at fair value. (2) Excludes restricted cash of $17 million and time deposits of $537 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $18.8 billion underlying funds receivable and customer accounts not measured and recorded at fair value. (4) Excludes non-marketable equity securities of $1.8 billion measured using the Measurement Alternative or equity method accounting.
(1) Excludes cash of $4.8 billion not measured and recorded at fair value. (2) Excludes restricted cash of $109 million and time deposits of $635 million not measured and recorded at fair value. (3) Excludes cash, time deposits, and funds receivable of $17.2 billion underlying funds receivable and customer accounts not measured and recorded at fair value. (4) Excludes non-marketable equity securities of $1.3 billion measured using the Measurement Alternative or equity method accounting.
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Summary of investments under the fair value option | The following table summarizes the estimated fair value of our available-for-sale debt securities under the fair value option as of December 31, 2022 and 2021:
The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the years ended December 31, 2022 and 2021:
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Summary of financial assets and liabilities measured at fair value on a non-recurring basis | The following tables summarize our assets held as of December 31, 2022 and 2021 for which a non-recurring fair value measurement was recorded during the years ended December 31, 2022 and 2021, respectively:
(1) Excludes non-marketable equity securities of $700 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2022. (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2022. See “Note 6—Leases” for additional information.
(1) Excludes non-marketable equity securities of $657 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2021. (2) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2021. See “Note 6—Leases” for additional information.
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DERIVATIVE INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of outstanding derivative instruments | The fair value of our outstanding derivative instruments as of December 31, 2022 and 2021 was as follows:
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Schedule of offsetting assets | The following table provides the collateral exchanged posted and received:
(1) Right to reclaim cash collateral related to our derivative liabilities recognized in other current assets on our consolidated balance sheets. (2) Obligation to return counterparty cash collateral related to our derivative assets recognized in other current liabilities on our consolidated balance sheets.
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Schedule of offsetting liabilities | The following table provides the collateral exchanged posted and received:
(1) Right to reclaim cash collateral related to our derivative liabilities recognized in other current assets on our consolidated balance sheets. (2) Obligation to return counterparty cash collateral related to our derivative assets recognized in other current liabilities on our consolidated balance sheets.
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Schedule of recognized gains or losses related to derivative instruments designated as hedging instruments | The following table provides the location in the consolidated statements of income (loss) and amount of recognized gains or losses related to our derivative instruments:
(1) During the years ended December 31, 2022 and December 31, 2020, equity derivative contracts were entered into and matured which related to the sale of marketable equity securities related to a strategic investment. The cash flows associated with the equity derivative contracts were classified in cash flows from investing activities on our consolidated statements of cash flows. The following table provides the amount of pre-tax unrealized gains or losses included in the assessment of hedge effectiveness related to our derivative instruments designated as hedging instruments that are recognized in other comprehensive income (loss):
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Schedule of recognized gains or losses related to derivative instruments not designated as hedging instruments | The following table provides the location in the consolidated statements of income (loss) and amount of recognized gains or losses related to our derivative instruments:
(1) During the years ended December 31, 2022 and December 31, 2020, equity derivative contracts were entered into and matured which related to the sale of marketable equity securities related to a strategic investment. The cash flows associated with the equity derivative contracts were classified in cash flows from investing activities on our consolidated statements of cash flows.
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Schedule of notional amounts of outstanding derivatives | The following table provides the notional amounts of our outstanding derivatives:
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LOANS AND INTEREST RECEIVABLE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of delinquency status of the principal amount of consumer loans and interest receivable | The following tables present the delinquency status of consumer loans and interest receivable by year of origination. The amounts are based on the number of days past the billing date for revolving loans or contractual repayment date for installment loans. The “current” category represents balances that are within 29 days of the billing date or contractual repayment date, as applicable.
(1) Excludes receivables from other consumer credit products of $11 million at December 31, 2022.
(1) Excludes receivables from other consumer credit products of $44 million at December 31, 2021. The following tables present the delinquency status of merchant loans, advances, and interest and fees receivable by year of origination. The amounts are based on the number of days past the expected or contractual repayment date for amounts outstanding. The “current” category represents balances that are within 29 days of the expected repayment date or contractual repayment date, as applicable.
(1) Balances include the impact of modification programs offered by the Company as a part of our novel coronavirus (“COVID-19”) pandemic payment relief initiatives (as discussed further below).
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Schedule of allowance for loans and interest receivable | The following table summarizes the activity in the allowance for consumer loans and interest receivable for the years ended December 31, 2022 and 2021:
(1) Excludes allowances from other consumer credit products of $3 million and $4 million at December 31, 2022 and 2021, respectively. (2) Includes amounts related to foreign currency remeasurement and, for the year ended December 31, 2021, initial allowance for purchased credit deteriorated (“PCD”) loans acquired during the period. A portion of the Paidy loan portfolio acquired was determined to be purchase credit deteriorated as the loans were 30 days or more past due. As such, we recorded current expected credit losses on the PCD loans. The following table summarizes the activity in the allowance for merchant loans, advances, and interest and fees receivable, for the years ended December 31, 2022 and 2021:
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Loans modified as TDRs | The following table shows merchant loans, advances and interest and fees receivables which were modified as TDRs in the year ended December 31, 2021:
(1) Balances are as of modification date.
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DEBT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding aggregate principal amount related to the notes | The following table summarizes the Notes:
(1) The current portion of term debt is included within accrued expenses and other current liabilities on our consolidated balance sheets.
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Schedule of future principal payments associated with long term debt | As of December 31, 2022, the future principal payments associated with our term debt were as follows (in millions):
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance for transaction losses and negative customer balances related to protection programs | The following table shows changes in the allowance for transaction losses and negative customer balances related to our protection programs for the years ended December 31, 2022 and 2021:
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STOCK-BASED AND EMPLOYEE SAVINGS PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of RSUs, PBRSUs, and restricted stock activity | The following table summarizes RSU, PBRSU, and restricted stock activity under the Plan and the Inducement Plan as of December 31, 2022 and changes during the year ended December 31, 2022:
(1) Includes approximately 0.5 million of additional PBRSUs issued during 2022 due to the achievement of company performance metrics on awards granted in previous years. (2) Includes approximately 1.0 million of PBRSUs cancelled during 2022 resulting from a change in the method of payout of the Company portion of our Annual Incentive Plan from equity to cash for certain employees.
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Schedule of stock option activity | STOCK OPTION ACTIVITY The following table summarizes stock option activity of our employees under the Plan for the year ended December 31, 2022:
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Schedule of stock-based compensation expense | The impact on our results of operations of recording stock-based compensation expense under the Plan for the years ended December 31, 2022, 2021, and 2020 was as follows:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of income (loss) before income taxes | The components of income before income taxes are as follows:
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Schedule of income tax expense | The income tax expense (benefit) is composed of the following:
