Discontinued Operations

6 Months Ended

Jun. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

StubHub

On February 13, 2020, we completed the previously announced sale of our StubHub business to an affiliate of viagogo for a purchase price of $4.05 billion in cash, subject to certain adjustments specified in the purchase agreement, including adjustments for indebtedness, cash, working capital and transaction expenses of StubHub at the closing of the transaction. The sale was completed for $4.1 billion in proceeds ($3.2 billion, net of income taxes of approximately $900 million) and a pre-tax gain of $3.9 billion upon closing within income from discontinued operations, both subject to working capital adjustments.

At December 31, 2019, our StubHub segment did not meet the criteria for assets held for sale due to uncertainty that closing conditions of the sale, such as the buyer obtaining debt and equity financing, would be met on a timely basis. Upon the completion of the sale in the first quarter of 2020, we classified the results of our previous StubHub segment as discontinued operations in our condensed consolidated statement of income, condensed consolidated balance sheet and condensed consolidated statement of cash flows for all prior periods presented.

In connection with the sale of StubHub, we entered into a transition service agreement (“TSA”) with viagogo pursuant to which we will provide services, including, but not limited to, business support services for StubHub after the divestiture for fees of $40 million. These agreements commenced with the close of the transaction and have minimum initial terms ranging from 12 to 18 months and can be extended by viagogo for a maximum of 12 months.

The financial results of StubHub are presented as income from discontinued operations, net of income taxes in our condensed consolidated statement of income. The following table presents financial results from discontinued operations (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020 ⁽¹⁾		2019
StubHub income from discontinued operations, net of income taxes	$	7	$	3	$	2,935	$	8
PayPal and Enterprise (loss) from discontinued operations, net of income taxes	(1)		(1)		(2)		(4)
Income from discontinued operations, net of income taxes	$	6	$	2	$	2,933	$	4

⁽¹⁾Includes StubHub financial results from January 1, 2020 to February 13, 2020, in addition to the gain on sale recorded during the three months ended March 31, 2020.

The following table presents cash flows for StubHub (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020 ⁽¹⁾		2019
Net cash provided by (used in) discontinued operating activities	$	—	$	49	$	(110)	$	27
Net cash provided by (used in) discontinued investing activities	$	—	$	(4)	$	4,075	$	(17)

⁽¹⁾Includes StubHub financial results from January 1, 2020 to February 13, 2020, in addition to the gain on sale recorded during the three months ended March 31, 2020.

The financial results of StubHub are presented as income from discontinued operations, net of income taxes on our condensed consolidated statement of income. The following table presents the financial results of StubHub (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020⁽¹⁾		2019
Net revenues	$	—	$	264	$	100	$	494
Cost of net revenues	—		77		31		139
Gross profit	—		187		69		355
Operating expenses:
Sales and marketing	—		129		51		224
Product development	—		27		29		52
General and administrative	—		18		33		43
Provision for transaction losses	—		8		3		13
Amortization of acquired intangible assets	—		2		1		4
Total operating expenses	—		184		117		336
Income (loss) from operations of discontinued operations	—		3		(48)		19
Pre-tax gain on sale	—		—		3,876		—
Income from discontinued operations before income taxes	—		3		3,828		19
Income tax benefit (provision)	7		—		(893)		(11)
Income from discontinued operations, net of income taxes	$	7	$	3	$	2,935	$	8

⁽¹⁾Includes StubHub financial results from January 1, 2020 to February 13, 2020, in addition to the gain on sale recorded during the three months ended March 31, 2020.

For the three and six months ended June 30, 2020 and 2019, the loss from discontinued operations related to our former PayPal and Enterprise businesses was immaterial.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations in the condensed consolidated balance sheet (in millions):


	December 31, 2019
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents	$	52
Accounts receivable, net	9
Other current assets	80
Total current assets of discontinued operations	$	141
Long-term investments	11
Property and equipment, net	26
Goodwill	224
Intangible assets, net	5
Operating lease right-of-use assets	29
Deferred tax assets	8
Other assets	3
Total long-term assets of discontinued operations	$	306

Carrying amounts of liabilities included as part of discontinued operations:
Accounts payable	$	19
Accrued expenses and other current liabilities	215
Deferred revenue	23
Income taxes payable	2
Total current liabilities of discontinued operations	$	259
Operating lease liabilities	20

Other liabilities	6
Total long-term liabilities of discontinued operations	$	26