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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, 2023.
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
   
PayPal_Monogram_Full_Color_RGB.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 May 2, 2023, there were 1,115,713,968 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,
2023		December 31,
2022
 (In millions, except par value)
(Unaudited)
ASSETS
Current assets:  
Cash and cash equivalents$7,101 $7,776 
Short-term investments3,559 3,092 
Accounts receivable, net967 963 
Loans and interest receivable, net of allowances of $638 and $598 as of March 31, 2023 and December 31, 2022, respectively
7,495 7,431 
Funds receivable and customer accounts35,276 36,357 
Prepaid expenses and other current assets2,162 1,898 
Total current assets56,560 57,517 
Long-term investments4,632 5,018 
Property and equipment, net1,633 1,730 
Goodwill11,195 11,209 
Intangible assets, net730 788 
Other assets2,436 2,455 
Total assets$77,186 $78,717 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$142 $126 
Funds payable and amounts due to customers39,026 40,107 
Accrued expenses and other current liabilities4,164 4,055 
Income taxes payable577 813 
Total current liabilities43,909 45,101 
Deferred tax liability and other long-term liabilities2,938 2,925 
Long-term debt10,481 10,417 
Total liabilities57,328 58,443 
Commitments and contingencies (Note 13)
Equity:
Common stock, $0.0001 par value; 4,000 shares authorized; 1,122 and 1,136 shares outstanding as of March 31, 2023 and December 31, 2022, respectively
— — 
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
— — 
Treasury stock at cost, 192 and 173 shares as of March 31, 2023 and December 31, 2022, respectively
(17,522)(16,079)
Additional paid-in-capital18,529 18,327 
Retained earnings19,749 18,954 
Accumulated other comprehensive income (loss)(898)(928)
Total equity19,858 20,274 
Total liabilities and equity$77,186 $78,717 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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4
Table of Contents


PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended March 31,
20232022
 (In millions, except per share data)
(Unaudited)
Net revenues$7,040 $6,483 
Operating expenses:
Transaction expense 3,283 2,817 
Transaction and credit losses442 369 
Customer support and operations488 534 
Sales and marketing436 594 
Technology and development721 815 
General and administrative507 607 
Restructuring and other charges164 36 
Total operating expenses6,041 5,772 
Operating income999 711 
Other income (expense), net75 (82)
Income before income taxes1,074 629 
Income tax expense279 120 
Net income (loss)$795 $509 
Net income (loss) per share:
Basic$0.70 $0.44 
Diluted$0.70 $0.43 
Weighted average shares:
Basic1,129 1,163 
Diluted1,134 1,172 

The accompanying notes are an integral part of these condensed consolidated financial statements.


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5
Table of Contents

PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended March 31,
 20232022
 (In millions)
(Unaudited)
Net income (loss)$795 $509 
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments (“CTA”)(20)(95)
Net investment hedges CTA gains, net27 21 
Tax expense on net investment hedges CTA gains, net(6)(5)
Unrealized losses on cash flow hedges, net(111)(3)
Tax benefit on unrealized losses on cash flow hedges, net6 — 
Unrealized gains (losses) on investments, net175 (293)
Tax (expense) benefit on unrealized gains (losses) on investments, net(41)67 
Other comprehensive income (loss), net of tax30 (308)
Comprehensive income (loss)$825 $201 

The accompanying notes are an integral part of these condensed consolidated financial statements.


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6
Table of Contents

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, 20221,136 $(16,079)$18,327 $(928)$18,954 $20,274 
Net income— — — — 795 795 
Foreign CTA— — — (20)— (20)
Net investment hedges CTA gains, net— — — 27 — 27 
Tax expense on net investment hedges CTA gains, net— — — (6)— (6)
Unrealized losses on cash flow hedges, net— — — (111)— (111)
Tax benefit on unrealized losses on cash flow hedges, net— — — 6 — 6 
Unrealized gains on investments, net— — — 175 — 175 
Tax expense on unrealized gains on investments, net— — — (41)— (41)
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes5 — (157)— — (157)
Common stock repurchased(19)(1,432)— — — (1,432)
Excise tax on common stock repurchased— (11)— — — (11)
Stock-based compensation— — 359 — — 359 
Balances at March 31, 20231,122 $(17,522)$18,529 $(898)$19,749 $19,858 

Common Stock SharesTreasury 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 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,
 20232022
 (In millions)
(Unaudited)
Cash flows from operating activities:
Net income (loss)$795 $509 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Transaction and credit losses442 369 
Depreciation and amortization270 328 
Stock-based compensation345 429 
Deferred income taxes(67)(16)
Net (gains) losses on strategic investments(48)(14)
Other (92)65 
Changes in assets and liabilities:
Accounts receivable(3)(50)
Accounts payable3 (29)
Income taxes payable(235)17 
Other assets and liabilities (240)(391)
Net cash provided by operating activities1,170 1,217 
Cash flows from investing activities:
Purchases of property and equipment(170)(191)
Proceeds from sales of property and equipment1 3 
Purchases and originations of loans receivable(8,267)(5,525)
Principal repayment of loans receivable8,063 5,054 
Purchases of investments(6,100)(8,604)
Maturities and sales of investments5,445 8,751 
Funds receivable1,076 (239)
Collateral posted related to derivative instruments, net(22)(1)
Other investing activities8 — 
Net cash provided by (used in) investing activities34 (752)
Cash flows from financing activities:
Proceeds from issuance of common stock1 3 
Purchases of treasury stock(1,432)(1,500)
Tax withholdings related to net share settlements of equity awards(149)(244)
Borrowings under financing arrangements72 286 
Repayments under financing arrangements(5)(104)
Funds payable and amounts due to customers(1,020)863 
Collateral received related to derivative instruments, net(129)26 
Other financing activities— 1 
Net cash used in financing activities(2,662)(669)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (4)18 
Net change in cash, cash equivalents, and restricted cash (1,462)(186)
Cash, cash equivalents, and restricted cash at beginning of period 19,156 18,029 
Cash, cash equivalents, and restricted cash at end of period$17,694 $17,843 

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(continued)

 Three Months Ended March 31,
 20232022
 (In millions)
(Unaudited)
Supplemental cash flow disclosures:
Cash paid for interest$2 $12 
Cash paid for income taxes, net$495 $47 
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$7,101 $4,861 
Short-term investments13 27 
Funds receivable and customer accounts10,580 12,955 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$17,694 $17,843 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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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, continue to evolve through legislative and regulatory action and judicial interpretation. New or changing laws and regulations, including 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 (loss). 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 (loss). 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 March 31, 2023 and December 31, 2022, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct activities that would significantly impact their economic performance. As of March 31, 2023 and December 31, 2022, the carrying value of our investments in nonconsolidated VIEs was $135 million and $128 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 $233 million and $232 million as of March 31, 2023 and December 31, 2022, respectively.

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, 2022 (the “2022 Form 10-K”) filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on February 10, 2023.

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, 2023.



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

Beginning with the fourth quarter of 2022, we reclassified certain cash flows related to our collateral security arrangements for derivative instruments from cash flows from operating activities to cash flows from investing activities and cash flows from financing activities within the condensed consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current period presentation.

The current period presentation classifies all changes in collateral posted and collateral received related to derivative instruments on our condensed consolidated statements of cash flows as cash flows from investing activities and cash flows from financing activities, respectively. We believe that the current period presentation provides a more meaningful representation of the nature of the cash flows and allows for greater transparency as the cash flows related to the derivatives impact operating cash flows upon settlement exclusive of the offsetting cash flows from collateral.

The following table presents the effects of the changes on the presentation of these cash flows to the previously reported condensed consolidated statements of cash flows:
Three Months Ended March 31, 2022
(In millions)
As Previously Reported (1)
AdjustmentsReclassified
Net cash provided by (used in):
Operating activities(2)
$1,242 $(25)$1,217 
Investing activities(3)
(751)(1)(752)
Financing activities(4)
(695)26 (669)
Effect of exchange rates on cash, cash equivalents, and restricted cash18 — 18 
Net decrease in cash, cash equivalents, and restricted cash$(186)$— $(186)
(1) As reported in our Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on April 28, 2022.
(2) Financial statement line impacted in operating activities was “Other assets and liabilities.”
(3) Financial statement line impacted in investing activities was “Collateral posted related to derivative instruments, net.”
(4) Financial statement line impacted in financing activities was “Collateral received related to derivative instruments, net.”

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, the valuation of goodwill and intangible assets, and the valuation of strategic investments. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. Actual results could materially differ from these estimates.

Recently adopted accounting guidance

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 eliminated the accounting designation of a loan modification as a TDR and the measurement guidance for TDRs. The amendments also enhanced existing disclosure requirements and introduced new requirements related to modifications of receivables due from borrowers experiencing financial difficulty. Additionally, this guidance required entities to disclose gross charge-offs by year of origination for financing receivables, such as loans and interest receivable. The amended guidance was effective for fiscal years beginning after December 15, 2022 and was required to be applied prospectively, except for the recognition and measurement of TDRs, which could be applied on a modified retrospective basis. We adopted this guidance effective January 1, 2023 on a prospective basis. Our financial statements were not materially impacted upon adoption. For additional information, see “Note 11—Loans and Interest Receivable.”

