Analysis of Geographic Areas
PayPal Holdings Inc. operates in 2 regions: U.S. and Other countries.
Area Asset Turnover
PayPal Holdings Inc., asset turnover by geographic area
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 8.28 | 6.69 | 5.25 | 5.06 | 5.32 |
| Other countries | 29.72 | 22.51 | 24.98 | 26.95 | 45.11 |
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).
An analysis of geographic asset turnover from 2018 to 2022 reveals divergent efficiency trends between the United States and international markets. While the U.S. segment demonstrated a consistent improvement in asset utilization toward the end of the period, the international segment experienced significant volatility characterized by a sharp initial decline followed by a partial recovery.
- U.S. Asset Turnover
- The asset turnover ratio for the U.S. remained relatively stable between 2018 and 2020, fluctuating slightly between 5.06 and 5.32. However, a period of accelerated efficiency gains occurred starting in 2021, with the ratio climbing to 6.69 and further increasing to 8.28 by the end of 2022. This represents a total increase of approximately 55.6% over the five-year period, indicating a strengthening ability to generate revenue from domestic assets.
- Other Countries Asset Turnover
- International operations began the period with an exceptionally high turnover ratio of 45.11 in 2018. This was followed by a substantial contraction, with the ratio dropping to 26.95 in 2019 and continuing a downward trend to a low of 22.51 in 2021. A reversal of this trend is observed in 2022, where the ratio rebounded to 29.72, suggesting a recovery in operational efficiency or a realignment of the international asset base.
- Comparative Geographic Analysis
- There is a notable convergence in the turnover ratios between the two regions. The vast disparity observed in 2018 has narrowed significantly as the U.S. ratio trended upward while the international ratio generally trended downward before its recent recovery. This suggests a shift toward a more balanced distribution of asset productivity across the global operating footprint.
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Area Asset Turnover: U.S.
PayPal Holdings Inc.; U.S.; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net revenues | 15,807) | 13,712) | 11,013) | 9,417) | 8,324) |
| Long-lived assets | 1,910) | 2,050) | 2,096) | 1,862) | 1,566) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 8.28 | 6.69 | 5.25 | 5.06 | 5.32 |
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).
1 2022 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 15,807 ÷ 1,910 = 8.28
Between 2018 and 2022, a significant increase in operational efficiency regarding asset utilization within the U.S. geographic area is observed. Net revenues grew consistently over the five-year period, while the investment in long-lived assets peaked in 2020 and subsequently declined, leading to a substantial improvement in the asset turnover ratio.
- Net Revenue Performance
- Net revenues demonstrated a continuous upward trend, rising from 8,324 million USD in 2018 to 15,807 million USD by December 31, 2022. This growth indicates a strong and steady expansion of market activity in the U.S. region.
- Long-lived Asset Trajectory
- Long-lived assets increased from 1,566 million USD in 2018 to a maximum of 2,096 million USD in 2020. From 2021 onward, a gradual contraction is observed, with assets decreasing to 1,910 million USD by the end of 2022, suggesting a shift toward a more asset-light operational model.
- Area Asset Turnover Efficiency
- The area asset turnover ratio experienced an overall increase from 5.32 in 2018 to 8.28 in 2022. While the ratio remained relatively stable between 2018 and 2020, it accelerated sharply in 2021 and 2022. This progression reflects an enhanced capacity to generate higher volumes of revenue per unit of long-lived asset invested.
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Area Asset Turnover: Other countries
PayPal Holdings Inc.; Other countries; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net revenues | 11,711) | 11,659) | 10,441) | 8,355) | 7,127) |
| Long-lived assets | 394) | 518) | 418) | 310) | 158) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 29.72 | 22.51 | 24.98 | 26.95 | 45.11 |
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).
1 2022 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 11,711 ÷ 394 = 29.72
The financial trajectory for the "Other countries" geographic area between 2018 and 2022 is characterized by consistent revenue expansion and a volatile investment cycle in long-lived assets, which directly influenced the asset turnover efficiency.
- Net Revenue Trends
- Net revenues demonstrated a sustained upward trajectory from 2018 to 2022. Growth was most aggressive between 2018 and 2021, with revenues increasing from 7,127 million US$ to 11,659 million US$. This growth period culminated in 2022, where revenues reached 11,711 million US$, indicating a significant plateauing of growth compared to previous years.
