Q4 2015 Highlights:
- Gross Merchandise Volume of $21.9
billion
- Revenue of $2.3 billion
- Active buyer base grew 5% to 162
million
- Non-GAAP and GAAP EPS per diluted
share of $0.50 and $0.43, respectively, on a continuing operations
basis
- Repurchased $550 million of common
stock
eBay Inc. (NASDAQ: EBAY), a global commerce leader, today
reported that gross merchandise volume (GMV) for the quarter ended
December 31, 2015 was $21.9 billion, increasing 5% on a foreign
exchange (FX) neutral basis and was flat year over year on an
as-reported basis, reflecting the continued impact of a strong U.S.
dollar. Revenue for the quarter was $2.3 billion, up 5% on an
FX-Neutral basis and flat year over year on an as-reported basis,
driving non-GAAP net income from continuing operations of $600
million, or $0.50 per diluted share, and GAAP net income from
continuing operations of $523 million, or $0.43 per diluted share.
During the quarter, the company generated $1.1 billion of operating
cash flow from continuing operations and $1.0 billion of free cash
flow from continuing operations. eBay also repurchased $550 million
of its common stock and completed the divestiture of its Enterprise
business on November 2, 2015.
“We delivered solid fourth quarter results and continued to make
progress against our key priorities,” said Devin Wenig, President
and CEO of eBay Inc. “The quarter also marked the end of an
extraordinary year during which we completed the spin-off of
PayPal. We continue to grow our business and customer base while
executing our plan to reposition eBay for long-term success.”
Underlying total eBay Inc. performance, the Marketplace platform
delivered $20.7 billion of GMV, resulting in $1.9 billion in
revenue for the fourth quarter, up 1% on an FX-Neutral basis and
down 3% on an as-reported basis. During the 2015 holiday shopping
season, the Marketplace platform saw over 265 million transactions
across 190 markets, as consumers around the world shopped for great
deals and sought-after gifts. StubHub ended the year with strong
momentum, driving GMV of $1.2 billion in the fourth quarter and
$232 million of revenue, up 34%, aided by strength in the sports
and concerts categories. Classifieds delivered another quarter of
accelerating growth with revenue of $183 million, up 15% on an
FX-Neutral basis and up 2% on an as-reported basis with strong
performance in Germany and the United Kingdom.
For the full year 2015, eBay Inc.'s commerce platforms continued
to connect buyers and sellers around the world, with an active
buyer base that grew by 8 million, to 162 million total active
buyers, representing 5% growth. Total GMV was $82 billion, up 5% on
an FX-Neutral basis and down 1% on an as-reported basis, reflecting
the impact of a strong U.S. dollar. Revenue was $8.6 billion,
growing 5% on an FX-Neutral basis and down 2% on an as-reported
basis. The company delivered strong operating and free cash flow on
a continuing operations basis, generating $2.9 billion and $2.2
billion, respectively, during 2015.
The results of eBay Enterprise and PayPal are presented as
discontinued operations, appearing net of tax in a single line in
the company's statement of income.
Fourth Quarter and Full Year 2015
Financial Highlights (presented in millions, except per share data
and percentages)
Fourth Quarter Full Year
2015 2014
Change 2015 2014
Change eBay Inc.
Net revenues $2,322 $2,323 $(1)
—% $8,592 $8,790 $(198) (2)%
GAAP - Continuing Operations
Income (loss) from continuing operations
$523 $729 $(206) (28)% $1,947
$(865) $2,812
**
Earnings (loss) per diluted share from continuing operations
$0.43 $0.59 $(0.16) (26)% $1.60
$(0.69) $2.29
**
Non-GAAP - Continuing Operations
Net income (loss) $600 $685
$(85) (12)% $2,232 $2,386 $(154)
(6)% Earnings (loss) per diluted share $0.50
$0.55 $(0.05) (10)% $1.83 $1.89
$(0.06) (3)%
**Not meaningful
Other Selected Financial and Operational Results
- Operating margin — GAAP operating
margin decreased to 28.5% for the fourth quarter of 2015, compared
to 31.5% for the same period last year. Non-GAAP operating margin
decreased to 34.4% in the fourth quarter, compared to 36.7% for the
same period last year.
- Taxes — The GAAP effective tax rate for
continuing operations for the fourth quarter of 2015 was 19.5%,
compared to 1.2% for the fourth quarter of 2014. The non-GAAP
effective tax rate for continuing operations for the fourth quarter
of 2015 was 23.8%, compared to 20.3% for the fourth quarter of
2014.
- Cash flow — The company generated $1.1
billion of operating cash flow from continuing operations and $1.0
billion of free cash flow from continuing operations during the
fourth quarter of 2015.
- Stock repurchase program — The company
repurchased approximately $550 million of its common
stock, or 19.9 million shares, in the fourth quarter of
2015. The company's total repurchase authorization remaining as of
December 31, 2015 was $1.8 billion.
- Cash and cash equivalents and
non-equity investments — The company's cash and cash equivalents
and non-equity investments portfolio totaled $8.5 billion as of
December 31, 2015.
Business Outlook
- First quarter 2016 — The company
expects net revenue between $2.05 billion and $2.10 billion,
representing FX-Neutral growth of 3% - 5%, with non-GAAP earnings
per diluted share from continuing operations in the range of $0.43
- $0.45 and GAAP earnings per diluted share from continuing
operations in the range of $0.37 - $0.39.
- Full year 2016 — The company expects
net revenue between $8.5 billion and $8.8 billion, representing
FX-Neutral growth of 2% - 5%, with non-GAAP earnings per diluted
share from continuing operations in the range of $1.82 - $1.87 and
GAAP earnings per diluted share from continuing operations in the
range of $1.55 - $1.60.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss fourth quarter
2015 results at 1:30 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 https://investors.ebayinc.com. In addition, an
archive of the webcast will be accessible for 90 days through the
same link.
eBay Inc. uses its Investor Relations website at https://investors.ebayinc.com as a means of
disclosing material non-public information and for complying with
its disclosure obligations under Regulation FD. Accordingly,
investors should monitor, in addition to following press releases,
SEC filings, public conference calls and webcasts.
About eBay
eBay Inc. (NASDAQ: EBAY) is a global commerce leader including
the Marketplace, StubHub and Classifieds platforms. Collectively,
we connect millions of buyers and sellers around the world,
empowering people and creating opportunity through Connected
Commerce. Founded in 1995 in San Jose, Calif., eBay is one of the
world's largest and most vibrant marketplaces for discovering great
value and unique selection. In 2015, eBay enabled $82 billion of
gross merchandise volume. For more information about the company
and its global portfolio of online brands, visit www.ebayinc.com.
Presentation
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 non-GAAP financial measures are
presented on a continuing operations basis. 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.
Forward-Looking Statements
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 the future performance of eBay Inc. and its
consolidated subsidiaries, including expected financial results for
the first quarter and full year 2016 and the future growth in our
business. Actual results could differ materially from those
predicted or implied and reported results should not be considered
as an indication of future performance. Other factors that could
cause or contribute to such differences include, but are not
limited to: changes in political, business and economic conditions,
any regional or general economic downturn or crisis and any
conditions that affect ecommerce growth or cross-border trade;
fluctuations in foreign currency exchange rates; the company’s need
to successfully react to the increasing importance of mobile
commerce and the increasing social aspect of commerce; an
increasingly competitive environment for our business; changes to
the company’s capital allocation or management of operating cash
the company’s ability to manage its indebtedness, including
managing exposure to interest rates and maintaining its credit
ratings; 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 company’s need
and ability to manage regulatory, tax, data security and litigation
risks; whether the operational, marketing and strategic benefits of
the separation of the eBay and PayPal businesses can be achieved;
the company’s ability to timely upgrade and develop its technology
systems, infrastructure and customer service capabilities at
reasonable cost while maintaining site stability and performance
and adding new products and features; and the company’s ability to
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 https://investors.ebayinc.com or the SEC's website
at www.sec.gov. All information in
this release is as of January 27, 2016. 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.
eBay Inc.
