Summary
PayPal Holdings, Inc. (PYPL) filed an 8-K on April 9, 2020, primarily to announce a change in how it presents its non-GAAP Earnings Per Share (EPS) starting with the first quarter of 2020. The company will now exclude the impact of all gains and losses from its strategic investments from its non-GAAP EPS calculations. This change is being made to provide a clearer picture of the company's ongoing operational performance, as gains and losses from investments are outside of PayPal's direct operational control and are not considered indicative of its core business. While this change affects the reporting of non-GAAP EPS and prior periods have been reclassified for comparability, it's crucial for investors to note that these adjustments do not impact PayPal's U.S. GAAP results or other previously reported non-GAAP financial metrics such as revenue, operating expenses, operating income, operating margin, and free cash flows. The filing provides reclassified non-GAAP EPS data for fiscal years 2017, 2018, and 2019 to reflect this new presentation, allowing for more consistent period-over-period analysis of operational profitability.
Key Highlights
- 1PayPal is changing its non-GAAP EPS presentation to exclude all gains and losses from strategic investments.
- 2This revised presentation begins with the first quarter of 2020.
- 3The company believes this change offers a better understanding of ongoing operational performance.
- 4The adjustments are made because investment gains/losses are outside PayPal's operational control.
- 5This change does NOT impact PayPal's U.S. GAAP reported results.
- 6Other non-GAAP metrics like revenue, operating expenses, and free cash flow remain unaffected.
- 7Prior period non-GAAP EPS for 2017, 2018, and 2019 have been reclassified for comparability.