| Company Reports Record Q4 Net Revenues of $648 Million; Achieves Q4 GAAP Diluted EPS of $0.21 and Pro Forma Diluted EPS of $0.24; Raises 2004 Net Revenue Guidance to $3 Billion |
“Management's Discussion and Analysis of Financial Condition and Results of Operations”
eBay Inc. (Nasdaq:EBAY)(www.ebay.com), The World's Online Marketplace, reported financial results for its quarter and full year ended December 31, 2003.
eBay reported record consolidated Q4-03 net revenues of $648.4 million, up 57% year over year; record operating income of $203.1 million, up 78% year over year; and record pro forma operating income of $218.5 million, up 65% year over year. Operating income was 31% of net revenues and pro forma operating income was 34% of net revenues.
Consolidated net income in Q4-03 was $142.5 million, or $0.21 per diluted share. eBay's pro forma consolidated net income, excluding certain items, was a record $157.0 million, or $0.24 per diluted share.
These results exceeded the company's guidance of $590 million for net revenues, $0.19 for earnings per diluted share and $0.21 for pro forma earnings per diluted share.
For the full year, eBay generated consolidated net revenues of $2.17 billion, a 78% increase over the $1.21 billion reported in 2002. Consolidated net income increased 77% year over year to $441.8 million, or $0.67 per diluted share. On a pro forma basis, eBay reported a 94% increase in consolidated net income year over year to $494.6 million, or $0.75 per diluted share.
"eBay's outstanding fourth quarter demonstrates yet again the extraordinary power of our community," said Meg Whitman, President and CEO of eBay. "Across every important metric, eBay's global momentum is rapidly accelerating. The business is delivering tremendous results and our long-term prospects couldn't be brighter."
Full Year Key Financial and Operating Metrics
Consolidated Net Revenues -- Consolidated net revenues totaled a record $2.17 billion, which represented an increase of 78% from the $1.21 billion reported in the full year 2002.
Listings -- Listings totaled a record 971 million in the full year 2003, 52% higher than the 638 million listings reported in the full year 2002.
Gross Merchandise Sales (GMS) -- GMS, the total value of items sold, was a record $24 billion, representing a 60% year-over-year increase from the $15 billion reported in the full year 2002.
Key Q4 Financial and Operating Metrics
Consolidated Net Revenues -- Consolidated net revenues totaled a record $648.4 million, which represented an increase of 57% from the $413.9 million reported in Q4-02.
Transaction Revenues -- Consolidated net transaction revenues totaled a record $632.6 million, which represented an increase of 60% from the $396.5 million reported in Q4-02.
-- eBay U.S. Net Transaction Revenues -- eBay U.S. net transaction revenues totaled $291.6 million in Q4-03, reflecting 38% year-over-year growth.
-- eBay International Net Transaction Revenues -- eBay International net transaction revenues totaled $210.5 million in Q4-03, representing 96% year-over-year growth.
-- Payments Net Transaction Revenues -- Payments net transaction revenues totaled $130.6 million in Q4-03, representing 68% year-over-year growth.
Confirmed Registered Users -- Cumulative confirmed registered users at the end of Q4-03 totaled a record 94.9 million. This was a record sequential organic increase of 9.4 million users and a 54% increase over the 61.7 million users reported at the end of Q4-02.
Active Users -- Active users, the number of users on the eBay platform who bid, bought or listed over the trailing 12 months, increased to 41.2 million, a 49% increase over the 27.7 million active users reported in the same period a year ago.
Listings -- Listings totaled a record 292 million in Q4-03, 49% higher than the 195 million listings reported in Q4-02.
GMS -- GMS, the total value of items sold, was a record $7.1 billion, representing a 53% year-over-year increase from the $4.6 billion reported in Q4-02.
Total Payments Accounts -- The company's PayPal business had 40.3 million total accounts at the end of Q4-03, a 73% increase from the 23.3 million reported in Q4-02.
Total Payment Volume (TPV) -- TPV, the total payment volume in the company's PayPal business, was $3.7 billion in Q4-03, a 74% increase in the $2.1 billion reported in Q4-02.
Gross Profit -- Gross profit was a record $532.9 million, or 82% of net revenues, which was up from the 80% level reported in Q4-02.
Operating Income -- Operating income was a record $203.1 million, or 31% of net revenues, a 78% increase over the $113.9 million reported in Q4-02. Pro forma operating income increased 65% year over year to a record $218.5 million, or 34% of net revenues, versus the reported 32% in Q4-02.
