EXHIBIT 99.1
eBAY INC. ANNOUNCES THIRD QUARTER 2003 FINANCIAL RESULTS
—Company Reports Record Net Revenues of $531 Million, Up 84% Year Over Year—
—Achieves GAAP Diluted EPS of $0.16 and Pro Forma Diluted EPS of $0.18—
—Raises 2003 Guidance and Issues 2004 Guidance—
San Jose, CA, October 16, 2003 – eBay Inc. (Nasdaq: EBAY; www.ebay.com), the world’s online marketplace, reported financial results for its quarter ended September 30, 2003.
eBay reported record consolidated Q3-03 net revenues of $530.9 million, up 84% year over year; record operating income of $155.9 million, up 73% year over year; and record pro forma operating income of $172.2 million, up 87% year over year. Operating income was 29% of net revenues and pro forma operating income was 32% of net revenues.
Consolidated net income in Q3-03 was $103.3 million, or $0.16 per diluted share. eBay’s pro forma consolidated net income, excluding certain items, was a record $118.3 million, or $0.18 per diluted share.
These results exceeded the company’s guidance of $515 million for net revenues, $0.14 for GAAP earnings per diluted share and $0.17 for pro forma earnings per diluted share. Adjusting for the company’s 2-for-1 stock split effected during the quarter, pro forma earnings per diluted share would be $0.36, $0.02 above the company’s Q3-03 guidance of $0.34.
“Q3 was another very strong quarter for eBay and its community,” said Meg Whitman, President and CEO of eBay. “With record levels of registered users, listings, and gross merchandise sales, along with a strong performance by PayPal, eBay’s business continues to gain momentum going into the holiday season.”
Key Financial and Operating Metrics
Consolidated Net Revenues - Consolidated net revenues totaled a record $530.9 million, which represented an increase of 84% from the $288.8 million reported in Q3-02.
Transaction Revenues - Consolidated net transaction revenues totaled a record $517.1 million, which represented an increase of 96% from the $263.6 million reported in Q3-02.
| • | eBay U.S. Net Transaction Revenues – eBay U.S. net transaction revenues totaled $256.1 million in Q3-03, reflecting 41% year-over-year growth. | ||
| • | eBay International Net Transaction Revenues – eBay International net transaction revenues totaled $154.7 million in Q3-03, representing 105% year-over-year growth. |
– 1 –
eBay Announces Q3-03 Earnings (cont.)
| • | Payments Net Transaction Revenues – Payments net transaction revenues totaled $106.4 million in Q3-03. |
Confirmed Registered Users – Cumulative confirmed registered users at the end of Q3-03 totaled a record 85.5 million, reflecting the first-time inclusion of 3.2 million users from EachNet, which eBay acquired in July 2003. This was an increase of 10.2 million users sequentially and a 56% increase over the 54.9 million users reported at the end of Q3-02.
Active Users – Active users, the number of users on the eBay platform who bid, bought or listed over the trailing 12 months, increased to 37.4 million, a 55% increase over the 24.2 million active users reported in the same period a year ago.
Listings – Listings totaled a record 235 million in Q3-03, 47% higher than the 160 million listings reported in Q3-02.
Gross Merchandise Sales (GMS) – GMS, the total value of items sold, was a record $5.8 billion, representing a 53% year-over-year increase from the $3.8 billion reported in Q3-02.
Total Payment Volume (TPV) – TPV, the total payment volume in the company’s Payments business, was $3.0 billion in Q3-03, up from the $2.8 billion reported in Q2-03.
Gross Profit – Gross profit was a record $421.6 million, or 79% of net revenues, which was down from the 84% level reported in Q3-02, primarily reflecting the lower structural gross margin of the PayPal business and increased investments in technology and customer support.
Operating Income – Operating income was a record $155.9 million, or 29% of net revenues, a 73% increase over the $90.1 million reported in Q3-02. Pro forma operating income increased 87% year-over-year to a record $172.2 million, or 32% of net revenues, consistent with the reported 32% in Q3-02 despite the addition of the PayPal business.
GAAP Net Income – GAAP net income increased 69% year over year to $103.3 million, or $0.16 per diluted share.
Pro Forma Net Income – Pro forma net income increased 89% year over year to a record $118.3 million, or $0.18 per diluted share.
Operating and Free Cash Flows – Operating cash flows totaled $208.0 million, an 86% increase from the $111.9 million reported in Q3-02. Free cash flows, which are operating cash flows less capital expenditures, totaled a record $168.4 million, an 84% increase from $91.7 million reported in Q3-02.
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eBay Announces Q3-03 Earnings (cont.)
Key Category Performance – Based on Q3-03 GMS, eBay has nine categories that deliver $1 billion or more in worldwide annualized GMS: eBay Motors at $6.7 billion; Computers at $2.1 billion; Consumer Electronics at $1.9 billion; Books/Movies/Music at $1.7 billion; Sports at $1.5 billion; Clothing and Accessories at $1.3 billion; Collectibles at $1.1 billion; Home & Garden at $1.1 billion; and Toys at $1.0 billion.
Fixed Price Trading – eBay’s fixed price trading contributed approximately $1.6 billion or 28% of total GMS during Q3-03, primarily from eBay’s “Buy It Now” feature.
eBay Stores – eBay hosts approximately 145,000 stores worldwide.
Consolidated Financial and Operating Summary
eBay reported record consolidated net revenues of $530.9 million in Q3-03, representing an 84% year-over-year increase. Excluding PayPal, eBay’s Q3-03 net revenues totaled $422.6 million, representing a 46% year-over-year increase. PayPal’s Q3-03 net revenues totaled $108.4 million, representing an 83% year-over-year increase compared to the $59.3 million PayPal reported in Q3-02. On a year-over-year basis, consolidated net revenues reflected a foreign exchange benefit in Q3-03 of approximately $15 million.
Gross profit as a percentage of net revenues was 79%, which was below the 84% level reported in Q3-02. The year-over-year decline in the gross profit percentage primarily reflects the lower structural gross margin of the PayPal business and increased investment in technology and customer support.
Sales and marketing expenses totaled $136.4 million, or 26% of net revenues, down from the 30% reported in Q3-02. The year-over-year decline as a percentage of net revenues primarily reflects the addition of the PayPal business.
