-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JjWHYBKrh9GrBlOo1TH4F1m1BoRqcpAK1lMHeDnHlcgB3RE4yUQaTV1JjOYsH4SG 2ddxWAyyMxKAaTbT1aqv8w== 0000891618-03-001975.txt : 20030422 0000891618-03-001975.hdr.sgml : 20030422 20030422161532 ACCESSION NUMBER: 0000891618-03-001975 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030422 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EBAY INC CENTRAL INDEX KEY: 0001065088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 770430924 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24821 FILM NUMBER: 03658505 BUSINESS ADDRESS: STREET 1: 2145 HAMILTON AVENUE CITY: SAN JOSE STATE: CA ZIP: 95125 BUSINESS PHONE: 4085587400 MAIL ADDRESS: STREET 1: 2125 HAMILTON AVENUE CITY: SAN JOSE STATE: CA ZIP: 95125 8-K 1 f89397e8vk.htm FORM 8-K eBay, Inc., Form 8-K
Table of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 22, 2003

eBay Inc.


(Exact name of registrant as specified in its charter)
         
Delaware   000-24821   77-0430924

 
 
(State or other
jurisdiction of
incorporation)
  (Commission File Number)   (I.R.S. Employer Identification No.)

2145 Hamilton Avenue
San Jose, CA 95125


(Address of principal executive offices)

(408) 376-7400


(Registrant’s telephone number, including area code)

 


Item 7. Financial Statements and Exhibits.
Item 9. Regulation FD Disclosure Information Furnished Pursuant to Item 12. Disclosures of Results of Operations and Financial Condition.
SIGNATURE
INDEX TO EXHIBITS
EXHIBIT 99.1


Table of Contents

Item 7. Financial Statements and Exhibits.

    (c)  Exhibits

    99.1.  Press release dated April 22, 2003 containing financial information for eBay Inc. for the quarter ended March 31, 2003 and forward-looking statements relating to eBay’s performance during 2003.

Item 9. Regulation FD Disclosure Information Furnished Pursuant to Item 12. Disclosures of Results of Operations and Financial Condition.

     On April 22, 2003, eBay Inc. announced its financial results for the fiscal quarter ended March 31, 2003. A copy of eBay’s press release announcing these financial results and certain other information is attached as Exhibit 99.1 to this Current Report on Form 8-K.

     The attached press release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. To supplement our consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of gross profit, operating income, net income, earnings per share, and cash flows, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe 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 our core operating results. In addition, because we have historically reported certain non-GAAP results to investors, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results. Consistent with our historical practice, the non-GAAP measures included in the attached press release have been reconciled to the nearest GAAP measure.

     The attached press release also contains forward-looking statements relating to eBay’s performance during 2003. A more thorough discussion of certain factors which may affect the 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 eBay’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, and will also be included in eBay’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003 to be filed in the second quarter of 2003.

     In accordance with the procedural guidance in SEC Release No. 33-8216, the information in this report is being furnished under “Item 9. Regulation FD Disclosure” rather than under “Item 12. Disclosure of Results of Operations and Financial Condition.” The information in this report shall not be treated as “filed” for purposes of the Securities Exchange Act of 1934, as amended.

 


Table of Contents

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
Date: April 22, 2003   eBay Inc.
         
    By:   /s/ MICHAEL R. JACOBSON
       
        Michael R. Jacobson
Senior Vice President, Legal
Affairs, General Counsel and
Secretary

 


Table of Contents

eBay Inc.

INDEX TO EXHIBITS

     
Exhibit Number   Description

 
99.1   Press release dated April 22, 2003 containing financial information for eBay Inc. for the quarter ended March 31, 2003 and forward-looking statements relating to eBay’s performance during 2003.

  EX-99.1 3 f89397exv99w1.htm EXHIBIT 99.1 Exhibit 99.1

 

Exhibit 99.1

eBAY INC. ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS

Company Reports Record Quarterly Net Revenues of $476.5 million
Achieves Record GAAP Diluted EPS of $0.32 and Record Pro Forma Diluted EPS of $0.36
Raises 2003 Net Revenue and EPS Guidance

San Jose, CA, April 22, 2003 – eBay Inc. (Nasdaq: EBAY; www.ebay.com), the world’s online marketplace, reported financial results for its first quarter ended March 31, 2003.

eBay reported record consolidated Q1-03 net revenues of $476.5 million. Consolidated net income in Q1-03 was a record $104.2 million, or $0.32 per diluted share. eBay’s pro forma consolidated net income, excluding certain items, was a record $116.2 million, or $0.36 per diluted share.

