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Transcription

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Q3 2014 Financial Highlights
October 15, 2014
• This presentation contains non-GAAP measures relating to the company's performance. You can find the
reconciliation of these measures to the nearest comparable GAAP measures in the appendix at the end of
this presentation. All growth rates represent year-over-year comparisons, except as otherwise noted.
• This presentation contains forward-looking statements relating to our future performance that are based
on our current expectations, forecasts and assumptions and involve risks and uncertainties. These
statements include, but are not limited to, statements regarding expected financial results for the fourth
quarter and full year 2014; future growth in the Payments, Marketplaces and Enterprise businesses; and
the planned separation of eBay Inc.’s Marketplaces and PayPal businesses.
• Our actual results may differ materially from those included in this presentation for a variety of reasons,
including, but not limited to: the timing of the separation or whether it will be completed; whether the
operational, marketing and strategic benefits of the separation can be achieved; whether the costs and
expenses of the separation can be controlled within expectations; changes in political, business, and
economic conditions, including any European, Asian or general economic downturn or crisis; foreign
exchange rate fluctuations; our need to successfully react to the increasing importance of mobile
payments and mobile commerce and the social aspect of commerce; an increasingly competitive
environment for our businesses; changes to our capital allocation or management of operating cash; the
complexity of managing an increasingly large enterprise with a broad range of businesses; our need to
manage regulatory, tax and litigation risks (including risks specific to PayPal and PayPal Credit, formerly
Bill Me Later); our need to timely upgrade and develop our technology systems, infrastructure, and
customer service capabilities at reasonable cost while maintaining site stability and performance and
adding new products and features; and our ability to integrate, manage and grow businesses recently
acquired or that may be acquired in the future.
• You can find more information about factors that could affect our operating results in our most recent
annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q (available at
http://investor.ebayinc.com). You should not rely on any forward-looking statements, and we assume no
obligation to update them. All information in this presentation is as of October 15, 2014, and we do not
intend, and undertake no duty, to update this presentation.
2
eBay Inc. Q3 2014 Financial Highlights
• Enabled Commerce Volume (ECV*) of $63B, accelerated 1pt to 27%.
Payment volume growth of 29%, Marketplaces volume growth of 9%
• Mobile momentum continues…global volume acceleration
− Mobile payment volume ($12B) up 72%; Marketplaces mobile volume ($7B) up 41%
− Cross border trade volume ($14B) up 27%
• Revenue grew 12%. Non-GAAP EPS of $0.68, up 6%
• Strong balance sheet, completed $3.5B debt offering; generated $941M
free cash flow
• Reducing full year revenue guidance, and expect to be at the lower end
of full year Non-GAAP EPS guidance…slower Marketplace growth; FX
headwinds
*Enabled Commerce Volume (ECV) includes Marketplaces GMV (excluding vehicles and real estate), Payments Merchant Services Net TPV and eBay Enterprise Gross Merchandise
Sales not earned on eBay or paid for via PayPal or PayPal Credit (formerly Bill Me Later) during the period; excludes volume transacted through the Magento platform
Calculations of Non-GAAP EPS and Free Cash Flow (FCF) are included in the Appendix of this presentation
3
eBay Inc. Revenue
($ millions)
Revenue
4,530
Reported Y/Y Growth
Organic Y/Y Growth*
3,877
3,892
Q2 13
Q3 13
14%
15%
14%
14%
4,262
4,366
4,353
Q4 13
Q1 14
Q2 14
Q3 14
13%
13%
14%
13%
13%
10%
12%
10%
*Calculation of Organic Y/Y Growth is included in the Appendix of this presentation
4
eBay Inc. Non-GAAP EPS
Non-GAAP EPS*
$0.81
Reported Y/Y Growth
Non-GAAP Op. Margin*
$0.70
$0.69
$0.68
$0.63
$0.64
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
17%
26.8%
16%
29.2%
11%
26.9%
9%
24.4%
6%
23.7%
12%
26.3%
*Calculations of Non-GAAP EPS and Non-GAAP Op. Margin are included in the Appendix of this presentation
5
eBay Inc. Operating Expenses*
Sales & Marketing
Product Development
General & Admin.
