|
|
|
☒
|
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
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Page Number
|
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||
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|
||
|
|||
|
|||
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|||
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|||
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|||
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|||
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|||
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|||
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(In millions, except par value)
|
||||||
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,854
|
|
|
$
|
7,349
|
|
Short-term investments
|
2,332
|
|
|
3,412
|
|
||
Accounts receivable, net
|
412
|
|
|
435
|
|
||
Loans and interest receivable, net of allowances of $754 and $258 as of March 31, 2020 and December 31, 2019, respectively
|
3,712
|
|
|
3,972
|
|
||
Funds receivable and customer accounts
|
22,817
|
|
|
22,527
|
|
||
Prepaid expenses and other current assets
|
1,057
|
|
|
800
|
|
||
Total current assets
|
38,184
|
|
|
38,495
|
|
||
Long-term investments
|
2,366
|
|
|
2,863
|
|
||
Property and equipment, net
|
1,646
|
|
|
1,693
|
|
||
Goodwill
|
9,124
|
|
|
6,212
|
|
||
Intangible assets, net
|
1,369
|
|
|
778
|
|
||
Other assets
|
1,577
|
|
|
1,292
|
|
||
Total assets
|
$
|
54,266
|
|
|
$
|
51,333
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
217
|
|
|
$
|
232
|
|
Funds payable and amounts due to customers
|
24,817
|
|
|
24,527
|
|
||
Accrued expenses and other current liabilities
|
2,276
|
|
|
2,087
|
|
||
Income taxes payable
|
139
|
|
|
73
|
|
||
Total current liabilities
|
27,449
|
|
|
26,919
|
|
||
Deferred tax liability and other long-term liabilities
|
2,839
|
|
|
2,520
|
|
||
Long-term debt
|
7,967
|
|
|
4,965
|
|
||
Total liabilities
|
38,255
|
|
|
34,404
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
|||
Equity:
|
|
|
|
||||
Common stock, $0.0001 par value; 4,000 shares authorized; 1,173 shares outstanding as of both March 31, 2020 and December 31, 2019
|
—
|
|
|
—
|
|
||
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
|
—
|
|
|
—
|
|
||
Treasury stock at cost, 113 and 105 shares as of March 31, 2020 and December 31, 2019, respectively
|
(7,672
|
)
|
|
(6,872
|
)
|
||
Additional paid-in-capital
|
15,501
|
|
|
15,588
|
|
||
Retained earnings
|
8,258
|
|
|
8,342
|
|
||
Accumulated other comprehensive income (loss)
|
(120
|
)
|
|
(173
|
)
|
||
Total PayPal Stockholders’ equity
|
15,967
|
|
|
16,885
|
|
||
Noncontrolling interest
|
44
|
|
|
44
|
|
||
Total equity
|
16,011
|
|
|
16,929
|
|
||
Total liabilities and equity
|
$
|
54,266
|
|
|
$
|
51,333
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions, except per share data)
|
||||||
|
(Unaudited)
|
||||||
Net revenues
|
$
|
4,618
|
|
|
$
|
4,128
|
|
Operating expenses:
|
|
|
|
||||
Transaction expense
|
1,739
|
|
|
1,549
|
|
||
Transaction and credit losses
|
591
|
|
|
341
|
|
||
Customer support and operations
|
399
|
|
|
388
|
|
||
Sales and marketing
|
371
|
|
|
329
|
|
||
Technology and development
|
605
|
|
|
511
|
|
||
General and administrative
|
486
|
|
|
419
|
|
||
Restructuring and other charges
|
29
|
|
|
73
|
|
||
Total operating expenses
|
4,220
|
|
|
3,610
|
|
||
Operating income
|
398
|
|
|
518
|
|
||
Other income (expense), net
|
(135
|
)
|
|
199
|
|
||
Income before income taxes
|
263
|
|
|
717
|
|
||
Income tax expense
|
179
|
|
|
50
|
|
||
Net income
|
$
|
84
|
|
|
$
|
667
|
|
|
|
|
|
||||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.07
|
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.07
|
|
|
$
|
0.56
|
|
|
|
|
|
||||
Weighted average shares:
|
|
|
|
||||
Basic
|
1,173
|
|
|
1,171
|
|
||
Diluted
|
1,185
|
|
|
1,188
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
|
(Unaudited)
|
||||||
Net income
|
$
|
84
|
|
|
$
|
667
|
|
Other comprehensive income (loss), net of reclassification adjustments:
|
|
|
|
||||
Foreign currency translation adjustments (“CTA”)
|
(171
|
)
|
|
(67
|
)
|
||
Net investment hedge CTA gain
|
71
|
|
|
—
|
|
||
Unrealized gains (losses) on cash flow hedges, net
|
144
|
|
|
(46
|
)
|
||
Tax (expense) benefit on unrealized gains (losses) on cash flow hedges, net
|
(2
|
)
|
|
1
|
|
||
Unrealized gains on investments, net
|
15
|
|
|
11
|
|
||
Tax expense on unrealized gains on investments, net
|
(4
|
)
|
|
(2
|
)
|
||
Other comprehensive income (loss), net of tax
|
53
|
|
|
(103
|
)
|
||
Comprehensive income
|
$
|
137
|
|
|
$
|
564
|
|
|
Common Stock Shares
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other
Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Noncontrolling Interest
|
|
Total
Equity
|
|||||||||||||
|
||||||||||||||||||||||||||
|
(In millions)
|
|||||||||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||||||||
Balances at December 31, 2019
|
1,173
|
|
|
$
|
(6,872
|
)
|
|
$
|
15,588
|
|
|
$
|
(173
|
)
|
|
$
|
8,342
|
|
|
$
|
44
|
|
|
$
|
16,929
|
|
Adoption of current expected credit loss standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
—
|
|
|
(168
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
||||||
Foreign CTA
|
—
|
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
||||||
Net investment hedge CTA gain
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
||||||
