Equity Valuation Report on eBay Inc

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Equity Valuation Report

eBay Inc.

by Carlos Pang

CID 00892608

[email protected]

+44 7707 666060

mailto:[email protected]

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Client Specification

This report is written for potential investors who have exposure, or are seeking to gain an

exposure to the e-commerce industry, especially in eBay Inc.

This report intends to provide in depth analysis in the global e-commerce industry and in

eBay Inc. to assists in making investments decisions.

The ultimate goal of this report is to provide an unbiased rating of the stock in the form of a

BUY/HOLD/SELL recommendation, as well as a 12 months target price of which we think is

fair.

The report is structured in four main parts:

Market Overview – analysing the retail sector and e-commerce subsector.

Company Analysis – providing a description of the company’s structure and analysing

its historical performance.

Strategy Analysis – providing SWOT analysis and analysing its future strategies that drives

future performance.

Valuation – computing our 12 months fair price for eBay Inc.’s equity share under bull,

base and bear case scenarios under various valuation methods.

Discolusre and disclaimer:

This report should be viewed as an opinion only.

The analyst who created this report was a business seller on eBay.co.uk under the account:

carlos_pang

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Table of Contents

Executive Summary .................................................................................................................................. 6

Market Overview – Retail and E-commerce Industry ................................................................................. 7

Economic Outlook ............................................................................................................................................7

Top 250 Global Retailers / Top 50 E-commerce Retailers Analysis ..................................................................8

By Geographic Region .................................................................................................................................................. 8

By Primary Product Sector ........................................................................................................................................... 9

Company Analysis – eBay Inc. ................................................................................................................. 10

Company Description .................................................................................................................................... 10

M&A Activities ............................................................................................................................................... 10

Historical Performance .................................................................................................................................. 11

Strategy Analysis .................................................................................................................................... 12

SWOT Analysis ............................................................................................................................................... 12

Recent Innovations Overview ........................................................................................................................ 12

BRIC Expansion Opportunity ......................................................................................................................... 13

Valuation ............................................................................................................................................... 16

Key Operational Assumptions ....................................................................................................................... 16

Working Capital Analysis ............................................................................................................................... 17

Consolidated Operational Model – Base Case .............................................................................................. 18

Method 1 – Discounted Cash Flow Valuation ............................................................................................... 19

Weighted Average Cost of Capital Calculation........................................................................................................... 19

Base Case ................................................................................................................................................................... 20

Bear Case .................................................................................................................................................................... 21

Bull Case ..................................................................................................................................................................... 22

Method 2 – Comparable Analysis .................................................................................................................. 23

Historical Trading Multiples ....................................................................................................................................... 23

Comparable Analysis .................................................................................................................................................. 23

Method 3 – Sum of the Part (SOTP) Analysis ................................................................................................ 24

Historical EV/Revenue multiple by Sector ................................................................................................................. 24

SOTP ........................................................................................................................................................................... 24

Valuation Summary ....................................................................................................................................... 25

References ............................................................................................................................................. 26

Appendix ............................................................................................................................................... 27

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Table of Tables

Table 1 – Operational Assumptions – Base Case ...................................................................................... 16

Table 2 – Operational Assumptions – Bear Case ....................................................................................... 16

Table 3 – Operational Assumptions – Bull Case ......................................................................................... 17

Table 4 – Net Working Capital Analysis .................................................................................................... 17

Table 5 – Operational Model – Base Case ................................................................................................. 18

Table 6 – WACC ...................................................................................................................................... 19

Table 7 – DCF Projection – Base Case ....................................................................................................... 20

Table 8 – DCF Share Price Calculation – Base Case .................................................................................... 20

Table 9 – DCF Sensitivity Analysis – Base Case .......................................................................................... 20

Table 10 – DCF Projection – Bear Case .................................................................................................... 21

Table 11 – DCF Share Price Calculation – Bear Case .................................................................................. 21

Table 12 – DCF Sensitivity Analysis – Bear Case ........................................................................................ 21

Table 13 – DCF Projection – Bull Case ...................................................................................................... 22

Table 14 – DCF Share Price Calculation – Bull Case ................................................................................... 22

Table 15 – DCF Sensitivity Analysis – Bull Case ......................................................................................... 22

Table 16 – Historical Trading Multiples .................................................................................................... 23

Table 17 – Comp Valuation – Base Case .................................................................................................. 23

Table 18 – Comp Valuation – Bear Case ................................................................................................... 23

Table 19 – Comp Valuation – Bull Case .................................................................................................... 23

Table 20 – Historical Trading Multiple by Sector ....................................................................................... 24

Table 21 – SOTP Valuation – Base Case .................................................................................................... 24

Table 22 – SOTP Valuation – Bear Case .................................................................................................... 24

Table 23 – SOTP Valuation – Bull Case ..................................................................................................... 24

Table 24 – Summary – Share Price ........................................................................................................... 25

Table 25 – Summary – Enterprise Value ................................................................................................... 25

Table 26 – Operational Model – Bear Case ............................................................................................... 27

Table 27 – Operational Model – Bull Case ............................................................................................... 28

Table 28 – Income Statment .................................................................................................................... 29

Table 29 – Balance Sheet ........................................................................................................................ 30

Table 30 – Cash Flow Statement .............................................................................................................. 30

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Table of Figures

Figure 1 – US Retail Sales .......................................................................................................................... 7

Figure 2 – US Retail Sales Growth .............................................................................................................. 7

Figure 3 – US E-commerce Sales Migration ................................................................................................ 7

Figure 4 – Share of Total Sales among the Top 250 by Geography ................................................................ 8

Figure 5 – Top 250 Sales Growth by Geography .......................................................................................... 8

Figure 6 – Top 50 E-commerce Penetration and Growth by Geography ........................................................ 8

Figure 7 – Share of Total Sales among the Top 250 by Sector....................................................................... 9

Figure 8 – Top 250 Sales Growth by Sector ................................................................................................. 9

Figure 9 – Top 50 E-commerce Penetration and Growth by Sector............................................................... 9

Figure 10 – eBay Revenue by Sector ........................................................................................................ 10

Figure 11 – eBay Revenue by Region ........................................................................................................ 10

Figure 12 – eBay Revenue Evolution by Sector .......................................................................................... 11

Figure 13 – eBay Revenue Growth by Sector ............................................................................................ 11

Figure 14 – eBay EBITDA Margin Evolution by Sector ................................................................................ 11

Figure 15 – eBay Total Users ................................................................................................................... 11

Figure 16 – eBay Total Users Growth ....................................................................................................... 11

Figure 17 – BRIC Expansion ..................................................................................................................... 13

Figure 18 – Cash Evolution ...................................................................................................................... 13

Figure 19 – eBay Russia ........................................................................................................................... 14

Figure 20 – eBay Now ............................................................................................................................. 15

Figure 21 – Russia e-commerce forecast .................................................................................................. 14

Figure 22 – Brazil e-commerce forecast .................................................................................................... 14

Figure 23 – India e-commerce forecast .................................................................................................... 15

Figure 24 – China e-commerce forecast ................................................................................................... 15

Figure 25 – Target Share Price Football Field ............................................................................................ 25

Figure 26 – Target Enterprise Value Football Field .................................................................................... 25

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Executive Summary

Today’s Date 24/07/2014

Ticker EBAY US

12 Months Rating BUY

12 Months Target Price 64.0

Share Price as of Today 52.7

Stock Price Evolution

Trading Data and Key Metrics

52 Week Range 48.06-59.70

Shares Outstanding 1295m

Market Cap 68.2bn

P/E 24.9x

EPS 2.21

Financial Highlights

$m FY2011 FY2012 FY2013

Revenue 11652 14072 16047

% growth 27.3% 20.8% 14.0%

EBITDA 3313 4088 4771

% sales 28.4% 29.1% 29.7%

EBIT 2373 2888 3371

% sales 20.4% 20.5% 21.0%

Net Income 3229 2609 2856

EPS 2.50 2.02 2.21

Target Price Recommendation

We recommend a 12 months target price of

$64.0 with an upside of $79.3 and downside

of $49.0 based on our bull and bear case

scenarios.

This price is a weighted average of our target

prices obtained by discounted cash flow

analysis with perpetuity method ($78.9),

discounted cash flow analysis with exit

multiple method ($99.3), comparable analysis

($52.0) and sum of the part analysis ($50.8).

Outperforming e-commerce market

The internet and mobile revolution is driving

the e-commerce market. In 2012, US retail

sales grew at 5% while US e-commerce sales

grew at 15%. E-commerce growth is

catalysed by the development in online

payment system, targeted advertising as well

as cheaper and quicker delivery.

Upside from Marketplaces innovations

Recent innovations such as eBay Now (1 hour

delivery system), PhiSix Fashion Lab (virtually

try on clothing before purchase) and Global

Shipping Programme (discount international

shipping through economies of scale), are

motivating medium to long term growth.

