eBay's conference call with analysts is at 8:00 am EST today, here is the company's press release announcing second quarter 2015 earnings, you can view the full release with tables on the eBay investor relations website.
SAN JOSE, Calif. - Global commerce platform and payments leader eBay Inc. (Nasdaq:EBAY) today reported that revenue for the second quarter ended June 30, 2015 accelerated to $4.4 billion, with strength across both PayPal and eBay. This excludes $0.3 billion of eBay Enterprise revenue that is now presented as discontinued operations. GAAP income from continuing operations was $682 million or $0.56 per diluted share, and Non-GAAP income from continuing operations was $931 million or $0.76 per diluted share, driven by an acceleration in revenue growth at both businesses.
eBay Inc.’s commerce and payments ecosystems continued to increase the role they play in global commerce, with gross merchandise volume (GMV) growth on an FX neutral basis accelerating 1 point over the prior period to 6% and net total payment volume growth accelerating 3 points to 28%. On a year over year basis, foreign currency movements continued to have a negative effect, impacting the revenue growth rate of the eBay Marketplaces business by 8 points and the revenue growth rate of PayPal’s business by 3 points, with benefits from currency hedging partially offsetting the impact at PayPal. Additionally, weaker local currencies in some markets led to reduced demand for goods in export-oriented markets like the United States, impacting the growth of our cross border trade for eBay Marketplaces and PayPal.
"We are very pleased with our overall Q2 performance. PayPal and eBay both delivered strong Q2 results and have strong momentum. Dan, Devin and their respective teams are executing well and are prepared to create the next great chapter for PayPal and eBay," said eBay Inc. President and CEO John Donahoe.
PayPal net total payment volume (TPV) grew 20% in the second quarter to $66 billion, with Merchant Services volume up 27% and on-eBay volume down 1%. On an FX-neutral basis, PayPal TPV grew 28%, with Merchant Services volume up 36% and on-eBay volume up 6%. Payment volume through eBay Marketplaces was $14.5 billion, representing 22% of total TPV. Revenue grew to $2.3 billion. PayPal grew new active accounts 11% to 169 million and processed 1.1 billion transactions. We continued to deepen customer engagement with our customer base: in the second quarter transactions per active account increased to 24 per year, compared to 21 times a year ago, and monetization per active account increased to $50 per year. The strong, steady growth of PayPal’s customer base coupled with rising engagement continues to prove the brand’s growing popularity and value proposition globally. PayPal also agreed to acquire Xoom Corporation for approximately $890 million net of cash. We anticipate that acquiring Xoom will help accelerate PayPal’s entry into the $600 billion global remittance market, and that adding additional services to our technology platform will allow PayPal to amplify its consumer flywheel, creating a more powerful network effect.
"I am pleased with PayPal’s strong second quarter results. We continue to gain share globally in an incredibly dynamic market and I’m especially proud of our deepening engagement with our customers. As an independent company we will continue to lead the transformation of the payments industry by giving people better ways to move and manage their money," said PayPal President Dan Schulman. "I’d like to thank Devin and his team at eBay, who will continue to be key partners for PayPal in the future."
eBay Marketplaces GMV declined 2%, with the continuing strength of the dollar significantly impacting results; however, it grew 6% on an FX-neutral basis, a one point acceleration versus the prior quarter. In the U.S., GMV grew 2%; while International GMV was down 5%, it increased 8% on an FX-neutral basis. Total revenue for the quarter was $2.1 billion, down 3%, although growing 5% on an FX-neutral basis, a two point acceleration versus first quarter. eBay Marketplaces active buyers grew 6%. eBay had a strong second quarter and continues to execute against its three key strategic pillars: building a more robust commerce platform, driving a more vibrant marketplace and creating exceptional product and brand experiences.
Devin Wenig, President of eBay commented, "I am encouraged by the state of our business and the progress against our strategy. As eBay celebrates its 20th anniversary this year, we are making rapid changes to position the company for the future. My goal, and that of the entire leadership team, is for eBay to be the best global marketplace and a great enduring Internet business. As we move into our next chapter, we also look forward to continuing our strong partnership with Dan and the PayPal team."
During the quarter, the Board of Directors authorized the Company’s management to sell eBay Enterprise. Accordingly the results of eBay Enterprise are presented as discontinued operations, appearing net of tax in a single line in our statement of income. Based on the expected sales proceeds, the Company recorded an impairment of eBay Enterprise goodwill in the amount of approximately $786 million.
Other Selected Financial and Operational Results
Operating margin — GAAP operating margin decreased to 16.9% for the second quarter of 2015, compared to 20.8% for the same period last year. Non-GAAP operating margin increased to 27.4% in the second quarter, compared to 26.3% for the same period last year.
Taxes — The GAAP effective tax rate for continuing operations for the second quarter of 2015 was 21.3%, compared to 16.7% for the second quarter of 2014. The non-GAAP effective tax rate for continuing operations for the second quarter of 2015 was 20.1% compared to 19.0% for the second quarter of 2014.
Cash flow — The company generated $1.1 billion of operating cash flow from continuing operations and $688 million of free cash flow from continuing operations during the second quarter of 2015.
Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $15.1 billion at June 30, 2015.
Expected 2015 Financial Results for PayPal and eBay on a Stand-Alone Basis
PayPal Holdings, Inc.
Full year 2015 — PayPal Holdings, Inc. expects net revenues to grow 15% - 18% on an FX-neutral basis with GAAP earnings per diluted share in the range of $0.89 - $0.95 and non-GAAP earnings per diluted share in the range of $1.23 - $1.27. Guidance does not include the pending acquisition of Xoom Corporation.
Full year 2015 — eBay expects net revenues to grow 3% - 5% on an FX-neutral basis with GAAP earnings per diluted share in the range of $1.40 - $1.45 and non-GAAP earnings per diluted share in the range of $1.72 - $1.77.
In July 2015, eBay Inc.'s board of directors authorized an additional $1 billion stock repurchase program. Together with the approximately $2 billion remaining under eBay’s prior stock repurchase program authorized in January 2014, eBay's total repurchase authorization as of July 16, 2015, is approximately $3 billion. In addition to offsetting dilution from its equity compensation programs, eBay expects, subject to market conditions and other factors, to make opportunistic repurchases of its common stock to reduce outstanding share count. Any share repurchases under eBay’s stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss second quarter 2015 results at 5:00 a.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 website at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.
eBay Inc. uses its Investor Relations website at http://investor.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.
About eBay Inc.
eBay Inc. (NASDAQ:EBAY) is a global commerce and payments leader, providing a robust platform where merchants of all sizes can compete and win. Founded in 1995 in San Jose, Calif., eBay Inc. connects millions of buyers and sellers and enabled $255 billion of commerce volume in 2014. We do so through eBay, one of the world's largest online marketplaces, which allows users to buy and sell in nearly every country on earth; and through PayPal, which enables individuals and businesses to securely, easily and quickly send and receive digital 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.
All growth rates represent year over year comparisons, except as otherwise noted. All amounts in tables are presented in U.S. dollars, rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not sum or recalculate using the rounded dollar amounts provided.
UPDATE: eBay CFO Bob Swan announced moments ago during earnings call that eBay sold eBay Enterprise for $925 million, deal will close in 2nd half of 2015.
UPDATE: See today's Newsflash story for coverage of the eBay earnings call.