Market Overview

eBay Receives Non-Binding Proposal from Carl Icahn to Spin Off Paypal; Two Icahn Team Members Named to Board

Global commerce platform and payments leader eBay Inc. (Nasdaq: EBAY) today reported that revenue for the fourth quarter ended December 31, 2013, increased 13% to $4.5 billion, compared to the same period of 2012. The company reported fourth quarter net income on a GAAP basis of $850 million, or $0.65 per diluted share, and non-GAAP net income of $1.1 billion, or $0.81 per diluted share. Fourth quarter non-GAAP and GAAP earnings per share increased 16% and 14%, respectively, driven primarily by strong top-line growth. For the full year 2013, revenue grew 14%, non-GAAP earnings per share grew 15%, and GAAP earnings per share grew 9%. Total company Enabled Commerce Volume (ECV) increased 22% in the fourth quarter, accelerating one point, to $61 billion in commerce volume for merchant partners and brands. For the full year, ECV increased 21%, accelerating two points to $212 billion. Both Marketplaces and PayPal achieved record mobile results in 2013, each exceeding $20 billion in mobile volume. Mobile users represented 40% of eBay Inc.'s 36 million new users and accounts in 2013, contributing $35 billion in ECV, up 88%. "We feel good about our performance and strong finish in the fourth quarter, with the holiday shopping season clearly showing how online, mobile and other omni-channel commerce capabilities are changing how consumers shop and pay," said eBay Inc. CEO and President John Donahoe. "Mobile exceeded expectations for the year. Our total mobile commerce volume grew 88 percent, with eBay reaching $22 billion and PayPal hitting $27 billion in 2013. And mobile added more than 14 million customers. PayPal and eBay together create an incredibly strong global commerce ecosystem for consumers and merchants, and we continue to see tremendous growth opportunities ahead." PayPal delivered a strong fourth quarter performance with accelerating momentum in its merchant services business. Revenue increased 19% in both the quarter and the full year, resulting in $6.6 billion in 2013. PayPal gained 5.2 million active registered accounts in the quarter and ended the year with 143 million, a 16% increase. PayPal's net total payment volume (TPV) grew 25% in the quarter with 3 billion transactions generating $180 billion in net TPV for the full year. On-eBay payment volume grew 14% in both the quarter and for the full year, producing $54 billion in net TPV for the year. Merchant Services net TPV increased 31% in the quarter and 29% for the full year, resulting in $125 billion in net TPV for the year. Mobile was a key catalyst, with payments volume off eBay growing 128% for the year. Total mobile payment volume for the year was $27 billion. The fourth quarter also saw the close of the Braintree acquisition. Marketplaces gross merchandise volume (GMV) excluding vehicles grew 13% in both the fourth quarter and full year totaling $76.5 billion in 2013, driven primarily by strong growth in its domestic business. Revenue grew 12% in both the fourth quarter and the full year, totaling $8.3 billion in 2013. Marketplaces gained 4.6 million active users in the quarter and ended the year with 128 million active users. Its U.S. business grew 14% in the fourth quarter and 15% for the full year, generating $30.4 billion in GMV excluding vehicles for the year. Its international business grew 12% in the quarter and for the full year, generating $46.1 billion in GMV excluding vehicles for the year. Mobile continued to gain traction during 2013 with 40% of all GMV in the fourth quarter involving a mobile device touch point, resulting in $22 billion in mobile commerce volume for the full year. Fixed price GMV excluding vehicles grew 19% globally in the fourth quarter and represented 73% of total GMV. eBay Enterprise generated $1.8 billion in Merchandise Sales in the fourth quarter and $4.2 billion for the full year, up 11% in the quarter and 14% for the full year. It produced $1.1 billion in revenue for the full year with growth pressured by merchant and channel mix and reduction in take rate. eBay Enterprise enabled its clients to grow same-store sales 13% in the quarter and 15% for the full year, outpacing ecommerce growth rates in the U.S. Enterprise clients are increasingly adopting technology from across the eBay portfolio: PayPal has 97% coverage with growing utilization of Bill Me Later; Marketplaces has 33 Enterprise accounts live on its platform and growing penetration of its eBay Now platform.

