e bay 2011analystday_final2

Welcome to eBay‟s 2011 Analyst DayJennifer CeranVice President Investor Relations and Financial Planning & Analysis

February 10, 2011

Forward-Looking StatementThis presentation contains non-GAAP measures relating to the company's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the appendix at the end of this presentation.

This presentation includes forward-looking statements relating to our future performance 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 expected future performance (including, without limitation, projected financial and operating results for the company and its Marketplaces and PayPal businesses), business strategy and plans, as well as anticipated developments concerning our business and industry.

Our actual results may differ materially from those discussed in these presentation for a variety of reasons, including, but not limited to, the after effects of the global economic downturn; changes in political, business, and economic conditions; foreign exchange rate fluctuations; the impact and integration of recent and future acquisitions; our increasing need to grow revenues from existing users in established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise, with a broad range of businesses; 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 upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability.

This presentation also contains product demonstrations, some of which are conceptual and may not be developed or launched in the same form, with all of the same features or at all.

You can find more information about factors that could affect our operating results in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q (available at http://investor.ebayinc.com). You should not rely on any forward-looking statements, and we assume no obligation to update them. All information in the presentation is as of February 10, 2011, and we do not intend, and undertake no duty, to update this presentation.

http://investor.ebayinc.com/

AgendaPresenters TitleJenny Ceran “Welcome and Today’s Agenda”

John Donahoe “eBay and the Changing Commerce Landscape”

Scott Thompson, Ed Eger, Sam Shrauger “The Future of Payments is Now”

Break

John Donahoe, Mark Carges, Doug McCallum, Christopher Payne

“Reinventing the Shopping Experience”

Lunch

Bob Swan “Capitalizing on our Opportunities …3 Yr Outlook”

Senior Management “Question and Answer”

Two years ago

A “different” eBay

The future

An inflection point…

Digital Social

4 trends shape how consumers shop and pay

Mobile Local

Traditional boundaries are blurring

Onlineworld

Offlineworld

Mobile

Promotions & coupons

Mobile eCommerce

Payment

Store location Shopping lists

In-store pricecomparison

Self-scanning & self-checkout

Loyalty

Consumers have a “store in their pocket”

“New retail” demands new ways to reach consumers

Sole proprietors

Small and medium size businesses

Large merchants

Merchants of all sizes must reach buyers in new ways and keep up with innovation

Multi-channel

Globalcompetition

Pace ofinnovation

Millions of buyers

Sole proprietors

Small and medium size businesses

Large merchants

Huge opportunity: Taking the “e” out of ecommerce

2008 = $325B 2013 = $10T

Yesterday Tomorrow

Online 6%

Web-influenced

offline37%

Online+

OfflineOffline

Today

Online 4%

Offline96%

Source: ForresterSource: Forrester, Euromonitor and Economist Intelligence Unit

Source: Economist Intelligence Unit

The new retail future: our unique position

Buyers

eBay

Classifieds

Shopping.com

StubHub

Mobile Apps

PayPal

Sellers

Connected with consumers wherever they are

At home On-the-go

Everywhere

Our merchant footprint is expanding

Offline retailBig brands online

Small business

ConsumerSellers

And our platform assets can enable new opportunities

Buyers Sellers

Developers

eBay Platform

The Next Generation of Commerce Leadership

PayPal Advantages

Unmatched competitive advantages

Significant runway in the core

Expanded opportunity ahead

Marketplaces Advantages

Turning the corner

Technology-led innovation

Sustainable, profitable growth

eBay Inc. Advantages

Synergies with two strong cores

Accelerating innovation

Expanding opportunity set through open commerce platform

Playing offense in new commerce landscape

The Future of Payments is NowScott ThompsonPresident, PayPal

February 10, 2011

The evolving PayPal story

Significant runway in core business

23


Expanding opportunity ahead

2011 Revenue

2009Analyst Day

Forecast

CurrentTrajectory1

2011 Segment Margin

2009Analyst Day

Forecast

CurrentTrajectory1

$4.0-5.0Billion

$4.2+Billion 18-20% Exceed

range

On track to meet 2009 Analyst Day forecasts

24

1. Trajectory based on performance through 2010

$72Billion

$92Billion

2008 2009 2010

$60Billion

TPV growing 3.0 timesfaster than online market1

Growth in Total Payment Volume (TPV)

1. Online market growth based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates

25

1. As of December 31 2. Trailing 12 months

Growth in accounts and engagement

26

Transactions peractive consumer account2

11.5 12.2 13.5

2008 2009 2010

Active accounts1

In millions

70 81 94

2008 2009 2010

Growth in global presence

27

New active accounts% of PayPal global total

Total Payment Volume% of PayPal global total

2008 2010

36% 41%

64% 59%

International

United States

2008 2010

55% 58%

45% 42%

28

Internet Companies

Global Financial Networks

Transforming commerce online

What we said at Analyst Day 2009Unmatched advantages

Internet technology

Fraudexpertise

Global connections

Closed-loop data

29

Internettechnology

Fraudexpertise

Globalconnections

Closed-loopdata

Pace of innovation

Cross-border business

Digital wallet

Openplatform

Where we are todayUnmatched advantages

30

Operating successfully in a regulated environment globally

31

• Support for 190 markets, 24 currencies and 20 local language sites

• Global connections to 15K+ bank partners and 57 financial networks

PayPal‟s position in the ecosystem

32

Financial institutions

Telcos Payment startups

Internet companies

Delivering greater value to consumers

33

Multi-channel payments

Buyer protection

Payment flexibility Global markets

Loyalty benefitsCredit / Bill Me Later

Security

34

Ease of online selling

Higher conversion & sales Less expensive

Cross border Marketing / promotions

Multi-channel payments

Delivering greater value to merchants

2013E2010

2.1B

1.7B Global internet users2

Global onlineretail sales1

$415B

$630B

• Over 50% of Internet users are in developing countries3

• eCommerce is 6% of retail sales in the United States3

• 35% of consumers in Western Europe will have mobile internet access by 20133

Favorable global trends

1. Forrester and Euromonitor; excludes food/grocery and online travel 2. Forrester; 2010 & 2013 data is straight-lined from Forrester 2009 & 2014 estimates 3. Forrester

