2009 ebay paypal skype analyst day
TRANSCRIPT
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Agenda
8:15 INTRO AND DISCLOSURESMark Rowen, VP of Investor Relations, eBay Inc.
John Donahoe, President & CEO, eBay Inc.
8:50 PAYPAL: Vision and potential for PayPalco ompson, res en , ay a
9:30 BREAK
Lorrie Norrington, President, eBay MarketplacesStephanie Tilenius, SVP Global Product & General Manager, eBay North AmericaMark Car es, SVP & Chief Technolo Officer, eBa Inc.
11:00 SKYPE
Josh Silverman, President, Skype
:
12:30 FINANCE: Business model and operational excellenceBob Swan, Chief Financial Officer, eBay Inc.
1:00 GENERAL Q&A
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Forward looking statement
This presentation may make forward-looking statements relating to our future performance that arebased on our current expectations, forecasts and assumptions and involve risks and uncertainties,including those relating to the companys ability to grow its businesses, user base and user activity.
Our actual results may differ materially from those discussed during this presentation for a variety ofreasons, including, but not limited to, the impact of recent global economic events and the global
economic downturn; foreign-exchange-rate fluctuations; changes in political, business, and economicconditions our abilit to rofitabl ex and our business model to new t es of merchandise and sellers
the impact and integration of recent and future acquisitions; our increasing need to grow revenues fromexisting users in established markets; an increasingly competitive environment for our businesses; thecomplexity of managing a growing company with a broad range of businesses, our need to manageregulatory, tax, IP and litigation risks (including risks specific to PayPal and the financial industry, and risks
customer service infrastructure at reasonable cost while adding new features and maintaining sitestability.
annual report on our Form 10-K and our subsequent quarterly reports on Form 10-Q (available athttp://investor.ebay.com). You should not unduly rely on any forward-looking statements, and we
assume no obligation to update them. All information in this presentation is as of March 11, 2009, and wedo not intend, and undertake no duty, to update this presentation.
This presentation contains non-GAAP measures relating to the company's performance. You can findthe reconciliation of those measures to the nearest comparable GAAP measures in the appendix at theend of this presentation.
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March 11, 2009
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What we do: Connect buyers and sellers
eBay
Buyers Sellersay a
Classifieds
Shopping.com
StubHub
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Our company has evolved
2004 2008ClassifiedAdvertising,all others
Auctions
Auctions
Fixed price
$3 3BFixed price
$3.3B$8.5BClassified,Advertising,all others $8.5B
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Our markets are still in their early days
eCommerce OnlinePayments OnlineCommunications$1.4T
$0.6T$0.4T
$
future008 future008 future008
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And markets differ:Multi le winners in sho in : Few winners in a ments
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Online consumer behaviors continue to change
yesterday today tomorrow
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How we will win
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PayPal Highlights
2 Unmatched advantages
3 Si nificant o ortunit ahead
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What to expect from PayPal
A secon core w e gger
The leading global onlinepayment networ
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Marketplaces
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Our starting point: Worlds largest marketplace
Buyers Sellers
3M items bought daily
50,000 categories
150M+ live listings
Multiple formats
Robust and scalable technoloplatform
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Piercing the myths
eBay Playbook Customer-driveninnovation
Auctions asstrate
Auctions as one ofseveral formats
O en Mana edmarketplace marketplace
Tweak the model Transform the model
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eBay Highlights
1 Focus where we can win: Secondary Market
2 Transform our Marketplace
3 Grow complementary formats
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What to expect from eBay
We are creating the new eBay and
This will take time 2009: growth expected to be slowerthan the market
2010: growth expected to be wit the market 2011: growth expected to be fasterthan the market
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Skype Highlights
Accelerating user growth and1
opportunity, positioned to win
more valuable
h f k
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What to expect from Skype
rong s an a one us ness
one of fastest rowin in histor
realizes best value
O i diff l h
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Operating differently across the company
Customer driven
Unlocking technology
Operating discipline
S
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Summary
Connecting buyers and sellers in innovative
PayPal: Leading online global payment network eBay Marketplace: Win in global secondary
Skype: Great standalone, we will maximize itspotential and value
nl kin T hn l inn a f r rExperiences
ccoun a e, sc p ne
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The Global InternetThe Global Internet
Pa ment NetworkPa ment Network
March 11, 2009
24
An evolving industry
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An evolving industry
1 Powering global eCommerce
3 Significant opportunity ahead
25
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26
Traditional payments not designed for the web
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Traditional payments not designed for the web
Review &
Complete
27
Traditional payments not designed for the web
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Traditional payments not designed for the web
rau s ers
ID theft
28
Traditional payment networks are limited