Product development expenses totaled $39.7 million, or approximately 7% of net revenues, down from the 8% of net revenues reported in both Q2-03 and Q3-02. Total product development expenses in Q3-03 do not include $11.4 million of required cost capitalization for major site and other product development efforts.
General and administrative costs totaled $74.2 million, or about 14% of net revenues, consistent with the 14% of net revenues reported in Q3-02. Included in Q3-03 general and administrative costs were PayPal’s transaction losses, which represented approximately 0.22% of PayPal’s total payment volume. The incremental general and administration costs primarily reflect an increase in headcount, legal costs, and insurance.
Income from operations totaled a record $155.9 million during Q3-03, a 73% increase over the $90.1 million reported in Q3-02. On a pro forma basis, income from operations totaled a record $172.2 million, an 87% increase over the $92.2 reported in Q3-02.
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eBay Announces Q3-03 Earnings (cont.)
Net interest and other income totaled $5.5 million in Q3-03, down from the $10.9 million reported in Q2-03. On a pro forma basis, net interest and other income decreased to $5.5 million in Q3-03 from $9.9 million in Q2-03. These decreases were primarily the result of interest-only payments of $1.9 million related to the San Jose facilities, which were recorded as a lease-related operating expense in prior periods and eBay’s share of acquisition costs incurred by EachNet.
The GAAP and pro forma effective tax rates for Q3-03 were 32.0% and 32.8% respectively, a decrease from the 36% GAAP and pro forma effective tax rate in Q3-02. The lower rate reflects an increased profit contribution from the company’s international operations.
eBay’s balance sheet remains strong. At the end of Q3-03, the company had $2.6 billion in aggregate cash and investments and more than $5.5 billion in total assets.
The company reported $208.0 million in operating cash flows, 86% higher than the $111.9 million reported in Q3-02, primarily reflecting increased profitability.
Capital expenditures totaled $39.6 million in Q3-03, 96% higher than the $20.2 million reported in Q3-02. Free cash flows, which are operating cash flows less capital expenditures, were a record $168.4 million in Q3-03, 84% higher than $91.7 million reported in Q3-02.
Business Outlook
Fiscal Year 2003
Net Revenues – The company now expects that consolidated net revenues could be as high as $590 million for Q4-03, $15 million higher than the company’s most recent guidance. Full year 2003 net revenues could be as high as $2.1 billion. This higher net revenue outlook derives from the strength of eBay’s US, International and Payments businesses. eBay’s guidance is based on an assumed Q4-03 quarterly weighted average exchange rate of US$1.14 per Euro.
GAAP Diluted EPS – eBay now estimates GAAP earnings per diluted share could be $0.19 in Q4-03. eBay estimates that earnings per diluted share for the full year 2003 could be as high as $0.65, $0.02 higher than the company’s most recent guidance.
Pro Forma Diluted EPS – eBay now estimates pro forma earnings per diluted share to be $0.21 in Q4-03. eBay estimates that pro forma earnings per diluted share for the full year 2003 could be as high as $0.72, $0.01 higher than the company’s most recent guidance. eBay now believes that amortization of intangible assets, stock-based compensation expenses and other pro forma items, primarily related to the company’s acquisitions, will be approximately $12 million, net of tax, during Q4-03.
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eBay Announces Q3-03 Earnings (cont.)
Fiscal Year 2004
Net Revenues – The company expects that net revenues for 2004 could be as high as $2.9 billion. On a quarterly basis, eBay expects consolidated net revenues to be approximately $675 million in Q1-04, $695 million in Q2-04, $710 million in Q3-04 and $820 million in Q4-04. eBay’s guidance is based on an assumed 2004 quarterly weighted average exchange rate of US$1.14 per Euro.
GAAP Diluted EPS – eBay estimates that earnings per diluted share for the full year 2004 could be as high as $0.91. From a quarterly perspective, eBay estimates GAAP earnings per diluted share could be as high as $0.22 in Q1-04, $0.21 in Q2-04, $0.22 in Q3-04 and $0.26 in Q4-04.
Pro Forma Diluted EPS – eBay estimates that pro forma earnings per diluted share for the full year 2004 could be as high as $0.98. From a quarterly perspective, eBay estimates pro forma earnings per diluted share could be as high as $0.24 in Q1-04, $0.23 in Q2-04, $0.23 in Q3-04 and $0.28 in Q4-04.
Effective Tax Rate – eBay’s current estimate for its 2004 effective tax rate is 30% on a GAAP basis and 31% on a pro forma basis. This compares to an expected GAAP and pro forma effective tax rate of approximately 32% in 2003. This lower effective tax rate estimate reflects anticipated increased profit contribution from the company’s international operations.
Non-GAAP Measures
To supplement the company’s consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of certain components of financial performance, including gross profit, operating income, net income, earnings per share, cash flows, and effective tax rate, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance and the company’s prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. In addition, because eBay has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company’s financial reporting. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. Consistent with the company’s historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
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eBay Announces Q3-03 Earnings (cont.)
About eBay
eBay is The World’s Online Marketplace™. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an ever-growing online community.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries. Those statements involve risks and uncertainties, and the company’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to: the company’s need to manage an increasingly large company with a broad range of businesses; the company’s ability to deal with the increasingly competitive environment for online trading, including competition for the company’s sellers from other trading sites and other means of selling, and competition for the company’s buyers from other merchants, online and offline; the litigation, regulatory, credit card association, and other risks specific to PayPal; the company’s need to manage other regulatory, tax, and litigation risks even as the company’s product offerings expand and the company’s services are offered in more jurisdictions, including, most recently, China; the company’s ability to upgrade and develop the company’s systems, infrastructure and customer service capabilities to accommodate growth at a reasonable cost; the company’s ability to maintain site stability on all of the company’s sites; the company’s ability to continue to expand the company’s model to new types of merchandise and sellers; the company’s ability to continue to expand outside of the US; fluctuations in foreign exchange rates; and the costs and benefits of announced and prospective acquisitions and other commercial transactions.
More information about factors that could affect the company’s operating results is included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations site at http://investor.ebay.com. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof. eBay assumes no obligation to update such statements.
