On May 16, 2019, the Company closed a private placement by PayPal, Inc. in which it issued and sold 11 million shares of its common stock at a purchase price of $45.00 per share and received aggregate proceeds of $500 million. Additionally, PayPal and the Company agreed to extend their global partnership, including a commitment to jointly explore certain commercial collaborations.

In November 2017, SoftBank Group Corp. ("SoftBank") led a consortium to seek a stake in the Company by directly investing between $1.0 billion to $1.3 billion via purchase of the Company's Series G-1 preferred stock at $48.77 per share and a tender offer to purchase shares of any type or class at $32.97 per share from existing stockholders and employees. The direct investment was contingent on a minimum number of shares to be sold in the tender offer. In January 2018, the transaction closed and the consortium purchased 25.6 million Series G-1 shares from the Company for total proceeds of $1.3 billion and 242.8 million common stock and preferred stock shares from existing stockholders resulting in an ownership interest of approximately 20% of the outstanding equity of the Company (the "SoftBank Investment"). The price of the transaction with existing shareholders was not in excess of fair value, and therefore no compensation expense nor increase in accumulated deficit was recognized.

Contemporaneous with the closing of the transaction, certain governance changes of the Company were enacted. All shares of Class B common stock were converted into Class A common stock, and Series Seed, Series A and Series B preferred stock shares became convertible into Class A common stock.

As of December 31, 2018, there were warrants to purchase 150,071 shares of Series E redeemable convertible preferred stock and 922,655 shares of Series G redeemable convertible preferred stock outstanding. During 2019, the warrant to purchase Series G redeemable convertible preferred stock was exercised in full and the fair value of the warrant was reclassified to redeemable convertible preferred

The following table summarizes the redeemable convertible preferred stock outstanding immediately prior to the conversion into common stock, and the rights and preferences of the Company’s respective series preceding the Company’s IPO in May 2019 (in millions, except share amounts which are reflected in thousands and per share amounts):



Series	Shares Authorized	Shares Issued and Outstanding	Per Share Liquidation Preference		Aggregate Liquidation Preference		Per Share Dividend Per Annum		Per Share Initial Conversion Price		Carrying Value, Net of Issuance Costs
Seed	174,030	152,591	$	0.00906	$	1	$	0.00073	$	0.00906	$	1
A	152,053	150,427	0.09248		14		0.00584		0.07303		11
B	123,646	122,721	0.35448		44		0.02836		0.35448		43
C-1	76,551	76,551	4.45438		341		0.28508		3.56350		273
C-2	31,004	31,004	3.56350		110		0.22806		2.85080		62
C-3	842	842	4.45438		4		0.28508		3.56350		3
D	87,193	82,443	15.51305		1,279		1.24105		15.51305		1,291
E	84,504	84,140	33.31758		2,803		2.66540		33.31758		2,793
F	25,228	21,262	39.63858		843		3.17109		39.63858		842
G	150,188	140,619	48.77223		6,858		3.90178		48.77223		6,858
G-1	35,881	35,881	48.77223		1,750		3.90178		48.77223		1,750
G-2	5,126	5,126	48.77223		250		3.90178		48.77223		250
	946,246	903,607			$	14,297					$	14,177

After conversion of the above mentioned redeemable convertible preferred stock into common stock upon closing of the Company’s IPO, the Company’s board of directors was granted the authority to issue up to 10 million shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. As of December 31, 2019, there was no preferred stock issued and outstanding.

As of December 31, 2019, the Company has authority to issue 5.0 billion shares of common stock with a par value of $0.00001 per share. Holders of common stock are entitled to dividends when and if declared by the Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of December 31, 2019, no dividends have been declared. As of December 31, 2019, there were 1.7 billion shares of common stock issued and outstanding.

The Company has granted restricted common stock to certain continuing employees, primarily in connection with acquisitions. Vesting of this stock may be dependent on a combination of service and performance conditions that become satisfied upon the occurrence of a qualifying event. The Company has the right to repurchase shares for which the vesting conditions are not satisfied.

