|
|
|
☒
|
QUARTERLY 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
|
|
|
Delaware
|
|
|
47-2989869
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
|
(I.R.S. Employer
Identification No.)
|
2211 North First Street
|
San Jose
|
California
|
95131
|
(Address of Principal Executive Offices)
|
|
|
(Zip Code)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, $0.0001 par value per share
|
PYPL
|
NASDAQ Global Select Market
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
|
|
|
|
|
Page Number
|
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(In millions, except par value)
|
||||||
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,877
|
|
|
$
|
7,575
|
|
Short-term investments
|
3,585
|
|
|
1,534
|
|
||
Accounts receivable, net
|
417
|
|
|
313
|
|
||
Loans and interest receivable, net of allowances of $243 and $172 as of September 30, 2019 and December 31, 2018, respectively
|
3,477
|
|
|
2,532
|
|
||
Funds receivable and customer accounts
|
22,511
|
|
|
20,062
|
|
||
Prepaid expenses and other current assets
|
881
|
|
|
947
|
|
||
Total current assets
|
37,748
|
|
|
32,963
|
|
||
Long-term investments
|
2,771
|
|
|
971
|
|
||
Property and equipment, net
|
1,701
|
|
|
1,724
|
|
||
Goodwill
|
6,178
|
|
|
6,284
|
|
||
Intangible assets, net
|
629
|
|
|
825
|
|
||
Other assets
|
1,196
|
|
|
565
|
|
||
Total assets
|
$
|
50,223
|
|
|
$
|
43,332
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
193
|
|
|
$
|
281
|
|
Short-term debt
|
—
|
|
|
1,998
|
|
||
Funds payable and amounts due to customers
|
24,011
|
|
|
21,562
|
|
||
Accrued expenses and other current liabilities
|
2,038
|
|
|
2,002
|
|
||
Income taxes payable
|
98
|
|
|
61
|
|
||
Total current liabilities
|
26,340
|
|
|
25,904
|
|
||
Deferred tax liability and other long-term liabilities
|
2,436
|
|
|
2,042
|
|
||
Long-term debt
|
4,964
|
|
|
—
|
|
||
Total liabilities
|
33,740
|
|
|
27,946
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
|||
Equity:
|
|
|
|
||||
Common stock, $0.0001 par value; 4,000 shares authorized; 1,174 shares outstanding as of both September 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
|
—
|
|
|
—
|
|
||
Treasury stock at cost, 102 and 91 shares as of September 30, 2019 and December 31, 2018, respectively
|
(6,566
|
)
|
|
(5,511
|
)
|
||
Additional paid-in-capital
|
15,266
|
|
|
14,939
|
|
||
Retained earnings
|
7,835
|
|
|
5,880
|
|
||
Accumulated other comprehensive income (loss)
|
(52
|
)
|
|
78
|
|
||
Total equity
|
16,483
|
|
|
15,386
|
|
||
Total liabilities and equity
|
$
|
50,223
|
|
|
$
|
43,332
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions, except per share data)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net revenues
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Transaction expense
|
1,701
|
|
|
1,366
|
|
|
4,877
|
|
|
4,003
|
|
||||
Transaction and loan losses
|
340
|
|
|
295
|
|
|
999
|
|
|
934
|
|
||||
Customer support and operations
|
390
|
|
|
350
|
|
|
1,177
|
|
|
1,030
|
|
||||
Sales and marketing
|
316
|
|
|
325
|
|
|
1,001
|
|
|
913
|
|
||||
Technology and development
|
533
|
|
|
452
|
|
|
1,527
|
|
|
1,341
|
|
||||
General and administrative
|
401
|
|
|
377
|
|
|
1,239
|
|
|
1,111
|
|
||||
Restructuring and other charges
|
—
|
|
|
28
|
|
|
71
|
|
|
297
|
|
||||
Total operating expenses
|
3,681
|
|
|
3,193
|
|
|
10,891
|
|
|
9,629
|
|
||||
Operating income
|
697
|
|
|
490
|
|
|
1,920
|
|
|
1,596
|
|
||||
Other income (expense), net
|
(213
|
)
|
|
43
|
|
|
224
|
|
|
94
|
|
||||
Income before income taxes
|
484
|
|
|
533
|
|
|
2,144
|
|
|
1,690
|
|
||||
Income tax expense
|
22
|
|
|
97
|
|
|
192
|
|
|
217
|
|
||||
Net income
|
$
|
462
|
|
|
$
|
436
|
|
|
$
|
1,952
|
|
|
$
|
1,473
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.37
|
|
|
$
|
1.66
|
|
|
$
|
1.24
|
|
Diluted
|
$
|
0.39
|
|
|
$
|
0.36
|
|
|
$
|
1.64
|
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
1,175
|
|
|
1,181
|
|
|
1,174
|
|
|
1,187
|
|
||||
Diluted
|
1,188
|
|
|
1,199
|
|
|
1,188
|
|
|
1,206
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net income
|
$
|
462
|
|
|
$
|
436
|
|
|
$
|
1,952
|
|
|
$
|
1,473
|
|
Other comprehensive income (loss), net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(90
|
)
|
|
(6
|
)
|
|
(148
|
)
|
|
(33
|
)
|
||||
Unrealized (losses) gains on investments, net
|
(5
|
)
|
|
4
|
|
|
16
|
|
|
(6
|
)
|
||||
Tax benefit (expense) on unrealized (losses) gains on investments, net
|
1
|
|
|
(1
|
)
|
|
(5
|
)
|
|
2
|
|
||||
Unrealized gains on hedging activities, net
|
71
|
|
|
34
|
|
|
7
|
|
|
249
|
|
||||
Tax expense on unrealized gains on hedging activities, net
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Other comprehensive income (loss), net of tax
|
(24
|
)
|
|
30
|
|
|
(130
|
)
|
|
208
|
|
||||
Comprehensive income
|
$
|
438
|
|
|
$
|
466
|
|
|
$
|
1,822
|
|
|
$
|
1,681
|
|
|
Common Stock Shares
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other
Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total
Equity
|
|||||||||||
|
||||||||||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balances at December 31, 2018
|
1,174
|
|
|
$
|
(5,511
|
)
|
|
$
|
14,939
|
|
|
$
|
78
|
|
|
$
|
5,880
|
|
|
$
|
15,386
|
|
Adoption of lease accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
667
|
|
|
667
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|||||
Tax benefit on unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
6
|
|
|
—
|
|
|
(302
|
)
|
|
—
|
|
|
—
|
|
|
(302
|
)
|
|||||
Common stock repurchased
|
(8
|
)
|
|
(705
|
)
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|
256
|
|
|||||
Balances at March 31, 2019
|
1,172
|
|
|
$
|
(6,216
|
)
|
|
$
|
14,848
|
|
|
$
|
(25
|
)
|
|
$
|
6,550
|
|
|
$
|
15,157
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
823
|
|
|
823
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Tax benefit on unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
5
|
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|||||
Common stock repurchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
235
|
|
|
—
|
|
|
—
|
|
|
235
|
|
|||||
Balances at June 30, 2019
|
1,177
|
|
|
$
|
(6,216
|
)
|
|
$
|
15,010
|
|
|
$
|
(28
|
)
|
|
$
|
7,373
|
|
|
$
|
16,139
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462
|
|
|
462
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
(90
|
)
|
|||||
Unrealized losses on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Tax benefit on unrealized losses on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Unrealized gains on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|||||
Tax expense on unrealized gains on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|||||
Common stock repurchased
|
(3
|
)
|
|
(350
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
—
|
|
|
275
|
|
|||||
Balances at September 30, 2019
|
1,174
|
|
|
$
|
(6,566
|
)
|
|
$
|
15,266
|
|
|
$
|
(52
|
)
|
|
