Private Equity Solutions

eBay Inc. Announces Second Quarter 2004 Financial Results with Company Reports Record Q2 Net Revenues of $773.4 Million, Up 52% Year Over Year

Achieves Q2 GAAP Diluted EPS of $0.28 and Pro Forma Diluted EPS of $0.29; Raises 2004 Net Revenues and EPS Guidance

SAN JOSE, Calif.--(BUSINESS WIRE)--July 21, 2004-- eBay Inc. (Nasdaq:EBAY)(www.ebay.com), The World's Online Marketplace, reported financial results for its quarter ended June 30, 2004. eBay reported record consolidated Q2-04 net revenues of $773.4 million, up 52% year over year; operating income of $253.9 million, up 108% year over year; and pro forma operating income of $275.6 million, up 99% year over year. Operating income was 33% of net revenues and pro forma operating income was 36% of net revenues.
Consolidated net income in Q2-04 was $190.4 million, or $0.28 per diluted share. eBay's pro forma consolidated net income, excluding certain items, was $197.7 million, or $0.29 per diluted share.

These results exceeded the company's guidance of $760 million for net revenues, $0.24 for earnings per diluted share and $0.26 for pro forma earnings per diluted share.

"Q2 was another great quarter for eBay, and we're more confident than ever in the long-term potential of our business," said Meg Whitman, President and CEO of eBay. "In light of typical seasonality, we continued to gain momentum thanks to the enormous dedication of our global community."

Key Financial and Operating Metrics

Consolidated Net Revenues -- Consolidated net revenues totaled a record $773.4 million, which represented an increase of 52% from the $509.3 million reported in Q2-03.

Transaction Revenues -- Consolidated net transaction revenues totaled a record $751.7 million, which represented an increase of 51% from the $496.9 million reported in Q2-03.

-- eBay U.S. Net Transaction Revenues -- eBay U.S. net transaction revenues totaled $319.1 million in Q2-04, reflecting 32% year-over-year growth.

-- eBay International Net Transaction Revenues -- eBay International net transaction revenues totaled $273.7 million in Q2-04, representing 76% year-over-year growth.

-- Payments Net Transaction Revenues -- Payments net transaction revenues totaled $158.8 million in Q2-04, representing 60% year-over-year growth.

Confirmed Registered Users -- Cumulative confirmed registered users at the end of Q2-04 totaled a record 114.0 million, representing a 51% increase over the 75.3 million users reported at the end of Q2-03.

Active Users -- Active users, the number of users on the eBay platform who bid, bought or listed over the trailing 12 months, increased to 48.0 million, a 41% increase over the 34.1 million active users reported in the same period a year ago.

Listings -- New listings totaled a record 332.3 million in Q2-04, 48% higher than the 225.0 million listings reported in Q2-03. New listings in Q2-04 includes 16.4 million new listings generated from eBay Stores inventory during the quarter, versus 3.4 million new stores inventory listings in Q2-03.

Gross Merchandise Volume (GMV) -- Gross Merchandise Volume, the total value of all successfully closed listings on eBay's trading platforms, was $8.0 billion, representing a 42% year-over-year increase from the $5.6 billion reported in Q2-03. The definition of GMV and the basis for calculation is the same used historically to define Gross Merchandise Sales (GMS). The name of this metric has been changed to be more consistent with other metrics used and to provide better clarity.

Total Payments Accounts -- eBay's PayPal business had 50.4 million total accounts at the end of Q2-04, a 62% increase from the 31.1 million reported in Q2-03.

Total Payment Volume (TPV) -- PayPal's TPV was $4.4 billion in Q2-04, a 53% increase from the $2.8 billion reported in Q2-03.

Gross Profit -- Gross profit was $626.9 million, or 81% of net revenues, which is consistent with the percentage reported in Q2-03.

Operating Income -- Operating income was $253.9 million, or 33% of net revenues, a 108% increase over the $122.1 million reported in Q2-03. Pro forma operating income increased 99% year over year to $275.6 million, or 36% of net revenues, compared to 27% in Q2-03.

GAAP Net Income -- GAAP net income increased 107% year over year to $190.4 million, or $0.28 per diluted share.

Pro Forma Net Income -- Pro forma net income increased 92% year over year to $197.7 million, or $0.29 per diluted share.

Operating and Free Cash Flows -- Operating cash flows totaled $263.1 million. Free cash flows, representing operating cash flows less capital expenditures, totaled $197.4 million.

