2009 ebay paypal skype analyst day

8/8/2019 2009 Ebay Paypal Skype Analyst Day

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Agenda

8:15 INTRO AND DISCLOSURESMark Rowen, VP of Investor Relations, eBay Inc.

John Donahoe, President & CEO, eBay Inc.

8:50 PAYPAL: Vision and potential for PayPalco ompson, res en , ay a

9:30 BREAK

Lorrie Norrington, President, eBay MarketplacesStephanie Tilenius, SVP Global Product & General Manager, eBay North AmericaMark Car es, SVP & Chief Technolo Officer, eBa Inc.

11:00 SKYPE

Josh Silverman, President, Skype

:

12:30 FINANCE: Business model and operational excellenceBob Swan, Chief Financial Officer, eBay Inc.

1:00 GENERAL Q&A


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Forward looking statement

This presentation may make forward-looking statements relating to our future performance that arebased on our current expectations, forecasts and assumptions and involve risks and uncertainties,including those relating to the companys ability to grow its businesses, user base and user activity.

Our actual results may differ materially from those discussed during this presentation for a variety ofreasons, including, but not limited to, the impact of recent global economic events and the global

economic downturn; foreign-exchange-rate fluctuations; changes in political, business, and economicconditions our abilit to rofitabl ex and our business model to new t es of merchandise and sellers

the impact and integration of recent and future acquisitions; our increasing need to grow revenues fromexisting users in established markets; an increasingly competitive environment for our businesses; thecomplexity of managing a growing company with a broad range of businesses, our need to manageregulatory, tax, IP and litigation risks (including risks specific to PayPal and the financial industry, and risks

customer service infrastructure at reasonable cost while adding new features and maintaining sitestability.

annual report on our Form 10-K and our subsequent quarterly reports on Form 10-Q (available athttp://investor.ebay.com). You should not unduly rely on any forward-looking statements, and we

assume no obligation to update them. All information in this presentation is as of March 11, 2009, and wedo not intend, and undertake no duty, to update this presentation.

This presentation contains non-GAAP measures relating to the company's performance. You can findthe reconciliation of those measures to the nearest comparable GAAP measures in the appendix at theend of this presentation.


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March 11, 2009


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What we do: Connect buyers and sellers

eBay

Buyers Sellersay a

Classifieds

Shopping.com

StubHub


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Our company has evolved

2004 2008ClassifiedAdvertising,all others

Auctions

Auctions

Fixed price

$3 3BFixed price

$3.3B$8.5BClassified,Advertising,all others $8.5B


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Our markets are still in their early days

eCommerce OnlinePayments OnlineCommunications$1.4T

$0.6T$0.4T

$

future008 future008 future008


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And markets differ:Multi le winners in sho in : Few winners in a ments


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Online consumer behaviors continue to change

yesterday today tomorrow


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How we will win


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PayPal Highlights

2 Unmatched advantages

3 Si nificant o ortunit ahead


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What to expect from PayPal

A secon core w e gger

The leading global onlinepayment networ


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Marketplaces


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Our starting point: Worlds largest marketplace

Buyers Sellers

3M items bought daily

50,000 categories

150M+ live listings

Multiple formats

Robust and scalable technoloplatform


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Piercing the myths

eBay Playbook Customer-driveninnovation

Auctions asstrate

Auctions as one ofseveral formats

O en Mana edmarketplace marketplace

Tweak the model Transform the model


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eBay Highlights

1 Focus where we can win: Secondary Market

2 Transform our Marketplace

3 Grow complementary formats


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What to expect from eBay

We are creating the new eBay and

This will take time 2009: growth expected to be slowerthan the market

2010: growth expected to be wit the market 2011: growth expected to be fasterthan the market


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Skype Highlights

Accelerating user growth and1

opportunity, positioned to win

more valuable

h f k


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What to expect from Skype

rong s an a one us ness

one of fastest rowin in histor

realizes best value

O i diff l h


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Operating differently across the company

Customer driven

Unlocking technology

Operating discipline

S


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Summary

Connecting buyers and sellers in innovative

PayPal: Leading online global payment network eBay Marketplace: Win in global secondary

