AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · A large two-sided platform, convenient checkout and improving engagement support a limited structural advantage. Comparative network benefits and barriers to replication are not quantified.
durability · 2/4 · Established reach and actual engagement support persistence, while penalty-free contract exits and branded checkout underperformance limit confidence in durability.
customer dependency · 1/4 · Checkout convenience and recurring engagement provide utility, but customers generally can terminate without a penalty. Essential dependence or substantial migration costs are not demonstrated.
erosion resilience · 2/4 · Engagement and Venmo monetization improved in 2025, and TPV continued growing in 2026. Branded checkout underperformance and declining operating income despite revenue growth show incomplete resilience.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Observed monetization is fragile: first-half 2026 revenue grew 6% against TPV growth of 10%, despite an additional partner-institution revenue contribution. Volume-adjusted fees and customer incentives also constrain yield. This is indirect pricing evidence, not proof of a specific price cut.
retention · 2/4 · Monthly active accounts and transactions per active account excluding PSP improved in 2025, followed by 2026 TPV growth. These indirectly demonstrate repeat demand, but do not establish cohort retention; contracts permit penalty-free exits.
margin resilience · 2/4 · 2025 operating income growth shows a favorable outcome, followed by first-half 2026 operating margin falling from 19% to 17% as transaction expenses grew faster. The record is mixed and does not demonstrate reliable cost pass-through.
contractual freedom · 1/4 · Disclosed fee adjustments depend on processed volume, while customers can exit without termination penalties. German merchant terms constrain surcharging and presentation but face regulatory scrutiny. Broad unilateral repricing authority is not established.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.64
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.75
Financial strength79
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 84.55
- netDebtEbitGrade
- 88.35
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 42.94
- Debt / FCF (x)
- 2.08
- Net debt / operating income (x)
- 0.58
- Interest coverage (x)
- 13.75
- Current ratio (x)
- 1.29
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -5.98
- 3-year average SBC / revenue (%)
- 3.95
- cashConversionGrade
- 100.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation and reduced share count support disciplined capital returns. However, 2025 operating cash flow declined to $6.416 billion, while treasury purchases of $6.052 billion plus capital expenditure and dividends exceeded that cash flow. First-half 2026 cash generation improved. Repurchase value creation is not established.
incentive alignment · 2/4 · The approved 2025 program links annual incentives to transaction margin dollars and operating income, and performance equity to relative shareholder returns with three-year cliff vesting. Service-based equity and the conditional cash retention award add retention incentives without equivalent performance hurdles. Ownership and realized new-CEO alignment remain insufficiently disclosed.
execution · 2/4 · Operating results indirectly support mixed execution: 2025 engagement, Venmo revenue and operating income improved, but branded checkout missed expectations and first-half 2026 operating income declined despite revenue growth. The March 2026 CEO appointment does not establish turnaround success.
governance · 2/4 · Annual elections, majority voting, independent Board leadership and a disclosed clawback policy provide substantive accountability mechanisms. The clawback provision involves committee discretion, and the leadership change demonstrates action rather than proven effectiveness.
Evidence
We believe that our competitive strengths include the following: •Two-sided platform—we facilitate online and offline transactions for millions of consumers and merchants.
Business / Our Strengths / two-sided platform · Filed 03/02/2026
As of December 31, 2025, we had 439 million active accounts across approximately 200 markets1 around the world.
Business / Our Strengths / active accounts and markets at December 31, 2025 · Filed 03/02/2026
• Monthly active accounts grew to 227 million, with transactions per active account (excluding PSP) up 5%.
Proxy Statement Summary / 2025 operating achievements / engagement · Filed 07/04/2026
Our PayPal and Venmo branded checkout experiences allow consumers to complete purchases in just a few steps without having to enter payment and address information.
Business / Consumer solutions / branded checkout · Filed 03/02/2026
The number of active accounts provides management with additional perspective on the overall scale of our platform, but may not have a direct relationship to our operating results.
Business / active-account metric limitation · Filed 03/02/2026
Our contracts with our customers are usually open-ended and can be terminated by either party without a termination penalty after the notice period has lapsed.
Note 1 / customer contract termination terms · Filed 03/02/2026
Our recent results have not met our expectations, particularly in branded checkout.
