Financial Analysis

BUSINESS COMBINATIONSIn the first quarter of 2026, we completed an acquisition with a total purchase price of $134 million, consisting primarily of cash consideration, which was accounted for as a business combination. In the second quarter of 2025, we completed an acquisition with a total purchase price of $19 million, consisting of cash consideration, which was accounted for as a business combination.

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COMMITMENTS AND CONTINGENCIES LITIGATION AND REGULATORY MATTERS Overview We are involved in legal and regulatory proceedings on an ongoing basis. Certain of these proceedings are in early stages and may seek an indeterminate amount of damages or penalties or may require us to change or adopt certain business practices. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial statements at that time. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For those proceedings in which an unfavorable outcome is reasonably possible but not probable, (i) we have disclosed an estimate of the reasonably possible loss or range of losses or (ii) we have concluded that our estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) is not material. If we cannot estimate the probable or reasonably possible loss or range of losses arising from a legal proceeding, we have disclosed that fact. In assessing the materiality of a legal proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by p …

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DEBT NOTES In May 2026, we issued fixed-rate notes with varying maturity dates for an aggregate principal amount of $2.0 billion, consisting of $650 million aggregate principal amount of 4.550% notes due 2028, $850 million aggregate principal amount of 4.950% notes due 2031, and $500 million aggregate principal amount of 5.550% notes due 2036. Interest on the notes is payable on June 1 and December 1, beginning on December 1, 2026. The notes are senior unsecured obligations and are collectively referred to as the Notes. We may redeem the Notes in whole at any time or in part from time to time, prior to maturity, at their redemption prices. Upon the occurrence of both a change of control of the Company and a downgrade of the Notes below an investment grade rating, we will be required to offer to repurchase each series of Notes at a price equal to 101% of the then outstanding principal amounts, plus accrued and unpaid interest. The Notes are subject to covenants, including limitations on our ability to create liens on our assets, enter into sale and leaseback transactions, and merge or consolidate with another entity, in each case subject to certain exceptions, limitations, and qualifications. Proceeds from the issuance of these Notes may be used for general corporate purposes, which may include funding the repayment or redemption of outstanding debt, share repurchases, ongoing operations, capital expenditures, and possible acquisitions of businesses, assets, or strategic inves …

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The following table presents our revenue disaggregated by primary geographical market and category: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In millions) Primary geographical markets U.S. $ 5,048 $ 4,709 $ 9,930 $ 9,172 Other countries (1) 3,634 3,579 7,105 6,907 Total net revenues (2) $ 8,682 $ 8,288 $ 17,035 $ 16,079 Revenue category Transaction revenues $ 7,832 $ 7,441 $ 15,333 $ 14,457 Revenues from other value added services 850 847 1,702 1,622 Total net revenues (2) $ 8,682 $ 8,288 $ 17,035 $ 16,079 (1) No single country included in the other countries category generated more than 10% of total net revenues. (2) Total net revenues include $589 million and $506 million for the three months ended June 30, 2026 and 2025, respectively, and $1.1 billion for both the six months ended June 30, 2026 and 2025, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers . Such revenues relate to interest and fees earned on loans and interest receivable, including loans and interest receivable held for sale, hedging gains or losses, and interest earned and gains or losses on certain assets underlying customer balances.

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STOCK-BASED PLANS In May 2026, our stockholders approved the PayPal Holdings, Inc. 2026 Equity Incentive Award Plan (the 2026 Plan) to replace the PayPal Holdings, Inc. 2015 Equity Incentive Award Plan, as amended and restated (the 2015 Plan) as the source of equity awards granted on or after May 19, 2026, and no additional equity awards will be granted under the 2015 Plan following that date. The 2026 Plan authorizes the issuance of up to 39.1 million shares of our common stock, plus up to 44.6 million shares of our common stock underlying awards granted under the 2015 Plan that expire or are terminated, are settled in cash without the delivery of shares, or otherwise become available for grant in accordance with the terms of the 2015 Plan on or after May 19, 2026. STOCK-BASED COMPENSATION EXPENSE Stock-based compensation expense is measured based on the estimated fair value of shares at the time of grant and recognized over the awards vesting period. The following table summarizes the impact of stock-based compensation expense on our results of operations for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In millions) Customer support and operations $ 52 $ 53 $ 101 $ 104 Sales and marketing 32 34 67 67 Technology and development 131 136 257 247 General and administrative 67 83 141 155 Restructuring and other 19 19 Total stock-based compensation expense $ 301 $ 306 $ 585 $ 573 Capitalized as p …

