PARTII Item7. ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations As our transaction revenue is typically correlated with TPV growth and the number of payment transactions completed on our payments platform, management uses these metrics to gain insights into the scale and strength of our payments platform, the engagement level of our customers, and underlying activity and trends which may be indicators of current andfuture performance.We presentthesekey metricsto enhanceinvestorsevaluationof the performanceof our business andoperatingresults. Our key metrics are calculated using internal company data based on the activity we measure on our payments platform and compiled from multiple systems, including systems that are internally developed or acquired through business combinations. While the measurement of our key metrics is based on what we believe to be reasonable methodologies and estimates, there are inherent challenges and limitations in measuring our key metrics globally at our scale. The methodologiesusedtocalculateourkeymetricsrequirejudgment. Weregularly review our processes for calculating these key metrics, and from time to time we may make adjustments to improve the accuracy or relevance of our metrics. For example, we continuously apply models, processes, and practices designed to detect and prevent fraudulent account creation on our platforms, and work to improve and enhance those capabilities. When we detect a significant volume of illegitimate activity, we generally remove the activity identified from our key metrics. Although such adjustments may impact key metrics reported in prior periods, we generally do not update previously reported key metrics to reflect these subsequent adjustments unless the retrospective impact of process improvementsorenhancementsisdeterminedbymanagementtobematerial. NetRevenues Ourrevenuesareclassifiedintothefollowingtwocategories: • Transaction revenues: Net transaction fees charged to merchants and consumers on a transaction basis based on the TPV completed on our payments platform. Growth in TPV is directly impacted by the number of payment transactions that we enable on our payments platform. We earn additional fees from merchants and consumers: on transactions where we perform currency conversion, when we enable cross-border transactions (i.e., transactions where the merchant and consumer are in different countries), to facilitate the instant transfer of funds for our customers from their PayPal or Venmo account to their bank account or debit card, to facilitate the purchase and sale of cryptocurrencies,as contractual compensation from sellers that violate our contractual terms (for example, through fraud or counterfeiting), andothermiscellaneousfees. • Revenues from other value added services: Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our merchants and consumers. We also earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain assets underlyingcustomerbalances. Ourrevenuescanbesignificantlyimpactedbyanumberoffactors,includingthefollowing: • Themixofmerchants,products,andservices; • Themixbetweendomesticandcross-bordertransactions; • Thegeographicregionorcountryinwhichatransactionoccurs;and • Theamountofourloansreceivableoutstandingwithmerchantsandconsumers. Refer to “Part I, Item 1A, Risk Factors” in this Form 10-K for further discussion on factors that may impact our revenue. 34 •2022AnnualReport