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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 March 31, 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
   
pypl-20220331_g1.jpg

PayPal Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware47-2989869
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
2211 North First StreetSan Jose,California95131
(Address of Principal Executive Offices)(Zip Code)
(408) 967-1000
(Registrant’s telephone number, including area code)
  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per sharePYPLNASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Yes ☐ No  ☒
As of April 22, 2022, there were 1,158,039,929 shares of the registrant’s common stock, $0.0001 par value, outstanding, which is the only class of common or voting stock of the registrant issued.


PayPal Holdings, Inc.
TABLE OF CONTENTS
Page Number


Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

PayPal Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
2022		December 31,
2021
 (In millions, except par value)
(Unaudited)
ASSETS
Current assets:  
Cash and cash equivalents$4,861 $5,197 
Short-term investments3,104 4,303 
Accounts receivable, net850 800 
Loans and interest receivable, net of allowances of $476 and $491 as of March 31, 2022 and December 31, 2021, respectively
5,223 4,846 
Funds receivable and customer accounts37,046 36,141 
Prepaid expenses and other current assets1,298 1,287 
Total current assets52,382 52,574 
Long-term investments7,145 6,797 
Property and equipment, net1,861 1,909 
Goodwill11,370 11,454 
Intangible assets, net1,185 1,332 
Other assets1,862 1,737 
Total assets$75,805 $75,803 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$140 $197 
Funds payable and amounts due to customers39,746 38,841 
Accrued expenses and other current liabilities3,828 3,755 
Income taxes payable253 236 
Total current liabilities43,967 43,029 
Deferred tax liability and other long-term liabilities3,013 2,998 
Long-term debt8,222 8,049 
Total liabilities55,202 54,076 
Commitments and contingencies (Note 13)
Equity:
Common stock, $0.0001 par value; 4,000 shares authorized; 1,161 and 1,168 shares outstanding as of March 31, 2022 and December 31, 2021, respectively
— — 
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
— — 
Treasury stock at cost, 143 and 132 shares as of March 31, 2022 and December 31, 2021, respectively
(13,380)(11,880)
Additional paid-in-capital17,383 17,208 
Retained earnings17,044 16,535 
Accumulated other comprehensive income (loss)(444)(136)
Total equity20,603 21,727 
Total liabilities and equity$75,805 $75,803 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
20222021
 (In millions, except per share data)
(Unaudited)
Net revenues$6,483 $6,033 
Operating expenses:
Transaction expense 2,817 2,275 
Transaction and credit losses369 273 
Customer support and operations534 518 
Sales and marketing594 602 
Technology and development815 741 
General and administrative607 524 
Restructuring and other charges36 58 
Total operating expenses5,772 4,991 
Operating income711 1,042 
Other income (expense), net(82)(170)
Income before income taxes629 872 
Income tax expense (benefit)120 (225)
Net income$509 $1,097 
Net income per share:
Basic$0.44 $0.94 
Diluted$0.43 $0.92 
Weighted average shares:
Basic1,163 1,173 
Diluted1,172 1,190 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31,
 20222021
 (In millions)
(Unaudited)
Net income $509 $1,097 
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments (“CTA”)(95)(53)
Net investment hedges CTA gains, net21 — 
Tax expense on net investment hedges CTA gains, net(5)— 
Unrealized (losses) gains on cash flow hedges, net(3)198 
Tax benefit (expense) on unrealized (losses) gains on cash flow hedges, net— (3)
Unrealized losses on investments, net(293)(15)
Tax benefit on unrealized losses on investments, net67 4 
Other comprehensive income (loss), net of tax(308)131 
Comprehensive income$201 $1,228 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock
Shares		Treasury StockAdditional Paid-In CapitalAccumulated Other
Comprehensive Income (Loss)		Retained EarningsTotal 
Equity
 (In millions)
(Unaudited)
Balances at December 31, 20211,168 $(11,880)$17,208 $(136)$16,535 $21,727 
Net income— — — — 509 509 
Foreign CTA— — — (95)— (95)
Net investment hedges CTA gains, net— — — 21 — 21 
Tax expense on net investment hedges CTA gains, net— — — (5)— (5)
Unrealized losses on cash flow hedges, net— — — (3)— (3)
Unrealized losses on investments, net— — — (293)— (293)
Tax benefit on unrealized losses on investments, net— — — 67 — 67 
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes4 — (273)— — (273)
Common stock repurchased(11)(1,500)— — — (1,500)
Stock-based compensation— — 447 — — 447 
Other— — 1 — — 1 
Balances at March 31, 20221,161 $(13,380)$17,383 $(444)$17,044 $20,603 
Common Stock SharesTreasury StockAdditional Paid-In CapitalAccumulated Other
Comprehensive Income (Loss)		Retained EarningsNoncontrolling InterestTotal 
Equity
 (In millions)
(Unaudited)
Balances at December 31, 20201,172 $(8,507)$16,644 $(484)$12,366 $44 $20,063 
Net income— — — — 1,097 — 1,097 
Foreign CTA— — — (53)— — (53)
Unrealized gains on cash flow hedges, net— — — 198 — — 198 
Tax expense on unrealized gains on cash flow hedges, net— — — (3)— — (3)
Unrealized losses on investments, net— — — (15)— — (15)
Tax benefit on unrealized losses on investments, net— — — 4 — — 4 
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes7 — (870)— — — (870)
Common stock repurchased(5)(1,323)— — — — (1,323)
Stock-based compensation— — 387 — — — 387 
Change in noncontrolling interest— — — — — (44)(44)
Balances at March 31, 20211,174 $(9,830)$16,161 $(353)$13,463 $— $19,441 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,
 20222021
 (In millions)
(Unaudited)
Cash flows from operating activities:
Net income$509 $1,097 
Adjustments to reconcile net income to net cash provided by operating activities:
Transaction and credit losses369 273 
Depreciation and amortization328 300 
Stock-based compensation429 368 
Deferred income taxes(16)— 
Net (gains) losses on strategic investments(14)120 
Other 74 51 
Changes in assets and liabilities:
Accounts receivable(50)(97)
Accounts payable(29)(34)
Income taxes payable17 (33)
Other assets and liabilities (375)(287)
Net cash provided by operating activities1,242 1,758 
Cash flows from investing activities:
Purchases of property and equipment(191)(221)
Proceeds from sales of property and equipment3 — 
Purchases and originations of loans receivable(5,525)(2,133)
Principal repayment of loans receivable5,054 2,208 
Purchases of investments(8,604)(10,975)
Maturities and sales of investments8,751 9,718 
Funds receivable(239)(180)
Net cash used in investing activities(751)(1,583)
Cash flows from financing activities:
Proceeds from issuance of common stock3 2 
Purchases of treasury stock(1,500)(1,323)
Tax withholdings related to net share settlements of equity awards(244)(863)
Borrowings under financing arrangements286 — 
Repayments under financing arrangements(104)— 
Funds payable and amounts due to customers863 3,011 
Other financing activities1 — 
Net cash (used in) provided by financing activities(695)827 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 18 (42)
Net change in cash, cash equivalents, and restricted cash (186)960 
Cash, cash equivalents, and restricted cash at beginning of period 18,029 18,040 
Cash, cash equivalents, and restricted cash at end of period$17,843 $19,000 
Supplemental cash flow disclosures:
Cash paid for interest$12 $12 
Cash paid for income taxes, net$47 $87 
The table below reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents$4,861 $5,717 
Short-term investments27 26 
Funds receivable and customer accounts12,955 13,257 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$17,843 $19,000 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1—OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OVERVIEW AND ORGANIZATION