Unrealized gains on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|
144
|
|
||||||
Tax expense on unrealized gains on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes
|
8
|
|
|
—
|
|
|
(382
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(382
|
)
|
||||||
Common stock repurchased
|
(8
|
)
|
|
(800
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(800
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
295
|
|
||||||
Balances at March 31, 2020
|
1,173
|
|
|
$
|
(7,672
|
)
|
|
$
|
15,501
|
|
|
$
|
(120
|
)
|
|
$
|
8,258
|
|
|
$
|
44
|
|
|
$
|
16,011
|
|
|
Common Stock Shares
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other
Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Noncontrolling Interest
|
|
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 CTA
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
||||||
Unrealized losses on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
||||||
Tax benefit on unrealized losses on cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Tax expense on unrealized gains on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
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
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
84
|
|
|
$
|
667
|
|
Adjustments:
|
|
|
|
||||
Transaction and credit losses
|
591
|
|
|
341
|
|
||
Depreciation and amortization
|
293
|
|
|
230
|
|
||
Stock-based compensation
|
283
|
|
|
247
|
|
||
Deferred income taxes
|
(79
|
)
|
|
74
|
|
||
Unrealized losses (gains) on strategic investments
|
151
|
|
|
(180
|
)
|
||
Other
|
(32
|
)
|
|
(44
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
77
|
|
|
(96
|
)
|
||
Changes in loans and interest receivable held for sale, net
|
—
|
|
|
4
|
|
||
Accounts payable
|
(21
|
)
|
|
(3
|
)
|
||
Income taxes payable
|
51
|
|
|
14
|
|
||
Other assets and liabilities
|
106
|
|
|
(227
|
)
|
||
Net cash provided by operating activities
|
1,504
|
|
|
1,027
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(206
|
)
|
|
(218
|
)
|
||
Proceeds from sales of property and equipment
|
119
|
|
|
—
|
|
||
Changes in principal loans receivable, net
|
(386
|
)
|
|
(357
|
)
|
||
Purchases of investments
|
(3,593
|
)
|
|
(8,138
|
)
|
||
Maturities and sales of investments
|
5,511
|
|
|
6,028
|
|
||
Acquisitions, net of cash and restricted cash acquired
|
(3,612
|
)
|
|
—
|
|
||
Funds receivable
|
(401
|
)
|
|
(2,175
|
)
|
||
Net cash used in investing activities
|
(2,568
|
)
|
|
(4,860
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
1
|
|
|
7
|
|
||
Purchases of treasury stock
|
(800
|
)
|
|
(756
|
)
|
||
Tax withholdings related to net share settlements of equity awards
|
(402
|
)
|
|
(309
|
)
|
||
Borrowings under financing arrangements
|
3,000
|
|
|
—
|
|
||
Funds payable and amounts due to customers
|
457
|
|
|
2,560
|
|
||
Other financing activities
|
(15
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
2,241
|
|
|
1,502
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
(178
|
)
|
|
1
|
|
||
Net change in cash, cash equivalents, and restricted cash
|
999
|
|
|
(2,330
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
15,743
|
|
|
13,233
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
16,742
|
|
|
$
|
10,903
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
||||
Cash paid for interest
|
$
|
11
|
|
|
$
|
20
|
|
Cash paid for income taxes, net
|
$
|
30
|
|
|
$
|
22
|
|
|
|
|
|
||||
The below table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,854
|
|
|
$
|
4,515
|
|
Short term investments
|
17
|
|
|
15
|
|
||
Funds receivable and customer accounts
|
8,871
|
|
|
6,373
|
|
||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
16,742
|
|
|
$
|
10,903
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Primary geographical markets
|
|
|
|
||||
United States (“U.S.”)
|
$
|
2,469
|
|
|
$
|
2,187
|
|
United Kingdom (“U.K.”)
|
478
|
|
|
433
|
|
||
Other countries(1)
|
1,671
|
|
|
1,508
|
|
||
Total revenues(2)
|
$
|
4,618
|
|
|
$
|
4,128
|
|
|
|
|
|
||||
Revenue category
|
|
|
|
||||
Transaction revenues
|
$
|
4,215
|
|
|
$
|
3,731
|
|
Other value added services
|
403
|
|
|
397
|
|
||
Total revenues(2)
|
$
|
4,618
|
|
|
$
|
4,128
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions, except per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
84
|
|
|
$
|
667
|
|
Denominator:
|
|
|
|
||||
Weighted average shares of common stock - basic
|
1,173
|
|
|
1,171
|
|
||
Dilutive effect of equity incentive awards
|
12
|
|
|
17
|
|
||
Weighted average shares of common stock - diluted
|
1,185
|
|
|
1,188
|
|
||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.07
|
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.07
|
|
|
$
|
0.56
|
|
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive
|
2
|
|
|
3
|
|
|
(In millions)
|
||
Goodwill
|
$
|
2,959
|
|
Customer lists and user base
|
115
|
|
|
Marketing related
|
30
|
|
|
Developed technology
|
572
|
|
|
Total intangibles
|
$
|
717
|
|
Accounts receivable, net
|
55
|
|
|
Deferred tax liabilities, net
|
(76
|
)
|
|
Other net liabilities
|
(18
|
)
|
|
Total purchase consideration
|
$
|
3,637
|
|
|
December 31,
2019 |
|
Goodwill
Acquired
|
|
Adjustments
|
|
March 31,
2020 |
||||||||
|
(In millions)
|
||||||||||||||
Total goodwill
|
$
|
6,212
|
|
|
$
|
2,959
|
|
|
$
|
(47
|
)
|
|
$
|
9,124
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||
|
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
