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eBay(EBAY) - 2024 Q2 - Quarterly Results
eBayeBay(US:EBAY)2024-07-31 20:07

Executive Summary This section provides an overview of eBay's strong Q2 2024 financial performance, strategic advancements, and key innovations driving future growth Second Quarter 2024 Performance Overview eBay Inc. reported strong Q2 2024 financial results, exceeding expectations with positive year-over-year Gross Merchandise Volume (GMV) growth and increased revenue, driven by Focus Categories and new AI capabilities - eBay's Q2 2024 results were strong, marking progress toward sustainable, long-term growth3 - Continued momentum in Focus Categories contributed to increased GMV3 - New AI capabilities are driving innovation and transforming customer experience3 - The company exceeded expectations across key financial metrics, achieving positive year-over-year GMV growth despite an uneven discretionary demand environment3 Strategic Initiatives and Innovation eBay advanced strategic focus categories, integrated new payment methods, expanded its refurbished program, launched AI-powered features, and completed the sale of Adevinta shares while acquiring Goldin - Completed the sale of Adevinta shares for $2.4 billion in cash and $1.9 billion in Aurelia shares7 - Acquired Goldin from Collectors, sold the eBay vault, and established a commercial agreement for streamlined grading, storage, and selling experiences7 - Enabled Venmo as an additional payment method, targeting Gen Z and Millennials for increased payment flexibility7 - Expanded the eBay Refurbished program to include golf clubs, offering warranties and hassle-free returns7 - Launched innovative product features, including generative-AI powered 'Shop the look' for fashion buyers (U.S. and U.K.) and an AI-powered background enhancement tool for sellers (U.S., U.K., Germany)7 - Introduced improved selling and buying experiences for pre-owned apparel in the U.K., featuring a new selling flow and Generative AI-powered 'Shop the look' and 'Explore' features for buyers7 - Partnered with Certilogo to launch a 'click-to-resell' feature for pre-owned clothing, including authenticity verification via Certilogo's AI-based system, piloted by Save The Duck7 Financial Highlights (Q2 2024) This section details eBay's Q2 2024 financial performance, including key metrics, operating margins, tax rates, cash flow, and capital returns Key Financial Metrics eBay achieved a 1% increase in revenue and GMV on an as-reported and FX-Neutral basis for Q2 2024, with GAAP diluted EPS growing 39% to $0.45 and Non-GAAP diluted EPS increasing 15% to $1.18 Key Financial Metrics (Millions) | Metric | Q2 2024 | Q2 2023 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Net revenues | $2,572M | $2,540M | $32M | 1% | | GAAP Net income (Continuing Ops) | $226M | $172M | $54M | 31% | | GAAP EPS (Diluted, Continuing Ops) | $0.45 | $0.32 | $0.13 | 39% | | Non-GAAP Net income (Continuing Ops) | $602M | $555M | $47M | 8% | | Non-GAAP EPS (Diluted, Continuing Ops) | $1.18 | $1.03 | $0.15 | 15% | Gross Merchandise Volume (Billions) | Metric | Q2 2024 | Q2 2023 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Gross Merchandise Volume | $18.4B | $18.2B | $0.2B | 1% | | GMV (FX-Neutral) | $18.4B | N/A | N/A | 1% | Operating Margins and Tax Rates Both GAAP and Non-GAAP operating margins improved year-over-year in Q2 2024, reaching 21.3% and 27.9% respectively, while the GAAP effective tax rate decreased significantly to 31.1% Operating Margins and Tax Rates | Metric | Q2 2024 | Q2 2023 | Change (pp) | | :-------------------------- | :------ | :------ | :---------- | | GAAP Operating Margin | 21.3% | 20.4% | +0.9 | | Non-GAAP Operating Margin | 27.9% | 26.9% | +1.0 | | GAAP Effective Tax Rate | 31.1% | 39.7% | -8.6 | | Non-GAAP Effective Tax Rate | 16.5% | 16.5% | 0.0 | Cash Flow and Capital Returns In Q2 2024, eBay generated $367 million in operating cash flow and $278 million in free cash flow, returning $1.1 billion to stockholders through share repurchases and dividends Cash Flow and Capital Returns (Millions/Billions) | Metric | Q2 2024 | Q2 2023 | | :-------------------------- | :------ | :------ | | Operating Cash Flow | $367M | $605M | | Free Cash Flow | $278M | $492M | | Share Repurchases | $1.0B | $250M | | Cash Dividends Paid | $135M | $133M | | Total Capital Returned | $1.1B | $385M | - Total repurchase authorization remaining as of June 30, 2024, was approximately $1.9 billion15 - Cash and cash equivalents