CEO letter / recent results and branded checkout underperformance · Filed 07/04/2026
OVERVIEW OF RESULTS OF OPERATIONS The following table provides a summary of our condensed consolidated financial results for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollar Percent 2026 2025 Dollar Percent (In millions, except percentages and per share data) Net revenues $ 8,682 $ 8,288 $ 394 5 % $ 17,035 $ 16,079 $ 956 6 % Operating expenses 7,255 6,784 471 7 % 14,120 13,045 1,075 8 % Operating income 1,427 1,504 (77) (5) % 2,915 3,034 (119) (4) % Operating margin 16 % 18 % ** ** 17 % 19 % ** ** Other income (expense), net (117) 25 (142) (568) % (212) 98 (310) (316) % Income tax expense 206 268 (62) (23) % 486 584 (98) (17) % Effective tax rate 16 % 18 % ** ** 18 % 19 % ** ** Net income (loss) $ 1,104 $ 1,261 $ (157) (12) % $ 2,217 $ 2,548 $ (331) (13) % Net income (loss) per diluted share $ 1.25 $ 1.29 $ (0.04) (3) % $ 2.46 $ 2.58 $ (0.12) (5) % Net cash provided by operating activities $ 1,983 $ 898 $ 1,085 121 % $ 3,117 $ 2,058 $ 1,059 51 % All amounts in tables are rounded to the nearest million, except as otherwise noted.
MD&A / second-quarter and first-half 2026 results · Filed 28/07/2026
•Trusted brands—we have built well-recognized and trusted brands, including PayPal and Venmo.
Business / Our Strengths / trusted brands assertion · Filed 03/02/2026
• Advanced Venmo monetization, growing revenue approximately 20% to $1.7 billion.3 • Continued to scale Buy Now, Pay Later, with TPV growing more than 20% to over $40 billion.
Proxy Statement Summary / 2025 Venmo revenue and BNPL volume achievements · Filed 07/04/2026
Our reputation and brands are globally recognized, important to our business, and affect our ability to attract and retain our customers.
Risk Factors / reputation and brands · Filed 03/02/2026
et Cie, S.C.A.’s contractual terms with merchants in Germany prohibiting surcharging and requiring parity presentation of PayPal relative to other payment methods.
Note 13 / regulatory proceedings / German merchant contract provisions · Filed 28/07/2026
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 The increase in net revenues was driven primarily by growth in TPV of 10% and growth in revenue earned from an independent chartered financial institution (“partner institution”).
MD&A / first-half 2026 revenue drivers and TPV growth · Filed 28/07/2026
Our operating margin declined, reflecting the unfavorable impact of a higher transaction expense growth rate.
MD&A / first-half 2026 operating margin decline · Filed 28/07/2026
The fee charged per transaction is adjusted up or down if the volume processed for a specified period is different from prior period defined volumes.
Note 1 / volume-based transaction fee adjustments · Filed 03/02/2026
Our transaction revenues are also reduced by certain incentives provided to our customers.
Note 1 / customer incentives reducing transaction revenue · Filed 03/02/2026
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2025 2024 2023 (In millions) Cash flows from operating activities: Net income (loss) $ 5,233 $ 4,147 $ 4,246 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Transaction and credit losses 1,720 1,442 1,682 Depreciation and amortization 963 1,032 1,072 Stock-based compensation 1,002 1,230 1,475 Deferred income taxes 217 231 (668) Net (gains) losses on strategic investments (162) 285 (201) Gain on divestiture of business, excluding transaction costs — — (356) Accretion of discounts on investments, net of amortization of premiums (83) (335) (367) Adjustments to loans and interest receivable, held for sale 193 125 53 Other (287) (3) (104) Originations of loans receivable, held for sale (36,730) (24,498) (11,470) Proceeds from repayments and sales of loans receivable, originally classified as held for sale 35,414 24,352 10,795 Changes in assets and liabilities: Accounts receivable 144 85 (114) Transaction loss allowance for cash losses, net (1,318) (1,131) (1,188) Other current assets and non-current assets (493) (393) (116) Accounts payable 4 83 7 Other current liabilities and non-current liabilities 599 798 97 Net cash provided by operating activities 6,416 7,450 4,843 Cash flows from investing activities: Purchases of reverse repurchase agreements (201) (424) — Maturities of reverse repurchase agreements 288 337 — Purchases of property and equipment (852) (683) (623) Proceeds from sales of property and equipment 3 1 45 Purchases and originations of loans receivable (20,190) (21,807) (25,198) Proceeds from repayments and sales of loans receivable, originally classified as held for investment 19,688 20,272 26,660 Purchases of investments (20,399) (26,209) (21,980) Maturities and sales of investments 22,933 26,962 24,295 Proceeds from divestiture of business, net of cash divested — — 466 Funds receivable (303) 2,908 (2,943) Collateral posted related to derivative instruments, net (149) 73 (56) Other (21) 259 86 Net cash provided by investing activities 797 1,689 752 Cash flows from financing activities: Borrowings from repurchase agreements 2,949 656 — Repayments of repurchase agreements (2,949) (656) — Proceeds from issuance of common stock 117 95 127 Purchases of treasury stock (6,052) (6,047) (5,002) Tax withholdings related to net share settlements of equity awards (383) (351) (257) Borrowings under financing arrangements 2,637 1,546 1,528 Repayments under financing arrangements (2,155) (1,661) (1,053) Funds payable and amounts due to customers 174 (1,954) 1,861 Collateral received related to derivative instruments and reverse repurchase agreements, net (160) 156 (197) Payments of dividends to stockholders (130) — — Other (6) (60) — Net cash used in financing activities (5,958) (8,276) (2,993) FY 2025 FORM 10-K 62 Table of Contents PayPal Holdings, Inc.
