eBay(US:EBAY)2025-07-31 20:04PART I: FINANCIAL INFORMATION Item 1: Financial Statements (unaudited) This section presents the company's unaudited condensed consolidated financial statements for Q2 2025 Condensed Consolidated Statement of Income Highlights (Three Months Ended June 30) | Financial Metric | 2025 (in millions) | 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2,730 | $2,572 | +6.1% | | Gross Profit | $1,954 | $1,837 | +6.4% | | Income from Operations | $484 | $549 | -11.8% | | Net Income | $368 | $224 | +64.3% | | Diluted EPS | $0.79 | $0.45 | +75.6% | Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $5,919 | $7,567 | | Total Assets | $17,961 | $19,365 | | Total Current Liabilities | $5,940 | $6,098 | | Total Liabilities | $13,212 | $14,207 | | Total Stockholders' Equity | $4,749 | $5,158 | Note 1 — The Company and Summary of Significant Accounting Policies This note outlines the company's business, basis of presentation, and significant accounting policies - eBay is a global commerce leader with marketplace platforms that empower millions of buyers and sellers in over 190 markets27 - Effective January 1, 2024, the company changed its estimate of the useful lives for servers and networking equipment from three to four years, citing improvements in hardware, software, and data center designs30 - The company adopted new accounting standards (ASU 2023-07 for Segment Reporting and ASU 2023-08 for Crypto Assets) with no material impact on its financial statements3738 Note 2 — Net Income Per Share This note provides a detailed computation of basic and diluted net income per share for Q2 2025 and 2024 Net Income Per Share Calculation (Three Months Ended June 30) | Per Share Data | 2025 | 2024 | | :--- | :--- | :--- | | Basic | | | | Continuing Operations | $0.80 | $0.45 | | Net Income | $0.80 | $0.45 | | Diluted | | | | Continuing Operations | $0.79 | $0.45 | | Net Income | $0.79 | $0.45 | | Weighted-Average Shares (in millions) | | | | Basic | 461 | 503 | | Diluted | 470 | 507 | Note 3 — Goodwill and Intangible Assets This note details changes in goodwill and intangible assets, including an increase from the Caramel acquisition - Goodwill increased by $117 million to $4.386 billion in the first six months of 2025, mainly from the acquisition of Caramel ($72 million) and foreign currency adjustments ($45 million)45 - Expected future amortization of intangible assets is projected to be $25 million for the remainder of 2025 and $42 million for 202647 Intangible Assets (Net Carrying Amount, in millions) | Asset Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Customer lists and user base | $43 | $46 | | Marketing related | $36 | $38 | | Developed technologies | $51 | $34 | | Total | $131 | $119 | Note 4 — Segments This note clarifies that eBay operates as a single reportable segment and breaks down revenue by activity and geography - The company operates as one reportable segment, and performance is assessed by the CEO based on consolidated net income49 Net Revenues by Activity (Six Months Ended June 30, in millions) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Marketplace revenues | $4,391 | $4,346 | | Advertising revenues | $924 | $782 | | Total net revenues | $5,315 | $5,128 | Net Revenues by Geography (Six Months Ended June 30, in millions) | Geography | 2025 | 2024 | | :--- | :--- | :--- | | United States | $2,743 | $2,595 | | United Kingdom | $712 | $782 | | China | $611 | $566 | | Germany | $483 | $489 | | Rest of world | $766 | $696 | | Total net revenues | $5,315 | $5,128 | Note 5 — Investments This note details the company's investment portfolio, highlighting a $225 million cash distribution from Aurelia - In Q2 2025, eBay received a $225 million cash distribution from its equity investment in Aurelia, which was treated as a return of capital66 - The carrying value of the investment in Aurelia was $653 million as of June 30, 2025, down from $867 million at year-end 2024, primarily due to the cash distribution67 Fair Value of Investments (in millions) | Investment Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Short-term investments | $1,706 | $3,457 | | Long-term investments (debt) | $1,608 | $1,309 | | Total equity investments | $912 | $1,130 | Note 6 — Derivative Instruments This note explains the use of derivatives to mitigate risk and notes the expiration of the Adyen warrant - The company uses foreign currency and interest rate contracts to hedge against volatility in cash flows from forecasted revenues, expenses, and intercompany balances7879 - The warrant agreement with Adyen N.V. expired on January 31, 202585 Notional Amounts of Outstanding Derivatives (in millions) | Derivative Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Foreign exchange contracts (cash flow hedges) | $1,859 | $1,329 | | Foreign exchange contracts (not designated) | $1,847 | $1,667 | | Interest rate contracts (cash flow hedges) | $200 | $150 | | Total | $3,906 | $3,146 | Note 7 — Fair Value Measurement of Assets and Liabilities This note details the three-level hierarchy used for fair value measurement of financial assets and liabilities - The Adyen warrant, previously a Level 3 derivative, had its balance reduced to zero by December 31, 2024, following exercise and expiration104105 Financial Assets Measured at Fair Value (June 30, 2025, in millions) | Asset Category | Total Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Cash, cash equivalents & restricted cash | $3,231 | $3,231 | $— | $— | | Derivatives | $69 | $— | $54 | $15 | | Short-term investments | $1,706 | $— | $1,706 | $— | | Long-term investments | $1,608 | $— | $1,608 | $— | | Total Financial Assets | $6,614 | $3,231 | $3,368 | $15 | Note 8 — Supplemental Consolidated Financial Information This note provides additional detail on specific financial statement line items like accrued expenses - For the six months ended June 30, 2024, the 'Loss on equity investments and warrant, net' of $319 million was driven by unrealized losses on Adevinta shares, changes in the fair value of the Adyen warrant, and the Aurelia option117 Accrued Expenses and Other Current Liabilities (June 30, 2025, in millions) | Expense Type | Amount | | :--- | :--- | | Accrued indirect tax expense | $495 | | Accrued compensation and related benefits | $438 | | Accrued marketing expenses | $222 | | Other current tax liabilities | $191 | | Total | $2,288 | Note 9 — Debt This note outlines the company's $6.75 billion debt structure and recent repayment of $800 million in senior notes - In March 2025, eBay repaid the $800 million principal amount of its 1.900% senior notes due 2025 upon maturity121 - The company has a $2.0 billion revolving credit facility maturing in January 2029, which was undrawn as of June 30, 2025127128 Total Debt Summary (in millions) | Debt Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Long-Term Debt | $5,002 | $5,752 | | Short-Term Debt | $1,746 | $1,673 | | Total Debt | $6,748 | $7,425 | Note 10 — Commitments and Contingencies This note discusses legal proceedings, including a deferred prosecution agreement and a dismissed DOJ complaint - A civil complaint filed by the DOJ regarding alleged violations of environmental acts was dismissed by the District Court, and the government's subsequent appeal was voluntarily dismissed in April 2025136 - The company is under a three-year deferred prosecution agreement (DPA) related to a 2019 stalking incident, which requires an independent compliance monitor135 - Accrued amounts for legal and regulatory proceedings were not material as of June 30, 2025, and the company believes reasonably possible losses in excess of accruals are also not material138 Note 11 — Stockholders' Equity This note covers changes in stockholders' equity, focusing on stock repurchases and dividend payments - During the six months ended June 30, 2025, the company paid $268 million in cash dividends147 - In July 2025, the Board declared a cash dividend of $0.29 per share, payable in September 2025147 Stock Repurchase Activity (Six Months Ended June 30, 2025) | Metric | Value | | :--- | :--- | | Shares Repurchased (millions) | 18 | | Average Price per Share | $68.64 | | Value of Shares Repurchased (millions) | $1,250 | | Remaining Authorization (millions) | $2,048 | Note 12 — Employee Benefit Plans This note details stock-based compensation expense and outstanding restricted stock units (RSUs) - As of June 30, 2025, there were 24 million restricted stock units (RSUs) outstanding149 Stock-Based Compensation Expense (in millions) | Period | Expense | | :--- | :--- | | Three Months Ended June 30, 2025 | $165 | | Six Months Ended June 30, 2025 | $301 | | Three Months Ended June 30, 2024 | $154 | | Six Months Ended June 30, 2024 | $300 | Note 13 — Income Taxes This note discusses ongoing tax examinations and the expected reduction of unrecognized tax benefits - The company is under examination by tax authorities in the U.S. and other material jurisdictions for tax years from 2010 to 2023152 - eBay expects the gross amount of unrecognized tax benefits to decrease by at least $210 million within the next 12 months153 - New U.S. tax legislation, the 'One Big Beautiful Bill Act,' was enacted on July 4, 2025, and the company is evaluating its potential impact on its effective tax rate and deferred tax liabilities155 Note 14 — Accumulated Other Comprehensive Income This note provides a detailed reconciliation of the changes in Accumulated Other Comprehensive Income (AOCI) Changes in AOCI (Six Months Ended June 30, 2025, in millions) | AOCI Component | Beginning Balance (Dec 31, 2024) | Net Change | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | | Unrealized (Losses) on Derivatives | $75 | $(114) | $(39) | | Unrealized Gains on Investments | $(7) | $18 | $11 | | Foreign Currency Translation | $130 | $64 | $194 | | Total AOCI | $206 | $(11) | $195 | Note 15 — Restructuring This note details the completion of a 2023 workforce reduction plan and the remaining accrued liability - A workforce reduction plan from Q4 2023 was substantially completed in Q2 2024161 - As of June 30, 2025, the remaining accrued restructuring liability was $5 million, down from $10 million at the beginning of the year161 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, revenue