October 16, 2013
This presentation contains non-gaap measures relating to the company's performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the appendix at the end of this presentation. All growth rates represent year-over-year comparisons, except as otherwise noted. This presentation contains forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the fourth quarter and full year 2013 and future growth in the Payments, Marketplaces and Enterprise businesses. Our actual results may differ materially from those included in this presentation for a variety of reasons, including, but not limited to: changes in political, business, and economic conditions, including any continuing U.S. government shutdown or default; foreign exchange rate fluctuations; our need to successfully react to the increasing importance of mobile payments and mobile commerce and the social aspect of commerce; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise with a broad range of businesses; our need to manage regulatory, tax and litigation risks (including risks specific to PayPal and Bill Me Later); our need to timely upgrade and develop our technology systems, infrastructure, and customer service capabilities at reasonable cost while maintaining site stability and performance and adding new products and features; and our ability to integrate, manage and grow businesses recently acquired or that may be acquired in the future. You can find more information about factors that could affect our operating results in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q (available at http://investor.ebayinc.com). You should not rely on any forward-looking statements, and we assume no obligation to update them. All information in this presentation is as of October 16, 2013, and we do not intend, and undertake no duty, to update this presentation. 2
ebay Inc. Strong third quarter results Enabled Commerce Volume (ECV*) of $52B (up 21%) ebay Inc. take rate** of 7.6% Revenue grew 14%. Non-GAAP EPS of $0.64, up 17% Generated $1,017M of free cash flow Double digit active user growth at both PayPal and Marketplaces Announced agreement to acquire Braintree for $800M; received $485M from the sale of investments in ShopRunner and RueLaLa, and repayment of the Kynetic note receivable We are maintaining our full year guidance, and expect to be at the lower end of the range for top and bottom line *Enabled Commerce Volume (ECV) includes Marketplaces GMV, PayPal Merchant Services TPV and ebay Enterprise Merchandise Sales not earned on ebay or paid for via PayPal or Bill Me Later during the period. Excludes volume transacted through the Magento platform **ebay Inc. take rate is calculated as ebay Inc. Revenue / ECV As adjusted for the expected impact of the Braintree acquisition announced on September 26, 2013 (assuming closing in late Q4-13) Calculations of Non-GAAP EPS and Free Cash Flow (FCF) are included in the Appendix of this presentation 3
ebay Inc. Enabled Commerce Volume ($ millions) Enabled Commerce Volume* 50,185 48,795 50,597 51,507 Mobile leader: 75% growth in mobile ECV, 3.2M new customers added via mobile 41,906 42,593 Global reach: 22% of ECV cross-border; PayPal localized in Russia; ebay Fashion app launched in Brazil; Global Shipping Program expanded to 37 countries Omnichannel expansion: Enhanced PayPal app rolled out in 125 countries, and order ahead live in 4 countries; Click & Collect announced in U.K. Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Reported Y/Y Growth 15% 16% 21% 19% 21% 21% Fx-Neutral Y/Y Growth 19% 19% 21% 19% 21% 21% Take Rate** 8.1% 8.0% 8.0% 7.7% 7.7% 7.6% Engagement: >500M items listed on Marketplaces globally; free 2 day shipping pilot at 9 ebay Enterprise clients when paying with PayPal *Enabled Commerce Volume (ECV) includes Marketplaces GMV, PayPal Merchant Services TPV and ebay Enterprise Merchandise Sales not earned on ebay or paid for via PayPal or Bill Me Later during the period. Excludes volume transacted through the Magento platform **ebay Inc. take rate is calculated as ebay Inc. Revenue / ECV 4
