Stock Analysis on Net
Stock Analysis on Net

PayPal Holdings Inc. (NASDAQ:PYPL)

This company has been moved to the archive! The financial data has not been updated since May 9, 2023.

Common-Size Income Statement 

PayPal Holdings Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net revenues 100.00 100.00 100.00 100.00 100.00
Transaction expense -44.24 -40.66 -36.98 -38.21 -36.12
Transaction and credit losses -5.71 -4.18 -8.12 -7.77 -8.25
Customer support and operations -7.70 -8.18 -8.29 -9.09 -9.11
Sales and marketing -8.20 -9.64 -8.67 -7.88 -8.50
Technology and development -11.82 -11.97 -12.31 -11.73 -11.85
General and administrative -7.63 -8.33 -9.65 -9.63 -9.97
Restructuring and other charges -0.75 -0.24 -0.65 -0.40 -2.00
Operating expenses -86.06% -83.20% -84.67% -84.70% -85.80%
Operating income 13.94% 16.80% 15.33% 15.30% 14.20%
Interest income 0.63 0.22 0.41 1.11 1.09
Interest expense -1.10 -0.91 -0.97 -0.65 -0.50
Net gains (losses) on strategic investments -1.10 0.18 8.92 1.17 0.56
Other -0.13 -0.13 -0.08 -0.06 0.03
Other income (expense), net -1.71% -0.64% 8.28% 1.57% 1.18%
Income before income taxes 12.23% 16.16% 23.61% 16.87% 15.38%
Income tax (expense) benefit -3.44 0.28 -4.02 -3.03 -2.06
Net income 8.79% 16.43% 19.59% 13.84% 13.31%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Revenue Stability
Net revenues remained consistently at 100% in each year from 2018 to 2022, serving as the baseline for all other percentage analyses.
Transaction Expenses
Transaction expenses as a percentage of net revenues increased steadily from -36.12% in 2018 to a peak of -44.24% in 2022. This upward trend indicates rising costs associated with transactions, which could be due to increased volumes, fee structure changes, or operational inefficiencies.
Transaction and Credit Losses
The ratio of transaction and credit losses showed a declining trend from -8.25% in 2018 down to a low of -4.18% in 2021, before rising again to -5.71% in 2022. The initial reduction may reflect improved credit risk management or better collection efforts, though the subsequent increase indicates some reversal in this positive trend.
Customer Support and Operations
Spending on customer support and operations decreased gradually over the period, moving from -9.11% in 2018 to -7.7% in 2022. This reduction suggests efficiency gains in operational support or changes in resource allocation.
Sales and Marketing
Sales and marketing expenses fluctuated moderately, declining from -8.5% in 2018 to -7.88% in 2019, increasing to -9.64% in 2021, and then falling back to -8.2% in 2022. This volatility could reflect shifts in strategic emphasis on marketing campaigns or adjustments to competitive pressures.
Technology and Development
Technology and development costs remained relatively stable, hovering around -12% of net revenues across all years. Minor variations hint at ongoing investment in product innovation and system improvements without significant expansion or reduction.
General and Administrative Expenses
General and administrative expenses showed a gradual decrease from -9.97% in 2018 to -7.63% in 2022, indicating improved cost control and possibly organizational streamlining.
Restructuring and Other Charges
These charges remained low and variable, generally below -1%, indicating minimal impact on overall expenses except for fluctuations without a clear directional trend.
Total Operating Expenses
Operating expenses as a percentage of net revenues slightly declined from -85.8% in 2018 to -83.2% in 2021, suggesting improved operational efficiency. However, an increase to -86.06% in 2022 indicates a reversal, primarily driven by higher transaction expenses.
Operating Income
Operating income attained a peak of 16.8% in 2021 but then declined to 13.94% in 2022. This fluctuation correlates with the variations in operating expenses and suggests that profitability at the operating level was challenged in the most recent year.
Interest Income and Expense
Interest income remained relatively low and variable, declining overall from 1.09% in 2018 to 0.63% in 2022. Interest expense increased from -0.5% in 2018 to -1.1% in 2022, pointing to higher interest costs or increased borrowing.
Net Gains (Losses) on Strategic Investments
Investment gains showed significant volatility, with a notable spike to 8.92% in 2020 followed by a reversal to -1.1% in 2022. Such fluctuations indicate exposure to market risks or varying success in strategic initiatives during this period.
Other Income (Expense), Net
Other income was positive and somewhat growing from 2018 to 2020 but turned negative in subsequent years, reaching -1.71% in 2022. This shift may reflect unfavorable non-operating events or investment results.
Income Before Income Taxes
This measure peaked sharply in 2020 at 23.61%, declining thereafter to 12.23% in 2022. The significant rise in 2020 aligns with a strong operating performance and gains on investments, while later decreases suggest a return to more normalized profit levels.
Income Tax Expense (Benefit)
Income taxes generally remained a modest negative impact, with an unusual tax benefit of 0.28% in 2021, contrasting with tax expenses averaging around -3%. This variation could reflect tax planning outcomes or changes in jurisdictional tax rates.
Net Income
Net income followed an upward trend to a peak of 19.59% in 2020, then declined to 8.79% by 2022. While profitability improved significantly in earlier years, recent declines reflect pressures from rising expenses, decreased operating income, and unfavorable changes in non-operating income components.