EBay : Q2 2019 Earnings Call Presentation

Q2 2019 FINANCIAL HIGHLIGHTS

July 17, 2019

DISCLOSURES

This presentation contains non-GAAP measures relating to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the appendix at the end of this presentation. All growth rates represent year-over-year comparisons, except as otherwise noted.

This presentation contains forward-looking statements that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of eBay Inc. and its consolidated subsidiaries, including expected financial results for the third quarter and full year 2019 and the future growth in our business.

Our actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to: changes in political, business and economic conditions, any regional or general economic downturn or crisis and any conditions that affect ecommerce growth or cross-border trade; the company's ability to realize expected growth opportunities in payments intermediation and advertising; the outcome of the operating and strategic portfolio reviews; fluctuations in foreign currency exchange rates; our need to successfully react to the increasing importance of mobile commerce and the increasing social aspect of commerce; an increasingly competitive environment for our business; changes to our capital allocation, including the timing, declaration, amount and payment of any future dividends or levels of the company's share repurchases, or management of operating cash; our ability to manage indebtedness, including managing exposure to interest rates and maintaining credit ratings; our need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; our ability to implement our initiative to intermediate payments on our marketplace platform; our need and ability to manage regulatory, tax, data security and litigation risks; whether the operational, marketing and strategic benefits of the separation of the eBay and PayPal businesses can be achieved; our ability to timely upgrade and develop technology systems, infrastructure and customer service capabilities at reasonable cost while maintaining site stability and performance and adding new products and features; and our ability to integrate, manage and grow businesses that have been acquired or may be acquired in the future.

The forward-looking statements in this presentation do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

More information about factors that could affect our operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting our Investor Relations website at https://investors.ebayinc.com or the SEC's website at www.sec.gov. All information in this presentation is as of July 17, 2019. Undue reliance should not be placed on the forward-looking statements in this presentation, which are based on information available to us on the date hereof. We assume no obligation to update such statements.

2

CFO COMMENTS

Q2 HIGHLIGHTS

• Revenue of $2.7B, up 2% Y/Y (up 4%FX-Neutral)
• GAAP EPS of $0.46 andNon-GAAP EPS of $0.68
• GAAP operating margin of 21%, up 6pts Y/Y
• Non-GAAPoperating margin of 27%, up 2pts Y/Y
• Generated $744M of Operating Cash Flow and $607M of Free Cash Flow
• Returned $1.6B to shareholders through share repurchases and cash dividends
• Reaffirming organicFX-neutral revenue growth rates and raising GAAP and Non- GAAP EPS guidance for the full year

4Reconciliation of Non-GAAP figures and calculation of Free Cash Flow (FCF) are included in the Appendix of this presentation

TRAILING 12-MONTH ACTIVE BUYERS

(millions)

		180	182
	179
175	177

171

	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Y/Y Growth*	4%	4%	4%	4%	4%	4%

5*Starting in the second quarter of 2018, Y/Y growth rate is on a pro-forma basis, which includes Giosis' Japan business active buyers in both current and prior year periods

GMV

($ millions)

Int'l

US

US Y/Y Growth

Int'l FX-Neutral Y/Y Growth

Total FX-Neutral Y/Y Growth

Sold Items Y/Y Growth

23,591

23,629

22,719

24,641

22,589

22,601

14,115	14,357	13,708	14,883	13,701	13,768

9,476	9,272	9,011	9,758	8,888	8,833
Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
7%	5%	3%	(1)%	(6)%	(5)%
7%	7%	7%	5%	3%	2%
7%	7%	5%	2%	(1)%	0%
1%	0%	0%	0%	0%	0%

6

REVENUE

($ millions)

	2,580	2,640	2,649	2,877	2,643	2,687
MS&O		563	560	582	535	557
557

Transaction	2,023	2,077	2,089	2,295	2,108	2,130

	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Y/Y Growth.	12%	9%	6%	6%	2%	2%
FX-Neutral Y/Y Growth.	7%	6%	6%	6%	4%	4%
Organic FX-Neutral Y/Y Growth.	7%	6%	5%	5%	3%	4%
Trxn Take Rate.	8.6%	8.8%	9.2%	9.3%	9.3%	9.4%

7	Calculation of total Revenue and Organic Revenue growth is included in the Appendix of this presentation; MS&O = Marketing Services & Other Revenue