(% of Revenue)
(% of Revenue)
(% of Revenue)
Prov. for Trxn &
Loan Loss**
(% of Revenue)
18.4%
20.2%
10.1%
Q3 13
Q3 14
Ramp in marketing &
brand spend at both
Marketplaces &
PayPal
Q3 13
10.4%
Q3 14
Product & customer
experience
investments
9.3%
Q3 13
9.0%
Q3 14
Operating leverage
Q3 14 Non-GAAP Op Income:
$1,032M
Q3 14 Non-GAAP Net Income:
$848M
4.7%
5.7%
Q3 13
Q3 14
Increase in PayPal
loss rate & TPV growth
above PayPal revenue
growth
*All expenses are shown on a Non-GAAP basis (calculations can be found in the Appendix of this presentation)
**Prov. for Trxn & Loan Loss includes Marketplaces and PayPal transaction loss, Marketplaces consumer protection programs, bad debt expense and PayPal Credit loan loss
Calculations of Non-GAAP Operating Income and Non-GAAP Net Income are included in the Appendix of this presentation
6
eBay Inc. Free Cash Flow
($ millions)
Free Cash Flow*
1,432
1,225
1,017
968
941
658
Reported Y/Y Growth
Capex % of Revenue
FCF % of Revenue
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
60%
9%
17%
28%
8%
26%
31%
6%
32%
52%
5%
23%
86%
6%
28%
-7%
10%
22%
*Calculation of Free Cash Flow (FCF) is included in the Appendix of this presentation
7
eBay Inc. Cash Flow & Capital Allocation
($ billions)
Cash Balance/Flows
15.1
• Raised $3.5 billion through senior
0.3
12.4
0.0
0.9
0.3
Free Cash Flow / Other Movements
unsecured notes for general
corporate purposes
2.3
• Paid down $1.2B of commercial paper;
10.3
none outstanding
• 73% of PayPal Credit principal loan
portfolio funded with offshore cash
8.6
Short/Long-Term Investments
• Total US cash, cash equivalents and
non-equity investments at quarter end
$5.1B
Int'l Cash
US Cash
2.8
• Significant capacity to capitalize two
2.0
independent companies with
appropriate capital structures and
funding flexibility
2.3
1.5
Q2 14 Ending
Balance*
FCF**
Buyback
Credit
Debt
Other***
Q3 14 Ending
Balance*
*Cash balances/flows include cash, cash equivalents and non-equity investments
**Calculation of Free Cash Flow is included in the Appendix of this presentation
***Other includes primarily employee stock issuance and FX impact
8
Payments Revenue
($ millions)
149
Revenue
205
167
1,700
1,741
1,783
Q1 14
Q2 14
Q3 14
143
145
1,693
127
Marketing Services &
Other Revenue
Transaction Revenue
Total Revenue
Y/Y Growth
Fx-Neutral Y/Y Growth
% Int'l
1,475
1,493
Q2 13
Q3 13
Q4 13
1,620
19%
20%
52%
1,836
19%
20%
53%
1,624
20%
21%
51%
1,845
19%
20%
52%
1,946
20%
20%
51%
1,950
20%
21%
52%
9
Payments Operating Metrics
(In millions, except %)
Global Active Accounts
Y/Y Growth
Net Number of Payments
Y/Y Growth
On eBay TPV
Y/Y Growth
Merchant Services TPV*
Y/Y Growth
Total TPV
Y/Y Growth
% Int'l TPV
Global On eBay Penetration Rate
Q2 13
132.4
17%
Q3 13
137.4
17%
Q4 13
142.6
16%
Q1 14
148.4
16%
Q2 14
152.5
15%
Q3 14
156.9
14%
700.6
24%
729.4
24%
846.1
22%
834.4
22%
850.2
21%
894.6
23%
13,006
15%
15%
29,807
29%
29%
42,813
24%
25%
48%
13,112
14%
15%
30,725
30%
30%
43,837
25%
25%
48%
15,311
14%
13%
36,662
31%
31%
51,973
25%
25%
49%
14,844
15%
13%
37,162
32%
32%
52,006
27%
26%
49%
14,675
13%
10%
40,371
35%
33%
55,046
29%
26%
49%
14,341
9%
8%
42,235
37%
37%
56,576
29%
28%
49%
77.2%
78.2%
78.4%
78.9%
79.8%
80.5%
Take Rate
Transaction Expense
Loss Rate
Transaction Margin**
3.79%
