| [January 23, 2008] |
 |
eBay Inc. Reports Fourth Quarter and Full Year 2007 Results
SAN JOSE, Calif. --(Business Wire)-- 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 the 3 Skypephone in 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(a) $1,126 ($778) (69%)
---------------------------------------- -------- ------ ------- -----
Earnings per share (diluted) $0.25(a) $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%
---------------------------------------- -------- ------ ------- -----
(a) 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%.
-- 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 at http://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 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 announced and/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 on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's investor relations web site at http://investor.ebay.com or the SEC's web site at www.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.
eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars 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
============ ============
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.
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(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
======================= =========================
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(In Thousands, Except Percentages)
Net Revenues by
Type
Three Months Ended
--------------------------------------
December 31, March 31, June 30,
2006 2007 2007
--------------------------------------
Net transaction revenues
Marketplaces $1,198,418 $1,211,545 $1,236,835
Current quarter vs prior
quarter 18% 1% 2%
Current quarter vs prior
year quarter 24% 22% 24%
Percent of Marketplaces
revenue from
international 51% 52% 52%
Payments 402,958 418,992 432,294
Current quarter vs prior
quarter 19% 4% 3%
Current quarter vs prior
year quarter 35% 28% 31%
Percent of Payments
revenue from
international 40% 41% 42%
Communications 63,417 77,078 89,133
Current quarter vs prior
quarter 27% 22% 16%
Current quarter vs prior
year quarter 156% 119% 102%
Percent of Communications
revenue from
international 84% 85% 85%
--------------------------------------
Total net transaction
revenues 1,664,793 1,707,615 1,758,262
Current quarter vs prior
quarter 18% 3% 3%
Current quarter vs prior
year quarter 29% 26% 28%
Advertising and other non-
transaction revenues
Total advertising and other
non-transaction revenues 55,108 60,459 76,167
Current quarter vs prior
quarter 33% 10% 26%
Current quarter vs prior
year quarter 49% 65% 96%
--------------------------------------
Total net revenues $1,719,901 $1,768,074 $1,834,429
======================================
Current quarter vs prior
quarter 19% 3% 4%
Current quarter vs prior
year quarter 29% 27% 30%
Three Months Ended
---------------------------
September 30, December 31,
2007 2007
---------------------------
Net transaction revenues
Marketplaces $1,267,463 $1,419,520
Current quarter vs prior quarter 2% 12%
Current quarter vs prior year quarter 25% 18%
Percent of Marketplaces revenue from
international 51% 54%
Payments 447,952 539,301
Current quarter vs prior quarter 4% 20%
Current quarter vs prior year quarter 32% 34%
Percent of Payments revenue from
international 43% 44%
Communications 96,772 113,732
Current quarter vs prior quarter 9% 18%
Current quarter vs prior year quarter 93% 79%
Percent of Communications revenue from
international 83% 83%
---------------------------
Total net transaction revenues 1,812,187 2,072,553
Current quarter vs prior quarter 3% 14%
Current quarter vs prior year quarter 29% 24%
Advertising and other non-transaction
revenues
Total advertising and other non-
transaction revenues 77,033 108,053
Current quarter vs prior quarter 1% 40%
Current quarter vs prior year quarter 86% 96%
---------------------------
Total net revenues $1,889,220 $2,180,606
===========================
Current quarter vs prior quarter 3% 15%
Current quarter vs prior year quarter 30% 27%
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(In Thousands, Except Percentages)
Net Revenues by Segment
Three Months Ended
-------------------------------------
December 31, March 31, June 30,
2006 2007 2007
-------------------------------------
Marketplaces $1,237,523 $1,250,200 $1,290,552
Current quarter vs prior
quarter 18% 1% 3%
Current quarter vs prior
year quarter 24% 23% 26%
Percent of Marketplaces
revenue from international 50% 51% 52%
Payments 416,796 439,341 454,167
Current quarter vs prior
quarter 19% 5% 3%
Current quarter vs prior
year quarter 37% 31% 34%
Percent of Payments revenue
from international 41% 41% 42%
Communications 65,582 78,533 89,710
Current quarter vs prior
quarter 31% 20% 14%
Current quarter vs prior
year quarter 164% 123% 103%
Percent of Communications
revenue from international 84% 85% 84%
-------------------------------------
Total net revenues $1,719,901 $1,768,074 $1,834,429
=====================================
Current quarter vs prior
quarter 19% 3% 4%
Current quarter vs prior
year quarter 29% 27% 30%
Three Months Ended
----------------------------
September 30, December 31,
2007 2007
----------------------------
Marketplaces $1,320,632 $1,502,507
Current quarter vs prior quarter 2% 14%
Current quarter vs prior year quarter 26% 21%
Percent of Marketplaces revenue from
international 51% 54%
Payments 470,396 562,712
Current quarter vs prior quarter 4% 20%
Current quarter vs prior year quarter 35% 35%
Percent of Payments revenue from
international 43% 44%
Communications 98,192 115,387
Current quarter vs prior quarter 9% 18%
Current quarter vs prior year quarter 96% 76%
Percent of Communications revenue
from international 82% 83%
----------------------------
Total net revenues $1,889,220 $2,180,606
============================
Current quarter vs prior quarter 3% 15%
Current quarter vs prior year quarter 30% 27%
Net Revenues by Geography
Three Months Ended
-------------------------------------
December 31, March 31, June 30,
2006 2007 2007
-------------------------------------
US net revenues $ 872,287 $ 884,909 $ 895,820
Current quarter vs prior
quarter 14% 1% 1%
Current quarter vs prior year
quarter 20% 18% 24%
Percent of total 51% 50% 49%
International net revenues 847,614 883,165 938,609
Current quarter vs prior
quarter 24% 4% 6%
Current quarter vs prior year
quarter 40% 38% 37%
Percent of total 49% 50% 51%
-------------------------------------
Total net revenues $1,719,901 $1,768,074 $1,834,429
=====================================
Current quarter vs prior
quarter 19% 3% 4%
Current quarter vs prior year
quarter 29% 27% 30%
Three Months Ended
----------------------------
September 30, December 31,
2007 2007
----------------------------
US net revenues $ 929,605 $1,032,336
Current quarter vs prior quarter 4% 11%
Current quarter vs prior year quarter 22% 18%
Percent of total 49% 47%
International net revenues 959,615 1,148,270
Current quarter vs prior quarter 2% 20%
Current quarter vs prior year quarter 40% 35%
Percent of total 51% 53%
----------------------------
Total net revenues $1,889,220 $2,180,606
============================
Current quarter vs prior quarter 3% 15%
Current quarter vs prior year quarter 30% 27%
eBay Inc.
Unaudited eBay Marketplaces Supplemental Operating Data
(In Millions, Except Percentages)
December March June September December
31, 31, 30, 30, 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
previous 12-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.
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 March June 30, September December
31, 31, 30, 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 previous 12-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.
eBay Inc.
Unaudited Communications Supplemental Operating Data
(In Millions, Except Percentages)
December March June September December
31, 31, 30, 30, 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.
eBay Inc.
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 on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's investor relations web site at http://investor.ebay.com or the SEC's web site at www.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 approx. 24% approx. 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.
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.
eBay Inc.
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)
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
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
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