Market Overview

eBay Inc. Reports Second Quarter Results

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SAN JOSE, Calif., July 17, 2019 /PRNewswire/ -- eBay Inc. (NASDAQ:EBAY), a global commerce leader, delivered revenue for the quarter ended June 30, 2019 of $2.7 billion, increasing 2% on an as-reported basis and 4% on a foreign exchange (FX) neutral basis, primarily driven by gross merchandise volume (GMV) of $22.6 billion, down 4% on an as-reported basis and flat on a FX-Neutral basis.

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During the quarter, eBay delivered GAAP net income from continuing operations of $403 million, or $0.46 per diluted share and Non-GAAP net income from continuing operations of $589 million, or $0.68 per diluted share. The company generated $744 million of operating cash flow and $607 million of free cash flow from continuing operations while also repurchasing approximately $1.5 billion of its common stock and paying $120 million in cash dividends in the quarter.

"We remained focused on building our active buyer base, delivering outstanding customer experiences, and accelerating our growth initiatives in the second quarter," said Devin Wenig, President and CEO of eBay Inc. "Managed payments continues to exceed expectations, while first party advertising is providing significant benefits to sellers, and new features are making our marketplace easier to use."

In the second quarter, eBay grew active buyers by 4% across its platforms, for a total of 182 million global active buyers. Underlying total eBay performance, the Marketplace platforms delivered $2.2 billion of revenue and $21.5 billion of GMV. Marketplace revenue growth was 1% on an as-reported basis and 3% on a FX-Neutral basis, and GMV was down 5% on an as-reported basis and down 1% on a FX-Neutral basis. StubHub platforms drove revenue of $264 million, up 7% on both an as-reported and FX-Neutral basis, and GMV of $1.1 billion, up 5% on an as-reported basis and up 6% on a FX-Neutral basis. Classifieds platforms delivered revenue of $271 million, up 5% on an as-reported basis and up 12% on a FX-Neutral basis.

Based on these results and increased confidence in the year, eBay raised EPS guidance for the full year for the second quarter in a row.

Growth Initiatives

eBay accelerated adoption of its new payments platform, with over 6,000 sellers opting into the program. The company achieved more than $270 million of GMV during the quarter, an increase of 24% quarter-over-quarter that brings the total GMV since launch to $636 million. The PayPal integration for all enrolled U.S. sellers is complete and the offering in Germany is on track to be live by the end of 2019, pending regulatory approval.

First-party advertising continued its impressive growth trajectory. In the second quarter, over 940,000 sellers leveraged first-party advertising to promote over 250 million listings, resulting in $89 million of revenue, a year-over-year growth rate of over 130% on a FX-Neutral basis.

eBay also continued to simplify the buying experience and make the platform more powerful for sellers. The company launched new pages that transformed previously unstructured listings into a more intuitive set of product results, unveiled Brand Outlet, and broadened the simplified returns process to more customers. New seller features were announced to increase buyer conversion including Buy Again, Trending in Your Interests and an expanded Offers to Buyers. The Volume Pricing user interface was dramatically improved, making it much easier for sellers to offer volume-based discounts and for buyers to act on those discounts. In addition, eBay introduced new APIs that will give third-party developers access to managed payments, Promoted Listings and Login with eBay.

Portfolio Update

eBay has taken two actions in the last several weeks to strengthen its portfolio. First, the company has reached a commercial agreement with Paytm Mall to bring eBay's global inventory onto one of the largest marketplaces in India. Second, eBay has reached an agreement to sell its flash sale German business brands4friends. The company is also actively reviewing the role and value of StubHub and Classifieds in its portfolio to determine the best path forward to maximize shareholder value.

Second Quarter 2019 Financial Highlights (presented in millions, except per share data and percentages)


Second Quarter




2019

2018

Change

eBay Inc.





