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FORM
|
10-Q
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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EBAY INC
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(Exact name of registrant as specified in its charter)
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||
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Delaware
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77-0430924
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(State or other jurisdiction of
incorporation or organization)
|
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(I.R.S. Employer
Identification Number)
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||
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2025 Hamilton Avenue
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|
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San Jose
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,
|
California
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|
95125
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading symbol(s)
|
Name of exchange on which registered
|
Common stock
|
EBAY
|
The Nasdaq Global Select Market
|
6.00% Notes due 2056
|
EBAYL
|
The Nasdaq Global Select Market
|
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
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Emerging growth company
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☐
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Item 1:
|
Financial Statements
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(In millions, except par value)
|
||||||
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,508
|
|
|
$
|
2,202
|
|
Short-term investments
|
2,969
|
|
|
2,713
|
|
||
Accounts receivable, net
|
797
|
|
|
712
|
|
||
Other current assets
|
1,570
|
|
|
1,499
|
|
||
Total current assets
|
6,844
|
|
|
7,126
|
|
||
Long-term investments
|
1,936
|
|
|
3,778
|
|
||
Property and equipment, net
|
1,573
|
|
|
1,597
|
|
||
Goodwill
|
5,185
|
|
|
5,160
|
|
||
Intangible assets, net
|
94
|
|
|
92
|
|
||
Operating lease right-of-use assets
|
670
|
|
|
—
|
|
||
Deferred tax assets
|
4,468
|
|
|
4,792
|
|
||
Other assets
|
399
|
|
|
274
|
|
||
Total assets
|
$
|
21,169
|
|
|
$
|
22,819
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
2,063
|
|
|
$
|
1,546
|
|
Accounts payable
|
303
|
|
|
286
|
|
||
Accrued expenses and other current liabilities
|
2,515
|
|
|
2,335
|
|
||
Deferred revenue
|
178
|
|
|
170
|
|
||
Income taxes payable
|
150
|
|
|
117
|
|
||
Total current liabilities
|
5,209
|
|
|
4,454
|
|
||
Operating lease liabilities
|
519
|
|
|
—
|
|
||
Deferred tax liabilities
|
2,684
|
|
|
2,925
|
|
||
Long-term debt
|
7,243
|
|
|
7,685
|
|
||
Other liabilities
|
1,408
|
|
|
1,474
|
|
||
Total liabilities
|
17,063
|
|
|
16,538
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value; 3,580 shares authorized; 842 and 915 shares outstanding
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
15,911
|
|
|
15,716
|
|
||
Treasury stock at cost, 845 and 763 shares
|
(29,396
|
)
|
|
(26,394
|
)
|
||
Retained earnings
|
17,125
|
|
|
16,459
|
|
||
Accumulated other comprehensive income
|
464
|
|
|
498
|
|
||
Total stockholders’ equity
|
4,106
|
|
|
6,281
|
|
||
Total liabilities and stockholders’ equity
|
$
|
21,169
|
|
|
$
|
22,819
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net revenues
|
$
|
2,687
|
|
|
$
|
2,640
|
|
|
$
|
5,330
|
|
|
$
|
5,220
|
|
Cost of net revenues
|
630
|
|
|
597
|
|
|
1,231
|
|
|
1,156
|
|
||||
Gross profit
|
2,057
|
|
|
2,043
|
|
|
4,099
|
|
|
4,064
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
817
|
|
|
838
|
|
|
1,559
|
|
|
1,594
|
|
||||
Product development
|
322
|
|
|
352
|
|
|
619
|
|
|
686
|
|
||||
General and administrative
|
274
|
|
|
368
|
|
|
583
|
|
|
638
|
|
||||
Provision for transaction losses
|
71
|
|
|
66
|
|
|
143
|
|
|
138
|
|
||||
Amortization of acquired intangible assets
|
12
|
|
|
13
|
|
|
25
|
|
|
23
|
|
||||
Total operating expenses
|
1,496
|
|
|
1,637
|
|
|
2,929
|
|
|
3,079
|
|
||||
Income from operations
|
561
|
|
|
406
|
|
|
1,170
|
|
|
985
|
|
||||
Interest and other, net
|
(51
|
)
|
|
301
|
|
|
13
|
|
|
269
|
|
||||
Income before income taxes
|
510
|
|
|
707
|
|
|
1,183
|
|
|
1,254
|
|
||||
Income tax provision
|
(107
|
)
|
|
(69
|
)
|
|
(259
|
)
|
|
(209
|
)
|
||||
Income from continuing operations
|
403
|
|
|
638
|
|
|
924
|
|
|
1,045
|
|
||||
Income (loss) from discontinued operations, net of income taxes
|
(1
|
)
|
|
4
|
|
|
(4
|
)
|
|
4
|
|
||||
Net income
|
$
|
402
|
|
|
$
|
642
|
|
|
$
|
920
|
|
|
$
|
1,049
|
|
|
|
|
|
|
|
|
|
||||||||
Income per share - basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.47
|
|
|
$
|
0.64
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income per share - basic
|
$
|
0.47
|
|
|
$
|
0.64
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
||||||||
Income per share - diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.46
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income per share - diluted
|
$
|
0.46
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
860
|
|
|
992
|
|
|
880
|
|
|
1,001
|
|
||||
Diluted
|
867
|
|
|
1,004
|
|
|
887
|
|
|
1,016
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net income
|
$
|
402
|
|
|
$
|
642
|
|
|
$
|
920
|
|
|
$
|
1,049
|
|
Other comprehensive income, net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gain (loss)
|
(20
|
)
|
|
(325
|
)
|
|
(52
|
)
|
|
(193
|
)
|
||||
Unrealized gains (losses) on investments, net
|
16
|
|
|
(2
|
)
|
|
56
|
|
|
(38
|
)
|
||||
Tax benefit (expense) on unrealized gains (losses) on investments, net
|
(5
|
)
|
|
—
|
|
|
(15
|
)
|
|
10
|
|
||||
Unrealized gains (losses) on hedging activities, net
|
11
|
|
|
137
|
|
|
(30
|
)
|
|
108
|
|
||||
Tax benefit (expense) on unrealized gains (losses) on hedging activities, net
|
(2
|
)
|
|
(29
|
)
|
|
7
|
|
|
(23
|
)
|
||||
Other comprehensive income/(loss), net of tax
|
—
|
|
|
(219
|
)
|
|
(34
|
)
|
|
(136
|
)
|
||||
Comprehensive income
|
$
|
402
|
|
|
$
|
423
|
|
|
$
|
886
|
|
|
$
|
913
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Common stock:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Common stock issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Common stock repurchased/forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, end of period
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||
Additional paid-in-capital:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
15,785
|
|
|
15,362
|
|
|
15,716
|
|
|
15,293
|
|
||||
Common stock and stock-based awards issued
|
52
|
|
|
58
|
|
|
55
|
|
|
67
|
|
||||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(65
|
)
|
|
(93
|
)
|
|
(119
|
)
|
|
(153
|
)
|
||||
Stock-based compensation
|
139
|
|
|
151
|
|
|
260
|
|
|
271
|
|
||||
Other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Balance, end of period
|
15,911
|
|
|
15,478
|
|
|
15,911
|
|
|
15,478
|
|
||||
Treasury stock at cost:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
(27,895
|
)
|
|
(22,903
|
)
|
|
(26,394
|
)
|
|
(21,892
|
)
|
||||
Common stock repurchased
|
(1,501
|
)
|
|
(989
|
)
|
|
(3,002
|
)
|
|
(2,000
|
)
|
||||
Balance, end of period
|
(29,396
|
)
|
|
(23,892
|
)
|
|
(29,396
|
)
|
|
(23,892
|
)
|
||||
Retained earnings:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
16,847
|
|
|
14,335
|
|
|
16,459
|
|
