SAN JOSE, Calif., April 26 - eBay Inc. (Nasdaq: EBAY)
(http://www.ebay.com), the world's largest person-to-person online trading community,
today reported financial results for its first quarter ended March 31, 1999.
The Company generated net revenues of $34.0 million in the first quarter
of 1999, a 469 percent increase over the $6.0 million reported for the same
period last fiscal year. Gross profit margin decreased to 85 percent for the
quarter from 89 percent a year ago. Net income for the current quarter was
$5.9 million, or $0.05 per share on a fully diluted basis. eBay's net income
before the effect of non-cash charges related to stock based compensation and
acquisition expenses was $7.0 million, or $0.05 per fully diluted share,
compared with $569,000 or $0.01 per fully diluted share during the first
quarter of fiscal 1998.
The primary contributor to the increase in revenues for the quarter was
the increased activity on the site. Gross merchandise sales (the value of
goods traded) for the current quarter were $541 million, up 76 percent from
the $307 million reported in the fourth quarter of 1998. The number of
registered users increased more than 1.6 million to over 3.8 million at
March 31, 1999, an increase of about 75 percent from the more than 2.1 million
registered users at December 31, 1998. In addition, eBay hosted over
22.9 million auctions during the first quarter of 1999, up from 13.6 million
in the fourth quarter of last year.
The Company remains committed to providing a safe, easy-to-use trading
environment on the eBay site. As a result, the Company made significant
personnel investments during the first quarter which affected costs in all
income statement categories. Cost of sales increased during the first quarter
largely due to labor and related costs associated with the Company's expansion
of its customer service department and depreciation of recently acquired site
equipment. In addition, the Company realized additional costs in volume-driven
transactional expenses such as ISP connectivity charges and bank processing
charges for customer fees paid by credit cards. The increase in sales and
marketing expenses in the first quarter over the prior period was primarily
due to personnel growth, the expansion of online advertising, tradeshow
programs and international marketing. Product development expenses increased
due to additional headcount and the use of consultants, but were otherwise
relatively unchanged compared to the fourth quarter of 1998. General and
administrative expenses increased substantially over the previous quarter
again primarily due to the Company's investment in personnel, increases in
professional service fees and incremental costs associated with being a public
company.
For the first quarter, eBay recorded certain non-cash charges of
$666,000 and $453,000 related to the amortization of stock compensation and
acquisition-related expenses, respectively. The Company recorded a tax
provision of $4.3 million, representing an effective tax rate of 42 percent of
first quarter pretax income.
"We are excited to start 1999 with strong first quarter results and
positive growth across all metrics. This past quarter, we continued our
efforts to bring a wider audience to eBay through a variety of marketing
endeavors including online and traditional advertising, grassroots marketing,
public relations and strong word of mouth referrals. We also brought eBay to
the international market with the launches of the U.K. and Canadian sites,"
stated Meg Whitman, President and CEO of eBay. "In addition, we expanded the
end-to-end trading solutions to include packaging, shipping, photo hosting and
authentication services for our users. As we grow, we continue to focus on our
mission to provide our users the tools to help them trade practically anything
on earth."
The Company's overall balance sheet is largely unchanged from the fourth
quarter of 1998. The Company added $8.4 million in net fixed assets consisting
mostly of computer hardware and software and advanced an $18.8 million payment
for future marketing efforts as part of the strategic alliance with AOL. The
Company's balance sheet was strengthened with the completion of its secondary
stock offering completed in April 1999.
About eBay
eBay (http://www.ebay.com), the world's personal trading community(TM), pioneered
person-to-person online trading. Founded in 1995, eBay has developed an
efficient and entertaining trading site on the Web that is available 24 hours
a day, seven days a week. Currently, there are more than 1.8 million items
listed for sale. More than 250,000 items are added daily in more than
1,000 categories including: antiques; books, movies and music; coins and
stamps; collectibles; computers; dolls and figures; jewelry and gemstones;
photo and electronics; pottery and glass; sports memorabilia; and toys.
Forward Looking Statements
This announcement contains forward looking statements that involve risks
and uncertainties, including those relating to the Company's ability to grow
its user base. Actual results could differ materially from those discussed.
Factors that could cause or contribute to such differences include, but are
not limited to, the Company's need to manage significant growth in all aspects
of its business, the increasingly competitive environment for online trading,
including the effect of the recent entry of competitors which have
significantly greater financial and marketing resources, issues of integrating
new acquisitions and seasonal factors, including a relative decrease in
activity during the spring and summer periods. More information about
potential factors which could affect the Company's business and financial
results is included in the Company's Form 10-K for the period ended
December 31, 1998 under the headings "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Prospectus dated April 12, 1999. All forward looking statements
are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update such statements.
eBAY INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
Dec. 31, March 31,
1998 1999
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $31,790 $24,850
Short-term investments 40,401 32,121
Accounts receivable, net 6,369 12,104
Other current assets 4,825 23,588
Total current assets 83,385 92,663
Property and equipment, net 7,831 16,235
Intangible and other assets, net 1,267 814
$92,483 $109,712
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,385 $3,748
Customer advances 727 1,022
Income taxes payable -- 2,713
Deferred tax liabilities 1,682 1,682
Other current liabilities 4,244 8,947
Total current liabilities 8,038 18,112
Total stockholders' equity 84,445 91,600
$92,483 $109,712
eBAY INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts; unaudited)
Three Months Ended
March 31,
1998 1999
Historical
Net revenues $5,981 $34,010
Cost of net revenues 630 5,121
Gross profit 5,351 28,889
Operating expenses:
Sales and marketing 2,106 12,067
Product development 518 1,924
General and administrative 1,028 5,043
Amortization of acquired intangibles -- 328
Total operating expenses 3,652 19,362
Income from operations 1,699 9,527
Interest and other income, net 22 639
Income before income taxes 1,721 10,166
Provision for income taxes (1,573) (4,270)
Net income $148 $5,896
Net income per share:
Basic $0.00 $0.06
Weighted average shares - basic 26,936 95,047
Diluted $0.00 $0.05
Weighted average shares - diluted 97,614 127,979
Supplemental Information(A)
Historical net income $148 $5,896
Add back of certain non-cash expenses:
Amortization of stock compensation 421 666
Amortization of acquisition-related expenses(B) -- 453
Total add back 421 1,119
Supplemental net income excluding
certain non-cash expenses $569 $7,015
Supplemental net income per share:
Basic $0.02 $0.07
Diluted $0.01 $0.05
(A) The accompanying supplemental financial information is presented for
informational purposes only and should not be considered as a substitute for
the historical financial information presented in accordance with generally
accepted accounting principles.
(B) Expenses associated with the amortization of acquisition-related
charges are included within cost of net revenues as well as operating expenses
under the heading "amortization of acquired intangibles."