Unaudited Condensed Consolidated
Balance Sheet
December 31,2015
December 31,2014
(In millions, except par value
amounts)
ASSETS Current assets: Cash and cash equivalents $
1,832 $ 4,105 Short-term investments 4,299 3,730 Accounts
receivable, net 619 600 Other current assets 1,154 1,048 Current
assets of discontinued operations — 17,048 Total current
assets 7,904 26,531 Long-term investments 3,391 5,736 Property and
equipment, net 1,554 1,486 Goodwill 4,451 4,671 Intangible assets,
net 90 133 Other assets 395 207 Long-term assets of discontinued
operations — 6,368 Total assets $ 17,785 $ 45,132
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Short-term debt $ — $ 850 Accounts payable 349 107 Accrued expenses
and other current liabilities 1,736 3,830 Deferred revenue 106 108
Income taxes payable 72 125
Current liabilities of discontinued
operations
— 12,511 Total current liabilities 2,263 17,531 Deferred and
other tax liabilities, net 2,092 522 Long-term debt 6,779 6,777
Other liabilities 75 79 Long-term liabilities of discontinued
operations — 317 Total liabilities 11,209 25,226
Total stockholders' equity 6,576 19,906 Total
liabilities and stockholders' equity $ 17,785 $ 45,132
eBay Inc.
Unaudited Condensed Consolidated
Statement of Income
Three Months EndedDecember
31,
Year EndedDecember 31,
2015 2014 2015 2014
(In millions, except per share amounts) Net revenues
$ 2,322 $ 2,323 $ 8,592 $ 8,790 Cost of net revenues (1) 493
442 1,771 1,663 Gross profit 1,829
1,881 6,821 7,127 Operating expenses: Sales
and marketing (1) 595 627 2,267 2,442 Product development (1) 229
236 923 983 General and administrative (1) 260 211 1,122 889
Provision for transaction losses 72 66 271 262 Amortization of
acquired intangible assets 11 10 41 75
Total operating expenses 1,167 1,150 4,624
4,651 Income from operations 662 731 2,197 2,476 Interest
and other, net (12 ) 7 209 39 Income from
continuing operations before income taxes 650 738 2,406 2,515
Provision for income taxes (127 ) (9 ) (459 ) (3,380 ) Income
(loss) from continuing operations $ 523 $ 729 $ 1,947 $ (865 )
Income (loss) from discontinued operations, net of income taxes (2)
(46 ) 294 (222 ) 911 Net income $ 477 $ 1,023
$ 1,725 $ 46 Income (loss) per share -
basic: Continuing operations $ 0.44 $ 0.59 $ 1.61 $ (0.69 )
Discontinued operations $ (0.04 ) $ 0.24 $ (0.18 ) $ 0.73
Net income per share - basic $ 0.40 $ 0.83 $
1.43 $ 0.04 Income (loss) per share - diluted:
Continuing operations $ 0.43 $ 0.59 $ 1.60 $ (0.69 ) Discontinued
operations $ (0.04 ) $ 0.23 $ (0.18 ) $ 0.73 Net
income per share - diluted $ 0.39 $ 0.82 $ 1.42
$ 0.04 Weighted average shares: Basic 1,191
1,230 1,208 1,251 Diluted 1,204
1,241 1,220 1,251
(1) Includes stock-based compensation as
follows:
Cost of net revenues $ 10 $ 10 $ 38 $ 33 Sales and marketing 19 22
94 93 Product development 25 26 108 116 General and administrative
24 35 139 102 $ 78 $ 93 $
379 $ 344
(2) Includes PayPal financial
results from October 1, 2014 to December 31, 2014 for Fourth
Quarter; January 1, 2015 to July 17, 2015 and January 1, 2014 to
December 31, 2014 for Full Year; also includes the eBay Enterprise
financial results from October 1, 2015 to November 2, 2015 and
October 1, 2014 to December 31, 2014 for Fourth Quarter; January 1,
2015 to November 2, 2015 and January 1, 2014 to December 31, 2014
for Full Year.
eBay Inc.
