Q1- Q1 12 Financial Highlights April il

Transcription

1 Q1-12 Financial Highlights April 18, 2012

2 This presentation contains non-gaap measures relating to the company's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the appendix at the end of this presentation. This presentation contains forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the second quarter and full year 2012 and the future growth in the Payments, Marketplaces and GSI businesses. Our actual results may differ materially from those included in this presentation for a variety of reasons, including, but not limited to; changes in political, business, and economic conditions; foreign exchange rate fluctuations; the impact and integration of recent and future acquisitions, including GSI; our increasing need to grow revenues from existing users in established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise, with a broad range of businesses; our need to manage regulatory, tax, IP and litigation risks (including risks specific to PayPal, Bill Me Later and the financial industry); and our need to timely upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability. You can find more information about factors that could affect our operating results in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q (available at You should not rely on any forward-looking statements, and we assume no obligation to update them. All information in this presentation is as of April 18, 2012, and we do not intend, and undertake no duty, to update this presentation. 1

3 Q1-12 Summary Great start to 2nd year of 3 year journey... Revenue growth* up 29% and non-gaap EPS** up 18% driven by strength across all businesses Continuing to invest in new products and improve the customer experience Capital allocation: Strong free cash flow impacted by tax payment related to Skype sale... Repurchased 7M shares... Announced 2 acquisitions and 1 divestiture Increasing full year outlook to reflect operating performance 2 *Note: All growth rates represent year-over-year growth in Q1-12 compared to the same period of the prior year at spot FX rates ** Calculation of Non-GAAP EPS is included in the Appendix of this presentation

4 Q1-12 Summary Revenue ($ millions) Revenue 3,380 3,277 2,196 2,215 2,249 2,495 2,546 2,760 2,966 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Reported Y/Y Growth 9% 6% 1% 5% 16% 25% 32% 35% 29% Organic Y/Y Growth* 11% 13% 12% 12% 14% 18% 18% 19% 18% 3 *Calculation of Organic Y/Y Growth is included in the Appendix of this presentation

5 Q1-12 Summary Non-GAAP EPS* Non-GAAP EPS* $0.60 $0.55 $0.52 $0.47 $0.48 $0.48 $0.42 $0.40 $0.40 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Reported Y/Y Growth 8% 8% 4% 16% 12% 20% 20% 17% 18% Non-GAAP Op. Margin* 30.6% 29.1% 28.7% 29.5% 29.4% 27.6% 25.3% 28.7% 26.9% 4 *Calculations of Non-GAAP EPS and Non-GAAP Op. Margin are included in the Appendix of this presentation

6 Q1-12 Summary Free Cash Flow* Generation ($ millions) Free Cash Flow* Free cash flow impacted by tax payments of ~$300M related to the sale of the remaining share of Skype in Q Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Reported Y/Y Growth -54% -14% 3% 10% 107% 5% -9% 5% -48% Capex % of Revenue e 7% 9% 7% 8% 6% 9% 10% 9% 7% FCF % of Revenue 12% 23% 26% 26% 22% 20% 18% 20% 9% 5 *Calculation of FCF is included in the Appendix of this presentation

7 Business Update Payments Revenue and Volume Revenue* TPV ($ millions) ($ billions) Int l US Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $ millions ,073 1,107 1,240 1,309 y/y growth 22% 23% 31% 32% 28% 32% Fx-neutral y/y growth 24% 23% 30% 31% 28% 31% $ billions y/y growth 26% 28% 34% 31% 24% 24% Fx-neutral y/y growth 28% 27% 29% 27% 24% 25% 6 * Starting Q1 12, includes inter-bu revenue, which is eliminated at the consolidated ebay Inc. level