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Traditional payment networks are limited
29
Worldwide accessibility
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Worldwide accessibility
30
Enabling small sellers
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Enabling small sellers
31
Enabling large merchants across the web
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Enabling large merchants across the web
or
32
Solving consumer payment problems
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Solving consumer payment problems
Personal Payments
Marsha Ali
33
Solving consumer payment problems
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Solving consumer payment problems
Personal Payments
Marsha Ali
Erica
34Grocery
Weve built a global Internet payment network
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We ve built a global Internet payment network
190 lobal markets
17 local lan ua e sites
19 currencies
35
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Growth in active accounts
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TPV growing+23%- as er
than+1
Billion
Billion
Billion
.Million
.Million
.Million
2006 2007 2008
37
Growth in global Total Payment Volume (TPV)
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g y ( )
TPV growing. - as er
than
Billion
Billion
Billion
2006 2007 2008
38
Strong stated preference for online payments
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g p p y
#22#11
#33 #2#11
39
Tremendous payment volume opportunity
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p y pp y
TPV Growing 2-3XFaster than CompetitorsTPVTPV
$100-
120BILLION
Billion
Billion
Billion
2006 2007 2008 2011
40
How well get there
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Global eBayGlobal eBayGlobal
Merchant
Global
Merchant AdjacentAdjacentServicesServices paymentspayments
41
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42
Penetration growing on eBay
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73 78%3-78%
rage
20088%
llerCo
ve
eBaySe
Consumer Preference
43
Significant opportunity in international markets
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2008 eBay aGMV & PayPal penetrationIncludin Shi in & Handlin
$29B
79%41
North America International
44
Share gains across eBay markets
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PayPal penetration in eBay markets (%)
80
60
40
20
2006
2007
2008
2005
2004
20082007200620052004
45
eBay is a powerful partner
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New activeaccounts ac uired Total PaymentVolume
9.7M$31B
7.8M $22B
MS
eBay
1H 2007 2H 2008 1H 2007 2H 2008
46
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47
Gaining share in Global Merchant Services
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-
verage
5% 2008
hant
Co
Mer
Consumer Preference
48
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Serving the worlds largest online brands
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PP # of top 50
online merchants
21
18
30
50
Share gain opportunity in North America
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North America
$305-
$237Billion Billion
Share2008 2011
9% 13-14%
51
and in large International markets
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InternationalNorth America
480
Billion
$293Billion
$305-
$237Billion Billion
2008 2011
2% 5-6%2008 2011
9% 13-14%Share
52
Bill Me Later complements PayPal
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& preference
53
Sales lift for merchants
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Sales lift through
offers
54
Fast, convenient, secure credit for consumers
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Structural advantage in risk management
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Credit card$$$$$$$$$$
$$
56
Significant PayPal BML synergies
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Grow eBay GMVAccelerate merchantsales cycle
Speed Bill Me Laterconsumer acquisition
Turn transactionexpense into revenue
Decrease Bill Me Laterfraud losses
Reduce Bill Me Later costof capital
57
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58
Many sectors need payment solutions
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Mo b ile &o t h e r d e v ic e s B a n k s
Bu s in e s s e s wit hspecializedp a ym e n t n e ed s Go v e r n me n t sp a y m e n t n e e d s
S o c ia l n e t wo r ks Non-profits
59
PayPal platform enables developers
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225k+developers
100k+developers
660k+developers
developers
Millions ofPlatform
Millions of.NET developers
PayPal global Internet payments network
60
Early traction: Non-retail & mobile
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Tremendous growth ahead
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Global Total Payment Volume
Adjacent
Pa ments
-
GlobalM h terchantServices
2008 2011
$4-5 billion in revenue by 2011
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.BILLION
-BILLION
2008 2011
63
Long-term high growth businesses
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-BML integration
Medium term: mar ins return to 18-20%
business scales over investments
64
The Internet is becoming more mainstream
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1.4B lobal Internet users
> 50% of users are in emerging markets
Users spend 15 hours per week online
-
65
An evolving industry
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1 Powering global eCommerce
3 Significant opportunity ahead
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a and be ai
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In Marketplaces we are
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Creating a NEW eBay
Fixing our foundation by transforming the user
Positionin to win the lar e o ortunit in the
secondary market Growing our complementary formats
eBay is about the largest selection ofgreat deals in any format
Marketplace connects buyers and sellers globally
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Buyers Sellers
3M items bought daily 50,000 categories
150M+ live listings Multiple formats
Robust and scalable
technology platform
An increasingly global footprint