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Schedule of reconciliation of the difference between the effective income tax rate and the federal statutory rate | The following is a reconciliation of the difference between the effective income tax rate and the federal statutory rate:
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Schedule of deferred tax assets and liabilities | Significant deferred tax assets and liabilities consist of the following:
The following table shows the deferred tax assets and liabilities within our consolidated balance sheets:
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Schedule of unrecognized tax benefits | The following table reflects changes in unrecognized tax benefits for the periods presented below:
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RESTRUCTURING AND OTHER CHARGES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Summary of restructuring reserve activity | The following table summarizes the restructuring reserve activity during the year ended December 31, 2022:
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OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation and Principles of Consolidation (Details) $ in Millions |
Dec. 31, 2022
USD ($)
entity
|
Dec. 31, 2021
USD ($)
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Number of consolidated variable interest entities | entity | 2 | |
Short-term investments | $ 3,092 | $ 4,303 |
Loans and interest receivable, net | 7,431 | 4,846 |
Long-term debt | 10,417 | 8,049 |
Long-term investments | 5,018 | 6,797 |
Variable interest entity, reporting entity involvement, maximum loss exposure, amount | 232 | 205 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Short-term investments | 87 | |
Loans and interest receivable, net | 21 | |
Long-term debt | 98 | |
Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Long-term investments | $ 128 | $ 74 |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for Loans and Interest Receivable (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
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Merchant Receivables | Minimum | Merchant Products | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Projected loss rate period | 2 years 6 months | |
Merchant Receivables | Maximum | Merchant Products | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Projected loss rate period | 3 years 6 months | |
Consumer Receivables | Revolving Credit Products | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Projected loss rate period | 2 years | |
Consumer Receivables | Minimum | Installment Credit Products | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Projected loss rate period | 7 months | 7 months |
Consumer Receivables | Maximum | Installment Credit Products | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Projected loss rate period | 3 years 6 months | 2 years 6 months |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Intangible Assets (Details) |
12 Months Ended |
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Dec. 31, 2022 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 2 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 7 years |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for Transaction Losses and Negative Customer Balances (Details) |
12 Months Ended |
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Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Allowance for negative customer balances, threshold period past due, writeoff | 120 days |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations of Risk (Details) |
12 Months Ended | ||
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Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Accounts receivable | Customer concentration risk | Customer 1 | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.00% | 25.00% | |
Long-term notes receivable | Customer concentration risk | Partner 1 | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 18.00% | 22.00% | |
Revenue | Product concentration risk | eBay Marketplaces Platform | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 2.00% | 6.00% | 13.00% |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Property, Plant and Equipment [Line Items] | |||
Advertising expense | $ 518 | $ 740 | $ 654 |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted Accounting Guidance (Details) - Cumulative Effect, Period of Adoption, Adjustment $ in Millions |
Jun. 30, 2022
USD ($)
|
