PayPal : Third Quarter 2023 News Release

Third Quarter 2023 Results

San Jose, California  November 1, 2023

(NASDAQ: PYPL)

• Q3'23: Solid third quarter performance delivering on both revenue and EPS
• • Total payment volume (TPV) of $387.7 billion, growing 15% and 13% on an FX-neutral (FXN) basis
  • Net revenues of $7.4 billion, growing 8% and 9% FXN
  • GAAP operating income of $1.2 billion, growing 4%; non-GAAP operating income of $1.6 billion, growing 8%
  • GAAP EPS of $0.93 compared to $1.15 in Q3'22; non-GAAP EPS of $1.30 compared to $1.08 in Q3'22, growing 20%
  • Operating cash flow of $1.3 billion1 with free cash flow of $1.1 billion1
• FY'23: Ongoing operating discipline driving earnings growth
• • Q4'23 net revenues expected to grow ~6%-7% on a spot basis and ~7%-8% FXN
  • Q4'23 GAAP EPS expected to be ~$1.20; non-GAAP EPS expected to grow ~10% to ~$1.36
  • FY'23 GAAP EPS now expected to be ~$3.75 compared to $2.09 in FY'22; non-GAAP EPS now expected to grow ~21% to ~$4.98
  • FY'23 share repurchases expected to reach ~$5 billion
• Appointing Jamie Miller Chief Financial Officer (CFO), effective November 6
• • Jamie is an accomplished CFO with decades of experience in both senior finance and operations roles, guiding companies through dynamic environments and meaningful transformation, including GE and Cargill, and was most recently CFO of EY

Q3'23 Highlights

		GAAP
	USD $	YoY
	Change
Net	$7.4B	8%
Revenues
Operating	$1.2B	4%
Income

Non-GAAP

USD $	YoY
Change
$7.4B	9%2
$1.6B	8%

"My first 30 days leading PayPal have confirmed my belief in the company's strong assets and market position. Now, we must harness these strengths and put the weight of the organization behind our most important priorities.

In the process, we will become more efficient so we can innovate and execute with higher velocity. The opportunity to drive greater impact for our customers and unlock profitable growth makes it an exciting time to be at PayPal."

EPS

$0.93

(19%)

$1.30

20%

Alex Chriss

President and CEO

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section titled "Non-GAAP Measures of Financial Performance" and the subsequent tables at the end of this press release.

1. Q3'23 includes a ~$0.8 billion negative impact from European buy now, pay later (BNPL) loans originated as held for sale (HFS).
2. On an FXN basis.

Q3 2023 Results

1

Key Operating and Financial Metrics

Total Payment Volume

Net Revenues

	Spot	FXN			Spot	FXN
	+15% | +13%			+8% | +9%
	$337.0B	$387.7B			$6.8B	$7.4B
	Q3'22	Q3'23			Q3'22	Q3'23
	Operating Income				EPS
GAAP	Non-GAAP1	GAAP	Non-GAAP1
+4%		+8%	(19%)	+20%
		$1.5B	$1.6B	$1.15			$1.30
				$1.08
	$1.2B
$1.1B				$0.93
Q3'22	Q3'23	Q3'22	Q3'23	Q3'22	Q3'23	Q3'22	Q3'23

Financial Highlights

Net revenues increased 8% and 9% FXN

• Net revenues of $7.4 billion, growing 8% and 9% FXN
• GAAP operating income of $1.2 billion, growing 4%; non-GAAP operating income of $1.6 billion, growing 8%
• GAAP operating margin of 15.7%, declining 59 basis points; non-GAAP operating margin of 22.2%, declining 18 basis points
• GAAP EPS of $0.93, compared to $1.15 in Q3'22; non-GAAP EPS of $1.30, compared to $1.08 in Q3'22
• • GAAP EPS includes a positive impact of ~$0.02 from PayPal's strategic investment portfolio, compared to a positive impact of ~$0.34 in Q3'22

"PayPal delivered solid third quarter results, with currency- neutral revenue growth and EPS ahead of our expectations.

Our performance demonstrates disciplined expense management and capital allocation. We are focused on accelerating our profitable growth."

Gabrielle Rabinovitch

SVP, Acting CFO

1. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section titled "Non-GAAP Measures of Financial Performance" and the subsequent tables at the end of this press release.

Q3 2023 Results

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Win Win Coffee

Nikisha Bailey and Matt Nam founded Win Win Coffee to build community around coffee that's ethically and sustainably sourced.

