Analysis of Geographic Areas
PayPal Holdings Inc. operates in 2 regions: U.S. and Other countries.
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- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2015
- Net Profit Margin since 2015
- Operating Profit Margin since 2015
- Return on Equity (ROE) since 2015
- Return on Assets (ROA) since 2015
- Aggregate Accruals
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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. | |||||
| Other countries |
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).
- Geographic Asset Turnover Trends
- Over the period analyzed, the asset turnover in the U.S. exhibits a generally upward trend. Starting at a ratio of 5.32 in 2018, it slightly decreased to 5.06 in 2019, followed by a marginal increase to 5.25 in 2020. From 2020 onwards, the ratio shows a significant increase, reaching 6.69 in 2021 and further climbing to 8.28 in 2022. This indicates an improvement in the efficiency of asset usage in the United States segment, particularly marked in the last two years.
- In contrast, the asset turnover for other countries experienced a notable decline from 2018 through 2021, falling from a high 45.11 in 2018 to 22.51 in 2021. However, this trend reversed somewhat in 2022, with a rebound to 29.72. Despite this recovery, the ratio remains substantially lower than the level observed at the beginning of the period.
- The data reveals a pronounced disparity between the U.S. and other countries' asset turnover ratios in terms of scale and volatility. While the U.S. figures show steady improvement with moderate variability, the other countries’ data depict a sharp initial drop followed by a partial recovery.
- Overall, the trends suggest increasing operational efficiency in the U.S. region, potentially supported by strategic initiatives or market conditions, whereas in other international markets, the company might be facing challenges that impacted asset utilization, with signs of partial recovery in recent periods.
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 | |||||
| Long-lived assets | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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
= ÷ =
- Net Revenues
- There was a consistent upward trend in net revenues from 2018 through 2022. Starting at 8,324 million US dollars in 2018, revenues increased each year, reaching 15,807 million US dollars in 2022. This represents nearly a doubling of net revenues over the five-year period, indicating robust growth in the business operations within the U.S. geographic area.
- Long-lived Assets
- Long-lived assets showed a general upward trend from 2018 to 2020, increasing from 1,566 million to 2,096 million US dollars. However, starting in 2021, there was a decline to 2,050 million and further down to 1,910 million in 2022. This suggests a reduction in investment or disposition of certain long-term assets in the later years, after a period of asset growth.
- Area Asset Turnover
- The area asset turnover ratio exhibited some fluctuations but overall demonstrated significant improvement over the analyzed timeframe. It initially decreased slightly from 5.32 in 2018 to 5.06 in 2019 but rebounded to 5.25 in 2020. Thereafter, it increased markedly to 6.69 in 2021 and further to 8.28 in 2022. This upward trend suggests increasingly efficient use of assets to generate revenue in this region during the latter years.
- Overall Insights
- The data reflects strong revenue growth in the U.S. area coupled with a decreasing asset base after 2020, which correlates with a rise in asset turnover efficiency. This indicates that the company managed to enhance revenue generation from a relatively smaller asset base in recent years, pointing to improved operational effectiveness or a strategic shift in asset utilization. The decline in long-lived assets might also suggest asset optimization or a move towards less capital-intensive operations.
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 | |||||
| Long-lived assets | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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
= ÷ =
- Net Revenues
- Net revenues showed a consistent upward trend over the five-year period. Starting at 7,127 million US dollars in 2018, revenues increased steadily each year, reaching 11,711 million US dollars by the end of 2022. The most significant growth occurred between 2019 and 2020, with an increase of approximately 2,086 million US dollars, followed by a more moderate growth rate in the subsequent years.
- Long-lived Assets
- The value of long-lived assets grew substantially from 158 million US dollars in 2018 to a peak of 518 million US dollars in 2021. However, in 2022, there was a noticeable decline to 394 million US dollars. Despite this decrease in the final year, the overall trend across the period is one of asset accumulation, reflecting possible investments in property, plant, equipment, or other long-term assets up to 2021.