|
13,929
|
|
||||
Net income
|
402
|
|
|
642
|
|
|
920
|
|
|
1,049
|
|
||||
Dividends and dividend equivalents declared
|
(124
|
)
|
|
—
|
|
|
(254
|
)
|
|
—
|
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Balance, end of period
|
17,125
|
|
|
14,977
|
|
|
17,125
|
|
|
14,977
|
|
||||
Accumulated other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
464
|
|
|
800
|
|
|
498
|
|
|
717
|
|
||||
Foreign currency translation adjustment
|
(20
|
)
|
|
(325
|
)
|
|
(52
|
)
|
|
(193
|
)
|
||||
Change in unrealized gains (losses) on investments
|
16
|
|
|
(2
|
)
|
|
56
|
|
|
(38
|
)
|
||||
Change in unrealized gains (losses) on derivative instruments
|
11
|
|
|
137
|
|
|
(30
|
)
|
|
108
|
|
||||
Tax benefit (provision) on above items
|
(7
|
)
|
|
(29
|
)
|
|
(8
|
)
|
|
(13
|
)
|
||||
Balance, end of period
|
464
|
|
|
581
|
|
|
464
|
|
|
581
|
|
||||
Total stockholders’ equity
|
$
|
4,106
|
|
|
$
|
7,146
|
|
|
$
|
4,106
|
|
|
$
|
7,146
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends and dividend equivalents declared per share or restricted stock unit
|
$
|
0.14
|
|
|
$
|
—
|
|
|
$
|
0.28
|
|
|
$
|
—
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
920
|
|
|
$
|
1,049
|
|
(Income) loss from discontinued operations, net of income taxes
|
4
|
|
|
(4
|
)
|
||
Adjustments:
|
|
|
|
||||
Provision for transaction losses
|
143
|
|
|
138
|
|
||
Depreciation and amortization
|
344
|
|
|
349
|
|
||
Stock-based compensation
|
260
|
|
|
271
|
|
||
(Gain) loss on investments, net
|
1
|
|
|
(260
|
)
|
||
Deferred income taxes
|
71
|
|
|
(17
|
)
|
||
Change in fair value of warrant
|
(105
|
)
|
|
(106
|
)
|
||
Changes in assets and liabilities, net of acquisition effects
|
(344
|
)
|
|
(553
|
)
|
||
Net cash provided by operating activities
|
1,294
|
|
|
867
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of property and equipment
|
(319
|
)
|
|
(342
|
)
|
||
Purchases of investments
|
(24,178
|
)
|
|
(10,365
|
)
|
||
Maturities and sales of investments
|
25,827
|
|
|
12,555
|
|
||
Acquisitions, net of cash acquired
|
(93
|
)
|
|
(302
|
)
|
||
Other
|
49
|
|
|
1
|
|
||
Net cash provided by investing activities
|
1,286
|
|
|
1,547
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of common stock
|
55
|
|
|
67
|
|
||
Repurchases of common stock
|
(2,949
|
)
|
|
(2,000
|
)
|
||
Payments for taxes related to net share settlements of restricted stock units and awards
|
(119
|
)
|
|
(153
|
)
|
||
Payments for dividends
|
(245
|
)
|
|
—
|
|
||
Repayment of debt
|
—
|
|
|
(750
|
)
|
||
Other
|
—
|
|
|
(31
|
)
|
||
Net cash used in financing activities
|
(3,258
|
)
|
|
(2,867
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(20
|
)
|
|
(51
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(698
|
)
|
|
(504
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
2,219
|
|
|
2,140
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,521
|
|
|
$
|
1,636
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
||||
Cash paid for:
|
|
|
|
||||
Interest
|
$
|
154
|
|
|
$
|
162
|
|
Income taxes
|
$
|
221
|
|
|
$
|
454
|
|
Noncash investing activities:
|
|
|
|
||||
Relinquishment of equity method investment
|
$
|
—
|
|
|
$
|
266
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
403
|
|
|
$
|
638
|
|
|
$
|
924
|
|
|
$
|
1,045
|
|
Income (loss) from discontinued operations, net of income taxes
|
(1
|
)
|
|
4
|
|
|
(4
|
)
|
|
4
|
|
||||
Net income
|
$
|
402
|
|
|
$
|
642
|
|
|
$
|
920
|
|
|
$
|
1,049
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock - basic
|
860
|
|
|
992
|
|
|
880
|
|
|
1,001
|
|
||||
Dilutive effect of equity incentive awards
|
7
|
|
|
12
|
|
|
7
|
|
|
15
|
|
||||
Weighted average shares of common stock - diluted
|
867
|
|
|
1,004
|
|
|
887
|
|
|
1,016
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income per share - basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.47
|
|
|
$
|
0.64
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income per share - basic
|
$
|
0.47
|
|
|
$
|
0.64
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Income per share - diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.46
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income per share - diluted
|
$
|
0.46
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive
|
20
|
|
|
15
|
|
|
23
|
|
|
13
|
|
|
Motors.co.uk
|
||
Goodwill
|
$
|
65
|
|
Purchased intangible assets
|
30
|
|
|
Net liabilities
|
(2
|
)
|
|
Total
|
$
|
93
|
|
|
Giosis
|
||
Purchased intangible assets
|
$
|
91
|
|
Goodwill
|
532
|
|
|
Net liabilities
|
(50
|
)
|
|
Total
|
$
|
573
|
|
|
December 31,
2018 |
|
Goodwill
Acquired |
|
Adjustments
|
|
June 30,
2019 |
||||||||
Marketplace
|
$
|
4,594
|
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
4,556
|
|
StubHub
|
227
|
|
|
—
|
|
|
—
|
|
|
227
|
|
||||
Classifieds
|
339
|
|
|
65
|
|
|
(2
|
)
|
|
402
|
|
||||
Total
|
$
|
5,160
|
|
|
$
|
65
|
|
|
$
|
(40
|
)
|
|
$
|
5,185
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (Years)
|
||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer lists and user base
|
$
|
536
|
|
|
$
|
(460
|
)
|
|
$
|
76
|
|
|
5
|
|
$
|
519
|
|
|
$
|
(445
|
)
|
|
$
|
74
|
|
|
5
|
Marketing related
|
578
|
|
|
(572
|
)
|
|
6
|
|
|
5
|
|
584
|
|
|
(578
|
)
|
|
6
|
|
|
5
|
||||||
Developed technologies
|
280
|
|
|
(272
|
)
|
|
8
|
|
|
3
|
|
278
|
|
|
(269
|
)
|
|
9
|
|
|
3
|
||||||
All other
|
161
|
|
|
(157
|
)
|
|
4
|
|
|
4
|
|
160
|
|
|
(157
|
)
|
|
3
|
|
|
4
|
||||||
Total
|
$
|
1,555
|
|
|
$
|
(1,461
|
)
|
|
$
|
94
|
|
|
|
|
$
|
1,541
|
|
|
$
|
(1,449
|
)
|
|
$
|
92
|
|
|
|
|
|
|
||
Remaining 2019
|
|
$
|
29
|
|
2020
|
|
44
|
|
|
2021
|
|
18
|
|
|
2022
|
|
2
|
|
|
2023
|
|
1
|
|
|
Total
|
|
$
|
94
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Revenues
|
|
|
|
|
|
|
|
||||||||
Marketplace
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
$
|
1,887
|
|
|
$
|
1,837
|
|
|
$
|
3,772
|
|
|
$
|
3,629
|
|
Marketing services and other revenues
|
270
|
|
|
298
|
|
|
547
|
|
|
608
|
|
||||
Total Marketplace
|
2,157
|
|
|
2,135
|
|
|
4,319
|
|
|
4,237
|
|
||||
|
|
|
|
|
|
|
|
||||||||
StubHub
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
243
|
|
|
240
|
|
|
466
|
|
|
471
|
|
||||
Marketing services and other revenues
|
21
|
|
|
6
|
|
|
28
|
|
|
7
|
|
||||
Total StubHub
|
264
|
|
|
246
|
|
|
494
|
|
|
478
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Classifieds (1)
|
271
|
|
|
259
|
|
|
527
|
|
|
505
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Elimination of inter-segment net revenue (2)
|
(5
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
||||
Total consolidated net revenue
|
$
|
2,687
|
|
|
$
|
2,640
|
|
|
$
|
5,330
|
|
|
$
|
5,220
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||||
Marketplace
|
$
|
691
|
|
|
$
|
639
|
|
|
$
|
1,463
|
|
|
$
|
1,327
|
|
StubHub
|
11
|
|
|
5
|
|
|
37
|
|
|
36
|
|
||||
Classifieds
|
102
|
|
|
98
|
|
|
194
|
|
|
185
|
|
||||
Corporate and other costs
|
(243
|
)
|
|
(336
|
)
|
|
(524
|
)
|
|
(563
|
)
|
||||
Total operating income
|
561
|
|
|
406
|
|
|
1,170
|
|
|
985
|
|
||||
Interest and other, net
|
(51
|
)
|
|
301
|
|
|
13
|
|
|
269
|
|
||||
Income before income taxes
|
$
|
510
|
|
|
$
|
707
|
|
|
$
|
1,183
|
|
|
$
|
1,254
|
|
(1)
|
Classifieds net revenues consists entirely of marketing services and other revenue.
|
(2)
|
Represents revenue generated between our reportable segments.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
U.S.
