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Welcome to eBay‟s 2011 Analyst DayJennifer CeranVice President Investor Relations and Financial Planning & Analysis
February 10, 2011
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Forward-Looking StatementThis 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 includes 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 future performance (including, without limitation, projected financial and operating results for the company and its Marketplaces and PayPal businesses), business strategy and plans, as well as anticipated developments concerning our business and industry.
Our actual results may differ materially from those discussed in these presentation for a variety of reasons, including, but not limited to, the after effects of the global economic downturn; changes in political, business, and economic conditions; foreign exchange rate fluctuations; the impact and integration of recent and future acquisitions; 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 upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability.
This presentation also contains product demonstrations, some of which are conceptual and may not be developed or launched in the same form, with all of the same features or at all.
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 http://investor.ebayinc.com). You should not rely on any forward-looking statements, and we assume no obligation to update them. All information in the presentation is as of February 10, 2011, and we do not intend, and undertake no duty, to update this presentation.
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AgendaPresenters TitleJenny Ceran “Welcome and Today’s Agenda”
John Donahoe “eBay and the Changing Commerce Landscape”
Scott Thompson, Ed Eger, Sam Shrauger “The Future of Payments is Now”
Break
John Donahoe, Mark Carges, Doug McCallum, Christopher Payne
“Reinventing the Shopping Experience”
Lunch
Bob Swan “Capitalizing on our Opportunities …3 Yr Outlook”
Senior Management “Question and Answer”
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Two years ago
A “different” eBay
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The future
An inflection point…
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Digital Social
4 trends shape how consumers shop and pay
Mobile Local
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Traditional boundaries are blurring
Onlineworld
Offlineworld
Mobile
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Promotions & coupons
Mobile eCommerce
Payment
Store location Shopping lists
In-store pricecomparison
Self-scanning & self-checkout
Loyalty
Consumers have a “store in their pocket”
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“New retail” demands new ways to reach consumers
Sole proprietors
Small and medium size businesses
Large merchants
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Merchants of all sizes must reach buyers in new ways and keep up with innovation
Multi-channel
Globalcompetition
Pace ofinnovation
Millions of buyers
Sole proprietors
Small and medium size businesses
Large merchants
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Huge opportunity: Taking the “e” out of ecommerce
2008 = $325B 2013 = $10T
Yesterday Tomorrow
Online 6%
Web-influenced
offline37%
Online+
OfflineOffline
Today
Online 4%
Offline96%
Source: ForresterSource: Forrester, Euromonitor and Economist Intelligence Unit
Source: Economist Intelligence Unit
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The new retail future: our unique position
Buyers
eBay
Classifieds
Shopping.com
StubHub
Mobile Apps
PayPal
Sellers
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Connected with consumers wherever they are
At home On-the-go
Everywhere
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Our merchant footprint is expanding
Offline retailBig brands online
Small business
ConsumerSellers
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And our platform assets can enable new opportunities
Buyers Sellers
Developers
eBay Platform
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The Next Generation of Commerce Leadership
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PayPal Advantages
Unmatched competitive advantages
Significant runway in the core
Expanded opportunity ahead
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Marketplaces Advantages
Turning the corner
Technology-led innovation
Sustainable, profitable growth
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eBay Inc. Advantages
Synergies with two strong cores
Accelerating innovation
Expanding opportunity set through open commerce platform
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Playing offense in new commerce landscape
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The Future of Payments is NowScott ThompsonPresident, PayPal
February 10, 2011
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The evolving PayPal story
Significant runway in core business
23
Unmatched competitive advantages
Expanding opportunity ahead
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2011 Revenue
2009Analyst Day
Forecast
CurrentTrajectory1
2011 Segment Margin
2009Analyst Day
Forecast
CurrentTrajectory1
$4.0-5.0Billion
$4.2+Billion 18-20% Exceed
range
On track to meet 2009 Analyst Day forecasts
24
1. Trajectory based on performance through 2010
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$72Billion
$92Billion
2008 2009 2010
$60Billion
TPV growing 3.0 timesfaster than online market1
Growth in Total Payment Volume (TPV)
1. Online market growth based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates
25
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1. As of December 31 2. Trailing 12 months
Growth in accounts and engagement
26
Transactions peractive consumer account2
11.5 12.2 13.5
2008 2009 2010
Active accounts1
In millions
70 81 94
2008 2009 2010
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Growth in global presence
27
New active accounts% of PayPal global total
Total Payment Volume% of PayPal global total
2008 2010
36% 41%
64% 59%
International
United States
2008 2010
55% 58%
45% 42%
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28
Internet Companies
Global Financial Networks
Transforming commerce online
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What we said at Analyst Day 2009Unmatched advantages
Internet technology
Fraudexpertise
Global connections
Closed-loop data
29
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Internettechnology
Fraudexpertise
Globalconnections
Closed-loopdata
Pace of innovation
Cross-border business
Digital wallet
Openplatform
Where we are todayUnmatched advantages
30
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Operating successfully in a regulated environment globally
31
• Support for 190 markets, 24 currencies and 20 local language sites
• Global connections to 15K+ bank partners and 57 financial networks
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PayPal‟s position in the ecosystem
32
Financial institutions
Telcos Payment startups
Internet companies
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Delivering greater value to consumers
33
Multi-channel payments
Buyer protection
Payment flexibility Global markets
Loyalty benefitsCredit / Bill Me Later
Security
