Exhibit 99.1
eBAY INC. REPORTS FOURTH QUARTER AND FULL YEAR 2007 RESULTS
Major businesses and robust growth in newer lines of business drive revenue
Major businesses and robust growth in newer lines of business drive revenue
San Jose, Calif, January 23, 2008 — eBay Inc. (Nasdaq: EBAY; www.ebay.com) today reported financial results for its fourth quarter and year ended December 31, 2007. The ecommerce company posted fourth quarter revenue of $2.18 billion, representing a $461 million year-over-year increase. Revenue grew across all businesses highlighted by more robust growth from PayPal, StubHub, Skype, classifieds and advertising. The company recorded net income on a GAAP basis of $531 million or $0.39 per diluted share, and non-GAAP net income of $611 million or $0.45 per diluted share.
For the full year, eBay Inc. posted $7.67 billion in revenue, net income on a GAAP basis of $348 million or $0.25 per diluted share, and non-GAAP net income of $2.11 billion or $1.53 per diluted share.
GAAP operating margin increased to 28.7% for the quarter, compared to 26.2% for the same period last year. Non-GAAP operating margin increased to 34.6% for the quarter, from 33.4% for the same period last year. For the full year GAAP operating margin came in at 8.0%, with non-GAAP operating margin at 33.1%.
eBay Inc. generated $793 million of operating cash flow and $665 million of free cash flow during the fourth quarter. The company’s full year operating cash flow was $2.64 billion and free cash flow was $2.19 billion.
“We’re very pleased with the results for the quarter which were strengthened by a solid holiday shopping season,” said eBay Inc. President and CEO, Meg Whitman. “We had a remarkably strong year from a financial perspective. We enter 2008 with our most diverse portfolio of ecommerce offerings ever — positioning us to drive long-term growth in the global ecommerce market.”
Quarterly Business Highlights
• | The company purchased approximately 9.2 million shares of its common stock at a cost of approximately $312 million (For the full year, the company repurchased 44.6 million shares of its common stock for approximately $1.5 billion). |
• | eBay announced a cross border trade agreement with Yahoo! Japan to provide Japanese consumers with access to eBay.com through the site Seikamon.com. |
• | eBay completed the acquisition of Afterbuy to extend service and support for professional sellers in Germany. |
• | StubHub completed its 10 millionth ticket sale and announced a promotional agreement with ESPN to make StubHub the exclusive tickets provider on ESPN.com. |
• | PayPal signed top merchant service account deals with U.S. Airways, AirTran, drugstore.com and Shop NBC among others. |
• | PayPal hired four seasoned executives with deep consumer, technology and international experience to help drive the company’s ongoing expansion. |
• | Skype announced a partnership with MySpace enabling voice communications for more than 110 million MySpace users. |
• | Skype launched the3 Skypephonein eight countries including the United Kingdom, Italy and Australia to enable users to make Skype-to-Skype calls and chats on mobile phones. |
“Our fourth quarter results capped off a great year for eBay, with strong top-line growth, stronger bottom-line growth, and excellent free cash flows,” said Bob Swan, eBay Inc. CFO. “We closed the year with a very strong balance sheet, giving us the financial flexibility to invest across all of our business units in order to extend our leadership positions.”
Financial Highlights(presented in millions, except per share data)
Fourth Quarter | ||||||||||||||||
2007 | 2006 | Change | ||||||||||||||
Net revenue | $ | 2,181 | $ | 1,720 | $ | 461 | 27 | % | ||||||||
GAAP | ||||||||||||||||
Net income | $ | 531 | $ | 346 | $ | 185 | 53 | % | ||||||||
Earnings per share (diluted) | $ | 0.39 | $ | 0.25 | $ | 0.14 | 57 | % | ||||||||
Non-GAAP | ||||||||||||||||
Net income | $ | 611 | $ | 431 | $ | 180 | 42 | % | ||||||||
Earnings per share (diluted) | $ | 0.45 | $ | 0.31 | $ | 0.14 | 45 | % |
Full Year | ||||||||||||||||
2007 | 2006 | Change | ||||||||||||||
Net revenue | $ | 7,672 | $ | 5,970 | $ | 1,702 | 29 | % | ||||||||
GAAP | ||||||||||||||||
Net income | $ | 348 | * | $ | 1,126 | $ | (778 | ) | (69 | )% | ||||||
Earnings per share (diluted) | $ | 0.25 | * | $ | 0.79 | $ | (0.54 | ) | (68 | )% | ||||||
Non-GAAP | ||||||||||||||||
Net income | $ | 2,106 | $ | 1,492 | $ | 614 | 41 | % | ||||||||
Earnings per share (diluted) | $ | 1.53 | $ | 1.05 | $ | 0.48 | 46 | % |
* | Includes previously reported goodwill impairment charge of $1.39 billion recorded in the third quarter of 2007, which was not deductible for tax purposes. |
Quarterly Business Unit Discussion
Marketplaces
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had a strong quarter with a record $1.50 billion in revenue, equating to 21% year-over-year growth. Revenue growth was driven by StubHub, advertising, the fixed price format on eBay and, in part, by the benefit of a weaker U.S. dollar. Based on average monthly unique visits, eBay was the number one ecommerce site in the U.S., UK and Germany during the 2007 holiday shopping season, according to Nielsen Online. Approximately 54% of Marketplaces revenue came from markets outside the U.S. Gross merchandise volume was $16.21 billion for the quarter, an increase of 12% over the fourth quarter of 2006. eBay continues to focus on buyer and seller initiatives to accelerate gross merchandise volume in the U.S., Germany and the United Kingdom.