GAAP Net Income -- GAAP net income increased 64% year over year to $142.5 million, or $0.21 per diluted share.
Pro Forma Net Income -- Pro forma net income increased 79% year over year to a record $157.0 million, or $0.24 per diluted share.
Operating and Free Cash Flows -- Operating cash flows totaled $267.4 million. Free cash flows, representing operating cash flows less capital expenditures, totaled $171.7 million.
Key Category Performance -- Based on Q4-03 GMS, eBay now has ten categories that deliver $1 billion or more in worldwide annualized GMS: eBay Motors at $7.5 billion; Consumer Electronics at $2.6 billion; Computers at $2.4 billion; Books/Movies/Music at $2.0 billion; Clothing and Accessories at $1.8 billion; Sports at $1.8 billion; Collectibles at $1.5 billion; Toys at $1.5 billion; Home & Garden at $1.3 billion; and Jewelry & Gemstones at $1.3 billion.
Fixed Price Trading -- eBay's fixed price trading contributed approximately $2.0 billion or 28% of total GMS during Q4-03, primarily from eBay's "Buy It Now" feature.
eBay Stores -- eBay hosts approximately 154,000 stores worldwide. However, the company initiated store fees for the first time for certain of its international websites in early Q1-04, therefore, the number of eBay stores worldwide may decrease in future periods.
Consolidated Financial and Operating Summary
eBay reported record consolidated net revenues of $648.4 million in Q4-03, representing a 57% year-over-year increase. On a year-over-year basis, consolidated net revenues reflected a foreign exchange benefit in Q4-03 of approximately $26.7 million.
Gross profit as a percentage of net revenues was 82%, a 2 percentage point improvement from the 80% level reported in Q4-02, primarily reflecting improved cost leverage and cost savings from its recently launched eBay Picture Services.
Sales and marketing expenses totaled $172.8 million, or 27% of net revenues, up from the 26% reported in Q4-02. The year-over-year increase as a percentage of net revenues primarily reflects increases in international marketing efforts combined with expanded television advertising campaigns.
Product development expenses totaled $46.4 million, or approximately 7% of net revenues, down from the 8% of net revenues reported in Q4-02. Total product development expenses in Q4-03 do not include $9.2 million of required cost capitalization for major site and other product development efforts.
General and administrative costs totaled $96.0 million, or about 15% of net revenues, consistent with the 15% of net revenues reported in Q4-02. The incremental dollar change in general and administration costs primarily reflects the resolution of various legal matters, headcount and insurance.
Income from operations totaled a record $203.1 million during Q4-03, a 78% increase over the $113.9 million reported in Q4-02. On a pro forma basis, income from operations totaled a record $218.5 million, a 65% increase over the $132.4 million reported in Q4-02. Included in both the GAAP and pro forma Q4-03 results were $10.6 million of incremental costs related to the resolution of various legal matters primarily relating to PayPal and $11.4 million of year-over-year effect on operating expenses from changes in foreign exchange rates.
Net interest and other income totaled $9.4 million in Q4-03, up from the $5.5 million reported in Q3-03. The increase was primarily the result of Q4-03 foreign currency gains and additional investment income.
The GAAP and pro forma effective tax rates for Q4-03 were 32% and 30% respectively, a decrease from the 36% GAAP and pro forma effective tax rate in Q4-02. The lower rate reflects an increased profit contribution from the company's international operations.
eBay's balance sheet remains strong. At the end of Q4-03, the company had $2.8 billion in aggregate cash and investments and more than $5.8 billion in total assets.
The company reported $267.4 million in operating cash flows and $95.7 million of capital expenditures in Q4-03, resulting in free cash flows of $171.7 million.
Business Outlook
Net Revenues -- The company expects that net revenues for 2004 could be as high as $3.0 billion. On a quarterly basis, eBay expects consolidated net revenues could be as high as $700 million in Q1-04, $720 million in Q2-04, $725 million in Q3-04 and $855 million in Q4-04. eBay's guidance is based on an assumed 2004 quarterly weighted average exchange rate of US$1.20 per Euro.
GAAP Diluted EPS -- eBay expects that GAAP earnings per diluted share for the full year 2004 could be as high as $0.99. From a quarterly perspective, eBay estimates GAAP earnings per diluted share could be as high as $0.24 in Q1-04, $0.23 in Q2-04, $0.23 in Q3-04 and $0.29 in Q4-04.