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34
Ease of online selling
Higher conversion & sales Less expensive
Cross border Marketing / promotions
Multi-channel payments
Delivering greater value to merchants
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2013E2010
2.1B
1.7B Global internet users2
Global onlineretail sales1
$415B
$630B
• Over 50% of Internet users are in developing countries3
• eCommerce is 6% of retail sales in the United States3
• 35% of consumers in Western Europe will have mobile internet access by 20133
Favorable global trends
1. Forrester and Euromonitor; excludes food/grocery and online travel 2. Forrester; 2010 & 2013 data is straight-lined from Forrester 2009 & 2014 estimates 3. Forrester
35
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~50 billion connected devices globally in 20201
Video gamesystems
Navigation systems
Mobile phones Televisions
Appliances
eReaders
1. Ericsson forecast
Computers Tablets
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Video gamesystems
Computers
Navigation systems
Mobile phones Televisions
Tablets
Appliances
eReaders
PayPal seeks to enable payments across devices and channels
ubiquitousdigital wallet
1. Ericsson forecast
~50 billion connected devices globally in 20201
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Lines are blurring between online & offline
38
ubiquitousdigital wallet
Mobile
Online Offline
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39
Connected devices will unlock retail sales
2010 Global Retail Sales1
$8+ Trillion
Just 1% of global retail sales is $80B+ in TPV
1. Economist Intelligence Unit excluding food/grocery
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How we will achieve our vision
40
Global Merchant Services
Global Marketplaces
Adjacencies & Seeds
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Continued strength in core business
41
Marketplaces Merchant Services
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1. Calculated based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates; not to scale; excludes Bill Me Later2. As of December 31 3. Trailing 12 months
Success across merchants & consumers
42
PayPal global share1
2008
2010Merchant coverage
Consumer preference
14%
18%
Key metrics
Active sellers
Active accounts2
Transactions / active consumer account3
2008 2010
8M 9M
70M 94M
11.5 13.5
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PayPal‟s virtuous cycle
43
Consumer preference
Merchant coverage
Global eCommerce
growth
Increased consumer
engagement
Increased merchant
coverage and penetration
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Continued strength in core business
44
Global eCommerce
growth
Increased consumer
engagement
Increased merchant
coverage and penetration
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Powerful partnership with eBay
45
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Penetration growing on eBay
46
PayPal penetration on eBay globally (%)
eBay Addressable GMV & PayPal penetration2010
2008 2013E
69% 75-80%58%
2010 United States
85%
International
57%
$19B
$25B
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1. Excludes Bill Me Later
Merchant Services gaining volume & share
47
Merchant Services TPV and % of total TPV1
201020092008200720062005
30%35%
42%49%
56%62%
$8B $12B $20B $30B$40B
$56B
$125B+
2013E
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Success across merchant segments
48
Share of Global eCommerce1
Share of PayPal merchant accounts1
Small / mediumbusinesses
Sole proprietors
Large merchants
1. Illustrative representation of size
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Delivering value for all merchants
49
Small / mediumbusinesses
Merchant segment PayPal value to segment
• All-in-one solution• Competitive pricing• Fraud detection
Sole proprietors • Ease of getting and selling online
Large merchants• More payment options• Multi-channel payments• Higher conversion rates
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Better PayPal integration drives volume
50
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PayPal # of top 100online merchants1
59
40
30
28
63
Retail
Travel
PayPal large merchants
United States
United Kingdom
Germany
France
Australia
Serving the world‟s largest brands
1. Internal analysis; United States count includes both PayPal and Bill Me Later merchants
51
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Expanding our global footprint
52
Countries with increased local merchant services presence in 2010-2011
Brazil
Mexico
Turkey
Israel
Norway
Singapore
Malaysia
Sweden
Denmark
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$17B $22B
2008 2009 2010
$14B
Connecting sellers and buyers globally
53
$40-45B
2013E
Global Cross Border TPV
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Continued strength in core business
54
Global eCommerce
growth
Increased consumer
engagement
Increased merchant
coverage and penetration
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1. As of December 31 2. Trailing 12 months
Engagement drives the business
55
Transactions peractive consumer account2
13.5
2010 2013E
Active accounts1
In millions
94
2010 2013E
130+ 16.5+
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Improving engagement for consumers
56
Casual users• Growing coverage where our
consumers shop• Offering Bill Me Later credit
during checkout
New to PayPal• Specialized customer support
team for new members• Updated online tools
Highly engaged
• Dedicated customer support with “white glove” service
• Product investment• PayPal Advantage program
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Rewarding our engaged consumers
57
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Increasing value to consumers
58
Bill Me Later provides credit to consumers during checkout
Helps merchants drive sales and increase conversion
Helps PayPal drive consumer engagement and preference
Fill up your cart Checkout using Bill Me Later Receive your Bill … Later
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Source of new Bill Me Later accounts1
Lift on eBay average order value when paid with Bill
Me Later2
59
1. Q4 2010 2. Q4 2010; includes shipping and handling
Bill Me Later engaging eBay consumers
+25%40%
60%Accounts openedoff-eBay
Accounts openedon-eBay
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Driving the core business
60
Merchant Coverage Consumer Engagement
• Penetrating eBay globally
• Strengthening relationships with all merchant segments
• Expanding our global footprint
• Growing cross-border trade
• Moving into new verticals
• Rewarding engaged consumers
• Increasing value delivered to consumers
• Engaging eBay consumers with Bill Me Later
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PayPal global share1
Source: Internal PayPal analysis, not to scale
Significant runway in core business
61
2008
2010Merchant coverage
Consumer preference
14%
18%
20-24%2013E
1. Calculated based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates; not to scale; excludes Bill Me Later
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Expanding our business through innovation
62
Adjacencies Seeds
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The adjacent opportunities are immense
63
Point of sale1
~$8T+Credit2
~$5T+Mobile
Payments3
~$180BDigital Goods4
~$20B
