SAN JOSE, Calif., Oct. 26 - eBay Inc. (Nasdaq: EBAY)
(http://www.ebay.com), the world's largest online personal trading community, today
reported financial results for its third quarter ended September 30, 1999.
The Company generated consolidated net revenues of $58.5 million in the
third quarter of 1999, a 169 percent increase over the $21.7 million reported
for the same period last year. Consolidated net income for the quarter was
$1.4 million, or $0.01 per share on a diluted basis. eBay's consolidated net
income excluding the effects of certain non-cash charges was $3.2 million, or
$0.02 per diluted share, compared with $1.8 million, or $0.02 per diluted
share during the third quarter of 1998.
"In the third quarter of 1999, eBay continued to record strong increases
in gross merchandise sales and registered users," said Meg Whitman, President
and CEO of eBay. "The eBay community now transacts almost $3 billion per year
on an annualized basis on our site. This reaffirms eBay as the world's largest
personal trading community."
Key operating metrics on the eBay site:
-- eBay's gross merchandise sales (the value of goods traded on the eBay
site) for the third quarter of 1999 climbed to $741 million, up
280 percent over the $195 million reported in the third quarter of 1998
-- Registered users increased to 7.7 million by quarter end, an increase
of 509 percent from the 1.3 million at September 30, 1998
-- eBay hosted 36.2 million auctions during the third quarter, compared to
9.2 million during the same period of last year. This represents year
over year growth of 292 percent
Ms. Whitman continued, "This was a quarter of strong execution and many
accomplishments in every part of the company, as eBay continued to expand into
new markets and leveraged the acquisitions made in the last quarter into new
online initiatives."
Execution highlights:
-- Launched a new "Automotive" category for both general and collector
cars (in conjunction with Kruse International --
http://pages.ebay.com/auto-index.html )
-- Launched "eBay: Go Local!" new regional search that permits users to
buy and sell in their local areas
( http://pages.ebay.com/regional/hub.html )
-- Delivered a highly successful "free listing day" that generated
tremendous community excitement with over 4 million items on the site
-- an all-time record
-- Launched eBay's German site and initiated final value fees. eBay
Germany currently has well over 500,000 listings on its site (not
included in the "stats" section of the eBay home page or key operating
metrics -- http://www.ebay.de )
-- Rolled out eBay's strategy for the wireless Internet: "eBay
Everywhere" by partnering with both SkyTel and Palm Computing to enable
users to track, view and bid on items
( http://pages.ebay.com/community/news/happenings.html )
-- Launched a new AOL co-branded site across all AOL categories
( http://www.ebay.aol.com )
-- Completed eBay "From our homepage to your hometown" tour of
30 communities across the country
-- Improved response time for customer support by more than 50% in the
last six months
-- Added key new members to the eBay team, including Maynard Webb, head of
eBay Technologies, and Jeff Jordan, General Manager of End-to-End
trading services
-- Installed the warm back-up system, upgraded the operating and database
systems and added system capacity
-- Expanded eBay's co-location facilities at Exodus and opened new
facilities at AboveNet
Financial and operating summary:
The primary contributor to the increase in eBay net revenues for the
quarter was the increased usage of the eBay site. As expected, net revenues
from eBay's traditional auction subsidiaries decreased seasonally. The
seasonal decrease in Butterfield & Butterfield's net revenues was partially
offset by Kruse's strong quarter.
In the third quarter, the Company continued to make significant
investments in personnel, contractors and equipment to support the site's
infrastructure. These investments, along with continued additions to customer
support personnel, resulted in increased cost of net revenues both in absolute
dollars and as a percentage of net revenues versus the prior quarter.
Personnel and contractor costs were the largest single contributor to the
increase in operating expenses during the third quarter. Sales and marketing
expenses increased over the prior quarter due to increased online advertising
costs, including the recognition of advertising costs under the AOL agreement,
and expenses associated with Kruse's Auburn auction and other promotional
activities. Increases in product development costs were driven largely by
personnel additions, including those involved with new business initiatives.
General and administrative cost increases were driven by personnel additions,
legal costs, and public company expenses, including SEC filing fees.
