Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, inflationary pressure, foreign exchange rate volatility and geopolitical events, new or planned features or services, or management strategies). You can generally identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “potential,” “ongoing,” “target” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in “Part I – Item 1A: Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), as well as in our unaudited condensed consolidated financial statements, related notes, and the other information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission (“SEC”). We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the unaudited condensed consolidated financial statements and the related notes included in this report.

When we refer to “we,” “our,” “us” or “eBay” in this Quarterly Report on Form 10-Q, we mean the current Delaware corporation (eBay Inc.) and its consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.

OVERVIEW

Business

eBay Inc. is a global commerce leader that connects people and builds communities to create economic opportunity for all. Our technology empowers millions of buyers and sellers in more than 190 markets around the world, providing everyone the opportunity to grow and thrive. Founded in 1995 in San Jose, California, eBay is one of the world's largest and most vibrant marketplaces for discovering great value and unique selection.

In 2022, and extending into the third quarter of 2023, we experienced reduced traffic in most markets resulting from geopolitical events, inflationary pressure, foreign exchange rate volatility, elevated interest rates and lower consumer confidence. These factors negatively impacted discretionary consumer spending, are uncertain in duration and we expect them to continue throughout 2023.

Presentation

In addition to the corresponding measures under generally accepted accounting principles (“GAAP”), management uses non-GAAP measures in reviewing our financial results. The foreign exchange neutral (“FX-Neutral”), or constant currency, net revenue amounts discussed below are non-GAAP financial measures and are not in accordance with, or an alternative to, measures prepared in accordance with GAAP. Accordingly, the FX-Neutral information appearing in the following discussion of our results of operations should be read in conjunction with the information provided below in “Non-GAAP Measures of Financial Performance,” which includes reconciliations of FX-Neutral financial measures to the most directly comparable GAAP measures. We calculate the year-over-year impact of foreign currency movements using prior period foreign currency rates, excluding hedging activity, applied to current year transactional currency amounts.

Quarter Highlights

Net revenues increased 5% to $2,500 million during the three months ended September 30, 2023 compared to the same period in 2022. FX-Neutral net revenues (as defined above) increased 5% during the three months ended September 30, 2023 compared to the same period in 2022. Operating margin decreased to 18.2% for the three months ended September 30, 2023 compared to 23.9% for the same period in 2022.

We generated cash flow from continuing operating activities of $862 million during the three months ended September 30, 2023 compared to $735 million in the same period in 2022.

We recorded $1,212 million of aggregate gains in gain (loss) on equity investments and warrant, net on our condensed consolidated statement of income during the three months ended September 30, 2023 compared to $593 million of aggregate losses recorded during the same period in 2022.

During the three months ended September 30, 2023, we made cash payments of $626 million related to the purchase of common stock and $132 million in dividends.

In November 2023, we declared a quarterly cash dividend of $0.25 per share of common stock to be paid on December 15, 2023 to stockholders of record as of December 1, 2023.

RESULTS OF OPERATIONS

We have one reportable segment to reflect the way management and our chief operating decision maker review and assess performance of the business. Our reportable segment is Marketplace, which includes our online marketplace located at www.ebay.com, its localized counterparts and the eBay suite of mobile apps. The accounting policies of our segment are the same as those described in “Note 1 — The Company and Summary of Significant Accounting Policies” in our condensed consolidated financial statements included elsewhere in this report.

Net Revenues

Beginning in the fourth quarter of 2022, we present revenues generated from both Marketplace GMV and non-GMV based businesses as “Net revenues” in order to more closely align our presentation of net revenues with how our business is operated. We formerly presented such amounts as “Net transaction revenues” and “Marketing services and other (MS&O) revenues,” and those line items for such prior periods have been conformed to current period presentation. Consolidated net revenues are unchanged.

Net revenues primarily include final value fees, feature fees, fees to promote listings, payment services fees, listing fees, and store subscription fees from sellers on our platforms. Our net revenues also include revenues from the sale of advertisements, revenue sharing arrangements and shipping fees. Our net revenues are reduced by incentives, including discounts, coupons and rewards, provided to our customers.

