-
Revenue of $2.3 billion and growth of 15%, foreign currency neutral
revenue growth of 19% on a non-GAAP pro forma basis
-
GAAP operating margin up 80 basis points to 15% and non-GAAP
operating margin up 200 basis points on a pro forma basis to 20%
-
28% GAAP EPS growth to $0.25 and 31% non-GAAP pro forma EPS growth
to $0.31
SAN JOSE, Calif.--(BUSINESS WIRE)--
Global technology platform and payments leader PayPal Holdings, Inc.
(Nasdaq:PYPL) today announced results for the third quarter ended
September 30, 2015, demonstrating PayPal's strong start as an
independent, public company. For the quarter, PayPal gained market
share, expanded its customer base, deepened engagement with merchants
and consumers and delivered on its financial commitments.
The company reported record revenue for the period of $2.3 billion, an
increase of 15% on a non-GAAP pro forma basis and 19% on a foreign
currency (FX) neutral basis. GAAP net income for the quarter was $301
million or $0.25 per diluted share, and non-GAAP net income was $377
million or $0.31 per diluted share, driven primarily by growing
relevancy with its customer base.
"PayPal is entirely focused on digital payments and transforming money
for people around the world. This clear focus and our strong value
proposition allowed us to deliver strong financial results in the third
quarter," said Dan Schulman, President and CEO of PayPal. "We are
operating in a time when change is sweeping through the financial
services industry driven by the rise of mobile technology and the
acceleration of money becoming digital. These two massive trends play
directly to our strengths and we are leveraging this transformation to
extend and accelerate our lead."
Gaining Market Share
In the third quarter, PayPal gained market share and extended its lead
with total payment volume (TPV) growing substantially faster than the
rate of global e-commerce. Total PayPal TPV grew 27% on an FX neutral
basis to $70 billion and merchant services TPV advanced 34% on an FX
neutral basis and represented 80% of TPV for the quarter. The company
also continued to accelerate its lead in mobile payments, processing 345
million transactions, an increase of 38%.
Expanding PayPal's Customer Base
In the quarter, consumers across the world, and merchants, large and
small signed up for PayPal in record numbers. The company grew its
customer base to 173 million active customers and continued to add new
partners to acquire customers like Macy's, Shell in the UK and Latin
America's largest mobile wireless provider America Movil. PayPal's large
global customer base and strong two sided platform are tremendous assets
and difficult to replicate.
Deepening PayPal's Engagement with Customers
PayPal's aim is not only to grow its customer base, but to create
deeper, more relevant relationships with each of its customers. In the
third quarter, the company processed 1.22 billion payment transactions,
which translates to 27 payment transactions per active customer account.
This is an increase from 24 payment transactions per active customer
account in the same period last year. $2.1 billion of volume was
processed through the Venmo product, growing over 200%, making it one of
the fastest growing apps in the world by dollar volume.
"These metrics demonstrate the trust that our customers place in PayPal,
and they are increasingly finding more utility and value in their PayPal
accounts," said Schulman.
PayPal Credit
Credit is an important way PayPal deepens its relationships with its
customers, both merchants and consumers. The company is committed to
creating transparent and compelling credit products that help its
customers have better control over their money. The PayPal Working
Capital product achieved a milestone, having facilitated more than $1
billion in credit to small and mid-sized merchants since inception.
Repeat usage for this product and high customer satisfaction rates
demonstrate that by designing offerings to serve its customers' needs
coupled with global ubiquity, PayPal can create a virtuous cycle and
sustainable platform.
Third Quarter 2015 Financial Highlights
|
|
|
|
Third Quarter
|
|
(presented in millions, except per share data and percentages)
|
|
|
2015
|
|
2014
|
|
YoY Growth
|
|
FX-Neutral YoY
Growth
|
|
Total Payment Volume (TPV)
|
|
|
$69,738 |
|
$58,184 |
|
$11,554 |
|
20%
|
|
27%
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$2,258 |
|
$1,975 |
|
$283 |
|
14%
|
|
18%
|
|
Net income
|
|
|
$301 |
|
$234 |
|
$67 |
|
29%
|
|
N/A
|
|
Earnings per diluted share
|
|
|
$0.25 |
|
$0.19 |
|
$0.06 |
|
28%
|
|
N/A
|
|
Non-GAAP Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$2,258 |
|
$1,971 |
|
$287 |
|
15%
|
|
19%
|
|
Net income
|
|
|
$377 |
|
$288 |
|
$89 |
|
31%
|
|
N/A
|
|
Earnings per diluted share
|
|
|
$0.31 |
|
$0.24 |
|
$0.07 |
|
31%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Selected Financial and Operational Results
Operating Margin - GAAP operating margin for the third quarter of
2015 increased to 14.6%, compared to 13.8% for the same period last
year. Non-GAAP operating margin increased to 19.9%, compared to non-GAAP
pro forma operating margin of 17.9% for the same period last year.
Assuming the operating agreement and other commercial agreements with
eBay Inc. entered into in connection with the spin-off had been in
effect during the third quarter of 2014, non-GAAP operating margin
increased 200 basis points during the third quarter of 2015 compared to
the same period last year.
Other Value Added Services (OVAS) - OVAS revenue increased 25% to
$0.3 billion. OVAS benefited from the amendment and extension of the
Company's agreement with Synchrony Financial and the growth of interest
income and fees from its PayPal Credit products.
Taxes - The GAAP effective tax rate for the third quarter of 2015
was 14.0%, compared to 15.2% for the third quarter of 2014. The non-GAAP
effective tax rate was 17.7% compared to the non-GAAP pro forma
effective tax rate of 18.6% for the third quarter of 2014.
Cash flow - PayPal generated $652 million of operating cash flow
and $519 million of free cash flow during the third quarter of 2015.
Cash and cash equivalents and non-equity investments - PayPal's
cash and cash equivalents and non-equity investments totaled $6.7
billion at September 30, 2015.
Expected 2015 Financial Results for PayPal
Holdings, Inc.
Full year 2015 - PayPal expects net revenues to grow 15% - 18% on
an FX neutral GAAP basis and 15% - 18% on an FX neutral non-GAAP pro
forma basis. PayPal expects GAAP earnings per diluted share in the range
of $0.94 - $0.98 and non-GAAP pro-forma earnings per diluted share in
the range of $1.23 - $1.27.