and non-equity investments portfolio totaled $6.3 billion as of June 30, 202415 Business Operations and Strategic Developments This section outlines eBay's platform enhancements, strategic partnerships, and significant social and environmental impact initiatives during the quarter Platform Enhancements and Partnerships eBay expanded its consignment service to luxury items, formed strategic partnerships with Condé Nast and McLaren Formula 1, collaborated with Seagate on sustainability, and launched new AI-powered product features - Expanded consignment service in the U.S. to include luxury watches, footwear, and fine jewelry, partnering with Linda's Stuff9 - Partnered with Condé Nast to spotlight pre-loved apparel at major fashion events9 - Became an Official Partner of the McLaren Formula 1 Team for a multi-year collaboration, featuring eBay branding on race cars for four races in 20249 - Announced a sustainability collaboration with Seagate, offering direct sales of factory recertified hard drives on eBay to reduce e-waste7 Social and Environmental Impact eBay released its 2023 Impact and Recommerce Reports, partnered with Elton John for 'Rocket Man Resale', granted nearly $7 million through the eBay Foundation, and saw eBay for Charity contributions exceed $47 million globally - Released its 2023 Impact Report, showcasing efforts in economic opportunities, sustainable commerce, and a diverse workforce9 - Published its latest Recommerce Report, emphasizing the benefits of shopping pre-loved items9 - Launched 'Rocket Man Resale' in partnership with Elton John, selling his personal collection of pre-loved fashion items exclusively on eBay, with all proceeds benefiting the Elton John AIDS Foundation9 - eBay Foundation granted nearly $7 million to strategic nonprofit partners in the U.S. to address barriers to entrepreneurship for historically excluded groups9 - eBay for Charity contributed over $47 million globally in Q2, representing a 22% year-over-year increase9 Financial Statements This section presents eBay's condensed consolidated financial statements, including the balance sheet, statement of income, and statement of cash flows Condensed Consolidated Balance Sheet As of June 30, 2024, eBay's total assets decreased to $20.38 billion from $21.62 billion at year-end 2023, primarily due to the sale of Adevinta shares, with total liabilities at $14.85 billion and stockholders' equity at $5.53 billion Condensed Consolidated Balance Sheet (Millions) | Metric | June 30, 2024 (Millions) | December 31, 2023 (Millions) | | :-------------------------------- | :----------------------- | :-------------------------- | | Total current assets | $7,269 | $11,016 | | Equity investment in Adevinta | $— | $4,474 | | Equity investment in Aurelia | $1,910 | $— | | Total assets | $20,378 | $21,620 | | Total current liabilities | $5,799 | $4,520 | | Total liabilities | $14,853 | $15,224 | | Total stockholders' equity | $5,525 | $6,396 | Condensed Consolidated Statement of Income For the three months ended June 30, 2024, eBay reported net revenues of $2.57 billion and a gross profit of $1.84 billion, with income from operations at $549 million and GAAP net income from continuing operations at $226 million Condensed Consolidated Statement of Income (Millions) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | | :----------------------------------- | :----------------- | :----------------- | | Net revenues | $2,572 | $2,540 | | Cost of net revenues | $735 | $718 | | Gross profit | $1,837 | $1,822 | | Total operating expenses | $1,288 | $1,304 | | Income from operations | $549 | $518 | | Income from continuing operations | $226 | $172 | | Net income | $224 | $171 | | Diluted EPS (Continuing operations) | $0.45 | $0.32 | Condensed Consolidated Statement of Cash Flows Net cash provided by operating activities for Q2 2024 was $367 million, with investing activities providing $652 million (boosted by $2.42 billion from Adevinta share sale), and financing activities using $1.12 billion Condensed Consolidated Statement of Cash Flows (Millions/Billions) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | | :----------------------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $367 | $601 | | Net cash provided (used in) by investing activities | $652 | $(277) | | Proceeds from sale of shares in Adevinta | $2,417 | $— | | Net cash used in financing activities | $(1,119) | $(70) | | Repurchases of common stock | $(1,030) | $(250) | | Payments for dividends | $(135) | $(133) | | Cash, cash