1. Economist Intelligence Unit excluding food/grocery2. Nilson Report3. Juniper Research4. GigaOm
2010 GlobalMarket Size
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Bill Me Later (BML) synergies
64
• Improve customer economics
• Lower BML fraud losses
• Lower BML cost of capital
• Increase merchant coverage and speed up merchant sales cycle
• Increase consumer engagement and preference
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1. Internal analysis on multiple tests groups each consisting of 5-10K US consumers who signed up for Bill Me Later in July 2010; Engaged defined as 13+ trxns in trailing 12 mos
BML increases spending & engagementAverage spend per
consumer after signing up for Bill Me Later1
Number of “engaged” consumers after signing up
for Bill Me Later1
65
+124%+76%
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Continue to grow Bill Me Later
66
Total Payment Volumefor Bill Me Later
$1.3B
$0.9B
2008 2010
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Evolving key capabilities to accelerate growth
UnderwritingDecision
PayPal & eBay Data
CreditScore
Risk ModelingEngine
Transaction Details
Merchant History
67
Proprietary Data Superior Insight Incremental Growth
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Global launch of Digital Goods platform
68
Digital Goods platform is a payment solution for digital media(e.g. games, software, video, music, news, eBooks)
in PayPal Digital Goods TPV in 2010, up over 50% year-over-year
$3.4B
countries launched the new “PayPal for Digital Goods” product, with key merchants such as Facebook
17
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Enabling new monetization models
69
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Rapid growth of mobile
70
PayPal Mobile TPVIn millions
2008
$25
2009 2010
$140
$750
2011E
$2,000+
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Key priorities to accelerate mobile growth
71
Increase global coverage
Expand mCommerce products and market share
Evolve the mobile wallet
Availability across technologies and platforms
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Driving innovation through open platform
72
PayPal payments platform
Accelerating internal innovation•Foundation for new products, services, and markets
• Increased responsiveness to market developments
Enabling external innovation•Global open payment platform•Thousands of engaged developers• Innovative solutions for changing payments landscape
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Lines are blurring between online & offline
73
Onlineworld
Offlineworld
Mobile
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PayPal powers the digital wallet
74
Traditionalwallet
Financial flexibility &
control
Ubiquitous access across
channels
Financial connections among individuals,
groups & businesses
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How we will achieve our vision
75
Global Merchant Services
Global Marketplaces
Adjacencies & Seeds
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Expanding our business through innovation
Continued strength in core business
An incredible future
Rapidly growing addressable market
76
Unmatched competitive advantages
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The world’s favorite wayto pay and be paid
77
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Reinventing the Shopping Experience
John DonahoePresident and Chief Executive Officer, eBay Inc.February 10, 2011
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What we said in March 2009 …
Transforming our Marketplace... Fixing the foundation
Focusing where we can win… Secondary market
Growing our complementary formats
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Today
A “new” eBay
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2011 Revenue
2009Analyst Day
Forecast
CurrentTrajectory
2011 Segment Margin
2009Analyst Day
Forecast
CurrentTrajectory
$5-7Billion
35-45%
How have we done?
82
Middle of
range Middle of
range
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Adjacencies include Classifieds, Advertising, StubHub and other non-transactional revenue
Marketplaces mix shift...
Q4 20102008
Adjacencies and Vehicles
Auctions
Fixed Price
Adjacencies and Vehicles
Auctions
Fixed Price
Global Revenue
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The eBay Strategy
84
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay experience
Innovate for Customers
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Driving Technology, User Experience & InnovationMark CargesSenior Vice President and Chief Technology Officer, MarketplacesFebruary 10, 2011
85
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Culture of innovation focused on customer needs
Tailored shopping experiences across categories and devices
World class technology organization delivering greater innovation
Technology: Transforming the shopping experience
86
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“Did you fix search?”
“Have you improved the user experience?”
That‟s great, but …
87
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Platform
Search
Catalog
User Experience
2009 Priorities
88
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Search improvements:
Before & after
89
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Catalog enables:
Mobile selling
90
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Catalog enables:
Product based experience
91
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User experience improvements:
Fashion: Personalization & profiles
92
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User experience improvements:
Fashion: Image search
93
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Platform improvements:
eBay Mobile(iPad, iPhone, Android, RIM, Windows)
94
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96
Highlights of key launches since March 2009
Greatly Improved Search Experience and Relevance
Image Search and Visual Navigation
Hands-down Leader in Mobile Commerce
Fashion Shopping Experience, Fashion Outlet, Fashion VaultMotors Parts and Accessories Shopping Experience
Fitment for Motors Parts and Accessories
Expanding Coverage in Catalogs
Full Product-based Experience in MP3 Players, GPS, and DVDs
Simplified Selling, Tools for Large Sellers, Better Shipping Visibility
New Home Page
eBay Buyer Protection
Deals: Daily Deals, Flash Sales, eBay Bucks, DealFinder
eBay Group Gifts
eBay Garden
Modern Site Design
Instant Sale
eBay Top-Rated Sellers
Tell Us What You Think
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Transforming eBay in 2011+
97
User Experience
• Develop search as competitive advantage
• Leverage catalog across eBay
• Simplify selling
• Transform site experience
• Create more tailored shopping experiences
Platform
• Faster innovation
• Mobile: enable access
CatalogSearch
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International Marketplaces
Douglas McCallumSenior Vice President, Marketplaces EuropeFebruary 10, 2011
98
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This is an extraordinary time for eBay.
99
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International: Large growth opportunity
Source: Forrester and Euromonitor; excluding travel US
100
eBay non-vehicle GMV (2010)
eCommerce aggregate growth opportunity, 2011 – 2015 (Est.)