35

~50 billion connected devices globally in 20201

Video gamesystems

Navigation systems

Mobile phones Televisions

Appliances

eReaders

1. Ericsson forecast

Computers Tablets

Video gamesystems

Computers

Navigation systems

Mobile phones Televisions

Tablets

Appliances

eReaders

PayPal seeks to enable payments across devices and channels

ubiquitousdigital wallet

1. Ericsson forecast

~50 billion connected devices globally in 20201

Lines are blurring between online & offline

38

ubiquitousdigital wallet

Mobile

Online Offline

39

Connected devices will unlock retail sales

2010 Global Retail Sales1

$8+ Trillion

Just 1% of global retail sales is $80B+ in TPV

1. Economist Intelligence Unit excluding food/grocery

How we will achieve our vision

40

Global Merchant Services

Global Marketplaces

Adjacencies & Seeds

Continued strength in core business

41

Marketplaces Merchant Services

1. Calculated based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates; not to scale; excludes Bill Me Later2. As of December 31 3. Trailing 12 months

Success across merchants & consumers

42

PayPal global share1

2008

2010Merchant coverage

Consumer preference

14%

18%

Key metrics

Active sellers

Active accounts2

Transactions / active consumer account3

2008 2010

8M 9M

70M 94M

11.5 13.5

PayPal‟s virtuous cycle

43

Consumer preference

Merchant coverage

Global eCommerce

growth

Increased consumer

engagement

Increased merchant

coverage and penetration


44

Global eCommerce

growth

Increased consumer

engagement

Increased merchant


Powerful partnership with eBay

45

Penetration growing on eBay

46

PayPal penetration on eBay globally (%)

eBay Addressable GMV & PayPal penetration2010

2008 2013E

69% 75-80%58%

2010 United States

85%

International

57%

$19B

$25B

1. Excludes Bill Me Later

Merchant Services gaining volume & share

47

Merchant Services TPV and % of total TPV1

201020092008200720062005

30%35%

42%49%

56%62%

$8B $12B $20B $30B$40B

$56B

$125B+

2013E

Success across merchant segments

48

Share of Global eCommerce1

Share of PayPal merchant accounts1

Small / mediumbusinesses

Sole proprietors

Large merchants

1. Illustrative representation of size

Delivering value for all merchants

49

Small / mediumbusinesses

Merchant segment PayPal value to segment

• All-in-one solution• Competitive pricing• Fraud detection

Sole proprietors • Ease of getting and selling online

Large merchants• More payment options• Multi-channel payments• Higher conversion rates

Better PayPal integration drives volume

50

PayPal # of top 100online merchants1

59

40

30

28

63

Retail

Travel

PayPal large merchants

United States

United Kingdom

Germany

France

Australia

Serving the world‟s largest brands

1. Internal analysis; United States count includes both PayPal and Bill Me Later merchants

51

http://southwest.com/?ref=home_gn

Expanding our global footprint

52

Countries with increased local merchant services presence in 2010-2011

Brazil

Mexico

Turkey

Israel

Norway

Singapore

Malaysia

Sweden

Denmark

$17B $22B

2008 2009 2010

$14B

Connecting sellers and buyers globally

53

$40-45B

2013E

Global Cross Border TPV


54

Global eCommerce

growth

Increased consumer

engagement

Increased merchant


1. As of December 31 2. Trailing 12 months

Engagement drives the business

55

Transactions peractive consumer account2

13.5

2010 2013E

Active accounts1

In millions

94

2010 2013E

130+ 16.5+

Improving engagement for consumers

56

Casual users• Growing coverage where our

consumers shop• Offering Bill Me Later credit

during checkout

New to PayPal• Specialized customer support

team for new members• Updated online tools

Highly engaged

• Dedicated customer support with “white glove” service

• Product investment• PayPal Advantage program

Rewarding our engaged consumers

57

Increasing value to consumers

58

Bill Me Later provides credit to consumers during checkout

Helps merchants drive sales and increase conversion

Helps PayPal drive consumer engagement and preference

Fill up your cart Checkout using Bill Me Later Receive your Bill … Later

Source of new Bill Me Later accounts1

Lift on eBay average order value when paid with Bill

Me Later2

59

1. Q4 2010 2. Q4 2010; includes shipping and handling

Bill Me Later engaging eBay consumers

+25%40%

60%Accounts openedoff-eBay

Accounts openedon-eBay

Driving the core business

60

Merchant Coverage Consumer Engagement

• Penetrating eBay globally

• Strengthening relationships with all merchant segments

• Expanding our global footprint

• Growing cross-border trade

• Moving into new verticals

• Rewarding engaged consumers

• Increasing value delivered to consumers

• Engaging eBay consumers with Bill Me Later

PayPal global share1

Source: Internal PayPal analysis, not to scale

Significant runway in core business

61

2008

2010Merchant coverage

Consumer preference

14%

18%

20-24%2013E

1. Calculated based on 12 countries (US, CA, AU, UK, DE, FR, IT, NL, ES, AT, BE, CH) using Forrester online retail and travel estimates; not to scale; excludes Bill Me Later

Expanding our business through innovation

62

Adjacencies Seeds

The adjacent opportunities are immense

63

Point of sale1

~$8T+Credit2

~$5T+Mobile

Payments3

~$180BDigital Goods4

~$20B

1. Economist Intelligence Unit excluding food/grocery2. Nilson Report3. Juniper Research4. GigaOm

2010 GlobalMarket Size

Bill Me Later (BML) synergies

64

• Improve customer economics

• Lower BML fraud losses

• Lower BML cost of capital

• Increase merchant coverage and speed up merchant sales cycle

• Increase consumer engagement and preference

1. Internal analysis on multiple tests groups each consisting of 5-10K US consumers who signed up for Bill Me Later in July 2010; Engaged defined as 13+ trxns in trailing 12 mos

