30th October, 2002
eBay Outlines Global Business Strategy at 2002 Analyst Conference
San Jose, Calif., October 30, 2002 - eBay Inc. (Nasdaq: eBay www.ebay.com ), the world's online marketplace, today held its annual financial analyst conference, during which the company outlined its strategy for growth. At the meeting, eBay reaffirmed its financial guidance for 2003 and its 2005 revenue goal of $3 billion. The company also provided a long-term view of its business.
"Working with our community of users, eBay has built a transaction-based business like no other," said Meg Whitman, president and CEO of eBay. "The power of our business model along with the ongoing dedication and success of our buyers and sellers give us great confidence in the future."
eBay executives highlighted key areas of growth, both in the U.S. and internationally, as well as the importance of online payments, and underscored the company's ongoing commitment to returns-based investment and profitability.
Sources of Revenue Growth -- The U.S. Business
eBay executives outlined plans for growing the U.S. business across all of its categories, fixed price trading, online payments and marketing. Well-established areas such as computers and eBay Motors were highlighted along with newer categories such as apparel and business & industrial. eBay also described the increased adoption of fixed price trading and seller merchandising features such as eBay Stores.
Sources of Revenue Growth -- The International Business
The company reviewed its international expansion and its current presence in 27 markets around the world. The growth of eBay's top three international sites - eBay Germany, eBay United Kingdom and Internet Auction in Korea -- was highlighted. The company's portfolio of international businesses has been profitable on a fully allocated basis for four consecutive quarters.
Sources of Revenue Growth - Online Payments
The company reiterated the strategic importance of its recent acquisition of PayPal, the world's online payments solution. Three key areas for growth were laid out: integration of PayPal's product on the eBay platform, PayPal's business off eBay, and international expansion. Although it is too early to identify trends, the company noted that after only two weeks of initial product integration, early integration results look promising. PayPal's total payment volume increased more than 10% during the prior week.
Operations
eBay summarized its progress in scaling operations to support its ever-growing business around the world. Areas of focus included cost efficient and returns-based management discipline as well as heightened expertise across technology, trust and safety, customer support and human resources.
Financial Outlook
Q4 2002
eBay reaffirmed its guidance for the fourth quarter of 2002. The company expects that in Q4-02 consolidated net revenues could range between $372 and $381 million, and pro forma earnings per diluted share could range between $0.22 and $0.23. In addition, the company indicated that expected transaction revenues for the quarter could range between $359 million and $366 million, and that other revenues, which include offline, advertising and end-to-end services, could range between $13 million and $15 million.
Full Year 2002
eBay also reaffirmed full year 2002 guidance of between $1.17 billion and $1.18 billion in net revenues and pro forma earnings per share of $0.81 to $0.82. In addition, the company estimates that gross merchandise sales could range between $14.4 billion and $14.6 billion, and that transaction revenues excluding PayPal could approximate $1.0 billion. The company also estimated that 2002 operating cash flows could approximate $430 million and free cash flows could approximate $300 million.
2003
As previously stated, eBay believes consolidated net revenues for 2003 could range between $1.77 billion and $1.83 billion, pro forma earnings per diluted share could range between $1.12 and $1.15, and GAAP earnings per diluted share could range between $1.02 and $1.05. In addition, the company estimated that transaction revenues could range between $1.71 billion and $1.77 billion, and that other revenues, including offline, advertising and end-to-end services, could approximate $60 million. eBay also believes that free cash flows for 2003 could approximate $500 million.
2005
The company reaffirmed its 2005 revenue goal of $3 billion, not including incremental PayPal revenues.
Long Term
Looking beyond 2005, the company said that eBay, excluding PayPal, might achieve operating margins between 35% and 40%, a range higher than previously indicated. In addition, the company estimates that long-term PayPal margins could range between 20% and 25%. eBay emphasized that, since the PayPal acquisition closed only one month ago, it is too early to project revenue contribution or consolidated pro forma operating margins for the long term.
Active Users
In addition, the company published a new active user metric to illustrate the vibrancy of the eBay marketplace. The company defines active user as any user who has bid, bought or sold in the trailing twelve-month period, excluding the users of Half.com and Korea's Internet Auction Co. At the end of Q3, there were 24.2 million unique users on eBay and $511 in gross merchandise sales per active user.
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 the integration of PayPal and the litigation, regulatory, credit card association, and other risks specific to PayPal, to manage other 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 commercial relationships, 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, its quarterly reports on Form 10-Q, and its other S.E.C. filings and prospectuses. All forward-looking statements are based on information available to the company on the date hereof, assume no significant acquisitions or dispositions, and the company assumes no obligation to update such statements. |
