e bay 2011-03-15

eBay

ANALYSIS for NASDAQ : EBAY MARCH 15, 2011

$32.81$43.5 B MKT CAP

Trefis Estimate

$30.44$39.5 B MKT CAP

Market Price

— CORPORATE SNAPSHOT —

eBay is known for operating the online marketplace eBay.com. The

company's marketplace is where third-party buyers and sellers can transact in

a variety of products including clothing, electronics, media, collectibles,

automobiles and many other types of merchandise.

In addition to eBay.com, the company operates other online commerce

platforms like Half.com, Rent.com, Shopping.com, and classifieds websites.

eBay also makes money through its global payments platform called PayPal.

PayPal enables enables secure, easy, quick, and cost-effective transfer of

payments online.

— VALUATION HIGHLIGHTS —

eBay Marketplaces is 49% of the Trefis price estimate for eBay's stock1.

PayPal is 21% of the Trefis price estimate for eBay's stock2.

Our share price estimate and the overall company value is derived by

summing-up the values of individual divisions/businesses in a sum-of-the-

parts analysis. The value of each division is calculated using a discounted cash

flow (DCF) methodology.

We forecast fundamental drivers like pricing, market share, and profit

margins for different businesses in estimating the division’s value within the

DCF framework. The analysis below primarily focuses on those important

forecasts that drive our share price and value estimate.

Our complete analysis, including sources of historical data, underlying

equations and additional discussion are available on www.trefis.com.

— POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE —

EBAY MARKETPLACES

4

Average Selling Price of Merchandise on

eBay

5eBay Transaction Take Rate

6

Listings-to-Sales Conversion Rate for

Merchandise on eBay

7

Number of Merchandise Listings on

eBay

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Marketplaces EBITDA Profit

Margin

PAYPAL 10Average Payment Size on PayPal

11PayPal Payment Take Rate

11Number of Accounts on PayPal

12Payments per Account on PayPal

13PayPal EBITDA Profit Margin

MARKETING & ADVERTISING 15Marketing & Advertising Revenue

16

Marketing & Advertising EBITDA

Profit Margin

APPENDICES 17Summary P&L for eBay

18Detailed eBay Marketplaces P&L

19Detailed PayPal P&L

20

Detailed Marketing & Advertising

P&L

https://www.trefis.com/company#/EBAY?from=pdf:TR

http://www.trefis.com

Below are key drivers of eBay's value that present opportunities for upside or

downside to the current Trefis price estimate for eBay:

eBay Marketplaces

eBay Transaction Take Rate: We currently forecast take rate, eBay's

commission on items sold, to decrease from about 8% in 2010 to 7.1% by

the end of the Trefis forecast period. There could be 6% upside to the

Trefis price estimate if take rate were to remain flat at around 8%.

•

Marketplaces EBITDA Profit Margin: We currently forecast

marketplaces margin to increase from about 34% in 2010 to nearly 36% by

the end of the Trefis forecast period. There could be 17% upside to the

Trefis price estimate if margin were to rebound to 2005 levels of about

46%. On the other hand, there could be 13% downside to the Trefis

price estimate if margins continued falling, reaching 20% by the end of

the Trefis forecast period.

•

PayPal

Payments per Account on PayPal: We currently forecast that the

average number of payments per PayPal account will remain flat at

around 1.3. There could be 9% upside to the Trefis price estimate if

payments were to rebound to 2005 levels of 1.7 payments per account.

On the other hand, there could be 16% downside to the Trefis price

estimate if payments per PayPal account fell to 0.5 by the end of the

Trefis forecast period.

•

PayPal EBITDA Profit Margin: We currently forecast PayPal margins

to increase from about 18% in 2010 to 24% by the end of the Trefis

forecast period. There could be 12% downside to the Trefis price

estimate if margins fell to 2009 levels of 9%.

•

For additional details, select a driver above or select a division from the

interactive Trefis split for eBay at the top of the page.

— SOURCES OF VALUE —

We estimate that eBay Marketplaces is the most valuable segment for the

following reasons:

Marketplaces' Take Rate Higher than PayPal Take RateThe take rate represents the average commission made by eBay on

transactions. We estimate eBay's take rate for items sold through its

marketplaces to be around 8% by 2010 compared to a PayPal take rate of 3.6%

in the same period.