BML increases spending & engagementAverage spend per

consumer after signing up for Bill Me Later1

Number of “engaged” consumers after signing up

for Bill Me Later1

65

+124%+76%

Continue to grow Bill Me Later

66

Total Payment Volumefor Bill Me Later

$1.3B

$0.9B

2008 2010

Evolving key capabilities to accelerate growth

UnderwritingDecision

PayPal & eBay Data

CreditScore

Risk ModelingEngine

Transaction Details

Merchant History

67

Proprietary Data Superior Insight Incremental Growth

Global launch of Digital Goods platform

68

Digital Goods platform is a payment solution for digital media(e.g. games, software, video, music, news, eBooks)

in PayPal Digital Goods TPV in 2010, up over 50% year-over-year

$3.4B

countries launched the new “PayPal for Digital Goods” product, with key merchants such as Facebook

17

Enabling new monetization models

69

Rapid growth of mobile

70

PayPal Mobile TPVIn millions

2008

$25

2009 2010

$140

$750

2011E

$2,000+

Key priorities to accelerate mobile growth

71

Increase global coverage

Expand mCommerce products and market share

Evolve the mobile wallet

Availability across technologies and platforms

Driving innovation through open platform

72

PayPal payments platform

Accelerating internal innovation•Foundation for new products, services, and markets

• Increased responsiveness to market developments

Enabling external innovation•Global open payment platform•Thousands of engaged developers• Innovative solutions for changing payments landscape

Lines are blurring between online & offline

73

Onlineworld

Offlineworld

Mobile

PayPal powers the digital wallet

74

Traditionalwallet

Financial flexibility &

control

Ubiquitous access across

channels

Financial connections among individuals,

groups & businesses

How we will achieve our vision

75

Global Merchant Services

Global Marketplaces

Adjacencies & Seeds

Expanding our business through innovation


An incredible future

Rapidly growing addressable market

76


The world’s favorite wayto pay and be paid

77

Reinventing the Shopping Experience

John DonahoePresident and Chief Executive Officer, eBay Inc.February 10, 2011

79

What we said in March 2009 …

Transforming our Marketplace... Fixing the foundation

Focusing where we can win… Secondary market

Growing our complementary formats

Today

A “new” eBay

2011 Revenue

2009Analyst Day

Forecast

CurrentTrajectory

2011 Segment Margin

2009Analyst Day

Forecast

CurrentTrajectory

$5-7Billion

35-45%

How have we done?

82

Middle of

range Middle of

range

Adjacencies include Classifieds, Advertising, StubHub and other non-transactional revenue

Marketplaces mix shift...

Q4 20102008

Adjacencies and Vehicles

Auctions

Fixed Price

Adjacencies and Vehicles

Auctions

Fixed Price

Global Revenue

The eBay Strategy

84

Improve Trust

Increase Selection

Develop Tailored Shopping Experiences

Market the eBay experience

Innovate for Customers

Driving Technology, User Experience & InnovationMark CargesSenior Vice President and Chief Technology Officer, MarketplacesFebruary 10, 2011

85

Culture of innovation focused on customer needs

Tailored shopping experiences across categories and devices

World class technology organization delivering greater innovation

Technology: Transforming the shopping experience

86

“Did you fix search?”

“Have you improved the user experience?”

That‟s great, but …

87

Platform

Search

Catalog

User Experience

2009 Priorities

88

Search improvements:

Before & after

89

Catalog enables:

Mobile selling

90

Catalog enables:

Product based experience

91

User experience improvements:

Fashion: Personalization & profiles

92

User experience improvements:

Fashion: Image search

93

Platform improvements:

eBay Mobile(iPad, iPhone, Android, RIM, Windows)

94

96

Highlights of key launches since March 2009

Greatly Improved Search Experience and Relevance

Image Search and Visual Navigation

Hands-down Leader in Mobile Commerce

Fashion Shopping Experience, Fashion Outlet, Fashion VaultMotors Parts and Accessories Shopping Experience

Fitment for Motors Parts and Accessories

Expanding Coverage in Catalogs

Full Product-based Experience in MP3 Players, GPS, and DVDs

Simplified Selling, Tools for Large Sellers, Better Shipping Visibility

New Home Page

eBay Buyer Protection

Deals: Daily Deals, Flash Sales, eBay Bucks, DealFinder

eBay Group Gifts

eBay Garden

Modern Site Design

Instant Sale

eBay Top-Rated Sellers

Tell Us What You Think

Transforming eBay in 2011+

97

User Experience

• Develop search as competitive advantage

• Leverage catalog across eBay

• Simplify selling

• Transform site experience

• Create more tailored shopping experiences

Platform

• Faster innovation

• Mobile: enable access

CatalogSearch

International Marketplaces

Douglas McCallumSenior Vice President, Marketplaces EuropeFebruary 10, 2011

98

This is an extraordinary time for eBay.

99

International: Large growth opportunity

Source: Forrester and Euromonitor; excluding travel US

100

eBay non-vehicle GMV (2010)

eCommerce aggregate growth opportunity, 2011 – 2015 (Est.)