Payments
PayPal posted another stellar quarter with $563 million in revenue, an increase of 35% year-over-year. Net total payment volume (TPV) for the quarter was $14.04 billion, an increase of 35% year-over-year. The revenue and net TPV growth represents increased penetration on eBay as well as expanded adoption of PayPal Merchant Services across the Web. PayPal will continue to focus on greater penetration into the Marketplaces business as well as the acquisition of new merchants.
Communications
Skype contributed $115 million in revenue, representing 76% year-over-year growth, and posted a fourth consecutive quarter of segment profitability. Skype attracted new users at a rapid pace through the quarter and ended the period with more than 276 million registered users around the world.
Selected Financial Results
• | Taxes — The GAAP effective tax rate for the quarter was 21%, compared to 28% for the fourth quarter of 2006. The non-GAAP effective tax rate for the quarter was 24% compared to 29% for the fourth quarter of 2006. The GAAP effective tax rate for 2007 was 54% while the full year non-GAAP tax rate came in at 21%. |
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• | Cash, cash equivalents and investments — The company’s cash, cash equivalents and investments totaled $5.04 billion at December 31, 2007 compared to $3.50 billion at December 31, 2006. |
Business Outlook
• | Full year 2008 — eBay expects net revenues in the range of $8.500 to $8.750 billion with GAAP earnings per diluted share in the range of $1.27 to $1.31 and non-GAAP earnings per diluted share in the range of $1.63 to $1.67. |
• | First quarter 2008 — eBay expects net revenues in the range of $2.000 to $2.050 billion with GAAP earnings per diluted share in the range of $0.28 to $0.30 and non-GAAP earnings per diluted share in the range of $0.37 to $0.39. |
Other Updates
• | In a separate press release, the company also announced today changes to its management team, including the retirement of current President and CEO Meg Whitman and the naming of John Donahoe as her successor as of March 31, 2008. |
• | The company’s board of directors has approved another stock repurchase program for $2 billion. The new program gives the company the ability to repurchase up to $2.85 billion of its common stock under its combined repurchase programs. |
Quarterly Conference Call
eBay will host a conference call to discuss fourth quarter results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company’s Investor Relations web site athttp://investor.ebay.com. In addition, an archive of the webcast will be accessible through the same link.
About eBay Inc.
Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, PayPal, Skype, Shopping.com, and others. eBay Inc. is headquartered in San Jose, California.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission (SEC): non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate, and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of other non-GAAP financial measures to the nearest comparable GAAP measures, see “Non-GAAP Measures of Financial Performance,” “Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin,” “Reconciliation of GAAP Net Income to Non-GAAP Net Income,” “Reconciliation of GAAP to Non-GAAP Effective Tax Rate,” “Reconciliation of Operating Cash Flows to Free Cash Flow” and “Business Outlook” included in this press release.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. The company’s actual results could differ materially from those predicted and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the company’s need to increasingly achieve growth from its existing users in its more established markets; the company’s ability to deal with the increasingly competitive ecommerce environment, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; the effect of management changes and business initiatives; the regulatory, patent, competitive and other risks specific to Skype; the competitive, regulatory, credit card association, and other risks specific to PayPal, especially as it continues to expand geographically; the company’s need to manage other regulatory, tax, and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the company’s ability to upgrade and develop its systems, infrastructure and customer service capabilities at reasonable cost; the company’s ability to maintain site stability and performance on all
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of its sites while adding new products and features in a timely fashion; changes in political, business and economic conditions, including conditions that affect consumer confidence or ecommerce growth; fluctuations in foreign exchange rates; the company’s ability to profitably expand its business model to new types of merchandise and sellers; and, the company’s ability to profitably integrate, manage and grow businesses that have been acquired recently or may be acquired in the future. The forward-looking statements in this release do not include the potential impact of any acquisitions that may be announcedand/or completed after the date hereof.
