Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Apr 29 2014 15:25:06

eBay Releases First Quarter 2014 Earnings

By: Ina Steiner

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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.

Business Outlook
    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.




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Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Philip Cohen
Web Site

Tue Apr 29 16:19:04 2014

What a shame it is that only those executives that run around in circles all day in the eBay executive suite get to share in the “profits” from any of these claimed increases in revenue—never the long-suffering eBay shareholders (even a $1.8 billion buy back of stock has had no positive effect on the value of their eBay shares), which makes one wonder if the profits from such increases in revenue are really there, or if they are, has Johnny Ho still got them squirreled away overseas in a low-tax tax-haven country, waiting for the Administration to forgo U.S. taxes thereon, so that Johnny Ho can help the President “create more jobs”—Ho. Ho, Ho …

And what does the "smart money" on Wall Street think about eBay? Well, in August 2007, when the "Pain From Bain" was already effectively in control of eBay, the share prices of eBay and Amazon were both ~$40; with eBay recently ~$52 and Amazon ~$299, clearly, Wall Street still considers eBay to be a "dog", and Johnny Ho to be a very poor dog handler ...

One has to wonder if Mr Omidyar has ever thought about just how much more fabulously wealthy he might now have been had he not ok'd the handing over of the control of eBay to the delusional, destructive, incompetent, unscrupulous, narcissistic, sociopathic Johnny Ho? Indeed, had he, in August 2007, traded in the ~108 million eBay shares, that he still holds today, for shares in Amazon, instead of ~$6 billion, his worth would now have been ~$32 billion! Now that, surely, is something for all of eBay's long-suffering "long" investors to think about, is it not? ...

eBay Inc, where the incompetent mingle with the malevolent and the criminal … http://bit.ly/11F2eas

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: FLIPPER This user has validated their user name.

Tue Apr 29 16:49:35 2014

On earnings call Donahue apparently mentioned the possibility of FEE CHANGES. Will post more as it becomes available

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Tue Apr 29 17:12:07 2014

"On earnings call Donahue apparently mentioned the possibility of FEE CHANGES. Will post more as it becomes available"

I'm sure he's thinking about reducing them...

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Tue Apr 29 17:17:14 2014

Treasury stock (repurchased stock)is not counted in the GAAP calculation of EPS.

If a corporation wants to show incresed earnings per share in the face of flagging fiscal performances they need only repurchase their own common stock.

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Tue Apr 29 17:29:59 2014

"NEW YORK (AP) -- EBay recorded a loss in the first-quarter due to a hefty tax charge on foreign earnings,..."

eBay is repatriating some off their offshore profits and taking the hit for these untaxed corporate dollars.

When a corporation decides to pay these taxes in order to repatriate the cash associated with untaxed earnings it's because there is a burning need for cash that cannot be immediately satisfied from other sources.

There is something going on inside that's making the timbers creak.

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Philip Cohen
Web Site

Tue Apr 29 17:52:15 2014

Oh, what a shame, Johnny Ho is going to have to pay $3 billion in U.S. taxes on the $9 billion he wants to repatriate from, one assumes, some dinky Caribbean island, or more probably Ireland. The Ho will only have $6 billion left to play with …

As Puck says, the only reason they are repatriating these profits is probably because they need the money. Regardless, want to bet that the long-suffering eBay shareholders will still see none of those profits?

Still, someone has to pay for all that U.S. defence expenditure; although, no doubt, Johnny Ho would not be able to see any reason why the U.S. middle class should not continue wholly shoulder that burden also ...

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: FLIPPER This user has validated their user name.

Tue Apr 29 17:56:09 2014

On earnings call Donahue apparently mentioned the possibility of FEE CHANGES. Will post more as it becomes available"

I'm sure he's thinking about reducing them...

No DOUBT!! /sarc  

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: HappyOne This user has validated their user name.

Tue Apr 29 18:48:07 2014

Can someone please explain to me how a $3 Billion discrete tax charge can be a non cash charge? Thank you

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

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

Tue Apr 29 18:54:53 2014

Moe voodoo accounting. It's another shell game of transferring money from place to place because they know the SEC is too lazy to investigate.

