eBay Inc. Reports Strong Third Quarter 2013 Results
eBay Inc. Reports Strong Third Quarter 2013 Results
Total Company Enabled Commerce Volume Up 21% Year over Year, Generating Double Digit Growth in Revenue and Earnings
SAN JOSE, Calif.--(BUSINESS WIRE)-- Global commerce platform and payments leader eBay Inc. (NAS: EBAY) today reported that revenue for the third quarter ended September 30, 2013, increased 14% to $3.9 billion, compared to the same period of 2012. The company reported third quarter net income on a GAAP basis of $689 million, or $0.53 per diluted share, and non-GAAP net income of $837 million, or $0.64 per diluted share. Third quarter non-GAAP earnings per diluted share increased 17% driven primarily by strong top-line growth. GAAP earnings per diluted share increased 16%, driven by revenue growth and the sale of our investments in RueLaLa and ShopRunner.
Total company Enabled Commerce Volume (ECV) grew 21% for the quarter, to $52 billion. The growth demonstrates the power of the company's global commerce platforms, technology assets and mobile commerce capabilities across Marketplaces, PayPal and eBay Enterprise. In the third quarter, cross-border trade, another competitive strength of the company, was $11 billion, representing 22% of the company's total ECV. Mobile enabled commerce volume was up 75% in the quarter, with downloads since inception exceeding 200 million and the company's suite of mobile apps attracting 3.2 million new customers.
"We delivered strong third quarter results, with mobile driving a significant portion of our new user growth and continuing to transform how consumers shop and pay around the world," said John Donahoe, President and CEO, eBay Inc. "Our scale and experience, the strength of our global commerce platforms, our technology assets and our mobile commerce capabilities strongly position us to be a leader in the commerce revolution under way. In the past 12 months we have enabled $200 billion of commerce volume, a 20 percent increase in a fairly lackluster macro environment. That growth demonstrates the strength of our core businesses and our power as a partner, not a competitor, to merchants, brands and retailers."
PayPal delivered a strong third quarter performance with revenue increasing 19% to $1.6 billion. PayPal gained 5.0 million active registered accounts and ended the quarter with 137 million, a 17% increase. PayPal's net total payment volume (TPV) grew 25% to $44 billion driven by consumer and merchant use of PayPal both on and off eBay. Merchant Services net TPV increased 30% with a sequential acceleration of payment volume. PayPal continues to invest in leading payments innovation, growing its addressable market, and driving global consumer and merchant acquisition through seamless and simple experiences. Key developments in the third quarter included the launch of a fully localized offering in Russia and PayPal's enhanced consumer app for iOS and Android. PayPal also delivered innovation offline by helping consumers save time and money through closed loop offers where merchants can put coupons directly into consumers' digital wallets. The enhanced PayPal consumer app gives customers in the U.S. and Australia convenient order-ahead and pay-at-table capabilities as well as the ability to check in and pay with the PayPal digital wallet at thousands of retail locations in the U.S., U.K., Canada and Australia.
Marketplaces also delivered a strong third quarter performance with revenue increasing 12% to $2.0 billion. Marketplaces gained 3.9 million active users in the period and ended the quarter with 124 million, a 14% increase. Gross merchandise volume (GMV), excluding vehicles, increased 13% to $18 billion. Fixed price GMV grew 18% globally and represented 71% of total GMV. U.S. GMV, excluding vehicles, increased 15% to $7.4 billion and international GMV, excluding vehicles, increased 12% to $11 billion driven by mobile and investment in buyer experience. The selection of items available on Marketplaces grew to over 500 million listings reflecting the success of consumer selling initiatives, particularly on mobile. Free shipping was provided on more than half of U.S. transactions in the quarter and the global shipping program continued to expand. In addition, the introduction and expansion of several local initiatives enabled customers to access local merchant inventory through apps to improve choice and reduce fulfillment time.
eBay Enterprise contributed $238 million in revenue for the third quarter, a 5% increase. Its Commerce Technologies generated $787 million in Merchandise Sales, a 13% increase, but revenue was pressured by a reduction in take rate. eBay Enterprise enabled its clients to grow same-store sales 13%, decelerating sequentially, but broadly in line with ecommerce growth rates. The company expects its broad 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 the connected consumer. eBay Enterprise launched four brands on its new suite of modular Commerce Technologies during the quarter.
Third Quarter 2013 Financial Highlights (presented in millions, except per share data and percentages)
|Enabled commerce volume (ECV)||$51,507||$42,593||$8,914||21%|
|Earnings per diluted share||$0.53||$0.45||$0.07||16%|
|Earnings per diluted share||$0.64||$0.55||$0.09||17%|
|Net total payment volume||$43,837||$35,159||$8,678||25%|
|Gross merchandise volume (GMV), excl. vehicles||$18,360||$16,281||$2,079||13%|
Other Selected Financial Results
- Operating margin — GAAP operating margin increased to 20.5% for the third quarter of 2013, compared to 19.6% for the same period last year. Non-GAAP operating margin increased to 26.8% in the third quarter, compared to 26.3% for the same period last year.
