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Jul 25, 2000


eBay Inc. Releases Second Quarter 2000 Financial Results

Reported Net Income Grows 84 Percent Quarter over Quarter

Online Net Revenues More Than Doubled Year over Year

SAN JOSE, Calif., July 25 - eBay Inc. (Nasdaq: EBAY) (http://www.ebay.com), the world's largest online trading community, today reported financial results for its second quarter ended June 30, 2000.

eBay reported consolidated net revenues of $97.4 million in the second quarter of 2000, a 97 percent increase over the $49.5 million reported for the same period last year. Consolidated net income for the quarter was $11.6 million, or $0.04 per share on a diluted basis. eBay's consolidated net income excluding the effects of certain non-cash and stock-related charges was $13.2 million, or $0.05 per diluted share, compared with $5.1 million, or $0.02 per diluted share during the second quarter of 1999.

"The top line for the second quarter was in fact the bottom line: eBay's record profits," said Gary Bengier, CFO of eBay. "These profits were powered by record revenues and the record gross merchandise sales traded on the eBay platform."

"We are very pleased with our second quarter results," said Meg Whitman, President & CEO of eBay. "Everyday the eBay marketplace becomes indispensable to more people and small businesses around the world."

Key financial and operating metrics:
    -- Online Net Revenues -- eBay's online net revenues reached $87.9
       million, a 130 percent increase over the $38.2 million in the second
       quarter of 1999.
    -- Gross Merchandise Sales -- eBay users transacted a record $1.3 billion
       in gross merchandise sales (the value of goods traded on the eBay
       site), representing a 108 percent increase over the second quarter of
       1999.
    -- Registered Users -- eBay expanded the number of registered users to
       15.8 million by quarter end, an increase of 183 percent from 5.6
       million on June 30, 1999.
    -- Auctions Hosted -- eBay hosted 62.5 million auctions during the second
       quarter, compared to 29.3 million during the same period last year.
       This represents year-over-year growth of 113 percent.
    -- Gross Margins -- Margins grew to 76% from 73% reported in the prior
       quarter.
    -- Cash Flow -- eBay generated $28.3 million in cash from operations
       increasing total cash and financial investments to $839.0 million.
    -- Uptime -- eBay reported another quarter of over 99% system uptime.
Key Execution highlights:
    -- On July 11, 2000, completed the acquisition of Half.com which will add
       fixed priced functionality to the expanding eBay trading platform.
    -- Announced eBay Anywhere, a comprehensive new mobile strategy that aims
       to make eBay accessible from any Internet-enabled mobile device.
       (http://www.ebay.com/anywhere/)
    -- Initiated listing fees for eBay U.K. (http://www.ebay.co.uk)
    -- Reported a 56% increase in vehicle listings since the launch of the new
       Automobile site on April 24, 2000.
    -- Announced a strategic alliance between Saturn and eBay Motors for auto
       inspection services.
       (http://pages.ebay.com/ebaymotors/services/inspection/inspection.html)
    -- Launched eBay co-branded person to person site for the Go Network
       portal. (http://pages.ebay.go.com/index.html)
    -- Launched the pilot program for Electronic Checks by Billpoint which
       offers users another convenient online payment option in addition to
       credit cards. (http://pages.ebay.com/help/buyerguide/bp-overview.html)
    -- Introduced Instant Purchase, a listing option that allows U.S. buyers
       to pay U.S. sellers immediately after a listing ends with one click of
       the "Pay Now" icon.
       (http://pages.ebay.com/help/buyerguide/bp-overview.html)
    -- Launched the redesigned homepage to better highlight all the new and
       exciting features offered by eBay. (http://www.ebay.com/)
    -- Launched the beta version of Picture Services, an integrated photo
       hosting services for eBay users in the Antiques & Art and Pottery &
       Glass categories. (http://pages.ebay.com/sell/preview-pspilot.html)
    -- eBay received major awards this quarter, including ZDNet's 1st Annual
       Visionary Award, recognizing technological efforts, PC World's 2000
       World Class Award citing eBay as the "Best Shopping Site," and the
       Computerworld Smithsonian Award, placing eBay in the permanent archives
       of the Smithsonian's information technology research collection.
Financial and operating summary:

The primary contributor to the increase in the Company's net revenues for the quarter was on-line activity. Net revenues from eBay's traditional off- line auction subsidiaries increased slightly from the prior quarter.

Cost of sales remained relatively flat quarter to quarter and declined slightly as a percent of revenue due to the management of costs in customer support and site operations. Both product development and general and administrative costs increased in absolute dollars, but remained comparable as a percentage of revenue. Sales and marketing expenses decreased over the prior quarter.