Skype: Great standalone, we will maximize itspotential and value

nl kin T hn l inn a f r rExperiences

ccoun a e, sc p ne


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The Global InternetThe Global Internet

Pa ment NetworkPa ment Network

March 11, 2009

24

An evolving industry


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1 Powering global eCommerce

3 Significant opportunity ahead

25


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26

Traditional payments not designed for the web


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Review &

Complete

27



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rau s ers

ID theft

28

Traditional payment networks are limited


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Traditional payment networks are limited

29

Worldwide accessibility


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Worldwide accessibility

30

Enabling small sellers


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Enabling small sellers

31

Enabling large merchants across the web


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Enabling large merchants across the web

or

32

Solving consumer payment problems


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Personal Payments

Marsha Ali

33



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Personal Payments

Marsha Ali

Erica

34Grocery

Weve built a global Internet payment network


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We ve built a global Internet payment network

190 lobal markets

17 local lan ua e sites

19 currencies

35


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Growth in active accounts


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TPV growing+23%- as er

than+1

Billion

Billion

Billion

.Million

.Million

.Million

2006 2007 2008

37

Growth in global Total Payment Volume (TPV)


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g y ( )

TPV growing. - as er

than

Billion

Billion

Billion

2006 2007 2008

38

Strong stated preference for online payments


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g p p y

#22#11

#33 #2#11

39

Tremendous payment volume opportunity


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p y pp y

TPV Growing 2-3XFaster than CompetitorsTPVTPV

$100-

120BILLION

Billion

Billion

Billion

2006 2007 2008 2011

40

How well get there


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Global eBayGlobal eBayGlobal

Merchant

Global

Merchant AdjacentAdjacentServicesServices paymentspayments

41


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42

Penetration growing on eBay


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73 78%3-78%

rage

20088%

llerCo

ve

eBaySe

Consumer Preference

43

Significant opportunity in international markets


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2008 eBay aGMV & PayPal penetrationIncludin Shi in & Handlin

$29B

79%41

North America International

44

Share gains across eBay markets


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PayPal penetration in eBay markets (%)

80

60

40

20

2006

2007

2008

2005

2004

20082007200620052004

45

eBay is a powerful partner


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New activeaccounts ac uired Total PaymentVolume

9.7M$31B

7.8M $22B

MS

eBay

1H 2007 2H 2008 1H 2007 2H 2008

46


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47

Gaining share in Global Merchant Services


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-

verage

5% 2008

hant

Co

Mer

Consumer Preference

48


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Serving the worlds largest online brands


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PP # of top 50

online merchants

21

18

30

50

Share gain opportunity in North America


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North America

$305-

$237Billion Billion

Share2008 2011

9% 13-14%

51

and in large International markets


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InternationalNorth America

480

Billion

$293Billion

$305-

$237Billion Billion

2008 2011

2% 5-6%2008 2011

9% 13-14%Share

52

Bill Me Later complements PayPal


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& preference

53

Sales lift for merchants


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Sales lift through

offers

54

Fast, convenient, secure credit for consumers


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55

Structural advantage in risk management


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Credit card$$$$$$$$$$

$$

56

Significant PayPal BML synergies


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Grow eBay GMVAccelerate merchantsales cycle

Speed Bill Me Laterconsumer acquisition

Turn transactionexpense into revenue

Decrease Bill Me Laterfraud losses

Reduce Bill Me Later costof capital

57


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58

Many sectors need payment solutions


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Mo b ile &o t h e r d e v ic e s B a n k s

Bu s in e s s e s wit hspecializedp a ym e n t n e ed s Go v e r n me n t sp a y m e n t n e e d s

