eBAY INC. ANNOUNCES SECOND QUARTER 2005 FINANCIAL RESULTS
- Company Reports Record Q2 Net Revenues of $1.086 Billion -
- Achieves Q2 GAAP Diluted EPS of $0.21 and Pro Forma Diluted EPS of $0.22 -
- Raises 2005 Net Revenues and EPS Guidance -
San Jose, CA, July 20, 2005 - eBay Inc. (Nasdaq: EBAY; www.ebay.com) reported financial results for
its quarter ended June 30, 2005.
eBay reported record consolidated Q2-05 net revenues of $1.086 billion, up 40% year over year; record
operating income of $379.0 million, up 49% year over year, representing a 35% operating margin; and
record pro forma operating income of $406.4 million, up 47% year over year, representing a 37% pro
forma operating margin.
Consolidated net income in Q2-05 was a record $291.6 million, or $0.21 per diluted share. eBay’s pro
forma consolidated net income was a record $307.2 million, or $0.22 per diluted share.
These results exceeded the high end of the company’s guidance of $1.050 billion for net revenues, and
exceeded the company’s guidance of $0.16 for earnings per diluted share, and $0.18 for pro forma
earnings per diluted share.
“eBay achieved remarkable results in Q2,” said Meg Whitman, President and CEO of eBay. “Excellent
momentum in the US and Germany, as well as at PayPal, all helped deliver an impressive jump in
revenues and profit.”
Key Financial and Operating Metrics
Consolidated Net Revenues - Consolidated net revenues totaled a record $1.086 billion in Q2-05, which
represented an increase of 40% from the $773.4 million reported in Q2-04.
• U.S. Marketplace Net Revenues - U.S. Marketplace net revenues totaled $423.6 million in Q2-05,
representing 27% year-over-year growth.
• International Marketplace Net Revenues - International Marketplace net revenues totaled $418.8
million in Q2-05, representing 51% year-over-year growth.
• Payments Net Revenues - Payments net revenues totaled $243.9 million in Q2-05, representing
51% year-over-year growth.
2
eBay Announces Q2-05 Earnings (cont.)
Confirmed Registered Users - Cumulative confirmed registered users at the end of Q2-05 totaled 157.3
million, representing a 38% increase over the 114.0 million users reported at the end of Q2-04.
Active Users - Active users, the number of users on the eBay platform who bid, bought, or listed an item
within the previous 12-month period, increased to a record 64.6 million in Q2-05, a 34% increase over the
48.0 million active users reported in the same period a year ago.
Listings - New listings totaled a record 440.1 million in Q2-05, 32% higher than the 332.3 million new
listings reported in Q2-04.
Gross Merchandise Volume (GMV) - GMV, the total value of all successfully closed listings on eBay’s
trading platforms, was a record $10.9 billion, representing a 36% year-over-year increase from the $8.0
billion reported in Q2-04.
Total Payments Accounts - PayPal’s business had 78.9 million total accounts at the end of Q2-05, a 56%
increase from the 50.4 million reported in Q2-04. Total payments accounts represents the cumulative total
of all accounts opened, excluding accounts that have been closed or locked, and users that made payments
with PayPal but have not registered.
Total Payment Volume (TPV) - TPV, the dollar volume of payments initiated through the PayPal system,
was a record $6.5 billion in Q2-05, a 49% increase from the $4.4 billion reported in Q2-04.
GAAP Operating Income - GAAP operating income increased 49% year over year to $379.0 million, or
35% of net revenues.
Pro Forma Operating Income - Pro forma operating income increased 47% year over year to $406.4
million, or 37% of net revenues. Pro forma operating income represents GAAP operating income adjusted
to exclude certain items, primarily stock based compensation expense and related payroll taxes and
amortization of acquired intangible assets.
GAAP Net Income - GAAP net income increased 53% year over year to $291.6 million, or $0.21 per
diluted share.
Pro Forma Net Income - Pro forma net income increased 55% year over year to $307.2 million, or $0.22
per diluted share. Pro forma net income represents GAAP net income adjusted to exclude certain items,
primarily stock based compensation expense and related payroll taxes, amortization of acquired intangible
assets and income taxes related to these items.
Operating and Free Cash Flows - Operating cash flows totaled $496.6 million. Free cash flows,
representing operating cash flows less capital expenditures of $90.5 million, totaled $406.1 million.
3
eBay Announces Q2-05 Earnings (cont.)
Key Category Performance* - Based on Q2-05 GMV, the following categories delivered $1 billion or more
in worldwide annualized GMV: eBay Motors at $14.3 billion; Clothing & Accessories at $3.3 billion;
Consumer Electronics at $3.2 billion; Computers at $2.9 billion; Home & Garden at $2.5 billion;
Books/Movies/Music at $2.4 billion; Sports at $2.1 billion; Collectibles at $2.0 billion; Toys at $1.6 billion;
Jewelry & Watches at $1.5 billion; Business & Industrial at $1.5 billion; and Cameras & Photo at $1.3
billion.
Fixed Price Trading - eBay’s fixed price trading contributed approximately $3.2 billion or 29% of total
GMV during Q2-05, primarily from eBay’s “Buy It Now” feature.
eBay Stores - At the end of Q2-05, eBay hosted approximately 299,000 stores worldwide, with
approximately 173,000 stores hosted on the U.S. site.
Consolidated Financial and Operating Summary
eBay reported record consolidated net revenues of $1.086 billion in Q2-05, representing a 40% year-overyear
increase. On a year-over-year basis, consolidated net revenues reflected a foreign currency
translation benefit in Q2-05 of approximately $24.7 million. On a sequential basis, consolidated net
revenues were negatively impacted by foreign currency translation in Q2-05 by approximately $17.3
million.
Gross profit was $894.5 million, or 82% of net revenues, higher than the 81% reported in Q2-04. The
percentage increase was primarily the result of an increase in our Payments segment gross margin.
Sales and marketing expenses totaled $287.1 million, or 26% of net revenues, up from the 24% reported
in Q2-04. The percentage increase was primarily the result of international expansion and industry-wide
increases in Internet marketing rates, partially offset by marketing efficiencies. Sales and marketing
expenses as a percentage of net revenues in Q2-05 was consistent with Q1-05.
Product development expenses totaled $71.6 million, or 7% of net revenues, down from the 8% reported
in Q2-04.
General and administrative costs totaled $129.3 million, or 12% of net revenues, down from the 13% of
net revenues reported in Q2-04. The percentage decrease was primarily the result of a lower transaction
loss rate in our Payments segment due to improved transaction loss detection and related loss prevention
programs.
_______________
*For further detail on the eBay Marketplace’s current annualized $1 billion categories, including trended data, please see the metrics section
on eBay’s Investor Relations website at investor.ebay.com/fundamentals.cfm.
4
eBay Announces Q2-05 Earnings (cont.)
Income from operations totaled $379.0 million during Q2-05, a 49% increase over the $253.9 million
reported in Q2-04. On a pro forma basis, income from operations totaled $406.4 million, a 47% increase
over the $275.6 million reported in Q2-04. Included in both the GAAP and pro forma Q2-05 consolidated
income from operations was a $12.5 million year-over-year net benefit from changes in foreign exchange
rates. On a sequential basis, both the GAAP and pro forma consolidated income from operations were
negatively impacted by foreign currency translation in Q2-05 by approximately $10.1 million.
Interest and other income, net, totaled $32.5 million in Q2-05, up from the $22.4 million reported in Q2-
04. The increase was primarily the result of increased interest income earned on larger cash, cash
equivalents, and investment balances.
The GAAP effective tax rate for Q2-05 was 29%, a decrease from the GAAP effective tax rate of 30% for
Q2-04, and an increase from the 28% for Q1-05. The pro forma effective tax rate for Q2-05 was 30%, a
decrease from the pro forma effective tax rate of 31% for Q2-04, and an increase from the 29% for Q1-05.
The lower GAAP and pro forma effective tax rates for Q2-05, as compared to Q2-04, and the higher
sequential GAAP and pro forma effective tax rates for Q2-05 reflect changes in the company’s
geographic business mix.
The company reported $496.6 million in operating cash flows and $90.5 million of capital expenditures in
Q2-05, resulting in free cash flows of $406.1 million. The company’s cash, cash equivalents, and
investments totaled more than $3.8 billion at the end of Q2-05.
Business Outlook
The following updated guidance reflects current business trends and assumed exchange rates. The updated
guidance is based on an assumed weighted average exchange rate of US $1.20 per Euro, as compared to
the prior guidance, which assumed a weighted average exchange rate of US $1.30 per Euro. The guidance
does not include the impact of the completion of the acquisition of Shopping.com or any other potential
acquisitions.
Net Revenues - eBay now expects consolidated net revenues for 2005 to be in the range of $4.340 billion
to $4.410 billion. In Q3-05, eBay now expects consolidated net revenues to be in the range of $1.045
billion to $1.070 billion, reflecting a stronger US dollar and strong business momentum.
GAAP Diluted EPS - eBay now estimates GAAP earnings per diluted share for the full year 2005 to be in
the range of $0.77 to $0.78, an increase from the previous guidance of $0.71 to $0.73. In Q3-05, eBay
now estimates GAAP earnings per diluted share to be $0.18.
Pro Forma Diluted EPS - eBay now estimates pro forma earnings per diluted share for the full year 2005
to be in the range of $0.82 to $0.83, an increase from the previous guidance of $0.76 to $0.78. In Q3-05,
eBay now estimates pro forma earnings per diluted share to be $0.19.
5
eBay Announces Q2-05 Earnings (cont.)
Capital Expenditures - eBay continues to expect its capital expenditures to be in the range of $340 million
to $400 million for the full year 2005, which amount to approximately 8% to 9%, respectively, of eBay’s
guidance for net revenues. These expected capital expenditures for 2005 excludes the Q1-05 payment of a
lease obligation for our headquarters facility of approximately $126 million.
Quarterly Conference Call
eBay will host a conference call to discuss second quarter results at 2 pm Pacific Time today. A live
webcast of the conference call can be accessed through the company’s Investor Relations website at
investor.ebay.com. In addition, an archive of the webcast will be accessible through the same link.
Non-GAAP Measures
To supplement the company’s consolidated financial statements presented in accordance with GAAP,
eBay uses non-GAAP measures of certain components of financial performance. These non-GAAP
measures include pro forma net income, pro forma earnings per diluted share, pro forma operating
margin, and free cash flows. These non-GAAP measures are provided to enhance investors’ overall
understanding of the company’s current financial performance and the company’s prospects for the future.
Specifically, the company believes the non-GAAP results provide useful information to both management
and investors by excluding certain expenses, gains and losses that may not be indicative of its core
operating results. In addition, because eBay has historically reported certain non-GAAP results to
investors, the company believes the inclusion of non-GAAP measures provides consistency in the
company’s financial reporting. These measures should be considered in addition to results prepared in
accordance with generally accepted accounting principles, but should not be considered a substitute for, or
superior to, GAAP results. Reconciliation of all non-GAAP measures included in this press release, to the
nearest GAAP measure, can be found in the financial tables included in this press release.
About eBay
eBay is The World’s Online Marketplace®. Founded in 1995, eBay created a powerful platform for the
sale of goods and services by a passionate community of individuals and businesses. On any given day,
there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local,
national and international basis with customized sites in markets around the world. Through an array of
services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an evergrowing
online community.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its
consolidated subsidiaries. Those statements involve risks and uncertainties, and the company’s actual
results could differ materially from those discussed. Factors that could cause or contribute to such
differences include, but are not limited to: the company’s need to manage an increasingly large company
with a broad range of businesses of varying degrees of maturity; the company’s need to increasingly
achieve growth from its existing users as well as from new users in its more established markets; the
6
eBay Announces Q2-05 Earnings (cont.)
company’s ability to deal with the increasingly competitive e-commerce 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; fluctuations in foreign exchange rates; the litigation,
regulatory, credit card association, and other risks specific to PayPal as it continues to expand
geographically; the company’s need to manage other regulatory, tax, and litigation risks even as its
product offerings expand and its services are offered in more jurisdictions; the company’s ability to
upgrade and develop its systems, infrastructure and customer service capabilities to accommodate growth
at a 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; the company’s ability to profitably expand its
model to new types of merchandise and sellers; and, the company’s ability to profitably integrate and
manage recent and future acquisitions and other transactions. The forward looking statements in this
release do not include the potential impact of any acquisitions, such as the pending acquisition of
Shopping.com Ltd., that may be completed after the date hereof.
More information about factors that could affect the company’s operating results is included under the
captions “Risk Factors That May Affect Results of Operations and Financial Condition” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the
company’s annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be
obtained by visiting the company’s investor relations site at investor.ebay.com. Undue reliance
should not be placed on the forward-looking statements in this release, which are based on information
available to the company on the date hereof. eBay assumes no obligation to update such statements.
Investor Relations Contact: Tracey Ford 408-376-7205
Media Relations Contact: Hani Durzy 408-376-7458
Investor Information Request: 408-376-7493
Company News: www.businesswire.com
Investor Relations Website: investor.ebay.com
7
eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)
December 31,
2004
June 30,
2005
ASSETS
Current assets
Cash and cash equivalents $ 1,330,045 $ 1,855,649
Short-term investments 682,004 896,951
Accounts receivable, net 240,856 269,641
Funds receivable from customers 123,424 200,171
Restricted cash and investments 155,405 32,077
Other current assets 379,415 435,339
Total current assets 2,911,149 3,689,828
Long-term investments 1,267,707 1,064,260
Property and equipment, net 709,773 745,257
Goodwill 2,709,794 3,119,969
Intangible assets, net 362,909 387,366
Other assets 29,719 26,442
$ 7,991,051 $ 9,033,122
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 37,958 $ 41,686
Funds payable and amounts due to customers 331,805 507,731
Accrued expenses and other current liabilities 421,969 454,186
Deferred revenue and customer advances 50,439 42,079
Short-term obligations 124,272 −
Income taxes payable 118,427 141,136
Total current liabilities 1,084,870 1,186,818
Deferred tax liabilities, net 135,971 242,697
Other liabilities 41,869 34,486
Total liabilities 1,262,710 1,464,001
Total stockholders’ equity 6,728,341 7,569,121
$ 7,991,051 $ 9,033,122
8
eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2004 2005 2004 2005
Net revenues $ 773,412 $ 1,086,303
$ 1,529,651
$ 2,118,027
Cost of net revenues 146,531 191,840 280,889 378,209
Gross profit 626,881 894,463 1,248,762 1,739,818
Operating expenses:
Sales and marketing 189,150 287,144 381,840 558,493
Product development 59,978 71,639 112,676 145,428
General and administrative 102,940 129,340 193,576 265,729
Payroll tax on employee stock options 5,186 1,560 10,332 7,291
Amortization of acquired intangible assets 15,769 25,794 29,732 48,317
Total operating expenses 373,023 515,477 728,156 1,025,258
Income from operations 253,858 378,986 520,606 714,560
Interest and other income, net 22,443 32,525 45,942 54,928
Interest expense (2,047) (405) (4,378) (2,125)
Income before income taxes and minority interests 274,254 411,106 562,170 767,363
Provision for income taxes (81,598) (119,518) (167,354) (219,466)
Minority interests (2,261) (28) ( 4,321) (46)
