eBay releases second quarter 2022 financial report, performance exceeds expectations

August 4 , 202 2 – eBay Inc. (NASDAQ: EBAY), a global commerce leader connecting hundreds of millions of buyers and sellers around the world, today announced financial results for the second quarter ended June 30, 2022.

Jamie Iannone, CEO of eBay, said: "I am pleased that we reported another strong quarter. Our team delivered better-than-expected financial results across the board, while continuing to make significant progress on our long-term plans. Our focused category strategy is working, and payments and advertising are driving further growth. eBay is in a better position today than when we entered the pandemic. Despite rising inflation and an uncertain macro environment, we remain on track to deliver on our 2022 commitments."

Second Quarter Financial Highlights

ŸRevenue was $2.4 billion, down 9% year-over-year, and down 6% year-over-year excluding the impact of foreign exchange changes.

Total transaction volume was US $18.5 billion, down 18% year-on-year. Excluding the impact of exchange rate changes, it was down 14% year-on-year.

GAAP net loss from continuing operations was $536 million, or $0.96 per diluted share, primarily due to changes in the fair value of equity investments .

Non - GAAP net income from continuing operations was $554 million, or $0.99 per diluted share.

ŸGAAP operating margins were 21.7% and 28.7%, respectively.

Operating cash flow from continuing operations was $577 million and free cash flow from continuing operations was $466 million.

Ÿ Sold part of its stake in Kakao Bank for US$242 million and part of its stake in Adyen for US$129 million.

Returned more than $1.4 billion to shareholders in the second quarter , including approximately $1.3 billion in share repurchases and $121 million in cash dividends .

Business Highlights

eBay has joined a consortium of investors led by The Chernin Group that has made a strategic investment in Funko. As part of this investment, Funko and eBay will enter into a commercial agreement under which eBay will become Funko 's preferred secondary market platform and the two companies will collaborate on the release of exclusive products.

Ÿ eBay has acquired KnownOrigin, an NFT (non-fungible token) trading platform that provides artists with a platform to create unique authentic digital collectibles in the form of NFTs. As an early pioneer in the NFT field, KnownOrigin has innovative technology and a talented team, coupled with eBay's influence and reputation, which will drive a new wave of NFT creators, sellers and buyers.

Ÿ eBay announced that it is taking steps to close its Turkish marketplace business GittiGidiyor. eBay regularly reviews its global business operations and made this strategic decision based on the ongoing dynamics of the market. Although the closure of GittiGidiyor will not have a material impact on eBay's future revenue and operating profit, approximately 3 million of eBay's active buyers in the second quarter came from the Turkish marketplace.

Revenue Plan

eBay's first-party advertising products generated $232 million in revenue in the second quarter, up 2% year-over-year and 6% year - over-year excluding currency fluctuations. The primary driver of eBay's first-party advertising products was the Promoted Listings advertising service.

eBay's advertising product revenues for the second quarter were approximately $275 million, representing approximately 1.5% of total transaction volume .

· eBay has expanded its Buyer FX program to include more payment options, allowing eBay buyers to purchase in the currency of their choice, providing greater flexibility and further reducing transaction friction for customers.

During the second quarter, eBay introduced Klarna invoicing and installment payment options to German buyers .

Technology-oriented platform reshaping

eBay launches eBay Vault, a state-of-the-art storage facility and digital marketplace for collectors. Now available for single graded trading cards and “pull-together” graded autograph cards valued at over $500 , eBay Vault enables collectors to simplify and protect their assets. eBay Vault is the latest in a series of major innovations for collectors that combine physical and digital capabilities to make collecting more advanced than ever before.

Through a strategic partnership with Professional Sports Authenticators (PSA), eBay has expanded its Trading Card Guarantee to include graded trading cards sold on eBay for more than $500 .

eBay also expanded its sneaker and handbag authenticity guarantee program to Australia and the U.K. In Australia, eBay also hosted eBay 's Museum of Authentics , which showcased a collection of rare sneakers, partnered with Afterpay's Australian Fashion Week to engage influencers, and strengthened eBay's marketplace authentication service for luxury handbags.

In April , eBay Motors hosted the first-ever New York Auto Parts Show , designed to showcase how car enthusiasts can build, restore or maintain their "dream car." Facing unprecedented supply chain challenges, the show partnered with some of the industry's top manufacturers and superstars to create and assemble a series of "Re - Concept cars" to showcase how the best "new" cars on the road can be transformed from existing old cars.

