EBAY INC

Previous wording

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the condensed consolidated financial statements and the related notes included in this report. This section of this Form 10-Q generally discusses items relating to the three and nine-month periods ended September 30, 2024 and 2023 and comparisons between the respective periods.

Current wording

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the condensed consolidated financial statements and the related notes included in this report. This section of this Form 10-Q generally discusses items relating to the three-month periods ended March 31, 2025 and 2024 and comparisons between the respective periods.

Previous wording

eBay Inc. is a global commerce leader that connects people and builds communities to create economic opportunity for all. Our technology empowers millions of buyers and sellers in more than 190 markets around the world, providing everyone the opportunity to grow and thrive. Our Marketplace platforms, including our online marketplace located at www.ebay.com and its localized counterparts, our off-platform businesses in Japan and the United States, and our suite of mobile apps, together, create one of the world's largest and most vibrant marketplaces for discovering great value and unique selection.

Current wording

eBay Inc. is a global commerce leader that connects people and builds communities to create economic opportunity for all. Our technology empowers millions of buyers and sellers in more than 190 markets around the world, providing everyone the opportunity to grow and thrive. Our Marketplace platforms, including our online marketplace located at www.ebay.com and its localized counterparts, our off-platform marketplaces and our suite of mobile apps, together, create one of the world's largest and most vibrant marketplaces for discovering great value and unique selection.

Previous wording

We present foreign exchange neutral (“FX-Neutral”) net revenues to supplement our results of operations presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and to enhance investors’ understanding of our global business performance by excluding the positive or negative year-over-year impact of foreign currency movements on reported net revenues. We define FX-Neutral net revenues as GAAP net revenues minus the exchange rate effect, which we calculate by applying prior period foreign currency exchange rates to current year transactional currency amounts, excluding hedging activity. We believe presenting FX-Neutral net revenues provides useful information to both management and investors by isolating the effects of foreign currency exchange rate fluctuations that may not be indicative of our core operating results. In addition, because we have historically reported certain FX-Neutral results to investors, we believe that the inclusion of these FX-Neutral measures provides consistency in our financial reporting. FX-Neutral net revenues are non-GAAP financial measures that are not based on any comprehensive set of accounting rules or principles and may be calculated differently than other “FX-Neutral,” “constant currency” or similarly titled measures used by other companies. FX-Neutral net revenues are not presented as an alternative to GAAP net revenues and should only be used to evaluate our results of operations in conjunction with GAAP net revenues.

Current wording

In addition to presenting net revenues in accordance with U.S. generally accepted accounting principles (“GAAP”), we also present foreign exchange neutral (“FX-Neutral”) net revenues to supplement our results of operations presented in accordance with GAAP and to enhance investors’ understanding of our global business performance by excluding the positive or negative year-over-year impact of foreign currency movements on reported net revenues. We define FX-Neutral net revenues as GAAP net revenues minus the exchange rate effect, which we calculate by applying prior period foreign currency exchange rates to current year transactional currency amounts, excluding hedging activity. We believe presenting FX-Neutral net revenues provides useful information to both management and investors by isolating the effects of foreign currency exchange rate fluctuations that may not be indicative of our core operating results. In addition, as we have historically reported certain FX-Neutral results to investors, we believe that continuing to include these FX-Neutral measures provides consistency in our financial reporting. FX-Neutral net revenues are non-GAAP financial measures that are not based on any comprehensive set of accounting rules or principles and may be calculated differently than other “FX-Neutral,” “constant currency,” or similarly titled measures used by other companies. FX-Neutral net revenues are not presented as an alternative to GAAP net revenues and should only be used to evaluate our results of operations in conjunction with GAAP net revenues.

Previous wording

Net revenues increased 3% to $2,576 million during the three months ended September 30, 2024 compared to the same period in 2023. FX-Neutral net revenues (as defined above) increased 3% during the three months ended September 30, 2024 compared to the same period in 2023. Operating margin increased to 23.1% for the three months ended September 30, 2024 compared to 18.2% for the same period in 2023.

Current wording

Net revenues increased 1% to $2,585 million for the three months ended March 31, 2025 compared to $2,556 million during the same period in 2024. Operating margin decreased to 23.8% compared to 24.7% during the same period in 2024.

Previous wording

We generated cash flow from continuing operating activities of $755 million during the three months ended September 30, 2024 compared to $862 million in the same period in 2023.

Current wording

We generated cash flow from continuing operating activities of $787 million for the three months ended March 31, 2025 compared to $615 million in the same period in 2024.

Previous wording

In January 2023, we repaid the $1.2 billion aggregate principal amount of the floating rate and 2.750% senior notes due 2023 on the date of maturity.

