01—Abstract
Summary
Summary of the 10-Q filed October 20, 2016. Cited figures are marked; the original filing is the authoritative source.
eBay Inc. reported net revenues of $2.217 billiona for the third quarter of 2016, a 6% increase year-over-year.
However, diluted earnings per share from continuing operations declined to $0.36b from $0.45 in the prior year's quarter. The company's operating margin also decreased to 24% from 28%. Despite a decrease in reported net income due to discontinued operations, eBay generated substantial cash flow from continuing operations, totaling $802 million for the quarter, indicating operational strength.
The company continued to execute its capital allocation strategy, repurchasing approximately $2.0 billionc of its common stock during the first nine months of 2016, demonstrating a commitment to returning value to shareholders. eBay also saw significant growth in its StubHub segment, with net transaction revenues increasing by 31% year-over-year, driven by strong GMV growth in concerts, sports, and theater events. The Classifieds segment also showed robust performance, with FX-Neutral marketing services and other revenues increasing by 14% year-over-year.
02—Key points
Key Highlights
- Net revenues increased 6% to $2.217 billion in Q3 2016 compared to Q3 2015.
- Diluted EPS from continuing operations decreased to $0.36 in Q3 2016 from $0.45 in Q3 2015.
- Operating margin decreased to 24% in Q3 2016 from 28% in Q3 2015.
- Cash flow from continuing operating activities was $802 million for Q3 2016.
- StubHub net transaction revenues increased 31% year-over-year due to strong GMV growth.
- eBay repurchased approximately $2.0 billion of its common stock during the first nine months of 2016.
- Goodwill increased from $4.451 billion to $4.727 billion primarily due to acquisitions and foreign currency translation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2016, eBay Inc kept $0.19.
- Revenue$2.22B100.0%
- Cost of revenue−$498.0M22.5%
- Gross profit$1.72B77.5%
- Operating costs−$1.18B53.1%
- Operating income$542.0M24.4%
- Interest, other & tax−$129.0M5.8%
- Net income$413.0M18.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2016filed October 20, 2016Financial Statements
Q3 FY2016 against Q3 FY2015
| Line item | Q3 FY2016Q3 FY2015 | Change |
|---|---|---|
| Revenue | $2.22B$2.10B | +5.6% |
| Cost of Revenue | $498.00M$433.00M | +15.0% |
| Gross Profit | $1.72B$1.67B | +3.2% |
| R&D Expenses | $288.00M$241.00M | +19.5% |
| Operating Expenses | $1.18B$1.09B | +8.2% |
| Operating Income | $542.00M$578.00M | −6.2% |
| Net Income | $413.00M$539.00M | −23.4% |
| EPS (Basic) | $0.37$0.45 | −17.8% |
| EPS (Diluted) | $0.36$0.45 | −20.0% |
| Shares Outstanding (Basic) | 1.13B1.21B | −6.9% |
| Shares Outstanding (Diluted) | 1.14B1.22B | −6.9% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in total assets?
Total assets increased from $17.755 billion at December 31, 2015, to $20.502 billion at September 30, 2016. This increase was largely driven by a significant rise in short-term investments (from $4.299 billion to $6.292 billion) and an increase in goodwill (from $4.451 billion to $4.727 billion), primarily due to acquisitions and foreign currency translation.
How has the company's debt structure changed?
Total debt increased from $6.749 billion at December 31, 2015, to $9.031 billion at September 30, 2016. This increase was primarily due to the issuance of $2.25 billion in senior unsecured notes in Q1 2016, including new tranches maturing in 2018, 2022, and 2056, and the reclassification of long-term debt to short-term debt.
What is the impact of discontinued operations on the financial results?
The financial results of PayPal and the former Enterprise segment are presented as discontinued operations. For the nine months ended September 30, 2016, this resulted in a loss of $7 million, compared to a loss of $176 million for the same period in 2015. While contributing to a lower net income, the ongoing business (continuing operations) shows a more positive trend in EPS and revenue.
How has the company managed its cash and investments?
eBay reported $1.753 billion in cash and cash equivalents and $6.292 billion in short-term investments as of September 30, 2016, an increase from $1.832 billion and $4.299 billion, respectively, at the end of 2015. The company generated $2.207 billion in cash from continuing operating activities for the first nine months of 2016, underscoring strong operational cash generation. They also continue to repurchase shares and manage their investment portfolio actively.
06—Continue