38%
62%
International
US International
190% Larger
$270B
$95B
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Increased customer focus by categories
101
Passionate about shopping in their category
Many shared requirements such as easy finding & trusted shopping experience
Some category-specific needs, such as visual browsing & size filters in fashion
Fashion Electronics
Home
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eBay strategy is working in the UK
102
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay Experience
Innovate for Customers
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UK: Greatly improved trust perception
Video
NPS for Active Buyers
Q4 '09 Q4 '10
% of UK Core GMV from Top-rated sellers
18%
30%
Source: Based on surveys conducted by eBay and a 3rd party vendor
… leading to enhanced customer perception
Top-rated sellers are increasing share of UK
GMV …
103
Q4 „09 Q4 „10
Top Competitor
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UK: Dramatic increase in selection
Average weekly fixed price live listings in the UK
2007 2008 2009 2010
104
Significant pricing and search changes
25%
60%
YoYgrowth
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105
Featuring leading UK brands & retailers
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eBay: A fashionable destination
106
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Outlet sellers: Brands people love
107
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Integrated marketing drives awareness
Video
108
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Innovation in the UK with mobile
2010 quarterly mobile GMV
Q4 '09 Q4 '10
… very attractive to our buyers
A new channel for our sellers …
~260% YoYGrowth
109
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2009 2010
19%
Strategy driving share gains in the UK
% YoY growth
Source: Forrester; market growth excludes travel
110
UK eCommerce market growth
eBay vs. UK eCommerce market growth
15%
8%
10%
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From a step-change in online fashion …
Applying recipe to other strategic verticals
… to
111
Rolling out to Germany & other European markets
eBay EU plans: Building on UK Fashion
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eBay leadership in Germany
Source: Nielsen
112
Unique Visitors vs. #2 Player
1.2x
1.3x
2.4x
1.8x
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Apply the strategy to Germany
• eBay Buyer Protection
• C2C & B2C growth• Brands4Friends
• Retail positioning with integrated marketing
• Fashion experience• Electronics experience
• Mobile innovation
113
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay Experience
Innovate for Customers
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay Experience
Innovate for Customers
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2010
Foundation of trust in Germany
114
Higher seller standards• Ramp Top-rated seller penetration
2012+
eBay Buyer Protection program• Raise consumer understanding• Further PayPal penetration • Strengthen Buyer protection
2011
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Brands4Friends: Private Sales leader
115
Over 600 direct brand relationships
Flash sales provides retail experience
Selection of brands sold on Brands4Friends.de; Source Brands4Friends.de
NIKESAMSONITEPUMA
MEXXBURTONORWELL
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Accelerating Brands4Friends‟ leadership
116
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Deals program driving results“Deals” driving velocity in Germany …
… resulting in GMV growth
Q4'09 Q4'10
“Deals” GMV in Germany
117
+170% YoYGrowth
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eBay is building on its success in Europe
Extending leadership in UK
Competing in France & Italy
Increasing leadership in Netherlands & Scandinavian
Positioning for growth in Russia & Eastern Europe
Employing strategy in Germany
118
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Growth in Asia-Pacific region
Korea: market leadership through Gmarket and IAC
China: leveraging exports business for global customers
Australia: strong business exceeding market growth
Portfolio of marketplaces
Rest of Asia: expanding footprint through partnerships & investments
India: market leading position with significant growth opportunity
119
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Global Marketplace enables cross-border trade
~20%of eBay business is
across borders*
120
*As of Q4 2010
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Actively managing China & HK exports
GMV of China and Hong Kong Top-rated sellers grew by 33% in Q4 2010 YoY
Facilitate inventory sourcing for Top-rated US sellers
Partner with China and Hong Kong sellers to improve buyer experience
121
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Summary: eBay‟s international opportunity
62% of 2010 GMV international
Portfolio of market leading positions
eBay strategy customized by geography
Global Marketplace enables cross-border trade
Expanding within new geographic markets
122
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Marketplaces North America
Christopher PayneVice President, Marketplaces North AmericaFebruary 10, 2011
123
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Christopher, …
124
“Can eBay compete in the U.S. market?”
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125
I believe we can.
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126
Our focus
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2010: Increased selectionImplemented search, pricing and format changes to increase selection:
127
Jan „10 Dec „10
35M Items
100M Items
Listings in Core Search Results
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2010: Improvements driving conversion
128
Q4 '09 Q4 '10
Sold items accelerating
4%
8%
% YoY growth of US Sold Items
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2011: Executing on eBay strategy
129
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay Experience
Innovate for Customers
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Trust: Consistent, trusted marketplace
130
Growing Top-rated Sellers
Removed sub-standard sellers
Launched eBay Buyer Protection
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Trust: Results show it is working…
131
Trust: “Safe place to shop”
Best in Class
H2 ‟09
58%
67%
63%
66%
Top buyers
H2 ‟10
Based on surveys conducted by eBay and a Third Party vendor; survey question :“[company‟s site] is a safe place to shop online”
Improving trust on eBay
Top buyers
Best in Class
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Trust: Free shipping
132
Percent of sold items with free shipping
5%
33%
Q1 „08 Q4 „10
Increasing Sales with Free Shipping
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Selection: Stimulate business selling
Q4 '09 Q4 '10
GMV for Top-rated sellers
+12% Growth
133
Top-rated sellers grew with market
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eBay Business Seller: Barnes & Noble
134
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Selection: Stimulate consumer selling
Average Buyer Average Buyer who sells
Buyers who sell increase value for eBay
135
Increasing consumer engagement
Customer Value for eBay
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136
Selection: eBay Instant Sale
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Tailored shopping experience: Customer needs
Shopping behavior differs by category
Want tailored shopping experiences
137
Fashion Tech Tickets Vehicle parts
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Launched tailored shopping experiences
138
Electronics
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2008 2009 2010
Tailored shopping experience: Tickets
23%CAGR
StubHubGMV
139
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Tailored shopping experience: Motors
Motor Parts Business: 10% YoY GMV growth in Q4 '10
Tire center: +18% Conversion rate (Q4 YoY growth)
140
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Tailored shopping experience: Fashion
Fashion: 8% YoY GMV growth in Q4 '10
141
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Launched tailored shopping experiences
142
Electronics
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143
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Innovation: Expanding opportunities
144
MobileSocialLocal
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Innovation: Milo & RedLaser integration
Increases selection through local options
Retailers Increases foot traffic and sales
Customers
145
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2011: Executing on eBay strategy
146
Improve Trust
Increase Selection
Develop Tailored Shopping Experiences
Market the eBay Experience
Innovate for Customers
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Driving Technology, User Experience & InnovationMark CargesSenior Vice President and Chief Technology Officer, MarketplacesFebruary 10, 2011
147
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Innovation: Expanding opportunities
148
MobileSocialLocal
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149
Accessing offline inventory online.
