PayPal Holdings Inc. (NASDAQ:PYPL)

Goodwill

The goodwill balance remained relatively stable from 2018 to 2019, with a slight decline from $6,284 million to $6,212 million. It then experienced a substantial increase in 2020, rising sharply to $9,135 million, followed by continued growth in 2021 reaching $11,454 million. In 2022, it slightly decreased to $11,209 million, indicating a minor adjustment or impairment after the previous peak.

Customer lists and user base

This intangible asset showed moderate fluctuation over the observed period. It saw a slight decrease from $1,134 million in 2018 to $1,114 million in 2019, followed by a gradual increase in 2020 to $1,206 million. A more pronounced rise occurred in 2021, peaking at $1,726 million, then slightly declined to $1,664 million in 2022. The trend suggests investments in expanding or valuing the customer base with some year-to-year variability.

Marketing related intangibles

Marketing-related assets depicted minor variation over the five-year span, starting at $301 million in 2018 and slightly declining to $294 million in 2019. These assets increased somewhat in 2020 to $321 million, then grew significantly in 2021 to $405 million before a marginal decline to $395 million in 2022. The pattern indicates sustained expenditure or capitalization in marketing activity with a peak in 2021.

Developed technology

The developed technology asset category nearly doubled from $453 million in 2018 to $999 million in 2020, highlighting substantial capital allocation or acquisitions in technology development. Growth continued, though at a slower rate, reaching $1,109 million in 2021 and remaining relatively stable at $1,099 million in 2022. This reflects ongoing investment and the maintenance of technological assets.

All other intangible assets

This category showed considerable expansion from $245 million in 2018 to $436 million in 2019, followed by stabilization between 2020 and 2022, fluctuating slightly around the mid-400s. This suggests an initial acquisition or reevaluation followed by consistent valuation or additions in miscellaneous intangible assets.

Intangible assets, gross carrying amount

The gross carrying amount of intangible assets increased steadily from $2,133 million in 2018 to a peak of $3,694 million in 2021, then experienced a minor decline to $3,596 million in 2022. This trend aligns with the notable increases in developed technology and customer-related intangibles, indicating overall growth in intangible investments.

Accumulated amortization

Accumulated amortization showed a consistent upward trend in absolute value, increasing from -$1,308 million in 2018 to -$2,808 million in 2022. This reflects ongoing amortization expense over the intangible assets' useful lives, which grew at a substantial rate in line with the increasing balance of intangible assets.

Intangible assets, net carrying amount

The net carrying amount of intangible assets increased from $825 million in 2018 to $1,332 million in 2021, reflecting acquisition and capitalization growth exceeding amortization. However, in 2022, it experienced a pronounced decline to $788 million, which may indicate increased amortization, impairments, or disposals during that year leading to a significant reduction in net intangible assets.

Goodwill and intangible assets (combined)

The combined balance of goodwill and intangible assets increased steadily from $7,109 million in 2018 to a peak of $12,786 million in 2021. It then declined to $11,997 million in 2022, following the decrease observed in goodwill and net intangible assets individually. This overall pattern reflects net acquisitions, investments, and subsequent adjustments affecting long-term asset valuation.

The financial data reveals several important trends regarding total assets and stockholders' equity over the five-year period ending in 2022.

Total Assets

Reported total assets increased steadily each year, rising from $43.3 billion in 2018 to $78.7 billion in 2022. This represents an overall growth of approximately 81.6%. The most significant jump occurred between 2019 and 2020, with an increase of roughly 37%. Adjusted total assets, which likely exclude goodwill and possibly other intangibles, follow a similar upward trajectory but at consistently lower levels, moving from $37.0 billion in 2018 to $67.5 billion in 2022. This suggests that goodwill and related intangible assets constitute a considerable portion of total assets, but both reported and adjusted asset bases expanded substantially over the period.

Stockholders’ Equity

Reported stockholders’ equity rose steadily from $15.4 billion in 2018 to a peak of $21.7 billion in 2021, before declining to $20.3 billion in 2022. This indicates a healthy growth trend overall, with a slight reduction during the last year reported. Adjusted stockholders’ equity, which adjusts for goodwill and related items, shows a different pattern: it increased from $9.1 billion in 2018 to $10.9 billion in 2020, but then gradually decreased to $9.1 billion in 2022. The adjusted equity figures are significantly lower than the reported equity throughout the period, reflecting the impact of goodwill and intangible asset adjustments.

Overall, the data highlights strong asset growth, both reported and adjusted, likely fueled by business expansion and acquisitions. However, adjusted stockholders’ equity exhibits more modest growth and a downward trend in recent years, which may point to goodwill impairments or other adjustments that reduce the net book value attributable to shareholders. The divergence between reported and adjusted equity emphasizes the importance of considering intangible asset components when evaluating the company’s financial position.