S o c ia l n e t wo r ks Non-profits

59

PayPal platform enables developers


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225k+developers

100k+developers

660k+developers

developers

Millions ofPlatform

Millions of.NET developers

PayPal global Internet payments network

60

Early traction: Non-retail & mobile


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61

Tremendous growth ahead


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Global Total Payment Volume

Adjacent

Pa ments

-

GlobalM h terchantServices

2008 2011

$4-5 billion in revenue by 2011


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.BILLION

-BILLION

2008 2011

63

Long-term high growth businesses


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-BML integration

Medium term: mar ins return to 18-20%

business scales over investments

64

The Internet is becoming more mainstream


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1.4B lobal Internet users

> 50% of users are in emerging markets

Users spend 15 hours per week online

-

65



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1 Powering global eCommerce

3 Significant opportunity ahead

66


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a and be ai

67


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In Marketplaces we are


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Creating a NEW eBay

Fixing our foundation by transforming the user

Positionin to win the lar e o ortunit in the

secondary market Growing our complementary formats

eBay is about the largest selection ofgreat deals in any format

Marketplace connects buyers and sellers globally


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Buyers Sellers

3M items bought daily 50,000 categories

150M+ live listings Multiple formats

Robust and scalable

technology platform

An increasingly global footprint


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North America(4 6 % o f To ta l) Europe(4 5% o f To ta l) Asia Pacific(9 % o f To ta l)46 % o f Total) (45 % o f Total) (9% of Total)

$2 6B $$1.9B

$2.6B

$1.4B$2.5B

2005 2008 2005 2008 2005 2008$0.3B $0.5B

Broad choice of formats


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A ti Fi d P iuctions Fixed Price

ClassifiedsdvertisingBuyers Sellers

VerticalExperiences

Unique advantages of Marketplace model


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Wide global supply ofSuperiorproducts without ownershipflexibility

Surface best inventoryregardless of format

Ultimate buyerchoice

Enabling competition, butSellernot competing against sellersplatform

Sellers compete so ourbuyers get the best deals

Customerswin


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rowin faster?

By 2008, we had fallen behind


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Customer experience hadfallen behind

Optimizing for auctions, and

Customerexperience

constraining fixed price

Open Marketplacephilosophy slowed us down

Too incremental not driving the marketplace

Approachto change

Needed to revamp technology

Our three year journey


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2008 2009 2010+

enhance trust improve selection

os on or grow transform the user experience

innovate throu h technolo grow our complementary formats


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ay ng t e groun wor .

In 2008, we began to fix the foundation


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New feedback systemTruststandards Surface highest trust sellers in search

Better deals race to the top in searchUser experience& search 4X in listings duration for fixed price

Created incentives for high qualitySeller Started risk-free pricingIncentives

Our trusted sellers are doing well

More trusted Contributing to more Growing faster than


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sellers of our GMV eCommerce49% trusted sellers

eCommerce27%

26%

24%17%

4%

12%

4%-6%

% of Sellers with 4.8+

DSRs

% of GMV from 4.8+ DSR

sellers

GMV Growth Y/Y(ex. V ehicles)

Data shown is US only% of Sellers includes only sellers that have a DSR rating; Trusted sellers have 4.8+ DSRsGMV excludes vehicles, real estate and StubHub

Increased selection

Average Daily Live Listings (Millions)


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g gFixed Price

151 Auctions

119

29 29Q4 07 Q4 08

Lower shipping costs = better value for buyers

% of listings offering free shipping


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30%

20%

10%

Q1 08 Q2 08 Q3 08 Q4 08

0%


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ecessary es

In 2009 were taking bolder actions


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First contact resolution for top buyersTrust eBa rotection for to bu ers US UK Increasing exposure for high-quality sellers

s an ar s

Optimize new search platform

-

Enabling multiple-SKU listings

& search Integrate local classifieds listings

Improving seller economics on eBay

e erIncentives

We must stabilize, then grow our business


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2008 2009 2010+

Fix the foundation

Position for growth

Our focus: the secondary market

Large retailSmall retailLiquidationUsed


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~$500B

Inventory: o ec e

Vintage Pre-Owned

Out of season Some new

Inventory: Out of season

n season

eBay today

Overstock/returns Liquidation inventory

Secondary market: large, compelling opportunity

Consolidating this inventory creates step-change in


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deals and selection for our buyers

~$500B MarketOff-priceretailers Outlets Liquidators

Wholesalers

A Marketplace is ideal to win the secondary market

d k k l d l


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Secondary market Marketplace model

Inefficientsupply chains Absorbs volatile supply Moves dee -SKUp y

Items ofuncertain value Sellers can test market price Multiple formats to drive velocity

Buyers lookinguyers lookingforemost forgreat deals Best deals with reliable service