|
$
|
1,057
|
|
|
$
|
1,055
|
|
|
$
|
2,115
|
|
|
$
|
2,129
|
|
Germany
|
393
|
|
|
407
|
|
|
777
|
|
|
799
|
|
||||
United Kingdom
|
369
|
|
|
369
|
|
|
725
|
|
|
725
|
|
||||
South Korea
|
300
|
|
|
304
|
|
|
598
|
|
|
587
|
|
||||
Rest of world
|
568
|
|
|
505
|
|
|
1,115
|
|
|
980
|
|
||||
Total net revenues
|
$
|
2,687
|
|
|
$
|
2,640
|
|
|
$
|
5,330
|
|
|
$
|
5,220
|
|
|
June 30, 2019
|
||||||||||||||
|
Gross
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Corporate debt securities
|
2,957
|
|
|
1
|
|
|
(2
|
)
|
|
2,956
|
|
||||
|
$
|
2,970
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
2,969
|
|
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
1,782
|
|
|
4
|
|
|
(3
|
)
|
|
1,783
|
|
||||
|
$
|
1,782
|
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
1,783
|
|
|
December 31, 2018
|
||||||||||||||
|
Gross
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Corporate debt securities
|
2,615
|
|
|
—
|
|
|
(9
|
)
|
|
2,606
|
|
||||
Government and agency securities
|
90
|
|
|
—
|
|
|
—
|
|
|
90
|
|
||||
|
$
|
2,722
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
2,713
|
|
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
3,682
|
|
|
1
|
|
|
(48
|
)
|
|
3,635
|
|
||||
|
$
|
3,682
|
|
|
$
|
1
|
|
|
$
|
(48
|
)
|
|
$
|
3,635
|
|
|
June 30, 2019
|
||
One year or less (including restricted cash of $13)
|
$
|
2,969
|
|
One year through two years
|
1,069
|
|
|
Two years through three years
|
450
|
|
|
Three years through four years
|
264
|
|
|
|
$
|
4,752
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Equity investments without readily determinable fair values
|
$
|
136
|
|
|
$
|
137
|
|
Equity investments under the equity method of accounting
|
17
|
|
|
6
|
|
||
Total equity investments
|
$
|
153
|
|
|
$
|
143
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Carrying value, beginning of period
|
$
|
137
|
|
|
$
|
890
|
|
|
$
|
137
|
|
|
$
|
872
|
|
Additions
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||
Downward adjustments for observable price changes and impairment
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
||||
Foreign currency translation and other
|
(1
|
)
|
|
(34
|
)
|
|
(1
|
)
|
|
(16
|
)
|
||||
Carrying value, end of period
|
$
|
136
|
|
|
$
|
859
|
|
|
$
|
136
|
|
|
$
|
859
|
|
|
Balance Sheet Location
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Derivative Assets:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other Current Assets
|
|
$
|
45
|
|
|
$
|
72
|
|
Foreign exchange contracts designated as net investment hedges
|
Other Current Assets
|
|
—
|
|
|
—
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
Other Current Assets
|
|
21
|
|
|
38
|
|
||
Warrant
|
Other Assets
|
|
253
|
|
|
148
|
|
||
Foreign exchange contracts designated as cash flow hedges
|
Other Assets
|
|
6
|
|
|
4
|
|
||
Interest rate contracts designated as fair value hedges
|
Other Assets
|
|
25
|
|
|
—
|
|
||
Total derivative assets
|
|
|
$
|
350
|
|
|
$
|
262
|
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other Current Liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts designated as net investment hedges
|
Other Current Liabilities
|
|
3
|
|
|
1
|
|
||
Interest rate contracts designated as fair value hedges
|
Other Current Liabilities
|
|
1
|
|
|
7
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
Other Current Liabilities
|
|
37
|
|
|
30
|
|
||
Interest rate contracts designated as fair value hedges
|
Other Liabilities
|
|
2
|
|
|
10
|
|
||
Total derivative liabilities
|
|
|
$
|
43
|
|
|
$
|
48
|
|
|
|
|
|
|
|
||||
Total fair value of derivative instruments
|
|
|
$
|
307
|
|
|
$
|
214
|
|
|
December 31, 2018
|
|
Amount of Gain (Loss)
Recognized in Other
Comprehensive
Income
|
|
Amount of Gain (Loss)
Reclassified From
AOCI to Earnings
|
|
June 30, 2019
|
||||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
68
|
|
|
$
|
4
|
|
|
$
|
34
|
|
|
$
|
38
|
|
|
December 31, 2017
|
|
Amount of Gain (Loss)
Recognized in Other
Comprehensive
Income
|
|
Amount of Gain (Loss)
Reclassified From
AOCI to Earnings
|
|
June 30, 2018
|
||||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
(57
|
)
|
|
$
|
59
|
|
|
$
|
(49
|
)
|
|
$
|
51
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Foreign exchange contracts designated as cash flow hedges recognized in net revenues
|
$
|
13
|
|
|
$
|
(21
|
)
|
|
$
|
33
|
|
|
$
|
(49
|
)
|
Foreign exchange contracts designated as cash flow hedges recognized in cost of net revenues
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Foreign exchange contracts not designated as hedging instruments recognized in interest and other, net
|
(13
|
)
|
|
4
|
|
|
(18
|
)
|
|
2
|
|
||||
Total gain (loss) recognized from foreign exchange derivative contracts in the condensed consolidated statement of income
|
$
|
1
|
|
|
$
|
(17
|
)
|
|
$
|
16
|
|
|
$
|
(47
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain (loss) from interest rate contracts designated as fair value hedges recognized in interest and other, net
|
$
|
24
|
|
|
$
|
(9
|
)
|
|
$
|
39
|
|
|
$
|
(39
|
)
|
Gain (loss) from hedged items attributable to hedged risk recognized in interest and other, net
|
(24
|
)
|
|
9
|
|
|
(39
|
)
|
|
39
|
|
||||
Total gain (loss) recognized from interest rate derivative contracts in the condensed consolidated statement of income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain (loss) attributable to changes in the fair value of warrant recognized in interest and other, net
|
$
|
(8
|
)
|
|
$
|
106
|
|
|
$
|
105
|
|
|
$
|
106
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
1,646
|
|
|
$
|
1,510
|
|
Foreign exchange contracts designated as net investment hedges
|
150
|
|
|
804
|
|
||
Foreign exchange contracts not designated as hedging instruments
|
3,732
|
|
|
3,517
|
|
||
Interest rate contracts designated as fair value hedges
|
2,400
|
|
|
2,400
|
|
||
Total
|
$
|
7,928
|
|
|
$
|
8,231
|
|
|
June 30, 2019
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,508
|
|
|
$
|
1,508
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
13
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
2,956
|
|
|
—
|
|
|
2,956
|
|
|
—
|
|
||||
Total short-term investments
|
2,969
|
|
|
13
|
|
|
2,956
|
|
|
—
|
|
||||
Derivatives
|
350
|
|
|
—
|
|
|
97
|
|
|
253
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
1,783
|
|
|
—
|
|
|
1,783
|
|
|
—
|
|
||||
Total long-term investments
|
1,783
|
|
|
—
|
|
|
1,783
|
|
|
—
|
|
||||
Total financial assets
|
$
|
6,610
|
|
|
$
|
1,521
|
|
|
$
|
4,836
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
December 31, 2018
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
2,202
|
|
|
$
|
2,052
|
|
|
$
|
150
|
|
|
$
|
—
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
2,606
|
|
|
—
|
|
|
2,606
|
|
|
—
|
|
||||
Government and agency securities
|
90
|
|
|
—
|
|
|
90
|
|
|
—
|
|
||||
Total short-term investments
|
2,713
|
|
|
17
|
|
|
2,696
|
|
|
—
|
|
||||
Derivatives
|
262
|
|
|
—
|
|
|
114
|
|
|
148
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
3,635
|
|
|
—
|
|
|
3,635
|
|
|
—
|
|
||||
Total long-term investments
|
3,635
|
|
|
—
|
|
|
3,635
|
|
|
—
|
|
||||
Total financial assets
|
$
|
8,812
|
|
|
$
|
2,069
|
|
|
$
|
6,595
|
|
|
$
|
148
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
June 30,
2019 |
||
Opening balance as of January 1, 2019
|
$
|
148
|
|
Change in fair value
|
105
|
|
|
Closing balance as of June 30, 2019
|
$
|
253
|
|
|
|
Coupon
|
|
As of
|
|
Effective
|
|
As of
|
|
Effective
|
||||||
|
|
Rate
|
|
June 30, 2019
|
|
Interest Rate
|
|
December 31, 2018
|
|
Interest Rate
|
||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
||||||
Floating Rate Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||
Senior notes due 2019
|
|
LIBOR plus 0.48%
|
|
$
|
400
|
|
|
3.161
|
%
|
|
$
|
400
|
|
|
3.123
|
%
|
Senior notes due 2023
|
|
LIBOR plus 0.87%
|
|
400
|
|
|
3.562
|
%
|
|
400
|
|
|
3.499
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Fixed Rate Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||
Senior notes due 2019
|
|
2.200%
|
|
1,150
|
|
|
2.346
|
%
|
|
1,150
|
|
|
2.346
|
%
|
||
Senior notes due 2020
|
|
3.250%
|
|
500
|
|
|
3.389
|
%
|
|
500
|
|
|
3.389
|
%
|
||
Senior notes due 2020
|
|
2.150%
|
|
500
|
|
|
2.344
|
%
|
|
500
|
|
|
2.344
|
%
|
||
Senior notes due 2021
|
|
2.875%
|
|
750
|
|
|
2.993
|
%
|
|
750
|
|
|
2.993
|
%
|
||
Senior notes due 2022
|
|
3.800%
|
|
750
|
|
|
3.989
|
%
|
|
750
|
|
|
3.989
|
%
|
||
Senior notes due 2022
|
|
2.600%
|
|
1,000
|
|
|
2.678
|
%
|
|
1,000
|
|
|
2.678
|
%
|
||
Senior notes due 2023
|
|
2.750%
|
|
750
|
|
|
2.866
|
%
|
|
750
|
|
|
2.866
|
%
|
||
Senior notes due 2024
|
|
3.450%
|
|
750
|
|
|
3.531
|
%
|
|
750
|
|
|
3.531
|
%
|
||
Senior notes due 2027
|
|
3.600%
|
|
850
|
|
|
3.689
|
%
|
|
850
|
|
|
3.689
|
%
|
||
Senior notes due 2042
|
|
4.000%
|
|
750
|
|
|
4.114
|
%
|
|
750
|
|
|
4.114
|
%
|
||
Senior notes due 2056
|
|
6.000%
|
|
750
|
|
|
6.547
|
%
|
|
750
|
|
|
6.547
|
%
|
||
Total senior notes
|
|
|
|
9,300
|
|
|
|
|
9,300
|
|
|
|
||||
Hedge accounting fair value adjustments
|
|
|
|
23
|
|
|
|
|
(10
|
)
|
|
|
||||
Unamortized discount and debt issuance costs
|
|
|
|
(49
|
)
|
|
|
|
(55
|
)
|
|
|
||||
Other long-term borrowings
|
|
|
|
19
|
|
|
|
|
—
|
|
|
|
||||
Less: Current portion of long-term debt
|
|
|
|
(2,050
|
)
|
|
|
|
(1,550
|
)
|
|
|
||||
Total long-term debt
|
|
|
|
7,243
|
|
|
|
|
7,685
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-Term Debt
|
|
|
|
|
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
|
|
|
2,050
|
|
|
|
|
1,550
|
|
|
|
||||
Hedge accounting fair value adjustments
|
|
|
|
(1
|
)
|
|
|
|
(7
|
)
|
|
|
||||
Unamortized discount and debt issuance costs
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
||||
Other short-term borrowings
|
|
|
|
15
|
|
|
|
|
4
|
|
|
|
||||
Total short-term debt
|
|
|
|
2,063
|
|
|
|
|
1,546
|
|
|
|
||||
Total Debt
|
|
|
|
$
|
9,306
|
|
|
|
|
$
|
9,231
|
|
|
|
|
|
As of
|
||
|
Balance Sheet Location
|
June 30, 2019
|
||
Assets
|
|
|
||
Operating
|
Operating lease right-of-use assets
|
$
|
670
|
|
Finance
|
Property and equipment, net (1)
|
29
|
|
|
Total leased assets
|
|
$
|
699
|
|
|
|
|
||
Liabilities
|
|
|
||
Operating - current
|
Accrued expenses and other current liabilities
|
$
|
170
|
|
Finance - current
|
Short-term debt
|
9
|
|
|
Operating - noncurrent
|
Operating lease liabilities
|
519
|
|
|
Finance - noncurrent
|
Long-term debt
|
19
|
|
|
Total lease liabilities
|
|
$
|
717
|
|
(1)
|
Recorded net of accumulated amortization of $1 million as of June 30, 2019.
|
Lease Costs
|
Statement of Income Location
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Finance lease cost:
|
|
|
|
|
||||
Amortization of right-of-use assets
|
Cost of net revenues
|
$
|
1
|
|
|
$
|
1
|
|
Interest on lease liabilities
|
Interest and other, net
|
$
|
—
|
|
|
—
|
|
|
Operating lease cost (2)
|
Cost of net revenues, Sales and marketing, Product development and General and administrative expenses
|
$
|
53
|
|
|
$
|
105
|
|
Total lease cost
|
|
$
|
54
|
|
|
$
|
106
|
|
(2)
|
Includes variable lease payments and sublease income that were immaterial during the three and six months ended June 30, 2019.
|
|
Operating
|
|
Finance
|
||||
Remaining 2019
|
$
|
101
|
|
|
$
|
5
|
|
2020
|
165
|
|
|
11
|
|
||
2021
|
151
|
|
|
11
|
|
||
2022
|
132
|
|
|
3
|
|
||
2023
|
88
|
|
|
—
|
|
||
Thereafter
|
119
|
|
|
—
|
|
||
Total lease payments
|
756
|
|
|
30
|
|
||
Less interest
|
(67
|
)
|
|
(2
|
)
|
||
Present value of lease liabilities
|
$
|
689
|
|
|
$
|
28
|
|
|
Leases (3)
|
||
2019
|
$
|
136
|
|
2020
|
104
|
|
|
2021
|
91
|
|
|
2022
|
76
|
|
|
2023
|
51
|
|
|
Thereafter
|
119
|
|
|
Total minimum lease payments
|
$
|
577
|
|
(3)
|
Amounts are based on ASC 840, Leases that were superseded upon our adoption of ASC 842, Leases on January 1, 2019.
|
|
Six Months Ended
June 30, 2019 |
|
Weighted Average Remaining Lease Term
|
|
|
Operating leases
|
4.96 years
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
Operating leases
|
3.50
|
%
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
||
Operating cash flows from operating leases
|
$
|
48
|
|
|
$
|
98
|
|
Operating cash flows from finance leases
|
$
|
—
|
|
|
$
|
—
|
|
Financing cash flows from finance leases
|
$
|
2
|
|
|
$
|
2
|
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Right-of-use assets obtained in exchange for new lease obligations:
|
|
|
|
|
|
||
Operating leases
|
$
|
21
|
|
|
$
|
39
|
|
Finance leases
|
$
|
30
|
|
|
$
|
30
|
|
|
Shares Repurchased (1)
|
|
Average Price per Share (2)
|
|
Value of Shares Repurchased (2)
|
|
Remaining Amount Authorized
|
|||||||
Balance as of January 1, 2019
|
|
|
|
|
|
|
$
|
3,151
|
|
|||||
Authorization of additional plan in January 2019
|
|
|
|
|
|
|
4,000
|
|
||||||
Repurchase of shares of common stock
|
82
|
|
|
$
|
36.74
|
|
|
$
|
3,000
|
|
|
(3,000
|
)
|
|
Balance as of June 30, 2019
|
|
|
|
|
|
|
$
|
4,151
|
|
|
(1)
|
These repurchased shares of common stock were recorded as treasury stock and were accounted for under the cost method. None of the repurchased shares of common stock have been retired.
|
(2)
|
Excludes broker commissions.
|
|
Units
|
|
Outstanding as of January 1, 2019
|
34
|
|
Awarded
|
16
|
|
Vested
|
(9
|
)
|
Forfeited
|
(5
|
)
|
Outstanding as of June 30, 2019
|
36
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of net revenues
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
29
|
|
|
$
|
29
|
|
Sales and marketing
|
25
|
|
|
31
|
|
|
48
|
|
|
56
|
|
||||
Product development
|
54
|
|
|
58
|
|
|
99
|
|
|
103
|
|
||||
General and administrative
|
45
|
|
|
46
|
|
|
84
|
|
|
83
|
|
||||
Total stock-based compensation expense
|
$
|
139
|
|
|
$
|
151
|
|
|
$
|
260
|
|
|
$
|
271
|
|
Capitalized in product development
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
Unrealized Gains (Losses) on Derivative Instruments
|
|
Unrealized
Gains (Losses) on
Investments
|
|
Foreign
Currency
Translation
|
|
Estimated Tax (Expense) Benefit
|
|
Total
|
||||||||||
Balance as of March 31, 2019
|
$
|
27
|
|
|
$
|
(16
|
)
|
|
$
|
430
|
|
|
$
|
23
|
|
|
$
|
464
|
|
Other comprehensive income (loss) before reclassifications
|
25
|
|
|
16
|
|
|
(20
|
)
|
|
(10
|
)
|
|
11
|
|
|||||
Less: Amount of gain (loss) reclassified from AOCI
|
14
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
11
|
|
|||||
Net current period other comprehensive income (loss)
|
11
|
|
|
16
|
|
|
(20
|
)
|
|
(7
|
)
|
|
—
|
|
|||||
Balance as of June 30, 2019
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
410
|
|
|
$
|
16
|
|
|
$
|
464
|
|
|
Unrealized Gains (Losses) on Derivative Instruments
|
|
Unrealized
Gains (Losses)
on Investments
|
|
Foreign
Currency
Translation
|
|
Estimated Tax (Expense) Benefit
|
|
Total
|
||||||||||
Balance as of December 31, 2018
|
$
|
68
|
|
|
$
|
(56
|
)
|
|
$
|
462
|
|
|
$
|
24
|
|
|
$
|
498
|
|
Other comprehensive income (loss) before reclassifications
|
4
|
|
|
56
|
|
|
(52
|
)
|
|
(15
|
)
|
|
(7
|
)
|
|||||
Less: Amount of gain (loss) reclassified from AOCI
|
34
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
27
|
|
|||||
Net current period other comprehensive income (loss)
|
(30
|
)
|
|
56
|
|
|
(52
|
)
|
|
(8
|
)
|
|
(34
|
)
|
|||||
Balance as of June 30, 2019
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
410
|
|
|
$
|
16
|
|
|
$
|
464
|
|
|
Unrealized Gains (Losses) on Derivative Instruments
|
|
Unrealized
Gains (Losses) on Investments |
|
Foreign
Currency Translation |
|
Estimated Tax (Expense) Benefit
|
|
Total
|
||||||||||
Balance as of March 31, 2018
|
$
|
(86
|
)
|
|
$
|
(51
|
)
|
|
$
|
880
|
|
|
$
|
57
|
|
|
$
|
800
|
|
Other comprehensive income (loss) before reclassifications
|
116
|
|
|
(2
|
)
|
|
(325
|
)
|
|
(24
|
)
|
|
(235
|
)
|
|||||
Less: Amount of gain (loss) reclassified from AOCI
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
5
|
|
|
(16
|
)
|
|||||
Net current period other comprehensive income (loss)
|
137
|
|
|
(2
|
)
|
|
(325
|
)
|
|
(29
|
)
|
|
(219
|
)
|
|||||
Balance as of June 30, 2018
|
$
|
51
|
|
|
$
|
(53
|
)
|
|
$
|
555
|
|
|
$
|
28
|
|
|
$
|
581
|
|
|
Unrealized Gains (Losses) on Derivative Instruments
|
|
Unrealized
Gains (Losses) on Investments |
|
Foreign
Currency Translation |
|
Estimated Tax (Expense) Benefit
|
|
Total
|
||||||||||
Balance as of December 31, 2017
|
$
|
(57
|
)
|
|
$
|
(15
|
)
|
|
$
|
748
|
|
|
$
|
41
|
|
|
$
|
717
|
|
Other comprehensive income (loss) before reclassifications
|
59
|
|
|
(39
|
)
|
|
(193
|
)
|
|
(2
|
)
|
|
(175
|
)
|
|||||
Less: Amount of gain (loss) reclassified from AOCI
|
(49
|
)
|
|
(1
|
)
|
|
—
|
|
|
11
|
|
|
(39
|
)
|
|||||
Net current period other comprehensive income (loss)
|
108
|
|
|
(38
|
)
|
|
(193
|
)
|
|
(13
|
)
|
|
(136
|
)
|
|||||
Balance as of June 30, 2018
|
$
|
51
|
|
|
$
|
(53
|
)
|
|
$
|
555
|
|
|
$
|
28
|
|
|
$
|
581
|
|
Details about AOCI Components
|
|
Affected Line Item in the Statement of Income
|
|
Amount of Gain (Loss) Reclassified From AOCI
|
||||||||||||||
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gains (losses) on cash flow hedges - foreign exchange contracts
|
|
Net Revenues
|
|
$
|
13
|
|
|
$
|
(21
|
)
|
|
$
|
33
|
|
|
$
|
(49
|
)
|
|
|
Cost of net revenues
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
|
Total, from continuing operations before income taxes
|
|
14
|
|
|
(21
|
)
|
|
34
|
|
|
(49
|
)
|
||||
|
|
Provision for income taxes
|
|
(3
|
)
|
|
5
|
|
|
(7
|
)
|
|
11
|
|
||||
|
|
Total, net of income taxes
|
|
11
|
|
|
(16
|
)
|
|
27
|
|
|
(38
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on investments
|
|
Interest and other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
|
|
Total, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications for the period
|
|
Total, net of income taxes
|
|
$
|
11
|
|
|
$
|
(16
|
)
|
|
$
|
27
|
|
|
$
|
(39
|
)
|
|
Employee Severance and Benefits
|
||
Accrued liability as of January 1, 2019
|
$
|
8
|
|
Charges
|
41
|
|
|
Payments
|
(39
|
)
|
|
Accrued liability as of June 30, 2019
|
$
|
10
|
|
ITEM 2:
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Quarter Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
2,303
|
|
|
$
|
2,419
|
|
|
$
|
2,498
|
|
|
$
|
2,707
|
|
% change from prior quarter
|
(7
|
)%
|
|
5
|
%
|
|
3
|
%
|
|
8
|
%
|
||||
2018
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
2,580
|
|
|
$
|
2,640
|
|
|
$
|
2,649
|
|
|
$
|
2,877
|
|
% change from prior quarter
|
(5
|
)%
|
|
2
|
%
|
|
0
|
%
|
|
9
|
%
|
||||
2019
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
2,643
|
|
|
$
|
2,687
|
|
|
|
|
|
|
|||
% change from prior quarter
|
(8
|
)%
|
|
2
|
%
|
|
|
|
|
|
Three Months Ended
June 30, |
|
% Change
|
|
Six Months Ended
June 30, |
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
As Reported
|
|
2019
|
|
2018
|
|
As Reported
|
||||||||||
U.S.
|
$
|
1,057
|
|
|
$
|
1,055
|
|
|
—
|
%
|
|
$
|
2,115
|
|
|
$
|
2,129
|
|
|
(1
|
)%
|
Percentage of net revenues
|
39
|
%
|
|
40
|
%
|
|
|
|
40
|
%
|
|
41
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
International
|
1,630
|
|
|
1,585
|
|
|
3
|
%
|
|
3,215
|
|
|
3,091
|
|
|
4
|
%
|
||||
Percentage of net revenues
|
61
|
%
|
|
60
|
%
|
|
|
|
60
|
%
|
|
59
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net revenues
|
$
|
2,687
|
|
|
$
|
2,640
|
|
|
2
|
%
|
|
$
|
5,330
|
|
|
$
|
5,220
|
|
|
2
|
%
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Net transaction revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
1,887
|
|
|
$
|
1,837
|
|
|
3
|
%
|
|
$
|
3,772
|
|
|
$
|
3,629
|
|
|
4
|
%
|
StubHub
|
243
|
|
|
240
|
|
|
1
|
%
|
|
466
|
|
|
471
|
|
|
(1
|
)%
|
||||
Total
|
2,130
|
|
|
2,077
|
|
|
3
|
%
|
|
4,238
|
|
|
4,100
|
|
|
3
|
%
|
||||
Marketing services and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
270
|
|
|
298
|
|
|
(9
|
)%
|
|
547
|
|
|
608
|
|
|
(10
|
)%
|
||||
Classifieds
|
271
|
|
|
259
|
|
|
5
|
%
|
|
527
|
|
|
505
|
|
|
4
|
%
|
||||
StubHub
|
21
|
|
|
6
|
|
|
**
|
|
|
28
|
|
|
7
|
|
|
**
|
|
||||
Elimination of inter-segment net revenues
|
(5
|
)
|
|
—
|
|
|
**
|
|
|
(10
|
)
|
|
—
|
|
|
**
|
|
||||
Total
|
557
|
|
|
563
|
|
|
(1
|
)%
|
|
1,092
|
|
|
1,120
|
|
|
(2
|
)%
|
||||
Total net revenues
|
$
|
2,687
|
|
|
$
|
2,640
|
|
|
2
|
%
|
|
$
|
5,330
|
|
|
$
|
5,220
|
|
|
2
|
%
|
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
GMV:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
21,484
|
|
|
$
|
22,569
|
|
|
(5
|
)%
|
|
$
|
43,055
|
|
|
$
|
45,116
|
|
|
(5
|
)%
|
StubHub
|
1,117
|
|
|
1,060
|
|
|
5
|
%
|
|
2,135
|
|
|
2,104
|
|
|
1
|
%
|
||||
Total
|
$
|
22,601
|
|
|
$
|
23,629
|
|
|
(4
|
)%
|
|
$
|
45,190
|
|
|
$
|
47,220
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transaction take rate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
8.78
|
%
|
|
8.14
|
%
|
|
0.64
|
%
|
|
8.76
|
%
|
|
8.04
|
%
|
|
0.72
|
%
|
||||
StubHub
|
21.73
|
%
|
|
22.68
|
%
|
|
(0.95
|
)%
|
|
21.84
|
%
|
|
22.38
|
%
|
|
(0.54
|
)%
|
||||
Total
|
9.42
|
%
|
|
8.79
|
%
|
|
0.63
|
%
|
|
9.38
|
%
|
|
8.68
|
%
|
|
0.70
|
%
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||||||||
Marketplace net transaction revenues (1)
|
$
|
1,887
|
|
|
$
|
1,837
|
|
|
3
|
%
|
|
5
|
%
|
|
$
|
3,772
|
|
|
$
|
3,629
|
|
|
4
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketplace GMV
|
$
|
21,484
|
|
|
$
|
22,569
|
|
|
(5
|
)%
|
|
(1
|
)%
|
|
$
|
43,055
|
|
|
$
|
45,116
|
|
|
(5
|
)%
|
|
(1
|
)%
|
Marketplace take rate
|
8.78
|
%
|
|
8.14
|
%
|
|
0.64
|
%
|
|
|
|
8.76
|
%
|
|
8.04
|
%
|
|
0.72
|
%
|
|
|
(1)
|
Marketplace net transaction revenues were net of $13 million and $33 million hedging activity during the three and six months ended June 30, 2019, respectively. Marketplace net transaction revenues were net of $21 million and $49 million hedging activity during the three and six ended June 30, 2018, respectively.