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North America(4 6 % o f To ta l) Europe(4 5% o f To ta l) Asia Pacific(9 % o f To ta l)46 % o f Total) (45 % o f Total) (9% of Total)
$2 6B $$1.9B
$2.6B
$1.4B$2.5B
2005 2008 2005 2008 2005 2008$0.3B $0.5B
Broad choice of formats
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A ti Fi d P iuctions Fixed Price
ClassifiedsdvertisingBuyers Sellers
VerticalExperiences
Unique advantages of Marketplace model
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Wide global supply ofSuperiorproducts without ownershipflexibility
Surface best inventoryregardless of format
Ultimate buyerchoice
Enabling competition, butSellernot competing against sellersplatform
Sellers compete so ourbuyers get the best deals
Customerswin
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rowin faster?
By 2008, we had fallen behind
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Customer experience hadfallen behind
Optimizing for auctions, and
Customerexperience
constraining fixed price
Open Marketplacephilosophy slowed us down
Too incremental not driving the marketplace
Approachto change
Needed to revamp technology
Our three year journey
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2008 2009 2010+
enhance trust improve selection
os on or grow transform the user experience
innovate throu h technolo grow our complementary formats
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ay ng t e groun wor .
In 2008, we began to fix the foundation
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New feedback systemTruststandards Surface highest trust sellers in search
Better deals race to the top in searchUser experience& search 4X in listings duration for fixed price
Created incentives for high qualitySeller Started risk-free pricingIncentives
Our trusted sellers are doing well
More trusted Contributing to more Growing faster than
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sellers of our GMV eCommerce49% trusted sellers
eCommerce27%
26%
24%17%
4%
12%
4%-6%
% of Sellers with 4.8+
DSRs
% of GMV from 4.8+ DSR
sellers
GMV Growth Y/Y(ex. V ehicles)
Data shown is US only% of Sellers includes only sellers that have a DSR rating; Trusted sellers have 4.8+ DSRsGMV excludes vehicles, real estate and StubHub
Increased selection
Average Daily Live Listings (Millions)
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g gFixed Price
151 Auctions
119
29 29Q4 07 Q4 08
Lower shipping costs = better value for buyers
% of listings offering free shipping
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30%
20%
10%
Q1 08 Q2 08 Q3 08 Q4 08
0%
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ecessary es
In 2009 were taking bolder actions
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First contact resolution for top buyersTrust eBa rotection for to bu ers US UK Increasing exposure for high-quality sellers
s an ar s
Optimize new search platform
-
Enabling multiple-SKU listings
& search Integrate local classifieds listings
Improving seller economics on eBay
e erIncentives
We must stabilize, then grow our business
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2008 2009 2010+
Fix the foundation
Position for growth
Our focus: the secondary market
Large retailSmall retailLiquidationUsed
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~$500B
Inventory: o ec e
Vintage Pre-Owned
Out of season Some new
Inventory: Out of season
n season
eBay today
Overstock/returns Liquidation inventory
Secondary market: large, compelling opportunity
Consolidating this inventory creates step-change in
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deals and selection for our buyers
~$500B MarketOff-priceretailers Outlets Liquidators
Wholesalers
A Marketplace is ideal to win the secondary market
d k k l d l
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Secondary market Marketplace model
Inefficientsupply chains Absorbs volatile supply Moves dee -SKUp y
Items ofuncertain value Sellers can test market price Multiple formats to drive velocity
Buyers lookinguyers lookingforemost forgreat deals Best deals with reliable service
Search brings it all togetherg
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Transforming
the user experience
Before: Auctions ending soonest
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Before: Auctions ending soonest
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Sorted by timeendingnding
Less relevance
High shippingcosts
After: relevant, well-priced inventory from trusted sellers
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After: relevant, well-priced inventory from trusted sellers
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Sorted by bestmatchore relevantfirst item
Free shipping
Search experience that merges products and listings
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New vertical experience for hard goods
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New vertical experience for hard goods
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Inventorysorted byconditiononditionShows value
and savings
Buyers can select from multiple SKUs for soft goods
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Snapshot view for Clothing, Shoes and Accessories
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Buyers can find local inventory from Classifieds
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Core searchresults
ClassifiedslassifiedsSponsoredlinksinks
Unique power of a marketplace
Bose iPod docking station case study
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Unique power of a marketplace
Bose iPod docking station case study
To search is new in box
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To search is new in boxFixed Price
Price $50 lower than
Great seller
Unique power of a marketplace
Bose iPod docking station case study
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Consumer seller with100% Feedback scores se ng are y use
Auction price closed atower an re a
Trusted sellers compete to provide the best deals
Garmin Nuvi 200w eBay sale history (10/19-11/10)
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Seller 1 $142.89
Seller 3$145 $139.95
$140
Seller 2
$141.89 Seller 4 Seller 3
$135.