In April , eBay expanded the eBay Refurbished program to include tablets, smartwatches, laptops, and desktops in multiple condition levels. This year, the program will add hundreds of thousands of items, allowing eBay to meet consumer needs at every price point without sacrificing quality and trust. The expansion includes the launch of eBay Refurbished in Canada, giving buyers access to “like-new” items ranging from moderately worn to brand new, all backed by a one- or two-year warranty.

eBay Inc. launched a beta of eBay Live, a dedicated shopping platform that provides a new way for people to browse and purchase products in a real-time, interactive environment. The new beta technology combines entertainment with instant purchasing on one of the world’s largest shopping platforms.

Ÿ eBay has partnered with Snapchat to create a quick and easy way to share eBay listings to Snapchat directly from the eBay app. With just a few clicks, users can create a page on Snapchat with the eBay listing details, an image and a clickable link back to the eBay listing.

eBay announced a partnership with the British reality TV show Love Island , becoming the show’s first-ever second-hand fashion partner.

Influence

eBay released its 2021 Impact Report, detailing progress toward its 2025 and 2030 economic empowerment and sustainability goals. For the first time, eBay also published its calculations of the environmental and financial benefits of keeping products in circulation to prevent them from being immediately discarded to landfill or incinerated.

eBay Inc. released its sixth annual Diversity, Equity and Inclusion (DE&I) Report, outlining how the company remains committed, open and transparent, celebrating wins while also acknowledging areas for improvement.

eBay , in partnership with the GLIDE Foundation, hosted the 21st and final “Power of One” charity lunch auction with Warren Buffett. The auction made history with a record-breaking bid of over $19 million, bringing the total raised in nearly 20 years to over $53 million to support the GLIDE Foundation’s transformative programs and services to lift people out of poverty, hunger and homelessness.

eBay for Charity’s global donations in the second quarter were close to $56 million, up 52% ​​year-over-year.

Through the company’s matching gifts program, the eBay Foundation matched more than $500,000 in employee donations to charitable causes and communities around the world and supported volunteer efforts.

In the second quarter, eBay received three Women 's Choice Awards , Best Company for Diversity , Best Company for Women and Best Company for Millennials . eBay was also recognized as one of LinkedIn's Best Companies in Retail and received Handshake 's Early Talent Award , which recognizes eBay's early career program.

Other financial and operating results

ŸOperating profit margin: The operating profit margin calculated based on GAAP in the second quarter of 2022 decreased to 21.7%, compared with 27.4% in the same period last year. The operating profit margin calculated based on non-GAAP in the second quarter of 2022 decreased to 28.7%, compared with 32.8% in the same period last year.

ŸTaxes : The effective tax rate for continuing operations calculated on a GAAP basis was 26.3% for the second quarter of 2022, compared to 26.6% for the second quarter of 2021. The effective tax rate for continuing operations calculated on a non-GAAP basis was 16.5% for the second quarter of 2022. (Note 1: eBay uses a non-GAAP tax rate to evaluate operating results. Based on eBay's current long-term forecast, the company uses a non-GAAP tax rate of 16.5%. This non-GAAP tax rate may change for a variety of reasons, including changes in eBay's regional earnings mix or changes in the underlying tax laws in the major jurisdictions where the company operates.)

ŸCash Flow: eBay's operating cash flow from continuing operations was $577 million in the second quarter of 2022, and free cash flow from continuing operations was $466 million.

ŸCapital Returns: eBay repurchased approximately $1.3 billion of common stock in the second quarter of 2022, with a total of approximately 25 million shares repurchased. As of June 30, 2022, eBay has a total authorized remaining repurchase value of $3.4 billion. In the second quarter of 2022, eBay also distributed cash dividends of $121 million.

Cash , cash equivalents and non-equity investments: As of June 30, 2022, eBay's cash, cash equivalents and non-equity investment portfolio totaled $4.5 billion.

Business Outlook

eBay Inc. provides the following guidance for continuing operations for the third quarter of 2022:

Net revenue is expected to be between $2.29 billion and $2.37 billion, with year-over-year organic growth of -2% to -5% excluding the impact of currency fluctuations .

· Expected GAAP diluted earnings per share from continuing operations to be in the range of $0.63 to $0.69;

Non - GAAP diluted earnings per share from continuing operations are expected to be in the range of $0.89 to $0.95.

eBay Inc. provides the following guidance for continuing operations in 2022:

Net revenue is expected to be between $9.6 billion and $9.9 billion, with year-over-year organic growth of -3% to -6% excluding the impact of currency fluctuations .

GAAP diluted earnings per share from continuing operations are expected to be in the range of -$1.83 to -$1.98.

Non - GAAP diluted earnings per share from continuing operations are expected to be in the range of $3.95 to $4.10.

Declare a dividend

eBay Inc.’s Board of Directors has declared a cash dividend of $0.22 per share of common stock, payable on September 16, 2022, to shareholders of record as of September 1, 2022.