Fourth Quarter and Full Year 2013 Financial Highlights (presented in millions,

except per share data and percentages)

Fourth Quarter Full Year 2013 2012 Change 2013 2012 Change --------------- ------- ------- ------------- -------- -------- ------------ eBay Inc. --------------- ------- ------- ------- ---- -------- -------- ------- --- Net revenue $4,530 $3,992 $538 13% $16,047 $14,072 $1,975 14% --------------- ------- ------- ------- ---- -------- -------- ------- --- Enabled Commerce Volume (ECV) $61,201 $50,186 $11,015 22% $212,100 $175,837 $36,263 21% --------------- ------- ------- ------- ---- -------- -------- ------- --- GAAP --------------- ------- ------- ------- ---- -------- -------- ------- --- Net income $850 $751 $99 13% $2,856 $2,609 $247 9% --------------- ------- ------- ------- ---- -------- -------- ------- --- Earnings per diluted share $0.65 $0.57 $0.08 14% $2.18 $1.99 $0.19 9% --------------- ------- ------- ------- ---- -------- -------- ------- --- Non-GAAP --------------- ------- ------- ------- ---- -------- -------- ------- --- Net income $1,067 $927 $140 15% $3,556 $3,100 $456 15% --------------- ------- ------- ------- ---- -------- -------- ------- --- Earnings per diluted share $0.81 $0.70 $0.11 16% $2.71 $2.36 $0.35 15% --------------- ------- ------- ------- ---- -------- -------- ------- --- Business Units --------------- ------- ------- ------- ---- -------- -------- ------- --- Payments --------------- ------- ------- ------- ---- -------- -------- ------- --- Net revenue $1,836 $1,541 $295 19% $6,628 $5,574 $1,054 19% --------------- ------- ------- ------- ---- -------- -------- ------- --- Net total payment volume $51,973 $41,471 $10,502 25% $179,663 $144,937 $34,726 24% --------------- ------- ------- ------- ---- -------- -------- ------- --- Marketplaces --------------- ------- ------- ------- ---- -------- -------- ------- --- Net revenue $2,299 $2,050 $249 12% $8,284 $7,398 $886 12% --------------- ------- ------- ------- ---- -------- -------- ------- --- Gross merchandise volume (excl. vehicles) $21,518 $19,105 $2,413 13% $76,495 $67,763 $8,732 13% --------------- ------- ------- ------- ---- -------- -------- ------- --- Enterprise --------------- ------- ------- ------- ---- -------- -------- ------- --- Net revenue $392 $398 $(6) (2)% $1,112 $1,083 $29 3% --------------- ------- ------- ------- ---- -------- -------- ------- --- Merchandise Sales $1,771 $1,595 $176 11% $4,180 $3,682 $498 14% --------------- ------- ------- ------- ---- -------- -------- ------- ---

Other Selected Financial Results -- Operating margin -- GAAP operating margin increased to 22.6% for the fourth quarter of 2013, compared to 21.9% for the same period last year.

Non-GAAP operating margin increased to 29.2% for the fourth quarter, compared to 28.5% for the same period last year.

-- Taxes -- The GAAP effective tax rate for the fourth quarter of 2013 was 17%, compared to 14% for the fourth quarter of 2012. For the fourth quarter of 2013, the non-GAAP effective tax rate was 20% compared to 18%

for the fourth quarter of 2012. The increase in the GAAP effective tax rate was due primarily to an increase in earnings in higher tax jurisdictions.

-- Cash flow -- The company generated $1.7 billion of operating cash flow and $1.4 billion of free cash flow during the fourth quarter. For the full year the company generated $5.0 billion of operating cash flow and $3.7 billion of free cash flow.

-- Stock repurchase program -- The company repurchased approximately $254 million of its common stock in the fourth quarter.

-- Cash and cash equivalents and non-equity investments -- The company's cash and cash equivalents and non-equity investments portfolio totaled $12.8 billion at December 31, 2013.

-- Proposal from Carl Icahn -- The company also announced today that it has

received a notice from Carl Icahn indicating that he has nominated two of his employees to its Board of Directors and submitted a non-binding proposal for a spinoff of its PayPal business into a separate company. The notice stated that companies controlled by Mr. Icahn had, earlier this month, acquired shares and derivative securities that give him an economic interest of approximately 0.82% in the company.eBay welcomes the opportunity to listen to the perspective of all of its shareholders, including Mr. Icahn. His Board nominations will be passed on to the Board's Corporate Governance and Nominating Committee, which will

Posted-In: Earnings News Guidance Hedge Funds Buybacks Asset Sales Movers Tech General

 

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