ebay Inc. Revenue ($ millions) Revenue 2,760 2,966 3,380 3,277 3,398 3,404 3,992 3,748 3,877 3,892 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Reported Y/Y Growth 25% 32% 35% 29% 23% 15% 18% 14% 14% 14% Organic Y/Y Growth* 18% 18% 19% 18% 18% 18% 19% 15% 15% 14% *Calculation of Organic Y/Y Growth is included in the Appendix of this presentation 5
ebay Inc. Non-GAAP EPS Non-GAAP EPS* $0.48 $0.48 $0.60 $0.55 $0.56 $0.55 $0.70 $0.63 $0.63 $0.64 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Reported Y/Y Growth 20% 20% 17% 18% 16% 14% 17% 14% 12% 17% Non-GAAP Op. Margin* 27.6% 25.3% 28.7% 26.9% 27.3% 26.3% 28.5% 27.4% 26.3% 26.8% *Calculations of Non-GAAP EPS and Non-GAAP Op. Margin are included in the Appendix of this presentation 6
ebay Inc. Free Cash Flow ($ millions) Free Cash Flow* 1,090 1,017 543 526 691 792 638 658 411 289 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Reported Y/Y Growth 5% -9% 5% -48% -24% 51% 58% 121% 60% 28% Capex % of Revenue 9% 10% 9% 7% 10% 11% 7% 8% 9% 8% FCF % of Revenue 20% 18% 20% 9% 12% 23% 27% 17% 17% 26% *Calculation of Free Cash Flow (FCF) is included in the Appendix of this presentation 7
Payments Revenue ($ millions) Revenue 109 114 149 127 123 102 Marketing Services & Other Revenue Transaction Revenue 1,234 1,264 1,431 1,435 1,475 1,493 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 $ Millions 1,357 1,367 1,541 1,548 1,624 1,620 Y/Y Growth 26% 23% 24% 18% 20% 19% Fx-Neutral Y/Y Growth 27% 24% 24% 20% 21% 20% % Int'l 51% 51% 52% 51% 51% 52% Reflects reclassification of a portion of Marketing Services & Other (MS&O) revenue from International to the U.S. for Q4 11-Q4 12 8
Payments Operating Metrics (In millions, except %) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Global Active Accounts 113.2 117.4 122.7 127.7 132.4 137.4 Y/Y Growth 13% 14% 15% 16% 17% 17% Net Number of Payments 564.8 589.2 691.7 681.6 700.6 729.4 Y/Y Growth 31% 28% 26% 23% 24% 24% On ebay TPV 11,336 11,455 13,444 12,953 13,006 13,112 Y/Y Growth 15% 15% 18% 13% 15% 14% Fx-Neutral Y/Y Growth 18% 18% 18% 14% 15% 15% Merchant Services TPV* 23,114 23,704 28,026 28,087 29,807 30,725 Y/Y Growth 23% 23% 28% 25% 29% 30% Fx-Neutral Y/Y Growth 26% 26% 28% 26% 29% 30% Total TPV 34,451 35,159 41,471 41,040 42,813 43,837 Y/Y Growth 20% 20% 24% 21% 24% 25% Fx-Neutral Y/Y Growth 23% 23% 25% 22% 25% 25% % Int'l TPV 47% 47% 48% 47% 48% 48% Global On ebay Penetration Rate 75.6% 76.6% 76.6% 76.9% 77.2% 78.2% Take Rate 3.94% 3.89% 3.72% 3.77% 3.79% 3.70% Transaction Expense 1.07% 1.07% 1.03% 1.05% 1.04% 1.05% Loss Rate 0.26% 0.30% 0.28% 0.29% 0.31% 0.30% Transaction Margin** 66.3% 64.8% 64.7% 64.4% 64.4% 63.4% Expanded merchant coverage online, added 3 new Internet Retailer 100 clients in the U.S. and 7 in Europe Innovated in omnichannel with enhanced mobile app; enabling closed loop offers; PayPal Here U.K. Chip & PIN launch; and partnerships with TSYS and MICROS Segment margin up due primarily to operating expense leverage partially offset by lower take rate from large merchant mix, foreign currency hedges, and lower cross-currency transaction growth Payments Segment Margin 25.8% 22.6% 23.0% 24.1% 23.0% 22.7% *Merchant Services TPV includes TPV for Bill Me Later (whether used within or outside of the PayPal wallet) and Zong **Transaction Margin calculation has been adjusted to include total revenues (including revenue from credit and Zong), less transaction expense (including credit cost of funds), less transaction loss (including credit loan losses), divided by global take rate (based on global total revenues divided by total TPV) 9