More information about factors that could affect the company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s annual report onForm 10-K and quarterly reports onForm 10-Q, copies of which may be obtained by visiting the company’s investor relations web site athttp://investor.ebay.com or the SEC’s web site atwww.sec.gov. 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 Contact: | Tracey Ford | 408-376-7205 | ||||
Media Relations Contact: | Jose Mallabo | 408-376-7458 | ||||
Investor Information Request: | 408-376-7493 | |||||
Company News: | http://www.businesswire.com | |||||
Investor Relations Web site: | http://investor.ebay.com |
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eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(In Thousands)
December 31, | December 31, | |||||||
2006 | 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,662,792 | $ | 4,221,191 | ||||
Short-term investments | 554,841 | 676,264 | ||||||
Accounts receivable, net | 393,195 | 480,557 | ||||||
Funds receivable | 399,297 | 427,337 | ||||||
Other current assets | 960,461 | 1,317,156 | ||||||
Total current assets | 4,970,586 | 7,122,505 | ||||||
Long-term investments | 277,853 | 138,237 | ||||||
Property and equipment, net | 998,196 | 1,120,452 | ||||||
Goodwill | 6,544,278 | 6,257,153 | ||||||
Intangible assets, net | 682,977 | 596,038 | ||||||
Other assets | 20,121 | 131,652 | ||||||
$ | 13,494,011 | $ | 15,366,037 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 83,392 | $ | 156,613 | ||||
Funds payable and amounts due to customers | 1,159,952 | 1,513,578 | ||||||
Accrued expenses and other current liabilities | 681,669 | 1,151,139 | ||||||
Deferred revenue and customer advances | 128,964 | 166,495 | ||||||
Income taxes payable | 464,418 | 111,754 | ||||||
Total current liabilities | 2,518,395 | 3,099,579 | ||||||
Deferred and other tax liabilities, net | 31,784 | 510,557 | ||||||
Other liabilities | 39,200 | 51,299 | ||||||
Total liabilities | 2,589,379 | 3,661,435 | ||||||
Total stockholders’ equity | 10,904,632 | 11,704,602 | ||||||
$ | 13,494,011 | $ | 15,366,037 | |||||
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eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(In Thousands, Except Per Share Amounts)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Net revenues(2) | $ | 1,719,901 | $ | 2,180,606 | $ | 5,969,741 | $ | 7,672,329 | ||||||||
Cost of net revenues(1) | 356,317 | 505,973 | 1,256,792 | 1,762,972 | ||||||||||||
Gross profit | 1,363,584 | 1,674,633 | 4,712,949 | 5,909,357 | ||||||||||||
Operating expenses(1): | ||||||||||||||||
Sales and marketing | 461,329 | 519,133 | 1,619,857 | 1,925,393 | ||||||||||||
Product development | 131,248 | 169,316 | 494,695 | 619,727 | ||||||||||||
General and administrative | 275,724 | 306,731 | 978,363 | 1,156,015 | ||||||||||||
Amortization of acquired intangible assets | 45,398 | 53,313 | 197,078 | 204,104 | ||||||||||||
Impairment of goodwill | — | — | — | 1,390,938 | ||||||||||||
Total operating expenses | 913,699 | 1,048,493 | 3,289,993 | 5,296,177 | ||||||||||||
Income from operations(3) | 449,885 | 626,140 | 1,422,956 | 613,180 | ||||||||||||
Interest and other income, net | 37,399 | 51,921 | 130,017 | 154,271 | ||||||||||||
Interest expense | (3,687 | ) | (6,596 | ) | (5,916 | ) | (16,600 | ) | ||||||||
Income before income taxes | 483,597 | 671,465 | 1,547,057 | 750,851 | ||||||||||||
Provision for income taxes | (137,130 | ) | (140,579 | ) | (421,418 | ) | (402,600 | ) | ||||||||
Net income | $ | 346,467 | $ | 530,886 | $ | 1,125,639 | $ | 348,251 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.25 | $ | 0.39 | $ | 0.80 | $ | 0.26 | ||||||||
Diluted | $ | 0.25 | $ | 0.39 | $ | 0.79 | $ | 0.25 | ||||||||
Weighted average shares: | ||||||||||||||||
Basic | 1,380,577 | 1,352,077 | 1,399,251 | 1,358,797 | ||||||||||||
Diluted | 1,402,749 | 1,368,067 | 1,425,472 | 1,376,174 | ||||||||||||
(1) Includes stock-based compensation as follows: | ||||||||||||||||
Cost of net revenues | $ | 7,873 | $ | 9,466 | $ | 32,981 | $ | 37,009 | ||||||||
Sales and marketing | 21,614 | 16,798 | 96,547 | 81,299 | ||||||||||||
Product development | 18,787 | 19,251 | 81,489 | 76,002 | ||||||||||||
General and administrative | 26,391 | 24,138 | 106,393 | 107,503 | ||||||||||||
Total stock-based compensation | $ | 74,665 | $ | 69,653 | $ | 317,410 | $ | 301,813 | ||||||||
(2) | Net revenues for the three-month period ended December 31, 2007 were positively impacted by foreign currency translation of approximately $97 million compared to the same period of the prior year. Net revenues for the twelve-month period ended December 31, 2007 were positively impacted by foreign currency translation of approximately $276 million compared to the same period of the prior year. On a sequential period, net revenues for the three-month period ended December 31, 2007 were positively impacted by foreign currency translation of approximately $45 million. | |
