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Monday July 26, 4:15 pm Eastern Time
Company Press Release
SOURCE: eBay Inc.
eBay Inc. Announces Second Quarter 1999 Financial
Results
Registered Users Increased 46% Sequentially to 5.6 Million
SAN JOSE, Calif., July 26 /PRNewswire/ -- eBay Inc. (Nasdaq: EBAY -
news; www.ebay.com), the world's largest
person-to-person online trading community, today reported financial
results for its second quarter ended June 30, 1999.
(Photo: newscom.com )
The Company generated consolidated net revenues of $49.5 million in
the second quarter of 1999, a 154 percent increase over the
$19.5 million reported for the same period last year. Revenues are
net of the $3.9 million in credits given to users for the June 10th
site outage. Consolidated net income for the quarter was $816,000, or
$0.01 per share on a diluted basis. eBay's consolidated net
income excluding the effects of non-cash and one-time merger related
charges was $5.1 million, or $0.04 per diluted share,
compared with $5.2 million, or $0.05 per diluted share during the
second quarter of 1998. These consolidated results include the
effects of the acquisitions of Butterfield & Butterfield, Kruse
International, Billpoint and Alando.
In addition to the consolidated statement of income, eBay
supplementally reported a pro forma statement of income, which
excludes
one-time merger related costs and the financial results of the recent
acquisitions. eBay pro forma net revenues were $38.2 million in
the second quarter of 1999, a 327 percent increase over the $8.9
million reported for the same period last year. Pro forma revenues
are net of the $3.9 million in credits given to users. eBay pro forma
net income for the second quarter of 1999 was $4.3 million, or
$0.03 per share on a diluted basis. Net income before the effect of
non-cash and one-time merger related charges was $5.1 million,
or $0.04 per diluted share, compared with $2.5 million, or $0.02 per
diluted share during the second quarter of 1998.
The primary contributor to the increase in eBay pro forma net
revenues for the quarter was the increased activity on the site. The
number of registered users increased more than 1.7 million to 5.6
million at June 30, 1999, an increase of 46 percent from the more
than 3.8 million registered users at March 31, 1999 and an increase
of 556 percent from June 30, 1998. eBay hosted 29.4 million
auctions during the second quarter of 1999, up from 22.9 million in
the first quarter of 1999, representing sequential growth of 28
percent and year over year growth of 346 percent. In addition, eBay's
gross merchandise sales (the value of goods traded on the
eBay site) for the second quarter of 1999 were $622 million, up 15
percent from the $541 million reported in the first quarter of
1999, and 346 percent over the second quarter of 1998.
In the second quarter, eBay continued to experience rapid growth in
its business. In order to support this new level of activity, the
Company made significant investments in personnel, infrastructure and
marketing programs during the second quarter, which
affected costs in all segments of the eBay pro forma income statement.
Pro forma cost of net revenues increased significantly in absolute
dollars during the quarter largely due to site operations and
customer support. Site operation expenditures included additional
labor and related costs, depreciation on new equipment and ISP
connectivity fees. Customer support costs included additional
personnel and the opening of a new center in Salt Lake City. These
investments, combined with the effects of the user credits, caused
gross margin to decline during the quarter to 77 percent. Pro
forma gross margin excluding the impact of the user credits was 79
percent.
The increase in pro forma sales and marketing expense in the second
quarter over the first quarter was primarily due to personnel
growth, the expansion of online advertising, product marketing, the
continuation of radio advertising and international expansion. Pro
forma product development expense increased significantly in the
second quarter due to additional labor and related expenses. Pro
forma general and administrative expense increased over the previous
quarter primarily due to the Company's investment in
personnel, including those in its SafeHarbor(TM) program, and
increases in professional service fees.
For the second quarter, eBay recorded consolidated non-cash
amortization charges of $1.5 million related to stock-based
compensation and $327,000 associated with acquired intangibles. eBay
also recorded $4.4 million of one-time merger related
charges. The Company recorded a consolidated tax provision of
$591,000 representing an effective tax rate of 42 percent of
second quarter consolidated pretax income.
''We have tremendous momentum in our flagship business,'' said Meg
Whitman, President and CEO of eBay. ''Our customers now
transact well over $200 million in gross merchandise sales per month,
making this the most vibrant consumer e-commerce site on the
entire Internet. Our community continues to expand at a rate higher
than the Internet in general. During the second quarter, we made
unparalleled investments in infrastructure while taking bold moves in
several new business areas including international, regional,
premium, and person-to-person payments while maintaining
profitability in the flagship business.''
The Company's overall balance sheet was strengthened in the second
quarter primarily from the proceeds of the follow-on offering
that was completed in April 1999. Consolidated assets as of June 30,
1999 were over $922 million, which included over $752
million of cash and high quality financial instruments.
About eBay
eBay (www.ebay.com), the world's personal trading community(TM),
pioneered person-to-person online trading. Founded in
1995, eBay has developed an efficient and entertaining trading site
on the Web. Currently, there are more than 2.4 million items
listed for sale. More than 300,000 items are added daily in more than
1,600 categories including: antiques; books, movies and
music; coins and stamps; collectibles; computers; dolls and figures;
jewelry and gemstones; photo and electronics; pottery and glass;
sports memorabilia; and toys. eBay is also engaged in the traditional
auction business through its subsidiaries, Butterfield &
Butterfield and Kruse International.
Forward Looking Statements
This announcement contains forward looking statements that involve
risks and uncertainties, including those relating to the
Company's ability to grow its user base. Actual results could differ
materially from those discussed. Factors that could cause or
contribute to such differences include, but are not limited to, the
Company's need to maintain site stability, to successfully manage
and integrate its new acquisitions, to manage significant growth in
all aspects of its business, to deal with the increasingly competitive
environment for online trading. More information about potential
factors which could affect the Company's business and financial
results is included in the Company's Form 10-K for the period ended
December 31, 1998 under the headings ''Risk Factors'' and
''Management's Discussion and Analysis of Financial Condition and
Results of Operations'', its Form 10Q for the period ending
March 31, 1999 and its Form 8-K/A filed on July 26, 1999. All forward
looking statements are based on information available to
the Company on the date hereof, and the Company assumes no obligation
to update such statements.
Company News On Call: prnewswire.com
Press Release fax-on-demand service: 800-758-5804, ext. 132637
eBAY INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands; unaudited)
December 31, June 30,
1998 1999
ASSETS
Current assets:
Cash and cash equivalents $37,285 $347,553
Short-term investments 40,401 76,771
Accounts receivable, net 12,425 23,908
Other current assets 7,479 24,623
Total current assets 97,590 472,855
Property and equipment, net 44,062 72,319
Investments -- 358,724
Deferred tax asset -- 11,231
Intangible and other assets, net 7,884 7,080
$149,536 $922,209
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,997 $31,578
Accrued expenses and other current liabilities 6,577 16,124
Customer advances and deferred revenue 973 2,109
Debt and leases, current portion 4,047 13,305
Income taxes payable 1,380 7,570
Deferred tax liabilities 1,682 1,682
Total current liabilities 24,656 72,368
Debt and leases, long-term portion 18,361 5,521
Other liabilities 5,981 6,108
48,998 83,997
Total stockholders' equity 100,538 838,212
$149,536 $922,209
eBAY INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts; unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
Net revenues $19,480 $49,479 $33,468 $92,280
Cost of net revenues 3,286 10,945 5,777 18,922
Gross profit 16,194 38,534 27,691 73,358
Operating expenses:
Sales and marketing 6,324 22,916 11,903 39,874
Product development 1,030 5,476 1,548 7,639
General and administrative 4,492 10,088 6,800 17,702
Amortization
of acquired intangibles 150 327 150 655
Merger related costs -- 4,359 -- 4,359
Total operating expenses 11,996 43,166 20,401 70,229
Income (loss) from operations 4,198 (4,632) 7,290 3,129
Interest and
other income (expense), net (432) 6,039 (432) 6,314
Income before income taxes 3,766 1,407 6,858 9,443
Provision for income taxes (1,037) (591) (2,685) (4,862)
Net income $2,729 $816 $4,173 $4,581
Net income per share:
Basic $0.07 $0.01 $0.12 $0.04
Weighted average
shares -- basic 39,447 106,855 34,248 102,343
Diluted $0.02 $0.01 $0.04 $0.03
Weighted average
shares -- diluted 109,929 136,614 104,808 134,525
Supplemental (A)
Historical net income (loss) $2,729 $816 $4,173 $4,581
Add back certain
non-cash and merger costs:
Amortization
of stock-based compensation 1,078 1,457 1,499 2,275
Amortization
of acquired intangibles (B) 150 327 150 780
Merger related costs (C) -- 2,528 -- 2,528
Charitable contribution
of Common Stock 1,216 -- 1,216 --
Total add back 2,444 4,312 2,865 5,583
Supplemental net income excluding
certain non-cash and merger
related charges $5,173 $5,128 $7,038 $10,164
Supplemental net income per share:
Basic $0.13 $0.05 $0.21 $0.10
Diluted $0.05 $0.04 $0.07 $0.08
(A) The accompanying supplemental financial information is presented for
informational purposes only and should not be considered as a substitute
for the historical financial information presented in accordance with
generally accepted accounting principles.
(B) Expenses associated with the amortization of acquisition related
charges are included within cost of net revenues as well as operating
expenses under the heading "amortization of acquired intangibles."
(C) Supplemental information on merger related costs reflects a 42 percent
tax benefit when compared to the operating expenses under the heading
"merger related costs."
eBAY INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts; unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
Historical (A)
Net revenues $8,941 $38,183 $14,922 $72,193
Cost of net revenues 1,106 8,722 1,736 13,843
Gross profit 7,835 29,461 13,186 58,350
Operating expenses:
Sales and marketing 2,504 17,061 4,610 29,128
Product development 1,030 4,153 1,548 6,077
General and administrative 3,159 7,094 4,187 12,137
Amortization
of acquired intangibles 150 327 150 655
Total operating expenses 6,843 28,635 10,495 47,997
Income from operations 992 826 2,691 10,353
Interest and other income, net 54 6,570 76 7,209
Income before income taxes 1,046 7,396 2,767 17,562
Provision for income taxes (979) (3,106) (2,552) (7,376)
Net income $67 $4,290 $215 $10,186
Net income per share:
Basic $0.00 $0.04 $0.01 $0.10
Weighted average
shares -- basic 37,332 106,855 32,133 102,343
Diluted $0.00 $0.03 $0.00 $0.08
Weighted average
shares -- diluted 107,814 136,614 102,693 134,525
Supplemental (B)
Historical net income $67 $4,290 $215 $10,186
Add back certain
non-cash and merger costs:
Amortization of
stock-based compensation 1,078 501 1,499 1,167
Amortization
of acquired intangibles (C) 150 327 150 780
Charitable contribution
of Common Stock 1,216 -- 1,216 --
Total add back 2,444 828 2,865 1,947
Supplemental net income
excluding certain non-cash
and one time charges $2,511 $5,118 $3,080 $12,133
Supplemental net income per share:
Basic $0.07 $0.05 $0.10 $0.12
Diluted $0.02 $0.04 $0.03 $0.09
(A) Represents the historical financial information of eBay Inc.,
excluding non-recurring merger related costs and the effect of the mergers
with Butterfield and Butterfield, Kruse International, Billpoint, Inc.,
and alando.de AG.
(B) The accompanying supplemental financial information is presented for
informational purposes only and should not be considered as a substitute
for the historical financial information presented in accordance with
generally accepted accounting principles.
(C) Expenses associated with the amortization of acquisition related
charges are included within cost of net revenues as well as operating
expenses under the heading "amortization of acquired intangibles." |