|
$
|
1,205
|
|
|
$
|
(713
|
)
|
|
$
|
492
|
|
|
6
|
|
$
|
1,114
|
|
|
$
|
(700
|
)
|
|
$
|
414
|
|
|
7
|
Marketing related
|
321
|
|
|
(247
|
)
|
|
74
|
|
|
3
|
|
294
|
|
|
(239
|
)
|
|
55
|
|
|
3
|
||||||
Developed technology
|
999
|
|
|
(388
|
)
|
|
611
|
|
|
3
|
|
445
|
|
|
(343
|
)
|
|
102
|
|
|
3
|
||||||
All other
|
433
|
|
|
(241
|
)
|
|
192
|
|
|
7
|
|
436
|
|
|
(229
|
)
|
|
207
|
|
|
7
|
||||||
Intangible assets, net
|
$
|
2,958
|
|
|
$
|
(1,589
|
)
|
|
$
|
1,369
|
|
|
|
|
$
|
2,289
|
|
|
$
|
(1,511
|
)
|
|
$
|
778
|
|
|
|
Fiscal years:
|
|
||
Remaining 2020
|
$
|
335
|
|
2021
|
398
|
|
|
2022
|
336
|
|
|
2023
|
98
|
|
|
2024
|
96
|
|
|
Thereafter
|
106
|
|
|
Total
|
$
|
1,369
|
|
|
Three Months Ended
March 31, 2020 |
|
Three Months Ended
March 31, 2019 |
||||
|
(In millions)
|
||||||
Lease expense
|
|
|
|
||||
Operating lease expense
|
$
|
38
|
|
|
$
|
34
|
|
Sublease income
|
(1
|
)
|
|
(2
|
)
|
||
Total lease expense cost
|
$
|
37
|
|
|
$
|
32
|
|
|
|
|
|
||||
Other information:
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
35
|
|
|
$
|
31
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
244
|
|
|
$
|
5
|
|
|
|
|
|
||||
|
Balance at March 31, 2020
|
|
Balance at December 31, 2019
|
||||
|
(In millions, except weighted-average figures)
|
||||||
Operating lease right-of-use assets
|
$
|
687
|
|
|
$
|
479
|
|
Other current lease liabilities
|
122
|
|
|
104
|
|
||
Operating lease liabilities
|
608
|
|
|
403
|
|
||
Total operating lease liabilities
|
730
|
|
|
507
|
|
||
Weighted-average remaining lease term—operating leases
|
7.3 years
|
|
|
5.8 years
|
|
||
Weighted-average discount rate—operating leases
|
4
|
%
|
|
5
|
%
|
|
Operating Leases
|
||
Fiscal years:
|
(In millions)
|
||
Remaining 2020
|
$
|
114
|
|
2021
|
139
|
|
|
2022
|
107
|
|
|
2023
|
94
|
|
|
2024
|
86
|
|
|
Thereafter
|
300
|
|
|
Total
|
$
|
840
|
|
Less: present value discount
|
(110
|
)
|
|
Lease liability
|
$
|
730
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
Currency
Translation Adjustment (“CTA”)
|
|
Net InvestmentHedge CTA Gain (Loss)
|
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Beginning balance
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
(150
|
)
|
|
$
|
(31
|
)
|
|
$
|
—
|
|
|
$
|
(173
|
)
|
Other comprehensive income (loss) before reclassifications
|
186
|
|
|
15
|
|
|
(171
|
)
|
|
71
|
|
|
(6
|
)
|
|
95
|
|
||||||
Less: Amount of gain reclassified from accumulated other comprehensive income (“AOCI”)
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
||||||
Net current period other comprehensive income (loss)
|
144
|
|
|
15
|
|
|
(171
|
)
|
|
71
|
|
|
(6
|
)
|
|
53
|
|
||||||
Ending balance
|
$
|
150
|
|
|
$
|
17
|
|
|
$
|
(321
|
)
|
|
$
|
40
|
|
|
$
|
(6
|
)
|
|
$
|
(120
|
)
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized Gains (Losses) on Investments
|
|
Foreign
CTA |
|
Estimated Tax Benefit (Expense)
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
182
|
|
|
$
|
(13
|
)
|
|
$
|
(93
|
)
|
|
$
|
2
|
|
|
$
|
78
|
|
Other comprehensive income (loss) before reclassifications
|
6
|
|
|
11
|
|
|
(67
|
)
|
|
(1
|
)
|
|
(51
|
)
|
|||||
Less: Amount of gain reclassified from AOCI
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||||
Net current period other comprehensive income (loss)
|
(46
|
)
|
|
11
|
|
|
(67
|
)
|
|
(1
|
)
|
|
(103
|
)
|
|||||
Ending balance
|
$
|
136
|
|
|
$
|
(2
|
)
|
|
$
|
(160
|
)
|
|
$
|
1
|
|
|
$
|
(25
|
)
|
Details about AOCI Components
|
|
Amount of Gains (Losses) Reclassified from AOCI
|
|
Affected Line Item in the Statement of Income
|
||||||
|
|
Three Months Ended March 31,
|
|
|
||||||
|
|
2020
|
|
2019
|
|
|
||||
|
|
(In millions)
|
|
|
||||||
Gains on cash flow hedges—foreign exchange contracts
|
|
$
|
42
|
|
|
$
|
52
|
|
|
Net revenues
|
Unrealized (losses) gains on investments
|
|
—
|
|
|
—
|
|
|
Other income (expense), net
|
||
|
|
$
|
42
|
|
|
$
|
52
|
|
|
Income before income taxes
|
|
|
—
|
|
|
—
|
|
|
Income tax expense
|
||
Total reclassifications for the period
|
|
$
|
42
|
|
|
$
|
52
|
|
|
Net income
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Interest income
|
$
|
33
|
|
|
$
|
49
|
|
Interest expense
|
(37
|
)
|
|
(22
|
)
|
||
Gains (losses) on strategic investments
|
(124
|
)
|
|
180
|
|
||
Other
|
(7
|
)
|
|
(8
|
)
|
||
Other income (expense), net
|
$
|
(135
|
)
|
|
$
|
199
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(In millions)
|
||||||
Funds receivable and customer accounts:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,871
|
|
|
$
|
8,387
|
|
Time deposits
|
552
|
|
|
514
|
|
||
Available-for-sale debt securities
|
9,614
|
|
|
10,190
|
|
||
Funds receivable
|
3,780
|
|
|
3,436
|
|
||
Total funds receivable and customer accounts
|
$
|
22,817
|
|
|
$
|
22,527
|
|
Short-term investments:
|
|
|
|
||||
Time deposits
|
$
|
204
|
|
|
$
|
614
|
|
Available-for-sale debt securities
|
2,060
|
|
|
2,734
|
|
||
Restricted cash
|
68
|
|
|
64
|
|
||
Total short-term investments
|
$
|
2,332
|
|
|
$
|
3,412
|
|
Long-term investments:
|
|
|
|
||||
Available-for-sale debt securities
|
$
|
661
|
|
|
$
|
1,025
|
|
Restricted cash
|
6
|
|
|
—
|
|
||
Strategic investments
|
1,699
|
|
|
1,838
|
|
||
Total long-term investments
|
$
|
2,366
|
|
|
$
|
2,863
|
|
|
March 31, 2020
|
||||||||||||||
|
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
|
$
|
4,793
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