###
| Investor Relations Contacts: | David Joseph 408-376-7057 | |
| Tracey Ford 408-376-7205 | ||
| Media Relations Contact: | Chris Donlay 408-376-7458 | |
| Investor Information Request: | 408-376-7493 | |
| Company News: | http://www.businesswire.com | |
| Investor Relations Website: | http://investor.ebay.com |
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eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)
| December 31, | September 30, | ||||||||||
| 2002 | 2003 | ||||||||||
ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,109,313 | $ | 1,583,875 | |||||||
| Short-term investments | 89,690 | 163,765 | |||||||||
| Accounts receivable, net | 131,453 | 169,050 | |||||||||
| Funds receivable | 41,014 | 84,659 | |||||||||
| Other current assets | 96,988 | 109,657 | |||||||||
| Total current assets | 1,468,458 | 2,111,006 | |||||||||
| Long-term investments | 470,227 | 730,155 | |||||||||
| Restricted cash and investments | 134,644 | 127,083 | |||||||||
| Property and equipment, net | 218,028 | 534,624 | |||||||||
| Goodwill | 1,456,024 | 1,643,120 | |||||||||
| Intangible assets, net | 279,465 | 271,578 | |||||||||
| Deferred tax assets | 84,218 | 63,547 | |||||||||
| Other assets | 13,380 | 19,581 | |||||||||
| $ | 4,124,444 | $ | 5,500,694 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 47,424 | $ | 54,584 | |||||||
| Funds payable and amounts due to customers | 50,396 | 110,071 | |||||||||
| Accrued expenses and other current liabilities | 199,323 | 335,987 | |||||||||
| Deferred revenue and customer advances | 18,846 | 25,246 | |||||||||
| Short-term debt | 2,970 | 3,586 | |||||||||
| Income taxes payable | 67,265 | 78,352 | |||||||||
| Total current liabilities | 386,224 | 607,826 | |||||||||
| Long-term debt | 13,798 | 11,456 | |||||||||
| Long-term lease liability | — | 122,498 | |||||||||
| Deferred tax liabilities | 111,843 | 101,169 | |||||||||
| Other liabilities | 22,874 | 15,862 | |||||||||
| Minority interests | 33,232 | 49,526 | |||||||||
| Total liabilities | 567,971 | 908,337 | |||||||||
| Total stockholders’ equity | 3,556,473 | 4,592,357 | |||||||||
| $ | 4,124,444 | $ | 5,500,694 | ||||||||
– 7 –
eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2002 | 2003 | 2002 | 2003 | |||||||||||||||
| Net revenues | $ | 288,779 | $ | 530,942 | $ | 800,172 | $ | 1,516,703 | ||||||||||
| Cost of net revenues | 45,374 | 109,353 | 131,212 | 300,601 | ||||||||||||||
| Gross profit | 243,405 | 421,589 | 668,960 | 1,216,102 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Sales and marketing | 88,008 | 136,408 | 240,916 | 394,784 | ||||||||||||||
| Product development | 24,163 | 39,737 | 72,816 | 112,888 | ||||||||||||||
| General and administrative | 39,352 | 74,238 | 108,441 | 206,714 | ||||||||||||||
| Patent litigation expense | — | — | — | 29,965 | ||||||||||||||
| Payroll tax on employee stock options | 526 | 1,510 | 2,636 | 7,984 | ||||||||||||||
| Amortization of acquired intangible assets | 1,239 | 13,824 | 3,877 | 37,668 | ||||||||||||||
| Total operating expenses | 153,288 | 265,717 | 428,686 | 790,003 | ||||||||||||||
| Income from operations | 90,117 | 155,872 | 240,274 | 426,099 | ||||||||||||||
| Interest and other income (expense), net | 8,729 | 7,806 | 25,117 | 26,419 | ||||||||||||||
| Interest expense | (50 | ) | (2,267 | ) | (1,433 | ) | (2,335 | ) | ||||||||||
| Impairment of certain equity investments | (2,600 | ) | — | (3,781 | ) | (230 | ) | |||||||||||
| Income before cumulative effect of accounting change, income taxes and minority interests | 96,196 | 161,411 | 260,177 | 449,953 | ||||||||||||||
| Provision for income taxes | (34,314 | ) | (51,137 | ) | (97,011 | ) | (139,698 | ) | ||||||||||
| Minority interests | (879 | ) | (1,611 | ) | (271 | ) | (5,533 | ) | ||||||||||
| Net income before cumulative effect of accounting change | 61,003 | 108,663 | 162,895 | 304,722 | ||||||||||||||
| Cumulative effect of accounting change, net of tax | — | (5,413 | ) | — | (5,413 | ) | ||||||||||||
| Net income | $ | 61,003 | $ | 103,250 | $ | 162,895 | $ | 299,309 | ||||||||||
| Net income per basic share: | ||||||||||||||||||
| Net income before cumulative effect of accounting change | $ | 0.11 | $ | 0.17 | $ | 0.29 | $ | 0.48 | ||||||||||
| Cumulative effect of accounting change | — | (0.01 | ) | — | (0.01 | ) | ||||||||||||
| Net income per basic share | $ | 0.11 | $ | 0.16 | $ | 0.29 | $ | 0.47 | ||||||||||
| Net income per diluted share: | ||||||||||||||||||
| Net income before cumulative effect of accounting change | $ | 0.11 | $ | 0.17 | $ | 0.29 | $ | 0.47 | ||||||||||
| Cumulative effect of accounting change | — | (0.01 | ) | — | (0.01 | ) | ||||||||||||
| Net income per diluted share | $ | 0.11 | $ | 0.16 | $ | 0.29 | $ | 0.46 | ||||||||||
| Weighted average shares: | ||||||||||||||||||
| Basic | 564,534 | 642,729 | 560,896 | 635,484 | ||||||||||||||
| Diluted | 573,182 | 662,231 | 571,274 | 653,325 | ||||||||||||||
– 8 –
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||
| September 30, 2002 | September 30, 2003 | |||||||||||||||||||||||||||||||||
| Reported | Pro Forma Entries | Pro Forma | Reported | Pro Forma Entries | Pro Forma | |||||||||||||||||||||||||||||
| Net revenues | $ | 288,779 | $ | — | $ | 288,779 | $ | 530,942 | $ | — | $ | 530,942 | ||||||||||||||||||||||
| Cost of net revenues | 45,374 | (3 | ) | (a | ) | 45,371 | 109,353 | (48 | ) | (a | ) | 109,305 | ||||||||||||||||||||||
| Gross profit | 243,405 | 3 | 243,408 | 421,589 | 48 | 421,637 | ||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||
| Sales and marketing | 88,008 | (12 | ) | (a | ) | 87,996 | 136,408 | (169 | ) | (a | ) | 136,239 | ||||||||||||||||||||||
| Product development | 24,163 | (74 | ) | (a | ) | 24,089 | 39,737 | (220 | ) | (a | ) | 39,517 | ||||||||||||||||||||||
| General and administrative | 39,352 | (240 | ) | (a | ) | 39,112 | 74,238 | (524 | ) | (a | ) | 73,714 | ||||||||||||||||||||||
| Patent litigation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Payroll tax on employee stock options | 526 | (526 | ) | (b | ) | — | 1,510 | (1,510 | ) | (b | ) | — | ||||||||||||||||||||||
| Amortization of acquired intangible assets | 1,239 | (1,239 | ) | (c | ) | — | 13,824 | (13,824 | ) | (c | ) | — | ||||||||||||||||||||||
| Total operating expenses | 153,288 | (2,091 | ) | 151,197 | 265,717 | (16,247 | ) | 249,470 | ||||||||||||||||||||||||||
| Income from operations | 90,117 | 2,094 | 92,211 | 155,872 | 16,295 | 172,167 | ||||||||||||||||||||||||||||
| Interest and other income (expense), net | 8,729 | (2,201 | ) | (d | ) | 6,528 | 7,806 | — | 7,806 | |||||||||||||||||||||||||
| Interest expense | (50 | ) | — | (50 | ) | (2,267 | ) | — | (2,267 | ) | ||||||||||||||||||||||||
| Impairment of certain equity investments | (2,600 | ) | 2,600 | (e | ) | — | — | — | — | |||||||||||||||||||||||||
| Income before cumulative effect of accounting change, income taxes and minority interests | 96,196 | 2,493 | 98,689 | 161,411 | 16,295 | 177,706 | ||||||||||||||||||||||||||||
| Provision for income taxes | (34,314 | ) | (779 | ) | (f | ) | (35,093 | ) | (51,137 | ) | (6,629 | ) | (f | ) | (57,766 | ) | ||||||||||||||||||
| Minority interests | (879 | ) | — | (879 | ) | (1,611 | ) | — | (1,611 | ) | ||||||||||||||||||||||||
| Net income before cumulative effect of accounting change | 61,003 | 1,714 | 62,717 | 108,663 | 9,666 | 118,329 | ||||||||||||||||||||||||||||
| Cumulative effect of accounting change, net of tax | — | — | — | (5,413 | ) | 5,413 | (g | ) | — | |||||||||||||||||||||||||
| Net income | $ | 61,003 | $ | 1,714 | $ | 62,717 | $ | 103,250 | $ | 15,079 | $ | 118,329 | ||||||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||||||||||
| Basic | $ | 0.11 | $ | 0.11 | $ | 0.16 | $ | 0.18 | ||||||||||||||||||||||||||
| Diluted | $ | 0.11 | $ | 0.11 | $ | 0.16 | $ | 0.18 | ||||||||||||||||||||||||||
| Weighted average shares: | ||||||||||||||||||||||||||||||||||
| Basic | 564,534 | 564,534 | 642,729 | 642,729 | ||||||||||||||||||||||||||||||
| Diluted | 573,182 | 573,182 | 662,231 | 662,231 | ||||||||||||||||||||||||||||||
| Operating margin | 31 | % | 1 | % | 32 | % | 29 | % | 3 | % | 32 | % | ||||||||||||||||||||||
Notes:
| (a) | Non-cash stock-based compensation expense | |
| (b) | Employer payroll taxes on employee non-qualified stock option gains | |
| (c) | Amortization of acquired intangible assets | |
| (d) | Gain on sale of certain real estate properties and recovery of fully reserved receivables | |
| (e) | Impairment of certain equity investments | |
| (f) | Income taxes associated with certain pro forma entries | |
| (g) | Cumulative effect of accounting changes, net of tax |
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eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, 2002 | September 30, 2003 | |||||||||||||||||||||||||||||||||
| Pro Forma | Pro Forma | |||||||||||||||||||||||||||||||||
| Reported | Entries | Pro Forma | Reported | Entries | Pro Forma | |||||||||||||||||||||||||||||
| Net revenues | $ | 800,172 | $ | — | $ | 800,172 | $ | 1,516,703 | $ | — | $ | 1,516,703 | ||||||||||||||||||||||
| Cost of net revenues | 131,212 | 267 | (a | ) | 131,479 | 300,601 | (196 | ) | (a | ) | 300,405 | |||||||||||||||||||||||
| Gross profit | 668,960 | (267 | ) | 668,693 | 1,216,102 | 196 | 1,216,298 | |||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||
| Sales and marketing | 240,916 | 55 | (a | ) | 240,971 | 394,784 | (867 | ) | (a | ) | 393,917 | |||||||||||||||||||||||
| Product development | 72,816 | (103 | ) | (a | ) | 72,713 | 112,888 | (1,095 | ) | (a | ) | 111,793 | ||||||||||||||||||||||
| General and administrative | 108,441 | (682 | ) | (a | ) | 107,759 | 206,714 | (2,574 | ) | (a | ) | 204,140 | ||||||||||||||||||||||
| Patent litigation expense | — | — | — | 29,965 | — | 29,965 | ||||||||||||||||||||||||||||
| Payroll tax on employee stock options | 2,636 | (2,636 | ) | (b | ) | — | 7,984 | (7,984 | ) | (b | ) | — | ||||||||||||||||||||||
| Amortization of acquired intangible assets | 3,877 | (3,877 | ) | (c | ) | — | 37,668 | (37,668 | ) | (c | ) | — | ||||||||||||||||||||||
| Total operating expenses | 428,686 | (7,243 | ) | 421,443 | 790,003 | (50,188 | ) | 739,815 | ||||||||||||||||||||||||||
| Income from operations | 240,274 | 6,976 | 247,250 | 426,099 | 50,384 | 476,483 | ||||||||||||||||||||||||||||
| Interest and other income (expense), net | 25,117 | (3,785 | ) | (d | ) | 21,332 | 26,419 | (979 | ) | (d | ) | 25,440 | ||||||||||||||||||||||
| Interest expense | (1,433 | ) | — | (1,433 | ) | (2,335 | ) | — | (2,335 | ) | ||||||||||||||||||||||||
| Impairment of certain equity investments | (3,781 | ) | 3,781 | (e | ) | — | (230 | ) | 230 | (e | ) | — | ||||||||||||||||||||||
| Income before cumulative effect of accounting change, income taxes and minority interests | 260,177 | 6,972 | 267,149 | 449,953 | 49,635 | 499,588 | ||||||||||||||||||||||||||||
| Provision for income taxes | (97,011 | ) | (2,053 | ) | (f | ) | (99,064 | ) | (139,698 | ) | (16,759 | ) | (f | ) | (156,457 | ) | ||||||||||||||||||
| Minority interests | (271 | ) | (590 | ) | (g | ) | (861 | ) | (5,533 | ) | — | (5,533 | ) | |||||||||||||||||||||
| Net income before cumulative effect of accounting change | 162,895 | 4,329 | 167,224 | 304,722 | 32,876 | 337,598 | ||||||||||||||||||||||||||||
| Cumulative effect of accounting change, net of tax | — | — | — | (5,413 | ) | 5,413 | (h | ) | — | |||||||||||||||||||||||||
| Net income | $ | 162,895 | $ | 4,329 | $ | 167,224 | $ | 299,309 | $ | 38,289 | $ | 337,598 | ||||||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||||||||||
| Basic | $ | 0.29 | $ | 0.30 | $ | 0.47 | $ | 0.53 | ||||||||||||||||||||||||||
| Diluted | $ | 0.29 | $ | 0.29 | $ | 0.46 | $ | 0.52 | ||||||||||||||||||||||||||
| Weighted average shares: | ||||||||||||||||||||||||||||||||||
| Basic | 560,896 | 560,896 | 635,484 | 635,484 | ||||||||||||||||||||||||||||||
| Diluted | 571,274 | 571,274 | 653,324 | 653,324 | ||||||||||||||||||||||||||||||
| Operating margin | 30 | % | 1 | % | 31 | % | 28 | % | 3 | % | 31 | % | ||||||||||||||||||||||
Notes:
| (a) | Non-cash stock-based compensation expense | |
| (b) | Employer payroll taxes on employee non-qualified stock option gains | |
| (c) | Amortization of acquired intangible assets | |
| (d) | Gain on sale of certain real estate properties and recovery of fully reserved receivables | |
| (e) | Impairment of certain equity investments | |
| (f) | Income taxes associated with certain pro forma entries | |
| (g) | Minority shareholders’ portion of impairment of certain equity investments | |
| (h) | Cumulative effect of accounting change, net of tax |
– 10 –
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)
(U.S. Dollars In Thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2002 | 2003 | 2002 | 2003 | ||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||
| Net income | $ | 61,003 | $ | 103,250 | $ | 162,895 | $ | 299,309 | |||||||||||
| Adjustments: | |||||||||||||||||||
| Cumulative effect of accounting change | — | 5,413 | — | 5,413 | |||||||||||||||
| Provision for doubtful accounts and authorized credits | 6,696 | 12,331 | 18,917 | 31,964 | |||||||||||||||
| Provision for transaction losses | — | 6,818 | — | 24,891 | |||||||||||||||
| Depreciation and amortization | 17,172 | 43,358 | 48,560 | 113,885 | |||||||||||||||
| Stock-based compensation | 590 | 961 | 727 | 4,732 | |||||||||||||||
| Tax benefit on the exercise of employee stock options | 34,164 | 42,710 | 96,586 | 105,647 | |||||||||||||||
| Impairment of certain equity investments | 2,600 | — | 3,781 | 230 | |||||||||||||||
| Minority interests and other | (660 | ) | (175 | ) | (4,572 | ) | 3,982 | ||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||
| Accounts receivable | (19,798 | ) | (15,574 | ) | (54,021 | ) | (70,650 | ) | |||||||||||
| Funds receivable | — | (1,596 | ) | — | (43,645 | ) | |||||||||||||
| Other current assets | 5,675 | (12,176 | ) | (6,936 | ) | (9,298 | ) | ||||||||||||
| Other non-current assets | (2,039 | ) | (1,821 | ) | (4,062 | ) | (6,424 | ) | |||||||||||
| Deferred tax assets, net | 4,271 | 13,457 | 3,418 | 12,598 | |||||||||||||||
| Accounts payable | (549 | ) | (10,680 | ) | 1,960 | 6,553 | |||||||||||||
| Due to customers and funds payable | — | 9,878 | — | 59,674 | |||||||||||||||
| Accrued expenses and other liabilities | 14,057 | 18,383 | 32,153 | 49,724 | |||||||||||||||
| Deferred revenue and customer advances | (5,646 | ) | 3,631 | 653 | 6,238 | ||||||||||||||
| Income taxes payable | (5,608 | ) | (10,155 | ) | (3,018 | ) | 11,878 | ||||||||||||
| Net cash provided by operating activities | 111,928 | 208,013 | 297,041 | 606,701 | |||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Purchases of property and equipment | (20,202 | ) | (39,629 | ) | (94,420 | ) | (269,616 | ) | |||||||||||
| Purchases of investments | (269,687 | ) | (618,503 | ) | (578,082 | ) | (1,481,047 | ) | |||||||||||
| Maturities and sales of investments | 269,509 | 642,624 | 536,467 | 1,131,998 | |||||||||||||||
| Proceeds from sale of subsidiary and property and equipment | 6,646 | — | 9,529 | — | |||||||||||||||
| Acquisitions, net of cash acquired | — | (102,772 | ) | (54,610 | ) | (107,161 | ) | ||||||||||||
| Net cash provided by (used in) investing activities | (13,734 | ) | (118,280 | ) | (181,116 | ) | (725,826 | ) | |||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from issuance of common stock, net | 35,682 | 97,216 | 104,126 | 570,189 | |||||||||||||||
| Principal payments on long-term debt | (386 | ) | (929 | ) | (3,793 | ) | (1,727 | ) | |||||||||||
| Net cash provided by financing activities | 35,296 | 96,287 | 100,333 | 568,462 | |||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (1,734 | ) | 6,298 | 8,396 | 25,225 | ||||||||||||||
| Net increase in cash and cash equivalents | 131,756 | 192,318 | 224,654 | 474,562 | |||||||||||||||
| Cash and cash equivalents at beginning of period | 616,867 | 1,391,557 | 523,969 | 1,109,313 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 748,623 | $ | 1,583,875 | $ | 748,623 | $ | 1,583,875 | |||||||||||
| Net cash provided by operating activities | $ | 111,928 | $ | 208,013 | $ | 297,041 | $ | 606,701 | |||||||||||
| Less: Purchases of property and equipment | (20,202 | ) | (39,629 | ) | (94,420 | ) | (269,616 | ) | |||||||||||
| Free cash flow | $ | 91,726 | $ | 168,384 | $ | 202,621 | $ | 337,085 | |||||||||||
– 11 –
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
(U.S. Dollars In Thousands, Except Percentages)
| Three Months Ended | ||||||||||||||||||||||
| September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||||
| Net Revenues by Type | 2002 | 2002 | 2003 | 2003 | 2003 | |||||||||||||||||
Transaction | ||||||||||||||||||||||
| U.S | $ | 182,209 | $ | 211,388 | $ | 234,876 | $ | 242,385 | $ | 256,076 | ||||||||||||
Current quarter vs prior quarter | 9 | % | 16 | % | 11 | % | 3 | % | 6 | % | ||||||||||||
Current quarter vs prior year quarter | 53 | % | 58 | % | 49 | % | 45 | % | 41 | % | ||||||||||||
| International | 75,296 | 107,366 | 137,504 | 155,155 | 154,715 | |||||||||||||||||
Current quarter vs prior quarter | 19 | % | 43 | % | 28 | % | 13 | % | (0 | %) | ||||||||||||
Current quarter vs prior year quarter | 163 | % | 173 | % | 166 | % | 146 | % | 105 | % | ||||||||||||
| Payments | 6,094 | 77,703 | 93,179 | 99,363 | 106,350 | |||||||||||||||||
Current quarter vs prior quarter | 29 | % | 1175 | % | 20 | % | 7 | % | 7 | % | ||||||||||||
Current quarter vs prior year quarter | 26 | % | 1281 | % | 1847 | % | 2006 | % | 1645 | % | ||||||||||||
| Total transaction | 263,599 | 396,457 | 465,559 | 496,903 | 517,141 | |||||||||||||||||
Current quarter vs prior quarter | 12 | % | 50 | % | 17 | % | 7 | % | 4 | % | ||||||||||||
Current quarter vs prior year quarter | 73 | % | 122 | % | 118 | % | 111 | % | 96 | % | ||||||||||||
3rd party advertising | ||||||||||||||||||||||
| U.S | 14,148 | 7,062 | 5,492 | 6,848 | 8,291 | |||||||||||||||||
Current quarter vs prior quarter | (9 | %) | (50 | %) | (22 | %) | 25 | % | 21 | % | ||||||||||||
Current quarter vs prior year quarter | (40 | %) | (74 | %) | (70 | %) | (56 | %) | (41 | %) | ||||||||||||
| International | 898 | 1,716 | 1,313 | 1,432 | 1,760 | |||||||||||||||||
Current quarter vs prior quarter | (26 | %) | 91 | % | (23 | %) | 9 | % | 23 | % | ||||||||||||
Current quarter vs prior year quarter | (42 | %) | 110 | % | 59 | % | 18 | % | 96 | % | ||||||||||||
| Payments | — | 1,478 | 2,027 | 2,160 | 2,029 | |||||||||||||||||
Current quarter vs prior quarter | N/A | N/A | 37 | % | 7 | % | (6 | %) | ||||||||||||||
Current quarter vs prior year quarter | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
| Total 3rd party advertising | 15,046 | 10,256 | 8,832 | 10,440 | 12,080 | |||||||||||||||||
Current quarter vs prior quarter | (10 | %) | (32 | %) | (14 | %) | 18 | % | 16 | % | ||||||||||||
Current quarter vs prior year quarter | (40 | %) | (64 | %) | (54 | %) | (37 | %) | (20 | %) | ||||||||||||
End-to-end services | ||||||||||||||||||||||
| U.S | 6,096 | 5,591 | 2,101 | 1,926 | 1,721 | |||||||||||||||||
Current quarter vs prior quarter | 20 | % | (8 | %) | (62 | %) | (8 | %) | (11 | %) | ||||||||||||
Current quarter vs prior year quarter | (22 | %) | 27 | % | (57 | %) | (62 | %) | (72 | %) | ||||||||||||
| Payments | — | 587 | — | — | — | |||||||||||||||||
Current quarter vs prior quarter | N/A | N/A | (100 | %) | N/A | N/A | ||||||||||||||||
Current quarter vs prior year quarter | (100 | %) | 607 | % | N/A | N/A | N/A | |||||||||||||||