International market opportunities

Expansion especially in the BRIC region is a

key growth driver for eBay, as BRIC offers

faster growth and less e-commerce

penetrated market. The world’s top 50 online

retailer’s ecommerce sales grew at a

staggering 35% in the Asia Pacific region in

2012.

0

10

20

30

40

50

60

70

80

90

Jul/11 Jul/12 Jul/13 Jul/14 Jul/15

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Market Overview – Retail and E-commerce Industry

Economic Outlook

2013 was a difficult year for the global retail industry. Europe entered recession which lasted until the

first quarter of 2013; there were fear that the Eurozone would fail; China’s growth slowed

considerably. Although the US market showed signs of modest recovery and emerging market

growth remained reasonably strong, the overall economic environment was weak. Despite the

difficult economy, US total retail sales and US total e-commerce sales grew by 5% and 15%

respectively in 2012.

Source: www.census.gov

Source: www.census.gov

Going forward, we expect to see a continued migration of retail sales from traditional channel to

online channel, driven by mobile computing devices, cheaper and more efficient shipping

programs, and faster delivery times. We expect to see a 14.4% 2013-2023 CAGR e-commerce sales.

3,999 3,946

3,630

3,841

4,133

4,344

136 141 145 169

198 227

2007 2008 2009 2010 2011 2012

Figure 1 - US Retail Sales ($Billion)

Total Sales E-commerce Sales

3%-1%

-8%

6% 8%5%

20%

4% 3%

17% 17%15%

2007 2008 2009 2010 2011 2012

Figure 2 - US Retail Sales Growth

Total Sales Growth

E-commerce Sales Growth

3.4% 3.6%4.0%

4.4%4.8%

5.2%

2007 2008 2009 2010 2011 2012

Figure 3 - US E-commerce Sales

Migration

E-commerce Sales / Total Sales

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Top 250 Global Retailers / Top 50 E-commerce Retailers Analysis

We have analysed the top 250 global retailers and top 50 global e-commerce retailers by

sales. We have analysed the growth rates and profitability by geographic regions as well as

by primary product sectors. To assess fundamental demand, the analysis excludes

facilitators like Ebay, Alibaba and Tmall. It also excludes 9 other companies including apple

whose unusually high profit distorts the results.

By Geographic Region

North America

North America makes up the largest share of

sales from the top 250 retailers with 45.2%. US

sales growth cooled from 6.3% to 4.3% in 2012.

28 of the largest 50 e-commerce retailers are

from the US. We see an above average e-

commerce penetration (12%) and a below

average e-commerce sales growth (19%).

Latin America

Latin American retailers have the highest sales

CAGR of 14.7%. Strong growth is also

accompanied by industry leading profitability

with 4.9% net profit margin.

Europe

European retailers are dragged by the

Eurozone credit crisis, resulting in slow growth

(4.5% 2012 sales growth) and high

unemployment. Despite 17 of the largest 50 e-

commerce retailers are from Europe, only 5%

of total sales are e-commerce sales.

Asia Pacific

Eurozone crisis considerably reduced Europe’s

demand of Chinese import, hurting Chinese

sales growth (4.9% 2012 sales growth). Large

and rapidly growing e-commerce companies

are driving market leading e-commerce

growth (35%)

Africa / Middle East

Similar to Latin America, Africa / Middle East

experienced strong growth 17% CAGR with

above average profitability 4.4$ net profit

margin.

Source: Deloitte – Global Powers of Retailing 2014


Most of Africa / Middle East do not have online operation


Africa/Mi

ddle East,

1.1%

Asia

Pacific,

15.1%

Europe,

37.1%Latin

America,

1.6%

North

America,

45.2%

Figure 4 - Share of Total Sales among

the Top 250

17.0%

4.9% 4.5%

14.8%

4.2%13.5%

4.9% 4.5%

14.7%

4.8%

Figure 5 - Top 250 Sales Growth

2007-2012 Sales CAGR 2012 Sales Growth

6% 5% 8%12%

35%

25%20% 19%

Asia Pacific Europe Latin

America

North

America

Figure 6 - Top 50 E-commerce

Penetration and Growth

E-commerse Sales / Total Sales

2012 E-commerce Sales Growth

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Top 250 Global Retailers / Top 50 E-commerce Retailers Analysis

By Primary Product Sector

Fashion Goods

Fashion Goods is the most profitable sector in

2012 as well as historically, with a 7.4% net

profit margin. It is considerably smaller than

the other product sectors except diversified

goods. E-commerce penetration is below

average (7%) possibly because customers are

reluctant to buy clothes which they haven’t

tried on. But technological advances and

cheaper return postages are mitigating this

problem, driving its e-commerce growth

(24%).

Fast-moving Consumer Goods

FMCG is the largest product sector. It enjoyed

the strongest CAGR and 2012 growth (both

5.3%). This is not surprising given demands for

food and other packaged goods are less

sensitive to the recession. Since foods are

limited by expiry dates, food retailers are less

likely to sell online, resulting in a low e-

commerce penetration (2%). However, we

see the highest e-commerce sales growth in

this sector.

Hardlines & Leisure Goods

Excluding Apple whose large profit skewed

the data, consumer electronics and

entertainment media retailers within this sector

faces a challenging operating environment,

half of which operated at a loss in 2012.

Despite this, the sector saw a 4.5% growth in

2012 and a market leading e-commerce

penetration.

Diversified Goods

This comprises of companies who did not have

a majority of sales for the three above sectors.

It is the worst performing sector in terms of

growth with CAGR of 2.3% and 2012 growth of

2.6%.




Fashion

Goods,

8.8%

Fast-

moving

Consume

r Goods,

68.3%

Hardlines

& Leisure

Goods,

14.9%

Diversified

, 8.0%

Figure 7 - Share of Total Sales

amoung the Top 250

3.3%

5.3%

3.9%

2.3%

5.1% 5.3%4.5%

2.6%

Fashion

Goods

Fast-moving

Consumer

Goods

Hardlines &

Leisure

Goods

Diversified

Figure 8 - Top 250 Sales Growth

2007-2012 Sales CAGR 2012 Sales Growth

7%2%

15% 14%

24% 26% 24% 22%

Fashion

Goods

Fast-moving

Consumer

Goods

Hardlines &

Leisure

Goods

Diversified

Figure 9 - Top 50 E-commerce

Penetration and Growth

E-commerse Sales / Total Sales

2012 E-commerce Sales Growth

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Company Analysis – eBay Inc.

Company Description

eBay is a global commerce and payments platform. It connects buyers and sellers of all size

as well as offer payment solutions. eBay operates through three reportable segments:

Marketplaces, Payments and Enterprise.

Marketplaces

It includes eBay’s core global e-commerce

platform, ebay.com, and other localized sites

such as eBay.de and eBay.co.uk and other

products specific sites such as stubhub.com

(for event tickets).

Payments

It include eBay’s core payment brand PayPal,

which facilitates quick and secure worldwide

payments through a broad range of mobile

devices. It also includes a credit business, Bill

Me Later which allows consumers to use credit

payments for their purchases.

Enterprise

eBay acquired GSI commerce in 2011, which

creates and maintain online stores for large,

nationally recognized retailers. It also provides

marketing, customer care, technology

integration solutions. GSI was renamed

Enterprise in 2013

Source: eBay Annual Report 2014


M&A Activities

Recent M&A Strategy

Fredrik Ahlberg, head of expansion at eBay explains that eBay’s M&A strategy addresses four key

areas: mobile, local, social and digital. He says that development in mobile devices are shaping

demand for retailers; more people than ever are using the internet to find items that are close to

them locally; development in social media are revolutionising the marketing business; technology is

having a big impact on payment solutions.

Notable Acquisitions

2014 Enable Customer to virtually try on clothes online before purchasing

2013 Offer one day delivery by connecting retailer with local courier

2013 Helps online business to process credit card payments

2011 Provide localised information to facilitate advertisement

Source: Own Construction

Marketpl

aces

52%Payments

41%

Enterprise

7%

Figure 10 - Revenue By Sector

U.S

48%Internatio

nal

52%

Figure 11 - Revenue By Region

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Company Analysis – eBay Inc.

Historical Performance


We saw a declining sales growth for eBay

for the past 3 years. However the sales

growth of 21% and 14% in year 2012 and

2013 were both higher than its US industry

average growth of 14% and 13%, but

were lower than global industry average

growth of 22% and 18%.

Growth was mainly driven by its PayPal

business, which was actively expanding

its offline business into restaurants and gas

stations.

We also saw an increasing EBITDA Margin

for the past 3 years from 28% to 30%


Source: Statista 2014



We saw a healthy growth for eBay’s client base, especially for Market Place buyers whose

growth accelerated to 30% in 2013.

