eBay 2009 Annual Report Download - page 3

To Our Stockholders,
In 2009, eBay Inc. became a stronger, more focused company. We communicated our three-year growth and
operating targets in March 2009, setting bold goals for us to remain a global payments and e-commerce leader.
During the year, we experienced significant growth in our payments business, which we believe is well-
positioned for success in the years to come. We strengthened our Marketplaces business by fixing fundamental
issues that we believe were holding us back. And we sold a majority of Skype, allowing us to focus on our two
core growth engines: payments and e-commerce. We did all of this while embracing the kind of operational and
financial discipline that is the hallmark of a healthy, growing company.
Our financial performance for the full year reflects these efforts. Despite the challenging environment in 2009,
particularly in the first half of the year, we delivered $8.7 billion in revenues, a 2 percent increase from the prior
year, and $1.83 of diluted EPS. Although our operating margin of 17 percent was lower compared to 2008, we
delivered $2.9 billion in operating cash flow for the year.
We connected more buyers and sellers than ever before through our core payments and e-commerce
businesses in 2009. PayPal had an exceptional 2009, ending the year with net total payment volume (TPV) of
$71 billion – a 19 percent increase over 2008 – and 81 million active registered accounts globally. Our
Marketplaces business, led by eBay, grew its customer base to 90 million active users worldwide and took
important steps in improving the fundamentals of its business, focusing on trust, value and selection.
Our Marketplaces portfolio got stronger overall in 2009: Acquiring Gmarket, Korea’s leading online
marketplace, gave us a leadership position in a key e-commerce market in Asia. StubHub, a leading online
secondary tickets marketplace, continued its robust growth trajectory in 2009, as did our global classifieds
businesses, which now includes DBA.dk/BilBasen, two leading online classifieds sites in Denmark that we
acquired in 2008.
In November 2009, we sold approximately 70 percent of Skype, allowing us to focus our energies on our two
core businesses. At the same time, Skype got top-notch partners to help the company realize its full potential and
eBay Inc. retained the ability to share in the company’s future success through an ongoing minority stake.
PayPal grew even more ubiquitous in 2009, driving strong consumer and merchant adoption. By the end of
2009, PayPal supported 24 currencies in 190 markets – a truly global business. PayPal continues to leverage this
unique global footprint by making it easier to send and receive payments across borders. In fact, cross-border
trade now accounts for almost 25 percent of PayPal’s net TPV.
PayPal’s merchant services division once again delivered strong growth both in the U.S. and worldwide. In 2009,
for the first time, annual revenue and net TPV from PayPal’s merchant services business exceeded PayPal’s net
TPV on eBay. And our momentum is predicated on a fundamental strength: Merchants generally realize higher
transaction completion rates when PayPal is available as a payment option. In other words, consumers are more
likely to complete the transaction when PayPal is used.
PayPal also drove consumer adoption through Bill Me Later, which was integrated into the PayPal “wallet” on
certain merchant sites in 2009, giving consumers more funding options. PayPal Student Accounts launched in the
fall, helping to eliminate the hassle of everyday money exchanges between parents and teens.
In 2009, PayPal became the first major payments platform to open up to third-party developers – a move that we
believe will accelerate the adoption of PayPal and innovation in payments overall. Simply put, we are well on our
way to making PayPal the preferred online payments provider around the world. In 2010, we will remain focused
on driving consumer and merchant adoption of PayPal on eBay and across the Web, as well as expanding our
open platform initiative and ongoing integration of Bill Me Later onto eBay.
eBay continues to be one of the most popular shopping destinations on Earth, and we made great strides in
2009 to ensure the vitality of this business for buyers and sellers everywhere. Our focus was improving the
fundamentals – trust, value and selection – and winning in the secondary market. We were pleased to see our
efforts starting to pay off by year’s end. But more important, our progress is evident across key success metrics:
Net Promoter Scores, our measure for customer loyalty, were up significantly in our major markets (U.S., U.K.
and Germany) and sold items growth accelerated in the last three quarters of 2009. We saw significant
improvement in the area of trust as we continued to raise the bar on customer experience across the eBay
marketplace. In 2009, we introduced Top-Rated Seller status as a way for buyers to easily identify those sellers
who consistently receive high customer satisfaction ratings and meet certain other criteria. Bottom line: Sellers
who deliver the very best service experience are succeeding on eBay, and our buyers are benefitting.