- Gross Merchandise Volume of $20.9
billion
- Revenue of $2.2 billion
- GAAP and Non-GAAP EPS per diluted
share of $0.38 and $0.43, respectively, on a continuing operations
basis
- Repurchased $500 million of common
stock
- Board approves additional $2.5
billion stock repurchase authorization
- Raises full year 2016 revenue and
EPS guidance
eBay Inc. (NASDAQ:EBAY), a global commerce leader, delivered
gross merchandise volume (GMV) for the quarter ended June 30, 2016
of $20.9 billion, increasing 6% on a foreign exchange (FX) neutral
basis and 4% on an as-reported basis. Revenue for the quarter was
$2.2 billion, up 7% on an FX-Neutral basis and 6% on an as-reported
basis, driving GAAP net income from continuing operations of $437
million, or $0.38 per diluted share, and non-GAAP net income from
continuing operations of $496 million, or $0.43 per diluted share.
During the quarter, the company generated $764 million of operating
cash flow and $617 million of free cash flow from continuing
operations while also repurchasing $500 million of its common
stock.
“Q2 was another good quarter where we delivered strong results
and had acceleration in growth,” said Devin Wenig, President and
CEO of eBay Inc. “We are now one year into executing our
strategy to provide the best choice, the most relevance and the
most powerful selling platform, and there are signs of momentum in
our business. We continue to invest in our platforms to ensure eBay
is a global commerce leader for years to come.”
Underlying total eBay Inc. performance, the Marketplace
platforms delivered $19.8 billion of GMV and $1.8 billion of
revenue in the second quarter. Marketplace revenue was up 3% on an
FX-Neutral basis and 1% on an as-reported basis, driven by
accelerating GMV growth of 5% on an FX-Neutral basis and 3% on an
as-reported basis as well as growth in Marketing Services &
Other revenue. StubHub growth accelerated in the quarter, with GMV
of $1.1 billion, up 35%, and revenue of $225 million, up 40%, aided
by strength across multiple genres and the continued benefit from
ongoing product innovation. The Classifieds platforms delivered
another quarter of strong performance with revenue of $207 million,
up 15%, primarily driven by the Automotive and Real Estate
verticals across several key geographies, including Germany and
Canada.
In the second quarter, eBay crossed the one billion live
listings mark for the first time, underscoring efforts to expand
the breadth of selection offered to consumers, while making
progress on enhancing its shopping platform to improve
discoverability. eBay also recently announced its intent to acquire
several companies to strengthen its technology and expand its
geographical footprint. Expertmaker, which closed in Q2, and
SalesPredict will help contribute to eBay's efforts to build the
world's most comprehensive product knowledge base, in addition to
furthering capabilities in artificial intelligence and machine
learning. TicketBis will strengthen StubHub’s international
footprint, and Ticket Utils will provide sellers with enhanced
tools to better manage their inventory.
Second Quarter 2016 Financial
Highlights (presented in millions, except per share data and
percentages)
Second Quarter
2016 2015 Change eBay
Inc.
Net revenues $2,230 $2,110 $120 6%
GAAP - Continuing Operations
Income from continuing operations
$437 $430 $7 2% Earnings per diluted
share from continuing operations $0.38 $0.35
$0.03 8%
Non-GAAP - Continuing Operations
Net income
$496 $517 $(21) (4)% Earnings per diluted
share $0.43 $0.42 $0.01 2%
Other Selected Financial and Operational Results
- Operating margin — GAAP operating
margin increased to 23.8% for the second quarter of 2016, compared
to 20.3% for the same period last year. Non-GAAP operating margin
decreased to 29.1% in the second quarter of 2016, compared to 32.1%
for the same period last year.
- Taxes — The GAAP effective tax rate for
continuing operations for the second quarter of 2016 was 16.4%,
compared to 22.1% for the second quarter of 2015. The non-GAAP
effective tax rate for continuing operations for the second quarter
of 2016 was 18.2%, compared to 19.5% for the second quarter of
2015.
- Cash flow — The company generated $764
million of operating cash flow from continuing operations and $617
million of free cash flow from continuing operations during the
second quarter of 2016.
- Stock repurchase program — The company
repurchased approximately $500 million of its common
stock, or 20.8 million shares, in the second quarter of
2016. The company's total repurchase authorization remaining as of
June 30, 2016 was $0.3 billion.
- Cash and cash equivalents and
non-equity investments — The company's cash and cash equivalents
and non-equity investments portfolio totaled $10.4 billion as of
June 30, 2016.
Business Outlook
- Third quarter 2016 — The company
expects net revenue between $2.16 billion and $2.19 billion,
representing FX-Neutral growth of 6% - 7%, with non-GAAP earnings
per diluted share from continuing operations in the range of $0.42
- $0.44 and GAAP earnings per diluted share from continuing
operations in the range of $0.35 - $0.37.
- Full year 2016 — The company expects
net revenue between $8.85 billion and $8.95 billion, representing
FX-Neutral growth of 5% - 6%, with non-GAAP earnings per diluted
share from continuing operations in the range of $1.85 - $1.90 and
GAAP earnings per diluted share from continuing operations in the
range of $1.60 - $1.65.
In July 2016, eBay's board of directors authorized an additional
$2.5 billion stock repurchase program, with no expiration from the
date of authorization. The stock repurchase program is intended to
programmatically offset the impact of dilution from our equity
compensation programs and, subject to market conditions and other
factors, to make opportunistic repurchases of our common stock to
reduce our outstanding share count. Any share repurchases under our
stock repurchase programs may be made through open market
transactions, block trades, privately negotiated transactions
(including accelerated share repurchase transactions) or other
means at times and in such amounts as management deems appropriate
and will be funded from our working capital or other financing
alternatives.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss second quarter
2016 results at 2:00 p.m. Pacific Time today. A live webcast
of the conference call, together with a slide presentation that
includes supplemental financial information and reconciliations of
certain non-GAAP measures to their nearest comparable GAAP
measures, can be accessed through the company's Investor Relations
website at 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 third 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 July 20, 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 June 30, December 31,
2016 2015 (In millions, except par value
amounts) ASSETS Current assets: Cash and cash
equivalents $ 2,001 $ 1,832 Short-term investments 6,085 4,299
Accounts receivable, net 628 619 Other current assets 1,200
1,154 Total current assets 9,914 7,904 Long-term investments 3,541
3,391 Property and equipment, net 1,502 1,554 Goodwill 4,487 4,451
Intangible assets, net 74 90 Other assets 475 365 Total
assets $ 19,993 $ 17,755
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable 304 349 Accrued
expenses and other current liabilities 1,718 1,736 Deferred revenue
116 106 Income taxes payable 68 72 Total current liabilities
2,206 2,263 Deferred and other tax liabilities, net 2,204 2,092
Long-term debt 9,054 6,749 Other liabilities 76 75 Total
liabilities 13,540 11,179 Total stockholders' equity
6,453 6,576 Total liabilities and stockholders' equity $
19,993 $ 17,755
eBay Inc. Unaudited
Condensed Consolidated Statement of Income
Three Months Ended Six Months Ended June
30, June 30, 2016 2015 2016
2015 (In millions, except per share amounts)
Net revenues $ 2,230 $ 2,110 $ 4,367 $ 4,171 Cost of net
revenues (1) 493 434 970 845 Gross
profit 1,737 1,676 3,397 3,326
Operating expenses: Sales and marketing (1) 622 588 1,160 1,107
Product development (1) 295 232 534 453 General and administrative
(1) 218 353 427 655 Provision for transaction losses 64 65 116 134
Amortization of acquired intangible assets 7 10 15
20 Total operating expenses 1,206 1,248
2,252 2,369 Income from operations 531 428 1,145 957
Interest and other, net (8 ) 124 (31 ) 134 Income
from continuing operations before income taxes 523 552 1,114 1,091
Provision for income taxes (86 ) (122 ) (195 ) (212 ) Income from
continuing operations $ 437 $ 430 $ 919 $ 879 Loss from
discontinued operations, net of income taxes (2) (2 ) (347 ) (2 )
(170 ) Net income $ 435 $ 83 $ 917 $ 709
Income (loss) per share - basic: Continuing
operations $ 0.38 $ 0.35 $ 0.80 $ 0.72 Discontinued operations —
(0.28 ) — (0.14 ) Net income per share - basic $ 0.38
$ 0.07 $ 0.80 $ 0.58 Income
(loss) per share - diluted: Continuing operations $ 0.38 $ 0.35 $
0.79 $ 0.72 Discontinued operations — (0.28 ) — (0.14
) Net income per share - diluted $ 0.38 $ 0.07 $ 0.79
$ 0.58 Weighted average shares: Basic 1,144
1,217 1,151 1,217 Diluted 1,149
1,225 1,159 1,227 (1) Includes
stock-based compensation as follows: Cost of net revenues $ 10 $ 10
$ 17 $ 18 Sales and marketing 26 23 47 47 Product development 44 25
75 54 General and administrative 33 57 62 89
$ 113 $ 115 $ 201 $ 208
(2) Includes PayPal and eBay Enterprise
financial results from April 1, 2015 to June 30, 2015 for Second
Quarter. Includes PayPal and eBay Enterprise financial results from
January 1, 2015 to June 30, 2015 for the six months ended June 30,
2015.
eBay Inc. Unaudited Condensed Consolidated
Statement of Cash Flows Three Months Ended
Six Months Ended June 30, June 30,
2016 2015 2016 2015
(In millions) Cash flows from operating activities: Net
income $ 435 $ 83 $ 917 $ 709 Income from discontinued operations,
net of income taxes 2 347 2 170 Adjustments: Provision for
transaction losses 64 65 116 134 Depreciation and amortization 167
174 334 334 Stock-based compensation 113 115 201 208 Gain on sale
of investments (6 ) (102 ) (6 ) (102 ) Changes in assets and
liabilities, and other, net of acquisition effects (11 ) (136 )
(159 ) (406 ) Net cash provided by continuing operating activities
764 546 1,405 1,047 Net cash provided
by (used in) discontinued operating activities (1) (1 ) 610
(1 ) 1,260 Net cash provided by operating activities 763
1,156 1,404 2,307 Cash flows from
investing activities: Purchases of property and equipment (147 )
(201 ) (305 ) (297 ) Purchases of investments (2,193 ) (930 )
(5,128 ) (3,350 ) Maturities and sales of investments 1,489 1,933
3,519 3,952 Other (47 ) (2 ) (59 ) (3 ) Net cash provided by (used
in) continuing investing activities (898 ) 800 (1,973 ) 302
Net cash used in discontinued investing activities (1) —
(2,497 ) — (2,723 ) Net cash used in investing
activities (898 ) (1,697 ) (1,973 ) (2,421 ) Cash flows from
financing activities: Proceeds from issuance of common stock 45 108
52 146 Repurchases of common stock (500 ) — (1,501 ) (1,000 )
Excess tax benefits from stock-based compensation 3 20 4 40 Tax
withholdings related to net share settlements of restricted stock
units and awards (69 ) (129 ) (77 ) (180 ) Proceeds from issuance
of long-term debt, net — — 2,216 — Repayment of debt (6 ) — (6 ) —
Other (10 ) — (3 ) — Net cash provided by (used in)
continuing financing activities (537 ) (1 ) 685 (994 ) Net
cash provided by discontinued financing activities (1) — 8
— 16 Net cash provided by (used in) financing
activities (537 ) 7 685 (978 ) Effect of exchange
rate changes on cash and cash equivalents (13 ) 48 53
(249 ) Net increase (decrease) in cash and cash equivalents (685 )
(486 ) 169 (1,341 ) Cash and cash equivalents at beginning
of period 2,686 5,473 1,832 6,328 Cash
and cash equivalents at end of period 2,001 4,987 2,001 4,987 Less:
Cash and cash equivalents of discontinued operations — 2,578
— 2,578 Cash and cash equivalents of
continuing operations at end of period $ 2,001 $ 2,409
$ 2,001 $ 2,409
(1) Includes PayPal and eBay Enterprise
financial results from April 1, 2015 to June 30, 2015 for Second
Quarter. Includes PayPal and eBay Enterprise financial results from
January 1, 2015 to June 30, 2015 for the six months ended June 30,
2015.
eBay Inc. Unaudited Summary of Consolidated Net
Revenues Net Revenues by Type Three
Months Ended June 30, March 31,
December 31, September 30, June
30, 2016 2016 2015 2015 2015
(In millions, except percentages)
Net Revenues by Type:
Net transaction revenues: Marketplace $ 1,521 $ 1,500 $
1,584 $ 1,459 $ 1,524 Current quarter vs prior year quarter — % (2
)% (5 )% (5 )% (3 )% Percent from international 62 % 61 % 63 % 62 %
62 % StubHub 225 177 232 200 161 Current quarter vs prior year
quarter 40 % 34 % 34 % 17 % 8 % Percent from international 1 % 2 %
1 % 2 % 2 %
Total net transaction revenues 1,746 1,677 1,816
1,659 1,685 Current quarter vs prior year quarter 4 % 1 % (1 )% (3
)% (2 )% Percent from international 54 % 55 % 55 % 54 % 56 %
Marketing services and other revenues: Marketplace 277 274
326 266 251 Current quarter vs prior year quarter 10 % 17 % 4 % — %
(5 )% Percent from international 46 % 44 % 47 % 44 % 47 %
Classifieds 207 186 183 178 180 Current quarter vs prior year
quarter 15 % 15 % 2 % (3 )% (4 )% Percent from international 100 %
100 % 100 % 100 % 100 % Corporate and other — — (3 )
(4 ) (6 )
Total marketing services and other revenues 484
460 506 440 425 Current quarter vs prior year quarter 14 % 17 % 4 %
(2 )% (6 )% Percent from international 69 % 67 % 66 % 67 % 70 %
Total net revenues $
2,230 $ 2,137 $ 2,322 $ 2,099 $ 2,110
Current quarter vs prior year quarter 6 % 4 % — % (2 )% (3
)%
eBay Inc. Unaudited Supplemental Operating
Data Three Months Ended June 30,
March 31, December 31,
September 30, June 30, 2016 2016
2015 2015 2015 (In millions, except
percentages)
Active Buyers (1) 164 162 162 159 157
Current quarter vs prior year quarter 4 % 4 % 5 % 5 % 6 %
Gross Merchandise Volume (2) Marketplace $ 19,790 $
19,581 $ 20,676 $ 18,674 $ 19,273 Current quarter vs prior year
quarter 3 % 1 % (1 )% (3 )% (2 )% StubHub $ 1,060 $ 869 $ 1,184 $
927 $ 788 Current quarter vs prior year quarter 35 % 29 % 30 % 10 %
1 %
Total GMV $ 20,850 $ 20,450 $ 21,860
$ 19,601 $ 20,061 Current quarter vs prior
year quarter 4 % 1 % — % (2 )% (2 )% (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 September 30, 2016
(In millions, except per share amounts) GAAP
Non-GAAP (a) Diluted EPS from continuing
operations $0.35 - $0.37 $0.42 - $0.44
Twelve Months
Ending December 31, 2016 GAAP Non-GAAP
(b) (In millions, except per share amounts)
Diluted EPS from continuing operations $1.60 - $1.65 $1.85 -
$1.90 (a) Estimated non-GAAP amounts above for the three
months ending September 30, 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 $105 - $115 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 $420 - $440 million as well
as the related tax impact.
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 are 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 Six Months Ended June 30,
June 30, June 30, June 30, 2016
2015 2016 2015 (In millions, except
percentages) GAAP operating income $ 531 $ 428 $ 1,145 $ 957
Stock-based compensation expense and related employer payroll taxes
120 125 209 225 Amortization of acquired intangible assets within
cost of net revenues 4 6 8 12 Amortization of acquired intangible
assets within operating expenses 7 10 15 20 Separation — 89 (1 )
119 Restructuring and acquisition related — 3 — 62 Other
significant gains, losses or charges (13 ) 17 (13 ) 17
Total non-GAAP operating income adjustments 118 250
218 455 Non-GAAP operating income $ 649
$ 678 $ 1,363 $ 1,412 Non-GAAP operating
margin 29.1 % 32.1 % 31.2 % 33.9 %
Reconciliation of GAAP
Net Income to Non-GAAP Net Income and GAAP Effective Tax
Rate to Non-GAAP Effective Tax Rate* Three
Months Ended Six Months Ended June 30,
June 30, June 30, June 30,
2016 2015 2016 2015 (In millions,
except percentages) GAAP income from continuing operations before
income taxes $ 523 $ 552 $ 1,114 $ 1,091 GAAP provision for income
taxes (86 ) (122 ) (195 ) (212 ) GAAP net income from continuing
operations $ 437 $ 430 $ 919 $ 879 Non-GAAP adjustments to net
income from continuing operations: Non-GAAP operating income from
continuing operations adjustments (see table above) 118 250 218 455
Gains or losses on investments (35 ) (160 ) (35 ) (170 ) Tax effect
of non-GAAP adjustments (24 ) (3 ) (56 ) (61 ) Non-GAAP net income
from continuing operations $ 496 $ 517 $ 1,046 $ 1,103
Diluted net income from continuing operations per share: GAAP $
0.38 $ 0.35 $ 0.79 $ 0.72 Non-GAAP $
0.43 $ 0.42 $ 0.90 $ 0.90 Shares used
in GAAP and non-GAAP diluted net income per-share calculation 1,149
1,225 1,159 1,227 GAAP effective
tax rate - Continuing operations 16 % 22 % 18 % 19 % Tax effect of
non-GAAP adjustments to net income from continuing operations 2 %
(3 )% 1 % 1 % Non-GAAP effective tax rate - Continuing Operations
18 % 19 % 19 % 20 %
*Presented on a continuing operations
basis
Reconciliation of Operating Cash Flow
to Free Cash Flow*
Three Months Ended Six Months
Ended June 30, June 30, June 30,
June 30, 2016 2015 2016
2015 (In millions) (In millions) Net cash provided by
continuing operating activities $ 764 $ 546 $ 1,405 $ 1,047 Less:
Purchases of property and equipment (147 ) (201 ) (305 ) (297 )
Free cash flow from continuing operations $ 617 $ 345
$ 1,100 $ 750
*Presented on a continuing operations
basis
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160720006343/en/
eBay Inc.Investor Relations Contact:Selim Freihair@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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