(3) | Operating income for the three-month period ended December 31, 2007 was positively impacted by foreign currency translation of approximately $49 million compared to the same period of the prior year. Operating income for the twelve-month period ended December 31, 2007 was positively impacted by foreign currency translation of approximately $146 million compared to the same period of the prior year. On a sequential period, operating income for the three-month period ended December 31, 2007 was positively impacted by foreign currency translation of approximately $25 million. |
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eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(In Thousands)
(In Thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 346,467 | $ | 530,886 | $ | 1,125,639 | $ | 348,251 | ||||||||
Adjustments: | ||||||||||||||||
Provision for doubtful accounts and authorized credits | 26,536 | 29,613 | 100,729 | 96,461 | ||||||||||||
Provision for transaction losses | 44,743 | 38,407 | 126,439 | 139,255 | ||||||||||||
Depreciation and amortization | 143,616 | 159,816 | 544,552 | 601,707 | ||||||||||||
Impairment of goodwill | — | — | — | 1,390,938 | ||||||||||||
Stock-based compensation related to stock options and employee stock purchases | 74,665 | 69,653 | 317,410 | 301,813 | ||||||||||||
Deferred income taxes | (96,393 | ) | (72,469 | ) | (227,850 | ) | (141,403 | ) | ||||||||
Tax benefit from stock-based compensation | 39,775 | 30,320 | 148,565 | 143,203 | ||||||||||||
Excess tax benefit from stock-based compensation | (15,108 | ) | (15,804 | ) | (92,371 | ) | (84,830 | ) | ||||||||
Changes in assets and liabilities, net of acquisition effects: | ||||||||||||||||
Accounts receivable | (52,719 | ) | (99,300 | ) | (169,750 | ) | (185,616 | ) | ||||||||
Funds receivable | (92,528 | ) | 137,952 | (146,900 | ) | (25,780 | ) | |||||||||
Other current assets | (104,252 | ) | 20,735 | (443,530 | ) | (416,277 | ) | |||||||||
Other non-current assets | (743 | ) | (9,648 | ) | 10,126 | (88,717 | ) | |||||||||
Accounts payable | (30,915 | ) | 24,247 | 32,986 | 36,954 | |||||||||||
Funds payable and amounts due to customers | 187,671 | (83,942 | ) | 575,137 | 336,875 | |||||||||||
Accrued expenses and other liabilities | 19,208 | (24,467 | ) | (31,022 | ) | (18,825 | ) | |||||||||
Deferred revenue and customer advances | 11,195 | 10,330 | 47,859 | 37,807 | ||||||||||||
Income taxes payable and other tax liabilities | 124,743 | 46,217 | 329,772 | 169,293 | ||||||||||||
Net cash provided by operating activities | 625,961 | 792,546 | 2,247,791 | 2,641,109 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment, net | (96,573 | ) | (127,933 | ) | (515,448 | ) | (453,967 | ) | ||||||||
Purchases of investments | (35,850 | ) | (65,378 | ) | (583,263 | ) | (270,676 | ) | ||||||||
Maturities and sales of investments | 497,948 | 104,941 | 1,380,227 | 888,757 | ||||||||||||
Acquisitions, net of cash acquired | — | (543,370 | ) | (45,505 | ) | (863,565 | ) | |||||||||
Other | 1,638 | 783 | (7,158 | ) | 6,305 | |||||||||||
Net cash provided by (used in) investing activities | 367,163 | (630,957 | ) | 228,853 | (693,146 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of common stock, net | 104,407 | 141,756 | 313,482 | 506,955 | ||||||||||||
Repurchases of common stock, net | (999,999 | ) | (314,698 | ) | (1,666,540 | ) | (1,485,397 | ) | ||||||||
Excess tax benefits from stock-based compensation | 15,108 | 15,804 | 92,371 | 84,830 | ||||||||||||
Proceeds from borrowings | — | 200,220 | — | 200,220 | ||||||||||||
Net cash (used in) provided by financing activities | (880,484 | ) | 43,082 | (1,260,687 | ) | (693,392 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 67,895 | 103,929 | 133,255 | 303,828 | ||||||||||||
Net increase in cash and cash equivalents | 180,535 | 308,600 | 1,349,212 | 1,558,399 | ||||||||||||
Cash and cash equivalents at beginning of period | 2,482,257 | 3,912,591 | 1,313,580 | 2,662,792 | ||||||||||||
Cash and cash equivalents at end of period | $ | 2,662,792 | $ | 4,221,191 | $ | 2,662,792 | $ | 4,221,191 | ||||||||
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eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(In Thousands, Except Percentages)
(In Thousands, Except Percentages)
Net Revenues by Type
Three Months Ended | ||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
Net transaction revenues | ||||||||||||||||||||
Marketplaces | $ | 1,198,418 | $ | 1,211,545 | $ | 1,236,835 | $ | 1,267,463 | $ | 1,419,520 | ||||||||||