During Q1-03, consolidated net transaction revenues increased to a record $465.6 million, driven by 49% year-over-year transaction revenue growth in the core eBay U.S. business, 166% year-over-year transaction revenue growth internationally, and a $92.2 million transaction revenue contribution from PayPal.

“Q1 was a terrific quarter for eBay, delivering record results across every part of the business,” said Meg Whitman, President and CEO of eBay. “We are now more confident than ever in eBay’s long-term potential across every facet of our business.”

Key Financial and Operating Metrics

Gross Merchandise Sales (GMS) — GMS, the total value of items sold, were a record $5.32 billion, representing a 71% year-over-year increase from the $3.11 billion reported in Q1-02.

Registered Users — Cumulative confirmed registered users at the end of Q1-03 were a record 68.8 million, an increase of 7.1 million sequentially and a 49% increase over the 46.1 million users reported at the end of Q1-02.

Active Users — Active users, the number of users on the eBay platform who bid, bought or listed over the trailing twelve months, increased to 31.1 million, a 57% increase over the 19.8 million active users for the same period a year ago.

Listings — Listings totaled a record 220 million in Q1-03, 59% higher than the 138 million in Q1-02.

Transaction Revenues — Consolidated net transaction revenues totaled a record $465.6 million, which represented an increase of 118% from the $213.7 million reported in Q1-02.

Gross Profit — Gross profit was a record $384.4 million, or 81% of net revenues.

Operating Income — Operating income was a record $148.1 million, representing a 109% increase over the $70.7 million reported in Q1-02 and 31% of net revenues, versus 29% in Q1-02. Pro forma operating income was $165.6 million, or 35% of net revenues, versus 30% in Q1-02.

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GAAP Net Income — GAAP net income increased 119% year over year, to a record $104.2 million, or $0.32 per diluted share.

Pro Forma Net Income — Pro forma net income increased 130% year over year, to a record $116.2 million, or $0.36 per diluted share.

Operating and Free Cash Flows — Operating cash flows totaled a record $190.0 million, a 106% increase from the $92.3 million reported in Q1-02. Free cash flows totaled $146.1 million, an 81% increase from the $80.8 million reported in Q1-02.

Payments — Payments segment net transaction revenues reached a record $93.2 million in Q1-03, driven by PayPal total payment volume (TPV) of $2.63 billion.

Key Execution Highlights

eBay U.S. Net Transaction Revenues — eBay U.S. net transaction revenues totaled $234.9 million in Q1-03, reflecting 49% year-over-year growth.

eBay International Net Transaction Revenues — eBay international net transaction revenues totaled $137.5 million in Q1-03, representing 166% year-over-year growth.

Key Category Performance — Based on Q1-03 annualized GMS, eBay has eight categories that are more than $1 billion in worldwide GMS: eBay Motors at $5.3 billion; Computers at $2.1 billion; Consumer Electronics at $2.1 billion; Books/Movies/Music at $1.6 billion; Sports at $1.3 billion; Collectibles at $1.2 billion; Clothing and Accessories at $1.2 billion; and Toys at $1.1 billion.

Fixed Price Trading — eBay’s fixed price trading contributed approximately $1.40 billion or 26% of total GMS during Q1-03, primarily from eBay’s “Buy It Now” feature. Pure fixed price, which allows sellers to offer items for a set price rather than in an auction format, accounted for 10% of eBay’s global GMS.

eBay Stores — eBay hosts approximately 100,000 stores, including nearly 50,000 sellers on eBay.com and more than 50,000 sellers internationally.

Consolidated Financial and Operating Summary

eBay reported record net revenues of $476.5 million in Q1-03, representing a 94% year-over-year increase. Excluding PayPal, eBay’s Q1-03 net revenues totaled $382.3 million, representing a 56% year-over-year increase. PayPal’s Q1-03 net revenues totaled $94.2 million, representing a 93% year-over-year increase compared to the $48.8 million PayPal reported in Q1-02. The strong Q1-03 performance was attributed to a combination of effective integrated marketing programs and a substantial increase in user activity. Revenues from third party advertisers declined 54% year over year to $8.8 million and now represent approximately 2% of net revenues.

Payments net transaction revenues totaled $93.2 million in Q1-03, driven by PayPal total payment volume of $2.63 billion, an 80% year-over-year increase over the Q1-02 total payment volume of $1.46 billion. Including net revenues from third party advertising, total payments net revenues

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totaled $95.2 million. In Q1-03, 67% of total payment volume came from eBay and other online trading sites, up from 66% in Q4-02. eBay continues to expect that its Billpoint operations, which contributed $1 million in net revenues in Q1-03, will be completely phased out during the second quarter of 2003.