The following table summarizes the activity related to the Company’s restricted common stock for the year ended December 31, 2019. For purposes of this table, vested restricted common stock represents the shares for which the service condition had been fulfilled as of December 31, 2019 (in thousands, except per share amounts):



	Number of Shares		Weighted-average Grant-Date Fair Value per Share
Unvested restricted common stock as of December 31, 2018	898		$	34.81
Granted	—		$	—
Vested	(621	)	$	34.84
Canceled and forfeited	(66	)	$	34.59
Unvested restricted common stock as of December 31, 2019	211		$	34.73

The Company maintains three equity incentive plans: the 2019 Equity Incentive Plan (“2019 Plan”), the 2013 Equity Incentive Plan (“2013 Plan”) and the 2010 Stock Plan (“2010 Plan” and collectively, “Plans”). The 2013 Plan serves as the successor to the 2010 Plan and provides for the issuance of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), SARs, restricted stock and RSUs to employees, consultants and advisors of the Company.

In January 2019, the Company’s board of directors approved an amendment to the 2013 Plan to increase the number of shares of common stock reserved for issuance by 85 million shares, for a total of 293 million shares reserved.

In March 2019, the Company’s board of directors adopted the 2019 Plan. The 2019 Plan was approved in April 2019 with 130 million shares of common stock reserved for future issuance. The 2019 Plan became effective on May 9, 2019 the date of the underwriting agreement between the Company and the underwriters for the IPO. The 2019 Plan is the successor to the 2013 Plan. The number of shares of the Company’s common stock available for issuance under the 2019 Plan automatically increases on January 1 of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029 by the lesser of (a) 5% of the total number of the shares of common stock outstanding on December 31 of the immediately preceding calendar year, and (b) such number of shares determined by the Company’s board of directors. Pursuant to the automatic increase feature of the 2019 Plan, the Company's board of directors approved an increase of 86 million shares reserved for issuance effective January 1, 2020.

The Company’s 2019 Plan provides for the grant of ISOs, NSOs, SARs, restricted stock awards, RSUs, performance-based awards, and other awards (that are based in whole or in part by reference to the Company’s common stock) (collectively, “awards”). ISOs may be granted only to the Company’s employees, including the Company’s officers, and the employees of any parent or subsidiary. All other awards may be granted to the Company’s employees, including the Company’s officers, the Company’s non-employee directors and consultants, and the employees and consultants of the Company’s affiliates.



	SARs Outstanding Number of SARs		Options Outstanding Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
As of December 31, 2018	758		42,936		$	9.22	5.74	$	1,456
Granted	86		250		$	43.00
Exercised	(417	)	(6,884	)	$	2.85
Canceled and forfeited	(36	)	(1,462	)	$	33.29
Expired	(54	)	(39	)	$	26.49
As of December 31, 2019	337		34,801		$	9.79	4.75	$	746
Vested and expected to vest as of December 31, 2019	203		29,585		$	4.97	4.49	$	745
Exercisable as of December 31, 2019	203		29,585		$	4.97	4.49	$	745

The following table summarizes the activity related to the Company’s RSUs for the year ended December 31, 2019. For purposes of this table, vested RSUs represent the shares for which the service condition had been fulfilled as of December 31, 2019 (in thousands, except per share amounts):



	Number of Shares		Weighted-Average Grant-Date Fair Value per Share
Unvested and outstanding as of December 31, 2018	75,835		$	37.20
Granted	62,830		$	41.55
Vested	(36,034	)	$	37.87
Canceled and forfeited	(17,888	)	$	40.53
Unvested and outstanding as of December 31, 2019	84,743		$	39.82

Stock-based compensation expense is allocated based on the cost center to which the award holder belongs. The following table summarizes total stock-based compensation expense by function for the years ended December 31, 2017, 2018 and 2019 (in millions):



	Year Ended December 31,
	2017		2018		2019
Operations and support	$	30	$	15	$	454
Sales and marketing	9		9		242
Research and development	25		65		2,958
General and administrative	73		83		942
Total	$	137	$	172	$	4,596

Through May 9, 2019, no stock-based compensation expense had been recognized for certain awards with a performance condition based on the occurrence of a qualifying event (such as an IPO), as such qualifying event was not probable. Upon the Company's IPO, the performance condition was met and $3.6 billion of stock-based compensation expense was recognized related to these awards. Shares were then issued related to the vesting of the RSUs with such performance-based vesting conditions. To meet the related tax withholding requirements, the Company withheld 29 million of the 76 million shares of common stock issued. The 29 million shares of common stock withheld for taxes were returned to the shares reserved for future issuance under the Company’s 2019 Plan. Based on the IPO public offering price of $45.00 per share, the tax withholding obligation was $1.3 billion. For additional information related to the Company’s IPO, refer to Note 1 - Description of Business and Summary of Significant Accounting Policies.