Local
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150
Increasing selection & options for customers as the lines blur between online and offline commerce
Local
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Social networking drives shopping behavior.
Social
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Leveraging the social graph to enable engagement and social commerce
Social
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153
Mobile devices make anyplace a store.Mobile
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iPhone Fashion App: Virtually try on sunglasses
154
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Mobile devices make anyplace a store.Mobile
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Extending leadership position by providing access any time, any place, any device
Mobile
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Open Commerce Platform
157
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Marketplaces & PayPal have developer networks
Opened platforms to external developer networks
Developer Network
158
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Merchant & consumer needs are changing
• to find what they want
• when they want it
• how they want it
Anywhere, anytime
• multiple channels
• demand generation
• fast innovation
Without complexity
Consumers want… Merchants want…
159
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eBay has unique assets to address needs
• Payments• Identity
• Demand generation• Inventory• Data/Catalog
160
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eBay Inc. – Enabling commerce
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Capitalizing on our OpportunitiesBob SwanCFOSan Jose
February 10, 2011
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Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
Agenda …
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What we said … Analyst Day Mar‟09
Our aspiration for 2011
$10 - $12 B
$6 to 7 billion
Mid-single digit
Revenue Goal
2011
Free Cash Flow
2009 - 2011
EPS CAGR2009 - 2011
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What we said … Analyst Day Mar‟09
* As of March 2009: Direct segment margin does not include ~3-4 points of corporate overhead
$4 - $5BHigh growth & gaining share
$1B+Hyper growth
$5 - $7BGrow at ecommerce rates in‟10, faster in
‟11
Revenue
Directsegment margin*
35% to 45%
18% to 20%
18% to 20%
Keygrowthdriver
Fixed price, Advertising, Classifieds,
Buyer retention
On-eBay penetration,Merchant services,
BML, Mobile
Usersactivity
monetization
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What we said … Operational ExcellenceAchieving full potential requires…
Operating smarter
Significant investment
$2B over 3 years
Lower processing costs
Improved customer
experience
Organizationsimplification
Customerretention / loyalty
User experience / search / platform
Improved trust / comprehension
Customer retention / loyalty ...lower take rate
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2009 2010 2011 Guidance
On track to deliver …
$8.1B$9.2B
$10.3B – $10.6B
* Ex Skype; reconciliation in appendix
13-14% REVENUE CAGR
Non-GAAPEPS* $1.47 $1.73 $1.90-$1.95
Op Margin* 29.5% 29.5% ~ flat Y/Y
PayPal
Marketplaces
$2.8B
$5.3B
$3.4B
$5.7B
14-15% EPS CAGR
Revenue*
(Jan 19, 2011)
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On track to deliver OE cost savings …
2009 2010 2011 Est.
Cost Savings Achieved...
$0.6B
$0.8B
~$1.0B A lower take rate... Align with our sellers
More R&D... Accelerating the rate of innovation
A more trusted experience... eBay / PayPal protections
More loyal customers... Less churn
... while reinvesting wisely
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*Reconciliation in appendix
… on track to deliver ... FCF
$2.3B
$2.0B
> $2.3B+2011 Est.
2010
2009
Reduced by ~$350M
one-time tax payments
... cumulative free cash flows > $6.5B
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... On track to deliver ... portfolio
Sold 70% of Skype... …Strengthened core businesses
~ $2B Proceeds ~ $2.7B
BML …extend
PayPal reach
Gmarket…expand Asia
presence
dba/BilBasen/Brands4Friends… Alternative formats
Reinvested
... a stronger, more focused portfolio
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... we have an increasingly diverse portfolio... By GeographyBy Format...
2010 Revenue
Americas49%
Europe36%
Asia15%
Marketplaces Adjacencies/
Seeds
PayPal Adjacencies/
Seeds
Fixed Price
AuctionsPP on eBay
Merchant Services
Marketplaces
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Market growth rates...accelerating!
• On and off-line
• Many devices
• All geographies
Consumers can shop anywhere all the time
The lines of commerce are blurring
... and market trends are in our favor ...
Online 6%
Offline57%
Web-influenced
offline37%
Global eCommerce Y/Y* eCommerce + retail**
** 2010 US forecast, Forrester Research* Global eCommerce growth estimates, Forrester and Euromonitor, excludes online travel
Last ~3 years Next ~3 years
~15%CAGR
... Sellers/merchants need help navigating
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Excellent balance sheet
As we enter 2011 …We feel good about where we are:
... See enormous opportunity ahead
Improving macro picture ... Expanding market opportunityA stronger, more diverse portfolio... And a massive global footprintStable “Core”... “Adjacencies” with scale... Seeds” with possibilitiesOps Excellence... The way we work
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Growing cash balance... What will you do
... and we recognize the concerns
... We are confident in our plans !!
Increasing competition ... in both e-commerce & payments ... US & Intl.
The Core eBay ... bridging gap to competition without end-to-end control
Evolving regulatory framework ... Durbin ... PayPal margin implications
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Agenda …
Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
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Our framework for growth ...
Protect and Extend our “Core” Businesses
Expand“Adjacencies”
Plant and Grow “Seeds”
...Leverage our platform... and balance sheet
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Our framework for execution ...$1B+ over next 3 years (2011-2013)
Operatingsmarter
Significantinvestment
Lower processing
costs / fraudBetter customer
experience ... Fewer defects
Scale... leverage
Increased consumer engagement
Improved customer experience... more outbound
Accelerate innovation ... more product
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Our framework for capital allocation ...
Strategic Acquisitions/ Investments
Organic Investment
Redistribute Excess Cash
~Buyback~
Fund BML growth Strengthen our
portfolio... extend our reach
Offset comp-based dilution
Redistribute Cash
... while maintaining financial flexibility !!
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Agenda …
Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
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Framework for growth …
181
Credit Digital Mobile P2P
Platform X ... Seeds* Internal analysis; not to scale; excludes Bill Me Later
2008
2010
Mer
chan
t cov
erag
e
Consumer preference
2013E
14%
18%
20-24%PayPal global share*
Accelerate the rate of innovation
Offline...PointOf Sale
Follow our merchants... ... and our customers
LocalSocial
2008
2010
Mer
chan
t cov
erag
e
Consumer preference
2013E
14%
18%
20-24%
PayPal global share*
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What do you have to believe ...
182
~40%+
~30%+
~9%+
Merchant Services
Credit
Seeds
2010 2013 Est.
Seeds ... Credit / Other
Adjacencies... Merchant Services
Core ... On eBay
Revenue
$6 - 7B
$3.4B
~24%+Low Mid-high
~35%
~25%
~7%
~21%
CAGR %
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Growth on eBay ...
183
A $40B+ TPV Platform in 2013*…
Americas ~85%... stable
Stable aGMV growth…
Europe >60%... + ~10 pts
Asia >80%... stable
CrossBorder >80%... + ~5 ptsTrade
…Increased penetration*
… ~75%+ penetration !!*2007 2008 2009 2010 2011 E 2012 E 2013 E
* Company projections
mid-high single digits
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Merchant Services momentum continues ...
184
Credit
Seeds
A $125B+ TPV Platform in 2013*…
Market/SSS Growth… ~ 10-15%
Increased Coverage… ~ 5-10%
Increased Consumer Frequency…
~ 10-15%
~ 25-40%
CAGR %**
2008
2010
Mer
chan
t cov
erag
e
Consumer preference
2013E
14%
18%
20-24%
PayPal global share**
* 2010 to 2013 CAGR: company projections**Internal analysis; not to scale; excludes Bill Me Later
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2010 2013 Est.2010 2013 Est. 2010 2013 Est.
New products gain momentum ...
Digital Goods Credit/BML Mobile
nTPVRevenues nTPV
10X+3X+3X+
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... and Platform expands opportunities
• 60k developers ... 1,500 apps
• Innovative solutions for changing payments landscape
Developer platform accelerates time to
market…
Enables opportunities we would never
think of…
Enables opportunities we don’t do…
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PayPal‟s business model …
'08 '09 '10 Future '08 '09 '10 Future '08 '09 '10 Future
Great proposition for merchants
(Global take rate)
Consumer Funding Choice
(Transaction Expense)
Risk management(Transaction losses)
Stable / down declines stable / down
... ~60%+ transaction margin business*
* * *
* Company projections
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OE improves customer experience ...
Creates capacity to invest ... and drives operating leverage/efficiency
Consumer Engagement ... Merchant Adoption
(Sales & Marketing % Revenue)
Our Contact/Ops Center...
(% of Revenue)
... Our Product Development cycle
(% of Revenue)
2010 Future 2010 Future
Responsive
Responsive
Outbound
2010 Future
Innovate
Sustain/ Maintain
~8%~11%~10%
* Company projections
* * *
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Ops Excellence ... funds investments
Transaction margin marginally lower
Significant operating leverage and process
improvement
Higher R&D... Consumer
engagement
„10 Segment margin ~ 21%...
... Yields „13 segment margin ~ 24-26%** Company projections
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In summary, PayPal 2013 outlook
Revenue
Direct segment margin* 24% to 26%
Key growth drivers
Consumer Preferences,
Merchant coverage; New ProductsNew Markets
*Direct segment margin does not include ~3 points of corporate overhead
$6 - $7B (mid-point CAGR: 24%)
High growth & gaining share
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Agenda …
Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
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Framework for growth ...
TrustTailored Shopping Experiences
EngagementCustomer focus
TechnologyUser experience
Platform... mobile
Accelerate the rate of innovation
New formats
Existing:Advertising, Classifieds, Private sale, StubHub
New:Local, Social
New markets
The core platform...
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What do you have to believe ... CAGR %
~12%
~5%
Credit
Seeds
2010 2013 Est.
Adjacent formats / Seeds*
eBay Platform** GMV
Revenue
$7-8B
$5.7B
* Classifieds, Advertising, StubHub, Shopping.com, Rent.com, other** GMV-based transactional business, excluding StubHub
~7%Low
~15%+
~7%+
~10%+Mid-High
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Note: All GMV figures are FX-neutral*Company projections
**Growth rates are 2008-2010 CAGR, ex Gmarket
The Core... a ~$75B+* GMV platform in „13
'09 '10 '13 E
Fixed Price expands...
... Auction stable ... ... Vehicles format shift
From 50% to ~70% of GMV...
'09 '10 '13 E
From 50% to ~30% of GMV...
'09 '10 '13 E
Shifting from GMV to lead gen model
Flat ...
The widest selection... The best deals... A trusted experience
Double digit CAGR
** ** **
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2010 2013 E2010 2013 E2010 2013 E
Connecting ... with adjacent formats
Classifiedsformat*
Advertising-based format**
Improved Verticals
*Includes Rent.com revenue ** Includes Shopping.com revenue
Double-digit CAGR
Mid-single digit CAGR
Double-digit CAGR
Rev
enue
StubHub
Private sale
Today, a nearly $1.3B collection of businesses...
Rev
enue
Rev
enue
... Expected to grow at ~15% CAGR
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“Seeds”... Better conversion... new markets
Organic Innovation
• Mobile / Local / Social
• Group Gifts• Deal Finder• Instant Sale• Deal Blasts
Investments
• Magento• Appcelerator
Acquisitions
• Red Laser• Milo• Critical Path
Software
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OE improves customer experience ...