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FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025: June 30, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) (In millions) Assets: Cash and cash equivalents (1) Money market fund $ 49 $ 49 $ Short-term investments (2) : U.S. government and agency securities 50 50 Foreign government and agency securities 100 100 Corporate debt securities 788 788 Mortgage-backed and asset-backed securities 289 289 Commercial paper 1,636 1,636 Total short-term investments 2,863 2,863 Funds receivable and customer accounts (3) : U.S. government and agency securities 4,787 4,787 Foreign government and agency securities 336 336 Corporate debt securities 3,064 3,064 Mortgage-backed and asset-backed securities 4,489 4,489 Municipal securities 81 81 Commercial paper 4,608 4,608 Total funds receivable and customer accounts 17,365 17,365 Derivatives (4) 148 148 Long-term investments (2),(5) : U.S. government and agency securities 521 521 Corporate debt securities 633 633 Mortgage-backed and asset-backed securities 1,115 1,115 Marketable equity securities 106 106 Total long-term investments 2,375 106 2,269 Total financial assets $ 22,800 $ 155 $ 22,645 Liabilities: Derivatives (4) $ 52 $ $ 52 (1) Exclu …

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GOODWILL AND INTANGIBLE ASSETS GOODWILL The following table presents goodwill balances and adjustments to those balances during the six months ended June 30, 2026: December 31, 2025 Goodwill Acquired Foreign CTA June 30, 2026 (In millions) Total goodwill $ 10,864 $ 104 $ (39) $ 10,929 The goodwill acquired during the six months ended June 30, 2026 was associated with one acquisition as described in Note 4Business Combinations. INTANGIBLE ASSETS The components of identifiable intangible assets were as follows: June 30, 2026 December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In millions) Intangible assets (1) : Customer lists and user base $ 372 $ (243) $ 129 $ 372 $ (224) $ 148 Marketing related 58 (54) 4 60 (50) 10 Developed technology 23 (5) 18 9 (2) 7 All other 215 (188) 27 208 (165) 43 Intangible assets, net $ 668 $ (490) $ 178 $ 649 $ (441) $ 208 (1) Excludes intangible assets which have been fully amortized, but are still in use. Amortization expense for intangible assets was $33 million and $48 million for the three months ended June 30, 2026 and 2025, respectively. Amortization expense for intangible assets was $65 million and $95 million for the six months ended June 30, 2026 and 2025, respectively. Expected future intangible asset amortization as of June 30, 2026 was as follows: Fiscal years: (In millions) Remaining 2026 $ 50 2027 67 2028 53 2029 2 2030 2 Thereafter …

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INCOME TAXES Our effective tax rate for the three and six months ended June 30, 2026 was 16% and 18%, respectively. Our effective tax rate for the three and six months ended June 30, 2025 was 18% and 19%, respectively. The difference between our effective tax rate and the U.S. federal statutory rate of 21% in the periods presented was primarily the result of foreign and U.S. income taxed at different rates as well as discrete tax adjustments including tax effects of stock-based compensation. Gross unrecognized tax benefits were approximately $2.5 billion as of both June 30, 2026 and December 31, 2025. Due to various factors, including uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of these unrecognized tax benefits is highly uncertain. It is reasonably possible that within the next twelve months, we may receive additional tax adjustments by various tax authorities or possibly reach resolution of audits in one or more jurisdictions. These adjustments or settlements could result in changes to our unrecognized tax benefits related to positions on prior year tax filings.