Gross profit as a percentage of net revenues was 81%, up from the 80% level reported in Q4-02, but down from the 83% level reported in Q1-02. The reported gross profit percentage reflects an improvement in the US and International operations offset by the lower gross margin from PayPal.

Sales and marketing expenses totaled $123.8 million, or 26% of net revenues, consistent with the 26% reported in Q4-02 and down from the 30% reported in Q1-02. The sequential dollar increase in sales and marketing expense was attributed to the company’s integrated marketing campaigns combined with the incremental expenses from the PayPal business.

Product development costs totaled $34.3 million, or approximately 7% of net revenues, down from the 8% of net revenues reported in Q4-02 and the 10% of net revenues reported in Q1-02. Product development expense reflects an actual spending increase combined with the incremental expenses from the PayPal business, partially offset by $4.7 million of required capitalization for major site and product development efforts.

General and administrative costs totaled $63.0 million, or about 13% of net revenues, down from the 15% of net revenues reported for Q4-02 and consistent with the 13% of net revenues reported for Q1-02. The sequential percentage decrease primarily reflects leverage in the core eBay business partially offset by the addition of PayPal general and administrative expenses. PayPal’s transaction losses represented approximately 0.34% of PayPal’s total payment volume.

Income from operations totaled $148.1 million during Q1-03, a 109% increase over the $70.7 million reported in Q1-02. On a pro forma basis, income from operations totaled $165.6 million, or 35% of Q1-03 consolidated net revenues, comparing favorably to the $74.4 million and 30% of net revenues reported in Q1-02.

Net interest and other income totaled $7.4 million in Q1-03, down from the $24.0 million reported in Q4-02. The sequential decrease primarily reflects certain one-time gains in Q4-02. On a pro forma basis, net interest and other income increased to $7.7 million from $6.6 million in Q4-02.

eBay reported a consolidated pro forma tax provision of $54.7 million. The Q1-03 effective pro forma tax rate was 32%, down from the 36% effective tax rate in Q4-02 and the 38% rate in Q1-02. The lower effective tax rate reflects the increasing profit contribution from the company’s international operations.

eBay’s balance sheet remains strong. At the end of Q1-03, the company had $2.2 billion in aggregate corporate cash and investments and total assets of more than $4.5 billion.

The company reported $190.0 million in operating cash flows, 106% higher than the $92.3 million reported in Q1-02, primarily reflecting increased profitability.

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Free cash flows during Q1-03 totaled $146.1 million, 81% higher than the $80.8 million reported in Q1-02. Capital expenditures in Q1-03 totaled $43.9 million, relating primarily to the purchase of site-related hardware and software, the build-out of PayPal’s new customer service center, and the required capitalization of certain product development costs.

Business Outlook

Net Revenues — The company now expects that revenues for 2003 could be as high as $2.05 billion, $150 million higher than the company’s most recent guidance. This higher revenue outlook derives from the strength of eBay’s U.S., International and Payments businesses. From a quarterly perspective, eBay estimates that Q2-03 revenues could be $500 million, Q3-03 $510 million, and Q4-03 $564 million.

GAAP Diluted EPS — eBay now estimates that earnings per diluted share for the full year 2003 could be as high as $1.27, $0.15 higher than the company’s most recent guidance. From a quarterly perspective, eBay estimates that GAAP earnings per diluted share to be $0.30 in Q2-03, $0.30 in Q3-03 and $0.35 in Q4-03.

Pro Forma Diluted EPS — The company’s pro forma earnings per diluted share for the full year 2003 could be as high as $1.41, $0.14 higher than the company’s most recent guidance. eBay now believes that amortization of intangible assets, stock-based compensation expenses and other pro forma items primarily related to the PayPal acquisition, as well as the related tax impact of these items, will range between $11.0 million to $12.0 million per quarter through 2003. From a quarterly perspective, eBay estimates pro forma earnings per diluted share to be $0.33 in Q2-03, $0.33 in Q3-03 and $0.39 in Q4-03.

Effective Tax Rate — eBay’s current estimate for its effective tax rate is 32% for 2003.

Non-GAAP Measures

To supplement our consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of gross profit, operating income, net income, earnings per share, and cash flows, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe 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 our core operating results. In addition, because we have historically reported certain non-GAAP results to investors, we believe the inclusion of non-GAAP measures provides consistency in our 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 our 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™. 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

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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.