38%

62%

International

US International

190% Larger

$270B

$95B

Increased customer focus by categories

101

Passionate about shopping in their category

Many shared requirements such as easy finding & trusted shopping experience

Some category-specific needs, such as visual browsing & size filters in fashion

Fashion Electronics

Home

eBay strategy is working in the UK

102

Improve Trust

Increase Selection


Market the eBay Experience


UK: Greatly improved trust perception

Video

NPS for Active Buyers

Q4 '09 Q4 '10

% of UK Core GMV from Top-rated sellers

18%

30%

Source: Based on surveys conducted by eBay and a 3rd party vendor

… leading to enhanced customer perception

Top-rated sellers are increasing share of UK

GMV …

103

Q4 „09 Q4 „10

Top Competitor

UK: Dramatic increase in selection

Average weekly fixed price live listings in the UK

2007 2008 2009 2010

104

Significant pricing and search changes

25%

60%

YoYgrowth

105

Featuring leading UK brands & retailers

eBay: A fashionable destination

106

Outlet sellers: Brands people love

107

Integrated marketing drives awareness

Video

108

Innovation in the UK with mobile

2010 quarterly mobile GMV

Q4 '09 Q4 '10

… very attractive to our buyers

A new channel for our sellers …

~260% YoYGrowth

109

2009 2010

19%

Strategy driving share gains in the UK

% YoY growth

Source: Forrester; market growth excludes travel

110

UK eCommerce market growth

eBay vs. UK eCommerce market growth

15%

8%

10%

From a step-change in online fashion …

Applying recipe to other strategic verticals

… to

111

Rolling out to Germany & other European markets

eBay EU plans: Building on UK Fashion

eBay leadership in Germany

Source: Nielsen

112

Unique Visitors vs. #2 Player

1.2x

1.3x

2.4x

1.8x

Apply the strategy to Germany

• eBay Buyer Protection

• C2C & B2C growth• Brands4Friends

• Retail positioning with integrated marketing

• Fashion experience• Electronics experience

• Mobile innovation

113

Improve Trust

Increase Selection




Improve Trust

Increase Selection




2010

Foundation of trust in Germany

114

Higher seller standards• Ramp Top-rated seller penetration

2012+

eBay Buyer Protection program• Raise consumer understanding• Further PayPal penetration • Strengthen Buyer protection

2011

Brands4Friends: Private Sales leader

115

Over 600 direct brand relationships

Flash sales provides retail experience

Selection of brands sold on Brands4Friends.de; Source Brands4Friends.de

NIKESAMSONITEPUMA

MEXXBURTONORWELL

Accelerating Brands4Friends‟ leadership

116

Deals program driving results“Deals” driving velocity in Germany …

… resulting in GMV growth

Q4'09 Q4'10

“Deals” GMV in Germany

117

+170% YoYGrowth

eBay is building on its success in Europe

Extending leadership in UK

Competing in France & Italy

Increasing leadership in Netherlands & Scandinavian

Positioning for growth in Russia & Eastern Europe

Employing strategy in Germany

118

Growth in Asia-Pacific region

Korea: market leadership through Gmarket and IAC

China: leveraging exports business for global customers

Australia: strong business exceeding market growth

Portfolio of marketplaces

Rest of Asia: expanding footprint through partnerships & investments

India: market leading position with significant growth opportunity

119

Global Marketplace enables cross-border trade

~20%of eBay business is

across borders*

120

*As of Q4 2010

Actively managing China & HK exports

GMV of China and Hong Kong Top-rated sellers grew by 33% in Q4 2010 YoY

Facilitate inventory sourcing for Top-rated US sellers

Partner with China and Hong Kong sellers to improve buyer experience

121

Summary: eBay‟s international opportunity

62% of 2010 GMV international

Portfolio of market leading positions

eBay strategy customized by geography

Global Marketplace enables cross-border trade

Expanding within new geographic markets

122

Marketplaces North America

Christopher PayneVice President, Marketplaces North AmericaFebruary 10, 2011

123

Christopher, …

124

“Can eBay compete in the U.S. market?”

125

I believe we can.

126

Our focus

2010: Increased selectionImplemented search, pricing and format changes to increase selection:

127

Jan „10 Dec „10

35M Items

100M Items

Listings in Core Search Results

2010: Improvements driving conversion

128

Q4 '09 Q4 '10

Sold items accelerating

4%

8%

% YoY growth of US Sold Items

2011: Executing on eBay strategy

129

Improve Trust

Increase Selection




Trust: Consistent, trusted marketplace

130

Growing Top-rated Sellers

Removed sub-standard sellers

Launched eBay Buyer Protection

Trust: Results show it is working…

131

Trust: “Safe place to shop”

Best in Class

H2 ‟09

58%

67%

63%

66%

Top buyers

H2 ‟10

Based on surveys conducted by eBay and a Third Party vendor; survey question :“[company‟s site] is a safe place to shop online”

Improving trust on eBay

Top buyers

Best in Class

Trust: Free shipping

132

Percent of sold items with free shipping

5%

33%

Q1 „08 Q4 „10

Increasing Sales with Free Shipping

Selection: Stimulate business selling

Q4 '09 Q4 '10

GMV for Top-rated sellers

+12% Growth

133

Top-rated sellers grew with market

eBay Business Seller: Barnes & Noble

134

Selection: Stimulate consumer selling

Average Buyer Average Buyer who sells

Buyers who sell increase value for eBay

135

Increasing consumer engagement

Customer Value for eBay

136

Selection: eBay Instant Sale

Tailored shopping experience: Customer needs

Shopping behavior differs by category

Want tailored shopping experiences

137

Fashion Tech Tickets Vehicle parts

Launched tailored shopping experiences

138

Electronics

2008 2009 2010

Tailored shopping experience: Tickets

23%CAGR

StubHubGMV

139

Tailored shopping experience: Motors

Motor Parts Business: 10% YoY GMV growth in Q4 '10

Tire center: +18% Conversion rate (Q4 YoY growth)

140

Tailored shopping experience: Fashion

Fashion: 8% YoY GMV growth in Q4 '10

141

Launched tailored shopping experiences

142

Electronics

Innovation: Expanding opportunities

144

MobileSocialLocal

Innovation: Milo & RedLaser integration

Increases selection through local options

Retailers Increases foot traffic and sales

Customers

145

2011: Executing on eBay strategy

146

Improve Trust

Increase Selection




Driving Technology, User Experience & InnovationMark CargesSenior Vice President and Chief Technology Officer, MarketplacesFebruary 10, 2011

147

Innovation: Expanding opportunities

148

MobileSocialLocal

149

Accessing offline inventory online.

Local

150

Increasing selection & options for customers as the lines blur between online and offline commerce

Local

151

Social networking drives shopping behavior.