Unaudited Condensed Consolidated
Statement of Cash Flows
Three Months EndedDecember
31,
Year EndedDecember 31,
2015 2014 2015 2014
(In millions) Cash flows from operating activities: Net
income $ 477 $ 1,023 $ 1,725 $ 46
(Income) loss from discontinued
operations, net of income taxes
46 (294 ) 222 (911 ) Adjustments: Provision for transaction losses
72 66 271 262 Depreciation and amortization 171 164 687 682
Stock-based compensation 78 93 379 344 Gain on sale of investments
17 (9 ) (195 ) (12 ) Deferred income taxes 83 (235 ) (32 ) 2,744
Changes in assets and liabilities, net of acquisition effects 182
30 (180 ) 73 Net cash provided by continuing
operating activities 1,126 838 2,877 3,228
Net cash provided by (used in) discontinued operating
activities(1) (86 ) 803 1,156 2,449 Net cash
provided by operating activities 1,040 1,641 4,033
5,677 Cash flows from investing activities: Purchases
of property and equipment (129 ) (200 ) (668 ) (622 ) Purchases of
investments (2,292 ) (1,944 ) (6,744 ) (8,752 ) Maturities and
sales of investments 1,202 3,910 6,781 8,115 Acquisitions, net of
cash acquired — — (24 ) (55 ) Other (3 ) (6 ) (18 ) (11 ) Net cash
provided by (used in) continuing investing activities (1,222 )
1,760 (673 ) (1,325 ) Net cash provided by (used in)
discontinued investing activities(1) 899 (688 ) (2,938 )
(1,348 ) Net cash provided by (used in) investing activities (323 )
1,072 (3,611 ) (2,673 ) Cash flows from financing
activities: Proceeds from issuance of common stock 48 122 221 300
Repurchases of common stock (637 ) (1,182 ) (2,149 ) (4,658 )
Excess tax benefits from stock-based compensation 2 19 74 75 Tax
withholdings related to net share settlements of restricted stock
units and awards (19 ) (28 ) (245 ) (252 )
Proceeds from issuance of long-term debt,
net
— — — 3,482 Repayment of debt (600 ) — (850 ) — Other (21 ) (2 )
(11 ) 6
Net cash used in continuing financing
activities
(1,227 ) (1,071 ) (2,960 ) (1,047 ) Net cash provided by (used in)
discontinued financing activities(1) 5 6 (1,594 ) 25
Net cash used in financing activities
(1,222 ) (1,065 ) (4,554 ) (1,022 ) Effect of exchange rate changes
on cash and cash equivalents (78 ) (110 ) (364 ) (148 ) Net
(decrease) increase in cash and cash equivalents (583 ) 1,538
(4,496 ) 1,834 Cash and cash equivalents at beginning
of period 2,415 4,790 6,328 4,494 Cash
and cash equivalents at end of period 1,832 6,328 1,832 6,328
Less: Cash and cash equivalents of
discontinued operations - Enterprise
— 29 — 29
Less: Cash and cash equivalents of
discontinued operations - PayPal
— 2,194 — 2,194
Cash and cash equivalents of continuing
operations at end of period
$ 1,832 $ 4,105 $ 1,832 $ 4,105
(1) Includes PayPal financial
results from October 1, 2014 to December 31, 2014 for Fourth
Quarter; January 1, 2015 to July 17, 2015 and January 1, 2014 to
December 31, 2014 for Full Year; also includes the eBay Enterprise
financial results from October 1, 2015 to November 2, 2015 and
October 1, 2014 to December 31, 2014 for Fourth Quarter; January 1,
2015 to November 2, 2015 and January 1, 2014 to December 31, 2014
for Full Year.
eBay Inc.