Net income $ 190,395 $ 291,560 $ 390,495 $ 547,851
Net income per share:
Basic $ 0.14 $ 0.22 $ 0.30 $ 0.41
Diluted $ 0.14 $ 0.21 $ 0.29 $ 0.40
Weighted average shares:
Basic 1,316,138 1,351,375 1,310,574 1,347,429
Diluted 1,364,842 1,379,088 1,356,299 1,380,736
9
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Notes:
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of equity investment
(e) Income taxes associated with certain pro forma entries
Three Months Ended Three Months Ended
June 30, 2004 June 30, 2005
GAAP
Pro Forma
Entries Pro Forma GAAP
Pro Forma
Entries Pro Forma
Net revenues $ 773,412 $ - $ 773,412 $ 1,086,303 $ - $ 1,086,303
Cost of net revenues 146,531
(4) (a) 146,527 191,840 - 191,840
Gross profit 626,881 4 626,885 894,463 - 894,463
Operating expenses:
Sales and marketing 189,150 (14) (a) 189,136 287,144 - 287,144
Product development 59,978 (114) (a) 59,864 71,639 721 (a) 72,360
General and administrative 102,940 (685) (a) 102,255 129,340 (771) (a) 128,569
Payroll tax on employee stock options 5,186 (5,186) (b) - 1,560 (1,560) (b) -
Amortization of acquired intangible assets 15,769
(15,769) (c) - 25,794 (25,794) (c) -
Total operating expenses 373,023 (21,768) 351,255 515,477 (27,404) 488,073
Income from operations 253,858 21,772 275,630 378,986 27,404 406,390
Interest and other income, net 22,443 (7,298) (d) 15,145 32,525
(2,260) (d) 30,265
Interest expense (2,047) - (2,047) (405) - (405)
Income before income taxes and minority interests 274,254 14,474 288,728 411,106 25,144 436,250
Provision for income taxes (81,598) (7,207) (e) (88,805) (119,518) (9,468) (e)
(128,986)
Minority interests (2,261) - (2,261) (28) - (28)
Net income $ 190,395 $ 7,267 $ 197,662 $ 291,560 $ 15,676 $ 307,236
Net income per share:
Basic $ 0.14 $ 0.15 $ 0.22 $ 0.23
Diluted $ 0.14 $ 0.14 $ 0.21 $ 0.22
Weighted average shares:
Basic 1,316,138 1,316,138 1,351,375 1,351,375
Diluted 1,364,842 1,364,842 1,379,088 1,379,088
Operating margin 33% 3% 36% 35% 2% 37%
10
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Notes:
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of equity investment
(e) Income taxes associated with certain pro forma entries
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2005
GAAP
Pro Forma
Entries Pro Forma GAAP
Pro Forma
Entries Pro Forma
Net revenues $ 1,529,651 $ - $ 1,529,651 $ 2,118,027 $ - $ 2,118,027
Cost of net revenues 280,889
(28) (a) 280,861 378,209 (78) (a) 378,131
Gross profit 1,248,762 28 1,248,790 1,739,818 78 1,739,896
Operating expenses:
Sales and marketing 381,840 (89) (a) 381,751 558,493 - 558,493
Product development 112,676 (303) (a) 112,373 145,428 399 (a) 145,827
General and administrative 193,576 (953) (a) 192,623 265,729 (3,967) (a) 261,762
Payroll tax on employee stock options 10,332 (10,332) (b) - 7,291 (7,291) (b) -
Amortization of acquired intangible assets 29,732 (29,732) (c) - 48,317 (48,317) (c) -
Total operating expenses 728,156 (41,409) 686,747 1,025,258 (59,176) 966,082
Income from operations 520,606 41,437 562,043 714,560 59,254 773,814
Interest and other income, net 45,942 (7,298) (d) 38,644 54,928 (2,260) (d) 52,668
Interest expense (4,378) - (4,378)
(2,125) - (2,125)
Income before income taxes and minority interests 562,170 34,139 596,309 767,363 56,994 824,357
Provision for income taxes (167,354) (16,186) (e) (183,540) (219,466)
(22,071) (e) (241,537)
Minority interests (4,321) - (4,321) (46) - (46)
Net income $ 390,495 $ 17,953 $ 408,448 $ 547,851 $ 34,923 $ 582,774
Net income per share:
Basic $ 0.30 $ 0.31 $ 0.41 $ 0.43
Diluted $ 0.29 $ 0.30 $ 0.40 $ 0.42
Weighted average shares:
Basic
1,310,574 1,310,574 1,347,429 1,347,429
Diluted 1,356,299 1,356,299 1,380,736 1,380,736
Operating margin 34% 3% 37% 34% 3% 37%
11
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2004 2005 2004 2005
Cash flows from operating activities:
Net income $ 190,395 $ 291,560 $ 390,495 $ 547,851
Adjustments:
Provision for doubtful accounts and authorized credits 22,697 22,697 38,301 44,721
Provision for transaction losses 10,706 12,556 22,350 31,135
Depreciation and amortization 59,434 85,305 115,119 164,965
Amortization of unearned stock-based compensation 818 50 1,374 3,646
Tax benefit on the exercise of employee stock options 83,197 25,607 159,837 110,599
Minority interests 2,261 10 4,321 28
Changes in assets and liabilities, net of acquisition effects:
Accounts receivable (38,663) (17,220) (53,717) (71,382)
Funds receivable from customers (178) 3,179 (61,869) (74,154)
Other current assets 2,934 (13,759) (112,811) (12,556)
Other non-current assets 1,842 (389) (2,825) (8,750)
Deferred tax liabilities, net (15,660) 65,188 (18,281) 67,428
Accounts payable (40,563) (17,910) 1,778 2,999
Funds payable and amounts due to customers (13,161) 12,897 130,491 181,825
Accrued expenses and other liabilities (11,157) 8,107 (9,133) (13,731)
Deferred revenue and customer advances 1,869 380 9,719 (6,595)
Income taxes payable 6,329 18,274 14,196 23,922
Net cash provided by operating activities 263,100 496,532 629,345 991,951
Cash flows from investing activities:
Purchases of property and equipment, net (65,653) (90,479) (136,565) (170,063)
Purchases of investments (385,754) (286,527) (1,209,537) (654,621)
Maturities and sales of investments 235,452 547,975 752,880 793,640
Purchases of intangibles and other non-current assets (1,503) (1,953) (2,448) (1,953)
Acquisitions, net of cash acquired (137,852) (81,606) (172,515) (526,614)
Net cash used in investing activities (355,310) 87,410 (768,185) (559,611)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 182,205 80,387 355,294 259,666
Payment of headquarters facility lease obligation — — — (126,390)
Principal payments on long-term obligations (1,008) — (2,155) (1,849)
Net cash provided by financing activities 181,197 80,387 353,139 131,427
Effect of exchange rate changes on cash and cash equivalents (1,982) (25,452) (7,099) (38,163)
Net increase in cash and cash equivalents 87,005 638,877 207,200 525,604
Cash and cash equivalents at beginning of period 1,501,708 1,216,772 1,381,513 1,330,045
Cash and cash equivalents at end of period $ 1,588,713 $ 1,855,649 $ 1,588,713 $ 1,855,649
Net cash provided by operating activities $ 263,100 $ 496,532 $ 629,345 $ 991,951
Less: Purchases of property and equipment, net (65,653) (90,479) (136,565) (170,063)
Less: Payment of headquarters facility lease obligation — — — (126,390)
Free cash flow $ 197,447 $ 406,053 $ 492,780 $ 695,498
12
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Type
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Net Transaction Revenues
U.S. Marketplace $ 319,119 $ 330,643 $ 362,736 $ 388,759 $ 408,452
Current quarter vs prior quarter (2%) 4% 10% 7% 5%
Current quarter vs prior year quarter 32% 29% 24% 19% 28%
International Marketplace 273,740 282,294 344,348 387,187 411,671
Current quarter vs prior quarter 6% 3% 22% 12% 6%
Current quarter vs prior year quarter 76% 82% 64% 51% 50%
Payments 158,815 166,282 200,203 227,097 237,217
Current quarter vs prior quarter 2% 5% 20% 13% 4%
Current quarter vs prior year quarter 60% 56% 53% 46% 49%
Total net transaction revenues 751,674
779,219
907,287 1,003,043 1,057,340
Current quarter vs prior quarter 2% 4% 16% 11% 5%
Current quarter vs prior year quarter 51% 51% 43% 36% 41%
Advertising and other non-transaction revenues
Total advertising and other non-transaction revenues 21,738 26,657 28,495 28,681 28,963
Current quarter vs prior quarter 25% 23% 7% 1% 1%
Current quarter vs prior year quarter 76% 93% 81% 65% 33%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
13
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Segment
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
U.S. Marketplace $ 334,481 $ 347,343 $ 379,454 $ 404,848 $ 423,565
Current quarter vs prior quarter (1%) 4% 9% 7% 5%
Current quarter vs prior year quarter 33% 31% 25% 20% 27%
International Marketplace 277,444 286,516 350,309 393,792 418,839
Current quarter vs prior quarter 7% 3% 22% 12% 6%
Current quarter vs prior year quarter 77% 83% 65% 52% 51%
Payments 161,487 172,017 206,019 233,084 243,899
Current quarter vs prior quarter 2% 7% 20% 13% 5%
Current quarter vs prior year quarter 59% 59% 55% 47% 51%
Percent of Payments revenue which is international 28.7% 30.1% 33.0% 35.0% 35.1%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
Net Revenues by Geography
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
U.S. net revenues $ 449,571 $ 467,545 $ 517,465 $ 556,246 $ 581,851
Current quarter vs prior quarter (1%) 4% 11% 7% 5%
Current quarter vs prior year quarter 36% 33% 28% 22% 29%
% of total 58% 58% 55% 54% 54%
International net revenues 323,841 338,331 418,317 475,478 504,452
Current quarter vs prior quarter 8% 4% 24% 14% 6%
Current quarter vs prior year quarter 82% 88% 72% 58% 56%
% of total 42% 42% 45% 46% 46%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
14
eBay Inc.