Current wording

In March 2025, we repaid the $800 million aggregate principal amount of our previously outstanding 1.900% senior notes due 2025 on the date of maturity.

Previous wording

In October 2024, our Board of Directors (our “Board”) declared a quarterly cash dividend of $0.27 per share of common stock to be paid on December 13, 2024 to stockholders of record as of November 29, 2024.

Current wording

In April 2025, our Board of Directors (our “Board”) declared a quarterly cash dividend of $0.29 per share of common stock to be paid on June 13, 2025 to stockholders of record as of May 30, 2025.

Previous wording

We have one reportable segment to reflect the way management and our chief operating decision maker review and assess performance of the business. Our reportable segment is Marketplace, which includes our online marketplace located at www.ebay.com and its localized counterparts, our off-platform businesses in Japan and the United States, and our suite of mobile apps. The accounting policies of our segment are the same as those described in “Note 1 — The Company and Summary of Significant Accounting Policies” in our condensed consolidated financial statements included in this report.

Current wording

We have one reportable segment, which reflects how our chief operating decision maker (“CODM”), our President and Chief Executive Officer, reviews and assesses performance of the business. This reportable segment includes our online marketplace located at www.ebay.com and its localized counterparts, our off-platform marketplaces and our suite of mobile apps. The accounting policies of this segment are the same as those described in “Note 1 — The Company and Summary of Significant Accounting Policies” in our condensed consolidated financial statements included elsewhere in this report.

Previous wording

Net revenues primarily include final value fees, feature fees, fees to promote listings, payment services fees, listing fees, and store subscription fees from sellers on our platforms. Our net revenues also include revenues from the sale of advertisements, revenue sharing arrangements and shipping fees. Our net revenues are reduced by incentives, including discounts, coupons and rewards, provided to our customers.

Current wording

Marketplace revenues primarily consist of commissions related to the connection service including final value fees, listing fees, feature fees, and foreign exchange fees. Marketplace revenues also include store subscription fees, shipping fees, and certain other fees. Marketplace revenues are reduced by customer incentive programs, including discounts, coupons, and rewards.

Previous wording

We expect transaction activity patterns on our platforms to trend with general consumer buying patterns and expect that these trends will continue. Seasonal trends in net revenues may be influenced by macroeconomic conditions as well as the introduction and scaling of new products. The following table presents our total net revenues and the sequential quarterly movements of these net revenues for the periods indicated (in millions, except percentages):

Current wording

We expect volume on our Marketplace platforms to trend with general consumer buying patterns. Seasonal trends in net revenues have been influenced by macroeconomic conditions, foreign exchange rate fluctuations, as well as the introduction and scaling of new products and initiatives. The following table presents our total net revenues and the sequential quarterly movements of these net revenues for the periods indicated (in millions, except percentages):

Previous wording

Revenues are attributed to U.S. and international geographies primarily based upon the country in which the customer is located. The following table presents net revenues by geography for the periods indicated (in millions, except percentages):

Current wording

Revenues are attributed to the United States and international geographies primarily based upon the country in which the customer is located. The following table presents net revenues by geography for the periods indicated (in millions, except percentages):

Previous wording

(1)Net revenues included $11 million and $31 million of hedging losses during the three and nine months ended September 30, 2024, respectively, compared to $2 million and $45 million of hedging gains during the same periods in 2023.

Current wording

(1)Net revenues included $8 million of hedging gains for the three months ended March 31, 2025 compared to $10 million of hedging losses during the same period in 2024.

Previous wording

(2)Foreign currency movements relative to the U.S. dollar had unfavorable impacts of $6 million and $3 million on net revenues during the three and nine months ended September 30, 2024, respectively, compared to a favorable impact of $43 million and an unfavorable impact of $11 million during the same periods in 2023. The effect of foreign currency exchange rate movements during the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily attributable to the strengthening of the U.S. dollar against the euro and other major currencies.

Current wording

(2)Foreign currency movements relative to the U.S. dollar had an unfavorable impact of $21 million for the three months ended March 31, 2025 compared to a favorable impact of $14 million during the same period in 2024. The effect of foreign currency exchange rate movements for the three months ended March 31, 2025 compared to the same period in 2024 was primarily attributable to the strengthening of the U.S. dollar against the euro and other major currencies.

Previous wording

Our commerce platforms operate globally, resulting in certain revenues that are denominated in foreign currencies, primarily the British pound and euro. Year-over-year appreciation or depreciation of the U.S. dollar may have a material impact to our financial results. We experienced elevated foreign currency volatility which we expect to continue throughout 2024. Through our hedging programs, we actively monitor foreign currency volatility and attempt to mitigate significant risk. As shown in the table above, we generate approximately half of our net revenues internationally. Therefore, we are subject to the risks related to conducting business in foreign countries as discussed in “Part I — Item 1A: Risk Factors” of the 2023 Form 10-K.