PayPal Holdings, Inc. (“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015 and is a leading technology platform that enables digital payments and simplifies commerce experiences on behalf of merchants and consumers worldwide. PayPal is committed to democratizing financial services to help improve the financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world. Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world in the markets we serve, anytime, on any platform, and using any device when sending payments or getting paid, including person-to-person payments.

We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy, cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the advent of digital payments, are continuing to evolve through legislative and regulatory action and judicial interpretation. New or changing laws and regulations, including the changes to their interpretation and implementation, as well as increased penalties and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for our customers.

SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation
The accompanying condensed consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is included in other income (expense), net on our condensed consolidated statements of income. Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our condensed consolidated statements of income. Our investment balance is included in long-term investments on our condensed consolidated balance sheets.
We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is in a VIE, we then assess if we are the primary beneficiary, which would require consolidation.
As of December 31, 2021, we had consolidated two VIEs that provided financing for and held loans receivable of Paidy, Inc. (“Paidy”). We were the primary beneficiary of the VIEs as we performed the servicing and collection for the loans receivable which were the activities that most significantly impacted the VIE’s economic performance and we had the obligation to absorb the losses and/or the right to receive the benefits of the VIE that could potentially be significant to these entities. The financial results of our consolidated VIEs were included in the condensed consolidated financial statements. As of December 31, 2021, the carrying value of the assets and liabilities of our consolidated VIEs was included as short-term investments of $87 million, loans and interest receivable, net of $21 million, and long-term debt of $98 million. Cash of $87 million, included in short-term investments, was restricted to settle the debt obligations. As of March 31, 2022, we have terminated Paidy’s legacy debt structure with a new credit agreement executed in February 2022. As a result, we no longer have any consolidated VIEs as of March 31, 2022. See “Note 12—Debt” for additional information.
As of March 31, 2022 and December 31, 2021, the carrying value of our investments that are in nonconsolidated VIEs was $86 million and $74 million, respectively, and is included as non-marketable equity securities applying the equity method of accounting in long-term investments on our condensed consolidated balance sheets. Our maximum exposure to loss related to our nonconsolidated VIEs, which represents funded commitments and any future funding commitments, was $230 million and $205 million as of March 31, 2022 and December 31, 2021, respectively.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 3, 2022.
In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for all interim periods presented. Certain amounts for prior periods have been reclassified to conform to the financial statement presentation as of and for the three months ended March 31, 2022.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and credit losses, income taxes, loss contingencies, revenue recognition, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. These estimates may change as new events occur, and as additional information surrounding the continued impact of the novel coronavirus (“COVID-19”) pandemic becomes available. Actual results could differ from these estimates and any such differences may be material to our financial statements.

Recent accounting guidance

In March 2022, the SEC released Staff Accounting Bulletin No. 121 (“SAB 121”), which provides interpretive guidance for an entity to consider when it operates a platform that allows its users to transact in crypto-assets and that engages in activities in which it has obligations to safeguard customers’ crypto-assets, whether directly or through an agent or another third party acting on its behalf. The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto-assets held for its platform users with a corresponding asset, regardless of its assessment as to who controls the crypto-asset. The crypto-asset safeguarding liability and related asset will be measured at the fair value of the crypto-assets held for the platform users with the measurement of the safeguarding asset taking into account any potential loss events. SAB 121 also requires disclosures related to the entity’s safeguarding obligations for crypto-assets held for its platform users. SEC registrants are expected to comply with SAB 121 in the first interim or annual financial statements ending after June 15, 2022 with retrospective application as of the beginning of the fiscal year. We are evaluating the approach to, and impact of, adopting this new accounting guidance on our condensed consolidated financial statements.

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses. This amended guidance will eliminate the accounting designation of a loan modification as a TDR, including eliminating the measurement guidance for TDRs. The amendments also enhance existing disclosure requirements and introduce new requirements related to modifications of receivables made to borrowers experiencing financial difficulty. Additionally, this guidance requires entities to disclose gross write-offs by year of origination for financing receivables, such as loans and interest receivable. The amended guidance is effective for fiscal years beginning after December 15, 2022 and is required to be applied prospectively, except for the recognition and measurement of TDRs which can be applied on a modified retrospective basis. We are evaluating the approach to, and impact of, adopting this new accounting guidance on our condensed consolidated financial statements.

In 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This amended guidance provides transition relief for the accounting impact of reference rate reform. For a limited period, this guidance provides optional expedients and exceptions for applying GAAP to certain contract modifications, hedging relationships, and other transactions affected by a reference rate expected to be discontinued due to reference rate reform. The amended guidance is effective through December 31, 2022. Our exposure to London Interbank Offered Rate (“LIBOR”) is primarily limited to an insignificant portion of our available-for-sale debt securities. Accordingly, we do not expect reference rate reform to have a material impact on our condensed consolidated financial statements.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable. We do not believe any of these accounting pronouncements have had, or will have, a material impact on our condensed consolidated financial statements or disclosures.

NOTE 2—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.

DISAGGREGATION OF REVENUE
We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our Chief Executive Officer, who reviews our operating results on a consolidated basis. We operate as one segment and have one reportable segment. Based on the information provided to and reviewed by our CODM, 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 the same.

The following table presents our revenue disaggregated by primary geographical market and category:
 Three Months Ended March 31,
 20222021
(In millions)
Primary geographical markets
U.S.$3,671 $3,063 
United Kingdom (“U.K.”)526 625 
Other countries(1)
2,286 2,345 
Total net revenues(2)
$6,483 $6,033 
Revenue category
Transaction revenues$5,998 $5,621 
Revenues from other value added services485 412 
Total net revenues(2)
$6,483 $6,033 
(1) No single country included in the other countries category generated more than 10% of total net revenues.
(2) Total net revenues include $187 million and $59 million for the three months ended March 31, 2022 and 2021, respectively, 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, fees, and gains earned on loans and interest receivable, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.