Pro Forma Diluted EPS -- eBay expects that pro forma earnings per diluted share for the full year 2004 could be as high as $1.04. From a quarterly perspective, eBay estimates pro forma earnings per diluted share could be as high as $0.25 in Q1-04, $0.25 in Q2-04, $0.24 in Q3-04 and $0.30 in Q4-04.
Effective Tax Rate -- eBay expects its 2004 effective tax rate could be 30% on a GAAP basis and 31% on a pro forma basis. This effective tax rate estimate reflects anticipated increased profit contribution from the company's international operations.
Capital Expenditures -- eBay expects its capital expenditures to total $250 million for the full year 2004, without taking into account acquisitions.
Non-GAAP Measures
To supplement the company's consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of certain components of financial performance, including gross profit, operating income, net income, earnings per share, cash flows, and effective tax rate, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. 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 results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. 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. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. Consistent with the company's historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
About eBay
eBay is The World's Online Marketplace(R). Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an ever-growing online community.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries. Those statements involve risks and uncertainties, and the company's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to: the company's need to manage an increasingly large company with a broad range of businesses; the company's ability to deal with the increasingly competitive environment for online trading, 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 litigation, regulatory, credit card association, and other risks specific to PayPal; the company's need to manage other regulatory, tax, and litigation risks even as its product offerings expand and its services are offered in more jurisdictions; the company's ability to upgrade and develop its systems, infrastructure and customer service capabilities to accommodate growth at a reasonable cost; the company's ability to maintain site stability on all of its sites; the company's ability to continue to expand its model to new types of merchandise and sellers; the company's ability to continue to expand outside of the US; fluctuations in foreign exchange rates; and the costs and benefits of announced and prospective acquisitions and other commercial transactions.
More information about factors that could affect the company's operating results is included under the captions "Risk Factors That May Affect Results of Operations and Financial Condition" 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 quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's investor relations site at http://investor.ebay.com. 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,
2002 2003
------------ ------------
ASSETS
--------------------------------------------
Current assets:
Cash and cash equivalents $1,109,313 $1,381,513
Short-term investments 89,690 340,576
Accounts receivable, net 131,453 225,871
Funds receivable 41,014 79,893
Other current assets 96,988 118,029
------------ ------------
Total current assets 1,468,458 2,145,882
Long-term investments 470,227 934,171
Restricted cash and investments 134,644 127,432
Property and equipment, net 218,028 601,785
Goodwill 1,456,024 1,719,311
Intangible assets, net 279,465 274,057
Other assets 13,380 17,496
------------ ------------
$4,040,226 $5,820,134
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------
Current liabilities:
Accounts payable $47,424 $64,633
Funds payable and amounts due to customers 50,396 106,568
Accrued expenses and other current
liabilities 199,323 356,491
Deferred revenue and customer advances 18,846 28,874
Short-term debt 2,970 2,840
Income taxes payable 67,265 87,870
------------ ------------
Total current liabilities 386,224 647,276
Long-term obligations 13,798 124,476
Deferred tax liabilities 27,625 79,238
Other liabilities 22,874 33,494
Minority interests 33,232 39,408
------------ ------------
Total liabilities 483,753 923,892
------------ ------------
Total stockholders' equity 3,556,473 4,896,242