Current quarter vs prior quarter | 18 | % | 1 | % | 2 | % | 2 | % | 12 | % | ||||||||||
Current quarter vs prior year quarter | 24 | % | 22 | % | 24 | % | 25 | % | 18 | % | ||||||||||
Percent of Marketplaces revenue from international | 51 | % | 52 | % | 52 | % | 51 | % | 54 | % | ||||||||||
Payments | 402,958 | 418,992 | 432,294 | 447,952 | 539,301 | |||||||||||||||
Current quarter vs prior quarter | 19 | % | 4 | % | 3 | % | 4 | % | 20 | % | ||||||||||
Current quarter vs prior year quarter | 35 | % | 28 | % | 31 | % | 32 | % | 34 | % | ||||||||||
Percent of Payments revenue from international | 40 | % | 41 | % | 42 | % | 43 | % | 44 | % | ||||||||||
Communications | 63,417 | 77,078 | 89,133 | 96,772 | 113,732 | |||||||||||||||
Current quarter vs prior quarter | 27 | % | 22 | % | 16 | % | 9 | % | 18 | % | ||||||||||
Current quarter vs prior year quarter | 156 | % | 119 | % | 102 | % | 93 | % | 79 | % | ||||||||||
Percent of Communications revenue from international | 84 | % | 85 | % | 85 | % | 83 | % | 83 | % | ||||||||||
Total net transaction revenues | 1,664,793 | 1,707,615 | 1,758,262 | 1,812,187 | 2,072,553 | |||||||||||||||
Current quarter vs prior quarter | 18 | % | 3 | % | 3 | % | 3 | % | 14 | % | ||||||||||
Current quarter vs prior year quarter | 29 | % | 26 | % | 28 | % | 29 | % | 24 | % | ||||||||||
Advertising and other non-transaction revenues | ||||||||||||||||||||
Total advertising and other non-transaction revenues | 55,108 | 60,459 | 76,167 | 77,033 | 108,053 | |||||||||||||||
Current quarter vs prior quarter | 33 | % | 10 | % | 26 | % | 1 | % | 40 | % | ||||||||||
Current quarter vs prior year quarter | 49 | % | 65 | % | 96 | % | 86 | % | 96 | % | ||||||||||
Total net revenues | $ | 1,719,901 | $ | 1,768,074 | $ | 1,834,429 | $ | 1,889,220 | $ | 2,180,606 | ||||||||||
Current quarter vs prior quarter | 19 | % | 3 | % | 4 | % | 3 | % | 15 | % | ||||||||||
Current quarter vs prior year quarter | 29 | % | 27 | % | 30 | % | 30 | % | 27 | % |
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eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(In Thousands, Except Percentages)
(In Thousands, Except Percentages)
Net Revenues by Segment
Three Months Ended | ||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
Marketplaces | $ | 1,237,523 | $ | 1,250,200 | $ | 1,290,552 | $ | 1,320,632 | $ | 1,502,507 | ||||||||||
Current quarter vs prior quarter | 18 | % | 1 | % | 3 | % | 2 | % | 14 | % | ||||||||||
Current quarter vs prior year quarter | 24 | % | 23 | % | 26 | % | 26 | % | 21 | % | ||||||||||
Percent of Marketplaces revenue from international | 50 | % | 51 | % | 52 | % | 51 | % | 54 | % | ||||||||||
Payments | 416,796 | 439,341 | 454,167 | 470,396 | 562,712 | |||||||||||||||
Current quarter vs prior quarter | 19 | % | 5 | % | 3 | % | 4 | % | 20 | % | ||||||||||
Current quarter vs prior year quarter | 37 | % | 31 | % | 34 | % | 35 | % | 35 | % | ||||||||||
Percent of Payments revenue from international | 41 | % | 41 | % | 42 | % | 43 | % | 44 | % | ||||||||||
Communications | 65,582 | 78,533 | 89,710 | 98,192 | 115,387 | |||||||||||||||
Current quarter vs prior quarter | 31 | % | 20 | % | 14 | % | 9 | % | 18 | % | ||||||||||
Current quarter vs prior year quarter | 164 | % | 123 | % | 103 | % | 96 | % | 76 | % | ||||||||||
Percent of Communications revenue from international | 84 | % | 85 | % | 84 | % | 82 | % | 83 | % | ||||||||||
Total net revenues | $ | 1,719,901 | $ | 1,768,074 | $ | 1,834,429 | $ | 1,889,220 | $ | 2,180,606 | ||||||||||
Current quarter vs prior quarter | 19 | % | 3 | % | 4 | % | 3 | % | 15 | % | ||||||||||
Current quarter vs prior year quarter | 29 | % | 27 | % | 30 | % | 30 | % | 27 | % |
Net Revenues by Geography
Three Months Ended | ||||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
US net revenues | $ | 872,287 | $ | 884,909 | $ | 895,820 | $ | 929,605 | $ | 1,032,336 | ||||||||||
Current quarter vs prior quarter | 14 | % | 1 | % | 1 | % | 4 | % | 11 | % | ||||||||||
Current quarter vs prior year quarter | 20 | % | 18 | % | 24 | % | 22 | % | 18 | % | ||||||||||
Percent of total | 51 | % | 50 | % | 49 | % | 49 | % | 47 | % | ||||||||||
International net revenues | 847,614 | 883,165 | 938,609 | 959,615 | 1,148,270 | |||||||||||||||
Current quarter vs prior quarter | 24 | % | 4 | % | 6 | % | 2 | % | 20 | % | ||||||||||
Current quarter vs prior year quarter | 40 | % | 38 | % | 37 | % | 40 | % | 35 | % | ||||||||||
Percent of total | 49 | % | 50 | % | 51 | % | 51 | % | 53 | % | ||||||||||
Total net revenues | $ | 1,719,901 | $ | 1,768,074 | $ | 1,834,429 | $ | 1,889,220 | $ | 2,180,606 | ||||||||||
Current quarter vs prior quarter | 19 | % | 3 | % | 4 | % | 3 | % | 15 | % | ||||||||||
Current quarter vs prior year quarter | 29 | % | 27 | % | 30 | % | 30 | % | 27 | % |
9
eBay Inc.