1.04%
0.31%
64.4%
3.70%
1.05%
0.30%
63.4%
3.53%
0.97%
0.32%
63.5%
3.55%
0.99%
0.27%
64.6%
3.53%
0.95%
0.28%
65.1%
3.45%
0.95%
0.33%
62.8%
Payments Segment Margin
23.0%
22.7%
25.7%
25.7%
24.5%
20.9%
TPV acceleration due
primarily to Braintree,
adding 3pts to Merchant
Services FX-Neutral TPV
growth
Braintree negatively
impacted transaction
margin by 70bpts
Lower take rate due to
large merchant mix,
Braintree, and foreign
currency hedges
Segment margin down
due primarily to
Braintree and increased
investments in product
and brand
*Merchant Services TPV is the total dollar volume of payments, net of payment reversals, successfully completed through our payments networks, including PayPal Credit (formerly Bill
Me Later), Venmo, and payments processed through Braintree’s full stack payments platform during the period; excludes PayPal’s and Braintree’s payment gateway businesses and
payments for transactions on our Marketplaces platforms. **Transaction Margin calculation has been adjusted to include total revenues (including revenue from credit), less transaction
expense (including credit cost of funds), less transaction loss (including credit loan losses), divided by global take rate (based on global total revenues divided by total TPV)
10
Credit Operating Metrics
Accelerates growth for merchants
Offers consumers more choice
Lowers transaction expense
Early stage of growth
30%
4
PayPal Credit Growth
6%
Portfolio Balance ($B)*
PayPal Credit Share of U.S. GMV & TPV†
Share of US Addressable
GMV
3
4%
20%
Share of US Addressable
GMV & MS TPV
2
Risk Adjusted Margin**
2%
10%
1
0%
0
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Share of US MS TPV
0%
Q2 13
Q3 14
Q3 13
Q4 13
Q1 14
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
PayPal Credit TPV ($M)
934
1,009
1,314
1,092
1,252
1,302
Y/Y growth
34%
30%
27%
29%
34%
29%
Portfolio Balance ($M)*
2,391
2,564
2,915
2,892
3,099
3,338
Risk Adjusted Margin**
16.2%
16.1%
15.8%
16.2%
16.6%
16.8%
Net Charge-Off Rate***
5.6%
5.5%
6.3%
5.4%
5.5%
5.3%
Q2 14
Q3 14
*Gross receivables balance as of 9/30/14. **Risk adjusted margin represents annualized credit portfolio revenue, excluding contra-revenue incentives to customers or merchants, less cost
of funds and less net credit and fraud losses during the period, divided by average loan receivables for the period. ***Net charge-off rate is the annualized ratio of net credit losses over the
average daily loan receivables balance during the period. Net credit losses are the principal loan losses, exclusive of interest and late fee write offs, less recoveries of previously charged off
balances. †% of US Marketplaces GMV and Merchant Services TPV funded using PayPal Credit (formerly Bill Me Later, excluding Bill Me Later legacy business)
11
Marketplaces Revenue
($ millions)
Revenue
471
422
418
1,578
1,609
Q2 13
Q3 13
428
452
449
1,828
1,727
1,722
1,707
Q4 13
Q1 14
Q2 14
Q3 14
2,299
12%
11%
59%
2,156
10%
9%
60%
2,174
9%
6%
61%
2,156
6%
5%
59%
Other Revenue
Transaction Revenue
Total Revenue
Y/Y Growth
% Int'l
2,001
10%
10%
59%
2,027
12%
12%
58%
Reflects reclassification of vehicles and real estate revenues from transaction revenue to marketing services and other revenue
12
Marketplaces Operating Metrics
(In millions, except percentages)
