This summary is based on the first quarter fiscal 2008 earnings call conducted by eBay Inc. (EBAY) on April 16, 2008.
Management:
President, CEO and Director: John J Donahue
SVP and CFO: Robert H Swan
VP, Investor Relations: Mark Rowen
Key Investor Issues:
- Q1 non-GAAP EPS was 42 cents, an increase of 26% from 33 cents in last year quarter.
- Revenue rose 22% from $377 million in last year quarter to $460 million.
- Full year 2008 net revenues forecast to be in the range of $8.7 billion to $9 billion.
- John Donahue assumed the role of CEO on March 31, 2008.
First-Quarter Financial Highlights
The company recorded non-GAAP net income of $562 million versus $460 million in the previous year quarter.
This represents an increase of $102 million, or 22%.
The quarter GAAP operating margin decreased to 25.2% compared with 26.5% in the same period last year.
- The non-GAAP operating margin dipped to 32% for the quarter versus 33.6% for the same period in the previous year.
- The decrease in operating margins was a result of the faster growing lower-margin businesses such as PayPal and Skype.
The management reported operating cash flow of $766 million during the quarter.
The free cash flow during the quarter was $632 million.
The company repurchased approximately 37 million shares of its outstanding common stock at a cost of about $1 billion.
- The cash, cash equivalents and investments totaled $4.11 billion end of first quarter compared with $5.04 billion in the fourth quarter of 2007.
- The GAAP effective tax rate for the quarter was 21% versus 24% for the first quarter of 2007.
- The non-GAAP effective tax rate for the quarter was 23% compared with 26% for the first quarter of 2007.
- The company completed the re-organization of select North American and European functional groups to align more closely with strategic priorities.
Performance Analysis of Segments
Marketplaces
- The unit consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites.
- Q1 revenue was $1.48 billion, representing a 19% year-on-year growth.
- The growth in revenue was driven by advertising, classifieds and StubHub.
- StuHub announced a deal making for the online ticket marketplace for the Daytona 500.
- The management reported that the net revenues generated outside of the U.S. were 55% of total Marketplaces net revenues for the quarter.
- The gross merchandise volume was $16.04 billion for the quarter, an increase of 12% compared with the first quarter of 2007.
- The unit continues to focus on customer-facing initiatives designed to make transactions on the eBay platform safer and it’s various global sites easier to use while enhancing selection in a unique way.
- During the quarter, the management began using detailed seller ratings (DSRs) to extend seller discounts for qualified power sellers based on the quality of their service. The management also began to increase the exposure for listings and search results for those sellers with consistently high DSRs.
Payments:
- PayPal posted $582 million in net revenue, an increase of 32% year-over-year.
- The net total payment volume (TPV) increased by 34% year-on-year to $14.42 billion.
- The net revenue and net TPV growth was driven by the continued strong growth of Merchant Services globally and increased penetration on eBay internationally.
- During the quarter, PayPal processed an average of $158 million of TPV each day, which is equivalent to $6.6 million of TPV per hour.
