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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from             to             .
Commission file number 001-36859
   

PayPal Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware47-2989869
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
2211 North First StreetSan Jose,California95131
(Address of Principal Executive Offices)(Zip Code)
(408) 967-1000
(Registrant’s telephone number, including area code)
  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per sharePYPLNASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Yes No  
As of April 30, 2021, there were 1,174,728,054 shares of the registrant’s common stock, $0.0001 par value, outstanding, which is the only class of common or voting stock of the registrant issued.



PayPal Holdings, Inc.
TABLE OF CONTENTS
Page Number



Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 2: FINANCIAL STATEMENTS

PayPal Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
2021
December 31,
2020
 (In millions, except par value)
(Unaudited)
ASSETS
Current assets:  
Cash and cash equivalents$5,717 $4,794 
Short-term investments7,369 8,289 
Accounts receivable, net674 577 
Loans and interest receivable, net of allowances of $744 and $838 as of March 31, 2021 and December 31, 2020, respectively
2,731 2,769 
Funds receivable and customer accounts35,623 33,418 
Prepaid expenses and other current assets1,318 1,148 
Total current assets53,432 50,995 
Long-term investments5,994 6,089 
Property and equipment, net1,806 1,807 
Goodwill9,117 9,135 
Intangible assets, net938 1,048 
Other assets1,230 1,305 
Total assets$72,517 $70,379 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$191 $252 
Funds payable and amounts due to customers38,323 35,418 
Accrued expenses and other current liabilities2,731 2,648 
Income taxes payable95 129 
Total current liabilities41,340 38,447 
Deferred tax liability and other long-term liabilities2,794 2,930 
Long-term debt8,942 8,939 
Total liabilities53,076 50,316 
Commitments and contingencies (Note 13)
Equity:
Common stock, $0.0001 par value; 4,000 shares authorized; 1,174 and 1,172 shares outstanding as of March 31, 2021 and December 31, 2020, respectively
  
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
  
Treasury stock at cost, 122 and 117 shares as of March 31, 2021 and December 31, 2020, respectively
(9,830)(8,507)
Additional paid-in-capital16,161 16,644 
Retained earnings13,463 12,366 
Accumulated other comprehensive income (loss)(353)(484)
Total PayPal stockholders’ equity19,441 20,019 
Noncontrolling interest 44 
Total equity19,441 20,063 
Total liabilities and equity$72,517 $70,379 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

PayPal Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
20212020
 (In millions, except per share data)
(Unaudited)
Net revenues$6,033 $4,618 
Operating expenses:
Transaction expense 2,275 1,739 
Transaction and credit losses273 591 
Customer support and operations518 399 
Sales and marketing602 371 
Technology and development741 605 
General and administrative524 486 
Restructuring and other charges58 29 
Total operating expenses4,991 4,220 
Operating income1,042 398 
Other income (expense), net(170)(135)
Income before income taxes872 263 
Income tax (benefit) expense(225)179 
Net income$1,097 $84 
Net income per share:
Basic$0.94 $0.07 
Diluted$0.92 $0.07 
Weighted average shares:
Basic1,173 1,173 
Diluted1,190 1,185 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31,
 20212020
 (In millions)
(Unaudited)
Net income $1,097 $84 
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments (“CTA”)(53)(171)
Net investment hedge CTA gain 71 
Unrealized gains on cash flow hedges, net198 144 
Tax expense on unrealized gains on cash flow hedges, net(3)(2)
Unrealized (losses) gains on investments, net(15)15 
Tax benefit (expense) on unrealized (losses) gains on investments, net4 (4)
Other comprehensive income (loss), net of tax131 53 
Comprehensive income$1,228 $137 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock SharesTreasury StockAdditional Paid-In CapitalAccumulated Other
Comprehensive Income (Loss)
Retained EarningsNoncontrolling InterestTotal 
Equity
 (In millions)
(Unaudited)
Balances at December 31, 20201,172 $(8,507)$16,644 $(484)$12,366 $44 $20,063 
Net income— — — — 1,097 — 1,097 
Foreign CTA— — — (53)— — (53)
Unrealized gains on cash flow hedges, net— — — 198 — — 198 
Tax expense on unrealized gains on cash flow hedges, net— — — (3)— — (3)
Unrealized losses on investments, net— — — (15)— — (15)
Tax benefit on unrealized losses on investments, net— — — 4 — — 4 
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes7 — (870)— — — (870)
Common stock repurchased(5)(1,323)— — — — (1,323)
Stock-based compensation— — 387 — — — 387 
Change in noncontrolling interest— — — — — (44)(44)
Balances at March 31, 20211,174 $(9,830)$16,161 $(353)$13,463 $ $19,441 

