Slide 1: Q2 2019 Financial Highlights
Q2 2019 FINANCIAL HIGHLIGHTS July 17, 2019
Slide 2: Disclosures
DISCLOSURES This presentation contains non-GAAP measures relating to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the appendix at the end of this presentation. All growth rates represent year-over-year comparisons, except as otherwise
Slide 3: CFO Comments
CFO COMMENTS
Slide 4: Q2 Highlights
Q2 HIGHLIGHTS • Revenue of $2.7B, up 2% Y/Y (up 4% FX-Neutral) • GAAP EPS of $0.46 and Non-GAAP EPS of $0.68 • GAAP operating margin of 21%, up 6pts Y/Y • Non-GAAP operating margin of 27%, up 2pts Y/Y • Generated $744M of Operating Cash Flow and $607M of Free Cash Flow • Returned $1.6B to shareholde
Slide 5: Trailing 12-Month Active Buyers
TRAILING 12-MONTH ACTIVE BUYERS (millions) 182 179 180 177 175 171 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Y/Y Growth* 4% 4% 4% 4% 4% 4% 5 *Starting in the second quarter of 2018, Y/Y growth rate is on a pro-forma basis, which includes Giosis’ Japan business active buyers in both current and prior year
Slide 6: GMV
GMV ($ millions) 23,591 23,629 22,719 24,641 22,589 22,601 14,115 14,357 14,883 13,708 13,701 13,768 Int’l 9,476 9,272 9,011 9,758 8,888 8,833 US Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 US Y/Y Growth 7% 5% 3% (1)% (6)% (5)% Int’l FX-Neutral Y/Y Growth 7% 7% 7% 5% 3% 2% Total FX-Neutral Y/Y Growth 7% 7%
Slide 7: Revenue
REVENUE ($ millions) 2,580 2,640 2,649 2,877 2,643 2,687 582 560 535 557 MS&O 557 563 • Q2 FX-Neutral Transaction Revenue up 4% Y/Y … down 1pt Q/Q 2,295 • Q2 FX-Neutral MS&O Transaction 2,023 2,077 2,089 2,108 2,130 Revenue up 4% Y/Y ... up 3pts Q/Q Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Y/Y Growth. 12
Slide 8: Marketplace GMV & Revenue
MARKETPLACE GMV & REVENUE ($ millions) • Q2 FX-Neutral B2C GMV down 1% Y/Y and FX- 23,231 22,547 22,569 Neutral C2C GMV flat GMV 21,482 21,571 21,484 Y/Y 316 • Q2 FX-Neutral 310 298 301 277 270 Transaction Revenue up MS&O 5% Y/Y, down 1pt Q/Q Revenue • Q2 FX-Neutral MS&O Revenue down 6% Y/Y, Transac
Slide 9: Payments Progress
PAYMENTS PROGRESS 700 $636M ~6,000 600 ~4,300 500 400 300 200 100 Q1 19 Q2 19 Product Launch 6/30/19 # Sellers in Program 9/25/18 Cumulative GMV Intermediated GMV intermediated to date = $636M Grew total sellers in the program by nearly 40% Q/Q Q2 US GMV exit penetration = 3.8% 9
Slide 10: StubHub GMV & Revenue
STUBHUB GMV & REVENUE ($ millions) • Q2 FX-Neutral GMV up 1,410 6% Y/Y, up 8pts Q/Q 1,237 on a stronger sporting GMV 1,060 1,117 event landscape 1,044 1,018 1 • Q2 FX-Neutral 1 1 3 3 3 5 Transaction Revenue MS&O 2 2 5 5 53 6 21 up 1% Y/Y 9 1 Revenue 1 6 1 61 6 7 7 • Q2 FX-Neutral MS&O 311 Revenue up
Slide 11: Classifieds Revenue
CLASSIFIEDS REVENUE ($ millions) • Q2 FX-Neutral Revenue up 12% Y/Y, flat Q/Q, driven by ongoing strength in Germany and UK motors vertical 271 259 263 254 256 • Segment Margin flat 246 Y/Y driven by operating leverage offset by marketing investments and a stronger USD Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Slide 12: Non-GAAP Expenses
NON-GAAP EXPENSES (% of revenue) Operating Expense at 50.3%, down 3pts Y/Y Cost of Revenue Sales & Marketing Product Development General & Admin 21.8% 22.8% 30.6% 29.5% 11.1% 8.8% 8.2% 10.0% Q2 18 Q2 19 Q2 18 Q2 19 Q2 18 Q2 19 Q2 18 Q2 19 Lower cost base Investments in KO, SH Productivity in product
Slide 13: Non-GAAP EPS
NON-GAAP EPS • Q2 Non-GAAP Operating Margin up 170bps Y/Y primarily due to continued cost leverage and a stronger USD, partially $0.71 offset by Payments $0.67 $0.68 investments $0.53 $0.53 $0.56 • Q2 Non-GAAP EPS growth driven by net benefit of share repurchases and margin expansion, Q1 18 Q2 18 Q3
