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Quote:EBAY INC. REPORTS FIRST QUARTER 2008 RESULTS
Delivered second consecutive $2-billion plus quarter
Completed approximately $1 billion in stock repurchases
Acquired Fraud Sciences Ltd.

San Jose, Calif, April 16, 2008 — eBay Inc. (Nasdaq: EBAY) today reported financial results for its first quarter ended March 31, 2008. The ecommerce company posted first quarter revenue of $2.19 billion, up $424 million from the same period last year. Revenue growth was driven primarily by Marketplaces net transaction revenues, the ongoing expansion at PayPal, Skype and the company’s global classifieds business. The company’s global footprint helped it benefit from strength in other currencies, relative to the U.S. dollar. The company recorded net income on a GAAP basis of $460 million or $0.34 per diluted share, and non-GAAP net income of $562 million or $0.42 per diluted share.

GAAP operating margin decreased to 25.2% for the quarter, compared to 26.5% for the same period last year. Non-GAAP operating margin decreased to 32.0% for the quarter, compared to 33.6% for the same period last year. The decrease in operating margins was caused primarily by our faster growing lower-margin businesses, such as PayPal and Skype.

eBay Inc. generated $766 million of operating cash flow during the first quarter. Free cash flow during the quarter was $632 million.

“This was a very strong financial quarter for the company,” said eBay Inc. President and CEO John Donahoe. “The results reflect the strength provided by our diverse portfolio of businesses. Our stability and growth continues to give us the confidence to make innovative changes to our products to keep customers engaged for years to come.”

Quarterly Business Highlights
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John Donahoe assumed the role of chief executive officer on March 31.
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eBay rolled out several initiatives in an effort to enhance user experience on the site -- primarily by re-structuring fees for sellers and introducing a default search order based on relevance and seller quality.
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The company repurchased approximately 37 million shares of its outstanding common stock at a cost of approximately $1 billion.
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eBay Motors reached a milestone with its 3 millionth vehicle sold on the site.
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PayPal signed Merchant Service account deals with JetBlue Airlines, Ferrari Store (Italy), CompUSA and Office Depot (U.K.), among others.
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PayPal completed the acquisition of Fraud Sciences to accelerate the development of its fraud detection tools.
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PayPal expanded its seller protection plan for eBay Power Sellers.
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Skype named Josh Silverman as its chief executive officer on February 25.
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Skype achieved 100 billion cumulative Skype-to-Skype minutes.
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The company’s global portfolio of classifieds businesses reported a 101% increase in unique visitors year over year, with an average of 70 million monthly unique visitors.
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StubHub announced a deal making it the online ticket marketplace for the Daytona 500.
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The company completed the reorganization of select North American and European functional groups to align more closely with strategic priorities.

“We are pleased with our first quarter results. We generated strong revenue growth, even stronger earnings growth and excellent free cash flow. During the quarter, we opportunistically repurchased approximately 3% of eBay shares outstanding," said Bob Swan, eBay Inc. CFO. "We are seeing some positive early indicators based on our key initiatives, but there is still much work to be done. For the remainder of 2008, we'll continue to focus on the strategies we've put into motion, and we believe our guidance will allow us to invest in, and make the necessary changes to, our business while still delivering on our financial commitments."

Quarterly Business Unit Discussion

Marketplaces
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had a strong quarter with a $1.48 billion in revenue, equating to 19% year-over-year growth. Revenue growth was driven primarily by advertising, classifieds and StubHub. Net revenues generated outside the U.S. were 55% of total Marketplaces net revenues for the quarter. Gross merchandise volume was $16.04 billion for the quarter, an increase of 12% over the first quarter of 2007. Marketplaces continues to focus on customer-facing initiatives designed to make transactions on the eBay platform safer and its various global sites easier to use while enhancing selection in a uniquely eBay way.

Payments
PayPal had a strong quarter with $582 million in net revenue, an increase of 32% year-over-year. Net total payment volume (TPV) for the quarter was $14.42 billion, an increase of 34% year-over-year. The net revenue and net TPV growth was driven primarily by the continued strong growth of Merchant Services globally and increased penetration on eBay internationally. Growth in global active accounts increased to 60.2 million, representing 17% year-over-year growth. Globally, PayPal will continue to focus on greater penetration into the Marketplaces business and the acquisition of new merchants.

Communications
Skype continued its strong growth trajectory, reporting $126 million in revenue for the quarter, representing 61% year-over-year growth. Skype added 33 million registered users in the quarter, ending the period with more than 309 million registered users around the world. Skype now has the largest registered user base within eBay Inc.’s portfolio of businesses.

Other Selected Financial Results
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Taxes — The GAAP effective tax rate for the quarter was 21%, compared to 24% for the first quarter of 2007. The non-GAAP effective tax rate for the quarter was 23% compared to 26% for the first quarter of 2007.
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Cash, cash equivalents and investments — The company’s cash, cash equivalents and investments totaled $4.11 billion at March 31, 2008, compared to $5.04 billion at December 31, 2007.

Business Outlook
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Full year 2008 – eBay now expects net revenues in the range of $8.700 to $9.000 billion with GAAP earnings per diluted share in the range of $1.35 to $1.40 and non-GAAP earnings per diluted share in the range of $1.70 to $1.75.
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Second quarter 2008 – eBay now expects net revenues in the range of $2.100 to $2.150 billion with GAAP earnings per diluted share in the range of $0.30 to $0.32 and non-GAAP earnings per diluted share in the range of $0.39 to $0.41.

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Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. The company’s actual results could differ materially from those predicted and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the company’s need to increasingly achieve growth from its existing users, particularly in its more established markets, as well as the need to acquire new users; the company’s ability to deal with the increasingly competitive ecommerce environment, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; the effect of management changes and business initiatives; the regulatory, intellectual property, competitive and other risks specific to Skype; the competitive, regulatory, credit card association, and other risks specific to PayPal, especially as it continues to expand geographically; the company’s need to manage other regulatory, tax, and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the company’s ability to upgrade and develop its systems, infrastructure and customer service capabilities at reasonable cost; the company’s ability to maintain site stability and performance on all of its sites while adding new products and features in a timely fashion; changes in political, business and economic conditions, including conditions that affect consumer confidence or ecommerce growth; fluctuations in foreign exchange rates; the company’s ability to profitably expand its business model to new types of merchandise and sellers; and, the company’s ability to profitably integrate, manage and grow businesses that have been acquired recently or may be acquired in the future. The forward-looking statements in this release do not include the potential impact of any acquisitions that may be announced and/or completed after the date hereof.


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(2) Net revenues for the three-month period ended March 31, 2008 were positively impacted by foreign currency translation of approximately $110 million compared to the same period of the prior year. On a sequential period, net revenues for the three-month period ended March 31, 2008 were positively impacted by foreign currency translation of approximately $27 million.
(3) Operating income for the three-month period ended March 31, 2008 was positively impacted by foreign currency translation of approximately $57 million compared to the same period of the prior year. On a sequential period, operating income for the three-month period ended March 31, 2008 was positively impacted by foreign currency translation of approximately $17 million.
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(1) Beginning with the first quarter of 2008, we reclassified revenue generated primarily from our Marketplaces non-gross merchandise volume based businesses (which includes Shopping.com, Rent.com and our classified websites) from "Net Transaction Revenues" to "Marketing Services and Other Revenues" in order to more closely align our net transaction revenue presentation with our key operating metrics. "Marketing Service and Other Revenues" also includes amounts previously reflected under "Advertising and Other Revenue."

Quote:During the quarter ending March 31 - the day Donahoe grabbed the reins from former CEO Meg Whitman - the world's most popular online auction house raked in revenues of $2.19bn, a 24 per cent increase from a year ago, while profits hit $460m, a 22 percent leap from the previous year.

This came despite what eBay called "softening" economies in the US and the UK. "We saw a slowing in terms of buyers' propensity to buy toward the end of the first quarter," Chief Financial Officer Bob Swan said during the call. The US is eBay's number one market, while Britain is number three (just behind Germany).

But eBay cleaned up in other parts of the world, benefiting from a weak American dollar. Fifty-five per cent of the company's "marketplace" revenue - cash generated from auctions on eBay.com, Shopping.com, StubHub, Kijiji, and other sites - came from outside the US.

The number of eBay users increased only 1 per cent from the previous year, while gross merchandising volume (GMV) - the sum value of all closed auctions - decreased one per cent. But the number of auction listings rose 10 per cent...