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||||||||
StubHub net transaction revenues
|
$
|
243
|
|
|
$
|
240
|
|
|
1
|
%
|
|
1
|
%
|
|
$
|
466
|
|
|
$
|
471
|
|
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
StubHub GMV
|
$
|
1,117
|
|
|
$
|
1,060
|
|
|
5
|
%
|
|
6
|
%
|
|
$
|
2,135
|
|
|
$
|
2,104
|
|
|
1
|
%
|
|
2
|
%
|
StubHub take rate
|
21.73
|
%
|
|
22.68
|
%
|
|
(0.95
|
)%
|
|
|
|
21.84
|
%
|
|
22.38
|
%
|
|
(0.54
|
)%
|
|
|
|
Three Months Ended
June 30, |
|
% Change
|
|
Six Months Ended
June 30, |
|
% Change
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
|
2019
|
|
2018
|
|
As Reported
|
|
FX-Neutral
|
||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||||||||
Marketplace
|
$
|
270
|
|
|
$
|
298
|
|
|
(9
|
)%
|
|
(6
|
)%
|
|
$
|
547
|
|
|
$
|
608
|
|
|
(10
|
)%
|
|
(7
|
)%
|
Classifieds
|
271
|
|
|
259
|
|
|
5
|
%
|
|
12
|
%
|
|
527
|
|
|
505
|
|
|
4
|
%
|
|
12
|
%
|
||||
StubHub
|
21
|
|
|
6
|
|
|
**
|
|
|
**
|
|
|
28
|
|
|
7
|
|
|
**
|
|
|
**
|
|
||||
Elimination of inter-segment net revenues
|
(5
|
)
|
|
—
|
|
|
**
|
|
|
**
|
|
|
(10
|
)
|
|
—
|
|
|
**
|
|
|
**
|
|
||||
Total MS&O revenues
|
$
|
557
|
|
|
$
|
563
|
|
|
(1
|
)%
|
|
4
|
%
|
|
$
|
1,092
|
|
|
$
|
1,120
|
|
|
(2
|
)%
|
|
2
|
%
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Cost of net revenues
|
$
|
630
|
|
|
$
|
597
|
|
|
6
|
%
|
|
$
|
1,231
|
|
|
$
|
1,156
|
|
|
7
|
%
|
Percentage of net revenues
|
23.4
|
%
|
|
22.6
|
%
|
|
|
|
|
23.1
|
%
|
|
22.1
|
%
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Sales and marketing
|
$
|
817
|
|
|
$
|
838
|
|
|
(2
|
)%
|
|
$
|
1,559
|
|
|
$
|
1,594
|
|
|
(2
|
)%
|
Percentage of net revenues
|
30
|
%
|
|
32
|
%
|
|
|
|
29
|
%
|
|
31
|
%
|
|
|
||||||
Product development
|
322
|
|
|
352
|
|
|
(9
|
)%
|
|
619
|
|
|
686
|
|
|
(10
|
)%
|
||||
Percentage of net revenues
|
12
|
%
|
|
13
|
%
|
|
|
|
12
|
%
|
|
13
|
%
|
|
|
||||||
General and administrative
|
274
|
|
|
368
|
|
|
(26
|
)%
|
|
583
|
|
|
638
|
|
|
(9
|
)%
|
||||
Percentage of net revenues
|
10
|
%
|
|
14
|
%
|
|
|
|
11
|
%
|
|
12
|
%
|
|
|
||||||
Provision for transaction losses
|
71
|
|
|
66
|
|
|
9
|
%
|
|
143
|
|
|
138
|
|
|
3
|
%
|
||||
Percentage of net revenues
|
3
|
%
|
|
3
|
%
|
|
|
|
3
|
%
|
|
3
|
%
|
|
|
||||||
Amortization of acquired intangible assets
|
12
|
|
|
13
|
|
|
(8
|
)%
|
|
25
|
|
|
23
|
|
|
9
|
%
|
||||
Total operating expenses
|
$
|
1,496
|
|
|
$
|
1,637
|
|
|
(9
|
)%
|
|
$
|
2,929
|
|
|
$
|
3,079
|
|
|
(5
|
)%
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Income from operations
|
$
|
561
|
|
|
$
|
406
|
|
|
38
|
%
|
|
$
|
1,170
|
|
|
$
|
985
|
|
|
19
|
%
|
Operating margin
|
20.9
|
%
|
|
15.4
|
%
|
|
|
|
|
21.9
|
%
|
|
18.9
|
%
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||
Total interest and other, net
|
$
|
(51
|
)
|
|
$
|
301
|
|
|
**
|
|
$
|
13
|
|
|
$
|
269
|
|
|
**
|
Percentage of net revenues
|
(2
|
)%
|
|
11
|
%
|
|
|
|
—
|
%
|
|
5
|
%
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income tax provision
|
$
|
107
|
|
|
$
|
69
|
|
|
$
|
259
|
|
|
$
|
209
|
|
Effective tax rate
|
20.9
|
%
|
|
9.7
|
%
|
|
21.9
|
%
|
|
16.6
|
%
|
|
Three Months Ended
June 30, 2019 |
|
Three Months Ended
June 30, 2018 |
|
|
|
|
||||||||||||||
|
As Reported
|
|
Exchange Rate Effect(1)(3)
|
|
FX-Neutral(2)
|
|
As Reported
|
|
As Reported % Change
|
|
FX-Neutral
% Change
|
||||||||||
GMV:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
21,484
|
|
|
$
|
(930
|
)
|
|
$
|
22,414
|
|
|
$
|
22,569
|
|
|
(5
|
)%
|
|
(1
|
)%
|
StubHub
|
1,117
|
|
|
(7
|
)
|
|
1,124
|
|
|
1,060
|
|
|
5
|
%
|
|
6
|
%
|
||||
Total GMV
|
$
|
22,601
|
|
|
$
|
(937
|
)
|
|
$
|
23,538
|
|
|
$
|
23,629
|
|
|
(4
|
)%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net transaction revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
1,887
|
|
|
$
|
(57
|
)
|
|
$
|
1,944
|
|
|
$
|
1,837
|
|
|
3
|
%
|
|
5
|
%
|
StubHub
|
243
|
|
|
—
|
|
|
243
|
|
|
240
|
|
|
1
|
%
|
|
1
|
%
|
||||
Total
|
2,130
|
|
|
(57
|
)
|
|
2,187
|
|
|
2,077
|
|
|
3
|
%
|
|
4
|
%
|
||||
Marketing services and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
270
|
|
|
(11
|
)
|
|
281
|
|
|
298
|
|
|
(9
|
)%
|
|
(6
|
)%
|
||||
Classifieds
|
271
|
|
|
(18
|
)
|
|
289
|
|
|
259
|
|
|
5
|
%
|
|
12
|
%
|
||||
StubHub
|
21
|
|
|
—
|
|
|
21
|
|
|
6
|
|
|
**
|
|
|
**
|
|
||||
Elimination of inter-segment net revenue
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
**
|
|
|
**
|
|
||||
Total
|
557
|
|
|
(29
|
)
|
|
586
|
|
|
563
|
|
|
(1
|
)%
|
|
4
|
%
|
||||
Total net revenues
|
$
|
2,687
|
|
|
$
|
(86
|
)
|
|
$
|
2,773
|
|
|
$
|
2,640
|
|
|
2
|
%
|
|
4
|
%
|
|
Six Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2018 |
|
|
|
|
||||||||||||||
|
As Reported
|
|
Exchange Rate Effect(1)(3)
|
|
FX-Neutral(2)
|
|
As Reported
|
|
As Reported % Change
|
|
FX-Neutral
% Change
|
||||||||||
GMV:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
43,055
|
|
|
$
|
(1,713
|
)
|
|
$
|
44,768
|
|
|
$
|
45,116
|
|
|
(5
|
)%
|
|
(1
|
)%
|
StubHub
|
2,135
|
|
|
(11
|
)
|
|
2,146
|
|
|
2,104
|
|
|
1
|
%
|
|
2
|
%
|
||||
Total GMV
|
$
|
45,190
|
|
|
$
|
(1,724
|
)
|
|
$
|
46,914
|
|
|
$
|
47,220
|
|
|
(4
|
)%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net transaction revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
3,772
|
|
|
$
|
(96
|
)
|
|
$
|
3,868
|
|
|
$
|
3,629
|
|
|
4
|
%
|
|
5
|
%
|
StubHub
|
466
|
|
|
(2
|
)
|
|
468
|
|
|
471
|
|
|
(1
|
)%
|
|
(1
|
)%
|
||||
Total net transaction revenues
|
4,238
|
|
|
(98
|
)
|
|
4,336
|
|
|
4,100
|
|
|
3
|
%
|
|
5
|
%
|
||||
Marketing services and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
547
|
|
|
(19
|
)
|
|
566
|
|
|
608
|
|
|
(10
|
)%
|
|
(7
|
)%
|
||||
Classifieds
|
527
|
|
|
(37
|
)
|
|
564
|
|
|
505
|
|
|
4
|
%
|
|
12
|
%
|
||||
StubHub, Corporate and other
|
28
|
|
|
—
|
|
|
28
|
|
|
7
|
|
|
**
|
|
|
**
|
|
||||
Elimination of inter-segment net revenue
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
**
|
|
|
**
|
|
||||
Total marketing services and other revenues
|
1,092
|
|
|
(56
|
)
|
|
1,148
|
|
|
1,120
|
|
|
(2
|
)%
|
|
2
|
%
|
||||
Total net revenues
|
$
|
5,330
|
|
|
$
|
(154
|
)
|
|
$
|
5,484
|
|
|
$
|
5,220
|
|
|
2
|
%
|
|
4
|
%
|
|
(1)
|
We define exchange rate effect as the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to current year transactional currency amounts excluding hedging activity.
|
(2)
|
We define FX-Neutral GMV as GMV minus the exchange rate effect. We define the non-GAAP financial measures of FX-Neutral net revenues as net revenues minus the exchange rate effect.
|
(3)
|
Marketplace net transaction revenues were net of $13 million and $33 million hedging activity during the three and six months ended June 30, 2019, respectively. Marketplace net transaction revenues were net of $21 million and $49 million hedging activity during the three and six ended June 30, 2018, respectively.
