eBay Inc.
Jul 18, 2012
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eBay Inc. Reports Strong Second Quarter 2012 Results

Revenue and Net Income up Double Digits Year Over Year; Marketplaces Business Delivers Strongest Growth Since 2006

SAN JOSE, Calif.--(BUSINESS WIRE)-- eBay Inc., a global commerce platform and payments company (Nasdaq: EBAY), today reported that revenue for the second quarter ended June 30, 2012 increased 23% to $3.4 billion, compared to the same period of 2011. The company reported second quarter net income on a non-GAAP basis of $730 million, or $0.56 per diluted share, up 16% year over year primarily due to strong top-line growth partially offset by increased investment in the shopping experience and the impact of acquisitions. GAAP net income of $692 million, or $0.53 per diluted share, reflected a gain on the divestiture of a business in 2012 and increased significantly year over year due to a loss from the divestiture of certain GSI businesses and GSI transaction-related expenses in the second quarter of 2011.

"We delivered a great second quarter, driven by eBay Marketplaces' best performance in years, strong growth at PayPal and strong same-store-sales growth for GSI's large retail customers," said John Donahoe, eBay Inc. President and CEO. "Our entire company is strong, but we're particularly pleased with eBay Marketplaces, which delivered its strongest organic growth in gross merchandise volume, excluding vehicles, since 2006. And mobile continues to be a game changer. We now expect eBay and PayPal mobile to each transact $10 billion in volume in 2012 -- that's more than double 2011, a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago. Retail is at an inflection point, and we are helping to reshape how people around the world shop and pay."

PayPal delivered a strong second quarter performance. PayPal ended the quarter with 113.2 million active registered accounts, a 13% increase over the second quarter of 2011. PayPal revenue increased 26% year over year, driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption and strong growth in Bill Me Later. PayPal's net total payment volume (TPV) grew 20% year over year to $34.5 billion. PayPal continues to focus on innovation, delivering on its vision of anytime, anywhere payments and growing its business in mobile and point of sale. This quarter, the company announced a joint venture with SoftBank in Japan, extending its global expansion strategy for small business payment solution PayPal Here. Sixteen large brand-name U.S. retailers have announced their intent to work with PayPal on point of sale initiatives. The PayPal point of sale payment solution, which gives shoppers the opportunity to pay using just their mobile phone number or PayPal payment card and PIN, was rolled out in Abercrombie & Fitch and Jos. A. Bank stores in the U.S. beginning in the quarter.

eBay's Marketplaces business delivered its strongest organic growth rate in gross merchandise volume (GMV), excluding vehicles, since 2006, at 15% on a year-over-year basis, excluding the effects of foreign currency (FX). Also excluding FX, international GMV, excluding vehicles, increased 16% and fixed price GMV, excluding vehicles, increased 20% year over year.

Marketplaces GMV, excluding vehicles, increased 10% year over year to $16 billion in the second quarter of 2012. Marketplaces revenue increased 9% year over year, driven by strong growth across all regions. Sold items increased 20% compared to the second quarter of 2011, a 2.5 percentage point acceleration, reflecting a better customer experience and improved selection. U.S. GMV, excluding vehicles, in the second quarter increased 14% year over year, driven by growth in active users, mobile engagement and strong performance in key verticals, including fashion, tickets and parts & accessories. International GMV, excluding vehicles, increased 8% year over year to $10 billion, driven by strong growth in Europe and Asia-Pacific. Fixed price GMV, which represented 65% of total GMV in the second quarter, grew 13% globally year over year. Downloads of eBay's suite of mobile apps have surpassed 90 million globally since the launch of mobile in the third quarter of 2008.

The company's GSI business, which was acquired in the second quarter of 2011, contributed $221 million in revenue for the second quarter. GSI generated $674 million in global ecommerce (GeC) merchandise sales during the second quarter. Same store sales grew 21% year over year, reflecting strong ecommerce sales from retail clients.

