OTHER FINANCIAL STATEMENT DETAILS

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

CRYPTO ASSET SAFEGUARDING LIABILITY AND CORRESPONDING SAFEGUARDING ASSET

We allow our customers in certain markets to buy, hold, sell, receive, and send certain cryptocurrencies as well as use the proceeds from sales of cryptocurrencies to pay for purchases at checkout. These cryptocurrencies consist of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin (collectively, “our customers’ crypto assets”). We engage third parties, which are licensed trust companies, to provide certain custodial services, including holding our customers’ cryptographic key information, securing our customers’ crypto assets, and protecting them from loss or theft, including indemnification against certain types of losses such as theft. Our third-party custodians hold the crypto assets in a custodial account in PayPal’s name for the benefit of PayPal’s customers. We maintain the internal recordkeeping of our customers’ crypto assets, including the amount and type of crypto asset owned by each of our customers in that custodial account. As of June 30, 2023, we utilize two third-party custodians; as such, there is concentration risk in the event these custodians are not able to perform in accordance with our agreement.

Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our customers, which is recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets. We also recognize a corresponding safeguarding asset which is recorded in prepaid expenses and other current assets on our condensed consolidated balance sheets. The crypto asset safeguarding liability and corresponding safeguarding asset are measured and recorded at fair value on a recurring basis using prices available in the market we determine to be the principal market at the balance sheet date. The corresponding safeguarding asset may be adjusted for loss events, as applicable. As of June 30, 2023, the Company has not incurred any safeguarding loss events, and therefore, the crypto asset safeguarding liability and corresponding safeguarding asset were recorded at the same value.

The following table summarizes the significant crypto assets we hold for the benefit of our customers and the crypto asset safeguarding liability and corresponding safeguarding asset as of June 30, 2023 and December 31, 2022:


	June 30, 2023		December 31, 2022
	(In millions)
Bitcoin	$	532	$	291
Ethereum	369		250
Other	115		63
Crypto asset safeguarding liability	$	1,016	$	604
Crypto asset safeguarding asset	$	1,016	$	604

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2023:


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Investments		Foreign Currency Translation Adjustment (“CTA”)		Net Investment Hedges CTA Gains (Losses)		Estimated Tax (Expense) Benefit		Total
	(In millions)
Beginning balance	$	—	$	(416)	$	(595)	$	26	$	87	$	(898)
Other comprehensive income (loss) before reclassifications	11		13		(216)		169		(41)		(64)
Less: Amount of gain reclassified from accumulated other comprehensive income (loss) (“AOCI”)	34		—		—		—		—		34
Net current period other comprehensive income (loss)	(23)		13		(216)		169		(41)		(98)
Ending balance	$	(23)	$	(403)	$	(811)	$	195	$	46	$	(996)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended June 30, 2022:


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Investments		Foreign CTA		Net Investment Hedges CTA Gains (Losses)		Estimated Tax (Expense) Benefit		Total
	(In millions)
Beginning balance	$	196	$	(380)	$	(365)	$	45	$	60	$	(444)
Other comprehensive income (loss) before reclassifications	320		(164)		(300)		135		(4)		(13)
Less: Amount of gain reclassified from AOCI	107		—		—		—		—		107
Net current period other comprehensive income (loss)	213		(164)		(300)		135		(4)		(120)
Ending balance	$	409	$	(544)	$	(665)	$	180	$	56	$	(564)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2023:


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Investments		Foreign CTA		Net Investment Hedges CTA Gains (Losses)		Estimated Tax (Expense) Benefit		Total
	(In millions)
Beginning balance	$	111	$	(591)	$	(575)	$	(1)	$	128	$	(928)
Other comprehensive income (loss) before reclassifications	(24)		163		(236)		196		(82)		17
Less: Amount of gain (loss) reclassified from AOCI	110		(25)		—		—		—		85
Net current period other comprehensive income (loss)	(134)		188		(236)		196		(82)		(68)
Ending balance	$	(23)	$	(403)	$	(811)	$	195	$	46	$	(996)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2022:


	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Investments		Foreign CTA		Net Investment Hedges CTA Gains (Losses)		Estimated Tax (Expense) Benefit		Total
	(In millions)
Beginning balance	$	199	$	(87)	$	(270)	$	24	$	(2)	$	(136)
Other comprehensive income (loss) before reclassifications	364		(457)		(395)		156		58		(274)
Less: Amount of gain reclassified from AOCI	154		—		—		—		—		154
Net current period other comprehensive income (loss)	210		(457)		(395)		156		58		(428)
Ending balance	$	409	$	(544)	$	(665)	$	180	$	56	$	(564)

The following table provides details about reclassifications out of AOCI for the periods presented below:


Details about AOCI Components	Amount of Gains (Losses) Reclassified from AOCI								Affected Line Item in the Statements of Income (Loss)
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Gains on cash flow hedges—foreign currency exchange contracts	$	34	$	107	$	110	$	154	Net revenues
Losses on investments	—		—		(23)				Net revenues
Losses on investments	—		—		(2)		—		Other income (expense), net
	34		107		85		154		Income before income taxes
	—		—		—		—		Income tax expense
Total reclassifications for the period	$	34	$	107	$	85	$	154	Net income (loss)

OTHER INCOME (EXPENSE), NET

The following table reconciles the components of other income (expense), net for the periods presented below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Interest income	$	116	$	27	$	224	$	42
Interest expense	(87)		(69)		(174)		(128)
Net gains (losses) on strategic investments	133		(672)		181		(658)
Other	8		(1)		14		(53)
Other income (expense), net	$	170	$	(715)	$	245	$	(797)