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Crypto asset safeguarding asset | $ 596 |
Crypto asset safeguarding liability | $ 596 |
REVENUE - Additional Information (Details) |
12 Months Ended |
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Dec. 31, 2022
obligation
segment
| |
Disaggregation of Revenue [Line Items] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Revenues from other value added services | |
Disaggregation of Revenue [Line Items] | |
Number of performance obligations | obligation | 1 |
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 27,518 | $ 25,371 | $ 21,454 |
Transaction revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 25,206 | 23,402 | 19,918 |
Revenues from other value added services | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 2,312 | 1,969 | 1,536 |
Interest and fees earned on loans and interest receivable and hedging gains losses and interest earned on certain assets underlying customer balances | |||
Disaggregation of Revenue [Line Items] | |||
Revenues which do not represent revenues recognized in the scope of ASC Topic 606 | 1,300 | 425 | 597 |
U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 15,807 | 13,712 | 11,013 |
United Kingdom (“U.K.”) | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 2,071 | 2,340 | 2,340 |
Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 9,640 | $ 9,319 | $ 8,101 |
NET INCOME (LOSS) PER SHARE - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Numerator: | |||
Net income (loss), basic | $ 2,419 | $ 4,169 | $ 4,202 |
Net income (loss), diluted | $ 2,419 | $ 4,169 | $ 4,202 |
Denominator: | |||
Weighted average shares of common stock - basic (in shares) | 1,154 | 1,174 | 1,173 |
Dilutive effect of equity incentive awards (in shares) | 4 | 12 | 14 |
Weighted average shares of common stock - diluted (in shares) | 1,158 | 1,186 | 1,187 |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 2.10 | $ 3.55 | $ 3.58 |
Diluted (in dollars per share) | $ 2.09 | $ 3.52 | $ 3.54 |
Common stock equivalents excluded from net income (loss) per diluted share because their effect would have been anti-dilutive or potentially dilutive | 13 | 2 | 1 |
BUSINESS COMBINATIONS - Narrative (Details) |
12 Months Ended |
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Dec. 31, 2022
business
| |
Business Combination and Asset Acquisition [Abstract] | |
Number of businesses acquired or divested | 0 |
BUSINESS COMBINATIONS - Acquisitions Completed in 2020 (Details) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2020
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
business
|
Dec. 31, 2020
USD ($)
business
|
|
Business Acquisition [Line Items] | ||||
Number of businesses acquired | business | 5 | 1 | ||
Payments to Acquire Businesses, Net of Cash Acquired | $ 0 | $ 2,763 | $ 3,609 | |
Honey Science Corporation | ||||
Business Acquisition [Line Items] | ||||
Percentage of interests acquired | 100.00% | |||
Total purchase price | $ 3,635 | $ 3,600 | ||
Aggregate purchase price for acquisitions | 4,000 | |||
Payments to Acquire Businesses, Net of Cash Acquired | 3,600 | |||
Equity interest issued or issuable, value assigned | $ 400 | |||
Intangible assets acquired, useful life | 3 years | |||
Award vesting period | 4 years |
BUSINESS COMBINATIONS - Other Information (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended |
---|---|---|
Jan. 31, 2020 |
Dec. 31, 2021 |
|
Companies Acquired in Fiscal Year 2021 | ||
Business Acquisition [Line Items] | ||
Step acquisition, equity interest in acquiree, fair value | $ 64 | |
Companies Acquired in Fiscal Year 2021 | Other income (expense), net | ||
Business Acquisition [Line Items] | ||
Step acquisition, equity interest in acquiree, remeasurement gain | $ 36 | |
Honey Science Corporation | ||
Business Acquisition [Line Items] | ||
Equity interest issued or issuable, value assigned | $ 400 | |
Award vesting period | 4 years |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill Balances and Adjustments (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Total Goodwill | ||
Beginning balance | $ 11,454 | $ 9,135 |
Goodwill Acquired | 0 | 2,355 |
Adjustments | (245) | (36) |
Ending balance | $ 11,209 | $ 11,454 |
GOODWILL AND INTANGIBLE ASSETS - Additional Information (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
business
|
Dec. 31, 2020
USD ($)
business
|
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Number of businesses acquired | business | 5 | 1 | |
