PayPal(PYPL) - 2025 Q1 - Quarterly Report

Financial Performance - Net revenues for the three months ended March 31, 2025, were $7,791 million, a 1% increase from$ 7,699 million in the same period of 2024[179]. - Operating income increased by $362 million, or 31%, reaching$ 1,530 million, with an operating margin of 20% compared to 15% in the prior year[183]. - Net income rose by $399 million, or 45%, totaling$ 1,287 million, driven by increased operating income and other income[184]. - Total Payment Volume (TPV) increased by 3% to $417 billion for the three months ended March 31, 2025, compared to$ 404 billion in 2024[206]. - Revenues from other value-added services increased by $110 million, or 17%, primarily due to a$ 70 million increase in interest and fee revenue from loans[208]. Transaction and Account Metrics - Total payment volume (TPV) grew by 3%, contributing to the increase in net revenues despite a decline in transaction revenue due to changes in TPV mix[181]. - Active accounts increased by 2% to 436 million as of March 31, 2025, compared to 427 million in the same period of 2024[206]. - Total payment transactions decreased by 7% to 6.0 billion for the three months ended March 31, 2025, down from 6.5 billion in 2024[206]. - Transaction revenues remained consistent, with a decline of approximately $200 million from Braintree products offset by a$ 170 million increase from Venmo and PayPal services[200]. Operating Expenses and Income - Operating expenses decreased by $270 million, or 4%, primarily due to a decline in transaction expenses and restructuring costs[182]. - Total operating expenses decreased by 4% to$ 6.261 billion for the three months ended March 31, 2025, down from $6.531 billion in 2024[209]. - Sales and marketing expenses increased by$ 67 million, or 16%, primarily due to higher spending on marketing and brand advertising[227]. - Foreign exchange rate movements had a net unfavorable impact of $17 million on operating income for the three months ended March 31, 2025[188]. Cash Flow and Investments - Net cash provided by operating activities decreased by$ 757 million to $1.160 billion for the three months ended March 31, 2025, compared to$ 1.917 billion for the same period in 2024[241][242]. - Net cash used in investing activities increased by $4.6 billion, totaling$ (3.657) billion for the three months ended March 31, 2025, primarily due to a decline in maturities and sales of investments[244]. - Net cash provided by financing activities increased by $3.4 billion to$ 994 million for the three months ended March 31, 2025, compared to $(2.362) billion for the same period in 2024[245]. - As of March 31, 2025, the company had cash, cash equivalents, and investments totaling$ 14.192 billion, an increase from $13.846 billion as of December 31, 2024[239]. - The company issued fixed and floating rate notes totaling$ 1.5 billion in March 2025, with an aggregate principal amount of $12.1 billion in debt outstanding as of March 31, 2025[247]. Loans and Receivables - Consumer loans and interest receivable balance increased by 21% to$ 5.4 billion as of March 31, 2025, compared to $4.5 billion in 2024[220]. - Merchant loans, advances, and interest receivable outstanding increased by 32% to$ 1.6 billion as of March 31, 2025, compared to $1.2 billion in 2024[223]. - The company sold$ 5.3 billion of loans and interest receivable during the three months ended March 31, 2025, compared to $4.8 billion in the same period of 2024[255]. Tax and Foreign Exchange - The effective income tax rate decreased to 20% for the three months ended March 31, 2025, down from 27% in 2024[237]. - The company is exposed to foreign exchange risk due to significant international operations, with potential impacts from a 10% change in exchange rates for all currencies[269]. - The company has a foreign currency exposure management program to mitigate the effects of currency fluctuations on consolidated cash flows and results of operations through foreign exchange contracts[270]. - A hypothetical 10% weakening of the U.S. dollar would have resulted in a decrease of approximately$ 443 million in AOCI related to foreign exchange contracts[272]. - Adverse changes in exchange rates of a hypothetical 10% would have negatively impacted income before income taxes by approximately $309 million at March 31, 2025, without considering the offsetting effect of foreign currency exchange contracts[274]. Strategic Investments - Strategic investments totaled$ 1.6 billion as of March 31, 2025, representing about 10% of the total cash and investment portfolio[276]. - A hypothetical adverse change of 10% in the carrying value of strategic investments would have resulted in a decrease of approximately $163 million[276]. - The financial success of investments in privately held companies is typically dependent on liquidity events such as public offerings or acquisitions[276].