eBay Marketplace Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Confirmed Registered Users (1) 114.0 125.0 135.5 147.1 157.3
Current quarter vs prior quarter 9% 10% 8% 9% 7%
Current quarter vs prior year quarter 51% 46% 43% 40% 38%
Active Users (2) 48.0 51.7 56.1 60.5 64.6
Current quarter vs prior quarter 6% 8% 9% 8% 7%
Current quarter vs prior year quarter 41% 38% 36% 34% 34%
Number of Non-Stores Listings (3) 315.9 327.7 376.6 399.8 402.2
Current quarter vs prior quarter (1%) 4% 15% 6% 1%
Current quarter vs prior year quarter 43% 42% 31% 25% 27%
Number of Stores Listings (3) 16.4 20.3 28.0 32.0 37.9
Current quarter vs prior quarter 105% 24% 38% 14% 18%
Current quarter vs prior year quarter 332% 395% 449% 300% 131%
Gross Merchandise Volume (4) $ 8,012 $ 8,307 $ 9,810 $ 10,602 $ 10,884
Current quarter vs prior quarter 0% 4% 18% 8% 3%
Current quarter vs prior year quarter 42% 44% 39% 32% 36%
Our classified websites are not included in these metrics.
____________
(1) Cumulative total of all users who have completed the registration process on one of eBay’s trading platforms.
(2) All users, excluding users of Half.com, Internet Auction, and our classified websites, who bid on, bought, or listed an
item within the previous 12-month period. Includes users of eBay EachNet in China and eBay India since the migration
to the eBay platform in September 2004 and April 2005, respectively.
(3) All listings on eBay’s trading platforms during the quarter, regardless of whether the listing subsequently closed
successfully.
(4) Total value of all successfully closed listings between users on eBay’s trading platforms during the quarter, regardless of
whether the buyer and seller actually consummated the transaction.
15
eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Total accounts (1) 50.4 56.7 63.8 71.6 78.9
Current quarter vs prior quarter 11% 13% 13% 12% 10%
Current quarter vs prior year quarter 62% 61% 58% 57% 56%
Active accounts (2) 15.5 17.4 20.2 22.1 22.9
Total number of payments (3) 77.7 83.4 99.6 110.4 113.2
Current quarter vs prior quarter (2%) 7% 19% 11% 3%
Current quarter vs prior year quarter 45% 45% 46% 39% 46%
Total payment volume (4) $ 4,350 $ 4,637 $ 5,607 $ 6,233 $ 6,471
Current quarter vs prior quarter 1% 7% 21% 11% 4%
Current quarter vs prior year quarter 53% 52% 51% 44% 49%
eBay Marketplace as % of total payment volume 69% 70% 71% 71% 70%
Transaction rates:
Transaction revenue rate 3.64% 3.59% 3.57% 3.64% 3.67%
Transaction processing expense rate 1.34% 1.30% 1.27% 1.15% 1.08%
Transaction loss rate 0.25% 0.22% 0.31% 0.30% 0.19%
____________
(1) Cumulative total of all personal, premier, or business accounts opened, excluding accounts that have been closed or
locked, and users that made payments using PayPal but have not registered.
(2) All accounts, and users whether registered or not, that sent or received at least one payment through the PayPal system
during the quarter.
(3) Total number of payments initiated through the PayPal system during the quarter, regardless of whether the payment
was actually sent successfully, or was reversed, rejected, or pending at the end of the quarter.
(4) Total dollar volume of payments initiated through the PayPal system during the quarter, regardless of whether the
payment was actually sent successfully, or was reversed, rejected, or was pending at the end of the quarter.
16
eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press release are approximate in nature because eBay’s
future performance is difficult to predict. Such guidance is based on information available on the date hereof, and eBay
assumes no obligation to update it.
eBay’s future performance involves risks and uncertainties, and the company’s actual results could differ materially from such
guidance. Some of the factors that could affect the company’s operating results are set forth under the caption “Forward-
Looking Statements” above in this press release. More information about factors that could affect eBay’s operating results is
included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report on
Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations
site at investor.ebay.com.
Three months ending September 30, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 1,045-$1,070 — $ 1,045-$1,070
Diluted EPS $0.18 $ 0.01(b) $0.19
Three months ending December 31, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 1,180-$1,220 — $ 1,180-$1,220
Diluted EPS $ 0.20 - $0.21 $ 0.01(b) $ 0.21- $0.22
Year ending December 31, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 4,340-$4,410 — $ 4,330-$4,410
Operating margin 32% 3%(a) 35%
Diluted EPS* $ 0.77- $0.78 $ $0.05(b) $ 0.82-$0.83
Effective tax rate 28% - 29% 29% - 30%
____________
* Please note that the sum of the quarters may not total to the full year EPS because the quarterly EPS is calculated using
the respective results and weighted average shares for each quarter, and the full year EPS is calculated using the results
and weighted average shares for the full year.
(a) Pro forma guidance reflects estimated quarterly adjustments for amortization of acquired intangible assets of
approximately $25 - $28 million, payroll taxes on employee stock options of approximately $2 - $5 million, stock based
compensation of approximately $1 - $2 million and other adjustments estimated to result in an operating margin
adjustment of approximately 2 - 3% for each of the quarters in the year ending December 31, 2005.
(b) Net of tax, the above pro forma items are estimated to result in a $0.01 per diluted share adjustment for each of the
remaining quarters in the year ending December 31, 2005.