The following table presents net revenues for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
Net revenues			$	2,500					$	2,380					5		%				$	7,550					$	7,285					4		%

Seasonality

We expect transaction activity patterns on our platforms to trend with general consumer buying patterns and expect that these trends will continue. Seasonal trends in net revenues may be influenced as we introduce and scale new products throughout the year. In addition, macroeconomic conditions, including the impact of COVID-19, have disrupted seasonal patterns in net revenues, particularly in the first quarter of 2021. The following table presents our total net revenues and the sequential quarterly movements of these net revenues for the periods indicated (in millions, except percentages):

			Quarter Ended
			March 31						June 30						September 30						December 31
2021
Net revenues			$	2,638					$	2,668					$	2,501					$	2,613
% change from prior quarter			6		%				1		%				(6)		%				4		%
2022
Net revenues			$	2,483					$	2,422					$	2,380					$	2,510
% change from prior quarter			(5)		%				(2)		%				(2)		%				5		%
2023
Net revenues			$	2,510					$	2,540					$	2,500					$	—
% change from prior quarter			—		%				1		%				(2)		%

Net Revenues by Geography

Revenues are attributed to U.S. and international geographies primarily based upon the country in which the customer is located. The following table presents net revenues by geography for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
U.S.			$	1,259					$	1,187					6		%				$	3,785					$	3,612					5		%
Percentage of net revenues			50		%				50		%										50		%				50		%
International			1,241						1,193						4		%				3,765						3,673						3		%
Percentage of net revenues			50		%				50		%										50		%				50		%
Total net revenues			$	2,500					$	2,380					5		%				$	7,550					$	7,285					4		%

Our commerce platforms operate globally, resulting in certain revenues that are denominated in foreign currencies, primarily the British pound and euro. Year-over-year appreciation or depreciation of the U.S. dollar may have a material impact to our financial results. We experienced elevated foreign currency volatility which we expect to continue throughout 2023. Through our hedging programs, we actively monitor foreign currency volatility and attempt to mitigate significant risk. As shown in the table above, we generate approximately half of our net revenues internationally. Therefore, we are subject to the risks related to conducting business in foreign countries as discussed in “Part I - Item 1A: Risk Factors” of the 2022 Form 10-K.

Net revenues included $2 million and $45 million of hedging gains during the three and nine months ended September 30, 2023 compared to $36 million and $51 million of hedging gains during the same periods in 2022. Foreign currency movements relative to the U.S. dollar had a favorable impact of $43 million and an unfavorable impact of $11 million on net revenues during the three and nine months ended September 30, 2023, respectively, compared to an unfavorable impact of $100 million and $253 million on net revenues during the same periods in 2022. The effect of foreign currency exchange rate movements during the three months ended September 30, 2023 compared to the same periods in 2022 was primarily attributable to the weakening of the U.S. dollar against the British pound while the effect of foreign currency exchange rate movements during the nine months ended September 30, 2023 compared to the same periods in 2022 was primarily attributable to the strengthening of the U.S. dollar against the British pound and other major currencies.

Key Operating Metrics

Gross Merchandise Volume (“GMV”) and take rate are significant factors that we believe affect our net revenues.

GMV consists of the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes. Despite GMV’s divergence from revenue, we still believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our platforms in a given period.

Take rate is defined as net revenues divided by GMV and represents net revenues as a percentage of overall volume on our platforms. We believe that take rate provides a useful measure of our ability to monetize volume through marketplace services on our platforms in a given period. We use take rate to identify key revenue drivers on our marketplace.

The following table presents net revenues, GMV and take rate for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,												% Change												Nine Months Ended September 30,												% Change
			2023						2022						As Reported						FX-Neutral						2023						2022						As Reported						FX-Neutral
Net revenues (1)			$	2,500					$	2,380					5		%				5		%				$	7,550					$	7,285					4		%				4		%
Supplemental data:
GMV			$	17,991					$	17,715					2		%				—		%				$	54,615					$	55,673					(2)		%				(1)		%
Take rate (2)			13.90		%				13.43		%				0.47		%										13.82		%				13.09		%				0.73		%

(1) Net revenues were net of $2 million and $45 million hedging gains during the three and nine months ended September 30, 2023 as compared to $36 million and $51 million hedging gains during the same periods in 2022.