Forward-Looking Statements

This announcement contains forward-looking statements relating to the performance of eBay and its consolidated subsidiaries during 2003. Those statements involve risks and uncertainties, and our actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to: our need to manage an increasingly large company with a broad range of businesses; to deal with the increasingly competitive environment for online trading, both in specific vertical categories and generally; to manage the integration of PayPal and the litigation, regulatory, credit card association, and other risks specific to PayPal; to manage our other regulatory, tax, and litigation risks even as our product offerings and geographies expand; to maintain site stability on all of our sites; to continue to expand our model to new types of merchandise and sellers, and to continue to expand outside of the U.S.; as well as the timing and commercial success of new features and functions added to our websites; the success of the company's commercial partners and commercial relationships; and the costs and benefits of announced and prospective joint ventures, acquisitions and other commercial transactions. More information about factors that could affect our 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 our Annual Report on Form 10-K for the year ended December 31, 2002, and will also be included in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003, which will be filed in the second quarter of 2003. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update such statements.

###

     
Investor Relations Contacts:
Media Relations Contact:
Investor Information Request:
Company News:
  David Joseph 408-376-7057
Tracey Ford 408-376-7205
Kevin Pursglove 408-376-7458
408-376-7493 or email to investor_relations@ebay.com
http://www.businesswire.com

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eBay Inc.

Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)

                       
          December 31,   March 31,
          2002   2003
         
 
     
ASSETS
               
Current assets:
               
 
Cash and cash equivalents
  $ 1,109,313     $ 1,554,418  
 
Short-term investments
    89,690       122,283  
 
Accounts receivable, net
    131,453       157,263  
 
Funds receivable
    41,014       83,885  
 
Other current assets
    96,988       95,825  
 
   
     
 
   
Total current assets
    1,468,458       2,013,674  
Long-term investments
    470,227       361,989  
Restricted cash and investments
    134,644       127,736  
Property and equipment, net
    218,028       241,800  
Goodwill
    1,456,024       1,470,867  
Intangible assets, net
    279,465       267,742  
Deferred tax assets
    84,218       76,861  
Other assets
    13,380       12,306  
 
 
   
     
 
 
  $ 4,124,444     $ 4,572,975  
 
   
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
 
Accounts payable
  $ 47,424     $ 54,039  
 
Funds payable and amounts due to customers
    50,396       97,277  
 
Accrued expenses and other current liabilities
    199,323       218,022  
 
Deferred revenue and customer advances
    18,846       20,535  
 
Short-term debt
    2,970       3,340  
 
Income taxes payable
    67,265       71,642  
 
   
     
 
   
Total current liabilities
    386,224       464,855  
Long-term debt
    13,798       13,122  
Deferred tax liabilities
    111,843       106,677  
Other liabilities
    22,874       20,693  
Minority interests
    33,232       42,437  
 
   
     
 
   
Total liabilities
    567,971       647,784  
 
   
     
 
Total stockholders’ equity
    3,556,473       3,925,191  
 
   
     
 
 
  $ 4,124,444     $ 4,572,975  
 
   
     
 

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eBay Inc.

Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)

                       
          Three Months Ended
          March 31,
         
          2002   2003
         
 
Net revenues
  $ 245,106     $ 476,492  
 
Cost of net revenues
    41,277       92,098  
 
   
     
 
     
Gross profit
    203,829       384,394  
 
   
     
 
 
Operating expenses:
               
   
Sales and marketing
    73,104       123,760  
   
Product development
    24,307       34,332  
   
General and administrative
    32,493       63,000  
   
Payroll expense on employee stock options
    1,679       3,290  
   
Amortization of acquired intangible assets
    1,530       11,868  
 
   
     
 
     
Total operating expenses
    133,113       236,250  
 
   
     
 
 
Income from operations
    70,716       148,144  
 
Interest and other income (expense), net
    7,387       7,704  
 
Interest expense
    (685 )     (31 )
 
Impairment of certain equity investments
    (1,181 )     (230 )
 
   
     
 
 
Income before income taxes and minority interests
    76,237       155,587  
 
Provision for income taxes
    (29,411 )     (49,018 )
 
Minority interests in consolidated companies
    758       (2,378 )
 
   
     
 
 
Net income
  $ 47,584     $ 104,191  
 
   
     
 
 
Net income per share:
               
   
Basic
  $ 0.17     $ 0.33  
 
   
     
 
   
Diluted
  $ 0.17     $ 0.32  
 
   
     
 
 
Weighted average shares:
               
   
Basic
    278,332       313,658  
 
   
     
 
   
Diluted
    284,891       321,259  
 
   
     
 

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eBay Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)

                                                       
          Three Months Ended   Three Months Ended
          March 31, 2002   March 31, 2003
         
 
          Reported   Pro Forma Entries   Pro Forma   Reported   Pro Forma Entries   Pro Forma
         
 
 
 
 
 
Net revenues
  $ 245,106             $ 245,106     $ 476,492     $     $ 476,492  
 
Cost of net revenues
    41,277       (28 ) (a)     41,249       92,098       (84 )(a)     92,014  
 