Current wording

Our Marketplace platforms operate globally, resulting in certain revenues that are denominated in foreign currencies, primarily the British pound and euro. Year-over-year appreciation or depreciation of the U.S. dollar may have a material impact to our financial results as we have experienced and may continue to experience elevated foreign currency volatility in the future, including as a result of tariffs and related global trade announcements. Through our hedging programs, we actively monitor foreign currency volatility and attempt to mitigate significant movements. As shown in the table above, we generate approximately half of our net revenues internationally. Therefore, we are subject to the risks related to conducting business in foreign countries as discussed in “Part I — Item 1A: Risk Factors” of the 2024 Form 10-K.

Previous wording

GMV consists of the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes. Despite GMV’s divergence from revenue, we still believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our platforms in a given period.

Current wording

GMV consists of the total value of all paid transactions between users on our Marketplace platforms during the applicable period inclusive of shipping fees and taxes. We believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our Marketplace platforms in a given period.

Previous wording

Take rate is defined as net revenues divided by GMV and represents net revenues as a percentage of overall volume on our platforms. We believe that take rate provides a useful measure of our ability to monetize volume through marketplace services on our platforms in a given period. We use take rate to identify key revenue drivers on our marketplace.

Current wording

Take rate is defined as net revenues divided by GMV and represents net revenue as a percentage of overall volume on our Marketplace platforms. We believe that take rate provides a useful measure of our ability to monetize volume through services on our Marketplace platforms in a given period. We use take rate to identify key revenue drivers.

Previous wording

(1)Net revenues included $11 million and $31 million of hedging losses during the three and nine months ended September 30, 2024, respectively, compared to $2 million and $45 million of hedging gains during the same periods in 2023.

Current wording

(1)Net revenues included $8 million of hedging gains for the three months ended March 31, 2025 compared to $10 million of hedging losses during the same period in 2024.

Previous wording

During the three and nine months ended September 30, 2024, the increase in net revenues was primarily due to higher GMV and the expansion of promoted listings products, eBay International Shipping and financial services offered to buyers and sellers within our payments platform. Net revenues and GMV increased despite the impact of dynamic discretionary spending trends resulting from geopolitical events, inflationary pressure, foreign exchange rate volatility, elevated interest rates and lower consumer confidence.

Current wording

The increase in net revenues for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to higher GMV and the expansion of promoted listings products, partially offset by changes to fee structure in certain markets.

Previous wording

Cost of net revenues represents costs associated with customer support, site operations and payment processing. Significant components of these costs primarily consist of employee compensation (including stock-based compensation), contractor costs, facilities costs, depreciation of equipment and amortization expense, bank transaction fees, credit card interchange and assessment fees, authentication costs, shipping costs and digital services tax. The following table presents cost of net revenues for the periods indicated (in millions, except percentages):

Current wording

Cost of net revenues represents costs associated with customer support, site operations and payment processing. Significant components of these costs primarily consist of employee compensation (including stock-based compensation), contractor costs, facilities costs, depreciation of equipment and amortization expense, bank transaction fees, credit card interchange and assessment fees, authentication costs, shipping costs and indirect tax expenses. The following table presents cost of net revenues for the periods indicated (in millions, except percentages):

Previous wording

(1)Cost of net revenues were net of immaterial hedging activity during the three and nine months ended September 30, 2024 and 2023, respectively.

Current wording

(1)Cost of net revenues were net of immaterial hedging activity for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

(2)Foreign currency movements relative to the U.S. dollar had unfavorable impacts of $1 million and $3 million on cost of net revenues during the three and nine months ended September 30, 2024, respectively, compared to an unfavorable impact of $8 million and a favorable impact of $7 million during the same periods in 2023.

Current wording

(2)Foreign currency movements relative to the U.S. dollar had a favorable impact of $5 million on cost of net revenues for the three months ended March 31, 2025 compared to an unfavorable impact of $3 million during the same period in 2024.

Previous wording

The increase in cost of net revenues during the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to a $21 million increase related to indirect tax matters, a $15 million increase in cost of promoted listings products and an $8 million increase in site operations costs, partially offset by a $16 million decrease in payment processing costs driven by rate improvements and a $14 million decrease in depreciation expense due to the change in our estimate of the useful lives for our servers and networking equipment.