Unaudited eBay Marketplaces Supplemental Operating Data
(In Millions, Except Percentages)
(In Millions, Except Percentages)
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
Active Users (1) | 81.8 | 82.9 | 83.3 | 83.0 | 83.2 | |||||||||||||||
Current quarter vs prior quarter | 3 | % | 1 | % | 0 | % | (0 | )% | 0 | % | ||||||||||
Current quarter vs prior year quarter | 14 | % | 10 | % | 7 | % | 4 | % | 2 | % | ||||||||||
Number of New Listings (2) | 610.2 | 588.5 | 559.2 | 555.6 | 637.2 | |||||||||||||||
Current quarter vs prior quarter | 5 | % | (4 | )% | (5 | )% | (1 | )% | 15 | % | ||||||||||
Current quarter vs prior year quarter | 12 | % | 2 | % | (6 | )% | (5 | )% | 4 | % | ||||||||||
Gross Merchandise Volume (3) | $ | 14,434 | $ | 14,281 | $ | 14,464 | $ | 14,395 | $ | 16,213 | ||||||||||
Current quarter vs prior quarter | 14 | % | (1 | %) | 1 | % | (0 | %) | 13 | % | ||||||||||
Current quarter vs prior year quarter | 20 | % | 14 | % | 12 | % | 14 | % | 12 | % | ||||||||||
Fixed Price Trading(4)as % of gross merchandise volume | 38 | % | 39 | % | 39 | % | 41 | % | 42 | % | ||||||||||
eBay Stores (5)(in thousands) | 593 | 632 | 649 | 520 | 532 | |||||||||||||||
Current quarter vs prior quarter | 3 | % | 7 | % | 3 | % | (20 | )% | 2 | % | ||||||||||
Current quarter vs prior year quarter | 55 | % | 30 | % | 20 | % | (9 | )% | (10 | )% | ||||||||||
Percent of eBay Stores hosted internationally | 56 | % | 57 | % | 57 | % | 46 | % | 46 | % |
Rent.com, Shopping.com, and eBay’s classifieds web sites are not included in these metrics. |
(1) | All users, excluding users of StubHub, Half.com and Internet Auction, who bid on, bought, or listed an item within the previous12-month period. Users may register more than once, and as a result, may have more than one account. | |
(2) | Listings on eBay Marketplaces trading platforms during the quarter, regardless of whether the listing subsequently closed successfully. | |
(3) | Total value of all successfully closed items between users on eBay Marketplaces trading platforms during the quarter, regardless of whether the buyer and seller actually consummated the transaction. | |
(4) | Primarily, GMV related to eBay’s “Buy It Now” feature on eBay Marketplaces trading platforms during the quarter. | |
(5) | Total number of eBay Stores worldwide, hosted on eBay’s Marketplaces trading platforms as of each respective quarter end. Beginning in Q3-07, eBay China stores are excluded. |
10
eBay Inc.
Unaudited Payments Supplemental Operating Data
(In Millions, Except Percentages)
The metrics for all periods shown below have been adjusted to reflect new management definitions which we believe improve the consistency between how management measures and monitors its business.
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
Active registered accounts (1) | 49.4 | 51.3 | 52.8 | 54.8 | 57.3 | |||||||||||||||
Current quarter vs prior quarter | 5 | % | 4 | % | 3 | % | 4 | % | 5 | % | ||||||||||
Current quarter vs prior year quarter | 20 | % | 18 | % | 16 | % | 16 | % | 16 | % | ||||||||||
Net number of payments (2) | 167.2 | 171.9 | 168.0 | 172.2 | 203.9 | |||||||||||||||
Current quarter vs prior quarter | 18 | % | 3 | % | (2 | )% | 3 | % | 18 | % | ||||||||||
Current quarter vs prior year quarter | 24 | % | 19 | % | 20 | % | 21 | % | 22 | % | ||||||||||
Net total payment volume (3) | $ | 10,439 | $ | 10,777 | $ | 11,080 | $ | 11,569 | $ | 14,044 | ||||||||||
Current quarter vs prior quarter | 21 | % | 3 | % | 3 | % | 4 | % | 21 | % | ||||||||||
Current quarter vs prior year quarter | 36 | % | 30 | % | 32 | % | 34 | % | 35 | % | ||||||||||
Merchant Services net total payment volume as% of net total payment volume | 35 | % | 38 | % | 42 | % | 44 | % | 44 | % | ||||||||||
Transaction rates (4) | ||||||||||||||||||||
Transaction revenue rate | 3.86 | % | 3.89 | % | 3.90 | % | 3.87 | % | 3.84 | % | ||||||||||
Transaction processing expense rate | 1.13 | % | 1.15 | % | 1.18 | % | 1.21 | % | 1.18 | % | ||||||||||
Transaction loss rate | 0.43 | % | 0.33 | % | 0.31 | % | 0.27 | % | 0.27 | % |
(1) | All registered accounts that successfully sent or received at least one payment or payment reversal through the PayPal system within the previous12-month period. | |
(2) | Number of payments, net of payment reversals, successfully completed through the PayPal system during the quarter, excluding the payment gateway business. | |
(3) | Total dollar volume of payments, net of payment reversals, successfully completed through the PayPal system during the quarter, excluding the payment gateway business. | |
(4) | Transaction rates represent the ratio of PayPal net transaction revenues (including the payment gateway business), PayPal third-party processing expenses, and PayPal fraud and protection program losses relative to net total payment volume. |
11
eBay Inc.
