Crypto assets (ASU 2023-08): disclosure examples

(1) As a result of the adoption of ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets , the previously reported periods in 2024 have been recast. See Recent Accounting Pronouncements below for further details.

The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders (in millions):

Three Months Ended September 30,	Nine Months Ended September 30,
2025	2024	2025	2024
Weighted average shares used in computing net income per share of common stock, basic	3,227	3,198	3,223	3,192
Add:
Stock-based awards	299	290	300	286
Convertible senior notes	—	—	—	1
Warrants	—	9	—	10
Weighted average shares used in computing net income per share of common stock, diluted	3,526	3,497	3,523	3,489

The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income per share of common stock attributable to common stockholders, because their effect was anti-dilutive (in millions):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets (including the Company's bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective January 1, 2025 on a prospective basis, with a cumulative-effect adjustment to the opening balance of retained earnings. Prior periods were not restated. As a result, the Company’s financial results for the three and nine months ended September 30, 2025 are not directly comparable to the financial results for earlier periods. See Note 3, Digital Assets, to the Consolidated Financial Statements, for further information.

The adoption of ASU 2023-08 resulted in the following impacts as of January 1, 2025:

In 2023, the FASB issued ASU 2023-08—Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The guidance addresses the accounting and disclosure requirements for certain crypto assets and requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recognized in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The standard is effective for annual reporting periods beginning after December 15, 2024, including interim reporting periods within those fiscal years. We adopted this guidance in the first quarter of 2025 with no material impact on our consolidated financial statements and related disclosures.

In 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance is intended to further standardize income tax disclosures primarily related to the presentation of the effective tax rate reconciliation and income taxes paid information on our financial statements and disclosures. The standard is effective for annual reporting periods beginning after December 15, 2024. We adopted this guidance prospectively in the fourth quarter of 2025 with no material impact on our consolidated financial statements.

In 2025, the FASB issued ASU 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The guidance is intended to improve certain aspects of the accounting for and disclosure of internally developed software costs specific to website development. The standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We have elected to early adopt the standard effective January 1, 2026, using the retrospective transition method, which required us to recast each prior reporting period presented consistent with the new standard.

The most significant impact of the standard relates to the capitalization of product development cost for our Marketplace platforms. Under the new standard, due to the iterative and agile nature of our product development,

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

we have determined that significant development uncertainty generally persists until the software is deployed, or within a short period prior to deployment. Consequently, we expect substantially all product development costs related to the Company’s Marketplace platforms would be expensed as the probable-to-complete threshold would not have been met.

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets . This amended guidance requires fair value measurement of certain crypto assets each reporting period, with the changes in fair value reflected in net income. The amendments also require disclosures of the name, fair value, units held, and cost basis for each significant crypto asset held and annual reconciliations of crypto asset holdings. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. We adopted this guidance effective as of January 1, 2025. We have applied the amendments of this guidance as a cumulative-effect adjustment to retained earnings. The adoption of this guidance did not have a significant impact on our condensed consolidated financial statements.

12

PayPal Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

In January 2025, the SEC released Staff Accounting Bulletin (“SAB”) No. 122 rescinding SAB No. 121, which required an entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding asset and required disclosures related to the entity’s safeguarding obligations. SAB No. 122 is effective for annual periods beginning after December 15, 2024 and is required to be applied on a fully retrospective basis, with early adoption permitted. We adopted this guidance as of March 31, 2025 and derecognized the crypto asset safeguarding liability and corresponding safeguarding asset on our condensed consolidated balance sheet as of December 31, 2024. Additionally, we derecognized the associated deferred tax asset and liability as of December 31, 2024. The adoption of this guidance did not impact our condensed consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity or cash flows.

The following table presents the effects of the changes on the presentation of our condensed consolidated balance sheet:

• Stablecoin : Crypto assets designed to minimize price volatility. A stablecoin is designed to track the price of an underlying asset such as fiat money or an exchange-traded commodity (such as precious metals or industrial metals), while other stablecoins utilize algorithms that are designed to maintain a relative stable price of the asset. Stablecoins can be backed by fiat money, physical commodities or other crypto assets.

• Staking : An energy efficient equivalent of mining. Stakers use their tokens to validate transactions and create blocks. In exchange for this service, stakers earn a reward.

• Supported crypto assets : The crypto assets we support for trading and custody on our platform, which include crypto assets for trading and crypto assets under custody.

For additional information regarding our key business metrics, which include Monthly Transacting Users, Assets on Platform, Trading Volume, and Net Income as well as our use of Adjusted EBITDA, a non-GAAP financial measure, see the sections titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics ” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measure ” in Part II, Item 7 of this Annual Report on Form 10-K.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” or the negative of these terms or other similar expressions.

Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about:

• our future financial performance, including our expectations regarding our net revenue, operating expenses, and our ability to achieve and maintain future profitability;

• our business plan and our ability to effectively manage any growth;

• anticipated trends, growth rates, and challenges in our business, the onchain economy, the price, and market capitalization of crypto assets and in the markets in which we operate;

• market acceptance of our products and services;

• beliefs and objectives for future operations;

The manner in which we account for our bitcoin under applicable accounting rules has changed. Prior to our adoption of Accounting Standards Update 2023-08, "Accounting for and Disclosure of Crypto Assets", which added Subtopic Accounting Standards Codification 350-60, “Intangibles - Goodwill and Other - Crypto Asset”, to the accounting standards codification (“ASU 2023-08”), our bitcoin was accounted for as an indefinite-lived intangible asset and for each reporting period, we were required to evaluate our bitcoin for impairment and record impairment losses if the fair value decreased below the carrying value during the assessed period. Since impairment losses for our bitcoin investment could not be recovered for any subsequent increases in fair value until the asset was sold, our operating results were adversely affected in any period in which such impairment occurred. Upon adoption of ASU 2023-08, we remeasured our bitcoin investment to its fair value as of January 1, 2023, resulting in an adjustment to our accumulated deficit. We will continue to remeasure our bitcoin investment at the end of each reporting period with changes recognized in our consolidated statements of operations. Accordingly, fluctuations in the market value of bitcoin in any quarter may cause fluctuations in our financial results. If there are future changes in applicable accounting rules that require us to change the manner in which we account for our bitcoin investment, there could be a material and adverse effect on our financial results and the market price of our Class A common stock.

We are exposed to fluctuations in foreign currency exchange rates.

Our exposure to fluctuations in foreign currency exchange rates through our international operations could have a negative impact on our reported results of operations. From time to time, we may enter into forward contracts, options, and/or foreign exchange swaps related to foreign currency exposures that arise in the normal course of our business. These and other such hedging activities may not eliminate our exposure to foreign exchange fluctuations. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

We are subject to taxation related risks in multiple jurisdictions.

Nine Months Ended September 30,
2025	2024
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	827,021	849,206
Reconciling items:
Depreciation	281,122	221,841
Amortization of definite-lived intangibles	192,958	185,483
Amortization of non-recoupable ticketing contract advances	61,971	62,237
Deferred income taxes	69,419	( 14,059 )
Amortization of debt issuance costs and discounts	13,392	13,168
Stock-based compensation expense	126,912	85,450
Unrealized changes in fair value of contingent consideration	17,012	( 22,453 )
Equity in losses of nonconsolidated affiliates, net of distributions	16,525	20,586
Provision for uncollectible accounts receivable	19,385	( 1,101 )
Gain on mark-to-market of investments in nonconsolidated affiliates and crypto assets	( 10,341 )	( 100,048 )
Gain on sale of operating and fixed assets	( 19,390 )	( 3,064 )
Other, net	( 7,424 )	( 8,554 )
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable	( 753,810 )	( 565,093 )
Increase in prepaid expenses and other assets	( 401,117 )	( 341,941 )
Increase in accounts payable, accrued expenses and other liabilities	1,019,909	586,960
Decrease in deferred revenue	( 4,498 )	( 288,566 )
Net cash provided by operating activities	1,449,046	680,052
CASH FLOWS FROM INVESTING ACTIVITIES

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. This ASU addresses the accounting and disclosure requirements for certain crypto assets and requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in earnings in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2024. The Company adopted the update for the condensed consolidated financial statements issued for the three and nine month periods ended September 30, 2025, and it does not have a material impact on the condensed consolidated financial statements as the Company does not hold a material amount of crypto assets.

On January 23, 2025, the SEC issued Staff Accounting Bulletin 122 (“SAB 122”), which rescinds the interpretive guidance included in the Staff Accounting Bulletin 121 (“SAB 121”). SAB 121, issued March 31, 2022, provided interpretive guidance from the SEC regarding the accounting for obligations to safeguard digital assets that an entity holds on behalf of customers. For public entities, SAB 122 is effective on a fully retrospective basis in annual periods beginning after December 15, 2024. Additionally, SAB 122 was codified by the FASB in March 2025, under ASU 2025-02, Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The Company has early adopted the guidance for the condensed consolidated financial statements issued for the three and nine month periods ended September 30, 2025 and, therefore, no longer discloses safeguarded digital assets within Note 8 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”), Note 13 (“Fair Value Measurement”), and the condensed consolidated balance sheets. The adoption had no material impact on the previously reported condensed consolidated financial statements as the Company liquidated all digital assets held on behalf of customers in the third quarter of 2024.

There were no other applicable material accounting pronouncements that have been adopted during the three and nine month periods ended September 30, 2025.