Net revenues are attributed to the country in which the merchant is located, or in the case of a cross-border transaction, may be earned from the country in which the consumer and the merchant respectively reside. Revenues earned from other value added services are typically attributed to the country in which either the customer or partner reside.

NOTE 3—NET INCOME PER SHARE

Basic net income per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The dilutive effect of outstanding equity incentive awards is reflected in diluted net income per share by application of the treasury stock method. The calculation of diluted net income per share excludes all anti-dilutive common shares.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following table sets forth the computation of basic and diluted net income per share for the periods indicated:
 Three Months Ended March 31,
 20222021
(In millions, except per share amounts)
Numerator:
Net income$509 $1,097 
Denominator:
Weighted average shares of common stock - basic1,163 1,173 
Dilutive effect of equity incentive awards9 17 
Weighted average shares of common stock - diluted1,172 1,190 
Net income per share:
Basic$0.44 $0.94 
Diluted$0.43 $0.92 
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive6 2 

NOTE 4—BUSINESS COMBINATIONS

There were no acquisitions accounted for as business combinations or divestitures completed in the three months ended March 31, 2022 or 2021.

ACQUISITIONS COMPLETED IN 2021

Paidy

We completed the acquisition of Paidy in October 2021 by acquiring all outstanding shares for total consideration of approximately $2.7 billion, consisting of approximately $2.6 billion in cash, and approximately $161 million in assumed restricted stock and restricted stock units, subject to vesting conditions. Paidy is a two-sided payments platform that primarily provides buy now, pay later solutions (installment credit offerings) in Japan. With the acquisition of Paidy, we intend to expand our capabilities and relevance in Japan.

The following table summarizes the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
(In millions)
Goodwill$1,918 
Customer lists and user base512 
Marketing related83 
Developed technology47 
Total intangibles$642 
Loans and interest receivable, net197 
Cash and cash equivalents101 
Other net assets87 
Short-term and long-term debt(188)
Deferred tax liabilities, net(186)
Total purchase price$2,571 


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The intangible assets acquired consist primarily of merchant contracts, trade name/trademarks, and developed technology with estimated useful lives of three to seven years. Contractual gross loans and interest receivable acquired were $216 million. We expect to collect substantially all of these receivables. The excess of the purchase consideration, including the fair value of our equity investment, over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is attributable to the workforce of Paidy and the synergies expected to arise from the acquisition, including continued customer acquisition. We do not expect goodwill to be deductible for income tax purposes. The allocation of the purchase price for this acquisition has been prepared on a preliminary basis and changes to the allocation to certain assets, liabilities, and tax estimates may occur as additional information becomes available.

In connection with the acquisition, we issued restricted stock and restricted stock units with an approximate grant date fair value of $161 million, which represents post-business combination expense. The equity granted is a combination of shares issued to certain former Paidy employees subject to a holdback arrangement and assumed Paidy employee equity grants, which vest over a period of up to approximately four years and are subject to continued employment.

Other Acquisitions

In 2021, we completed four other acquisitions accounted for as business combinations. The total purchase price for these acquisitions was $542 million, consisting primarily of cash consideration. The allocation of purchase consideration resulted in approximately $90 million of technology, customer, and marketing related intangible assets with estimated useful lives ranging from approximately one to seven years, net assets of $17 million, and initial goodwill of approximately $435 million attributable to the workforce of the acquired companies and the synergies expected to arise from these acquisitions, including the integration of the acquired technology with our existing product offerings. We do not expect goodwill to be deductible for income tax purposes. The allocation of the purchase price for these acquisitions has been prepared on a preliminary basis and changes to the allocation to certain assets, liabilities, and tax estimates may occur as additional information becomes available.

OTHER INFORMATION

Prior to acquisition, we held minority interests in certain of the companies we acquired in 2021. We remeasured these investments immediately before the completion of the respective acquisitions at a total acquisition-date fair value of $64 million, which resulted in an aggregate gain of $36 million recognized as other income (expense), net in our condensed consolidated statements of income. The acquisition-date fair value was derived using the value paid less a control premium based on market analysis performed by a third party.

