eBay 2009 Annual Report Download - page 60

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ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that
involve expectations, plans or intentions (such as those relating to future business or financial results, new
features or services, or management strategies). You can identify these forward-looking statements by words
such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,”
“plan” and other similar expressions. These forward-looking statements involve risks and uncertainties that
could cause our actual results to differ materially from those expressed or implied in our forward-looking
statements. Such risks and uncertainties include, among others, those discussed in “Item 1A: Risk Factors” of
this Annual Report on Form 10-K as well as our consolidated financial statements, related notes, and the other
financial information appearing elsewhere in this report and our other filings with the SEC. We do not intend,
and undertake no obligation, to update any of our forward-looking statements after the date of this report to
reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements.
You should read the following Management’s Discussion and Analysis of Financial Condition and Results
of Operations in conjunction with the consolidated financial statements and the related notes included in this
report.
Overview
For most of fiscal 2009, we operated three primary business segments: Marketplaces, Payments and
Communications. Our Marketplaces segment provides the infrastructure to enable global online commerce on a
variety of platforms, including the traditional eBay.com platform and our other online platforms, such as our
online classifieds businesses, our secondary tickets marketplace (StubHub), our online shopping comparison
website (Shopping.com) and our apartment listing service platform (Rent.com), as well as our fixed price media
marketplace (Half.com). Our Payments segment is comprised of our online payment solutions — PayPal (which
enables individuals and businesses to securely, easily and quickly send and receive payments online in
approximately 190 markets worldwide) and Bill Me Later. Our Communications segment, which consisted of
Skype, enabled Internet communications calls between Skype users and provided low-cost connectivity to
traditional fixed-line and mobile telephones. On November 19, 2009, we completed the sale of Skype to an
investor group (please see “Note 4 — Sale of Skype” to our consolidated financial statements for additional
information related to this transaction). Skype was consolidated with our results of operations through
November 19, 2009, but was not consolidated with our results of operations after November 19, 2009. Following
the completion of the sale of Skype, we operated and continue to operate two primary business segments:
Marketplaces and Payments.
Overall, revenue increased 2% to $8.7 billion in 2009 compared to 2008. The increase was driven primarily
by PayPal offset by a decline in revenues generated from our Marketplaces business. We achieved an operating
margin of 17% in 2009 compared to 24% in 2008 driven by the impact of a legal settlement charge, acquisitions
and foreign currency movements against the U.S. dollar. Diluted earnings per share increased to $1.83 in 2009
compared to $1.36 in 2008 driven primarily by the gain on the sale of Skype. Operating cash flow increased to
$2.91 billion in 2009 from $2.88 billion in 2008.
Some key operating metrics that members of our senior management regularly review to evaluate our
financial results include net promoter score (NPS), market share, gross merchandise volume (GMV), GMV
excluding vehicles, number of sold items, net total payment volume (TPV), net number of payments, free cash
flow, and revenue, excluding acquisitions and foreign currency impact.
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