eBay's conference call with analysts is at 5:00 pm Eastern today, here is the company's press release announcing fourth quarter and full-year results for 2009, you can view full release with table's on eBay's investor website. Note: see bottom of this post for links to AuctionBytes' coverage.
SAN JOSE, Calif. - eBay Inc. (Nasdaq:EBAY) today reported financial results for the fourth quarter and full year ended December 31, 2009. The e-commerce company posted fourth-quarter revenue of $2.4 billion, up 16% from the same period last year. This includes revenue of $112.0 million from Skype for the period that we fully owned it. Excluding Skype from the fourth quarter of 2008 and the fourth quarter of 2009, revenue growth would have been 19%. The year-over-year increase was due primarily to excellent growth in PayPal and StubHub and improvement in growth rates in the core eBay business, as well as the positive impact from foreign currency movements. The company recorded net income on a GAAP basis of $1.4 billion or $1.02 per diluted share, and non-GAAP net income of $585.8 million or $0.44 per diluted share for the fourth quarter of 2009.
"Reconciliation of Operating Cash Flows to Free Cash Flow"
For the full year, eBay Inc. posted $8.7 billion in revenue, net income on a GAAP basis of $2.4 billion or $1.83 per diluted share, and non-GAAP net income of $2.1 billion or $1.58 per diluted share.
GAAP operating margin decreased to 7.6% for the quarter, compared to 22.3% for the same period last year. The year-over-year decrease in GAAP operating margin was due primarily to the impact from a settlement agreement between Skype, Joltid and entities controlled by its founders. Non-GAAP operating margin decreased to 29.3% for the quarter, compared to 32.8% for the same period last year. The decrease in non-GAAP operating margin was caused in part by recent acquisitions and the company's continuing shift in the mix of its businesses, partially offset by productivity gains.
eBay Inc. generated $770.6 million of operating cash flow and $597.7 million of free cash flow during the fourth quarter.
"We delivered a strong fourth quarter with double-digit revenue growth driven by exceptional performance at PayPal and turnaround progress and momentum in our core eBay business," said eBay Inc. President and CEO John Donahoe. "PayPal significantly expanded its presence globally and, for the first time, processed more than $20 billion in total payment volume in a quarter. Gross merchandise volume and sold items accelerated for the third consecutive quarter. We are starting 2010 with significant progress against our three-year growth strategies for PayPal and eBay and a clear focus on our priorities going forward."
Quarterly Business Unit Discussion
The Payments business unit reported $795.6 million in revenue for the quarter, an increase of 28% year over year. Net total payment volume (TPV) for the quarter was $21.4 billion, an increase of 34% year over year. The growth in revenue and TPV was driven primarily by continued momentum in PayPal's Merchant Services business and growth on the eBay platform. PayPal continued to increase its penetration on eBay and across other e-commerce platforms. The Payments business plans to remain focused on continuing consumer and merchant adoption on and off eBay, expansion of PayPal's open platform initiative and ongoing integration of Bill Me Later onto eBay.
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other e-commerce sites, recorded $1.5 billion in revenue for the quarter, a 15% year-over-year increase. Marketplaces net transaction revenue increased 17% year over year. The Marketplaces business unit benefited from strong growth in its fixed-price format, the continuing success of its highest rated sellers, and double-digit organic growth in sold items. Marketplaces continued to benefit from growth in its international business, which accounted for approximately 60% of Marketplaces revenue for the fourth quarter. Gross Merchandise Volume (GMV) (excluding vehicles) was $14.2 billion for the quarter, an increase of 24% compared to the fourth quarter of 2008. StubHub had a particularly strong quarter driven primarily by high-profile concerts and sporting events leading to strong demand and market share gains. The Marketplaces business plans to continue to focus on trust, value and selection in its core business to drive GMV growth, and on format expansion.