Marketplaces' Margins Higher than PayPal MarginsWe estimate that eBay Marketplaces will have operating margins of around

34% by 2010. In comparison, we estimate that PayPal will have 18% operating

margins by 2010.

TREFIS ANALYSIS for EBAY [email protected] + 1 617 394 8763 •2

https://www.trefis.com/company?hm=EBAY.trefis&driver=0259&from=pdf




— KEY TRENDS —

Focus on Increasing Conversion RateConversion rate is a key focus area for eBay, as it seeks to increase the success

of sellers in converting listed items to sold items. eBay has implemented a

number of features to increase the conversion rate on Marketplaces. One of

the more important changes they've made is improving functionality and

stepping up efforts related to Trust and Safety.

Growing PayPal User BasePayPal users will continue to grow as eBay continues to integrate Paypal into

its adjacent Marketplaces platforms like Shopping.com and Rent.com--and

through increased penetration of PayPal on third party merchant platforms,

as eBay increases its focus on SMEs.

Increasing Payments CompetitionGoogle Checkout and credit card merchants will limit eBay's ability to

increase revenues by increasing its commission on PayPal transactions ("take

rate").


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eBay Marketplaces The eBay Marketplaces division constitutes 48.6% of our $32.81 price estimate for this stock, based on our sum of the parts

analysis.The most important drivers for the eBay Marketplaces business are:

Average Selling Price of Merchandise on eBay

eBay Transaction Take Rate

Listings-to-Sales Conversion Rate for Merchandise on eBay

Number of Merchandise Listings on eBay

Marketplaces EBITDA Profit Margin

— AVERAGE SELLING PRICE OF MERCHANDISE ON EBAY —

This represents the average sale price of items sold on eBay's properties including eBay.com, Half.com, Rent.com and

Shopping.com. The average price incorporates the wide range of prices found on eBay--from low priced merchandise to

expensive electronics, motor vehicles, and boats.

Average Selling Price of Merchandise on eBay has declined from around $60 in 2007 to $51 in 2009. We expect the same

dynamic to decline for 2010 before picking up again.

Forecast Rationale

WEAK ECONOMY IS FORCING CONSUMERS TO TRADE DOWN ON PURCHASES

We believe that selling prices may decline significantly in 2010 (more in International markets), as users continue to

trade down their purchases. Prices may snap back in 2011 and increase gradually afterward.

AVERAGE PRICES ARE A FUNCTION OF THE MIX OF ITEMS SOLD

Average Selling Price of Merchandise on eBay is also a function of the mix of items listed and sold on the platform.

Average Selling Price of Merchandise on eBay was impacted negatively in 2009, as higher priced auto sales were

Average Selling Price of Merchandise on eBay ($)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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http://www.trefis.com//company?hm=EBAY.trefis&division=0005&driver=0257&from=pdf:TR

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decimated by macroeconomic factors and declines in consumer spending.

Sources for historical data and explanations can be found on the Trefis.com website (link)

— EBAY TRANSACTION TAKE RATE —

The eBay Transaction Take Rate represents eBay's commission on items sold. Take rates are primarily a function of

pricing actions initiated by eBay to drive higher-priced listings and higher conversion rates on their platforms.

After experiencing growth in prior years, eBay witnessed a stagnation in its take rate in 2008 and 2009 due to weak

economy and competition. We expect the eBay Transaction Take Rate to increase.

Forecast Rationale

EBAY'S VOLUME VS. PRICING DECISIONS

There is a strategic trade-off between between volume and price. eBay has shown the willingness to use pricing as a

means to bring more sellers on board, as well as to provide incentives for sellers to enhance the user experience by

engaging in safer, simpler transactions. We expect that to continue to be the case.

MIX OF THE PRODUCTS SOLD

Higher priced products have lower take rates

MORE COMPETITION

We expect Amazon--as well as brick and mortar stalwarts like Wal-Mart--to make continued efforts to expand and

improve their online presence.

MORE DISCOUNTS TO POWERSELLERS

We expect eBay to continue providing more discounts to powersellers, as they improve their service levels.


eBay Transaction Take Rate (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170.0

2.5

5.0

7.5


https://www.trefis.com/company?hm=EBAY.trefis&division=0005&driver=0257&from=pdf:TR&scroll=1



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— LISTINGS-TO-SALES CONVERSION RATE FOR MERCHANDISE ON EBAY —

This represents the percentage of items for sale listed on eBay that are actually sold. If the conversion rate is increasing

while total listings remain the same or continue to increase, this means that the number of items sold on eBay has

increased

Listings-to-Sales Conversion Rate for Merchandise on eBay has stayed more or less in a tight range of 39-43% over the

years. We would expect the conversion rates to stay stable going forward as well.

Forecast RationaleSupporting:

REWARDS PROGRAMS LIKE EBAY BUCKS TO DRIVE SALES – eBay has introduced a few programs like the eBay Bucks (in

August 2010) in which shoppers can earn 2% of the purchase value of qualified items and are issued an eBay Bucks

certificate at the end of each quarter. This sum can then be redeemed within the next 30 days. According to the eBay

management, over three million shoppers have enrolled in the eBay Bucks program and spent five times more than

those not enrolled till October 2010. If eBay continues to come up with such innovative programs, this conversion

rate could actually increase in the future

ENHANCED CONSUMER EXPERIENCE DRIVEN BY RATINGS-BASED FEE INCENTIVES FOR SELLERS – DSR (Detailed Seller

Ratings) based fee incentives for sellers is motivating them to exceed buyer expectations in all respects, which creates

a positive feedback loop that brings more buyers on the site and leads to increasing conversion rates.

ENHANCED CONSUMER EXPERIENCE DRIVEN BY RATINGS-BASED FEE INCENTIVES FOR SELLERS

DSR (Detailed Seller Ratings) based fee incentives for sellers is motivating them to exceed buyer expectations in all

respects, which creates a positive feedback loop that brings more buyers on the site and leads to increasing conversion

rates.

AS EBAY ATTACKS FRAUD IN MORE EFFICIENT WAYS

eBay continuously updates its fraud detection software. For example, eBay can detect if someone is selling most items

significantly below the sticker prices. eBay has more robust authentication programs--especially for sellers of higher-

Listings-to-Sales Conversion Rate for Merchandise on eBay (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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http://seekingalpha.com/article/231226-ebay-ceo-discusses-q3-2010-results-earnings-call-transcript?

http://seekingalpha.com/article/231226-ebay-ceo-discusses-q3-2010-results-earnings-call-transcript?

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valued goods. It can even gathers phone numbers, addresses, and credit reports if needed; and keeps on adding

features like password key chains to reduce instances of fraud on their platforms.

AS EBAY MAKES SEARCH ON ITS PLATFORM MORE EFFICIENT

Mitigating:

RISING CONVERSION RATES OF LISTINGS CAN LEAD TO MORE LISTINGS

Although the positive factors listed above may initially increase conversion rates, such initiatives over the long run

may not necessarily translate into a higher sales to listing ratio, since more listings are likely to be added, putting

downward pressure on the ratio.


— NUMBER OF MERCHANDISE LISTINGS ON EBAY —

This represents the number of items for sale listed on eBay's properties including eBay.com, Half.com, and

Shopping.com.

The number of listings have increased from 2.4 million in 2006 to 2.9 million in 2009. We expect listings to grow.

Forecast Rationale

TRADITIONAL RETAILERS HAVE STARTED TO LIST THEIR MERCHANDISE ON EBAY – Traditional retail players like the

U.K.'s Saville Row, Jigsaw and Ed Hardy have started to list their merchandise on eBay website. We believe such

trend will benefit eBay by dramatically increasing its merchandise listings.

NUMBER OF INTERNET USERS CONTINUE TO GROW RAPIDLY – Global Internet-users have increased from 700 million

in 2003 to around 1.7 billion in 2009, and is expected to be around 2 billion by the end of 2010. We expect the rapid

increase of internet users in the future also.

Number of Merchandise Listings on eBay (Bil)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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ONLINE RETAILING CONTINUES TO GROW, AS IT STILL REPRESENTS LESS THAN 10% IN THE US AND 5%

INTERNATIONALLY OF TOTAL RETAIL SPENDING ON "ELECTRONICS AND GENERAL MERCHANDISE" – Online retail

penetration of Electronics and General Merchandise in the US in 2009 was around 10% having grown from 5% in

2004. We expect the penetration to continue to grow. Online retail penetration of Electronics and General

Merchandise outside the US in 2009 was around 5.7%, having more than doubled from 2.4% in 2004.