| Total end-to-end services | 6,096 | 6,178 | 2,101 | 1,926 | 1,721 | |||||||||||||||||
Current quarter vs prior quarter | 20 | % | 1 | % | (66 | %) | (8 | %) | (11 | %) | ||||||||||||
Current quarter vs prior year quarter | (25 | %) | 38 | % | (57 | %) | (62 | %) | (72 | %) | ||||||||||||
Offline net revenues | 4,038 | 1,037 | — | — | — | |||||||||||||||||
Current quarter vs prior quarter | (56 | %) | (74 | %) | (100 | %) | 0 | % | 0 | % | ||||||||||||
Current quarter vs prior year quarter | (55 | %) | (87 | %) | (100 | %) | (100 | %) | (100 | %) | ||||||||||||
Total net revenues | $ | 288,779 | $ | 413,928 | $ | 476,492 | $ | 509,269 | $ | 530,942 | ||||||||||||
Current quarter vs prior quarter | 8 | % | 43 | % | 15 | % | 7 | % | 4 | % | ||||||||||||
Current quarter vs prior year quarter | 49 | % | 89 | % | 94 | % | 91 | % | 84 | % | ||||||||||||
– 12 –
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
| Three Months Ended | |||||||||||||||||||||
| September 30, | December 31, | March 31, | June 30, | September 30, | |||||||||||||||||
| Net Revenues by Segment | 2002 | 2002 | 2003 | 2003 | 2003 | ||||||||||||||||
U.S | $ | 206,491 | $ | 225,078 | $ | 242,469 | $ | 251,159 | $ | 266,088 | |||||||||||
Current quarter vs prior quarter | 5 | % | 9 | % | 8 | % | 4 | % | 6 | % | |||||||||||
Current quarter vs prior year quarter | 30 | % | 30 | % | 29 | % | 27 | % | 29 | % | |||||||||||
International | 76,194 | 109,082 | 138,817 | 156,587 | 156,475 | ||||||||||||||||
Current quarter vs prior quarter | 18 | % | 43 | % | 27 | % | 13 | % | (0 | %) | |||||||||||
Current quarter vs prior year quarter | 152 | % | 172 | % | 164 | % | 143 | % | 105 | % | |||||||||||
Payments | 6,094 | 79,768 | 95,206 | 101,523 | 108,379 | ||||||||||||||||
Current quarter vs prior quarter | 29 | % | 1209 | % | 19 | % | 7 | % | 7 | % | |||||||||||
Current quarter vs prior year quarter | 18 | % | 1297 | % | 1889 | % | 2051 | % | 1678 | % | |||||||||||
Total net revenues | $ | 288,779 | $ | 413,928 | $ | 476,492 | $ | 509,269 | $ | 530,942 | |||||||||||
Current quarter vs prior quarter | 8 | % | 43 | % | 15 | % | 7 | % | 4 | % | |||||||||||
Current quarter vs prior year quarter | 49 | % | 89 | % | 94 | % | 91 | % | 84 | % | |||||||||||
| Three Months Ended | |||||||||||||||||||||
| September 30, | December 31, | March 31, | June 30, | September 30, | |||||||||||||||||
| Net Revenues by Geography | 2002 | 2002 | 2003 | 2003 | 2003 | ||||||||||||||||
U.S. net revenues | $ | 212,585 | $ | 290,583 | $ | 319,170 | $ | 331,322 | $ | 351,187 | |||||||||||
Current quarter vs prior quarter | 5 | % | 37 | % | 10 | % | 4 | % | 6 | % | |||||||||||
Current quarter vs prior year quarter | 29 | % | 62 | % | 66 | % | 64 | % | 65 | % | |||||||||||
% of total | 74 | % | 70 | % | 67 | % | 65 | % | 66 | % | |||||||||||
International net revenues | 76,194 | 123,345 | 157,322 | 177,947 | 179,755 | ||||||||||||||||
Current quarter vs prior quarter | 18 | % | 62 | % | 28 | % | 13 | % | 1 | % | |||||||||||
Current quarter vs prior year quarter | 152 | % | 208 | % | 199 | % | 177 | % | 136 | % | |||||||||||
% of total | 26 | % | 30 | % | 33 | % | 35 | % | 34 | % | |||||||||||
Total net revenues | $ | 288,779 | $ | 413,928 | $ | 476,492 | $ | 509,269 | $ | 530,942 | |||||||||||
Current quarter vs prior quarter | 8 | % | 43 | % | 15 | % | 7 | % | 4 | % | |||||||||||
Current quarter vs prior year quarter | 49 | % | 49 | % | 94 | % | 91 | % | 84 | % | |||||||||||
– 13 –
eBay Inc.
eBay Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
| September 30, | December 31, | March 31, | June 30, | September 30, | |||||||||||||||||
| 2002 | 2002 | 2003 | 2003 | 2003 | |||||||||||||||||
Confirmed Registered Users | 54.9 | 61.7 | 68.8 | 75.3 | 85.5 | ||||||||||||||||
Current quarter vs prior quarter | 10 | % | 12 | % | 12 | % | 9 | % | 14 | % | |||||||||||
Current quarter vs prior year quarter | 46 | % | 46 | % | 49 | % | 51 | % | 56 | % | |||||||||||
Active Users (1) | 24.2 | 27.7 | 31.1 | 34.1 | 37.4 | ||||||||||||||||
Current quarter vs prior quarter | 11 | % | 14 | % | 12 | % | 10 | % | 10 | % | |||||||||||
Current quarter vs prior year quarter | 52 | % | 56 | % | 57 | % | 57 | % | 55 | % | |||||||||||
Number of Listings | 159.6 | 195.5 | 219.7 | 225.0 | 234.6 | ||||||||||||||||
Current quarter vs prior quarter | 10 | % | 22 | % | 12 | % | 2 | % | 4 | % | |||||||||||
Current quarter vs prior year quarter | 47 | % | 55 | % | 59 | % | 55 | % | 47 | % | |||||||||||
Gross Merchandise Sales | $ | 3,766 | $ | 4,600 | $ | 5,317 | $ | 5,635 | $ | 5,775 | |||||||||||
Current quarter vs prior quarter | 11 | % | 22 | % | 16 | % | 6 | % | 2 | % | |||||||||||
Current quarter vs prior year quarter | 60 | % | 68 | % | 71 | % | 66 | % | 53 | % | |||||||||||
(1) Defined as all users, excluding Half.com and Internet Auction, who bid, bought, or listed an item within the previous 12-month period.