Quarterly Conference Call and Webcast
PayPal Holdings, Inc. will host a conference call to discuss third
quarter 2015 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 and non-GAAP pro-forma measures to their most directly
comparable GAAP measures, can be accessed through the company's Investor
Relations website at https://investor.paypal-corp.com.
In addition, an archive of the webcast will be accessible for 90 days
through the same link.
PayPal Holdings, Inc. uses its Investor Relations website at https://investor.paypal-corp.com,
its PayPal Stories Blog https://www.paypal.com/stories/us,
Twitter handle (@PayPal) and LinkedIn page https://www.linkedin.com/company/paypal
as a means of disclosing information about the company and for complying
with its disclosure obligations under Regulation FD. The information we
post through these channels may be deemed material. Accordingly,
investors should monitor these channels in addition to PayPal's press
releases, SEC filings, public conference calls and webcasts.
About PayPal
At PayPal (Nasdaq: PYPL), we put people at the center of everything we
do. Founded in 1998, we continue to be at the forefront of the digital
payments revolution. Last year we processed 4 billion payments, of which
1 billion were made on mobile devices. PayPal gives people better ways
to connect to their money and to each other, helping them safely access
and move their money and offering a choice of how they would like to pay
or be paid. With our 173 million active customer accounts, we have
created an open and secure payments ecosystem that people and businesses
choose to securely transact with each other online, in stores and on
mobile devices. PayPal is a truly global payments platform that is
available to people in 203 markets, allowing customers to get paid in
more than 100 currencies, withdraw funds to their bank accounts in 57
currencies and hold balances in their PayPal accounts in 26 currencies.
For more information on PayPal, visit https://about.paypal-corp.com.
For PYPL financial information visit https://investor.paypal-corp.com.
Presentation
All growth rates represent year-over-year comparisons, except as
otherwise noted. FX-neutral results are calculated by translating the
current period's local currency results by the prior period's exchange
rate. FX-neutral growth rates are calculated by comparing the current
period's FX-neutral results by the prior period's results, excluding the
impact of hedging. All amounts in tables are presented in U.S. dollars,
rounded to the nearest millions, except as otherwise noted. As a result,
certain amounts may not sum or recalculate using the rounded dollar
amounts provided.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as
"non-GAAP financial measures" by the Securities and Exchange Commission
(SEC): non-GAAP net income, non-GAAP earnings per diluted share,
non-GAAP operating margin, non-GAAP effective tax rate and free cash
flow. In addition, the company has included certain pro forma
adjustments in its presentation of non-GAAP net revenue, non-GAAP net
income, non-GAAP earnings per diluted share, and non-GAAP operating
margin in this presentation (collectively referred to as "non-GAAP pro
forma measures"). These adjustments reflect items that are factually
supportable, directly attributable to the separation of the company from
eBay Inc. on July 17, 2015, and expected to have a continuing impact on
the company's results of operations. The company has included these pro
forma adjustments because management believes that they help to
facilitate comparisons of the company's operating results between
periods. In discussing year-over-year comparisons, the company has
chosen to present non-GAAP pro forma measures because it believes that
these measures provide investors a consistent basis for reviewing the
company's performance across different periods. 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 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," "Reconciliation of Operating Cash Flow to
Free Cash Flow," "Reconciliation of GAAP Operating Margin to Non-GAAP
Pro Forma Operating Margin, GAAP Net Income (Loss) to Non-GAAP Pro Forma
Net Income, and GAAP Diluted EPS to Non-GAAP Pro Forma Diluted EPS," and
"Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro Forma Net
Revenues by Type, and GAAP Net Revenues by Geography to Non-GAAP Pro
Forma Net Revenues by Geography" included in this press release.
Forward-Looking Statements
This press release contains forward-looking statements relating to,
among other things, the future performance of PayPal Holdings, Inc. and
its consolidated subsidiaries that are based on the company's current
expectations, forecasts and assumptions and involve risks and
uncertainties. These statements include, but are not limited to,
statements regarding expected financial results for full year 2015 and
future growth in the company's businesses. Actual results could differ
materially from those predicted or implied and reported results should
not be considered as an indication of future performance. Factors that
could cause or contribute to such differences include, but are not
limited to: changes in political, business and economic conditions,
including any regional general economic downturn or crisis and any
conditions that affect ecommerce growth; fluctuations in foreign
currency exchange rates; the company's ability to successfully react to
the increasing importance of mobile payments and mobile commerce; the
company's ability to deal with the increasingly competitive environment
for its businesses, including competition for consumer and merchants;
changes to the company's capital allocation or management of operating
cash; the company's need to manage an increasingly large enterprise with
a broad range of businesses of varying degrees of maturity and in many
different geographies; the effect of management changes and business
initiatives; the company's need and ability to manage other regulatory,
tax and litigation risks as its services are offered in more
jurisdictions and applicable laws become more restrictive; any changes
the company may make to its product offerings; the competitive,
regulatory, payment card association-related and other risks specific to
the company's PayPal, PayPal Credit, Braintree and Venmo products,
especially as PayPal continues to expand geographically and introduce
new products and as new laws and regulations related to payments and
financial services come into effect; the company's ability to timely
upgrade and develop its technology systems, infrastructure and customer
service capabilities at reasonable cost; the company's ability to
maintain stability and performance of its Payment Platform while adding
new products and features in a timely fashion; and the company's ability
to profitably integrate, manage and grow businesses that have been
acquired or may be acquired in the future. The forward-looking
statements in this release do not include the potential impact of any
acquisitions or divestitures that may be announced and/or completed
after the date hereof.
More information about factors that could affect the company's operating
results is included under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the company's registration statement on Form 10, as
amended, and subsequent quarterly reports on Form 10-Q, copies of which
may be obtained by visiting the company's Investor Relations website at https://investor.paypal-corp.com
or the SEC's website at www.sec.gov.
All information in this release is as of October 28, 2015. Undue
reliance should not be placed on the forward-looking statements in this
press release, which are based on information available to the company
on the date hereof. The company assumes no obligation to update such
statements.
