PayPal Holdings, Inc.

Last modified by Md. Touhidul Islam on 2024/01/04 08:07

Contents

Summary
Brief Company Overview
Recent Business Developments
Recent Financing Activities
Financial Performance Highlights
- Q3 Performance Highlights
- Annual Performance Highlights
Business Overview
Company History
Reference

Summary

PayPal Holdings Inc. (NASDAQ: PYPL) is a leading technology platform that enables digital payments and simplifies commerce experiences for merchants and consumers worldwide.
PayPal provides mobile banking services, PayPal Cards, PayPal Loans, Merchant Payment Solutions, PayPal Zettle, PayPal credit, and other payment solutions.
PayPal was established in March 2000 as a result of a merger between two companies, Confinity and X.com.
As of 30 September 2023, for the quarter ended, the return on equity (ROE) and earnings per share (EPS) of PayPal are 6.29% and $0.93, respectively. As of 30 September 2023, the gross margin is 39.03%, the operating margin is 15.75%, and the net margin is 16.73%.
Net revenues for the year ended on 31 December 2022 were $27,518 million, increased by 8% compared with the prior year's revenue ended on 31 December 2021, which amounted to $25,371 million, resulting in an increase in the net revenue by $2,147 million driven primarily by growth in total payment volume (TPV) of 9%.

Brief Company Overview

paypal logo PayPal Holdings Inc. (NASDAQ: PYPL) is a leading technology platform that enables digital payments and simplifies commerce experiences for merchants and consumers worldwide. PayPal provides mobile banking services, PayPal Cards, PayPal Loans, Merchant Payment Solutions, PayPal Zettle, PayPal credit, and other payment solutions. PayPal was established in March 2000 as a result of a merger between two companies, Confinity and X.com. The headquarters of PayPal is located in San Jose, California, United States. It also has offices in 14 other locations in the United States and in 30 countries around the world. PayPal’s customers are mainly consumers and merchants who use its platform to make and receive payments online or on mobile devices. PayPal has over 435 million active accounts worldwide as of the second quarter of 2023. PayPal’s customers span across more than 200 markets and can transact in more than 100 currencies. PayPal’s customers also include nonprofits and donors who use its services to support various causes. The Chief Executive Officer, who regularly reviews the operating results on a consolidated basis, determines the company operates in one segment and has one reportable segment.

PayPal was founded in December 1998 as Confinity by Max Levchin, Peter Thiel, and others. In January 1999, Elon Musk launched X.com, another online payment company. In March 2000, Confinity and X.com merged to form PayPal. In October 2002, PayPal went public and was acquired by eBay for $1.5 billion. In July 2015, PayPal spun off from eBay and became an independent company. Since then, PayPal has expanded its products and services to include PayPal Credit, Xoom, Zettle, Honey, and Cryptocurrency. The current CEO of PayPal is Alex Chriss, who was appointed president and CEO on September 27, 2023.¹ He succeeded Dan Schulman, who had been the President and CEO of PayPal since July 2015. PayPal Holdings total number of employees in 2022 was 29,900, a 3.24% decline from 2021. As of 30 September 2023, for the quarter ended, the return on equity (ROE) and earnings per share (EPS) of PayPal are 6.29% and $0.93, respectively. The company does not pay any dividends. As of September 2023, PayPal has 1,094 million shares outstanding. PayPal had 2,574 institutional shareholders. The top 10 institutional shareholders held 30.54% of the total shares, with Vanguard Group Inc being the largest shareholder with 91,219,038 shares. The 52-week share price range is between $52.25 to $88.62, and the trailing PE is 18.35. As of 30 September 2023, the gross margin is 39.03%, the operating margin is 15.75%, and the net margin is 16.73%.

paypal headquarters

Recent Business Developments

On August 7, 2023, PayPal (NASDAQ: PYPL) announced the launch of a U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), fully-backed, regulated stablecoins that has the potential to transform payments in web3 and digitally native environments.²
On August 14, 2023, PayPal announced that its Board of Directors had appointed senior Intuit executive Alex Chriss as President and CEO, effective on September 27, 2023.³
On September 7, 2023, PayPal partnered with Meta to enable donations on Facebook and Instagram in the US, UK, Australia, and Canada.⁴
On September 12, 2023, Uber signed a multi-year global deal with PayPal, deepening PayPal's role as a critical strategic partner as Uber continues to expand and scale in markets worldwide.⁵
On September 21, 2023, The BBB Institute for Marketplace Trust (BBB Institute), the educational foundation of the International Association of Better Business Bureaus, announced PayPal, a BBB Accredited Business, as a new member of its Corporate Trust Council.⁶

