PayPal Holdings, Inc.PYPL
PayPal Holdings, Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES
FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS
The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024:
| December 31, 2025 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Assets: | ||||||||||||||||||||
Cash and cash equivalents(1): | ||||||||||||||||||||
Money market fund | $ | 4 | $ | 4 | $ | — | ||||||||||||||
Short-term investments(2),(5): | ||||||||||||||||||||
| U.S. government and agency securities | 443 | — | 443 | |||||||||||||||||
| Foreign government and agency securities | 60 | — | 60 | |||||||||||||||||
| Corporate debt securities | 984 | — | 984 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 448 | — | 448 | |||||||||||||||||
| Commercial paper | 350 | — | 350 | |||||||||||||||||
| Total short-term investments | 2,285 | — | 2,285 | |||||||||||||||||
Funds receivable and customer accounts(3): | ||||||||||||||||||||
| U.S. government and agency securities | 3,530 | — | 3,530 | |||||||||||||||||
| Foreign government and agency securities | 371 | — | 371 | |||||||||||||||||
| Corporate debt securities | 2,736 | — | 2,736 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 3,831 | — | 3,831 | |||||||||||||||||
| Municipal securities | 98 | — | 98 | |||||||||||||||||
| Commercial paper | 4,265 | — | 4,265 | |||||||||||||||||
| Total funds receivable and customer accounts | 14,831 | — | 14,831 | |||||||||||||||||
Derivatives(4) | 20 | — | 20 | |||||||||||||||||
Long-term investments(2),(5): | ||||||||||||||||||||
| U.S. government and agency securities | 400 | — | 400 | |||||||||||||||||
| Foreign government and agency securities | 50 | — | 50 | |||||||||||||||||
| Corporate debt securities | 650 | — | 650 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 1,321 | — | 1,321 | |||||||||||||||||
| Marketable equity securities | 180 | 180 | — | |||||||||||||||||
| Total long-term investments | 2,601 | 180 | 2,421 | |||||||||||||||||
| Total financial assets | $ | 19,741 | $ | 184 | $ | 19,557 | ||||||||||||||
| Liabilities: | ||||||||||||||||||||
Derivatives(4) | $ | 158 | $ | — | $ | 158 | ||||||||||||||
| Total financial liabilities | $ | 158 | $ | — | $ | 158 | ||||||||||||||
(1) Excludes cash and cash equivalents of $8.0 billion not measured and recorded at fair value.
(2) Excludes time deposits of $93 million not measured and recorded at fair value.
(3) Excludes cash, time deposits, and funds receivable of $23.4 billion underlying funds receivable and customer accounts not measured and recorded at fair value.
(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other long-term liabilities,” respectively, on our consolidated balance sheets.
(5) Excludes non-marketable equity securities of $1.7 billion measured using the Measurement Alternative or equity method accounting.
| December 31, 2024 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Assets: | ||||||||||||||||||||
Cash and cash equivalents(1): | ||||||||||||||||||||
Money market fund | $ | 14 | $ | 14 | $ | — | ||||||||||||||
Short-term investments(2): | ||||||||||||||||||||
| U.S. government and agency securities | 186 | — | 186 | |||||||||||||||||
| Foreign government and agency securities | 84 | — | 84 | |||||||||||||||||
| Corporate debt securities | 1,749 | — | 1,749 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 853 | — | 853 | |||||||||||||||||
| Commercial paper | 1,282 | — | 1,282 | |||||||||||||||||
| Total short-term investments | 4,154 | — | 4,154 | |||||||||||||||||
Funds receivable and customer accounts(3): | ||||||||||||||||||||
| U.S. government and agency securities | 5,711 | — | 5,711 | |||||||||||||||||
| Foreign government and agency securities | 379 | — | 379 | |||||||||||||||||
| Corporate debt securities | 667 | — | 667 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 4,047 | — | 4,047 | |||||||||||||||||
| Municipal securities | 504 | — | 504 | |||||||||||||||||
| Commercial paper | 3,392 | — | 3,392 | |||||||||||||||||
| Total funds receivable and customer accounts | 14,700 | — | 14,700 | |||||||||||||||||
Derivatives(4) | 243 | — | 243 | |||||||||||||||||
Long-term investments(2), (5): | ||||||||||||||||||||
| U.S. government and agency securities | 235 | — | 235 | |||||||||||||||||
| Foreign government and agency securities | 123 | — | 123 | |||||||||||||||||
| Corporate debt securities | 1,602 | — | 1,602 | |||||||||||||||||
Mortgage-backed and asset-backed securities | 1,042 | — | 1,042 | |||||||||||||||||
| Marketable equity securities | 23 | 23 | — | |||||||||||||||||
| Total long-term investments | 3,025 | 23 | 3,002 | |||||||||||||||||
| Total financial assets | $ | 22,136 | $ | 37 | $ | 22,099 | ||||||||||||||
| Liabilities: | ||||||||||||||||||||
Derivatives(4) | $ | 37 | $ | — | $ | 37 | ||||||||||||||
| Total financial liabilities | $ | 37 | $ | — | $ | 37 | ||||||||||||||
(1) Excludes cash and cash equivalents of $6.6 billion not measured and recorded at fair value.
