PayPal : News Release (opens in new window)

PAYPAL HOLDINGS, INC. (NASDAQ: PYPL)

First Quarter 2021 Results

San Jose, California, May 5, 2021

Q1'21: Strongest first quarter results in PayPal's history

• Total Payment Volume (TPV) of $285 billion, growing 50%, and 46% on an FX-neutral basis (FXN); revenue of $6.03 billion, growing 31%, and 29% on an FXN basis
• GAAP EPS of $0.92, up from $0.07, and non-GAAP EPS of $1.22, up from $0.66
• Added 14.5 million Net New Active Accounts (NNAs); ended the quarter with 392 million active accounts

FY'21: Raising NNAs, TPV, revenue, and earnings guidance

• TPV expected to grow ~30% at current spot rates and on an FXN basis; revenue expected to grow ~20% at current spot rates and ~18.5% on an FXN basis, to ~$25.75 billion
• GAAP EPS expected to be ~$3.33 compared to $3.54 in FY'20; non-GAAP EPS expected to grow ~21% to ~$4.70
• 52-55million NNAs expected to be added in FY'21

Q1'21 Highlights

	GAAP		Non-GAAP
		YoY			YoY
	USD $	Change		USD $	Change
Net Revenues	$6.03B	29%*		$6.03B	29%*
Operating Income	$1.04B	162%		$1.67B	84%
EPS	$0.92	1200%		$1.22	84%

Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy. Our addressable market continues to grow as we launch new products and services for our 392 million active accounts."

Dan Schulman

President and CEO

* On an FXN basis; on a spot basis net revenues grew 31%

Key Operating and Financial Metrics

Net New Active Accounts1	Total Payment Volume	Net Revenues
(28%)	+46%2	+29%2
20.2M			$285B		$6.03B
10.2M	14.5M			$4.62B
honey acq
		$191B
10.0M
organic
Q1'20	Q1'21	Q1'20	Q1'21	Q1'20	Q1'21

GAAP / Non-GAAP EPS3

Operating Cash Flow / Free Cash Flow3,4

GAAP

Non-GAAP

Operating Cash Flow

Free Cash Flow

+1200%

+84%

+24%

+27%

			$1.22		$1.76B
		$0.66		$1.42B			$1.54B
				$1.22B
	$0.92
$0.07
Q1'20	Q1'21	Q1'20	Q1'21	Q1'20	Q1'21	Q1'20	Q1'21

1. Q1'20 NNAs include a one-time addition of 10.2M accounts in January 2020 from the acquisition of Honey 2. On an FXN basis; on a spot basis TPV grew 50% and net revenues grew 31% 3. For a reconciliation of non- GAAP financial measures to the most directly comparable GAAP financial measures, please see the section titled "Non-GAAP Measures of Financial Performance" and the subsequent tables at the end of this press release 4. Reflects the impact of reclassification as described in our Form 8-K filed with the Securities and Exchange Commission ("SEC") on February 3, 2021

2 Results 2021 Q1

Financial Highlights

Sustained outperformance across key financial metrics

• Revenue of $6.03 billion; growing 31%, and 29% on an FXN basis
• GAAP operating margin of 17.3%, expanding 865 basis points; non- GAAP operating margin of 27.7%, expanding 807 basis points
• GAAP EPS of $0.92, up from $0.07, and non-GAAP EPS of $1.22, up from $0.66
• • In Q1'20, credit loss reserves increased by $237 million due to revisions in macroeconomic projections, negatively impacting GAAP and non-GAAP EPS by $0.17 in the period

Our record-breaking first quarter results underscore the ongoing strength, diversification, and relevance of our scaled, two-sided, global payments platform. We are raising our FY'21 guidance based on these strong results."

John Rainey

CFO and EVP

Global Customer Operations

Operating Highlights

Significant customer growth and solid engagement

• 14.5 million NNAs added, bringing total active accounts to 392 million, up 21%
• 4.4 billion payment transactions, up 34%
• $285 billion in TPV, up 50% on a spot basis and 46% FXN
• • Merchant Services volume grew 54% on a spot basis and 50% FXN, and represented 94% of TPV
  • Venmo processed approximately $51 billion in TPV, growing 63%
• 42.2 payment transactions per active account on a trailing twelve months basis, growing 7%

Balance Sheet and Liquidity

Strong balance sheet and cash-flow generation

• PayPal's cash, cash equivalents, and investments totaled $19.1 billion as of March 31, 2021
• PayPal's debt totaled $8.9 billion as of the end of the first quarter
• PayPal generated cash flow from operations of $1.76 billion, growing 24%, and free cash flow of $1.54 billion, growing 27%
• In Q1'21, PayPal repurchased approximately 5.3 million shares of common stock, returning $1.3 billion to stockholders

Strategic Initiatives and Business Updates

Delivering new experiences and supporting communities

• Venmo-brandedcredit card now fully ramped and available for all eligible Venmo users to apply
• PayPal's cryptocurrency offerings expanded to enable U.S. customers to transact using cryptocurrency to fund commerce
• Buy-hold-sellcryptocurrency experiences launched for Venmo customers in April
• December 2020 Coronavirus (COVID-19) relief bill allowed for second round eligibility for the U.S. Small Business Administration's Paycheck Protection Program. Since the inception of the COVID-19 relief bill, PayPal has facilitated ~$3 billion in loans under the PPP program to approximately 100,000 businesses

3 Results 2021 Q1

Long Stone Farm, a grass-based livestock operation run by Casey and Justin Wisch, began attracting many new customers as the COVID-19 pandemic set in, and the duo turned to PayPal's QR Codes in response to customer requests for an option to pay

digitally and limit contact.