9156

11652

14072

16047

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2010 2011 2012 2013

Figure 12 - Revenue Growth By Sector

($M)

Marketplaces Payments Enterprise

16%

11% 12%

28%26%

19%27%

21%

14%

2011A 2012A 2013A

Figure 13 - Revenue Growth By Sector

Marketplaces Payments Total

95 100 108140

94 106123

143

2010 2011 2012 2013

Figure 15 - Total Users (M)

eBay Total Active Buyers

PayPal Total Active Accounts

37% 36% 37% 38%

20% 20%22% 23%

31%28% 29% 30%

2010A 2011A 2012A 2013A

Figure 14 - EBITDA Margin By Sector

Marketplaces Payments Total

6% 8%

30%

13%15% 16%

2011 2012 2013

Figure 16 - Total Users Growth

eBay Buyers Growth

PayPal Accounts Growth

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Strategy Analysis

SWOT Analysis

Strength Weakness

Market leader with a Strong Brand – world’s

largest internet marketplace

Attractive Business Model – does not

compete with merchants as they do not sell

products under their own name (unlike

Amazon)

High level of innovation in market places –

including eBay Now, Global Shipping

Program, The Plaza and the acquisition of

PhiSix

Declining overall fee – driven by

competitive pressures may weaken margins

in Marketplaces, sacrificing profitability in

the short term but may bring growth into the

long term

Low margins in PayPal – driven by expansion

activities, sacrificing profitability in the short

term but may bring growth into the long

term

Opportunity Threat

BRIC expansion opportunity – increasing

exposure to high growth, less penetrated e-

commerce market

Mobile expansion – taking advantage of

the growing number of mobile shoppers

Possible slowdown of PayPal growth –

caused by a slowdown in US e-commerce

industry growth

Competition in Marketplaces from Aboard –

such as Alibaba, TaoBao, Tencent

Recent Innovations Overview

eBay Now – 1 hour delivery

Launched in 2012 in US, eBay Now allow consumer to browse, purchase and receive goods from

local merchants within 1 hour. The 2012 acquisition of Shutl is expected to enable expansion to 25 US

market as well as London by the end of 2014, enabling eBay to access ~50% of US GDP. The service

cost only $5 per delivery. It provides a way to compete with Amazon’s delivery by drones.

The Plaza – eBay online storefront

It is expected to rollout in 2014. It creates an online shopping mall for larger brands. It allows them to

design their own storefront and distance themselves from the used/second handed goods concept

that the eBay brand may bring while still benefit from the strong eBay site traffic.

Global Shipping Program

US sellers can now ship to over 40 countries worldwide by sending their parcels to the international

shipping centre in Kentucky. eBay utilises the economies of scale and reduces the cost of handling

customs, duties, taxes etc.

PhiSix

The 2014 acquisition is developing a virtual dressing room technology that allows consumers to

virtually try on clothes by sending their measurements online. This will help alleviate traditional

concerns about whether clothes purchased online will fit.

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Strategy Analysis

BRIC Expansion Opportunity

Figure 17

Source: eBay company report

In 2012, approximately 6 million Marketplaces active users located in BRIC. eBay stated a

goal of increasing this number by 6.5 folds. We believe eBay is able to achieve this by

making significant investment and utilising their large cash balance which stood at

approximately 9 billion by the end of 2014.


6622 59299408 9025

2010 2011 2012 2013

Figure 18 - Cash ($M)

Cash & Equivalents

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Strategy Analysis


Figure 19

Source: eBay company report

Russia

eBay’s operation in Russia mostly comprise of

importing goods from other region. In

September 2013, eBay added Russia to its

Global Shipping Programme, allowing US

sellers to sell to Russia.

According to UBS, eBay is currently the top

international player in Russia already, further,

Russian active users roughly doubled during

2013 to achieve more than 1 million active

users.

The Russian e-commerce market grew by 23%

in 2013. Statista forecasts a CAGR of 14% from

2012-2016.

Brazil

eBay’s Brazilian Marketplaces business is still in

its early development stage. On the other

hand, the PayPal business has been operating

in Brazil since 2012.

eBay acquired 20% stakes in Mercadolibre

which is the dominant e-commerce

marketplace in Brazil.

The Brazilian e-commerce market grew by 16%

in 2013. Statista forecast a CAGR of 13% from

2012-2016.



1821

23 2521%19%

11%7%

2013 2014 2015 2016

Figure 21 - Russia e-commerce

Forecast ($Bn)

eCommerce Sales

eCommerce Sales Growth

1821 23 25

16%20%

8% 7%

2013 2014 2015 2016

Figure 22 - Brazil e-commerce Sales

($Bn)

E-commerce Sales


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Strategy Analysis


Figure 20

Source: eBay website

India

eBay recently offered a 9-hour delivery service

in Mumbai. In addition, eBay’s innovation

PowerShip program provides Indian sellers with

packing materials, doorstep pick up of

packages, discount delivery etc by partnering

with shipping companies such as Fed-Ex.

The Indian e-commerce market grew by 35%

in 2013. Statista forecast a CAGR of 27% from

2012-2016.

China

eBay has large competitors in China including

Taobao and TMall, which forced eBay to exit

China market a few years after it entered in

2003.

eBay re-entered by focusing on the export

market, offering Chinese seller to sell aboard.

On the importing side, it partnered with

Xiu.com to focus on the fashion sector.

The Chinese e-commerce market grew by

65% in 2013. Statista forecast a CAGR of 41%

from 2012-2016.



1621

2631

35%

27%24% 22%

2013 2014 2015 2016

Figure 23 - India e-commerce Sales

($Bn)

E-commerce Sales


182

275

359

44065%

51%

31%23%

2013 2014 2015 2016

Figure 24 - China e-commerce Sales

($Bn)

E-commerce Sales


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Valuation

Key Operational Assumptions

Base Case

We expect strong revenue growths driven by expansion opportunity in BRIC market, the

continuing mobile revolution, and the continuing migration from retail to online sales.

We forecast modest margin improvements due to the continued investment in new innovations

and international markets, as well as higher growth in the low margin PayPal Business.

Bear Case

Bear Case reflects the possible negative impact to revenue growth due to tough competition in

the Marketplaces business and a slowdown in user growth in PayPal and Marketplaces, as well

as a generally weaker global retail market due to macro uncertainties.

Table 1 - Operational Assumptions - Base Case

2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue Growth

Marketplaces 9.7% 11.2% 10.0% 9.0% 8.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Payments 19.0% 23.9% 24.0% 25.0% 22.0% 19.0% 15.0% 10.0% 10.0% 10.0%

Enterprise 9.0% 12.5% 14.0% 12.0% 10.0% 8.0% 7.0% 7.0% 7.0% 7.0%

SG&A 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

EBITDA Margin

Marketplaces 38.7% 39.7% 40.0% 40.5% 40.3% 40.0% 40.0% 40.0% 40.0% 40.0%

Payments 22.5% 22.7% 23.0% 23.0% 23.5% 24.0% 24.0% 24.0% 24.0% 24.0%

Enterprise 7.0% 7.3% 7.6% 8.0% 7.7% 7.5% 7.5% 7.5% 7.5% 7.5%

Deperation and Amortization

Marketplaces 11.7% 11.7% 13.0% 13.0% 12.0% 12.0% 11.0% 11.0% 11.0% 11.0%

Payments 7.0% 8.0% 8.0% 9.0% 9.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Enterprise 2.9% 2.9% 2.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Income taxes 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1%

CapEx 9% 10% 9% 8% 7% 7% 7% 7% 7% 7%

Table 2 - Operational Assumptions - Bear Case

2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue Growth

Marketplaces 5.8% 6.7% 6.0% 5.4% 5.1% 3.6% 3.6% 3.6% 3.6% 3.6%

Payments 11.4% 14.3% 14.4% 15.0% 13.2% 11.4% 9.0% 6.0% 6.0% 6.0%

Enterprise 5.4% 7.5% 8.4% 7.2% 6.0% 4.8% 4.2% 4.2% 4.2% 4.2%

SG&A 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%

EBITDA Margin

Marketplaces 34.8% 35.7% 36.0% 36.5% 36.3% 36.0% 36.0% 36.0% 36.0% 36.0%

Payments 20.3% 20.4% 20.7% 20.7% 21.2% 21.6% 21.6% 21.6% 21.6% 21.6%

Enterprise 6.3% 6.6% 6.8% 7.2% 6.9% 6.8% 9.5% 9.5% 9.5% 9.5%


Marketplaces 12.2% 12.3% 13.7% 13.7% 12.6% 12.6% 11.6% 11.6% 11.6% 11.6%

Payments 7.3% 8.4% 8.4% 9.5% 9.5% 8.4% 8.4% 8.4% 8.4% 8.4%

Enterprise 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.2% 3.2% 3.2% 3.2%

Income taxes 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2%

CapEx 5.4% 6.0% 5.4% 4.8% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2%

17 | P a g e

Valuation

Bull Case

Bull Case reflects the possible up side impact of eBay innovations (eBay Now, Global Shipping

Program, The Plaza, acquisition of PhiSix) on sales growth especially in the medium and long

term.

It also assumes continued strong user growth at Marketplaces and Payments as well as

continued strong e-commerce penetrations.

Working Capital Analysis

Source: Bloomberg, eBay Annual Report, own construction

Days receivable and payable forecasts are based on the average of past 3 years.