Recent Financing Activities

On September 2023, for the third quarter ended, PayPal issued and took proceeds amounting to $109 million to purchase treasury stocks.⁷
On September 2023, for the third quarter ended, PayPal purchased treasury stocks amounting to $1,434 million from the proceeds of borrowings and encashment of loan receivables.⁸

Financial Performance Highlights

Q3 Performance Highlights

Net revenues for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, were $7,418 million, increased by 8% compared with the prior year's third quarter revenue, which amounted to $6,846 million. The net revenue increased by $572 million. Total Payment Volume (TPV) from PayPal amounted to $387,701 million, which increased by 15% compared with the prior year's third-quarter volume, which amounted to $336,973 million. Gross Profit for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was $2,895 million, declined by 3% compared with the prior year's third quarter gross profit, which amounted to $2,982 million resulting in a decline in gross profit by $87 million. Gross margin for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was 39.03%, declined by 4.53% compared with the prior year's third quarter gross margin, which amounted to 43.56%, resulting in a decline in profitability. Operating Profit for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was $1,168 million, increased by 4% compared with the prior year's third quarter operating profit, which amounted to $1,118 million, resulting in an increase in operating profit by $50 million. Operating margin for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was 15.75%, declined by 0.59% compared with the prior year's third quarter operating margin, which amounted to 16.33%, resulting in a decline in profitability. Net Profit for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was $1,241 million, which declined by 21% compared with the prior year's third quarter net profit, which amounted to $1,578 million, resulting in a decline in net profit by $337 million. Net margin for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was 16.73%, declined by 6.32% compared with the prior year's third quarter net margin, which amounted to 23.05%, resulting in a decline in profitability. Earnings Per Share (EPS) for the third quarter of the 2023-24 fiscal year, as of 30 September 2023, was 0.93, declined by 19% compared with the prior year's third quarter EPS, which amounted to 1.15, resulting in a decline in profitability from investment. The company did not pay any dividends.

Annual Performance Highlights

Net revenues for the year ended on 31 December 2022 were $27,518 million, increased by 8% compared with the prior year's revenue ended on 31 December 2021, which amounted to $25,371 million, resulting in an increase in the net revenue by $2,147 million. Net revenues increased by $2,147 million, or 8%, in 2022 compared to 2021, driven primarily by growth in total payment volume (TPV) of 9%. Gross Profit for the year ended on 31 December 2022 was $11,653 million, declined by 2% compared with the prior year's gross profit ended on 31 December 2021, which amounted to $11,921 million, resulting in a decline in the gross profit by $268 million. The Gross Margin for the year ended on 31 December 2022 was 42.35%, which declined by 4.64% compared with the prior year's gross margin that ended on 31 December 2021, which amounted to 46.99%, resulting in a decline in profitability. Operating Profit for the year ended on 31 December 2022 was $3,837 million, declined by 10% compared with the prior year's operating profit ended on 31 December 2021, which amounted to $4,262 million, resulting in a decline in the operating profit by $425 million. The Operating Margin for the year ended on 31 December 2022 was 13.94%, which declined by 2.86% compared with the prior year's operating margin that ended on 31 December 2021, which amounted to 16.80%, resulting in a decline in profitability. Net Profit for the year ended on 31 December 2022 was $2,419 million, declined by 42% compared with the prior year's net profit ended on 31 December 2021, which amounted to $4,169 million, resulting in a decline in the net profit by $1,750 million. The Net Margin for the year ended on 31 December 2022 was 8.79%, which declined by 7.64% compared with the prior year's net margin that ended on 31 December 2021, which amounted to 16.43%, resulting in a decline in profitability. Earnings Per Share (EPS) for the year ended on 31 December 2022 was $2.10, declined by 41% compared with the prior year's EPS ended on 31 December 2021, which amounted to $3.55, resulting in a decline in the EPS by $1.45. The company did not pay any dividends.

