eBay(EBAY)2024-10-31 20:05Revenue and Profit Performance - Net revenues for Q3 2024 increased to $2.576 billion, up from $2.500 billion in Q3 2023[11] - Gross profit for Q3 2024 rose to $1.849 billion, compared to $1.795 billion in Q3 2023[11] - Income from operations for Q3 2024 was $595 million, up from $455 million in Q3 2023[11] - Net income for Q3 2024 was $634 million, compared to $1.305 billion in Q3 2023[11] - Comprehensive income for Q3 2024 was $701 million, compared to $1.317 billion in Q3 2023[12] - Net income for the nine months ended September 30, 2024, was $1.296 billion, compared to $2.043 billion in the same period in 2023[17] - Net revenues for the three months ended September 30, 2024 increased by 3% to $2.576 billion, compared to $2.500 billion in the same period in 2023[181] - Net revenues for the nine months ended September 30, 2024 increased by 2% to $7.704 billion, compared to $7.550 billion in the same period in 2023[181] - Net revenues increased 3% to $2,576 million in Q3 2024 compared to $2,500 million in Q3 2023, with FX-Neutral net revenues also increasing by 3%[163] - U.S. net revenues grew 3% to $1,302 million in Q3 2024, representing 51% of total net revenues, while international net revenues also increased by 3% to $1,274 million, accounting for 49% of total net revenues[175] Assets and Liabilities - Total assets decreased to $19.915 billion as of September 30, 2024, from $21.620 billion as of December 31, 2023[9] - Total liabilities decreased to $14.495 billion as of September 30, 2024, from $15.224 billion as of December 31, 2023[9] - Total stockholders' equity as of September 30, 2024, was $5.420 billion, down from $5.899 billion in 2023[15] - Goodwill increased by $54 million to $4.321 billion as of September 30, 2024, primarily due to the acquisition of Goldin, a U.S.-based auction house[43] - Intangible assets had a net carrying amount of $129 million as of September 30, 2024, with amortization expense of $27 million for the nine months ended September 30, 2024[44] - Total debt as of September 30, 2024, was $7.418 billion, including $7.000 billion in senior notes and $1.243 billion in short-term debt[109] - The fair value of senior notes was approximately $6.5 billion as of September 30, 2024, down from $7.1 billion as of December 31, 2023[115] - Customer accounts and funds receivable totaled $984 million as of September 30, 2024, compared to $1,013 million as of December 31, 2023[123] - Other current assets increased to $1,186 million as of September 30, 2024, from $1,011 million as of December 31, 2023[124] - Accrued expenses and other current liabilities totaled $2,275 million as of September 30, 2024, up from $2,196 million as of December 31, 2023[126] Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2024, were $1.737 billion, compared to $2.304 billion in 2023[17] - Cash, cash equivalents, and restricted cash at the end of the period were $2.372 billion, down from $3.009 billion in 2023[20] - Repurchases of common stock for the nine months ended September 30, 2024, totaled $2.238 billion, up from $1.118 billion in 2023[17] - Proceeds from the sale of shares in Adevinta for the nine months ended September 30, 2024, were $2.410 billion[17] - Short-term investments in corporate debt and government securities had an estimated fair value of $3.302 billion as of September 30, 2024[50] - Long-term investments in corporate debt and government securities had an estimated fair value of $956 million as of September 30, 2024[50] - Investment securities in a continuous loss position for less than 12 months had an estimated fair value of $1.3 billion and unrealized losses of $1 million as of September 30, 2024[55] - Investment securities in a continuous loss position for greater than 12 months had an estimated fair value of $728 million and unrealized losses of $13 million as of September 30, 2024[55] - Total estimated fair value of short-term and long-term investments classified as available-for-sale debt securities was $4.258 billion as of September 30, 2024[56] - Total equity investments decreased from $5.004 billion as of December 31, 2023 to $2.488 billion as of September 30, 2024[57] - The equity investment in Adevinta was valued at $4.474 billion as of December 31, 2023[60] - The equity investment in Aurelia was valued at $1.9 billion as of September 30, 2024[70] - An unrealized loss of $234 million and a realized gain on sale of $78 million were recorded related to the sale of the investment in Adevinta for the nine months ended September 30, 2024[62] - Unrealized gains of $1.367 billion and $1.331 billion were recorded related to the change in fair value of the investment in Adevinta for the three and nine months ended September 30, 2023, respectively[64] - The fair value of the equity investment in Gmarket was $323 million and $335 million as of September 30, 2024 and December 31, 2023, respectively[67] - The company exercised the option to purchase approximately 404 thousand shares of Adyen valued at $630 million on the settlement date of October 30, 2024, in exchange for $108 million in cash[82] - The fair value of the warrant increased from $364 million as of December 31, 2023, to $484 million as of September 30, 2024[83] - Total derivative assets increased from $396 million as of December 31, 2023, to $506 million as of September 30, 2024[83] - Total derivative liabilities decreased from $33 million as of December 31, 2023, to $20 million as of September 30, 2024[83] - The notional amount of foreign exchange contracts designated as cash flow hedges decreased from $1,699 million as of December 31, 2023, to $1,395 million as of September 30, 2024[92] - The notional amount of foreign exchange contracts not designated as hedging instruments decreased from $2,225 million as of December 31, 2023, to $1,509 million as of September 30, 2024[92] - The total gain (loss) recognized from foreign exchange derivative contracts in the condensed consolidated statement of income was $(28) million for the nine months ended September 30, 2024, compared to $47 million for the same period in 2023[87] - The total gain recognized from interest rate derivative contracts in the condensed consolidated statement of income was $8 million for the nine months ended September 30, 2024, compared to $9 million for the same period in 2023[88] - The gain (loss) attributable to changes in the fair value of the warrant recognized in gain (loss) on equity investments and warrant, net was $120 million for the nine months ended September 30, 2024, compared to $(40) million for the same period in 2023[89] - Total cash, cash equivalents, and restricted cash amounted to $2.493 billion as of December 31, 2023[97] - Equity investment in Adevinta was valued at $4.474 billion, classified under Level 1 in the fair value hierarchy[97][103] - Derivatives were valued at $396 million, with $364 million classified under Level 3 due to significant unobservable inputs[97] - Short-term investments totaled $2.533 billion, primarily consisting of corporate debt securities ($2.162 billion) and government and agency securities ($371 million)[97] - Long-term investments amounted to $934 million, including $335 million in equity investments under the fair value option classified under Level 3[97] - The warrant valuation using the Black-Scholes model resulted in a fair value of $484 million, with a probability of vesting range of 0.0% - 95.0% (weighted average 80.4%)[102] - Equity investment in Gmarket was valued at $323 million, with revenue multiples ranging from 0.7x to 2.0x under the GPC method and 0.9x to 1.8x under the GMAC method[106] - The Aurelia Option was valued at $74 million using a Black-Scholes model, classified under Level 3 in the fair value hierarchy[107] - The company repaid $750 million of 3.450% senior notes on August 1, 2024, and $1.2 billion of floating rate and 2.750% senior notes in January 2023[110] - eBay issued $450 million of commercial paper notes with a weighted average interest rate of 5.09% and a weighted average remaining term of 114 days as of September 30, 2024[116] - The company terminated a $2 billion credit agreement in January 2024 and entered into a new $2.0 billion five-year revolving credit facility[118] - eBay had $450 million of commercial paper notes outstanding as of September 30, 2024, leaving $1.6 billion of borrowing capacity available under the Credit Agreement[119] - The allowance for doubtful accounts decreased to $10 million as of September 30, 2024, from $23 million as of December 31, 2023[121] - Total gain (loss) on equity investments and warrant, net was $199 million for the three months ended September 30, 2024, compared to $1,212 million in the same period in 2023[127] - The company authorized an incremental $2.0 billion under its stock repurchase program in February 2024, in addition to the $4.0 billion previously authorized in 2022[139] - The company repurchased 42 million shares of common stock at an average price of $53.51 per share, totaling $2.249 billion, leaving $1.198 billion remaining authorized for repurchases as of September 30, 2024[139] - The company paid $131 million in cash dividends during the three months ended September 30, 2024, and declared a cash dividend of $0.27 per share to be paid on December 13, 2024[140] - The company recorded $146 million in stock-based compensation expense for the three months ended September 30, 2024, and $446 million for the nine months ended September 30, 2024[144] - The company expects the gross amount of unrecognized tax benefits to be reduced by at least $170 million within the next 12 months[146] - The company had a liability of $292 million for deemed repatriation of foreign earnings as of September 30, 2024, included in "Income taxes payable" on its condensed consolidated balance sheet[147] - The company's accumulated other comprehensive income (AOCI) balance was $232 million as of September 30, 2024, compared to $165 million as of June 30, 2024[149] - The company recorded a pre-tax charge of $42 million in the first quarter of 2023 related to workforce reduction as part of operational improvement plans[154] - Workforce reduction in 2023 resulted in a pre-tax charge of $99 million, with the reduction substantially completed by Q2 2024[155] - The company experienced elevated foreign