- Company Reports Record Q2 Net Revenues of $1.086 Billion -
- Achieves Q2 GAAP Diluted EPS of $0.21 and Pro Forma Diluted EPS of $0.22 -
- Raises 2005 Net Revenues and EPS Guidance -
San Jose, CA, July 20, 2005 - eBay Inc. (Nasdaq: EBAY; www.ebay.com) reported financial results for
its quarter ended June 30, 2005.
eBay reported record consolidated Q2-05 net revenues of $1.086 billion, up 40% year over year; record
operating income of $379.0 million, up 49% year over year, representing a 35% operating margin; and
record pro forma operating income of $406.4 million, up 47% year over year, representing a 37% pro
forma operating margin.
Consolidated net income in Q2-05 was a record $291.6 million, or $0.21 per diluted share. eBay’s pro
forma consolidated net income was a record $307.2 million, or $0.22 per diluted share.
These results exceeded the high end of the company’s guidance of $1.050 billion for net revenues, and
exceeded the company’s guidance of $0.16 for earnings per diluted share, and $0.18 for pro forma
earnings per diluted share.
“eBay achieved remarkable results in Q2,” said Meg Whitman, President and CEO of eBay. “Excellent
momentum in the US and Germany, as well as at PayPal, all helped deliver an impressive jump in
revenues and profit.”
Key Financial and Operating Metrics
Consolidated Net Revenues - Consolidated net revenues totaled a record $1.086 billion in Q2-05, which
represented an increase of 40% from the $773.4 million reported in Q2-04.
• U.S. Marketplace Net Revenues - U.S. Marketplace net revenues totaled $423.6 million in Q2-05,
representing 27% year-over-year growth.
• International Marketplace Net Revenues - International Marketplace net revenues totaled $418.8
million in Q2-05, representing 51% year-over-year growth.
• Payments Net Revenues - Payments net revenues totaled $243.9 million in Q2-05, representing
51% year-over-year growth.
2
eBay Announces Q2-05 Earnings (cont.)
Confirmed Registered Users - Cumulative confirmed registered users at the end of Q2-05 totaled 157.3
million, representing a 38% increase over the 114.0 million users reported at the end of Q2-04.
Active Users - Active users, the number of users on the eBay platform who bid, bought, or listed an item
within the previous 12-month period, increased to a record 64.6 million in Q2-05, a 34% increase over the
48.0 million active users reported in the same period a year ago.
Listings - New listings totaled a record 440.1 million in Q2-05, 32% higher than the 332.3 million new
listings reported in Q2-04.
Gross Merchandise Volume (GMV) - GMV, the total value of all successfully closed listings on eBay’s
trading platforms, was a record $10.9 billion, representing a 36% year-over-year increase from the $8.0
billion reported in Q2-04.
Total Payments Accounts - PayPal’s business had 78.9 million total accounts at the end of Q2-05, a 56%
increase from the 50.4 million reported in Q2-04. Total payments accounts represents the cumulative total
of all accounts opened, excluding accounts that have been closed or locked, and users that made payments
with PayPal but have not registered.
Total Payment Volume (TPV) - TPV, the dollar volume of payments initiated through the PayPal system,
was a record $6.5 billion in Q2-05, a 49% increase from the $4.4 billion reported in Q2-04.
GAAP Operating Income - GAAP operating income increased 49% year over year to $379.0 million, or
35% of net revenues.
Pro Forma Operating Income - Pro forma operating income increased 47% year over year to $406.4
million, or 37% of net revenues. Pro forma operating income represents GAAP operating income adjusted
to exclude certain items, primarily stock based compensation expense and related payroll taxes and
amortization of acquired intangible assets.
GAAP Net Income - GAAP net income increased 53% year over year to $291.6 million, or $0.21 per
diluted share.
Pro Forma Net Income - Pro forma net income increased 55% year over year to $307.2 million, or $0.22
per diluted share. Pro forma net income represents GAAP net income adjusted to exclude certain items,
primarily stock based compensation expense and related payroll taxes, amortization of acquired intangible
assets and income taxes related to these items.
Operating and Free Cash Flows - Operating cash flows totaled $496.6 million. Free cash flows,
representing operating cash flows less capital expenditures of $90.5 million, totaled $406.1 million.
3
eBay Announces Q2-05 Earnings (cont.)
Key Category Performance* - Based on Q2-05 GMV, the following categories delivered $1 billion or more
in worldwide annualized GMV: eBay Motors at $14.3 billion; Clothing & Accessories at $3.3 billion;
Consumer Electronics at $3.2 billion; Computers at $2.9 billion; Home & Garden at $2.5 billion;
Books/Movies/Music at $2.4 billion; Sports at $2.1 billion; Collectibles at $2.0 billion; Toys at $1.6 billion;
Jewelry & Watches at $1.5 billion; Business & Industrial at $1.5 billion; and Cameras & Photo at $1.3
billion.
Fixed Price Trading - eBay’s fixed price trading contributed approximately $3.2 billion or 29% of total
GMV during Q2-05, primarily from eBay’s “Buy It Now” feature.
eBay Stores - At the end of Q2-05, eBay hosted approximately 299,000 stores worldwide, with
approximately 173,000 stores hosted on the U.S. site.
Consolidated Financial and Operating Summary
eBay reported record consolidated net revenues of $1.086 billion in Q2-05, representing a 40% year-overyear
increase. On a year-over-year basis, consolidated net revenues reflected a foreign currency
translation benefit in Q2-05 of approximately $24.7 million. On a sequential basis, consolidated net
revenues were negatively impacted by foreign currency translation in Q2-05 by approximately $17.3
million.
Gross profit was $894.5 million, or 82% of net revenues, higher than the 81% reported in Q2-04. The
percentage increase was primarily the result of an increase in our Payments segment gross margin.
Sales and marketing expenses totaled $287.1 million, or 26% of net revenues, up from the 24% reported
in Q2-04. The percentage increase was primarily the result of international expansion and industry-wide
increases in Internet marketing rates, partially offset by marketing efficiencies. Sales and marketing
expenses as a percentage of net revenues in Q2-05 was consistent with Q1-05.
Product development expenses totaled $71.6 million, or 7% of net revenues, down from the 8% reported
in Q2-04.
General and administrative costs totaled $129.3 million, or 12% of net revenues, down from the 13% of
net revenues reported in Q2-04. The percentage decrease was primarily the result of a lower transaction
loss rate in our Payments segment due to improved transaction loss detection and related loss prevention
programs.
_______________
*For further detail on the eBay Marketplace’s current annualized $1 billion categories, including trended data, please see the metrics section
on eBay’s Investor Relations website at investor.ebay.com/fundamentals.cfm.
4
eBay Announces Q2-05 Earnings (cont.)
Income from operations totaled $379.0 million during Q2-05, a 49% increase over the $253.9 million
reported in Q2-04. On a pro forma basis, income from operations totaled $406.4 million, a 47% increase
over the $275.6 million reported in Q2-04. Included in both the GAAP and pro forma Q2-05 consolidated
income from operations was a $12.5 million year-over-year net benefit from changes in foreign exchange
rates. On a sequential basis, both the GAAP and pro forma consolidated income from operations were
negatively impacted by foreign currency translation in Q2-05 by approximately $10.1 million.
Interest and other income, net, totaled $32.5 million in Q2-05, up from the $22.4 million reported in Q2-
04. The increase was primarily the result of increased interest income earned on larger cash, cash
equivalents, and investment balances.
The GAAP effective tax rate for Q2-05 was 29%, a decrease from the GAAP effective tax rate of 30% for
Q2-04, and an increase from the 28% for Q1-05. The pro forma effective tax rate for Q2-05 was 30%, a
decrease from the pro forma effective tax rate of 31% for Q2-04, and an increase from the 29% for Q1-05.
The lower GAAP and pro forma effective tax rates for Q2-05, as compared to Q2-04, and the higher
sequential GAAP and pro forma effective tax rates for Q2-05 reflect changes in the company’s
geographic business mix.
