Slide 1: Q4 2019 Financial Highlights
Q4 2019 FINANCIAL HIGHLIGHTS January 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: Q4 Highlights
Q4 HIGHLIGHTS • Revenue of $2.8B, down 2% Y/Y (flat Y/Y FX-Neutral) • GAAP EPS of $0.69 and Non-GAAP EPS of $0.81 • GAAP operating margin of 22%, down 2pt Y/Y • Non-GAAP operating margin of 29%, flat Y/Y • Generated $811M of Operating Cash Flow and $672M of Free Cash Flow • Returned $1.1B to shareho
Slide 5: Trailing 12-Month Active Buyers
TRAILING 12-MONTH ACTIVE BUYERS (millions) 182 183 183 179 180 177 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Y/Y Growth 4% 4% 4% 4% 4% 2% 5
Slide 6: GMV
GMV ($ millions) 22,719 24,641 22,589 22,601 21,721 23,299 14,883 13,708 13,701 13,768 14,352 13,232 Int’l 9,011 9,758 8,888 8,833 8,489 8,947 US Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 US Y/Y Growth 3% (1)% (6)% (5)% (6)% (8)% Int’l FX-Neutral Y/Y Growth 7% 5% 3% 2% 1% (1)% Total FX-Neutral Y/Y Growth
Slide 7: Revenue
REVENUE ($ millions) 2,649 2,877 2,643 2,687 2,649 2,821 • Q4 FX-Neutral 582 539 557 534 Transaction Revenue 560 535 up 1% Y/Y … down 2pts MS&O Q/Q • Q4 FX-Neutral MS&O Revenue down 5% 2,295 2,108 2,130 2,115 2,282 Y/Y, with 7pts driven 2,089 Transaction by asset disposition ... down 3pts Q/Q • FY 1
Slide 8: Marketplace GMV & Revenue
MARKETPLACE GMV & REVENUE ($ millions) 23,231 • Q4 FX-Neutral 21,966 Transaction Revenue GMV 21,482 21,571 21,484 up 1% Y/Y, down 20,489 3pt Q/Q 316 259 301 277 270 254 • Q4 FX-Neutral MS&O MS&O Revenue down 17% Revenue Y/Y, down 4pts Q/Q • Segment Margin up 1,984 1,977 1pt Y/Y Transaction 1,803 1,8
Slide 9: StubHub GMV & Revenue
STUBHUB GMV & REVENUE • Q4 FX-Neutral GMV ($ millions) down 5% Y/Y, down 5pts Q/Q, on a softer concerts and theater 1,410 landscape 1,333 GMV 1,237 1,232 • Q4 FX-Neutral 1,117 1,018 Transaction Revenue 1 down 2% Y/Y 1 1 3 3 3 16 53 20 3 25 5 5 203 MS&O 52 5 621 21 • Q4 FX-Neutral MS&O 96 6 61 21 1 R
Slide 10: Classifieds Revenue
CLASSIFIEDS REVENUE ($ millions) • Q4 FX-Neutral Revenue up 6% Y/Y, down 2pts Q/Q, driven by display advertising headwinds 271 269 263 265 • Segment Margin down 254 256 1pt Y/Y • FY 19 Total Revenue $1.1B … FX-Neutral growth 9% Y/Y Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Rev Y/Y Growth. 8% 8% 4% 5% 4% 3
Slide 11: Non-GAAP Expenses
NON-GAAP EXPENSES (% of revenue) Operating Expense at 48.2%, down ~2pt Y/Y Cost of Revenue Sales & Marketing Product Development General & Admin 20.9% 22.5% 31.8% 8.5% 9.2% 7.7% 28.4% 6.7% Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 Q4 18 Q4 19 Investments in Lower Marketplaces Costs related to payments, KO
Slide 12: Non-GAAP EPS
NON-GAAP EPS • Q4 Non-GAAP Operating Margin up 10bps Y/Y, with investments more than offset by operating efficiencies and asset disposition $0.81 $0.71 • Q4 Non-GAAP EPS Y/Y $0.67 $0.68 $0.67 growth driven by net $0.56 benefit of share repurchases, lower tax rate and operating efficiencies, offset b
Slide 13: Free Cash Flow
FREE CASH FLOW ($ millions) • Q4 FCF down 39% Y/Y driven by timing of working capital and cash taxes 1,104 913 • FY 19 FCF $2.6B 607 672 • FY 19 CapEx 5% of 381 368 Revenue Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Y/Y Growth (47)% 39% 9% 223% 140% (39)% CapEx % of Revenue 7% 5% 7% 5% 4% 5% FCF % of Reven
Slide 14: 2019 Cash & Debt
2019 CASH & DEBT Capital Allocation Tenets $3.8B • Preserve financial flexibility to execute on strategy and drive long-term value creation Debt Net Debt • Drive organic growth while balancing profitability Q4 19 Ending Cash and Investments* • Supplement organic growth with disciplined acquisitions
Slide 15: Capital Structure Progress in 2019
