Mail Stop 3561
September 24,
2018
Devin N. Wenig
President and Chief Executive Officer
eBay Inc.
2025 Hamilton Avenue
San Jose, CA 95125
Re: eBay Inc.
Form 10-K for the year ended December 31, 2017
Filed February 5, 2018
Form 10-Q for the quarter ended June 30, 2018
Filed July 19, 2018
File No. 001-37713
Dear Mr Wenig:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If you
do not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have
additional comments.
Form 10-K for the year ended December 31, 2017
General
1. In a letter to the staff dated May 14, 2015, you discussed your
subsidiary PayPal's 2015
settlement with OFAC for processing transactions to or from Sudan,
and PayPal's
disclosure to OFAC of subsequent similar transactions referencing
sanctioned
countries. On page 20 of its 10-K filed February 7, 2018, PayPal
provides similar
information. Additionally, we are aware of news reports indicating
that entities in North
Korea, Sudan and Syria, possibly including their governments, may
have offered or sold
items on the ebay.com website. North Korea, Sudan and Syria are
designated by the
Department of State as state sponsors of terrorism, and are subject
to U.S. economic
sanctions and/or export controls.
Devin N. Wenig
eBay Inc.
September 24, 2018
Page 2
Please describe to us the nature and extent of any past, current, and
anticipated contacts
with North Korea, and any such contacts with Sudan and Syria since your
2015 letter,
including contacts with their governments, whether through subsidiaries,
affiliates,
partners, customers, joint ventures or other direct or indirect
arrangements. Please also
discuss the materiality of those contacts, in quantitative terms and in
terms of qualitative
factors that a reasonable investor would deem important in making an
investment
decision. Tell us the approximate dollar amounts of revenues, assets and
liabilities
associated with those countries for the last three fiscal years and the
subsequent interim
period. Address for us the potential impact of the investor sentiment
evidenced by
divestment and similar initiatives that have been directed toward
companies that have
operations associated with U.S.-designated state sponsors of terrorism.
Finally, to the
extent PayPal has self-reported to OFAC possible violations of North
Korea, Sudan or
Syria economic sanctions subsequent to your 2015 letter, please describe
the transactions
to us and tell us the maximum dollar amount of the potential related
penalties.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 39
2. Please revise your results of operations discussion to provide greater
insight to your
investors regarding the underlying causes of increases or decreases in
the components of
net income. For example, when you identify intermediate causes of
changes in revenues,
such as changes in GMV and "take rates," please describe in sufficient
detail the
underlying reasons driving such changes.
Form 10-Q for the quarter ended June 30, 2018
Notes to Condensed Consolidated Financial Statements
Note 1 The Company and Summary of Significant Accounting Policies
Revenue Recognition, page 7
3. We note your net transaction revenues consist of a single performance
obligation. Please
address the following items for your Marketplace arrangements:
Clarify the exact nature of this performance obligation. Your
reference to core
services is unclear. Refer to ASC 606-10-50-12(c).
Tell us each promised good or service you have identified in these
arrangements. In
addition, provide us your analysis regarding how you determined that
all goods and
services in these arrangements should be combined. Reference ASC
606-10-25-19
through 22.
Devin N. Wenig
eBay Inc.
September 24, 2018
Page 3
Provide us with a specific and comprehensive discussion of the terms
of your Price
Match Guarantee, eBay Authenticate, shipping services and eBay Money
Back
Guarantee and if you determined that these are services provided to
users or
customers.
We note under ASC 605 you recognized revenue from listing fees
ratably over the
estimated period of the listing. Please help us understand why under
ASC 606 you
have combined these listing services with other services in
determining your
performance obligation. In addition, tell us how the final value
fees and fees to
promote or feature listings from sellers are calculated. Also
clarify if and how
promotion fees differ from listing fees.
4. We note that you generate revenue from revenue sharing arrangements.
Please provide
us with a comprehensive discussion of the terms of these arrangements
including what
specified services are provided. In addition, please provide us your
analysis regarding
how you determined when you are a principal and when you are an agent in
these
arrangements. Reference ASC 606-10-55-36 through 40 and ASC
606-10-50-12(c).
5. We note your disclosure that your contracts may include promises to
transfer multiple
services including discounts on future services. Please tell us, and
revise future filings to
clarify, which contracts contain multiple performance obligations. In
addition, please
clarify if these discounts are a material right and, if so, when the
related revenue is
recognized. Reference ASC 606-10-50-12.
6. We note your disclosure that certain incentives provided to certain
users from which you
do not earn revenue within the context of the identified contract are
recognized as sales
and marketing expenses. Please provide us with a specific discussion of
the nature of
these incentives and clarify your consideration of the identified
contract. In addition, tell
us how and why you concluded that these amounts should be classified as
a reduction to
revenue under ASC 605 but are classified as sales and marketing expenses
under ASC
606.
Note 7 Derivative Instruments, page 15
7. We note that you entered into a warrant with a service provider that
entitles you to
acquire shares of the service provider. You disclose that you account
for the warrant as a
derivative under ASC 815, reflecting the derivative at fair value on
your balance sheet
with changes in fair value reflected within income. However, you also
indicate that the
"day-one value attributable to the warrants" was recorded as a deferred
credit liability
that will be amortized over the life of the warrant. Citing
authoritative accounting
guidance, please tell us why you are deferring the day-one liability.
Also clarify how and
why the warrants were in an initial liability position and quantify for
us the initial
deferred credit.
Devin N. Wenig
eBay Inc.
September 24, 2018
Page 4
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Lisa Sellars, Staff Accountant, at (202) 551-3348 or
Andrew Blume,
Staff Accountant, at (202) 551-3254 with questions regarding these comments or
related matters.
Please contact me at (202) 551-3737 with any other questions.
Sincerely,
/s/ Jennifer Thompson
Jennifer Thompson
Accounting Branch
Chief
Office of Consumer
Products