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LEASES PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, customer services and operations centers, product development offices, and data centers. PayPal also enters into computer equipment finance leases. While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and are instead treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. The short-term lease exemption has been adopted for all leases with a duration of less than 12 months. PayPals lease portfolio includes a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements. The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In millions) Operating lease expense $ 45 $ 40 $ 85 $ 81 Finance lease expense - amortization of right-of-use (ROU) lease assets 4 4 8 8 Sublease income (2) (2) (4) (4) Total lease expense, net $ 47 $ 42 $ 89 $ 85 Supplemental cash flow information related to leases during the three and six months ended June 30, 2026 and 2025 were as follows: Three Month …

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Recently issued accounting guidance In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, the guidance requires disclosure of selling expenses and its definition. The new guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied either prospectively or retrospectively. We are evaluating the impact this amended guidance may have on the notes to our condensed consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amended guidance modernizes the accounting for costs related to internal-use software to more closely align with current software development methods. The guidance removes references to project stages and clarifies when we are required to start capitalizing eligible costs. The new guidance is effective for fiscal years beginning after D …

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REVENUE We enable our customers to send and receive payments. We earn revenue primarily by completing payment transactions for our customers on our payments platform and from other value added services. Our revenues are classified into two categories: transaction revenues and revenues from other value added services. We record a contract asset when we have a conditional right to consideration for services we have already transferred to our customer. These contract assets are included in other assets in our condensed consolidated balance sheets and were $248 million and $238 million as of June 30, 2026 and December 31, 2025, respectively. DISAGGREGATION OF REVENUE We believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets and types of revenue categories (transaction revenues and revenues from other value added services). Revenues recorded within these categories are earned from similar products and services for which the nature of associated fees and the related revenue recognition models are substantially similar. The following table presents our revenue disaggregated by primary geographical market and category: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In millions) Primary geographical markets U.S. $ 5,048 $ 4,709 $ 9,930 $ 9,172 Other countries (1) 3,634 3,579 7,105 6,907 Total net revenues (2) …

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SEGMENT INFORMATION Our chief operating decision maker (CODM), our Chief Executive Officer, manages the business and evaluates operating performance based on consolidated net income. Our CODM uses consolidated net income to monitor budget versus actual results. We operate as one segment and have one reportable segment that constitutes consolidated results. The following table sets forth our segment information for revenue, segment profit (loss), and significant expenses: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In millions) Net revenues $ 8,682 $ 8,288 $ 17,035 $ 16,079 Less (add): Transaction expense 4,385 3,968 8,550 7,672 Transaction losses 323 383 599 661 Credit losses 74 93 176 186 Customer support and operations (1) 462 413 908 811 Sales and marketing (1) 546 583 1,064 1,071 Technology and development (1) 849 767 1,642 1,498 General and administrative (1) 503 461 994 964 Restructuring and other 113 116 187 182 Other income (expense), net 117 (25) 212 (98) Income tax expense 206 268 486 584 Segment net income (loss) $ 1,104 $ 1,261 $ 2,217 $ 2,548 (1) Includes depreciation and amortization expense. For the three and six months ended June 30, 2026, total depreciation and amortization expense was $246 million and $484 million, respectively. For the three and six months ended June 30, 2025, total depreciation and amortization expense was $239 million and $484 million, respectively. There are no reconciling items or adjustments between segme …

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STOCKHOLDERS EQUITY STOCK REPURCHASE PROGRAM During the six months ended June 30, 2026, we repurchased approximately 67 million shares of our common stock for approximately $3.0 billion at an average cost of $44.99, excluding excise tax. These shares were purchased in the open market under our stock repurchase program authorized in February 2025. As of June 30, 2026, a total of approximately $10.9 billion remained available for future repurchases of our common stock under our February 2025 stock repurchase program. DIVIDEND PROGRAM The following table summarizes our dividend activities for the six months ended June 30, 2026: Record Date Payment Date Dividend Per Share Total $ Value (in millions) June 4, 2026 June 25, 2026 $0.14 $125 March 4, 2026 March 25, 2026 $0.14 $130 …

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