Global Active Buyers
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
130.8
134.9
140.3
145.1
148.9
152.3
13%
13%
14%
14%
14%
13%
Y/Y Growth in Sold Items
11.4%
11.4%
11.2%
11.4%
9.5%
9.1%
US GMV*
7,253
7,408
8,342
8,141
7,972
7,896
17%
15%
14%
11%
10%
7%
11,023
10,937
13,162
12,404
12,513
12,179
Y/Y Growth
11%
12%
12%
13%
14%
11%
11%
11%
10%
11%
8%
7%
18,276
18,345
21,503
20,545
20,485
20,075
Y/Y Growth
13%
13%
13%
12%
12%
9%
13%
12%
12%
11%
8%
7%
39.7%
38.9%
41.1%
39.7%
Y/Y Growth
Y/Y Growth
International GMV*
GMV*
Marketplaces Segment Margin
36.3%
GMV pressure due to
reduced traffic from cyberattack and SEO algorithm
changes
Free shipping on 58% of
transactions across US, UK,
DE
Global fixed price GMV grew
15% and auctions GMV
declined 7%
Segment margin down due
primarily to increased spend
in marketing and contra
35.9%
*Gross Merchandise Volume (GMV) is the total value of all successfully closed transactions between users on Marketplaces platforms during the period regardless of whether the buyer
and seller actually consummated the transaction; excludes vehicles and real estate gross merchandise volume
13
eBay Enterprise Revenue & Operating Metrics
($ millions)
Revenue/Metrics
74
Other Revenue
66
67
61
61
60
208
207
199
Strong volume
growth offset
by business
mix
Segment
margin down
due primarily to
Marketing
Services
softness and
gearing up for
Holiday
333
Transaction Revenue
Total Revenue*
Y/Y Growth
Gross Merchandise Sales**
Y/Y Growth
Same Store Sales (SSS) Y/Y Growth
Segment Margin*
193
185
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
259
12%
815
21%
19%
1.0%
252
6%
787
13%
13%
3.4%
407
-1%
1,771
13%
13%
15.4%
269
8%
936
16%
11%
4.7%
267
3%
940
15%
14%
1.1%
259
3%
900
14%
13%
-0.5%
*From Q1 2014, Magento is included in eBay Enterprise MS&O revenue and segment margin with prior quarters restated
**Gross Merchandise Sales represents the retail value of all sales transactions, inclusive of freight charges and net of allowance for returns and discounts, which flow through our
Enterprise commerce technologies, whether we record the full amount of such transaction as a product sale or a percentage of such transaction as a service fee; excludes volume
transacted through the Magento platform
14
Guidance
Q4 2014 Guidance
Revenue
(in billions)
Y/Y Growth
Non-GAAP EPS*
Y/Y Growth
Low
High
$4.85
$4.95
7%
9%
$0.88
$0.91
8%
12%
Guidance Context
• Slower Marketplaces growth and a stronger US$ than expected… approximately ($300M) revenue
and ($0.07) Non-GAAP EPS impact in H2, partially offset by cost control and favorable tax rate
• Expect Q4 Non-GAAP Effective Tax Rate of 18%-19% helped by geographic business mix
• Continue to expect US R&D tax credit will be extended in 2014
• Reducing full year revenue guidance to $17.85-$17.95B, and expect to be at the low end of
prior Non-GAAP EPS full year guidance range
*Calculations of Non-GAAP EPS and Non-GAAP Effective Tax Rate are included in the Appendix of this presentation
15
Creating Two World Class Independent Platforms…
Operating agreements
Capital structure
Regulatory
• Preserve current
relationships
• Strong balance sheets
capitalized for success
• Current debt and
significant cash balance
expected to remain at
“new” eBay
• Cash for PayPal to