Table 3 - Operational Assumptions - Bull Case

2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue Growth

Marketplaces 12.6% 14.6% 13.0% 11.7% 11.1% 7.8% 7.8% 7.8% 7.8% 7.8%

Payments 24.7% 31.1% 31.2% 32.5% 28.6% 24.7% 19.5% 13.0% 13.0% 13.0%

Enterprise 11.7% 16.3% 18.2% 15.6% 13.0% 10.4% 9.1% 9.1% 9.1% 9.1%

SG&A 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%

EBITDA Margin

Marketplaces 40.6% 41.7% 42.0% 42.5% 42.3% 42.0% 42.0% 42.0% 42.0% 42.0%

Payments 23.6% 23.8% 24.2% 24.2% 24.7% 25.2% 25.2% 25.2% 25.2% 25.2%

Enterprise 7.4% 7.7% 8.0% 8.4% 8.1% 7.9% 7.9% 7.9% 7.9% 7.9%


Marketplaces 11.1% 11.1% 12.4% 12.4% 11.4% 11.4% 10.5% 10.5% 10.5% 10.5%

Payments 6.6% 7.6% 7.6% 8.6% 8.6% 7.6% 7.6% 7.6% 7.6% 7.6%

Enterprise 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.9% 2.9% 2.9% 2.9%

Income taxes 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%

CapEx 10.8% 12.0% 10.8% 9.6% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4%

Table 4 - Net Working Capital Analysis

2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Short term investments 3600.5 4388.6 5349.3 6551.8 7913.6 9323.0 10730.6 11932.2 13274.7 14775.2

Days 69.7 69.7 69.7 69.7 69.7 69.7 69.7 69.7 69.7 69.7

Accounts & notes receivables 2052.0 2501.2 3048.7 3734.1 4510.2 5313.5 6115.7 6800.5 7565.6 8420.8

Days 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7 39.7

Other current assets 12521.6 15262.5 18603.6 22785.5 27521.6 32423.1 37318.2 41497.1 46165.9 51384.3

Days 242.3 242.3 242.3 242.3 242.3 242.3 242.3 242.3 242.3 242.3

Total currrent assets 18174.1 22152.3 27001.6 33071.4 39945.4 47059.6 54164.5 60229.7 67006.3 74580.3

Accounts payable 405.8 491.6 604.4 749.8 914.7 1087.2 1263.6 1411.4 1577.2 1763.0

Days 26.1 26.1 26.1 26.1 26.1 26.1 26.1 26.1 26.1 26.1

Short-term borrowings 491.4 599.0 730.2 894.3 1080.2 1272.5 1464.7 1628.7 1811.9 2016.7

Days 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5

Other short term liabilities 12564.6 15314.9 18667.5 22863.8 27616.2 32534.5 37446.5 41639.7 46324.6 51560.9

Days 243.2 243.2 243.2 243.2 243.2 243.2 243.2 243.2 243.2 243.2

Total current liabilities 13461.9 16405.6 20002.0 24507.8 29611.0 34894.2 40174.7 44679.7 49713.7 55340.7

Net Working Capital 4712.3 5746.7 6999.6 8563.5 10334.4 12165.4 13989.8 15550.0 17292.6 19239.7

Change in Net Working Capital (1437.7) 1034.5 1252.9 1563.9 1770.9 1831.0 1824.4 1560.2 1742.6 1947.1

18 | P a g e

Valuation

Consolidated Operational Model – Base Case

To obtain segment specific trading multiples and improve our confidence in assumption, we

have conducted our forecast for revenue growth and margins at the segment level.

Adjusted EBIT is derived from GAAP EBIT minus their pro-rated corporate cost based on GAAP

EBIT share.

Depreciation and amortization are also pro-rated based on GAAP EBIT share.

Tax Expense as a percentage of EBIT is an average from past 3 years.

Table 5 - Operational Model

2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue 11652 14072 16047 18210 21264 24811 29028 33564 38017 42297 45867 49754 53987

% growth 27.3% 20.8% 14.0% 13.5% 16.8% 16.7% 17.0% 15.6% 13.3% 11.3% 8.4% 8.5% 8.5%

Marketplaces 6642 7398 8284 9088 10105 11116 12116 13146 13935 14771 15657 16597 17593

% growth 16.1% 11.4% 12.0% 9.7% 11.2% 10.0% 9.0% 8.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Payments 4412 5574 6628 7887 9772 12118 15147 18480 21991 25289 27818 30600 33660

% growth 28.4% 26.3% 18.9% 19.0% 23.9% 24.0% 25.0% 22.0% 19.0% 15.0% 10.0% 10.0% 10.0%

Enterprise 590 1083 1112 1212 1364 1554 1741 1915 2068 2213 2368 2534 2711

% growth - 83.6% 2.7% 9.0% 12.5% 14.0% 12.0% 10.0% 8.0% 7.0% 7.0% 7.0% 7.0%

Corporate 8 39 55 55 55 55 55 55 55 55 55 55 55

% growth - 387.5% 41.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Elimination 0 (22) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32)

% growth - - 45.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Cost of Revenue (3461) (4216) (5036) (5554) (6429) (7535) (8886) (10350) (11803) (13234) (14403) (15679) (17073)

% sales 29.7% 30.0% 31.4% 30.5% 30.2% 30.4% 30.6% 30.8% 31.0% 31.3% 31.4% 31.5% 31.6%

Gross Profit 8191 9856 11011 12656 14835 17276 20141 23214 26214 29062 31464 34074 36914

SG&A (4878) (5768) (6240) (7284) (8506) (9924) (11611) (13426) (15207) (16919) (18347) (19901) (21595)

% sales 41.9% 41.0% 38.9% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

EBITDA 3313 4088 4771 5372 6330 7352 8530 9788 11007 12144 13117 14173 15319

% sales 28.4% 29.1% 29.7% 29.5% 29.8% 29.6% 29.4% 29.2% 29.0% 28.7% 28.6% 28.5% 28.4%

Marketplaces 2361 2716 3178 3512 4012 4446 4907 5298 5574 5908 6263 6639 7037

% segment sales 35.5% 36.7% 38.4% 38.7% 39.7% 40.0% 40.5% 40.3% 40.0% 40.0% 40.0% 40.0% 40.0%

Payments 878 1254 1506 1775 2218 2787 3484 4343 5278 6069 6676 7344 8078

% segment sales 19.9% 22.5% 22.7% 22.5% 22.7% 23.0% 23.0% 23.5% 24.0% 24.0% 24.0% 24.0% 24.0%

Enterprise 74 118 86 85 100 118 139 147 155 166 178 190 203

% segment sales 12.6% 10.9% 7.8% 7.0% 7.3% 7.6% 8.0% 7.7% 7.5% 7.5% 7.5% 7.5% 7.5%

Depreciation and amortization (940) (1200) (1400) (1645) (2005) (2460) (2990) (3298) (3493) (3715) (4019) (4351) (4711)

% sales 8.1% 8.5% 8.7% 9.0% 9.4% 9.9% 10.3% 9.8% 9.2% 8.8% 8.8% 8.7% 8.7%

Marketplaces (670) (797) (933) (1059) (1183) (1445) (1575) (1578) (1672) (1625) (1722) (1826) (1935)

% segment sales 10.1% 10.8% 11.3% 11.7% 11.7% 13.0% 13.0% 12.0% 12.0% 11.0% 11.0% 11.0% 11.0%

Payments (249) (368) (442) (551) (782) (969) (1363) (1663) (1759) (2023) (2225) (2448) (2693)

% segment sales 5.6% 6.6% 6.7% 7.0% 8.0% 8.0% 9.0% 9.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Enterprise (21) (35) (25) (35) (40) (46) (52) (57) (62) (67) (72) (77) (83)

% segment sales 3.6% 3.2% 2.3% 2.9% 2.9% 2.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

EBIT (adjusted) 2373 2888 3371 3726 4325 4891 5540 6490 7514 8429 9097 9822 10608

% sales 20.4% 20.5% 21.0% 20.5% 20.3% 19.7% 19.1% 19.3% 19.8% 19.9% 19.8% 19.7% 19.6%

Marketplaces 1691 1919 2246 2454 2829 3001 3332 3720 3902 4284 4541 4813 5102

% segment sales 25.5% 25.9% 27.1% 27.0% 28.0% 27.0% 27.5% 28.3% 28.0% 29.0% 29.0% 29.0% 29.0%

Payments 629 886 1064 1223 1437 1818 2121 2680 3519 4046 4451 4896 5386

% segment sales 14.2% 15.9% 16.1% 15.5% 14.7% 15.0% 14.0% 14.5% 16.0% 16.0% 16.0% 16.0% 16.0%

Enterprise 53 83 61 50 60 72 88 90 93 99 106 113 121

% segment sales 9.0% 7.7% 5.5% 4.1% 4.4% 4.7% 5.0% 4.7% 4.5% 4.5% 4.5% 4.5% 4.5%

Net Interest 1537 196 95 104 121 137 155 182 210 236 255 275 297

% EBIT 64.8% 6.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%

EBT 3910 3084 3466 3831 4446 5028 5696 6672 7724 8665 9352 10097 10905

% sales 33.6% 21.9% 21.6% 21.0% 20.9% 20.3% 19.6% 19.9% 20.3% 20.5% 20.4% 20.3% 20.2%

Tax Expense (681) (475) (610) (786) (913) (1032) (1169) (1369) (1585) (1779) (1920) (2072) (2238)

% EBIT 28.7% 16.4% 18.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1%

Net Income 3229 2609 2856 3045 3533 3996 4526 5303 6139 6887 7433 8025 8667

% sales 27.7% 18.5% 17.8% 16.7% 16.6% 16.1% 15.6% 15.8% 16.1% 16.3% 16.2% 16.1% 16.1%

19 | P a g e

Valuation

Method 1 – Discounted Cash Flow Valuation

Weighted Average Cost of Capital Calculation

CAPM is used to compute the weighted

average cost of capital for eBay.