The analysis of financial ratios over the five-year period reveals notable trends in the company's asset efficiency, leverage, and profitability, both on a reported basis and after adjusting for goodwill.

Total Asset Turnover

The reported total asset turnover shows a slight decline from 0.36 in 2018 to 0.30 in 2020, followed by a gradual recovery to 0.35 by 2022. The adjusted total asset turnover follows a similar pattern but consistently remains higher than the reported figures, starting at 0.42 in 2018, dipping to 0.35 in 2020, and then improving to 0.41 by 2022. This indicates that after adjusting for goodwill, asset utilization efficiency is better throughout the period, although a dip around 2020 suggests some operational challenges or asset base growth outpacing revenue in that year.

Financial Leverage

Reported financial leverage shows a steady increase from 2.82 in 2018 to 3.88 in 2022, suggesting a rising reliance on debt or other liabilities relative to equity. The adjusted financial leverage presents a more pronounced increase, starting at 4.07 in 2018 and escalating to 7.45 in 2022. This sharp rise in adjusted leverage implies that when goodwill is excluded, the company’s equity base is smaller, leading to higher leverage. The trend indicates increasing financial risk over the period, especially when considering the adjusted figures.

Return on Equity (ROE)

Reported ROE initially trends upward from 13.37% in 2018 to a peak of 20.99% in 2020, followed by a slight decline to 19.19% in 2021 and a more significant drop to 11.93% in 2022. The adjusted ROE, consistently higher than the reported figures, rises sharply from 22.6% in 2018 to 40.58% in 2021 before declining to 26.69% in 2022. The ascent through 2021 reflects strong profitability relative to shareholder equity when goodwill is removed, while the 2022 decline might indicate profitability pressures or increased equity post-adjustment.

Return on Assets (ROA)

Reported ROA shows a moderate increase from 4.75% in 2018 to 5.97% in 2020, then a slight decrease to 5.5% in 2021 and a substantial decline to 3.07% in 2022. Adjusted ROA follows a similar pattern but with marginally higher values, reaching 6.86% in 2020 and then falling to 3.58% in 2022. This reduction in ROA in 2022 suggests a decrease in the efficiency of asset utilization to generate earnings, which is corroborated by both reported and adjusted data.

Overall, the data indicate that the company experienced improvements in profitability and asset utilization efficiency up to around 2020-2021, with a peak in adjusted ROE and relatively stable asset turnover. However, from 2021 to 2022, there is a clear weakening across several metrics: total asset turnover shows modest recovery but remains below earlier peaks, ROE and ROA decline significantly, and financial leverage continues to increase, particularly on an adjusted basis. The rising leverage combined with diminishing returns may reflect increasing financial risk and pressure on profitability.

The financial data indicates a consistent growth in total assets over the five-year period. Reported total assets increased steadily from 43,332 million US dollars in 2018 to 78,717 million US dollars in 2022. Similarly, adjusted total assets, which exclude goodwill, followed the same upward trajectory, rising from 37,048 million US dollars in 2018 to 67,508 million US dollars in 2022.

Regarding asset efficiency, the reported total asset turnover ratio experienced a slight decline from 0.36 in 2018 to 0.30 in 2020, followed by a recovery to 0.35 by 2022. This suggests a reduction in asset utilization efficiency during the initial years, with improvement in the most recent periods.

The adjusted total asset turnover ratio, which accounts for asset values excluding goodwill, showed a similar but less pronounced pattern. It decreased from 0.42 in 2018 to 0.35 in 2020, then increased to 0.41 by 2022. This trend highlights a temporary dip in the efficiency with which the firm utilized its core assets, with a notable recovery in the subsequent years.

Overall, the data suggests the company expanded its asset base significantly between 2018 and 2022 while experiencing fluctuations in asset turnover ratios. The improvement in total asset turnover ratios after 2020 indicates enhanced operational efficiency despite the increasing scale of assets. The adjusted figures reinforce the observation of a recovery in efficiency, suggesting that the core assets, net of goodwill, have been managed more effectively in recent years.

The analysis of the reported and goodwill adjusted financial data over the five-year period reveals several notable trends in the company's asset base, equity, and financial leverage. These trends provide insight into the company's changing financial structure and risk profile.

Total Assets

The reported total assets show a consistent upward trend from US$43,332 million in 2018 to US$78,717 million in 2022, indicating substantial growth in the asset base. Similarly, the adjusted total assets—accounting for goodwill—also increased steadily from US$37,048 million in 2018 to US$67,508 million in 2022. The difference between reported and adjusted assets suggests a significant portion of assets is attributable to goodwill, which grew over time but the gap between reported and adjusted assets widened somewhat, reflecting growing intangible assets on the balance sheet.