Social

152

Leveraging the social graph to enable engagement and social commerce

Social

153

Mobile devices make anyplace a store.Mobile

iPhone Fashion App: Virtually try on sunglasses

154

155

Mobile devices make anyplace a store.Mobile

156

Extending leadership position by providing access any time, any place, any device

Mobile

Open Commerce Platform

157

Marketplaces & PayPal have developer networks

Opened platforms to external developer networks

Developer Network

158

Merchant & consumer needs are changing

• to find what they want

• when they want it

• how they want it

Anywhere, anytime

• multiple channels

• demand generation

• fast innovation

Without complexity

Consumers want… Merchants want…

159

eBay has unique assets to address needs

• Payments• Identity

• Demand generation• Inventory• Data/Catalog

160

eBay Inc. – Enabling commerce

161

Capitalizing on our OpportunitiesBob SwanCFOSan Jose

February 10, 2011

Since March „09 Analyst Day... where we are now

Over the next 3 years…

Our framework for execution... PayPal… extending leadership positionMarketplaces… expanding market opportunities

Capital allocation… investing for growth

3 year outlook… what you should expect from us

Agenda …

What we said … Analyst Day Mar‟09

Our aspiration for 2011

$10 - $12 B

$6 to 7 billion

Mid-single digit

Revenue Goal

2011

Free Cash Flow

2009 - 2011

EPS CAGR2009 - 2011

What we said … Analyst Day Mar‟09

* As of March 2009: Direct segment margin does not include ~3-4 points of corporate overhead

$4 - $5BHigh growth & gaining share

$1B+Hyper growth

$5 - $7BGrow at ecommerce rates in‟10, faster in

‟11

Revenue

Directsegment margin*

35% to 45%

18% to 20%

18% to 20%

Keygrowthdriver

Fixed price, Advertising, Classifieds,

Buyer retention

On-eBay penetration,Merchant services,

BML, Mobile

Usersactivity

monetization

What we said … Operational ExcellenceAchieving full potential requires…

Operating smarter

Significant investment

$2B over 3 years

Lower processing costs

Improved customer

experience

Organizationsimplification

Customerretention / loyalty

User experience / search / platform

Improved trust / comprehension

Customer retention / loyalty ...lower take rate

2009 2010 2011 Guidance

On track to deliver …

$8.1B$9.2B

$10.3B – $10.6B

* Ex Skype; reconciliation in appendix

13-14% REVENUE CAGR

Non-GAAPEPS* $1.47 $1.73 $1.90-$1.95

Op Margin* 29.5% 29.5% ~ flat Y/Y

PayPal

Marketplaces

$2.8B

$5.3B

$3.4B

$5.7B

14-15% EPS CAGR

Revenue*

(Jan 19, 2011)

On track to deliver OE cost savings …

2009 2010 2011 Est.

Cost Savings Achieved...

$0.6B

$0.8B

~$1.0B A lower take rate... Align with our sellers

More R&D... Accelerating the rate of innovation

A more trusted experience... eBay / PayPal protections

More loyal customers... Less churn

... while reinvesting wisely

*Reconciliation in appendix

… on track to deliver ... FCF

$2.3B

$2.0B

> $2.3B+2011 Est.

2010

2009

Reduced by ~$350M

one-time tax payments

... cumulative free cash flows > $6.5B

... On track to deliver ... portfolio

Sold 70% of Skype... …Strengthened core businesses

~ $2B Proceeds ~ $2.7B

BML …extend

PayPal reach

Gmarket…expand Asia

presence

dba/BilBasen/Brands4Friends… Alternative formats

Reinvested

... a stronger, more focused portfolio

... we have an increasingly diverse portfolio... By GeographyBy Format...

2010 Revenue

Americas49%

Europe36%

Asia15%

Marketplaces Adjacencies/

Seeds

PayPal Adjacencies/

Seeds

Fixed Price

AuctionsPP on eBay

Merchant Services

Marketplaces

Market growth rates...accelerating!

• On and off-line

• Many devices

• All geographies

Consumers can shop anywhere all the time

The lines of commerce are blurring

... and market trends are in our favor ...

Online 6%

Offline57%

Web-influenced

offline37%

Global eCommerce Y/Y* eCommerce + retail**

** 2010 US forecast, Forrester Research* Global eCommerce growth estimates, Forrester and Euromonitor, excludes online travel

Last ~3 years Next ~3 years

~15%CAGR

... Sellers/merchants need help navigating

Excellent balance sheet

As we enter 2011 …We feel good about where we are:

... See enormous opportunity ahead

Improving macro picture ... Expanding market opportunityA stronger, more diverse portfolio... And a massive global footprintStable “Core”... “Adjacencies” with scale... Seeds” with possibilitiesOps Excellence... The way we work

Growing cash balance... What will you do

... and we recognize the concerns

... We are confident in our plans !!

Increasing competition ... in both e-commerce & payments ... US & Intl.

The Core eBay ... bridging gap to competition without end-to-end control

Evolving regulatory framework ... Durbin ... PayPal margin implications

Agenda …






Our framework for growth ...

Protect and Extend our “Core” Businesses

Expand“Adjacencies”

Plant and Grow “Seeds”

...Leverage our platform... and balance sheet

Our framework for execution ...$1B+ over next 3 years (2011-2013)

Operatingsmarter

Significantinvestment

Lower processing

costs / fraudBetter customer

experience ... Fewer defects

Scale... leverage

Increased consumer engagement

Improved customer experience... more outbound

Accelerate innovation ... more product

Our framework for capital allocation ...

Strategic Acquisitions/ Investments

Organic Investment

Redistribute Excess Cash

~Buyback~

Fund BML growth Strengthen our

portfolio... extend our reach

Offset comp-based dilution

Redistribute Cash

... while maintaining financial flexibility !!

Agenda …






Framework for growth …

181

Credit Digital Mobile P2P

Platform X ... Seeds* Internal analysis; not to scale; excludes Bill Me Later

2008

2010

Mer

chan

t cov

erag

e

Consumer preference

2013E

14%

18%

20-24%PayPal global share*

Accelerate the rate of innovation

Offline...PointOf Sale

Follow our merchants... ... and our customers

LocalSocial

2008

2010

Mer

chan

t cov

erag

e

Consumer preference

2013E

14%

18%

20-24%

PayPal global share*

What do you have to believe ...

182

~40%+

~30%+

~9%+

Merchant Services

Credit

Seeds

2010 2013 Est.

Seeds ... Credit / Other

Adjacencies... Merchant Services

Core ... On eBay

Revenue

$6 - 7B

$3.4B

~24%+Low Mid-high

~35%

~25%

~7%

~21%

CAGR %

Growth on eBay ...