4,821
|
|
Foreign government and agency securities
|
1,757
|
|
|
4
|
|
|
(1
|
)
|
|
1,760
|
|
||||
Corporate debt securities
|
1,754
|
|
|
—
|
|
|
(4
|
)
|
|
1,750
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
U.S. government and agency securities
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||
Foreign government and agency securities
|
258
|
|
|
—
|
|
|
—
|
|
|
258
|
|
||||
Corporate debt securities
|
1,390
|
|
|
2
|
|
|
(5
|
)
|
|
1,387
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|||||||
U.S. government and agency securities
|
100
|
|
|
—
|
|
|
—
|
|
|
100
|
|
||||
Foreign government and agency securities
|
125
|
|
|
1
|
|
|
—
|
|
|
126
|
|
||||
Corporate debt securities
|
443
|
|
|
—
|
|
|
(8
|
)
|
|
435
|
|
||||
Total available-for-sale debt securities(1)
|
$
|
10,670
|
|
|
$
|
35
|
|
|
$
|
(18
|
)
|
|
$
|
10,687
|
|
|
December 31, 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
|
$
|
4,996
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,996
|
|
Foreign government and agency securities
|
1,392
|
|
|
—
|
|
|
—
|
|
|
1,392
|
|
||||
Corporate debt securities
|
2,112
|
|
|
—
|
|
|
—
|
|
|
2,112
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Foreign government and agency securities
|
533
|
|
|
—
|
|
|
—
|
|
|
533
|
|
||||
Corporate debt securities
|
1,955
|
|
|
—
|
|
|
—
|
|
|
1,955
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|||||||
U.S. government and agency securities
|
140
|
|
|
—
|
|
|
—
|
|
|
140
|
|
||||
Foreign government and agency securities
|
207
|
|
|
—
|
|
|
—
|
|
|
207
|
|
||||
Corporate debt securities
|
676
|
|
|
2
|
|
|
—
|
|
|
678
|
|
||||
Total available-for-sale debt securities(1)
|
$
|
12,011
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
12,013
|
|
|
March 31, 2020(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
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
—
|
|
Foreign government and agency securities
|
422
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
422
|
|
|
(1
|
)
|
||||||
Corporate debt securities
|
769
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
769
|
|
|
(4
|
)
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign government and agency securities
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
||||||
Corporate debt securities
|
759
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
759
|
|
|
(5
|
)
|
||||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt securities
|
297
|
|
|
(8
|
)
|
|
3
|
|
|
—
|
|
|
300
|
|
|
(8
|
)
|
||||||
Total available-for-sale debt securities
|
$
|
2,802
|
|
|
$
|
(18
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
2,805
|
|
|
$
|
(18
|
)
|
|
December 31, 2019(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
|
$
|
2,452
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,452
|
|
|
$
|
—
|
|
Foreign government and agency securities
|
563
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
593
|
|
|
—
|
|
||||||
Corporate debt securities
|
825
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
825
|
|
|
—
|
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign government and agency securities
|
115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
||||||
Corporate debt securities
|
424
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
424
|
|
|
—
|
|
||||||
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. government and agency securities
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|
—
|
|
||||||
Foreign government and agency securities
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
||||||
Corporate debt securities
|
27
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
71
|
|
|
—
|
|
||||||
Total available-for-sale debt securities
|
$
|
4,581
|
|
|
$
|
—
|
|
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
4,655
|
|
|
$
|
—
|
|
|
March 31, 2020
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In millions)
|
||||||
One year or less
|
$
|
9,407
|
|
|
$
|
9,429
|
|
After one year through five years
|
1,260
|
|
|
1,255
|
|
||
After five years through ten years
|
3
|
|
|
3
|
|
||
Total
|
$
|
10,670
|
|
|
$
|
10,687
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Carrying amount, beginning of period
|
$
|
497
|
|
|
$
|
293
|
|
Adjustments related to non-marketable equity securities:
|
|
|
|
||||
Net (sales) additions(1)
|
(9
|
)
|
|
19
|
|
||
Gross unrealized gains
|
45
|
|
|
57
|
|
||
Gross unrealized losses and impairments
|
(13
|
)
|
|
—
|
|
||
Carrying amount, end of period
|
$
|
520
|
|
|
$
|
369
|
|
|
|
March 31, 2020
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
||||||
|
|
(In millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents(1)
|
|
$
|
1,238
|
|
|
$
|
—
|
|
|
$
|
1,238
|
|
Short-term investments(2):
|
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
|
50
|
|
|
—
|
|
|
50
|
|
|||
Foreign government and agency securities
|
|
604
|
|
|
—
|
|
|
604
|
|
|||
Corporate debt securities
|
|
1,406
|
|
|
—
|
|
|
1,406
|
|
|||
Total short-term investments
|
|
$
|
2,060
|
|
|
$
|
—
|
|
|
$
|
2,060
|
|
Funds receivable and customer accounts(3):
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
916
|
|
|
—
|
|
|
916
|
|
|||
U.S. government and agency securities
|
|
4,821
|
|
|
—
|
|
|
4,821
|
|
|||
Foreign government and agency securities
|
|
2,804
|
|
|
—
|
|
|
2,804
|
|
|||
Corporate debt securities
|
|
1,989
|
|
|
—
|
|
|
1,989
|
|