ACTIVE USERS ON THE SITE CONTINUE TO INCREASE – eBay had 90 million active users in 2009 as compared to just 48

million in 2004.

NUMBER OF LISTINGS PER ACTIVE USER CONTINUES TO INCREASE – The number of listings per active user has gone

up in response to efforts put in place by eBay to simplify the fee structure. eBay has made significant reductions in the

insertion fee for fixed price listings.


— MARKETPLACES EBITDA PROFIT MARGIN —

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses,

such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional

EBITDA as a percentage of divisional revenues. We adjust EBITDA figures to exclude non-recurring charges and non-

cash charges, such as Stock-Based Compensation Expenses.

Marketplaces EBITDA Profit Margin has been 30-36% in recent years. We expect Marketplaces EBITDA Profit Margin

to remain constant.

Forecast Rationale

CONTINUED TOUGH PRICING--AND THUS TAKE RATE DECREASES--SHOULD KEEP A LID ON MARKETPLACES MARGINS.

LACK OF OPERATING LEVERAGE – SG&A at least needs to keep pace with revenues, as growth moves away from

auctions to fixed-price formats, where the competition is much stiffer.

Marketplaces EBITDA Profit Margin (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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3. PRICING WILL FIX THE SELLER SIDE OF THE TRANSACTION FOR EBAY – Lower fees will drive an increase in sellers

and listings. However, to drive conversion of those listings into eventual sales, eBay has a lot of work ahead to

facilitate a more enriched buyer experience on the site, which would mean continued investments in R&D to improve

the Finding facility on its platforms or to enhance its safety and trust features.


In addition, you can see the detailed P&L for the eBay Marketplaces business in the Appendix (link)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Revenue (Bil $) 4.68 4.71 4.46 4.80 5.17 5.57 6.00 6.46 6.96 7.50 8.08

Direct Expense (Bil $) 2.61 3.03 3.08 3.12 3.32 3.57 3.78 4.08 4.39 4.73 5.10

Indirect Expense (Bil $) 0.35 1.02 0.34 0.79 0.67 0.76 0.85 0.93 1.01 1.13 1.23

Gross Profit (Bil $) 2.07 1.68 1.38 1.68 1.86 2.00 2.21 2.38 2.57 2.77 2.98

Free Cash Flow (Bil $) N/A N/A N/A N/A 1.19 1.24 1.36 1.46 1.55 1.64 1.76



http://www.google.com

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PayPal The most important drivers for the PayPal business are:

Average Payment Size on PayPal

PayPal Payment Take Rate

Number of Accounts on PayPal

Payments per Account on PayPal

PayPal EBITDA Profit Margin

— AVERAGE PAYMENT SIZE ON PAYPAL —

This represents the average size of each transaction carried out through Paypal.

Average Payment Size on PayPal declined from a peak of $68.02 in 2007 to $64.09 in 2009, owing to weak economy. We

expect Average Payment Size on PayPal to increase in future.

Forecast Rationale

AVERAGE PAYMENT SIZE FOR PAYPAL HIGHER THAN THE AVERAGE SELLING PRICE ON MARKETPLACES, IMPLYING

THAT EITHER: – The average price of items sold--and thus payments size--is higher for non-eBay platforms; or. The

transactions carried out through PayPal--out of all transactions on eBay's Marketplaces--have a higher average selling

price associated.

FUTURE AVERAGE PRICING TRENDS. – % of Paypal Total Payment Volume (TPV) that is generated from the eBay

platform has declined from around 64% in 2006 to 44% in 2009. The average price of items sold on non-eBay

platforms is higher as mentioned above. Since PayPal's penetration of non-eBay could continue to increase, this

situation will create an upward bias in the overall average prices for PayPal.


Average Payment Size on PayPal ($)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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— PAYPAL PAYMENT TAKE RATE —

This represents the average commission made by PayPal on each transaction.

The PayPal Payment Take Rate has remained in a range of 3.5-3.9% from 2003 to 2009. We expect the take rate to be

under marginal downward pressure going forward as a result of increased competition.

Forecast Rationale

INTENSELY COMPETITIVE NATURE OF PAYMENTS TO BE A CONTINUED HEADWIND TO PRICING – eBay faces a range of

competitors in the payments segments, including Google Checkout, credit card merchant processors like Amex, First

Data, Amazon payments, and money remittance companies like Western Union. . The competitive nature of

payments will ensure that take rates face a gradual compression in the future.


— NUMBER OF ACCOUNTS ON PAYPAL —

Represents the number of users having a PayPal accounts

PayPal Payment Take Rate (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170.0

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The number of accounts has been growing at a tremendous pace for many years. Number of Accounts on PayPal

increased from around 31 million in 2006 to 77 million by 2009. The growth is a reflection of eBay's concerted efforts to

integrate PayPal into its "Marketplaces" segment and forge strategic relationships with a diversified group of leading

online commerce portals like Blue Nile and Toys R US. We expect the growth rate in user accounts to decelerate, but still

continue at respectable double-digit pace in both US and International markets for the foreseeable future.

Forecast Rationale

INCREASED TOTAL PAYMENT VOLUME OF PAYPAL ON EBAY'S MARKETPLACES PLATFORMS

PayPal increased its Total Payment Volume from eBay's marketplaces from $24 billion in 2006 to around $31 billion

in 2009. This growth was however, slower than the growth of Paypal's overall TPV, which increased from $38 billion

in 2006 to $72 billion in 2009. We would expect the TPV from eBay marketplaces to continue to increase going

forward, as eBay continues to integrate PayPal into its adjacent marketplaces platforms like Shopping.com and

Rent.com. In addition, eBay's focus on Buyer protection programs will increase and enhance PayPal use on the

platform

INCREASED PENETRATION OF PAYPAL ON THIRD PARTY MERCHANT PLATFORMS

Paypal's TPV penetration of third party merchants has steadily increased from 36% in 2006 to 56% in 2009. PayPal

has already forged relationships with leading ecommerce websites like Blue Nile, Southwest Airlines, Barnes &

Noble, and Toys R US. We would expect growth in this segment to continue as eBay focuses more on small and

medium businesses, as well as proprietors.


— PAYMENTS PER ACCOUNT ON PAYPAL —

This represents the number of transactions per Paypal user per month.

Number of Accounts on PayPal (Mil)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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Payments per account have declined from 1.7 in 2005 to 1.2 in 2009. We expect the payments per account to stabilize.

Forecast RationaleSupporting:

INCREASING PAYPAL PRESENCE OFF EBAY AT MERCHANT SITES

Payments per Account on PayPal should rise as eBay expands its partnerships with more third party sites to use

PayPal.

Mitigating:

THE LONG TAIL EFFECT

Contrary to the growth trend in the number of accounts, the number of transactions has been decreasing at a rapid

pace. We would expect that trend to continue as marginal users are likely to be low quality (i.e. not as heavy users of

the e-commerce functionality as early adopters generally are).


— PAYPAL EBITDA PROFIT MARGIN —





Payments per Account on PayPal (per Month)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170.00

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The PayPal EBITDA Profit Margin has been 9-16% in recent years. We expect PayPal EBITDA Profit Margin to

increase. For eBay's overall operating margins, we expect a continued shift towards lower margin PayPal. In terms of

individual segments, we expect the following dynamics to impact the operating margins going forward:

Forecast Rationale

THE PAYMENTS BUSINESS IS SIGNIFICANTLY MORE COMPETITIVE THAN MARKETPLACES – This should make

continued investments necessary. However, given that a significant majority of the business comes from eBay, that

part of the business is shielded from competitive threats, which will marginalize the threat of competition.

AS AN OFFSET TO COMPETITION, EBAY WILL BE SHIFTING ITS CURRENT MIX OF TRANSACTIONS ON PAYPAL – This

will likely involve a switch from credit card based to bank account or direct PayPal account based payments, which are

higher margin. We are assuming a constant margin profile over the explicit period forecast, as competition and the

transaction mix factors offset each other.


In addition, you can see the detailed P&L for the PayPal business in the Appendix (link)

PayPal EBITDA Profit Margin (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017



Indirect Expense (Bil $) 0.14 0.50 0.20 0.54 0.51 0.64 0.77 0.88 1.02 1.20 1.37

Gross Profit (Bil $) 0.44 0.38 0.24 0.62 0.79 0.99 1.20 1.42 1.69 1.92 2.18

Free Cash Flow (Mil $) N/A N/A N/A N/A 281 345 430 540 668 720 810





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Marketing & Advertising The most important drivers for the Marketing & Advertising business are:

Marketing & Advertising Revenue

Marketing & Advertising EBITDA Profit Margin

— MARKETING & ADVERTISING REVENUE —

Marketing & Advertising revenues are derived from the sale of advertisements on Marketplaces as well as from classifieds

fees. Revenues from comparison-shopping site shopping.com are also included.