------------ ------------
$4,040,226 $5,820,134
============ ============
eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
------------------ ----------------------
2002 2003 2002 2003
------------------ ----------------------
Net revenues $413,928 $648,393 $1,214,100 $2,165,096
Cost of net revenues 82,664 115,457 213,876 416,058
------------------ ----------------------
Gross profit 331,264 532,936 1,000,224 1,749,038
------------------ ----------------------
Operating expenses:
Sales and marketing 108,734 172,781 349,650 567,565
Product development 31,820 46,427 104,636 159,315
General and administrative 63,344 95,989 171,785 302,703
Patent litigation expense - - - 29,965
Payroll tax on employee
stock options 1,379 1,606 4,015 9,590
Amortization of acquired
intangible assets 12,064 12,991 15,941 50,659
------------------ ----------------------
Total operating expenses 217,341 329,794 646,027 1,119,797
------------------ ----------------------
Income from operations 113,923 203,142 354,197 629,241
Interest and other income
(expense), net 24,092 11,384 49,209 37,803
Interest expense (59) (1,979) (1,492) (4,314)
Impairment of certain equity
investments - (1,000) (3,781) (1,230)
------------------ ----------------------
Income before cumulative
effect of accounting change,
income taxes and minority
interests 137,956 211,547 398,133 661,500
Provision for income taxes (48,935) (67,040) (145,946) (206,738)
Minority interests (2,025) (2,045) (2,296) (7,578)
------------------ ----------------------
Net income before cumulative
effect of accounting change 86,996 142,462 249,891 447,184
Cumulative effect of
accounting change, net of
tax - - - (5,413)
------------------ ----------------------
Net income $86,996 $142,462 $249,891 $441,771
================== ======================
Net income per basic share:
Net income before
cumulative effect of
accounting change $0.14 $0.22 $0.43 $0.70
Cumulative effect of
accounting change - - - (0.01)
------------------ ----------------------
Net income per basic share $0.14 $0.22 $0.43 $0.69
================== ======================
Net income per diluted share:
Net income before
cumulative effect of
accounting change $0.14 $0.21 $0.43 $0.68
Cumulative effect of
accounting change - - - (0.01)
------------------ ----------------------
Net income per diluted
share $0.14 $0.21 $0.43 $0.67
================== ======================
Weighted average shares:
Basic 617,288 646,819 574,992 638,288
================== ======================
Diluted 628,790 666,165 585,640 656,657
================== ======================
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended
December 31, 2002
----------------------------------
Pro
Forma
Reported Entries Pro Forma
----------------------------------
Net revenues $413,928 $- $413,928
Cost of net revenues 82,664 (106)(a) 82,558
------------------- -----------
Gross profit 331,264 106 331,370
------------------- -----------
Operating expenses:
Sales and marketing 108,734 (678)(a) 108,056
Product development 31,820 (1,407)(a) 30,413
General and administrative 63,344 (2,832)(a) 60,512
Patent litigation expense - - -
Payroll tax on employee stock
options 1,379 (1,379)(b) -
Amortization of acquired
intangible assets 12,064 (12,064)(c) -
------------------- -----------
Total operating expenses 217,341 (18,360) 198,981
------------------- -----------
Income from operations 113,923 18,466 132,389
Interest and other income (expense),
net 24,092 (17,459)(d) 6,633
Interest expense (59) - (59)
Impairment of certain equity
investments - - -
------------------- -----------
Income before cumulative effect of
accounting change, income taxes and
minority interests 137,956 1,007 138,963
Provision for income taxes (48,935) (363)(f) (49,298)
Minority interests (2,025) - (2,025)
------------------- -----------
Net income before cumulative effect
of accounting change 86,996 644 87,640
Cumulative effect of accounting
change, net of tax - - -
------------------- -----------
Net income $86,996 $644 $87,640
=================== ===========
Net income per share:
Basic $0.14 $0.14
=========== ===========
Diluted $0.14 $0.14
=========== ===========
Weighted average shares:
Basic 617,288 617,288
=========== ===========
Diluted 628,790 628,790
=========== ===========
Operating margin 28% 4% 32%
Three Months Ended
December 31, 2003
----------------------------------
Pro
Forma
Reported Entries Pro Forma
