SAN JOSE, Calif.--(BUSINESS WIRE)--Global ecommerce and online payments leader eBay Inc. (Nasdaq: EBAY) today reported that revenue for the fiscal third quarter ended September 30, 2010, increased 1% to $2.2 billion, or up 10% excluding Skype, compared to the same period of 2009. The company recorded third quarter net income on a GAAP basis of $431.9 million, or $0.33 per diluted share, and non-GAAP net income of $530.6 million, or $0.40 per diluted share, representing a 14% increase excluding Skype, compared to the same period of 2009.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”
The company’s PayPal business delivered strong third quarter performance, expanding its leadership position in online payments with growth in revenue, total payment volume and active registered accounts. PayPal ended the quarter with 90 million active accounts worldwide adding more than a million new accounts each month during the quarter. And for the fourth consecutive quarter, Merchant Services net total payment volume grew 40% or more year over year. The Marketplaces business continued to make progress in improving the customer experience and drove customer-focused innovation in key areas, including mobile commerce and fashion. Sold items, excluding Gmarket, were up almost 13% year over year and accelerated in the US and UK.
“We delivered strong third quarter results, with great performance at PayPal and stable results at eBay,” said John Donahoe, eBay Inc. President and CEO. “PayPal gained share globally and eBay continued to improve key metrics. Our company is strong and we are managing our global portfolio to balance strengths, challenges and opportunities, invest in growth and deliver consistent performance.”
Other Selected Financial Results
Operating margin – GAAP operating margin for the third quarter increased to 21.8%, compared to 19.8% for the same period last year. Non-GAAP operating margin increased slightly to 28.7% for the quarter, compared to 28.4% for the same period last year, as productivity gains were offset in part by the impact of a stronger dollar and faster growth in the company’s lower margin payments business.
Taxes – The GAAP effective tax rate for the third quarter of 2010 was 16%, compared to 20% for the third quarter of 2009. For the third quarter of 2010, the non-GAAP effective tax rate remained unchanged at 21% compared to the third quarter of 2009.
Cash flow – The company generated $747.1 million of operating cash flow and $580.1 million of free cash flow during the quarter.
Cash and cash equivalents and non-equity investments – The company’s cash and cash equivalents and non-equity investments portfolio totaled $6.1 billion at September 30, 2010, compared to $5.2 billion at December 31, 2009.
Stock repurchase programs – The company repurchased approximately $300 million of its common stock in the third quarter. In addition, the company’s board of directors authorized an additional $2.0 billion stock repurchase program for the purpose of offsetting dilution from the company’s equity compensation programs.
Increasing financial flexibility – To capitalize on historically low US interest rates, the company’s board of directors has approved the issuance of up to $1.5 billion in term debt financing under the company’s existing shelf registration statement and the establishment of an up to $1.0 billion commercial paper program. The company may seek to execute these transactions in the near term, subject to market conditions. If these financings are consummated, they would enhance the company’s flexibility to invest in its business and make strategic acquisitions, as well as finance the Bill Me Later portfolio.
Business Outlook
Fourth quarter 2010 – eBay expects net revenues in the range of $2.39 to $2.49 billion with GAAP earnings per diluted share in the range of $0.37 to $0.40 and non-GAAP earnings per diluted share in the range of $0.45 to $0.48.
Full year 2010 – eBay now expects net revenues in the range of $9.05 to $9.15 billion with GAAP earnings per diluted share in the range of $1.30 to $1.33 and non-GAAP earnings per diluted share in the range of $1.67 to $1.70.
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