183

A $40B+ TPV Platform in 2013*…

Americas ~85%... stable

Stable aGMV growth…

Europe >60%... + ~10 pts

Asia >80%... stable

CrossBorder >80%... + ~5 ptsTrade

…Increased penetration*

… ~75%+ penetration !!*2007 2008 2009 2010 2011 E 2012 E 2013 E

* Company projections

mid-high single digits

Merchant Services momentum continues ...

184

Credit

Seeds

A $125B+ TPV Platform in 2013*…

Market/SSS Growth… ~ 10-15%

Increased Coverage… ~ 5-10%

Increased Consumer Frequency…

~ 10-15%

~ 25-40%

CAGR %**

2008

2010

Mer

chan

t cov

erag

e

Consumer preference

2013E

14%

18%

20-24%

PayPal global share**

* 2010 to 2013 CAGR: company projections**Internal analysis; not to scale; excludes Bill Me Later

2010 2013 Est.2010 2013 Est. 2010 2013 Est.

New products gain momentum ...

Digital Goods Credit/BML Mobile

nTPVRevenues nTPV

10X+3X+3X+

... and Platform expands opportunities

• 60k developers ... 1,500 apps

• Innovative solutions for changing payments landscape

Developer platform accelerates time to

market…

Enables opportunities we would never

think of…

Enables opportunities we don’t do…

http://www.google.com/imgres?imgurl=http://www.americanwireless.com/images/coop/greendot/GreenDot_OL.gif&imgrefurl=http://www.aaymca.com/green-dot-aaymca-dot-com-20100828/green-dot-i7-princess/&usg=__C6I-o1jC2rjLTXx2qcqVORtOBZg=&h=872&w=872&sz=184&hl=en&start=4&zoom=1&um=1&itbs=1&tbnid=Ejl6RS7H-VS-7M:&tbnh=146&tbnw=146&prev=/images?q=greendot&um=1&hl=en&tbs=isch:1

http://www.google.com/imgres?imgurl=http://www.e3creative.net/images/odesk_logo.png&imgrefurl=http://www.e3creative.net/&usg=__kWD5P1zLnaC7p_dDSXBlgbQXyfo=&h=271&w=702&sz=16&hl=en&start=2&zoom=1&um=1&itbs=1&tbnid=gp9BAb8O8I6NHM:&tbnh=54&tbnw=140&prev=/images?q=odesk&um=1&hl=en&sa=N&tbs=isch:1

PayPal‟s business model …

'08 '09 '10 Future '08 '09 '10 Future '08 '09 '10 Future

Great proposition for merchants

(Global take rate)

Consumer Funding Choice

(Transaction Expense)

Risk management(Transaction losses)

Stable / down declines stable / down

... ~60%+ transaction margin business*

* * *


OE improves customer experience ...

Creates capacity to invest ... and drives operating leverage/efficiency

Consumer Engagement ... Merchant Adoption

(Sales & Marketing % Revenue)

Our Contact/Ops Center...

(% of Revenue)

... Our Product Development cycle

(% of Revenue)

2010 Future 2010 Future

Responsive

Responsive

Outbound

2010 Future

Innovate

Sustain/ Maintain

~8%~11%~10%


* * *

Ops Excellence ... funds investments

Transaction margin marginally lower

Significant operating leverage and process

improvement

Higher R&D... Consumer

engagement

„10 Segment margin ~ 21%...

... Yields „13 segment margin ~ 24-26%** Company projections

In summary, PayPal 2013 outlook

Revenue

Direct segment margin* 24% to 26%

Key growth drivers

Consumer Preferences,

Merchant coverage; New ProductsNew Markets

*Direct segment margin does not include ~3 points of corporate overhead

$6 - $7B (mid-point CAGR: 24%)

High growth & gaining share

Agenda …






Framework for growth ...

TrustTailored Shopping Experiences

EngagementCustomer focus

TechnologyUser experience

Platform... mobile

Accelerate the rate of innovation

New formats

Existing:Advertising, Classifieds, Private sale, StubHub

New:Local, Social

New markets

The core platform...

What do you have to believe ... CAGR %

~12%

~5%

Credit

Seeds

2010 2013 Est.

Adjacent formats / Seeds*

eBay Platform** GMV

Revenue

$7-8B

$5.7B

* Classifieds, Advertising, StubHub, Shopping.com, Rent.com, other** GMV-based transactional business, excluding StubHub

~7%Low

~15%+

~7%+

~10%+Mid-High

Note: All GMV figures are FX-neutral*Company projections

**Growth rates are 2008-2010 CAGR, ex Gmarket

The Core... a ~$75B+* GMV platform in „13

'09 '10 '13 E

Fixed Price expands...

... Auction stable ... ... Vehicles format shift

From 50% to ~70% of GMV...

'09 '10 '13 E

From 50% to ~30% of GMV...

'09 '10 '13 E

Shifting from GMV to lead gen model

Flat ...

The widest selection... The best deals... A trusted experience

Double digit CAGR

** ** **

2010 2013 E2010 2013 E2010 2013 E

Connecting ... with adjacent formats

Classifiedsformat*

Advertising-based format**

Improved Verticals

*Includes Rent.com revenue ** Includes Shopping.com revenue

Double-digit CAGR

Mid-single digit CAGR

Double-digit CAGR

Rev

enue

StubHub

Private sale

Today, a nearly $1.3B collection of businesses...

Rev

enue

Rev

enue

... Expected to grow at ~15% CAGR

“Seeds”... Better conversion... new markets

Organic Innovation

• Mobile / Local / Social

• Group Gifts• Deal Finder• Instant Sale• Deal Blasts

Investments

• Magento• Appcelerator

Acquisitions

• Red Laser• Milo• Critical Path

Software

OE improves customer experience ...

Improved buyer experience

Growing trusted sellers

32%+Q4‟10

% of GMV...

Reducing number of bad buyer experiences

Consistent decline

Q4‟10

BBEs... from Top rated sellers

... with Free Shipping

Satisfaction guaranteed

eBay Buyer Protection

... Lower customer acquisition

... Lower customer service costs; more outbound...