Slide 14: Free Cash Flow
FREE CASH FLOW ($ millions) • Q2 FCF up 223% Y/Y due to timing of cash 1,104 taxes and CapEx, and operational growth 607 337 381 368 188 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Y/Y Growth (25)% (64)% (47)% 39% 9% 223% CapEx % of Revenue 6% 7% 7% 5% 7% 5% FCF % of Revenue 13% 7% 14% 38% 14% 23% 14 Calcul
Slide 15: 2019 Cash & Debt
2019 CASH & DEBT Capital Allocation Tenets $6.3B • Preserve financial flexibility to execute on strategy and drive long-term value creation Debt Q2 19 Ending Cash and • Drive organic growth while balancing profitability Investments* ($3.0B) • Supplement organic growth with disciplined acquisitions a
Slide 16: Capital Structure Progress
= Complete CAPITAL STRUCTURE PROGRESS Capital Allocation & Return Target Capital Structure Dividend • Initiating a quarterly dividend • We plan to maintain our current BBB+ rating … • First payment of $0.14 per share expected on or important as we build our payment about March 20, 2019 to shareholde
Slide 17: Guidance
GUIDANCE Q3 19 Q3 Guidance Context Low High • Non-GAAP EPS growth driven by: Revenue. $2.61 $2.66 • Net benefit of share repurchase program (in billions) . ~13pts Y/Y Growth. (1)% 1% • Operational productivity offset by Organic FX-Neutral Y/Y Growth. investment in managed payments 1% 3% • Non-GAAP e
Slide 18: Q&A
Q&A
Slide 19: Reconciliations
RECONCILIATIONS
Slide 20: 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, 2018 2018 2018 2018 2019 2019 (in millions, except percentages) GAAP operating income $ 579 $ 406 $ 556 $ 681 $ 609 $ 561 Stock-based compensation expense a
Slide 21: 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, 2018 2018 2018 2018 2019 2019 (in millions, except per share data) GAAP Income from continuing operations $ 407 $ 638 $ 720 $ 763 $ 521 $ 403 Stock-based co
Slide 22: GAAP to Non-GAAP Quarterly Reconciliations: Statement of Income
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS STATEMENT OF INCOME June 30, 2019 Three months ended June 30, 2018 Non-GAAP Non-GAAP Reported Entries Non-GAAP Reported Entries Non-GAAP (in millions, except per share data and percentages) Net revenues $ 2,687 $ — $ 2,687 $ 2,640 $ — $ 2,640 Cost of net re
Slide 23: 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, 2018 2018 2018 2018 2019 2019 (in millions) Net cash provided by continuing operating activities $ 495 $ 372 $ 560 $ 1,234 $ 550 $ 744 Less: Purchases of property and equipment, net (158
Slide 24: Reconciliation of Total Revenue
RECONCILIATION OF TOTAL REVENUE Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2018 2018 2018 2018 2019 2019 Net Revenues by Type (in millions) Net Transaction Revenues: Marketplace (2) $ 1,792 $ 1,837 $ 1,803 $ 1,984 $ 1,885 $ 1,887 StubHub 231 240 286 311 223 2
Slide 25: Reconciliation of Organic Revenue
RECONCILIATION OF ORGANIC REVENUE Three months ended March 31, June 30, September 30, December 31, March 31, June 30, 2018 2018 2018 2018 2019 2019 As Reported Revenue Growth 12% 9% 6% 6% 2% 2% Acquisition/Disposition Impact —% (0)% (1)% (1)% (1)% (0)% Foreign Currency Impact (5)% (3)% (0)% (1)% 2%
Slide 26: GAAP to Non-GAAP Reconciliations: Guidance
GAAP TO NON-GAAP RECONCILIATIONS GUIDANCE Three Months Ending September 30, 2019 (in billions, except per share amounts) GAAP Non-GAAP (a) Net Revenue $2.61 - $2.66 $2.61 - $2.66 Diluted EPS $0.40 - $0.44 $0.62 - $0.65 Twelve Months Ending December 31, 2019 (in billions, except per share amounts) GA
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