Q3 Revenue of $2.6 billion; GMV of $22.7 billion.
•Revenue of $2.6 billion
•GAAP and Non-GAAP EPS per diluted share of $0.73 and $0.56, respectively, on a continuing operations basis
•Repurchased approximately $1.0 billion of common stock
eBay Inc. (NASDAQ: EBAY), a global commerce leader, delivered revenue for the quarter ended September 30, 2018 of $2.6 billion, increasing 6% on an as-reported basis and 6% on a foreign exchange (FX) neutral basis, primarily driven by gross merchandise volume (GMV) of $22.7 billion, up 5% on both an as-reported and FX-Neutral basis.
During the quarter, eBay delivered GAAP net income from continuing operations of $720 million, or $0.73 per diluted share and Non-GAAP net income from continuing operations of $554 million, or $0.56 per diluted share. The company generated $560 million of operating cash flow and $381 million of free cash flow from continuing operations while also repurchasing approximately $1.0 billion of its common stock in the quarter.
"This quarter we continued to make foundational investments to improve the long-term competitiveness of our marketplace while setting the stage for significant growth opportunities," said Devin Wenig, President and CEO of eBay Inc. "We will continue to innovate the customer experience while executing our growth initiatives in Payments and Advertising to position eBay for future success."
In the third quarter, eBay grew active buyers by 4% across its platforms, for a total of 177 million global active buyers. Underlying total eBay Inc. performance, the Marketplace platforms delivered $2.1 billion of revenue and $21.5 billion of GMV. Marketplace revenue growth was 6% on an as-reported basis and 5% on an FX-Neutral basis, and GMV was up 5% on both an as-reported and FX-Neutral basis. StubHub drove revenue of $291 million, up 7% on both an as-reported and FX-Neutral basis, and GMV of $1.2 billion, up 7% on both an as-reported and FX-Neutral basis. Classifieds platforms delivered revenue of $254 million, up 8% on an as-reported basis and 11% on an FX-Neutral basis.
eBay rolled out a number of new or expanded programs for its customers during the quarter. For sellers, eBay and Square Capital announced a partnership that enables eBay's sellers in the US to access up to $100,000 in funding in as little as one business day to help them grow their businesses. For buyers, eBay continued to scale guaranteed delivery and launched the service in Australia. For its developer community, eBay introduced new application programming interfaces that allow developers to now incorporate eBay features such as Image Search, machine translation and marketplace feeds into their own platforms.
The company remains focused on its growth opportunities in Payments and Advertising. According to the timeline it committed to at the beginning of the year, eBay began rolling out its new payments experience in the US last month and has intermediated $38 million of GMV thus far. The company also began accepting Apple Pay - an easy, secure and private way to pay - as one of the first forms of payment in this new experience, with approximately 12% of iOS transactions made with Apple Pay to date. In Advertising, eBay expanded Promoted Listings placements during the quarter and now has over 400 thousand sellers promoting over 160 million listings.
In the third quarter, eBay completed the sale of its equity investment in Flipkart, representing net proceeds of nearly $1.0 billion, and ended its strategic relationship with the company. eBay also recently announced its intent to acquire Motors.co.uk, a leading UK-based classifieds site. Combining the inventory, customer relationships and traffic available on Gumtree UK, eBay Motors UK and Motors.co.uk is expected to help UK car dealers increase their leads and bring buyers more choice and value.
Third Quarter Financial Highlights (presented in millions, except per share data and percentages
2018 2017 Change
Net revenues $2,649 $2,498 $151 6%
GAAP - Continuing Operations
Income from continuing operations $720 $520 $200 38%
Earnings per diluted share from continuing operations $0.73 $0.48 $0.25 52%
Non-GAAP - Continuing Operations
Net income $554 $511 $43 8%
Earnings per diluted share $0.56 $0.47 $0.09 19%
Other Selected Financial and Operational Results
•Operating margin — GAAP operating margin decreased to 21.0% for the third quarter of 2018, compared to 23.0% for the same period last year. Non-GAAP operating margin decreased to 26.4% in the third quarter of 2018, compared to 28.4% for the same period last year.
•Taxes — The GAAP effective tax rate for continuing operations for the third quarter of 2018 was 24.1%, compared to 25.0% for the third quarter of 2017. The non-GAAP effective tax rate for continuing operations for the third quarter of 2018 was 15.4%, compared to 22.8% for the third quarter of 2017.
•Cash flow — The company generated $560 million of operating cash flow from continuing operations and $381 million of free cash flow from continuing operations during the third quarter of 2018.
•Stock repurchase program — The company repurchased approximately $1.0 billion of its common stock, or 29 million shares, in the third quarter of 2018. The company's total repurchase authorization remaining as of September 30, 2018 was $4.7 billion.
•Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $9.0 billion as of September 30, 2018.
•Fourth quarter 2018 — The company expects net revenue between $2.85 billion and $2.89 billion, representing Organic FX-Neutral growth of 4% - 5%, with GAAP earnings per diluted share from continuing operations in the range of $0.87 - $0.92 and non-GAAP earnings per diluted share from continuing operations in the range of $0.67 - $0.69.
•Full year 2018 — The company now expects net revenue between $10.72 billion and $10.76 billion, representing Organic FX-Neutral growth of approximately 6%, with GAAP earnings per diluted share from continuing operations in the range of $2.62 - $2.67 and non-GAAP earnings per diluted share from continuing operations in the range of $2.29 - $2.31.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss third quarter 2018 results at 3:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company's Investor Relations website at https://investors.ebayinc.com. In addition, an archive of the webcast will be accessible for at least three months through the same link.
eBay Inc. uses its Investor Relations website at https://investors.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.