= Complete CAPITAL STRUCTURE PROGRESS IN 2019 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 sh
Slide 16: 2020 Guidance
2020 GUIDANCE Org FX-Neutral Revenue Growth @ midpoint Revenue $10.72B - $10.92B MP Volume incl IST impact ~(2)pts Y/Y Growth (1)% - 1% Advertising & Managed Payments ~3pts Organic FX-Neutral Y/Y Growth 1% - 3% Classifieds/StubHub/Other MS&O ~1pt Organic FX-Neutral Y/Y Growth ~2pts Operating Margin
Slide 17: Q1 Guidance
Q1 GUIDANCE Q1 20 Q1 Guidance Context Low High • Non-GAAP EPS growth driven by: Revenue. $2.55 $2.60 • ~11 pts from the combined benefit of lower (in billions) . share count and operational growth, partially offset by payments investments Y/Y Growth. (4)% (2)% Organic FX-Neutral Y/Y Growth. • Headwi
Slide 18: Q&A
Q&A
Slide 19: Appendix
APPENDIX
Slide 20: Internet Sales Tax Impact on MP US GMV
INTERNET SALES TAX IMPACT ON MP US GMV (3)% (3)% FXN US GMV Growth x IST (5)% ~ 3 pts (6)% ~ 1 pt ~ 6 pts IST Impact ~ 1 pt (6)% (6)% (7)% (9)% FXN US GMV Growth Q1'19 Q2'19 Q3'19 Q4'19 New States: 3 5 14 11 Total States: 3 8 22 33 Large States: NY CA, TX 20
Slide 21: Reconciliations
RECONCILIATIONS
Slide 22: GAAP to Non-GAAP Quarterly Reconciliations: Operating Margin
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS OPERATING MARGIN September 30, December 31, March 31, June 30, September 30, December 31, 2018 2018 2019 2019 2019 2019 GAAP operating income $ 556 $ 681 $ 609 $ 561 $ 532 $ 619 Stock-based compensation expense and related employer payroll taxes 127 143 126
Slide 23: GAAP to Non-GAAP Quarterly Reconciliations: Net Income / EPS
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS NET INCOME / EPS September 30, December 31, March 31, June 30, September 30, December 31, 2018 2018 2019 2019 2019 2019 GAAP Income from continuing operations $ 720 $ 763 $ 521 $ 403 $ 310 $ 558 Stock-based compensation expense and related employer payroll
Slide 24: GAAP to Non-GAAP Quarterly Reconciliations: Statement of Income
GAAP TO NON-GAAP QUARTERLY RECONCILIATIONS STATEMENT OF INCOME December 31, 2019 December 31, 2018 Reported Non-GAAP Entries Non-GAAP Reported Non-GAAP Entries Non-GAAP (in millions, except per share data and percentages) Net revenues $ 2,821 $ — $ 2,821 $ 2,877 $ — $ 2,877 Cost of net revenues 650
Slide 25: Calculation of Free Cash Flow
CALCULATION OF FREE CASH FLOW September 30, December 31, March 31, June 30, September 30, December 31, 2018 2018 2019 2019 2019 2019 Net cash provided by continuing operating activities $ 560 $ 1,234 $ 550 $ 744 $ 1,009 $ 811 Less: Purchases of property and equipment, net (179) (130) (182) (137) (96
Slide 26: Reconciliation of Total Revenue
RECONCILIATION OF TOTAL REVENUE September 30, December 31, March 31, June 30, September 30, December 31, 2018 2018 2019 2019 2019 2019 Net Revenues by Type Net Transaction Revenues: Marketplace (2) $ 1,803 $ 1,984 $ 1,885 $ 1,887 $ 1,829 $ 1,977 StubHub 286 311 223 243 286 305 Total net transaction
Slide 27: Reconciliation of Organic Revenue
RECONCILIATION OF ORGANIC REVENUE Three months ended September 30, December 31, March 31, June 30, September 30, December 31, 2018 2018 2019 2019 2019 2019 As Reported Revenue Growth 6% 6% 2% 2% 0% -2% Acquisition/Disposition Impact (1)% (1)% (1)% (0)% 1% 1% Foreign Currency Impact (0)% (1)% 2% 2% 2
Slide 28: GAAP to Non-GAAP Reconciliations: Guidance
GAAP TO NON-GAAP RECONCILIATIONS GUIDANCE Three Months Ending March 31, 2020 (in billions, except per share amounts) GAAP Non-GAAP (a) Net Revenue $2.55 - $2.60 $2.55 - $2.60 Diluted EPS $0.50 - $0.53 $0.70 - $0.73 Twelve Months Ending December 31, 2020 (in billions, except per share amounts) GAAP N
Slide 29: Slide 29