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April 18, 2012 04:15 PM Eastern Daylight Time
Revenue and Net Income up Double Digits Year Over Year as PayPal and Marketplaces Momentum Continues
SAN JOSE, Calif.--()--Global commerce platform and payments leader eBay Inc. (NASDAQ:EBAY) today reported that revenue for the first quarter ended March 31, 2012, increased 29% to $3.3 billion, compared to the same period of 2011. The company reported first quarter net income on a GAAP basis of $570 million, or $0.44 per diluted share, and non-GAAP net income of $725 million, or $0.55 per diluted share. The year-over-year increase in first quarter GAAP and non-GAAP earnings per diluted share was driven primarily by strong top-line growth, partially offset by increased investment in the shopping experience and the impact of acquisitions.
“Reconciliation of GAAP Net Income to Non-GAAP Net Income”
“The first quarter was a strong start to the year for us with momentum continuing in our Marketplaces, PayPal and GSI Commerce businesses," said eBay Inc. President and CEO John Donahoe. "We believe that innovation in retail today is technology driven, and consumers are embracing smarter, easier, better ways to shop. We are enabling commerce in this new retail environment, supporting and partnering with sellers of all sizes and giving consumers worldwide the ability to shop anytime, anywhere, for whatever they want.”
The company's PayPal business delivered strong first quarter performance. PayPal ended the quarter with 109.8 million active registered accounts, a 12% increase over the first quarter of 2011. PayPal revenue increased 32% year over year, driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption. PayPal's net total payment volume (TPV) grew 24% year over year to $34 billion. PayPal continues to invest in innovation, focusing on its core platform as well as mobile and point of sale initiatives. PayPal expects to process $7 billion in mobile TPV in 2012. PayPal launched an expansion of its payment services to offline merchants in the first quarter. The Home Depot has launched PayPal payments in all of its nearly 2,000 U.S. stores, giving shoppers the opportunity to pay using just their mobile phone number or PayPal payment card and PIN. Users can switch between paying with their phone or payment card at any time. The company also launched PayPal Here in the U.S., Australia, Canada and Hong Kong. With PayPal Here, small businesses can now process almost any form of payment online or offline, including credit and debit cards, checks and PayPal using only a smartphone.
The company's Marketplaces business also delivered strong first quarter performance. Gross merchandise volume (GMV) excluding vehicles increased 12% year over year to $16 billion. Sold items increased 17% compared to the first quarter of 2011, reflecting the continued impact of improvements to eBay's core technology that are designed to make it easier and faster for shoppers to browse and buy. U.S. GMV excluding vehicles increased 13% year over year as sold items growth, mobile engagement and momentum in fashion and parts & accessories were key drivers of growth in the first quarter. Fixed price GMV, which represented 64% of total GMV in the first quarter, grew 18% globally year over year, a four-point acceleration compared to the fourth quarter of 2011. International GMV excluding vehicles increased 11% year over year to $10 billion, reflecting improved performance in Korea and solid growth in Europe. Downloads of eBay's suite of mobile apps surpassed 12 million in the first quarter and 78 million globally since the launch of mobile in the third quarter of 2008. eBay expects to generate $8 billion in mobile volume transacted in 2012.
The company's GSI business, which was acquired in the second quarter of 2011, contributed $237 million in revenue for the first quarter. GSI generated $715 million in global ecommerce (GeC) merchandise sales during the quarter. Same store sales grew 26% year over year, reflecting strong ecommerce sales from retail clients.
First Quarter 2012 Financial Highlights (presented in millions, except per share data and percentages)
| First Quarter | ||||||||
| 2012 | 2011 | Change | ||||||
| GAAP | ||||||||
| Net revenue | $3,277 | $2,546 | $731 | 29% | ||||
| Net income | $570 | $476 | $94 | 20% | ||||
| Earnings per diluted share | $0.44 | $0.36 | $0.08 | 21% | ||||
| Non-GAAP | ||||||||
| Net income | $725 | $619 | $106 | 17% | ||||
| Earnings per diluted share | $0.55 | $0.47 | $0.08 | 18% | ||||
| First Quarter | ||||||||
| 2012 | 2011 | Change | ||||||
| Business Units | ||||||||
| Payments | ||||||||
| Net revenue | $1,309 | $993 | $316 | 32% | ||||
| Net total payment volume | $33,857 | $27,362 | $6,495 | 24% | ||||
| Merchant Services | $22,433 | $17,567 | $4,866 | 28% | ||||
| On eBay | $11,424 | $9,795 | $1,629 | 17% | ||||
| Marketplaces | ||||||||
| Net revenue | $1,728 | $1,553 | $175 | 11% | ||||
| Gross merchandise volume (excl. vehicles) | $16,206 | $14,496 | $1,710 | 12% | ||||
| U.S. | $6,366 | $5,631 | $735 | 13% | ||||
| International | $9,840 | $8,865 | $975 | 11% | ||||
| GSI | ||||||||
| Net revenue | $237 | $— | $237 | N/A | ||||
| GeC Merchandise Sales | $715 | $— | $715 | N/A | ||||
Other Selected Financial Results
- Operating margin — GAAP operating margin decreased to 19.9% for the first quarter of 2012, compared to 22.2% for the same period last year. Non-GAAP operating margin decreased to 26.9% for the quarter, compared to 29.4% for the same period last year. The decrease in GAAP and non-GAAP operating margin was due primarily to the impact of acquisitions and business mix.
- Taxes — The GAAP effective tax rate for the first quarter of 2012 was 17%, compared to 16% for the first quarter of 2011. For the first quarter of 2012 and 2011, the non-GAAP effective tax rate was 20% and 19%, respectively.
- Cash flow — The company generated $531 million of operating cash flow and $289 million of free cash flow during the first quarter, which were negatively impacted by a one-time tax payment of approximately $300 million related to the gain on the sale of our remaining equity interest in Skype in fourth quarter 2011.
- Stock repurchase program — The company repurchased approximately $240 million of its common stock in the first quarter.
- Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $7.8 billion at March 31, 2012 up from $7.5 billion at December 31, 2011.