----------------------------------
Net revenues $648,393 $- $648,393
Cost of net revenues 115,457 (32)(a) 115,425
------------------- -----------
Gross profit 532,936 32 532,968
------------------- -----------
Operating expenses:
Sales and marketing 172,781 (109)(a) 172,672
Product development 46,427 (144)(a) 46,283
General and administrative 95,989 (475)(a) 95,514
Patent litigation expense - - -
Payroll tax on employee stock
options 1,606 (1,606)(b) -
Amortization of acquired
intangible assets 12,991 (12,991)(c) -
------------------- -----------
Total operating expenses 329,794 (15,325) 314,469
------------------- -----------
Income from operations 203,142 15,357 218,499
Interest and other income (expense),
net 11,384 - 11,384
Interest expense (1,979) - (1,979)
Impairment of certain equity
investments (1,000) 1,000 (e) -
------------------- -----------
Income before cumulative effect of
accounting change, income taxes and
minority interests 211,547 16,357 227,904
Provision for income taxes (67,040) (1,836)(f) (68,876)
Minority interests (2,045) - (2,045)
------------------- -----------
Net income before cumulative effect
of accounting change 142,462 14,521 156,983
Cumulative effect of accounting
change, net of tax - - -
------------------- -----------
Net income $142,462 $14,521 $156,983
=================== ===========
Net income per share:
Basic $0.22 $0.24
=========== ===========
Diluted $0.21 $0.24
=========== ===========
Weighted average shares:
Basic 646,819 646,819
=========== ===========
Diluted 666,165 666,165
=========== ===========
Operating margin 31% 2% 34%
Notes:
------
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option
gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of certain real estate properties and recovery of
fully reserved receivables
(e) Impairment of certain equity investments
(f) Income taxes associated with certain pro forma entries
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Year Ended
December 31, 2002
----------------------------------
Pro
Forma
Reported Entries Pro Forma
----------------------------------
Net revenues $1,214,100 $- $1,214,100
Cost of net revenues 213,876 161 (a) 214,037
------------------- -----------
Gross profit 1,000,224 (161) 1,000,063
------------------- -----------
Operating expenses:
Sales and marketing 349,650 (623)(a) 349,027
Product development 104,636 (1,510)(a) 103,126
General and administrative 171,785 (3,514)(a) 168,271
Patent litigation expense - - -
Payroll tax on employee stock
options 4,015 (4,015)(b) -
Amortization of acquired
intangible assets 15,941 (15,941)(c) -
------------------- -----------
Total operating expenses 646,027 (25,603) 620,424
------------------- -----------
Income from operations 354,197 25,442 379,639
Interest and other income (expense),
net 49,209 (21,244)(d) 27,965
Interest expense (1,492) - (1,492)
Impairment of certain equity
investments (3,781) 3,781 (e) -
------------------- -----------
Income before cumulative effect of
accounting change, income taxes and
minority interests 398,133 7,979 406,112
Provision for income taxes (145,946) (2,415)(f) (148,361)
Minority interests (2,296) (590)(g) (2,886)
------------------- -----------
Net income before cumulative effect
of accounting change 249,891 4,974 254,865
Cumulative effect of accounting
change, net of tax - - -
------------------- -----------
Net income $249,891 $4,974 $254,865
=================== ===========
Net income per share:
Basic $0.43 $0.44
=========== ===========
Diluted $0.43 $0.44
=========== ===========
Weighted average shares:
Basic 574,992 574,992
=========== ===========
Diluted 585,640 585,640
=========== ===========
Operating margin 29% 2% 31%
Year Ended
December 31, 2003
----------------------------------
Pro
Forma
Reported Entries Pro Forma
----------------------------------
Net revenues $2,165,096 $- $2,165,096
Cost of net revenues 416,058 (228)(a) 415,830
------------------- -----------
Gross profit 1,749,038 228 1,749,266
------------------- -----------
Operating expenses:
Sales and marketing 567,565 (976)(a) 566,589
Product development 159,315 (1,239)(a) 158,076
General and administrative 302,703 (3,049)(a) 299,654
Patent litigation expense 29,965 - 29,965
Payroll tax on employee stock
options 9,590 (9,590)(b) -
Amortization of acquired intangible
assets 50,659 (50,659)(c) -
------------------- -----------
Total operating expenses 1,119,797 (65,513) 1,054,284