Overall marketing and ad revenue as a % of total revenue has increased from nearly 9% in 2004 to around 14% in

2009; and we expect that trend to continue.

Forecast Rationale

BETTER MONETIZATION OF USER TRAFFIC ON VARIOUS EBAY SITES WILL CONTINUE TO DRIVE REVENUE GROWTH –

Marketing revenues have grown at a faster pace than overall eBay revenues over the past years. We expect that trend

to continue going forward, as eBay better monetizes its vast user base and traffic through text and graphical

advertisements.

E-COMMERCE TO DRIVE GROWTH IN ADJACENT MARKETS AS WELL – Online retail is a mid-single digit percentage of

overall retail sales in the US. We believe that as that percentage grows, so will the use of adjacent markets like online

comparison shopping sites, such as eBay's shopping.com. eBay makes money from shopping.com primarily through

advertising, but also through referral fees paid by retailers whose traffic and sales comes from shopping.com.


— MARKETING & ADVERTISING EBITDA PROFIT MARGIN —

Marketing & Advertising Revenue ($ Bil)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170.0

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Forecast RationaleWe expect marketing and advertising margins to increase slightly over the foreseeable future for the following reasons:

REVENUE GROWTH TO GO ALONG WITH HIGHER FIXED COST

We expect marketing and advertising revenue to grow in the low double-digits teens rate. However, we also expect

the fixed-cost to increase proportionally, which will keep a tab on margins increase in the future.


In addition, you can see the detailed P&L for the Marketing & Advertising business in the Appendix (link)

Marketing & Advertising EBITDA Profit Margin (%)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017



Indirect Expense (Mil $) 58.3 208 81.0 181 159 186 209 228 251 281 312

Gross Profit (Mil $) 351 387 360 386 433 476 518 560 605 655 722






Appendix

Summary P&L for eBay

Summary P&L for eBay

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Revenues (Bil $) 7.29 7.99 8.15 9.16 10.3 11.6 12.9 14.2 15.7 17.3 19.2

eBay Marketplaces (% of total) 64.2 59.0 54.7 52.4 50.0 48.0 46.5 45.4 44.4 43.3 42.1

PayPal (% of total) 25.2 29.0 32.4 35.6 38.1 40.3 42.0 43.3 44.7 46.0 47.2

Marketing & Advertising (% of total) 10.6 12.0 12.9 12.0 11.9 11.7 11.5 11.2 11.0 10.8 10.7

Direct Expenses (Bil $) 4.43 5.54 6.17 6.48 7.26 8.14 8.97 9.85 10.8 12.0 13.3


PayPal (% of total) 15.4 15.7 12.1 23.2 25.7 28.5 30.5 32.6 34.7 36.0 37.1


Gross Profit (Bil $) 2.86 2.45 1.98 2.68 3.08 3.46 3.93 4.37 4.86 5.34 5.89


PayPal (% of total) 15.4 15.7 12.1 23.2 25.7 28.5 30.5 32.6 34.7 36.0 37.1


Indirect Expenses (Bil $) 0.55 1.74 0.63 1.51 1.34 1.59 1.83 2.04 2.29 2.61 2.91


PayPal (% of total) 25.2 29.0 32.4 35.6 38.1 40.3 42.0 43.3 44.7 46.0 47.2



eBay Marketplaces (% of total) N/A N/A N/A N/A 68.1 66.0 64.8 62.6 60.3 59.9 59.0

PayPal (% of total) N/A N/A N/A N/A 16.2 18.5 20.5 23.2 25.9 26.4 27.2

Marketing & Advertising (% of total) N/A N/A N/A N/A 15.7 15.5 14.7 14.2 13.8 13.7 13.8


Detailed P&L for the eBay Marketplacesbusiness The most important drivers for the eBay Marketplaces business are discussed above, here is the detailed P&L.

eBay Marketplaces: Detailed P&L

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Revenues

Marketplaces Net Revenue (Bil $) 4.68 4.71 4.46 4.80 5.17 5.57 6.00 6.46 6.96 7.50 8.08