$
|
7,835
|
|
|
$
|
16,483
|
|
|
Common Stock Shares
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other
Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total
Equity
|
|||||||||||
|
||||||||||||||||||||||
|
(In millions)
|
|||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||
Balances at December 31, 2017
|
1,200
|
|
|
$
|
(2,001
|
)
|
|
$
|
14,314
|
|
|
$
|
(142
|
)
|
|
$
|
3,823
|
|
|
$
|
15,994
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
511
|
|
|
511
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Unrealized losses on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Tax benefit on unrealized losses on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Tax benefit on unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
7
|
|
|
—
|
|
|
(226
|
)
|
|
—
|
|
|
—
|
|
|
(226
|
)
|
|||||
Common stock repurchased
|
(24
|
)
|
|
(1,810
|
)
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(1,825
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Balances at March 31, 2018
|
1,183
|
|
|
$
|
(3,811
|
)
|
|
$
|
14,287
|
|
|
$
|
(169
|
)
|
|
$
|
4,334
|
|
|
$
|
14,641
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
526
|
|
|
526
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
|||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Unrealized gains on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|
—
|
|
|
233
|
|
|||||
Tax expense on unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
7
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|||||
Common stock repurchased
|
(6
|
)
|
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Balances at June 30, 2018
|
1,184
|
|
|
$
|
(4,311
|
)
|
|
$
|
14,434
|
|
|
$
|
36
|
|
|
$
|
4,860
|
|
|
$
|
15,019
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
436
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Unrealized gains on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Tax expense on unrealized losses on hedging activities, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
Common stock repurchased
|
(7
|
)
|
|
(600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
221
|
|
|
—
|
|
|
—
|
|
|
221
|
|
|||||
Balances at September 30, 2018
|
1,178
|
|
|
$
|
(4,911
|
)
|
|
$
|
14,664
|
|
|
$
|
66
|
|
|
$
|
5,296
|
|
|
$
|
15,115
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
1,952
|
|
|
$
|
1,473
|
|
Adjustments:
|
|
|
|
||||
Transaction and loan losses
|
999
|
|
|
934
|
|
||
Depreciation and amortization
|
685
|
|
|
553
|
|
||
Stock-based compensation
|
736
|
|
|
623
|
|
||
Deferred income taxes
|
(122
|
)
|
|
(34
|
)
|
||
Cost basis adjustments to loans and interest receivable held for sale
|
—
|
|
|
244
|
|
||
Unrealized gains on strategic investments
|
(170
|
)
|
|
(31
|
)
|
||
Other
|
(130
|
)
|
|
(48
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(103
|
)
|
|
(133
|
)
|
||
Changes in loans and interest receivable held for sale, net
|
4
|
|
|
1,407
|
|
||
Accounts payable
|
(51
|
)
|
|
5
|
|
||
Income taxes payable
|
(33
|
)
|
|
(21
|
)
|
||
Other assets and liabilities
|
(470
|
)
|
|
(623
|
)
|
||
Net cash provided by operating activities
|
3,297
|
|
|
4,349
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(530
|
)
|
|
(599
|
)
|
||
Proceeds from sales of property and equipment
|
17
|
|
|
—
|
|
||
Changes in principal loans receivable, net
|
(1,111
|
)
|
|
3,573
|
|
||
Purchases of investments
|
(19,808
|
)
|
|
(15,641
|
)
|
||
Maturities and sales of investments
|
17,390
|
|
|
15,947
|
|
||
Acquisitions, net of cash and restricted cash acquired
|
—
|
|
|
(2,136
|
)
|
||
Funds receivable
|
(1,292
|
)
|
|
(427
|
)
|
||
Net cash (used in) provided by investing activities
|
(5,334
|
)
|
|
717
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
78
|
|
|
83
|
|
||
Purchases of treasury stock
|
(1,106
|
)
|
|
(2,925
|
)
|
||
Tax withholdings related to net share settlements of equity awards
|
(473
|
)
|
|
(392
|
)
|
||
Borrowings under financing arrangements
|
5,471
|
|
|
2,075
|
|
||
Repayments under financing arrangements
|
(2,509
|
)
|
|
(1,101
|
)
|
||
Funds payable and amounts due to customers
|
2,376
|
|
|
2,767
|
|
||
Net cash provided by financing activities
|
3,837
|
|
|
507
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
(49
|
)
|
|
(89
|
)
|
||
Net change in cash, cash equivalents, and restricted cash
|
1,751
|
|
|
5,484
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
13,233
|
|
|
8,285
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
14,984
|
|
|
$
|
13,769
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
||||
Cash paid for interest
|
$
|
76
|
|
|
$
|
47
|
|
Cash paid for income taxes, net
|
$
|
220
|
|
|
$
|
228
|
|
|
|
|
|
||||
The below table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheet to the total of the same amounts shown in the condensed consolidated statement of cash flows:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,877
|
|
|
$
|
8,147
|
|
Short term investments
|
10
|
|
|
16
|
|
||
Funds receivable and customer accounts
|
8,097
|
|
|
5,606
|
|
||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows
|
$
|
14,984
|
|
|
$
|
13,769
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
(In millions)
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
Revised
|
||||||
|
|
|
|
|
|
||||||
Transaction expense
|
$
|
1,366
|
|
|
$
|
—
|
|
|
$
|
1,366
|
|
Transaction and loan losses
|
295
|
|
|
—
|
|
|
295
|
|
|||
Customer support and operations
|
367
|
|
|
(17
|
)
|
|
350
|
|
|||
Sales and marketing
|
326
|
|
|
(1
|
)
|
|
325
|
|
|||
Product development
|
269
|
|
|
(269
|
)
|
|
—
|
|
|||
Technology and development
|
—
|
|
|
452
|
|
|
452
|
|
|||
General and administrative
|
354
|
|
|
23
|
|
|
377
|
|
|||
Depreciation and amortization
|
188
|
|
|
(188
|
)
|
|
—
|
|
|||
Restructuring and other charges
|
28
|
|
|
—
|
|
|
28
|
|
|||
Total operating expenses
|
$
|
3,193
|
|
|
$
|
—
|
|
|
$
|
3,193
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
(In millions)
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
Revised
|
||||||
|
|
|
|
|
|
||||||
Transaction expense
|
$
|
4,003
|
|
|
$
|
—
|
|
|
$
|
4,003
|
|
Transaction and loan losses
|
934
|
|
|
—
|
|
|
934
|
|
|||
Customer support and operations
|
1,075
|
|
|
(45
|
)
|
|
1,030
|
|
|||
Sales and marketing
|
924
|
|
|
(11
|
)
|
|
913
|
|
|||
Product development
|
782
|
|
|
(782
|
)
|
|
—
|
|
|||
Technology and development
|
—
|
|
|
1,341
|
|
|
1,341
|
|
|||
General and administrative
|
1,061
|
|
|
50
|
|
|
1,111
|
|
|||
Depreciation and amortization
|
553
|
|
|
(553
|
)
|
|
—
|
|
|||
Restructuring and other charges
|
297
|
|
|
—
|
|
|
297
|
|
|||
Total operating expenses
|
$
|
9,629
|
|
|
$
|
—
|
|
|
$
|
9,629
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Primary geographical markets
|
|
|
|
|
|
|
|
||||||||
United States (“U.S.”)
|
$
|
2,327
|
|
|
$
|
1,962
|
|
|
$
|
6,811
|
|
|
$
|
6,135
|
|
United Kingdom (“U.K.”)