It's reported elsewhere that The Ho is lowering StubHub fees.

A few weeks ago, there was quite a furor when ticket buyers began learning how much ebay was getting per transaction, and many of them began buying on alternative sites.

Once again Ho Greed working against the long term health of the company.

The Ho never learned in business that one strategy for increasing stock value is grow your PAYING customer base and treat them well.

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: FLIPPER This user has validated their user name.

Tue Apr 29 19:17:55 2014

It's reported elsewhere that The Ho is lowering StubHub fees.

A few weeks ago, there was quite a furor when ticket buyers began learning how much ebay was getting per transaction, and many of them began buying on alternative sites.

Have to wonder if they'll make up the lost revenue by RAISING FEES in the future for small sellers like me :/

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: FLIPPER This user has validated their user name.

Tue Apr 29 19:19:14 2014

Sorry Ming forgot the quotation marks on your comment - good catch re: STUBHHUB fees ;)

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Tue Apr 29 19:22:10 2014

Ebay's accounting handled oh-so-capably  by the accounting firm of Houdini, Copperfield and Blaine.

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Tue Apr 29 19:43:56 2014

"Can someone please explain to me how a $3 Billion discrete tax charge can be a non cash charge? Thank you"

That's easy.
The offsetting debit on the transaction (after the credit to Cash) will be to Retained Earnings or some balance sheet Reserve account(s)

Both in violation of APB #9 Concerning Reporting the Results of Operations:

http://clio.lib.olemiss.edu/cdm/ref/collection/aicp
a/id/104

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: Eric Saeger This user has validated their user name.

Wed Apr 30 12:20:10 2014

The economy isn't as hideous as it was during the last few years.  However, what with all the free listing promos and whatnot we're seeing in the trenches, the only way eBay could have had such an uptick in marketplace (meaning eBay proper, as opposed to eBay+Paypal) is if they raked it in from Partner programs.  
That dog might hunt for a while, but I imagine sooner or later these partners (Toys R Us and whatnot) are going to notice that the ROI isn't worth the partnership cost.  
Or not, who knows.  These corporations may be content just to have the chance to put little guys out of business by their mere presence.  
Which is sort of unmanly, you know?  It's like Bryce Harper playing against Little Leaguers just to pad his stats.  

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: Massachusets Howler This user has validated their user name.

Wed Apr 30 13:01:30 2014

THIS WAS A LOSS as well as a lower expectation report.

This is what we have been waiting for folks.

Things ARE as bad as we believed.

They ARE even talking about RAISING FEES AGAIN.

Ebay is THINKING AHEAD.
It is ebay who is behind the efforts to "repatriate funds freely" and it is they who are trying to break up the internet spectrum into pieces to allow businesses to only use the fastest speed (they are having luck with this recently here in Washington, DC).
They plan to further limit our exposure with the internet speed cycling and then we small sellers WILL BE TOAST- this company is for these 2 schemes- free repatriation and automatic internet speed/exposure throttling.
To finally have ebay run TV ads not for US but for Paypal is beyond DISGUSTING.

Now our fees are being used to fuel not OUR SALES but ebays ugly sister Paypal!

Nice to see that GSI EXECUTIVE get clipped with stock manipulation but they have just uncovered the TIP OF THE ICEBERG at this point- keep digging SEC and you will find SO MUCH MORE.

Ebay must have taken a serious HIT over last years MEAGER Holiday season- buyer must have wanted to return many items after the fact that they ended up paying out as the 90 day returns rule is a STRATEGY to save Ebay $$$.
Ebay had such a lackluster holiday season that they KNOW the numbers will not come up for their expectations unless they get that 20% DISCOUNT BACK from that 15-20% of sellers to make their nut.

They are just planning ahead this time- they do not want to pull out this policy in October and need to do it now for it to go as unnoticed and unconnected to the Holidays as possible.

To pay 3 billion dollars to repatriate those funds is something no other company would do- they are out of US cash as sellers have not been listing/selling like they expected- we have slowed down and it has hurt them FINALLY.

