eBay 2004 Annual Report Download - page 1

To our Stockholders, Partners, Employees and the eBay Community
A Global Community Ì 10 Years Old
eBay is an extraordinary company. During the past 10 years Ì the company's Ñrst decade Ì eBay has
revolutionized the way people shop and trade. Before eBay came along very few people had ever experienced
an auction. eBay has introduced millions of people to a whole new trading format Ì a format based on the
fairness inherent in natural market dynamics and the good we Ñnd in our friends and neighbors.
Perhaps more importantly, eBay has empowered millions of people to pursue their dreams of economic
and entrepreneurial success. And that success has had an even deeper social impact. After all, the eBay
platform is built on trust. The millions of successful transactions that take place on the site each day are a
testament to the fact that people, when left to their own devices, almost always do the right thing. Every
successful eBay transaction validates two people's beliefs in the good of others. In our world, that is a very
powerful achievement.
eBay thrived in 2004 because our global community of buyers and sellers unleashed their passion for
trading. Our community grew to 135 million registered users worldwide, with more and more people
recognizing the many opportunities available to them through eBay. Small business on eBay really came into
its own in 2004. Early in the year, we discovered through our research that more than 430,000 users in the
United States make all or some of their livelihoods through selling on the site.
The ingenuity and creativity of our users, no matter where they are, is inspiring. A mother of six in
Germany started a business selling kitchen products on eBay, and now teaches others in her isolated
community how to use the site to make extra money. A man in China who always dreamed of starting his own
business now sells coins and stamps from his home in Shanghai to buyers around the world. A radio collector
in Colorado has purchased more than 1,300 radios on eBay, fulÑlling his passion to own one of the world's
most comprehensive radio collections. And a Utah restaurateur purchased the majority of the equipment for
his family-owned restaurant on eBay at a savings that allowed him to start his business much sooner than
expected. These stories, and millions more just like them, convince us that eBay is the best place to buy and
sell online.
A Fast Growing Company
Thanks to our community's success, eBay experienced exceptional growth across every part of the
business in 2004. The eBay community listed more than 1.4 billion items last year, a 45% increase from 2003.
This increase in listings led to gross merchandise volume or GMV, which is the value of all successfully closed
listings on eBay, of $34.2 billion in 2004, up from $23.8 billion in 2003. As a result, 2004 net revenues reached
nearly $3.3 billion, a jump of 51% over the prior year.
eBay achieved new milestones in 2004. Operating proÑt grew more than 68%, reaching well over one
billion dollars for the Ñrst time in eBay's history. This proÑt growth translated directly into cash Öows, with
operating cash Öows also breaking the one billion dollar mark for the Ñrst time ever and free cash Öows1
growing by more than 95% to $992 million. eBay ended 2004 with more than $7.9 billion in total assets,
including nearly $3.4 billion in cash and investments, which gives us the Ñnancial Öexibility to reinvest in the
business. Few ten year old companies can deliver these types of results.
2004 was also a year of expansion for eBay. In India, we acquired Baazee.com, which allowed us to enter
a very young but promising Internet market. We launched two new sites of our own in the Philippines and
Malaysia, and consolidated our ownership of Internet Auction Company in Korea, our third largest market
outside the U.S. In the U.S., we announced the acquisition of Rent.com, the leading transaction-based website
for apartment rentals, which closed in early 2005. We believe Rent.com will complement our own real estate
category and provide for additional growth in this area. With the acquisition of mobile.de in Germany and
Marktplaats.nl in the Netherlands, as well as our equity investment in craigslist.org, we took important Ñrst
1eBay deÑnes free cash Öows as operating cash Öows less purchase of property and equipment, which in
2004 were $1.3 billion and $293 million, respectively.