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Wed July 22 2009 16:22:04

eBay Inc. Reports Second Quarter 2009 Results

By: Ina Steiner

Sponsored Link

eBay's Press Release announcing 2nd quarter earnings, via BusinessWire: SAN JOSE, Calif.--eBay Inc. (Nasdaq:EBAY) today reported financial results for the second quarter ended June 30, 2009. The ecommerce company posted second quarter revenue of $2.10 billion, a $97.7 million year-over-year decrease. The year-over-year revenue growth of PayPal and Skype was offset by the effects of the stronger dollar and a modest decline in the Marketplaces business. The company recorded net income on a GAAP basis of $327.3 million or $0.25 per diluted share, and non-GAAP net income of $478.6 million or $0.37 per diluted share.

GAAP operating margin decreased to 19.6% for the quarter, compared to 24.8% for the same period last year. Non-GAAP operating margin decreased to 28.7% for the quarter, compared to 31.9% for the same period last year. The decrease in operating margins was caused primarily by the impact of the stronger dollar and the company’s continuing shift to faster growing, lower margin businesses, partially offset by strong cost controls.

eBay Inc. generated $730.7 million of operating cash flow during the second quarter. Free cash flow during the quarter was $602.3 million.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” said eBay Inc. President and CEO John Donahoe. “We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I’m pleased with our pace, our progress and our performance.”

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


 
 
 
 


Second Quarter

 



 
2008
2009

Change

Net revenue
$2,196
$2,098
($98)
(4%)
GAAP
 
 
 

Net income
$460
$327
($133)
(29%)
Earnings per diluted share
$0.35
$0.25
($0.10)
(28%)
Non-GAAP
 
 
 

Net income
$568
$479
($89)
(16%)
Earnings per diluted share
$0.43
$0.37
($0.06)
(14%)

Quarterly Business Unit Discussion

Payments

The Payments business unit reported a strong quarter with $669.3 million in revenue, an increase of 11% year over year. Net total payment volume (TPV) for the quarter was $16.71 billion, an increase of 12%. The revenue and TPV growth was driven by continued momentum in PayPal Merchant Services and the contribution made by Bill Me Later. Continued increases in PayPal penetration on eBay helped offset the negative impact of lower addressable gross merchandise volume (GMV) on revenue and TPV. Active registered accounts reached 75.4 million, an increase of 20% year over year. The Payments business will continue to focus on the acquisition of new merchants, greater penetration into the Marketplaces business and the integration of Bill Me Later.

Marketplaces

The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, recorded $1.26 billion in revenue, a 14% year-over-year decline. The revenue drop was attributable to the impact of the stronger dollar and the impact of challenging macroeconomic conditions. eBay Marketplaces continues to make progress in stabilizing its core business as the year-over-year decline in revenue slowed versus the prior quarter. Approximately 57% of Marketplaces revenue came from markets outside of the U.S. GMV (excluding vehicles) was $11.13 billion for the quarter, a decrease of 10%, compared to the second quarter of 2008. Online classifieds revenue increased 19% year over year. A focus on geographic, format and category expansion combined with improving trust, value and selection for customers are expected to drive future revenue.

Communications

Skype contributed $170.0 million in revenue for the quarter, representing 25% year-over-year growth. Skype added 37.3 million registered users during the quarter and ended the period with more than 480.5 million registered users. In addition to growing its user base, Skype is focused on product strategies to enhance customer engagement.

Other Selected Financial Results

  • Taxes — The GAAP effective tax rate for the quarter was 20%, compared to 19% for the second quarter of 2008. The non-GAAP effective tax rate was 20% for the second quarter of 2009, compared to 22% for the second quarter of 2008.
  • Cash and cash equivalents — The company’s cash and cash equivalents totaled $2.57 billion at June 30, 2009, compared to $3.19 billion at December 31, 2008. The acquisition of Gmarket for $1.21 billion was completed on June 15, 2009.

Business Outlook

  • Third quarter 2009 — eBay expects net revenues in the range of $2.050 to $2.150 billion with GAAP earnings per diluted share in the range of $0.22 to $0.24 and non-GAAP earnings per diluted share in the range of $0.34 to $0.36.

Quarterly Conference Call

eBay will host a conference call to discuss second quarter 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 web site at http://investor.ebay.com. In addition, an archive of the webcast will be accessible through the same link.

About eBay Inc.

Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, P




Comments (29) | Permalink

Readers Comments

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Patricia

Wed Jul 22 16:35:18 2009

Wow! Almost 29 percent decline.  This is a whole lot worse than I expected.  If they keep John Donahoe and his crew after this then they're stark raving insane!

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Karma

Wed Jul 22 16:42:46 2009

Donahoe is "pleased with our pace, our progress and our performance".....

WoW...

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: just me

Wed Jul 22 17:19:55 2009

The real frosting on the overbaked cake is going to be the earnings from Amazon.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: stock up

Wed Jul 22 17:29:36 2009

Well I don't know about how everyone feels but after hours trading has the stock way UP.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Daisy

Wed Jul 22 17:43:36 2009

I don't get why the stock is way up, but Ebay beat their expectation, which they had purposely set low. LOL

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: unaware

Wed Jul 22 17:45:14 2009

The business news says Amazon is buying shoe seller Zappos... I guess we know now why Zappos disappeared so quickly from being a potential eBay Diamond Seller. I think Amazon has the right idea, buy up the potential Diamond Sllers before they can get on eBay... I hope it works. I think eBay will have to consider that a threat to their new business plan.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: JoeS

Wed Jul 22 17:50:06 2009

So this is eBay's third quarter in a row to lose revenue Y/Y. Wait till that reality sets in on Wall St. Not really much to get excited about beating expectations when the bar has already been lowered and the company continues to underperform.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Ron

Wed Jul 22 18:11:41 2009

I'm kind of surprised that they beat analysts' estimates.  This does indicate some stabilization, but I do think that the jury is still out on the success of their strategy.  Being a daily and longtime user of the site, from my perspective, things have really gone downhill, much more than the results indicate.  Of course, it's difficult to know the real story from one's personal perspective, but I'm a little suspicious of the numbers.  There are a lot of accounting tricks that will fudge results, but eventually the truth catches up.  I guess that we'll have to see what happens over the next year or two.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: fruity

Wed Jul 22 18:12:43 2009

I dont understand anything about these numbers other than it doesnt surprise me about the paypal growth. When you start freezing funds, implementing rolling reserves and 21 day holds for new sellers then you make lots of money right? Plus, ummm there's lots of ways you can ''give'' paypal a good balance if you were wanting to ''assist'' them. WINK WINK.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: fruity

Wed Jul 22 18:14:00 2009

Dont forget, ebay held that employee pep rally contest where all the employees competed to see who listed the most or sold the most GMV thingy

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Ron

Wed Jul 22 18:47:17 2009

@fruity

It's true that these are segmented results, so we don't have exact numbers on where the money is coming from.  But, you're right, Paypal is probably making fistfuls of money, and certainly subsidizing the Marketplace business to some extent

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: EventHorizon1984

Wed Jul 22 18:59:49 2009

Anyone notice the eBay Stores statistics are missing again from the 2009 Q2 SEC report?

2009 Q2 no eBay Stores statistics.
http://yahoo.brand.edgar-online.com/displayfilinginfo.a
spx?FilingID=6707732-7177-83286&type=sect&dcn=0001193125-09-153149

Rhetorical
question: Is that a hint from eBay about the future of eBay Stores?

2009 Q1 no eBay Stores statistics.
http://yahoo.brand.edgar-online.com/displayfilinginfo.a
spx?FilingID=6553063-7170-80590&type=sect&dcn=0001193125-09-084618

Or
maybe that data is buried deep in the stock holder reports, and not longer shown to the general public?

2008 Q4 last? public eBay Stores statistics here.
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?Fi
lingID=6354712-7544-84802&type=sect&dcn=0000891618-09-000008

Anyone
know?

.
“An analogy that is fairly simple is that the old eBay made a living in peoples’ attics and garages”
“The new eBay is sitting in warehouses, liquidators, and off-price retailers. And they’re looking for a cost-effective channel to be able to move high velocity.”
Lorrie Norrington, President eBay Marketplaces, March 2009

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: fruity

Wed Jul 22 19:21:52 2009

Well if you look at the ebayzon thingy they're working on, i can't really see how stores would fit in

http://shop.ebay.com/products/ipod
click a listing, you'll see

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Ebay Pays My Minimum Monthly Payment

Wed Jul 22 19:37:46 2009

Ebay marketplace-"a 14% year-over-year decline".

Don't be surprised if Amazon shows a 14% increase in their marketplace.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: unaware

Wed Jul 22 20:01:18 2009

They eliminated eBay Stores in Australia and they are most likely going to do it here. Everything will be GTC Buy It Now listings at 35 cents a month for each listing, with the only good news being that ALL listings will be in main search (but of course with all of the special treatment that Diamonds get and all of the other bizarre search things eBay is doing I am not sure that will matter anymore).  

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

This user has validated their user name. by: Ming the Merciless

Wed Jul 22 20:54:48 2009

I'll be back full force when I recover from a serious sinus infection.

Marketplace will continue to decline, and ebafia may be having second thoughts about shedding the profitable Skype.

The question is whether PayPal growth can continue to offset marketplace losses.

Also as long as the SEC will allow ebafia to 'manipulate' numbers and as long as the FTC will allow them 'manipulate' statistics and deals, ebafia will likely continue showing paper profits until employees show up for work one day only to find the entrances padlocked (see Enron).

Be back soon I hope.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Jeff S

Wed Jul 22 21:38:51 2009

Zappo-Zon totally blew up Donahoe's report.  Bezos is brilliant.  Will be watching the AMZN/EBAY stock trends tomorrow with interest.  Great hijack today.

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: Fruity

Wed Jul 22 21:44:55 2009

The transcripts are in, read this gem!


"Free shipping -- free shipping has basically held up because in many ways, all we did was to use a carrot to make our sellers aware of how much buyers were responding to free shipping. And now our sellers are aware of it and they will respond and they are responding, so in certain categories it’s essential and it makes a big difference. In other categories, it makes less of a difference and we will do what we usually do, is we’ll let the market, you know, we’ll let the marketplace determine the right level of free shipping by category and sellers will respond to what buyers do."

http://seekingalpha.com/article/150628-ebay-q2-2009-earnin
gs-call-transcript?source=bnet&page=-1

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: o.c.d.collectibles

Wed Jul 22 22:11:56 2009

What does Jack Ma have to say about this?

1.customers 1st
2.company second
3.stockholders 3rd

Who are the customers? The sellers!


No wonder TaoBao is so successful in China!

Too bad Corporate Ebay doesn't see it this way...

eBay Inc. Reports Second Quarter 2009 Results   eBay Inc. Reports Second Quarter 2009 Results

by: the realist

Wed Jul 22 23:21:23 2009

Sinuses or is the little guy at  ComicCon this week?

Hmmmmmm...

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