   
     
     
     
     
     
 
     
Gross profit
    203,829       28       203,857       384,394       84       384,478  
 
   
     
     
     
     
     
 
 
Operating expenses:
                                               
   
Sales and marketing
    73,104       (46 ) (a)     73,058       123,760       (418 )(a)     123,342  
   
Product development
    24,307       (111 ) (a)     24,196       34,332       (517 )(a)     33,815  
   
General and administrative
    32,493       (274 ) (a)     32,219       63,000       (1,253 )(a)     61,747  
   
Payroll expense on employee stock options
    1,679       (1,679 ) (b)           3,290       (3,290 )(b)      
   
Amortization of acquired intangible assets
    1,530       (1,530 ) (c)           11,868       (11,868 )(c)      
 
   
     
     
     
     
     
 
     
Total operating expenses
    133,113       (3,640 )     129,473       236,250       (17,346 )     218,904  
 
   
     
     
     
     
     
 
 
Income from operations
    70,716       3,668       74,384       148,144       17,430       165,574  
 
Interest and other income (expense), net
    7,387             7,387       7,704             7,704  
 
Interest expense
    (685 )           (685 )     (31 )           (31 )
 
Impairment of certain equity investments
    (1,181 )     1,181 (d)           (230 )     230 (d)      
 
   
     
     
     
     
     
 
 
Income before income taxes and minority interests
    76,237       4,849       81,086       155,587       17,660       173,247  
 
Provision for income taxes
    (29,411 )     (1,291 )(e)     (30,702 )     (49,018 )     (5,651 )(e)     (54,669 )
 
Minority interests in consolidated companies
    758       (590 )(f)     168       (2,378 )           (2,378 )
 
   
     
     
     
     
     
 
 
Net income
  $ 47,584     $ 2,968     $ 50,552     $ 104,191     $ 12,009     $ 116,200  
 
   
     
     
     
     
     
 
 
Net income per share:
                                               
   
Basic
  $ 0.17             $ 0.18     $ 0.33             $ 0.37  
 
   
     
     
     
     
     
 
   
Diluted
  $ 0.17             $ 0.18     $ 0.32             $ 0.36  
 
   
     
     
     
     
     
 
 
Weighted average shares:
                                               
   
Basic
    278,332               278,332       313,658               313,658  
 
   
     
     
     
     
     
 
   
Diluted
    284,891               284,891       321,259               321,259  
 
   
     
     
     
     
     
 
 
Gross Margin
    83 %           83 %     81 %           81 %
 
Operating Margin
    29 %     1 %     30 %     31 %     4 %     35 %

Notes:

(a)   Non-cash stock based compensation expense
 
(b)   Employer payroll taxes on employee exercises of non-qualified stock options
 
(c)   Amortization of acquired intangible assets
 
(d)   Impairment of certain equity investments
 
(e)   Incremental income taxes associated with certain pro forma entries
 
(f)   Minority interest attributable to impairment of certain equity investments

- 8 -


 

eBay Inc.

Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)

                       
          Three Months Ended
         
          March 31,        
          2002   2003
         
 
Cash flows from operating activities:
               
 
Net income
  $ 47,584     $ 104,191  
 
Adjustments:
               
   
Provision for doubtful accounts and authorized credits
    8,148       9,137  
   
Provision for transaction losses
          8,993  
   
Depreciation and amortization
    13,011       32,020  
   
Stock-based compensation
    913       2,272  
   
Tax benefit on the exercise of employee stock options
    29,411       41,340  
   
Impairment of certain equity investments
    1,181       230  
   
Minority interests and other
    (2,042 )     1,778  
   
Changes in assets and liabilities:
               
     
Accounts receivable
    (27,832 )     (34,824 )
     
Funds receivable
          (42,871 )
     
Other current assets
    (1,561 )     1,258  
     
Other non-current assets
    1,218       1,140  
     
Deferred tax assets, net
    (2,411 )     616  
     
Accounts payable
    507       6,826  
     
Due to customers and funds payable
          46,881  
     
Accrued expenses and other liabilities
    21,041       4,904  
     
Deferred revenue and customer advances
    732       1,744  
     
Income taxes payable
    2,373       4,371  
 
   
     
 
Net cash provided by operating activities
    92,273       190,006  
 
   
     
 
Cash flows from investing activities:
               
   
Purchases of property and equipment
    (11,494 )     (43,908 )
   
Purchases of investments
    (208,245 )     (135,153 )
   
Maturities and sales of investments
    200,509       218,360  
   
Acquisitions, net of cash acquired
    (43,557 )     (4,389 )
 