finance loan receivables
portfolio
• Need favorable opinion
and/or rulings on taxfree nature of
transaction
• Minimize dis-synergies
• Strategic flexibility
Manage trade-offs
• Effectiveness of Form
10 registration
statement filed with the
SEC
While opportunistically
buying stock in the interim
Anticipate H1 ‘15 filing and H2 ‘15 separation
16
Summary
• We have two great businesses in markets with strong tailwinds
supporting them
• Consumers continue to embrace ecommerce and digital payments,
playing directly to our strengths
• With other large ecosystem players embracing mobile commerce, we
believe this will accelerate the blurring of lines between offline and
online, raising consumer awareness and expanding our addressable
market
• We will continue to focus on execution while moving with speed to
effectuate the separation
17
Q&A
Appendix
Calculation of Organic Revenue Growth
June 30,
Sept 30,
Dec 31,
Mar 31,
June 30,
Sept 30,
2013
2013
2013
2014
2014
2014
Total revenue growth
14 %
14 %
13 %
14 %
13 %
12 %
Acquisition/Disposition impact
—%
—%
—%
(0.5)%
(1)%
(1)%
Foreign currency impact
1%
—%
—%
(0.5)%
(2)%
(1)%
15 %
14 %
13 %
13 %
10 %
10 %
Total organic revenue growth
20
Reconciliation of Quarterly GAAP to Non-GAAP
Operating Margin
(in millions)
GAAP operating income
$
Stock-based compensation expense and related
employer payroll taxes
Acquisition related transaction expense
Amortization of acquired intangible assets (1)
Restructuring
Jun 30,
Sept 30,
Dec 31,
Mar 31,
Jun 30,
Sept 30,
2013
2013
2013
2014
2014
2014
750 $
799 $
1,022
878
168
141
199
—
—
101
$
794 $
781
164
177
173
9
—
—
—
100
94
103
95
78
—
—
(2)
—
—
—
Non-GAAP operating income
$
1,019 $
1,040 $
1,322
1,145
$
1,066 $
1,032
Revenues
$
3,877 $
3,892 $
4,530
4,262
$
4,366 $
4,353
GAAP operating margin
19.3 %
20.5 %
22.6 %
20.6 %
18.2 %
17.9 %
Non-GAAP operating margin
26.3 %
26.8 %
29.2 %
26.9 %
24.4 %
23.7 %
(1) Includes amortization of acquired intangible
assets within cost of net revenues and operating
expenses.
21
Reconciliation of Quarterly GAAP to Non-GAAP Net
Income / EPS
(in millions, except per share data)
GAAP net income (loss)
$
Stock-based compensation expense and related employer
payroll taxes
Jun 30,
Sept 30,
Dec 31,
Mar 31,
June 30,
Sept 30,
2013
2013
2013
2014
2014
2014
640 $
689 $
850 $
168
141
199
(2,326) $
676 $
673
164
177
173
—
—
—
9
—
—
101
100
94
103
95
78
Restructuring
—
—
(2)
—
—
—
Skype sale and transaction related items
—
—
—
—
—
—
Acquisition related items
—
—
—
—
—
—
Loss on divested business
—
—
—
—
—
—
Accretion of note receivable
(5)
(5)
—
—
—
—
1
Acquisition related transaction expense
Amortization of acquired intangible assets (1)
Amortization of intangibles
Gain on sale of RueLaLa and ShopRunner
2
2
1
1
2
—
(75)
—
—
—
—
—
—
(3)
—
—
—
—
Gain on investment
(5)
Gain from the divestiture of a business
—
Income taxes associated with certain non-GAAP entries
—
(79)
(15)
(82)
(74)
Non-GAAP net income
$
822 $
837 $
1,067
899 $
868 $
848
Non-GAAP net income per diluted share
$
0.63 $
0.64 $
0.81
0.70 $
0.69 $
0.68
1,267 $
1,251
Shares used in non-GAAP diluted share calculation
1,313
1,310
(84)
1,310
2,957
1,292
(1) Includes amortization of acquired intangible assets
within cost of net revenues and operating expenses.