Common Stock SharesTreasury StockAdditional Paid-In CapitalAccumulated Other
Comprehensive Income (Loss)
Retained EarningsNoncontrolling InterestTotal 
Equity
 (In millions)
(Unaudited)
Balances at December 31, 20191,173 $(6,872)$15,588 $(173)$8,342 $44 $16,929 
Adoption of current expected credit loss standard— — — — (168)— (168)
Net income— — — — 84 — 84 
Foreign CTA— — — (171)— — (171)
Net investment hedge CTA gain— — — 71 — — 71 
Unrealized gains on cash flow hedges, net— — — 144 — — 144 
Tax expense on unrealized gains on cash flow hedges, net— — — (2)— — (2)
Unrealized gains on investments, net— — — 15 — — 15 
Tax expense on unrealized gains on investments, net— — — (4)— — (4)
Common stock and stock-based awards issued and assumed, net of shares withheld for employee taxes8 — (382)— — — (382)
Common stock repurchased(8)(800)— — — — (800)
Stock-based compensation— — 295 — — — 295 
Balances at March 31, 20201,173 $(7,672)$15,501 $(120)$8,258 $44 $16,011 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,
 20212020
 (In millions)
(Unaudited)
Cash flows from operating activities:
Net income$1,097 $84 
Adjustments to reconcile net income to net cash provided by operating activities:
Transaction and credit losses273 591 
Depreciation and amortization300 293 
Stock-based compensation368 283 
Deferred income taxes (79)
Net losses on strategic investments120 124 
Other 51 (5)
Changes in assets and liabilities:
Accounts receivable(97)77 
Accounts payable(34)(21)
Income taxes payable(33)51 
Other assets and liabilities (287)23 
Net cash provided by operating activities1,758 1,421 
Cash flows from investing activities:
Purchases of property and equipment(221)(206)
Proceeds from sales of property and equipment 119 
Changes in principal loans receivable, net75 (386)
Purchases of investments(10,975)(3,593)
Maturities and sales of investments9,718 5,511 
Acquisitions, net of cash and restricted cash acquired (3,612)
Funds receivable(180)(387)
Net cash used in investing activities(1,583)(2,554)
Cash flows from financing activities:
Proceeds from issuance of common stock2 1 
Purchases of treasury stock(1,323)(800)
Tax withholdings related to net share settlements of equity awards(863)(402)
Borrowings under financing arrangements 3,000 
Funds payable and amounts due to customers3,011 526 
Other financing activities (15)
Net cash provided by financing activities827 2,310 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (42)(178)
Net change in cash, cash equivalents, and restricted cash 960 999 
Cash, cash equivalents, and restricted cash at beginning of period 18,040 15,743 
Cash, cash equivalents, and restricted cash at end of period$19,000 $16,742 
Supplemental cash flow disclosures:
Cash paid for interest$12 $11 
Cash paid for income taxes, net$87 $30 
The below table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents$5,717 $7,854 
Short term investments26 17 
Funds receivable and customer accounts13,257 8,871 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$19,000 $16,742 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1—OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OVERVIEW AND ORGANIZATION

PayPal Holdings, Inc. (“PayPal,” the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in January 2015 and is a leading technology platform and digital payments company that enables digital and mobile payments on behalf of merchants and consumers worldwide. PayPal is committed to democratizing financial services to improve the financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world. Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world, anytime, on any platform, and using any device when sending payments or getting paid. We also facilitate person-to-person payments through our PayPal, Venmo, and Xoom products and services and simplify and personalize shopping experiences for our consumers through our Honey Platform. Our combined payment solutions, including our core PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, and Hyperwallet products and services, comprise our proprietary Payments Platform.

We operate globally and in a rapidly evolving regulatory environment characterized by a heightened focus by regulators globally on all aspects of the payments industry, including countering terrorist financing, anti-money laundering, privacy, cybersecurity, and consumer protection. The laws and regulations applicable to us, including those enacted prior to the advent of digital and mobile payments, are continuing to evolve through legislative and regulatory action and judicial interpretation. New or changing laws and regulations, including the changes to their interpretation and implementation, as well as increased penalties and enforcement actions related to non-compliance, could have a material adverse impact on our business, results of operations, and financial condition. We monitor these areas closely and are focused on designing compliant solutions for our customers.

SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation
The condensed consolidated financial statements include the financial statements of PayPal and our wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The noncontrolling interest reported was a component of equity on our condensed consolidated balance sheets and represented the equity interests not owned by PayPal and was recorded for consolidated entities we controlled and of which we owned less than 100%. Noncontrolling interest was not presented separately on our condensed consolidated statements of income as the amount was de minimis.
Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is included in other income (expense), net on our condensed consolidated statements of income and our investment balance is included in long-term investments on our condensed consolidated balance sheets. Investments in entities where we do not have the ability to exercise significant influence over the investee are accounted for at fair value or cost minus impairment, if any, adjusted for changes resulting from observable price changes, which are included in other income (expense), net on our condensed consolidated statements of income. Our investment balance is included in long-term investments on our condensed consolidated balance sheets.
We determine at the inception of each investment, and re-evaluate if certain events occur, whether an entity in which we have made an investment is considered a variable interest entity (“VIE”). If we determine an investment is a VIE, we then assess if we are the primary beneficiary, which would require consolidation. As of March 31, 2021, no VIEs qualified for consolidation as the structures of these entities do not provide us with the ability to direct activities that would significantly impact their economic performance. The carrying value of our investments that are VIEs was de minimis and included as non-marketable equity securities accounted for using the equity method of accounting in long-term investments on our condensed consolidated balance sheets. Our maximum exposure to loss, which represents funded commitments and any future funding commitments, was $129 million and $105 million as of March 31, 2021 and December 31, 2020, respectively.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) filed with the Securities and Exchange Commission on February 5, 2021.

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for all interim periods presented. Certain amounts for prior years have been reclassified to conform to the financial statement presentation as of and for the three months ended March 31, 2021.
Reclassifications

Beginning with the fourth quarter of 2020, we reclassified certain cash flows related to customer balances from cash flows from operating activities to cash flows from investing activities and cash flows from financing activities within the condensed consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current period presentation. These changes have no impact on our previously reported consolidated net income, financial position, net change in cash, cash equivalents, and restricted cash, or total cash, cash equivalents, and restricted cash as reported on our condensed consolidated statements of cash flows.

The current period presentation classifies all changes in funds receivable and customer accounts and funds payable and amounts due to customers consistently on our condensed consolidated statement of cash flows as cash flows from investing activities and cash flows from financing activities, respectively, regardless of which product the cash flows relate to on our Payments Platform. The current period presentation provides a more meaningful representation of the cash flows related to the movement of customer funds due to the restrictions on and use of those funds.

The following table presents the effects of the changes on the presentation of these cash flows to the previously reported condensed consolidated statements of cash flows:
Three Months Ended March 31, 2020
(In millions)
As Previously Reported (1)
AdjustmentsReclassified
Net cash provided by (used in):
Operating activities(2)
$1,504 $(83)$1,421 
Investing activities(3)
(2,568)14 (2,554)
Financing activities(4)
2,241 69 2,310 
Effect of exchange rates on cash, cash equivalents, and restricted cash(178) (178)
Net increase in cash, cash equivalents, and restricted cash$999 $ $999 
(1) As reported in our Form 10-Q filed with the SEC on May 7, 2020.
(2) Financial statement line impacted in operating activities was “Other assets and liabilities.”
(3) Financial statement line impacted in investing activities was “Funds receivable.”
(4) Financial statement line impacted in financing activities was “Funds payable and amounts due to customers.”

Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and credit losses, loss contingencies, income taxes, revenue recognition, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and various other assumptions which we believe to be reasonable under the circumstances. These estimates may change as new events occur, and as additional information surrounding the continued impact of the novel coronavirus (“COVID-19”) pandemic becomes available. Actual results could differ from these estimates and any such differences may be material to our financial statements.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Recent accounting guidance

In 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This amended guidance provides transition relief for the accounting impact of reference rate reform. For a limited period, this guidance provides optional expedients and exceptions for applying GAAP to certain contract modifications, hedging relationships, and other transactions affected by a reference rate expected to be discontinued due to reference rate reform. The amended guidance is effective through December 31, 2022. Our exposure to London Interbank Offered Rate (“LIBOR”) is primarily limited to an insignificant portion of our available-for-sale debt securities and, accordingly, we do not expect reference rate reform to have a material impact on our condensed consolidated financial statements.

There are other new accounting pronouncements issued by the FASB that we have adopted or will adopt, as applicable. We do not believe any of these accounting pronouncements have had, or will have, a material impact on our condensed consolidated financial statements or disclosures.

NOTE 2—REVENUE

PayPal enables its customers to send and receive payments. We earn revenue primarily by completing payment transactions for our customers on our Payments Platform and from other value added services. Our revenues are classified into two categories: transaction revenues and revenues from other value added services.