 
   
     
 
Net cash provided by (used in) investing activities
    (62,787 )     34,910  
 
   
     
 
Cash flows from financing activities:
               
 
Proceeds from issuance of common stock, net
    27,004       217,385  
 
Principal payments on long-term debt
    (3,296 )     (307 )
 
 
   
     
 
Net cash provided by financing activities
    23,708       217,078  
 
   
     
 
Effect of exchange rate changes on cash and cash equivalents
    (312 )     3,111  
 
   
     
 
Net increase in cash and cash equivalents
    52,882       445,105  
Cash and cash equivalents at beginning of period
    523,969       1,109,313  
 
 
   
     
 
Cash and cash equivalents at end of period
  $ 576,851     $ 1,554,418  
 
   
     
 
Net cash provided by operating activities
  $ 92,273     $ 190,006  
Less: Purchases of property and equipment
    (11,494 )     (43,908 )
 
   
     
 
Free cash flow
  $ 80,779     $ 146,098  
 
   
     
 

- 9 -


 

eBay Inc.
Unaudited Summary of Consolidated Net Revenues

(U.S. Dollars In Thousands, Except Percentages)

Net Revenues by Type

                                           
      Three Months Ended
     
      March 31,   June 30,   September 30,   December 31,   March 31,
      2002   2002   2002   2002   2003
     
 
 
 
 
Transaction
                                       
 
U.S
  $ 157,153     $ 167,489     $ 182,209     $ 211,388     $ 234,876  
 
Current quarter vs prior quarter
    17 %     7 %     9 %     16 %     11 %
 
Current quarter vs prior year quarter
    44 %     48 %     53 %     58 %     49 %
 
International
    51,724       63,099       75,296       107,366       137,504  
 
Current quarter vs prior quarter
    32 %     22 %     19 %     43 %     28 %
 
Current quarter vs prior year quarter
    191 %     152 %     163 %     173 %     166 %
 
Payments
    4,787       4,719       6,094       77,703       93,179  
 
Current quarter vs prior quarter
    (15 %)     (1 %)     29 %     1175 %     20 %
 
Current quarter vs prior year quarter
    88 %     22 %     26 %     1281 %     1847 %
 
   
     
     
     
     
 
 
Total transaction
    213,664       235,307       263,599       396,457       465,559  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    19 %     10 %     12 %     50 %     17 %
 
Current quarter vs prior year quarter
    65 %     66 %     73 %     122 %     118 %
3rd party advertising
                                       
 
U.S
    18,206       15,490       14,148       7,062       5,492  
 
Current quarter vs prior quarter
    (33 %)     (15 %)     (9 %)     (50 %)     (22 %)
 
Current quarter vs prior year quarter
    56 %     (14 %)     (40 %)     (74 %)     (70 %)
 
International
    827       1,210       898       1,716       1,313  
 
Current quarter vs prior quarter
    1 %     46 %     (26 %)     91 %     (23 %)
 
Current quarter vs prior year quarter
    703 %     37 %     (42 %)     110 %     59 %
 
Payments
                      1,478       2,027  
 
Current quarter vs prior quarter
    N/A       N/A       N/A       N/A       37 %
 
Current quarter vs prior year quarter
    N/A       N/A       N/A       N/A       N/A  
 
   
     
     
     
     
 
 
Total 3rd party advertising
    19,033       16,700       15,046       10,256       8,832  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    (32 %)     (12 %)     (10 %)     (32 %)     (14 %)
 
Current quarter vs prior year quarter
    62 %     (11 %)     (40 %)     (64 %)     (54 %)
End-to-end services
                                       
 
U.S
    4,869       5,091       6,096       5,591       2,101  
 
Current quarter vs prior quarter
    11 %     5 %     20 %     (8 %)     (62 %)
 
Current quarter vs prior year quarter
    (17 %)     (44 %)     (22 %)     27 %     (57 %)
 
Payments
                      587        
 
Current quarter vs prior quarter
    (100 %)     N/A       N/A       N/A       (100 %)
 
Current quarter vs prior year quarter
    N/A       (100 %)     (100 %)     607 %     N/A  
 
   
     
     
     
     
 
 
Total end-to-end services
    4,869       5,091       6,096       6,178       2,101  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    9 %     5 %     20 %     1 %     (66 %)
 
Current quarter vs prior year quarter
    (17 %)     (46 %)     (25 %)     38 %     (57 %)
 
   
     
     
     
     
 
Offline net revenues
    7,540       9,189       4,038       1,037        
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    (3 %)     22 %     (56 %)     (74 %)     (100 %)
 