After winning funding from PayPal's Community Impact partners - Black Girl Ventures and the New York Urban League - Nikisha and Matt were able to signifcantly grow and evolve their business. Now, they are leveraging PayPal Checkout online and Venmo QR codes at their pop-ups to drive sales.

Up next, Win Win plans to launch an online coffee marketplace powered by PayPal and Braintree that will bridge the gap by connecting growers directly with buyers - spreading the joy of incredible coffee and creating equity across the coffee diaspora.

"We started Win Win Coffee to make a positive impact on the world - both for coffee lovers and coffee growers - and PayPal has been there throughout our journey. We've used PayPal products online and in-person to increase our sales, and also participated in PayPal community events that gave us the opportunity to consult with employees on how to scale and grow our business."

Nikisha Bailey & Matt Nam

Co-founders, Win Win Coffee

Operating Highlights

Double digit volume and transaction growth year over year

• $387.7 billion in TPV, growing 15% and 13% FXN
• 6.3 billion payment transactions, up 11%
• 56.6 payment transactions per active account on a trailing twelve month basis, up 13%
• 428 million total active accounts, compared to 432 million in Q3'22

Balance Sheet and Liquidity

Strong balance sheet and continued commitment to capital return

• Cash, cash equivalents, and investments totaled $15.4 billion as of September 30, 2023
• Debt totaled $10.6 billion as of September 30, 2023
• In Q3'23, repurchased approximately 23 million shares of common stock, returning $1.4 billion to stockholders
• • On a trailing twelve month basis, repurchased approximately 75 million shares of common stock, returning $5.4 billion to stockholders

Q3 2023 Results

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Cash Flow

• In Q3'23, generated cash flow from operations of $1.3 billion, and free cash flow of $1.1 billion
• • Cash flow from operations and free cash flow include a $0.8 billion negative impact from European buy now, pay later (BNPL) loans originated as held for sale (HFS) in the quarter
  • Excluding the impact of BNPL loans originated as HFS, adjusted free cash flow of $1.9 billion in Q3'23 and $3.8 billion year-to-date
• In June 2023, PayPal entered into a multi-year agreement with KKR to sell up to €40 billion of eligible consumer installment receivables. In October 2023, PayPal began selling those receivables and as of October 31, 2023, approximately $1.4 billion of such receivables, which were classified as held for sale, have been sold

Operating Cash Flow2,3

Q3'22		Q3'23
$1.8B	$2.1B
			$1.3B
		($0.8B)
Operating	Net	HFS	Operating
cash flow	inflows	impact	cash flow

Free Cash Flow / Adjusted Free Cash Flow1,2,3,4

Q3'22

Q3'23

$1.9B

$1.6B

$1.1B

$0.8B

Free	Free	Adjustment	Adjusted
cash flow	cash flow	for HFS	free cash
		impact	flow

1. For a reconciliation of non-GAAP financial measures to the and the subsequent tables at the end of this press release. 2. billion negative impact from European BNPL loans originated free cash flow and adjusted free cash flow.

most directly comparable GAAP financial measures, please see the section titled "Non-GAAP Measures of Financial Performance" Reflects the impact of reclassification as described in our earnings press release dated February 9, 2023. 3. Q3'23 includes a ~$0.8 as HFS. Figures may not sum due to rounding. 4. See page 18 of this press release for a reconciliation of operating cash flow to

Q3 2023 Results

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Q3'23 Financial and Operating Highlights

Presented in millions, except per share data and percentages

Total payment volume (TPV)

	Net revenues
	Operating margin
GAAP	Effective tax rate
Net income (loss)
	Earnings
	per diluted share
	Net cash provided by
	operating activities1,2
	Net revenues
	Operating margin
-GAAP	Effective tax rate
Non	Net income
	Earnings
	per diluted share
	Free cash flow1,2

Q3 2023	Q3 2022	YoY Growth	FXN
YoY Growth
$387,701	$336,973	$50,728	15%	13%
$7,418	$6,846	$572	8%	N/A
15.7%	16.3%	**	(59bps)	N/A
17.8%	15.7%	**	2.1pts	N/A
$1,020	$1,330	($310)	(23%)	N/A
$0.93	$1.15	($0.22)	(19%)	N/A
$1,259	$1,755	($496)	(28%)	N/A
$7,418	$6,846	$572	8%	9%
22.2%	22.4%	**	(18bps)	N/A
15.9%	16.2%	**	(0.4pts)	N/A
$1,427	$1,254	$173	14%	N/A
$1.30	$1.08	$0.22	20%	N/A
$1,101	$1,573	($472)	(30%)	N/A

1. Reflects the impact of reclassification as described in our earnings press release dated February 9, 2023.
2. Q3'23 includes a ~$0.8 billion negative impact from European BNPL loans originated as HFS.