(2) Take rate is defined as net revenues divided by GMV, as discussed above.

Net revenues increased primarily due to the investment in focus categories and higher take rate driven by the expansion of promoted listings, international shipping and payment services. The increase in net revenues was partially offset by a reduction in traffic in most markets resulting from geopolitical events, inflationary pressure, foreign exchange rate volatility, elevated interest rates and lower consumer confidence, which negatively impacted discretionary consumer spending during the three and nine months ended September 30, 2023.

The divergence in the respective growth rates of net revenues and GMV during the three and nine months ended September 30, 2023 compared to 2022 was primarily due to the benefit of a higher take rate during the same periods, as discussed above. We expect the divergence between net revenues and GMV to continue throughout the year. Despite GMV’s divergence from net revenues, we still believe the metric provides a useful measure of volume in a given period.

Cost of Net Revenues

Cost of net revenues represents costs associated with customer support, site operations and payment processing. Significant components of these costs primarily consist of employee compensation including stock-based compensation, contractor costs, facilities costs, depreciation of equipment and amortization expense, bank transaction fees, credit card interchange and assessment fees, authentication costs, shipping costs and digital services tax. The following table presents cost of net revenues for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
Cost of net revenues (1)			$	705					$	647					9		%				$	2,123					$	1,999					6		%
Percentage of net revenues			28		%				27		%										28		%				27		%

(1) Cost of net revenues were net of immaterial hedging activity during the three and nine months ended September 30, 2023 and 2022.

Cost of net revenues increased during the three months ended September 30, 2023 compared to the same period in 2022 primarily driven by a $30 million increase related to the launch of eBay International Shipping, a $9 million increase related to the expansion of authentication services and an $8 million unfavorable impact of foreign currency movements relative to the U.S. dollar.

Cost of net revenues increased during the nine months ended September 30, 2023 compared to the same period in 2022 primarily driven by a $69 million increase related to the launch of eBay International Shipping, a $38 million increase related to the expansion of authentication services, and an $18 million increase in employee related costs, partially offset by a $9 million decrease in payment processing costs incurred and a $7 million favorable impact of foreign currency movements relative to the U.S. dollar.

Operating Expenses

The following table presents operating expenses for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
Sales and marketing			$	567					$	538					5		%				$	1,644					$	1,582					4		%
Percentage of net revenues			23		%				23		%										22		%				22		%
Product development			401						345						16		%				1,145						990						16		%
Percentage of net revenues			16		%				14		%										15		%				14		%
General and administrative			283						212						33		%				831						675						23		%
Percentage of net revenues			11		%				9		%										11		%				9		%
Provision for transaction losses			85						69						23		%				259						251						3		%
Percentage of net revenues			3		%				3		%										3		%				3		%
Amortization of acquired intangible assets			4						1						**						17						3						**
Total operating expenses			$	1,340					$	1,165					15		%				$	3,896					$	3,501					11		%

** Not meaningful

Foreign currency movements relative to the U.S. dollar had an unfavorable impact of $8 million and a favorable impact of $33 million on operating expenses during the three and nine months ended September 30, 2023, respectively, compared to a favorable impact of $50 million and $131 million during the same periods in 2022. Hedging activity within operating expenses was immaterial during the three and nine months ended September 30, 2023.

Sales and Marketing

Sales and marketing expenses primarily consist of advertising and marketing program costs (both online and offline), employee compensation including stock-based compensation, certain user coupons and rewards, contractor costs, facilities costs and depreciation on equipment. Online marketing expenses represent traffic acquisition costs in various channels such as paid search, affiliates marketing and display advertising. Offline advertising primarily includes brand campaigns and buyer/seller communications.

The increase in sales and marketing expenses during the three months ended September 30, 2023 compared to the same period in 2022 was primarily due to a $20 million increase in employee related costs and an $8 million unfavorable impact of foreign currency movements relative to the U.S. dollar.