------------------- -----------
Income from operations 629,241 65,741 694,982
Interest and other income (expense),
net 37,803 (979)(d) 36,824
Interest expense (4,314) - (4,314)
Impairment of certain equity
investments (1,230) 1,230 (e) -
------------------- -----------
Income before cumulative effect of
accounting change,
income taxes and minority
interests 661,500 65,992 727,492
Provision for income taxes (206,738)(18,595)(f) (225,333)
Minority interests (7,578) - (7,578)
------------------- -----------
Net income before cumulative effect
of accounting change 447,184 47,397 494,581
Cumulative effect of accounting
change, net of tax (5,413) 5,413 (h) -
------------------- -----------
Net income $441,771 $52,810 $494,581
=================== ===========
Net income per share:
Basic $0.69 $0.77
=========== ===========
Diluted $0.67 $0.75
=========== ===========
Weighted average shares:
Basic 638,288 638,288
=========== ===========
Diluted 656,657 656,657
=========== ===========
Operating margin 29% 3% 32%
Notes:
------
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option
gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of certain real estate properties and recovery of
fully reserved receivables
(e) Impairment of certain equity investments
(f) Income taxes associated with certain pro forma entries
(g) Minority shareholders' portion of impairment of certain equity
investments
(h) Cumulative effect of accounting change, net of tax
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2002 2003 2002 2003
---------------------- ----------------------
Cash flows from operating
activities:
Net income $86,996 $142,462 $249,891 $441,771
Adjustments:
Cumulative effect of
accounting change - - - 5,413
Provision for doubtful
accounts and
authorized credits 6,538 14,085 25,455 46,049
Provision for
transaction losses 7,832 11,510 7,832 36,401
Depreciation and
amortization 28,016 45,118 76,576 159,003
Stock-based
compensation 5,226 760 5,953 5,492
Tax benefit on the
exercise of employee
stock options (5,349) 24,991 91,237 130,638
Impairment of certain
equity investments - 1,000 3,781 1,230
Minority interests 5,896 3,802 1,324 7,784
Gain on sale of assets (21,378) - (21,378) -
Changes in assets and
liabilities:
Accounts receivable (562) (82,723) (54,583) (153,373)
Funds receivable (11,819) 4,766 (11,819) (38,879)
Other current assets 17,652 (3,835) 10,716 (13,133)
Other non-current
assets 2,867 2,313 (1,195) (4,111)
Deferred tax assets,
net 4,716 57,172 8,134 69,770
Accounts payable 12,671 10,795 14,631 17,348
Due to customers and
funds payable (6,027) (3,502) (6,027) 56,172
Accrued expenses and
other liabilities 3,328 35,980 35,481 85,704
Deferred revenue and
customer advances 2,127 2,626 2,780 8,864
Income taxes payable 44,132 98 41,114 11,976
---------------------- ----------------------
Net cash provided by
operating activities 182,862 267,418 479,903 874,119
---------------------- ----------------------
Cash flows from investing
activities:
Purchases of property
and equipment (44,250) (95,768) (138,670) (365,384)
Purchases of investments (145,225) (554,006) (723,307)(2,035,053)
Maturities and sales of
investments 190,988 165,264 727,455 1,297,262
Proceeds from sale of
assets 26,645 - 36,174 -
Acquisitions, net of
cash acquired (4,801) (109,206) (59,411) (216,367)
---------------------- ----------------------
Net cash provided by
(used in) investing
activities 23,357 (593,716) (157,759)(1,319,542)
---------------------- ----------------------
Cash flows from financing
activities:
Proceeds from issuance
of common stock, net 148,005 130,628 252,131 700,817
Proceeds from long-term
debt 3,768 - 3,768 -
Principal payments on
long-term debt (39) (10,224) (3,832) (11,951)
---------------------- ----------------------
Net cash provided by
financing activities 151,734 120,404 252,067 688,866
---------------------- ----------------------
Effect of exchange rate
changes on cash and cash
equivalents 2,737 3,532 11,133 28,757
---------------------- ----------------------
Net increase in cash and
cash equivalents 360,690 (202,362) 585,344 272,200
Cash and cash equivalents
at beginning of period 748,623 1,583,875 523,969 1,109,313
---------------------- ----------------------
Cash and cash equivalents
at end of period $1,109,313 $1,381,513 $1,109,313 $1,381,513
====================== ======================
Net cash provided by