|
455
|
|
|
397
|
|
|
1,342
|
|
|
1,191
|
|
||||
Other countries(1)
|
1,596
|
|
|
1,324
|
|
|
4,658
|
|
|
3,899
|
|
||||
Total revenues(2)
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue category
|
|
|
|
|
|
|
|
||||||||
Transaction revenues
|
$
|
3,955
|
|
|
$
|
3,343
|
|
|
$
|
11,564
|
|
|
$
|
9,858
|
|
Other value added services
|
423
|
|
|
340
|
|
|
1,247
|
|
|
1,367
|
|
||||
Total revenues(2)
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
462
|
|
|
$
|
436
|
|
|
$
|
1,952
|
|
|
$
|
1,473
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock - basic
|
1,175
|
|
|
1,181
|
|
|
1,174
|
|
|
1,187
|
|
||||
Dilutive effect of equity incentive awards
|
13
|
|
|
18
|
|
|
14
|
|
|
19
|
|
||||
Weighted average shares of common stock - diluted
|
1,188
|
|
|
1,199
|
|
|
1,188
|
|
|
1,206
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.37
|
|
|
$
|
1.66
|
|
|
$
|
1.24
|
|
Diluted
|
$
|
0.39
|
|
|
$
|
0.36
|
|
|
$
|
1.64
|
|
|
$
|
1.22
|
|
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
December 31,
2018 |
|
Goodwill
Acquired
|
|
Adjustments
|
|
September 30,
2019 |
||||||||
|
(In millions)
|
||||||||||||||
Total goodwill
|
$
|
6,284
|
|
|
$
|
—
|
|
|
$
|
(106
|
)
|
|
$
|
6,178
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||
|
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
|
$
|
1,106
|
|
|
$
|
(680
|
)
|
|
$
|
426
|
|
|
7
|
|
$
|
1,134
|
|
|
$
|
(623
|
)
|
|
$
|
511
|
|
|
7
|
Marketing related
|
293
|
|
|
(230
|
)
|
|
63
|
|
|
3
|
|
301
|
|
|
(207
|
)
|
|
94
|
|
|
3
|
||||||
Developed technology
|
443
|
|
|
(324
|
)
|
|
119
|
|
|
3
|
|
453
|
|
|
(269
|
)
|
|
184
|
|
|
3
|
||||||
All other
|
245
|
|
|
(224
|
)
|
|
21
|
|
|
5
|
|
245
|
|
|
(209
|
)
|
|
36
|
|
|
5
|
||||||
Intangible assets, net
|
$
|
2,087
|
|
|
$
|
(1,458
|
)
|
|
$
|
629
|
|
|
|
|
$
|
2,133
|
|
|
$
|
(1,308
|
)
|
|
$
|
825
|
|
|
|
Fiscal years:
|
|
||
Remaining 2019
|
$
|
49
|
|
2020
|
184
|
|
|
2021
|
132
|
|
|
2022
|
70
|
|
|
2023
|
70
|
|
|
Thereafter
|
124
|
|
|
Total
|
$
|
629
|
|
|
Three Months Ended
September 30, 2019 |
|
Nine Months Ended
September 30, 2019 |
||||
|
(In millions, except weighted-average figures)
|
||||||
Lease expense
|
|
|
|
||||
Operating lease expense
|
$
|
33
|
|
|
$
|
99
|
|
Sublease income
|
(5
|
)
|
|
(9
|
)
|
||
Total lease expense cost
|
$
|
28
|
|
|
$
|
90
|
|
|
|
|
|
||||
Other information:
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
31
|
|
|
$
|
93
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
32
|
|
|
$
|
100
|
|
Weighted-average remaining lease term—operating leases
|
6.0 years
|
|
|
6.0 years
|
|
||
Weighted-average discount rate—operating leases
|
5
|
%
|
|
5
|
%
|
|
Operating Leases
|
||
Fiscal years:
|
(In millions)
|
||
Remaining 2019
|
$
|
32
|
|
2020
|
120
|
|
|
2021
|
97
|
|
|
2022
|
77
|
|
|
2023
|
58
|
|
|
Thereafter
|
216
|
|
|
Total
|
$
|
600
|
|
Less: present value discount
|
(87
|
)
|
|
Lease liability
|
$
|
513
|
|
|
Operating Leases
|
||
Fiscal years:
|
(In millions)
|
||
2019
|
$
|
124
|
|
2020
|
111
|
|
|
2021
|
96
|
|
|
2022
|
81
|
|
|
2023
|
63
|
|
|
Thereafter
|
189
|
|
|
Total minimum lease payments
|
$
|
664
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
Currency
Translation
|
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
118
|
|
|
$
|
8
|
|
|
$
|
(151
|
)
|
|
$
|
(3
|
)
|
|
$
|
(28
|
)
|
Other comprehensive income (loss) before reclassifications
|
141
|
|
|
(6
|
)
|
|
(90
|
)
|
|
—
|
|
|
45
|
|
|||||
Less: Amount of gain (loss) reclassified from accumulated other comprehensive income
|
70
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Net current period other comprehensive income (loss)
|
71
|
|
|
(5
|
)
|
|
(90
|
)
|
|
—
|
|
|
(24
|
)
|
|||||
Ending balance
|
$
|
189
|
|
|
$
|
3
|
|
|
$
|
(241
|
)
|
|
$
|
(3
|
)
|
|
$
|
(52
|
)
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
Currency Translation |
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
104
|
|
|
$
|
(22
|
)
|
|
$
|
(52
|
)
|
|
$
|
6
|
|
|
$
|
36
|
|
Other comprehensive income (loss) before reclassifications
|
41
|
|
|
5
|
|
|
(6
|
)
|
|
(2
|
)
|
|
38
|
|
|||||
Less: Amount of gain reclassified from accumulated other comprehensive income
|
7
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Net current period other comprehensive income (loss)
|
34
|
|
|
4
|
|
|
(6
|
)
|
|
(2
|
)
|
|
30
|
|
|||||
Ending balance
|
$
|
138
|
|
|
$
|
(18
|
)
|
|
$
|
(58
|
)
|
|
$
|
4
|
|
|
$
|
66
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
Currency
Translation
|
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
182
|
|
|
$
|
(13
|
)
|
|
$
|
(93
|
)
|
|
$
|
2
|
|
|
$
|
78
|
|
Other comprehensive income (loss) before reclassifications
|
187
|
|
|
15
|
|
|
(148
|
)
|
|
(5
|
)
|
|
49
|
|
|||||
Less: Amount of gain (loss) reclassified from accumulated other comprehensive income
|
180
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||
Net current period other comprehensive income (loss)
|
7
|
|
|
16
|
|
|
(148
|
)
|
|
(5
|
)
|
|
(130
|
)
|
|||||
Ending balance
|
$
|
189
|
|
|
$
|
3
|
|
|
$
|
(241
|
)
|
|
$
|
(3
|
)
|
|
$
|
(52
|
)
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
Currency Translation |
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
(111
|
)
|
|
$
|
(12
|
)
|
|
$
|
(25
|
)
|
|
$
|
6
|
|
|
$
|
(142
|
)
|
Other comprehensive income (loss) before reclassifications
|
183
|
|
|
(6
|
)
|
|
(33
|
)
|
|
(2
|
)
|
|
142
|
|
|||||
Less: Amount of loss reclassified from accumulated other comprehensive income
|
(66
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
|||||
Net current period other comprehensive income (loss)
|
249
|
|
|
(6
|
)
|
|
(33
|
)
|
|
(2
|
)
|
|
208
|
|
|||||
Ending balance
|
$
|
138
|
|
|
$
|
(18
|
)
|
|
$
|
(58
|
)
|
|
$
|
4
|
|
|
$
|
66
|
|
Details of Accumulated Other Comprehensive
Income (Loss) Components |
|
Amount of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Affected Line Item in the Statement of Income
|
||||||
|
|
Three Months Ended September 30,
|
|
|
||||||
|
|
2019
|
|
2018
|
|
|
||||
|
|
(In millions)
|
|
|
||||||
Gains on cash flow hedges—foreign exchange contracts
|
|
$
|
70
|
|
|
$
|
7
|
|
|
Net revenues
|
Unrealized (losses) gains on investments
|
|
(1
|
)
|
|
1
|
|
|
Other income (expense), net
|
||
|
|
$
|
69
|
|
|
$
|
8
|
|
|
Income before income taxes
|
|
|
—
|
|
|
—
|
|
|
Income tax expense
|
||
Total reclassifications for the period
|
|
$
|
69
|
|
|
$
|
8
|
|
|
Net income
|
Details of Accumulated Other Comprehensive
Income (Loss) Components |
|
Amount of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Affected Line Item in the Statement of Income
