01—Abstract
Summary
Summary of the 10-Q filed October 31, 2018. Cited figures are marked; the original filing is the authoritative source.
eBay Inc. reported solid third-quarter 2018 results, with net revenues increasing by 6% year-over-year to $2.6 billiona.
This growth was driven by a 6% increase in net transaction revenues, primarily from the Marketplace and StubHub segments, as well as a 6% rise in Marketing Services & Other revenues, boosted by Classifieds. The company demonstrated strong operational execution, with diluted earnings per share (EPS) rising to $0.73b from $0.48 in the prior year's comparable quarter. While operating margin saw a slight decrease to 21.0% from 23.0%, this was influenced by increased sales and marketing expenses and other operational costs. eBay also generated significant cash flow from operations, amounting to $1.4 billion for the first nine months of the year, while actively managing its capital through substantial share repurchases totaling $3.0 billion during the same period.
02—Key points
Key Highlights
- Net revenues grew 6% year-over-year to $2.65 billion for the third quarter of 2018.
- Diluted earnings per share (EPS) increased to $0.73, up from $0.48 in the prior year's third quarter.
- Total Gross Merchandise Volume (GMV) increased by 5% to $22.72 billion in Q3 2018.
- The company repurchased $3.0 billion of common stock in the first nine months of 2018, with $4.7 billion remaining on authorized repurchase programs.
- Goodwill increased by $532 million due to the acquisition of Giosis' Japan business.
- eBay sold its investment in Flipkart, recognizing a gain of $313 million.
- The effective tax rate for the nine months ended September 30, 2018 was 19.9%, a significant increase from 7.6% in the prior year, partly due to tax reform and legal structure realignments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, eBay Inc kept $0.27.
- Revenue$2.65B100.0%
- Cost of revenue−$608.0M23.0%
- Gross profit$2.04B77.0%
- Operating costs−$1.49B56.1%
- Operating income$556.0M21.0%
- Interest, other & tax$165.0M6.2%
- Net income$721.0M27.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed October 31, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $2.65B$2.50B | +6.0% |
| Cost of Revenue | $608.00M$556.00M | +9.4% |
| Gross Profit | $2.04B$1.94B | +5.2% |
| R&D Expenses | $307.00M$316.00M | −2.8% |
| Operating Expenses | $1.49B$1.37B | +8.6% |
| Operating Income | $556.00M$574.00M | −3.1% |
| Net Income | $721.00M$520.00M | +38.7% |
| EPS (Basic) | $0.74$0.49 | +51.0% |
| EPS (Diluted) | $0.73$0.48 | +52.1% |
| Shares Outstanding (Basic) | 974.00M1.06B | −8.3% |
| Shares Outstanding (Diluted) | 983.00M1.08B | −8.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of eBay's revenue growth in Q3 2018?
eBay's revenue growth in Q3 2018 was primarily driven by an increase in net transaction revenues, particularly from its Marketplace platform, and growth in Marketing Services & Other revenues, notably from its Classifieds segment. This was supported by a 5% increase in Gross Merchandise Volume (GMV).
How has eBay managed its capital and shareholder returns?
eBay has actively managed its capital through significant share repurchase programs. In the first nine months of 2018, the company repurchased $3.0 billion of its common stock and had approximately $4.7 billion remaining under its authorized repurchase programs as of September 30, 2018. This demonstrates a commitment to returning capital to shareholders.
What significant events impacted eBay's financial results beyond core operations?
Key non-operational events impacting eBay's results include the acquisition of Giosis' Japan business, which added $532 million in goodwill, and the sale of its investment in Flipkart, which generated a $313 million gain. Additionally, the company incurred $84 million in pre-tax restructuring charges related to a global workforce reduction.
How did the Tax Cuts and Jobs Act affect eBay's tax provision?
The Tax Cuts and Jobs Act, enacted in late 2017, significantly impacted eBay's tax provision. The company recognized a provisional charge of $3.1 billion in Q4 2017. While analysis was ongoing as of September 30, 2018, an update in October 2018 indicated a favorable tax ruling would result in a $389 million income tax benefit related to U.S. tax reform in Q4 2018. The effective tax rate for the nine months of 2018 was 19.9% compared to 7.6% in the prior year.
06—Continue