Recent Accounting Pronouncements – Issued, not yet Adopted

Accounting changes - In December of 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, “Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.” The updated accounting guidance requires that an entity measure crypto assets at fair value in the statement of financial position each reporting period and recognize changes from remeasurement in net income. The guidance was effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The update required a cumulative-effect adjustment to the opening balance at the date of adoption. The Company adopted the guidance on January 1, 2025 and recorded an increase to Retained earnings of $ 5 million.

Recently issued ASUs - In December of 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

In November of 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The updated accounting guidance requires disaggregated disclosure of specified expense categories. The guidance also requires disclosure of total selling expenses and how the Company defines selling expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Prospective application is required, with retrospective application permitted. The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures.

In September of 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The updated guidance changes the accounting for internal-use software by eliminating references to sequential project stages. Eligible software development cost capitalization will begin when: (1) management has authorized and committed to funding the software

Effective January 1, 2024, upon the adoption of Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), digital assets are measured at fair value. Fair value measurements for digital assets are based on quoted market prices in active markets. Gains and losses upon sale of digital assets are measured as the difference between the cash proceeds and the carrying basis of the digital assets as determined on a first-in, first-out (“FIFO”) basis for each pool of digital assets.

Prior to January 1, 2024, digital assets, including those held as collateral, were accounted for as indefinite-lived intangible assets. Accordingly, these digital assets were not subject to amortization. Instead, we tested digital assets for impairment by comparing the digital asset’s fair value to its carrying value. We measured and recognized an impairment loss whenever the carrying value exceeded quoted market prices of the respective digital assets during the period and applied costs to transactions on a first-in, first-out basis.

Other income (expense), net

Other income (expense), net, is composed of multiple income (expense) categories, including, but not limited to, the following:

• Realized and unrealized gains (losses) on liabilities at fair value (e.g., convertible debt, warrants, derivatives, and embedded derivatives);

• Realized and unrealized gains (losses) on investments, which include changes in fair value related to our marketable equity securities, digital assets held for investment and observable price changes on our non-marketable equity securities;

• Impairment losses on equity investments;

• Interest income on corporate cash balances;

• Interest expense, net of accretion of discounts and amortization of premiums; and

• Foreign currency exchange gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities.

Income tax expense (benefit)

Income tax expense (benefit) includes income taxes related to foreign jurisdictions and U.S. Federal and state income taxes. As we conduct business activities internationally, any changes in the U.S. and foreign taxation of such activities may increase our overall provision for income taxes in the future.

Results of Operations

As discussed in Note 2, “New Accounting Pronouncements”, the Company adopted ASU No. 2023-08, “Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets” during the first quarter of fiscal year 2026, which requires entities to measure crypto assets that meet specific criteria at fair value. Prior to the adoption of ASU No. 2023-08 in the first quarter of fiscal year 2026, the Company held the Canton Coins on its Balance Sheet at their cost basis, which was immaterial, for investment purposes and to pay any fees associated with its Canton Network activity. During the first quarter of 2026, the Company began converting the coins to cash nearly immediately after they were earned.

The cost basis of the Canton Coins received is initially recorded at fair value on the date of receipt as a component of Other non-current assets on the Condensed Consolidated Balance Sheets and Revenue on the Statements of Earnings within the Company’s GTO reportable segment. Beginning in the first quarter of fiscal year 2026, in accordance with ASU No. 2023-08, the Canton Coins are then remeasured to fair market value at the end of each reporting period, through an adjustment to unrealized gain/(loss), included as a component of Other non-operating income (expenses), net on the Consolidated Statements of Earnings within Corporate and Other. The Company employs the specific identification method to determine the cost basis of the Canton Coins sold for the computation of gains and losses on their disposal or sale. Realized gains (losses) on sale of Canton Coins, if applicable, are included as a component of Other non-operating income (expenses), net in the Consolidated Statements of Earnings within Corporate and Other. Refer to Note 7, “Fair Value of Financial Instruments” for details regarding the Company’s digital asset holdings.

During the fourth quarter of 2025, we launched SoFi Crypto which provides our members the ability to buy, sell and hold digital assets. To facilitate these member transactions and provide liquidity for the platform, we maintain an incidental inventory of crypto assets for operational purposes, none of which are held as long-term speculative investments. As of December 31, 2025, the fair value of our crypto assets held for operational purposes was immaterial to our overall consolidated financial condition.

The crypto asset market is characterized by significant price volatility and is sensitive to factors such as regulatory changes, technical developments and shifts in overall market sentiment. Historically, certain crypto assets have experienced high levels of price fluctuation, as measured by the annualized standard deviation of daily price returns. We manage our exposure to these price fluctuations through exposure monitoring and internal inventory limits. Given that our holdings are incidental, short-term in nature and immaterial, a hypothetical significant increase or decrease in the market price of crypto assets as of December 31, 2025, would not have a material impact on our consolidated results of operations.