Current wording

The increase in cost of net revenues for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to an $18 million increase in depreciation expense due to the prior year benefit related to the change in useful lives of our servers and networking equipment and a $14 million increase in cost of promoted listings products, partially offset by a $10 million decrease in payment processing costs driven by rate improvements.

Previous wording

(2)Foreign currency movements relative to the U.S. dollar had an unfavorable impact of $1 million and a favorable impact of $2 million on operating expenses during the three and nine months ended September 30, 2024, respectively, compared to an unfavorable impact of $8 million and a favorable impact of $33 million during the same periods in 2023.

Current wording

(1)Foreign currency movements relative to the U.S. dollar had a favorable impact of $12 million on operating expenses for the three months ended March 31, 2025 compared to an unfavorable impact of $4 million during the same period in 2024.

Previous wording

Sales and marketing expenses primarily consist of advertising and marketing program costs (both online and offline), employee compensation (including stock-based compensation), certain user coupons and rewards, contractor costs, facilities costs and depreciation on equipment. Online marketing expenses represent traffic acquisition costs in various channels such as paid search, affiliates marketing and display advertising. Offline advertising primarily includes brand campaigns and buyer/seller communications.

Current wording

Sales and marketing expenses primarily consist of marketing program costs, employee compensation (including stock-based compensation), certain user coupons and rewards, contractor costs, facilities costs and depreciation on equipment. Marketing program costs represent traffic acquisition costs in various channels such as paid search, affiliates marketing and display advertising, as well as brand campaigns and buyer/seller communications.

Previous wording

Product development expenses primarily consist of employee compensation (including stock-based compensation), contractor costs, facilities costs and depreciation on equipment. Product development expenses are net of required capitalization of major platform and other product development efforts, including the development and maintenance of our technology platform. Our top technology priorities include improving seller tools and buyer experiences across our platforms powered by intelligent computing at scale.

Current wording

Product development expenses primarily consist of employee compensation (including stock-based compensation), contractor costs, facilities costs and depreciation on equipment. Product development expenses are net of required capitalization of major platform and other product development efforts, including the development and maintenance of our technology platform. Our top technology priorities include improving seller tools and buyer experiences across our Marketplace platforms powered by intelligent computing at scale.

Previous wording

The decrease in product development expenses during the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to a decrease in employee-related costs. While employee costs are decreasing, we continue to invest in strategic areas such as browsing experience, search optimization and providing relevant recommendations to enhance the experience for our customers around the world.

Current wording

The increase in product development expenses for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to an increase in employee-related costs as we continue to invest in strategic areas such Artificial Intelligence (“AI”) to make our marketplace more efficient and intuitive.

Previous wording

Capitalized internal use and platform development costs were $27 million and $84 million during the three and nine months ended September 30, 2024, respectively, compared to $28 million and $86 million during the same periods in 2023. These costs are primarily reflected as a cost of net revenues when amortized in future periods.

Current wording

Capitalized internal use and platform development costs were $28 million for the three months ended March 31, 2025 compared to $29 million during the same period in 2024. These costs are primarily reflected as a cost of net revenues when amortized in future periods.

Previous wording

Provision for transaction losses primarily consists of transaction loss expense associated with our buyer protection programs, losses from our managed payments services, fraud and bad debt expense. We expect our provision for transaction losses to fluctuate depending on many factors, including changes to our protection programs and the impact of regulatory changes.

Current wording

Provision for transaction losses consists primarily of losses resulting from our buyer protection programs, chargebacks for unauthorized credit card use, and merchant related chargebacks due to non-delivery of goods or services. We expect our provision for transaction losses to fluctuate depending on many factors, including changes to our protection programs and macroeconomic conditions.

Previous wording

We recorded $199 million of aggregate gains in gain (loss) on equity investments and warrant, net on our condensed consolidated statement of income during the three months ended September 30, 2024 compared to $1,212 million of aggregate gains recorded during the same period in 2023.

Current wording

Loss on equity investments and warrant, net

Previous wording

Gain (loss) on equity investments and warrant, net primarily consists of gains and losses related to our various types of equity investments, including our equity investments in Adevinta ASA (“Adevinta”) and Gmarket Global LLC (“Gmarket”), and gains and losses due to changes in fair value of the warrant received from Adyen N.V. (“Adyen”) and the Aurelia Option (as defined in “Note 5 — Investments”). The following table presents gain (loss) on equity investments and warrant, net for the periods indicated (in millions, except percentages):

Current wording

Loss on equity investments and warrant, net primarily consists of gains and losses related to our various types of equity investments, including our equity investments in Adevinta ASA (“Adevinta”) and Gmarket Global LLC (“Gmarket”), and gains and losses due to changes in fair value of the warrant received from Adyen N.V. (“Adyen”). The following table presents Loss on equity investments and warrant, net for the periods indicated (in millions, except percentages):

Previous wording

The change in gain (loss) on equity investments and warrant, net during the three months ended September 30, 2024 compared to the same period in 2023 was primarily driven by the change in the fair value of our equity investments and the warrant as well as the change in fair value of the Aurelia Option.

