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EBay Inc. Reports Strong Third Quarter 2012 Results

Stocks in this article: EBAY

GSI revenue increased 12% year over year to $226 million, driven primarily by a 16% year over year increase in global ecommerce (GeC) merchandise sales. Same store sales grew 19% year over year, reflecting strong ecommerce sales from retail clients. GSI is winning new clients and bringing eBay's innovative technology solutions and services to merchants of all sizes.

 

Third Quarter 2012 Financial Highlights (presented in millions, except per share data and percentages) (1)

 
Third Quarter
  2012 2011 Change
GAAP        
Net revenue $3,404 $2,966 $438 15%
Net income $597 $491 $106 22%
Earnings per diluted share $0.45 $0.37 $0.08 21%
Non-GAAP        
Net income $718 $628 $90 14%
Earnings per diluted share $0.55 $0.48 $0.07 14%
         

 

Third Quarter
  2012 2011 Change
Business Units        
Payments        
Net revenue $1,367 $1,107 $260 23%
Net total payment volume $35,159 $29,282 $5,877 20%
Merchant Services $23,704 $19,314 $4,390 23%
On eBay $11,455 $9,968 $1,487 15%
Marketplaces        
Net revenue $1,806 $1,653 $153 9%
Gross merchandise volume (GMV), excl. vehicles $16,281 $14,666 $1,615 11%
U.S. GMV $6,479 $5,588 $891 16%
International GMV $9,801 $9,078 $723 8%
GSI        
Net revenue $226 $202 $24 12%
GeC Merchandise Sales $698 $601 $97 16%

(1) Certain amounts may not add/subtract due to rounding and may not recalculate using the rounded dollar amounts provided.

 

Other Selected Financial Results

  • Operating margin — GAAP operating margin increased to 19.6% for the third quarter of 2012, compared to 18.1% for the same period last year. Non-GAAP operating margin increased to 26.3% in the third quarter, compared to 25.3% for the same period last year.
  • Taxes — The GAAP effective tax rate for the third quarter of 2012 was 11%, compared to 20% for the third quarter of 2011. The decrease was due primarily to increased earnings in low tax jurisdictions and the favorable impact of discrete items, primarily related to stock-based compensation. For the third quarter of 2012 and 2011, the non-GAAP effective tax rate was 20% and 21%, respectively.
  • Cash flow — The company generated $1.2 billion of operating cash flow and $792 million of free cash flow during the third quarter of 2012.
  • Stock repurchase programs — The company repurchased approximately $47 million of its common stock in the third quarter of 2012.
  • Debt issuance — The company issued senior unsecured notes in an aggregate principal amount of $3 billion during the third quarter of 2012.
  • Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $10.8 billion at September 30, 2012, up from $7.5 billion at December 31, 2011.

Business Outlook

  • Fourth quarter 2012 — eBay expects net revenues in the range of $3,850 - $4,000 million with GAAP earnings per diluted share in the range of $0.55 - $0.58 and non-GAAP earnings per diluted share in the range of $0.66 - $0.69.
  • Full year 2012 — eBay now expects net revenues in the range of $13,950 - $14,100 million with GAAP earnings per diluted share in the range of $1.95 - $1.99 and non-GAAP earnings per diluted share in the range of $2.32 - $2.35.

Quarterly Conference Call

eBay will host a conference call to discuss third quarter 2012 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 website 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) is a global commerce platform and payments leader connecting millions of buyers and sellers. We do so through eBay, the world's largest online marketplace, which allows users to buy and sell in nearly every country on earth; through PayPal, which enables individuals and businesses to securely, easily and quickly send and receive digital payments; and through GSI, which facilitates ecommerce, multichannel retailing and digital marketing for global enterprises. X.commerce harnesses the developer community of Magento, an ecommerce platform, by providing technology solutions and eBay Inc. capabilities to merchants of all sizes, supporting eBay Inc.'s mission of enabling commerce. 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.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission (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 (GAAP). For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see “Business Outlook,” “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 Effective Tax Rate to Non-GAAP Effective Tax Rate” and “Reconciliation of Operating Cash Flow to Free Cash Flow” included in this press release.

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