PARTIV Note1—OverviewandSummaryofSignificantAccountingPolicies PayPalHoldings,Inc. NotestoConsolidatedFinancialStatements—(Continued) ConcentrationsofRisk Our cash, cash equivalents, short-term investments, accounts receivable, loans and interest receivable, net, funds receivable and customer accounts, long-term investments, and long-term notes receivable, are potentially subject to concentration of credit risk. Cash, cash equivalents, and customer accounts are placed with financial institutions that management believes are of high credit quality. In addition, funds receivable are generated primarily with financial institutions which management believes are of high credit quality. We invest our cash, cash equivalents, and customer accounts primarily in highly liquid, highly rated instruments which are uninsured. We have corporate deposit balances with financial services institutions which exceed the FDIC insurance limit of $250,000. As part of our cash management process, weperform periodic evaluations of the relative credit standing of these financial institutions. Our accounts receivable are ANNU derived from revenue earned from customers located in the U.S. and internationally. Our loans and interest receivable are derived from merchant and consumer financing activities for customers located in the U.S. and internationally. Our long- AL term notes receivable is derived from deferred proceeds associated with the sale of our U.S. consumer credit receivables REPOR portfolio to a partner institution in 2018. As of December 31, 2022 and 2021, one customer accounted for 20% and 25% of net accounts receivables, respectively. No customer accounted for more than 10% of net loans receivable as of T December 31, 2022 and 2021. At December 31, 2022 and 2021, one partner institution accounted for our long-term notes receivable balance, which represented 18% and 22% of other assets, respectively. During the years ended December 31, 2022, 2021, and 2020, no customer accounted for more than 10% of net revenues. During the years ended December 31, 2022, 2021, and 2020, we earned approximately 2%, 6%, and 13% of revenue, respectively, from customers on eBays Marketplacesplatform.Noothersourceofrevenuerepresentedmorethan10%ofourrevenue. RevenueRecognition See“Note2—Revenue”forinformationrelatedtoourrevenuerecognition. AdvertisingExpense Weexpensethecostofproducingadvertisementsat the time production occurs and expense the cost of communicating advertisementsin the period during which the advertising space or airtime is used as sales and marketing expense. Online advertising expensesare recognizedbasedonthetermsoftheindividualagreements,whicharegenerallyoverthegreater of the ratio of the number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis over the term of the contract. Advertising expense totaled $518 million, $740 million, and $654millionfortheyearsendedDecember31,2022,2021,and2020,respectively. DefinedContributionSavingsPlans Wehaveadefinedcontribution savings plan in the U.S. which qualifies under Section 401(k) of the Internal Revenue Code (“Code”). Our non-U.S. employees are covered by other savings plans. Expenses related to our defined contribution savingsplansarerecordedwhenservicesarerenderedbyouremployees. Stock-basedCompensation Wedeterminecompensationexpenseassociatedwithrestrictedstockunits,performancebasedrestrictedstockunits,and restricted stock awards based on the estimated fair value of our common stock on the date of grant. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for the years ended December 31, 2022, 2021, and 2020 has been reduced for estimated forfeitures. When estimatingforfeitures, we considervoluntary terminationbehaviorof our employeesas well as trendsof actualforfeitures. ForeignCurrency Many of our foreign subsidiaries have designated the local currency of their respective countries as their functional currency. Assets and liabilities of our non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Revenues and expenses of our non-U.S. dollar functional currency subsidiariesare translatedinto U.S. dollars using daily exchange rates. Gains and losses resulting from these translationsare recorded as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains and losses from the remeasurementofforeigncurrencytransactionsintothefunctionalcurrencyarerecognizedasotherincome(expense),net in our consolidatedstatementsof income(loss). •2022AnnualReport 71