DISAGGREGATION OF REVENUE

We determine operating segments based on how our chief operating decision maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our Chief Executive Officer, who reviews our operating results on a consolidated basis. We operate as one segment and have one reportable segment. Based on the information provided to and reviewed by our CODM, we believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets and type of revenue categories (transaction revenues and revenues from other value added services). Revenues recorded within these categories are earned from similar services for which the nature of associated fees and the related revenue recognition models are substantially the same.

The following table presents our revenue disaggregated by primary geographical market and category:
 Three Months Ended March 31,
 20212020
(In millions)
Primary geographical markets
United States (“U.S.”)$3,063 $2,469 
United Kingdom (“U.K.”)625 478 
Other countries(1)
2,345 1,671 
Total net revenues(2)
$6,033 $4,618 
Revenue category
Transaction revenues$5,621 $4,215 
Revenues from other value added services412 403 
Total net revenues(2)
$6,033 $4,618 
(1) No single country included in the other countries category generated more than 10% of total revenue.
(2) Total net revenues include $59 million and $247 million for the three months ended March 31, 2021 and 2020, respectively, which do not represent revenues recognized in the scope of Accounting Standards Codification Topic 606, Revenue from contracts with customers. Such revenues relate to interest, fees, and gains earned on loans and interest receivable, as well as hedging gains or losses, and interest earned on certain assets underlying customer balances.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Net revenues are attributed to the country in which the merchant is located, or in the case of a cross-border transaction, may be earned from the country in which the consumer and the merchant respectively reside. Revenues earned from other value added services are typically attributed to the country in which either the customer or partner reside.

NOTE 3—NET INCOME PER SHARE

Basic net income per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding for the period. The dilutive effect of outstanding equity incentive awards is reflected in diluted net income per share by application of the treasury stock method. The calculation of diluted net income per share excludes all anti-dilutive common shares.

The following table sets forth the computation of basic and diluted net income per share for the periods indicated:
 Three Months Ended March 31,
 20212020
(In millions, except per share amounts)
Numerator:
Net income$1,097 $84 
Denominator:
Weighted average shares of common stock - basic1,173 1,173 
Dilutive effect of equity incentive awards17 12 
Weighted average shares of common stock - diluted1,190 1,185 
Net income per share:
Basic$0.94 $0.07 
Diluted$0.92 $0.07 
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive2 2 

NOTE 4—BUSINESS COMBINATIONS

There were no acquisitions accounted for as business combinations or divestitures completed in the three months ended March 31, 2021.

ACQUISITION COMPLETED IN 2020

Honey Science Corporation

We completed our acquisition of Honey Science Corporation (“Honey”) in January 2020 by acquiring all outstanding shares for total consideration of approximately $4.0 billion, consisting of approximately $3.6 billion in cash and approximately $400 million in assumed restricted stock, restricted stock units, and options, subject to vesting conditions. We believe our acquisition of Honey will enhance our value proposition by allowing us to further simplify and personalize shopping experiences for consumers while driving conversion and increasing consumer engagement and sales for merchants.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following table summarizes the final allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
(In millions)
Goodwill$2,962 
Customer lists and user base115 
Marketing related30 
Developed technology572 
Total intangibles$717 
Accounts receivable, net50 
Deferred tax liabilities, net(58)
Other net liabilities(36)
Total purchase price$3,635 

The intangible assets acquired consist primarily of customer contracts, trade name/trademarks, and developed technology with estimated useful lives of three years. The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, and is attributable to the workforce of Honey and the synergies expected to arise from the acquisition through continued customer acquisition, cross selling initiatives, and product enhancements. Goodwill was not deductible for income tax purposes.

In association with the acquisition, we assumed restricted stock, restricted stock units, and options with an approximate grant date fair value of $400 million, which represents post-business combination expense. The equity granted is a combination of shares issued to certain former Honey employees subject to a holdback arrangement and assumed Honey employee grants, which vest over a period of up to four years and are subject to continued employment.

NOTE 5—GOODWILL AND INTANGIBLE ASSETS
GOODWILL
The following table presents goodwill balances and adjustments to those balances during the three months ended March 31, 2021:
December 31,
2020
Goodwill
Acquired
 Adjustments March 31,
2021
 (In millions)
Total goodwill$9,135 $ $(18)$9,117 

The adjustments to goodwill during the three months ended March 31, 2021 pertain to foreign currency translation adjustments.