$128.97$130
$125
Deals are better than ever
In the U S a new Tivo HD
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In the U.S., a new Tivo HDDVR costs an average of
12% less than competitiors
Daily Deals driving great value for consumers
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Breadth of inventory
Secondary Market
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LatestiPod NanoBrand New
LatestiPod NanoNew Open Box
Prior GeniPod NanoBrand New
All generationsiPod NanoRefurbs / Usedrand New New, Open Box Brand New Refurbs / Used
eBay is the best way to access the worlds inventory
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eBay is the best way to access the worlds inventory
Retail-like option:i d ll
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experienced sellers
vetted by eBay
eBay is the best way to access the worlds inventory
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Marketplace option:
eBay is the best way to access the worlds inventory
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Local option:connects buyers
with nearby sellers
eBay is the best way to access the worlds inventory
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Advertising:shows whats available
across the web
We will continue to transform our user experience
eBay will be:
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A trusted, easy-to-use and rewarding shopping
formats, experiences and inventory
Positioned to capture the secondary market and
Becoming the channel of choice for webs best sellers
Velocit Best channel for velocity and cash flow
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Increasing operational efficiency- Reduce contacts via better trust- Tools for shipping and tracking
- Seller dashboard for better insights
Release mana ement and
Reliability communications
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Top eBay technology questions
u y u wu y u w
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u y u w
u y u w
What are ou doin toWhat are ou doin toimprove the userimprove the userexperience?experience?
2009 Priorities
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1 Search2 Catalog3 User Ex erience4
Search in a real-time marketplace
All changes immediately reflected in searchy80M+ from bids price changes listings purchases etc
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80M+ from bids, price changes, listings, purchases, etc.
S hi i d i i & fiophisticated navigation & refinementDifferent for each of our 50,000 categories
Unique mix of formats and inventory Vintage & collectible to liquidation & new out-of-season
Search in 2009
Improve relevancemprove relevance
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Data mining & machine learning
Better sortingBest Match surfaces most relevant info
S h l tfearch as a platformFoundation for custom shopping experiencesacross categories
2009 Priorities
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1 Search2 Catalog3 User Ex erience4
Catalogs: bringing structure
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UPC codePC code
B ghtoughtcatalog
to unstructured data
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to unstructured data
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Bigpictures
Satin floralaccentsccents
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eBaysBay sCatalogBringing structure to
2009 Priorities
S h
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1 Search2 Catalog3 User Ex erience4
User experience
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User experience
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User experience: visual browse
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More likethis colorhis color
More likethis style
User experience: category customization
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2009 Priorities
Search
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1 Search2 Catalog3 User Ex erience4
Opening eBay.com to developers
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Native onBBay
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Driving the technology agenda at eBay differently
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- , -software develo ment
, ,intensel customer-focuseddevelopment process
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Well continue to grow formats like Classifieds
Classifieds global revenue
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46%CAGR
$86M2005 2008
Classifieds market: large, growing, complementary
Global online classifieds market size
Vehicles, goods
, ,
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Complementaryto eBay
2008 2010
Sources: Gerson Lehman Group Analysis - August 2008; eMarketer; CollinsSteward LLC Report - Nov 2008; Internal estimates
Classifieds is a strong global opportunity
danada#1 Denmark
Netherlands#1
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#1United Kingdom#1 Germany#1
A t liItalySpain
#2Australia
#2#1
We are #1 or #2 in 8 major markets
Multiple ways to monetize Classifieds
Insertion Fees Feature Fees AdvertisingCPC advertisingome page featuredJob posting fees
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High value goodsCPM advertising
High value goods
A ti Fi d P iuctions Fixed Price
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ClassifiedsdvertisingBuyers Sellers
VerticalExperiences
We are reshaping the Marketplaces business
Auctions
Marketplaces revenue
Fixed price
Advertising
.