Unaudited Summary of Consolidated Net
Revenues
Net Revenues by Type
Three Months Ended
December 31,2015
September 30,2015
June 30,2015
March 31,2015
December 31,2014
(In millions, except percentages)
Net Revenues by Type:
Net transaction revenues: Marketplace $ 1,584 $ 1,459 $
1,524 $ 1,536 $ 1,662 Current quarter vs prior year quarter (5 )%
(5 )% (3 )% (3 )% N/A Percent from international 63 % 62 % 62 % 60
% 63 % StubHub 232 200 161 132 174 Current quarter vs prior year
quarter 34 % 17 % 8 % (2 )% N/A Percent from international 1 % 2 %
2 % 2 % 1 %
Total net transaction revenues 1,816 1,659 1,685
1,668 1,836 Current quarter vs prior year quarter (1 )% (3 )% (2 )%
(3 )% N/A Percent from international 55 % 54 % 56 % 55 % 57 %
Marketing services and other revenues: Marketplace
326 266 251 235 312 Current quarter vs prior year quarter 4 % — %
(5 )% (10 )% N/A Percent from international 47 % 44 % 47 % 49 % 48
% Classifieds 183 178 180 162 180 Current quarter vs prior year
quarter 2 % (3 )% (4 )% (2 )% N/A Percent from international 100 %
100 % 100 % 100 % 100 % Corporate and other (3 ) (4 ) (6 ) (4 ) (5
)
Total marketing services and other revenues 506 440 425
393 487 Current quarter vs prior year quarter 4 % (2 )% (5 )% (8 )%
N/A Percent from international 66 % 67 % 70 % 70 % 67 %
Total net revenues $ 2,322
$ 2,099 $ 2,110 $ 2,061 $ 2,323
Current quarter vs prior year quarter — % (2 )% (3 )% (4 )% N/A
eBay Inc.
Unaudited Supplemental Operating
Data
Three Months Ended
December 31,2015
September 30,2015
June 30,2015
March 31,2015
December 31,2014
(In millions, except percentages)
Active Buyers (1)
162 159 157 156 154 Current quarter vs prior year quarter 5 % 5 % 6
% 8 % 10 %
Gross Merchandise Volume (2)
Marketplace $20,676 $18,674 $19,273 $19,476 $20,883 Current quarter
vs prior year quarter (1 )% (3 )% (2 )% (2 )% 1 % StubHub $1,184
$927 $788 $675 $911 Current quarter vs prior year quarter 30 % 10 %
1 % 6 % 2 %
Total GMV $21,860 $19,601 $20,061
$20,151 $21,794 Current quarter vs prior year
quarter — % (2 )% (2 )% (2 )% 1 % (1) All buyers who
successfully closed a transaction on our Marketplace and StubHub
platforms within the previous 12-month period. Buyers may register
more than once, and as a result, may have more than one account.
(2) Total value of all successfully closed transactions between
users on our Marketplace and StubHub platforms during the period
regardless of whether the buyer and seller actually consummated the
transaction. We believe that GMV provides a useful measure of the
overall volume of closed transactions that flow through our
platforms in a given period, notwithstanding the inclusion in GMV
of closed transactions that are not ultimately consummated.
eBay Inc.Business Outlook(In
Millions, Except Per Share Amounts)
The guidance figures provided below and elsewhere in this
press release are forward-looking statements, reflect a number of
estimates, assumptions and other uncertainties, and are approximate
in nature because the company's future performance is difficult to
predict. Such guidance is based on information available on the
date of this press release, and the company assumes no obligation
to update it.
The company's future performance involves risks and
uncertainties, and the company's actual results could differ
materially from the information below and elsewhere in this press
release. 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 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 its most recent annual report on Form 10-K and
subsequent quarterly reports on Form 10-Q, copies of which may
be obtained by visiting eBay's investor relations website at
https://investors.ebayinc.com or the
SEC's website at www.sec.gov.
eBay Inc.
Three Months Ending March 31, 2016 (In
millions, except per share amounts) GAAP
Non-GAAP (a) Diluted EPS from continuing
operations $0.37 - $0.39 $0.43 - $0.45
Twelve Months
Ending December 31, 2016 GAAP Non-GAAP
(b) (In millions, except per share amounts)
Diluted EPS from continuing operations $1.55 - $1.60 $1.82 -
$1.87 (a) Estimated non-GAAP amounts above for the three
months ending March 31, 2016, reflect adjustments that exclude the
estimated amortization of acquired intangible assets of
approximately $10 - $15 million and estimated stock-based
compensation expense and employer payroll taxes on stock-based
compensation expense of approximately $85 - $95 million as well as
the related tax impact. (b) Estimated non-GAAP amounts above for
the twelve months ending December 31, 2016, reflect adjustments
that exclude the estimated amortization of acquired intangible
assets of approximately $35 - $45 million and estimated stock-based
compensation expense and employer payroll taxes on stock-based
compensation expense of approximately $410 - $430 million.