8 Business Update Payments Operating Metrics (In millions, except percentages) Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Active Registered Accounts Global Active Accounts Y/Y Growth 17% 16% 15% 14% 13% 12% Net Number of Payments Y/Y Growth 28% 26% 29% 29% 30% 31% TPV On ebay 9,884 9,795 9,881 9,968 11,413 11,424 Y/Y Growth 11% 14% 23% 22% 15% 17% Fx-Neutral Y/Y Growth 13% 13% 17% 18% 16% 18% Merchant Services* 16,982 17,567 18,860 19,314 21,959 22,433 Strong FX-neutral TPV growth driven by strong payments growth offset by lower average payment volume. Transaction margin up Y/Y driven by: Take rate: increased due to BML and FX fees Trxn expense: lower Y/Y Growth 37% 38% 42% 36% 29% 28% due to better funding Fx-Neutral Y/Y Growth 39% 37% 37% 33% 29% 28% mix lower processing costs On ebay Penetration Rate Global 70.0% 70.8% 71.4% 73.1% 74.4% 75.6% Loss rate: higher due primarily to business mix Take Rate 3.61% 3.63% 3.73% 3.78% 3.71% 3.87% Transaction Expense 1.11% 1.11% 1.11% 1.14% 1.04% 1.07% Loss Rate 0.20% 0.21% 0.25% 0.31% 0.27% 0.26% Transaction Margin** 63.5% 63.7% 63.6% 61.5% 64.8% 65.6% Payments Segment Margin 22.1% 22.3% 21.9% 19.5% 24.7% 26.4% Segment margin increased due primarily to improvement in transaction margin and operating leverage 7 * Merchant Services TPV includes TPV for Bill Me Later whether used within or outside of the PayPal wallet **Transaction Margin calculation has been adjusted to include total revenues (including revenue from credit), less transaction expense (including credit cost of funds), less transaction loss (including credit loan losses), divided by global take rate (based on global total revenues divided by total TPV)

9 Business Update Credit Metrics Portfolio Balance: $1.6B* 18% 1.8% 1.6% 1.4% 1.2% 1.0% BML Share of US TPV ** 90% 80% 70% 60% 50% BML TPV Growth 20% 16% 12% Risk Adjusted Margin*** 0.8% 0.6% 40% 30% 8% 0.4% 20% 4% 0.2% 0.0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q % 0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 0% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 BML share of US TPV continued to grow Y/Y, creating transaction expense savings for PayPal Penetration flat Q/Q due to seasonality BML growth coming from increased penetration in Marketplaces and Merchant Services BML active customer base grew 32% Y/Y and spend per active customer increased 15% Favorable increase Y/Y driven by higher revolving balances, lower charge-offs and decrease in cost of funds 8 Credit Operating Metrics Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 BML TPV ($M) BML TPV (Y/Y) 72% 79% 67% 64% 44% 51% Portfolio Balance ($M) ,084 1,236 1,560 1,580 Risk Adjusted Margin 14.4% 14.7% 16.5% 18.0% 16.9% 16.8% Net Charge-offs 6.1% 4.9% 4.3% 4.3% 4.4% 4.5% * Gross receivables balance as of 3/31/12 ** % of US Marketplaces and Merchant Services TPV funded using Bill Me Later *** Risk adjusted margin represents the annualized ratio of Bill Me Later revenue, excluding contra-revenue incentives to customers or merchants, less cost of funds less net credit and fraud losses relative to average loans receivable for the 3-month period

10 Business Update Marketplaces Revenue Revenue* Marketing Services & Other Revenue ($ millions) Transaction Revenue ,259 1,285 1,350 1,354 1,443 1,425 9 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $ millions 1,524 1,553 1,663 1,653 1,772 1,728 y/y growth 4% 12% 19% 17% 16% 11% Fx-neutral y/y yygrowth 6% 11% 12% 12% 17% 13% % Int'l 59% 60% 59% 59% 60% 59% * Starting Q1 12, includes inter-bu revenue, which is eliminated at the consolidated ebay Inc. level

11 Business Update Marketplaces Operating Metrics (In millions, except percentages) Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Active Users Global Active Users Y/Y Growth 5% 5% 6% 6% 6% 7% Sold Items Y/Y Growth in Sold Items 9.5% 6.5% 7.7% 9.6% 11.3% 17.2% GMV US Non-Vehicles GMV 5,584 5,631 5,490 5,588 6,157 6,366 Y/Y Growth 5% 10% 14% 14% 10% 13% Int'l Non-Vehicles GMV 9,455 8,866 9,191 9,078 10,333 9,840 Y/Y Growth 6% 8% 19% 18% 9% 11% Fx-Neutral Y/Y Growth 9% 6% 8% 10% 10% 13% Non-Vehicles GMV 15,039 14,497 14,681 14,666 16,490 16,206 Y/Y Growth 6% 8% 17% 16% 10% 12% Fx-Neutral Y/Y Growth 8% 8% 10% 11% 10% 13% Vehicles GMV 1,920 2,050 2, ,149 1, ,871 Y/Y Growth -8% 1% 2% 0% -3% -9% Fx-Neutral Y/Y Growth -7% 0% -3% -4% -3% -8% Fixed price as a % of GMV 62% 61% 62% 63% 64% 64% Segment Margin Marketplaces Segment Margin 39.2% 40.5% 38.8% 38.5% 40.6% 38.7% Active users growth driven by US, UK and Australia Sold items growth driven by UK, China, US and Korea FX-neutral non-vehicles GMV: US momentum driven by strong growth in fashion, tickets and parts & accessories categories Int l APAC strong, UK strong, Germany stable GMV by format: Continued mix shift with strong fixed price growth at 18%, while auctions were up 3% y/y Segment margin decreased due primarily to increased investments in technology and marketing 10