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Advertising
ClassifiedsOther $3.5B
2005 2008
We are reshaping the Marketplaces business
Marketplaces revenue
AuctionsAuctions$5-7B
Auctionsstabilizes buttrails the marketFixed priceAdvertising
.
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Advertising
ClassifiedsOther Fixed Pricegrows faster$3.5B than the market
Oth f tther formatsgrow faster thanthe market2005 2008 2011
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A New eBay
...Fixing the foundation
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Focusing where we can winSecondary market
3 Growin our com lementar formats
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5 year-olds in history
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With acceleratinggrowth, and outstandingfundamentals
Attacking an enormous opportunity, andpositioned to win
Business is getting stronger
Enabling the Worlds Conversations
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a s ree
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Skype-to-Skypego)
calls
Subscriptions Video Calling
Online numbers
Chat/IM Voicemail
Conference Calling SMS
Skype is one of the fastest adopted
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With massive (and accelerating)
Skype Calling Minutes (billions)
usage
of worldsinternational 20
100B CumulativeMinutes
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14 2 14 816
10 9 10 8 11.914.2 14.8
7 5 9.510.9 10.8 9.8
7.5
2006 2007 2008
Remarkable global reach
52MAPAC
urope
148M
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147M
Rest of the World
59M
And a owerful business model
Skype Revenue
Slightly ahead ofeBay and PayPal
($Milli )
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($Millions)
2004 and 2005 estimated based on SkypeOut billings
Negligible customeracquisition costs
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Negligible capex/network
- =negative working capital
Strong free cash flowconversion (FCF)
** Direct segment margin and does not include allocation for corporate costs
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Voice Data
r
Means there is potential for Skype everywhere
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Easier / EverywhereRicher Experience More Choices
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PresenceVideo-calling
Unified MessagingChat, Voice, File
Transfer areSelect best-of-breed
eam ess ev ce
integration
a e-s a esPAYG, premium services
=
Voice Data
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The opportunity
communication software company.
The opportunity ismass ve
Communication is aHUGE $1.4T market
HH income for the past 40
years
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3.0%
1.5%
2.0%
0.5%
1.0%
0.0%
1981 1986 1991 1996 2001
$300BEBITDA
Market size: Communication relative to Search and ecommerce ($
in Bn)
Source:Trends in Telephony Servicefrom FCC (June 2005)
In 2008 we sharpened our focus oncus omers, w remar a e resu s
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YoY YoY
Active Users Engagement
(Calling Minutes per Active User)
Leading to Accelerating Revenue Growt
70%YoY Growth Rates (Revenue)60% Organic*
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50%
Organic
41%
31%33%30%
40%
10%
20% Reported(Fx-impacted)
0%
Q1 08 Q2 08 Q3 08 Q4 08
* Euro-denominated (Skypes functional currency)
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Higher VIDEO penetration led to more users,an more ca ng m nu es
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eo ca ng ncreases engagemen an u y
SUBSCRIPTIONS added a popular new paid,
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We hit an inflection
point in 2008
t ype s s ze, sma c anges ma e
a HUGE difference
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Increasing penetration of paid products by 1=
To be a billion dollar business
just one more call per day!