Current wording

The change in Loss on equity investments and warrant, net for the three months ended March 31, 2025 compared to the same period in 2024 was primarily driven by the changes in fair value of our equity investments and the warrant. Refer to “Note 5 — Investments” for further details about our equity investments and “Note 6 — Derivative Instruments” for further details about the warrant.

Previous wording

Interest expense primarily consists of interest charges on amounts borrowed, commitment fees on unborrowed amounts under our credit agreement and interest expense on our outstanding debt securities and commercial paper, if any. Interest income and other, net primarily consists of interest earned on cash, cash equivalents and investments, gains and losses on foreign exchange transactions and transaction costs on acquisitions. The following table presents interest expense and interest income and other, net for the periods indicated (in millions, except percentages):

Current wording

Interest expense primarily consists of interest charges on amounts borrowed, commitment fees on unborrowed amounts under our credit agreement and interest expense on our outstanding debt securities and commercial paper, as applicable. Interest income and other, net primarily consists of interest earned on cash, cash equivalents, investments and customer accounts, gains and losses on foreign exchange transactions and transaction costs of acquisitions. The following table presents interest expense and interest income and other, net for the periods indicated (in millions, except percentages):

Previous wording

Interest expense decreased during the three and nine months ended September 30, 2024, primarily due to a lower average notional amount of outstanding debt compared to the same periods in 2023.

Current wording

Interest expense decreased for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to a lower average notional amount of outstanding debt.

Previous wording

Interest income increased during the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily due to higher yields on interest bearing instruments.

Current wording

Interest income increased for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to a higher average notional amount of fixed-income investments.

Previous wording

The following table presents provision for income taxes for the periods indicated (in millions, except percentages):

Current wording

The following table presents provision for income taxes and the effective tax rate for the periods indicated (in millions, except percentages):

Previous wording

The decrease in our effective tax rate for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to the excess tax benefits on stock-based compensation.

Current wording

The increase in our effective tax rate for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to a California court ruling related to apportionment of dividends during the first quarter of 2024, partially offset by an increase of excess benefits on stock-based compensation.

Previous wording

Our operating cash flows arise primarily from cash received from our customers on our platforms offset by cash payments for sales and marketing, employee compensation and payment processing expenses.

Current wording

Our operating cash flows arise primarily from cash received from our customers on our Marketplace platforms offset by cash payments for sales and marketing, employee compensation and payment processing expenses.

Previous wording

Cash provided by continuing operating activities of $1.7 billion in the nine months ended September 30, 2024 compared to cash provided by continuing operating activities of $2.3 billion in the nine months ended September 30, 2023 was primarily attributable to working capital movements and changes in non-cash items during the nine months ended September 30, 2024 compared to the same period in 2023.

Current wording

Cash provided by continuing operating activities of $787 million for the three months ended March 31, 2025 compared $615 million for the three months ended March 31, 2024 was primarily attributable to working capital movements.

Previous wording

Cash provided by continuing investing activities of $951 million in the nine months ended September 30, 2024 was primarily attributable to proceeds of $10.4 billion from the maturities and sales of investments and proceeds of $2.4 billion from the sale of our equity investment in Adevinta, partially offset by cash paid for investments of $11.5 billion and property and equipment of $341 million.

Current wording

Cash provided by continuing investing activities of $1.3 billion for the three months ended March 31, 2025 was primarily attributable to proceeds of $4.6 billion from the maturities of investments, partially offset by cash paid for investments of $3.0 billion and property and equipment of $143 million.

Previous wording

Cash used in continuing financing activities of $2.8 billion in the nine months ended September 30, 2024 was primarily attributable to cash paid to repurchase $2.2 billion of common stock, repayment of the $750 million aggregate principal amount of our previously outstanding 3.450% senior notes and $405 million paid in cash dividends, partially offset by borrowings under our commercial paper program of $441 million.

Current wording

Cash used in continuing financing activities of $1.2 billion for the three months ended March 31, 2025 was primarily attributable to the repayment of the $800 million aggregate principal amount of our previously outstanding 1.900% senior notes due 2025, $615 million paid to repurchase common stock, the $441 million repayment of commercial paper, and $134 million paid in cash dividends, partially offset by proceeds of $568 million from the issuance of commercial paper.