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
(In millions, except par value)
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,880
|
|
|
$
|
2,201
|
|
Short-term investments
|
|
|
2,419
|
|
|
29
|
|
Accounts receivable, net
|
|
|
173
|
|
|
65
|
|
Loans and interest receivable, net
|
|
|
3,602
|
|
|
3,586
|
|
Funds receivable and customer accounts
|
|
|
11,802
|
|
|
10,612
|
|
Notes and receivables from affiliates
|
|
|
—
|
|
|
694
|
|
Other current assets
|
|
|
678
|
|
|
378
|
|
Total current assets
|
|
|
20,554
|
|
|
17,565
|
|
Long-term investments
|
|
|
2,392
|
|
|
31
|
|
Property and equipment, net
|
|
|
1,298
|
|
|
922
|
|
Goodwill |
|
|
3,415
|
|
|
3,189
|
|
Intangible assets, net
|
|
|
174
|
|
|
156
|
|
Other assets
|
|
|
63
|
|
|
54
|
|
Total assets
|
|
|
$
|
27,896
|
|
|
$
|
21,917
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
114
|
|
|
$
|
115
|
|
Funds payable and amounts due to customers
|
|
|
11,802
|
|
|
10,612
|
|
Notes and payables to affiliates
|
|
|
—
|
|
|
1,093
|
|
Accrued expenses and other current liabilities
|
|
|
1,089
|
|
|
1,434
|
|
Income taxes payable
|
|
|
67
|
|
|
29
|
|
Total current liabilities
|
|
|
13,072
|
|
|
13,283
|
|
Long-term liabilities
|
|
|
1,610
|
|
|
386
|
|
Total liabilities
|
|
|
14,682
|
|
|
13,669
|
|
Equity:
|
|
|
|
|
|
|
Net parent investment
|
|
|
—
|
|
|
8,138
|
|
Common stock, $0.0001 par value; 4,000 shares authorized; 1,221 and
1,218 outstanding
|
|
|
—
|
|
|
—
|
|
Additional paid-in-capital
|
|
|
12,910
|
|
|
—
|
|
Retained earnings
|
|
|
301
|
|
|
—
|
|
Accumulated other comprehensive income
|
|
|
3
|
|
|
110
|
|
Total equity
|
|
|
13,214
|
|
|
8,248
|
|
Total liabilities and equity
|
|
|
$
|
27,896
|
|
|
$
|
21,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Statement of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
$
|
2,258
|
|
|
|
$
|
1,975
|
|
|
|
$
|
6,692
|
|
|
|
$
|
5,832
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction expense
|
|
|
|
651
|
|
|
|
537
|
|
|
|
1,860
|
|
|
|
1,576
|
|
|
Transaction and loan losses
|
|
|
|
201
|
|
|
|
180
|
|
|
|
564
|
|
|
|
453
|
|
|
Customer support and operations
|
|
|
|
317
|
|
|
|
257
|
|
|
|
900
|
|
|
|
775
|
|
|
Sales and marketing (1) |
|
|
|
235
|
|
|
|
267
|
|
|
|
716
|
|
|
|
735
|
|
|
Product development (1) |
|
|
|
230
|
|
|
|
232
|
|
|
|
695
|
|
|
|
651
|
|
|
General and administrative (1) |
|
|
|
141
|
|
|
|
101
|
|
|
|
414
|
|
|
|
338
|
|
|
Depreciation and amortization (1) |
|
|
|
153
|
|
|
|
129
|
|
|
|
444
|
|
|
|
384
|
|
|
Restructuring
|
|
|
|
—
|
|
|
|
—
|
|
|
|
49
|
|
|
|
—
|
|
|
Total operating expenses
|
|
|
|
1,928
|
|
|
|
1,703
|
|
|
|
5,642
|
|
|
|
4,912
|
|
|
Operating income
|
|
|
|
330
|
|
|
|
272
|
|
|
|
1,050
|
|
|
|
920
|
|
|
Other income (expense), net
|
|
|
|
20
|
|
|
|
4
|
|
|
|
20
|
|
|
|
(6
|
)
|
|
Income before income taxes
|
|
|
|
350
|
|
|
|
276
|
|
|
|
1,070
|
|
|
|
914
|
|
|
Income tax expense
|
|
|
|
49
|
|
|
|
42
|
|
|
|
209
|
|
|
|
781
|
|
|
Net income
|
|
|
|
$
|
301
|
|
|
|
$
|
234
|
|
|
|
$
|
861
|
|
|
|
$
|
133
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.25
|
|
|
|
$
|
0.19
|
|
|
|
$
|
0.71
|
|
|
|
$
|
0.11
|
|
|
Diluted
|
|
|
|
$
|
0.25
|
|
|
|
$
|
0.19
|
|
|
|
$
|
0.70
|
|
|
|
$
|
0.11
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
1,221
|
|
|
|
1,218
|
|
|
|
1,221
|
|
|
|
1,218
|
|
|
Diluted
|
|
|
|
1,227
|
|
|
|
1,224
|
|
|
|
1,227
|
|
|
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer support and operations
|
|
|
|
16
|
|
|
|
12
|
|
|
|
44
|
|
|
|
39
|
|
|
Sales and marketing
|
|
|
|
18
|
|
|
|
14
|
|
|
|
42
|
|
|
|
40
|
|
|
Product development
|
|
|
|
33
|
|
|
|
28
|
|
|
|
97
|
|
|
|
80
|
|
|
General and administrative
|
|
|
|
25
|
|
|
|
20
|
|
|
|
68
|
|
|
|
56
|
|
|
Depreciation and amortization
|
|
|
|
2
|
|
|
|
1
|
|
|
|
6
|
|
|
|
3
|
|
|
|
|
|
|
$
|
94
|
|
|
|
$
|
75
|
|
|
|
$
|
257
|
|
|
|
$
|
218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Combined and Consolidated Statement of Cash
Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
301
|
|
|
|
$
|
234
|
|
|
|
$
|
861
|
|
|
|
$
|
133
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and loan losses
|
|
|
|
201
|
|
|
|
180
|
|
|
|
564
|
|
|
|
453
|
|
|
Depreciation and amortization
|
|
|
|
153
|
|
|
|
129
|
|
|
|
444
|
|
|
|
384
|
|
|
Stock-based compensation
|
|
|
|
94
|
|
|
|
75
|
|
|
|
256
|
|
|
|
218
|
|
|
Deferred income taxes
|
|
|
|
(5
|
)
|
|
|
(18
|
)
|
|
|
87
|
|
|
|
677
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
|
(8
|
)
|
|
|
(2
|
)
|
|
|
(24
|
)
|
|
|
(35
|
)
|
|
Premium received on sale of principal loans receivable held for sale
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
(35
|
)
|
|
|
—
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(85
|
)
|
|
|
1
|
|
|
|
(98
|
)
|
|
|
2
|
|
|
Notes and receivable from affiliates, net
|
|
|
|
79
|
|
|
|
111
|
|
|
|
121
|
|
|
|
24
|
|
|
Changes in principal loans receivable held for sale, net
|
|
|
|
5
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
Accounts payable
