eBay 2015 Annual Report Download - page 82

Download and view the complete annual report

Please find page 82 of the 2015 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
ability to exercise significant influence, but not control, over the investee are accounted for using the equity
method of accounting. For such investments, our share of the investees’ results of operations is included in
interest and other, net and our investment balance is included in long-term investments. Investments in entities
where we hold less than a 20% ownership interest are generally accounted for using the cost method of
accounting, and our share of the investees’ results of operations is included in our consolidated statement of
income to the extent dividends are received.
We have evaluated all subsequent events through the date the financial statements were issued.
Revenue recognition
We generate net transaction revenues primarily from final value fees and listing fees paid by sellers. Final
value fee revenues are recognized at the time that the transaction is successfully closed, while listing fee revenues
are recognized ratably over the estimated period of the listing. An auction transaction is considered successfully
closed when at least one buyer has bid above the seller’s specified minimum price or reserve price, whichever is
higher, at the end of the transaction term.
Our marketing services revenues are derived principally from the sale of advertisements, revenue sharing
arrangements, classifieds fees, marketing service fees and lead referral fees. Our advertising revenues are derived
principally from the sale of online advertisements. The duration of our advertising contracts has ranged from one
week to five years, but is generally one week to one year. Advertising revenues on contracts are recognized as
“impressions” (i.e., the number of times that an advertisement appears in pages viewed by users of our platforms)
are delivered, or as “clicks” (which are generated each time users on our platforms click through our
advertisements to an advertiser’s designated website) are provided to advertisers. For contracts with minimum
monthly or quarterly advertising commitments where the fee and commitments are fixed throughout the term, we
recognize revenue ratably over the term of the agreement. We also may enter into arrangements to purchase
services from certain customers and if the service is not considered an identifiable benefit that is separable from
the customer’s purchase of our services or for which we cannot reasonably estimate fair value, the fees paid to
the customer is recorded as a reduction in revenue. Some of our advertising contracts consist of multiple
elements which generally include a blend of various impressions and clicks as well as other marketing
deliverables. Where neither vendor-specific objective evidence nor third-party evidence of selling price exists,
we use management’s best estimate of selling price (BESP) to allocate arrangement consideration on a relative
basis to each element. BESP is generally based on the selling prices of the various elements when they are sold to
customers of a similar nature and geography on a stand-alone basis or estimated stand-alone pricing when the
element has not previously been sold on a stand-alone basis. These estimates are generally based on pricing
strategies, market factors and strategic objectives. Revenues related to revenue sharing arrangements are
recognized based on revenue reports received from our partners, provided that collectability is reasonably
assured. Revenues related to fees for listing items on our Classifieds platforms are recognized over the estimated
period of the classified listing. Lead referral fee revenue is generated from lead referral fees based on the number
of times users click through to a merchant’s website from our platforms. Lead referral fees are recognized in the
period in which a user clicks through to the merchant’s website.
Our other revenues are derived principally from contractual arrangements with third parties that provide
services to our users. Revenues from contractual arrangements with third parties are recognized as the contracted
services are delivered to end users.
To drive traffic to our platforms, we provide incentives to our users in the form of coupons and buyer and
seller rewards. These incentives are generally treated as reductions in revenue.
F-8