On November 19, 2009, eBay Inc. completed the sale of the majority of Skype to an investor group. The company received cash proceeds of approximately $1.9 billion and a note in the principal amount of $125.0 million and retained an approximately 30 percent equity interest in Skype. On a GAAP basis, the sale resulted in a net gain of $1.4 billion recorded in interest and other income, net on our condensed consolidated statement of income. Skype contributed $112.0 million in revenue during the fourth quarter of 2009. We account for our approximately 30 percent continuing investment in Skype under the equity method of accounting.
Other Selected Financial Results
* Taxes - The GAAP effective tax rate for the quarter was 15%, compared to 22% for the fourth quarter of 2008. The non-GAAP effective tax rate was 16% for the fourth quarter of 2009, compared to 24% for the fourth quarter of 2008.
* Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $5.2 billion at December 31, 2009, compared to $3.2 billion at December 31, 2008.
* First-quarter 2010 - eBay estimates net revenues in the range of $2.1 billion to $2.2 billion, representing growth of 12% to 18% excluding the 2009 impact of Skype. The company also estimates GAAP earnings per diluted share in the range of $0.29 to $0.31 and non-GAAP earnings per diluted share in the range of $0.39 to $0.41, representing growth of 8% to 13% excluding the 2009 impact of Skype.
* Full-year 2010 - eBay estimates net revenues in the range of $8.8 billion to $9.1 billion, representing growth of 9% to 12% excluding the 2009 impact of Skype. The company also estimates GAAP earnings per diluted share in the range of $1.29 to $1.34 and non-GAAP earnings per diluted share in the range of $1.63 to $1.68, representing growth of 11% to 14% excluding the 2009 impact of Skype.
Quarterly Conference Call
eBay will host a conference call to discuss fourth quarter and full year 2009 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.ebayinc.com. In addition, an archive of the webcast will be accessible through the same link.
About eBay Inc.
Founded in 1995 in San Jose, Calif., eBay Inc. (NASDAQ:EBAY) connects millions of buyers and sellers globally on a daily basis through eBay, the world's largest online marketplace, and PayPal, which enables individuals and businesses to securely, easily and quickly send and receive online payments. We also reach millions through specialized marketplaces such as StubHub, the world's largest ticket marketplace, and eBay Classifieds, which together has presence in more than 1,000 cities around the world. For more information about the company and our global portfolio of online brands, visit www.ebayinc.com.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission, or SEC: non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate, and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see "Non-GAAP Measures of Financial Performance," "Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin," "Reconciliation of GAAP Net Income to Non-GAAP Net Income," "Reconciliation of GAAP to Non-GAAP Effective Tax Rate," "Reconciliation of Operating Cash Flows to Free Cash Flow" and "Business Outlook" included in this press release.
This press release contains forward-looking statements relating to, among other things, the future performance of eBay and its consolidated subsidiaries 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 first quarter and full year 2010, the focus of the Payments and Marketplaces business units going forward and future growth in the Marketplaces and Payments businesses. The company's actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the further impact of the credit crisis, continued or worsening economic downturn and other changes in political, business and economic conditions, including any interest rates and conditions that affect consumer confidence or e-commerce growth; fluctuations in foreign exchange rates; the company's ability to profitably integrate, manage and grow businesses that have been acquired recently or may be acquired in the future; the company's need to increasingly achieve growth from its existing users, particularly in its more established markets; the company's ability to deal with the increasingly competitive e-commerce environment, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the company's need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; the effect of management changes and business initiatives; the company's need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; any changes the company may make to its product offerings; the competitive, regulatory, credit card association-related, and other risks specific to PayPal and Bill Me Later, especially as PayPal continues to expand geographically and grow its open platform initiative; the company's ability to upgrade and develop its systems, infrastructure and customer service capabilities at reasonable cost; and the company's ability to maintain site stability and performance on all of its sites while adding new products and features in a timely fashion. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.
More information about factors that could affect the company's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.ebayinc.com or the SEC's web site at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof. eBay assumes no obligation to update such statements.
Update 1/21/10: See AuctionBytes coverage of the Q4-2009 earnings report:
eBay Q4-2009 Revenue Up, But Marketplace Turnaround Uncertain (link)
eBay CEO Tells Analysts Company Will Rebalance U.S. Marketplace (link)