The cash flow statement reveals positive trends in cash flows during the year ended 31 December 2022. Operating, investing, and financing activities experienced notable changes. There was a net cash inflow in operating activities amounting to $5,813 million in 2022 and a net cash inflow amounting to $5,797 million in 2022. The net cash used in investing activities was $3,421 million and $5,149 million in 2022 and 2021, respectively. The net cash used in financing activities was $1,110 million in 2022, and the net cash used was $557 million in 2021. The net cash generated from operating activities of $5,813 million in 2022 was due primarily to operating income of $3,837 million, as well as adjustments for non-cash expenses, including provision for transaction and credit losses of $1,572 million, depreciation and amortization of $1,317 million, and stock-based compensation of $1,261 million. Cash flows from operating activities were also impacted by changes in income taxes payable of $373 million, net losses on the strategic investments of $304 million, and an increase in other liabilities of $483 million. These changes, which favorably impacted cash generated from operations, were partially offset by actual cash transaction losses incurred during the period of $1,230 million and changes in deferred income taxes of $811 million. The net cash used in investing activities of $3,421 million in 2022 was due primarily to purchases and originations of loans receivable of $28,170 million, purchases of investments of $20,219 million, changes in funds receivable from customers of $2,813 million, and purchases of property and equipment of $706 million. These cash outflows were partially offset by principal repayment of loans receivable of $24,903 million and maturities and sales of investments of $23,411 million. The net cash used in financing activities of $1,110 million in 2022 was due primarily to the repurchase of $4,199 million of the common stock under the July 2018 stock repurchase program, repayments of borrowings under financing arrangements of $1,686 million (including the repurchase and redemption of certain fixed rate notes and repayment of borrowings under a prior credit agreement, both described below under “Available credit and debt”), and tax withholdings of $336 million related to net share settlement of equity awards. These cash outflows were partially offset by borrowings under financing arrangements of $3,475 million (including proceeds from the issuance of fixed-rate debt in May 2022 and borrowings under the Paidy credit agreements) and changes in funds payable and amounts due to customers of $1,498 million.

In 2022, PayPal delivered solid financial and operating results across the key performance metrics. This was accomplished during a challenging period of macroeconomic uncertainty, slowing e-commerce growth, and geopolitical instability. The company ended the year with 435 million active consumer and merchant accounts, and the revenue increased by 8% to $27,518 million compared to 2021. In 2022, PayPal processed over 223,000 payment transactions and over $136,000,000 million in total payment volume across its platform, representing year-over-year increases of 16% and 9%, respectively. The company returned $4,199 million to stockholders through share repurchases in 2022, representing more than 80% of the free cash flow. Importantly, the company also narrowed the focus on key strategic initiatives and identified areas to operate more efficiently, reducing both costs and complexity throughout the organization.

Business Overview

PayPal Holdings, Inc. 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. It is a leading technology platform that enables digital payments and simplifies commerce experiences for merchants and consumers worldwide. PayPal provides mobile banking services, PayPal Cards, PayPal Loans, Merchant Payment Solutions, PayPal Zettle, PayPal credit, and other payment solutions. PayPal was established in March 2000 as a result of a merger between two companies, Confinity and X.com. The headquarters of PayPal is located in San Jose, California, United States.⁹ It also has offices in 14 other locations in the United States and in 30 countries around the world. PayPal’s customers are mainly consumers and merchants who use its platform to make and receive payments online or on mobile devices. PayPal has over 435 million active accounts worldwide as of the second quarter of 2023. PayPal’s customers span across more than 200 markets and can transact in more than 100 currencies. PayPal’s customers also include nonprofits and donors who use its services to support various causes. 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. The goal is to enable merchants and consumers to manage and move their money anywhere in the world in the markets it serves, anytime, on any platform, and using any device when sending payments or getting paid, including person-to-person (“P2P”) payments. PayPal’s payment solutions enable customers to connect, transact, and send and receive payments, whether they are online or in person. PayPal provides proprietary payment solutions accepted by merchants that enable the completion of payments on its platform on behalf of customers. It operates a global, two-sided network at scale that connects merchants and consumers with 435 million active accounts (consisting of 400 million consumer active accounts and 35 million merchant active accounts) across more than 200 markets as of December 31, 2022. The payments platform utilizes a combination of proprietary and third-party technologies and services intended to facilitate transactions efficiently and securely between millions of merchants and consumers worldwide across different channels, markets, and networks. It connects with financial service providers around the world and allows consumers to make purchases using a wide range of payment methods, regardless of where a merchant is located. Consumers who use the payments platform can send payments in more than 200 markets around the world and in nearly 150 currencies, withdraw funds to their bank accounts in 56 currencies, and hold balances in their PayPal accounts in 25 currencies.

paypal

Segmental Analysis

The Chief Executive Officer, who regularly reviews the operating results on a consolidated basis, determines the company operates in one segment and has one reportable segment. Based on the information provided to and reviewed by the CEO, the nature, amount, timing, and uncertainty of the revenue and cash flows and how they are affected by economic factors are most appropriately depicted through the 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.