The increase in sales and marketing expenses during the nine months ended September 30, 2023 compared to the same period in 2022 was primarily due to a $62 million increase in employee related costs and a $27 million increase in advertising and marketing program costs (both online and offline), partially offset by a $17 million favorable impact of foreign currency movements relative to the U.S. dollar and a $15 million decrease in user coupons and rewards.

Product Development

Product development expenses primarily consist of employee compensation including stock-based compensation, contractor costs, facilities costs and depreciation on equipment. Product development expenses are net of required capitalization of major platform and other product development efforts, including the development and maintenance of our technology platform. Our top technology priorities include the implementation of our strategic plan including payment intermediation capabilities, improved seller tools and buyer experiences.

The increase in product development expenses during the three and nine months ended September 30, 2023 compared to the same periods in 2022 was primarily due to an increase in employee related costs as we continue to innovate and modernize the shopping experience across our platforms powered by intelligent computing at scale.

Capitalized internal use and platform development costs were $28 million and $86 million in the three and nine months ended September 30, 2023, respectively, compared to $38 million and $100 million in the three and nine months ended September 30, 2022. These costs are primarily reflected as a cost of net revenues when amortized in future periods.

General and Administrative

General and administrative expenses primarily consist of employee compensation including stock-based compensation, contractor costs, facilities costs, depreciation of equipment, employer payroll taxes on stock-based compensation, legal expenses, restructuring, insurance premiums and other professional service fees. Our legal expenses, including those related to various ongoing legal proceedings, may fluctuate substantially from period to period.

The increase in general and administrative expenses during the three months ended September 30, 2023 compared to the same period in 2022 was primarily due to a $50 million accrual for probable losses related to legal matters and a $20 million increase in employee related costs. For additional details related to our legal matters, please see “Note 11 — Commitments and Contingencies” to the condensed consolidated financial statements included in this report.

The increase in general and administrative expenses during the nine months ended September 30, 2023 compared to the same period in 2022 was primarily due to a $50 million accrual for probable losses related to legal matters, a $47 million increase in employee related costs and $41 million of restructuring costs that did not occur in the same period in 2022.

Provision for Transaction Losses

Provision for transaction losses primarily consists of transaction loss expense associated with our buyer protection programs, losses from our managed payments services, fraud and bad debt expense associated with our accounts receivable balance. We expect our provision for transaction losses to fluctuate depending on many factors, including changes to our protection programs and the impact of regulatory changes.

The increase in provision for transaction losses during the three months ended September 30, 2023 compared to the same period in 2022 was primarily due to $11 million in bad debt expense resulting from the recovery of losses related to a non-recurring consumer fraud incident in 2022.

The increase in provision for transaction losses during the nine months ended September 30, 2023 compared to the same period in 2022 was primarily due to $12 million higher transaction loss expense related to the launch of eBay International Shipping.

Gain (Loss) on Equity Investments and Warrant, Net

Gain (loss) on equity investments and warrant, net primarily consists of gains and losses related to various types of equity investments, including our equity investments in Adevinta, Gmarket and KakaoBank as well as gains and losses due to changes in fair value of the warrant received from Adyen (each as discussed and defined in the condensed consolidated financial statements included in this report). The following table presents gain (loss) on equity investments and warrant, net for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
Unrealized change in fair value of equity investment in Adevinta			$	1,367					$	(501)					373		%				$	1,331					$	(2,973)					145		%
Unrealized change in fair value of equity investment in Adyen			—						—						**						—						(118)						**
Unrealized change in fair value of equity investment in Gmarket			(43)						(40)						8		%				(83)						(299)						(72)		%
Unrealized change in fair value of equity investment in KakaoBank			(4)						(50)						(92)		%				(11)						(246)						(96)		%
Change in fair value of warrant			(109)						(27)						304		%				(40)						(246)						(84)		%
Realized change in fair value of shares sold in Adyen			—						24						**						—						(143)						**
Realized change in fair value of shares sold in KakaoBank			—						—						**						—						(75)						**
Gain (loss) on other investments			1						1						**						(1)						(5)						**
Total gain (loss) on equity investments and warrant, net			$	1,212					$	(593)					(304)		%				$	1,196					$	(4,105)					(129)		%
Percentage of net revenues			48		%				(25)		%										16		%				(56)		%

** Not meaningful

The change in gain (loss) on equity investments and warrant, net during the three and nine months ended September 30, 2023 compared to the same periods in 2022 was primarily driven by the change in the fair value of our equity investments in Adevinta, Gmarket and KakaoBank and the warrant.

