SAN JOSE, Calif., Oct. 19 - eBay Inc. (Nasdaq: EBAY)
(http://www.ebay.com), the world's largest online trading community, today reported
financial results for its third quarter ended September 30, 2000.
eBay reported consolidated net revenues of $113.4 million in the third
quarter of 2000, a 93.8 percent increase over the $58.5 million reported for
the same period last year. Consolidated net income for the quarter was
$15.2 million, or $0.05 per share on a diluted basis. eBay's consolidated net
income excluding the effects of certain non-cash and stock-related charges was
$19.1 million, or $0.07 per diluted share, compared with $3 million, or
$0.01 per diluted share during the third quarter of 1999.
"eBay delivered record revenues, profits, new users and commerce this
quarter," said Meg Whitman, President and CEO of eBay. "These results
underscore the long-term power of the platform and our global community."
Key financial and operating metrics:
-- Online Net Revenues -- eBay's online net revenues reached
$102.8 million, a 108 percent increase over the $49.5 million in the
third quarter of 1999.
-- Gross Merchandise Sales -- eBay users transacted a record $1.4 billion
in gross merchandise sales (the value of goods traded on the eBay
site), representing an 83 percent increase over the third quarter of
1999.
-- Registered Users -- eBay expanded the number of registered users to
18.9 million by quarter end, an increase of 146 percent from
7.7 million on September 30, 1999.
-- Reported Net Income -- eBay's reported net income reached
$15.2 million, more than twelve times the $1.2 million in the third
quarter of 1999.
-- Auctions Hosted -- eBay hosted 68.5 million auctions during the third
quarter, compared to 36.2 million during the same period last year.
This represents year-over-year growth of 89 percent.
-- Cash Flow -- eBay generated more than $33 million in cash from
operations in the third quarter, increasing total cash and financial
instruments to $877 million.
-- Gross Margin -- Gross margin increased eight percentage points to
79 percent this quarter from 71 percent in the third quarter of 1999.
Key execution highlights:
-- Launched the eBay France site on October 4, 2000.
(http://pages.ebay.france.com/index.html)
-- Completed the acquisition of Half.com on July 11, 2000
(http://www.half.com/)
-- Increased Billpoint listings and transactions by 35 percent and 40
percent, respectively, from July to September.
(http://pages.ebay.com/help/buyerguide/bp-overview.html)
-- Increased Automotive category listings to more than 71,000 representing
a 40 percent growth over the prior quarter and formed strategic
relationships with Titletransfer.com and CarFax.
(http://www.ebaymotors.com/)
-- Launched the Real Estate category and announced a strategic
relationship with Ziprealty.com.
(http://pages.ebay.com/realestate/index.html)
-- Launched eight new local trading sites: Baltimore, MD; Washington
D.C.; Oakland, CA; San Jose, CA; Orange County, CA; Richmond, VA;
Albany, NY; and Albuquerque-Santa Fe, NM.
(http://pages.ebay.com/regional/hub.html)
-- Announced a strategic alliance with UltimateBid for the trading of
unique events and experiences.
(http://pages.ebay.com/theme/tickets.html)
-- Listed and sold the first five Sun Blade 1000 workstations autographed
by Scott McNealy. (http://members.ebay.com/aboutme/auctions.sun.com/)
-- Introduced the SellPhone service on Half.com that enables sellers to
list items to the site with any telephone.
(http://corp.half.com/20000912.html)
-- Announced agreement with TradeOut, an Internet marketplace for surplus
business assets that brings new buyers to eBay's Business Exchange.
(http://pages.ebay.com/business_exchange/index.html)
-- Rolled out Picture Services, an integrated "drag & drop" photo hosting
service powered by IPIX for eBay users in all categories and on all
country sites. (http://pages.ebay.com/help/basics/pictureservices.html)
-- Brought fifteen government agencies to sell on eBay.
(http://members.ebay.com/aboutme/oregontrail2000/)
-- Announced "Remains of the Games" on eBay Australia where fans worldwide
can bid for official items from the Sydney 2000 Olympics.
(http://members.ebay.com.au/aboutme/sydney-olympics/)
-- Announced Digital Opportunity Program for Seniors, an initiative
designed to help senior citizens overcome the digital divide by
providing easier access to technology and education.
(http://www.ebay.com/seniors/)
Financial and operating summary:
The primary contributor to the quarter over quarter increase in the
Company's net revenue was increased on-line revenue, primarily from strength
in eBay's core business, early traction in new initiatives such as autos and
international, and continued success in increasing monetization of the site.
Net revenues from eBay's traditional off-line auction subsidiaries increased
slightly from the prior quarter.
Gross margin improved as a percentage of revenue quarter on quarter due to
the management of costs in customer support and site operations and increases
in higher gross margin areas such as autos and end-to-end trading solutions.
Sales and marketing increased on an absolute basis compared to the prior
quarter but decreased slightly as a percentage of revenue. Product
development cost increased due to an investment in engineering talent at both
Half.com and eBay. General and administrative costs decreased due to
efficiencies in personnel and outside professional service costs and to the
recovery of legal expenses from a settlement of certain litigation.