ur ra egy
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Mobile Business Platform
1 Leverage our core consumer business
Core CONSUMER is a $240B market2008 Worldwide Telecom Market1 - Total Market: $1.4
billion
$241BFixed Voice
onsumer
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.new users
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2. Better promote
products
3. Increase
revenue perpaying user
4. Monetize free
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va a ty post- oa
Device pre-load
Operator partnerships
Sk e is available for downloadtoday on several platforms
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Approximately 12 million downloadsat the end of 2008
Sk es artnershi with Hutchison 3
un s so , one o e mos
l h d t f 3
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popular pre-pay handsets for 3
20% higher margin than 3s
average
79% of customers are new to 3
No Sk e download re uired
Partnership with leadingworldwide mobile
an se prov er
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Skype pre-loaded andintegrated on select N series
Available in somemarkets starting 2H 2009
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$203BFixed VoiceBusiness
A compelling business offering
35%* ofusers say
ReduceBusiness TravelCost SavingsBenefits Productivity
they use
Skype for
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Business TravelCost SavingsBenefits Productivity Skype forbusinessur oses
Focus Expand Build outBusinessProduct
SalesChannel
PaidSupport
35%
er ng
65%
*Based on a survey of U.S., CN, U.K of Skype users in March 2008
Platform: A Thrivin Ecos stem
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users
devices
15,000 DevelopersPartnerships with
world-class companies
W t ti
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We are startinga new chapter in our history
Act 1
2003 2008
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Platform: Desktop/Laptop
Revenue Stream: SkypeOut
Market segment: LD calling
Main product: VoiceOne
markets
Main target user: Consumers
Act 22009 2011
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Platforms + Mobile
Business subscriptions
Market segments + CollaborationMany
Regions + Emerging Targets + Business
an eyon
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Platform
Balance of revenue streams
u p e mar e segmen s Established products
Regional ubiquityr
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March 11, 2009
What you heard todayhat you heard today
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What o can e pecthat o can e pectWhat you can expectf i th f tWhat you can expectf i th f trom us in the futurerom us in the future
We play in very attractive markets
eCommerce OnlinePayments OnlineCommunications$1.4T
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$0.6T$0.4T
$
future008 future008 2008 futureSource: External estimates & internal analysis
We have the three leading brands on the web
$5.6B Rev 2008 with $2.4B Rev in 2008 with $0.6B Rev in 2008 with
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$ $2.4B Rev in 2008 with $0.6B Rev in 2008 with-
~$60B GMV 2008
-
~$60B TPV in 2008
-
More than 100B Skype
callin minutes~eCommerce
~86M active users
~eCommerce
~70M active users
~400M registeredusers
Proven and powerful business models
Stron cash Very highHigh growth
en ine generation
good marginsgood margins
margins
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good marginsgood marginsmargins
M&A: Using financial strength to extend our reach
Strengthen Extend Acquire
geographicfootprint
formats /products
keytechnologies
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A significantly diversified portfolio2008004 2008StubHub
Other MP
BML
Text &Graphical Ads
ClassifiedsAdjacencies Other MP
Adjacencies
Auctions
Classifieds
A ti
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Auctions
Fixedprice
$Fixed price
$3.3B $8 5B8.5B
An expanding global footprintNorth America
48% of total
Europe41% of total
Asia11% of total
Up 30%
Up 149%
Up 44%
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Up 149%
.Billion$0.4
Billion$3.5$2.4$4.1$3.2
2006 2008 2006 2008 2006 2008
onononon
Portfolio has generated excellent financialsFree cash flow*on-GAAPEPS*Revenue
23%$7.7B
$8.5B
$6.0$7.7B
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26% 14%4.6$1 71 $2 2 $2.3B
$0.86 $1.05$1.53 $1.71 $1.6B $1.7B $2.2
05 06 07 08 05 06 07 08 05 06 07 08
* Reconciliation in appendix
Attractive returns on invested capital
ROIC*
25% 27%
23%
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23%
2005 2006 2007 2008
* Reconciliation in appendix
2008 was a tough year Full year performance was ok
2008 1st half 2nd half
op ne p
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Non-GAAP
EPS*Up 12% 25% 0%
Free cash
flow*
.