22
Reconciliation of Quarterly GAAP to Non-GAAP
Quarterly Statement of Income
Reported
Three Months Ended
Three Months Ended
September 30, 2014
September 30, 2013
Non-GAAP
Entries
Non-GAAP
Non-GAAP
Entries
Reported
Non-GAAP
(in millions, except per share data and percentages)
Net revenues
$
Cost of net revenues
4,353
1,389
$
(19) (a)
4,353 $
3,892
1,350
1,224
$
(20) (c)
Gross Profit
2,964
39
—
$
3,892
(9) (a)
1,196
(19) (c)
3,003
2,668
(28)
2,696
Operating expenses:
Sales and marketing
923
(46) (a)
877
755
(38) (a)
717
Product development
511
(57) (a)
454
433
(42) (a)
391
General and administrative
442
(51) (a)
391
415
(51) (a)
363
(1) (b)
Notes:
Provision for transaction and loan
losses
249
Amortization of acquired intangible
assets
58
(58) (c)
249
185
—
81
185
(81) (c)
—
(a) Stock-based compensation expense
(b) Employer payroll taxes on stock-based compensation
Total operating expense
2,183
(212)
1,971
1,869
(213)
1,656
(c) Amortization of acquired intangible assets and developed technology
Income from operations
781
251
1,032
799
241
1,040
(d) Income taxes associated with certain non-GAAP entries
Interest and other income, net
20
1
18
74
(r)
2 (r)
(3) (s)
(h) Sale of Skype and transaction related items
(5) (m)
Income before income taxes
801
Provision for income taxes
(128)
$
673
Basic
$
Diluted
$
249
(74) (d)
175
(e) Restructuring charges
(75) (t)
Accretion of note receivable
Net income (loss)
(4)
1,050
873
(202)
(184)
$
848 $
689
0.54
$
0.68 $
0.54
$
0.68 $
163
1,036
(15) (d)
$
148
(199)
$
837
0.53
$
0.65
0.53
$
0.64
(i) Acquisition related transaction expense
(j) Gain from the acquisition of a business
(k) Loss on divested business
Net income (loss) per share:
Weighted average shares:
(m) Accretion of note receivable
(p) Gain on the divestiture of a business
(q) Fanatics lawsuit settlement
Basic
1,242
1,242
1,295
1,295
Diluted
1,251
1,251
1,310
1,310
Operating margin
18 %
6%
24 %
21 %
6%
27 %
Effective tax rate
16 %
3%
19 %
21 %
(2)%
19 %
(r) Intangible amortization
(t) Gain on sale of RueLaLa and ShopRunner
(s) Gain on investment
23
Calculation of Free Cash Flow
Three months ended
Jun 30,
Sept 30,
Dec 31,
Mar 31,
June 30,
Sept 30,
2013
2013
2013
2014
2014
2014
(in millions)
GAAP operating cash
flow
1,011
1,334
1,713
1,174
1,494
1,368
Purchases of property
and equipment, net
(353)
(317)
(281)
(206)
(269)
(427)
658
1,017
1,432
968
1,225
941
Free cash flow
24
Q4 2014 and FY 2014 GAAP and Non-GAAP Guidance
Three Months Ending
December 31, 2014
(in millions, except per share amounts)
Revenues
Diluted EPS
GAAP
Non-GAAP (a)
$4,850 - $4,950
$4,850 - $4,950
$0.73 - $0.76
$0.88 - $0.91
(a) Estimated non-GAAP amounts above for the three months ending December 31, 2014
reflect adjustments that exclude the estimated amortization of acquired intangible assets of
approximately $70-$80 million and estimated stock-based compensation expense and employer
payroll taxes on stock-based compensation expense of approximately $170-$180 million as well
as the related tax impact.
25

earned

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