Unaudited Communications Supplemental Operating Data
(In Millions, Except Percentages)
Unaudited Communications Supplemental Operating Data
(In Millions, Except Percentages)
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2006 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
Registered users (1) | 171.2 | 195.5 | 219.6 | 245.7 | 276.3 | |||||||||||||||
Current quarter vs prior quarter | 26 | % | 14 | % | 12 | % | 12 | % | 12 | % | ||||||||||
Current quarter vs prior year quarter | 129 | % | 107 | % | 94 | % | 81 | % | 61 | % |
(1) | Cumulative number of unique user accounts, which includes users who may have registered via non-Skype based websites. Users may register more than once, and as a result, may have more than one account. |
12
eBay Inc.
Business Outlook
(In Millions, Except Per Share Amounts And Percentages)
Business Outlook
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press release are forward-looking statements and are approximate in nature because eBay’s future performance is difficult to predict. Such guidance is based on information available on the date of this earnings release, 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 the information below. 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” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report onForm 10-K and quarterly reports onForm 10-Q, copies of which may be obtained by visiting the company’s investor relations web site athttp://investor.ebay.com or the SEC’s web site atwww.sec.gov.
Three months ending March 31, 2008 | ||||||||
GAAP | Non-GAAP(a) | |||||||
Net revenues | $ | 2,000-$2,050 | $ | 2,000-$2,050 | ||||
Diluted EPS | $ | 0.28-$0.30 | $ | 0.37-$0.39 |
Year ending December 31, 2008 | ||||||||
GAAP | Non-GAAP(a) | |||||||
Net revenues | $ | 8,500-$8,750 | $ | 8,500-$8,750 | ||||
Operating margin | ~24 | % | ~32 | % | ||||
Diluted EPS | $ | 1.27-$1.31 | $ | 1.63-$1.67 | ||||
Effective tax rate | 21.0%-22.0 | % | 22.0%-23.0 | % |
(a) | Non-GAAP amounts and percentages reflect estimated quarterly adjustments to exclude the amortization of acquired intangible assets of approximately $55-$60 million and stock-based compensation and payroll taxes on employee stock options of approximately $95-$110 million. See further discussion regarding non-GAAP measures of financial performance on the following pages. |
13
eBay Inc.
Non-GAAP Measures of Financial Performance
To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, eBay uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate, and free cash flow.
These non-GAAP measures are not in accordance with, or an alternative for, 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 eBay’s results of operations as determined in accordance with GAAP. These measures should only be used to evaluate eBay’s results of operations in conjunction with the corresponding GAAP measures.
Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the tables included on page 13, 15 and 16 of this press release.
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 measures provide useful information to both management and investors by excluding certain expenses, gains and losses, and net purchases of property and equipment that may not be indicative of its core operating results and business outlook. 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.
For its internal budgeting process, and as discussed further below, eBay’s management uses financial statements that do not include stock-based compensation expense related to employee stock options and employee stock purchases, employer payroll taxes on employee non-qualified stock option gains, amortization or impairment of acquired intangible assets and the income taxes associated with the foregoing. In addition to the corresponding GAAP measures, eBay’s management also uses the foregoing non-GAAP measures in reviewing the financial results of eBay.
eBay excludes the following items from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin and non-GAAP effective tax rate:
Stock-based compensation related to stock options and employee stock purchases. These expenses consist of expenses for stock options and employee stock purchases under Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment.” eBay excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that eBay does not believe are reflective of ongoing operating results.
Employer payroll taxes on employee non-qualified stock option gains. This amount is dependent on eBay’s stock price and the timing and size of exercise by employees of their stock options, over which management has limited to no control, and as such does not correlate to eBay’s operation of the business.
Amortization or impairment of acquired intangible assets and impairment of goodwill. eBay incurs amortization or impairments of acquired intangible assets in connection with acquisitions and investments. eBay excludes these items because they arise from eBay’s prior acquisitions and have no direct correlation to the current operating results of eBay’s business.
Income taxes associated with certain non-GAAP entries. This amount is used to present stock-based compensation and the other amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.
In addition to the non-GAAP measures discussed above, eBay also uses free cash flow. Free cash flow represents operating cash flows less net purchases of property and equipment. eBay considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property, buildings, and equipment, which can then be used to, among other things, invest in eBay’s business, make strategic acquisitions, strengthen the balance sheet and repurchase stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the company’s cash balance for the period.
