eBay (EBAY)

Q3 2011 Earnings Call

October 19, 2011 5:00 pm ET


John J. Donahoe - Chief Executive Officer, President, Interim President of eBay Marketplaces and Director

Jennifer Ceran -

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


Mark S. Mahaney - Citigroup Inc, Research Division

Spencer Wang - Crédit Suisse AG, Research Division

Justin Post - BofA Merrill Lynch, Research Division

Matthew R. Nemer - Wells Fargo Securities, LLC, Research Division

Douglas Anmuth - JP Morgan Chase & Co, Research Division

Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division

Scott W. Devitt - Morgan Stanley, Research Division

Benjamin A. Schachter - Macquarie Research

Gil B. Luria - Wedbush Securities Inc., Research Division



Good day, ladies and gentlemen, and welcome to eBay's Third Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to hand the conference over to Ms. Jennifer Cerran, Vice President of Investor Relations. Ma'am, you may begin.

Jennifer Ceran

Thank you, and good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the third quarter of 2011.

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. All gross rates mentioned in Bob and John's prepared remarks represent year-over-year comparisons unless they clarify otherwise.

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 will make forward-looking statements relating to our future performance that are based on the 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 quarter and full year 2011 and the future growth in the Payments, Marketplaces and GSI businesses.

Our actual results may differ materially from those discussed in this call for a variety of reasons including, but not limited to, global economic events; changes in political, business and economic conditions; foreign exchange rate fluctuation; our ability to integrate, manage and grow businesses recently acquired or that may be acquired in the future, including GSI; our increasing need to grow revenues from existing users, particularly in more established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise with a broad range of businesses at different stages of maturities; and our need to manage regulatory tax, IT and litigation risks, including risks specific to PayPal, Bill Me Later and the financial industry; and our need to timely upgrade our technology and customer service infrastructure at reasonable cost or adding new products and features and maintaining site stability and performance.

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 should not rely on any forward-looking statements. All information in this presentation is as of October 19, 2011, and we do not intend and undertake no duty to update this information.

With that, let me turn the call over to John

John J. Donahoe

Thanks, Jenny. And good afternoon, everyone, and welcome to our Q3 earnings call. Q3 was another strong quarter for our company. eBay, PayPal and GSI all performed well, and we see significant global growth opportunities and synergies across our portfolio. Before taking a look at our results, I want to take a moment to recap our strategy.

Our company is focused on enabling commerce. This means giving consumers a seamless shopping experience across multiple channels, whether they're shopping online, offline or on a mobile device. Consumers want to shop anytime, anywhere. And this requires retailers of all sizes use the ability to engage consumers where, when and how they want to shop.

In today's commerce environment, a physical retail store is just another point of access. Location alone can't compete when consumers have shopping malls in their pockets. Retail must be technology-enabled and consumer-led.

Global technology platforms increasingly enable commerce, and we have powerful commerce platforms in our core eBay, PayPal and GSI businesses. We're also building valuable commerce capabilities in mobile, local and social. This includes technologies such as Milo, RedLaser and Zong.

And last week, we launched X.commerce, our open commerce ecosystem. X.commerce makes our technology and global platforms available to third-party developers, which we believe will accelerate commerce innovation. We believe that technology-led innovation is changing shopping and rapidly influencing customer behavior.

We are at an inflection point in global commerce. In fact, we believe we'll see more change in how people shop and pay over the next 3 years than we've seen in the last decade. And as we enter this new wave of global commerce innovation, I feel very good about our ability to compete, win and lead.

Now let's take a look at our results in Q3. We had a strong top line and bottom line quarter. Revenue grew 32% in Q3, and non-GAAP EPS was up 20%. PayPal continued to drive strong momentum, surpassing $1 billion in revenue for the second consecutive quarter. Marketplaces had a strong quarter, with 17% revenue growth supported by strong momentum in the U.S. market and solid growth internationally.

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