but a brutal second half!* Reconciliation in appendix
... and 2009 will be a challenging year
A tough economy
Turnaround effort continues in
Si nificant headwind from stron US dollar
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Si nificant headwind from stron US dollar
Two acquisitions in 4Q 2008 will beut ve n 2009
will earn less
Positioning for the future: Clear priorities
a i aliz n Pa Pal n rm u n ial
Transition the core eBay platform for
todays consumer with alternative formats
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y
Skype to be all it can be
Operating smarter create capacityto invest
PayPal Merchant Services ~$30B TPV
Merchant services revenueStrong growth despite difficulteconomic conditions will continue to growrapidly over next 3 yrs
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20110100090084 083 082 081 08
PayPal On eBay ~$30B TPV
On-eBay RevenueDecelerating along witheBay core GMV increased penetrationwill drive growth
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20110100090084 083 082 081 08
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PayPal: Capitalizing on enormous potential
$4 - $5BPayPal revenue
n
payments
40% range
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30% rangeMerchant
serviceslow single
digits On eBay
2008 2009 2010 2011
-CAGRs
Marketplaces: Broad choice of formats
A ti Fi d P iuctions Fixed Price
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ClassifiedsdvertisingBuyers Sellers
VerticalExperiences
Marketplaces Fixed Price format $22B GMV
Doubleixed price revenue . . . $2B 2008with double digit growth
g
and huge growth potential
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20110100090084 083 082 081 08fx-neutral excluding vehicles.
Marketplaces: Complementary formats
Advertising Classifieds2X2008~2X
2008evenue revenue008 2008
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2008 2011 2008 2011
Auction format: $23B GMV
CAGR in
ne ative double
Auction revenue . . . $2B 2008digit rangeA differentiated format
Smaller before stabilizing
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20110100090084 083 082 081 08fx-neutral excluding vehicles.
Marketplaces: A state of transition $5 - $7Bi 2011
Marketplaces revenue
in 2011Other
~2X 2008 levels ClassifiedsAdvertisingOther
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V hi lFi d iVehicles
smaller before biggerFixed price
2008 2009 2010 2011Auction
2008 2009 2010 2011
Skype: Powerful standalone businessSkype revenue
in 2011
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30% range 2009-2011
2008 2009 2010 2011
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u ng a gger an s rongeru ng a gger an s ronger
ill d iill d i
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we will need to operate smarter in we will need to operate smarter in
or er o un our nves men s or er o un our nves men s
Achieving full potential requires
Operating Significant2B over 3 earssmar er nves men
Lower
processing costs retention / loyalty
U i /
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ImprovedUser experience /search / platform
experience
Improved trust /rgan zat on
simplificationcomprehension
Operating smarter: weve simplified the org
Simplified organizationby removing ~10% of HC ~$450y g Million
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Q3 08 ending HC 3 yr savings3 08 ending HC 3 yr savings
Operating smarter improved customer experienceWe spent $700M in 2008 on customer support
Drive Down ContactsEliminate Root Causes
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2008
$300M in savings more satisfied customers
e nves n a e er cus omer exper ence
Operating smarter: Lower processing costsWe spent $700M in 2008 in processing PayPal transactions
rov nconsumer choice
aunc n newproducts
ANNESSA: INNESSA: I
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dont knowwhere theseimages are
Cards BalanceBank
images areHi her Lower
lowering processing costs reinvestment/comprehension
Operating smarter to create capacity to investHigh growth lower
margin business
Operationalexcellence
Reinvest
perat ng arg n evers
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FX Business Ops Reinvestment
Appendix
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pp
Reconciliation of GAAPto Non-GAAP EPS
December 31, December 31, December 31, December 31, December 31,
(in millions) 2004 2005 2006 2007 2008
GAAP net income (loss) $ 778.2 $ 1,082.1 $ 1,125.6 $ 348.3 $ 1,779.4Stock-based compensation expense 5.8 31.8 317.4 301.8 352.1
we ve on s n e
- . . . . .Amortization of acquired intangible assets (1) 65.9 128.9 214.9 223.7 264.1Restructuring 49 1
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Restructuring - - - - 49.1
Impairment of goodwill - - - 1,390.9 -Gain on sale of equity investment (6.4) (2.3) - - -
Income taxes associated with certain non-GAAP entries (31.5) (50.5) (171.6) (165.4) (202.9)
- . , . , . , . , .
Diluted net income per share:
GAAP net income per diluted share $ 0.57 $ 0.78 $ 0.79 $ 0.25 $ 1.36
Non-GAAP net income per diluted share $ 0.61 $ 0.86 $ 1.05 $ 1.53 $ 1.71
Shares used in non-GAAP diluted share calculation 1,368 1,394 1,425 1,376 1,313
(1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses.
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