Stockholders’ Equity

Reported total stockholders’ equity increased from US$15,386 million in 2018 to a peak of US$21,727 million in 2021 before declining to US$20,274 million in 2022. In contrast, adjusted equity—excluding goodwill—exhibited a different pattern: it increased modestly from US$9,102 million in 2018 to US$10,884 million in 2020, followed by a decline through 2022, dropping to US$9,065 million. This contrast indicates that goodwill and other intangible assets significantly influence the reported equity figures and that the tangible equity base has weakened somewhat in recent years.

Financial Leverage

The reported financial leverage ratio, which measures the relationship between total assets and equity, gradually increased from 2.82 times in 2018 to 3.88 times by 2022. This increase reflects a rising propensity to utilize debt or liabilities relative to equity. More pronounced is the trend in adjusted financial leverage, which rose from 4.07 times in 2018 to a notably higher 7.45 times in 2022. The accelerating increase in adjusted leverage suggests that when goodwill is excluded, the company’s reliance on debt has grown substantially, indicating a higher financial risk profile over the period.

The analysis of the financial data over the five-year period reveals several notable trends in both reported and goodwill-adjusted figures for PayPal Holdings Inc.

Total PayPal Stockholders’ Equity (Reported)

The reported total stockholders’ equity showed a generally upward trend from 2018 to 2021, increasing from $15,386 million to $21,727 million. However, in 2022 there was a decline to $20,274 million, indicating some contraction in equity after consecutive years of growth.

Total PayPal Stockholders’ Equity (Adjusted for Goodwill)

The adjusted total stockholders’ equity, which excludes goodwill, also exhibited overall growth between 2018 and 2020, rising from $9,102 million to $10,884 million. Unlike the reported figures, the adjusted equity decreased more consistently after 2020, falling to $9,065 million by 2022. This pattern suggests that the equity, excluding goodwill, has been under pressure in recent years.

Reported Return on Equity (ROE)

The reported ROE demonstrated a positive trajectory from 2018 through 2020, rising from 13.37% to a peak of 20.99%. Following the peak, ROE decreased to 19.19% in 2021 and further dropped to 11.93% in 2022. This decline in the last year signals a reduction in profitability relative to shareholders' equity on a reported basis.

Adjusted Return on Equity (ROE)

The adjusted ROE, which accounts for goodwill adjustments, was consistently higher than the reported ROE throughout the period. It increased sharply from 22.6% in 2018 to a peak of 40.58% in 2021, indicating strong profitability excluding the effects of goodwill. However, 2022 recorded a significant reduction to 26.69%, reflecting weakened earnings performance when considering the adjusted equity base.

Overall, the data indicates that while PayPal’s reported equity and profitability grew substantially until 2020–2021, there were notable declines in 2022. The goodwill-adjusted figures depict a more volatile equity base with sharper declines in recent years and a more pronounced drop in adjusted profitability, suggesting the underlying business may have faced increased challenges or headwinds impacting shareholder returns.

The reported total assets of the company show a steady upward trend over the five-year period, increasing from 43,332 million US dollars at the end of 2018 to 78,717 million US dollars by the end of 2022. This represents a significant cumulative growth, indicating ongoing asset accumulation or acquisition activities during this timeframe.

Similarly, the adjusted total assets, which account for goodwill adjustments, follow the same increasing trajectory, rising from 37,048 million US dollars in 2018 to 67,508 million US dollars in 2022. The adjusted asset base remains consistently lower than the reported total assets each year, reflecting the impact of goodwill write-downs or similar adjustments factored into this measure.

Regarding profitability as measured by return on assets (ROA), the reported ROA begins at 4.75% in 2018, maintains a relatively stable level in 2019, then improves notably in 2020 to 5.97%. The ROA slightly decreases in 2021 to 5.5%, followed by a marked decline to 3.07% in 2022. This decline in the last year suggests a reduction in asset efficiency or profitability relative to the asset base.

The adjusted ROA, which excludes goodwill effects, demonstrates a comparable pattern but consistently yields higher returns than the reported figures. Starting at 5.55% in 2018, it slightly decreases to 5.45% in 2019, before peaking at 6.86% in 2020. Like the reported ROA, it declines thereafter to 6.48% in 2021 and experiences a more pronounced drop to 3.58% in 2022.

Overall, the data depict consistent growth in asset size, both reported and adjusted, over the five-year span, with notable improvements in asset profitability up to 2020. However, there is a clear downward trend in both reported and adjusted ROA in the most recent year, indicating potential challenges in maintaining profitability or efficiency despite continued asset growth.