Transaction Revenues are generated primarily from fees paid by customers to receive payments on PayPal’s platform. These fees may have a fixed and variable component. The variable component is generally a percentage of the value of the payment amount and is known at the time the transaction is processed. For a portion of the transactions, the variable component of the fee is eligible for reimbursement when the underlying transaction is approved for a refund. PayPal estimates the amount of fee refunds that will be processed each quarter and records a provision against the transaction revenues. The volume of activity processed on the payments platform, which results in transaction revenue, is referred to as Total Payment Volume (“TPV”). PayPal earns additional fees from merchants and consumers on transactions where it performs currency conversion when it enables cross-border transactions (i.e., transactions where the merchant and consumer are in different countries) to facilitate the instant transfer of funds for customers from their PayPal or Venmo account to their bank account or debit card, to facilitate the purchase and sale of cryptocurrencies, as contractual compensation from sellers that violate the contractual terms (for example, through fraud or counterfeiting), and other miscellaneous fees. The transaction revenues are also reduced by certain incentives provided to the customers. Transaction revenues grew by $1.8 billion, or 8%, in 2022 compared to 2021 driven primarily by growth in the unbranded card processing volume, which consists primarily of Braintree products and services and to a lesser extent, Venmo products and services, in each case driven by growth in TPV and the number of payment transactions on the payments platform. This growth in transaction revenues was partially offset by a decline in TPV and revenue generated from core PayPal products and services, including foreign currency exchange fees revenue, due primarily to a decrease in revenue earned on eBay’s marketplace platform. Additionally, for the year ended December 31, 2022, transaction revenues included $190 million in contractual compensation from sellers that violated the contractual terms, compared to $82 million in the year ended December 31, 2021. This contractual compensation and the year-over-year increase are predominantly attributable to activity in international markets. PayPal had active accounts of 435 million and 426 million as of December 31, 2022, and 2021, respectively, an increase of 2%. Number of payment transactions was 22.3 billion and 19.3 billion as of December 31, 2022 and 2021, respectively, an increase of 16%. TPV was $1.36 trillion and $1.25 trillion as of December 31, 2022 and 2021, respectively, an increase of 9%. Transaction revenues grew more slowly than TPV and the number of payment transactions in 2022 due primarily to declines in foreign currency exchange fees, TPV attributable to eBay’s marketplace (where PayPal had historically earned higher rates), and a decline in revenues from core PayPal products and services, partially offset by a favorable impact from hedging and an increase in revenue from Venmo products and services.

Other value-added services are comprised primarily of revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services that PayPal provides to merchants and consumers. These contracts typically have one performance obligation which is provided and recognized over the term of the contract. The transaction price is generally fixed and known at the end of each reporting period; however, for some agreements, it may be necessary to estimate the transaction price using the expected value method. Revenue earned from other value-added services is recorded on a net basis when PayPal is considered the agent with respect to processing transactions. PayPal also earns revenues from interest and fees earned on its portfolio of loans receivable and interest earned on certain assets underlying customer balances. Interest and fees earned on the portfolio of loans receivable are computed and recognized based on the effective interest method and are presented net of any required reserves and amortization of deferred origination costs. Revenues from other value added services increased by $343 million, or 17%, in 2022 compared to 2021 due primarily to an increase in interest earned on certain assets underlying customer account balances resulting from higher interest rates, the revenue share earned from an independent chartered financial institution (“partner institution”), and interest and fee revenue on merchant loans receivable portfolio. Growth in revenues from other value-added services in the current period was partially offset by the impact of revenue earned from the servicing of loans facilitated under the U.S. Government’s Paycheck Protection Program in 2021 of $157 million, for which revenue was de minimis in the current period.

