Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements. We do not use any of our derivative instruments for trading purposes.

We use foreign currency exchange contracts to reduce the volatility of cash flows related to forecasted revenues, expenses, assets and liabilities, including intercompany balances denominated in foreign currencies. These contracts are generally one month to one year in duration, but with maturities up to 24 months. The objective of the foreign exchange contracts is to ensure that ultimately the U.S. dollar-equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. We evaluate the effectiveness of our foreign exchange contracts designated as cash flow or net investment hedges on a quarterly basis.

For derivative instruments that are designated as cash flow hedges, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings in the same period the forecasted hedged transaction affects earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Unrealized gains and losses in AOCI associated with such derivative instruments are immediately reclassified into earnings. As of December 31, 2024, we have estimated that $18 million of net derivative gains related to our foreign exchange cash flow hedges and $8 million net derivative gains related to our interest rate cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. We classify cash flows related to our cash flow hedges as operating activities in our consolidated statement of cash flows.

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets or liabilities, including intercompany balances and equity investments denominated in non-functional currencies. The gains and losses on our derivatives not designated as hedging instruments are recognized in “Interest income and other, net,” which are offset by the foreign currency gains and losses on the related assets and liabilities that are also recognized in “Interest income and other, net.” We classify cash flows related to our non-designated hedging instruments in the same line item as the cash flows of the related assets or liabilities, which is generally within operating activities in our consolidated statement of cash flows. Cash flows related to the settlement of non-designated hedging instruments related to equity investments are classified within investing activities in our consolidated statement of cash flows.

We entered into a warrant agreement in conjunction with a commercial agreement with Adyen that, subject to meeting certain conditions, entitled us to acquire a fixed number of shares up to 5% of Adyen’s fully diluted issued and outstanding share capital at a specific date. The warrant had a term of seven years and vested in a series of four tranches, at a specified price per share (fixed for the first two tranches) upon meeting processing volume milestone targets on a calendar year basis. When a relevant milestone was reached, the warrant became exercisable with respect to the corresponding tranche of warrant shares. The warrant expired on January 31, 2025.

In the fourth quarter of 2024, we met the processing volume milestone required to vest in the second tranche of our warrant to purchase shares of Adyen. Upon vesting, we exercised the option to purchase shares of Adyen valued at $630 million in exchange for $108 million in cash. Cash paid related to the exercise of the second tranche of the warrant was classified as an investing activity in our consolidated statement of cash flows. As of December 31, 2024, the probability of meeting the processing volume milestone targets for remaining two tranches of the Adyen warrant was zero.

The warrant was accounted for as a derivative under ASC Topic 815, Derivatives and Hedging. As of December 31, 2023, the warrant was reported as a component of other current assets on the consolidated balance sheet. Changes in the fair value of the warrant were recognized in “Gain (loss) on equity investments and warrant, net” in our consolidated statement of income. The day-one value attributable to the other side of the warrant, which was recognized as a deferred credit, was reported within “Accrued expenses and other current liabilities” in our consolidated balance sheet and was amortized over the life of the initial commercial arrangement. See “Note 8 — Fair Value Measurements” for information about the fair value measurement of the warrant.


		December 31,
	Balance Sheet Location	2024		2023
Derivative Assets:
Foreign exchange contracts designated as cash flow hedges	Other current assets	$	41	$	10

Foreign exchange contracts not designated as hedging instruments	Other current assets	20		13
Interest rate contracts designated as cash flow hedges	Other current assets	7		—
Warrant	Other current assets	—		364
Foreign exchange contracts designated as cash flow hedges	Other assets	14		9
Other	Other assets	15		—


Total derivative assets		$	97	$	396

Derivative Liabilities:
Foreign exchange contracts designated as cash flow hedges	Other current liabilities	$	—	$	14


Foreign exchange contracts not designated as hedging instruments	Other current liabilities	18		19




Total derivative liabilities		$	18	$	33

Total fair value of derivative instruments		$	79	$	363

Under the master netting agreements with the respective counterparties to our derivative contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis in our consolidated balance sheet. As of December 31, 2024, the potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both assets and liabilities by $17 million, resulting in net derivative assets of $58 million. As of December 31, 2024, there was no potential effect of rights of set-off associated with the interest rate contracts as there were no liability positions.

The following tables present the activity of derivative instruments designated as cash flow hedges as of December 31, 2024 and 2023, and the impact of these derivative contracts on AOCI for the periods indicated (in millions):


	December 31, 2023		Amount of Gain Recognized in Other Comprehensive Income		Less: Amount of Gain (Loss) Reclassified From AOCI to Earnings		December 31, 2024
Foreign exchange contracts designated as cash flow hedges	$	(64)	$	33	$	(56)	$	25
Interest rate contracts designated as cash flow hedges	51		7		8		50
Total	$	(13)	$	40	$	(48)	$	75


	December 31, 2022		Amount of Loss Recognized in Other Comprehensive Income		Less: Amount of Gain Reclassified From AOCI to Earnings		December 31, 2023
Foreign exchange contracts designated as cash flow hedges	$	52	$	(63)	$	53	$	(64)
Interest rate contracts designated as cash flow hedges	62		—		11		51
Total	$	114	$	(63)	$	64	$	(13)


	Year Ended December 31,
	2024		2023		2022
Foreign exchange contracts designated as cash flow hedges recognized in net revenues	$	(54)	$	56	$	140
Foreign exchange contracts designated as cash flow hedges recognized in cost of net revenues	(2)		(3)		(2)

Foreign exchange contracts not designated as hedging instruments recognized in interest income and other, net	22		4		20
Total gain (loss) recognized from foreign exchange derivative contracts in the consolidated statement of income	$	(34)	$	57	$	158


	Year Ended December 31,
	2024		2023		2022

Interest rate contracts designated as cash flow hedges recognized in interest income and other, net	$	8	$	11	$	9
Interest rate contracts designated as fair value hedges recognized in interest income and other, net	2		—		—
Total gain recognized from interest rate derivative contracts in the consolidated statement of income	$	10	$	11	$	9

Derivative transactions are measured in terms of the notional amount, but this amount is not recognized in our consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which the value of foreign exchange payments under these contracts are determined. The following table presents the notional amounts of our outstanding derivatives as of the dates indicated (in millions):


	December 31,
	2024		2023
Foreign exchange contracts designated as cash flow hedges	$	1,329	$	1,699

Foreign exchange contracts not designated as hedging instruments	1,667		2,225

Interest rate contracts designated as cash flow hedges	150		—
Total	$	3,146	$	3,924

Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis.