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® Lehman Brothers Conference December 5, 2007

eBay investor briefing at Lehman Brothers Conference, December 2007

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Page 1: eBay investor briefing at Lehman Brothers Conference, December 2007

®

Lehman Brothers Conference

December 5, 2007

Page 2: eBay investor briefing at Lehman Brothers Conference, December 2007

2eBay Inc. - Proprietary & Confidential

®

This presentation contains non-GAAP measures relating to the company's performance. You can find the reconciliation of those measures to GAAP measures in the tables of our earnings release which is available through our investor relations website located at http://investor.ebay.com/downloads/Reconciliation.pdf.

This presentation may contain forward-looking statements regarding matters that involve risk and uncertainty, including those relating to the company’s ability to grow its businesses, user base and user activity. Our actual results may differ materially from those discussed for a variety of reasons, including our increasing need in established markets to grow revenues from existing users as well as from new users; an increasingly competitive e-commerce environment; the complexity of managing a growing company with a broad range of businesses; the impact of the company’s recently announced pricing and product changes; regulatory, tax, and litigation risks (including financial industry risks specific to PayPal and risks specific to Skype’s technology and to the VoIP industry); our need to upgrade our technology and customer service infrastructure to accommodate growth at reasonable cost while adding new features and maintaining site stability; our need to successfully extend our platforms to new countries and new types of merchandise and sellers; foreign-exchange-rate fluctuations; and the impact and integration of recent and future acquisitions.

You can find more information about factors that could affect our results in our annual report on our Form 10-K and our quarterly reports on Form 10-Q (available at http://investor.ebay.com). You should not unduly rely on any forward-looking statements, and we assume no obligation to update them.

Page 3: eBay investor briefing at Lehman Brothers Conference, December 2007

3eBay Inc. - Proprietary & Confidential

®

EBAY Investment Thesis

• Great portfolio of businesses…

• The leading position in 3 of the main activity areas online – Buy, Pay, Communicate

• Strong growth characteristics

• Inherent synergies within and across business units

• Strong financial model … demonstrated track record

• Financial capacity and flexibility to…

• Reinvest for growth

• Opportunistically reduce outstanding shares

• In 2008, we will capitalize on our current momentum … while accelerating investments to defend and extend our leadership positions

Page 4: eBay investor briefing at Lehman Brothers Conference, December 2007

Great portfolio of businesses

craigslist

Marketplaces Payments Communications

Pay CommunicateBuy

Page 5: eBay investor briefing at Lehman Brothers Conference, December 2007

$1.21

$2.17

$3.27

$4.55

$5.97

$7.60-$7.65

2002 2003 2004 2005 2006 2007E

(in b

illio

ns)

Q4 Guidance$2.10 B - $2.15 B

Q1 – Q3 Actual$5.49 B

Strong top line growth

*CAGR and growth rate for 2007 based on midpoint of guidance range.

45% CAGR*

Y/Y Revenue Growth 62% 78% 51% 39% 31% 28%*

Page 6: eBay investor briefing at Lehman Brothers Conference, December 2007

$0.22

$0.38

$0.61

$0.86

$1.05

$1.47-$1.49

2002 2003 2004 2005 2006 2007E

Q4 Guidance$0.39 - $0.41

Q1 – Q3 Actual$1.09

Excellent non-GAAP EPS growth

46% CAGR*

Y/Y EPS Growth 78% 73% 61% 42% 21% 41%

*CAGR and growth rate for 2007 based on midpoint of guidance range.

Page 7: eBay investor briefing at Lehman Brothers Conference, December 2007

$0.34

$0.51

$0.99

$1.57

$1.73

$2.05

2002 2003 2004 2005 2006 2007E

(in b

illio

ns)

Q4 Implied Guidance$0.53 B

Q1 – Q3 Actual$1.52 B

Strong free cash flow growth

43% CAGR

Y/Y FCF Growth 75% 49% 95% 59% 10% 18%

$.3

$.5

$1.0

$1.6

$1.7

$2.05

Page 8: eBay investor briefing at Lehman Brothers Conference, December 2007

Large and growing marketplaces business

• 38 global markets

• $57.6B GMV (TTM)

• 6M daily new listings

• 248M confirmed registered users

* As of October 17, 2007

2002 2003 2004 2005 2006

Other**Fixed Price*Auctions*

$0.2B

$4.3B53%

CAGR Other MP Revenue

eBay Auction Revenue

$3.9B YTD25% Y/Y

eBay Fixed Price Revenue

Page 9: eBay investor briefing at Lehman Brothers Conference, December 2007

…Significant opportunities for growth

+

• New formats• New monetization models

• Buyer experience improvements

• Improve Trust & Safety• Price elasticity testing

GMV Beyond GMV

Page 10: eBay investor briefing at Lehman Brothers Conference, December 2007

GMV growth

20061999

$43B YTD13% Y/Y

52% CAGR

$3B

$52B

Page 11: eBay investor briefing at Lehman Brothers Conference, December 2007

Listening to buyers feedback …

Shipping Feedback Ease of Use Trust & Safety ConflictResolution

We asked our buyers: “What one thing would you suggest that eBay focus on?”

Source: eBay Global User Satisfaction Study (US Data)—July 2006

Page 12: eBay investor briefing at Lehman Brothers Conference, December 2007

TnS: Feedback/Shipping

• Implemented Feedback 2.0 (Detailed Seller Ratings)

# Selling ATOs(000s)

• Actionable data on seller quality

• Focus on Reducing Phishing Scams• Enforcement of Seller Non Performance

• Anti-Counterfeit Efforts

Page 13: eBay investor briefing at Lehman Brothers Conference, December 2007

Ease of use

Best Match(launched in Oct 06)

Bid Assistant (launched in May 07)

Visual Search (launched in Sept 07)

Next Gen My eBay (launched in Oct 07)

Next Gen Checkout (launched in Oct 07)

New Home Page (launched in Sept 07)

Page 14: eBay investor briefing at Lehman Brothers Conference, December 2007

Improve conflict resolution

For Buyers:

• Top buyer account management

• Increased CS accessibility • Expanded buyer purchase

protection programs

For Sellers:

• Top seller account management • Expanded CS offerings for all

PowerSellers• Opened PowerSeller program to

include high unit volume sellers• Stronger proactive education on

good buying experiences

Combined CS organization … improved end-to-end experience

Page 15: eBay investor briefing at Lehman Brothers Conference, December 2007

Types of Pricing Promotions

Final Value Fees

Insertion Fees

Gallery Photos

Bundles {i.e Insertion Fee + Gallery Photo Fee}

Category Specific

What are we trying to learn?

Elasticity of Supply and Demand...

– Impact on quality of inventory

–Abundance and velocity of trade

–Longer term impact on buyers and sellers

– Impact of fee structure on sellers … risk/reward tradeoff

Price elasticity testing

Page 16: eBay investor briefing at Lehman Brothers Conference, December 2007

Beyond GMV … diversified revenue streams

Shopping.comClassifieds Advertising**

106% 114% 29%

2006*2006* 2006*2007* 2007*2007*

*All data is YTD through Q3**Advertising excludes “Other revenue”

Page 17: eBay investor briefing at Lehman Brothers Conference, December 2007

Enabling the world’s conversations

• Strong brand

• Great product

• Global reach

• Thriving ecosystem

Page 18: eBay investor briefing at Lehman Brothers Conference, December 2007

Enabling the world’s conversations

Revenue (M)

Q307Q405

• 246M registered users

• 10M+ peak online users

• 3B+ monthly call minutes

• 4.4% of total international long distance minutes*

• 28 languages and nearly every country

$98

* 2006 Telegeography

96% Y/Y growth

Page 19: eBay investor briefing at Lehman Brothers Conference, December 2007
Page 20: eBay investor briefing at Lehman Brothers Conference, December 2007

PayPal vision

The world’sfavorite way to pay

and be paid

Page 21: eBay investor briefing at Lehman Brothers Conference, December 2007

Why buyers love PayPal

SIMPLEEasy account set up“Express checkout” on the Internet

Transactions take a few seconds

SAFE“Shop without sharing”

Buyer protection

Page 22: eBay investor briefing at Lehman Brothers Conference, December 2007

EASY TO USEall-in-one solutionimmediate account setup

COST EFFECTIVEsimple bundled pricinglower processing cost than the competitionfewer fraudulent transactions

INCREASED SALESoffering PayPal drives incremental revenues

Why merchants love PayPal

Page 23: eBay investor briefing at Lehman Brothers Conference, December 2007

The “digitization of currency”?

source: Nilson Report (reflects total economy; electronic payments represent ACH and check conversion)

0

10

20

30

40

50

60

1990 2000 2010

Credit

DebitCash

Electronic

Prepaid

perc

ent

Check

payment volume by type (US)

Page 24: eBay investor briefing at Lehman Brothers Conference, December 2007

Strategically advantaged

• superior value proposition– consumers: safe and simple

– merchants: lower cost & incremental sales

• customer acquisition

• global payments platform

• anti-fraud capabilities and data

• funding mix advantage

• large merchant and consumer base

ACH

Inc

Page 25: eBay investor briefing at Lehman Brothers Conference, December 2007

PayPal a powerful payments brand

Awareness*

Aided

Q1 2007 PayPal “brand tracker” of a representative sample of US online shoppers:

88%

99%

98%

96%

21%

Usage**

Past 3 months

33%

67%

37%

12%

1%

Preference

“prefer”

17%

29%

12%

8%

1%

Page 26: eBay investor briefing at Lehman Brothers Conference, December 2007

Strong account and revenue growth

PayPal accounts

0

20

40

60

80

100

120

140

160

Q10

3Q20

3Q30

3Q40

3Q1

04Q20

4Q30

4Q40

4Q10

5Q20

5Q30

5Q40

5Q10

6Q20

6Q30

6Q40

6Q10

7Q20

7Q30

7

164 M34% yoy growth

Q1 04Q2 04

Q3 04Q4 04

Q1 05Q2 05

Q3 05Q4 05

Q1 06Q2 06

Q3 06Q4 06

Q1 07Q2 07

Q3 07

Merchant services

On-eBay

Revenue growth rates

61%

17%

Other facts for Q3: • $46.3B TPV (prior 12 months)• 177M transactions in Q3 • ~$3B in stored balances

Page 27: eBay investor briefing at Lehman Brothers Conference, December 2007

Global revenues

Large and diversifying revenue base

$0.4B

$1.4B

49% CAGR

2003 2004 2005 2006

Merchant Services

On eBay

$1.4B YTD33% Y/Y

Page 28: eBay investor briefing at Lehman Brothers Conference, December 2007

PRESENCE

PREF

EREN

CE

Goal: win e-commerce payments

Page 29: eBay investor briefing at Lehman Brothers Conference, December 2007

Clear pathway to success

on the web

other eBay marketplaces

on eBay

beyondpayments

Page 30: eBay investor briefing at Lehman Brothers Conference, December 2007

On eBay

Total Payment Volume ($B)

$4.3

$24.5

Q307 $6.8B18% Y/Y

2002 2006

Global penetration 32% 40% 47% 53% 57% 61%in Q307

Page 31: eBay investor briefing at Lehman Brothers Conference, December 2007

On eBay: key tactics

Checkout

Localized sites

Global serviceExpanded to 190 countriesand 17 currencies

Page 32: eBay investor briefing at Lehman Brothers Conference, December 2007

On the web: Merchant Services

Total Payment Volume ($B)

$2.7

$13.3

Q307 $5.4B61%Y/Y

2002 2006

Page 33: eBay investor briefing at Lehman Brothers Conference, December 2007

On the web: segmented strategy

volume sharenumber

small

large

medium

Page 34: eBay investor briefing at Lehman Brothers Conference, December 2007

On the web: key tactics

Marketing

Product

Sales & Distribution

universal checkout

Page 36: eBay investor briefing at Lehman Brothers Conference, December 2007

Other eBay marketplaces

~$10B un-penetrated opportunity

.de

Page 37: eBay investor briefing at Lehman Brothers Conference, December 2007

Beyond: innovating for the future

• PayPal PayLater

• Send money via Skype

• PayPal Plug-In

• PayPal labs

• PayPal Mobile WAP

Page 38: eBay investor briefing at Lehman Brothers Conference, December 2007

PayLater

PayLater:

point-of-sale credit

No payments for 90 days availablewith PayPal Credit

Page 39: eBay investor briefing at Lehman Brothers Conference, December 2007

Send money via Skype

Page 40: eBay investor briefing at Lehman Brothers Conference, December 2007

PayPal Plug-in for toolbars

Consumers can use PayPal to form-fill & pay securely on any e-commerce merchant –

even if they don’t accept PayPal yet

Page 41: eBay investor briefing at Lehman Brothers Conference, December 2007

PayPal Labs

MySpace: fundraising badge

Facebook: fundraising badge

Page 42: eBay investor briefing at Lehman Brothers Conference, December 2007

Clear pathway to success

on the web

other eBay marketplaces

on eBay

beyondpayments

Page 43: eBay investor briefing at Lehman Brothers Conference, December 2007

eBay Inc looking forward…

• Core eBay• Product/ TnS/ Pricing learnings

• Strong growth trajectory• PayPal Merchant Services • Skype

• New formats / monetization continue to gain momentum

• Classifieds• Advertising• StubHub

• Leverage / productivity

Momentum• Competitive environment intensifying

• Need to do more/better/faster • Business mix

• Lower- margin businesses growing fastest

• Accelerating investments• PayPal MS – build ubiquity• PayLater – accelerate adoption• Skype – more user engagement

Headwinds

• Q4 Holiday Season• ’08 Economic Environment• FX

? Unknowns ?

Page 44: eBay investor briefing at Lehman Brothers Conference, December 2007

Summary

• Great portfolio of businesses: Buy, Pay and Communicate

• Focused on execution

• Strong financial model … demonstrated track record

• Great opportunities in 2008 and beyond