eBay 2011 Annual Report Download - page 58

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, future results of operations or financial condition, new or planned 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 in our consolidated financial
statements, related notes, and the other 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
eBay is a global commerce platform and payments leader. We enable commerce through eBay, the world's largest online marketplace,
which allows users to buy and sell in nearly every country on earth; through PayPal, which enables individuals and businesses to securely, easily
and quickly send and receive online payments; and through GSI, which facilitates ecommerce, multichannel retailing and interactive marketing for
global enterprises. X.commerce brings together the technology assets and developer communities of eBay, PayPal and Magento, an ecommerce
storefront platform, to support eBay Inc.'s mission of enabling commerce. We also reach millions through specialized marketplaces such as
StubHub, the world's largest ticket marketplace, and eBay classifieds sites, which together have a presence in more than 1,000 cities around the
world.
We have three reportable business segments: Marketplaces, Payments and GSI. Our Marketplaces segment includes our eBay.com platform
and its localized counterparts and our other online trading platforms, such as our online classifieds businesses and StubHub. Our Payments
segment is comprised of PayPal, Bill Me Later and Zong. Our GSI segment was added upon the completion of our acquisition of GSI Commerce,
Inc. (GSI) on June 17, 2011. The results of our new GSI segment have been included in our consolidated results of operations from the acquisition
date.
In 2011, net revenues increased 27% to $11.7 billion compared to $9.2 billion in 2010, driven primarily by a 29% increase in PayPal net
total payment volume (TPV) and a 13% increase in Marketplaces gross merchandise volume, or GMV, excluding vehicles, as well as the impact
from GSI, which we acquired in June 2011. We achieved an operating margin of 20% in 2011 compared to 22% in 2010. This reduction in
operating margin was driven primarily by the impact of acquisitions. Our diluted earnings per share increased to $2.46 in 2011, a $1.10 increase
compared to 2010, driven primarily by a gain resulting from the sale of our remaining 30% interest in Skype and growth in net revenue, partially
offset by the impact of a loss on a divested business, acquisitions and a higher tax rate. We generated cash flow from operations of approximately
$3.3 billion in 2011 compared to $2.7 billion in 2010.
Our Marketplaces segment total net revenues increased $921.1 million, or 16%, in 2011 compared to 2010. The increase in total net
revenues was driven primarily by a year-over-year increase in GMV excluding vehicles of 13%, the acquisition of brands4friends in the first
quarter of 2011 and an increase in revenue attributable to our classifieds and advertising businesses. Marketplaces segment operating margin
decreased 0.7 percentage points in 2011 compared to 2010 due to the impact of acquisitions, primarily brands4friends. Our payments segment
total net revenues increased $976.5 million, or 28%, in 2011 compared to 2010. The increase in total net revenues was driven primarily by a year-
over-year increase in net TPV of 29%, growth in Bill Me Later revenue and the impact of acquisitions. Our Payments segment operating margin
increased 1.2 percentage points in 2011 compared to 2010 due primarily to productivity gains, improvement in Bill Me Later's operating
performance and favorable impact of regulatory changes, partially offset by higher transactions losses and investments in our platform. Our GSI
segment was formed as a result of our acquisition of GSI in June 2011. From the acquisition date through December 31, 2011, GSI contributed
$590.1 million in revenue and had a segment operating margin of 14%.
ITEM 7:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS