- Gross Merchandise Volume of $20.1
billion
- Revenue of $2.2 billion
- GAAP and Non-GAAP EPS per diluted
share of $0.36 and $0.45, respectively, on a continuing operations
basis
- Repurchased $500 million of common
stock
eBay Inc. (NASDAQ: EBAY), a global commerce leader, delivered
gross merchandise volume (GMV) for the quarter ended September 30,
2016 of $20.1 billion, increasing 5% on a foreign exchange (FX)
neutral basis and 3% on an as-reported basis. Revenue for the
quarter was $2.2 billion, up 8% on an FX-Neutral basis and 6% on an
as-reported basis. GAAP net income from continuing operations was
$418 million, or $0.36 per diluted share, and non-GAAP net income
from continuing operations was $509 million, or $0.45 per diluted
share. During the quarter, the company generated $802 million of
operating cash flow and $617 million of free cash flow from
continuing operations while also repurchasing $500 million of its
common stock.
“In Q3 we delivered good top- and bottom-line financial results,
led by consistent performance across our business,” said Devin
Wenig, President and CEO of eBay Inc. “We continued to transform
the shopping experience on eBay, delivered more personalization
capabilities and began to activate our updated brand
messaging.”
In the third quarter, eBay added over one million active buyers
across its platforms, to a total of 165 million global active
buyers. Underlying total eBay Inc. performance, the Marketplace
platforms delivered $19.0 billion of GMV and $1.8 billion of
revenue. Marketplace revenue was up 5% on an FX-Neutral basis and
2% on an as-reported basis, driven by GMV growth of 4% on an
FX-Neutral basis and 2% on an as-reported basis as well as growth
in Marketing Services & Other revenue. StubHub had another
strong quarter with GMV of $1.1 billion, up 23%, and revenue of
$263 million, up 32%, aided by strength across concerts, theater
and baseball as well as the continued benefit from ongoing product
innovation. The Classifieds platforms delivered another quarter of
good performance with revenue of $197 million, up 14% on an
FX-Neutral basis and 11% on an as-reported basis, primarily driven
by the Automotive and Real Estate verticals across several key
geographies.
eBay made progress during the quarter in driving the most
relevant shopping experiences for consumers. Marketplace delivered
further enhancements to its mobile platform and introduced Quick
Sale, a targeted consumer destination for selling mobile phones.
The company also began to activate an updated strategy for the eBay
brand and was recently ranked as number 32 in Interbrand’s Best
Global Brands 2016 report. StubHub continued to drive innovation,
expanding its virtual reality technology to more venues in the
United States, as well as launching a blended primary and secondary
tickets experience with the Philadelphia 76ers. Classifieds began
integrating tickets inventory from StubHub in Canada, while
furthering efforts to integrate inventory from eBay in several
markets.
eBay continues to be acquisitive in the areas of geographic and
vertical expansion, and adding key technology and talent. Most
recently, it announced an agreement to purchase Corrigon Ltd., a
pioneer of visual search technologies, expected to contribute to
the Marketplace platform's structured data initiative. In addition
to its recent strategic acquisitions, eBay has returned $2 billion
of capital to shareholders in 2016 in the form of share
repurchases. eBay also recently sold most of its stake in
MercadoLibre, Inc. The sale enables eBay to realize a significant
gain on its investment, and the company intends to use the net
proceeds in a manner consistent with its capital allocation
policy.
Third Quarter 2016 Financial Highlights
(presented in millions, except per share data and
percentages)
Third Quarter 2016
2015 Change eBay
Inc.
Net revenues
$2,217 $2,099 $118
6%
GAAP - Continuing Operations
Income from continuing operations $418
$545 $(127) (23)% Earnings per
diluted share from continuing operations $0.36
$0.45 $(0.09) (20)%
Non-GAAP - Continuing Operations
Net
income $509 $529
$(20) (4)% Earnings per diluted share
$0.45 $0.43 $0.02
5%
Other Selected Financial and Operational Results
- Operating margin — GAAP operating
margin decreased to 24.4% for the third quarter of 2016, compared
to 27.5% for the same period last year. Non-GAAP operating margin
decreased to 29.9% in the third quarter of 2016, compared to 31.9%
for the same period last year.
- Taxes — The GAAP effective tax rate for
continuing operations for the third quarter of 2016 was 21.6%,
compared to 18.0% for the third quarter of 2015. The non-GAAP
effective tax rate for continuing operations for the third quarter
of 2016 was 22.2%, compared to 20.2% for the third quarter of
2015.
- Cash flow — The company generated $802
million of operating cash flow from continuing operations and $617
million of free cash flow from continuing operations during the
third quarter of 2016.
