EBay Conference Call Highlights

eBay Inc (NASDAQ: EBAY) reported its third quarter earnings on Thursday, Shares of the company are down 5 percent.

Spinoff:

• Separation of eBay and PayPal into independently publicly traded companies.
• Split best positions each business for long-term success.
• We've always been committed to making the right decisions at the right time to do what's best for eBay, PayPal and our shareholders.
• And now with the decision made, our focus is on moving forward with clarity and speed to minimize distraction and capitalize on the opportunities ahead.
• Our priority is setting eBay and PayPal up for success as independent companies.
• Ensuring they continue to execute well until separation occurs.

Financials:

• Now, let's take a look at our results for the quarter. We enabled $63 billion of commerce volume in the third quarter, up 27%.
• Mobile and cross-border trade continue to be major contributors, accounting for 21% and 22% respectively of our total enabled commerce volume.
• Overall, revenue was up 12% in Q3 and non-GAAP EPS was up 6%.
• eBay and PayPal both generated double-digit customer growth with PayPal reaching almost 157 million active registered accounts.
• eBay topping 152 million active buyers.
• Payments volume increased 29%, and Marketplaces' volume increased 9%.
• Mobile payment volume was $12 billion, up 72% and Marketplaces' mobile volume was 7 billion, up 41%.
• Marketplaces' growth has been slower than we expected, and the U.S. dollar has been stronger than we expected.
• Combined, these reduced our second half of the year revenue outlook by approximately $300 million.
• In Q3 we generated net revenues of $4.4 billion, up 12%.
• Organic revenue growth was 10% in the quarter.
• We generated free cash flow of $941 million in the quarter.
• Our balance sheet is as strong as it has ever been and we have the capacity to capitalize two independent companies

PayPal:

• PayPal had another strong quarter.
• Merchant Services TPV grew 37% in Q3.
• Revenue also accelerated from the prior quarter, up 21% on an FX neutral basis.
• Increased consumer adoption and expanded merchant coverage continue to drive strong results.
• PayPal continues to lead in the dynamic and competitive mobile payment space.
• PayPal's mobile payments volume was up 72% in the third quarter to $12 billion, accounting for 20% of total payments volume.
• And PayPal's on track to process 1 billion mobile transactions this year.
• PayPal also continues to innovate, with its introduction of One Touch payments in September.
• One Touch is the fastest way to pay on any mobile device, regardless of platform or payment method.
• Focused on ensuring that PayPal has the right structure as an independent company.
• For the fourth quarter of 2014, we expect revenue of $4.85 billion to $4.95 billion, representing growth of 7% to 9%.

EBay:

• eBay is clearly facing some near-term challenges.
• For the third quarter, global GMV grew 7% on an FX neutral basis and revenue was up 5%.
• Global fixed price volume was up 15%.
• Slowing traffic growth has delayed the modest recovery we expected during the second half.
• Following the cyber-attack earlier this year, you'll recall that eBay made a bold decision to reset passwords for all users.
• And we believe that eBay's underlying fundamentals remain solid.
• eBay has more selection than ever with more than 800 million listings, and fixed price and international growth remains solid.
• eBay will be focusing more aggressively on where it can compete and win and deliver sustainable growth.
• Separation will allow eBay to more clearly align its strategy, cost structure and capital allocation in a way that's good for customers and good for shareholders.
• eBay Enterprise, gross merchandise sales were up 14% and revenue was up 3% during the quarter.
• Today, eBay Enterprise enables store-based order fulfillment for 5,000 stores in 15 countries, representing 41 retail brands, and another 1,000 stores are planned by year end.