paypal app logo

Other Information

In July 2018, the Board of Directors authorized a stock repurchase program that provides for the repurchase of up to $10 billion of common stock with no expiration from the date of authorization. In June 2022, the Board of Directors authorized an additional stock repurchase program that provides for the repurchase of up to $15 billion of common stock with no expiration from the date of authorization. The stock repurchase programs are intended to offset the impact of dilution from the equity compensation programs and, subject to market conditions and other factors, may also be used to make opportunistic repurchases of common stock to reduce outstanding share count. Any share repurchases under the stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions including accelerated share repurchase agreements or other means at times and in such amounts as management deems appropriate, and will be funded from the working capital or other financing alternatives. Moreover, any stock repurchases are subject to market conditions and other uncertainties, and PayPal cannot predict if or when any stock repurchases will be made. It may terminate the stock repurchase programs at any time without prior notice.

In February 2022, PayPal entered into a credit agreement (the “Paidy Credit Agreement”) with Paidy as co-borrower, which provides for an unsecured revolving credit facility of ¥60.0 billion. In September 2022, the Paidy Credit Agreement was modified to increase the borrowing capacity by ¥30.0 billion for a total borrowing capacity of ¥90.0 billion (approximately $686 million as of December 31, 2022). In the year ended December 31, 2022, ¥64.3 billion (approximately $491 million) was drawn down under the Paidy Credit Agreement. Accordingly, on December 31, 2022, ¥25.7 billion (approximately $195 million) of borrowing capacity was available for the purposes permitted by the Paidy Credit Agreement, subject to customary conditions for borrowing. In October 2021, PayPal assumed a credit agreement through the acquisition of Paidy (the “Prior Credit Agreement”). The Prior Credit Agreement provided for a secured revolving credit facility of approximately ¥22.8 billion (approximately $198 million at the time of acquisition). In the first quarter of 2022, PayPal terminated the Prior Credit Agreement and repaid outstanding borrowings. In September 2019, It entered into a credit agreement (the “Credit Agreement”) that provides for an unsecured $5.0 billion, five-year revolving credit facility that includes a $150 million letter of credit sub-facility and a $500 million Swingline sub-facility, with available borrowings under the revolving credit facility reduced by the amount of any letters of credit and Swingline borrowings outstanding from time to time. As of December 31, 2022, no borrowings were outstanding under the Credit Agreement and as such, $5.0 billion of borrowing capacity was available for the purposes permitted by the Credit Agreement, subject to customary conditions to borrowing.

As of December 31, 2022 and 2021, approximately $4.9 billion and $4.1 billion, respectively, of unused credit was available to PayPal Credit account holders in the U.K. While this amount represents the total unused credit available, it has not experienced, and do not anticipate, that all of the PayPal Credit account holders will access their entire available credit at any given point in time. In addition, the individual lines of credit that make up this unused credit are subject to periodic review and termination based on, among other things, account usage and customer creditworthiness.

The strategic investments are subject to a variety of market-related risks that could substantially reduce or increase the carrying value of the portfolio. As of December 31, 2022, and 2021, the strategic investments totaled $2.1 billion and $3.2 billion, which represented approximately 14% and 20% of the total cash, cash equivalents, and short-term and long-term investment portfolio at each of those respective dates. The strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are primarily investments in privately held companies.

During the year ended December 31, 2021, PayPal completed five acquisitions reflecting 100% of the equity interests of the acquired companies, for an aggregate purchase price of $3.1 billion. It completed the acquisition of Paidy in October 2021 by acquiring all outstanding shares for total consideration of approximately $2.7 billion, consisting of approximately $2.6 billion in cash and approximately $161 million in assumed restricted stock and restricted stock units, subject to vesting conditions. Paidy is a two-sided payment platform that primarily provides buy now, pay later solutions (installment credit offerings) in Japan. With the acquisition of Paidy, PayPal expanded its capabilities and relevance in Japan. In 2021, PayPal completed four other acquisitions accounted for as business combinations. The total purchase price for these acquisitions was $542 million, consisting primarily of cash consideration. The allocation of purchase consideration resulted in approximately $90 million of technology, customer, and marketing-related intangible assets with estimated useful lives ranging from approximately one to seven years, net assets of $17 million, and goodwill of approximately $435 million attributable to the workforce of the acquired companies and the synergies expected to arise from these acquisitions, including the integration of the acquired technology with the existing product offerings. Goodwill was not considered deductible for income tax purposes.