For the third quarter, eBay recorded consolidated non-cash charges of
$3.4 million related to stock-based compensation and approximately
$0.9 million relating to acquired intangibles, payroll taxes on the exercise
of employee stock options and one time merger-related expenses. eBay recorded
a consolidated tax provision of $10.1 million representing an effective tax
rate of 40 percent of third quarter consolidated pretax income.
The Company's overall balance sheet continued to improve during the third
quarter of 2000 as consolidated assets increased by $25 million over the
second quarter of 2000. The improvement resulted primarily from an increase
of cash and investments driven by eBay's the more than $33 million positive
cash flow from operations.
About eBay
eBay is the world's largest on-line trading community. Founded in 1995,
eBay created a powerful marketplace for the sale of goods and services by a
passionate community of individuals and businesses. On any given day, there
are millions of items for sale on the site across thousands of categories.
eBay enables trade on a local, national and international basis with local
sites in 68 markets worldwide. and country specific sites in the United
Kingdom, Canada, Germany, France, Japan and Australia. With the acquisition of
Half.com in July 2000, eBay's community now benefits from a marketplace which
includes traditional auction and fixed-price trading.
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 business and 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 both an
increasingly broad range of businesses and significant growth, to deal with
the increasingly competitive environment for online trading, to manage
regulatory and litigation risks, to maintain site stability and to continue to
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, 1999 and its 10-Qs
for the periods ended March 31, 2000 and June 30, 2000 under the headings
"Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and under the heading "Risk Factors" in
its Registration Statement on Form S-3 filed on September 19, 2000. 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 SHEETS
(in thousands; unaudited)
December 31, September 30,
1999 2000
ASSETS
Current assets:
Cash and cash equivalents $221,801 $130,558
Short-term investments 181,086 302,542
Accounts receivable, net 36,538 49,226
Other current assets 25,882 40,419
Total current assets 465,307 522,745
Property and equipment, net 112,202 122,054
Long-term investments 373,988 317,489
Restricted cash and investments -- 126,390
Deferred tax asset 5,639 10,887
Intangible and other assets, net 12,689 14,581
$969,825 $1,114,146
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $32,133 $18,796
Accrued expenses and other current liabilities 32,675 60,862
Deferred revenue and customer advances 5,997 5,170
Debt and leases, current 15,781 8,965
Income taxes payable 6,455 7,966
Total current liabilities 93,041 101,759
Debt and leases, long-term 15,023 22,887
Other liabilities 5,900 5,881
Minority interests 1,732 14,740
Total liabilities 115,696 145,267
Total stockholders' equity 854,129 968,879
$969,825 $1,114,146
eBAY INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts; unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 2000 1999 2000
Net revenues $58,525 $113,377 $150,805 $297,416
Cost of net revenues 17,081 23,912 36,003 71,499
Gross profit 41,444 89,465 114,802 225,917
Operating expenses:
Sales and marketing 27,278 41,137 67,152 117,713
Product development 6,958 15,783 14,597 41,007
General and
administrative 11,914 17,341 29,616 54,872
Payroll expense on
employee stock options -- 17 -- 1,752
Amortization of
acquired intangibles 328 264 983 879
Merger related costs -- 607 4,359 1,431
Total operating
expenses 46,478 75,149 116,707 217,654
Income (loss) from
operations (5,034) 14,316 (1,905) 8,263
Interest and other
income, net 7,078 11,036 13,392 32,981
Income before income
taxes 2,044 25,352 11,487 41,244
Provision for income
taxes (858) (10,141) (5,720) (16,815)
Net income $1,186 $15,211 $5,767 $24,429
Net income per share:
Basic $0.01 $0.06 $0.03 $0.10
Diluted $0.00 $0.05 $0.02 $0.09
Weighted average shares
Basic 227,975 255,741 212,488 249,070
Diluted 276,179 280,297 271,476 280,567
Supplemental (A)
Historical income
(loss) from
operations $(5,034) $14,316 $(1,905) $8,263
Add back certain
non-cash and merger
costs:
Amortization of
stock-based
compensation 1,377 3,360 3,652 6,720
Amortization of
acquired
intangibles (B) 430 264 1,210 879
Payroll expense
on employee
stock options -- 17 -- 1,752
Merger related costs -- 607 4,359 1,431
Total add back 1,807 4,248 9,221 10,782
Supplemental income
(loss from operations
excluding certain
non-cash and merger
and stock option
related charges (3,227) 18,564 7,316 19,045
Interest and other
income, net 7,078 11,036 13,392 32,981
Supplemental provision
for income taxes (C) (858) (10,496) (7,551) (18,503)
Supplemental net
income excluding
certain non cash,
merger and stock
option related
charges $2,993 $19,104 $13,157 $33,523
Supplemental net
income per share,
diluted $0.01 $0.07 $0.05 $0.12
(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 may be included within cost of net revenues as well as
operating expenses under the heading "amortization of acquired
intangibles."
(C) Supplemental provision for income taxes includes a 42 percent tax
effect for merger related costs in 1999 and a 42 percent tax effect
for the first and second quarter in 2000 and a 40 percent tax effect
for the third quarter in 2000 for the amortization of acquired
intangibles, payroll expense on employee stock options and merger
related costs.