eBay Inc posts $7.67 bn in revenue

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eBay Inc . (Nasdaq: EBAY; www.ebay.com) today reported financial results for its fourth quarter and year ended December 31, 2007.  The ecommerce company posted fourth quarter revenue of $2.18 billion, representing a $461 million year-over-year increase.  Revenue grew across all businesses highlighted by more robust growth from PayPal, StubHub, Skype, classifieds and advertising.  The company recorded net income on a GAAP basis of $531 million or $0.39 per diluted share, and non-GAAP net income of $611 million or $0.45 per diluted share.

 

For the full year, eBay Inc. posted $7.67 billion in revenue, net income on a GAAP basis of $348 million or $0.25 per diluted share, and non-GAAP net income of $2.11 billion or $1.53 per diluted share.

 

GAAP operating margin increased to 28.7% for the quarter, compared to 26.2% for the same period last year. Non-GAAP operating margin increased to 34.6% for the quarter, from 33.4% for the same period last year.  For the full year GAAP operating margin came in at 8.0%, with non-GAAP operating margin at 33.1%. 

 

eBay Inc. generated $793 million of operating cash flow and $665 million of free cash flow during the fourth quarter. The company's full year operating cash flow was $2.64 billion and free cash flow was $2.19 billion.

           

"We're very pleased with the results for the quarter which were strengthened by a solid holiday shopping season," said eBay Inc. President and CEO, Meg Whitman. "We had a remarkably strong year from a financial perspective.  We enter 2008 with our most diverse portfolio of ecommerce offerings ever -- positioning us to drive long-term growth in the global ecommerce market."

 

Quarterly Business Highlights

 

• The company purchased approximately 9.2 million shares of its common stock at a cost of approximately $312 million (For the full year, the company repurchased 44.6 million shares of its common stock for approximately  $1.5 billion).
• eBay announced a cross border trade agreement with Yahoo! Japan to provide Japanese consumers with access to eBay.com through the site Seikamon.com.
• eBay completed the acquisition of Afterbuy to extend service and support for professional sellers in Germany.
• StubHub completed its 10 millionth ticket sale and announced a promotional agreement with ESPN to make StubHub the exclusive tickets provider on ESPN.com.
• PayPal signed top merchant service account deals with U.S. Airways, AirTran, drugstore.com and Shop NBC among others.
• PayPal hired four seasoned executives with deep consumer, technology and international experience to help drive the company's ongoing expansion.
• Skype announced a partnership with MySpace enabling voice communications for more than 110 million MySpace users.
• Skype launched the 3 Skypephone in eight countries including the United Kingdom, Italy and Australia to enable users to make Skype-to-Skype calls and chats on mobile phones. 

"Our fourth quarter results capped off a great year for eBay, with strong top-line growth, stronger bottom-line growth, and excellent free cash flows," said Bob Swan, eBay Inc. CFO. "We closed the year with a very strong balance sheet, giving us the financial flexibility to invest across all of our business units in order to extend our leadership positions." 

 

Quarterly Business Unit Discussion

 

Marketplaces

 

The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had a strong quarter with a record $1.50 billion in revenue, equating to 21% year-over-year growth.  Revenue growth was driven by StubHub, advertising, the fixed price format on eBay and, in part, by the benefit of a weaker U.S. dollar.  Based on average monthly unique visits, eBay was the number one ecommerce site in the U.S., UK and Germany during the 2007 holiday shopping season, according to Nielsen Online.  Approximately 54% of Marketplaces revenue came from markets outside the U.S. Gross merchandise volume was $16.21 billion for the quarter, an increase of 12% over the fourth quarter of 2006. eBay continues to focus on buyer and seller initiatives to accelerate gross merchandise volume in the U.S., Germany and the United Kingdom.

 

Payments

 

PayPal posted another stellar quarter with $563 million in revenue, an increase of 35% year-over-year.  Net total payment volume (TPV) for the quarter was $14.04 billion, an increase of 35% year-over-year. The revenue and net TPV growth represents increased penetration on eBay as well as expanded adoption of PayPal Merchant Services across the Web.  PayPal will continue to focus on greater penetration into the Marketplaces business as well as the acquisition of new merchants.

 

Communications

 

Skype contributed $115 million in revenue, representing 76% year-over-year growth, and posted a fourth consecutive quarter of segment profitability.  Skype attracted new users at a rapid pace through the quarter and ended the period with more than 276 million registered users around the world.

 

Selected Financial Results

 

• Taxes - The GAAP effective tax rate for the quarter was 21%, compared to 28% for the fourth quarter of 2006. The non-GAAP effective tax rate for the quarter was 24% compared to 29% for the fourth quarter of 2006. The GAAP effective tax rate for 2007 was 54% while the full year non-GAAP tax rate came in at 21%. 
• Cash, cash equivalents and investments - The company's cash, cash equivalents and investments totaled $5.04 billion at December 31, 2007 compared to $3.50 billion at December 31, 2006. 

Business Outlook

 

• Full year 2008 - eBay expects net revenues in the range of $8.500 to $8.750 billion with GAAP earnings per diluted share in the range of $1.27 to $1.31 and non-GAAP earnings per diluted share in the range of $1.63 to $1.67.  
• First quarter 2008 - eBay expects net revenues in the range of $2.000 to $2.050 billion with GAAP earnings per diluted share in the range of $0.28 to $0.30 and non-GAAP earnings per diluted share in the range of $0.37 to $0.39. 

Other Updates

 

• In a separate press release, the company also announced today changes to its management team, including the retirement of current President and CEO Meg Whitman and the naming of John Donahoe as her successor as of March 31, 2008. 
• The company's board of directors has approved another stock repurchase program for $2 billion.  The new program gives the company the ability to repurchase up to $2.85 billion of its common stock under its combined repurchase programs.  

Sourced From: Vaishnavi Corporate Communications Pvt Ltd