Interest and Other, Net

Interest and other, net primarily consists of interest earned on cash, cash equivalents and investments, as well as foreign exchange transaction gains and losses, gain/loss on acquisitions or disposals and interest expense, consisting of interest charges on amounts borrowed and commitment fees on unborrowed amounts under our credit agreement and interest expense on our outstanding debt securities and commercial paper, if any. The following table presents interest and other, net for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						% Change						2023						2022						% Change
Interest income			$	58					$	18					222		%				$	148					$	36					311		%
Interest expense			(65)						(55)						18		%				(198)						(173)						14		%
Foreign exchange and other			1						8						(88)		%				(1)						27						(104)		%
Total interest and other, net			$	(6)					$	(29)					(79)		%				$	(51)					$	(110)					(54)		%
Percentage of net revenues			0		%				(1)		%										(1)		%				(2)		%

Interest income increased primarily due to higher yields on corporate debt and government and agency securities in a higher interest rate environment. We expect this trend to continue throughout 2023.

Interest expense increased primarily due to higher rates offset by lower average notional on outstanding debt during 2023. In 2023, we repaid two tranches of senior notes at substantially lower interest rates than the senior notes that were issued during the fourth quarter of 2022. As a result, we expect continued upward pressure on interest expense throughout 2023.

Income Tax Provision

The following table presents provision (benefit) for income taxes for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Income tax provision (benefit)			$	355					$	16					$	629					$	(485)
Effective tax rate			21.4		%				(29.9)		%				23.5		%				20.0		%

The increase in our effective tax rate for the three and nine months ended September 30, 2023 compared to the same periods in 2022 was primarily due to unrealized investment gains in 2023 and unrealized investment losses in 2022 relative to total income and loss from continuing operations before tax in 2023 and 2022, respectively.

The increase in our effective tax rate for the nine months ended September 30, 2023 compared to the same period in 2022 was also impacted by an increase in reserves for uncertain tax positions in 2023, offset by the 2022 deduction related to the closure of our marketplace in Turkey.

We are regularly under examination by tax authorities both domestically and internationally. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, although there are inherent uncertainties in these examinations. Due to the ongoing tax examinations, it is generally impractical to determine the amount and timing of these adjustments. However, we expect several tax examinations to close within the next twelve months. See “Note 14 — Income Taxes” to the condensed consolidated financial statements included in this report for more information on estimated settlements within the next twelve months.

Non-GAAP Measures of Financial Performance

To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles, we use FX-Neutral net revenues, which are non-GAAP financial measures. Management uses the foregoing non-GAAP measures in reviewing our financial results. We define FX-Neutral net revenues as net revenues minus the exchange rate effect. We define exchange rate effect as the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to current year transactional currency amounts, excluding hedging activity.

These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. These measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

These non-GAAP measures are provided to enhance investors’ overall understanding of our current financial performance and prospects for the future. Specifically, we believe these non-GAAP measures provide useful information to both management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook. In addition, because we have historically reported certain non-GAAP results to investors, we believe that the inclusion of these non-GAAP measures provides consistency in our financial reporting.

The following tables present a reconciliation of FX-Neutral GMV and FX-Neutral net revenues (each as defined below) to our reported GMV and net revenues for the periods indicated (in millions, except percentages):

			Three Months Ended September 30,
			2023																		2022						% Change
			As Reported						Exchange Rate Effect (1)(3)						FX-Neutral (2)						As Reported						As Reported						FX-Neutral
GMV			$	17,991					$	319					$	17,672					$	17,715					2		%				—		%
Net Revenues			$	2,500					$	43					$	2,457					$	2,380					5		%				5		%

			Nine Months Ended September 30,
			2023																		2022						% Change
			As Reported						Exchange Rate Effect (1)(3)						FX-Neutral (2)						As Reported						As Reported						FX-Neutral
GMV			$	54,615					$	(461)					$	55,076					$	55,673					(2)		%				(1)		%
Net Revenues			$	7,550					$	(11)					$	7,561					$	7,285					4		%				4		%

(1) We define exchange rate effect as the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to current year transactional currency amounts excluding hedging activity.