 

Second Quarter 2012 Financial Highlights (presented in millions, except per share data and percentages)

       
Second Quarter
  2012 2011 Change
GAAP        
Net revenue $3,398 $2,760 $638 23%
Net income $692 $283 $409 144%
Earnings per diluted share $0.53 $0.22 $0.31 141%
Non-GAAP        
Net income $730 $631 $99 16%
Earnings per diluted share $0.56 $0.48 $0.08 16%
 
         
Second Quarter
  2012 2011 Change
Business Units        
Payments        
Net revenue $1,357 $1,073 $ 284 26%
Net total payment volume $34,451 $28,742 $ 5,709 20%
Merchant Services $23,114 $18,860 $ 4,254 23%
On eBay $11,337 $9,882 $ 1,455 15%
Marketplaces        
Net revenue $1,814 $1,663 $ 151 9%
Gross merchandise volume (excl. vehicles) $16,171 $14,680 $ 1,491 10%
U.S. $6,241 $5,490 $ 751 14%
International $9,930 $9,191 $ 739 8%
GSI        
Net revenue $221 $24* $ 197 N/A
GeC Merchandise Sales $674 $76* $ 598 N/A
 
*   Reflects net revenues and GeC Merchandise Sales attributable to the GSI segment from June 17, 2011 (the date the acquisition of GSI was completed).
 

Other Selected Financial Results

Business Outlook

Quarterly Conference Call

eBay will host a conference call to discuss second quarter 2012 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 website at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

About eBay Inc.

Founded in 1995 in San Jose, Calif., eBay Inc. (NASDAQ:EBAY) is a global commerce platform and payments leader connecting millions of buyers and sellers. We do so through eBay, the world's largest online marketplace, which allows users to buy and sell in nearly every country on earth; through PayPal, which enables individuals and businesses to securely, easily and quickly send and receive digital payments; and through GSI, which facilitates ecommerce, multichannel retailing and digital marketing for global enterprises. X.commerce brings together the technology assets and developer communities of eBay, PayPal and Magento, an ecommerce platform, to support eBay Inc.'s mission of enabling commerce. We also reach millions through specialized marketplaces such as StubHub, the world's largest ticket marketplace, and eBay classifieds sites, which together have a presence in more than 1,000 cities around the world. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.

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 (GAAP). For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see "Business Outlook," "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 Effective Tax Rate to Non-GAAP Effective Tax Rate" and "Reconciliation of Operating Cash Flow to Free Cash Flow" included in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of eBay and its consolidated subsidiaries that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the third quarter and full year 2012, and the future growth in the Payments, Marketplaces and GSI businesses, mobile payments and mobile commerce. The company's actual results could differ materially from those predicted or implied 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: changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; changes to our capital allocation, including increasing liquidity above current levels; the company's ability to profitably integrate, manage and grow businesses that have been acquired recently or may be acquired in the future; the company's need to successfully react to the increasing importance of mobile payments and mobile commerce and the increasing social aspect of commerce; 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 company's 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 company's need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; any changes the company may make to its product offerings; the competitive, regulatory, credit card association-related and other risks specific to PayPal and Bill Me Later, especially as PayPal continues to expand geographically and introduce new products and as new laws and regulations related to financial services companies come into effect; the company's ability to timely upgrade and develop its systems, infrastructure and customer service capabilities, including GSI's v.11 initiative, at reasonable cost; and 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. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures 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 most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at http://investor.ebayinc.com or the SEC's website 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

 

 

June 30,

2012

 

December 31,

2011

(In millions)
 
ASSETS
Current assets:
Cash and cash equivalents $ 4,038 $ 4,691
Short-term investments 1,716 1,238
Accounts receivable, net 648 682
Loans and interest receivable, net 1,621 1,501
Funds receivable and customer accounts 4,295 3,968
Other current assets 960 581
Total current assets 13,278 12,661
Long-term investments 2,630 2,453
Property and equipment, net 2,238 1,986
Goodwill 8,417 8,365
Intangible assets, net 1,272 1,406
Other assets 423 449
Total assets $ 28,258 $ 27,320
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 564 $ 565
Accounts payable 257 282
Funds payable and amounts due to customers 4,295 3,968
Accrued expenses and other current liabilities 1,468 1,511
Deferred revenue 137 110
Income taxes payable 79 298
Total current liabilities 6,800 6,734
Deferred and other tax liabilities, net 956 1,073
Long-term debt 1,518 1,525
Other liabilities 72 58
Total liabilities 9,346