• Q2FX-Neutral Transaction Revenue up 4% Y/Y … down 1pt Q/Q
• Q2FX-Neutral MS&O Revenue up 4% Y/Y ...
  up 3pts Q/Q

MARKETPLACE GMV & REVENUE

($ millions)

GMV	22,547	22,569		23,231	21,571
21,482		21,484
		298	301	316	277	270
MS&O	310
Revenue
Transaction	1,792	1,837	1,803	1,984	1,885	1,887
Revenue

	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
FX-Neutral GMV Y/Y Growth.	7%	7%	5%	3%	(1)%	(1)%
FX-Neutral Rev Y/Y Growth.	7%	6%	5%	6%	4%	3%
Trxn Take Rate .	7.9%	8.1%	8.4%	8.5%	8.7%	8.8%
Segment Margin .	33%	30%	30%	31%	36%	32%

8B2C = Business to Consumer sellers; C2C = Consumer to Consumer sellers

• Q2FX-Neutral B2C GMV down 1% Y/Y and FX- Neutral C2C GMV flat Y/Y
• Q2FX-Neutral Transaction Revenue up 5% Y/Y, down 1pt Q/Q
• Q2FX-Neutral MS&O Revenue down 6% Y/Y, up 2pts Q/Q
• Japan acquisition impact of <1pt on Q2FX-Neutral GMV and Revenue
• Segment Margin up 2pts Y/Y primarily due to continued cost leverage and currency hedging gains, partially offset by a stronger USD and Payments investments

PAYMENTS PROGRESS

~6,000

~4,300

Q1 19

Q2 19

# Sellers in Program

Grew total sellers in the program by nearly 40% Q/Q

9

700

600

500

400

300

200

100

Product Launch

9/25/18

Cumulative GMV Intermediated

GMV intermediated to date = $636M

Q2 US GMV exit penetration = 3.8%

$636M

6/30/19

STUBHUB GMV & REVENUE

($ millions)

GMV

MS&O

Revenue

Transaction Revenue

			1,410
		1,237
1,044	1,060			1,018	1,117
1	1	1	3	3	3
2	2	5		5 3
6			6	21
1			7
		286	311
231	240		223	243

•	Q2 FX-Neutral GMV up
	6% Y/Y, up 8pts Q/Q
	on a stronger sporting
	event landscape
•	Q2 FX-Neutral
	Transaction Revenue
	up 1% Y/Y
• Q2 FX-Neutral MS&O
	Revenue up 255% Y/Y
	due to 1P inventory
•	Segment Margin up
	2pts Y/Y driven by
	operational leverage

	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
GMV FX-Neutral Y/Y Growth.	13%	5%	7%	(1)%	(2)%	6%
Rev FX-Neutral Y/Y Growth.	9%	3%	7%	2%	0%	7%
Trxn Take Rate.	22.1%	22.7%	23.1%	22.1%	22.0%	21.7%
SegmenSegment Margint	13%	2%	10%	26%	11%	4%
10

and a stronger USD,

partially offset by 1P

inventory

CLASSIFIEDS REVENUE

($ millions)

									•	Q2 FX-Neutral Revenue
										up 12% Y/Y, flat Q/Q,
										driven by ongoing
										strength in Germany
							271			and UK motors vertical
			259		263			•	Segment Margin flat
			254	256
		246
									Y/Y driven by operating
										leverage offset by
										marketing investments
										and a stronger USD
		Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Rev Y/Y Growth.	24%	18%	8%	8%	4%	5%
FX-Neutral Rev Y/Y Growth.	10%	10%	11%	11%	12%	12%
Segment Margin	35%	38%	39%	44%	36%	38%

11

NON-GAAP EXPENSES

(% of revenue)

Operating Expense at 50.3%, down 3pts Y/Y

Cost of Revenue

21.8%	22.8%
Q2 18	Q2 19

Sales & Marketing

30.6%	29.5%
Q2 18	Q2 19

Product Development

11.1%	10.0%
Q2 18	Q2 19

General & Admin

8.8%	8.2%
Q2 18	Q2 19

Investments in KO, SH 1P and Site Operations

Lower cost base		Productivity in product
partially offset by			Operating leverage
	initiative related spend
Giosis' Japan business