- Stock repurchase program — The company
repurchased approximately $500 million of its common
stock, or 16.5 million shares, in the third quarter of
2016. The company's total repurchase authorization remaining as of
September 30, 2016 was $2.3 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
September 30, 2016.
Business Outlook
- Fourth quarter 2016 — The company
expects net revenue between $2.36 billion and $2.41 billion,
representing FX-Neutral growth of 4% - 6%, with non-GAAP earnings
per diluted share from continuing operations in the range of $0.52
- $0.54 and GAAP earnings per diluted share from continuing
operations in the range of $1.05 - $1.15.
- Full year 2016 — The company expects
net revenue between $8.95 billion and $9.0 billion, representing
FX-Neutral growth of 6% - 7%, 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 $2.22 - $2.32.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss third 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 fourth 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 October 19, 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
September 30, December 31, 2016
2015 (In millions, except par value amounts)
ASSETS Current assets: Cash and cash equivalents $ 1,753 $
1,832 Short-term investments 6,292 4,299 Accounts receivable, net
626 619 Other current assets 1,112 1,154 Total current
assets 9,783 7,904 Long-term investments 3,921 3,391 Property and
equipment, net 1,526 1,554 Goodwill 4,727 4,451 Intangible assets,
net 117 90 Other assets 428 365 Total assets $ 20,502
$ 17,755
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Short-term debt $ 1,449 $ — Accounts payable 278 349
Accrued expenses and other current liabilities 1,813 1,736 Deferred
revenue 116 106 Income taxes payable 107 72 Total current
liabilities 3,763 2,263 Deferred and other tax liabilities, net
2,268 2,092 Long-term debt 7,582 6,749 Other liabilities 70
75 Total liabilities 13,683 11,179 Total
stockholders' equity 6,819 6,576 Total liabilities and
stockholders' equity $ 20,502 $ 17,755
eBay Inc.
Unaudited Condensed Consolidated
Statement of Income
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 (In millions,
except per share amounts) Net revenues $ 2,217 $ 2,099 $
6,584 $ 6,270 Cost of net revenues (1) 498 433 1,468
1,278 Gross profit 1,719 1,666 5,116
4,992 Operating expenses: Sales and marketing (1) 600
565 1,760 1,672 Product development (1) 288 241 822 694 General and
administrative (1) 224 207 651 862 Provision for transaction losses
56 65 172 199 Amortization of acquired intangible assets 9
10 24 30
Total operating expenses
1,177 1,088 3,429 3,457 Income from
operations 542 578 1,687 1,535 Interest and other, net (9 ) 87
(40 ) 221 Income from continuing operations before
income taxes 533 665 1,647 1,756 Provision for income taxes (115 )
(120 ) (310 ) (332 ) Income from continuing operations $ 418 $ 545
$ 1,337 $ 1,424 Loss from discontinued operations, net of income
taxes (2) (5 ) (6 ) (7 ) (176 ) Net income $ 413 $ 539
$ 1,330 $ 1,248 Income (loss) per share
- basic: Continuing operations $ 0.37 $ 0.45 $ 1.17 $ 1.17
Discontinued operations — — (0.01 ) (0.14 ) Net
income per share - basic $ 0.37 $ 0.45 $ 1.16
$ 1.03 Income (loss) per share - diluted: Continuing
operations $ 0.36 $ 0.45 $ 1.16 $ 1.16 Discontinued operations —
— (0.01 ) (0.14 ) Net income per share - diluted $
0.36 $ 0.45 $ 1.15 $ 1.02
Weighted average shares: Basic 1,126 1,210 1,143
1,214 Diluted 1,139 1,223 1,153
1,226 (1) Includes stock-based compensation as
follows: Cost of net revenues $ 9 $ 10 $ 26 $ 28 Sales and
marketing 24 28 71 75 Product development 40 29 115 83 General and
administrative 32 26 94 115 $ 105
$ 93 $ 306 $ 301
(2) Includes PayPal financial results from July 1, 2015 to July
17, 2015; and January 1, 2015 to July 17, 2015; respectively; also
includes eBay Enterprise financial results for the full periods in
2015, respectively.
eBay Inc.