PayPal competes with a wide range of businesses. Some of the current and potential competitors are or may be larger than PayPal, have larger customer bases, greater brand recognition, longer operating histories, a dominant or more secure position, broader geographic scope, volume, scale, resources, and market share, or offer products and services that PayPal does not offer. Other competitors are or may be smaller or younger companies that may be more agile in responding to regulatory and technological changes and customer preferences. PayPal faces competition from a wide range of businesses and from all forms of physical and electronic payments. It faces competition from banks and financial institutions, which provide traditional payment methods (particularly credit cards and debit cards (collectively, “payment cards”), electronic bank transfers, and credit), payment networks that facilitate payments for payment cards or proprietary retail networks, payment card processors, and “card on file” services. It also faces competition from providers offering a variety of payment products and services, including tokenized and contactless payment cards, digital wallets and mobile payment solutions, credit, installment or other buy now pay later methods, real-time payment systems, P2P payments, and money remittance services, card readers and other devices or technologies for payment at the point of sale, virtual currencies and distributed ledger technologies, and tools that simplify and personalize shopping experiences for consumers and merchants. The products and services face competition from all forms of payments, which include paper-based payments (primarily cash and checks), credit cards, debit cards, electronic bank transfers, account-to-account payments, credit, installment methods, digital wallets and mobile payment solutions, contactless payments (including contactless cards, tokenized cards, Near Field Communication (NFC) based solutions, and Quick Response (QR) code-based solutions), and virtual currencies, such as cryptocurrencies and stablecoins. Some of PayPal's key competitors are Square, Stripe, Google Pay, Skrill, and Payoneer. These companies offer various online payment solutions, such as point-of-sale systems, mobile credit card readers, online payment processing, digital wallets, money transfer services, and global payment platforms. They cater to different segments of customers, such as small businesses, online businesses, developers, Gmail users, Android device owners, freelancers, e-commerce sellers, and international transactions.

The distribution channels of PayPal are the different ways that the company delivers its online payment solutions to its customers, both consumers and merchants. PayPal’s website is the primary channel for customers to sign up, manage, and use their PayPal accounts. Customers can also access various features and services, such as sending and receiving money, paying for goods and services, withdrawing funds, and accessing working capital. PayPal’s mobile app allows customers to access their PayPal accounts and perform transactions on their smartphones or tablets. The app also enables customers to use features such as PayPal QR code, PayPal One Touch, and PayPal Cash Card. PayPal partners with various online marketplaces, such as eBay, Etsy, Shopify, and WooCommerce, to offer PayPal as a payment option for buyers and sellers. Customers can use PayPal to pay for their purchases, receive payments for their sales, and manage their transactions on these platforms. PayPal also enables customers to use its payment solutions in physical locations, such as stores, restaurants, and vending machines. Customers can use the PayPal QR code, PayPal Cash Card, or PayPal Here (a mobile card reader) to pay or accept payments in person. PayPal integrates with social media platforms, such as Facebook, Instagram, and Pinterest, to allow customers to shop and pay directly on these channels.

Company History

PayPal was originally established by Max Levchin, Peter Thiel, and Luke Nosek in December 1998 as Fieldlink, later renamed Confinity, a company that developed security software for hand-held devices.¹⁰ Having had no success with that business model, however, it switched its focus to a digital wallet. The first version of the PayPal electronic payments system was launched in 1999.

In March 2000, Confinity merged with x.com, an online financial services company founded in March 1999 by Elon Musk, Harris Fricker, Christopher Payne, and Ed Ho. Musk was optimistic about the future success of the money transfer business Confinity was developing. Musk and Bill Harris, then-president and CEO of X.com, disagreed about the potential future success of the money transfer business and Harris left the company in May 2000. In October of that year, Musk decided that X.com would terminate its other internet banking operations and focus on payments. That same month, Elon Musk was replaced by Peter Thiel as CEO of X.com, which was renamed PayPal in June 2001 and went public in 2002. PayPal's IPO was listed under the ticker PYPL at $13 per share and generated over $61 million.

