Slide 1: Q2 2020 Financial Highlights
Q2 2020 FINANCIAL HIGHLIGHTS July 28, 2020
Slide 2: Disclosures
DISCLOSURES This presentation contains non-GAAP measures relating to our performance. You can find the reconciliation of these measures, except for FX-Neutral basis, to the nearest comparable GAAP measures in the appendix at the end of this presentation. All growth rates represent year-over-year com
Slide 3: CFO Comments
CFO COMMENTS
Slide 4: Q2 Highlights
Q2 HIGHLIGHTS • Revenue of $2.9B, up 18% Y/Y (+22% Y/Y Organic FX-Neutral) • GAAP EPS of $1.04 and Non-GAAP EPS of $1.08 • GAAP operating margin of 29%, up 6pts Y/Y • Non-GAAP operating margin of 34%, up 5pts Y/Y • Generated $964M of Operating Cash Flow and $866M of Free Cash Flow • Returned $0.1B t
Slide 5: Active Buyers
ACTIVE BUYERS (millions) 182 171 173 174 174 174 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 T12M Y/Y Growth 4% 4% 4% 2% 2% 5% 5 All reported results are from continuing operations
Slide 6: Marketplace GMV
MARKETPLACE GMV ($ millions) 21,571 21,484 20,489 21,966 21,259 27,135 Int’l 16,646 • Q2 FX-Neutral B2C GMV up 29% Y/Y and 13,646 13,695 14,272 13,628 FX-Neutral C2C GMV 13,155 up 31% Y/Y US 7,925 7,789 10,489 7,334 7,694 7,631 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 US Y/Y Growth (7)% (6)% (6)% (9)% (4
Slide 7: Revenue
REVENUE ($ millions) 2,413 2,423 2,343 2,500 2,374 2,865 • Q2 FX-Neutral 418 Transaction Revenue up 33% Y/Y … MS&O 528 536 514 523 474 accelerating 30pts Q/Q • Q2 FX-Neutral MS&O Revenue down 20% 2,447 Y/Y, driven by 1,885 1,887 1,977 1,900 Classifieds Motors Transaction 1,829 revenue pressure and B
Slide 8: Marketplace Revenue
MARKETPLACE REVENUE ($ millions) 2,162 2,157 2,083 2,236 2,130 2,668 • Q2 FX-Neutral Transaction Revenue up 221 33% Y/Y, accelerating 30pts Q/Q 259 MS&O 277 270 254 230 • Q2 FX-Neutral MS&O Revenue down 16% Y/Y, decelerating 1pt Q/Q 2,447 • Segment Margin up 8pts 1,885 1,887 1,829 1,977 1,900 Y/Y, d
Slide 9: Classifieds Revenue
CLASSIFIEDS REVENUE ($ millions) • Q2 FX-Neutral Revenue down 24% Y/Y, decelerating 24pts Q/Q, driven by Motors fee discounts and continued display advertising headwinds 271 265 269 • Segment Margin down 256 248 8pts Y/Y, driven by volume softness and 201 verticals investments, partially offset by m
Slide 10: Non-GAAP Expenses
NON-GAAP EXPENSES (% of revenue) Operating Expense at 45.2%, down ~3pts Y/Y Cost of Revenue Sales & Marketing Product Development General & Admin Transaction Losses 22.2% 20.4% 27.4% 10.1% 8.4% 8.7% 3.3% 24.1% 9.1% 2.6% Q2 19 Q2 20 Q2 19 Q2 20 Q2 19 Q2 20 Q2 19 Q2 20 Q2 19 Q2 20 Volume leverage, Mar
Slide 11: Non-GAAP EPS
NON-GAAP EPS • Q2 Non-GAAP Operating Margin up 5pts Y/Y, with higher volume leverage and continued cost control, offset by lower Classifieds revenue and payments investments $1.08 • Q2 Non-GAAP EPS Y/Y $0.74 $0.77 growth driven by higher $0.65 $0.66 $0.64 revenue and net benefit of share repurchases
Slide 12: Free Cash Flow
FREE CASH FLOW ($ millions) • Q2 FCF up 54% Y/Y 837 866 driven by higher 626 earnings and timing of 562 604 cash taxes 392 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Y/Y Growth 20% 237% 109% (39)% 54% 54% CapEx % of Revenue 7% 5% 4% 5% 4% 3% FCF % of Revenue 16% 23% 36% 25% 25% 30% 12 Calculation of Free C
Slide 13: 2020 Cash & Debt