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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 regularly 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,
 20232022
(In millions)
Primary geographical markets
U.S.$4,147 $3,671 
Other countries(1)
2,893 2,812 
Total net revenues(2)
$7,040 $6,483 
Revenue category
Transaction revenues$6,364 $5,998 
Revenues from other value added services676 485 
Total net revenues(2)
$7,040 $6,483 
(1) No single country included in the other countries category generated more than 10% of total net revenues.
(2) Total net revenues include $451 million and $187 million for the three months ended March 31, 2023 and 2022, 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 and fees 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 party paying our fee is located.

NOTE 3—NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) 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 (loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares. During periods when we report net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items would decrease the net loss per share.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
 Three Months Ended March 31,
 20232022
(In millions, except per share amounts)
Numerator:
Net income (loss)$795 $509 
Denominator:
Weighted average shares of common stock - basic1,129 1,163 
Dilutive effect of equity incentive awards5 9 
Weighted average shares of common stock - diluted1,134 1,172 
Net income (loss) per share:
Basic$0.70 $0.44 
Diluted$0.70 $0.43 
Common stock equivalents excluded from income (loss) per diluted share because their effect would have been anti-dilutive or potentially dilutive14 6 

NOTE 4—BUSINESS COMBINATIONS

There were no acquisitions accounted for as business combinations or divestitures completed in the three months ended March 31, 2023 and 2022.

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, 2023:
December 31,
2022		Goodwill Acquired Adjustments March 31,
2023
 (In millions)
Total goodwill$11,209 $— $(14)$11,195 

The adjustments to goodwill during the three months ended March 31, 2023 pertained to foreign currency translation adjustments.

INTANGIBLE ASSETS

The components of identifiable intangible assets were as follows:
 March 31, 2023December 31, 2022
 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$1,596 $(1,062)$534 7$1,664 $(1,092)$572 7
Marketing related394 (343)51 5395 (339)56 5
Developed technology1,079 (1,037)42 31,099 (1,048)51 3
All other439 (336)103 7438 (329)109 7
Intangible assets, net$3,508 $(2,778)$730 $3,596 $(2,808)$788  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
        

In the three months ended March 31, 2023, we retired approximately $84 million of fully amortized intangible assets, of which $65 million and $19 million were included in customer lists and user base and developed technology, respectively. Amortization expense for intangible assets was $57 million and $118 million for the three months ended March 31, 2023 and 2022, respectively.

Expected future intangible asset amortization as of March 31, 2023 was as follows (in millions):

Fiscal years:
Remaining 2023$160 
2024195 
2025159 
2026102 
202764 
Thereafter50 
Total$730 

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, 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 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 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.

As of March 31, 2023, we had no finance leases.

The components of lease expense were as follows:
Three Months Ended March 31,
20232022
(In millions)
Lease expense
Operating lease expense$41 $42 
Sublease income(2)(2)
Lease expense, net$39 $40 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Supplemental cash flow information related to leases was as follows:
Three Months Ended March 31,
20232022
(In millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$43 $41 
Right-of-use (“ROU”) lease assets obtained in exchange for new operating lease liabilities$(1)$83 
Other non-cash ROU lease asset activity$(21)$(10)

Supplemental balance sheet information related to leases was as follows:
March 31,
2023		December 31,
2022
(In millions, except weighted-average figures)
Operating ROU lease assets$512 $574 
Current operating lease liabilities151 151 
Operating lease liabilities529 569 
Total operating lease liabilities$680 $720 
Weighted-average remaining lease term—operating leases
5.7 years5.7 years
Weighted-average discount rate—operating leases
4 %3 %

Future minimum lease payments for our operating leases as of March 31, 2023 were as follows:
Operating Leases
Fiscal years:(In millions)
Remaining 2023$130 
2024157 
2025116 
2026106 
202793 
Thereafter155 
Total$757 
Less: present value discount(77)
Lease liability$680 

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, 2023 and 2022, we incurred asset impairment charges of $39 million and $16 million, respectively, within restructuring and other charges on our condensed consolidated statements of income (loss). The impairments included a reduction to our ROU lease assets in the amount of $21 million and $10 million, respectively, which was attributed to certain leased space we are no longer utilizing for our business operations, a portion of which is being subleased.

As of March 31, 2023, we entered into additional operating leases primarily for real estate, which will commence in the second quarter of 2023 or later, with minimum lease payments aggregating to $13 million and lease terms ranging from four to six years.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 7—OTHER FINANCIAL STATEMENT DETAILS

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 custodian holds 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 March 31, 2023, we utilize one third-party custodian; as such, there is concentration risk in the event the custodian is 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 March 31, 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 March 31, 2023 and December 31, 2022:

March 31,
2023		December 31, 2022
(In millions)
Bitcoin$499 $291 
Ethereum362 250