During the years ended December 31, 2017, 2018 and 2019, the Company modified the terms of stock-based awards for certain employees upon their termination or change in employment status. The Company recorded incremental stock-based compensation cost in relation to the modification of stock-based awards of $69 million and $56 million for the years ended December 31, 2017 and 2018, respectively. Incremental stock-based compensation cost in relation to the modification of stock-based awards was not material for the year ended December 31, 2019.

As of December 31, 2019, there was $2.1 billion of unamortized compensation costs related to all unvested awards. The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 2.45 years. Stock-based compensation expense capitalized as internally developed software costs was not material for the years ended December 31, 2017 or 2018 and $61 million for the year ended December 31, 2019.

The weighted-average fair values of common stock and redeemable convertible preferred stock warrants granted to non-employee service providers and others in the years ended December 31, 2017 and 2018 were $43.14 and $47.20, respectively, for shares vested or expected to vest. No redeemable convertible preferred stock warrants were granted in 2019. The total grant-date fair value of warrants vested to non-employee service providers and others in the years ended December 31, 2017 and 2018 was $91 million and $4 million, respectively. The fair value of warrants granted during 2017 and 2018 was determined using the Black-Scholes option-pricing model using the weighted-average assumptions in the table below. During 2019, warrants vested were not material and no warrants were granted.

The weighted-average grant-date fair values of stock options and SARs granted to employees in the years ended December 31, 2017, 2018 and 2019 were $18.65, $12.94 and $19.91 per share, respectively. The fair value of stock options and SARs granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions:



	Year Ended December 31,
	2017		2018		2019
Expected term (in years)	8.5		6.0		6.0
Risk-free interest rate	2.0	%	2.8	%	2.2	%
Expected volatility	35.9	%	32.9	%	33.9	%
Expected dividend yield	—	%	—	%	—	%

The weighted-average grant-date fair values of Performance Awards with market-based targets in the years ended December 31, 2017, 2018 and 2019 were $18.96, $14.77 and $18.20 per share, respectively. The weighted-average derived service periods for Performance Awards with market-based targets in the years ended December 31, 2017, 2018 and 2019 were 3.35, 3.31, and 2.12 years, respectively. The fair value of Performance Awards with market-based targets granted was determined using a Monte Carlo model with the following weighted-average assumptions:

The following table represents a summary of common stock repurchased in connection with discrete arrangements with selected current and former employees during the years ended December 31, 2017 and 2018. The common stock shares repurchased for the year ended December 31, 2019 were not material.



	Year Ended December 31,
(In millions, except share amounts which are reflected in thousands, and per share amounts)	2017		2018
Common stock shares repurchased	3,765		286
Common stock repurchase cost	$	142	$	11
Fair value of repurchase recorded as an increase in accumulated deficit	$	32	$	13
Excess of fair value recorded as stock-based compensation	$	13	$	1
Price range per common stock share	$ 5.00 - $ 41.65		$ 36.58 - $ 41.65

In March 2019, the Company’s board of directors adopted the Company’s ESPP, and in April 2019, the Company’s stockholders approved the ESPP. The stock-based compensation expense recognized for the ESPP was not material during the year ended December 31, 2019. The ESPP became effective on May 9, 2019, the date of the underwriting agreement between the Company and the underwriters for the IPO. There are 25 million shares of common stock reserved for issuance under the ESPP. The number of shares of the Company’s common stock available for issuance under the ESPP automatically increases on January 1 of each year, beginning in 2020 and continuing through 2029, by the lesser of (a) 1.0% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, and (b) 25,000,000 shares. However, the Company’s board of directors or compensation committee may reduce the amount of the increase in any particular year.

As of December 31, 2019, 2 million shares of common stock were purchased under the ESPP at a weighted-average price of $23.83 per share, resulting in cash proceeds of $49 million. The Company selected the Black-Scholes option-pricing model as the method for determining the estimated fair value for the Company’s ESPP. As of December 31, 2019, total unrecognized compensation cost related to the ESPP was $43 million, which will be amortized over a period of 0.8 year. As of December 31, 2019, 23 million shares of the Company's common stock were reserved for future grants under the Company’s ESPP.