12Reconciliation of Non-GAAP expenses is included in the Appendix of this presentation

NON-GAAP EPS

$0.71$0.67 $0.68

$0.53 $0.53 $0.56

	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Non-GAAP EPS Y/Y Growth	9%	17%	19%	20%	26%	28%
Non-GAAP Operating Margin	27.9%	25.2%	26.4%	29.2%	29.8%	26.9%
GAAP EPS	$0.40	$0.64	$0.73	$0.80	$0.57	$0.46
GAAP EPS Y/Y Growth	(58)%	**	52%	**	45%	(27)%

13Reconciliation of Non-GAAP EPS and Non-GAAP Operating Margin is included in the Appendix of this presentation; ** Not meaningful

• Q2Non-GAAP Operating Margin up 170bps Y/Y primarily due to continued cost leverage and a stronger USD, partially offset by Payments investments
• Q2Non-GAAP EPS growth driven by net benefit of share repurchases and margin expansion, partially offset by Payments investments

FREE CASH FLOW

($ millions)

					1,104
							607
		337	188	381		368
		Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Y/Y Growth	(25)%	(64)%	(47)%	39%	9%	223%
CapEx % of Revenue	6%	7%	7%	5%	7%	5%
FCF % of Revenue	13%	7%	14%	38%	14%	23%

14Calculation of Free Cash Flow (FCF) is included in the Appendix of this presentation

• Q2 FCF up 223% Y/Y due to timing of cash taxes and CapEx, and operational growth

2019 CASH & DEBT

$6.3B

	Debt
Q2 19 Ending Cash and
Investments*	($3.0B)
	Net Debt

($9.3B)

Capital Allocation Tenets

• Preserve financial flexibility to execute on strategy and drivelong-term value creation
• Drive organic growth while balancing profitability
• Supplement organic growth with disciplined acquisitions and investments
• Optimize financial flexibility, access to debt and cost of capital
• Meaningful returns to shareholders through share repurchases and dividends

Repurchased $1.5B of shares and paid cash dividend of $120M in Q2

$4.2B Authorization Remaining**

15* Cash balances/flows include cash, cash equivalents and non-equity investments

• Authorization remaining as of June 30, 2019

CAPITAL STRUCTURE PROGRESS

= Complete

Capital Allocation & Return

Dividend

Initiating a quarterly dividend

First payment of $0.14 per share expected on or about March 20, 2019 to shareholders of record as of March 1, 2019

Share Repurchase

Additional share repurchase authorization of $4.0B with no expiration

• Expected 2019 share repurchase of approximately $5.0B

On Track: Repurchased $3.0B YTD

Target Capital Structure

• We plan to maintain our current BBB+ rating … important as we build our payment intermediation capabilitiesOn Track
• Expect to exit 2019 with cash and investments of approximately $3.5BOn Track
• Targetingmid-term leverage of approximately 1.5x net debt and gross debt below 3.0x EBITDA

On Track: Expect to pay down $1.6B of debt in Q3, no plans to refinance

Capital allocation tenets remain the same … disciplined execution

16

GUIDANCE

Revenue.

(in billions) .

Y/Y Growth.

Organic FX-Neutral Y/Y Growth.

Non-GAAP EPS.

Y/Y Growth.

Q3 19

Low High

$2.61 $2.66

(1)%1%

1%3%

$0.62 $0.65

10%15%

Q3 Guidance Context

• Non-GAAPEPS growth driven by:
• • Net benefit of share repurchase program ~13pts
  • Operational productivity offset by investment in managed payments
• Non-GAAPeffective tax rate of 15.5% - 17.5%

Full Year Guidance

• Lowering Revenue to $10.75 - $10.83 billion, maintaining OrganicFX-Neutral growth of 2-3%
• Non-GAAPOperating Margin of 28%-29% … Non-GAAP effective tax rate of 15% to 17%
• RaisingNon-GAAP EPS to $2.70 - $2.75
• Free Cash Flow of $2.1B to $2.3B … CapEx5-7% of Revenue

17Reconciliations of non-GAAP measures are included in the Appendix of this presentation

Q&A

RECONCILIATIONS

GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS OPERATING MARGIN

										Three months ended
	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,
		2018				2018				2018		2018					2019				2019
									(in millions, except percentages)
GAAP operating income	$	579	$	406	$	556	$	681	$	609	$	561
Stock-based compensation expense and related employer payroll taxes		126				158				127				143				126				145
Amortization of acquired intangible assets within cost of net revenues		6				4				3				1				2				2
Amortization of acquired intangible assets within operating expenses		10				13				13				13				13				12
Other significant gains, losses or charges		-				84				2				1				38				3
Non-GAAP operating income	$	721	$	665	$	701	$	839	$	788	$	723
Revenues	$	2,580	$	2,640	$	2,649	$	2,877	$	2,643	$	2,687
GAAP operating margin		22.5 %				15.4 %				21.0 %				23.7 %				23.0 %				20.9 %
Non-GAAP operating margin		27.9 %				25.2 %				26.4 %				29.2 %				29.8 %				26.9 %

20

GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS NET INCOME / EPS

								Three months ended
	March 31,	June 30,		September 30,		December 31,		March 31,			June 30,
		2018			2018			2018	2018			2019			2019
							(in millions, except per share data)
GAAP Income from continuing operations	$	407		$	638	$	720	$	763		$	521	$	403
Stock-based compensation expense and related employer payroll taxes		126			158			127			143			126			145
Amortization of acquired intangible assets within cost of net revenues		6			4			3			1			2			2
Amortization of acquired intangible assets within operating expenses		10			13			13			13			13			12
Other significant gains, losses or charges		-		84			2			1			38			3
Gains or losses on investments and sale of business		-		(246)			(313)			-		-			-
Change in fair market value of warrant		-		(106)			(126)			128			(113)			8
Tax Effects of US Tax Reform		-		-			-			(463)			-			-
Tax effect of step-up of intangible assets basis		-		-			-			(9)			-			199
Tax effect of non-GAAP adjustments		(1)			(12)			128			93			21			(183)
Non-GAAP net income from continuing operations	$	548		$	533	$	554	$	670		$	608	$	589
Non-GAAP net income from continuing operations per diluted share	$	0.53		$	0.53	$	0.56	$	0.71		$	0.67	$	0.68
Shares used in non-GAAP diluted share calculation		1,029			1,004			983			950			908			867

21

GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS

STATEMENT OF INCOME							Three months ended
			June 30, 2019								June 30, 2018
		Reported		Non-GAAP		Non-GAAP			Reported		Non-GAAP		Non-GAAP
			Entries				Entries
							(in millions, except per share data and percentages)
	Net revenues	$	2,687	$	-		$	2,687			$	2,640		$	-		$	2,640
	Cost of net revenues		630			(17)	(a)(b)		613				597			(20)		(a)(b)		577
	Gross Profit		2,057			17			2,074				2,043			20				2,063
	Operating expenses:
	Sales and marketing		817			(25)	(a)		792				838			(31)		(a)		807
	Product development		322			(54)	(a)		268				352			(58)		(a)		294
	General and administrative		274			(54)	(a)(d)		220				368			(137)		(a)(d)		231
	Provision for transaction losses		71			-			71				66			-			66
	Amortization of acquired intangible assets		12			(12)	(b)		-				13			(13)		(b)		-
	Total operating expense		1,496			(145)			1,351				1,637			(239)				1,398
	Income from operations		561			162			723				406			259				665
	Interest and other income, net		(51)			8	(f)		(43)				301			(352)		(e)(f)		(51)
	Income from continuing operations before income taxes		510			170			680				707			(93)				614
	Provision for income taxes		(107)			16	(c)(g)		(91)				(69)			(12)		(c)		(81)
	Income from continuing operations	$	403	$	186		$	589			$	638		$	(105)			$	533
	Net income (loss) from continuing operations per share:
	Basic	$	0.47					$	0.68	$	0.64						$	0.54
	Diluted	$	0.46					$	0.68			$	0.64						$	0.53
	Weighted average shares:
	Basic		860						860				992							992
	Diluted		867						867				1,004							1,004
	Operating margin		20.9 %			6.0 %			26.9 %				15.4 %			9.8 %				25.2 %
	Effective tax rate		20.9 %			(7.5)%			13.4 %				9.7 %			3.6 %				13.3 %

	Notes:
	(a) Stock-based compensation expense and related employer payroll taxes
	(b) Amortization of acquired intangible assets
	(c) Income taxes associated with certain non-GAAP entries
	(d) Other significant gains, losses or charges
	(e) Gains or losses on investments
22	(f) Change in fair market value of warrant
(g) Tax effect of step-up of intangible assests basis

CALCULATION OF FREE CASH FLOW

								Three months ended
	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,
		2018		2018				2018		2018				2019			2019
								(in millions)
Net cash provided by continuing operating activities	$	495	$	372	$	560	$	1,234	$	550	$	744
Less: Purchases of property and equipment, net		(158)			(184)			(179)			(130)			(182)			(137)
Free cash flow from continuing operations	$	337	$	188	$	381	$	1,104	$	368	$	607

23

RECONCILIATION OF TOTAL REVENUE

								Three months ended
	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,
		2018			2018		2018		2018				2019		2019
Net Revenues by Type								(in millions)
Net Transaction Revenues:
Marketplace (2)	$	1,792	$	1,837	$	1,803	$	1,984	$	1,885	$	1,887
StubHub		231			240			286			311			223			243
Total net transaction revenues	$	2,023	$	2,077	$	2,089	$	2,295	$	2,108	$	2,130
Marketing services and other revenues:
Marketplace	$	310	$	298	$	301	$	316	$	277	$	270
Classifieds		246			259			254			263			256			271
StubHub		1			6			5			3			7			21
Elimination of intersegment revenue		-			-			-			-			(5)			(5)
Total marketing and other revenues	$	557	$	563	$	560	$	582	$	535	$	557
Total net revenues (1)	$	2,580	$	2,640	$	2,649	$	2,877	$	2,643	$	2,687
(1) Foreign currency impact	$	109	$	70	$	4	$	(9)	$	(68)	$	(86)
(2) Hedge gain/(loss)	$	(28)	$	(21)	$	12	$	29	$	20	$	13

24

RECONCILIATION OF ORGANIC REVENUE

					Three months ended
	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,
	2018	2018	2018	2018	2019	2019
As Reported Revenue Growth	12%	9%	6%	6%	2%	2%
Acquisition/Disposition Impact	-%	(0)%	(1)%	(1)%	(1)%	(0)%
Foreign Currency Impact	(5)%	(3)%	(0)%	(1)%	2 %	2 %
Organic FX-Neutral Revenue Growth	7%	6%	5%	5%	3%	4%

OrganicFX-NeutralRevenue Growth. The company defines Organic FX-Neutral Revenue Growth as As Reported Revenue Growth excluding incremental revenue from acquisitions or dispositions for the twelve-month period following such acquisitions or dispositions and foreign exchange rate effects. The company believes this measure provides useful supplemental information regarding the company's underlying revenue trends by presenting revenue growth exclusive of these effects.

25

GAAP TO NON-GAAP RECONCILIATIONS GUIDANCE

		Three Months Ending
		September 30, 2019
(in billions, except per share amounts)		GAAP			Non-GAAP (a)
Net Revenue	$2.61 - $2.66	$2.61 - $2.66
Diluted EPS	$0.40 - $0.44	$0.62 - $0.65
		Twelve Months Ending
		December 31, 2019
(in billions, except per share amounts)		GAAP			Non-GAAP (b)
Net Revenue	$10.75 - $10.83			$10.75 - $10.83
Diluted EPS	$1.97 - $2.07	$2.70 - $2.75
		Twelve Months Ending
(in billions)		December 31, 2019
Net cash provided by continuing operations		$2.6 - $3.0
Less: Purchase of property and equipment, net		$(0.5) - $(0.7)
Free cash flow		$2.1 - $2.3

1. Estimatednon-GAAP amounts above for the three months ending September 30, 2019 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $10-$15 million, estimated stock-based compensation expense and associated employer payroll tax expense of approximately $135-$145 million and an adjustment that excludes the net deferred tax impact related to the step-up in the tax basis of intangible assets of approximately $40 - $50 million.
2. Estimatednon-GAAP amounts above for the twelve months ending December 31, 2019 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $50-$60 million, estimated stock-based compensation expense and associated employer payroll tax expense of approximately $530-$550 million and an adjustment that excludes the net deferred tax impact related to the step-up in the tax basis of intangible assets of approximately $150 - $170 million.

26