|Tue Apr 29 2014 15:25:06|
eBay Releases First Quarter 2014 Earnings
By: Ina Steiner
eBay's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing first quarter 2014 earnings, you can view the full release with tables on the eBay investor relations website.
eBay Inc. Reports First Quarter Results:
Enabled Commerce Volume Growth 24%
Revenue Growth 14%
Non-GAAP Earnings Growth 11%
Company Buys Back $1.8 Billion in Stock; Takes GAAP Tax Charge On Foreign Earnings To Increase Available U.S. Cash By $6.0 Billion
April 29, 2014 04:15 PM Eastern Daylight Time
SAN JOSE, Calif.-Global commerce platform and payments leader eBay Inc. (Nasdaq: EBAY) today reported that revenue for the first quarter ended March 31, 2014, increased 14% to $4.3 billion, compared to the same period in 2013. Non-GAAP earnings increased 11%, to $899 million or $0.70 per diluted share, over the prior year, driven by strong top line growth. A first quarter GAAP loss of ($2.3) billion or ($1.82) per diluted share, was due to a discrete tax charge of approximately $3.0 billion.
The role the company plays in global commerce continued to grow, with total company enabled commerce volume (ECV) increasing 24% in the first quarter to $58 billion. Mobile ECV advanced 70% to $11 billion representing 19% of volume. Mobile downloads since inception exceeded 240 million and attracted 6.5 million new customers in the quarter. Cross-border trade grew 24%, representing $13 billion, or 22%, of total company ECV.
“We delivered a strong first quarter, with enabled commerce volume up 24 percent and revenue up 14 percent,” said eBay Inc. President and CEO John Donahoe. “We are committed to delivering sustainable shareholder value and focusing on what matters most to our investors. We are executing our growth plans, capitalizing on the synergies in our portfolio and aggressively executing our $5.0 billion share buyback program. Today, we also announced a non-cash tax charge to facilitate repatriation of $6.0 billion net in foreign earnings, increasing our available U.S. cash and enhancing our financial flexibility."
PayPal net total payment volume (TPV) grew 27% with Merchant Services volume up 32% and on-eBay volume up 15%. Revenue grew to $1.8 billion. PayPal gained 5.8 million new active registered accounts to end the quarter at 148 million, up 16%. Global on-eBay penetration increased to 78.9%. PayPal continued to invest in its credit offerings, providing flexibility for consumers and merchants while improving its ability to manage transaction expense and reinvest in the business to accelerate growth.
eBay Marketplaces gross merchandise volume (GMV) grew 12%, with the U.S. up 11% and International up 13%. Revenue grew to $2.2 billion. Marketplaces gained 4.7 million new buyers to end the quarter with 145 million active buyers, up 14%. Top rated sellers in the company’s three largest markets grew their same-store-sales 19% and offered free shipping on 53% of transactions across those markets. The selection of items available on Marketplaces grew to over 650 million listings, including both platform and non-platform offerings, reflecting the success of improved selling initiatives, particularly on mobile.
eBay Enterprise gross merchandise sales (GMS) grew 16%. Revenue grew to $269 million. Enterprise enabled its clients to grow same-store sales 11%. eBay’s Magento business, which primarily services small to medium-sized businesses, was integrated into eBay Enterprise’s offerings, providing merchants of all sizes a highly flexible end-to-end solution.
Other Selected Financial and Operational Results
Operating margin — GAAP operating margin decreased to 20.6% for the first quarter of 2014, compared to 21.3% for the same period last year. Non-GAAP operating margin decreased to 26.9% in the first quarter, compared to 27.4% for the same period last year.
Taxes — The GAAP effective tax rate for the first quarter of 2014 was 366%, compared to 16% for the first quarter of 2013. The company recorded a discrete tax charge of approximately $3.0 billion taken on $9.0 billion of foreign earnings from the prior years that were previously not subject to U.S. tax. This increases available U.S. cash by approximately $6.0 billion (net of the tax charge) providing greater U.S. financial flexibility. Excluding the effect of this discrete tax charge, our effective tax rate for the quarter would have been 18%. The remaining two percentage point increase in the company’s GAAP effective tax rate compared to the same period of the prior year was due to an increase in current year foreign earnings subject to U.S. tax and the expiration of the federal R&D credit. For the first quarter of 2014 and 2013, the non-GAAP effective tax rate was 21% and 20%, respectively.
Cash flow — The company generated $1.2 billion of operating cash flow and $968 million of free cash flow during the first quarter of 2014.
Stock repurchase programs — The company repurchased 33.1 million shares of its common stock for approximately $1.8 billion in the first quarter of 2014. As of March 31, 2014, the company’s remaining share repurchase authorization was $3.8 billion.
Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $11.9 billion at March 31, 2014, down from $12.8 billion at December 31, 2013.
As previously announced, the company has settled its proxy fight with investor Carl Icahn. Icahn has withdrawn both his proposal to separate the company's PayPal business and his two nominees to the company's Board of Directors. The company has agreed to appoint David Dorman as an independent director to its Board of Directors. This will expand the number of independent directors on the board to 10.
Second quarter 2014 — The company expects net revenues in the range of $4,325 - $4,425 million with GAAP earnings per diluted share in the range of $0.51 - $0.53 and non-GAAP earnings per diluted share in the range of $0.67 - $0.69.
Full year 2014 — The company now expects net revenues in the range of $18,000 - $18,500 million with GAAP earnings per diluted share in the range of $0.04 - $0.09 and non-GAAP earnings per diluted share in the range of $2.95 - $3.00.