- Long-lived Assets Evolution
- A period of intensive capital investment occurred between 2018 and 2021, during which long-lived assets grew from 158 million US$ to 518 million US$. This represents a substantial expansion of the asset base over four years. However, a reversal occurred in 2022, with long-lived assets decreasing to 394 million US$, suggesting a reduction in capitalized expenditures or an acceleration of asset depreciation and divestment.
- Area Asset Turnover Analysis
- The area asset turnover ratio exhibited a downward trend for the majority of the period, falling from 45.11 in 2018 to a low of 22.51 in 2021. This decline was driven by the fact that the growth rate of long-lived assets significantly outpaced the growth rate of net revenues. The ratio recovered to 29.72 in 2022, a shift primarily attributed to the contraction of the long-lived asset base while revenues remained stable.
Overall, the data indicates that while the geographic area successfully scaled its revenue generation, the efficiency of its long-lived asset utilization declined during the expansion phase and only began to recover following the asset reduction in 2022.
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Net revenues
PayPal Holdings Inc., net revenues by geographic area
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 15,807) | 13,712) | 11,013) | 9,417) | 8,324) |
| Other countries | 11,711) | 11,659) | 10,441) | 8,355) | 7,127) |
| Total | 27,518) | 25,371) | 21,454) | 17,772) | 15,451) |
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).
Total net revenues exhibited consistent growth between 2018 and 2022, increasing from 15,451 million US$ to 27,518 million US$. While the upward trajectory remained constant throughout the period, the rate of growth experienced a notable deceleration in 2022 compared to the previous three years.
- U.S. Market Performance
- Net revenues within the United States demonstrated robust and sustained expansion, rising from 8,324 million US$ in 2018 to 15,807 million US$ in 2022. A significant acceleration in growth was observed between 2020 and 2021, during which U.S. revenues increased by approximately 24.5%, establishing the domestic market as the primary driver of total corporate growth.
- International Market Performance
- Revenues from other countries grew from 7,127 million US$ in 2018 to 11,711 million US$ in 2022. However, the growth pattern in these regions differed significantly from the U.S. market; after a period of strong expansion through 2020, international revenue growth slowed considerably, reaching a near-plateau between 2021 and 2022 with an increase of only 52 million US$.
- Geographic Revenue Concentration
- A shift in the geographic composition of revenue is evident. In 2018, the U.S. market accounted for approximately 53.9% of total net revenues, while other countries represented 46.1%. By 2022, the U.S. share of total revenue increased to approximately 57.4%, while the international share declined to 42.6%. This trend indicates an increasing concentration of revenue generation within the United States as international growth decelerated.
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Long-lived assets
PayPal Holdings Inc., long-lived assets by geographic area
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | 1,910) | 2,050) | 2,096) | 1,862) | 1,566) |
| Other countries | 394) | 518) | 418) | 310) | 158) |
| Total | 2,304) | 2,568) | 2,514) | 2,172) | 1,724) |
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).
Total long-lived assets experienced a period of consistent growth between 2018 and 2021, followed by a contraction in 2022. The total valuation rose from 1,724 million USD in 2018 to a peak of 2,568 million USD in 2021, before declining to 2,304 million USD by the end of the 2022 fiscal year.
- U.S. Asset Trajectory
- Assets located within the United States grew steadily from 1,566 million USD in 2018 to a peak of 2,096 million USD in 2020. Following this peak, a gradual downward trend is observed, with values decreasing to 2,050 million USD in 2021 and further to 1,910 million USD in 2022.
- International Asset Expansion and Contraction
- Long-lived assets in other countries exhibited the most rapid growth rate, increasing from 158 million USD in 2018 to 518 million USD in 2021. This indicates a period of significant international investment. However, this trend reversed sharply in 2022, with assets falling to 394 million USD, representing a year-over-year decrease of approximately 23.9%.
- Geographic Concentration Shift
- A shift in geographic distribution is evident between 2018 and 2021, as the proportion of assets held outside the U.S. increased from 9.2% to 20.2%. This diversification trend was partially reversed in 2022, as U.S.-based assets returned to a higher concentration of 82.9% of the total long-lived asset base.
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