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

GOODWILL

The following table presents goodwill balances and adjustments to those balances during the three months ended March 31, 2022:
December 31, 2021Goodwill Acquired Adjustments March 31, 2022
 (In millions)
Total goodwill$11,454 $— $(84)$11,370 

The adjustments to goodwill during the three months ended March 31, 2022 pertain primarily to foreign currency translation adjustments.

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
INTANGIBLE ASSETS

The components of identifiable intangible assets were as follows:
 March 31, 2022December 31, 2021
 
Gross Carrying Amount  
Accumulated Amortization 
Net Carrying AmountWeighted Average Useful Life (Years)
Gross Carrying Amount
Accumulated Amortization 
Net Carrying AmountWeighted Average Useful Life (Years)
 (In millions, except years)
Intangible assets:        
Customer lists and user base$1,704 $(967)$737 7$1,726 $(919)$807 7
Marketing related400 (321)79 5405 (315)90 5
Developed technology1,107 (879)228 31,109 (822)287 3
All other455 (314)141 7454 (306)148 7
Intangible assets, net$3,666 $(2,481)$1,185 $3,694 $(2,362)$1,332  
        
Amortization expense for intangible assets was $118 million and $106 million for the three months ended March 31, 2022 and 2021, respectively.

Expected future intangible asset amortization as of March 31, 2022 was as follows (in millions):
Fiscal years:
Remaining 2022$348 
2023226 
2024207 
2025169 
2026111 
Thereafter124 
Total$1,185 

NOTE 6—LEASES

PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, data centers, product development offices, customer services and operations centers, and warehouses.

While a majority of our lease agreements do not contain an explicit interest rate, we have certain lease agreements that 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 instead are 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.

PayPal’s lease portfolio contains a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements.

As of March 31, 2022, we had no finance leases.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The components of lease expense were as follows:
Three Months Ended March 31,
20222021
(In millions)
Lease expense
Operating lease expense$42 $45 
Sublease income(2)(2)
Lease expense, net$40 $43 

Supplemental cash flow information related to leases was as follows:
Three Months Ended March 31,
20222021
(In millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$41 $42 
Right-of-use (“ROU”) lease assets obtained in exchange for operating lease liabilities$73 $1 

Supplemental balance sheet information related to leases was as follows:
March 31, 2022December 31, 2021
(In millions, except weighted-average figures)
Operating ROU lease assets$693 $659 
Other current operating lease liabilities155 142 
Operating lease liabilities651 620 
Total operating lease liabilities$806 $762 
Weighted-average remaining lease term—operating leases
5.9 years6.1 years
Weighted-average discount rate—operating leases
3 %3 %
Future minimum lease payments for our operating leases as of March 31, 2022 were as follows:
Operating Leases
Fiscal years:(In millions)
Remaining 2022$131 
2023175 
2024156 
2025116 
202698 
Thereafter202 
Total$878 
Less: present value discount(72)
Lease liability$806 

Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases.

In the three months ended March 31, 2022 and 2021, we incurred asset impairment charges of $16 million and $26 million, respectively, within restructuring and other charges on our condensed consolidated statements of income. The impairments included a reduction to our ROU lease assets in the amount of $10 million and $21 million, respectively, which were attributed to certain leased space we are no longer utilizing for our core business operations, of which a portion is being subleased.

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

As of March 31, 2022, we have additional operating leases, primarily for real estate and data centers, which will commence in the second quarter of 2022 or later with minimum lease payments aggregating to $5 million and lease terms ranging from three to nine years.

NOTE 7—OTHER FINANCIAL STATEMENT DETAILS

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended March 31, 2022:
Unrealized Gains (Losses) on Cash Flow Hedges
Unrealized Losses on Investments
Foreign Currency
Translation Adjustment (“CTA”)
Net Investment Hedges CTA Gains
Estimated Tax (Expense) BenefitTotal
(In millions)
Beginning balance $199 $(87)$(270)$24 $(2)$(136)
Other comprehensive income (loss) before reclassifications44 (293)(95)21 62 (261)
Less: Amount of gain reclassified from accumulated other comprehensive income (“AOCI”)47 — — — — 47 
Net current period other comprehensive income (loss) (3)(293)(95)21 62 (308)
Ending balance $196 $(380)$(365)$45 $60 $(444)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended March 31, 2021:
Unrealized Gains (Losses) on Cash Flow Hedges
Unrealized Gains (Losses) on Investments
Foreign CTA
Net Investment Hedges CTA Gains
Estimated Tax BenefitTotal
(In millions)
Beginning balance $(323)$11 $(198)