Number of Merchandise Listings

on eBay (Bil)2.34 2.69 2.87 3.06 3.26 3.48 3.71 3.96 4.23 4.51 4.82

Listings-to-Sales Conversion Rate

for Merchandise on eBay (%)42.0 39.0 39.0 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2

Average Selling Price of

Merchandise on eBay ($)60.4 56.9 51.1 49.9 51.4 52.9 54.5 56.2 57.8 59.6 61.4

eBay Transaction Take Rate (%) 7.88 7.90 7.80 8.03 7.87 7.71 7.56 7.41 7.26 7.11 6.97


Expenses


Marketplaces EBITDA Profit

Margin (%)44.2 35.7 30.9 34.9 35.9 35.9 36.9 36.9 36.9 36.9 36.9


Effective Tax Rate (%) 17.9 16.7 42.0 15.8 25.8 26.8 27.8 28.8 29.8 30.8 31.8

Capex as a % of EBITDA (%) 15.6 18.0 28.7 26.8 26.8 28.8 28.8 28.8 28.8 28.8 28.8

Net Working Cap as % of

Revenue (%)-9.25 2.86 -1.54 2.51 2.31 2.11 1.91 1.71 1.51 1.31 1.11

Net Other Operating Assets as %

of Revenue (%)-5.90 -7.06 -7.82 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48

Total Expenses (Bil $) 2.97 4.05 3.43 3.92 3.99 4.33 4.63 5.00 5.41 5.86 6.32

Gross Profits (Bil $) 2.07 1.68 1.38 1.68 1.86 2.00 2.21 2.38 2.57 2.77 2.98



Detailed P&L for the PayPal business The most important drivers for the PayPal business are discussed above, here is the detailed P&L.

PayPal: Detailed P&L

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Revenues

PayPal Net Revenue (Bil $) 1.84 2.32 2.64 3.26 3.94 4.67 5.42 6.16 7.01 7.97 9.07

Average Payment Size on PayPal

($)68.0 67.7 64.1 63.3 64.6 65.9 67.2 68.5 69.9 71.3 72.7

Payments per Account on PayPal

(per Month)1.35 1.17 1.21 1.28 1.28 1.28 1.28 1.28 1.28 1.28 1.28

Number of Accounts on PayPal

(Mil)44.3 63.2 76.9 94.4 112 132 152 171 193 217 245

PayPal Payment Take Rate (%) 3.78 3.85 3.69 3.54 3.51 3.47 3.44 3.40 3.37 3.34 3.30


Expenses


PayPal EBITDA Profit Margin

(%)24.0 16.6 9.09 19.1 20.1 21.1 22.1 23.1 24.1 24.1 24.1





Revenue (%)-9.25 2.86 -1.54 2.51 2.31 2.11 1.91 1.71 1.51 1.31 1.11


of Revenue (%)-5.90 -7.06 -7.82 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48


Gross Profits (Bil $) 0.44 0.38 0.24 0.62 0.79 0.99 1.20 1.42 1.69 1.92 2.18



Detailed P&L for the Marketing &Advertising business The most important drivers for the Marketing & Advertising business are discussed above, here is the detailed P&L.

Marketing & Advertising: Detailed P&L

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Revenues

Marketing & Advertising Revenue

(Bil $)0.77 0.96 1.05 1.10 1.23 1.36 1.48 1.60 1.73 1.87 2.06

Marketing & Advertising

Revenue ($ Bil)0.77 0.96 1.05 1.10 1.23 1.36 1.48 1.60 1.73 1.87 2.06


Expenses


Marketing & Advertising

EBITDA Profit Margin (%)45.7 40.4 34.3 35.1 35.1 35.1 35.1 35.1 35.1 35.1 35.1

Indirect Expenses (Mil $) 58.3 208 81.0 181 159 186 209 228 251 281 312




Revenue (%)-9.25 2.86 -1.54 2.51 2.31 2.11 1.91 1.71 1.51 1.31 1.11


of Revenue (%)-5.90 -7.06 -7.82 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48 -5.48


Gross Profits (Mil $) 351 387 360 386 433 476 518 560 605 655 722



e bay 2011-03-15

Documents

paypal payments

paypal account

current trefis price

thetrefis price estimate

value estimate

paypal ebitda profit

detailed paypal pl

detailed ebay marketplaces