Amortization expense for intangible assets | $ | $ 471 | $ 443 | $ 451 |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Expected Future Intangible Asset Amortization (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | ||
2023 | $ 214 | |
2024 | 196 | |
2025 | 160 | |
2026 | 103 | |
2027 | 65 | |
Thereafter | 50 | |
Net Carrying Amount | $ 788 | $ 1,332 |
LEASES - Schedule of Future Minimum Operating Lease Payments (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Fiscal years: | ||
2023 | $ 169 | |
2024 | 155 | |
2025 | 114 | |
2026 | 103 | |
2027 | 90 | |
Thereafter | 147 | |
Total | 778 | |
Less: present value discount | (58) | |
Lease liability | $ 720 | $ 762 |
LEASES - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Leases [Abstract] | ||||
Operating lease, rent expense | $ 202 | $ 192 | $ 172 | |
Sale leaseback transaction, lease term (in years) | 8 years | |||
Sale leaseback transaction, net proceeds | $ 119 | |||
Asset impairment charges | 81 | 26 | 30 | |
Operating lease, impairment loss | 52 | $ 21 | $ 23 | |
Operating lease, lease not yet commenced, amount | $ 12 | |||
Operating lease, lease not yet commenced, term of contract | 6 years |
OTHER FINANCIAL STATEMENT DETAILS - Schedule of Other Income (Expense), Net (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Other Income and Expenses [Abstract] | |||
Interest income | $ 174 | $ 57 | $ 88 |
Interest expense | (304) | (232) | (209) |
Net gains (losses) on strategic investments | (304) | 46 | 1,914 |
Other | (37) | (34) | (17) |
Other income (expense), net | $ (471) | $ (163) | $ 1,776 |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Narrative (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Accrued interest receivable | $ 65 | $ 36 |
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Estimated Fair Values of Investments Classified as Available for Sale Included within Funds Receivable and Customer Accounts by Date of Contractual Maturity (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Amortized Cost | ||
One year or less | $ 11,591 | |
After one year through five years | 9,232 | |
After five years through ten years | 1,968 | |
After ten years | 78 | |
Gross Amortized Cost | 22,869 | $ 23,232 |
Fair Value | ||
One year or less | 11,470 | |
After one year through five years | 8,790 | |
After five years through ten years | 1,941 | |
After ten years | 77 | |
Total | $ 22,278 | $ 23,145 |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Strategic Investments (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Carrying value of marketable equity securities recorded in long-term investments | $ 323 | $ 1,900 |
Carrying value of non-marketable equity securities | 136 | 79 |
Carrying value of non-marketable equity securities which do not have readily determinable fair value | $ 1,800 | $ 1,300 |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Schedule of Adjustments to Carrying Value of Equity Investments (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Equity Securities without Readily Determinable Fair Value [Roll Forward] | ||
Carrying amount, beginning of period | $ 1,268 | $ 779 |
Adjustments related to non-marketable equity securities: | ||
Net additions | 100 | 133 |
Gross unrealized gains | 423 | 356 |
Gross unrealized losses and impairments | (104) | 0 |
Carrying amount, end of period | $ 1,687 | $ 1,268 |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Summary of Cumulative Gross Unrealized Gains and Cumulative Gross Unrealized Losses and Impairment Related to Non-marketable Equity Securities Accounted for Under the Measurement Alternative (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Cumulative gross unrealized gains | $ 1,137 | $ 733 |
Cumulative gross unrealized losses and impairments | $ (131) | $ (27) |
FUNDS RECEIVABLE AND CUSTOMER ACCOUNTS AND INVESTMENTS - Schedule of Unrealized Gains (Losses) on Strategic Investments, Excluding Those Accounted for Using the Equity Method (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Net unrealized gains (losses) | $ 79 | $ (46) |
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES - Summary of Investments Under the Fair Value Option (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt securities, available-for-sale, fair value | $ 22,278 | $ 23,145 |
Funds receivable and customer accounts | Fair Value Option, Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt securities, available-for-sale, fair value | 481 | 2,327 |