Improved buyer experience
Growing trusted sellers
32%+Q4‟10
% of GMV...
Reducing number of bad buyer experiences
Consistent decline
Q4‟10
BBEs... from Top rated sellers
... with Free Shipping
Satisfaction guaranteed
eBay Buyer Protection
... Lower customer acquisition
... Lower customer service costs; more outbound...
... Increased protection costs
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Ops Excellence ... to fund investments
Leverage and Ops Excellence
Faster growing adjacencies
Fund investments in trust, engagement
and innovation
Operating Margin Levers
„10 Segment margin ~ 40%...
... Yields „13 segment margin ~ 38 to 42%** Company projections
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In summary, Marketplaces 2013 outlook
Revenue
Direct segment margin* 38% to 42%
Key growth driversTailored shopping
experiences, Local C2C strength, global tickets, Mobile, Offline, Platform
*Direct segment margin does not include ~3 points of corporate overhead
$7 - $8B(mid-point CAGR : 10%)Grow with ecommerce rates, lead innovation
Marketplaces
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Agenda …
Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
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2008 Ending Balance 2010 Ending Balance
We enter „11 with a strong balance sheet
$7.8B
$3.3B
US$2.7B
Int‟l
$5.1B
FCF:$4.4B
M&A: $3.0B Skype:
$2.0B
Debt:$1.8B
$0.7BBuyback
Change in CashExcellent cash flows... A stronger, more focused portfolio... Lower cost of capital
... and the flexibility and discipline to invest wisely
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Our philosophy … in order of priority
Strategic Acquisitions/ Investments
Organic Investment
Redistribute Excess Cash
~Buyback~
Fund BML growth Strengthen our
portfolio... extend our reach
Offset comp-based dilution
Redistribute Cash
... while maintaining financial flexibility !!
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Accelerate strategic priorities with M&A ...
Expand our geographic
footprint
Marketplaces:Alternate formats... tailored shopping
experiences...
PayPal:Digital wallet … • Merchant growth
“enablers”; • Low cost processor
capabilities• Risk analytics
… while pursuing Technology/Talent-based acquisitions to accelerate organic plans
Capitalize on key market trends …• Mobile • Social • Local• Digital
... Enhancing our platform for commerce …
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Recent acquisitions ... future growth
Local Shopping … Milo.com
• Enter new adjacency
• Real-time availability of local inventory
• Brings offline inventory online
• Integration with eBay.com and RedLaser mobile app
Private Sales … Brands4Friends
• Participate in fastest-growing channel for secondary CSA in Europe
• Strengthens position as a leading online fashion destination in Europe
Mobile Development … Critical Path
Software
• Accelerates organic plans with technology & talent acquisition
• Increases mobile talent, capacity and capabilities
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Investments … to enhance opportunities
Geographic Reach
Adjacencies Non-Core
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Agenda …
Since March „09 Analyst Day... where we are now
Over the next 3 years…
Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities
Capital allocation… investing for growth
3 year outlook… what you should expect from us
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Our 3 year outlook to 2013
Revenue
Directsegment margin*
24% to 26%
Keygrowth
driver
*Direct segment margin does not include ~3 points of corporate overhead
$6 - $7B (mid-point CAGR: 24%)
High growth & gaining share
38% to 42%
Tailored shopping experiences, Local C2C strength, global tickets, Mobile, Offline, Platform
$7 - $8B(mid-point CAGR : 10%)Grow with ecommerce rates, lead innovation
Consumer Preferences,
Merchant coverage; New ProductsNew Markets
Marketplaces
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Our aspiration for 2013
$13B - $15BRevenue Goal2013
Free Cash Flow2011 - 2013
Non-GAAP EPS CAGR
2010 – 2013**
10 - 14%
$7.5 to 8.5B*
*Reconciliation in appendix**CAGR is measured using 2010 as the base
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Summary …
Incredible opportunity
Well positioned … unmatched competitive advantages
Accelerating innovation
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APPENDIX
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Reconciliation of GAAP to Non-GAAP EPS
December 31, December 31, December 31, December 31, December 31,(In millions, except per share amounts) 2006 2007 2008 2009 2010
GAAP net income (loss) $ 1,125.6 $ 348.3 $ 1,779.4 $ 2,389.1 $ 1,801.0 Stock-based compensation expense 317.4 301.8 352.1 394.8 381.5 Employer payroll taxes on stock-based compensation 5.3 6.9 3.1 5.3 13.8 Amortization of acquired intangible assets (1) 214.9 223.7 264.1 314.8 229.9 Restructuring - - 49.1 38.2 21.4 Impairment of goodwill - 1,390.9 - - - Joltid settlement - - - 343.2 - Sale of Skype and transaction related items - - - (1,407.5) 18.1 Amortization of intangibles and stock-based compensation for Skype - - - - 35.8 Income taxes associated with certain non-GAAP entries (171.6) (165.4) (202.9) (12.1) (202.8)
Non-GAAP net income $ 1,491.6 $ 2,106.2 $ 2,244.9 $ 2,065.8 $ 2,298.7 Non-GAAP net income attributable to Skype - - - (147.0) - Non-GAAP net income excluding Skype $ 1,491.6 $ 2,106.2 $ 2,244.9 $ 1,918.8 $ 2,298.7
Diluted net income per share:
GAAP $ 0.79 $ 0.25 $ 1.36 $ 1.83 $ 1.36 Non-GAAP $ 1.05 $ 1.53 $ 1.71 $ 1.58 $ 1.73 Non-GAAP excluding Skype $ - $ - $ - $ 1.47 $ 1.73
Shares used in non-GAAP diluted share calculation 1,425 1,376 1,313 1,305 1,327
(1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses.
