PayPal Holdings, Inc.PYPL

PayPal Holdings, Inc. Leases Disclosure

10-KFiled Feb 3, 20263 min read
LEASES
PayPal enters into various leases, which are primarily real estate operating leases. We use these properties for executive and administrative offices, customer services and operations centers, product development offices, and data centers. PayPal also enters into computer equipment finance leases.

While a majority of our lease agreements do not contain an explicit interest rate, certain of our lease agreements are subject to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and instead are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.

The short-term lease exemption has been adopted for all leases with a duration of less than 12 months.

PayPal’s lease portfolio includes a small number of subleases. A sublease situation can arise when currently leased real estate space is available and is surplus to operational requirements.

The components of lease expense were as follows:
Year Ended December 31,
202520242023
(In millions)
Operating lease expense$162 $159 $156 
Finance lease expense - amortization of ROU lease assets
16 8 — 
Sublease income(8)(12)(9)
Total lease expense, net
$170 $155 $147 
Supplemental cash flow information related to leases was as follows:
Year Ended December 31,
202520242023
(In millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$178 $169 $174 
Financing cash flows from finance leases
$6 $60 $— 
ROU lease assets obtained in exchange for new operating lease liabilities
$68 $343 $(1)
ROU lease assets obtained in exchange for new finance lease liabilities
$— $82 $— 
Other non-cash ROU lease asset activity(1)
$(5)$— $(40)
(1) ROU lease asset impairment

Supplemental balance sheet information related to leases was as follows:
As of December 31,
20252024
(In millions, except weighted-average figures)
Operating leases
Finance leases
Operating leases
Finance leases
ROU lease assets$539 $56 $599 $73 
Current lease liabilities148 7 135 5 
Long-term lease liabilities548 10 629 18 
Total lease liabilities$696 $17 $764 $23 
Weighted-average remaining lease term5.4 years3.4 years5.9 years4.4 years
Weighted-average discount rate4 %5 %4 %5 %

Future minimum lease payments for our leases as of December 31, 2025 were as follows:
Operating Leases
Finance Leases
Fiscal years:(In millions)
2026$174 $8 
2027170 6 
2028116 4 
202998 — 
203083 — 
Thereafter151— 
Total$792 $18 
Less: present value discount(96)(1)
Lease liability$696 $17 

Operating lease amounts include minimum lease payments under our non-cancelable operating leases primarily for office and data center facilities. Finance lease amounts include minimum lease payments under our non-cancelable finance leases primarily for computer equipment. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases. We recognize rent expense under such agreements on a straight-line basis.

As of December 31, 2025, we have an additional operating lease for an office, which will commence in the first quarter of 2026 or later with minimum lease payments aggregating to $284 million and a lease term of twelve years. As of December 31, 2025, we did not have any additional finance leases which have not yet commenced.

Historical Timeline

Fiscal YearFiled
2025Feb 3, 2026Showing above
2024Feb 4, 2025
2023Feb 8, 2024
2022Feb 10, 2023
2021Feb 3, 2022
2020Feb 5, 2021
2019Feb 6, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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