Net gains (losses) from fair value changes | (149) | (101) |
Short-term investments | Fair Value Option, Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt securities, available-for-sale, fair value | 0 | 13 |
Net gains (losses) from fair value changes | $ 0 | $ (30) |
DERIVATIVE INSTRUMENTS - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Offsetting Liabilities [Line Items] | |||
Maximum maturity of foreign currency exchange contracts | 18 months | ||
Net derivative gains related to cash flow hedges to be reclassified into earnings within the next 12 months | $ 110,000,000 | ||
Net investment hedge CTA gains (losses), reclassifications | 0 | $ 0 | $ 0 |
Derivative asset, offset | 70,000,000 | 102,000,000 | |
Derivative liability, offset | $ 70,000,000 | $ 102,000,000 |
DERIVATIVE INSTRUMENTS - Offsetting Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Other current assets | ||
Offsetting Liabilities [Line Items] | ||
Cash collateral posted | $ 24 | $ 5 |
Other current liabilities | ||
Offsetting Liabilities [Line Items] | ||
Cash collateral received | $ 203 | $ 209 |
DERIVATIVE INSTRUMENTS - Pre-tax Unrealized Gains or Losses Included in the Assessment of Hedge Effectiveness Related To Derivative Instruments Designated as Hedging Instruments That Are Recognized in Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Unrealized (losses) gains on foreign exchange contracts designated as net investment hedges | $ (25) | $ 0 | $ 55 | ||
Foreign Exchange Contract | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Unrealized gains (losses) on foreign exchange contracts designated as cash flow hedges | $ 374 | $ 332 | (309) | ||
Unrealized (losses) gains on foreign exchange contracts designated as net investment hedges | (25) | 0 | 55 | ||
Total unrealized gains (losses) recognized from derivative contracts designated as hedging instruments in the consolidated statements of comprehensive income (loss) | $ 349 | $ 332 | $ (254) |
DERIVATIVE INSTRUMENTS - Notional Amounts of Outstanding Derivatives (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Notional amounts | $ 18,989 | $ 25,763 |
Foreign Exchange Contract | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Notional amounts | 7,149 | 5,349 |
Foreign Exchange Contract | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Notional amounts | $ 11,840 | $ 20,414 |
LOANS AND INTEREST RECEIVABLE - Consumer Receivables (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Purchased consumer receivables | $ 381,000,000 | |
Consumer Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans and interest receivable | 5,872,000,000 | $ 3,847,000,000 |
Participation interest sold, value | $ 17,000,000 | $ 0 |
Threshold period, write-off of receivables | 180 days | |
Threshold period, write-off of bankrupt accounts | 60 days | |
Consumer Receivables | Geographic Distribution, Domestic | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Threshold period, write-off of receivables | 120 days | |
Consumer Loans Receivable | Consumer Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Expected period of repayment | 12 months |
LOANS AND INTEREST RECEIVABLE - Schedule of Allowance for Loans and Interest Receivable (Details) - Consumer Receivables - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Allowance for loans and interest receivable | ||
Beginning balance | $ 286 | $ 352 |
Provisions | 307 | 30 |
Charge-offs | (245) | (136) |
Recoveries | 21 | 28 |
Other | (22) | 12 |
Ending balance | 347 | 286 |
Consumer Loans Receivable | ||
Allowance for loans and interest receivable | ||
Beginning balance | 243 | 299 |
Provisions | 292 | 20 |
Charge-offs | (216) | (116) |
Recoveries | 21 | 28 |
Other | (18) | 12 |
Ending balance | 322 | 243 |
Interest Receivable | ||
Allowance for loans and interest receivable | ||
Beginning balance | 43 | 53 |
Provisions | 15 | 10 |
Charge-offs | (29) | (20) |
Recoveries | 0 | 0 |
Other | (4) | 0 |
Ending balance | 25 | 43 |
Other Consumer Credit Products | ||
Allowance for loans and interest receivable | ||
Beginning balance | 4 | |
Ending balance | $ 3 | $ 4 |
LOANS AND INTEREST RECEIVABLE - Schedule of Allowance for Merchant Loans, Advances, and Interest and Fees Receivable (Details) - Merchant Receivables - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | $ 201 | $ 483 |
Provisions | 127 | (138) |
Charge-offs | (114) | (185) |
Recoveries | 34 | 41 |