Credit Operating Metrics Portfolio Balance: $2.6B* 30% 20% 10% 0% Portfolio Balance ($M) BML Growth BML Share of U.S. GMV & TPV** BML Offshore Funded Portfolio Risk Adj. Margin*** Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 3,000 2,500 2,000 1,500 1,000 500 0 5% 4% 3% 2% 1% 0% BML Share of US Addressable GMV BML Share of US Addressable GMV & MS TPV BML Share of MS TPV Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Offshore funded loan receivable bal ($M) % Offshore Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 100% 80% 60% 40% 20% 0% Strong growth Good margins Improved funding mix Increasing returns to offshore cash Credit Operating Metrics Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 BML TPV ($M) 696 775 1,034 849 934 1,009 BML TPV (Y/Y growth) 39% 37% 31% 31% 34% 30% Portfolio Balance ($M) 1,692 1,878 2,261 2,258 2,391 2,564 Risk Adjusted Margin 15.5% 16.5% 15.6% 15.8% 16.2% 16.1% Net Charge-offs 4.6% 4.9% 5.3% 5.3% 5.6% 5.5% *Gross receivables balance as of 9/30/13 **% of US Marketplaces GMV and Merchant Services TPV funded using Bill Me Later (excluding Bill Me Later legacy business) Risk adjusted margin represents the annualized ratio of Bill Me Later revenue, excluding contra-revenue incentives to customers or merchants, less cost of funds less net credit and fraud losses relative to average loans receivable for the three month period 10
Marketplaces Revenue ($ millions) Revenue Marketing Services & Other Revenue 323 316 378 349 364 359 Transaction Revenue 1,491 1,490 1,672 1,608 1,637 1,668 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 $ Millions 1,814 1,806 2,050 1,957 2,001 2,027 Y/Y Growth 9% 9% 16% 13% 10% 12% Fx-Neutral Y/Y Growth 14% 13% 16% 13% 10% 12% % Int'l 60% 58% 59% 59% 59% 58% 11
Marketplaces Operating Metrics (In millions, except percentages) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Global Active Users 104.8 108.3 112.3 116.2 119.7 123.6 Y/Y Growth 8% 10% 12% 13% 14% 14% Y/Y Growth in Sold Items 19.7% 19.0% 17.4% 11.7% 11.3% 11.4% US Non-Vehicles GMV 6,241 6,479 7,338 7,364 7,266 7,420 Y/Y Growth 14% 16% 19% 16% 16% 15% Int'l Non-Vehicles GMV 9,930 9,801 11,767 10,962 11,026 10,940 Y/Y Growth 8% 8% 14% 11% 11% 12% Fx-Neutral Y/Y Growth 16% 15% 14% 11% 11% 11% Non-Vehicles GMV 16,171 16,281 19,105 18,326 18,292 18,360 Y/Y Growth 10% 11% 16% 13% 13% 13% Fx-Neutral Y/Y Growth 15% 15% 16% 13% 13% 12% Vehicles GMV 2,021 1,994 1,727 1,686 1,805 1,765 Y/Y Growth -10% -7% -7% -10% -11% -11% Fx-Neutral Y/Y Growth -7% -5% -8% -10% -10% -11% Fixed price as a % of GMV 65% 66% 68% 68% 69% 71% Marketplaces Segment Margin 39.6% 39.0% 41.5% 42.1% 39.7% 38.9% EU and Korea stabilized, with deterioration in the U.S. GMV growth driven primarily by mobile, and improved customer experience Expanded selection via seller improvements Improved trust with top rated seller coverage Free shipping on 54% of U.S. transactions Improved search experience through Cassini Segment margin down driven primarily by investments in trust and technology partially offset by operating expense leverage 12