... Increased protection costs

Ops Excellence ... to fund investments

Leverage and Ops Excellence

Faster growing adjacencies

Fund investments in trust, engagement

and innovation

Operating Margin Levers

„10 Segment margin ~ 40%...

... Yields „13 segment margin ~ 38 to 42%** Company projections

In summary, Marketplaces 2013 outlook

Revenue

Direct segment margin* 38% to 42%

Key growth driversTailored shopping

experiences, Local C2C strength, global tickets, Mobile, Offline, Platform


$7 - $8B(mid-point CAGR : 10%)Grow with ecommerce rates, lead innovation

Marketplaces

Agenda …






2008 Ending Balance 2010 Ending Balance

We enter „11 with a strong balance sheet

$7.8B

$3.3B

US$2.7B

Int‟l

$5.1B

FCF:$4.4B

M&A: $3.0B Skype:

$2.0B

Debt:$1.8B

$0.7BBuyback

Change in CashExcellent cash flows... A stronger, more focused portfolio... Lower cost of capital

... and the flexibility and discipline to invest wisely

Our philosophy … in order of priority

Strategic Acquisitions/ Investments

Organic Investment

Redistribute Excess Cash

~Buyback~

Fund BML growth Strengthen our

portfolio... extend our reach

Offset comp-based dilution

Redistribute Cash

... while maintaining financial flexibility !!

Accelerate strategic priorities with M&A ...

Expand our geographic

footprint

Marketplaces:Alternate formats... tailored shopping

experiences...

PayPal:Digital wallet … • Merchant growth

“enablers”; • Low cost processor

capabilities• Risk analytics

… while pursuing Technology/Talent-based acquisitions to accelerate organic plans

Capitalize on key market trends …• Mobile • Social • Local• Digital

... Enhancing our platform for commerce …

Recent acquisitions ... future growth

Local Shopping … Milo.com

• Enter new adjacency

• Real-time availability of local inventory

• Brings offline inventory online

• Integration with eBay.com and RedLaser mobile app

Private Sales … Brands4Friends

• Participate in fastest-growing channel for secondary CSA in Europe

• Strengthens position as a leading online fashion destination in Europe

Mobile Development … Critical Path

Software

• Accelerates organic plans with technology & talent acquisition

• Increases mobile talent, capacity and capabilities

Investments … to enhance opportunities

Geographic Reach

Adjacencies Non-Core

http://en.wikipedia.org/wiki/File:Mercado_libre_logo.png

http://upload.wikimedia.org/wikipedia/en/6/65/Skype_logo2.svg

http://en.wikipedia.org/wiki/File:Magento_logo.png

http://www.billfloat.com/

http://www.freshbooks.com/

http://rds.yahoo.com/_ylt=A0S020kqbDtNbgUAuLCJzbkF;_ylu=X3oDMTBpdnJhMHUzBHBvcwMxBHNlYwNzcgR2dGlkAw--/SIG=1kn769u04/EXP=1295826346/**http:/images.search.yahoo.com/images/view?back=http://images.search.yahoo.com/search/images?p=appcelerator&ei=UTF-8&fr=yfp-t-946&fr2=tab-web&w=2550&h=505&imgurl=www.pitchengine.com/brands/appcelerator/logos/appceleratorlogoR.png&rurl=http://www.pitchengine.com/appcelerator/appcelerator-titanium-releases-for-general-availability/50718/&size=69KB&name=Appcelerator+Tit...&p=appcelerator&oid=9f5a690a384da31b4ee4116c04a6d0e6&fr2=tab-web&no=1&tt=1990&sigr=136n6snmc&sigi=123ura8dj&sigb=12t26mj9t&.crumb=LU521/i4UHe

Agenda …






Our 3 year outlook to 2013

Revenue

Directsegment margin*

24% to 26%

Keygrowth

driver


$6 - $7B (mid-point CAGR: 24%)

High growth & gaining share

38% to 42%

Tailored shopping experiences, Local C2C strength, global tickets, Mobile, Offline, Platform

$7 - $8B(mid-point CAGR : 10%)Grow with ecommerce rates, lead innovation

Consumer Preferences,

Merchant coverage; New ProductsNew Markets

Marketplaces

Our aspiration for 2013

$13B - $15BRevenue Goal2013

Free Cash Flow2011 - 2013

Non-GAAP EPS CAGR

2010 – 2013**

10 - 14%

$7.5 to 8.5B*

*Reconciliation in appendix**CAGR is measured using 2010 as the base

Summary …

Incredible opportunity

Well positioned … unmatched competitive advantages

Accelerating innovation

APPENDIX

Reconciliation of GAAP to Non-GAAP EPS

December 31, December 31, December 31, December 31, December 31,(In millions, except per share amounts) 2006 2007 2008 2009 2010

GAAP net income (loss) $ 1,125.6 $ 348.3 $ 1,779.4 $ 2,389.1 $ 1,801.0 Stock-based compensation expense 317.4 301.8 352.1 394.8 381.5 Employer payroll taxes on stock-based compensation 5.3 6.9 3.1 5.3 13.8 Amortization of acquired intangible assets (1) 214.9 223.7 264.1 314.8 229.9 Restructuring - - 49.1 38.2 21.4 Impairment of goodwill - 1,390.9 - - - Joltid settlement - - - 343.2 - Sale of Skype and transaction related items - - - (1,407.5) 18.1 Amortization of intangibles and stock-based compensation for Skype - - - - 35.8 Income taxes associated with certain non-GAAP entries (171.6) (165.4) (202.9) (12.1) (202.8)

Non-GAAP net income $ 1,491.6 $ 2,106.2 $ 2,244.9 $ 2,065.8 $ 2,298.7 Non-GAAP net income attributable to Skype - - - (147.0) - Non-GAAP net income excluding Skype $ 1,491.6 $ 2,106.2 $ 2,244.9 $ 1,918.8 $ 2,298.7

Diluted net income per share:

GAAP $ 0.79 $ 0.25 $ 1.36 $ 1.83 $ 1.36 Non-GAAP $ 1.05 $ 1.53 $ 1.71 $ 1.58 $ 1.73 Non-GAAP excluding Skype $ - $ - $ - $ 1.47 $ 1.73

Shares used in non-GAAP diluted share calculation 1,425 1,376 1,313 1,305 1,327

(1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses.