|||
Total funds receivable and customer accounts
|
|
$
|
10,530
|
|
|
$
|
—
|
|
|
$
|
10,530
|
|
Derivatives
|
|
366
|
|
|
—
|
|
|
366
|
|
|||
Long-term investments(2),(4):
|
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
|
100
|
|
|
—
|
|
|
100
|
|
|||
Foreign government and agency securities
|
|
126
|
|
|
—
|
|
|
126
|
|
|||
Corporate debt securities
|
|
435
|
|
|
—
|
|
|
435
|
|
|||
Marketable equity securities
|
|
1,151
|
|
|
1,151
|
|
|
—
|
|
|||
Total long-term investments
|
|
$
|
1,812
|
|
|
$
|
1,151
|
|
|
$
|
661
|
|
Total financial assets
|
|
$
|
16,006
|
|
|
$
|
1,151
|
|
|
$
|
14,855
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Derivatives
|
|
$
|
209
|
|
|
$
|
—
|
|
|
$
|
209
|
|
|
|
December 31, 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)
|
|
$
|
2,835
|
|
|
$
|
—
|
|
|
$
|
2,835
|
|
Short-term investments(2):
|
|
|
|
|
|
|
||||||
Foreign government and agency securities
|
|
757
|
|
|
—
|
|
|
757
|
|
|||
Corporate debt securities
|
|
1,977
|
|
|
—
|
|
|
1,977
|
|
|||
Total short-term investments
|
|
2,734
|
|
|
—
|
|
|
2,734
|
|
|||
Funds receivable and customer accounts(3):
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
683
|
|
|
—
|
|
|
683
|
|
|||
U.S. government and agency securities
|
|
4,996
|
|
|
—
|
|
|
4,996
|
|
|||
Foreign government and agency securities
|
|
2,653
|
|
|
—
|
|
|
2,653
|
|
|||
Corporate debt securities
|
|
2,541
|
|
|
—
|
|
|
2,541
|
|
|||
Total funds receivable and customer accounts
|
|
10,873
|
|
|
—
|
|
|
10,873
|
|
|||
Derivatives
|
|
135
|
|
|
—
|
|
|
135
|
|
|||
Long-term investments(4):
|
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
|
140
|
|
|
—
|
|
|
140
|
|
|||
Foreign government and agency securities
|
|
207
|
|
|
—
|
|
|
207
|
|
|||
Corporate debt securities
|
|
678
|
|
|
—
|
|
|
678
|
|
|||
Marketable equity securities
|
|
1,314
|
|
|
1,314
|
|
|
—
|
|
|||
Total long-term investments
|
|
2,339
|
|
|
1,314
|
|
|
1,025
|
|
|||
Total financial assets
|
|
$
|
18,916
|
|
|
$
|
1,314
|
|
|
$
|
17,602
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Derivatives
|
|
$
|
122
|
|
|
$
|
—
|
|
|
$
|
122
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In millions)
|
||||||
Funds receivable and customer accounts
|
$
|
1,283
|
|
|
$
|
1,690
|
|
Short-term investments
|
$
|
365
|
|
|
$
|
246
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Funds receivable and customer accounts
|
$
|
(20
|
)
|
|
$
|
(29
|
)
|
Short-term investments
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
|
March 31, 2020
|
|
Significant Other
Observable Inputs (Level 2) |
||||
|
|
(In millions)
|
||||||
Non-marketable equity investments measured using the Measurement Alternative(1)
|
|
$
|
128
|
|
|
$
|
128
|
|
|
|
December 31, 2019
|
|
Significant Other
Observable Inputs (Level 2) |
||||
|
|
(In millions)
|
||||||
Non-marketable equity investments measured using the Measurement Alternative(1)
|
|
$
|
303
|
|
|
$
|
303
|
|
|
Balance Sheet Location
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
|
(In millions)
|
||||||
Derivative Assets:
|
|
|
|
|
|
||||
Foreign currency exchange contracts designated as hedging instruments
|
Other current assets
|
|
$
|
168
|
|
|
$
|
45
|
|
Foreign currency exchange contracts designated as hedging instruments
|
Other assets (non-current)
|
|
22
|
|
|
1
|
|
||
Foreign currency exchange contracts not designated as hedging instruments
|
Other current assets
|
|
176
|
|
|
89
|
|
||
Total derivative assets
|
|
|
$
|
366
|
|
|
$
|
135
|
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
|
||||
Foreign currency exchange contracts designated as hedging instruments
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
58
|
|
Foreign currency exchange contracts designated as hedging instruments
|
Other long-term liabilities
|
|
—
|
|
|
13
|
|
||
Foreign currency exchange contracts not designated as hedging instruments
|
Other current liabilities
|
|
209
|
|
|
51
|
|
||
Total derivative liabilities
|
|
|
$
|
209
|
|
|
$
|
122
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
|
Net revenues
|
||||||
Total amounts presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded
|
$
|
4,618
|
|
|
$
|
4,128
|
|
Gains on foreign exchange contracts designated as cash flow hedges reclassified from AOCI
|
$
|
42
|
|
|
$
|
52
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Gains (losses) on foreign exchange contracts recognized in other income (expense), net
|
$
|
37
|
|
|
$
|
(10
|
)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In millions)
|
||||||
Foreign exchange contracts designated as hedging instruments
|
$
|
4,424
|
|
|
$
|
4,550
|
|
Foreign exchange contracts not designated as hedging instruments
|
12,372
|
|
|
17,131
|
|
||
Total
|
$
|
16,796
|
|
|
$
|
21,681
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||
|
|
Amortized Cost Basis Revolving
|
|
Percent
|
|
Amortized Cost Basis
Revolving
|
|
Percent
|
||||||
|
|
(In millions, except percentages)
|
||||||||||||
Current
|
|
$
|
1,327
|
|
|
96.4
|
%
|
|
$
|
1,279
|
|
|
96.7
|
%
|
30-59 days
|
|
18
|
|
|
1.3
|
%
|
|
15
|
|
|
1.1
|
%
|
||
60-89 days
|
|
11
|
|
|
0.8
|
%
|
|
9
|
|
|
0.7
|
%
|
||
90-179 days
|
|
21
|
|
|
1.5
|
%
|
|
19
|
|
|
1.5
|
%
|
||
Total consumer loans and interest receivable(1)
|
|
$
|
1,377
|
|
|
100.0
|
%
|
|
$
|
1,322
|
|
|
100.0
|
%
|
|
March 31, 2020
|
|
March 31, 2019
|
||||||||||||||||
|
Consumer Loans Receivable