ebay Enterprise Revenue & Operating Metrics ($ millions) Revenue/Metrics Marketing Services & Other Revenue Transaction Revenue 52 55 169 171 65 334 50 52 53 186 193 185 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Total Revenue 221 226 398 236 246 238 Y/Y Growth 9% 12% 10% 0% 11% 5% Merchandise Sales* 674 698 1,569 807 815 787 Y/Y Growth 18% 16% 15% 13% 21% 13% Same Store Sales (SSS) Y/Y Growth 21% 19% 17% 16% 19% 13% Segment Margin 4.7% 6.1% 20.3% 2.8% 4.4% 5.0% Revenue growth impacted by take rate alignment, client mix, and channel mix 4 brands on the new platform in Q3, and new client Sony live on 10/11 Leveraging ebay Inc. assets PayPal: 97% of volume covered by PayPal, with 15% share of checkout; 5 clients offering PayPal POS Marketplaces: 27 client sites live *Merchandise Sales represents the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through our ebay Enterprise Commerce Technologies, whether we record the full amount of such transaction as a product sale or a net amount of such transaction as a service fee Reconciliation of ebay Enterprise revenue / operating metrics to amounts reported in ebay Inc. s financial statements can be found in the Appendix of this presentation 13
ebay Inc. Operating Expenses* Sales & Marketing (% of Revenue) Product Development (% of Revenue) General & Admin. (% of Revenue) Prov. for Trxn and Loan Loss** (% of Revenue) 20.3% 18.4% 10.4% 10.1% 9.6% 9.3% 4.3% 4.7% Q3 12 Q3 13 Q3 12 Q3 13 Q3 12 Q3 13 Q3 12 Q3 13 Shift in spend & marketing efficiencies Product & customer experience investments Operating leverage Marketplaces trust initiatives & PayPal TPV growing faster than ebay Inc. revenue Q3-13 Non-GAAP Op Income: $1,040M Q3-13 Non-GAAP Net Income: $837M *All expenses are shown on a Non-GAAP basis (calculations can be found in the Appendix of this presentation) **Prov. for Trxn and Loan Loss includes Marketplaces and PayPal transaction loss, Marketplaces consumer protection programs, bad debt expense and BML loan loss Calculations of Non-GAAP Operating Income and Non-GAAP Net Income are included in the Appendix of this presentation 14
ebay Inc. Cash Flow & Capital Allocation ($ billions) Cash Balance/Flows 13.0 Free Cash Flow / Other Movements 11.7 4.9 1.0 0.1 0.2 0.6 7.7 Generated FCF of $1,017M $485M from divestiture of ShopRunner & RueLaLa investments, and repayment of Kynetic note receivable Capex ~8% driven by search/data investments and site operations Short/Long-Term Investments Repurchased 2.8M shares for ~$146M 5.7 Int'l Cash US Cash 3.2 67% of BML loan receivables portfolio funded with offshore cash 1.1 2.1 Total US cash and non-equity investments at quarter end ~$3.9B Q2'13 Ending Balance* FCF Buyback BML Other** Q3'13 Ending Balance* *Cash balances/flows include cash, cash equivalents and non-equity investments **Other includes primarily FX impact, employee stock plans, and acquisitions/divestitures Calculation of Free Cash Flow is included in the Appendix of this presentation 15
Guidance Context Macro environment Europe and APAC mostly stable U.S. weaker with cautious outlook for Holiday season Currency the U.S. Dollar has weakened since July vs. the British Pound and Euro positive impact to topline, but no impact to bottom line due to hedging Investments/operating leverage We expect a $0.01 dilution to Non-GAAP EPS from the anticipated closing of the Braintree acquisition in late Q4 We expect to increase spend through our ebay Enterprise/PayPal free shipping pilot to drive higher conversion for merchants and increase share of checkout for PayPal Strong operating leverage Q3 momentum carries into Q4 Calculation of Non-GAAP EPS is included in the Appendix of this presentation 16