12 Business Update GSI Revenue and Operating Metrics Marketing Services & Other Revenue ($ millions) Revenue / Metrics Transaction Revenue 46 Q2-11 post close contribution 68 $8M $16M Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $24M Total Revenue* y/y growth n/a n/a n/a 16% 11% 15% GeC Merchandise $76M Sales** 1, , y/y growth 30% 21% 18% 18% 22% 20% Same Store Sales (SSS) y/y growth 27% 20% 20% -0.9% 18% 26% 26% Segment Margin N/A N/A N/A 2.8% 21.4% 9.5% 182 Revenue growth impacted by continued shift to service fee model. Excluding this impact, revenue growth would have been 19% Y/Y*** SSS GMS driven by strong sales for top merchants, offset by tougher comps Segment margin impacted by synergies and marketing services growth 11 * Results of operations of GSI are included in our consolidated results of operations as of June 17, Total Pro Forma transaction revenues are not comparable to prior year pro forma transaction revenues because of impact of revenues from divested businesses being recorded as service fees vs. gross product revenues for the post-acquisition stub period. Starting Q1 12 includes inter BU revenue, which is eliminated at the total ebay Inc. level ** GeC merchandise sales (GMS) represents the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through the GSI ecommerce platform, whether we record the full amount of such transaction as a product sale or a percentage of such transaction as a service fee. As of Q1 12, the numbers for Q1 11, Q2 11 and Q3 11 have been adjusted *** Calculation of revenue excluding the impact of the shift to a service fee model included in the Appendix of this presentation.

13 GSI Integration Update Enhance Synergies GSI on Platform Track Leverage ebay Channel Increase PayPal Ubiquity Revenue* Merchant coverage 207 Q1'11 Q1'12 Segment Margin N/A 9.5% Consumer preference GSI clients continue to gain share (SSS +26% Y/Y) V11 expected to begin limited deployment in Q GSI merchants/brands live on ebay Utilizing GSI demand generation capabilities ( from edialog, retargeting from Fetchback and affiliate marketing from Pepperjam) PayPal coverage of GSI s volume 90% PayPal share of checkout was 12% 12 * Results of operations of GSI are included in our consolidated results of operations as of June 17, Total Pro Forma transaction revenues are not comparable to Q3-10 Pro Forma transaction revenues because of impact of revenues from divested businesses being recorded as service fees vs. gross product revenues for the post-acquisition stub period. 12

14 Business Update Operating Expenses* Sales & Marketing (% of Revenue) Product Development (% of Revenue) General & Admin. (% of Revenue) Prov. for Trxn and Loan Loss** (% of Revenue) 19.6% 19.7% 9.6% 10.5% 9.5% 9.8% 4.2% 4.1% Q1 11 Q1 12 Q1 11 Q1 12 Q1 11 Q1 12 Q1 11 Q1 12 Increase due to investment in brand marketing to drive consumer engagement, offset by inclusion of GSI Increase due to investments in mobile, platform and pointof-sale initiatives, search, X.commerce and acquisitions Increase due to headcount, including recently completed acquisitions Trust improvements... Lower buyer protection expense Q1-12 Non-GAAP Op Inc*: $883M Q1-12 Non-GAAP Net Inc*: $725M 13 * All expenses are shown on a non-gaap basis (calculations can be found in the Appendix of this presentation) ** Prov. for Trxn and Loan Loss includes Marketplaces and PayPal transaction loss, Marketplaces consumer protection programs, bad debt expense and BML loan loss