Ending balance | 248 | 201 |
Merchant Loans and Advances | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | 192 | 440 |
Provisions | 109 | (116) |
Charge-offs | (105) | (173) |
Recoveries | 34 | 41 |
Ending balance | 230 | 192 |
Interest and Fees Receivable | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning balance | 9 | 43 |
Provisions | 18 | (22) |
Charge-offs | (9) | (12) |
Recoveries | 0 | 0 |
Ending balance | $ 18 | $ 9 |
LOANS AND INTEREST RECEIVABLE - Troubled Debt Restructurings ("TDRs") (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Financing receivable, modifications, payment default, threshold period past due | 60 days |
Minimum | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Financing receivable, modifications, term | 1 year |
Maximum | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Financing receivable, modifications, term | 5 years 6 months |
LOANS AND INTEREST RECEIVABLE - Loans Modified as TDRs (Details) - Merchant Receivables business in Thousands, $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
business
| |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |
Number of Accounts | business | 3 |
Outstanding Balances | $ | $ 45 |
Weighted Average Payment Term Extensions | 36 months |
DEBT - Other Available Facilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Uncommitted Credit Facilities | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 80 | $ 90 |
DEBT - Schedule of Future Principal Payments (Details) $ in Millions |
Dec. 31, 2022
USD ($)
|
---|---|
Future Principal Payments | |
2023 | $ 418 |
2024 | 1,250 |
2025 | 1,000 |
2026 | 1,250 |
2027 | 500 |
Thereafter | 6,000 |
Total | $ 10,418 |
COMMITMENTS AND CONTINGENCIES - Schedule of Allowance for Transaction Losses and Negative Customer Balances Related to Protection Products (Details) - Protection Programs - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Loss Contingency Accrual [Roll Forward] | ||
Beginning balance | $ 355 | $ 414 |
Provision | 1,170 | 1,153 |
Realized losses | (1,417) | (1,331) |
Recoveries | 170 | 119 |
Ending balance | $ 278 | $ 355 |
STOCK-BASED AND EMPLOYEE SAVINGS PLANS - Employee Stock Purchase Plan (Details) - PayPal Holdings, Inc. Employee Stock Purchase Plan - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum duration of common stock purchasing period | 2 years | ||
Purchase price of common stock, percent of fair market value | 85.00% | ||
Purchase period | 6 months | ||
Purchased number of shares under the employee stock purchase plan (in shares) | 1.9 | 1.4 | 1.7 |
Average price of shares purchased under the employee stock purchase plan (in dollars per share) | $ 73.20 | $ 114.36 | $ 80.36 |
Number of shares available for grant (approximately) (in shares) | 46.0 | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee subscription rate | 2.00% | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee subscription rate | 10.00% |
STOCK-BASED AND EMPLOYEE SAVINGS PLANS - Employee Saving Plans (Details) - Other Postretirement Benefit Plan - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum annual contributions per employee, percent of eligible compensation | 50.00% | ||
Employer matching contribution, maximum percentage of eligible employee salary | 4.00% | ||
Employer matching contribution, maximum annual contributions per employee | $ 12,200 | $ 11,600 | $ 11,600 |
Matching contribution expense | $ 83,000,000 | $ 81,000,000 | $ 72,000,000 |
INCOME TAXES - Schedule of Components of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (155) | $ 290 | $ 1,504 |
International | 3,521 | 3,809 | 3,561 |
Income before income taxes | $ 3,366 | $ 4,099 | $ 5,065 |
INCOME TAXES - Schedule of Income Tax Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Current: | |||
Federal | $ 688 | $ 6 | $ 310 |
State and local | 104 | 80 | 143 |
Foreign | 966 | 326 | 245 |
Total current portion of income tax expense | 1,758 | 412 | 698 |
Deferred: | |||
Federal | (563) | (401) | 259 |
State and local | (101) | (45) | (32) |
Foreign | (147) | (36) | (62) |
Total deferred portion of income tax expense (benefit) | (811) | (482) | 165 |
Income tax expense (benefit) | $ 947 | $ (70) | $ 863 |
INCOME TAXES - Schedule of Reconciliation of the Difference Between the Effective Income Tax Rate and the Federal Statutory Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 21.00% | 21.00% | 21.00% |
Domestic income taxed at different rates | (0.60%) | (1.70%) | 0.00% |