eBay Inc.Non-GAAP Measures of
Financial Performance
To supplement the company's condensed consolidated financial
statements presented in accordance with generally accepted
accounting principles, or GAAP, the company uses non-GAAP measures
of certain components of financial performance. These non-GAAP
measures include non-GAAP net income, non-GAAP earnings per diluted
share, non-GAAP operating margin, non-GAAP effective tax rate, and
free cash flow. These non-GAAP financial measures are presented on
a continuing operations basis.
These non-GAAP measures are not in accordance with, or an
alternative to, measures prepared in accordance with GAAP and may
be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with the company's results of operations as
determined in accordance with GAAP. These measures should only be
used to evaluate the company's results of operations in conjunction
with the corresponding GAAP measures.
Reconciliation to the nearest GAAP measure of all non-GAAP
measures included in this press release can be found in the tables
included in this press release.
These non-GAAP measures are provided to enhance investors'
overall understanding of the company's current financial
performance and its prospects for the future. Specifically, the
company believes the non-GAAP measures provide useful information
to both management and investors by excluding certain expenses,
gains and losses, or net purchases of property and equipment, as
the case may be, that may not be indicative of its core operating
results and business outlook. In addition, because the company has
historically reported certain non-GAAP results to investors, the
company believes that the inclusion of non-GAAP measures provides
consistency in the company's financial reporting.
For its internal budgeting process, and as discussed further
below, the company's management uses financial measures that do not
include stock-based compensation expense, employer payroll taxes on
stock-based compensation, amortization or impairment of acquired
intangible assets, impairment of goodwill, significant gains or
losses from the disposal/acquisition of a business, certain effects
of the planned separation of our eBay and PayPal business, certain
gains and losses on investments, restructuring-related charges and
the income taxes associated with the foregoing. In addition to the
corresponding GAAP measures, the company's management also uses the
foregoing non-GAAP measures in reviewing the financial results of
the company.
The company excludes the following items from non-GAAP net
income, non-GAAP earnings per diluted share, non-GAAP operating
margin and non-GAAP effective tax rate:
Stock-based compensation expense and related
employer payroll taxes. This expense consists of expenses for stock
options, restricted stock and employee stock purchases. The company
excludes stock-based compensation expense from its non-GAAP
measures primarily because they are non-cash expenses that
management does not believe are reflective of ongoing operating
results. The related employer payroll taxes is dependent on the
company's stock price and the timing and size of exercises by
employees of their stock options and the vesting of their
restricted stock, over which management has limited to no control,
and as such management does not believe it correlates to the
company's operation of the business.
Amortization or impairment of acquired
intangible assets, impairment of goodwill, significant gains or
losses and transaction expenses from the acquisition or disposal of
a business and certain gains or losses on investments. The company
incurs amortization or impairment of acquired intangible assets and
goodwill in connection with acquisitions and may incur significant
gains or losses from the acquisition or disposal of a business and
therefore excludes these amounts from its non-GAAP measures. The
company also excludes certain gains and losses on investments. The
company excludes the impact of the accretion of a note receivable
associated with the disposal of certain businesses. The company
excludes these items because management does not believe they
correlate to the ongoing operating results of the company's
business.
Restructuring. These charges consist of
expenses for employee severance and other exit and disposal costs.
The company excludes significant restructuring charges primarily
because management does not believe they are reflective of ongoing
operating results.
Other certain significant gains, losses, or
charges that are not indicative of the Company’s core operating
results. These are significant gains, losses, or charges during a
period that are the result of isolated events or transactions which
have not occurred frequently in the past and are not expected to
occur regularly or be repeated in the future. The company excludes
these amounts from its results primarily because management does
not believe they are indicative of its current or ongoing operating
results.
Separation. These are significant expenses
that are related to the separation of our eBay and PayPal
businesses into separate publicly traded companies. These consist
primarily of third-party consulting fees, legal fees, employee
retention payments, tax indemnifications and other expenses related
to the separation.