Search brings it all togetherg


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Transforming

the user experience

Before: Auctions ending soonest


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Before: Auctions ending soonest


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Sorted by timeendingnding

Less relevance

High shippingcosts

After: relevant, well-priced inventory from trusted sellers


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After: relevant, well-priced inventory from trusted sellers


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Sorted by bestmatchore relevantfirst item

Free shipping

Search experience that merges products and listings


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New vertical experience for hard goods


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New vertical experience for hard goods


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Inventorysorted byconditiononditionShows value

and savings

Buyers can select from multiple SKUs for soft goods


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Snapshot view for Clothing, Shoes and Accessories


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Buyers can find local inventory from Classifieds


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Core searchresults

ClassifiedslassifiedsSponsoredlinksinks

Unique power of a marketplace

Bose iPod docking station case study


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To search is new in box


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To search is new in boxFixed Price

Price $50 lower than

Great seller




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Consumer seller with100% Feedback scores se ng are y use

Auction price closed atower an re a

Trusted sellers compete to provide the best deals

Garmin Nuvi 200w eBay sale history (10/19-11/10)


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Seller 1 $142.89

Seller 3$145 $139.95

$140

Seller 2

$141.89 Seller 4 Seller 3

$135.

$128.97$130

$125

Deals are better than ever

In the U S a new Tivo HD


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In the U.S., a new Tivo HDDVR costs an average of

12% less than competitiors

Daily Deals driving great value for consumers


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Breadth of inventory

Secondary Market


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LatestiPod NanoBrand New

LatestiPod NanoNew Open Box

Prior GeniPod NanoBrand New

All generationsiPod NanoRefurbs / Usedrand New New, Open Box Brand New Refurbs / Used

eBay is the best way to access the worlds inventory


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Retail-like option:i d ll


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experienced sellers

vetted by eBay



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Marketplace option:



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Local option:connects buyers

with nearby sellers



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Advertising:shows whats available

across the web

We will continue to transform our user experience

eBay will be:


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A trusted, easy-to-use and rewarding shopping

formats, experiences and inventory

Positioned to capture the secondary market and

Becoming the channel of choice for webs best sellers

Velocit Best channel for velocity and cash flow


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Increasing operational efficiency- Reduce contacts via better trust- Tools for shipping and tracking

- Seller dashboard for better insights

Release mana ement and

Reliability communications


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Top eBay technology questions

u y u wu y u w


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u y u w

u y u w

What are ou doin toWhat are ou doin toimprove the userimprove the userexperience?experience?

2009 Priorities


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1 Search2 Catalog3 User Ex erience4

Search in a real-time marketplace

All changes immediately reflected in searchy80M+ from bids price changes listings purchases etc


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80M+ from bids, price changes, listings, purchases, etc.

S hi i d i i & fiophisticated navigation & refinementDifferent for each of our 50,000 categories

Unique mix of formats and inventory Vintage & collectible to liquidation & new out-of-season

Search in 2009

Improve relevancemprove relevance


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Data mining & machine learning

Better sortingBest Match surfaces most relevant info

S h l tfearch as a platformFoundation for custom shopping experiencesacross categories

2009 Priorities


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Catalogs: bringing structure


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UPC codePC code

B ghtoughtcatalog

to unstructured data


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to unstructured data


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Bigpictures

Satin floralaccentsccents


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eBaysBay sCatalogBringing structure to

2009 Priorities

S h


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User experience


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User experience


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User experience: visual browse


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More likethis colorhis color

More likethis style

User experience: category customization


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2009 Priorities

Search


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Opening eBay.com to developers


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Native onBBay


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Driving the technology agenda at eBay differently


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- , -software develo ment

, ,intensel customer-focuseddevelopment process


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Well continue to grow formats like Classifieds

Classifieds global revenue


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46%CAGR

$86M2005 2008

Classifieds market: large, growing, complementary

Global online classifieds market size

Vehicles, goods

, ,


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Complementaryto eBay

2008 2010

Sources: Gerson Lehman Group Analysis - August 2008; eMarketer; CollinsSteward LLC Report - Nov 2008; Internal estimates

Classifieds is a strong global opportunity

danada#1 Denmark

Netherlands#1


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#1United Kingdom#1 Germany#1

A t liItalySpain

#2Australia

#2#1

We are #1 or #2 in 8 major markets

Multiple ways to monetize Classifieds

Insertion Fees Feature Fees AdvertisingCPC advertisingome page featuredJob posting fees


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High value goodsCPM advertising

High value goods



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VerticalExperiences

We are reshaping the Marketplaces business

Auctions

Marketplaces revenue

Fixed price

Advertising

.