trends, and capital resources Overview This subsection provides a high-level overview of business performance, including GMV growth and macroeconomic pressures - GMV grew in H1 2025 due to strategy execution in Focus Categories, but was partially offset by pressures from geopolitical events, inflation, and interest rates167 - For Q2 2025, net revenues increased 6% to $2.73 billion, while operating margin decreased to 17.7% from 21.3% YoY, primarily due to higher non-recurring G&A expenses169170 - In Q2 2025, the company repurchased $625 million of common stock, paid $134 million in dividends, and received a $225 million cash distribution from its Aurelia investment171 Results of Operations This subsection analyzes operational results, including revenue growth drivers and increased operating expenses - GMV growth was driven by strategic initiatives, improved consumer demand, and strong performance in Focus Categories like Collectibles, Motors Parts & Accessories, and Luxury goods186 - General and administrative expenses increased 53% in Q2 2025 YoY, primarily due to a $57 million increase related to legal matters and a $55 million increase for senior leader transitions and restructuring194202 - The effective tax rate for Q2 2025 was 22.5%, down from 31.1% in Q2 2024, mainly due to higher excess tax benefits on stock-based compensation209 Key Operating Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | % Change (As Reported) | % Change (FX-Neutral) | | :--- | :--- | :--- | :--- | :--- | | Net Revenues (in millions) | $2,730 | $2,572 | 6% | 4% | | GMV (in millions) | $19,514 | $18,418 | 6% | 4% | | Take Rate | 13.99% | 13.96% | +0.03% | N/A | Liquidity and Capital Resources This subsection details the company's liquidity, cash flows, and capital allocation, including stock repurchases - Cash from operations decreased primarily due to a $682 million increase in cash paid for taxes213 - During the first six months of 2025, the company repurchased $1.3 billion of its common stock and had $2.0 billion remaining under its authorization as of June 30, 2025228 Cash Flow Summary (Six Months Ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $480 | $982 | | Net cash provided by investing activities | $1,379 | $902 | | Net cash used in financing activities | $(1,964) | $(1,805) | Item 3: Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to interest rate, equity price, and foreign currency risks - A hypothetical 1% (100 basis point) increase in interest rates would result in a $38 million decrease in the fair value of the company's investments as of June 30, 2025235 - As of June 30, 2025, the company held $912 million in equity investments, primarily in privately-held companies, exposing it to equity price risk237 - The company uses foreign exchange contracts to hedge its global revenue and cost exposures, resulting in an immaterial impact on pre-tax income from a hypothetical 20% adverse change in foreign exchange rates240243245 Item 4: Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and internal financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025246 - There were no material changes in internal control over financial reporting during the most recently completed fiscal quarter247 PART II: OTHER INFORMATION Item 1: Legal Proceedings This item references Note 10 for details on legal proceedings - Information regarding legal proceedings is detailed in Note 10 to the condensed consolidated financial statements250 Item 1A: Risk Factors This section states no material changes to risk factors from the 2024 Annual Report - There have been no material changes to the Company's risk factors from those disclosed in the 2024 Form 10-K251 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds This section details common stock repurchases of $625 million during Q2 2025 - For the three months ended June 30, 2025, eBay repurchased $625 million of its common stock, with $2.048 billion remaining available for future repurchases253 Issuer Purchases of Equity Securities (Q2 2025) | Period Ended | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 30, 2025 | 3,039,668 | $65.32 | | May 31, 2025 | 2,996,252 | $70.85 | | June 30, 2025 | 2,793,308 | $76.67 | | Total | 8,829,228 | N/A | Item 3: Defaults Upon Senior Securities This item is not applicable as there were no defaults on senior securities - Not applicable256 Item 4: Mine Safety Disclosures This item is not applicable to the company - Not applicable257 Item 5: Other Information This section discloses the adoption of Rule 10b5-1 trading plans by two senior executives - On May 22, 2025, Cornelius Boone, SVP, Chief People Officer, adopted a 10b5-1 trading plan for the potential sale of up to 32,661 shares and the gifting of 1,471 shares258 - On June 13, 2025, Mazen Rawashdeh, SVP, Chief Technology Officer, adopted a 10b5-1 trading plan for the potential sale of up to 41,558 shares259 Item 6: Exhibits This item lists all exhibits filed as part of the Quarterly Report on Form 10-Q - This section provides an index of all exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL documents260262