Twelve Months EndedReconciliation of GAAP EPS to Non-GAAP EPS
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Calculation of Free Cash Flow (FCF)
December 31, December 31, December 31, December 31, December 31,(in millions) 2006 2007 2008 2009 2010
GAAP operating cash flow $ 2,247.8
$ 2,641.3
$ 2,882.0
$ 2,908.1
$ 2,745.8
Purchases of property and equipment, net (515.4) (454.0) (565.9) (567.1) (723.9)
Free cash flow $ 1,732.4
$ 2,187.3
$ 2,316.1
$ 2,341.0
$ 2,021.9
Reconciliation of Operating Cash Flow to Free Cash FlowTwelve Months Ended
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Reconciliation of FY 2011 and FY2011-FY2013 Free Cash Flow (FCF) projection
Twelve Months Ended 3 Years Total(in Billions) 31-Dec-2011 FY2011 - FY2013
GAAP operating cash flow ~3.1B $10B - $11.3B
Purchases of property and equipment, net ~($0.8B) ($2.5B - $2.8B)
Free cash flow ~$2.3B $7.5B to $8.5B
Reconciliation of Operating Cash Flow to Free Cash Flow
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Calculation of ROIC
(in thousands, except percentages)
Numerator components: Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10Non-GAAP operating income 593,445$ 594,664$ 593,445$ 754,979$ 701,364$ 700,487$ 674,318$ 667,958$ 620,347$ 602,252$ 635,468$ 694,976$ 672,852$ 645,650$ 644,997$ 736,729$ Non-GAAP effective tax rate 26% 25% 10% 24% 23% 22% 17% 24% 22% 20% 21% 16% 22% 21% 21% 8%Non-GAAP operating income after tax 441,523$ 447,544$ 531,845$ 576,276$ 540,892$ 549,673$ 559,684$ 508,685$ 485,732$ 482,223$ 505,197$ 580,791$ 524,286$ 510,967$ 509,806$ 674,789$
Denominator components: Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10Total assets 13,920,051 14,361,157 14,786,812 15,366,037 15,046,305 15,021,625 14,240,157 15,592,439 15,127,787 16,566,289 17,356,372 18,408,320 18,690,178 18,747,584 19,948,062 22,003,762 Total cash, cash equivalents and investments 3,519,880 3,793,677 4,461,775 5,035,692 4,108,141 4,181,717 3,777,482 3,458,840 3,326,805 3,134,478 3,638,587 6,325,569 6,505,468 6,725,768 7,463,927 9,114,826 Current liabilities 2,250,571 2,328,643 3,272,867 3,099,579 3,080,432 3,006,234 2,854,733 3,705,087 3,159,924 3,730,364 3,646,678 3,641,968 3,587,011 3,564,261 3,808,909 4,516,514
TTM Non-GAAP operating income after tax 1,518,940$ 1,633,595$ 1,827,615$ 1,997,188$ 2,096,556$ 2,198,685$ 2,226,524$ 2,158,933$ 2,103,774$ 2,036,324$ 1,981,837$ 2,053,943$ 2,092,498$ 2,121,242$ 2,125,851$ 2,219,848$ TTM average total assets 13,339,193 13,697,718 14,005,030 14,385,614 14,696,072 14,916,387 14,892,187 15,053,313 15,005,663 15,309,659 15,776,609 16,610,241 17,229,789 17,953,749 18,630,103 19,559,581 TTM 95% of average cash, cash equivalents and investments3,486,641 3,536,980 3,622,670 3,858,237 3,974,641 4,100,390 4,097,313 3,906,756 3,582,067 3,397,071 3,293,876 3,778,013 4,356,872 5,002,675 5,825,271 6,865,756 TTM average current liabilities 2,078,113 2,207,540 2,518,232 2,694,011 2,806,418 2,957,551 3,062,769 3,149,213 3,161,282 3,291,268 3,419,357 3,576,804 3,553,189 3,634,056 3,649,765 3,823,733 ROIC 19.5% 20.5% 23.2% 25.5% 26.5% 28.0% 28.8% 27.0% 25.5% 23.6% 21.9% 22.2% 22.5% 22.8% 23.2% 25.0%
(in thousands, except percentages)2007 2008 2009 2010
TTM Non-GAAP operating income after tax 1,997,188$ 2,158,933$ 2,053,943$ 2,219,848$ TTM average total assets 14,385,614 15,053,313 16,610,241 19,559,581 TTM 95% of average cash, cash equivalents and investments3,858,237 3,906,756 3,976,856 6,865,756 TTM average current liabilities 2,694,011 3,149,213 3,576,804 3,823,733 ROIC 25.5% 27.0% 22.7% 25.0%
Reconciliation of Return of Invested Capital (ROIC)In millions, except percentages
Full Year Ended December 31,
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Reconciliation of FY 2011 GAAP to Non-GAAP Guidance (Jan. 19, 2011)
(in millions, except per share amounts) GAAP Non-GAAP (a)Revenues $2,400 - $2,500 $2,400 - $2,500Diluted EPS $0.34 - $0.36 $0.44 - $0.46
(in millions, except per share amounts) GAAP Non-GAAP (b)Revenues $10,300 - $10,600 $10,300 - $10,600
Diluted EPS $1.56- $ 1.61 $1.90 - $1.95
(a) Estimated non-GAAP amounts above for the three months ending March 31, 2011, reflect theadjustments that exclude the estimated amortization of acquired intangible assets of approximately$50 - $60 million, estimated stock-based compensation expense and employer payroll taxes onstock-based compensation expense of approximately $110 - $130 million and estimatedrestructuring charges of approximately $1 million.
Full Year Ending December 31, 2011
(b) Estimated non-GAAP amounts above for the twelve months ending December 31, 2011, reflectadjustments that exclude the estimated amortization of acquired intangible assets of approximately$200 - $240 million, estimated stock-based compensation expense and employer payroll taxes onstock-based compensation expense of approximately $420 - $460 million and estimated restruturingcharges of approximately $1 million.
Three Months Ending March 31, 2011