eBay Inc. (EBAY)

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eBay (EBAY)

Q2 2011 Earnings Call

July 20, 2011 5:00 pm ET


Robert Swan - Chief Financial Officer and Senior Vice President of Finance

Jenny Cerran -

John Donahoe - Chief Executive Officer, President, Interim President of eBay Marketplaces and Director


Scott Devitt - Morgan Stanley

Shawn Milne - Janney Montgomery Scott LLC

Spencer Wang - Crédit Suisse AG

Kenneth Sena - Evercore Partners Inc.

Douglas Anmuth - JP Morgan Chase & Co

Mark Mahaney - Citigroup Inc

Ross Sandler - RBC Capital Markets, LLC



Good day, ladies and gentlemen, and welcome to eBay's Second Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Ms. Jennifer Cerran, Vice President of Investor Relations. Ma'am, you may begin.

Jenny Cerran

Thank you. Good afternoon, everyone, and thank you for joining us, and welcome to eBay's earnings release conference call for the second quarter of 2011. Joining me today on the call are John Donahoe, our President and Chief Executive Officer; and Bob Swan, our Chief Financial Officer. We're providing a slide presentation to accompany Bob's commentary during the call. This conference call is also being broadcast on the Internet, and both the presentation and call are available through the Investor Relations section of the eBay website at investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non-GAAP measures when talking about our company's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call. In addition, management will make forward-looking statements relating to our future performance that are based on our expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the third quarter and full year 2011 and the future growth in the Payments, Marketplaces and GSI businesses. Our actual results may differ materially from those discussed in this call for a variety of reasons, including, but not limited to: global economic events, including sovereign debt uncertainties; changes in political, business and economic conditions; foreign exchange rates fluctuations; our ability to integrate, manage and grow businesses recently acquired or that may be acquired in the future, including GSI; our increasing need to grow revenues from existing users, particularly in more established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise with a broad range of businesses at different stages of maturity; our need to manage regulatory, tax, IP and litigation risks, including risks specific to PayPal, Bill Me Later and the financial industry; and our need to timely upgrade our technology and customer service infrastructure at reasonable cost, while adding products and features and maintaining site stability and performance. You can find more information about factors that could affect our operating results in our most recent will report on our Form 10-K and our subsequent quarterly report on Form 10-Q at investor.ebayinc.com. You should not rely on any forward-looking statements. All information on this presentation is as of July 20, 2011, and we do not intend and undertake no duty to update this information. With that, let me turn the call over to John.

John Donahoe

Thanks, Jenny, and good afternoon, everyone, and welcome to our Q2 earnings call. Q2 was a strong quarter for eBay. We generated strong financial results and strengthened our portfolio. I want to start out today by taking a moment to recap our growth strategy. We intend to compete and lead in the new retail, global environment that we see emerging. Technology-driven innovation is changing how consumers shop and pay. And these changes are blending online and offline into a new global commerce landscape.

In this new retail world, consumers expect a seamless experience across multiple channels, whether it's a physical store, a mobile phone, a laptop or any Internet-connected device. In this new world, physical stores will become just another point of access and location alone is no longer a sufficient competitive advantage.

The advantage is the ability to connect with consumers anytime, anywhere. And in this new environment, retailers of all sizes are seeking new competencies and capabilities. They are looking for partners who will provide flexible global platforms and technology-driven innovation that deliver consumer access, insight and engagement.

We aim to be such a partner, enabling the future of commerce. We're a different eBay today, a global commerce company. We enable consumers to get what they want, when they want, how they want it. And we enable merchants of all sizes to compete in this new commerce environment, and we won't compete with them.

We're delivering on our commitment to taking bold steps. Simply put, we're playing offense. And I feel good about our performance, our momentum and our opportunities.

Now let's talk about our results. We had a strong quarter. Our revenue and non-GAAP earnings per share exceeded the top end of our guidance with revenue growing 25% in Q2 and non-GAAP earnings up 20%. PayPal continues to deliver strong momentum, hitting 2 milestones, achieving its first $1 billion quarter in revenue and surpassing 100 million active registered users. And Marketplace has had a strong quarter as well with 19% revenue growth and a significant acceleration of growth in the U.S. market. We also announced a number of acquisitions in Q2, adding technology capabilities in important areas such as platform services, local commerce and mobile payments. And GSI is now our third of business unit, which significant expands our capabilities and relationships with large merchants and brands.

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