15 Q1-12 Cash Flow / Capital Allocation FCF impacted by tax payment related to Skype sale Cash Balance / Flows* Free Cash Flow / Other Movements (0.2) (0.0) (0.0) Generated FCF*** of $289M impacted by tax payment related to the sale of Skype Repurchased ~7M shares for ~$240M Q4'11 Ending Balance* 3.6 Short/Long Term Investments Int'l Cash US Cash 0.6 FCF Buyback BML M&A Debt Other** Q1'12 Ending Balance* continued to repurchase shares ~50% of BML loan portfolio funded with offshore cash Total US cash and non-equity investments ~$1.1B 14 *Cash balances/flows include cash, cash equivalents and non-equity investments ** Other includes FX impact, employee stock plans and other ***Calculation of FCF is included in the Appendix of this presentation

16 Guidance FY 2012 vs. January 12 Guidance Raising guidance by $100M in Revenue and $0.05 in Non-GAAP EPS $11.7B GSI Marketplaces PayPal $13.8B $14.1B $13.7B $14.0B Strong performance Guidance EPS Growth Drivers January April 18, 18, ~+15pts ~+17pts Accretive M&A ~+1 pt ~+1pt Stronger US Dollar ~(3pts) ~(2pts) Lower Yield ~(1pt) ~(1pt) Non-GAAP EPS* % +15% $2.30 $2.35 $2.03 $ $ % - 20% Expect non-gaap tax rate to be in the range of 18.5%-19.5% for FY 12 *Calculation of Non-GAAP EPS is included in the Appendix of this presentation (midpoint of range)

17 Guidance Q Q2'12 Guidance Revenue (in billions) Non-GAAP EPS* Low High Low High $3.25 $3.35 $0.53 $0.55 Y/Y Growth 18% 21% 10% 15% 16 **Calculation of Non-GAAP EPS is included in the Appendix of this presentation

18 Summary Strong Q1 with double digit top & bottom line growth PayPal continues strong trajectory online business strong, offline launched at Home Depot and via PayPal Here Marketplaces business doing well... Investments in Search, Mobile, Local and Social focused on enhancing platform capabilities GSI performing well momentum continues Increased 2012 guidance to reflect operating performance 17

19 Q & A 18

20 Appendix 19

21 Q1-12 Summary RoIC* Return on Invested Capital* 22.5% 22.8% 23.2% 25.0% 25.7% 25.3% 24.5% 23.9% 23.0% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q *Trailing 12-month Pro-Forma Net Operating Profits After Tax / (Average Total Assets 95% of Average Cash, Cash Equivalents, and Investments - Average Current Liabilities) Calculation of Return on Invested Capital is included in the Appendix of this presentation

22 Business Update GMV-Based Formats $12.0 $10.0 $8.0 $6.0 Fixed Price Auctions Vehicles ($ billions) ($ billions) ($ billions) $12.0 $12.0 $10.0 $10.0 $8.0 $8.0 $6.0 $6.0 $4.0 $4.0 $4.0 $2.0 $2.0 $2.0 $0.0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $0.0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $0.0 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 $ billions $9.9 $9.5 $9.8 $10.1 $11.3 $11.1 Y/Y Growth 14% 15% 22% 21% 14% 17% FX-Neutral Y/Y Growth* 16% 13% 15% 16% 14% 18% % of Total FX-Neutral GMV 58% 57% 58% 60% 62% 61% $ billions $5.1 $5.0 $4.9 $4.6 $5.2 $5.0 Y/Y Growth 7% 2% 9% 8% 1% 0% FX-Neutral Y/Y Growth 4% 2% 2% 3% 1% 3% % of Total FX-Neutral GMV 31% 30% 29% 27% 28% 28% $ billions $1.9 $2.1 $2.2 $2.1 $1.9 $1.9 Y/Y Growth 8% 1% 2% 0% 3% 9% FX-Neutral Y/Y Growth 7% 0% 3% 4% 3% 8% % of Total FX-Neutral GMV 11% 12% 13% 13% 10% 10% 21 Strong performance Stable dollar volume as shift continues to fixed price Shifting from GMV to lead gen model

23 Calculation of Organic Revenue Growth 22 Note: Acquisition impact includes acquisitions made within 12 months of the quarter.

24 Reconciliation of Quarterly GAAP to Non- GAAP Operating Margin 23

25 Reconciliation of Quarterly GAAP to Non- GAAP Net Income / EPS 24

26 Reconciliation of GAAP to Non-GAAP Quarterly Statement of Income 25

27 Calculation of Free Cash Flow 26

28 Reconciliation and Calculation of Return on Invested Capital 27

29 Q2 12 and FY 2012 GAAP and Non-GAAP Guidance 28