Key Category Performance -- Based on Q2-04 GMV, eBay has twelve categories that deliver $1 billion or more in worldwide annualized GMV: eBay Motors at $9.8 billion; Consumer Electronics at $2.5 billion; Computers at $2.4 billion; Clothing and Accessories at $2.2 billion; Books/Movies/Music at $2.1 billion; Sports at $2.0 billion; Home & Garden at $1.6 billion; Collectibles at $1.4 billion; Toys at $1.3 billion; Jewelry & Watches at $1.2 billion; Cameras & Photo at $1.1 billion; and Business & Industrial at $1.1 billion.

Fixed Price Trading -- eBay's fixed price trading contributed approximately $2.2 billion or 27% of total GMV during Q2-04, primarily from eBay's "Buy It Now" feature.

eBay Stores -- At the end of Q2-04, eBay hosted approximately 181,000 stores worldwide, with approximately 121,000 stores hosted on the U.S. site.

Patent Litigation -- eBay, PayPal and AT&T have reached agreement and are entering into a Stipulated Order of Dismissal regarding their patent infringement lawsuit in United States District Court in Delaware. The parties have agreed to keep the details of their arrangement confidential. eBay does not believe that the terms will result in a material impact on its results of operations or cash flows.

Consolidated Financial and Operating Summary

eBay reported record consolidated net revenues of $773.4 million in Q2-04, representing a 52% year-over-year increase. On a year-over-year basis, consolidated net revenues reflected a foreign currency translation benefit in Q2-04 of approximately $26.0 million. On a sequential basis, consolidated net revenues were negatively impacted by foreign currency translation in Q2-04 of approximately $11.3 million, primarily related to the Euro.

Gross profit was $626.9 million, or 81% of net revenues, which is consistent with the percentage reported in Q2-03.

Sales and marketing expenses totaled $189.2 million, or 24% of net revenues, compared with 26% reported in Q2-03. While sales and marketing expenses decreased as a percentage of net revenues, the absolute dollars increased, primarily as a result of global increases in both on-line and off-line marketing efforts and international expansion.

Product development expenses totaled $60.0 million, or 8% of net revenues, consistent with 8% of net revenues reported in Q2-03. Total product development expenses in Q2-04 do not include $9.7 million of required cost capitalization for major site and other product development efforts.

General and administrative costs totaled $102.9 million, or 13% of net revenues, down from the 14% of net revenues reported in Q2-03. While general and administrative costs decreased as a percentage of net revenues, the absolute dollars increased, primarily as a result of increases in headcount and professional services.

Income from operations totaled $253.9 million during Q2-04, a 108% increase over the $122.1 million reported in Q2-03. On a pro forma basis, income from operations totaled $275.6 million, a 99% increase over the $138.7 million reported in Q2-03. Included in both the GAAP and pro forma Q2-04 consolidated income from operations results was a $19.8 million year-over-year net benefit from changes in foreign currencies. On a sequential basis, both the GAAP and pro forma consolidated income from operations results were negatively impacted by foreign currency translation in Q2-04 of approximately $6.1 million, primarily related to the Euro.

Interest and other income, net, totaled $22.4 million in Q2-04, up from the $10.9 million reported in Q2-03. The increase in Q2-04 was primarily the result of a gain of approximately $7.3 million due to the sale of our equity investment in IPIX Corporation. This gain has been excluded from pro forma net income.

The GAAP effective tax rate for Q2-04 was 30%, consistent with the GAAP effective tax rate for Q2-03. The pro forma effective tax rate for Q2-04 was 31%, an increase from the 30% pro forma effective tax rate for Q2-03. The higher pro forma effective tax rate for Q2-04 compared to Q2-03 reflects an increase in our non-deductible expenses related primarily to acquisitions.

At the end of Q2-04, the company had $3.3 billion in aggregate cash and investments and more than $6.8 billion in total assets.

The company reported $263.1 million in operating cash flows and $65.7 million of capital expenditures in Q2-04, resulting in free cash flows of $197.4 million. Free cash flows for Q1-04 totaled $295.3 million. The decrease in Q2-04 is primarily due to the timing of vendor payments.

Business Outlook

For the remainder of 2004, and consistent with eBay's long-term opportunity and financial strategy, the company plans to invest significantly in China, the international expansion of PayPal, product development, customer support, Trust & Safety, infrastructure, and sales and marketing in the U.S., Germany, the U.K., Taiwan, and China.

