San Jose, CA, April 18, 2002 – eBay Inc. (NASDAQ: EBAY; www.ebay.com), the world’s online
marketplaceTM, reported financial results for its first quarter ended March 31, 2002.
eBay reported consolidated net revenues totaling a record $245.1 million. This represents a 59%
increase over the $154.1 million generated in the same period last year. Consolidated net income
for the quarter was a record $47.6 million, or $0.17 per diluted share. eBay’s pro forma
consolidated net income, excluding certain charges, was a record $50.6 million, or $0.18 per diluted
share.
“The company's focus and ability to execute allowed us to deliver record revenues and record
profitability for the quarter,” said Meg Whitman, President and CEO of eBay. “These results
demonstrate that the momentum in our core transaction business is stronger than ever.”
Based on the company’s most recent performance, eBay now believes that net revenues for Q2-02
will range between $260 and $265 million, bringing its first half 2002 net revenue guidance to
between $505 and $510 million, representing the high end of previous guidance. eBay also believes
that Q2-02 pro forma earnings per diluted share will approximate $0.17, bringing its first half 2002
guidance to approximately $0.35. This earnings level represents an increase of $0.03 to $0.04 from
the company’s previous guidance of $0.31 to $0.32 per diluted share.
For the full year 2002, eBay expects that net revenues will approximate $1.1 billion, representing
the high end of its previous guidance of $1.05 billion to $1.1 billion. On the bottom line, eBay now
believes that pro forma earnings per diluted share could range between $0.73 and $0.75, reflecting a
$0.03 to $0.04 increase from previous guidance.
Key Financial and Operating Metrics
Online Transaction Revenues – eBay reported record net online transaction revenues, which
exclude revenues from third party advertising and end-to-end services, of $213.7 million,
representing 65% year-over-year growth from the $129.7 million reported in Q1-01.
Gross Profit – eBay reported record gross profit totaling $203.8 million or 83% of net revenues
during the quarter, up from the 82% gross profit reported in Q1-01.
Pro Forma Operating Income – eBay reported record pro forma operating income totaling $74.4
million, or 30% of net revenues. This represents a 113% increase over Q1-01 pro forma operating
income of $35.0 million, or 23% of Q1-01 net revenues.
Pro Forma Net Income – eBay reported record pro forma net income totaling $50.6 million, or
$0.18 per diluted share. This earnings level represents a 65% increase over Q1-01 pro forma net
income of $30.6 million.
Operating and Free Cash Flows – eBay reported a record $92.3 million in operating cash flows,
147% higher than the $37.4 million reported in Q1-01. Free cash flows for Q1-02 were a record
$80.8 million, 203% higher than the $26.7 million reported in Q1-01.
Gross Merchandise Sales – eBay users transacted a record $3.11 billion in gross merchandise sales,
or GMS, during the first quarter, representing a 57% year-over-year increase from the $1.98 billion
reported in Q1-01.
Listings – eBay hosted a record 138.0 million listings during the quarter, representing a 55% year-over-
year increase from the 89.0 million reported in Q1-01.
Registered Users – eBay added 4.6 million new confirmed registered users, offset by approximately
1.0 million user IDs eliminated as part of the company’s Half.com integration efforts and enhanced
user registration policies. Cumulative confirmed registered users at the end of Q1-02 totaled a
record 46.1 million, representing a 55% increase over the 29.7 million users reported at the end of
Q1-01.
Key Execution Highlights
U.S. Online Net Revenues – U.S. online net transaction revenues totaled $161.9 million in Q1-02,
representing 16% sequential and 45% year-over-year growth. Including net revenues from third
party advertising and end-to-end services, total U.S. online net revenues were $185.0 million,
representing 8% sequential and 43% year-over-year growth.
International Net Revenues – Net revenues from international operations totaled $53 million in Q1-
02, or 21% of consolidated net revenues. Highlighting the quarter were 46% sequential net revenue
growth in the United Kingdom, 35% sequential net revenue growth in Germany and 23% sequential
net revenue growth in Canada. In total, international net revenues grew 31% sequentially and 194%
on a year-over-year basis.
International Profitability – On a fully allocated basis, eBay’s international business achieved a
double-digit operating margin, after turning profitable for the first time in Q4-01. Also during the
quarter, the company’s United Kingdom operations achieved profitability for the first time,
complementing the company’s existing profitable operations in Germany and Canada.
Asia Expansion – The company advanced its Asia business strategy through the acquisition of
NeoCom and its leading online auction sites in Taiwan, and through the acquisition of a 33 percent
interest in EachNet, China’s largest online marketplace. In addition, Internet Auction Company,
eBay’s majority-owned subsidiary in South Korea, reported record net revenues and improved
financial results.
Key Category Performance – The company achieved strong sequential and year-over-year growth
in gross merchandise sales across virtually all top-level categories. Globally, eBay’s ten largest
categories in Q1-02 were: eBay Motors, Computers, Consumer Electronics, Book/Movies/Music,
Collectibles, Sports, Toys, Clothing & Accessories, Jewelry & Gemstones and Antiques & Art.
Based on Q1-02 annualized gross merchandise sales, eBay now has four categories that each
represent greater than $1 billion businesses – eBay Motors with $2.5 billion, Computers with $1.4
billion, Consumer Electronics with $1.2 billion and Books/Movies/Music with $1.1 billion.