Q4 Guidance Revenue (in billions) Q4 2013 Guidance** Low High $4.50 $4.60 Y/Y Growth 13% 15% Non-GAAP EPS* $0.79 $0.81 Y/Y Growth 12% 15% We are maintaining our full year guidance, and expect to be at the lower end of the range for top and bottom line *Calculation of Non-GAAP EPS is included in the Appendix of this presentation **Assumes closing of Braintree acquisition in late Q4-13 As adjusted for the expected impact of the Braintree acquisition announced on September 26, 2013 (assuming closing in late Q4-13) 17
Summary Strong quarter for our core businesses while continuing to test and learn in adjacencies (MS&O, credit) and seeds (local, geographic expansion, omnichannel) PayPal continues its strong growth increasing focus on simplifying and improving customer experience Marketplaces is stable in deteriorating U.S. environment driven by investments in the buyer and seller experience ebay Enterprise continues to position its assets for growth, invest in technology and grow the client portfolio Investing for long-term focused on delivering omnichannel technology and commerce solutions to a larger addressable market 18
Q&A
Appendix
ebay Inc. RoIC Return on Invested Capital* 25.3% 24.5% 23.9% 23.0% 22.2% 22.2% 22.5% 22.9% 23.2% 23.7% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 *Trailing 12-month Pro-Forma Net Operating Profits After Tax / (Average Total Assets 95% of Average Cash, Cash Equivalents, and Investments - Average Current Liabilities) Calculation of Return on Invested Capital is included in the Appendix of this presentation 21
Marketplaces GMV Formats Fixed Price GMV Auction GMV Vehicles GMV ($ billions) ($ billions) ($ billions) $11.3 $11.7 $13.7 $13.1 $13.4 $13.9 $4.8 $4.6 $5.4 $5.2 $4.9 $4.5 $2.0 $2.0 $1.7 $1.7 $1.8 $1.8 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Y/Y Growth 16% 16% 21% 18% 18% 19% FX-Neutral Y/Y Growth 20% 20% 21% 17% 18% 18% % of Total FX-Neutral GMV 62% 64% 66% 66% 67% 69% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Y/Y Growth -1% 0% 4% 2% 1% -2% FX-Neutral Y/Y Growth 4% 4% 5% 2% 1% -3% % of Total FX-Neutral GMV 27% 25% 26% 26% 24% 22% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Y/Y Growth -10% -7% -7% -10% -11% -11% FX-Neutral Y/Y Growth -7% -5% -8% -10% -10% -11% % of Total FX-Neutral GMV 11% 11% 8% 8% 9% 9% Strong performance...... Stable dollar volume as shift continues to fixed price...... Shifting from GMV to lead gen model 22
Calculation of Organic Revenue Growth Mar 31, Jun 30, Sept 30, Dec 31, 2011 2011 2011 2011 Total revenue growth 16 % 25 % 32 % 35 % Acquisition/Disposition impact (1)% (2)% (11)% (16)% Foreign currency impact (1)% (5)% (3)% % Total organic revenue growth 14 % 18 % 18 % 19 % Mar 31, Jun 30, Sept 30, Dec 31, 2012 2012 2012 2012 Total revenue growth 29 % 23 % 15 % 18 % Acquisition/Disposition impact (11)% (8)% % 1 % Foreign currency impact % 3 % 3 % % Total organic revenue growth 18 % 18 % 18 % 19 % Mar 31, June 30, Sept 30, 2013 2013 2013 Total revenue growth 14 % 14 % 14 % Acquisition/Disposition impact 0.5 % % % Foreign currency impact 0.5 % 1 % % Total organic revenue growth 15 % 15 % 14 % 23