The company reported $496.6 million in operating cash flows and $90.5 million of capital expenditures in
Q2-05, resulting in free cash flows of $406.1 million. The company’s cash, cash equivalents, and
investments totaled more than $3.8 billion at the end of Q2-05.
Business Outlook
The following updated guidance reflects current business trends and assumed exchange rates. The updated
guidance is based on an assumed weighted average exchange rate of US $1.20 per Euro, as compared to
the prior guidance, which assumed a weighted average exchange rate of US $1.30 per Euro. The guidance
does not include the impact of the completion of the acquisition of Shopping.com or any other potential
acquisitions.
Net Revenues - eBay now expects consolidated net revenues for 2005 to be in the range of $4.340 billion
to $4.410 billion. In Q3-05, eBay now expects consolidated net revenues to be in the range of $1.045
billion to $1.070 billion, reflecting a stronger US dollar and strong business momentum.
GAAP Diluted EPS - eBay now estimates GAAP earnings per diluted share for the full year 2005 to be in
the range of $0.77 to $0.78, an increase from the previous guidance of $0.71 to $0.73. In Q3-05, eBay
now estimates GAAP earnings per diluted share to be $0.18.
Pro Forma Diluted EPS - eBay now estimates pro forma earnings per diluted share for the full year 2005
to be in the range of $0.82 to $0.83, an increase from the previous guidance of $0.76 to $0.78. In Q3-05,
eBay now estimates pro forma earnings per diluted share to be $0.19.
5
eBay Announces Q2-05 Earnings (cont.)
Capital Expenditures - eBay continues to expect its capital expenditures to be in the range of $340 million
to $400 million for the full year 2005, which amount to approximately 8% to 9%, respectively, of eBay’s
guidance for net revenues. These expected capital expenditures for 2005 excludes the Q1-05 payment of a
lease obligation for our headquarters facility of approximately $126 million.
Quarterly Conference Call
eBay will host a conference call to discuss second quarter results at 2 pm Pacific Time today. A live
webcast of the conference call can be accessed through the company’s Investor Relations website at
investor.ebay.com. In addition, an archive of the webcast will be accessible through the same link.
Non-GAAP Measures
To supplement the company’s consolidated financial statements presented in accordance with GAAP,
eBay uses non-GAAP measures of certain components of financial performance. These non-GAAP
measures include pro forma net income, pro forma earnings per diluted share, pro forma operating
margin, and free cash flows. These non-GAAP measures are provided to enhance investors’ overall
understanding of the company’s current financial performance and the company’s prospects for the future.
Specifically, the company believes the non-GAAP results provide useful information to both management
and investors by excluding certain expenses, gains and losses that may not be indicative of its core
operating results. In addition, because eBay has historically reported certain non-GAAP results to
investors, the company believes the inclusion of non-GAAP measures provides consistency in the
company’s financial reporting. These measures should be considered in addition to results prepared in
accordance with generally accepted accounting principles, but should not be considered a substitute for, or
superior to, GAAP results. Reconciliation of all non-GAAP measures included in this press release, to the
nearest GAAP measure, can be found in the financial tables included in this press release.
About eBay
eBay is The World’s Online Marketplace®. Founded in 1995, eBay created a powerful platform for the
sale of goods and services by a passionate community of individuals and businesses. On any given day,
there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local,
national and international basis with customized sites in markets around the world. Through an array of
services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an evergrowing
online community.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its
consolidated subsidiaries. Those statements involve risks and uncertainties, and the company’s actual
results could differ materially from those discussed. Factors that could cause or contribute to such
differences include, but are not limited to: the company’s need to manage an increasingly large company
with a broad range of businesses of varying degrees of maturity; the company’s need to increasingly
achieve growth from its existing users as well as from new users in its more established markets; the
6
eBay Announces Q2-05 Earnings (cont.)
company’s ability to deal with the increasingly competitive e-commerce 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; fluctuations in foreign exchange rates; the litigation,
regulatory, credit card association, and other risks specific to PayPal as it continues to expand
geographically; the company’s need to manage other regulatory, tax, and litigation risks even as its
product offerings expand and its services are offered in more jurisdictions; the company’s ability to
upgrade and develop its systems, infrastructure and customer service capabilities to accommodate growth
at a 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; the company’s ability to profitably expand its
model to new types of merchandise and sellers; and, the company’s ability to profitably integrate and
manage recent and future acquisitions and other transactions. The forward looking statements in this
release do not include the potential impact of any acquisitions, such as the pending acquisition of
Shopping.com Ltd., that may be completed after the date hereof.
More information about factors that could affect the company’s operating results is included under the
captions “Risk Factors That May Affect Results of Operations and Financial Condition” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the
company’s annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be
obtained by visiting the company’s investor relations site at investor.ebay.com. Undue reliance
should not be placed on the forward-looking statements in this release, which are based on information
available to the company on the date hereof. eBay assumes no obligation to update such statements.
Investor Relations Contact: Tracey Ford 408-376-7205
Media Relations Contact: Hani Durzy 408-376-7458
Investor Information Request: 408-376-7493
Company News: www.businesswire.com
Investor Relations Website: investor.ebay.com
7
eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)
December 31,
2004
June 30,
2005
ASSETS
Current assets
Cash and cash equivalents $ 1,330,045 $ 1,855,649
Short-term investments 682,004 896,951
Accounts receivable, net 240,856 269,641
Funds receivable from customers 123,424 200,171
Restricted cash and investments 155,405 32,077
Other current assets 379,415 435,339
Total current assets 2,911,149 3,689,828
Long-term investments 1,267,707 1,064,260
Property and equipment, net 709,773 745,257
Goodwill 2,709,794 3,119,969
Intangible assets, net 362,909 387,366
Other assets 29,719 26,442
$ 7,991,051 $ 9,033,122
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 37,958 $ 41,686
Funds payable and amounts due to customers 331,805 507,731
Accrued expenses and other current liabilities 421,969 454,186
Deferred revenue and customer advances 50,439 42,079
Short-term obligations 124,272 −
Income taxes payable 118,427 141,136
Total current liabilities 1,084,870 1,186,818
Deferred tax liabilities, net 135,971 242,697
Other liabilities 41,869 34,486
Total liabilities 1,262,710 1,464,001
Total stockholders’ equity 6,728,341 7,569,121
$ 7,991,051 $ 9,033,122
8
eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2004 2005 2004 2005
Net revenues $ 773,412 $ 1,086,303
$ 1,529,651
$ 2,118,027
Cost of net revenues 146,531 191,840 280,889 378,209
Gross profit 626,881 894,463 1,248,762 1,739,818
Operating expenses:
Sales and marketing 189,150 287,144 381,840 558,493
Product development 59,978 71,639 112,676 145,428
General and administrative 102,940 129,340 193,576 265,729
Payroll tax on employee stock options 5,186 1,560 10,332 7,291
Amortization of acquired intangible assets 15,769 25,794 29,732 48,317
Total operating expenses 373,023 515,477 728,156 1,025,258
Income from operations 253,858 378,986 520,606 714,560
Interest and other income, net 22,443 32,525 45,942 54,928
Interest expense (2,047) (405) (4,378) (2,125)
Income before income taxes and minority interests 274,254 411,106 562,170 767,363
Provision for income taxes (81,598) (119,518) (167,354) (219,466)
Minority interests (2,261) (28) ( 4,321) (46)
Net income $ 190,395 $ 291,560 $ 390,495 $ 547,851
Net income per share:
Basic $ 0.14 $ 0.22 $ 0.30 $ 0.41
Diluted $ 0.14 $ 0.21 $ 0.29 $ 0.40
Weighted average shares:
Basic 1,316,138 1,351,375 1,310,574 1,347,429
Diluted 1,364,842 1,379,088 1,356,299 1,380,736
9
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Notes:
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of equity investment
(e) Income taxes associated with certain pro forma entries
Three Months Ended Three Months Ended
June 30, 2004 June 30, 2005
GAAP
Pro Forma
Entries Pro Forma GAAP
Pro Forma
Entries Pro Forma
Net revenues $ 773,412 $ - $ 773,412 $ 1,086,303 $ - $ 1,086,303
Cost of net revenues 146,531
(4) (a) 146,527 191,840 - 191,840
Gross profit 626,881 4 626,885 894,463 - 894,463
Operating expenses:
Sales and marketing 189,150 (14) (a) 189,136 287,144 - 287,144
Product development 59,978 (114) (a) 59,864 71,639 721 (a) 72,360
General and administrative 102,940 (685) (a) 102,255 129,340 (771) (a) 128,569
Payroll tax on employee stock options 5,186 (5,186) (b) - 1,560 (1,560) (b) -
Amortization of acquired intangible assets 15,769
(15,769) (c) - 25,794 (25,794) (c) -
Total operating expenses 373,023 (21,768) 351,255 515,477 (27,404) 488,073
Income from operations 253,858 21,772 275,630 378,986 27,404 406,390
Interest and other income, net 22,443 (7,298) (d) 15,145 32,525
(2,260) (d) 30,265
Interest expense (2,047) - (2,047) (405) - (405)
Income before income taxes and minority interests 274,254 14,474 288,728 411,106 25,144 436,250
Provision for income taxes (81,598) (7,207) (e) (88,805) (119,518) (9,468) (e)
(128,986)
Minority interests (2,261) - (2,261) (28) - (28)
Net income $ 190,395 $ 7,267 $ 197,662 $ 291,560 $ 15,676 $ 307,236
Net income per share:
Basic $ 0.14 $ 0.15 $ 0.22 $ 0.23
Diluted $ 0.14 $ 0.14 $ 0.21 $ 0.22
Weighted average shares:
Basic 1,316,138 1,316,138 1,351,375 1,351,375
Diluted 1,364,842 1,364,842 1,379,088 1,379,088
Operating margin 33% 3% 36% 35% 2% 37%
10
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Notes:
(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of equity investment
(e) Income taxes associated with certain pro forma entries
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2005
GAAP
Pro Forma
Entries Pro Forma GAAP
Pro Forma
Entries Pro Forma
Net revenues $ 1,529,651 $ - $ 1,529,651 $ 2,118,027 $ - $ 2,118,027
Cost of net revenues 280,889
(28) (a) 280,861 378,209 (78) (a) 378,131
Gross profit 1,248,762 28 1,248,790 1,739,818 78 1,739,896
Operating expenses:
Sales and marketing 381,840 (89) (a) 381,751 558,493 - 558,493
Product development 112,676 (303) (a) 112,373 145,428 399 (a) 145,827
General and administrative 193,576 (953) (a) 192,623 265,729 (3,967) (a) 261,762
Payroll tax on employee stock options 10,332 (10,332) (b) - 7,291 (7,291) (b) -
Amortization of acquired intangible assets 29,732 (29,732) (c) - 48,317 (48,317) (c) -
Total operating expenses 728,156 (41,409) 686,747 1,025,258 (59,176) 966,082
Income from operations 520,606 41,437 562,043 714,560 59,254 773,814
Interest and other income, net 45,942 (7,298) (d) 38,644 54,928 (2,260) (d) 52,668
Interest expense (4,378) - (4,378)
(2,125) - (2,125)
Income before income taxes and minority interests 562,170 34,139 596,309 767,363 56,994 824,357
Provision for income taxes (167,354) (16,186) (e) (183,540) (219,466)
(22,071) (e) (241,537)
Minority interests (4,321) - (4,321) (46) - (46)
Net income $ 390,495 $ 17,953 $ 408,448 $ 547,851 $ 34,923 $ 582,774
Net income per share:
Basic $ 0.30 $ 0.31 $ 0.41 $ 0.43
Diluted $ 0.29 $ 0.30 $ 0.40 $ 0.42
Weighted average shares:
Basic
1,310,574 1,310,574 1,347,429 1,347,429
Diluted 1,356,299 1,356,299 1,380,736 1,380,736
Operating margin 34% 3% 37% 34% 3% 37%
11
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2004 2005 2004 2005
Cash flows from operating activities:
Net income $ 190,395 $ 291,560 $ 390,495 $ 547,851
Adjustments:
Provision for doubtful accounts and authorized credits 22,697 22,697 38,301 44,721
Provision for transaction losses 10,706 12,556 22,350 31,135
Depreciation and amortization 59,434 85,305 115,119 164,965
Amortization of unearned stock-based compensation 818 50 1,374 3,646
Tax benefit on the exercise of employee stock options 83,197 25,607 159,837 110,599
Minority interests 2,261 10 4,321 28
Changes in assets and liabilities, net of acquisition effects:
Accounts receivable (38,663) (17,220) (53,717) (71,382)
Funds receivable from customers (178) 3,179 (61,869) (74,154)
Other current assets 2,934 (13,759) (112,811) (12,556)
Other non-current assets 1,842 (389) (2,825) (8,750)
Deferred tax liabilities, net (15,660) 65,188 (18,281) 67,428
Accounts payable (40,563) (17,910) 1,778 2,999
Funds payable and amounts due to customers (13,161) 12,897 130,491 181,825
Accrued expenses and other liabilities (11,157) 8,107 (9,133) (13,731)
Deferred revenue and customer advances 1,869 380 9,719 (6,595)
Income taxes payable 6,329 18,274 14,196 23,922
Net cash provided by operating activities 263,100 496,532 629,345 991,951
Cash flows from investing activities:
Purchases of property and equipment, net (65,653) (90,479) (136,565) (170,063)
Purchases of investments (385,754) (286,527) (1,209,537) (654,621)
Maturities and sales of investments 235,452 547,975 752,880 793,640
Purchases of intangibles and other non-current assets (1,503) (1,953) (2,448) (1,953)
Acquisitions, net of cash acquired (137,852) (81,606) (172,515) (526,614)
Net cash used in investing activities (355,310) 87,410 (768,185) (559,611)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 182,205 80,387 355,294 259,666
Payment of headquarters facility lease obligation — — — (126,390)
Principal payments on long-term obligations (1,008) — (2,155) (1,849)
Net cash provided by financing activities 181,197 80,387 353,139 131,427
Effect of exchange rate changes on cash and cash equivalents (1,982) (25,452) (7,099) (38,163)
Net increase in cash and cash equivalents 87,005 638,877 207,200 525,604
Cash and cash equivalents at beginning of period 1,501,708 1,216,772 1,381,513 1,330,045
Cash and cash equivalents at end of period $ 1,588,713 $ 1,855,649 $ 1,588,713 $ 1,855,649
Net cash provided by operating activities $ 263,100 $ 496,532 $ 629,345 $ 991,951
Less: Purchases of property and equipment, net (65,653) (90,479) (136,565) (170,063)
Less: Payment of headquarters facility lease obligation — — — (126,390)
Free cash flow $ 197,447 $ 406,053 $ 492,780 $ 695,498
12
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Type
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Net Transaction Revenues
U.S. Marketplace $ 319,119 $ 330,643 $ 362,736 $ 388,759 $ 408,452
Current quarter vs prior quarter (2%) 4% 10% 7% 5%
Current quarter vs prior year quarter 32% 29% 24% 19% 28%
International Marketplace 273,740 282,294 344,348 387,187 411,671
Current quarter vs prior quarter 6% 3% 22% 12% 6%
Current quarter vs prior year quarter 76% 82% 64% 51% 50%
Payments 158,815 166,282 200,203 227,097 237,217
Current quarter vs prior quarter 2% 5% 20% 13% 4%
Current quarter vs prior year quarter 60% 56% 53% 46% 49%
Total net transaction revenues 751,674
779,219
907,287 1,003,043 1,057,340
Current quarter vs prior quarter 2% 4% 16% 11% 5%
Current quarter vs prior year quarter 51% 51% 43% 36% 41%
Advertising and other non-transaction revenues
Total advertising and other non-transaction revenues 21,738 26,657 28,495 28,681 28,963
Current quarter vs prior quarter 25% 23% 7% 1% 1%
Current quarter vs prior year quarter 76% 93% 81% 65% 33%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
13
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Segment
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
U.S. Marketplace $ 334,481 $ 347,343 $ 379,454 $ 404,848 $ 423,565
Current quarter vs prior quarter (1%) 4% 9% 7% 5%
Current quarter vs prior year quarter 33% 31% 25% 20% 27%
International Marketplace 277,444 286,516 350,309 393,792 418,839
Current quarter vs prior quarter 7% 3% 22% 12% 6%
Current quarter vs prior year quarter 77% 83% 65% 52% 51%
Payments 161,487 172,017 206,019 233,084 243,899
Current quarter vs prior quarter 2% 7% 20% 13% 5%
Current quarter vs prior year quarter 59% 59% 55% 47% 51%
Percent of Payments revenue which is international 28.7% 30.1% 33.0% 35.0% 35.1%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
Net Revenues by Geography
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
U.S. net revenues $ 449,571 $ 467,545 $ 517,465 $ 556,246 $ 581,851
Current quarter vs prior quarter (1%) 4% 11% 7% 5%
Current quarter vs prior year quarter 36% 33% 28% 22% 29%
% of total 58% 58% 55% 54% 54%
International net revenues 323,841 338,331 418,317 475,478 504,452
Current quarter vs prior quarter 8% 4% 24% 14% 6%
Current quarter vs prior year quarter 82% 88% 72% 58% 56%
% of total 42% 42% 45% 46% 46%
Total net revenues $ 773,412 $ 805,876 $ 935,782 $ 1,031,724 $ 1,086,303
Current quarter vs prior quarter 2% 4% 16% 10% 5%
Current quarter vs prior year quarter 52% 52% 44% 36% 40%
14
eBay Inc.