operating activities $182,862 $267,418 $479,903 $874,119
Less: Purchases of
property and equipment (44,250) (95,768) (138,670) (365,384)
---------------------- ----------------------
Free cash flow $138,612 $171,650 $341,233 $508,735
====================== ======================
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Type Three Months Ended
-------------------------------------------------
December March June September December
31, 31, 30, 30, 31,
2002 2003 2003 2003 2003
-------------------------------------------------
Transaction
U.S. $211,388 $234,876 $242,385 $256,076 $291,578
Current quarter vs
prior quarter 16% 11% 3% 6% 14%
Current quarter vs
prior year
quarter 58% 49% 45% 41% 38%
International 107,366 137,504 155,155 154,715 210,500
Current quarter vs
prior quarter 43% 28% 13% (0%) 36%
Current quarter vs
prior year
quarter 173% 166% 146% 105% 96%
Payments 77,703 93,179 99,363 106,350 130,561
Current quarter vs
prior quarter 1175% 20% 7% 7% 23%
Current quarter vs
prior year
quarter 1281% 1847% 2006% 1645% 68%
-------------------------------------------------
Total transaction 396,457 465,559 496,903 517,141 632,639
-------------------------------------------------
Current quarter vs
prior quarter 50% 17% 7% 4% 22%
Current quarter vs
prior year
quarter 122% 118% 111% 96% 60%
3rd party advertising and other non-
transaction net revenues
U.S. 13,690 7,593 8,774 10,012 11,540
Current quarter vs
prior quarter (44%) (45%) 16% 14% 15%
Current quarter vs
prior year
quarter (65%) (75%) (71%) (59%) (16%)
International 1,716 1,313 1,432 1,760 2,261
Current quarter vs
prior quarter 91% (23%) 9% 23% 28%
Current quarter vs
prior year
quarter 110% 59% 18% 96% 32%
Payments 2,065 2,027 2,160 2,029 1,953
Current quarter vs
prior quarter N/A (2%) 7% (6%) (4%)
Current quarter vs
prior year
quarter N/A N/A N/A N/A (5%)
-------------------------------------------------
Total 3rd party
advertising and
other non-
transaction net
revenues 17,471 10,933 12,366 13,801 15,754
-------------------------------------------------
Current quarter vs
prior quarter (31%) (37%) 13% 12% 14%
Current quarter vs
prior year
quarter (57%) (65%) (60%) (45%) (10%)
-------------------------------------------------
Total net revenues $413,928 $476,492 $509,269 $530,942 $648,393
=================================================
Current quarter vs
prior quarter 43% 15% 7% 4% 22%
Current quarter vs
prior year
quarter 89% 94% 91% 84% 57%
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Three Months Ended
-------------------------------------------------
December March June September December
Net Revenues by 31, 31, 30, 30, 31,
Segment 2002 2003 2003 2003 2003
-------------------------------------------------
U.S. $225,078 $242,469 $251,159 $266,088 $303,118
Current quarter vs
prior quarter 9% 8% 4% 6% 14%
Current quarter vs
prior year quarter 30% 29% 27% 29% 35%
International 109,082 138,817 156,587 156,475 212,761
Current quarter vs
prior quarter 43% 27% 13% (0%) 36%
Current quarter vs
prior year quarter 172% 164% 143% 105% 95%
Payments 79,768 95,206 101,523 108,379 132,514
Current quarter vs
prior quarter 1209% 19% 7% 7% 22%
Current quarter vs
prior year quarter 1297% 1889% 2051% 1678% 66%
-------------------------------------------------
Total net revenues $413,928 $476,492 $509,269 $530,942 $648,393
=================================================
Current quarter vs
prior quarter 43% 15% 7% 4% 22%
Current quarter vs
prior year quarter 89% 94% 91% 84% 57%
Three Months Ended
-------------------------------------------------
December March June September December
Net Revenues by 31, 31, 30, 30, 31,
Geography 2002 2003 2003 2003 2003
-------------------------------------------------
U.S. net revenues $290,583 $319,170 $331,322 $351,187 $404,833
Current quarter vs
prior quarter 37% 10% 4% 6% 15%
Current quarter vs
prior year quarter 62% 66% 64% 65% 39%
% of total 70% 67% 65% 66% 62%
International net
revenues 123,345 157,322 177,947 179,755 243,560
Current quarter vs
prior quarter 62% 28% 13% 1% 35%
Current quarter vs
prior year quarter 208% 199% 177% 136% 97%
% of total 30% 33% 35% 34% 38%
-------------------------------------------------
Total net revenues $413,928 $476,492 $509,269 $530,942 $648,393
=================================================
Current quarter vs
prior quarter 43% 15% 7% 4% 22%
Current quarter vs
prior year quarter 49% 94% 91% 84% 57%
eBay Inc.