Reconciliation of Quarterly GAAP to Non-GAAP Operating Margin (in millions) Sept 30, Dec 31, Mar 31, Jun 30, Sept 30, Dec 31, Mar 31, Jun 30, Sept 30, 2011 2011 2012 2012 2012 2012 2013 2013 2013 GAAP operating income (loss) $ 537 $ 754 $ 653 $ 695 $ 667 $ 874 $ 800 $ 750 $ 799 Stock-based compensation expense and related employer payroll taxes 110 112 125 129 125 130 129 168 141 Acquisition related transaction expense 1 Amortization of acquired intangible assets (1) 104 105 105 103 103 101 100 101 100 Restructuring 31 (4) Non-GAAP operating income $ 751 $ 972 $ 883 $ 927 $ 895 $ 1,136 $ 1,025 $ 1,019 $ 1,040 Revenues $ 2,966 $ 3,380 $ 3,277 $ 3,398 $ 3,404 $ 3,992 $ 3,748 $ 3,877 $ 3,892 GAAP operating margin 18.1 % 22.3 % 19.9 % 20.5 % 19.6 % 21.9 % 21.3 % 19.3 % 20.5 % Non-GAAP operating margin 25.3 % 28.7 % 26.9 % 27.3 % 26.3 % 28.5 % 27.4 % 26.3 % 26.8 % (1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses. 24
Reconciliation of Quarterly GAAP to Non-GAAP Net Income / EPS (in millions, except per share data) Sept 30, Dec 31, Mar 31, Jun 30, Sept 30, Dec 31, Mar 31, Jun 30, Sept 30, 2011 2011 2012 2012 2012 2012 2013 2013 2013 GAAP net income $ 491 $ 1,980 $ 570 $ 692 $ 597 $ 751 $ 677 $ 640 $ 689 Stock-based compensation expense and related employer payroll taxes 110 112 125 129 125 130 129 168 141 Acquisition related transaction expense 1 Amortization of acquired intangible assets (1) 104 105 105 103 103 101 100 101 100 Restructuring 31 (4) Skype sale and transaction related items (1,664) (2) Amortization of intangibles and stockbased compensation for Skype 24 Gain from the acquisition of a business (56) Acquisition related items (1) Loss on divested business 3 Accretion of note receivable (4) (4) (9) (5) (4) (4) (5) (5) (5) Amortization of intangibles 2 2 2 Gain on sale of RueLaLa and ShopRunner (75) Gain on investment (5) Gain from the divestiture of a business (118) Income taxes associated with certain non- GAAP entries (41) 259 (69) (71) (101) (81) (70) (79) (15) Non-GAAP net income $ 628 $ 789 $ 725 730 $ 718 $ 927 $ 829 $ 822 $ 837 Non-GAAP net income per diluted share $ 0.48 $ 0.60 $ 0.55 0.56 $ 0.55 $ 0.70 $ 0.63 $ 0.63 $ 0.64 Shares used in non-gaap diluted share calculation 1,309 1,308 1,308 1,309 1,314 1,318 1,319 1,313 1,310 (1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses. 25
Reconciliation of Quarterly GAAP to Non-GAAP Quarterly Statement of Income Reported Three Months Ended Non-GAAP Entries Non-GAAP Reported Non-GAAP Entries (in millions, except per share data and percentages) Three Months Ended September 30, 2013 September 30, 2012 Non-GAAP Net revenues $ 3,892 $ 3,892 $ 3,404 $ $ 3,404 Cost of net revenues 1,224 (9) (a) 1,196 1,022 (13) (a) 989 (19) (c) (20) (c) Gross Profit 2,668 28 2,696 2,382 33 2,415 Operating expenses: Sales and marketing 755 (38) (a) 717 726 (35) (a) 691 Product development 433 (42) (a) 391 389 (34) (a) 355 General and administrative 415 (51) (a) 363 369 (40) (a) 326 (1) (b) (3) (b) Provision for transaction and loan losses 185 185 148 148 Amortization of acquired intangible assets 81 (81) (c) 83 (83) (c) Total operating expense 1,869 (213) 1,656 1,715 (195) 1,520 Income from operations 799 241 1,040 667 228 895 Interest and other income, net 74 2 (r) (4) 5 (1) (75) (t) (2) (h) Accretion of note receivable (5) (m) (4) (m) Income before income taxes 873 163 1,036 672 222 894 Provision for income taxes (184) (15) (d) (199) (75) (101) (d) (176) Net income $ 689 148 $ 837 $ 597 $ 121 $ 718 Net income per share: Basic $ 0.53 $ 0.65 $ 0.46 $ 0.56 Diluted $ 0.53 $ 0.64 $ 0.45 $ 0.55 Weighted average shares: Basic 1,295 1,295 1,292 1,292 Diluted 1,310 1,310 1,314 1,314 Operating margin 21 % 6 % 27 % 20 % 6 % 26 % Effective tax rate 21 % (2)% 19 % 11 % 9 % 20 % Notes: (a) Stock-based compensation expense (b) Employer payroll taxes on stock-based compensation (c) Amortization of acquired intangible assets and developed technology (d) Income taxes associated with certain non-gaap entries (h) Sale of Skype and transaction related items (i) Acquisition related transaction expense (j) Gain from the acquisition of a business (k) Loss on divested business (m) Accretion of note receivable (p) Gain on the divestiture of a business (q) Fanatics lawsuit settlement (r) Intangible amortization (t) Gain on sale of RueLaLa and ShopRunner 26