(2) We define FX-Neutral GMV as GMV minus the exchange rate effect. We define the non-GAAP financial measures of FX-Neutral net revenues as net revenues minus the exchange rate effect.

(3) Net revenues were net of $2 million and $45 million hedging gains during the three and nine months ended September 30, 2023 as compared to $36 million and $51 million hedging gains during the same periods in 2022.

Liquidity and Capital Resources

Cash Flows

			Nine Months Ended September 30,
			2023						2022
			(In millions)
Net cash provided by (used in):
Continuing operating activities			$	2,308					$	1,941
Continuing investing activities			520						3,753
Continuing financing activities			(2,071)						(4,536)
Effect of exchange rates on cash, cash equivalents and restricted cash			(16)						(89)
Net decrease in cash, cash equivalents and restricted cash - discontinued operations			(4)						(369)
Net increase (decrease) in cash, cash equivalents and restricted cash			$	737					$	700

Continuing Operating Activities

Our operating cash flows arise primarily from cash received from our customers on our platforms offset by cash payments for sales and marketing, employee compensation and payment processing expenses.

Cash provided by continuing operating activities of $2.3 billion in the nine months ended September 30, 2023 compared to cash provided by continuing operating activities of $1.9 billion in the nine months ended September 30, 2022 was primarily attributable to working capital movements and changes in non-cash items during the nine months ended September 30, 2023 compared to the same period in 2022.

Continuing Investing Activities

Cash provided by continuing investing activities of $520 million in the nine months ended September 30, 2023 was primarily attributable to proceeds of $11.5 billion from the maturities and sales of investments, partially offset by cash paid for investments of $10.6 billion and property and equipment of $330 million.

The largely offsetting effects of purchases of investments and maturities and sale of investments results from the management of our investments. As our immediate cash needs change, purchase and sale activity will fluctuate.

Continuing Financing Activities

Cash used in continuing financing activities of $2.1 billion in the nine months ended September 30, 2023 was primarily attributable to debt repayments of $1,150 million related to the redemption of our floating rate and 2.750% senior notes due 2023, cash paid to repurchase $1,118 million of common stock, and $399 million paid in cash dividends, partially offset by net funds receivable and payable activity of $684 million driven by changes in payment processors.

The negative effect of exchange rate movements on cash, cash equivalents and restricted cash was due to the strengthening of the U.S. dollar against other currencies during the nine months ended September 30, 2023 and 2022.

Liquidity and Capital Resource Requirements

As of September 30, 2023 and December 31, 2022, we had assets classified as cash and cash equivalents as well as short-term and long-term non-equity investments, in an aggregate amount of $5.4 billion and $5.9 billion, respectively. These amounts do not include cash held on behalf of customers related to marketplace activity of $430 million and $69 million, respectively, which are recorded separately within customer accounts and funds receivable with a corresponding liability within customer accounts and funds payable in our condensed consolidated balance sheet. We believe these assets together with cash expected to be generated from operations, borrowings available under our credit agreement and commercial paper program, and our access to capital markets, will be sufficient to satisfy our material cash requirements over the next 12 months and for the foreseeable future.

However, geopolitical events, inflationary pressure, foreign exchange rate volatility, elevated interest rates and global economic uncertainty have caused material disruptions in both U.S. and international financial markets and economies and are uncertain in duration. The impact of these events has increased, and may continue to increase, our borrowing costs and other costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity. The future impact of these events cannot be predicted with certainty and we cannot assure that we will have access to external financing at times and on terms we consider acceptable, or at all, or that we will not experience other liquidity issues going forward.

Senior Notes

In January 2023, we redeemed the $1.2 billion aggregate principal amount of the floating rate and 2.750% senior notes due 2023. Total cash consideration paid was $1.2 billion, as the redemption price was equal to 100% of the principal amount. In addition, we paid accrued and unpaid interest on the principal amount.

