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EBay Inc. Reports Strong Second Quarter 2013 Results

Stocks in this article: EBAY

PayPal delivered a strong second quarter performance with revenue increasing 20% to $1.6 billion. PayPal gained 4.7 million active registered accounts in the period and ended the quarter with 132 million, a 17% increase. PayPal's net total payment volume (TPV) grew 24% to $43 billion driven by consumer and merchant use of PayPal both on and off eBay. PayPal continues to invest in growing its addressable market, product development, and consumer awareness. Payment velocity increased with a sequential acceleration of both the number of transactions and payment volume. PayPal made strides offline with PayPal Here now live in six countries while growing domestic merchant coverage by signing agreements with more than 50 merchant acquirers to facilitate usage of PayPal over the Discover network.

Marketplaces delivered a strong second quarter performance with revenue of $2.0 billion, increasing 10%, or 12% excluding the gain from the resolution of an indirect tax dispute in 2012. Marketplaces gained 3.5 million active users in the period and ended the quarter with 120 million, a 14% increase. Gross merchandise volume (GMV), excluding vehicles, increased 13% to $18 billion. Fixed price GMV grew 17% globally and represented 69% of total GMV. U.S. GMV, excluding vehicles, increased 16% to $7.3 billion driven by mobile and momentum in the parts & accessories and home & garden categories. International GMV, excluding vehicles, increased 11% to $11 billion, showing stable growth while facing a tougher macroeconomic environment. Marketplace's new search engine, which went live in North America in the second quarter, will help to enable smarter, faster and more intuitive search experiences.

GSI Commerce was renamed eBay Enterprise, reflecting the partnership that the business offers to retailers and brands through its comprehensive technology solutions and marketing services. eBay Enterprise contributed $246 million in revenue for the second quarter, an 11% increase. Its enterprise commerce platform generated $815 million in global ecommerce (GeC) Merchandise Sales, a 21% increase. eBay Enterprise enabled its clients to grow faster than the ecommerce market as measured by the 19% same store sales growth, but revenue was pressured by a reduction in take rate. The company expects its omnichannel product portfolio, including complementary eBay Inc. assets, to be increasingly adopted by merchants seeking opportunities to grow their businesses while seamlessly meeting the needs of their customers.

 

Second Quarter 2013 Financial Highlights (presented in millions, except per share data and percentages)

 
  Second Quarter  
    2013   2012   Change
eBay Inc.                
Net revenue   $3,877   $3,398   $479   14%
Enabled commerce volume (ECV)   $50,597   $41,906   $8,691   21%
GAAP          

 

   
Net income   $640   $692   $(52)   (8%)
Earnings per diluted share   $0.49   $0.53   $(0.04)   (8%)
Non-GAAP                
Net income   $822   $730   $92   13%
Earnings per diluted share   $0.63   $0.56   $0.07   13%

 

Second Quarter
    2013   2012   Change
Business Units                
Payments                
Net revenue   $1,624   $1,357   $267   20%
Net total payment volume   $42,813   $34,451   $8,362   24%
Marketplaces                
Net revenue   $2,001   $1,814   $187   10%
Gross merchandise volume (GMV), excl. vehicles   $18,292   $16,171   $2,121   13%
Enterprise                
Net revenue   $246   $221   $25   11%
GeC Merchandise Sales   $815   $674   $141   21%
   

Other Selected Financial Results

  • Operating margin — GAAP operating margin decreased to 19.3% for the second quarter of 2013, compared to 20.5% for the same period last year. Non-GAAP operating margin decreased to 26.3% in the second quarter, compared to 27.3% for the same period last year.
  • Taxes — The GAAP effective tax rate for the second quarter of 2013 was 15%, compared to 19% for the second quarter of 2012. For the second quarter of 2013 and 2012, the non-GAAP effective tax rate was 19% and 24%, respectively. The decrease in the company's GAAP and non-GAAP effective tax rates was due primarily to discrete items recorded in 2012 related to uncertain tax positions.
  • Cash flow — The company generated $1.0 billion of operating cash flow and $658 million of free cash flow during the second quarter of 2013.
  • Stock repurchase program — The company repurchased approximately $466 million of its common stock in the second quarter of 2013.
  • Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $11.7 billion at June 30, 2013 up from $11.5 billion at December 31, 2012.

Business Outlook

  • Third quarter 2013 — the company expects net revenues in the range of $3,850 - $3,950 million with GAAP earnings per diluted share in the range of $0.49 - $0.51 and non-GAAP earnings per diluted share in the range of $0.61 - $0.63.
  • Full year 2013 — the company expects net revenues in the range of $16,000 - $16,500 million with GAAP earnings per diluted share in the range of $2.21 - $2.26 and non-GAAP earnings per diluted share in the range of $2.70 - $2.75.

Quarterly Conference Call

eBay Inc. will host a conference call to discuss second quarter 2013 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.

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 $175 billion of commerce volume in 2012. 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 eBay Enterprise, which enables omnichannel commerce, multichannel retailing and digital marketing for global enterprises in the U.S. and internationally. 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.

Presentation

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.

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