01—Abstract
Summary
Summary of the 10-K filed February 17, 2010. Cited figures are marked; the original filing is the authoritative source.
eBay Inc.'s 2010 10-K filing for the fiscal year ending December 31, 2009, reveals a company navigating a complex economic landscape while focusing on its core Marketplaces and Payments businesses.
Total net revenues saw a modest 2% increase to $8.7 billiona, largely driven by the Payments segment (PayPal and Bill Me Later), which grew 16%. Conversely, the Marketplaces segment experienced a 5% decline in revenue, indicating a challenging environment for its core e-commerce operations. The company also completed the significant sale of its Communications segment (Skype) in November 2009, which contributed a substantial $1.4 billion gain on sale, boosting net income and diluted EPS significantly.
Operationally, eBay is adapting its Marketplaces strategy by reducing upfront listing fees and emphasizing success-based fees to better support sellers. For Payments, the focus is on expanding merchant services and increasing PayPal's penetration within eBay's own marketplace.
The company's financial health remains robust, with operating cash flow at $2.91 billionb, and it maintained a substantial cash position of $4.0 billion at year-end. However, investors should note the increased provision for transaction and loan losses and the rising costs associated with customer support and product development as the company invests in future growth.
02—Key points
Key Highlights
- Total net revenues increased 2% to $8.7 billion for fiscal year 2009.
- The Payments segment was a key growth driver, with net transaction revenues increasing 14% and net total payment volume (TPV) growing 19% year-over-year.
- The Marketplaces segment saw a 5% decline in net revenues, with total Gross Merchandise Volume (GMV) decreasing by 4%.
- eBay completed the sale of its Communications segment (Skype) in November 2009, realizing a $1.4 billion gain on sale, significantly impacting net income.
- The company reported strong operating cash flow of $2.91 billion and ended the year with $4.0 billion in cash and cash equivalents.
- Sales and marketing expenses remained relatively flat, but product development and general administrative expenses saw notable increases, reflecting investments in technology and a significant legal settlement.
- The company continued its stock repurchase program, though no shares were repurchased in 2009, with $656.5 million remaining available for future purchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, eBay Inc kept $0.27.
- Revenue$8.73B100.0%
- Cost of revenue−$2.48B28.4%
- Gross profit$6.25B71.6%
- Operating costs−$4.79B54.9%
- Operating income$1.46B16.7%
- Interest, other & tax$932.3M10.7%
- Net income$2.39B27.4%
Where FY2009 revenue went
$8.73B- Other operating costs: $3.99B, 46% of revenue
- Cost of revenue: $2.48B, 28% of revenue
- Operating income: $1.46B, 17% of revenue
- R&D: $803.1M, 9.2% of revenue
Kept 17% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 17, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $8.73B$8.54B | +2.2% |
| Cost of Revenue | $2.48B$2.23B | +11.3% |
| Gross Profit | $6.25B$6.31B | −1.0% |
| R&D Expenses | $803.07M$725.60M | +10.7% |
| Operating Expenses | $4.79B$4.24B | +13.1% |
| Operating Income | $1.46B$2.08B | −29.8% |
| Net Income | $2.39B$1.78B | +34.3% |
| EPS (Basic) | $1.85$1.37 | +35.0% |
| EPS (Diluted) | $1.83$1.36 | +34.6% |
| Shares Outstanding (Basic) | 1.29B1.30B | −1.0% |
| Shares Outstanding (Diluted) | 1.30B1.31B | −0.6% |
05—Questions
Frequently Asked Questions
What was eBay's primary business focus in 2009, and how did the segments perform?
eBay's primary business segments in 2009 were Marketplaces and Payments. The Marketplaces segment, its core e-commerce platform, experienced a revenue decline of 5%. The Payments segment, encompassing PayPal and Bill Me Later, showed strong growth, with net transaction revenues increasing by 14% and total payment volume up 19%. This indicates a shift in performance between the two core businesses.
What was the impact of the Skype sale on eBay's financial results?
eBay completed the sale of its Skype division in November 2009. This transaction resulted in a significant gain on sale of $1.4 billion, which substantially boosted eBay's net income and diluted earnings per share for the fiscal year. Following the sale, eBay's operations are primarily focused on Marketplaces and Payments.
How did the economic environment affect eBay's performance in 2009?
The report acknowledges the challenging economic environment, particularly impacting the Marketplaces business, where revenue declined. While PayPal showed resilience and growth, the overall economic slowdown led to a reduced emphasis on customer acquisition in favor of retention strategies and impacted market share in some segments of Marketplaces. The company also noted increased provisions for transaction and loan losses, partly attributed to economic conditions.
What is eBay's outlook and strategy for 2010?
For 2010, eBay expressed cautious optimism. The strategy for Marketplaces focuses on enhancing trust, value, and selection for buyers and providing better tools and pricing for sellers. For Payments, the company aims to strengthen its leadership by growing its Merchant Services business, increasing PayPal's penetration on eBay, and launching new products and innovations off-platform.
06—Continue