Twelve Months EndedReconciliation of GAAP EPS to Non-GAAP EPS

Calculation of Free Cash Flow (FCF)

December 31, December 31, December 31, December 31, December 31,(in millions) 2006 2007 2008 2009 2010

GAAP operating cash flow $ 2,247.8

$ 2,641.3

$ 2,882.0

$ 2,908.1

$ 2,745.8

Purchases of property and equipment, net (515.4) (454.0) (565.9) (567.1) (723.9)

Free cash flow $ 1,732.4

$ 2,187.3

$ 2,316.1

$ 2,341.0

$ 2,021.9

Reconciliation of Operating Cash Flow to Free Cash FlowTwelve Months Ended

Reconciliation of FY 2011 and FY2011-FY2013 Free Cash Flow (FCF) projection

Twelve Months Ended 3 Years Total(in Billions) 31-Dec-2011 FY2011 - FY2013

GAAP operating cash flow ~3.1B $10B - $11.3B

Purchases of property and equipment, net ~($0.8B) ($2.5B - $2.8B)

Free cash flow ~$2.3B $7.5B to $8.5B

Reconciliation of Operating Cash Flow to Free Cash Flow

Calculation of ROIC

(in thousands, except percentages)

Numerator components: Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10Non-GAAP operating income 593,445$ 594,664$ 593,445$ 754,979$ 701,364$ 700,487$ 674,318$ 667,958$ 620,347$ 602,252$ 635,468$ 694,976$ 672,852$ 645,650$ 644,997$ 736,729$ Non-GAAP effective tax rate 26% 25% 10% 24% 23% 22% 17% 24% 22% 20% 21% 16% 22% 21% 21% 8%Non-GAAP operating income after tax 441,523$ 447,544$ 531,845$ 576,276$ 540,892$ 549,673$ 559,684$ 508,685$ 485,732$ 482,223$ 505,197$ 580,791$ 524,286$ 510,967$ 509,806$ 674,789$

Denominator components: Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10Total assets 13,920,051 14,361,157 14,786,812 15,366,037 15,046,305 15,021,625 14,240,157 15,592,439 15,127,787 16,566,289 17,356,372 18,408,320 18,690,178 18,747,584 19,948,062 22,003,762 Total cash, cash equivalents and investments 3,519,880 3,793,677 4,461,775 5,035,692 4,108,141 4,181,717 3,777,482 3,458,840 3,326,805 3,134,478 3,638,587 6,325,569 6,505,468 6,725,768 7,463,927 9,114,826 Current liabilities 2,250,571 2,328,643 3,272,867 3,099,579 3,080,432 3,006,234 2,854,733 3,705,087 3,159,924 3,730,364 3,646,678 3,641,968 3,587,011 3,564,261 3,808,909 4,516,514

TTM Non-GAAP operating income after tax 1,518,940$ 1,633,595$ 1,827,615$ 1,997,188$ 2,096,556$ 2,198,685$ 2,226,524$ 2,158,933$ 2,103,774$ 2,036,324$ 1,981,837$ 2,053,943$ 2,092,498$ 2,121,242$ 2,125,851$ 2,219,848$ TTM average total assets 13,339,193 13,697,718 14,005,030 14,385,614 14,696,072 14,916,387 14,892,187 15,053,313 15,005,663 15,309,659 15,776,609 16,610,241 17,229,789 17,953,749 18,630,103 19,559,581 TTM 95% of average cash, cash equivalents and investments3,486,641 3,536,980 3,622,670 3,858,237 3,974,641 4,100,390 4,097,313 3,906,756 3,582,067 3,397,071 3,293,876 3,778,013 4,356,872 5,002,675 5,825,271 6,865,756 TTM average current liabilities 2,078,113 2,207,540 2,518,232 2,694,011 2,806,418 2,957,551 3,062,769 3,149,213 3,161,282 3,291,268 3,419,357 3,576,804 3,553,189 3,634,056 3,649,765 3,823,733 ROIC 19.5% 20.5% 23.2% 25.5% 26.5% 28.0% 28.8% 27.0% 25.5% 23.6% 21.9% 22.2% 22.5% 22.8% 23.2% 25.0%

(in thousands, except percentages)2007 2008 2009 2010

TTM Non-GAAP operating income after tax 1,997,188$ 2,158,933$ 2,053,943$ 2,219,848$ TTM average total assets 14,385,614 15,053,313 16,610,241 19,559,581 TTM 95% of average cash, cash equivalents and investments3,858,237 3,906,756 3,976,856 6,865,756 TTM average current liabilities 2,694,011 3,149,213 3,576,804 3,823,733 ROIC 25.5% 27.0% 22.7% 25.0%

Reconciliation of Return of Invested Capital (ROIC)In millions, except percentages

Full Year Ended December 31,

Reconciliation of FY 2011 GAAP to Non-GAAP Guidance (Jan. 19, 2011)

(in millions, except per share amounts) GAAP Non-GAAP (a)Revenues $2,400 - $2,500 $2,400 - $2,500Diluted EPS $0.34 - $0.36 $0.44 - $0.46

(in millions, except per share amounts) GAAP Non-GAAP (b)Revenues $10,300 - $10,600 $10,300 - $10,600

Diluted EPS $1.56- $ 1.61 $1.90 - $1.95

(a) Estimated non-GAAP amounts above for the three months ending March 31, 2011, reflect theadjustments that exclude the estimated amortization of acquired intangible assets of approximately$50 - $60 million, estimated stock-based compensation expense and employer payroll taxes onstock-based compensation expense of approximately $110 - $130 million and estimatedrestructuring charges of approximately $1 million.

Full Year Ending December 31, 2011

(b) Estimated non-GAAP amounts above for the twelve months ending December 31, 2011, reflectadjustments that exclude the estimated amortization of acquired intangible assets of approximately$200 - $240 million, estimated stock-based compensation expense and employer payroll taxes onstock-based compensation expense of approximately $420 - $460 million and estimated restruturingcharges of approximately $1 million.

Three Months Ending March 31, 2011

e bay 2011analystday_final2

Documents