Fixed-Price Trading – eBay’s fixed price offerings continue to drive seller success and contributed
more than 19% of total gross merchandise sales during Q1-02. GMS on completed “Buy It Now”
auctions remained constant, even as eBay introduced a $.05 fee. In addition, over 25,000 users are
currently paying monthly subscription fees for the merchandising capability offered by eBay Stores.
Financial and Operating Summary
During Q1-02, the company reported record net revenues of $245.1 million, representing 12%
sequential and 59% year-over-year increases. The sequential increase was driven largely by better-than-
expected results in the U.S. transaction business combined with continued strong performance
internationally. Revenues from third party advertisers represented approximately 8% of net
revenues, down from 13% of net revenues in Q4-01 and consistent with the 8% of net revenues
reported in Q1-01. The sequential decrease in advertising revenues was attributed primarily to the
current industry-wide weakness in the online advertising market. Overall, the company’s core
online transaction performance more than offset the sequential decrease in advertising revenues.
Gross profit as a percentage of net revenues increased to 83% as compared with 82% in both Q4-01
and Q1-01. The sequential margin improvement resulted from a combination of strong revenue
growth, relatively fixed costs in customer support and site operations, and efficiencies gained from
migrating the former iBazar sites to the eBay platform.
Sales and marketing expenses totaled $73.1 million, or 30% of net revenues, comparing favorably
to the 33% of net revenues reported in Q4-01 and the 36% reported in Q1-01. The sequential
improvement was attributed to lower sales and marketing expenditures in the former iBazar sites,
Internet Auction Company and Half.com, combined with improved pricing on U.S. Internet
advertising contracts.
Product development costs totaled $24.3 million, or approximately 10% of net revenues in Q1-02,
consistent with both Q4-01 and Q1-01. The sequential dollar increase of approximately $2.6
million resulted primarily from site feature and functionality improvements, V3 architecture
development and seller tools development.
General and administrative costs totaled $32.5 million, or about 13% of net revenues, down from
14% of net revenues in both Q4-01 and Q1-01. The sequential dollar increase of approximately
$1.2 million resulted principally from costs associated with the closure of eBay’s operations in
Japan.
Net interest and other income totaled $5.5 million in Q1-02, down from the $6.5 million reported in
Q4-01, primarily reflecting a $1.2 million impairment charge taken on certain equity investments
held by eBay’s Internet Auction Company subsidiary.
eBay reported a consolidated tax provision of $29.4 million, reflecting a 38% effective tax rate.
eBay’s balance sheet remains strong. At the end of Q1-02, the company had consolidated assets
totaling $1.79 billion, including $1.20 billion in aggregate cash and investments.
The company reported $92.3 million in operating cash flows, 147% higher than the $37.4 million
reported in Q1-01. Of this amount, $29 million is attributable to tax benefits on stock option
exercises. Free cash flows during Q1-02 totaled $80.8 million, 203% higher than the $26.7 million
reported in Q1-01.
Business Outlook
Q2-02 Outlook – eBay now believes that net revenues for Q2-02 will range between $260 and $265
million, bringing its first half 2002 net revenue guidance to between $505 and $510 million,
representing the high end of previous guidance. This net revenue outlook reflects the company’s
expectation that a sequential decrease in advertising revenues will be fully offset by higher than
previously anticipated transaction revenues, from both the U.S. and international markets.
The company remains committed to making important strategic investments to build its marketplace
for the long term. In Q2-02, eBay will increase marketing expenditures both domestically and
internationally and continue to roll out its next-generation technology infrastructure. In addition, as
previously disclosed, eBay expects to absorb approximately $4 million for the first full quarter of
operating losses from its NeoCom subsidiary.
Accordingly, eBay believes that Q2-02 pro forma earnings per diluted share will approximate
$0.17, bringing its first half 2002 guidance to approximately $0.35. This earnings level represents
an increase of $0.03 to $0.04 from the company’s previous guidance of $0.31 to $0.32 per diluted
share.
Full Year 2002 Outlook – Despite a decrease in advertising revenues, eBay expects that net
revenues will approximate $1.1 billion, representing the high end of its previous guidance. On the
bottom line, eBay now believes that pro forma earnings per diluted share could range between $0.73
and $0.75, reflecting a $0.03 to $0.04 increase from previous guidance. The company also expects
its operating margin could be between 29% and 30% for 2002, compared to previous guidance of
25% to 28%.
About eBay
eBay is the world’s online marketplaceTM. Founded in 1995, eBay created a powerful platform for the sale
of goods and services by a passionate community of individuals and businesses. On any given day, there are
millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and
international basis with customized sites in markets around the world.
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 an increasingly broad range of businesses, to deal with the increasingly
competitive environment for online trading, to manage regulatory and litigation risks even as its product
offerings and geographies expand, to maintain site stability and continue to expand its model to new types of
merchandise and sellers, to continue to expand outside of the U.S., as well as the timing and commercial
success of new features and functions added to the company’s sites, the price and demand for advertising
offered by the company, the success of the company’s commercial partners, and the costs of announced and
prospective joint ventures, acquisitions and other commercial transactions. More information about potential
factors which could affect the company’s business and financial results is included in the company’s Annual
Report on Form 10-K for the year ended December 31, 2001. 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.
