2. Legal disclosures placeholder
This presentation contains non-GAAP measures relating to the company's performance. You can find the reconciliation of
those measures to GAAP measures in the tables of our earnings release which is available through our investor relations
website located at http://investor.ebay.com/downloads/Reconciliation.pdf.
In addition, this presentation may contain forward-looking statements regarding matters that involve risk and uncertainty,
including those relating to the future financial results of Skype and eBay, and the impact of the acquisition of Skype on
eBay’s financial results. Our actual financial results could differ materially from those represented in this presentation.
Factors that could cause or contribute to such differences include, but are not limited to, the receipt and timing of the closing
of the transaction, the possibility that the transaction may not close, the reaction of the users of Skype’s services, the future
growth of Skype’s user base, the reaction of competitors and regulatory agencies to the transaction, developments in the
regulation of voice-over-Internet protocol (VoIP) services including those provided by Skype, and the possibility that
integration following the transaction may be more difficult than expected.
More information about factors that could affect the company’s operating results is included under the captions “Risk Factors
That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and
current reports on Form 8-K, copies of which may be obtained by visiting the company’s investor relations site at
http://investor.ebay.com. Undue reliance should not be placed on the forward-looking statements in this release, which are
based on information available to the company on the date hereof eBay assumes no obligation to update such statements.
2
4. eBay is evolution
• 1996 – 1998: US only, collectibles only
• 1999 – Moving beyond collectibles
• 1999 – Going global
• 2000 – Introducing Fixed Price and eBay Stores
• 2002 – PayPal: removing friction and building a huge new business
• 2004 – 2005: Creating other marketplaces Marktplaats, Mobile, Rent.com,
Shopping.com, Kijiji, ProStores
• Common theme – expanding our vision, our market and our opportunity
• Aspirational goal of growing faster than e-commerce
4
5. High performance company
(Real 2003 $M)
1,000,000
100,000
10,000
1,000
100
10
1
1 5 9 13 17 21 25 29 33 37 41
Years Since
Incorporation
5
6. High performance company
(Real 2003 $M)
1,000,000
100,000
GMV
10,000 TPV
1,000
100
10
1
1 5 9 13 17 21 25 29 33 37 41
Years Since
Incorporation
6
7. Expanding eBay’s share of e-commerce
• Skype will accelerate commerce on eBay
• Skype opens up new lines of business, new
monetization models, new geographies
• A great standalone communications business
• eBay + PayPal + Skype =
Unparalleled e-commerce and communications
engine
7
9. Simply powerful
Any Skype user in the
World (Free)
Internet
9
10. Simply powerful
Any Skype user in the
World (Free)
Internet
Any Regular Telephone in
the World (Low cost)
10
11. Easy to set up and use
1
Download and install
Skype client from website,
get headset
11
12. Easy to set up and use
1 2
Download and install Look up and
Skype client from website, add buddies
get headset
12
13. Easy to set up and use
1 2 3
Download and install Look up and Start talking with
Skype client from website, add buddies other Skype users
get headset
13
14. Rich functionality
Skype Me…
Find other Skype users
Send any kind of file
Advanced Instant Messaging
Make conference calls
Are you available?
Call any phone
Wallet
Get calls from any Leave voicemail
phone on your
Skype number
Forward calls to any number
14
15. Viral growth
44.1
On track for
57M 32.9
registered
Users in Q3!
19.8
11.5
6.8
4.1
Q104 Q204 Q304 Q404 Q105 Q205
Skype Registered Users (M)
15
17. Historic success
Number of
Reg Users
(MM) 60
50
40
30
20
10
0
1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 17
(IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003
18. Historic success
Number of
Users (MM)
60
50
Adding 150K
registered
users / day
40
30
20
10
0
1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 18
(IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003
19. A truly global community
SKYPE users
Non SKYPE users
Skype has a presence Skype is a market leader
in 225 countries and independent in every
territories worldwide major country(1)
(1) Skype estimates 19
20. Significant buzz all over the world…
“To ‘Skype’ is to call someone
over your computer”
USAToday (17 December 2004)
20
22. Accelerating e-commerce
• Accelerate existing
categories
• Create a new way to • Expand into new
monetize e-commerce categories
• Remove a key friction • Monetize new
marketplaces
• Expand the global
footprint
22
23. A new way to monetize e-commerce
eBay Today eBay with Skype
Transaction
Transaction- and
based lead-generation
monetization
monetization
Listing fees Listing fees
Final value fees Final value fees Pay
Feature fees Feature fees
+ per
call
PayPal fees PayPal fees
23
24. Communication is key to e-commerce
The online transaction process requires various
communication points along the way
“Steve” “Bob” the
the seller buyer
Q+A before purchase
Closing transaction
Order status
24
25. Communication is key to e-commerce
The online transaction process requires various
communication points along the way
“Steve” “Bob” the
the seller 5M e-mail messages are buyer
initiated per day between
eBay buyers & sellers
30% of eBay bids
take place in
the last 2 hours!