|
||||||
|
|
Nine Months Ended September 30,
|
|
|
||||||
|
|
2019
|
|
2018
|
|
|
||||
|
|
(In millions)
|
|
|
||||||
Gains (losses) on cash flow hedges—foreign exchange contracts
|
|
$
|
180
|
|
|
$
|
(66
|
)
|
|
Net revenues
|
Unrealized (losses) gains on investments
|
|
(1
|
)
|
|
—
|
|
|
Other income (expense), net
|
||
|
|
$
|
179
|
|
|
$
|
(66
|
)
|
|
Income before income taxes
|
|
|
—
|
|
|
—
|
|
|
Income tax expense
|
||
Total reclassifications for the period
|
|
$
|
179
|
|
|
$
|
(66
|
)
|
|
Net income
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Interest income
|
$
|
47
|
|
|
$
|
61
|
|
|
$
|
144
|
|
|
$
|
116
|
|
Interest expense
|
(29
|
)
|
|
(22
|
)
|
|
(78
|
)
|
|
(57
|
)
|
||||
Gains (losses) on strategic investments
|
(228
|
)
|
|
—
|
|
|
170
|
|
|
31
|
|
||||
Other
|
(3
|
)
|
|
4
|
|
|
(12
|
)
|
|
4
|
|
||||
Other income (expense), net
|
$
|
(213
|
)
|
|
$
|
43
|
|
|
$
|
224
|
|
|
$
|
94
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(In millions)
|
||||||
Funds receivable and customer accounts:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,097
|
|
|
$
|
5,642
|
|
Time deposits
|
469
|
|
|
389
|
|
||
Available-for-sale debt securities
|
9,502
|
|
|
10,940
|
|
||
Funds receivable
|
4,443
|
|
|
3,091
|
|
||
Total funds receivable and customer accounts
|
$
|
22,511
|
|
|
$
|
20,062
|
|
Short-term investments:
|
|
|
|
||||
Time deposits
|
$
|
761
|
|
|
$
|
774
|
|
Available-for-sale debt securities
|
2,757
|
|
|
685
|
|
||
Restricted cash
|
67
|
|
|
75
|
|
||
Total short-term investments
|
$
|
3,585
|
|
|
$
|
1,534
|
|
Long-term investments:
|
|
|
|
||||
Available-for-sale debt securities
|
$
|
983
|
|
|
$
|
676
|
|
Restricted cash
|
—
|
|
|
2
|
|
||
Strategic investments
|
1,788
|
|
|
293
|
|
||
Total long-term investments
|
$
|
2,771
|
|
|
$
|
971
|
|
|
September 30, 2019
|
||||||||||||||
|
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
|
$
|
5,359
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
5,361
|
|
Foreign government and agency securities
|
770
|
|
|
—
|
|
|
—
|
|
|
770
|
|
||||
Corporate debt securities
|
1,143
|
|
|
—
|
|
|
—
|
|
|
1,143
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
U.S. government and agency securities
|
155
|
|
|
—
|
|
|
—
|
|
|
155
|
|
||||
Foreign government and agency securities
|
379
|
|
|
—
|
|
|
—
|
|
|
379
|
|
||||
Corporate debt securities
|
2,098
|
|
|
—
|
|
|
—
|
|
|
2,098
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|||||||
U.S. government and agency securities
|
140
|
|
|
—
|
|
|
—
|
|
|
140
|
|
||||
Foreign government and agency securities
|
252
|
|
|
—
|
|
|
—
|
|
|
252
|
|
||||
Corporate debt securities
|
590
|
|
|
1
|
|
|
—
|
|
|
591
|
|
||||
Total available-for-sale debt securities(1)
|
$
|
10,886
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
10,889
|
|
|
December 31, 2018
|
||||||||||||||
|
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
|
$
|
6,945
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
6,947
|
|
Foreign government and agency securities
|
772
|
|
|
—
|
|
|
(1
|
)
|
|
771
|
|
||||
Corporate debt securities
|
883
|
|
|
—
|
|
|
—
|
|
|
883
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Corporate debt securities
|
393
|
|
|
—
|
|
|
(3
|
)
|
|
390
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Foreign government and agency securities
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||
Corporate debt securities
|
639
|
|
|
—
|
|
|
(11
|
)
|
|
628
|
|
||||
Total available-for-sale debt securities(1)
|
$
|
9,670
|
|
|
$
|
2
|
|
|
$
|
(15
|
)
|
|
$
|
9,657
|
|
|
September 30, 2019
|
||||||||||||||||||||||
|
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
|
$
|
594
|
|
|
$
|
—
|
|
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
594
|
|
|
$
|
—
|
|
Foreign government and agency securities
|
390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
390
|
|
|
—
|
|
||||||
Corporate debt securities
|
240
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
247
|
|
|
—
|
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign government and agency securities
|
92
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
|
—
|
|
||||||
Corporate debt securities
|
380
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
480
|
|
|
—
|
|
||||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. government and agency securities
|
140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|
—
|
|
||||||
Foreign government and agency securities
|
160
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||||
Corporate debt securities
|
142
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
205
|
|
|
—
|
|
||||||
Total available-for-sale debt securities
|
$
|
2,138
|
|
|
$
|
—
|
|
|
$
|
170
|
|
|
$
|
—
|
|
|
$
|
2,308
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||||||||||
|
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
|
$
|
2,419
|
|
|
$
|
—
|
|
(1)
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
2,437
|
|
|
$
|
—
|
|
Foreign government and agency securities
|
295
|
|
|
—
|
|
|
49
|
|
|
(1
|
)
|
|
344
|
|
|
(1
|
)
|
||||||
Corporate debt securities
|
281
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
288
|
|
|
—
|
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt securities
|
57
|
|
|
—
|
|
|
333
|
|
|
(3
|
)
|
|
390
|
|
|
(3
|
)
|
||||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign government and agency securities
|
10
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
38
|
|
|
—
|
|
||||||
Corporate debt securities
|
94
|
|
|
(2
|
)
|
|
534
|
|
|
(9
|
)
|
|
628
|
|
|
(11
|
)
|
||||||
Total available-for-sale debt securities
|
$
|
3,156
|
|
|
$
|
(2
|
)
|
|
$
|
969
|
|
|
$
|
(13
|
)
|
|
$
|
4,125
|
|
|
$
|
(15
|
)
|
|
September 30, 2019
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In millions)
|
||||||
One year or less
|
$
|
9,137
|
|
|
$
|
9,140
|
|
After one year through five years
|
1,745
|
|
|
1,745
|
|
||
After five years through ten years
|
4
|
|
|
4
|
|
||
Total
|
$
|
10,886
|
|
|
$
|
10,889
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Carrying amount, beginning of period
|
$
|
293
|
|
|
$
|
88
|
|
Adjustments related to non-marketable equity securities:
|
|
|
|
||||
Additions, net of sales
|
75
|
|
|
73
|
|
||
Gross unrealized gains
|
133
|
|
|
31
|
|
||
Carrying amount, end of period
|
$
|
501
|
|
|
$
|
192
|
|
|
|
September 30, 2019
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
||||||
|
|
(In millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents(1)
|
|
$
|
1,943
|
|
|
$
|
—
|
|
|
$
|
1,943
|
|
Short-term investments(2):
|
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
|
155
|
|
|
—
|
|
|
155
|
|
|||
Foreign government and agency securities
|
|
432
|
|
|
—
|
|
|
432
|
|
|||
Corporate debt securities
|
|
2,170
|
|
|
—
|
|
|
2,170
|
|
|||
Total short-term investments
|
|
$
|
2,757
|
|
|
$
|
—
|
|
|
$
|
2,757
|
|
Funds receivable and customer accounts(3):
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
2,300
|
|
|
—
|
|
|
2,300
|
|
|||
U.S. government and agency securities
|
|
5,361
|
|
|
—
|
|
|
5,361
|
|
|||
Foreign government and agency securities
|
|
2,560
|
|
|
—
|
|
|
2,560
|
|
|||
Corporate debt securities
|
|
1,581
|
|
|
—
|
|
|
1,581
|
|
|||
Total funds receivable and customer accounts
|
|
$
|
11,802
|
|
|
$
|
—
|
|
|
$
|
11,802
|
|
Derivatives
|
|
293
|
|
|
—
|
|
|
293
|
|
|||
Long-term investments(4):
|
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
|
140
|
|
|
—
|
|
|
140
|
|
|||
Foreign government and agency securities
|
|
252
|
|
|
—
|
|
|
252
|
|
|||
Corporate debt securities
|
|
591
|
|
|
—
|
|
|
591
|
|
|||
Marketable equity securities
|
|
1,287
|
|
|
1,287
|
|
|
—
|
|
|||
Total long-term investments
|
|
$
|
2,270
|
|
|
$
|
1,287
|
|
|
$
|
983
|
|
Total financial assets
|
|
$
|
19,065
|
|
|
$
|
1,287
|
|
|
$
|
17,778
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Derivatives
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
|
December 31, 2018
|
|
Significant Other
Observable Inputs (Level 2) |
||||
|
|
(In millions)
|
||||||
Assets:
|
|
|
|
|
||||
Cash and cash equivalents(1)
|
|
$
|
3,678
|
|
|
$
|
3,678
|
|
Short-term investments(2):
|
|
|
|
|
||||
Foreign government and agency securities
|
|
235
|
|
|
235
|
|
||
Corporate debt securities
|
|
450
|
|
|
450
|
|
||
Total short-term investments
|
|
685
|
|
|
685
|
|
||
Funds receivable and customer accounts(3):
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
605
|
|
|
605
|
|
||
U.S. government and agency securities
|
|
6,946
|
|
|
6,946
|
|
||
Foreign government and agency securities
|
|
2,434
|
|
|
2,434
|
|
||
Corporate debt securities
|
|
1,560
|
|
|
1,560
|
|
||
Total funds receivable and customer accounts
|
|
11,545
|
|
|
11,545
|
|
||
Derivatives
|
|
320
|
|
|
320
|
|
||
Long-term investments(2),(4):
|
|
|
|
|
||||
Foreign government and agency securities
|
|
48
|
|
|
48
|
|
||
Corporate debt securities
|
|
628
|
|
|
628
|
|
||
Total long-term investments
|
|
676
|
|
|
676
|
|
||
Total financial assets
|
|
$
|
16,904
|
|
|
$
|
16,904
|
|
Liabilities:
|
|
|
|
|
||||
Derivatives
|
|
$
|
67
|
|
|
$
|
67
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(In millions)
|
||||||
Funds receivable and customer accounts
|
$
|
2,228
|
|
|
$
|
2,339
|
|
Short-term investments
|
$
|
125
|
|
|
$
|
295
|
|
Long-term investments
|
$
|
—
|
|
|
$
|
10
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Funds receivable and customer accounts
|
$
|
(86
|
)
|
|
$
|
(18
|
)
|
|
$
|
(88
|
)
|
|
$
|
(87
|
)
|
Short-term investments
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
$
|
(8
|
)
|
|
$
|
(10
|
)
|
|
|
September 30, 2019
|
|
Significant Other
Observable Inputs (Level 2) |
|||
|
|
(In millions)
|
|||||
Non-marketable equity investments measured using the Measurement Alternative(1)
|
|
$
|
307
|
|
|
307
|
|
|
|
December 31, 2018
|
|
Significant Other
Observable Inputs (Level 2) |
|||
|
|
(In millions)
|
|||||
Non-marketable equity investments measured using the Measurement Alternative(1)
|
|
$
|
116
|
|
|
116
|
|
|
Balance Sheet Location
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
(In millions)
|
||||||
Derivative Assets:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other current assets
|
|
$
|
172
|
|
|
$
|
170
|
|
Foreign exchange contracts designated as cash flow hedges
|
Other assets (non-current)
|
|
17
|
|
|
11
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
Other current assets
|
|
104
|
|
|
139
|
|
||
Total derivative assets
|
|
|
$
|
293
|
|
|
$
|
320
|
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
3
|
|
Foreign exchange contracts not designated as hedging instruments
|
Other current liabilities
|
|
69
|
|
|
64
|
|
||
Total derivative liabilities
|
|
|
$
|
69
|
|
|
$
|
67
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
|
Net revenues
|
||||||||||||||
Total amounts presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
Gains (losses) on foreign exchange contracts designated as cash flow hedges reclassified from accumulated other comprehensive income
|
$
|
70
|
|
|
$
|
7
|
|
|
$
|
180
|
|
|
$
|
(66
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Gains (losses) on foreign exchange contracts recognized in other income (expense), net
|
$
|
31
|
|
|
$
|
12
|
|
|
$
|
30
|
|
|
$
|
27
|
|
Gains (losses) on foreign exchange contracts recognized in net revenues
|
—
|
|
|
4
|
|
|
—
|
|
|
5
|
|
||||
Total gains (losses) recognized from foreign exchange contracts not designated as hedging instruments
|
$
|
31
|
|
|
$
|
16
|
|
|
$
|
30
|
|
|
$
|
32
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(In millions)
|
||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
3,354
|
|
|
$
|
3,831
|
|
Foreign exchange contracts not designated as hedging instruments
|
13,736
|
|
|
10,703
|
|
||
Total
|
$
|
17,090
|
|
|
$
|
14,534
|
|
September 30, 2019
|
||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||
Current
|
|
30 - 59 Days Past Due
|
|
60 - 89 Days Past Due
|
|
90 - 180 Days Past Due
|
|
Total Past Due
|
|
Total
|
||||||||||||
$
|
965
|
|
|
$
|
31
|
|
|
$
|
12
|
|
|
$
|
22
|
|
|
$
|
65
|
|
|
$
|
1,030
|
|
93.7
|
%
|
|
3.0
|
%
|
|
1.2
|
%
|
|
2.1
|
%
|
|
6.3
|
%
|
|
100
|
%
|
December 31, 2018
|
||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||
Current
|
|
30 - 59 Days Past Due
|
|
60 - 89 Days Past Due
|
|
90 - 180 Days Past Due
|
|
Total Past Due
|
|
Total
|
||||||||||||
$
|
668
|
|
|
$
|
18
|
|
|
$
|
6
|
|
|
$
|
12
|
|
|
$
|
36
|
|
|
$
|
704
|
|
94.9
|
%
|
|
2.5
|
%
|
|
0.9
|
%
|
|
1.7
|
%
|
|
5.1
|
%
|
|
100
|
%
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||
|
Consumer Loans Receivable
|
Interest Receivable
|
Total Allowance
|
|
Consumer Loans Receivable
|
Interest Receivable
|
Total Allowance(1)
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
27
|
|
$
|
3
|
|
$
|
30
|
|
|
$
|
57
|
|
$
|
6
|
|
$
|
63
|
|
Provisions
|
18
|
|
6
|
|
24
|
|
|
50
|
|
9
|
|
59
|
|
||||||
Charge-offs
|
(31
|
)
|
(4
|
)
|
(35
|
)
|
|
(97
|
)
|
(12
|
)
|
(109
|
)
|
||||||
Recoveries(2)
|
25
|
|
—
|
|
25
|
|
|
12
|
|
—
|
|
12
|
|
||||||
Ending balance
|
$
|
39
|
|
$
|
5
|
|
$
|
44
|
|
|
$
|
22
|
|
$
|
3
|
|
$
|