Calculation of Free Cash Flow Three Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Full Year 2011 2011 2011 2011 2011 (in millions) GAAP operating cash flow $ 700 $ 783 $ 809 $ 983 $ 3,274 Purchases of property and equipment, net (149) (240) (283) (292) (963) Free cash flow $ 551 $ 543 $ 526 $ 691 $ 2,311 Three Months Ended Mar 31, Jun 30, Sept 30, Dec 31, Full Year 2012 2012 2012 2012 2012 (in millions) GAAP operating cash flow $ 531 $ 768 1,154 1,386 3,838 Purchases of property and equipment, net (242) (357) (362) (296) (1,257) Free cash flow $ 289 $ 411 792 1,090 2,581 Three Months Ended Mar 31, Jun 30, Sept 30, 2013 2013 2013 (in millions) GAAP operating cash flow $ 937 1,011 1,334 Purchases of property and equipment, net (299) (353) (317) Free cash flow $ 638 658 1,017 27
Reconciliation and Calculation of Return on Invested Capital In millions, except percentages Numerator components: Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Non-GAAP operating income $ 751 $ 972 $ 883 $ 927 $ 895 $ 1,136 $ 1,025 $ 1,019 $ 1,040 Tax rate 21 % 20 % 20 % 24 % 20 % 18 % 20 % 19 % 19 % Non-GAAP operating income after tax $ 594 $ 778 $ 705 $ 705 $ 719 $ 929 $ 825 $ 824 $ 841 Denominator components: Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Total assets $ 24,901 $ 27,320 $ 28,207 $ 28,258 $ 32,502 $ 37,274 $ 38,000 $ 38,550 $ 40,067 Total cash, cash equivalents and investments $ 7,031 $ 8,382 $ 8,732 $ 8,384 $ 11,635 $ 12,452 $ 12,574 $ 12,944 $ 14,409 Current liabilities $ 6,145 $ 6,734 $ 6,965 $ 6,800 $ 7,061 $ 11,066 $ 11,721 $ 11,669 $ 12,028 TTM Non-GAAP operating income after tax $ 2,491 $ 2,594 $ 2,691 $ 2,782 $ 2,906 $ 3,057 $ 3,177 $ 3,295 $ 3,418 TTM average total assets 22,938 24,413 25,653 26,704 28,238 30,712 32,808 34,877 37,238 TTM 95% of average cash, cash equivalents and investments 7,707 7,882 7,809 7,601 8,392 9,421 10,218 11,018 12,163 TTM average current liabilities 5,076 5,661 6,150 6,558 6,741 7,725 8,694 9,635 10,680 ROIC 24.5 % 23.9 % 23.0 % 22.2 % 22.2 % 22.5 % 22.9 % 23.2 % 23.7 % 28
Q4 13 GAAP and Non-GAAP Guidance Three Months Ending December 31, 2013 (in millions, except per share amounts) GAAP Non-GAAP (a) Revenues $4,500 - $4,600 $4,500 - $4,600 Diluted EPS $0.67 - $0.69 $0.79 - $0.81 (a) Estimated non-gaap amounts above for the three months ending December 31, 2013, reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $95-$105 million and estimated stock-based compensation expense and employer payroll taxes on stock-based compensation expense of approximately $145-$155 million as well as the related tax impact. 29
Reconciliation of ebay Enterprise Revenue & Operating Metrics All figures is US$ Millions Q4'12 Merchandise Sales Volume: As reported in ebay Inc. financial statements 1,595 Accounting adjustment (26) Adjusted Merchandise Sales Volume 1,569 Merchandise Sales Volume y/y Growth: As reported in ebay Inc. financial statements 17% Accounting adjustment -2% Adjusted Merchandise Sales Volume 15% Same Store Sales (SSS) y/y Growth: As reported in ebay Inc. financial statements 19% Accounting adjustment -2% Adjusted SSS y/y Growth 17% 30