Current quarter vs prior year quarter
    12 %     (16 %)     (55 %)     (87 %)     (100 %)
 
   
     
     
     
     
 
Total net revenues
  $ 245,106     $ 266,287     $ 288,779     $ 413,928     $ 476,492  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    12 %     9 %     8 %     43 %     15 %
 
Current quarter vs prior year quarter
    59 %     47 %     49 %     89 %     94 %

- 10 -


 

eBay Inc.
Unaudited Summary of Consolidated Net Revenues

(U.S. Dollars In Thousands, Except Percentages)

Net Revenues by Segment

                                           
      Three Months Ended
     
      March 31,   June 30,   September 30,   December 31,   March 31,
      2002   2002   2002   2002   2003
     
 
 
 
 
U.S.
  $ 187,768     $ 197,259     $ 206,491     $ 225,078     $ 242,469  
 
Current quarter vs prior quarter
    8 %     5 %     5 %     9 %     8 %
 
Current quarter vs prior year quarter
    41 %     31 %     30 %     30 %     29 %
International
    52,551       64,309       76,194       109,082       138,817  
 
Current quarter vs prior quarter
    31 %     22 %     18 %     43 %     27 %
 
Current quarter vs prior year quarter
    194 %     148 %     152 %     172 %     164 %
Payments
    4,787       4,719       6,094       79,768       95,206  
 
Current quarter vs prior quarter
    (16 %)     (1 %)     29 %     1209 %     19 %
 
Current quarter vs prior year quarter
    88 %     12 %     18 %     1297 %     1889 %
 
   
     
     
     
     
 
Total net revenues
  $ 245,106     $ 266,287     $ 288,779     $ 413,928     $ 476,492  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    12 %     9 %     8 %     43 %     15 %
 
Current quarter vs prior year quarter
    59 %     47 %     49 %     89 %     94 %

Net Revenues by Geography

                                           
      Three Months Ended
     
      March 31,   June 30,   September 30,   December 31,   March 31,
      2002   2002   2002   2002   2003
     
 
 
 
 
U.S. net revenues
  $ 192,555     $ 201,978     $ 212,585     $ 290,583     $ 319,170  
 
Current quarter vs prior quarter
    7 %     5 %     5 %     37 %     10 %
 
Current quarter vs prior year quarter
    41 %     30 %     29 %     62 %     66 %
 
% of total
    79 %     76 %     74 %     70 %     67 %
International net revenues
    52,551       64,309       76,194       123,345       157,322  
 
Current quarter vs prior quarter
    31 %     22 %     18 %     62 %     28 %
 
Current quarter vs prior year quarter
    194 %     148 %     152 %     208 %     199 %
 
% of total
    21 %     24 %     26 %     30 %     33 %
 
   
     
     
     
     
 
Total net revenues
  $ 245,106     $ 266,287     $ 288,779     $ 413,928     $ 476,492  
 
   
     
     
     
     
 
 
Current quarter vs prior quarter
    12 %     9 %     8 %     43 %     15 %
 
Current quarter vs prior year quarter
    59 %     47 %     49 %     89 %     94 %

- 11 -


 

eBay Inc.
eBay Unaudited Supplemental Operating Data

(In Millions, Except Percentages)

                                           
      Three Months Ended
     
      March 31,   June 30,   September 30,   December 31,   March 31,
      2002   2002   2002   2002   2003
     
 
 
 
 
Confirmed Registered Users
    46.1       49.7       54.9       61.7       68.8  
 
Current quarter vs prior quarter
    9 %     8 %     10 %     12 %     12 %
 
Current quarter vs prior year quarter
    55 %     46 %     46 %     46 %     49 %
Active Users (1)
    19.8       21.8       24.2       27.7       31.1  
 
Current quarter vs prior quarter
    11 %     10 %     11 %     14 %     12 %
 
Current quarter vs prior year quarter
    50 %     49 %     52 %     56 %     57 %
Number of Listings
    138.0       145.2       159.6       195.5       219.7  
 
Current quarter vs prior quarter
    9 %     5 %     10 %     22 %     12 %
 
Current quarter vs prior year quarter
    55 %     47 %     47 %     55 %     59 %
Gross Merchandise Sales
  $ 3,107     $ 3,395     $ 3,766     $ 4,600     $ 5,317  
 
Current quarter vs prior quarter
    14 %     9 %     11 %     22 %     16 %
 
Current quarter vs prior year quarter
    57 %     51 %     60 %     68 %     71 %


(1)   Defined as all users, excluding Half.com and Internet Auction, who bid, bought, or listed an item within the previous twelve month period.

- 12 -


 

eBay Inc.
PayPal Unaudited Supplemental Operating Data

(In Millions, Except Percentages)

eBay completed its acquisition of PayPal on October 3, 2002. PayPal’s financial statements and supplemental operating data have been included in eBay’s consolidated financial statements beginning October 4, 2002. The following table presents PayPal financial information for each of the full quarters ended December 31, 2001 through September 30, 2002, for the period from October 4, 2002 through December 31, 2002, and for the full quarter ended March 31, 2003.

                                                       
          Three Months Ended
         
                  March 31,   June 30,   September 30,   December 31,   March 31,
                  2002   2002   2002   2002   2003
                 
 
 
 
 
Revenue
                                               
   
Transaction
          $ 48.0     $ 52.5     $ 58.1     $ 72.6     $ 92.2  
     
Current quarter vs prior quarter
            23 %     9 %     11 %     25 %     27 %
     
Current quarter vs prior year quarter
            279 %     190 %     104 %     87 %     92 %
 
Non- transaction
          $ 0.8     $ 1.3     $ 1.2     $ 2.1     $ 2.0  
     
Current quarter vs prior quarter
            (33 %)     63 %     (8 %)     75 %     (5 %)
     
Current quarter vs prior year quarter
            (43 %)     (18 %)     (18 %)     75 %     150 %
 
Total revenues
          $ 48.8     $ 53.8     $ 59.3     $ 74.7     $ 94.2  
 
Percent of revenue which is international
            21.4 %     20.5 %     20.2 %     19.1 %     19.6 %
Metrics
                                               
 
Total accounts (1)
            15.4       17.8       19.7       23.3       27.2  
     
Current quarter vs prior quarter
            20 %     16 %     11 %     18 %     17 %
     
Current quarter vs prior year quarter
            114 %     103 %     86 %     82 %     77 %
 
Active accounts (2)
            5.2       5.5       6.3       7.9       9.4  
 
Total number of payments
            26.6       28.8       31.3       39.2       50.5  
     
Current quarter vs prior quarter
            19 %     8 %     9 %     25 %     29 %
     
Current quarter vs prior year quarter
            96 %     91 %     74 %     76 %     90 %
   
Total payment volume
          $ 1,460     $ 1,615     $ 1,787     $ 2,138     $ 2,628  
     
Current quarter vs prior quarter
            21 %     11 %     11 %     20 %     23 %
     
Current quarter vs prior year quarter
            127 %     116 %     93 %     77 %     80 %
 
Auction as % of total payment volume
            61 %     59 %     58 %     66 %     67 %
Transaction rates
                                               
 
Transaction revenue rate
            3.29 %     3.25 %     3.25 %     3.40 %     3.51 %
 
Transaction processing expense rate
            1.16 %     1.14 %     1.19 %     1.29 %     1.27 %
 
Transaction loss rate
            0.47 %     0.38 %     0.42 %     0.37 %     0.34 %


(1)   Subsequent to Q3-02, cxcludes closed and locked accounts
 
(2)   Users that sent or received at least one payment during the quarter

- 13 -


 

eBay Inc.
Guidance Summary

(U.S. Dollars in Millions, Except Per Share Amounts)

                         
    Three months ending June 30, 2003
   
    GAAP   Adjustments   Pro Forma
   
 
 
Net revenue
  $ 500           $ 500  
Operating margin
    27 %     4% (a)     31 %
Diluted EPS
  $ 0.30     $ 0.03 (b)   $ 0.33  
                         
    Three months ending September 30, 2003
   
    GAAP   Adjustments   Pro Forma
   
 
 
Net revenue
  $ 515           $ 515  
Operating margin
    28 %     3% (a)     31 %
Diluted EPS
  $ 0.30     $ 0.03 (b)   $ 0.33  
                         
    Three months ending December 31, 2003
   
    GAAP   Adjustments   Pro Forma
   
 
 
Net revenue
  $ 560           $ 560  
Operating margin
    30 %     2% (a)     32 %
Diluted EPS
  $ 0.35     $ 0.03 (b)   $ 0.38  


(a)   Pro forma guidance reflects estimated adjustments for amortization of acquired intangible assets of approximately $12 million, payroll taxes on employee stock options of approximately $4 million, stock based compensation of approximately $1million, and other adjustments estimated to result in an operating margin adjustment of 4% for the three months ending June 30, 2003, 3% for the three months ending September 30, 2003, and 2% for the three months ending December 31, 2003.
 
(b)   Net of tax, the above pro forma items resulted in a $0.03 per diluted share adjustment for the three months ending June 30, 2003 and September 30, 2003 and a $0.04 per diluted share adjustment for the three months ending December 31, 2003.

- 14 - -----END PRIVACY-ENHANCED MESSAGE-----