currency volatility, with hedging losses of $11 million in Q3 2024 compared to hedging gains of $2 million in Q3 2023[175] - Cash flow from continuing operating activities was $755 million in Q3 2024, down from $862 million in Q3 2023[164] - The company repaid $750 million in senior notes in August 2024 and had $450 million in commercial paper outstanding with a weighted average interest rate of 5.09% as of September 30, 2024[166] - In October 2024, the company exercised an option to purchase approximately 404 thousand shares of Adyen valued at $630 million for $108 million in cash[167] - The company declared a quarterly cash dividend of $0.27 per share, payable on December 13, 2024[165] Expenses and Costs - Depreciation and amortization expenses for the nine months ended September 30, 2024, were $245 million, down from $305 million in 2023[17] - The company changed the useful life estimate for servers and networking equipment from three to four years, resulting in a $57 million reduction in depreciation expense for the nine months ended September 30, 2024[25] - Cash paid for income taxes for the nine months ended September 30, 2024, was $640 million, up from $97 million in 2023[19] - Cost of net revenues for the three months ended September 30, 2024 increased by 3% to $727 million, compared to $705 million in the same period in 2023[184] - Cost of net revenues for the nine months ended September 30, 2024 increased by 2% to $2.162 billion, compared to $2.123 billion in the same period in 2023[184] - Sales and marketing expenses for the three months ended September 30, 2024 increased by 4% to $592 million, compared to $567 million in the same period in 2023[188] - Sales and marketing expenses for the nine months ended September 30, 2024 increased by 4% to $1.710 billion, compared to $1.644 billion in the same period in 2023[188] - Interest expense decreased by 3% to $63 million in Q3 2024 and by 2% to $194 million for the nine months ended September 30, 2024[205][206] - Interest income increased by 24% to $72 million in Q3 2024 and by 32% to $196 million for the nine months ended September 30, 2024[205][206] - Total interest income and other, net increased by 12% to $66 million in Q3 2024 and by 36% to $200 million for the nine months ended September 30, 2024[205] - Effective tax rate decreased to 20.2% in Q3 2024 and 21.7% for the nine months ended September 30, 2024, primarily due to excess tax benefits on stock-based compensation[207] Dividends and Share Repurchases - Dividends declared per share increased to $0.27 in Q3 2024, up from $0.25 in Q3 2023[14] - The company authorized an incremental $2.0 billion under its stock repurchase program in February 2024, in addition to the $4.0 billion previously authorized in 2022[139] - The company repurchased 42 million shares of common stock at an average price of $53.51 per share, totaling $2.249 billion, leaving $1.198 billion remaining authorized for repurchases as of September 30, 2024[139] - The company paid $131 million in cash dividends during the three months ended September 30, 2024, and declared a cash dividend of $0.27 per share to be paid on December 13, 2024[140] - The company declared a quarterly cash dividend of $0.27 per share, payable on December 13, 2024[165] Equity Investments and Warrants - Equity investments and warrant net gain (loss) change driven by fair value adjustments and realized gain from Adevinta shares sale[203] - The gain (loss) attributable to changes in the fair value of the warrant recognized in gain (loss) on equity investments and warrant, net was $120 million for the nine months ended September 30, 2024, compared to $(40) million for the same period in 2023[89] - Total gain (loss) on equity investments and warrant, net was $199 million for the three months ended September 30, 2024, compared to $1,212 million in the same period in 2023[127] - The company recorded $199 million in gains from equity investments and warrants in Q3 2024, compared to $1,212 million in the same period in 2023[164] Operational Metrics - GMV for the three months ended September 30, 2024 increased by 2% to $18.306 billion, compared to $17.991 billion in the same period in 2023[181] - Take rate for the three months ended September 30, 2024 increased by 0.18% to 14.08%, compared to 13.90% in the same period in 2023[181] - GMV for the nine months ended September 30, 2024 increased by 1% to $55.347 billion, compared to $54.615 billion in the same period in 2023[181] - Take rate for the nine months ended September 30, 2024 increased by 0.10% to 13.92%, compared to 13.82% in the same period in 2023[181] - Operating margin improved to 23.1% in Q3 2024 from 18.2% in Q3 2023[163] Customer Accounts and Funds - Customer accounts and funds receivable represent cash held by financial institutions and payment processors, with a portion considered restricted due to regional safeguarding requirements[32] - No credit-related losses were recorded for customer accounts and funds receivable in the first nine months of 2024 and 2023[33] - Restricted cash is held in interest-bearing accounts for global sabbatical programs and other compensation arrangements,