Stubhub was ripping off consumers and they got caught- now they re-spin it like they are doing the consumer a favor when it was THEM who did not DISCLOSE ALL COSTS, just like they do here when you list an ad- get the cost AFTER submitting the ad.

Ebay is trying to plan ahead to make up for a big loss against Amazon this holiday season-

They are being EXTREMELY SECRETIVE and are SENDING OUT MIXED SIGNALS Bob Swan/ JD about what they are going to do with the repatriated funds- YOU KNOW it is FOR STOCK BUYBACKS- HEY- I Thought they had already separated that $$$ for stock buybacks???? Guess not!

They need the $$ AGAIN for the stock buybacks- to fund their executive BONUSES- that is why Bob Swan are sending out this smoke about new asquisitions- THERE AREN"T ANY- it IS for the buybacks- this is for executive Bonuses- that IS the secret- we are not DUMB.

Ebay is out of US cash- have been saying it for over 6 months now and it appears to be true.

So, long term plan to continue their repatriation efforts, push through some sort of internet speed for big customer legislation, so they do not have to "compete with we LOWLY Sellers", get $$ AGAIN for the buybacks, pay the 3 billion they so DESPERATELY NEED so the stock bonuses can continue, also STRESS in the report NON-GAAP earnings leaving out the 3 billion we actually LOST by repatriating the cash.

Including GAAP, they LOST $1.89 a SHARE!!

They probably repatriated 1 hour AFTER releasing the report- they are out there saying "IF" we need the cash so it can LOOK LIKE this 1/4 they made .70 cents a share but now that the report has been submitted, they can go ahead and get the cash and pay the 3 billion irs penalty- then they SNEAK OUT and start adding to the discourse that there may be acquisitions- but there ARE NO ACQUISITIONS- it is an EXECUTIVE MONEY GRAB- as they use buyback stocks to FUND their employee stock program.

They will toss 3 billion into the sea to continue this fleecing- they will use OUR FUNDS to advertise not the marketplace- but paypal, just in time for Christmas.

Merry Christmas/ Happy Holidays for ebay and Paypal, for the sellers, not so much, again........

I think this company needs to be INVESTIGATED.

File a quick whistleblowers report at the SEC.gov- report ebay as participating in "Illegal pump and dump", which is exactly what they are doing.
It is such a predictable pattern that stock investors have been able to predictably do it for the last 20 months- REPORT THEM.

Sec.gov

Mass Howler

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: windsorbear

Wed Apr 30 13:19:53 2014

... apparently this was one of the things he was talking about concerning fees.  Read this carefully... no more monthly free listings for fixed-priced items in certain categories!!!

http://announcements.ebay.com/2014/04/sellers-upd
ates-to-fees-in-select-categories-could-mean-more-free-listings-for-you/?_trksid=p3984.m2301.l3955

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Wed Apr 30 13:21:35 2014



https://finance.yahoo.com/blogs/daily-ticker/why-did-ebay-repa
triate-funds--triggering-a--3b-tax-bill---when-apple-didn-t-and-borrowed-in-the-u-s--instead--d-left-funds-overseas-150411266.html

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

by: Mr. Me This user has validated their user name.

Wed Apr 30 13:23:17 2014

Auctions (small sellers selling unique items } down 9% , fixed price (large sellers, new, retail commonplace items) up 19%.....
exactly as planned

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: Puck

Wed Apr 30 13:33:02 2014

@windsorbear:

eBay is going to cram the price of a store down the throats of sellers in those categories in order to get any "free" fixed price listings.

How "Free" is that?

Perminate Link for eBay Releases First Quarter 2014 Earnings   eBay Releases First Quarter 2014 Earnings

This user has validated their user name. by: windsorbear

Wed Apr 30 13:44:23 2014

Not very "free" at all.  In fact, I'll have to make sure and NOT relist anything I have in those categories that are fixed price, or else I will be charged a listing fee.  I'm glad I've got most of my items transferred over to ebid.net and unisquare.com.  I'm so over the eBay thing... it was so much fun years ago, and now I dread reading every email I get from them.

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