|
Interest Receivable
|
Total Allowance(1)
|
|
Consumer Loans Receivable
|
Interest Receivable
|
Total Allowance(1)
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
49
|
|
$
|
8
|
|
$
|
57
|
|
|
$
|
27
|
|
$
|
3
|
|
$
|
30
|
|
Adjustment for adoption of credit losses accounting standard
|
24
|
|
4
|
|
28
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Provisions
|
98
|
|
20
|
|
118
|
|
|
1
|
|
2
|
|
3
|
|
||||||
Charge-offs
|
(21
|
)
|
(4
|
)
|
(25
|
)
|
|
(9
|
)
|
(1
|
)
|
(10
|
)
|
||||||
Recoveries(2)
|
9
|
|
—
|
|
9
|
|
|
10
|
|
—
|
|
10
|
|
||||||
Ending balance
|
$
|
159
|
|
$
|
28
|
|
$
|
187
|
|
|
$
|
29
|
|
$
|
4
|
|
$
|
33
|
|
March 31, 2020
|
||||||||||||||||||||||||||
(In millions, except percentages)
|
||||||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Total
|
|
Percentage
|
||||||||||||
Current
|
|
$
|
1,388
|
|
|
$
|
1,266
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,682
|
|
|
89.6%
|
30 - 59 Days
|
|
17
|
|
|
90
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|
4.0%
|
||||||
60 - 89 Days
|
|
3
|
|
|
56
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
2.2%
|
||||||
90 - 179 Days
|
|
—
|
|
|
94
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
3.6%
|
||||||
180+ Days
|
|
—
|
|
|
7
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|
17
|
|
|
0.6%
|
||||||
Total
|
|
$
|
1,408
|
|
|
$
|
1,513
|
|
|
$
|
73
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2,995
|
|
|
100%
|
December 31, 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
|
||||||||||||||
$
|
2,523
|
|
|
$
|
115
|
|
|
$
|
61
|
|
|
$
|
100
|
|
|
$
|
17
|
|
|
$
|
293
|
|
|
$
|
2,816
|
|
89.6
|
%
|
|
4.1
|
%
|
|
2.1
|
%
|
|
3.6
|
%
|
|
0.6
|
%
|
|
10.4
|
%
|
|
100
|
%
|
|
March 31, 2020
|
|
March 31, 2019
|
||||||||||||||||
|
Merchant Loans and Advances
|
Interest and Fees Receivable
|
Total Allowance
|
|
Merchant Loans and Advances
|
Interest and Fees Receivable
|
Total Allowance
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
171
|
|
$
|
20
|
|
$
|
191
|
|
|
$
|
115
|
|
$
|
15
|
|
$
|
130
|
|
Adjustment for adoption of credit losses accounting standard
|
165
|
|
17
|
|
182
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Provisions
|
243
|
|
24
|
|
267
|
|
|
54
|
|
6
|
|
60
|
|
||||||
Charge-offs
|
(78
|
)
|
(8
|
)
|
(86
|
)
|
|
(37
|
)
|
(3
|
)
|
(40
|
)
|
||||||
Recoveries
|
3
|
|
—
|
|
3
|
|
|
3
|
|
—
|
|
3
|
|
||||||
Ending balance
|
$
|
504
|
|
$
|
53
|
|
$
|
557
|
|
|
$
|
135
|
|
$
|
18
|
|
$
|
153
|
|
|
|
|
Balance at March 31, 2020
|
||||
|
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
|
|
|
(33
|
)
|
|
|
|
Total carrying amount of term debt
|
|
|
$
|
4,967
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Beginning balance
|
$
|
399
|
|
|
$
|
344
|
|
Provision
|
247
|
|
|
286
|
|
||
Realized losses
|
(270
|
)
|
|
(261
|
)
|
||
Recoveries
|
20
|
|
|
16
|
|
||
Ending balance
|
$
|
396
|
|
|
$
|
385
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Customer support and operations
|
$
|
52
|
|
|
$
|
48
|
|
Sales and marketing
|
39
|
|
|
32
|
|
||
Technology and development
|
113
|
|
|
93
|
|
||
General and administrative
|
87
|
|
|
81
|
|
||
Total stock-based compensation expense
|
$
|
291
|
|
|
$
|
254
|
|
Capitalized as part of internal use software and website development costs
|
$
|
10
|
|
|
$
|
10
|
|
|
Employee Severance and Benefits and Other Associated Costs
|
||
|
(In millions)
|
||
Accrued liability as of January 1, 2020
|
$
|
9
|
|
Charges
|
29
|
|
|
Payments
|
(5
|
)
|
|
Accrued liability as of March 31, 2020
|
$
|
33
|
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||
|
(In millions, except percentages and per share data)
|
|||||||||
Net revenues
|
$
|
4,618
|
|
|
$
|
4,128
|
|
|
12
|
%
|
Operating expenses
|
4,220
|
|
|
3,610
|
|
|
17
|
%
|
||
Operating income
|
$
|
398
|
|
|
$
|
518
|
|
|
(23
|
)%
|
Operating margin
|
9
|
%
|
|
13
|
%
|
|
**
|
|
||
Other income (expense), net
|
$
|
(135
|
)
|
|
$
|
199
|
|
|
(168
|
)%
|
Income tax expense
|
$
|
179
|
|
|
$
|
50
|
|
|
258
|
%
|
Effective tax rate
|
68
|
%
|
|
7
|
%
|
|
**
|
|
||
Net income
|
$
|
84
|
|
|
$
|
667
|
|
|
(87
|
)%
|
Net income per diluted share
|
$
|
0.07
|
|
|
$
|
0.56
|
|
|
(87
|
)%
|
Net cash provided by operating activities
|
$
|
1,504
|
|
|
$
|
1,027
|
|
|
46
|
%
|
|
Three Months Ended March 31, 2020
|
||
|
(In millions)
|
||
Unfavorable impact to net revenues (exclusive of hedging impact)
|
$
|
(50
|
)
|
Hedging impact
|
42
|
|
|
Unfavorable impact to net revenues
|
(8
|
)
|
|
Favorable impact to operating expense
|
37
|
|
|
Net favorable impact to operating income
|
$
|
29
|
|
|
Three Months Ended March 31, 2019
|
||
|
(In millions)
|
||
Unfavorable impact to net revenues (exclusive of hedging impact)
|
$
|
(116
|
)
|
Hedging impact
|
52
|
|
|
Unfavorable impact to net revenues
|
(64
|
)
|
|
Favorable impact to operating expense
|
62
|
|
|
Net unfavorable impact to operating income
|
$
|
(2
|
)
|
•
|
Transaction revenues: Net transaction fees charged to merchants and consumers on a transaction basis primarily based on the volume of activity, or Total Payment Volume (TPV), completed on our Payments Platform. Growth in TPV is directly impacted by the number of payment transactions that we enable on our Payments Platform. We earn additional fees 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 debit card or bank account, and other miscellaneous fees.
|
•