(2) Excludes restricted cash of $1 million and time deposits of $129 million not measured and recorded at fair value.
(3) Excludes cash, time deposits, and funds receivable of $23.0 billion underlying funds receivable and customer accounts not measured and recorded at fair value.
(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other long-term liabilities,” respectively, on our consolidated balance sheets.
(5) Excludes non-marketable equity securities of $1.5 billion measured using the Measurement Alternative or equity method accounting.
Our financial assets classified within Level 1 are valued using quoted prices for identical assets in active markets. All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2).
A majority of our derivative instruments are valued using pricing models that take into account the contractual terms as well as multiple observable inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices (Level 2).
As of December 31, 2025 and 2024, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value (Level 3).
We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries under the fair value option. Election of the fair value option allows us to recognize any gains and losses from fair value changes on such investments in other income (expense), net on the consolidated statements of income (loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding foreign exchange gains and losses relating to customer liabilities. The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Funds receivable and customer accounts | $ | 621 | $ | 620 | $ | 566 | $ | 564 | |||||||||||||||
The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Funds receivable and customer accounts | $ | 86 | $ | (29) | |||||||
ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS
The following tables summarize our assets held as of December 31, 2025 and 2024 for which a non-recurring fair value measurement was recorded during the years ended December 31, 2025 and 2024, respectively:
| December 31, 2025 | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
Loans and interest receivable, held for sale | $ | 1,223 | $ | 1,182 | $ | 41 | ||||||||||||||
Non-marketable equity securities measured using the Measurement Alternative(1) | 690 | 679 | 11 | |||||||||||||||||
| Total | $ | 1,913 | $ | 1,861 | $ | 52 | ||||||||||||||
(1) Excludes non-marketable equity securities of $819 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2025.
| December 31, 2024 | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
Loans and interest receivable, held for sale | $ | 541 | $ | 541 | $ | — | ||||||||||||||
Non-marketable equity securities measured using the Measurement Alternative(1) | 476 | 131 | 345 | |||||||||||||||||
| Total | $ | 1,017 | $ | 672 | $ | 345 | ||||||||||||||
(1) Excludes non-marketable equity securities of $860 million accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2024.
We measure loans and interest receivable, held for sale that are comparable to loans receivable sold to third-party investors using observable inputs, such as the most recent executed prices. These loans and interest receivable, held for sale are classified within Level 2 in the fair value hierarchy. Certain loans and interest receivable, held for sale are valued using significant unobservable inputs, such as adjustments to recently executed prices. These loans and interest receivable, held for sale are classified within Level 3 in the fair value hierarchy. Refer to “Note 11—Loans and Interest Receivable” for additional information on loans and interest receivable, held for sale.
We measure the non-marketable equity securities accounted for under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer. Non-marketable equity securities that have been remeasured during the period based on observable price changes are classified within Level 2 in the fair value hierarchy because we estimate the fair value based on valuation methods which only include significant inputs that are observable, such as the observable transaction price at the transaction date. The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value using significant unobservable inputs such as when we remeasure due to impairment and use discount rates, forecasted cash flows, and market data of comparable companies, among others.
FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE
Our financial instruments, including cash and certain cash equivalents, restricted cash, time deposits, reverse repurchase agreements, certain loans and interest receivable, held for sale, loans and interest receivable, net, certain customer accounts, notes receivable, commercial paper, and long-term debt related to borrowings on our credit facilities are carried at amortized cost, which approximates their fair value. Our term debt (including current portion) had a carrying value of approximately $10.8 billion and fair value of approximately $10.3 billion as of December 31, 2025. Our term debt (including current portion) had a carrying value of approximately $10.5 billion and fair value of approximately $9.8 billion as of December 31, 2024. If these financial instruments were measured at fair value in the financial statements, cash and certain cash equivalents would be classified as Level 1; restricted cash, time deposits, reverse repurchase agreements, certain loans and interest receivable, held for sale, certain customer accounts, commercial paper, and term debt (including current portion) would be classified as Level 2; and the remaining financial instruments would be classified as Level 3 in the fair value hierarchy.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 3, 2026 | Showing above |
| 2024 | Feb 4, 2025 | |
| 2023 | Feb 8, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 3, 2022 | |
| 2020 | Feb 5, 2021 | |
| 2019 | Feb 6, 2020 | |
| 2018 | Feb 7, 2019 | |
| 2017 | Feb 7, 2018 | |
| 2016 | Feb 8, 2017 | |
| 2015 | Feb 11, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.