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,294
|
|
|
$
|
867
|
|
Investing activities
|
1,286
|
|
|
1,547
|
|
||
Financing activities
|
(3,258
|
)
|
|
(2,867
|
)
|
||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
(20
|
)
|
|
(51
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
(698
|
)
|
|
$
|
(504
|
)
|
Item 3:
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Fair Value Asset/(Liability)
|
|
Fair Value Sensitivity
|
||||
|
(In millions)
|
||||||
Foreign exchange contracts - Cash flow hedges
|
$
|
51
|
|
|
$
|
(125
|
)
|
Foreign exchange contracts - Net investment hedges
|
$
|
(3
|
)
|
|
$
|
(31
|
)
|
Item 4:
|
Controls and Procedures
|
Item 1:
|
Legal Proceedings
|
Item 1A:
|
Risk Factors
|
•
|
ability to attract, retain and engage buyers and sellers;
|
•
|
volume of transactions and price and selection of goods;
|
•
|
trust in the seller and the transaction;
|
•
|
customer service;
|
•
|
brand recognition;
|
•
|
community cohesion, interaction and size;
|
•
|
website, mobile platform and application ease-of-use and accessibility;
|
•
|
system reliability and security;
|
•
|
reliability of delivery and payment, including customer preference for fast delivery and free shipping and returns;
|
•
|
level of service fees; and
|
•
|
quality of search tools.
|
•
|
uncertainties and instability in economic and market conditions caused by the United Kingdom’s vote to exit the European Union and any outcomes resulting from that vote;
|
•
|
uncertainty regarding how the United Kingdom’s access to the European Union Single Market and the wider trading, legal, regulatory and labor environments, especially in the United Kingdom and European Union, will be impacted by the United Kingdom’s vote to exit the European Union and any outcomes resulting from that vote, including the resulting impact on our business and that of our clients;
|
•
|
expenses associated with localizing our products and services and customer data, including offering customers the ability to transact business in the local currency and adapting our products and services to local preferences (e.g., payment methods) with which we may have limited or no experience;
|
•
|
trade barriers and changes in trade regulations;
|
•
|
difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural differences;
|
•
|
stringent local labor laws and regulations;
|
•
|
credit risk and higher levels of payment fraud;
|
•
|
profit repatriation restrictions, foreign currency exchange restrictions or extreme fluctuations in foreign currency exchange rates for a particular currency;
|
•
|
political or social unrest, economic instability, repression, or human rights issues;
|
•
|
geopolitical events, including natural disasters, public health issues, acts of war, and terrorism;
|
•
|
import or export regulations;
|
•
|
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and foreign laws prohibiting corrupt payments to government officials, as well as U.S. and foreign laws designed to combat money laundering and the financing of terrorist activities;
|
•
|
antitrust and competition regulations;
|
•
|
potentially adverse tax developments and consequences;
|
•
|
economic uncertainties relating to sovereign and other debt;
|
•
|
different, uncertain, or more stringent user protection, data protection, privacy, and other laws;
|
•
|
risks related to other government regulation or required compliance with local laws;
|
•
|
national or regional differences in macroeconomic growth rates;
|
•
|
local licensing and reporting obligations; and
|
•
|
increased difficulties in collecting accounts receivable.
|
•
|
our products and services continue to expand in scope and complexity;
|
•
|
we continue to expand into new businesses, including through acquisitions; and
|
•
|
the universe of patent owners who may claim that we, any of the companies that we have acquired, or our customers infringe their patents, and the aggregate number of patents controlled by such patent owners, continues to increase.
|
•
|
Some jurisdictions, in particular jurisdictions outside the United States, prohibit the resale of event tickets (anti-scalping laws) at prices above the face value of the tickets or at all, or highly regulate the resale of tickets, and new laws and regulations or changes to existing laws and regulations imposing these or other restrictions could limit or inhibit our ability to operate, or our users’ ability to continue to use, our tickets business.
|
•
|
Regulatory agencies or courts may claim or hold that we are responsible for ensuring that our users comply with these laws and regulations.
|
•
|
In many jurisdictions, our tickets business depends on commercial partnerships with event organizers or licensed ticket vendors, which we must develop and maintain on acceptable terms for our tickets business to be successful.
|
•
|
Our tickets business is subject to seasonal fluctuations and the general economic and business conditions that impact the sporting events and live entertainment industries.
|
•
|
A portion of the tickets inventory sold by sellers on the StubHub platform is processed by StubHub in digital form. Systems failures, security breaches, theft or other disruptions that result in the loss of such sellers’ tickets inventory could result in significant costs and a loss of consumer confidence in our tickets business.
|
•
|
Lawsuits alleging a variety of causes of actions have in the past, and may in the future, be filed against StubHub and eBay by venue owners, competitors, ticket buyers, and unsuccessful ticket buyers. Such lawsuits could result in significant costs and require us to change our business practices in ways that negatively affect our tickets business.
|
•
|
Our tickets business also faces significant competition from a number of sources, including ticketing service companies, event organizers, ticket brokers, and online and offline ticket resellers. Some ticketing service companies, event organizers, and professional sports teams have begun to issue event tickets through various forms of electronic ticketing systems that are designed to restrict or prohibit the transferability (and by extension, the resale) of such event tickets either to favor their own resale affiliates or to discourage resale or restrict resale of season tickets to a preferred, designated website. Ticketing service companies have also begun to use market-based pricing strategies or dynamic pricing to charge much higher prices, and impose additional restrictions on transferability, for premium tickets.
|
•
|
Some sports teams have threatened to revoke the privileges of season ticket owners if they resell their tickets through a platform that is not affiliated with, or approved by, such sports teams.