Unaudited Condensed Consolidated
Statement of Cash Flows
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 (In
millions) Cash flows from operating activities: Net income $
413 $ 539 $ 1,330 $ 1,248 Income from discontinued operations, net
of income taxes 5 6 7 176 Adjustments: Provision for transaction
losses 56 65 172 199 Depreciation and amortization 172 182 506 516
Stock-based compensation 105 93 306 301 (Gain) loss on sale of
investments 31 (110 ) 25 (212 ) Changes in assets and liabilities,
and other, net of acquisition effects 20 (71 ) (139 ) (477 )
Net cash provided by continuing operating activities 802 704
2,207 1,751 Net cash provided by (used in)
discontinued operating activities (1) — (18 ) (1 ) 1,242
Net cash provided by operating activities 802 686
2,206 2,993 Cash flows from investing
activities: Purchases of property and equipment (185 ) (242 ) (490
) (539 ) Purchases of investments (2,654 ) (1,102 ) (7,782 ) (4,452
) Maturities and sales of investments 2,410 1,627 5,929 5,579
Acquisitions, net of cash acquired (173 ) (24 ) (201 ) (24 ) Other
7 (12 ) (24 ) (15 ) Net cash provided by (used in)
continuing investing activities (595 ) 247 (2,568 ) 549
Net cash used in discontinued investing activities (1) —
(1,114 ) — (3,837 ) Net cash used in investing
activities (595 ) (867 ) (2,568 ) (3,288 ) Cash flows from
financing activities: Proceeds from issuance of common stock 15 27
67 173 Repurchases of common stock (501 ) (512 ) (2,002 ) (1,512 )
Excess tax benefits from stock-based compensation 5 32 9 72 Tax
withholdings related to net share settlements of restricted stock
units and awards (19 ) (46 ) (96 ) (226 ) Proceeds from issuance of
long-term debt, net — — 2,216 — Repayment of debt (11 ) (250 ) (17
) (250 ) Other 8 10 5 10 Net cash
provided by (used in) continuing financing activities (503 ) (739 )
182 (1,733 ) Net cash used in discontinued financing
activities (1) — (1,615 ) — (1,599 ) Net cash
provided by (used in) financing activities (503 ) (2,354 ) 182
(3,332 ) Effect of exchange rate changes on cash and cash
equivalents 48 (37 ) 101 (286 ) Net increase
(decrease) in cash and cash equivalents (248 ) (2,572 ) (79 )
(3,913 ) Cash and cash equivalents at beginning of period 2,001
4,987 1,832 6,328 Cash and cash
equivalents at end of period 1,753 2,415 1,753 2,415 Less: Cash and
cash equivalents of held for sale — 28 — 28
Cash and cash equivalents of continuing operations at end of
period $ 1,753 $ 2,387 $ 1,753 $ 2,387
(1) Includes PayPal financial results from July 1, 2015 to July
17, 2015; January 1, 2015 to July 17, 2015; respectively; also
includes eBay Enterprise financial results for the full periods in
2015, respectively.
eBay Inc. Unaudited Summary of
Consolidated Net Revenues Three Months Ended
September 30, 2016
June 30, 2016 March
31, 2016 December 31, 2015
September 30, 2015 (In millions,
except percentages) Net Revenues by Type: Net
transaction revenues: Marketplace $ 1,484 $ 1,521 $ 1,500 $
1,584 $ 1,459 Current quarter vs prior year quarter 2 % — % (2
)%
(5
)%
(5 )% Percent from international 62 % 62 % 61 % 63 % 62 % StubHub
261 225 177 232 200
Current quarter vs prior year quarter
31 % 40 % 34 % 34 % 17 % Percent from international 2 % 1 % 2 % 1 %
2 %
Total net transaction revenues 1,745 1,746 1,677 1,816
1,659 Current quarter vs prior year quarter 5 % 4 % 1 % (1 )% (3 )%
Percent from international 53 % 54 % 55 % 55 % 54 %
Marketing services and other revenues: Marketplace 273 277
274 326 266 Current quarter vs prior year quarter 3 % 10 % 17 % 4 %
— % Percent from international 45 % 46 % 44 % 47 % 44 % Classifieds
197 207 186 183 178 Current quarter vs prior year quarter 11 % 15 %
15 % 2 % (3 )% Percent from international 100 % 100 % 100 % 100 %
100 % StubHub, Corporate and other 2 — — (3 )
(4 )
Total marketing services and other revenues 472 484 460
506 440 Current quarter vs prior year quarter 7 % 14 % 17 % 4 % (2
)% Percent from international 68 % 69 % 67 % 66 % 67 %
Total net revenues $ 2,217
$ 2,230 $ 2,137 $ 2,322 $ 2,099
Current quarter vs prior year quarter 6 % 6 % 4 % — % (2 )%
eBay Inc. Unaudited Supplemental
Operating Data Three Months Ended September
30, 2016 June 30, 2016
March 31, 2016
December 31, 2015 September 30,
2015 (In millions, except percentages) Active