For the second quarter, eBay recorded consolidated non-cash charges of $799,000 related to stock-based compensation and acquired intangibles. The Company also recorded charges of $834,000 associated with payroll taxes on the exercise of employee stock options and $824,000 in one time merger-related expenses. eBay recorded a consolidated tax provision of $8.4 million representing an effective tax rate of 42 percent of second quarter consolidated pretax income.

The Company's overall balance sheet continued to improve during the second quarter of 2000 as consolidated assets increased by $35.7 million over the first quarter of 2000. The improvement resulted primarily from an increase of cash and investments driven by eBay's $28.3 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 small 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 53 markets in the U.S. and country specific sites in the United Kingdom, Canada, Germany, Japan and Australia. With the acquisition of Half.com in July 2000, eBay's community now benefits from a marketplace combining 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 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 under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and its Form 10-Q for the period ended March 31, 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 STATEMENT OF INCOME
             (in thousands, except per share amounts; unaudited)

                             Three Months Ended        Six Months Ended
                                  June 30,                   June 30,
                              1999         2000          1999         2000

    Net revenues           $49,479       $97,399      $92,280      $183,152
    Cost of net revenues    10,945        23,643       18,922        46,915
      Gross profit          38,534        73,756       73,358       136,237
    Operating expenses:
      Sales and marketing   22,916        32,814       39,874        66,754
      Product development    5,476        11,929        7,639        23,048
      General and
       administrative       10,088        18,285       17,702        34,079
      Amortization of
       acquired intangibles    327           340          655           615
      Payroll taxes on
       option exercises         --           834           --         1,735
      Merger related costs   4,359           824        4,359           824
        Total operating
         expenses           43,166        65,026       70,229       127,055
    Income (loss) from
     operations            (4,632)         8,730        3,129         9,182
    Interest and other
     income, net             6,039        11,252        6,314        21,642
    Income before income
     taxes                   1,407        19,982        9,443        30,824
    Provision for income
     taxes                   (591)       (8,392)      (4,862)      (12,946)
    Net income                $816       $11,590       $4,581       $17,878
    Net income per share:
      Basic                  $0.00         $0.05        $0.02         $0.07
      Diluted                $0.00         $0.04        $0.02         $0.06
    Weighted average shares
    Basic                  213,710       251,075      204,686       244,463
    Diluted                273,228       275,297      269,050       275,838

    Supplemental (A)

    Historical income
     (loss) from
     operations           $(4,632)        $8,730       $3,129        $9,182
    Add back certain
     non-cash and
     merger costs:
      Amortization of
       stock-based
       compensation          1,457           459        2,275         1,526
      Amortization of
       acquired
       intangibles (B)         327           340          780           615
      Payroll taxes
       on option exercises      --           834           --         1,735
      Merger related costs   4,359           824        4,359           824
        Total add back       6,143         2,457        7,414         4,700
    Supplemental income
     from operations
     excluding certain
     non-cash and merger
     and stock option
     related charges         1,511        11,187       10,543        13,882
    Interest and other
     income, net             6,039        11,252        6,314        21,642
    Supplemental provision
     for income
     taxes (C)             (2,422)       (9,232)      (6,693)      (14,285)
    Supplemental net
     income excluding
     certain non cash
     and merger and
     stock option
     related charges        $5,128       $13,207      $10,164       $21,239
    Supplemental net
     income per share,
     diluted                 $0.02         $0.05        $0.04         $0.08

    (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 the amortization of
        acquired intangibles, payroll taxes on option exercises and merger
        related costs in 2000.



                                  eBAY INC.
                     CONDENSED CONSOLIDATED BALANCE SHEET
                                (in thousands)

                                                  December 31,    June 30,
                                                      1999          2000
                                                     audited     unaudited
                                 ASSETS
    Current assets:
      Cash and cash equivalents                     $219,679       $135,621
      Short-term investments                         181,086        146,526
      Accounts receivable, net                        36,538         46,307
      Other current assets                            22,531         40,697
        Total current assets                         459,834        369,151

    Long-term investments                            373,988        430,467
    Restricted cash and investments                       --        126,390
    Property and equipment, net                      111,806        123,463
    Intangible assets, net                             8,812          8,154
    Deferred tax and other assets, net                 9,502         13,991
                                                    $963,942     $1,071,616

                    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                               $31,538        $25,941
      Accrued expenses and other current
       liabilities                                    32,550         50,417
      Deferred revenue and customer advances           5,997         13,035
      Debt and leases, current                        12,285         15,584
      Income taxes payable                             6,455          6,078
        Total current liabilities                     88,825        111,055

    Debt and leases, long-term                        15,018         14,745
    Other liabilities                                  5,900          5,885
    Minority interests                                 1,732         14,773
        Total liabilities                            111,475        146,458
    Total stockholders' equity                       852,467        925,158
                                                    $963,942     $1,071,616
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