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Advertising

ClassifiedsOther $3.5B

2005 2008

We are reshaping the Marketplaces business


AuctionsAuctions$5-7B

Auctionsstabilizes buttrails the marketFixed priceAdvertising

.


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Advertising

ClassifiedsOther Fixed Pricegrows faster$3.5B than the market

Oth f tther formatsgrow faster thanthe market2005 2008 2011


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A New eBay

...Fixing the foundation


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Focusing where we can winSecondary market

3 Growin our com lementar formats


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5 year-olds in history


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With acceleratinggrowth, and outstandingfundamentals

Attacking an enormous opportunity, andpositioned to win

Business is getting stronger

Enabling the Worlds Conversations


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a s ree


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Skype-to-Skypego)

calls

Subscriptions Video Calling

Online numbers

Chat/IM Voicemail

Conference Calling SMS

Skype is one of the fastest adopted


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With massive (and accelerating)

Skype Calling Minutes (billions)

usage

of worldsinternational 20

100B CumulativeMinutes


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14 2 14 816

10 9 10 8 11.914.2 14.8

7 5 9.510.9 10.8 9.8

7.5

2006 2007 2008

Remarkable global reach

52MAPAC

urope

148M


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147M

Rest of the World

59M

And a owerful business model

Skype Revenue

Slightly ahead ofeBay and PayPal

($Milli )


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($Millions)

2004 and 2005 estimated based on SkypeOut billings

Negligible customeracquisition costs


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Negligible capex/network

- =negative working capital

Strong free cash flowconversion (FCF)

** Direct segment margin and does not include allocation for corporate costs


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Voice Data

r

Means there is potential for Skype everywhere


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Easier / EverywhereRicher Experience More Choices


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PresenceVideo-calling

Unified MessagingChat, Voice, File

Transfer areSelect best-of-breed

eam ess ev ce

integration

a e-s a esPAYG, premium services

=

Voice Data


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The opportunity

communication software company.

The opportunity ismass ve

Communication is aHUGE $1.4T market

HH income for the past 40

years


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3.0%

1.5%

2.0%

0.5%

1.0%

0.0%

1981 1986 1991 1996 2001

$300BEBITDA

Market size: Communication relative to Search and ecommerce ($

in Bn)

Source:Trends in Telephony Servicefrom FCC (June 2005)

In 2008 we sharpened our focus oncus omers, w remar a e resu s


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YoY YoY

Active Users Engagement

(Calling Minutes per Active User)

Leading to Accelerating Revenue Growt

70%YoY Growth Rates (Revenue)60% Organic*


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50%

Organic

41%

31%33%30%

40%

10%

20% Reported(Fx-impacted)

0%

Q1 08 Q2 08 Q3 08 Q4 08

* Euro-denominated (Skypes functional currency)


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Higher VIDEO penetration led to more users,an more ca ng m nu es


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eo ca ng ncreases engagemen an u y

SUBSCRIPTIONS added a popular new paid,


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We hit an inflection

point in 2008

t ype s s ze, sma c anges ma e

a HUGE difference


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Increasing penetration of paid products by 1=

To be a billion dollar business

just one more call per day!

ur ra egy


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Mobile Business Platform

1 Leverage our core consumer business

Core CONSUMER is a $240B market2008 Worldwide Telecom Market1 - Total Market: $1.4

billion

$241BFixed Voice

onsumer


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.new users


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2. Better promote

products

3. Increase

revenue perpaying user

4. Monetize free


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va a ty post- oa

Device pre-load

Operator partnerships

Sk e is available for downloadtoday on several platforms


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Approximately 12 million downloadsat the end of 2008