Net Revenues -- The company now expects that consolidated net revenues for 2004 could be as high as $3.185 billion, $35 million higher than the company's most recent guidance. This improved outlook derives from the strength of eBay's U.S., International and Payments businesses. From a quarterly perspective, eBay expects that consolidated net revenues will be approximately $770 million in Q3-04, approximately even with Q2-04, and as high as $886 million in Q4-04. eBay's guidance for Q3-04 and Q4-04 is based on an assumed weighted average exchange rate of US $1.20 per Euro.

GAAP Diluted EPS -- eBay now expects that GAAP earnings per diluted share for the full year 2004 could be as high as $1.10, $0.04 higher than the company's most recent guidance. From a quarterly perspective, eBay estimates that GAAP earnings per diluted share could be as high as $0.24 in Q3-04 and $0.30 in Q4-04.

Pro Forma Diluted EPS -- eBay now expects that pro forma earnings per diluted share for the full year 2004 could be as high as $1.17, $0.04 higher than the company's most recent guidance. From a quarterly perspective, eBay estimates pro forma earnings per diluted share could be as high as $0.25 in Q3-04 and $0.32 in Q4-04.

Effective Tax Rate -- eBay's current estimate for its 2004 effective tax rate is 30% on a GAAP basis and 31% on a pro forma basis, which is consistent with previous guidance.

Capital Expenditures -- eBay expects its capital expenditures to total $315 million for the full year 2004, without taking into account acquisitions, which is $65 million higher than the company's most recent guidance. This is primarily due to the build out of a new data center to ensure redundancy and scalability.

Non-GAAP Measures

To supplement the company's consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of certain components of financial performance, including gross profit, operating income, net income, earnings per share, cash flows, and effective tax rate, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. In addition, because eBay has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company's financial reporting. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. Consistent with the company's historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.

About eBay

eBay is The World's Online Marketplace(R). Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an ever-growing online community.

Forward-Looking Statements

This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries. Those statements involve risks and uncertainties, and the company's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to: the company's need to manage an increasingly large company with a broad range of businesses; the company's ability to deal with the increasingly competitive environment for online trading, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the litigation, regulatory, credit card association, and other risks specific to PayPal; the company's need to manage other regulatory, tax, and litigation risks even as its product offerings expand and its services are offered in more jurisdictions; the company's ability to upgrade and develop its systems, infrastructure and customer service capabilities to accommodate growth at a reasonable cost; the company's ability to maintain site stability and performance on all of its sites; the company's ability to continue to expand its model to new types of merchandise and sellers; the company's ability to continue to expand outside of the US; fluctuations in foreign exchange rates; the need to manage the integration of announced and prospective acquisitions; and the costs and benefits of announced and prospective acquisitions and other commercial transactions.

More information about factors that could affect the company's operating results is included under the captions "Risk Factors That May Affect Results of Operations and Financial Condition" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's investor relations site at http://investor.ebay.com. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof. eBay assumes no obligation to update such statements.

eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)


December 31, June 30,
2003 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $1,381,513 $1,588,713
Short-term investments 340,576 548,924
Accounts receivable, net 225,871 242,287
Funds receivable 79,893 143,297
Other current assets 118,029 364,847
----------- -----------
Total current assets 2,145,882 2,888,068

Long-term investments 934,171 1,175,098
Restricted cash and investments 127,432 1,335
Property and equipment, net 601,785 639,140
Goodwill 1,719,311 1,834,662
Intangible assets, net 274,057 274,642
Other assets 17,496 19,552
----------- -----------
$5,820,134 $6,832,497
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $64,633 $68,194
Funds payable and amounts due to customers 106,568 233,042
Accrued expenses and other current
liabilities 356,491 329,833
Deferred revenue and customer advances 28,874 39,643
Short-term obligations 2,840 124,274
Income taxes payable 87,870 102,056
----------- -----------
Total current liabilities 647,276 897,042

Long-term obligations 124,476 887
Deferred tax liabilities 79,238 62,397
Other liabilities 33,494 32,356
Minority interests 39,408 43,730
----------- -----------
Total liabilities 923,892 1,036,412
----------- -----------
Total stockholders' equity 4,896,242 5,796,085
----------- -----------
$5,820,134 $6,832,497
=========== ===========



eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)


Three Months Ended Six Months Ended
June 30, June 30,
------------------ --------------------
2003 2004 2003 2004
------------------ --------------------

Net revenues $509,269 $773,412 $985,761 $1,529,651
Cost of net revenues 99,150 146,531 191,248 280,889
------------------ --------------------
Gross profit 410,119 626,881 794,513 1,248,762
------------------ --------------------
Operating expenses:
Sales and marketing 134,616 189,150 258,376 381,840
Product development 38,819 59,978 73,151 112,676
General and administrative 69,476 102,940 132,476 193,576
Patent litigation expense 29,965 - 29,965 -
Payroll tax on employee stock
options 3,184 5,186 6,474 10,332
Amortization of acquired
intangible assets 11,976 15,769 23,844 29,732
------------------ --------------------
Total operating expenses 288,036 373,023 524,286 728,156
------------------ --------------------
Income from operations 122,083 253,858 270,227 520,606
Interest and other income
(expense), net 10,909 22,443 18,613 45,942
Interest expense (37) (2,047) (68) (4,378)
Impairment of certain equity
investments - - (230) -
------------------ --------------------
Income before income taxes and
minority interests 132,955 274,254 288,542 562,170
Provision for income taxes (39,543) (81,598) (88,561) (167,354)
Minority interests (1,544) (2,261) (3,922) (4,321)
------------------ --------------------
Net income $91,868 $190,395 $196,059 $390,495
================== ====================

Net income per share:
Basic $0.14 $0.29 $0.31 $0.60
================== ====================
Diluted $0.14 $0.28 $0.30 $0.58
================== ====================

Weighted average shares:
Basic 636,680 658,069 632,022 655,287
================== ====================
Diluted 656,147 682,421 649,609 678,150
================== ====================



eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)


Three Months Ended
June 30, 2003
------------------------------
Pro Forma
Reported Entries Pro Forma
------------------------------

Net revenues $509,269 $- $509,269
Cost of net revenues 99,150 (64)(a) 99,086
----------------- ---------
Gross profit 410,119 64 410,183
----------------- ---------
Operating expenses:
Sales and marketing 134,616 (280)(a) 134,336
Product development 38,819 (358)(a) 38,461
General and administrative 69,476 (797)(a) 68,679
Patent litigation expense 29,965 - 29,965
Payroll tax on employee stock options 3,184 (3,184)(b) -
Amortization of acquired intangible
assets 11,976 (11,976)(c) -
----------------- ---------
Total operating expenses 288,036 (16,595) 271,441
----------------- ---------
Income from operations 122,083 16,659 138,742
Interest and other income (expense), net 10,909 (979)(d) 9,930
Interest expense (37) - (37)
Impairment of certain equity investments - - -
----------------- ---------
Income before income taxes and minority
interests 132,955 15,680 148,635
Provision for income taxes (39,543) (4,479)(f) (44,022)
Minority interests (1,544) - (1,544)
----------------- ---------
Net income $91,868 $11,201 $103,069
================= =========

Net income per share:
Basic $0.14 $0.16
========= =========
Diluted $0.14 $0.16
========= =========

Weighted average shares:
Basic 636,680 636,680
========= =========
Diluted 656,147 656,147
========= =========


Operating margin 24% 3% 27%
================= =========


Three Months Ended
June 30, 2004
------------------------------
Pro Forma
Reported Entries Pro Forma
------------------------------

Net revenues $773,412 $- $773,412
Cost of net revenues 146,531 (4)(a) 146,527
----------------- ---------
Gross profit 626,881 4 626,885
----------------- ---------
Operating expenses:
Sales and marketing 189,150 (14)(a) 189,136
Product development 59,978 (114)(a) 59,864
General and administrative 102,940 (685)(a) 102,255
Patent litigation expense - - -
Payroll tax on employee stock options 5,186 (5,186)(b) -
Amortization of acquired intangible
assets 15,769 (15,769)(c) -
----------------- ---------
Total operating expenses 373,023 (21,768) 351,255
----------------- ---------
Income from operations 253,858 21,772 275,630
Interest and other income (expense), net 22,443 (7,298)(e) 15,145
Interest expense (2,047) - (2,047)
Impairment of certain equity investments - - -
----------------- ---------
Income before income taxes and minority
interests 274,254 14,474 288,728
Provision for income taxes (81,598) (7,207)(f) (88,805)
Minority interests (2,261) - (2,261)
----------------- ---------
Net income $190,395 $7,267 $197,662
================= =========