– 14 –
eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
eBay completed its acquisition of PayPal on October 3, 2002. PayPal’s financial statements and supplemental operating data have been included in eBay’s consolidated financial statements beginning October 4, 2002. The following table presents PayPal financial information for the full quarter ended September 30, 2002, for the period from October 4, 2002 through December 31, 2002, and for the full quarters ended March 31, 2003, June 30, 2003 and September 30, 2003.
| September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||
| 2002 | 2002 | 2003 | 2003 | 2003 | ||||||||||||||||
Revenue | ||||||||||||||||||||
| Transaction | $ | 58.1 | $ | 72.6 | $ | 92.2 | $ | 99.4 | $ | 106.4 | ||||||||||
Current quarter vs prior quarter | 11 | % | 25 | % | 27 | % | 8 | % | 7 | % | ||||||||||
Current quarter vs prior year quarter | 104 | % | 87 | % | 92 | % | 90 | % | 83 | % | ||||||||||
| Non- transaction | $ | 1.2 | $ | 2.1 | $ | 2.0 | $ | 2.1 | $ | 2.0 | ||||||||||
Current quarter vs prior quarter | (8 | %) | 75 | % | (5 | %) | 7 | % | (5 | %) | ||||||||||
Current quarter vs prior year quarter | (18 | %) | 75 | % | 150 | % | 69 | % | 67 | % | ||||||||||
| Total revenues | $ | 59.3 | $ | 74.7 | $ | 94.2 | $ | 101.5 | $ | 108.4 | ||||||||||
| Percent of revenue which is international | 20.2 | % | 19.1 | % | 19.6 | % | 21.0 | % | 21.4 | % | ||||||||||
Metrics | ||||||||||||||||||||
| Total accounts (1) | 19.7 | 23.3 | 27.2 | 31.1 | 35.2 | |||||||||||||||
Current quarter vs prior quarter | 11 | % | 18 | % | 17 | % | 14 | % | 13 | % | ||||||||||
Current quarter vs prior year quarter | 86 | % | 82 | % | 77 | % | 75 | % | 79 | % | ||||||||||
| Active accounts (2) | 6.3 | 7.9 | 9.4 | 10.2 | 11.2 | |||||||||||||||
| Total number of payments | 31.3 | 39.2 | 50.5 | 53.7 | 57.4 | |||||||||||||||
Current quarter vs prior quarter | 9 | % | 25 | % | 29 | % | 6 | % | 7 | % | ||||||||||
Current quarter vs prior year quarter | 74 | % | 76 | % | 90 | % | 86 | % | 83 | % | ||||||||||
| Total payment volume | $ | 1,787 | $ | 2,138 | $ | 2,628 | $ | 2,843 | $ | 3,044 | ||||||||||
Current quarter vs prior quarter | 11 | % | 20 | % | 23 | % | 8 | % | 7 | % | ||||||||||
Current quarter vs prior year quarter | 93 | % | 77 | % | 80 | % | 76 | % | 70 | % | ||||||||||
| Auction as % of total payment volume | 58 | % | 69 | % | 67 | % | 66 | % | 67 | % | ||||||||||
Transaction rates | ||||||||||||||||||||
| Transaction revenue rate | 3.25 | % | 3.40 | % | 3.51 | % | 3.50 | % | 3.49 | % | ||||||||||
| Transaction processing expense rate | 1.19 | % | 1.29 | % | 1.27 | % | 1.30 | % | 1.25 | % | ||||||||||
| Transaction loss rate | 0.42 | % | 0.37 | % | 0.34 | % | 0.32 | % | 0.22 | % | ||||||||||
(1) Excludes closed and locked accounts
(2) Users that sent or received at least one payment during the quarter
– 15 –
eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press release are approximate in nature because eBay’s future performance is difficult to predict. Such guidance is based on information available on the date hereof, and eBay assumes no obligation to update it.
eBay’s future performance involves risks and uncertainties, and the company’s actual results could differ materially from such guidance. Some of the factors that could affect the company’s operating results are set forth under the caption “Forward-Looking Statements” above in this press release. More information about factors that could affect eBay’s operating results is included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations site at http://investor.ebay.com.
| Three months ending December 31, 2003 | ||||||||||||||||
| GAAP | Adjustments | Pro Forma | ||||||||||||||
Net revenue | $ | 590 | — | $ | 590 | |||||||||||
Operating margin | 31 | % | 3 | % | (a | ) | 34 | % | ||||||||
Diluted EPS | $ | 0.19 | $ | 0.02 | (b | ) | $ | 0.21 | ||||||||
Effective Tax Rate | 32 | % | 1 | % | (c | ) | 33 | % | ||||||||
| Three months ending March 31, 2004 | ||||||||||||||||
| GAAP | Adjustments | Pro Forma | ||||||||||||||
Net revenue | $ | 675 | — | $ | 675 | |||||||||||
Diluted EPS | $ | 0.22 | $ | 0.02 | (b | ) | $ | 0.24 | ||||||||
| Three months ending June 30, 2004 | ||||||||||||||||
| GAAP | Adjustments | Pro Forma | ||||||||||||||
Net revenue | $ | 695 | — | $ | 695 | |||||||||||
Diluted EPS | $ | 0.21 | $ | 0.02 | (b | ) | $ | 0.23 | ||||||||
| Three months ending September 30, 2004 | ||||||||||||||||
| GAAP | Adjustments | Pro Forma | ||||||||||||||
Net revenue | $ | 710 | — | $ | 710 | |||||||||||
Diluted EPS | $ | 0.22 | $ | 0.01 | (b | ) | $ | 0.23 | ||||||||
| Three months ending December 31, 2004 | ||||||||||||||||
| GAAP | Adjustments | �� | Pro Forma | |||||||||||||
Net revenue | $ | 820 | — | $ | 820 | |||||||||||
Diluted EPS | $ | 0.26 | $ | 0.02 | (b | ) | $ | 0.28 | ||||||||
| Year ending December 31, 2004 | ||||||||||||||||
| GAAP | Adjustments | Pro Forma | ||||||||||||||
Net revenue | $ | 2,900 | — | $ | 2,900 | |||||||||||
Diluted EPS | $ | 0.91 | $ | 0.07 | (b | ) | $ | 0.98 | ||||||||
Effective Tax Rate | 30 | % | 1 | % | (c | ) | 31 | % | ||||||||
– 16 –
| (a) | Pro forma guidance reflects estimated quarterly adjustments for amortization of acquired intangible assets of approximately $16-$18 million, payroll taxes on employee stock options of approximately $2 million, stock based compensation of approximately $1-$2 million and other adjustments estimated to result in an operating margin adjustment of 3% for the three months ending December 31, 2003 and for each of the quarters in the year ending December 31, 2004. | |
| (b) | Net of tax, the above pro forma items are estimated to result in a $0.02 per diluted share adjustment for the three months ending December 31, 2003 and for each of the quarters in the year ending December 31, 2004. | |
| (c) | Adjustments to the pro forma effective tax rate reflect the impact on the effective tax rate of the pro forma adjustments. |
– 17 –