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
INTANGIBLE ASSETS
The components of identifiable intangible assets are as follows:
 March 31, 2021December 31, 2020
 
Gross Carrying Amount  
Accumulated Amortization 
Net Carrying AmountWeighted Average Useful Life (Years)
Gross Carrying Amount
Accumulated Amortization 
Net Carrying AmountWeighted Average Useful Life (Years)
 (In millions, except years)
Intangible assets:        
Customer lists and user base$1,201 $(822)$379 6$1,206 $(797)$409 6
Marketing related321 (289)32 3321 (278)43 3
Developed technology999 (638)361 3999 (577)422 3
All other448 (282)166 7449 (275)174 7
Intangible assets, net$2,969 $(2,031)$938 $2,975 $(1,927)$1,048  
        
Amortization expense for intangible assets was $106 million and $114 million for the three months ended March 31, 2021 and 2020, respectively.

Expected future intangible asset amortization as of March 31, 2021 was as follows (in millions):
Fiscal years:
Remaining 2021$294 
2022337 
202399 
202498 
202582 
Thereafter28 
Total$938 

NOTE 6—LEASES

PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, data centers, product development offices, and customer service and operations centers.

While a majority of lease payments are based on the rate implicit in the lease, some lease payments are subject to annual changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.

The short-term lease exemption has been adopted for all leases with a duration of less than 12 months.

PayPal’s lease portfolio contains a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements. As of March 31, 2021, we had no finance leases.

The components of lease expense were as follows:
Three Months Ended March 31,
20212020
(In millions)
Lease expense
Operating lease expense$45 $38 
Sublease income(2)(1)
Total lease expense$43 $37 

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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Supplemental cash flow information related to leases was as follows:

Three Months Ended March 31,
20212020
(In millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$42 $35 
Right-of-use assets obtained in exchange for operating lease liabilities$1 $244 

Supplemental balance sheet information related to leases was as follows:
March 31,
2021
December 31,
2020
(In millions, except weighted-average figures)
Operating lease right-of-use assets$663 $707 
Other current lease liabilities141 144 
Operating lease liabilities630 642 
Total operating lease liabilities$771 $786 
Weighted-average remaining lease termoperating leases
6.8 years6.9 years
Weighted-average discount rateoperating leases
3 %3 %
Future minimum lease payments for our operating leases as of March 31, 2021 were as follows:
Operating Leases
Fiscal years:(In millions)
Remaining 2021$115 
2022135 
2023120 
2024107 
202595 
Thereafter273 
Total$845 
Less: present value discount(74)
Lease liability$771 

Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases.

In the first quarter of 2020, we entered into a sale-leaseback arrangement as the seller-lessee for a data center as the buyer-lessor obtained control of the facility. We sold the data center and simultaneously entered into an operating lease agreement with the purchaser for the right to use the facility for eight years. The Company received proceeds of approximately $119 million, net of selling costs, which resulted in a de minimis net gain on the sale transaction.

In the first quarter of 2021, we incurred asset impairment charges of $26 million within restructuring and other charges on our condensed consolidated statements of income. The impairments included a reduction to our right-of-use ("ROU") lease assets in the amount of $21 million, which were attributed to certain leased space we are no longer utilizing for our core business operations, a portion of which is being sub-leased.


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PayPal Holdings, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
As of March 31, 2021, we also have additional operating leases that have not yet commenced, primarily for real estate and data centers, with minimum lease payments aggregating to $28 million. These operating leases will commence prior to the end of fiscal year 2021 with lease terms ranging from three years to ten years.

NOTE 7—OTHER FINANCIAL STATEMENT DETAILS

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended March 31, 2021:
Unrealized Gains (Losses) on Cash Flow Hedges
Unrealized Gains (Losses) on Investments
Foreign
Currency
Translation Adjustment (“CTA”)
Net Investment Hedge CTA Gain
Estimated Tax BenefitTotal
(In millions)
Beginning balance $(323)$11 $(198)$24 $2 $(484)
Other comprehensive income (loss) before reclassifications139 (15)(53) 1 72 
Less: Amount of loss reclassified from accumulated other comprehensive income (“AOCI”)(59)    (59)
Net current period other comprehensive income (loss) 198 (15)(53) 1 131 
Ending balance $(125)$(4)$(251)$24 $3 $(353)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended March 31, 2020:
Unrealized Gains on Cash Flow Hedges
Unrealized Gains on Investments
Foreign
CTA
Net Investment Hedge CTA Gain (Loss)
Estimated Tax ExpenseTotal
(In millions)
Beginning balance $6 $2 $(150)$(31)$ $(173)
Other comprehensive income (loss) before reclassifications186 15 (171)71 (