Tax effect of non-GAAP adjustments. This
amount is used to present stock-based compensation and the other
amounts described above on an after-tax basis consistent with the
presentation of non-GAAP net income.
In addition to the non-GAAP measures discussed above, the
company also uses free cash flow. Free cash flow represents
operating cash flows less purchases of property and equipment. The
company considers free cash flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by the business after the purchases of
property, buildings, and equipment, which can then be used to,
among other things, invest in the company's business, make
strategic acquisitions, and repurchase stock. A limitation of the
utility of free cash flow as a measure of financial performance is
that it does not represent the total increase or decrease in the
company's cash balance for the period.
eBay Inc.
Reconciliation of GAAP Operating Margin
to Non-GAAP Operating Margin
Three Months Ended Year Ended
December 31,2015
December 31,2014
December 31,2015
December 31,2014
(In millions, except percentages) GAAP operating income $ 662 $ 731
$ 2,197 $ 2,476 Stock-based compensation expense and related
employer payroll taxes 78 96 396
373
Amortization of acquired intangible assets within cost of net
revenues 5 8 25 34 Amortization of acquired intangible assets
within operating expenses 11 10 41
75
Separation 43 7 160 7 Restructuring and acquisition related —
— 62 — Total non-GAAP operating
income adjustments 137 121 684
489
Non-GAAP operating income $ 799 $ 852 $ 2,881
$
2,965
Non-GAAP operating margin 34.4 % 36.7 % 33.5 % 33.7 %
Reconciliation of GAAP Net Income to
Non-GAAP Net Income and
GAAP Effective Tax Rate to Non-GAAP
Effective Tax Rate*
Three Months Ended Year Ended
December 31,2015
December 31,2014
December 31,2015
December 31,2014
(In millions, except percentages) GAAP income from continuing
operations before income taxes $ 650 $ 738 $ 2,406 $ 2,515 GAAP
provision for income taxes (127 ) (9 ) (459 ) (3,380 ) GAAP net
income from continuing operations $ 523 $ 729 $ 1,947 $ (865 )
Non-GAAP adjustments to net income from continuing operations:
Non-GAAP operating income from continuing operations adjustments
(see table above) 137 121 684
489
Gains or losses on investments — — (264 ) — Tax effect of non-GAAP
adjustments (60 ) (165 ) (135 ) 2,762 Non-GAAP net income
from continuing operations $ 600 $ 685 $ 2,232 $
2,386
Diluted net income from continuing operations per share:
GAAP $ 0.43 $ 0.59 $ 1.60 $ (0.69 ) Non-GAAP $
0.50 $ 0.55 $ 1.83 $ 1.89 Shares used
in GAAP diluted net income (loss) per-share calculation 1,204
1,241 1,220 1,251 Shares used in
non-GAAP diluted net income per-share calculation 1,204
1,241 1,220 1,262 GAAP effective tax
rate - Continuing operations 20 % 1 % 19 % 134 % Tax effect of
non-GAAP adjustments to net income (loss) from continuing
operations 4 % 19 % 2 % (113 )% Non-GAAP effective tax rate -
Continuing Operations 24 % 20 % 21 % 21 %
*Presented on a continuing operations
basis
Reconciliation of Operating Cash Flow
to Free Cash Flow*
Three Months Ended Year Ended
December 31,2015
December 31,2014
December 31,2015
December 31,2014
(In millions) (In millions) Net cash provided by continuing
operating activities $ 1,126 $ 838 $ 2,877 $ 3,228 Less: Purchases
of property and equipment (129 ) (200 ) (668 ) (622 ) Free cash
flow from continuing operations $ 997 $ 638 $ 2,209
$ 2,606
*Presented on a continuing operations
basis
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160127006267/en/
eBay Inc.Investor Relations Contact:Selim Freiha; Tina
Todascoir@ebay.comMedia Relations Contact:Abby
Smithpress@ebay.comCompany
News:https://www.ebayinc.com/stories/news/Investor Relations
website:https://investors.ebayinc.com
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