eBay Marketplace Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Confirmed Registered Users (1) 114.0 125.0 135.5 147.1 157.3
Current quarter vs prior quarter 9% 10% 8% 9% 7%
Current quarter vs prior year quarter 51% 46% 43% 40% 38%
Active Users (2) 48.0 51.7 56.1 60.5 64.6
Current quarter vs prior quarter 6% 8% 9% 8% 7%
Current quarter vs prior year quarter 41% 38% 36% 34% 34%
Number of Non-Stores Listings (3) 315.9 327.7 376.6 399.8 402.2
Current quarter vs prior quarter (1%) 4% 15% 6% 1%
Current quarter vs prior year quarter 43% 42% 31% 25% 27%
Number of Stores Listings (3) 16.4 20.3 28.0 32.0 37.9
Current quarter vs prior quarter 105% 24% 38% 14% 18%
Current quarter vs prior year quarter 332% 395% 449% 300% 131%
Gross Merchandise Volume (4) $ 8,012 $ 8,307 $ 9,810 $ 10,602 $ 10,884
Current quarter vs prior quarter 0% 4% 18% 8% 3%
Current quarter vs prior year quarter 42% 44% 39% 32% 36%
Our classified websites are not included in these metrics.
____________
(1) Cumulative total of all users who have completed the registration process on one of eBay’s trading platforms.
(2) All users, excluding users of Half.com, Internet Auction, and our classified websites, who bid on, bought, or listed an
item within the previous 12-month period. Includes users of eBay EachNet in China and eBay India since the migration
to the eBay platform in September 2004 and April 2005, respectively.
(3) All listings on eBay’s trading platforms during the quarter, regardless of whether the listing subsequently closed
successfully.
(4) Total value of all successfully closed listings between users on eBay’s trading platforms during the quarter, regardless of
whether the buyer and seller actually consummated the transaction.
15
eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
June 30,
2004
September 30,
2004
December 31,
2004
March 31,
2005
June 30,
2005
Total accounts (1) 50.4 56.7 63.8 71.6 78.9
Current quarter vs prior quarter 11% 13% 13% 12% 10%
Current quarter vs prior year quarter 62% 61% 58% 57% 56%
Active accounts (2) 15.5 17.4 20.2 22.1 22.9
Total number of payments (3) 77.7 83.4 99.6 110.4 113.2
Current quarter vs prior quarter (2%) 7% 19% 11% 3%
Current quarter vs prior year quarter 45% 45% 46% 39% 46%
Total payment volume (4) $ 4,350 $ 4,637 $ 5,607 $ 6,233 $ 6,471
Current quarter vs prior quarter 1% 7% 21% 11% 4%
Current quarter vs prior year quarter 53% 52% 51% 44% 49%
eBay Marketplace as % of total payment volume 69% 70% 71% 71% 70%
Transaction rates:
Transaction revenue rate 3.64% 3.59% 3.57% 3.64% 3.67%
Transaction processing expense rate 1.34% 1.30% 1.27% 1.15% 1.08%
Transaction loss rate 0.25% 0.22% 0.31% 0.30% 0.19%
____________
(1) Cumulative total of all personal, premier, or business accounts opened, excluding accounts that have been closed or
locked, and users that made payments using PayPal but have not registered.
(2) All accounts, and users whether registered or not, that sent or received at least one payment through the PayPal system
during the quarter.
(3) Total number of payments initiated through the PayPal system during the quarter, regardless of whether the payment
was actually sent successfully, or was reversed, rejected, or pending at the end of the quarter.
(4) Total dollar volume of payments initiated through the PayPal system during the quarter, regardless of whether the
payment was actually sent successfully, or was reversed, rejected, or was pending at the end of the quarter.
16
eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press release are approximate in nature because eBay’s
future performance is difficult to predict. Such guidance is based on information available on the date hereof, and eBay
assumes no obligation to update it.
eBay’s future performance involves risks and uncertainties, and the company’s actual results could differ materially from such
guidance. Some of the factors that could affect the company’s operating results are set forth under the caption “Forward-
Looking Statements” above in this press release. More information about factors that could affect eBay’s operating results is
included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report on
Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations
site at investor.ebay.com.
Three months ending September 30, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 1,045-$1,070 — $ 1,045-$1,070
Diluted EPS $0.18 $ 0.01(b) $0.19
Three months ending December 31, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 1,180-$1,220 — $ 1,180-$1,220
Diluted EPS $ 0.20 - $0.21 $ 0.01(b) $ 0.21- $0.22
Year ending December 31, 2005
GAAP Adjustments Pro Forma (a)
Net revenues $ 4,340-$4,410 — $ 4,330-$4,410
Operating margin 32% 3%(a) 35%
Diluted EPS* $ 0.77- $0.78 $ $0.05(b) $ 0.82-$0.83
Effective tax rate 28% - 29% 29% - 30%
____________
* Please note that the sum of the quarters may not total to the full year EPS because the quarterly EPS is calculated using
the respective results and weighted average shares for each quarter, and the full year EPS is calculated using the results
and weighted average shares for the full year.
(a) Pro forma guidance reflects estimated quarterly adjustments for amortization of acquired intangible assets of
approximately $25 - $28 million, payroll taxes on employee stock options of approximately $2 - $5 million, stock based
compensation of approximately $1 - $2 million and other adjustments estimated to result in an operating margin
adjustment of approximately 2 - 3% for each of the quarters in the year ending December 31, 2005.
(b) Net of tax, the above pro forma items are estimated to result in a $0.01 per diluted share adjustment for each of the
remaining quarters in the year ending December 31, 2005.