25
|
|
September 30, 2019
|
||||||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||||
Within Original Expected Repayment Period
|
|
30 - 59 Days Greater
|
|
60 - 89 Days Greater
|
|
90 - 180 Days Greater
|
|
180+ Days
|
|
Total Past Original Expected Repayment Period
|
|
Total
|
||||||||||||||
$
|
2,344
|
|
|
$
|
96
|
|
|
$
|
52
|
|
|
$
|
83
|
|
|
$
|
16
|
|
|
$
|
247
|
|
|
$
|
2,591
|
|
90.5
|
%
|
|
3.7
|
%
|
|
2.0
|
%
|
|
3.2
|
%
|
|
0.6
|
%
|
|
9.5
|
%
|
|
100
|
%
|
December 31, 2018(1)
|
||||||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||||
Within Original Expected Repayment Period
|
|
30 - 59 Days Greater
|
|
60 - 89 Days Greater
|
|
90 - 180 Days Greater
|
|
180+ Days
|
|
Total Past Original Expected Repayment Period
|
|
Total
|
||||||||||||||
$
|
1,706
|
|
|
$
|
66
|
|
|
$
|
32
|
|
|
$
|
57
|
|
|
$
|
13
|
|
|
$
|
168
|
|
|
$
|
1,874
|
|
91.0
|
%
|
|
3.6
|
%
|
|
1.7
|
%
|
|
3.0
|
%
|
|
0.7
|
%
|
|
9.0
|
%
|
|
100
|
%
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||
|
Merchant Loans and Advances
|
Interest and Fees Receivable
|
Total Allowance
|
|
Merchant Loans and Advances
|
Interest and Fees Receivable
|
Total Allowance
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
115
|
|
$
|
15
|
|
$
|
130
|
|
|
$
|
52
|
|
$
|
7
|
|
$
|
59
|
|
Provisions
|
181
|
|
22
|
|
203
|
|
|
120
|
|
18
|
|
138
|
|
||||||
Charge-offs
|
(140
|
)
|
(16
|
)
|
(156
|
)
|
|
(80
|
)
|
(8
|
)
|
(88
|
)
|
||||||
Recoveries
|
11
|
|
—
|
|
11
|
|
|
7
|
|
—
|
|
7
|
|
||||||
Ending balance
|
$
|
167
|
|
$
|
21
|
|
$
|
188
|
|
|
$
|
99
|
|
$
|
17
|
|
$
|
116
|
|
|
|
|
Balance at September 30, 2019
|
||||
|
Maturities
|
|
Amount
|
|
Effective Interest Rate
|
||
|
|
|
(in millions)
|
|
|
||
Fixed-rate 2.200% notes
|
9/26/2022
|
|
$
|
1,000
|
|
|
2.39%
|
Fixed-rate 2.400% notes
|
10/1/2024
|
|
1,250
|
|
|
2.52%
|
|
Fixed-rate 2.650% notes
|
10/1/2026
|
|
1,250
|
|
|
2.78%
|
|
Fixed-rate 2.850% notes
|
10/1/2029
|
|
1,500
|
|
|
2.96%
|
|
Total term debt
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
||
Unamortized premium (discount) and issuance costs, net
|
|
|
(36
|
)
|
|
|
|
Total carrying amount of term debt
|
|
|
$
|
4,964
|
|
|
|
2019
|
$
|
—
|
|
2020
|
—
|
|
|
2021
|
—
|
|
|
2022
|
1,000
|
|
|
2023
|
—
|
|
|
Thereafter
|
4,000
|
|
|
Total
|
$
|
5,000
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Beginning balance
|
$
|
395
|
|
|
$
|
304
|
|
|
$
|
344
|
|
|
$
|
266
|
|
Provisions, net of recoveries
|
256
|
|
|
259
|
|
|
789
|
|
|
764
|
|
||||
Realized losses
|
(295
|
)
|
|
(244
|
)
|
|
(777
|
)
|
|
(711
|
)
|
||||
Ending balance
|
$
|
356
|
|
|
$
|
319
|
|
|
$
|
356
|
|
|
$
|
319
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Customer support and operations
|
$
|
51
|
|
|
$
|
46
|
|
|
$
|
144
|
|
|
$
|
129
|
|
Sales and marketing
|
31
|
|
|
30
|
|
|
95
|
|
|
93
|
|
||||
Technology and development
|
119
|
|
|
76
|
|
|
292
|
|
|
222
|
|
||||
General and administrative
|
72
|
|
|
65
|
|
|
226
|
|
|
192
|
|
||||
Total stock-based compensation expense
|
$
|
273
|
|
|
$
|
217
|
|
|
$
|
757
|
|
|
$
|
636
|
|
Capitalized as part of internal use software and website development costs
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
29
|
|
|
$
|
26
|
|
|
Employee Severance and Benefits
|
||
|
(In millions)
|
||
Accrued liability as of January 1, 2019
|
$
|
3
|
|
Charges
|
78
|
|
|
Payments
|
(60
|
)
|
|
Accrued liability as of September 30, 2019
|
$
|
21
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
|
(In millions, except percentages and per share data)
|
||||||||||||||||||||
Net revenues
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
19
|
%
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
|
14
|
%
|
Operating expenses
|
3,681
|
|
|
3,193
|
|
|
15
|
%
|
|
10,891
|
|
|
9,629
|
|
|
13
|
%
|
||||
Operating income
|
$
|
697
|
|
|
$
|
490
|
|
|
42
|
%
|
|
$
|
1,920
|
|
|
$
|
1,596
|
|
|
20
|
%
|
Operating margin
|
16
|
%
|
|
13
|
%
|
|
**
|
|
|
15
|
%
|
|
14
|
%
|
|
**
|
|
||||
Other income (expense), net
|
$
|
(213
|
)
|
|
$
|
43
|
|
|
**
|
|
|
$
|
224
|
|
|
$
|
94
|
|
|
**
|
|
Income tax expense
|
$
|
22
|
|
|
$
|
97
|
|
|
(77
|
)%
|
|
$
|
192
|
|
|
$
|
217
|
|
|
(12
|
)%
|
Effective tax rate
|
5
|
%
|
|
18
|
%
|
|
**
|
|
|
9
|
%
|
|
13
|
%
|
|
**
|
|
||||
Net income
|
$
|
462
|
|
|
$
|
436
|
|
|
6
|
%
|
|
$
|
1,952
|
|
|
$
|
1,473
|
|
|
33
|
%
|
Net income per diluted share
|
$
|
0.39
|
|
|
$
|
0.36
|
|
|
7
|
%
|
|
$
|
1.64
|
|
|
$
|
1.22
|
|
|
35
|
%
|
Net cash provided by operating activities
|
$
|
1,096
|
|
|
$
|
4,670
|
|
|
**
|
|
|
$
|
3,297
|
|
|
$
|
4,349
|
|
|
**
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
|
(In millions)
|
||||||
Unfavorable impact to net revenues (exclusive of hedging impact)
|
$
|
(72
|
)
|
|
$
|
(281
|
)
|
Hedging impact
|
70
|
|
|
180
|
|
||
Unfavorable impact to net revenues
|
(2
|
)
|
|
(101
|
)
|
||
Favorable impact to operating expense
|
34
|
|
|
146
|
|
||
Net favorable impact to operating income
|
$
|
32
|
|
|
$
|
45
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||
|
(In millions)
|
||||||
(Unfavorable) favorable impact to net revenues (exclusive of hedging impact)
|
$
|
(30
|
)
|
|
$
|
186
|
|
Hedging impact
|
10
|
|
|
(63
|
)
|
||
(Unfavorable) favorable impact to net revenues
|
(20
|
)
|
|
123
|
|
||
Favorable (unfavorable) impact to operating expense
|
23
|
|
|
(61
|
)
|
||
Net favorable impact to operating income
|
$
|
3
|
|
|
$
|
62
|
|
•
|
Transaction revenues: Net transaction fees charged to merchants and consumers on a transaction basis primarily based on the volume of activity, or TPV (defined below), completed on our Payments Platform. Growth in TPV is directly impacted by the number of payment transactions that we enable on our Payments Platform. Payment transactions are the total number of payments, net of payment reversals, successfully completed through our Payments Platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions. We earn additional fees on transactions settled in foreign currencies when we enable cross-border transactions (i.e., transactions where the merchant and consumer are in different countries).
|
•
|
Other value added services: Net revenues derived primarily from revenue earned through partnerships, subscription fees, gateway fees, and other services we provide to our merchants and consumers. We also earn revenues from interest and fees earned primarily on our PayPal credit portfolio of loans receivable, gain on sale of participation interest in certain loans and advances, and interest earned on certain PayPal customer account balances.