|
|
|
|
(36
|
)
|
|
|
1
|
|
|
|
2
|
|
|
|
28
|
|
|
Notes payable to affiliates
|
|
|
|
(96
|
)
|
|
|
(73
|
)
|
|
|
(217
|
)
|
|
|
(116
|
)
|
|
Income taxes payable and other tax liabilities
|
|
|
|
54
|
|
|
|
17
|
|
|
|
89
|
|
|
|
26
|
|
|
Other assets and liabilities
|
|
|
|
—
|
|
|
|
(51
|
)
|
|
|
(241
|
)
|
|
|
(205
|
)
|
|
Net cash provided by operating activities
|
|
|
|
652
|
|
|
|
604
|
|
|
|
1,818
|
|
|
|
1,589
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(133
|
)
|
|
|
(173
|
)
|
|
|
(558
|
)
|
|
|
(369
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
|
15
|
|
|
|
—
|
|
|
|
26
|
|
|
|
—
|
|
|
Changes in principal loans receivable, net
|
|
|
|
(554
|
)
|
|
|
(262
|
)
|
|
|
(146
|
)
|
|
|
(495
|
)
|
|
Purchases of investments
|
|
|
|
(2,257
|
)
|
|
|
(41
|
)
|
|
|
(6,722
|
)
|
|
|
(65
|
)
|
|
Maturities and sales of investments
|
|
|
|
1,559
|
|
|
|
8
|
|
|
|
1,976
|
|
|
|
389
|
|
|
Acquisitions, net of cash acquired
|
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
(283
|
)
|
|
|
(1
|
)
|
|
Notes and receivables from affiliates
|
|
|
|
—
|
|
|
|
29
|
|
|
|
575
|
|
|
|
(348
|
)
|
|
Net cash used in investing activities
|
|
|
|
(1,380
|
)
|
|
|
(439
|
)
|
|
|
(5,132
|
)
|
|
|
(889
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
36
|
|
|
|
—
|
|
|
|
36
|
|
|
|
—
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
|
8
|
|
|
|
2
|
|
|
|
24
|
|
|
|
35
|
|
|
Contribution from (to) parent
|
|
|
|
29
|
|
|
|
(13
|
)
|
|
|
3,858
|
|
|
|
(2
|
)
|
|
Tax withholdings related to net share settlements of restricted
stock units and restricted stock awards
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
Repayments under financing arrangements, net
|
|
|
|
(4
|
)
|
|
|
26
|
|
|
|
(877
|
)
|
|
|
(61
|
)
|
|
Funds receivable and customer accounts
|
|
|
|
(416
|
)
|
|
|
76
|
|
|
|
(1,190
|
)
|
|
|
(698
|
)
|
|
Funds payable and amounts due to customers
|
|
|
|
416
|
|
|
|
(76
|
)
|
|
|
1,190
|
|
|
|
698
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
62
|
|
|
|
15
|
|
|
|
3,034
|
|
|
|
(28
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(16
|
)
|
|
|
(17
|
)
|
|
|
(41
|
)
|
|
|
(17
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(682
|
)
|
|
|
163
|
|
|
|
(321
|
)
|
|
|
655
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
2,562
|
|
|
|
2,096
|
|
|
|
2,201
|
|
|
|
1,604
|
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
1,880
|
|
|
|
$
|
2,259
|
|
|
|
$
|
1,880
|
|
|
|
$
|
2,259
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
2
|
|
|
|
$
|
4
|
|
|
|
$
|
14
|
|
|
|
$
|
13
|
|
|
Cash paid for income taxes
|
|
|
|
$
|
25
|
|
|
|
$
|
8
|
|
|
|
$
|
56
|
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
Unaudited Summary of Combined and
Consolidated Net Revenues
We earn revenue from the following types of transactions:
-
Transaction revenues: Net transaction fees charged to consumers and
merchants based on the volume of activity processed through our
Payments Platform, including our PayPal, PayPal Credit, Venmo and
Braintree products.
-
Other value added services: Net revenues derived principally from
interest and fees earned on our PayPal Credit products, subscription
fees, gateway fees, revenue share we earn through partnerships and
other services that we provide to consumers and merchants.
|
Net Revenues by Type
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
|
2014
|
|
|
|
|
(In millions, except percentages)
|
|
Transaction revenues(1) |
|
|
1,982
|
|
|
|
1,966
|
|
|
|
1,911
|
|
|
|
1,963
|
|
|
|
1,750
|
|
|
Current quarter vs prior quarter
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
(3
|
)%
|
|
|
12
|
%
|
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
|
13
|
%
|
|
|
15
|
%
|
|
|
14
|
%
|
|
|
N/A
|
|
|
N/A
|
|
Percentage of total
|
|
|
88
|
%
|
|
|
86
|
%
|
|
|
90
|
%
|
|
|
90
|
%
|
|
|
89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other value added services(1) |
|
|
276
|
|
|
|
327
|
|
|
|
223
|
|
|
|
226
|
|
|
|
221
|
|
|
Current quarter vs prior quarter
|
|
|
(16
|
)%
|
|
|
47
|
%
|
|
|
(1
|
)%
|
|
|
2
|
%
|
|
|
(18
|
)%
|
|
Current quarter vs prior year quarter
|
|
|
25
|
%
|
|
|
21
|
%
|
|
|
12
|
%
|
|
|
N/A
|
|
|
N/A
|
|
Percentage of total
|
|
|
12
|
%
|
|
|
14
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues(1) |
|
|
$
|
2,258
|
|
|
|
$
|
2,293
|
|
|
|
$
|
2,134
|
|
|
|
$
|
2,189
|
|
|
|
$
|
1,971
|
|
|
Current quarter vs prior quarter
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
|
(3
|
)%
|
|
|
11
|
%
|
|
|
(1
|
)%
|
|
Current quarter vs prior year quarter
|
|
|
15
|
%
|
|
|
16
|
%
|
|
|
14
|
%
|
|
|
N/A
|
|
|
N/A
|
(1) Q3'14 - Q2'15 net revenues are presented on a non-GAAP pro forma
basis to reflect the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged to
eBay. For a reconciliation to GAAP net revenues, please see
"Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro Forma Net
Revenues by Type, and GAAP Net Revenues by Geography to Non-GAAP Pro
Forma Net Revenues by Geography" included in the press release.