2020 CASH & DEBT Capital Allocation Tenets • Preserve financial flexibility to execute on strategy and drive long-term value creation $5.8 • Drive organic growth while balancing profitability Debt Net Debt • Supplement organic growth with disciplined acquisitions and investments Q2 20 Ending Cash an
Slide 14: Guidance
GUIDANCE Q3 20 Q3 Guidance Context Low High • Revenue growth driven by: Revenue. $2.64 $2.71 • Marketplace Volume growth in high teens and Managed (in billions) . Payments contribution to growth of ~3 pts, partially offset by Classifieds Y/Y Growth. 13% 16% • Non-GAAP EPS growth driven by: Organic F
Slide 15: Q&A
Q&A
Slide 16: Appendix
APPENDIX
Slide 17: Internet Sales Tax Impact on MP US GMV
INTERNET SALES TAX IMPACT ON MP US GMV US GMV 39% Growth x IST ~ 4 pts IST Impact +2% US GMV 35% Growth -3% -3% ~ 6 pts -5% -6% ~ 3 pts ~ 1 pt ~ 1 pt ~ 6 pts -4% -7% -6% -6% -9% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 New States: 3 5 14 11 5 1 Total States: 3 8 22 33 38 39 Large States: NY CA, TX 17
Slide 18: Reconciliations
RECONCILIATIONS
Slide 19: GAAP to Non-GAAP Quarterly Reconciliations: Operating Margin
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS OPERATING MARGIN Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2019 2020 2020 (in millions, except percentages) GAAP operating income $ 593 $ 558 $ 512 $ 589 $ 629 $ 821 Stock-based compensation expense a
Slide 20: GAAP to Non-GAAP Quarterly Reconciliations: Net Income / EPS
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS NET INCOME / EPS Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2019 2020 2020 (in millions, except percentages) GAAP Income from continuing operations $ 516 $ 400 $ 291 $ 526 $ 485 $ 740 Stock-based compe
Slide 21: GAAP to Non-GAAP Quarterly Reconciliations: Statement of Income
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS STATEMENT OF INCOME Three Months Ended Three Months Ended June 30, 2020 June 30, 2019 Reported Non-GAAP Entries Non-GAAP Reported Non-GAAP Entries Non-GAAP (in millions, except per share data and percentages) Net revenues $ 2,865 $ - $ 2,865 $ 2,423 $ - $ 2
Slide 22: Calculation of Free Cash Flow
CALCULATION OF FREE CASH FLOW Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2019 2020 2020 (in millions, except percentages) Net cash provided by continuing operating activities $ 572 $ 695 $ 931 $ 763 $ 702 $ 964 Less: Purchases of property and e
Slide 23: Reconciliation of Total Revenue
RECONCILIATION OF TOTAL REVENUE Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2019 2020 2020 (in millions, except percentages) Net Revenues by Type Net Transaction Revenues: Marketplace (2) $ 1,885 $ 1,887 $ 1,829 $ 1,977 $ 1,900 $ 2,447 Total net
Slide 24: Reconciliation of Organic FX-Neutral Revenue
RECONCILIATION OF ORGANIC FX-NEUTRAL REVENUE Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2019 2020 2020 As Reported Revenue Growth 3% 1% (1)% (2)% (2)% 18 % Acquisition/Disposition Impact (1)% (0)% 1% 2% 1% 2% Foreign Currency Impact 2% 3% 2% 2%
Slide 25: GAAP to Non-GAAP Reconciliations: Guidance
GAAP TO NON-GAAP RECONCILIATIONS GUIDANCE Three Months Ending September 30, 2020 (in billions, except per share amounts) GAAP Non-GAAP (a) Net Revenue $2.64 - $2.71 $2.64 - $2.71 Diluted EPS $0.58 - $0.64 $0.81 - $0.87 Twelve Months Ending December 31, 2020 (in billions, except per share amounts) GA
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