eBay's conference call with analysts is at 5:00 pm Eastern today, here is the company's press release announcing second quarter 2010 results, you can view the full release with tables on eBay's investor website.
eBay Inc. Reports Strong Second Quarter Revenue and Earnings Growth
SAN JOSE, Calif.-Global ecommerce and online payments leader eBay Inc. (Nasdaq:EBAY) today reported that revenue for the fiscal second quarter ended June 30, 2010, increased 6% to $2.2 billion, or 15% excluding Skype, compared to the same period of 2009. The company recorded second quarter net income on a GAAP basis of $412.2 million, or $0.31 per diluted share, and non-GAAP net income of $530.2 million, or $0.40 per diluted share, representing an 18% increase excluding Skype, compared to the same period of 2009.
"Reconciliation of GAAP to Non-GAAP Effective Tax Rate"
The company's PayPal business delivered record second quarter performance. PayPal added a million new accounts each month during the quarter and its merchant services business continued to gain share in ecommerce. For three consecutive quarters, PayPal's merchant services business has grown by over 40% year over year. The company also reported that the multiyear turnaround of its eBay business continued on track in the second quarter, with strength in Europe, expected performance in Asia, slower than expected growth in the U.S. and progress against underlying customer metrics focused on trust, value and selection for the world's largest online marketplace.
"We delivered strong second quarter results, demonstrating the global strength and increasing diversity of our business," said John Donahoe, eBay Inc. President and CEO. "PayPal is strong and getting stronger, building a robust and innovative global footprint serving all of ecommerce. And our eBay turnaround remains on track, with strong performance in Europe, significant changes in the U.S. and continued improvements to the buying and selling experience. We continue to focus on delivering strong financial results, managing a healthy balance sheet and making the necessary investments to compete, win and satisfy our customers."
Second Quarter 2010 Financial Highlights (presented in millions, except per share data and percentages)
Other Selected Financial Results
* Operating margin – GAAP operating margin for the second quarter increased to 21.9%, compared to 19.6% for the same period last year. Non-GAAP operating margin increased slightly to 29.1% for the quarter, compared to 28.7% for the same period last year, as productivity gains were offset in part by faster growth in the company's lower margin PayPal business.
* Taxes – The GAAP effective tax rate for the second quarter of 2010 was 17%, compared to 20% for the second quarter of 2009. The non-GAAP effective tax rate was 21% for the second quarter of 2010, compared to 20% for the second quarter of 2009.
* Cash flow – The company generated $726.4 million of operating cash flow and $519.2 million of free cash flow during the quarter.
* Cash and cash equivalents and non-equity investments – The company's cash and cash equivalents and non-equity investments portfolio totaled $5.6 billion at June 30, 2010, compared to $5.2 billion at December 31, 2009.
Business Outlook – Impact of Stronger Dollar
For the full year 2010, eBay expects its PayPal business unit to continue its strong performance, resulting in a positive impact to full year net revenues of approximately $100 million and $0.06 to $0.08 per diluted share. The company expects its Marketplaces business unit to continue its strong growth in Europe, offset by its slower growth in the U.S.
However, full year pressure from the stronger U.S. dollar, relative to other currencies, is expected to have full year negative impact on 2010 net revenues of approximately $250 million and $0.09 to $0.11 per diluted share.
As a result, the company is modestly adjusting full year guidance from that provided on January 20, 2010 and reaffirmed on April 21, 2010. The company now estimates full year 2010 net revenues in the range of $8.8 billion to $9.0 billion, representing growth of 9% to 11% compared to 2009, excluding Skype. The company also estimates GAAP earnings per diluted share in the range of $1.23 to $1.28 and non-GAAP earnings per diluted share in the range of $1.60 to $1.65, representing growth of 9% to 12% compared to 2009, excluding Skype.
Third quarter 2010 guidance includes the negative impact of pressure from a stronger U.S. dollar on net revenues and earnings on a year-over-year basis of approximately $70 million and $0.02 per diluted share. For the third quarter 2010, eBay estimates net revenues in the range of $2.13 billion to $2.18 billion, representing growth of 4% to 6% compared to third quarter 2009, excluding Skype. The company also estimates GAAP earnings per diluted share in the range of $0.26 to $0.28 and non-GAAP earnings per diluted share in the range of $0.35 to $0.37, representing growth of 0% to 6% compared to third quarter 2009, excluding Skype.
Quarterly Conference Call
eBay will host a conference call to discuss second quarter 2010 results at 2 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 for 90 days 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 its global portfolio of online brands, visit www.ebayinc.com.
Update: In a conference call on Wednesday afternoon, eBay told analysts it would tweak U.S. search, and that it would launch new "tailored shopping expereinces" in the consumer electronics and auto parts categories after launching its fashion portal this year - see "eBay to Tweak U.S. Search after Domestic Market Disappoints in Q2" (link to article).