PayPal Holdings, Inc. (NASDAQ:PYPL) Q4 2022 Earnings Conference Call February 9, 2023 5:00 PM ET Company Participants Gabrielle Rabinovitch - SVP and Acting CFO Daniel Schulman - President and CEO Conference Call Participants Lisa Ellis - SVB MoffettNathanson Darrin Peller - Wolfe Research James Faucette - Morgan Stanley Tien-Tsin Huang - JPMorgan Jason Kupferberg - Bank of America Merrill Lynch Timothy Chiodo - Credit Suisse David Togut - Evercore ISI Operator Good afternoon. My name is Julianne and I will ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) PayPal operates a global two-sided platform connecting 435 million active accounts, processing **$1.36 trillion** in TPV in 2022, with revenue primarily from transaction fees - Revenue is primarily generated by charging fees for payment transactions, supplemented by foreign currency conversion, instant transfers, cryptocurrency services, partnerships, and credit product interest and fees[11](index=11&type=chunk) - The company's growth strategy focuses on expanding its global customer base, increasing engagement, enhancing value propositions for merchants and consumers, and pursuing strategic partnerships and acquisitions[34](index=34&type=chunk) - As of December 31, 2022, PayPal employed approximately **29,900 people globally**, with significant presence across the Americas, Asia-Pacific, Europe, and the Middle East[59](index=59&type=chunk) - The company is subject to extensive global government regulation, including laws related to money transmission, banking, lending, consumer protection, anti-money laundering (AML), and data privacy[43](index=43&type=chunk)[44](index=44&type=chunk) Key Performance Metrics (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Active Accounts | 435 million | | Consumer Active Accounts | 400 million | | Merchant Active Accounts | 35 million | | Total Payment Volume (2022) | $1.36 Trillion | | Payment Transactions (2022) | 22.3 Billion | [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant cybersecurity, legal, regulatory, business, operational, and economic risks, including intense competition and evolving global compliance requirements - Cybersecurity and technology risks include sophisticated cyberattacks, phishing, ransomware, and system failures, potentially leading to data breaches, financial loss, and reputational damage[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - Legal, regulatory, and compliance risks stem from complex and evolving global laws governing money transmission, banking, credit, cryptocurrency, consumer protection, and AML, with non-compliance risking significant fines and operational restrictions[85](index=85&type=chunk)[87](index=87&type=chunk) - Business and operational risks include intense competition, changes to payment card network rules, credit losses from lending products, fraud, challenges in cross-border trade, and reliance on third-party partners[111](index=111&type=chunk)[114](index=114&type=chunk)[120](index=120&type=chunk) - Adverse global economic conditions, including recessions, inflation, and reduced consumer spending, could negatively impact transaction volumes and demand for the company's products and services[139](index=139&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[159](index=159&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) As of December 31, 2022, PayPal owns and leases **5.3 million square feet** of global property for its operations, with **1.1 million owned** and **4.2 million leased** Owned and Leased Facilities (in millions of sq. ft.) | Region | Owned Facilities (millions sq. ft.) | Leased Facilities (millions sq. ft.) | Total Facilities (millions sq. ft.) | | :--- | :--- | :--- | :--- | | United States | 1.0 | 2.2 | 3.2 | | Other Countries | 0.1 | 2.0 | 2.1 | | **Total** | **1.1** | **4.2** | **5.3** | [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 13 of the consolidated financial statements - Information regarding legal proceedings is incorporated by reference from "Note 13—Commitments and Contingencies—Litigation and Regulatory Matters" to the consolidated financial statements[161](index=161&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[161](index=161&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) PayPal's common stock trades on NASDAQ (PYPL), has never paid dividends, and actively repurchases shares, with **11.8 million shares** bought in Q4 2022 - The company's common stock is traded on the NASDAQ Global Select Market under the ticker symbol **PYPL**[163](index=163&type=chunk) - PayPal has never paid cash dividends and does not currently anticipate paying any in the foreseeable future[164](index=164&type=chunk) - As of December 31, 2022, approximately **$15.9 billion** remained available for future repurchases under authorized stock repurchase programs[167](index=167&type=chunk) Stock Repurchase Activity (Q4 2022) | Period | Total Shares Purchased (millions) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Oct 2022 | 8.2 | $85.81 | | Nov 2022 | 3.6 | $85.42 | | Dec 2022 | — | — | | **Total Q4 2022** | **11.8** | **N/A** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2022, net revenues grew **8% to $27.5 billion** and TPV increased **9% to $1.36 trillion**, but operating income declined **10%** and net income fell **42%** due to higher expenses and investment losses Consolidated Financial Results Summary | Metric | 2022 ($M) | 2021 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Revenues | $27,518 | $25,371 | 8% | | Operating Income | $3,837 | $4,262 | (10)% | | Operating Margin | 14% | 17% | (3 p.p.) | | Net Income | $2,419 | $4,169 | (42)% | | Diluted EPS | $2.09 | $3.52 | (41)% | Key Metrics Summary | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Active Accounts (EOP) | 435 M | 426 M | 2% | | Payment Transactions | 22.3 B | 19.3 B | 16% | | Total Payment Volume (TPV) | $1.36 T | $1.25 T | 9% | | Payment Transactions per Active Account | 51.4 | 45.4 | 13% | - Transaction revenues grew **8% in 2022**, driven by unbranded card processing (Braintree) and Venmo, partially offset by declines in core PayPal services and eBay marketplace revenue[194](index=194&type=chunk) - Operating expenses increased **12% in 2022**, primarily due to an **18% rise** in transaction expense from unfavorable product mix and a **48% increase** in transaction and credit losses[178](index=178&type=chunk)[202](index=202&type=chunk) - The company's liquidity position is strong, supported by **$13.7 billion** in cash, cash equivalents, and investments, and **$5.0 billion** available under its main revolving credit facility as of year-end 2022[228](index=228&type=chunk)[243](index=243&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) PayPal is exposed to interest rate, foreign currency exchange, and equity investment risks, which are managed through hedging programs and affect investment portfolio value and net income - A hypothetical **100 basis point** increase in interest rates would have decreased the fair value of cash equivalents and available-for-sale debt securities by approximately **$161 million** as of December 31, 2022[278](index=278&type=chunk) - A hypothetical **10% adverse change** in foreign currency exchange rates would have resulted in a net negative impact of approximately **$29 million** on income before taxes as of December 31, 2022, after considering hedging contracts[282](index=282&type=chunk)[286](index=286&type=chunk) - The company holds **$2.1 billion** in strategic investments as of year-end 2022, where a hypothetical **10% adverse change** would decrease the portfolio's carrying value by approximately **$215 million**[287](index=287&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020-2022, with PricewaterhouseCoopers LLP providing an unqualified opinion and identifying 'Allowance for Loans Receivable' as a critical audit matter - PricewaterhouseCoopers LLP issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[299](index=299&type=chunk) - The 'Allowance for Loans Receivable' was identified as a critical audit matter due to the high subjectivity in evaluating models that apply macroeconomic forecasts to estimate expected credit losses[306](index=306&type=chunk)[307](index=307&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=58&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[288](index=288&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2022, management concluded that disclosure controls and internal control over financial reporting were effective, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[289](index=289&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[290](index=290&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[291](index=291&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=58&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no information for this item - None[291](index=291&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[292](index=292&type=chunk) [Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[292](index=292&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[292](index=292&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=60&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[293](index=293&type=chunk) [Principal Accounting Fees and Services](index=60&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[294](index=294&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=61&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements, valuation and qualifying accounts schedule, and required exhibits - This item includes the Consolidated Financial Statements, the Report of Independent Registered Public Accounting Firm, and Financial Statement Schedule II—Valuation and Qualifying Accounts[296](index=296&type=chunk) [Form 10-K Summary](index=129&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no information for this item - None[599](index=599&type=chunk)

