eBay's conference call with analysts is at 5:00 pm Eastern today, here is the company's press release announcing first quarter results for 2010, you can view full release with table's on eBay's investor website.
Updated: See also "eBay Marketplaces GMV up 6% in U.S. in 1st Quarter YoY" (link to article), and "eBay CEO Says Stores-in-Core Will Take 2-3 Quarters to Play Out" (link to article).
SAN JOSE, Calif.--eBay Inc. (Nasdaq:EBAY) today reported financial results for its first quarter ended March 31, 2010. The e-commerce company posted first-quarter revenue of $2.2 billion, up 9% year over year, or up 18% excluding Skype. The increase was due to growth in the Payments and Marketplaces businesses, as well as a positive impact from foreign currency movements against the U.S. dollar. The company recorded net income on a GAAP basis of $397.7 million or $0.30 per diluted share, and non-GAAP net income of $554.2 million or $0.42 per diluted share for the first quarter of 2010.
GAAP operating margin increased to 22.2% for the quarter, compared to 20.9% for the same period last year. Non-GAAP operating margin decreased slightly to 30.6% for the quarter, compared to 30.7% for the same period last year, as productivity gains were offset by faster growth in the company's lower margin PayPal business and lower take rates.
eBay Inc. generated $418.3 million of operating cash flow and $266.0 million of free cash flow during the first quarter. Operating cash flow and free cash flow were reduced by a one-time tax payment of $207.4 million related to a legal entity restructuring, as a result of which the company moved approximately $1.1 billion in cash to the U.S. in the fourth quarter of 2009.
"Our first quarter results reflect another strong step toward achieving our three-year growth and profitability goals," said eBay Inc. President and CEO John Donahoe. "We are becoming a more customer-focused and technology-driven company, delivering more innovative products and experiences and driving operating efficiencies to reinvest in growth. We are improving the fundamentals of our business, strengthening eBay Marketplaces and aggressively growing PayPal to become the leader in global online payments."
Business Unit Discussion
Payments Business Delivers Record First Quarter Performance and Expands Global Footprint
The Payments business unit reported $21.3 billion in net total payment volume (TPV) for the quarter, an increase of 35% year over year. Revenue for the quarter was $809.3 million, an increase of 26% year over year. The growth in revenue and net 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 around the globe. The Payments business remains focused on consumer and merchant adoption on and off eBay, expansion of PayPal’s open platform initiative and the ongoing integration of Bill Me Later.
Other Q1 Payments Business Highlights:
* Entered into a new payment services agreement with China UnionPay (CUP), which will provide international retailers with access to customers holding more than 2.1 billion CUP cards.
* Signed a deal with Facebook that allows users to select PayPal to buy virtual goods in the Facebook gift shop. Businesses around the world can also launch marketing campaigns on Facebook and pay with PayPal.
* Launched new "Send Money" app for the iPhone®, which was downloaded more than one million times in less than three weeks. The app features conveniences such as "bump" money transfers and split check and collect money features.
* Since the launch of PayPal X in Q4 2009, thousands of developers have signed up on X.com and have built hundreds of apps that have already generated more than $30 million in TPV.
Marketplaces Performance Reflects Continued Turnaround Momentum
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, eBay Classifieds and other e-commerce sites, recorded $13.4 billion in gross merchandise volume (GMV) excluding vehicles for the quarter, a 24% year-over-year increase. The Marketplaces business unit benefited from the acceleration of growth in sold items driven by eBay's fixed-price format, and from the inclusion of Gmarket. Revenue was $1.4 billion for the quarter, a 13% increase compared to the first quarter of 2009. The year-over-year increase was due primarily to growth across all of the company's e-commerce businesses, as well as the inclusion of Gmarket and the positive impact from foreign currency movements against the U.S. dollar. Marketplaces benefited from growth both in its domestic and international business, which accounted for approximately 60% of Marketplaces revenue for the first quarter. The Marketplaces business will continue to focus on trust, value and selection in its core business, driving GMV growth, and expanding alternative formats including classifieds.
Other Q1 Marketplaces Business Highlights:
* Aligned eBay's success with sellers of all sizes with free auction listings and dramatically reduced listing fees for fixed-priced items in the U.S.
* Rolled out eBay Buyer Protection in the U.S. and U.K., providing a new level of customer support and trust, including an offer to cover a buyer's purchase price and original shipping for most purchases should a problem arise and the seller is unable to resolve the issue.
* Launched three new buying and selling mobile applications including an eBay app for the iPad, which delivers a visually compelling experience to browse the vast selection of products on eBay. eBay's popular iPhone shopping app has been downloaded more than 8.5 million times since Q3 2008.
* Introduced Fashion.ebay.com, a new shopping destination for clothing, shoes and accessories that showcases the breadth of new, vintage, branded and designer merchandise available on eBay.
Other Selected Financial Results
* Taxes - The GAAP effective tax rate for the quarter was 20%, compared to 19% for the first quarter of 2009. The non-GAAP effective tax rate was 22% for the first quarter of 2009 and 2010.
* Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $5.4 billion at March 31, 2010, compared to $5.2 billion at December 31, 2009.
* Second-quarter 2010 - eBay estimates net revenues in the range of $2.15 billion to $2.20 billion, representing growth of 11% to 14% excluding the 2009 impact of Skype. The company also estimates GAAP earnings per diluted share in the range of $0.27 to $0.29 and non-GAAP earnings per diluted share in the range of $0.37 to $0.39, representing growth of 9% to 15% 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 first quarter 2010 results at 2p.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 sites, which together have a 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 net income excluding Skype, 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 and Non-GAAP Net Income Excluding Skype," "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 second quarter and full year 2010, the focus of the Payments and Marketplaces business units going forward and future growth in the Payments and Marketplaces 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 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.