Net income per share:
Basic $0.29 $0.30
========= =========
Diluted $0.28 $0.29
========= =========

Weighted average shares:
Basic 658,069 658,069
========= =========
Diluted 682,421 682,421
========= =========


Operating margin 33% 3% 36%
================= =========

Notes:

(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option
gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of certain real estate properties and recovery of
fully reserved receivables
(e) Gain on sale of equity investment
(f) Income taxes associated with certain pro forma entries



eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)


Six Months Ended
June 30, 2003
----------------------------------
Pro Forma
Reported Entries Pro Forma
----------------------------------

Net revenues $985,761 $- $985,761
Cost of net revenues 191,248 (148)(a) 191,100
------------------- -----------
Gross profit 794,513 148 794,661
------------------- -----------
Operating expenses:
Sales and marketing 258,376 (698)(a) 257,678
Product development 73,151 (875)(a) 72,276
General and administrative 132,476 (2,050)(a) 130,426
Patent litigation expense 29,965 - 29,965
Payroll tax on employee stock
options 6,474 (6,474)(b) -
Amortization of acquired
intangible assets 23,844 (23,844)(c) -
------------------- -----------
Total operating expenses 524,286 (33,941) 490,345
------------------- -----------
Income from operations 270,227 34,089 304,316
Interest and other income (expense),
net 18,613 (979)(d) 17,634
Interest expense (68) - (68)
Impairment of certain equity
investments (230) 230(f) -
------------------- -----------
Income before income taxes and
minority interests 288,542 33,340 321,882
Provision for income taxes (88,561) (10,130)(g) (98,691)
Minority interests (3,922) - (3,922)
------------------- -----------
Net income $196,059 $23,210 $219,269
=================== ===========

Net income per share:
Basic $0.31 $0.35
=========== ===========
Diluted $0.30 $0.34
=========== ===========

Weighted average shares:
Basic 632,022 632,022
=========== ===========
Diluted 649,609 649,609
=========== ===========

Operating margin 27% 4% 31%
=================== ===========


Six Months Ended
June 30, 2004
----------------------------------
Pro Forma
Reported Entries Pro Forma
----------------------------------

Net revenues $1,529,651 $- $1,529,651
Cost of net revenues 280,889 (28)(a) 280,861
------------------- -----------
Gross profit 1,248,762 28 1,248,790
------------------- -----------
Operating expenses:
Sales and marketing 381,840 (89)(a) 381,751
Product development 112,676 (303)(a) 112,373
General and administrative 193,576 (953)(a) 192,623
Patent litigation expense - - -
Payroll tax on employee stock
options 10,332 (10,332)(b) -
Amortization of acquired
intangible assets 29,732 (29,732)(c) -
------------------- -----------
Total operating expenses 728,156 (41,409) 686,747
------------------- -----------
Income from operations 520,606 41,437 562,043
Interest and other income (expense),
net 45,942 (7,298)(e) 38,644
Interest expense (4,378) - (4,378)
Impairment of certain equity
investments - - -
------------------- -----------
Income before income taxes and
minority interests 562,170 34,139 596,309
Provision for income taxes (167,354) (16,186)(g) (183,540)
Minority interests (4,321) - (4,321)
------------------- -----------
Net income $390,495 $17,953 $408,448
=================== ===========

Net income per share:
Basic $0.60 $0.62
=========== ===========
Diluted $0.58 $0.60
=========== ===========

Weighted average shares:
Basic 655,287 655,287
=========== ===========
Diluted 678,150 678,150
=========== ===========

Operating margin 34% 3% 37%
=================== ===========

Notes:

(a) Non-cash stock based compensation expense
(b) Employer payroll taxes on employee non-qualified stock option
gains
(c) Amortization of acquired intangible assets
(d) Gain on sale of certain real estate properties and recovery of
fully reserved receivables
(e) Gain on sale of equity investment
(f) Impairment of certain equity investments
(g) Income taxes associated with certain pro forma entries



eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2003 2004 2003 2004
---------------------- ----------------------
Cash flows from operating
activities:
Net income $91,868 $190,395 $196,059 $390,495
Adjustments:
Provision for doubtful
accounts and
authorized credits 10,496 22,697 19,633 38,301
Provision for
transaction losses 9,080 10,706 18,073 22,350
Depreciation and
amortization 38,507 59,434 70,527 115,119
Amortization of
unearned stock-based
compensation 1,499 818 3,771 1,374
Tax benefit on the
exercise of employee
stock options 21,597 83,197 62,937 159,837
Impairment of certain
equity investments - - 230 -
Minority interests 2,379 2,261 4,157 4,321
Changes in assets and
liabilities, net of
acquisition effects:
Accounts receivable (20,252) (38,663) (55,076) (53,717)
Funds receivable 822 (178) (42,049) (61,869)
Other current assets 1,620 2,934 2,878 (112,811)
Other non-current
assets (5,743) 1,842 (4,603) (2,825)
Deferred tax
liabilities, net (1,475) (15,660) (859) (18,281)
Accounts payable 10,407 (40,563) 17,233 1,778
Funds payable and
amounts due to
customers 2,915 (13,161) 49,796 130,491
Accrued expenses and
other liabilities 26,437 (11,157) 31,341 (9,133)
Deferred revenue and
customer advances 863 1,869 2,607 9,719
Income taxes payable 17,662 6,329 22,033 14,196
---------------------- ----------------------
Net cash provided by
operating activities 208,682 263,100 398,688 629,345
---------------------- ----------------------
Cash flows from investing
activities:
Purchases of property
and equipment (186,079) (65,653) (229,987) (136,565)
Purchases of investments (727,391) (385,754) (862,544)(1,209,537)
Maturities and sales of
investments 271,014 235,452 489,374 752,880
Purchases of
intangibles and other
non-current assets - (1,503) - (2,448)
Acquisitions, net of
cash acquired - (137,852) (4,389) (172,515)
---------------------- ----------------------
Net cash provided by
investing activities (642,456) (355,310) (607,546) (768,185)
---------------------- ----------------------
Cash flows from financing
activities:
Proceeds from issuance
of common stock, net 255,588 182,205 472,973 355,294
Principal payments on
long-term obligations (491) (1,008) (798) (2,155)
---------------------- ----------------------
Net cash provided by
financing activities 255,097 181,197 472,175 353,139
---------------------- ----------------------
Effect of exchange rate
changes on cash and cash
equivalents 15,816 (1,982) 18,927 (7,099)
---------------------- ----------------------
Net increase (decrease)
in cash and cash
equivalents (162,861) 87,005 282,244 207,200
Cash and cash equivalents
at beginning of period 1,554,418 1,501,708 1,109,313 1,381,513
---------------------- ----------------------
Cash and cash equivalents
at end of period $1,391,557 $1,588,713 $1,391,557 $1,588,713
====================== ======================

Net cash provided by
operating activities $208,682 $263,100 $398,688 $629,345
Less: Purchases of
property and equipment (186,079) (65,653) (229,987) (136,565)
---------------------- ----------------------
Free cash flow $22,603 $197,447 $168,701 $492,780
====================== ======================



eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)


Net Revenues by Type
----------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30,
2003 2003 2003 2004 2004
----------------------------------------------

Transaction
U.S. $242,385 $256,076 $291,578 $326,217 $319,119
Current quarter vs
prior quarter 3% 6% 14% 12% (2%)
Current quarter vs
prior year quarter 45% 41% 38% 39% 32%

International 155,155 154,715 210,500 257,090 273,740
Current quarter vs
prior quarter 13% 0% 36% 22% 6%
Current quarter vs
prior year quarter 146% 105% 96% 87% 76%

Payments 99,363 106,350 130,561 155,513 158,815
Current quarter vs
prior quarter 7% 7% 23% 19% 2%
Current quarter vs
prior year quarter 2006% 1645% 68% 67% 60%

---------------------------------------------
Total transaction 496,903 517,141 632,639 738,820 751,674
---------------------------------------------
Current quarter vs
prior quarter 7% 4% 22% 17% 2%
Current quarter vs
prior year quarter 111% 96% 60% 59% 51%

Advertising and other
non-transaction revenues
U.S. 8,774 10,012 11,540 12,353 15,361
Current quarter vs
prior quarter 16% 14% 15% 7% 24%
Current quarter vs
prior year quarter (71%) (59%) (16%) 63% 75%

International 1,432 1,760 2,261 2,400 3,705
Current quarter vs
prior quarter 9% 23% 28% 6% 54%
Current quarter vs
prior year quarter 18% 96% 32% 83% 159%

Payments 2,160 2,029 1,953 2,666 2,672
Current quarter vs
prior quarter 7% (6%) (4%) 37% 0%
Current quarter vs
prior year quarter N/A N/A (5%) 32% 24%

