EBay's CEO Discusses Q1 2012 Results - Earnings Call Transcript

eBay (EBAY)

Q1 2012 Earnings Call

April 18, 2012 5:00 pm ET


Jennifer Ceran -

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

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


Heath P. Terry - Goldman Sachs Group Inc., Research Division

Spencer Wang - Crédit Suisse AG, Research Division

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

Ronald Josey - ThinkEquity LLC, Research Division

A. Justin Post - BofA Merrill Lynch, Research Division

Scott W. Devitt - Morgan Stanley, Research Division

Rohit Kulkarni

Charles Eugene Munster - Piper Jaffray Companies, Research Division

Benjamin A. Schachter - Macquarie Research

Colin A. Sebastian - Lazard Capital Markets LLC, Research Division



Good day, ladies and gentlemen, and welcome to eBay's Q1 2012 Earnings Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. And now I would like to turn the conference over to Jennifer Ceran, Vice President, Investor Relations.

Jennifer Ceran

Good afternoon, everyone. Thank you for joining us, and welcome to eBay's earnings release conference call for the first quarter of 2012. 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 growth rates mentioned in John and Bob's prepared remarks represent year-over-year comparisons, unless they clarify otherwise. This conference call is also being web -- sorry, 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 these 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 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 second quarter and full year 2012 and the future growth in the Payments, Marketplaces and GSI businesses, mobile commerce and mobile payments. 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 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 timely upgrade our technology and customer service infrastructure at reasonable cost, while 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 April 18, 2012, 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. Good afternoon, everyone, and welcome to our Q1 earnings call. We had a strong first quarter and an excellent start to the year driven by strong performance across eBay, PayPal and GSI. Our portfolio is enabling commerce around the world, and we're excited about our future. We're building a set of capabilities that is reshaping how people shop and pay.

We're helping merchants of all sizes compete in a rapidly changing multichannel retail environment, and we will never compete with them. And we're creating compelling and engaging experiences for consumers all over the world.

At the beginning of last year, we laid out bold 3-year growth goals, and our strong performance in 2011 was a big down payment toward achieving those goals. And our first quarter results of 2012 continued that momentum.

First quarter revenue grew 29%, and non-GAAP EPS was up 18%. All of our businesses performed well. First, let's take a look at PayPal.

We see enormous opportunity for PayPal online, on mobile devices and, increasingly, in the off-line environment as well. And PayPal is delivering this innovation on a global scale. In fact, for the second consecutive quarter, more than half of PayPal's revenue came from outside the U.S., highlighting PayPal's expanding global footprint as people around the world look for a safer, easier way to pay in their domestic markets and across borders.

Paypal's TPV on eBay was up 18% for the quarter on an FX-neutral basis. This was driven by strong Marketplaces performance and increasing penetration on eBay to nearly 76%. That's a point above the prior quarter and achieves PayPal's 2013 on eBay penetration goal a year ahead of plan.

In Merchant Services, TPV grew 28% on an FX-neutral basis as more retailers and consumers chose PayPal online. PayPal continued to add more than 1 million new active accounts per month in Q1, ending the quarter with almost 110 million active accounts.

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