|
•
|
To the extent that StubHub holds ticket inventory, we may be exposed to losses associated with such inventory.
|
•
|
requiring us to use a significant portion of our cash flow from operations and other available cash to service our indebtedness, thereby reducing the amount of cash available for other purposes, including capital expenditures and acquisitions;
|
•
|
our indebtedness and leverage may increase our vulnerability to downturns in our business, to competitive pressures, and to adverse changes in general economic and industry conditions;
|
•
|
adverse changes in the ratings assigned to our debt securities by credit rating agencies will likely increase our borrowing costs;
|
•
|
our ability to obtain additional financing for working capital, capital expenditures, acquisitions, share repurchases, dividends or other general corporate and other purposes may be limited; and
|
•
|
our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.
|
•
|
incur the tax cost of repatriating funds to the United States;
|
•
|
seek additional financing in the debt or equity markets;
|
•
|
refinance or restructure all or a portion of our indebtedness;
|
•
|
sell selected assets; or
|
•
|
reduce or delay planned capital or operating expenditures.
|
•
|
the potential loss of key customers, merchants, vendors and other key business partners of the companies we acquire, or dispose of, following and continuing after announcement of our transaction plans;
|
•
|
declining employee morale and retention issues affecting employees of companies that we acquire or dispose of, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired or disposed business;
|
•
|
difficulty making new and strategic hires of new employees;
|
•
|
diversion of management time and a shift of focus from operating the businesses to the transaction, and in the case of an acquisition, integration and administration;
|
•
|
the need to provide transition services to a disposed of company, which may result in the diversion of resources and focus;
|
•
|
the need to integrate the operations, systems (including accounting, management, information, human resource and other administrative systems), technologies, products and personnel of each acquired company, which is an inherently risky and potentially lengthy and costly process;
|
•
|
the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise as a result;
|
•
|
the need to implement or improve controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition may have lacked such controls, procedures and policies or whose controls, procedures and policies did not meet applicable legal and other standards;
|
•
|
risks associated with our expansion into new international markets;
|
•
|
derivative lawsuits resulting from the acquisition or disposition;
|
•
|
liability for activities of the acquired or disposed of company before the transaction, including intellectual property and other litigation claims or disputes, violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities and, in the case of dispositions, liabilities to the acquirors of those businesses under contractual provisions such as representations, warranties and indemnities;
|
•
|
the potential loss of key employees following the transaction;
|
•
|
the acquisition of new customer and employee personal information by us or a third party acquiring assets or businesses from us, which in and of itself may require regulatory approval and or additional controls, policies and procedures and subject us to additional exposure; and
|
•
|
our dependence on the acquired business’ accounting, financial reporting, operating metrics and similar systems, controls and processes and the risk that errors or irregularities in those systems, controls and processes will lead to errors in our condensed consolidated financial statements or make it more difficult to manage the acquired business.
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period Ended
|
|
Total Number of
Shares Purchased |
|
Average Price Paid
per Share (2) |
|
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
|
Maximum Dollar
Value that May Yet be Purchased Under the Programs (1) |
||||||
April 30, 2019
|
|
9,734,489
|
|
|
$
|
37.42
|
|
|
|
9,734,489
|
|
|
$
|
5,286,692,845
|
|
May 31, 2019
|
|
16,065,116
|
|
|
$
|
36.94
|
|
|
|
16,065,116
|
|
|
$
|
4,693,249,197
|
|
June 30, 2019
|
|
14,068,078
|
|
|
$
|
38.55
|
|
|
|
14,068,078
|
|
|
$
|
4,150,981,017
|
|
|
|
39,867,683
|
|
|
|
|
|
39,867,683
|
|
|
|
|
(1)
|
In January 2018 our Board authorized a $6.0 billion stock repurchase program and in January 2019 our Board authorized an additional $4.0 billion stock repurchase program. These stock repurchase programs have no expiration from the date of authorization.
|
(2)
|
Excludes broker commissions.
|
Item 3:
|
Defaults Upon Senior Securities
|
Item 4:
|
Mine Safety Disclosures
|
Item 5:
|
Other Information
|
Item 6:
|
Exhibits
|
Exhibit Number
|
|
Filed or furnished with this 10-Q
|
Description
|
3.01
|
|
X
|
|
3.02
|
|
X
|
|
10.01+
|
|
X
|
|
10.02+
|
|
X
|
|
31.01
|
|
X
|
|
31.02
|
|
X
|
|
32.01
|
|
X
|
|
32.02
|
|
X
|
|
101.INS
|
|
X
|
XBRL Instance Document
|
101.SCH
|
|
X
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
X
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
X
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
X
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
X
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
eBay Inc.
|
|
|
|
Principal Executive Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Devin N. Wenig
|
|
|
|
Devin N. Wenig
|
|
|
|
President and Chief Executive Officer
|
Date:
|
July 18, 2019
|
|
|
|
|
Principal Financial Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Scott F. Schenkel
|
|
|
|
Scott F. Schenkel
|
|
|
|
Senior Vice President, Chief Financial Officer
|
Date:
|
July 18, 2019
|
|
|
|
|
Principal Accounting Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Brian J. Doerger
|
|
|
|
Brian J. Doerger
|
|
|
|
Vice President, Chief Accounting Officer
|
Date:
|
July 18, 2019
|
|
|
|
/s/ John J. Donahoe
|
John J. Donahoe,
|
President and Chief Executive Officer
|
|
/s/ Michael R. Jacobson
|
Michael R. Jacobson, Secretary
|
Components
|
Annual Bonus Target %
|
|
Weighting
|
|
Performance Score as a % of Target
|
|
Weighted Payout Percent
|
|
Annual Eligible Earnings
|
|
Annual Payout Amount
|
Financial
|
65%
|
x
|
75%
|
x
|
112%
|
=
|
54.60%
|
x
|
421,154
|
=
|
229,950
|
Individual
|
65%
|
x
|
25%
|
x
|
175%
|
=
|
28.44%
|
x
|
421,154
|
=
|
119,766
|
Total Annual eIP Plan Payout
|
|
83.04%
|
|
421,154
|
|
349,716
|
Component
|
2016
|
2017
|
% Increase
|
Base Salary
|
500,000
|
515,000
|
3.0
|
Target EIP % (1)
|
65%
|
65%
|
0.0
|
Target eIP Amount (1)
|
325,000
|
334,750
|
3.0
|
Target Total Cash
|
825,000
|
849,750
|
3.0
|
Award Type
|
2016
|
2017
|
||
Estimate Award Value(3)
|
Award (#)
|
Estimated Value(4)
|
Award (#)
|
|
Restricted Stock Unit (RSU) (5)
|
|
|
|
|
Focal
|
2,000,000
|
83,362
|
1,000,000
|
TBD
|
Promo
|
200,000
|
6,264
|
|
|
Performance-Based Restricted Stock Unit (PBRSU)
|
|
|
|
|
PBRSU 2016-17(6)
|
300,000
|
9,395
|
|
|
PBRSU 2017-18(7)
|
|
|
1,500,000
|
TBD
|
Total Equity
|
2,500,000
|
|
2,500,000
|
|
Cycle
|
Target(9)
|
|
Payout
|
|
||
Estimated Value
|
Award (#)
|
Estimated Value
|
Award (#)
|
Vested (3) As of 3/1/17
|
Unvested (#)
|
|
2016-17 Focal
|
300,000
|
9,395
|
TBD
|
TBD
|
|
|
(i)
|
For PBRSUs, the number of shares subject to the 2017-18 target award will be determined by dividing the U.S. dollar value of the award by the Average eBay Closing Price (described below) and rounding up to the nearest whole number of shares of eBay common stock.
|
(ii)
|
For RSUs, the number of shares to be granted will be determined by dividing the U.S. dollar value of the award by the Average eBay Closing Price (described below) and rounding up to the nearest whole number of shares of eBay common stock.
|
(i)
|
For PBRSUs, the number of shares subject to the 2018-19 target award will be determined by dividing the U.S. dollar value of the award by the Average eBay Closing Price (described below) and rounding up to the nearest whole number of shares of eBay common stock.
|
(ii)
|
For RSUs, the number of shares to be granted will be determined by dividing the U.S. dollar value of the award by the Average eBay Closing Price (described below) and rounding up to the nearest whole number of shares of eBay common stock.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of eBay Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Devin N. Wenig
|
|
Devin N. Wenig
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of eBay Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Scott F. Schenkel
|
|
Scott F. Schenkel
|
|
Senior Vice President, Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
/s/ Devin N. Wenig
|
|
Devin N. Wenig
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Scott F. Schenkel
|
|
Scott F. Schenkel
|
|
Senior Vice President, Chief Financial Officer
|
|
(Principal Financial Officer)
|