Sk es artnershi with Hutchison 3

un s so , one o e mos

l h d t f 3


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popular pre-pay handsets for 3

20% higher margin than 3s

average

79% of customers are new to 3

No Sk e download re uired

Partnership with leadingworldwide mobile

an se prov er


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Skype pre-loaded andintegrated on select N series

Available in somemarkets starting 2H 2009


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$203BFixed VoiceBusiness

A compelling business offering

35%* ofusers say

ReduceBusiness TravelCost SavingsBenefits Productivity

they use

Skype for


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Business TravelCost SavingsBenefits Productivity Skype forbusinessur oses

Focus Expand Build outBusinessProduct

SalesChannel

PaidSupport

35%

er ng

65%

*Based on a survey of U.S., CN, U.K of Skype users in March 2008

Platform: A Thrivin Ecos stem


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users

devices

15,000 DevelopersPartnerships with

world-class companies

W t ti


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We are startinga new chapter in our history

Act 1

2003 2008


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Platform: Desktop/Laptop

Revenue Stream: SkypeOut

Market segment: LD calling

Main product: VoiceOne

markets

Main target user: Consumers

Act 22009 2011


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Platforms + Mobile

Business subscriptions

Market segments + CollaborationMany

Regions + Emerging Targets + Business

an eyon


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Platform

Balance of revenue streams

u p e mar e segmen s Established products

Regional ubiquityr


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March 11, 2009

What you heard todayhat you heard today


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What o can e pecthat o can e pectWhat you can expectf i th f tWhat you can expectf i th f trom us in the futurerom us in the future

We play in very attractive markets

eCommerce OnlinePayments OnlineCommunications$1.4T


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$0.6T$0.4T

$

future008 future008 2008 futureSource: External estimates & internal analysis

We have the three leading brands on the web

$5.6B Rev 2008 with $2.4B Rev in 2008 with $0.6B Rev in 2008 with


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$ $2.4B Rev in 2008 with $0.6B Rev in 2008 with-

~$60B GMV 2008

-

~$60B TPV in 2008

-

More than 100B Skype

callin minutes~eCommerce

~86M active users

~eCommerce

~70M active users

~400M registeredusers

Proven and powerful business models

Stron cash Very highHigh growth

en ine generation

good marginsgood margins

margins


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good marginsgood marginsmargins

M&A: Using financial strength to extend our reach

Strengthen Extend Acquire

geographicfootprint

formats /products

keytechnologies


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A significantly diversified portfolio2008004 2008StubHub

Other MP

BML

Text &Graphical Ads

ClassifiedsAdjacencies Other MP

Adjacencies

Auctions

Classifieds

A ti


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Auctions

Fixedprice

$Fixed price

$3.3B $8 5B8.5B

An expanding global footprintNorth America

48% of total

Europe41% of total

Asia11% of total

Up 30%

Up 149%

Up 44%


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Up 149%

.Billion$0.4

Billion$3.5$2.4$4.1$3.2

2006 2008 2006 2008 2006 2008

onononon

Portfolio has generated excellent financialsFree cash flow*on-GAAPEPS*Revenue

23%$7.7B

$8.5B

$6.0$7.7B


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26% 14%4.6$1 71 $2 2 $2.3B

$0.86 $1.05$1.53 $1.71 $1.6B $1.7B $2.2

05 06 07 08 05 06 07 08 05 06 07 08

* Reconciliation in appendix

Attractive returns on invested capital

ROIC*

25% 27%

23%


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23%

2005 2006 2007 2008

* Reconciliation in appendix

2008 was a tough year Full year performance was ok

2008 1st half 2nd half

op ne p


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Non-GAAP

EPS*Up 12% 25% 0%

Free cash

flow*

.

but a brutal second half!* Reconciliation in appendix

... and 2009 will be a challenging year

A tough economy

Turnaround effort continues in

Si nificant headwind from stron US dollar


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Si nificant headwind from stron US dollar

Two acquisitions in 4Q 2008 will beut ve n 2009

will earn less

Positioning for the future: Clear priorities

a i aliz n Pa Pal n rm u n ial

Transition the core eBay platform for

todays consumer with alternative formats


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y

Skype to be all it can be

Operating smarter create capacityto invest

PayPal Merchant Services ~$30B TPV

Merchant services revenueStrong growth despite difficulteconomic conditions will continue to growrapidly over next 3 yrs