14
eBay Inc.
Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin
(In Thousands, Except Percentages)
Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin
(In Thousands, Except Percentages)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
GAAP operating income | $ | 449,885 | $ | 626,140 | $ | 1,422,956 | $ | 613,180 | ||||||||
Stock-based compensation expense related to employee stock options and employee stock purchases | 74,665 | 69,653 | 317,410 | 301,813 | ||||||||||||
Payroll tax on stock option exercise | 919 | 1,522 | 5,319 | 6,872 | ||||||||||||
Amortization of developed technology (1) | 4,140 | 4,351 | 17,851 | 19,625 | ||||||||||||
Amortization of acquired intangible assets | 45,398 | 53,313 | 197,078 | 204,104 | ||||||||||||
Impairment of goodwill | — | — | — | 1,390,938 | ||||||||||||
Non-GAAP operating income | $ | 575,007 | $ | 754,979 | $ | 1,960,614 | $ | 2,536,532 | ||||||||
Non-GAAP operating margin | 33.4 | % | 34.6 | % | 32.8 | % | 33.1 | % | ||||||||
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In Thousands, Except Per Share Amounts)
(In Thousands, Except Per Share Amounts)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
GAAP net income | $ | 346,467 | $ | 530,886 | $ | 1,125,639 | $ | 348,251 | ||||||||
Stock-based compensation expense related to employee stock options and employee stock purchases | 74,665 | 69,653 | 317,410 | 301,813 | ||||||||||||
Payroll tax on stock option exercise | 919 | 1,522 | 5,319 | 6,872 | ||||||||||||
Amortization of developed technology (1) | 4,140 | 4,351 | 17,851 | 19,625 | ||||||||||||
Amortization of acquired intangible assets | 45,398 | 53,313 | 197,078 | 204,104 | ||||||||||||
Impairment of goodwill | — | — | — | 1,390,938 | ||||||||||||
Income taxes associated with certain non-GAAP entries | (41,042 | ) | (48,853 | ) | (171,690 | ) | (165,421 | ) | ||||||||
Non-GAAP net income | $ | 430,547 | $ | 610,872 | $ | 1,491,607 | $ | 2,106,182 | ||||||||
Diluted net income per share: | ||||||||||||||||
GAAP | $ | 0.25 | $ | 0.39 | $ | 0.79 | $ | 0.25 | ||||||||
Non-GAAP | $ | 0.31 | $ | 0.45 | $ | 1.05 | $ | 1.53 | ||||||||
Shares used in GAAP and non-GAAP diluted net income per-share calculation | 1,402,749 | 1,368,067 | 1,425,472 | 1,376,174 | ||||||||||||
(1) | Included within cost of net revenues on the Unaudited Condensed Consolidated Statement of Income |
15
eBay Inc.
Reconciliation of GAAP to Non-GAAP Effective Tax Rate
(In Thousands, Except Percentages)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
GAAP provision for income taxes (a) | $ | 137,130 | $ | 140,579 | $ | 421,418 | $ | 402,600 | ||||||||
Income taxes associated with certain non-GAAP entries | 41,042 | 48,853 | 171,690 | 165,421 | ||||||||||||
Non-GAAP provision for income taxes (b) | $ | 178,172 | $ | 189,432 | $ | 593,108 | $ | 568,021 | ||||||||
GAAP income before income taxes (c) | $ | 483,597 | $ | 671,465 | $ | 1,547,057 | $ | 750,851 | ||||||||
Stock-based compensation expense related to employee stock options and employee stock purchases | 74,665 | 69,653 | 317,410 | 301,813 | ||||||||||||
Payroll tax on stock option exercise | 919 | 1,522 | 5,319 | 6,872 | ||||||||||||
Amortization of developed technology (1) | 4,140 | 4,351 | 17,851 | 19,625 | ||||||||||||
Amortization of acquired intangible assets | 45,398 | 53,313 | 197,078 | 204,104 | ||||||||||||
Impairment of goodwill | — | — | — | 1,390,938 | ||||||||||||
Non-GAAP income before income taxes (d) | $ | 608,719 | $ | 800,304 | $ | 2,084,715 | $ | 2,674,203 | ||||||||
GAAP effective tax rate (a/c) | 28 | % | 21 | % | 27 | % | 54 | % | ||||||||
Non-GAAP effective tax rate (b/d) | 29 | % | 24 | % | 28 | % | 21 | % | ||||||||
Reconciliation of Operating Cash Flows to Free Cash Flow
(In Thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
Net cash provided by operating activities | $ | 625,961 | $ | 792,546 | $ | 2,247,791 | $ | 2,641,109 | ||||||||
Less: Purchases of property and equipment, net | (96,573 | ) | (127,933 | ) | (515,448 | ) | (453,967 | ) | ||||||||
Free cash flow | $ | 529,388 | $ | 664,613 | $ | 1,732,343 | $ | 2,187,142 | ||||||||
(1) | Included within cost of net revenues on the Unaudited Condensed Consolidated Statement of Income |
1