Cost of debt is calculated from eBay annual

report.

Risk free rate is the US 10 years Government

Bond yield.

Market risk premium is calculated from S&P

500 10 years annual return less the risk free

rate.

Tax Rate is taken from the eBay annual report

As a result, we obtained a 8.6% WACC.

Our forecasted Unlevered Free Cash Flows are discounted at this WACC in the calculations

that follow in the next three pages.

The sum of the discounted free cash flows is added to the terminal value to obtain the present

value of the enterprise value. From which, we can deduce the equity value and therefore

targeted share price.

We calculated terminal value by two methods, the perpetuity method and the exit multiple

method.

Using the perpetuity method, we get target prices of $100, $79, $60 for bull, base and bear

case scenarios.

Using the exit multiple method, we get target prices of $137, $99 and $66 for bull, base and

bear case scenarios.

Table 6 - WACC

Capital Structure

Debt 4123

Equity 13033

Debt/V 24.0%

Equity/V 76.0%

Cost of Debt

Cost of Debt 5.2%

Tax Rate 35.0%

After-tax Cost of Debt 3.4%

Cost of Equity

Risk-free Rate 2.5%

Market Risk Premium 7.3%

Levered Beta 1.060

Cost of Equity (CAPM) 10.3%

WACC 8.6%

20 | P a g e

Valuation


Base Case

Table 7 - Income Statement Projection

2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenues 18210 21264 24811 29028 33564 38017 42297 45867 49754 53987

% Growth 13.5% 16.8% 16.7% 17.0% 15.6% 13.3% 11.3% 8.4% 8.5% 8.5%

EBITDA 5372 6330 7352 8530 9788 11007 12144 13117 14173 15319

% Margin 29.5% 29.8% 29.6% 29.4% 29.2% 29.0% 28.7% 28.6% 28.5% 28.4%

EBIT 3726 4325 4891 5540 6490 7514 8429 9097 9822 10608

% Margin 20.5% 20.3% 19.7% 19.1% 19.3% 19.8% 19.9% 19.8% 19.7% 19.6%

- Tax (786) (913) (1032) (1169) (1369) (1585) (1779) (1920) (2072) (2238)

% EBIT 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1%

EBIAT 2940 3412 3859 4371 5121 5928 6651 7178 7750 8370

+ Depreciation 1645 2005 2460 2990 3298 3493 3715 4019 4351 4711

- Capital Expenditure (1639) (2126) (2233) (2322) (2349) (2661) (2961) (3211) (3483) (3779)

- Increase in Net Working Capital 1605 (766) (883) (1048) (1126) (1105) (1059) (885) (964) (1049)

Unlevered Free Cash Flow 4552 2524 3203 3991 4943 5656 6345 7101 7654 8252

Discount Factor 0.921 0.847 0.780 0.718 0.661 0.608 0.560 0.515 0.474 0.437

Present Value of Free Cash Flow 4190 2139 2498 2866 3267 3441 3553 3660 3632 3604

Table 8 - Share Price Calculation

Terminal Value - Perpetuity Method Terminal Value - Exit Multiple Method

2023E FCF 8252 2023E EBITDA 15319

Perpetuity Growth Rate 3.0% Exit Multiple 13.9x

Terminal Value 150798 Terminal Value 212213

Discount Factor 0.437 Discount Factor 0.437

PV of Terminal Value 65862 PV of Terminal Value 92686

Implied Share Price - Perpetuity Method Implied Share Price - Exit Multiple Method

Sum of Discounted FCF 32850 Sum of Discounted FCF 32850


Enterprise Value 2013 98712 Enterprise Value 2013 125536

- Net Debt (4123) - Net Debt (4123)

+ Cash 9025 + Cash 9025

Implied Equity Value 103614 Implied Equity Value 130438

Diluted Shares Outstanding 1313 Diluted Shares Outstanding 1313

Share Price 79 Share Price 99

Table 9 - Sensitiv ity Analysis

103614 2.0% 2.5% 3.0% 3.5% 4.0% 130437.7 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 111085 118434 127368 138461 152606 7.6% 141135 141172 141209 141246 141282

8.1% 101367 107267 114316 122885 133525 8.1% 135622 135657 135692 135727 135762

8.6% 93147 97954 103614 110376 118597 8.6% 130371 130404 130438 130471 130505

9.1% 86108 90074 94687 100118 106606 9.1% 125368 125400 125432 125464 125496

9.6% 80017 83325 87131 91558 96770 9.6% 120601 120631 120662 120692 120723

78.9 2.0% 2.5% 3.0% 3.5% 4.0% 99.3 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 84.6 90.2 97.0 105.5 116.2 7.6% 107.5 107.5 107.5 107.6 107.6

8.1% 77.2 81.7 87.1 93.6 101.7 8.1% 103.3 103.3 103.3 103.4 103.4

8.6% 70.9 74.6 78.9 84.1 90.3 8.6% 99.3 99.3 99.3 99.4 99.4

9.1% 65.6 68.6 72.1 76.3 81.2 9.1% 95.5 95.5 95.5 95.6 95.6

9.6% 60.9 63.5 66.4 69.7 73.7 9.6% 91.9 91.9 91.9 91.9 91.9

Equity Value Sensitiv ity - Exit Multiple Method

Share Price Sensitiv ity - Exit Multiple Method

Perpetuity Growth Rate


Exit Multiple

Equity Value Sensitiv ity - Perpetuity Method

Exit Multiple

WA

CC

WA

CC

WA

CC

WA

CC

Share Price Sensitiv ity - Perpetuity Method

21 | P a g e

Valuation


Bear Case


2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenues 17345 19081 20963 23046 25133 27036 28775 30186 31671 33233

% Growth 8.1% 10.0% 9.9% 9.9% 9.1% 7.6% 6.4% 4.9% 4.9% 4.9%

EBITDA 4618 5150 5663 6214 6751 7232 7703 8061 8436 8829

% Margin 26.6% 27.0% 27.0% 27.0% 26.9% 26.7% 26.8% 26.7% 26.6% 26.6%

EBIT 2968 3252 3456 3693 4130 4571 5005 5234 5474 5726

% Margin 17.1% 17.0% 16.5% 16.0% 16.4% 16.9% 17.4% 17.3% 17.3% 17.2%

- Tax (689) (755) (802) (857) (959) (1061) (1162) (1215) (1271) (1329)

% EBIT 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2%

EBIAT 2279 2497 2653 2835 3172 3510 3844 4019 4204 4397

+ Depreciation 1650 1898 2207 2522 2621 2662 2698 2826 2961 3103




Discount Factor 0.921 0.847 0.780 0.718 0.661 0.608 0.560 0.515 0.474 0.437




2023E FCF 5718 2023E EBITDA 8829










+ Cash 9025 + Cash 9025





78699 2.0% 2.5% 3.0% 3.5% 4.0% 86482.3 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 84041 89133 95324 103011 112812 7.6% 93022 93043 93065 93086 93107

8.1% 77224 81312 86196 92134 99507 8.1% 89654 89675 89695 89715 89735

8.6% 71446 74777 78699 83385 89081 8.6% 86444 86463 86482 86502 86521

9.1% 66489 69237 72433 76197 80692 9.1% 83382 83401 83419 83437 83456

9.6% 62191 64483 67121 70188 73800 9.6% 80462 80480 80497 80515 80532

59.9 2.0% 2.5% 3.0% 3.5% 4.0% 65.9 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 64.0 67.9 72.6 78.5 85.9 7.6% 70.8 70.9 70.9 70.9 70.9

8.1% 58.8 61.9 65.6 70.2 75.8 8.1% 68.3 68.3 68.3 68.3 68.3

8.6% 54.4 57.0 59.9 63.5 67.8 8.6% 65.8 65.9 65.9 65.9 65.9

9.1% 50.6 52.7 55.2 58.0 61.5 9.1% 63.5 63.5 63.5 63.5 63.6

9.6% 47.4 49.1 51.1 53.5 56.2 9.6% 61.3 61.3 61.3 61.3 61.3





Exit Multiple


Exit Multiple

WA

CC

WA

CC

WA

CC

WA

CC


22 | P a g e

Valuation


Bull Case


2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenues 18859 22987 28019 34317 41450 48833 56205 62499 69531 77390