Shortly after PayPal's IPO, the company was acquired by eBay on October 3, 2002, for $1.5 billion in eBay stock. More than 70 percent of all eBay auctions accepted PayPal payments, and roughly 1 in 4 closed auction listings were transacted via PayPal. PayPal became the default payment method used by the majority of eBay users, and the service competed with eBay's subsidiary Billpoint, as well as Citibank's c2it, Yahoo!'s PayDirect, and Google Checkout. In 2005, PayPal acquired the VeriSign payment solution to provide added security support. In 2007, PayPal announced a partnership with MasterCard, which led to the development and launch of the PayPal Secure Card service, a software that allows customers to make payments on websites that do not accept PayPal directly. By the end of 2007, the company generated $1.8 billion in revenue. In January 2008, PayPal acquired Fraud Sciences, a privately held Israeli start-up that developed online risk tools, for $169 million. In November 2008, the company acquired Bill Me Later, an online transactional credit company. By 2010, PayPal had over 100 million active user accounts in 190 markets through 25 different currencies. The company continued to build its Merchant Services division, providing e-payments for retailers on eBay. In 2011, PayPal announced that it would begin moving its business offline so that customers could make payments via PayPal in stores. In August 2012, the company announced its partnership with Discover Card to allow PayPal payments to be made at any of the seven million stores in the Discover network. By the end of 2012, PayPal's total payment volume processed was US$145 billion and accounted for 40% of eBay's revenue, amounting to US$1.37 billion in the 3rd quarter of 2012.

paypal company history

It was announced on September 30, 2014, that eBay would spin off PayPal into a separate publicly traded company, a move demanded in 2013 by activist hedge fund magnate Carl Icahn.¹¹ The spin-off was completed on July 18, 2015. Dan Schulman was the president and CEO, with former eBay CEO John Donahoe serving as chairman. On July 1, 2015, PayPal announced that it was acquiring digital money transfer company Xoom Corporation. PayPal spent $25 a share in cash to acquire the publicly traded Xoom, or about $1.09 billion. The deal was closed in the fourth quarter of 2015. The move strengthened PayPal’s international business, giving it access to Xoom’s 1.3 million active U.S. customers who sent about $7 billion in the 12 months to people in 37 countries. On September 1, 2015, PayPal launched its peer-to-peer payment platform "PayPal.Me", a service that allows users to send a custom link to request funds via text, email, or other messaging platforms. PayPal had 170 million users, as of September 2015, and the focus of PayPal.Me was to create a mobile-first user experience that enables faster payment sharing than PayPal's traditional tools. On May 17, 2018, PayPal agreed to purchase Swedish payment processor iZettle for $2.2 billion. This was PayPal's largest acquisition until late November 2019 and the company claims that it is the in-store expertise and digital marketing strength that will complement its own online and mobile payment services. On March 19, 2019, PayPal announced its partnership with Instagram as part of the company's new checkout feature, "Checkout on Instagram". In June 2019, PayPal reported that Chief Operating Officer Bill Ready would be leaving the company at the end of the year, transitioning into the role of commerce chief for Google. In October 2019, PayPal reported a loss of $228 million on investments, largely due to a failed return from a $500 million investment in Uber. On January 6, 2020, PayPal acquired Honey for over $4 billion. This is PayPal's largest acquisition to date. In June 2020, PayPal announced a $530 million commitment to support Black-owned businesses and minority communities in the United States.

In January 2021, PayPal became the first foreign operator with 100% control of a payment platform in China, gaining an advanced position in the local online payment market. In an international survey conducted in March 2021 by Morning Consult, PayPal was found to be the second most trusted brand globally. On October 20, 2021, Bloomberg reported that PayPal is interested in acquiring Pinterest, with a potential price of around $70 a share; there’s no certainty the talks will lead to an agreement. In June 2022, Shopify partnered with PayPal to offer Shopify Payments to merchants in France. In February 2023, PayPal announced layoffs for 2,000 of its workers, or 7% of its total workforce. It was reported in February 2023, that CEO Dan Schulman will step away from his role by the end of 2023. Schulman will continue to serve on the board of directors after vacating the position. In August 2023, the company named Intuit executive Alex Chriss CEO, effective September 27, 2023.¹² In August 2023, PayPal launched a U.S. dollar stablecoin called PayPal USD (PYUSD) for payments and transfers. In November 2023, it was announced that the SEC launched a legal investigation into both PayPal and Paxos, the trust responsible for issuing the stablecoin. Paypal said it was cooperating with the subpoena from the SEC’s Enforcement Division. In October 2023, it was announced PayPal had sold its reverse logistics subsidiary, Happy Returns, to UPS for an undisclosed amount.