As of September 30, 2023, we had fixed-rate senior notes outstanding for an aggregate principal amount of $7.8 billion, with $750 million payable within 12 months. The net proceeds from the issuances of these senior notes are used for general corporate purposes, including, among other things, capital expenditures, share repurchases, repayment of indebtedness and possible acquisitions.

Commercial Paper

We have a commercial paper program pursuant to which we may issue commercial paper notes in an aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397 days from the date of issue. As of September 30, 2023, there were no commercial paper notes outstanding.

Credit Agreement

In March 2020, we entered into a credit agreement that provides for an unsecured $2 billion five-year credit facility. We may also, subject to the agreement of the applicable lenders, increase commitments under the revolving credit facility by up to $1 billion. Funds borrowed under the credit agreement may be used for working capital, capital expenditures, acquisitions and other general corporate purposes. As of September 30, 2023, no borrowings were outstanding under our $2 billion credit agreement.

Income Taxes

As of September 30, 2023, our assets classified as cash and cash equivalents as well as short-term and long-term non-equity investments included assets held in certain of our foreign operations totaling approximately $2.2 billion. As we repatriate these funds to the U.S., we will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes on those amounts during the period when such repatriation occurs. We have accrued deferred taxes for the tax effect of repatriating the funds to the U.S.

During the first quarter of 2023, the IRS provided tax deadline relief following the California winter storms, as a result of which we have deferred our 2023 quarterly federal cash tax payments until the fourth quarter of 2023.

For additional details related to our income taxes, please see “Income Tax Provision” in our Results of Operations above and “Note 14 — Income Taxes” to the condensed consolidated financial statements included in this report.

Stock Repurchases

Our stock repurchase programs are intended to programmatically offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, to make opportunistic and programmatic repurchases of our common stock to reduce our outstanding share count. Any share repurchases under our stock repurchase programs will be funded from our working capital or other financing alternatives.

We expect to continue making opportunistic and programmatic repurchases of our common stock, subject to market conditions and other uncertainties. However, our stock repurchase programs may be limited or terminated at any time without prior notice. The timing and actual number of shares repurchased will depend on a variety of factors, including corporate and regulatory requirements, price and other market conditions and management’s determination as to the appropriate use of our cash.

During the nine months ended September 30, 2023, we repurchased approximately $1,151 million of our common stock under our stock repurchase programs. As of September 30, 2023, a total of approximately $1.7 billion remained available for future repurchases of our common stock under our stock repurchase programs. See “Note 12 — Stockholders’ Equity” to the condensed consolidated financial statements included in this report for more information about our stock repurchase programs.

Dividends

The Company paid a total of $132 million and $120 million in cash dividends during the three months ended September 30, 2023 and 2022, respectively, and $399 million and $370 million in cash dividends during the nine months ended September 30, 2023 and 2022, respectively. In November 2023, our Board of Directors declared a cash dividend of $0.25 per share of common stock to be paid on December 15, 2023 to stockholders of record as of December 1, 2023.

Other Capital Resource Requirements

We actively monitor all counterparties that hold our cash and cash equivalents and non-equity investments, focusing primarily on the safety of principal and secondarily on improving yield on these assets. We diversify our cash and cash equivalents and investments among various counterparties in order to reduce our exposure should any one of these counterparties fail or encounter difficulties. To date, we have not experienced any material loss or lack of access to our invested cash, cash equivalents or short-term investments; however, we can provide no assurances that access to our invested cash, cash equivalents or short-term investments will not be impacted by adverse conditions in the financial markets, including, without limitation, as a result of the impact of geopolitical events, inflationary pressure, lower consumer spending and foreign exchange rate volatility. At any point in time we have funds in our operating accounts and customer accounts that are deposited and invested with third party financial institutions.

We have entered into various indemnification agreements and, in the ordinary course of business, we have included limited indemnification provisions in certain of our agreements with parties with which we have commercial relations. It is not possible to determine the maximum potential loss under these various indemnification provisions due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses recorded in our consolidated statement of income in connection with our indemnification provisions have not been significant, either individually or collectively. See “Note 11 — Commitments and Contingencies” to the condensed consolidated financial statements included in this report for more information about our indemnification provisions.