For the third quarter, eBay recorded consolidated non-cash amortization
charges of $1.4 million related to stock-based compensation and $430,000
associated with acquired intangibles. The Company recorded a consolidated tax
provision of $979,000 representing an effective tax rate of 42 percent of
third quarter consolidated pretax income.
The Company's overall balance sheet was relatively unchanged in the third
quarter compared to the second quarter. Consolidated assets as of September
30, 1999 were approximately $910 million, which included over $740 million of
cash and high quality financial instruments.
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. Currently, there are more
than 3.0 million items listed for sale. More than 400,000 items are added
daily in more than 2,200 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. eBay is also engaged in the traditional auction business through its
subsidiaries, Butterfield & Butterfield and Kruse International.
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 maintain site stability, to successfully
manage and integrate its new acquisitions, to manage significant growth in all
aspects of its business, to deal with the increasingly competitive environment
for online trading and to successfully expand its model outside of the U.S.
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", its Form 10-Q for the period ending June 30, 1999, its Form 8-K/A
filed on July 26, 1999, its Form 8-K filed on September 14, 1999 and its Form
S-3 filed on September 30, 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; unaudited)
December 31, September 30,
1998 1999
ASSETS
Current assets:
Cash and cash equivalents $37,285 $246,538
Short-term investments 40,401 139,406
Accounts receivable, net 12,425 27,589
Other current assets 7,479 25,692
Total current assets 97,590 439,225
Property and equipment, net 44,062 82,102
Investments -- 367,711
Deferred tax asset -- 11,277
Intangible and other assets, net 7,884 9,327
$149,536 $909,642
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,997 $22,821
Accrued expenses
and other current liabilities 6,577 23,101
Customer advances
and deferred revenue 973 1,651
Debt and leases,
current portion 4,047 12,447
Income taxes payable 1,380 10,665
Deferred tax liabilities 1,682 1,682
Total current liabilities 24,656 72,367
Debt and leases, long-term portion 18,361 5,856
Other liabilities 5,981 6,114
48,998 84,337
Total stockholders' equity 100,538 825,305
$149,536 $909,642
eBAY INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts; unaudited)
3 Months Ended Sep. 30, 9 Months Ended Sept. 30,
1998 1999 1998 1999
Net revenues $21,731 $58,525 $55,199 $150,805
Cost of net revenues 4,367 17,081 10,144 36,003
Gross profit 17,364 41,444 45,055 114,802
Operating expenses:
Sales and marketing 9,414 27,230 21,317 67,104
Product development 1,514 6,851 3,062 14,490
General and administrative 4,249 11,779 11,049 29,481
Amortization
of acquired intangibles 327 328 477 983
Merger related costs -- -- -- 4,359
Total
operating expenses 15,504 46,188 35,905 116,417
Income (loss)
from operations 1,860 (4,744) 9,150 (1,615)
Interest and
other income
(expense), net (161) 7,075 (593) 13,389
Income before
income taxes 1,699 2,331 8,557 11,774
Provision for income taxes (1,238) (979) (3,923) (5,841)
Net income $461 $1,352 $4,634 $5,933
Net income per share:
Basic $0.01 $0.01 $0.12 $0.06
Diluted $0.00 $0.01 $0.04 $0.04
Weighted average shares:
Basic 48,385 115,980 39,002 105,864
Diluted 113,619 140,082 109,625 135,358
Supplemental (A)
Historical net income $461 $1,352 $4,634 $5,933
Add back certain
non-cash and
merger costs:
Amortization of
stock-based compensation 818 1,377 2,317 3,652
Amortization of
acquired intangibles (B) 515 430 665 1,210
Merger related costs (C) -- -- -- 2,528
Charitable contribution
of Common Stock -- -- 1,216 --
Total add back 1,333 1,807 4,198 7,390
Supplemental net income
excluding certain
non-cash and merger
related costs $1,794 $3,159 $8,832 $13,323
Supplemental net
income per share:
Basic $0.04 $0.03 $0.23 $0.13
Diluted $0.02 $0.02 $0.08 $0.10
(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."
(C) Supplemental information on merger related costs reflects a
42 percent tax benefit when compared to the operating expenses under the
heading "merger related costs."