---------------------------------------------
Total advertising and
other non-transaction
revenues 12,366 13,801 15,754 17,419 21,738
---------------------------------------------
Current quarter vs
prior quarter 13% 12% 14% 11% 25%
Current quarter vs
prior year quarter (60%) (45%) (10%) 59% 76%

---------------------------------------------
Total net revenues $509,269 $530,942 $648,393 $756,239 $773,412
=============================================
Current quarter vs
prior quarter 7% 4% 22% 17% 2%
Current quarter vs
prior year quarter 91% 84% 57% 59% 52%



eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)


Net Revenues by Segment
----------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30,
2003 2003 2003 2004 2004
----------------------------------------------

U.S. $251,159 $266,088 $303,118 $338,570 $334,481
Current quarter vs
prior quarter 4% 6% 14% 12% (1%)
Current quarter vs
prior year quarter 27% 29% 35% 40% 33%

International 156,587 156,475 212,761 259,490 277,444
Current quarter vs
prior quarter 13% 0% 36% 22% 7%
Current quarter vs
prior year quarter 143% 105% 95% 87% 77%

Payments 101,523 108,379 132,514 158,179 161,487
Current quarter vs
prior quarter 7% 7% 22% 19% 2%
Current quarter vs
prior year quarter 2051% 1678% 66% 66% 59%

---------------------------------------------
Total net revenues $509,269 $530,942 $648,393 $756,239 $773,412
=============================================
Current quarter vs
prior quarter 7% 4% 22% 17% 2%
Current quarter vs
prior year quarter 91% 84% 57% 59% 52%


Net Revenues by Geography
----------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30,
2003 2003 2003 2004 2004
----------------------------------------------

U.S. net revenues $331,322 $351,187 $404,833 $455,355 $449,571
Current quarter vs
prior quarter 4% 6% 15% 12% (1%)
Current quarter vs
prior year quarter 64% 65% 39% 43% 36%
% of total 65% 66% 62% 60% 58%

International net
revenues 177,947 179,755 243,560 300,884 323,841
Current quarter vs
prior quarter 13% 1% 35% 24% 8%
Current quarter vs
prior year quarter 177% 136% 97% 91% 82%
% of total 35% 34% 38% 40% 42%

---------------------------------------------
Total net revenues $509,269 $530,942 $648,393 $756,239 $773,412
=============================================
Current quarter vs
prior quarter 7% 4% 22% 17% 2%
Current quarter vs
prior year quarter 91% 84% 57% 59% 52%



eBay Inc.
eBay Unaudited Supplemental Operating Data
(In Millions, Except Percentages)


----------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30,
2003 2003 2003 2004 2004
----------------------------------------------

Confirmed Registered
Users (1) 75.3 85.5 94.9 104.8 114.0
Current quarter vs
prior quarter 9% 14% 11% 10% 9%
Current quarter vs
prior year quarter 51% 56% 54% 52% 51%

Active Users (2) 34.1 37.4 41.2 45.1 48.0
Current quarter vs
prior quarter 10% 10% 10% 9% 6%
Current quarter vs
prior year quarter 57% 55% 49% 45% 41%

Number of Listings (3) 225.0 234.6 291.7 327.7 332.3
Current quarter vs
prior quarter 2% 4% 24% 12% 1%
Current quarter vs
prior year quarter 55% 47% 49% 49% 48%

Gross Merchandise
Volume (4) $5,635 $5,775 $7,052 $8,039 $8,012
Current quarter vs
prior quarter 6% 2% 22% 14% 0%
Current quarter vs
prior year quarter 66% 53% 53% 51% 42%

(1) Cumulative total of all users who have completed their
registration process on one of eBay's trading platforms.

(2) All users, excluding Half.com, EachNet, and Internet Auction
users, who bid on, bought, listed, or sold an item within the
previous 12-month period.

(3) All listings on eBay's trading platforms during the quarter,
regardless of whether the listing subsequently closed
successfully.