• Not meaningful

Q3 2023 Results

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Financial Guidance

Q4'23 Guidance

• Net revenues expected to grow ~6%-7% on a spot basis and ~7%-8% FXN
• GAAP earnings per diluted share expected to be ~$1.20, compared to $0.81 in the prior year period, and non-GAAP earnings per diluted share expected to grow ~10% to $1.36, compared to $1.24 in the prior year period
• • In the fourth quarter of 2022, GAAP EPS included a negative impact of approximately $0.11 on PayPal's strategic investment portfolio
  • Estimated non-GAAP amounts for the three months ending December 31, 2023 reflect adjustments of approximately $150 million, including estimated stock-based compensation expense and related payroll taxes of approximately $400 million and an estimated pre-tax gain of approximately $329 million related to the sale of Happy Returns

FY'23 Guidance

• GAAP earnings per diluted share now expected to be ~$3.75, compared to $2.09 in FY'22; non-GAAP earnings per diluted share now expected to grow ~21% to ~$4.98, compared to $4.13 in FY'22
• • In 2022, GAAP EPS included a negative impact of approximately $0.20 on PayPal's strategic investment portfolio
  • Estimated non-GAAP amounts for the twelve months ending December 31, 2023 reflect adjustments of approximately $1.7 billion, including estimated stock-based compensation expense and related payroll taxes of approximately $1.6 billion, an estimated pre-tax gain of approximately $329 million related to the sale of Happy Returns in Q4'23, and a restructuring charge of approximately $117 million that occurred in Q1'23

Please see "Non-GAAP Financial Measures" and "Non-GAAP Measures of Financial Performance" for important additional information.

Conference Call & Webcast

PayPal Holdings, Inc. will host a conference call to discuss third quarter 2023 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures, can be accessed through the company's Investor Relations website at https://investor.pypl.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

Q3 2023 Results

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Presentation

All growth rates represent year-over-year comparisons, except as otherwise noted. FXN results are calculated by translating the current period local currency results by the prior period exchange rate. FXN growth rates are calculated by comparing the current period FXN results with the prior period results, excluding the impact from hedging activities. All amounts in tables are presented in U.S. dollars, rounded to the nearest millions, except as otherwise noted. As a result, certain amounts and rates may not sum or recalculate using the rounded dollar amounts provided.

Non-GAAP Financial Measures

This press release includes financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission ("SEC") including: non-GAAP net income, non- GAAP earnings per diluted share, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate, free cash flow and adjusted free cash flow. For an explanation of the foregoing non-GAAP measures, please see "Non-GAAP Measures of Financial Performance" included in this press release. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, see "Non-GAAP Measures of Financial Performance," "Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and GAAP Operating Margin to Non-GAAP Operating Margin," "Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income, GAAP Diluted EPS to Non-GAAP Diluted EPS, and GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate," and "Reconciliation of Operating Cash Flow to Free Cash Flow and Adjusted Free Cash Flow".

Q3 2023 Results

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Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future results of operations, financial condition, expectations, and plans of PayPal Holdings, Inc. and its consolidated subsidiaries ("PayPal") that reflect current projections and forecasts. Forward-looking statements can