PayPal Holdings, Inc. (NASDAQ:PYPL) UBS 50th Annual Global TMT Conference December 7, 2022 11:40 AM ET Company Participants Dan Schulman - President and Chief Executive Officer Conference Call Participants Rayna Kumar - UBS Rayna Kumar Good afternoon, everyone. I'm Rayna Kumar, and I lead US payment processors and IT services research at UBS. And today, I am joined by President and CEO of PayPal, Dan Schulman. Dan, thanks for joining us today. Dan Schulman Thank you. Question-and-Answer Session Q - Rayna Ku ...

PayPal Holdings, Inc. (NASDAQ:PYPL) Citi’s 2022 Global Fintech Conference November 15, 2022 4:15 PM ET Company Participants Doug Bland - SVP and GM, Head of Consumer Conference Call Participants Ashwin Shirvaikar - Citi Ashwin Shirvaikar All right. Good afternoon, everyone, and welcome to the last session of our fabulous two day Fintech Conference. Thank you all for being here. It's been a tremendous and very insightful two days, and hope to end here on an equally insightful note. So just kind of want to sa ...

Third Quarter 2022 Results San Jose, California November 3, 2022 • Q3'22: Solid third quarter, with revenue and EPS outperformance ◦ Net revenues of $6.85 billion, growing 11% and 12% on an FX-neutral basis (FXN); excluding eBay1, revenue grew 13% on a spot basis and 14% FXN ◦ GAAP EPS of $1.15 compared to $0.92 in Q3'21, and non-GAAP EPS of $1.08 compared to $1.11 in Q3'21 ◦ Operating cash flow of $1.9 billion, growing 29%, and free cash flow of $1.8 billion, growing 37% ◦ Total Payment Volume (TPV) of $33 ...

PayPal Holdings, Inc. (NASDAQ:PYPL) Q3 2022 Earnings Conference Call November 3, 2022 5:30 PM ET Corporate Participants Gabrielle Rabinovitch - Acting Chief Financial Officer and SVP, IR and Treasurer Daniel Schulman - President and Chief Executive Officer Conference Call Participants James Fossett - Morgan Stanley Jason Kupferberg - Bank of America Merrill Lynch Colin Sebastian - Baird Darrin Peller - Wolfe Research Lisa Ellis - MoffettNathanson Tien-Tsin Huang - JPMorgan David Togut - Evercore ISI Operato ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to . Commission file number 001-36859 PayPal Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) | --- | --- | --- | --- | |---------------------- ...

PayPal Holdings, Inc. Conference Call Summary Company Overview - PayPal Holdings, Inc. (NASDAQ:PYPL) is a leading digital payment platform with nearly 430 million consumer and merchant accounts [1][2] - The company has been at the forefront of digital payment transformation for over 20 years [2] Key Industry Insights - The digital payment industry is experiencing a shift in consumer behavior post-pandemic, with e-commerce returning to pre-pandemic growth trends [4] - PayPal has faced challenges from eBay's migration to managed payments, resulting in a revenue pressure of approximately $2.4 billion over the last several quarters [3] Core Business Performance - PayPal processed $1.25 trillion in Total Payment Volume (TPV) in 2021, primarily from Merchant Services [8] - The company has seen a gradual increase in revenue growth, with April at 7%, May at 10%, June at 12%, and July at 14% [5] - PayPal aims to grow its operating margin and leverage, targeting $900 million in cost reductions for the current year and $1.3 billion for the next year [6][7] Competitive Landscape - PayPal's Checkout service is core to its business, with significant advantages in scale and brand trust [9] - The company has almost 35 million active merchant accounts and 400 million active consumer accounts, significantly outpacing competitors [9] - Competition in the Checkout space is fierce, with many competitors pulling back due to profitability challenges, presenting an opportunity for PayPal to gain market share [10][11] Product Innovations and Strategies - PayPal is focusing on reducing latency in Checkout processes, improving availability, and enhancing user experience through in-line Checkout and accelerated checkout features [12][13][14] - Braintree, a PayPal service, has seen significant growth, with a 44% increase last quarter and a three-year CAGR of about 50% [18] - The company is also modernizing Venmo, which had a TPV of $230 billion in 2021, by revamping its features and integrating it more closely with PayPal [25][27] Cross-Border Transactions - Cross-border e-commerce has been negatively impacted by supply chain issues and eBay's influence, but is expected to recover as these challenges subside [20][23] - PayPal's cross-border transactions focus on e-commerce rather than travel, differentiating it from traditional payment networks like Visa and Mastercard [22] Financial Guidance and Future Outlook - PayPal anticipates revenue and earnings acceleration in the latter half of the year, with a strong performance in the third quarter [32][33] - The company is committed to maintaining a flat or reduced non-transactional operating expense year-over-year, while also focusing on growth and engagement [33][46] - PayPal's strategy includes investing in high-growth areas while managing costs effectively, ensuring a balance between growth and profitability [38][45] Leadership and Organizational Changes - Recent leadership changes aim to enhance accountability and drive the company's strategic initiatives [37][41] - The focus is on nurturing talent and ensuring that all teams are aligned towards common goals [40] Conclusion - PayPal is positioned to capitalize on current market opportunities by enhancing its product offerings, improving operational efficiency, and leveraging its strong brand trust to drive engagement and growth in the digital payment space [52][53]

PayPal Holdings, Inc. (NASDAQ:PYPL) Q2 2022 Earnings Conference Call August 2, 2022 5:00 PM ET Company Participants Gabrielle Rabinovitch - Interim CFO and SVP, Corporate Finance & IR Daniel Schulman - President, CEO & Director Conference Call Participants Tien-Tsin Huang - JPMorgan Chase & Co. Darrin Peller - Wolfe Research Lisa Ellis - MoffettNathanson Rayna Kumar - UBS Michael Ng - Goldman Sachs Group Jason Kupferberg - Bank of America Merrill Lynch David Togut - Evercore ISI Operator Good evening. My na ...