equivalents and restricted cash at end of period | $2,555 | $2,674 | Supplemental Operating Data This section provides additional operating metrics, including a summary of net revenues and trends in active buyers and Gross Merchandise Volume (GMV) Net Revenues Summary Total net revenues for Q2 2024 were $2.57 billion, a 1% year-over-year increase, with international revenue consistently accounting for approximately 50% of total net revenues Net Revenues Summary (Millions) | Metric | Q2 2024 (Millions) | Q1 2024 (Millions) | Q4 2023 (Millions) | Q3 2023 (Millions) | Q2 2023 (Millions) | | :-------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Total net revenues | $2,572 | $2,556 | $2,562 | $2,500 | $2,540 | | Current quarter vs prior year quarter | 1% | 2% | 2% | 5% | 5% | | Percent from international | 50% | 49% | 50% | 50% | 50% | Active Buyers and Gross Merchandise Volume (GMV) Active buyers remained stable at 132 million in Q2 2024, with total Gross Merchandise Volume (GMV) growing 1% year-over-year to $18.42 billion, driven by both U.S. and International segments Active Buyers (Millions) | Metric | Q2 2024 (Millions) | Q1 2024 (Millions) | Q4 2023 (Millions) | Q3 2023 (Millions) | Q2 2023 (Millions) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Active Buyers | 132 | 132 | 132 | 132 | 132 | | Current quarter vs prior year quarter | 0% | (1)% | (2)% | (3)% | (4)% | | Active Buyers (excl. GittiGidiyor, TCGplayer, Goldin) | 131 | 131 | 131 | 131 | 131 | | Current quarter vs prior year quarter | 0% | 0% | (1)% | (1)% | (3)% | Gross Merchandise Volume (Millions) | Metric | Q2 2024 (Millions) | Q1 2024 (Millions) | Q4 2023 (Millions) | Q3 2023 (Millions) | Q2 2023 (Millions) | | :-------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | | U.S. Gross Merchandise Volume | $8,798 | $8,974 | $8,891 | $8,638 | $8,702 | | Current quarter vs prior year quarter | 1% | 0% | 0% | (1)% | (3)% | | International Gross Merchandise Volume | $9,620 | $9,649 | $9,700 | $9,353 | $9,512 | | Current quarter vs prior year quarter | 1% | 3% | 4% | 4% | (1)% | | Total Gross Merchandise Volume | $18,418 | $18,623 | $18,591 | $17,991 | $18,214 | | Current quarter vs prior year quarter | 1% | 1% | 2% | 2% | (2)% | Business Outlook This section provides eBay's financial guidance for the third quarter of 2024 and details regarding its latest dividend declaration Third Quarter 2024 Guidance For Q3 2024, eBay projects net revenues between $2.50 billion and $2.56 billion, anticipating 1% to 3% FX-Neutral year-over-year growth, with diluted GAAP EPS of $0.82 to $0.87 and Non-GAAP EPS of $1.15 to $1.20 Q3 2024 Guidance | Metric | Q3 2024 Guidance | | :-------------------- | :--------------- | | Revenue | $2.50B - $2.56B | | FX-Neutral Y/Y Growth | 1% - 3% | | Diluted GAAP EPS | $0.82 - $0.87 | | Diluted Non-GAAP EPS | $1.15 - $1.20 | Dividend Declaration eBay's Board of Directors declared a cash dividend of $0.27 per share of common stock, payable on September 13, 2024, to stockholders of record as of August 30, 2024 - Cash dividend of $0.27 per share of common stock declared14 - Dividend payable on September 13, 2024, to stockholders of record as of August 30, 202414 Non-GAAP Financial Measures and Reconciliations This section explains eBay's use of non-GAAP financial measures and provides detailed reconciliations to their most directly comparable GAAP measures Explanation of Non-GAAP Measures eBay uses non-GAAP financial measures to provide investors with a clearer understanding of its core operating results, excluding items not indicative of ongoing operational performance - Non-GAAP measures are used to supplement GAAP financial statements and provide enhanced understanding of current financial performance and future prospects4548 - Excluded items from non-GAAP measures include stock-based compensation expense and related employer payroll taxes, amortization or impairment of acquired intangible assets, impairment of goodwill, certain amortization of deferred tax assets, significant gains or losses from business acquisitions/disposals, certain gains or losses on investments, restructuring charges, and changes in fair market value of warrants5051525354 - Free cash flow is defined as operating cash flows less purchases of property and equipment, used as a liquidity measure56 GAAP to Non-GAAP Operating Income Reconciliation For Q2 2024, eBay's non-GAAP operating income was $720 million, resulting in a non-GAAP operating margin of 27.9%, achieved by adjusting GAAP