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Ebay Inc. Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

Gross Merchandise Volume grew 6% on an FX-Neutral basis

Revenue of $2.1 billion

Non-GAAP EPS of $0.43 per share and GAAP EPS of $0.45 per share on a Continuing Operations Basis

Repurchased $599 million of Common Stock; $2.4 billion Repurchase Authorization Remaining

San Jose, California, October 21, 2015

- eBay Inc. (Nasdaq: EBAY), a global commerce leader, today reported that gross merchandise volume (GMV) for the quarter ended September 30, 2015, increased 6% on a foreign exchange (FX) neutral basis, in-line with the prior qua rter. Revenue for the quarter was $2.1 billion, driving non-GAAP net income from continuing operations of $529 million or $0.43 per diluted share, and GAAP net income from continuing operations of $545 million, or $0.45 per diluted share. The company repurchased $599 million of its common stock in the quarter, underscoring management's confidence in the long-term value of the business.

"We drove solid results in the quarter in which we completed a complex separation," said eBay Inc. President and CEO Devin Wenig. "We also marked eBay's 20th anniversary and made progress on executing our strategy to reposition the company to deliver stable and profitable long-term growth."

eBay Inc.’s commerce platforms continued to increase the role they play in global commerce, with an Active Buyer base that grew 5% year over year, to 159 million. GMV in the quarter was $19.6 billion, a 6% increase on an FX-Neutral basis and a 2% decline on an as-reported basis, reflecting the continued impact of a strong U.S. dollar. In the U.S., GMV grew 3%, a one point acceleration versus the prior quarter, and International GMV increased 7% on an FX-Neutral basis, while it was down 5% on an as-reported basis. Total revenue in the quarter of $2.1 billion was up 5% on an FX-Neutral basis and down 2% on an as-reported basis.

The eBay Classifieds and StubHub platforms both had strong quarters and continue to be key assets aligned with eBay's overall business strategy.

The quarter marked an important milestone for eBay as it celebrated its 20

anniversary with a number of activities, including a seller conference where significant upcoming changes to its seller policies and products were unveiled. These changes, which include more objective standards and a new Seller Hub, are intended to help small and medium sized sellers be even more successful on the eBay platform and better reward sellers who provide great service to eBay buyers.

During the quarter, eBay completed the distribution of PayPal and made progress against the completion of the sale of eBay Enterprise. Accordingly, the results of both PayPal and eBay Enterprise are presented as discontinued operations, appearing net of tax in a single line in the company's statement of income.

Quarter

Financial Highlights (presented in millions, except per share data and percentages)

Third Quarter

Change

Gross merchandise volume (GMV)

$19,601

$20,034

$(433)

Net revenue

$2,099

$2,150

GAAP - Continuing Operations

Income from continuing operations

Earnings per diluted share from continuing operations

GAAP - Discontinued Operations

Income (loss) from discontinued operations, net of income taxes

$(170)

Earnings per diluted share from discontinued operations

$(0.13)

Non-GAAP Continuing Operations

Net income

$(0.03)

**Not meaningful

(1) Includes PayPal financial results from July 1, 2015 to July 17, 2015; July 1, 2014 to September 30, 2014; respectively; also includes the financial results for the full periods, respectively, for eBay Enterprise.

Other Selected Financial and Operational Results

Operating margin — GAAP operating margin decreased to 27.6% for the

, compared to

for the same period last year. Non-GAAP operating margin decreased to

quarter, compared to

Taxes — The GAAP effective tax rate for continuing operations for the

. The non-GAAP effective tax rate for continuing operations for the

Cash flow — The company generated

$704 million

of operating cash flow from continuing operations and

$462 million

of free cash flow from continuing operations during the

Stock repurchase program — The company repurchased approximately $599 million of its common stock, or 21.9 million shares, in the third quarter. The company's total repurchase authorization remaining as of September 30, 2015 was $2.4 billion.

Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled

$8.0 billion

September 30, 2015

Business Outlook

Fourth quarter year 2015 — The company expects net revenues between $2,275 million to $2,325 million, representing FX-Neutral growth of 3% - 5%, with Non-GAAP earnings per diluted share from continuing operations in the range of $0.47 - $0.49 and GAAP earnings per diluted share from continuing operations in the range of $0.42 - $0.44.

Full year 2015 — The company is maintaining net revenue guidance of 3% - 5% growth on an FX-Neutral basis and increasing Non-GAAP earnings per diluted share from continuing operations to the range of $1.80 - $1.82 and GAAP earnings per diluted share from continuing operations to the range of $1.58 - $1.60.

Quarterly Conference Call and Webcast

eBay Inc. will host a conference call to discuss

results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company's Investor Relations website at

https://investors.ebayinc.com

. In addition, an archive of the webcast will be accessible for 90 days through the same link.

eBay Inc. uses its Investor Relations website at

as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.

About eBay

eBay Inc. (NASDAQ: EBAY) is a global commerce leader including the eBay, StubHub and eBay Classifieds platforms. Collectively, we connect millions of buyers and sellers around the world, empowering people and creating opportunity through Connected Commerce. Founded in 1995 in San Jose, Calif., eBay is one of the world’s largest and most vibrant marketplaces for discovering great value and unique selection. In 2014, eBay enabled $83 billion of gross merchandise volume. For more information about the company and its global portfolio of online brands, visit

www.ebayinc.com

Presentation

All growth rates represent year over year comparisons, except as otherwise noted. All amounts in tables are presented in U.S. dollars, rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not sum or recalculate using the rounded dollar amounts provided.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission (SEC): non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate and free cash flow. These non-GAAP financial measures are presented on a continuing operations basis. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see “Business Outlook,” “Non-GAAP Measures of Financial Performance,” “Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin,” “Reconciliation of GAAP Net Income to Non-GAAP Net Income and Reconciliation of GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate” and “Reconciliation of Operating Cash Flow to Free Cash Flow” included in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the company’s planned sale of the Enterprise business, and the future...


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