eBay Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
Three Months Ended
-------------------------------------------
December March June September December
31, 31, 30, 30, 31,
2002 2003 2003 2003 2003
-------------------------------------------
Confirmed Registered Users 61.7 68.8 75.3 85.5 94.9
Current quarter vs prior
quarter 12% 12% 9% 14% 11%
Current quarter vs prior
year quarter 46% 49% 51% 56% 54%
Active Users (1) 27.7 31.1 34.1 37.4 41.2
Current quarter vs prior
quarter 14% 12% 10% 10% 10%
Current quarter vs prior
year quarter 56% 57% 57% 55% 49%
Number of Listings 195.5 219.7 225.0 234.6 291.7
Current quarter vs prior
quarter 22% 12% 2% 4% 24%
Current quarter vs prior
year quarter 55% 59% 55% 47% 49%
Gross Merchandise Sales $4,600 $5,317 $5,635 $5,775 $7,052
Current quarter vs prior
quarter 22% 16% 6% 2% 22%
Current quarter vs prior
year quarter 68% 71% 66% 53% 53%
(1) Defined as all users, excluding Half.com, EachNet, and Internet
Auction, who bid, bought, or listed an item within the previous
12- month period
eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, except percentages)
Three Months Ended
-------------------------------------------
December March June September December
31, 31, 30, 30, 31,
2002 2003 2003 2003 2003
-------------------------------------------
Revenue
Transaction $72.6 $92.2 $99.4 $106.4 $130.6
Current quarter vs
prior quarter 25% 27% 8% 7% 23%
Current quarter vs
prior year quarter 87% 92% 90% 83% 80%
Non-transaction $2.1 $2.0 $2.1 $2.0 $2.0
Current quarter vs
prior quarter 75% (5%) 7% (5%) 0%
Current quarter vs
prior year quarter 75% 150% 69% 67% (5%)
Total revenues ($m) $74.7 $94.2 $101.5 $108.4 $132.6
International revenue
contribution 19.1% 19.6% 21.0% 21.4% 23.2%
Metrics
Total accounts (1) 23.3 27.2 31.1 35.2 40.3
Current quarter vs
prior quarter 18% 17% 14% 13% 14%
Current quarter vs
prior year quarter 82% 77% 75% 79% 73%
Active accounts (2) 7.9 9.4 10.2 11.2 13.2
Total number of payments 39.2 50.5 53.7 57.4 68.2
Current quarter vs
prior quarter 25% 29% 6% 7% 19%
Current quarter vs
prior year quarter 76% 90% 86% 83% 74%
Total payment volume $2,138 $2,628 $2,843 $3,044 $3,711
Current quarter vs
prior quarter 20% 23% 8% 7% 22%
Current quarter vs
prior year quarter 77% 80% 76% 70% 74%
Auction as % of total
payment volume 69% 67% 66% 67% 69%
Transaction rates
Transaction revenue rate 3.40% 3.51% 3.50% 3.49% 3.52%
Transaction processing
expense rate 1.29% 1.27% 1.30% 1.25% 1.23%
Transaction loss rate 0.37% 0.34% 0.32% 0.22% 0.31%
(1) Excludes closed and locked accounts
(2) Users that sent or received at least one payment during the
quarter
eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press
release are approximate in nature because eBay's future performance is
difficult to predict. Such guidance is based on information available
on the date hereof, 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 such
guidance. 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 That May Affect Results of Operations and
Financial Condition" 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
site at http://investor.ebay.com.
Three months ending March 31, 2004
--------------------------------------------
GAAP Adjustments Pro Forma (a)
--------------------------------------------
Net revenue $700 - $700
Diluted EPS $0.24 $0.01 (b) $0.25
Three months ending June 30, 2004
--------------------------------------------
GAAP Adjustments Pro Forma (a)
--------------------------------------------
Net revenue $720 - $720
Diluted EPS $0.23 $0.02 (b) $0.25
Three months ending September 30, 2004
--------------------------------------------
GAAP Adjustments Pro Forma (a)
--------------------------------------------
Net revenue $725 - $725
Diluted EPS $0.23 $0.01 (b) $0.24
Three months ending December 31, 2004
--------------------------------------------
GAAP Adjustments Pro Forma (a)
--------------------------------------------
Net revenue $855 - $855
Diluted EPS $0.29 $0.01 (b) $0.30
Year ending December 31, 2004
--------------------------------------------
GAAP Adjustments Pro Forma (a)
--------------------------------------------
Net revenue $3,000 - $3,000
Diluted EPS $0.99 $0.05 (b) $1.04
Effective Tax Rate 30% 1% (c) 31%
(a) Pro forma guidance reflects estimated quarterly adjustments for
amortization of acquired intangible assets of approximately $13 -
$14 million, payroll taxes on employee stock options of
approximately $2 million, stock based compensation of
approximately $300 - $600 thousand and other adjustments estimated
to result in an operating margin adjustment of 2 - 3% for each of
the quarters in the year ending December 31, 2004.
(b) Net of tax, the above pro forma items are estimated to result in a
$ 0.01 - $ 0.02 per diluted share adjustment for each of the
quarters in the year ending December 31, 2004.
(c) Adjustments to the pro forma effective tax rate reflect the impact
on the effective tax rate of the pro forma adjustments.
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