% Growth 17.5% 21.9% 21.9% 22.5% 20.8% 17.8% 15.1% 11.2% 11.3% 11.3%

EBITDA 5830 7148 8641 10450 12495 14586 16617 18389 20361 22556

% Margin 30.9% 31.1% 30.8% 30.5% 30.1% 29.9% 29.6% 29.4% 29.3% 29.1%

EBIT 4214 5095 6021 7118 8653 10380 11979 13244 14652 16219

% Margin 22.3% 22.2% 21.5% 20.7% 20.9% 21.3% 21.3% 21.2% 21.1% 21.0%

- Tax (800) (968) (1143) (1352) (1643) (1971) (2275) (2515) (2782) (3080)

% EBIT 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%

EBIAT 3414 4128 4878 5767 7010 8409 9704 10729 11870 13139

+ Depreciation 1616 2052 2619 3332 3841 4206 4639 5145 5709 6337




Discount Factor 0.921 0.847 0.780 0.718 0.661 0.608 0.560 0.515 0.474 0.437




2023E FCF 11028 2023E EBITDA 22556










+ Cash 9025 + Cash 9025





130937 2.0% 2.5% 3.0% 3.5% 4.0% 179393.1 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 140724 150545 162484 177309 196212 7.6% 194705 194759 194813 194867 194921

8.1% 127837 135722 145141 156593 170812 8.1% 186810 186862 186913 186965 187017

8.6% 116948 123373 130937 139973 150959 8.6% 179295 179344 179393 179442 179492

9.1% 107636 112936 119100 126358 135029 9.1% 172138 172185 172232 172279 172326

9.6% 99588 104009 109096 115011 121977 9.6% 165321 165366 165411 165456 165501

99.7 2.0% 2.5% 3.0% 3.5% 4.0% 136.6 13.8x 13.8x 13.9x 13.9x 13.9x

7.6% 107.2 114.7 123.8 135.0 149.4 7.6% 148.3 148.3 148.4 148.4 148.5

8.1% 97.4 103.4 110.5 119.3 130.1 8.1% 142.3 142.3 142.4 142.4 142.4

8.6% 89.1 94.0 99.7 106.6 115.0 8.6% 136.6 136.6 136.6 136.7 136.7

9.1% 82.0 86.0 90.7 96.2 102.8 9.1% 131.1 131.1 131.2 131.2 131.2

9.6% 75.8 79.2 83.1 87.6 92.9 9.6% 125.9 125.9 126.0 126.0 126.0





Exit Multiple


Exit Multiple

WA

CC

WA

CC

WA

CC

WA

CC


23 | P a g e

Valuation

Method 2 – Comparable Analysis

Historical Trading Multiples

Comparable Analysis

Base Case

Bear Case

Bull Case

We have used 3 trading

multiples: EV/Revenue,

EV/EBITDA and EV/EBIT to

compute eBay enterprise

value.

Due to the lack of close

comparable companies, the

pricing multiples are

calculated from historical

values of eBay itself instead of

other comparable companies.

Pricing multiples are selected

using 30% mean and 70%

median of past trading

multiples to dampen extreme

points.

Pricing multiples for bear and

bull cases are decreased and

increased by 10% respectively.

From each pricing multiples

and 2014 forecasted revenue,

we have computed the

implied enterprise values.

Enterprise value obtained from

Revenue, EBIT and EBITDA are

assigned weighting of 16.7%,

16.7% and 33.7% respectively.

As a result, we get a target

price of 62.0, 52.0 and 40.5 for

bull, base and bear case

respectively.

Table 16 - Valuation multiples

2010A 2011A 2012A 2013A Mean Median 2014E

EV/Revenue 3.4x 3.0x 4.3x 4.1x 3.7x 3.8x 3.8x

EV/EBIT 15.3x 14.9x 21.1x 19.6x 17.7x 17.5x 17.6x

EV/EBITDA 11.2x 10.7x 14.9x 13.9x 12.7x 12.5x 12.6x

Table 17 - Base Case From Revenue From EBIT From EBITDA

2014E Revenue 2014E EBIT 2014E EBITDA

18209.9 3726.5 5371.9

EV/Revenue EV/EBIT EV/EBITDA

3.8x 17.6x 12.6x

Implied EV 68603.4 65443.3 67510.0

Shares Outstanding 1295.0 1295.0 1295.0

Implied Share Price 53.0 50.5 52.1

Weighting 16.7% 16.7% 66.7%

Weighted EV

Weighted Share Price 52.0

67347.8

Table 18 - Bear Case From Revenue From EBIT From EBITDA


17344.8 2968.2 4618.4


3.4x 15.8x 11.3x

Implied EV 58809.5 46913.9 52236.2



Weighting 16.7% 16.7% 66.7%

Weighted EV


52444.7

Table 19 - Bull Case From Revenue From EBIT From EBITDA


18858.8 4214.0 5829.8


4.1x 19.3x 13.8x

Implied EV 78152.7 81406.3 80590.8



Weighting 16.7% 16.7% 66.7%

Weighted EV


80320.4

24 | P a g e

Valuation

Method 3 – Sum of the Part (SOTP) Analysis

Historical EV/Revenue multiple by Sector

SOTP

Base Case

Bear Case

Bull Case

We have used EV/Revenue

multiples for each sector to

conduct the Sum of the Part

analysis.

Pricing multiples are selected using

30% mean and 70% median of past

trading multiples to dampen

extreme points.

EV/Revenues for bear and bull

cases are decreased and

increased by 10% respectively.

We calculated the implied

enterprise value for each sector for

each case by multiplying our

forecasted 2014 revenues with our

forecasted EV/Revenue multiples.

Then we summed the enterprise

values for each sector to get the

implied firm enterprise values for

each case.

As a result, we get target prices of

57.8, 50.8 and 43.7 for our bull,

base and bear case scenario.

Table 20 - Historical Trading Multiples by Sector

EV/Revenue 2010A 2011A 2012A 2013A Mean Median 2014E

Marketplaces 4.2x 3.8x 5.5x 5.3x 4.7x 4.8x 4.7x

Payments 2.2x 2.1x 3.4x 3.2x 2.7x 2.7x 2.7x

Enterprise - 1.3x 1.6x 1.1x 1.4x 1.3x 1.3x

Table 21 - Base Case


2014E Revenue 9087.5 7887.3 1212.1

EV/Revenue 4.7x 2.7x 1.3x

Implied EV 43064.5 21138.8 1634.6



Total EV

Total Share Price 50.8

65837.8

Table 22 - Bear Case


2014E Revenue 8766.1 7383.6 1172.0


Implied EV 37387.2 17809.8 1422.5



Total EV


56619.6

Table 23 - Bull Case


2014E Revenue 9328.6 8265.1 1242.1


Implied EV 48627.5 24366.4 1842.6



Total EV


74836.5

25 | P a g e

Valuation

Valuation Summary

The target prices for each method

and each case are summarised

here.

Each method is assigned a weight to

arrive at the final target price for

eBay.

The weighted bull case target price

is the upper bound of the final target

price.

The weighted bear case target price

is the lower bound.

We arrive at our final target price of

$64.0 with an upside of $79.3 and

downside of $49.0.

Table 24 - Share Price Summary

Method Bull Case Base Case Bear Case Weight

DCF - Perpetuity 99.7 78.9 59.9 16.7%

DCF - Exit Multiple 136.6 99.3 65.9 16.7%

Comparables 62.0 52.0 40.5 33.3%

SOTP 57.8 50.8 43.7 33.3%

Share Price 79.3 64.0 49.0

Table 25 - Enterprise Value Summary

Method Bull Case Base Case Bear Case Weight

DCF - Perpetuity 126035 98712 73797 16.7%

DCF - Exit Multiple 174491 125536 81580 16.7%

Comparables 80320 67348 52445 33.3%

SOTP 74837 65838 56620 33.3%

Share Price 101807 81770 62251

99.7

136.6

62.0

57.8

59.9

65.9

40.5

43.7

0.0 50.0 100.0 150.0

DCF - Perpetuity

DCF - Exit Multiple

Comparables

SOTP

Figure 25 - Implied Share Price Football

Field

126035

174491

80320

74837

73797

81580

52445

56620

0 50000 100000 150000 200000

DCF - Perpetuity

DCF - Exit Multiple

Comparables

SOTP

Figure 26 - Implied Enterprise Value

Football Field

26 | P a g e

References

Equity Research Reports

Sheridan, Chiodo, Patel, UBS [2014] Countering eBay Fears Part 2: Marketplaces

Sena, McDade, McNellis, Evercore [2014] Solid Result From Payments Business

Schachter, White, Merrick, Macquarie [2014] eBay 1Q’14: An Uneasy Feeling

Landell-Mills, Indigo [2014] Overview of Q1 2014 - Strong execution & mobile focus

