EBay CEO Discusses Q4 2010 Earnings Call Transcript

eBay (EBAY)

Q4 2010 Earnings Call

January 19, 2011 5:00 pm ET


Robert Swan - Chief Financial Officer and Senior Vice President of Finance

John Donahoe - Chief Executive Officer, President and Director

Tracey Ford - Director, Investor Relations


Scott Devitt - Morgan Stanley

Sandeep Aggarwal - Caris & Company

Spencer Wang - Crédit Suisse AG

Douglas Anmuth - Barclays Capital

Colin A. Sebastian

Jeetil Patel - Deutsche Bank AG

Mark Mahaney - Citigroup Inc



Good day, ladies and gentlemen, and thank you for standing by, and welcome to eBay's Fourth Quarter 2010 Earnings Conference Call. [Operator Instructions] And now I'll turn the program over to Tracey Ford, Director of Investor Relations. Please go ahead.

Tracey Ford

Good afternoon. Thank you for joining us, and welcome to eBay's Earnings Release Conference Call for the Fourth Quarter of 2010. Joining me today on the call are John Donahoe, our President and Chief Executive Officer; and Bob Swan, our Chief Financial Officer.

We're providing a slide presentation to accompany Bob's commentary during the call. This conference call is also being broadcast on the Internet, and both the presentation and call are available through the Investor Relations section of the eBay website at investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non-GAAP measures in talking about our company's performance. You can find a reconciliation of those measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call.

In addition, management may make forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2011 and the future growth in the Payments and Marketplaces businesses. Our actual results may differ materially from those discussed in this call for a variety of reasons, including, but not limited to: the aftereffects of the global economic downturn; changes in political, business and economic conditions; foreign exchange rate fluctuations; the impact and integration of recent and future acquisitions; our increasing need to grow revenues from existing users, particularly in more established markets; the increasingly competitive environment for our businesses; the complexity of managing increasingly large enterprise with a broad range of businesses at different stages of maturity; our need to manage regulatory, tax, IP and litigation risks, including risks specific to PayPal, Bill Me Later and the financial industry; and our need to upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability.

You can find more information about factors that could affect our operating results in our most recent annual report on our Form 10-K and our subsequent quarterly reports on Form 10-Q, available at investor.ebayinc.com. You cannot rely on any forward-looking statements. All information in this presentation is as of January 19, 2011. We do not intend or undertake no duty to update.

With that, let me turn the call over to John.

John Donahoe

Thanks, Tracey, and good afternoon, everyone, and welcome to our Q4 earnings call.

In 2010, we have focused our company on three priorities: first, becoming a more customer-focused company; second, creating better user experiences through technology-driven innovation; and third, driving operating efficiency to reinvest in growth. We've made steady progress each quarter, and we ended the year with strong Q4 results. I'm proud of what our teams have accomplished. We're becoming a stronger, more competitive company. We're creating opportunity for sellers and merchants worldwide. Our products are becoming more innovative. And we're making it more convenient for millions of people to shop and pay online every day, with more choices to help them find whatever they want, whenever they want, wherever they are.

In Q4, revenue and earnings per share exceeded our guidance. Excluding Skype, revenue increased 10%, and non-GAAP EPS was up 24% year-over-year, driven by both stronger performance and onetime items. And we generated free cash flow of over $650 million.

PayPal drove strong payment and revenue growth while expanding margins. And eBay accelerated sold items growth, driven by gains in the U.S., U.K. and Germany.

We've extended our leadership position in mobile commerce, nearly tripling our eBay Mobile GMV year-over-year to nearly $2 billion, with strong holiday shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4 billion. Mobile is clearly becoming a new way people shop, and eBay is helping to lead the way with innovative apps across multiple platforms, including the iPad. Our Mobile apps have now been downloaded more than 30 million times in eight languages across 190 countries.

We also expanded our capabilities. In Q4, we made or announced acquisitions that we believe will strengthen our position in fashion, mobile and local commerce. brands4friends, Germany's largest online shopping club, deepens our fashion leadership position in Europe. In the U.S., Critical Path Software gives us deeper mobile application development capabilities. And our acquisition of Milo allows us to blend local off-line retail into an easy and convenient online shopping experience.

Across our core businesses in Q4 and 2010, we made progress against our growth objectives. Distinctions between online and off-line commerce continue to blur, and consumer behavior around how people shop and pay is rapidly changing. Our customer focus, deep commitment to technology-driven innovation and our operating discipline not only generated a strong quarter and year, but also position us well to be at the forefront of trends that are shaping the future of shopping and payments.

Read the rest of this transcript for free on seekingalpha.com

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