Consolidated Statements of Cash Flows / 2023–2025 · Filed 03/02/2026
• Continued our strong capital return program, deploying approximately $6 billion to share repurchases and reducing average share count by approximately 7%; initiated a quarterly cash dividend as part of a disciplined capital allocation strategy.
Proxy Statement Summary / 2025 capital returns and share-count reduction · Filed 07/04/2026
Form of Payment Performance Period Performance Criteria Objectives For More Information Salary Cash Ongoing Alignment of salary with performance is evaluated on an annual basis • Rewards individuals’ current contributions • Compensates for expected day-to-day performance • Reflects scope of roles and responsibilities Page 65 Annual Incentive Plan (“AIP”) Cash One year Transaction Margin Dollars and Non-GAAP Operating Income, adjusted for individual performance1 • Rewards successful annual performance • Incentivizes achievement of short-term performance goals designed to drive profitable growth and enhance stockholder value Page 66 Long-Term Incentive Plan (“LTI”) Performance-Based Restricted Stock Units (“PBRSUs”) Three years Earned based on rTSR, measured as compared to the S&P 500 over discrete 12-, 24- and 36-month measurement periods; three-year cliff vesting • Rewards achievement of performance goals over the three-year performance period designed to drive the creation of stockholder value • Intended to support long-term retention objectives while minimizing potential impact of short-term share price volatility by reinforcing the need to deliver consistent performance results over the full performance period Page 69 Restricted Stock Units (“RSUs”) Vests over three years Service-based vesting; ultimate value based on stock price performance • Rewards the creation of long-term value • Recognizes potential future contributions • Intended to support long-term retention objectives Page 71 1 Transaction margin dollars and non-GAAP operating income are not financial measures prepared in accordance with GAAP.
Compensation Discussion and Analysis / approved 2025 incentive program · Filed 07/04/2026
While the value is tied directly to our stock price performance, the service-based RSUs have some value regardless of whether our stock price increases or decreases, and are also designed to provide an appropriate incentive for our NEOs to remain with us throughout the three-year vesting period.
Compensation Discussion and Analysis / service-based RSU limitations · Filed 07/04/2026
Miller received a cash retention award of $3 million, which will vest and become payable as to 67% on February 2, 2027 and 33% on February 2, 2028, in each case generally subject to her continued employment with us through the applicable payment date.
Compensation Discussion and Analysis / conditional CFO retention award · Filed 07/04/2026
Together with annual director elections, majority voting in uncontested elections, and independent Board leadership, these mechanisms provide meaningful avenues for stockholder influence and accountability.
Governance / annual elections, majority voting and independent Board leadership · Filed 07/04/2026
Pursuant to the terms of the clawback policy, upon the occurrence of any of the following triggering events, the Compensation Committee will determine in its discretion whether to require the full or partial forfeiture and/or repayment of any incentive compensation covered by the policy: • a covered employee materially violates any written policy of the Company, including our Code of Business Conduct; • a covered employee causes material financial or reputational harm to PayPal; • a termination of a covered employee’s employment by the Company for cause (as defined in the Executive Severance Plan) or a determination by the Compensation Committee within 12 months following the covered employee’s termination of employment that grounds existed for a termination for cause; or • a material restatement of all or a portion of our financial statements occurs due to a supervisory or other failure by a covered employee.
Compensation policies / discretionary clawback triggers · Filed 07/04/2026
Seasoned Leadership to Drive Our Transformation As we announced in early February 2026, the Board appointed Enrique Lores as PayPal’s President and CEO effective March 1.
Independent Board Chair letter / CEO appointment effective March 1, 2026 · Filed 07/04/2026
• GAAP operating income increased 14% to $6.1 billion; non-GAAP operating income increased 9% to $6.4 billion.
Proxy Statement Summary / 2025 operating income growth · Filed 07/04/2026
