Name: PayPal Holdings Inc. (NASDAQ:PYPL) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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PayPal Holdings Inc., consolidated income statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net revenues	27,518)	25,371)	21,454)	17,772)	15,451)
Transaction expense	(12,173)	(10,315)	(7,934)	(6,790)	(5,581)
Transaction and credit losses	(1,572)	(1,060)	(1,741)	(1,380)	(1,274)
Customer support and operations	(2,120)	(2,075)	(1,778)	(1,615)	(1,407)
Sales and marketing	(2,257)	(2,445)	(1,861)	(1,401)	(1,314)
Technology and development	(3,253)	(3,038)	(2,642)	(2,085)	(1,831)
General and administrative	(2,099)	(2,114)	(2,070)	(1,711)	(1,541)
Restructuring and other charges	(207)	(62)	(139)	(71)	(309)
Operating expenses	(23,681)	(21,109)	(18,165)	(15,053)	(13,257)
Operating income	3,837)	4,262)	3,289)	2,719)	2,194)
Interest income	174)	57)	88)	197)	168)
Interest expense	(304)	(232)	(209)	(115)	(77)
Net gains (losses) on strategic investments	(304)	46)	1,914)	208)	87)
Other	(37)	(34)	(17)	(11)	4)
Other income (expense), net	(471)	(163)	1,776)	279)	182)
Income before income taxes	3,366)	4,099)	5,065)	2,998)	2,376)
Income tax (expense) benefit	(947)	70)	(863)	(539)	(319)
Net income	2,419)	4,169)	4,202)	2,459)	2,057)

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).

A consistent upward trajectory in net revenues is observed from 2018 through 2022, with values increasing from 15,451 million US$ to 27,518 million US$. This growth indicates a steady expansion of the top line over the five-year period. However, this growth has been accompanied by a proportional increase in operating expenses, which rose from 13,257 million US$ in 2018 to 23,681 million US$ in 2022.

Operating Income and Margin Trends: Operating income experienced a period of growth, peaking in 2021 at 4,262 million US$ before declining to 3,837 million US$ in 2022. While the absolute value of operating income remains higher than 2018 levels, the 2022 contraction suggests a compression in operating margins as the growth in operating expenses began to outpace revenue growth in the final year of the period.
Expense Structure Analysis: Transaction expenses constitute the largest portion of the cost base, showing a continuous increase from 5,581 million US$ in 2018 to 12,173 million US$ in 2022. Technology and development costs also showed a steady climb, increasing by approximately 78% over the period, reflecting ongoing investment in infrastructure. In contrast, sales and marketing expenses peaked in 2021 at 2,445 million US$ and saw a reduction to 2,257 million US$ in 2022, suggesting a shift in growth strategy or a tightening of discretionary spending.
Non-Operating Volatility and Net Income: Net income demonstrates significant volatility primarily driven by non-operating items. A notable spike occurred in 2020, where net income reached 4,202 million US$, heavily influenced by 1,914 million US$ in net gains on strategic investments. Conversely, 2022 saw a sharp decline in net income to 2,419 million US$. This decrease is attributable to a combination of lower operating income, a net loss of 304 million US$ on strategic investments, and a substantial increase in income tax expenses, which reached 947 million US$ in 2022 compared to a tax benefit of 70 million US$ in 2021.
Interest and Financial Position: A gradual increase in interest expense is evident, rising from 77 million US$ in 2018 to 304 million US$ in 2022. Interest income remained relatively volatile, peaking in 2019 and 2022, but the overall trend shows that the cost of debt or financing has increased more consistently than the income generated from interest-bearing assets.

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