|
Other value added services: Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our merchants and consumers. We also earn revenues from interest and fees earned 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.
|
•
|
An active account is an account registered directly with PayPal or a platform access partner that has completed a transaction on our Payments Platform or through our Honey Platform, not including gateway-exclusive transactions, within the past 12 months. A platform access partner is a third party whose customers are provided access to PayPal’s Payments Platform through such third party’s login credentials. The number of active accounts provides management with additional perspective on the growth of accounts across our Payments and Honey Platforms as well as the overall scale of our platforms. The acquisition of Honey contributed approximately 10.2 million new active accounts on the date of acquisition.
|
•
|
Number of payment transactions are the total number of payments, net of payment reversals, successfully completed on our Payments Platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
|
•
|
Number of payment transactions per active account reflects the total number of payment transactions within the previous 12-month period, divided by active accounts at the end of the period. The number of payment transactions per active account provides management with insight into the number of times a customer is engaged in payments activity on our Payments Platform in a given period.
|
•
|
TPV is the value of payments, net of payment reversals, successfully completed on our Payments Platform, or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||
|
(In millions, except percentages)
|
|||||||||
Transaction revenues
|
$
|
4,215
|
|
|
$
|
3,731
|
|
|
13
|
%
|
Other value added services
|
403
|
|
|
397
|
|
|
2
|
%
|
||
Net revenues
|
$
|
4,618
|
|
|
$
|
4,128
|
|
|
12
|
%
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||
|
(In millions, except percentages)
|
|||||||||
Active accounts(1)
|
325
|
|
|
277
|
|
|
17
|
%
|
||
Number of payment transactions
|
3,261
|
|
|
2,838
|
|
|
15
|
%
|
||
Payment transactions per active account
|
39.4
|
|
|
37.9
|
|
|
4
|
%
|
||
TPV
|
$
|
190,567
|
|
|
$
|
161,492
|
|
|
18
|
%
|
Percent of cross-border TPV
|
17
|
%
|
|
18
|
%
|
|
**
|
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||
|
(In millions, except percentages)
|
|||||||||
Transaction expense
|
$
|
1,739
|
|
|
$
|
1,549
|
|
|
12
|
%
|
Transaction and credit losses
|
591
|
|
|
341
|
|
|
73
|
%
|
||
Customer support and operations
|
399
|
|
|
388
|
|
|
3
|
%
|
||
Sales and marketing
|
371
|
|
|
329
|
|
|
13
|
%
|
||
Technology and development
|
605
|
|
|
511
|
|
|
18
|
%
|
||
General and administrative
|
486
|
|
|
419
|
|
|
16
|
%
|
||
Restructuring and other charges
|
29
|
|
|
73
|
|
|
(60
|
)%
|
||
Total operating expenses
|
$
|
4,220
|
|
|
$
|
3,610
|
|
|
17
|
%
|
Transaction expense rate(1)
|
0.91
|
%
|
|
0.96
|
%
|
|
**
|
|
||
Transaction and credit loss rate(2)
|
0.31
|
%
|
|
0.21
|
%
|
|
**
|
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||
|
(In millions, except percentages)
|
|||||||||
Transaction losses
|
$
|
247
|
|
|
$
|
286
|
|
|
(14
|
)%
|
Credit losses
|
344
|
|
|
55
|
|
|
525
|
%
|
||
Transaction and credit losses
|
$
|
591
|
|
|
$
|
341
|
|
|
73
|
%
|
Transaction loss rate (1)
|
0.13
|
%
|
|
0.18
|
%
|
|
|
|
March 31,
|
||||
|
2020
|
|
2019
|
||
Percent of consumer loans and interest receivables current(1)
|
96.4
|
%
|
|
97.2
|
%
|
Percent of consumer loans and interest receivables > 90 days outstanding(1),(2)
|
1.5
|
%
|
|
1.1
|
%
|
Net charge off rate(3)
|
3.6
|
%
|
|
3.3
|
%
|
|
March 31,
|
||||
|
2020
|
|
2019
|
||
Percent of merchant receivables within original expected or contractual repayment period(1)
|
89.6
|
%
|
|
91.1
|
%
|
Percent of merchant receivables > 90 days outstanding after the end of original expected or contractual repayment period(1)
|
4.2
|
%
|
|
3.7
|
%
|
Net charge off rate(2)
|
9.7
|
%
|
|
6.8
|
%
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In millions)
|
||||||
Cash, cash equivalents, and investments(1)(2)
|
$
|
10,779
|
|
|
$
|
11,722
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,504
|
|
|
$
|
1,027
|
|
Investing activities
|
(2,568
|
)
|
|
(4,860
|
)
|
||
Financing activities
|
2,241
|
|
|
1,502
|
|
||
Effect of exchange rates on cash, cash equivalents, and restricted cash
|
(178
|
)
|
|
1
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
$
|
999
|
|
|
$
|
(2,330
|
)
|
•
|
Merchants selling goods or services in advance of the date of their delivery (e.g., travel and events verticals) or experiencing bankruptcy, business failure, or other business interruption, which could result in our being liable to the buyers of such goods or services, either through our buyer protection program or through chargebacks on payment cards used by customers to fund their payments;
|
•
|
Merchants who utilize our PayPal Working Capital and PayPal Business Loan products defaulting on their payment obligations;
|
•
|
Consumers who utilize our PayPal Credit products defaulting on their payment obligations, including U.S. consumers, which may adversely impact our revenue share on the portfolio of U.S. consumer receivables owned by Synchrony Bank;
|
•
|
Increased cyber and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption in light of increased online banking, ecommerce, and other online activity;