Luria, Wedbush [2014] eBay A Peak into the Shopping Cart; Maintain OUTPERFORM

Other publications

Marketline [2014] eBay, Inc. – Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments

Canadean [2014] eBay Inc. – Company Profile, SWOT & Financial Report

Wright Investors’ Service [2014] Service Research Report: eBay Incorporated

Deloitte [2014] Global Powers of Retailing – retailing beyond

Deloitte [2014] The Omnichannal Opportunity – unlocking the power of the connected customers

PWC [2012] Introducing the PwC Global Consumer Index (GCI)

KPMG [2013] 2013 Retail Industry Outlook Survey

Databases

Bloomberg Terminal

Thomson One – thomsonone.com

Google Finance – www.google.com/finance

Yahoo Finance – www.finance.yahoo.com

Reuters – www.reuters.com

Statista – www.statista.com

US Census – www.census.gov

http://www.statista.com/

27 | P a g e

Appendix

Operational Model – Bear Case



2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue 11652 14072 16047 17345 19081 20963 23046 25133 27036 28775 30186 31671 33233

% growth 27.3% 20.8% 14.0% 8.1% 10.0% 9.9% 9.9% 9.1% 7.6% 6.4% 4.9% 4.9% 4.9%

Marketplaces 6642 7398 8284 8766 9355 9917 10452 10985 11381 11790 12215 12654 13110

% growth 16.1% 11.4% 12.0% 5.8% 6.7% 6.0% 5.4% 5.1% 3.6% 3.6% 3.6% 3.6% 3.6%

Payments 4412 5574 6628 7384 8442 9658 11107 12573 14006 15267 16183 17154 18183

% growth 28.4% 26.3% 18.9% 11.4% 14.3% 14.4% 15.0% 13.2% 11.4% 9.0% 6.0% 6.0% 6.0%

Enterprise 590 1083 1112 1172 1260 1366 1464 1552 1626 1695 1766 1840 1917

% growth - 83.6% 2.7% 5.4% 7.5% 8.4% 7.2% 6.0% 4.8% 4.2% 4.2% 4.2% 4.2%

Corporate 8 39 55 55 55 55 55 55 55 55 55 55 55

% growth - 387.5% 41.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Elimination 0 (22) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32)

% growth - - 45.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Cost of Revenue (3461) (4216) (5036) (5615) (6107) (6706) (7383) (8077) (8719) (9274) (9749) (10250) (10778)

% sales 29.7% 30.0% 31.4% 32.4% 32.0% 32.0% 32.0% 32.1% 32.3% 32.2% 32.3% 32.4% 32.4%

Gross Profit 8191 9856 11011 11730 12973 14258 15663 17056 18317 19501 20437 21421 22455

SG&A (4878) (5768) (6240) (7111) (7823) (8595) (9449) (10305) (11085) (11798) (12376) (12985) (13626)

% sales 41.9% 41.0% 38.9% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%

EBITDA 3313 4088 4771 4618 5150 5663 6214 6751 7232 7703 8061 8436 8829

% sales 28.4% 29.1% 29.7% 26.6% 27.0% 27.0% 27.0% 26.9% 26.7% 26.8% 26.7% 26.6% 26.6%

Marketplaces 2361 2716 3178 3049 3343 3570 3810 3984 4097 4244 4397 4556 4720

% segment sales 35.5% 36.7% 38.4% 34.8% 35.7% 36.0% 36.5% 36.3% 36.0% 36.0% 36.0% 36.0% 36.0%

Payments 878 1254 1506 1495 1725 1999 2299 2659 3025 3298 3495 3705 3928

% segment sales 19.9% 22.5% 22.7% 20.3% 20.4% 20.7% 20.7% 21.2% 21.6% 21.6% 21.6% 21.6% 21.6%

Enterprise 74 118 86 74 83 93 105 108 110 161 168 175 182

% segment sales 12.6% 10.9% 7.8% 6.3% 6.6% 6.8% 7.2% 6.9% 6.8% 9.5% 9.5% 9.5% 9.5%


% sales 8.1% 8.5% 8.7% 9.5% 9.9% 10.5% 10.9% 10.4% 9.8% 9.4% 9.4% 9.4% 9.3%

Marketplaces (670) (797) (933) (1072) (1150) (1354) (1427) (1384) (1434) (1362) (1411) (1462) (1514)

% segment sales 10.1% 10.8% 11.3% 12.2% 12.3% 13.7% 13.7% 12.6% 12.6% 11.6% 11.6% 11.6% 11.6%

Payments (249) (368) (442) (542) (709) (811) (1050) (1188) (1177) (1282) (1359) (1441) (1527)

% segment sales 5.6% 6.6% 6.7% 7.3% 8.4% 8.4% 9.5% 9.5% 8.4% 8.4% 8.4% 8.4% 8.4%

Enterprise (21) (35) (25) (36) (39) (42) (45) (48) (51) (54) (56) (59) (61)

% segment sales 3.6% 3.2% 2.3% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.2% 3.2% 3.2% 3.2%

EBIT (adjusted) 2373 2888 3371 2968 3252 3456 3693 4130 4571 5005 5234 5474 5726

% sales 20.4% 20.5% 21.0% 17.1% 17.0% 16.5% 16.0% 16.4% 16.9% 17.4% 17.3% 17.3% 17.2%

Marketplaces 1691 1919 2246 1977 2192 2216 2383 2600 2663 2883 2986 3094 3205

% segment sales 25.5% 25.9% 27.1% 22.6% 23.4% 22.4% 22.8% 23.7% 23.4% 24.5% 24.5% 24.5% 24.5%

Payments 629 886 1064 953 1016 1188 1250 1471 1849 2015 2136 2264 2400

% segment sales 14.2% 15.9% 16.1% 12.9% 12.0% 12.3% 11.3% 11.7% 13.2% 13.2% 13.2% 13.2% 13.2%

Enterprise 53 83 61 38 44 51 60 59 59 107 112 116 121

% segment sales 9.0% 7.7% 5.5% 3.2% 3.5% 3.8% 4.1% 3.8% 3.6% 6.3% 6.3% 6.3% 6.3%

Net Interest 1537 196 95 83 91 97 103 116 128 140 147 153 160

% EBIT 64.8% 6.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%

EBT 3910 3084 3466 3051 3343 3552 3796 4246 4699 5146 5381 5628 5887

% sales 33.6% 21.9% 21.6% 17.6% 17.5% 16.9% 16.5% 16.9% 17.4% 17.9% 17.8% 17.8% 17.7%

Tax Expense (681) (475) (610) (689) (755) (802) (857) (959) (1061) (1162) (1215) (1271) (1329)

% EBIT 28.7% 16.4% 18.1% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2% 23.2%

Net Income 3229 2609 2856 2362 2588 2750 2939 3287 3638 3984 4166 4357 4558

% sales 27.7% 18.5% 17.8% 13.6% 13.6% 13.1% 12.8% 13.1% 13.5% 13.8% 13.8% 13.8% 13.7%

28 | P a g e

Appendix

Operational Model – Bull Case



2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue 11652 14072 16047 18859 22987 28019 34317 41450 48833 56205 62499 69531 77390

% growth 27.3% 20.8% 14.0% 17.5% 21.9% 21.9% 22.5% 20.8% 17.8% 15.1% 11.2% 11.3% 11.3%

Marketplaces 6642 7398 8284 9329 10687 12076 13489 14980 16148 17408 18765 20229 21807

% growth 16.1% 11.4% 12.0% 12.6% 14.6% 13.0% 11.7% 11.1% 7.8% 7.8% 7.8% 7.8% 7.8%

Payments 4412 5574 6628 8265 10833 14213 18832 24218 30200 36089 40781 46082 52073

% growth 28.4% 26.3% 18.9% 24.7% 31.1% 31.2% 32.5% 28.6% 24.7% 19.5% 13.0% 13.0% 13.0%

Enterprise 590 1083 1112 1242 1444 1707 1973 2229 2461 2685 2930 3196 3487

% growth - 83.6% 2.7% 11.7% 16.3% 18.2% 15.6% 13.0% 10.4% 9.1% 9.1% 9.1% 9.1%

Corporate 8 39 55 55 55 55 55 55 55 55 55 55 55

% growth - 387.5% 41.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Elimination 0 (22) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32) (32)

% growth - - 45.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Cost of Revenue (3461) (4216) (5036) (5674) (6874) (8451) (10484) (12790) (15201) (17668) (19735) (22053) (24652)

% sales 29.7% 30.0% 31.4% 30.1% 29.9% 30.2% 30.5% 30.9% 31.1% 31.4% 31.6% 31.7% 31.9%

Gross Profit 8191 9856 11011 13185 16112 19568 23834 28660 33631 38537 42763 47478 52738

SG&A (4878) (5768) (6240) (7355) (8965) (10927) (13384) (16166) (19045) (21920) (24375) (27117) (30182)

% sales 41.9% 41.0% 38.9% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%

EBITDA 3313 4088 4771 5830 7148 8641 10450 12495 14586 16617 18389 20361 22556

% sales 28.4% 29.1% 29.7% 30.9% 31.1% 30.8% 30.5% 30.1% 29.9% 29.6% 29.4% 29.3% 29.1%