25
26. Skype is a leap forward in communication
• In transaction flow
• Instantaneous and private
• Free with rich experience
• Advanced functionality
26
27. eBay has historically removed friction
Friction point Solution
Trust &
safety Feedback
Description Pictures
Payments
Shipping
27
29. Accelerating e-commerce
• Accelerate existing
categories
• Create a new way to • Expand into new
monetize e-commerce categories
• Remove a key friction • Monetize new
marketplaces
• Expand the global
footprint
29
30. Skype accelerates certain existing
categories
Motors Business and industrial
Communications can
accelerate categories
that are:
Collectibles Sporting goods
• High involvement
• Expensive
• Complex Music
instruments Jewelry and watches
Motors, collectibles,
and B&I alone
represent ~40%
of eBay GMV
30
31. Skype accelerates certain existing
categories: Example
Future motors listing
Firstclassauto – currently online!
“ Firstclassauto – currently online! ”
31
32. Communications enables
expansion into new categories
Skype allows superior
access to categories that
• Require significant
communication
• Are less suited to
transaction-based
monetization
Source: Jupiter, Borrell, NADA, 32
Manheim, eBay estimates
33. Communications enables
expansion into new categories
Skype allows superior
access to categories that
• Require significant
communication
• Are less suited to
transaction-based
monetization
Source: Jupiter, Borrell, NADA, 33
Manheim, eBay estimates
34. Pay Per Call enables monetization of
new marketplaces
Pay Per Call on Local Classifieds
Paris
Listing Sponsorisé
Charles de Gaulle
Renault
Les meilleurs voitures!
Skype moi!
Bagnolet Peugeot
Skype moi!
BelleVille Audi
Skype moi!
34
35. Expanding the global footprint
Emerging markets New markets Cross-border trade
India China Japan
Nordic
Poland Brazil Russia
• Large grey markets • Limited eBay • Limited trust
• Limited trust on Internet presence
• Buyers need
• Culture of haggling • Large growth in more interaction
• Culture of IM/mobile Skype users and information
• Price sensitivity from sellers
35
38. A great standalone business
1 A large and growing opportunity
2 A strong leadership position
3 Competitive advantage
38
39. An important consumer activity
Minutes
480
per user 500
per 450 44% of all user
month(1) time online is
400
spent
350 communicating(2)
435 Calls from
300
home(3)
250
195 Share of VOIP
200
calls expected
150 127 to increase
80 significantly
100
over time
50 16
45 Skype today
0
Search eBay Web Email IM Phone
marketplace
Communications
Source: (1) Nielsen Netratings averages for biggest sites in
each category, (2) eBay estimates from Comscore data, (3) 39
Yankee Group as of April 2003
41. Increasing penetration
Global Broadband subscribers (M) US Broadband and VOIP households (M)
'04-'09
350
CAGR 80 30M VOIP
317.3 households in 72.3 Total
BB
300 287.8
21.6% 70 US by 2009 66.9
256.9 58.5
60
250
13.8%
223.1
50.1
50
200 185.4
41.1
40
145.7 32.6
150
18.1% 30
24.6
38% % VoIP
100
20
29%
50 18.8% 10 20%
8% 13%
1% 3%
0 0
2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009
United States Europe Asia/Pacific ROW VoIP subscribers Broadband households
Source: IDC 41
42. Increasing usage
VOIP Annual Minutes of Use (B) 1,495
760
367
183
42 72
10 17 27
2001 2002 2003 2004 2005E 2006E 2007E 2008E 2009E
Source: IDC 42
43. A leadership position
Skype’s global revenue base
Other
12%
NA
EU 13%
48%
Asia
27%
% of
total
Source: Skype, Sandvine 43
44. A leadership position
Skype’s global revenue base Skype segment share in North America
Other VOIP
12% 46.2% Skype is #1
Minutes
NA
EU 13%
48%
Asia VOIP
27% 35.8% Skype is #1
Users
% of
total
0 20 40 60
Estimated ~25% of Percent of total (%)
Skype users
are businesses
Source: Skype, Sandvine 44
45. Strong team
• Founders created Kazaa,
were executives at Tele2
• Entrepreneurial senior Niklas Zennström
management team from CEO & Co-Founder
Tele2, Microsoft, Yahoo!,
OpenWave
• Developers pioneered peer-
to-peer technology
Janus Friis
Co-Founder
45
49. Advanced technology
Virtual, peer-to-peer architecture
brings key advantages
• System is massively scalable
• No single point of failure
• Low CapEx
In addition, Skype has
• Better firewall tunneling that allows
more calls to be completed
• Advanced security and encryption
technology
49
50. Many great applications
Internet Explorer Toolbar - Beta Integration with Outlook - Beta
Web Presence Integration Voice Marketplace
Interactive Language Homework
voice learning tools tutoring
response
50