Buyers (1) 165 164 162 162 159 Current quarter vs prior
year quarter 3 % 4 % 4 % 5 % 5 %
Gross Merchandise
Volume (2) Marketplace $ 18,973 $ 19,790 $ 19,581 $
20,676 $ 18,674 Current quarter vs prior year quarter 2 % 3 % 1 %
(1 )% (3 )% StubHub $ 1,142 $ 1,060 $ 869 $ 1,184 $ 927 Current
quarter vs prior year quarter 23 % 35 % 29 % 30 % 10 %
Total
GMV $ 20,115 $ 20,850 $ 20,450 $ 21,860
$ 19,601 Current quarter vs prior year quarter 3 % 4
% 1 % — %
(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
December 31, 2016 (In millions, except per share
amounts) GAAP Non-GAAP (a) Net
Revenue $2,360 - $2,410 $2,360 - $2,410
Diluted EPS from
continuing operations $1.05 - $1.15 $0.52 - $0.54
Twelve Months Ending December 31, 2016 (In
millions, except per share amounts) GAAP Non-GAAP
(b) Net Revenue $8,950 - $9,000 $8,950 - $9,000
Diluted EPS from continuing operations $2.22 - $2.32 $1.85 -
$1.90
(a) Estimated non-GAAP amounts above for
the three months ending December 31, 2016, reflect adjustments that
exclude the estimated amortization of acquired intangible assets of
approximately $10 - $15 million, estimated stock-based compensation
expense and employer payroll taxes on stock-based compensation
expense of approximately $110 - $120 million, estimated gain from
the previously announced sale of most of our stake in MercadoLibre,
Inc., as well as the associated tax impacts.
(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 $45 - $50 million, estimated stock-based
compensation expense and employer payroll taxes on stock-based
compensation expense of approximately $425 - $435 million,
estimated gain from the previously announced sale of most of our
stake in MercadoLibre, Inc., as well as the associated tax
impacts.
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 Nine Months
Ended September 30, September 30, 2016
2015 2016 2015
(In millions, except percentages) GAAP operating income $
542 $ 578 $ 1,687 $ 1,535 Stock-based compensation expense and
related employer payroll taxes 106 94 315 319 Amortization of
acquired intangible assets within cost of net revenues 6 4 14 16
Amortization of acquired intangible assets within operating
expenses 9 10 24 30 Separation — — (1 ) 119 Restructuring and
acquisition related — — — 62 Other significant gains, losses or
charges — (16 ) (13 ) 1 Total non-GAAP operating
income adjustments 121 92 339 547
Non-GAAP operating income $ 663 $ 670 $ 2,026
$ 2,082 Non-GAAP operating margin 29.9 % 31.9 % 30.8 % 33.2
%
Reconciliation of
GAAP Net Income to Non-GAAP Net Income and GAAP Effective
Tax Rate to Non-GAAP Effective Tax Rate* Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015
2016 2015 (In millions, except
percentages) GAAP income from continuing operations before
income taxes $ 533 $ 665 $ 1,647 $ 1,756 GAAP provision for income
taxes (115 ) (120 ) (310 ) (332 ) GAAP net income from continuing
operations $ 418 $ 545 $ 1,337 $ 1,424 Non-GAAP adjustments to net
income from continuing operations: Non-GAAP operating income from
continuing operations adjustments (see table above) 121 92 339 547
Gains or losses on investments — (94 ) (35 ) (264 ) Tax effect of
non-GAAP adjustments (30 ) (14 ) (86 ) (75 ) Non-GAAP net income
from continuing operations $ 509 $ 529 $ 1,555 $ 1,632
Diluted net income from continuing operations per share: GAAP $
0.36 $ 0.45 $ 1.16 $ 1.16 Non-GAAP $
0.45 $ 0.43 $ 1.35 $ 1.33 Shares used
in GAAP and non-GAAP diluted net income per-share calculation 1,139
1,223 1,153 1,226 GAAP effective
tax rate - Continuing operations 22 % 18 % 19 % 19 % Tax effect of
non-GAAP adjustments to net income from continuing operations — % 2
% 1 %
1 % Non-GAAP effective tax rate - Continuing Operations 22 % 20 %
20 % 20 %
*Presented on a continuing operations
basis
Reconciliation of Operating Cash Flow
to Free Cash Flow*
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 (In millions) (In
millions) Net cash provided by continuing operating activities $
802 $ 704 $ 2,207 $ 1,751 Less: Purchases of property and equipment
(185 ) (242 ) (490 ) (539 ) Free cash flow from continuing
operations $ 617 $ 462 $ 1,717 $ 1,212
*Presented on a continuing operations
basis
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161019006370/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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