|
•
|
Challenges to the availability and reliability of our products and services resulting from changes to our normal operations, including due to one or more clusters of COVID-19 cases occurring at our data centers or customer service and operations centers or the temporary closure of sites due to mandatory local lockdown requirements, which may impact our employees and/or the systems or employees of our customers and business partners; and
|
•
|
An increased volume of unanticipated customer requests for support (resulting in increased call center volume to our customer support and operations centers) and regulatory requests for information and support or additional regulatory requirements, which could require additional resources and costs to address.
|
|
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 December 31, 2019
|
|
|
|
|
|
|
$
|
10,068
|
|
||||
January 1, 2020 through January 31, 2020
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
10,068
|
|
|
February 1, 2020 through February 29, 2020
|
2.6
|
|
|
$
|
113.31
|
|
|
2.6
|
|
|
9,766
|
|
|
March 1, 2020 through March 31, 2020
|
4.9
|
|
|
$
|
102.22
|
|
|
4.9
|
|
|
9,268
|
|
|
Balance as of March 31, 2020
|
7.5
|
|
|
|
|
7.5
|
|
|
$
|
9,268
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
Form
|
Date Filed
|
Filed Herewith
|
|
Honey Science Corporation 2015 Equity Incentive Plan, as amended on February 17, 2017 and April 16, 2018
|
S-8
|
1/7/2020
|
|
|
|
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
|
-
|
-
|
X
|
|
|
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
|
-
|
-
|
X
|
|
|
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
|
-
|
-
|
X
|
|
|
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
|
-
|
-
|
X
|
|
|
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
|
-
|
-
|
X
|
|
|
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
|
-
|
-
|
X
|
|
|
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 March 31, 2020, 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.
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X
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104
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Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
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X
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PayPal Holdings, Inc.
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Principal Executive Officer:
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By:
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/s/ Daniel H. Schulman
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Daniel H. Schulman
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President and Chief Executive Officer
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Date:
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May 6, 2020
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Principal Financial Officer:
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By:
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/s/ John D. Rainey
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John D. Rainey
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Chief Financial Officer and Executive Vice President,
Global Customer Operations
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Date:
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May 6, 2020
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Principal Accounting Officer:
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By:
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/s/ Aaron A. Anderson
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Aaron A. Anderson
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Vice President, Chief Accounting Officer
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Date:
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May 6, 2020
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/s/ Daniel H. Schulman
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Daniel H. Schulman
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President, Chief Executive Officer and Director
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(Principal Executive Officer)
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/s/ John D. Rainey
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John D. Rainey
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Chief Financial Officer and Executive Vice President, Global Customer Operations
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(Principal Financial Officer)
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/s/ Daniel H. Schulman
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Daniel H. Schulman
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President, Chief Executive Officer and Director
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(Principal Executive Officer)
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/s/ John D. Rainey
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John D. Rainey
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Chief Financial Officer and Executive Vice President, Global Customer Operations
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(Principal Financial Officer)
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