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||
Transaction revenues
|
$
|
3,955
|
|
|
$
|
3,343
|
|
|
18
|
%
|
|
$
|
11,564
|
|
|
$
|
9,858
|
|
|
17
|
%
|
Other value added services
|
423
|
|
|
340
|
|
|
24
|
%
|
|
1,247
|
|
|
1,367
|
|
|
(9
|
)%
|
||||
Net revenues
|
$
|
4,378
|
|
|
$
|
3,683
|
|
|
19
|
%
|
|
$
|
12,811
|
|
|
$
|
11,225
|
|
|
14
|
%
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||
Active accounts(1)
|
295
|
|
|
254
|
|
|
16
|
%
|
|
295
|
|
|
254
|
|
|
16
|
%
|
||||
Number of payment transactions(2)
|
3,090
|
|
|
2,463
|
|
|
25
|
%
|
|
8,901
|
|
|
7,004
|
|
|
27
|
%
|
||||
Payment transactions per active account(3)
|
39.8
|
|
|
36.5
|
|
|
9
|
%
|
|
39.8
|
|
|
36.5
|
|
|
9
|
%
|
||||
TPV(4)
|
$
|
178,670
|
|
|
$
|
143,004
|
|
|
25
|
%
|
|
$
|
512,521
|
|
|
$
|
414,771
|
|
|
24
|
%
|
Percent of cross-border TPV
|
17
|
%
|
|
19
|
%
|
|
**
|
|
|
18
|
%
|
|
20
|
%
|
|
**
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||
Transaction expense
|
$
|
1,701
|
|
|
$
|
1,366
|
|
|
25
|
%
|
|
$
|
4,877
|
|
|
$
|
4,003
|
|
|
22
|
%
|
Transaction and loan losses
|
340
|
|
|
295
|
|
|
15
|
%
|
|
999
|
|
|
934
|
|
|
7
|
%
|
||||
Customer support and operations(1)
|
390
|
|
|
350
|
|
|
11
|
%
|
|
1,177
|
|
|
1,030
|
|
|
14
|
%
|
||||
Sales and marketing(1)
|
316
|
|
|
325
|
|
|
(3
|
)%
|
|
1,001
|
|
|
913
|
|
|
10
|
%
|
||||
Technology and development(1)
|
533
|
|
|
452
|
|
|
18
|
%
|
|
1,527
|
|
|
1,341
|
|
|
14
|
%
|
||||
General and administrative(1)
|
401
|
|
|
377
|
|
|
6
|
%
|
|
1,239
|
|
|
1,111
|
|
|
12
|
%
|
||||
Restructuring and other charges
|
—
|
|
|
28
|
|
|
(100
|
)%
|
|
71
|
|
|
297
|
|
|
(76
|
)%
|
||||
Total operating expenses
|
$
|
3,681
|
|
|
$
|
3,193
|
|
|
15
|
%
|
|
$
|
10,891
|
|
|
$
|
9,629
|
|
|
13
|
%
|
Transaction expense rate(2)
|
0.95
|
%
|
|
0.96
|
%
|
|
**
|
|
|
0.95
|
%
|
|
0.97
|
%
|
|
**
|
|
||||
Transaction and loan loss rate(3)
|
0.19
|
%
|
|
0.21
|
%
|
|
**
|
|
|
0.19
|
%
|
|
0.23
|
%
|
|
**
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||
Transaction losses
|
$
|
256
|
|
|
$
|
259
|
|
|
(1
|
)%
|
|
$
|
789
|
|
|
$
|
764
|
|
|
3
|
%
|
Loan losses
|
84
|
|
|
36
|
|
|
133
|
%
|
|
210
|
|
|
170
|
|
|
24
|
%
|
||||
Transaction and loan losses
|
$
|
340
|
|
|
$
|
295
|
|
|
15
|
%
|
|
$
|
999
|
|
|
$
|
934
|
|
|
7
|
%
|
Transaction loss rate (1)
|
0.14
|
%
|
|
0.18
|
%
|
|
|
|
0.15
|
%
|
|
0.18
|
%
|
|
|
|
September 30,
|
||||
|
2019
|
|
2018
|
||
Percent of consumer loans and interest receivables current
|
93.7
|
%
|
|
94.6
|
%
|
Percent of consumer loans and interest receivables > 90 days outstanding(1)
|
2.1
|
%
|
|
1.6
|
%
|
Net charge off rate(2)
|
4.3
|
%
|
|
3.5
|
%
|
|
September 30,
|
||||
|
2019
|
|
2018(1)
|
||
Merchant loans and advances
|
|
|
|
||
Percent of merchant receivables within original expected or contractual repayment period
|
90.5
|
%
|
|
90.7
|
%
|
Percent of merchant receivables > 90 days outstanding after the end of original expected or contractual repayment period
|
3.8
|
%
|
|
3.8
|
%
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(In millions)
|
||||||
Cash, cash equivalents, and investments(1)(2)
|
$
|
11,378
|
|
|
$
|
9,710
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
3,297
|
|
|
$
|
4,349
|
|
Investing activities
|
(5,334
|
)
|
|
717
|
|
||
Financing activities
|
3,837
|
|
|
507
|
|
||
Effect of exchange rates on cash, cash equivalents, and restricted cash
|
(49
|
)
|
|
(89
|
)
|
||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
1,751
|
|
|
$
|
5,484
|
|
•
|
tighter credit,
|
•
|
higher unemployment,
|
•
|
consumer debt levels or reduced consumer confidence,
|
•
|
financial market volatility,
|
•
|
fluctuations in foreign currency exchange rates and interest rates,
|
•
|
changes and uncertainties related to government fiscal and tax policies,
|
•
|
changes and uncertainties about trade relationships between the U.S. and various other countries with respect to international trade agreements and policies, treaties, government regulations and tariffs, including the possibility of the U.S. and/or other countries imposing greater restrictions on international trade, significant increases in tariffs on imported goods, and other restrictive actions,
|
•
|
the inability of the U.S. Congress to enact a budget in a fiscal year, another sequestration, and/or another shutdown of the U.S. government,
|
•
|
government austerity programs, and
|
•
|
other negative financial news or macroeconomic developments.
|
•
|
technologies supporting our regulatory and compliance obligations (for example in relation to KYC and CIP obligations),
|
•
|
artificial intelligence and machine learning (for example in relation to fraud and risk decisioning),
|
•
|
payment technologies (for example real time payments, payment card tokenization and virtual currencies, including distributed ledger and blockchain technologies, and proximity payment technology, such as NFC and other contactless payments), and
|
•
|
commerce technologies, including in-store, online, mobile, virtual and social commerce (i.e., ecommerce through social networks).
|
•
|
if we are unable to utilize appropriate authorizations and regulatory permissions, our European operations could lose their ability to offer services into the U.K. market on a cross-border basis and for our U.K. based operations to offer services on a cross-border basis in the European markets. For example, our ability to work primarily with the Luxembourg regulator as the lead authority for various aspects of the U.K. operations of PayPal (Europe) S.à.r.l. et Cie., SCA (“PayPal (Europe))” and with the Swedish regulator for various aspects of the U.K. operations of iZettle AB (pub)(“iZettle”) may be impacted;
|
•
|
we could be required to obtain additional regulatory permissions to operate in the U.K. market, adding costs and potential inconsistency to our business (and, depending on the capacity of the U.K. authorities, the criteria for obtaining permission, and any possible transitional arrangements, there is a risk that our business in the U.K. could be materially affected or disrupted);
|
•
|
we could be required to comply with regulatory requirements in the U.K. that are in addition to, or inconsistent with, the regulatory requirements of the EU, leading to increased complexity and costs for our European and U.K. operations; and
|
•
|
our ability to attract and retain the necessary human resources in appropriate locations to support our U.K. and the European business could be adversely impacted.
|
•
|
banking,
|
•
|
credit,
|
•
|
deposit taking,
|
•
|
cross-border and domestic money transmission,
|
•
|
prepaid access,
|
•
|
foreign exchange,
|
•
|
privacy,
|
•
|
data protection,
|
•
|
cybersecurity,
|
•
|
banking secrecy,
|
•
|
payment services (including payment processing and settlement services),
|
•
|
consumer protection,
|
•
|
antitrust and competition,
|
•
|
economic and trade sanctions,
|
•
|
anti-money laundering, and
|
•
|
counter-terrorist financing.