|
Net Revenues by Geography
|
|
|
|
Three Months Ended
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
|
2014
|
|
|
|
|
|
(In millions, except percentages)
|
|
U.S. net revenues(1)(2) |
|
|
|
$
|
1,138
|
|
|
|
$
|
1,167
|
|
|
|
$
|
1,028
|
|
|
|
$
|
1,040
|
|
|
|
$
|
946
|
|
|
Current quarter vs prior quarter
|
|
|
|
(2
|
)%
|
|
|
14
|
%
|
|
|
(1
|
)%
|
|
|
10
|
%
|
|
|
(4
|
)%
|
|
Current quarter vs prior year quarter
|
|
|
|
20
|
%
|
|
|
19
|
%
|
|
|
14
|
%
|
|
|
N/A
|
|
|
N/A
|
|
Percent of total
|
|
|
|
50
|
%
|
|
|
51
|
%
|
|
|
48
|
%
|
|
|
48
|
%
|
|
|
48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International net revenues(1)(2) |
|
|
|
1,120
|
|
|
|
1,126
|
|
|
|
1,106
|
|
|
|
1,149
|
|
|
|
1,025
|
|
|
Current quarter vs prior quarter
|
|
|
|
(1
|
)%
|
|
|
2
|
%
|
|
|
(4
|
)%
|
|
|
12
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
|
9
|
%
|
|
|
13
|
%
|
|
|
14
|
%
|
|
|
N/A
|
|
|
N/A
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
20
|
%
|
|
|
N/A
|
|
|
N/A
|
|
Percent of total
|
|
|
|
50
|
%
|
|
|
49
|
%
|
|
|
52
|
%
|
|
|
52
|
%
|
|
|
52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues(1)(2) |
|
|
|
$
|
2,258
|
|
|
|
$
|
2,293
|
|
|
|
$
|
2,134
|
|
|
|
$
|
2,189
|
|
|
|
$
|
1,971
|
|
|
Current quarter vs prior quarter
|
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
|
(3
|
)%
|
|
|
11
|
%
|
|
|
(1
|
)%
|
|
Current quarter vs prior year quarter
|
|
|
|
15
|
%
|
|
|
16
|
%
|
|
|
14
|
%
|
|
|
N/A
|
|
|
N/A
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
|
19
|
%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
N/A
|
|
|
N/A
|
(1) Net revenues are attributed to U.S. and international geographies
primarily based upon the country in which the merchant is located, or in
the case of a cross border transaction, may be earned from each of the
countries in which the consumer and merchant each reside. Net revenues
earned from value added services are typically attributed to the country
in which either the consumer or the merchant reside.
(2) Q3'14 - Q2'15 net revenues are presented on a non-GAAP pro forma
basis to reflect the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged to
eBay. For a reconciliation to GAAP net revenues, please see
"Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro Forma Net
Revenues by Type, and GAAP Net Revenues by Geography to Non-GAAP Pro
Forma Net Revenues by Geography" included in the press release.
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Supplemental Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
|
2014
|
|
|
|
|
|
(In millions, except percentages)
|
|
Active customer accounts(1) |
|
|
|
173
|
|
|
169
|
|
|
165
|
|
|
162
|
|
|
157
|
|
Current quarter vs prior quarter
|
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
13
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of payment transactions(2) |
|
|
|
1,216
|
|
|
|
1,161
|
|
|
|
1,123
|
|
|
|
1,144
|
|
|
|
972
|
|
|
Current quarter vs prior quarter
|
|
|
|
5
|
%
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
|
18
|
%
|
|
|
5
|
%
|
|
Current quarter vs prior year quarter
|
|
|
|
25
|
%
|
|
|
25
|
%
|
|
|
22
|
%
|
|
|
23
|
%
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment transactions per active account(3) |
|
|
|
27
|
|
|
|
26
|
|
|
|
25
|
|
|
|
25
|
|
|
|
24
|
|
|
Current quarter vs prior quarter
|
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
|
|
12
|
%
|
|
|
11
|
%
|
|
|
9
|
%
|
|
|
7
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payment Volume(4) |
|
|
|
$
|
69,738
|
|
|
|
$
|
67,482
|
|
|
|
$
|
63,021
|
|
|
|
$
|
66,039
|
|
|
|
$
|
58,184
|
|
|
Current quarter vs prior quarter
|
|
|
|
3
|
%
|
|
|
7
|
%
|
|
|
(5
|
)%
|
|
|
14
|
%
|
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
|
|
20
|
%
|
|
|
19
|
%
|
|
|
17
|
%
|
|
|
23
|
%
|
|
|
28
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
|
|
27
|
%
|
|
|
27
|
%
|
|
|
25
|
%
|
|
|
26
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Expense Rate(5) |
|
|
|
0.93
|
%
|
|
|
0.94
|
%
|
|
|
0.91
|
%
|
|
|
0.90
|
%
|
|
|
0.92
|
%
|
|
Transaction and Loan Loss Rate(6) |
|
|
|
0.29
|
%
|
|
|
0.29
|
%
|
|
|
0.30
|
%
|
|
|
0.31
|
%
|
|
|
0.33
|
%
|
|
Transaction Margin(7) |
|
|
|
62.3
|
%
|
|
|
63.8
|
%
|
|
|
64.2
|
%
|
|
|
63.5
|
%
|
|
|
63.1
|
%
|
(1) An active customer account is a registered account that
successfully sent or received at least one payment or payment reversal
through our Payments Platform, excluding transactions processed through
our gateway products, in the past 12 months.
(2) Payment transactions is the total number of payments, net
of payment reversals, successfully completed through our Payments
Platform, excluding transactions processed through our gateway products.
(3) Number of payment transactions per active customer
account reflects the total number of payment transactions within the
previous 12 month period, divided by active customer accounts at the end
of the period.
(4) Total Payment Volume or "TPV" is the value of payments,
net of payment reversals, successfully completed through our Payments
Platform, excluding transactions processed through our gateway products.