operating income for specific non-cash and non-recurring items GAAP to Non-GAAP Operating Income Reconciliation (Millions) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | | :------------------------------------------------ | :----------------- | :----------------- | | GAAP operating income | $549 | $518 | | Stock-based compensation expense and related employer payroll taxes | $158 | $158 | | Amortization of acquired intangible assets | $9 | $8 | | Restructuring | $3 | $— | | Total non-GAAP operating income adjustments | $171 | $166 | | Non-GAAP operating income | $720 | $684 | | GAAP operating margin | 21.3% | 20.4% | | Non-GAAP operating margin | 27.9% | 26.9% | GAAP to Non-GAAP Net Income and Effective Tax Rate Reconciliation eBay's non-GAAP net income from continuing operations for Q2 2024 was $602 million, leading to a non-GAAP diluted EPS of $1.18 and a non-GAAP effective tax rate of 16.5% after various adjustments GAAP to Non-GAAP Net Income and Effective Tax Rate Reconciliation (Millions) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | | :------------------------------------------------ | :----------------- | :----------------- | | GAAP net income from continuing operations | $226 | $172 | | Non-GAAP operating income adjustments | $171 | $166 | | Realized change in fair value of shares sold in Adevinta | $(84) | $— | | Change in fair market value of warrant | $174 | $(31) | | Change in fair market value of other equity investments | $23 | $35 | | Fair value of Aurelia option | $109 | $— | | Income tax effects and adjustments | $(17) | $3 | | Non-GAAP net income from continuing operations | $602 | $555 | | GAAP diluted net income per share | $0.45 | $0.32 | | Non-GAAP diluted net income per share | $1.18 | $1.03 | | GAAP effective tax rate – Continuing operations | 31.1% | 39.7% | | Non-GAAP effective tax rate – Continuing operations | 16.5% | 16.5% | Operating Cash Flow to Free Cash Flow Reconciliation For Q2 2024, eBay's free cash flow was $278 million, derived by subtracting $89 million in property and equipment purchases from $367 million in net cash provided by operating activities Operating Cash Flow to Free Cash Flow Reconciliation (Millions) | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | | :-------------------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $367 | $605 | | Less: Purchases of property and equipment | $(89) | $(113) | | Free cash flow | $278 | $492 | Corporate Information and Disclosures This section provides essential corporate information about eBay, including its mission, forward-looking statements, risk factors, and investor/media contacts About eBay eBay Inc. is a global commerce leader founded in 1995, connecting millions of buyers and sellers across more than 190 markets worldwide, facilitating over $73 billion in gross merchandise volume in 2023 - eBay Inc. is a global commerce leader connecting millions of buyers and sellers in over 190 markets18 - Founded in 1995 in San Jose, California, eBay is one of the world's largest and most vibrant marketplaces18 - In 2023, eBay enabled more than $73 billion of gross merchandise volume18 Forward-Looking Statements and Risk Factors This press release contains forward-looking statements regarding eBay's future performance and strategic initiatives, which are subject to various risks and uncertainties that could cause actual results to differ materially - The press release contains forward-looking statements about eBay's future performance, financial results, strategic initiatives, and the effects of new product features or programs21 - Actual results could differ materially due to risks and uncertainties, including fluctuations in results, ability to attract/retain users, market competition, foreign operations, inflationary pressure, foreign currency exchange rates, geopolitical events, technological developments, and regulatory changes2122 - More information on risk factors is available in the company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q24 Investor and Media Contacts Contact information for investor relations (John Egbert) and media relations (Karly Tokioka) is provided, along with links to eBay's company news and investor relations websites for further information - Investor Relations Contact: John Egbert (ir@ebay.com)25 - Media Relations Contact: Karly Tokioka (press@ebay.com)25 - Company News: https://www.ebayinc.com/stories/news/[25](index=25&type=chunk) - Investor Relations website: https://investors.ebayinc.com[25](index=25&type=chunk)