(4) Total value of all successfully closed listings between users on
eBay's trading platforms during the quarter, regardless of whether
the buyer and seller actually consummated the transaction.



eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, except percentages)


----------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30,
2003 2003 2003 2004 2004
----------------------------------------------

Revenue
Transaction $99.4 $106.4 $130.6 $155.5 $158.8
Current quarter vs
prior quarter 8% 7% 23% 19% 2%
Current quarter vs
prior year quarter 90% 83% 80% 69% 60%

Non-transaction $2.1 $2.0 $2.0 $2.7 $2.7
Current quarter vs
prior quarter 7% (5%) 0% 37% 0%
Current quarter vs
prior year quarter 69% 67% (5%) 32% 24%

Total revenues ($m) $101.5 $108.4 $132.6 $158.2 $161.5

Percent of revenue
which is international 21.0% 21.4% 23.2% 26.2% 28.7%

Metrics
Total accounts (1) 31.1 35.2 40.3 45.6 50.4
Current quarter vs
prior quarter 14% 13% 14% 13% 11%
Current quarter vs
prior year quarter 75% 79% 73% 67% 62%

Active accounts (2) 10.2 11.2 13.2 14.5 15.5

Total number of
payments (3) 53.7 57.4 68.2 79.2 77.7
Current quarter vs
prior quarter 6% 7% 19% 16% (2%)
Current quarter vs
prior year quarter 86% 83% 74% 57% 45%

Total payment volume
(4) $2,843 $3,044 $3,711 $4,321 $4,350
Current quarter vs
prior quarter 8% 7% 22% 16% 1%
Current quarter vs
prior year quarter 76% 70% 74% 64% 53%

Auction as % of total
payment volume 66% 67% 69% 70% 69%

Transaction rates
Transaction revenue
rate 3.50% 3.49% 3.52% 3.60% 3.64%

Transaction processing
expense rate 1.30% 1.25% 1.23% 1.25% 1.34%

Transaction loss rate 0.32% 0.22% 0.31% 0.27% 0.25%

(1) Cumulative total of all personal, premier, or business accounts
opened, excluding accounts that have been closed or locked.

(2) All accounts that sent or received at least one payment through
the PayPal system during the quarter.

(3) Total number of payments initiated through the PayPal system
during the quarter, regardless of whether the payment was actually
sent successfully, or was reversed, rejected, or pending at the
end of the quarter.

(4) Total dollar volume of payments initiated through the PayPal
system during the quarter, regardless of whether the payment was
actually sent successfully, or was reversed, rejected, or was
pending at the end of the quarter.



eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)

The guidance figures provided below and elsewhere in this press
release are approximate in nature because eBay's future performance is
difficult to predict. Such guidance is based on information available
on the date hereof, and eBay assumes no obligation to update it.

eBay's future performance involves risks and uncertainties, and the
company's actual results could differ materially from such guidance.
Some of the factors that could affect the company's operating results
are set forth under the caption "Forward-Looking Statements" above in
this press release. More information about factors that could affect
eBay's operating results is included under the captions "Risk Factors
That May Affect Results of Operations and Financial Condition" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in its most recent annual report on Form 10-K
and quarterly reports on Form 10-Q, copies of which may be obtained by
visiting the company's investor relations site at
http://investor.ebay.com.


Three months ending September 30, 2004
---------------------------------------------
GAAP Adjustments Pro Forma(a)
---------------------------------------------

Net revenue $770 - $770
Diluted EPS $0.24 $0.01(b) $0.25

Three months ending December 31, 2004
---------------------------------------------
GAAP Adjustments Pro Forma(a)
---------------------------------------------

Net revenue $886 - $886
Diluted EPS $0.30 $0.02(b) $0.32

Year ending December 31, 2004
---------------------------------------------
GAAP Adjustments Pro Forma(a)
---------------------------------------------

Net revenue $3,185 - $3,185
Diluted EPS $1.10 $0.07(b) $1.17
Effective Tax Rate 30% 1%(c) 31%

(a) Pro forma guidance reflects estimated quarterly adjustments for
amortization of acquired intangible assets of approximately $15
million, payroll taxes on employee stock options of approximately
$4 million, stock based compensation of approximately $300 - $600
thousand and other adjustments estimated to result in an operating
margin adjustment of 2 - 3% for each of the quarters in the year
ending December 31, 2004.

(b) Net of tax, the above pro forma items are estimated to result in a
$0.01 - $0.02 per diluted share adjustment for each of the
quarters in the year ending December 31, 2004.

(c) Adjustments to the pro forma effective tax rate reflect the impact
on the effective tax rate of the pro forma adjustments.


Contacts


eBay Inc.
Tracey Ford, 408-376-7205 (Investor Relations)
Hani Durzy, 408-376-7458 (Media Relations)
Investor Information Request, 408-376-7493
Company News: http://www.businesswire.com
Investor Relations Website: http://investor.ebay.com

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