State taxes, net of federal benefit | 0.00% | 0.90% | 2.20% |
Foreign income taxed at different rates | (12.20%) | (13.40%) | (7.40%) |
Stock-based compensation expense | 4.10% | (7.30%) | (1.20%) |
Tax credits | (0.40%) | (2.40%) | (2.00%) |
Change in valuation allowances | 2.20% | 0.50% | 0.10% |
Intra-group transfer of intellectual property | 10.00% | 0.70% | 4.10% |
Other | 4.00% | 0.00% | 0.20% |
Effective income tax rate | 28.10% | (1.70%) | 17.00% |
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred tax assets: | ||
Net operating loss and credit carryforwards | $ 355 | $ 317 |
Accruals, allowances, and prepaids | 427 | 622 |
Lease liabilities | 173 | 176 |
Partnership investment | 0 | 5 |
Stock-based compensation | 154 | 188 |
Net unrealized losses | 151 | 23 |
Acquired intangibles | 38 | 0 |
Fixed assets and other intangibles | 655 | 84 |
Total deferred tax assets | 1,953 | 1,415 |
Valuation allowance | (341) | (274) |
Net deferred tax assets | 1,612 | 1,141 |
Deferred tax liabilities: | ||
Unremitted foreign earnings | (42) | (35) |
Acquired intangibles | 0 | (240) |
ROU lease assets | (138) | (154) |
Partnership investment | (12) | 0 |
Net unrealized gains | (135) | (351) |
Total deferred tax liabilities | (327) | (780) |
Net deferred tax assets | $ 1,285 | $ 361 |
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities by Balance Sheet Location (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred Tax [Line Items] | ||
Total deferred tax assets (non-current) | $ 1,612 | $ 1,141 |
Total deferred tax liabilities (non-current) | (327) | (780) |
Net deferred tax assets | 1,285 | 361 |
Other assets | ||
Deferred Tax [Line Items] | ||
Total deferred tax assets (non-current) | 1,310 | 547 |
Net deferred tax assets | 1,285 | 361 |
Deferred tax liability and other long-term liabilities | ||
Deferred Tax [Line Items] | ||
Total deferred tax liabilities (non-current) | $ (25) | $ (186) |
IINCOME TAXES - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Changes in unrecognized tax benefits | |||
Gross amounts of unrecognized tax benefits as of the beginning of the period | $ 1,678 | $ 1,479 | $ 1,141 |
Increases related to prior period tax positions | 52 | 172 | 92 |
Decreases related to prior period tax positions | (185) | (187) | (78) |
Increases related to current period tax positions | 337 | 232 | 360 |
Settlements | (2) | (15) | (34) |
Statute of limitation expirations | (3) | (3) | (2) |
Gross amounts of unrecognized tax benefits as of the end of the period | $ 1,877 | $ 1,678 | $ 1,479 |
RESTRUCTURING AND OTHER CHARGES - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring and Related Activities [Abstract] | |||
Restructuring expenses | $ 121 | $ 27 | $ 109 |
Asset impairment charges | $ 81 | $ 26 | $ 30 |
RESTRUCTURING AND OTHER CHARGES - Summary of Restructuring Reserve Activity (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring Reserve | |||
Restructuring liability, beginning balance | $ 5 | ||
Charges | 121 | $ 27 | $ 109 |
Payments | (102) | ||
Restructuring liability, ending balance | $ 24 | $ 5 |
Subsequent Events (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Subsequent Event [Line Items] | ||||
Employee severance and benefit costs | $ 121.0 | $ 27.0 | $ 109.0 | |
Subsequent Event | Workforce Reduction | ||||
Subsequent Event [Line Items] | ||||
Number of positions eliminated, period percent | 7.00% | |||
Employee severance and benefit costs | $ 100.0 |
Schedule II—VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Allowance for Transaction Losses and Negative Customer Balances | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Period | $ 355 | $ 414 | $ 399 |
Charged/ (Credited) to Net Income | 1,170 | 1,153 | 1,135 |
Charged to Other Accounts | 0 | 0 | 0 |
Charges Utilized/ (Write-offs) | (1,247) | (1,212) | (1,120) |
Balance at End of Period | 278 | 355 | 414 |
Allowance for Loans and Interest Receivable | |||
Movement in Valuation Allowances and Reserves | |||
Balance at Beginning of Period | 491 | 838 | 258 |
Charged/ (Credited) to Net Income | 437 | (104) | 689 |
Charged to Other Accounts | 0 | 0 | 210 |
Charges Utilized/ (Write-offs) | (330) | (243) | (319) |
Balance at End of Period | $ 598 | $ 491 | $ 838 |
Label | Element | Value |
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Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-13 [Member] |
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