(5) Transaction expense rate is calculated by dividing
transaction expense by TPV.
(6) Transaction and loan loss rate is calculated by dividing
transaction and loan loss by TPV.
(7) Transaction margin is total revenue less transaction
expense and transaction and loan loss, divided by total revenue.
Q3'14 - Q2'15 transaction expense rate, transaction and loan loss rate,
and transaction margin include the impact of pro forma adjustments
directly attributable to the separation of the company from eBay Inc. on
July 17, 2015 had they existed historically.
PayPal Holdings, Inc.
Non-GAAP Measures of Financial
Performance
To supplement the company's condensed consolidated financial statements
presented in accordance with generally accepted accounting principles,
or GAAP, the company uses non-GAAP measures of certain components of
financial performance. These non-GAAP measures include non-GAAP net
income, non-GAAP earnings per diluted share, non-GAAP operating margin,
non-GAAP effective tax rate and free cash flow. In addition, the company
has included certain pro forma adjustments in its presentation of
non-GAAP net revenue, non-GAAP net income, non-GAAP earnings per diluted
share, and non-GAAP operating margin in this presentation (collectively
referred to as "non-GAAP pro forma measures"). These adjustments reflect
items that are factually supportable, directly attributable to the
separation of the company from eBay Inc. on July 17, 2015, and expected
to have a continuing impact on the company's results of operations. The
company has included these pro forma adjustments because management
believes that they help to facilitate comparisons of the company's
operating results between periods. In discussing year-over-year
comparisons, the company has chosen to present non-GAAP pro forma
measures because it believes that these measures provide investors a
consistent basis for reviewing the company's performance across
different periods.
These non-GAAP measures are not in accordance with, or an alternative
to, measures prepared in accordance with GAAP and may be different from
non-GAAP measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules or
principles. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with the company's results of
operations as determined in accordance with GAAP. These measures should
only be used to evaluate the company's results of operations in
conjunction with the corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of all
non-GAAP measures included in this press release can be found in the
tables included in this press release.
These non-GAAP measures are provided to enhance investors' overall
understanding of the company's current financial performance and its
prospects for the future. Specifically, the company believes the
non-GAAP measures provide useful information to both management and
investors by excluding certain expenses, gains and losses, as the case
may be, that may not be indicative of its core operating results and
business outlook. In addition, because the company has historically
reported certain non-GAAP results to investors, the company believes
that the inclusion of non-GAAP measures provides consistency in the
company's financial reporting.
For its internal budgeting process, and as discussed further below, the
company's management uses financial measures that do not include
stock-based compensation expense, employer payroll taxes on stock-based
compensation, amortization or impairment of acquired intangible assets,
impairment of goodwill, significant gains or losses from the
disposal/acquisition of a business, certain effects of the planned
separation of our business from eBay, certain gains and losses on
investments, restructuring-related charges and the income taxes
associated with the foregoing. In addition to the corresponding GAAP
measures, the company's management also uses the foregoing non-GAAP
measures in reviewing the financial results of the company.
The company excludes the following items from non-GAAP net income,
non-GAAP earnings per diluted share, non-GAAP operating margin and
non-GAAP effective tax rate:
Stock-based compensation expense and related employer payroll taxes.
This expense consists of expenses for stock options, restricted stock
and employee stock purchases. The company excludes stock-based
compensation expense from its non-GAAP measures primarily because they
are non-cash expenses that management does not believe are reflective of
ongoing operating results. The related employer payroll taxes is
dependent on the company's stock price and the timing and size of
exercises by employees of their stock options and the vesting of their
restricted stock, over which management has limited to no control, and
as such management does not believe it correlates to the company's
operation of the business.
Amortization or impairment of acquired intangible assets, impairment
of goodwill, significant gains or losses and transaction expenses from
the acquisition or disposal of a business and certain gains or losses on
investments. The company incurs amortization or impairment of
acquired intangible assets and goodwill in connection with acquisitions
and may incur significant gains or losses from the acquisition or
disposal of a business and therefore excludes these amounts from its
non-GAAP measures. The company also excludes certain gains and losses on
investments. The company excludes these items because management does
not believe they correlate to the ongoing operating results of the
company's business.
Restructuring. These charges consist of expenses for employee
severance and other exit and disposal costs. The company excludes
significant restructuring charges primarily because management does not
believe they are reflective of ongoing operating results.
Other certain significant gains, losses, or charges that are not
indicative of the Company's core operating results. These are
significant gains, losses, or charges during a period that are the
result of isolated events or transactions which have not occurred
frequently in the past and are not expected to occur regularly or be
repeated in the future. The company excludes these amounts from its
results primarily because management does not believe they are
indicative of its current or ongoing operating results.
Separation. These are significant expenses related to the
separation of PayPal from eBay Inc. into an independent publicly traded
company. These consist primarily of third-party consulting fees, legal
fees, employee retention payments and other income and expenses incurred
to complete the separation.
Tax effect of non-GAAP adjustments. This amount is used to
present stock-based compensation and the other amounts described above
on an after-tax basis consistent with the presentation of non-GAAP net
income.
The company also uses free cash flow, a non-GAAP measure. Free cash flow
represents operating cash flows less purchases of property and
equipment. The company considers free cash flow to be a liquidity
measure that provides useful information to management and investors
about the amount of cash generated by the business after the purchases
of property, buildings, and equipment, which can then be used to, among
other things, invest in the company's business, make strategic
acquisitions, and repurchase stock. A limitation of the utility of free
cash flow as a measure of financial performance is that it does not
represent the total increase or decrease in the company's cash balance
for the period.
In addition to the non-GAAP measures discussed above, the Company also
analyzes certain measures, including revenue and operating expenses, on
an FX-neutral basis to better measure the comparability of operating
results between periods. The Company believes that changes in foreign
currency exchange rates are not indicative of the Company's operations
and evaluating growth in revenue and operating expenses on an FX-neutral
basis provides an additional meaningful and comparable assessment of
these measures to both management and investors. FX-neutral results are
calculated by translating the current period's local currency results by
the prior period's exchange rate. FX-neutral growth rates are calculated
by comparing the current period's FX-neutral results by the prior
period's results, excluding the impact of hedging.