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PayPal On eBay ~$30B TPV

On-eBay RevenueDecelerating along witheBay core GMV increased penetrationwill drive growth


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PayPal: Capitalizing on enormous potential

$4 - $5BPayPal revenue

n

payments

40% range


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30% rangeMerchant

serviceslow single

digits On eBay

2008 2009 2010 2011

-CAGRs

Marketplaces: Broad choice of formats



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VerticalExperiences

Marketplaces Fixed Price format $22B GMV

Doubleixed price revenue . . . $2B 2008with double digit growth

g

and huge growth potential


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20110100090084 083 082 081 08fx-neutral excluding vehicles.

Marketplaces: Complementary formats

Advertising Classifieds2X2008~2X

2008evenue revenue008 2008


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2008 2011 2008 2011

Auction format: $23B GMV

CAGR in

ne ative double

Auction revenue . . . $2B 2008digit rangeA differentiated format

Smaller before stabilizing


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20110100090084 083 082 081 08fx-neutral excluding vehicles.

Marketplaces: A state of transition $5 - $7Bi 2011


in 2011Other

~2X 2008 levels ClassifiedsAdvertisingOther


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V hi lFi d iVehicles

smaller before biggerFixed price

2008 2009 2010 2011Auction

2008 2009 2010 2011

Skype: Powerful standalone businessSkype revenue

in 2011


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30% range 2009-2011

2008 2009 2010 2011


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u ng a gger an s rongeru ng a gger an s ronger

ill d iill d i


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we will need to operate smarter in we will need to operate smarter in

or er o un our nves men s or er o un our nves men s

Achieving full potential requires

Operating Significant2B over 3 earssmar er nves men

Lower

processing costs retention / loyalty

U i /


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ImprovedUser experience /search / platform

experience

Improved trust /rgan zat on

simplificationcomprehension

Operating smarter: weve simplified the org

Simplified organizationby removing ~10% of HC ~$450y g Million


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Q3 08 ending HC 3 yr savings3 08 ending HC 3 yr savings

Operating smarter improved customer experienceWe spent $700M in 2008 on customer support

Drive Down ContactsEliminate Root Causes


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2008

$300M in savings more satisfied customers

e nves n a e er cus omer exper ence

Operating smarter: Lower processing costsWe spent $700M in 2008 in processing PayPal transactions

rov nconsumer choice

aunc n newproducts

ANNESSA: INNESSA: I


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dont knowwhere theseimages are

Cards BalanceBank

images areHi her Lower

lowering processing costs reinvestment/comprehension

Operating smarter to create capacity to investHigh growth lower

margin business

Operationalexcellence

Reinvest

perat ng arg n evers


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FX Business Ops Reinvestment

Appendix


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pp

Reconciliation of GAAPto Non-GAAP EPS

December 31, December 31, December 31, December 31, December 31,

(in millions) 2004 2005 2006 2007 2008

GAAP net income (loss) $ 778.2 $ 1,082.1 $ 1,125.6 $ 348.3 $ 1,779.4Stock-based compensation expense 5.8 31.8 317.4 301.8 352.1

we ve on s n e

- . . . . .Amortization of acquired intangible assets (1) 65.9 128.9 214.9 223.7 264.1Restructuring 49 1


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Restructuring - - - - 49.1

Impairment of goodwill - - - 1,390.9 -Gain on sale of equity investment (6.4) (2.3) - - -

Income taxes associated with certain non-GAAP entries (31.5) (50.5) (171.6) (165.4) (202.9)

- . , . , . , . , .

Diluted net income per share:

GAAP net income per diluted share $ 0.57 $ 0.78 $ 0.79 $ 0.25 $ 1.36

Non-GAAP net income per diluted share $ 0.61 $ 0.86 $ 1.05 $ 1.53 $ 1.71

Shares used in non-GAAP diluted share calculation 1,368 1,394 1,425 1,376 1,313

(1) Includes amortization of acquired intangible assets within cost of net revenues and operating expenses.


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2009 ebay paypal skype analyst day

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