be identified by words such as "may," "will," "would," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "continue," "strategy," "future," "opportunity," "plan," "project," "forecast," and other similar expressions. Forward-looking statements may include, but are not limited to, statements regarding our guidance and projected financial results for fourth quarter and full year 2023; our capital return program; the impact and timing of product launches and acquisitions; and the projected future growth of PayPal's businesses. Forward-looking statements are based upon various estimates and assumptions, as well as information known to PayPal as of the date of this press release, and are inherently subject to numerous risks and uncertainties. Our actual results could differ materially from those estimated or implied by forward- looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to compete in markets that are highly competitive and subject to rapid technological change, and to develop and deliver new or enhanced products and services on a timely basis; cyberattacks and security vulnerabilities, and associated impacts; the effect of global and regional political, economic, market and trade conditions, including military conflicts, supply chain issues and related events that affect payments or commerce activity, including inflation and rising interest rates; the impact of catastrophic events, such as global pandemics, that may disrupt our business, as well as our customers, suppliers, vendors and other business partners; the stability, security and performance of our payments platform; the effect of extensive government regulation and oversight related to our business, products and services in a variety of areas, including, but not limited to, laws covering payments, lending and consumer protection; the impact of complex and changing laws and regulations worldwide, including, but not limited to, laws covering privacy, data protection, and cybersecurity; the impact of payment card, bank, or other network rules or practices; risks related to our credit products, including customer default rates and the ability to realize benefits from our agreements with third parties, such as our agreement to sell our European loan receivables; changes in how consumers fund transactions; our ability to effectively detect and prevent the use of our services for fraud, abusive behaviors, illegal activities, or improper purposes; our ability to manage regulatory and litigation risks, and the outcome of legal and regulatory proceedings; our reliance on third parties in many aspects of our business; damage to our reputation or brands; fluctuations in foreign currency exchange rates; changes in tax rates and exposure to additional tax liabilities; changes to our capital allocation, management of operating cash or incurrence of indebtedness; our ability to timely develop and upgrade our technology systems, infrastructure and customer service capabilities; the impact of proposed or completed acquisitions, divestitures, strategic investments, or entries into new businesses or markets; and our ability to attract, hire, and retain highly talented employees. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or contemplated after the date hereof. More information about factors that could adversely affect PayPal's results of operations, financial condition and prospects, or that could cause actual results to differ from those expressed or implied in forward-looking statements is included under the captions "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in PayPal's most recent annual report on Form 10-K and its subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting PayPal's Investor Relations website at https://investor.pypl.com or the SEC's website at www.sec.gov. All information in this release is as of November 1, 2023. For the reasons discussed above, you should not place undue reliance on the forward-looking statements in this press release. PayPal assumes no obligation to update such forward-looking statements.

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Disclosure Channels

PayPal Holdings, Inc. uses the following channels as means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD:

• Investor Relations website (https://investor.pypl.com)
• PayPal Newsroom (https://newsroom.paypal-corp.com/)
• PayPal Corporate website (https://about.pypl.com)
• LinkedIn page (https://www.linkedin.com/company/paypal)
• Facebook page (https://www.facebook.com/PayPalUSA/)
• YouTube channel (https://www.youtube.com/paypal)
• Alex Chriss' LinkedIn profile (https://www.linkedin.com/in/alexchriss/)
• Alex Chriss' X profile (https://twitter.com/acce)
• Gabrielle Rabinovitch's LinkedIn profile (https://www.linkedin.com/in/gabriellerabinovitch/) The information that is posted through these channels may be deemed material.

Accordingly, investors should monitor these channels in addition to PayPal's press releases, filings with the SEC, public conference calls, and webcasts.

Investor Relations Contact	Media Relations Contact
[e-mail]	[e-mail]

© 2023 PayPal Holdings, Inc. All rights reserved. Other company and product names may be trademarks of their respective owners.

Q3 2023 Results

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PayPal Holdings, Inc.

Unaudited Condensed Consolidated Balance Sheets

	September 30,			December 31,
		2023			2022
		(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	6,816	$	7,776
Short-term investments		4,731			3,092
Accounts receivable, net		988			963
Loans and interest receivable, held for sale		2,165			-
Loans and interest receivable, net		5,066			7,431
Funds receivable and customer accounts		34,641			36,264
Prepaid expenses and other current assets		2,228			1,898
Total current assets		56,635			57,424
Long-term investments		3,855			5,018
Property and equipment, net		1,529			1,730
Goodwill		10,935			11,209
Intangible assets, net		564			788
Other assets		2,922			2,455
Total assets	$	76,440	$	78,624
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	131	$	126
Funds payable and amounts due to customers		38,641			40,014
Accrued expenses and other current liabilities		3,533			4,055
Income taxes payable		1,137			813
Total current liabilities		43,442			45,008
Deferred tax liability and other long-term liabilities		2,618			2,925
Long-term debt		10,640			10,417
Total liabilities		56,700			58,350
Equity:
Common stock, $0.0001 par value; 4,000 shares authorized; 1,080 and 1,136 shares		-			-
outstanding as of September 30, 2023 and December 31, 2022, respectively
Preferred stock, $0.0001 par value; 100 shares authorized, unissued		-			-
Treasury stock at cost, 237 and 173 shares as of September 30, 2023 and December 31,		(20,513)			(16,079)
2022, respectively
Additional paid-in-capital		19,307			18,327
Retained earnings		21,798			18,954
Accumulated other comprehensive income (loss)		(852)			(928)
Total equity		19,740			20,274
Total liabilities and equity	$	76,440	$	78,624

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