- Area Asset Turnover
- The area asset turnover ratio displayed a declining trend from 45.11 in 2018 to a low of 22.51 in 2021, indicating a decreasing efficiency in generating revenues from the geographic area's assets over those years. However, in 2022, this ratio rebounded to 29.72, suggesting an improvement in asset utilization or a relative increase in revenue generation efficiency compared to the previous year. This fluctuation might be related to changes in either revenues or assets, or both, as observed in the other data points.
- Summary
- Overall, net revenues in the region increased steadily, demonstrating growth and expanding operations. Long-lived assets grew over the majority of the period, suggesting increased investment, but declined in the final year, which may indicate divestitures or asset impairments. The area asset turnover ratio's decline for most of the period points to decreased efficiency in asset use, but its improvement in 2022 signals a potential recovery or optimization of asset utilization relative to revenues.
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. | |||||
| Other countries | |||||
| Total |
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 net revenues data across geographic areas for the periods from December 31, 2018, to December 31, 2022, show a consistent upward trajectory both in the U.S. and other countries, contributing to overall revenue growth.
- U.S. Market
- Net revenues in the U.S. region have shown a steady increase over the five-year period. Starting from $8,324 million in 2018, revenues rose each year, reaching $15,807 million in 2022. This represents a cumulative growth of approximately 90%, indicating a strong and growing market presence in the U.S. The year-over-year increases are consistent, with notable growth acceleration between 2020 and 2021, possibly reflecting enhanced market penetration or increased demand for services.
- Other Countries
- Revenues from other countries also demonstrate growth, starting at $7,127 million in 2018 and reaching $11,711 million by 2022. However, the growth rate is comparatively slower than that of the U.S. market. The increase from 2018 to 2020 is more pronounced, with revenues rising from $7,127 million to $10,441 million. After 2020, the growth appears to plateau somewhat, staying close to $11,659 million in 2021 and slightly increasing to $11,711 million in 2022, suggesting possible market saturation or external limitations affecting expansion abroad.
- Total Revenues
- Total revenues, combining domestic and international markets, show a robust upward trend, moving from $15,451 million in 2018 to $27,518 million in 2022. The total revenue growth reflects the combined contributions of both segments, with the U.S. market playing a significant role in driving growth in the latter years. The total revenue growth rate corresponds to an approximate 78% increase over the five-year time frame.
In summary, the data indicates a strong growth pattern in net revenues overall, with the U.S. market exhibiting more rapid and sustained expansion compared to other countries. The slower growth internationally in recent years could warrant further analysis to understand the underlying factors. The overall revenue increase suggests successful market strategies and expanding adoption of services across geographic regions.
Long-lived assets
PayPal Holdings Inc., long-lived assets by geographic area
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| U.S. | |||||
| Other countries | |||||
| Total |
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).
- Overall Trend
- There is a general increase in total long-lived assets from 2018 to 2021, reaching a peak in 2021, followed by a decline in 2022.
- U.S. Long-Lived Assets
- The U.S. segment shows a consistent upward trend from 2018 to 2020, increasing from 1566 million to 2096 million. However, from 2020 onwards, there is a slight decline, with the value dropping to 2050 million in 2021 and further to 1910 million in 2022. This indicates a reduction in long-lived asset investment or valuation in the U.S. market during the last two years.
- Other Countries Long-Lived Assets
- The assets in other countries have steadily increased from 158 million in 2018 to a peak of 518 million in 2021. Despite this strong growth, a notable decrease to 394 million is observed in 2022, which mirrors the trend observed in the U.S. segment but at a relatively higher percentage decline.
- Comparative Analysis
- The U.S. remains the dominant geographic area in terms of long-lived assets throughout the period, accounting for the majority of the total assets. The growth rate in other countries is more pronounced compared to the U.S. from 2018 to 2021, suggesting an expansion or increased investment outside the U.S. The declines observed in 2022 across both regions indicate a possible strategic adjustment or external factors impacting asset levels globally.
- Summary
- The data reveals a pattern of steady growth in long-lived assets across both U.S. and international regions until 2021, followed by a contraction in 2022. This could signal a shift in asset management strategy or changing market conditions affecting asset deployment. Both segments contribute to the fluctuations, with the U.S. maintaining a larger absolute amount but the international segment showing higher relative growth and decline.