Marketplaces 2361 2716 3178 3786 4455 5072 5736 6339 6782 7311 7881 8496 9159

% segment sales 35.5% 36.7% 38.4% 40.6% 41.7% 42.0% 42.5% 42.3% 42.0% 42.0% 42.0% 42.0% 42.0%

Payments 878 1254 1506 1953 2582 3432 4548 5976 7610 9094 10277 11613 13122

% segment sales 19.9% 22.5% 22.7% 23.6% 23.8% 24.2% 24.2% 24.7% 25.2% 25.2% 25.2% 25.2% 25.2%

Enterprise 74 118 86 91 111 136 166 180 194 211 231 252 275

% segment sales 12.6% 10.9% 7.8% 7.4% 7.7% 8.0% 8.4% 8.1% 7.9% 7.9% 7.9% 7.9% 7.9%


% sales 8.1% 8.5% 8.7% 8.6% 8.9% 9.3% 9.7% 9.3% 8.6% 8.3% 8.2% 8.2% 8.2%

Marketplaces (670) (797) (933) (1033) (1189) (1491) (1666) (1708) (1841) (1819) (1961) (2114) (2279)

% segment sales 10.1% 10.8% 11.3% 11.1% 11.1% 12.4% 12.4% 11.4% 11.4% 10.5% 10.5% 10.5% 10.5%

Payments (249) (368) (442) (549) (823) (1080) (1610) (2071) (2295) (2743) (3099) (3502) (3958)

% segment sales 5.6% 6.6% 6.7% 6.6% 7.6% 7.6% 8.6% 8.6% 7.6% 7.6% 7.6% 7.6% 7.6%

Enterprise (21) (35) (25) (34) (40) (48) (55) (63) (70) (77) (84) (92) (101)

% segment sales 3.6% 3.2% 2.3% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.9% 2.9% 2.9% 2.9%

EBIT (adjusted) 2373 2888 3371 4214 5095 6021 7118 8653 10380 11979 13244 14652 16219

% sales 20.4% 20.5% 21.0% 22.3% 22.2% 21.5% 20.7% 20.9% 21.3% 21.3% 21.2% 21.1% 21.0%

Marketplaces 1691 1919 2246 2753 3266 3581 4070 4631 4941 5492 5920 6382 6880

% segment sales 25.5% 25.9% 27.1% 29.5% 30.6% 29.7% 30.2% 30.9% 30.6% 31.6% 31.6% 31.6% 31.6%

Payments 629 886 1064 1404 1759 2352 2938 3905 5315 6352 7177 8110 9165

% segment sales 14.2% 15.9% 16.1% 17.0% 16.2% 16.6% 15.6% 16.1% 17.6% 17.6% 17.6% 17.6% 17.6%

Enterprise 53 83 61 57 71 88 110 117 124 135 146 159 174

% segment sales 9.0% 7.7% 5.5% 4.6% 4.9% 5.2% 5.6% 5.3% 5.0% 5.0% 5.0% 5.0% 5.0%

Net Interest 1537 196 95 118 143 169 199 242 291 335 371 410 454

% EBIT 64.8% 6.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%

EBT 3910 3084 3466 4332 5238 6190 7318 8896 10671 12314 13615 15062 16673

% sales 33.6% 21.9% 21.6% 23.0% 22.8% 22.1% 21.3% 21.5% 21.9% 21.9% 21.8% 21.7% 21.5%

Tax Expense (681) (475) (610) (800) (968) (1143) (1352) (1643) (1971) (2275) (2515) (2782) (3080)

% EBIT 28.7% 16.4% 18.1% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%

Net Income 3229 2609 2856 3532 4270 5046 5966 7252 8700 10039 11100 12280 13593

% sales 27.7% 18.5% 17.8% 18.7% 18.6% 18.0% 17.4% 17.5% 17.8% 17.9% 17.8% 17.7% 17.6%

29 | P a g e

Appendix

Income Statement


Table 28 - Income Statement

$M USD 12 Months Ending 2013-12-31 2010 2011 2012 2013

Revenues 9156 11652 14072 16047

By business segments 9156 11652 14072 16047

Marketplaces 5721 6642 7398 8284

Net transaction revenues 4800 5431 6078 6795

Advertising & other revenues 921 1211 1320 1489

Payments 3435 4412 5574 6628



Enterprise 0 590 1083 1112



Corporate and other 8 39 55

Eliminations and other 0 (22) (32)

By geographic segments 9156 11652 14072 16047

U.S 4214 5484 6778 7712

International 4942 6168 7294 8335

Cost of revenue (2564) (3461) (4216) (5036)

Marketplaces (1071) (1210) (1273) (1520)

Payments (1493) (1866) (2209) (2675)

Enterprise 0 (374) (696) (821)

Corporate and other 0 (11) (38) (20)

Gross profit 6592 8191 9856 11011

Operating expenses (4538) (5818) (6968) (7640)

Sales and marketing (1947) (2435) (2913) (3060)

Product development (908) (1235) (1573) (1768)

Gerneral and administrative (1101) (1364) (1567) (1703)

Prov ision for transaction and loan losses (392) (517) (580) (791)

Amortization of acquired intangible assets (190) (267) (335) (318)

EBIT 2054 2373 2888 3371

Marketplaces 2305 2631 2943 3351

Payments 722 978 1359 1588

Enterprise 0 83 128 91

Corporate and other (973) (1319) (1542) (1659)

Interest and other, net 44 1537 196 95

EBT 2098 3910 3084 3466

Provision for income taxes (297) (681) (475) (610)

Net income 1801 3229 2609 2856

30 | P a g e

Appendix

Balance Sheet

Cash Flow Statement

Table 29 - Balance Sheet

$M USD 12 Months Ending 2013-12-31 2010A 2011A 2012A 2013A

Assets

Cash & equivalents 5577.0 4691.1 6817.1 4494.1

Short term investments 1045.0 1238.3 2591.0 4531.0

Accounts & notes receivables 454.0 681.6 2982.0 899.0

Inventories 0.0 0.0 0.0 0.0

Other current assets 3988.0 6050.5 9008.0 13359.0

Total currrent assets 11064.0 12661.5 21398.1 23283.1

LT investments & LT receivables 2492.0 2452.8 3044.0 4971.0

Net fixed assets 1523.0 1986.2 2491.0 2760.0

Gross fixed assets 4876.8 5957.0 7120.0

Accumulated depreciation 2890.6 3466.0 4360.0

Other LT assets 6923.0 10219.8 10141.0 10474.0

Total LT assets 10938.0 14658.8 15676.0 18205.0

Total assets 22002.0 27320.3 37074.1 41488.1

Liability and equity

Accounts payable 185.0 283.1 301.0 309.0

Short-term borrowings 300.0 564.6 413.0 6.0

Other short term liabilities 4031.0 5886.5 10210.0 12324.0

Total current liabilities 4516.0 6734.2 10924.0 12639.0

LT borrowings 1494.0 1525.0 4106.0 4117.0

Other LT liabilities 690.0 1131.1 1179.0 1085.0

Total LT liabilities 2184.0 2656.1 5285.0 5202.0

Total liabilities 6700.0 9390.3 16209.0 17841.0

Share capital & APIC 10482.0 11146.4 12064.0 13033.0

Retained earnings & other equity 4820.0 6783.5 8801.0 10614.0

Total equity 15302.0 17929.9 20865.0 23647.0

Total liabilities & equity 22002.0 27320.2 37074.0 41488.0

Table 30 - Cash Flow Statement

$M USD 12 Months Ending 2013-12-31 2010A 2011A 2012A 2013A

Cash from operating activities 2745.8 3273.4 3838.0 4995.0

% Revenues 30% 28% 27% 31%

Net income 1801.0 3229.0 2609.0 2856.0

Depreciation & amortization 762.5 940.0 1200.0 1400.0

% Revenues 8% 8% 9% 9%

Other non-cash adjustment 1155.4 (593.8) 689.0 985.0

Change in non-cash capital (973.1) (301.8) (660.0) (246.0)

Cash from investing activities (2282.5) (3306.9) (3763.0) (6012.0)

Capital expenditures (723.9) (963.5) (1257.0) (1250.0)

Other investing activ ities (1558.6) (2343.4) (2506.0) (4762.0)

Cash from financing activities 1114.3 (853.2) 2051.0 (1306.0)

Change in short-term borrowing 300.0 250.0 (550.0) (400.0)

Increase in long-term borrowing 1488.7 0.0 2976.0 0.0

Decrease in long term borrowing 0.0 (199.3) 0.0 0.0

Increase in capital stocks 277.4 321.9 613.0 638.0

Decrease in capital stocks (711.1) (1064.0) (898.0) (1343.0)

Other financing activ ities (240.7) (161.8) (90.0) (201.0)

Net changes in cash 1577.6 (886.7) 2126.0 (2323.0)

Equity Valuation Report on eBay Inc

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