|
•
|
we could be required to comply with new regulatory requirements, resulting in increased complexity and costs for our Singapore and international operations;
|
•
|
we could be required to make changes to our compliance program, resulting in increased complexity and costs to operate both in Singapore as well as in the cross-border markets which are served by PayPal Pte. Ltd; and
|
•
|
we could be required to comply with additional safeguarding requirements, which could increase our operational costs.
|
•
|
the potential loss of key customers, vendors, and other key business partners of the companies we acquire, or dispose of, following and continuing after announcement of our transaction plans;
|
•
|
difficulty making strategic hires of new employees, declining employee morale, and retention issues affecting employees (particularly the potential loss of key personnel) of companies that we acquire or dispose of, which may result from changes in compensation, management, reporting relationships, future prospects, or the direction of the acquired or disposed business;
|
•
|
diversion of management time and focus;
|
•
|
inability to realize synergies expected to result from an acquisition;
|
•
|
the need to and difficulty of integrating the operations, systems (including accounting, compliance, management, information, human resource, and other administrative systems), technologies, data assets, products, and personnel of each acquired company, which is an inherently risky and potentially lengthy and costly process;
|
•
|
the need to and difficulty of implementing and/or enhancing controls, procedures, and policies appropriate for a larger public company at acquired companies which, prior to the acquisition, may have lacked such controls, procedures, and policies or whose controls, procedures, and policies did not meet applicable legal and regulatory standards;
|
•
|
the inefficiencies and lack of control that may result if integration of acquired companies is delayed or not implemented, and unforeseen difficulties and costs that may arise as a result;
|
•
|
potential exposure to new or increased regulatory oversight and uncertain or evolving legal, regulatory and compliance requirements associated with new products and services or entry into new markets, including transactions with, or investments in, companies involved in new or developing businesses or industries;
|
•
|
potential reputational risks that could arise from transactions with, or investments in, companies involved in new or developing businesses or industries, which may be subject to uncertain or evolving legal, regulatory and compliance requirements;
|
•
|
risks associated with our expansion into new international markets;
|
•
|
unidentified issues not discovered in our due diligence process, including product or service quality issues, intellectual property issues, and legal contingencies;
|
•
|
risks associated with the complexity of entering into and effectively managing joint ventures, strategic investments, and other strategic partnerships;
|
•
|
risks associated with undetected cyberattacks or security breaches at companies that we acquire or with which we may combine or partner;
|
•
|
lawsuits or regulatory actions resulting from the transaction;
|
•
|
liability for activities or conduct of an acquired company before the acquisition, including legal and regulatory claims or disputes, violations of laws and regulations, commercial disputes, tax liabilities, and other known and unknown liabilities;
|
•
|
the need to maintain, and comply with the requirements of, licenses for certain companies that we have acquired, and risks associated with any failure to maintain such licenses or comply with associated requirements;
|
•
|
the acquisition of new customer and employee personal information, which in and of itself may require regulatory approval and/or additional controls, policies, and procedures, and subject us to additional exposure and additional complexity and costs of compliance; and
|
•
|
our dependence on the accounting, financial reporting, operating metrics and similar systems, controls and processes of acquired businesses, and the risk that errors or irregularities in those systems, controls, and processes will lead to errors in our financial statements or make it more difficult to manage the acquired business.
|
•
|
our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations and generate sufficient cash flows to service such debt. We may be required to use a significant portion of our cash flow from operations and other available cash to service our indebtedness, thereby reducing the amount of cash available for other purposes, including capital expenditures and acquisitions;
|
•
|
our indebtedness and leverage may increase our vulnerability to downturns in our business, to competitive pressures, and to adverse changes in general economic and industry conditions;
|
•
|
our ability to obtain additional financing for working capital, capital expenditures, acquisitions, share repurchases, or other general corporate and other purposes may be limited; and
|
•
|
our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.
|
•
|
increased expectations from merchants regarding the reliability and availability of our systems and services and correspondingly lower amounts of downtime, which we may not be able to meet;
|
•
|
increased expectations from merchants that our systems and services will help them to comply with laws and regulations relating to tax, accounting, and bookkeeping, such as cash register systems, which we may not be able to meet;
|
•
|
significant competition at the point of sale, particularly from established payment card providers, many of which have substantially greater resources than we do;
|
•
|
increased targeting by fraudsters; given that our fraud models are less developed in this area, we may experience increases in fraud and associated transaction losses as we adjust to fraudulent activity at the point of sale;
|
•
|
exposure to product liability claims to the extent that hardware devices (e.g., card readers) that we produce for use at the point of sale malfunction or are not in compliance with laws, which could result in substantial liability and require product recalls or other actions;
|
•
|
constraints in key resources to develop and maintain point of sale software and ancillary hardware;
|
•
|
exposure to additional laws, rules, and regulations;
|
•
|
increased reliance on third parties involved with processing in-store payments, including independent software providers, electronic point of sale providers, hardware providers (such as card reader, cash drawer and pin-pad providers), payment processors, and banks that enable in-store transactions; and
|
•
|
lower operating income than our other payment solutions.
|
|
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 June 30, 2019
|
|
|
|
|
|
|
$
|
10,724
|
|
||||
July 1, 2019 through July 31, 2019
|
0.3
|
|
|
$
|
111.65
|
|
|
0.3
|
|
|
10,694
|
|
|
August 1, 2019 through August 31, 2019
|
2.9
|
|
|
$
|
107.04
|
|
|
2.9
|
|
|
10,379
|
|
|
September 1, 2019 through September 30, 2019
|
0.1
|
|
|
$
|
107.54
|
|
|
0.1
|
|
|
10,374
|
|
|
Balance as of September 30, 2019
|
3.3
|
|
|
|
|
3.3
|
|
|
$
|
10,374
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Date Filed
|
Filed Herewith
|
|
Indenture, dated as of September 26, 2019, by and between Registrant and Wells Fargo Bank, National Association, as Trustee.
|
8-K
|
9/26/2019
|
|
|
|
Officer’s Certificate, dated September 26, 2019, including the Forms of Note for the Registrant’s 2.200% Notes due 2022, 2.400% Notes due 2024, 2.650% Notes due 2026 and 2.850% Notes due 2029.
|
8-K
|
9/26/2019
|
|
|
|
Credit Agreement, dated as of September 11, 2019, among Registrant, 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 Registrant, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
|
8-K
|
9/12/2019
|
|
|
|
Certification of Registrant’s Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
-
|
-
|
X
|
|
|
Certification of Registrant’s Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
-
|
-
|
X
|
|
|
Certification of Registrant’s Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
-
|
-
|
X
|
|
|
Certification of Registrant’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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the related Notes to Condensed Consolidated Financial Statements.
|
-
|
-
|
X
|
104
|
|
Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
|
-
|
-
|
X
|
|
|
PayPal Holdings, Inc.
|
|
|
|
Principal Executive Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Daniel H. Schulman
|
|
|
|
Daniel H. Schulman
|
|
|
|
President and Chief Executive Officer
|
Date:
|
October 24, 2019
|
|
|
|
|
Principal Financial Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ John D. Rainey
|
|
|
|
John D. Rainey
|
|
|
|
Chief Financial Officer and Executive Vice President,
Global Customer Operations
|
Date:
|
October 24, 2019
|
|
|
|
|
Principal Accounting Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Aaron A. Anderson
|
|
|
|
Aaron A. Anderson
|
|
|
|
Vice President, Chief Accounting Officer
|
Date:
|
October 24, 2019
|
|
|
|
/s/ Daniel H. Schulman
|
|
Daniel H. Schulman
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
/s/ John D. Rainey
|
|
John D. Rainey
|
|
Chief Financial Officer and Executive Vice President, Global Customer Operations
|
|
(Principal Financial Officer)
|
|
/s/ Daniel H. Schulman
|
|
Daniel H. Schulman
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
/s/ John D. Rainey
|
|
John D. Rainey
|
|
Chief Financial Officer and Executive Vice President, Global Customer Operations
|
|
(Principal Financial Officer)
|