eBay 2003 Annual Report Download - page 1

To our Stockholders, Partners, Employees and the eBay Community
A Dedicated Community
eBay's global community of buyers and sellers amazed and inspired us in 2003. Not only did the
community grow by more than 33 million people during the year, but it demonstrated more passion for
trading than ever before. The community's drive and determination continued to build an ever more
dynamic and robust marketplace. By creating opportunity for millions of people, eBay's community is
changing the way commerce is done around the world.
Every day men and women around the world Ñnd new ways to take advantage of the eBay
marketplace. As a result, there are as many stories on eBay as there are members. An Ohio expert on 3D
viewers uses eBay to Ñnd rare models and vintage reels. A traveling salesman in Cape Cod sets up a
company selling high-end sneakers in order to stay home with his wife and young children. An
unemployed couple in Arkansas build a family business through selling art prints. A Minnesota farmer
searches eBay to Ñnd used farm equipment at a discount. A young man in Hong Kong turns his passion
for toy cars into a global trading business. These members, and millions more like them, are pursuing their
dreams and Ñnding new kinds of success with eBay.
Building a Company to Last
As the community has grown, the eBay marketplace has expanded and the business has become
stronger. Ninety-Ñve million users from more than 150 countries listed 971 million items on eBay last year.
The total value of goods sold on the site, which is called gross merchandise sales (or GMS), reached
nearly $24 billion, a 60% increase from 2002. At the same time, usage of PayPal, the company's online
payment service, also grew, demonstrating the convenience and value it brings to online trading. Total
PayPal accounts almost doubled to 40 million in 2003, driving 230 million transactions and total payment
volume of more than $12 billion, up 73% for the year.
As a result of this activity, 2003 was another year of signiÑcant revenue growth for eBay. Strong gross
merchandise sales and total payment volume drove 2003 consolidated net revenue past $2 billion for the
Ñrst time in our history, to $2.17 billion for the full year. It took eight years for eBay to reach $1 billion in
annual revenue. Just one year later, this amount has doubled.
There is no question that eBay is a fast growing company. To support this rapid growth and to lay the
groundwork for continued growth in the future, we increased our investment in key parts of the business in
2003. These strategic investments were made in product development, technology infrastructure, customer
support, Trust & Safety, and PayPal. Investing in these areas will help make eBay and PayPal even faster,
easier and safer to use, which will in turn allow our members to become even more successful.
Even though we made signiÑcant investments in 2003, we also delivered increasing proÑt and cash
growth. Net income grew to a record of $442 million, up 77% in 2003, resulting in record operating cash
Öows of $874 million, up 82%, and record free cash Öows of $509 million, up 49%.1 This helped us end the
year with an even stronger balance sheet consisting of $5.8 billion in total assets and $2.7 billion in cash
and investments.
Creating a healthy and Ñnancially sound company is crucial for our community. Because so many
people around the world depend on eBay for their hobbies and even their livelihoods, we feel we have a
responsibility to maintain a safe and reliable place for them to trade. As a result, we are committed to
building a company to last.
Our Future
Based on the growth we have seen over the past year, and the untapped potential that lies ahead, the
company's future looks very bright.
As we did in 2003, we will continue to invest in key growth areas of the business throughout 2004. In
Asia and Europe, we will invest in technology, marketing, and product development capacity. For PayPal,
(1) eBay deÑnes free cash Öows as operating cash Öows less purchases of property and equipment, which in
2003 were $874 million and $365 million, respectively.