"We're seeing about 70 to 80 percent of our transactions going through the PayPal QR Code now. It's a very dramatic shift for us."

Casey and Justin Wisch

Founders, Long Stone Farm

Lovettsville, VA

2020 Global Impact Report Highlights

Social	Employees	Environmental	Responsible
Innovation	& Culture	Sustainability	Business Practices

$300M+	100%	98%	45%
Deployed to address	Global gender & U.S.	Renewable energy use in	Diverse Board of Directors;
economic inequality;	ethnic pay equity; 26.5K	our data centers; on track	women or underrepresented
$535M total commitment	total global employees2	to be 100% by 2023	ethnic groups

$4.6B

84

2040

48%

In access to capital for

Overall engagement

Net-zero emissions goal;

U.S. hourly employees took

U.S. SMBs, including

score; PayPal in the top

25% science-based emissions

company-provided time off

$2B+ in PPP loans1

5% of our benchmark3

reduction target by 20254

to vote in 2020 U.S. election

4 4ResultsResults2021120Q1Q1

OPEN

Read more about our impact at paypal.com/impact

1. U.S. Small Business Administration's Paycheck Protection Program 2. As of December 31, 2020 3. Engagement score includes whether employees would recommend PayPal to their peers and/or are happy at PayPal. Our benchmark includes top technology companies including key competitors for top talent 4. From 2019 baseline

Q1'21 Financial and Operating Highlights

Presented in millions, except per share data and percentages

Total Payment Volume (TPV)

Net revenues

Operating margin

GAAP	Effective tax rate
Net income
	Earnings per diluted share
	Net cash provided by operating activities
	Net revenues
GAAP-	Operating margin
Effective tax rate
Non	Net income

Earnings per diluted share

Free cash flow

				FXN
Q1 2021	Q1 2020	YoY Growth	YoY Growth
$285,447	$190,567	$94,880	50%	46%
$6,033	$4,618	$1,415	31%	29%
17.3%	8.6%	**	865bps	N/A
(25.8%)	68.1%	**	(93.9pts)	N/A
$1,097	$84	$1,013	1206%	N/A
$0.92	$0.07	$0.85	1200%	N/A
$1,758	$1,4211	$337	24%	N/A
$6,033	$4,618	$1,415	31%	29%
27.7%	19.7%	**	807bps	N/A
10.4%	12.4%	**	(2.0pts)	N/A
$1,455	$786	$669	85%	N/A
$1.22	$0.66	$0.56	84%	N/A
$1,537	$1,2151	$322	27%	N/A

1. Reflects the impact of reclassification as described in our Form 8-K filed with the SEC on February 3, 2021 ** Not meaningful

Financial Guidance

Q2'21 Guidance

• PayPal expects revenue to grow ~19% at current spot rates and ~17% on an FXN basis, to ~$6.25 billion
• PayPal expects GAAP earnings per diluted share to be ~$0.76, compared to $1.29 in the prior year period, and for non- GAAP earnings per diluted share to grow ~5%, to ~$1.12
• • GAAP and non-GAAP EPS guidance does not include any expectation of any incremental adjustments to credit loss reserves
  • In the second quarter of 2020, GAAP and non-GAAP EPS included $0.07 of negative impact from increased credit provisions related to revised macroeconomic projections
  • GAAP EPS guidance does not include any expectation of net realized and unrealized gains and losses on PayPal's strategic investment portfolio
  • In the second quarter of 2020, GAAP EPS included a net unrealized gain of $0.58 on PayPal's strategic investment portfolio
  • Estimated non-GAAP amounts for the three months ending June 30, 2021 reflect adjustments of approximately $525 million, including estimated stock-based compensation expense and related payroll taxes of approximately $400 million

FY'21 Guidance

• PayPal expects to add NNAs in the range of 52-55 million
• PayPal expects TPV growth to be ~30% on a spot and FXN basis
• PayPal expects revenue to grow ~20% at current spot rates and ~18.5% on an FXN basis, to ~$25.75 billion
• PayPal expects GAAP EPS to be ~$3.33, and non-GAAP EPS to grow ~21%, to ~$4.70
• • GAAP and non-GAAP EPS guidance does not include any expectation of any incremental adjustments to credit loss reserves
  • GAAP EPS guidance includes ~$0.09 of net realized and unrealized losses on PayPal's strategic investment portfolio
  • In 2020, GAAP EPS included a net unrealized gain of ~$1.24 on PayPal's strategic investment portfolio
  • Estimated non-GAAP amounts for the twelve months ending December 31, 2021 reflect adjustments of approximately $2.21 billion, including estimated stock-based compensation expense and related payroll taxes of approximately $1.70 billion

Please see "Non-GAAP Financial Measures" and "Non-GAAP Measures of Financial Performance" for important additional information.

5 Results 2021 Q1

Conference Call and Webcast

PayPal Holdings, Inc. will host a conference call to discuss first quarter 2021 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 measures to their most directly comparable GAAP measures, can be accessed through the company's Investor Relations website at https://investor.pypl.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.