Net revenues

$2,687

$2,640

$47

2%

GAAP - Continuing Operations





Income (loss) from continuing operations

$403

$638

$(235)

(37)%

Earnings (loss) per diluted share from continuing operations

$0.46

$0.64

$(0.18)

(27)%

Non-GAAP - Continuing Operations





Net income

$589

$533

$56

11%

Earnings per diluted share

$0.68

$0.53

$0.15

28%

Other Selected Financial and Operational Results

  • Operating margin — GAAP operating margin increased to 20.9% for the second quarter of 2019, compared to 15.4% for the same period last year. Non-GAAP operating margin increased to 26.9% in the second quarter of 2019, compared to 25.2% for the same period last year.
  • Taxes — The GAAP effective tax rate for continuing operations for the second quarter of 2019 was 20.9%, compared to 9.7% for the second quarter of 2018. The non-GAAP effective tax rate for continuing operations for the second quarter of 2019 was 13.4%, compared to 13.3% for the second quarter of 2018.
  • Cash flow — The company generated $744 million of operating cash flow from continuing operations and $607 million of free cash flow during the second quarter of 2019.
  • Capital returns — The company repurchased approximately $1.5 billion of its common stock, or 40 million shares, in the second quarter of 2019. The company's total repurchase authorization remaining as of June 30, 2019 was $4.2 billion. The company also paid cash dividends of $120 million during the second quarter of 2019.
  • Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $6.3 billion as of June 30, 2019.

Business Outlook

  • Third quarter 2019 — The company expects net revenue between $2.61 billion and $2.66 billion, representing Organic FX-Neutral growth of 1% - 3%, with GAAP earnings per diluted share from continuing operations in the range of $0.40 - $0.44 and non-GAAP earnings per diluted share from continuing operations in the range of $0.62 - $0.65.
  • Full year 2019 — The company expects net revenue between $10.75 billion and $10.83 billion, representing Organic FX-Neutral growth of 2% - 3%, with GAAP earnings per diluted share from continuing operations in the range of $1.97 - $2.07 and non-GAAP earnings per diluted share from continuing operations in the range of $2.70 - $2.75.

Dividend Declaration

  • eBay's Board of Directors has declared a cash dividend of $0.14 per share of the company's common stock. The dividend is payable on September 20, 2019 to shareholders of record as of September 3, 2019.

Quarterly Conference Call and Webcast

eBay Inc. will host a conference call to discuss second quarter 2019 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 https://investors.ebayinc.com. In addition, an archive of the webcast will be accessible for at least three months through the same link.

eBay Inc. uses its Investor Relations website at https://investors.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.

About eBay

eBay Inc. (NASDAQ:EBAY) is a global commerce leader including the Marketplace, StubHub and Classifieds platforms. Collectively, we connect millions of buyers and sellers around the world, empowering people and creating opportunity for all. Founded in 1995 in San Jose, Calif., eBay is one of the world's largest and most vibrant marketplaces for discovering great value and unique selection. In 2018, eBay enabled $95 billion of gross merchandise volume. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.

Presentation

All growth rates represent year-over-year comparisons, except as otherwise noted. All amounts in tables are presented in U.S. dollars, rounded to the nearest million, except as otherwise noted. As a result, certain amounts may not sum or recalculate using the rounded dollar amounts provided.

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 non-GAAP financial measures are presented on a continuing operations basis. 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 of, 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 and 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 Inc. 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 the future performance of eBay Inc. and its consolidated subsidiaries, including expected financial results for the third quarter and full year 2019 and the future growth in its business, dividends and share repurchases. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to: changes in political, business and economic conditions, any regional or general economic downturn or crisis and any conditions that affect ecommerce growth or cross-border trade; the company's ability to realize expected growth opportunities in payments intermediation and advertising; the outcome of the operating and strategic portfolio reviews; fluctuations in foreign currency exchange rates; the company's need to successfully react to the increasing importance of mobile commerce and the increasing social aspect of commerce; an increasingly competitive environment for its business; changes to the company's capital allocation, including the timing, declaration, amount and payment of any future dividends or levels of the company's share repurchases, or management of operating cash; the company's ability to manage its indebtedness, including managing exposure to interest rates and maintaining its credit ratings; 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 company's need and ability to manage regulatory, tax, data security and litigation risks; whether the operational, marketing and strategic benefits of the separation of the eBay and PayPal businesses can be achieved; the company's ability to timely upgrade and develop its technology systems, infrastructure and customer service capabilities at reasonable cost while maintaining site stability and performance and adding new products and features; and the company's ability to integrate, manage and grow businesses that have been acquired or may be acquired in the future.

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 https://investors.ebayinc.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements.

eBay Inc.

Unaudited Condensed Consolidated Balance Sheet



June 30, 
 2019


December 31, 
 2018


(In millions)



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