eBAY INC. Reports Third Quarter 2009 Results

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Last Updated October 21, 2009

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SAN JOSE, Calif.–(BUSINESS WIRE)–eBay Inc. (Nasdaq:EBAY) today reported financial results for the third quarter ended September 30, 2009. The e-commerce company posted third-quarter revenue of $2.2 billion, up $120.3 million from the same period last year. The year-over-year revenue growth was driven primarily by the continued growth in PayPal, Skype, the company’s classifieds business as well as growth in eBay’s fixed-price format. The company recorded net income on a GAAP basis of $349.7 million or $0.27 per diluted share, and non-GAAP net income of $501.5 million or $0.38 per diluted share.

GAAP operating margin decreased to 19.8% for the quarter, compared to 24.7% for the same period last year. Non-GAAP operating margin decreased to 28.4% for the quarter, compared to 31.8% for the same period last year. The decrease in operating margins was caused primarily by the recently acquired Bill Me Later, the weaker U.S. dollar, and the company’s continuing shift to faster growing, lower margin businesses, partially offset by cost controls.

eBay Inc. generated $738.2 million of operating cash flow during the third quarter. Free cash flow during the quarter was $563.5 million.

“Our third quarter results were strong with PayPal gaining momentum and market share worldwide and our core eBay business showing positive trends,” said eBay Inc. President and CEO John Donahoe. “We’re delivering on our commitments, executing on our plans and operating smarter and faster.”

Quarterly Business Unit Discussion

Payments

The Payments business unit reported a strong quarter with $688.1 million in revenue, an increase of 15% year over year. Net total payment volume (TPV) for the quarter was $17.7 billion, an increase of 19% year over year. The revenue and TPV increases were driven by continued consumer and merchant adoption of PayPal. The payments business continued to increase its penetration on eBay and across e-commerce. Active registered accounts reached 78.0 million, an increase of 19% year over year. The Payments business will continue to focus on the acquisition of new merchants, greater penetration into the Marketplaces business and the ongoing integration of Bill Me Later.

Marketplaces

The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other e-commerce sites, recorded $1.4 billion in revenue, a 1% year over year decline. Marketplaces net transaction revenue declined 1% year over year, improving 13 points over the second quarter of 2009. The Marketplaces business unit benefited from strong growth in its fixed-price format, the continuing success of its highest rated sellers, and acceleration in sold items. Excluding the impact of the stronger U.S. dollar, revenue growth in the Marketplaces business was 4% year over year. Marketplaces continued to expand its international business, which accounted for 56% of Marketplaces revenue. GMV (excluding vehicles) was $12.2 billion for the quarter, an increase of 7%, compared to the third quarter of 2008. Online classifieds revenue increased 20% year over year driven primarily by the acquisition of Den Blå Avis and Bil Basen. A continued focus on trust, value and selection in the eBay Marketplace coupled with format expansion are expected to drive future GMV.

Communications

Skype contributed $185.2 million in revenue for the quarter, representing 29% year-over-year growth. Skype added 40.3 million registered users during the quarter and ended the period with more than 520.8 million registered users. In addition to growing its user base, Skype is focused on product strategies to enhance customer engagement. In September, eBay announced the sale of 65% of Skype to a group of private equity investors that is expected to close in the fourth quarter.

Other Selected Financial Results

* Taxes — The GAAP effective tax rate for the quarter was 20%, compared to 13% for the third quarter of 2008. The non-GAAP effective tax rate was 21% for the third quarter of 2009, compared to 17% for the third quarter of 2008.
* Cash and cash equivalents — The company’s cash and cash equivalents totaled $2.6 billion at September 30, 2009, compared to $3.2 billion at December 31, 2008.

Business Outlook

* Fourth-quarter 2009 — eBay expects net revenues in the range of $2.20 billion to $2.30 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 $0.38 to $0.40. These amounts assume a mid-quarter close date for the pending sale of Skype and do not reflect the gain on the pending sale of Skype of approximately $1.0 billion.

Investor Relations Contact: Tracey Ford 408-376-7205
Media Relations Contact: John Pluhowski 408-376-7458
Investor Information Request: 408-376-7493
Company News: http://www.businesswire.com
Investor Relations Web site: http://investor.ebayinc.com