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Operating
Margin
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(In millions, except percentages)
|
|
|
|
|
|
(unaudited)
|
|
GAAP operating income
|
|
|
|
$
|
330
|
|
|
|
$
|
272
|
|
|
Stock-based compensation expense and related employer payroll taxes
|
|
|
|
95
|
|
|
|
76
|
|
|
Acquisition related transaction expense
|
|
|
|
2
|
|
|
|
—
|
|
|
Separation
|
|
|
|
3
|
|
|
|
—
|
|
|
Restructuring
|
|
|
|
—
|
|
|
|
—
|
|
|
Amortization of acquired intangible assets
|
|
|
|
20
|
|
|
|
16
|
|
|
Total non-GAAP operating income adjustments
|
|
|
|
120
|
|
|
|
92
|
|
|
Non-GAAP operating income
|
|
|
|
$
|
450
|
|
|
|
$
|
364
|
|
|
Non-GAAP operating margin
|
|
|
|
19.9
|
%
|
|
|
18.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP Net Income,
|
|
GAAP Diluted EPS to Non-GAAP Diluted EPS,
|
|
and GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(In millions, except percentages)
|
|
|
|
|
|
(unaudited)
|
|
GAAP income before income taxes
|
|
|
|
$
|
350
|
|
|
|
$
|
276
|
|
|
GAAP provision for income taxes
|
|
|
|
49
|
|
|
|
42
|
|
|
GAAP net income
|
|
|
|
$
|
301
|
|
|
|
$
|
234
|
|
|
Non-GAAP adjustments to net income:
|
|
|
|
|
|
|
|
|
Non-GAAP operating income adjustments (see table above)
|
|
|
|
120
|
|
|
|
92
|
|
|
Amortization of investments
|
|
|
|
—
|
|
|
|
1
|
|
|
Other certain significant gains, losses, or charges
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
Separation (other income and expense)
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
Tax effect of non-GAAP adjustments
|
|
|
|
(32
|
)
|
|
|
(25
|
)
|
|
Non-GAAP net income
|
|
|
|
$
|
377
|
|
|
|
$
|
298
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share:(1)(2) |
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
$
|
0.25
|
|
|
|
$
|
0.19
|
|
|
Non-GAAP
|
|
|
|
$
|
0.31
|
|
|
|
$
|
0.24
|
|
|
Shares used in GAAP diluted net income per-share calculation
|
|
|
|
1,227
|
|
|
|
1,224
|
|
|
Shares used in non-GAAP diluted net income per-share calculation
|
|
|
|
1,227
|
|
|
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
|
|
14
|
%
|
|
|
15
|
%
|
|
Tax effect of non-GAAP adjustments to net income
|
|
|
|
4
|
%
|
|
|
3
|
%
|
|
Non-GAAP effective tax rate
|
|
|
|
18
|
%
|
|
|
18
|
%
|
(1) GAAP and Non-GAAP net income per diluted share for the
three months ended September 30, 2014 is based on the number of shares
of PayPal common stock outstanding on the distribution date. The same
number of shares was used to calculate the amount for the prior year
since no PayPal equity was outstanding for those periods.
(2) GAAP and Non-GAAP net income per diluted share for the
three months ended September 30, 2015 is based on the weighted average
number of common shares outstanding for the period beginning after the
distribution date.
|
|
|
Reconciliation of Operating Cash Flow to Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(In millions)
|
|
Net cash provided by operating activities
|
|
|
|
$
|
652
|
|
|
|
$
|
604
|
|
|
|
$
|
1,818
|
|
|
|
$
|
1,589
|
|
|
Less: Purchases of property and equipment
|
|
|
|
(133
|
)
|
|
|
(173
|
)
|
|
|
(558
|
)
|
|
|
(369
|
)
|
|
Free cash flow
|
|
|
|
$
|
519
|
|
|
|
$
|
431
|
|
|
|
$
|
1,260
|
|
|
|
$
|
1,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Pro Forma
Operating Margin,
|
|
GAAP Net Income to Non-GAAP Pro Forma Net Income,
|
|
and GAAP Diluted EPS to Non-GAAP Pro Forma Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2014
|
|
|
|
|
|
|
Reported
|
|
|
Non-
GAAP
Entries
|
|
|
Non-
GAAP
|
|
|
Pro Forma
Adjustments
|
|
|
Non-GAAP
Pro Forma
|
|
|
|
|
|
|
(in millions/unaudited)
|
|
|
Net revenues
|
|
|
|
$
|
1,975
|
|
|
|
—
|
|
|
|
$
|
1,975
|
|
|
|
$
|
(4
|
)
|
|
(g)
|
|
$
|
1,971
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction expense
|
|
|
|
537
|
|
|
|
—
|
|
|
|
537
|
|
|
|
—
|
|
|
|
537
|
|
|
|
Transaction and loan losses
|
|
|
|
180
|
|
|
|
—
|
|
|
|
180
|
|
|
|
10
|
|
(h)
|
|
190
|
|
|
|
Customer support and operations
|
|
|
|
257
|
|
|
|
(12
|
)
|
(a)
|
|
245
|
|
|
|
4
|
|
(h)(i)(j)
|
|
249
|
|
|
|
Sales and marketing
|
|
|
|
267
|
|
|
|
(14
|
)
|
(a)
|
|
253
|
|
|
|
(13
|
)
|
|
(l)
|
|
240
|
|
|
|
Product development
|
|
|
|
232
|
|
|
|
(28
|
)
|
(a)
|
|
204
|
|
|
|
—
|
|
|
|
204
|
|
|
|
General and administrative
|
|
|
|
101
|
|
|
|
(20
|
)
|
(a)
|
|
80
|
|
|
|
2
|
|
(h)
|
|
82
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
(b)
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
129
|
|
|
|
(1
|
)
|
(a)
|
|
112
|
|
|
|
4
|
|
(k)
|
|
116
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
(c)
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Total operating expense
|
|
|
|
1,703
|
|
|
|
(92
|
)
|
|
|
1,611
|
|
|
|
7
|
|
|
|
1,618
|
|
|
|
Operating income
|
|
|
|
272
|
|
|
|
92
|
|
|
|
364
|
|
|
|
(11
|
)
|
|
|
|
353
|
|
|
|
Other income (expense), net
|
|
|
|
4
|
|
|
|
1
|
|
(e)
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
(f)
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
276
|
|
|
|
89
|
|
|
|
365
|
|
|
|
(11
|
)
|
|
|
|
354
|
|
|
|
Income tax expense
|
|
|
|
42
|
|
|
|
25
|
|
(d)
|
|
67
|
|
|
|
(1
|
)
|
|
(m)
|
|
66
|
|
|
|
Net income (loss)
|
|
|
|
$
|
234
|
|
|
|
$
|
64
|
|
|
|
$
|
298
|
|
|
|
$
|
(10
|
)
|
|
|
|
$
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.19
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
Diluted
|
|
|
|
$
|
0.19
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
1,218
|
|
(n)
|
|
|
|
|
$
|
1,218
|
|
(n)
|
|
|
|
|
$
|
1,218
|
|
(n)
|
|
Diluted
|
|
|
|
$
|
1,224
|
|
(n)
|
|
|
|
|
$
|
1,224
|
|
(n)
|
|
|
|
|
$
|
1,224
|
|
(n)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
|
14
|
%
|
|
|
4
|
%
|
|
|
18
|
%
|
|
|
—
|
%
|
|
|
18
|
%
|
|
|
Effective tax rate
|
|
|
|
15
|
%
|
|
|
3
|
%
|
|
|
18
|
%
|
|
|
1
|
%
|
|
|
|
19
|
%
|
|
|
Notes:
|
|
(a) Stock-based compensation expense
|
|
(b) Employer payroll taxes on stock-based compensation
|
|
(c) Amortization of acquired intangible assets
|
|
(d) Income taxes associated with certain non-GAAP entries
|
|
(e) Intangible amortization
|
|
(f) Other certain gains and losses on investments
|
|
(g) Reflects the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged to
eBay.
