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

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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PayPal Holdings Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	2,419)	4,169)	4,202)	2,459)	2,057)
Transaction and credit losses	1,572)	1,060)	1,741)	1,380)	1,274)
Depreciation and amortization	1,317)	1,265)	1,189)	912)	776)
Stock-based compensation	1,261)	1,376)	1,376)	1,021)	853)
Deferred income taxes	(811)	(482)	165)	(269)	(171)
Cost basis adjustments to loans and interest receivable held for sale	—)	—)	—)	—)	244)
Net (gains) losses on strategic investments	304)	(46)	(1,914)	(207)	(86)
Other	205)	100)	47)	(150)	(86)
Accounts receivable	(163)	(222)	(100)	(120)	(59)
Changes in loans and interest receivable held for sale, net	—)	—)	—)	4)	1,407)
Transaction loss allowance for cash losses, net	(1,230)	(1,178)	(1,120)	(1,079)	(1,046)
Funds receivable	—)	—)	—)	(9)	(19)
Other current assets and non-current assets	118)	(150)	(498)	(566)	(93)
Accounts payable	(35)	(31)	(4)	4)	26)
Funds payable and amounts due to customers	—)	—)	—)	499)	22)
Income taxes payable	373)	73)	(230)	(40)	(44)
Other current liabilities and non-current liabilities	483)	406)	1,000)	722)	428)
Changes in assets and liabilities	(454)	(1,102)	(952)	(585)	622)
Adjustments to reconcile net income to net cash provided by operating activities	3,394)	2,171)	1,652)	2,102)	3,426)
Net cash provided by operating activities	5,813)	6,340)	5,854)	4,561)	5,483)
Purchases of property and equipment	(706)	(908)	(866)	(704)	(823)
Proceeds from sales of property and equipment	5)	5)	120)	17)	3)
Purchases and originations of loans receivable	(28,170)	(13,420)	(6,098)	(1,631)	—)
Principal repayment of loans receivable	24,903)	11,826)	6,392)	—)	3,121)
Purchases of investments	(20,219)	(40,116)	(41,513)	(27,881)	(22,381)
Maturities and sales of investments	23,411)	39,698)	30,908)	24,878)	21,898)
Acquisitions, net of cash and restricted cash acquired	—)	(2,763)	(3,609)	(70)	(2,124)
Funds receivable	(2,813)	193)	(1,552)	(342)	1,146)
Collateral posted related to derivative instruments, net	(19)	—)	—)	—)	—)
Other investing activities	187)	—)	—)	—)	—)
Net cash (used in) provided by investing activities	(3,421)	(5,485)	(16,218)	(5,733)	840)
Proceeds from issuance of common stock	143)	162)	137)	138)	144)
Purchases of treasury stock	(4,199)	(3,373)	(1,635)	(1,411)	(3,520)
Tax withholdings related to net share settlements of equity awards	(336)	(1,036)	(521)	(504)	(419)
Borrowings under financing arrangements	3,475)	272)	6,966)	5,471)	2,075)
Repayments under financing arrangements	(1,686)	(361)	(3,000)	(2,516)	(1,115)
Funds payable and amounts due to customers	1,498)	3,572)	10,597)	2,510)	1,573)
Collateral received related to derivative instruments, net	(6)	—)	—)	—)	—)
Other financing activities	1)	—)	(52)	—)	—)
Net cash provided by (used in) financing activities	(1,110)	(764)	12,492)	3,688)	(1,262)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(155)	(102)	169)	(6)	(113)
Net change in cash, cash equivalents, and restricted cash	1,127)	(11)	2,297)	2,510)	4,948)
Cash, cash equivalents, and restricted cash at beginning of period	18,029)	18,040)	15,743)	13,233)	8,285)
Cash, cash equivalents, and restricted cash at end of period	19,156)	18,029)	18,040)	15,743)	13,233)

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).

The company exhibits a strong capacity for generating cash from operating activities, although net income has shown significant volatility over the five-year period. Net income peaked in 2020 and 2021 at approximately 4.2 billion USD before declining to 2.4 billion USD in 2022. Despite this decline in accounting profit, net cash provided by operating activities remained resilient, fluctuating between 4.5 billion USD and 6.3 billion USD, suggesting a healthy conversion of earnings to cash supported by substantial non-cash adjustments.

Operating Cash Flow Dynamics: Cash generation is heavily supported by non-cash expenses. Depreciation and amortization increased steadily from 776 million USD in 2018 to 1.3 billion USD in 2022. Stock-based compensation has remained a significant add-back, consistently exceeding 1 billion USD annually from 2019 onward. A notable trend is the increase in transaction and credit losses, which rose to 1.57 billion USD by 2022, reflecting the risks associated with the expanding credit portfolio.
Loan Portfolio Expansion: A dramatic escalation in lending activities is observed in the investing section. Purchases and originations of loans receivable grew from zero in 2018 to 28.17 billion USD in 2022. This aggressive expansion is partially offset by principal repayments, which scaled from 3.12 billion USD in 2018 to 24.9 billion USD in 2022. This pattern indicates a high-velocity turnover of credit assets.
Investment and Acquisition Strategy: Investing activities are characterized by high volumes of short-term investment turnover and strategic acquisitions. Significant cash outflows for acquisitions occurred in 2020 (3.6 billion USD) and 2021 (2.7 billion USD). Purchases of investments peaked in 2020 at 41.5 billion USD, while maturities and sales of investments have consistently remained high to maintain liquidity.
Financing and Shareholder Returns: The company has shifted toward more aggressive shareholder returns through share repurchases. Purchases of treasury stock increased from 3.5 billion USD in 2018 to 4.2 billion USD in 2022. Financing activities were heavily influenced in 2020 by a large increase in funds payable and amounts due to customers, totaling 10.6 billion USD, which provided a substantial temporary boost to cash inflows.
Liquidity Position: The overall liquidity position has strengthened considerably. Cash, cash equivalents, and restricted cash grew from 8.28 billion USD at the start of 2018 to 19.15 billion USD by the end of 2022. This growth indicates a conservative cash management strategy despite significant investments in loan portfolios and share buybacks.

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