- Taxes — The GAAP effective tax rate for the third quarter of 2013 was 21%, compared to 11% for the third quarter of 2012. The increase in the company's GAAP effective tax rate was due to an increase in earnings in higher tax jurisdictions and the repayment of the Kynetic note receivable and the sale of our investments in RueLaLa and ShopRunner. For the third quarter of 2013 and 2012, the non-GAAP effective tax rate was 19% and 20%, respectively.
- Cash flow — The company generated $1.3 billion of operating cash flow and $1.0 billion of free cash flow during the third quarter of 2013. The company's investing activities benefited from proceeds of $485 million from the repayment of the Kynetic note receivable and the sale of our investments in RueLaLa and ShopRunner.
- Stock repurchase program — The company repurchased approximately $146 million of its common stock in the third quarter of 2013.
- Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $13.0 billion at September 30, 2013, up from $11.5 billion at December 31, 2012.
- Fourth quarter 2013 — the company expects net revenues in the range of $4,500 - $4,600 million with GAAP earnings per diluted share in the range of $0.67 - $0.69 and non-GAAP earnings per diluted share in the range of $0.79 - $0.81. The company's fourth quarter outlook assumes that the pending acquisition of Braintree will close late in the fourth quarter of 2013.
Quarterly Conference Call
eBay Inc. will host a conference call to discuss third 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.
Use of Investor Relations Website for Regulation FD Purposes
eBay Inc. also announced that it intends to use its Investor Relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Such disclosures will be included on the eBay Inc. Investor Relations website at investor.ebayinc.com. Accordingly, investors should monitor http://investor.ebayinc.com, in addition to following press releases, SEC filings and public conference calls and webcasts.
About eBay Inc.
eBay Inc. (NAS: 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.
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.
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 of, 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 and 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.
This press release contains forward-looking statements relating to, among other things, the future performance of eBay Inc. and its consolidated subsidiaries that are based on the company's 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 fourth quarter and full year 2013, and the future growth in the Payments, Marketplaces and Enterprise businesses, mobile payments and mobile commerce. The company's actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: changes in political, business and economic conditions, including any continuing U.S. government shutdown or default, any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; the company's need to successfully react to the increasing importance of mobile payments and mobile commerce and the increasing social aspect of commerce; the company's ability to deal with the increasingly competitive ecommerce environment, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the company's need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; the effect of management changes and business initiatives; the company's need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; any changes the company may make to its product offerings; the competitive, regulatory, credit card association-related and other risks specific to PayPal and Bill Me Later, especially as PayPal continues to expand geographically and introduce new products and as new laws and regulations related to financial services companies come into effect; the company's ability to timely upgrade and develop its technology systems, infrastructure and customer service capabilities, including our Enterprise Commerce Technologies, at reasonable cost; the company's ability to maintain site stability and performance on all of its sites while adding new products and features in a timely fashion; and the company's ability to profitably integrate, manage and grow businesses that have been acquired or may be acquired in the future. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.
More information about factors that could affect the company's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at http://investor.ebayinc.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements.
|Unaudited Condensed Consolidated Balance Sheet|
September 30, 2013
December 31, 2012
|Cash and cash equivalents||$||5,280||$||6,817|
|Accounts receivable, net||772||822|
|Loans and interest receivable, net||2,434||2,160|
|Funds receivable and customer accounts||9,073||8,094|
|Other current assets||926||914|
|Total current assets||23,476||21,398|
|Property and equipment, net||2,763||2,491|
|Intangible assets, net||863||1,128|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Funds payable and amounts due to customers||9,073||8,094|
|Accrued expenses and other current liabilities||2,008||1,916|
|Income taxes payable||87||63|
|Total current liabilities||12,028||10,924|
|Deferred and other tax liabilities, net||914||972|
|Total stockholders' equity||22,767||20,865|
|Total liabilities and stockholders' equity||$||40,067||$||37,074|
|Unaudited Condensed Consolidated Statement of Income|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|(In millions, except per share amounts)|
|Cost of net revenues (1)||1,224||1,022||3,587||2,992|
|Sales and marketing (1)||755||726||2,223||2,120|
|Product development (1)||433||389||1,318||1,157|
|General and administrative (1)||415||369||1,242||1,131|
|Provision for transaction and loan losses||185||148||553||413|
|Amortization of acquired intangible assets||81||83||245||251|
|Total operating expenses||1,869||1,715||5,581||5,072|
|Income from operations||799||667||2,349||2,015|
|Interest and other, net||74||5||89||74|
|Gain on divested business||—||—|