|
|
(h) Reflects the effect of the protection program losses and service
costs that were historically reimbursed to PayPal by eBay for the
administration of eBay's customer protection programs. Following the
separation, this program is no longer being administered by PayPal,
and therefore these costs are no longer reimbursed by eBay.
Following the separation, PayPal's customer protection programs have
been extended to its customers' purchases on eBay, and therefore
PayPal expects to incur incremental costs associated with its
customer protection programs.
|
|
(i) Reflects the impact of additional costs for shared data centers
and information technology facilities, except for the facilities in
Phoenix, Arizona, and Denver, Colorado, that continue to be managed
by eBay after the separation pursuant to the colocation services
agreements between the parties.
|
|
(j) Reflects the reversal of historically allocated amounts from
eBay to PayPal related to data center facilities in Phoenix,
Arizona, and Denver, Colorado, pursuant to the colocation services
agreements between the parties.
|
|
(k) Reflects depreciation expense related to data center facilities
in Phoenix, Arizona, and Denver, Colorado, pursuant to the
colocation services agreements between the parties.
|
|
(l) Reflects the net reduction of costs charged to PayPal by eBay
for referral services and user penetration.
|
|
(m) Reflects the tax effect of pro forma adjustments using the
statutory tax rate for the year ended December 31, 2014.
|
|
(n) The weighted average number of common shares outstanding for
basic and diluted earnings per share for the period is based on the
number of shares of PayPal common stock outstanding as of July 17,
2015, the distribution date from eBay.
|
|
|
|
|
|
Reconciliation of GAAP Net Revenues by Type to Non-GAAP Pro
Forma Net Revenues by Type,
|
|
and GAAP Net Revenues by Geography to Non-GAAP Pro Forma Net
Revenues by Geography
|
|
|
|
|
|
|
Net Revenues by Type
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
|
|
|
(In millions)
|
|
Transaction revenues
|
|
|
$
|
1,982
|
|
|
$
|
1,970
|
|
|
$
|
1,914
|
|
|
$
|
1,967
|
|
|
$
|
1,754
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Pro forma transaction revenues
|
|
|
1,982
|
|
|
1,966
|
|
|
1,911
|
|
|
1,963
|
|
|
1,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other value added services
|
|
|
$
|
276
|
|
|
$
|
327
|
|
|
$
|
223
|
|
|
$
|
226
|
|
|
$
|
221
|
|
|
Pro forma adjustment(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Pro forma other value added services
|
|
|
276
|
|
|
327
|
|
|
223
|
|
|
226
|
|
|
221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
$
|
2,258
|
|
|
$
|
2,297
|
|
|
$
|
2,137
|
|
|
$
|
2,193
|
|
|
$
|
1,975
|
|
|
Pro forma adjustment(1) |
|
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Total pro forma net revenues
|
|
|
2,258
|
|
|
2,293
|
|
|
2,134
|
|
|
2,189
|
|
|
1,971
|
|
(1) Reflects the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged to eBay.
|
Net Revenues by Geography
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
|
|
|
(In millions)
|
|
U.S. net revenues
|
|
|
$
|
1,138
|
|
|
$
|
1,170
|
|
|
$
|
1,030
|
|
|
$
|
1,043
|
|
|
$
|
949
|
|
|
Pro forma adjustment(1)
|
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
Total pro forma U.S. net revenues
|
|
|
1,138
|
|
|
1,167
|
|
|
1,028
|
|
|
1,040
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International net revenues
|
|
|
$
|
1,120
|
|
|
$
|
1,127
|
|
|
$
|
1,107
|
|
|
$
|
1,150
|
|
|
$
|
1,026
|
|
|
Pro forma adjustment(1)
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Total pro forma International net revenues
|
|
|
1,120
|
|
|
1,126
|
|
|
1,106
|
|
|
1,149
|
|
|
1,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
$
|
2,258
|
|
|
$
|
2,297
|
|
|
$
|
2,137
|
|
|
$
|
2,193
|
|
|
$
|
1,975
|
|
|
Pro forma adjustment(1)
|
|
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Total pro forma net revenues
|
|
|
2,258
|
|
|
2,293
|
|
|
2,134
|
|
|
2,189
|
|
|
1,971
|
|
(1) Reflects the impact of lower transaction revenues from payment
services provided by PayPal to eBay as the result of the terms of
certain commercial agreements negotiated between the parties that
stipulate lower transaction fees than those historically charged to eBay.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151028006663/en/
PayPal
Investor Relations Contacts:
Tom Hudson
Vice
President, Investor Relations
tom@paypal.com
or
Tracey
Ford
Senior Director, Investor Relations
tford@paypal.com
or
Media
Relations Contact:
Martha Cass, 416-860-6213
Director,
Corporate Communications
mcass@paypal.com
Source: PayPal
News Provided by Acquire Media