51. Many great applications
Internet Explorer Toolbar - Beta Integration with Outlook - Beta
Web Presence Integration Voice Marketplace
Interactive Language Homework
voice learning tools tutoring
response
51
53. Many great applications
Internet Explorer Toolbar - Beta Integration with Outlook - Beta
Web Presence Integration Voice Marketplace
Interactive Language Homework
voice learning tools tutoring
response
53
55. Many great applications
Internet Explorer Toolbar - Beta Integration with Outlook - Beta
Web Presence Integration Voice Marketplace
Interactive Language Homework
voice learning tools tutoring
response
55
56. Many great applications
Internet Explorer Toolbar Integration with Outlook
Picture share with Kodak Web Presence Integration
56
57. Many great applications
Internet Explorer Toolbar - Beta Integration with Outlook - Beta
Web Presence Integration Voice Marketplace
Interactive Language Homework
voice learning tools tutoring
response
57
58. Many great applications
Valuable content and services
Voice Marketplace
• Create and share
Interactive Language Homework
innovative voice voice learning tutoring
services response tools
(eg. traffic
• Content providers get a reports)
share of call revenue
Key partners
58
59. Reinforcing ecosystem
1000+ Developers
200+ Hardware devices 200+ Skype-enabled
labeled as Applications
Skype-compatible
30+ partnerships
with world-class
companies
59
60. The power of three
Users invite
other users
New users
invite more
users
60
61. The power of three
Users invite Sellers go where More sellers
other users buyers are offer PayPal
New users
Buyers go where More buyers
invite more
sellers are use PayPal
users
61
62. The power of three
Users invite Sellers go where More sellers
other users buyers are offer PayPal
New users
Buyers go where More buyers
invite more
sellers are use PayPal
users
eBay Users PayPal Wallet eBay Users
eBay Usage Skype Users Skype Users
PayPal Wallet Skype-Enabled eBay & Skype Usage
Commerce
62
64. Valuation considerations
• Traditional financial valuation methods
– Precedent transactions
– Value per user
– Discounted cash flow
• Earn out structure based on aggressive goals
• A great standalone business, not just VOIP functionality
– Leading market position with considerable momentum
– Technology leadership
– Considerable monetization potential
• Synergistic opportunities with existing businesses
64
65. The power of three: synergistic
opportunities
eBay + Paypal Users
• 157M eBay registered
users
• 79M PayPal accounts
• 1% overlap between
Skype and eBay US
users today(1)
eBay Usage
• 5M email messages/day
• 1.4B new listings/year
PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 65
66. The power of three: synergistic
opportunities
eBay + Paypal Users Skype Users
• 157M eBay registered • 54M registered
users users
• 79M PayPal accounts • ~25% of users are
• 1% overlap between business accounts
Skype and eBay US
users today(1)
Skype Commerce
(usage)
eBay Usage
• Skype-enabled
• 5M email messages/day
commerce
• 1.4B new listings/year
• 200+ Skype
hardware
applications
PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 66
67. The power of three: synergistic
opportunities
eBay + Paypal Users Skype Users Skype Users
• 157M eBay registered • 54M registered • >80% outside US
users users
• 79M PayPal accounts • ~25% of users are
• 1% overlap between business accounts Skype Usage
Skype and eBay US • Payment of call
users today(1) services
Skype Commerce • Send money to
(usage) buddies
eBay Usage
• Skype-enabled
• 5M email messages/day
commerce
• 1.4B new listings/year
• 200+ Skype
hardware
applications
PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 67
68. Transaction summary
• Pay $1.3B(1) in cash
Transaction Value • Deliver $1.3B(1) in eBay stock subject to certain sale
and Structure restrictions
• Total of $2.6B (4.8% of market cap)
• Earn out of up to an additional $1.5B(1,2) based on
high active user, gross profit, and revenue goals in
Performance-based 2008
earn out – Earn out participants received less up-front
consideration
– All of management opted for the earn out
Expected Closing • Q4 2005
(1) Based on an exchange rate of € 1.239 68
(2) Earn-out value presented on an undiscounted basis
69. Strong Business Model
• Large market opportunity
• Transaction-based revenues Rapid revenue growth
• No inventory or warehouses
• Efficient customer acquisition
• High operating leverage Outstanding
cash generation
• Low capital requirements
(1) Nielsen Netratings 69
70. Skype revenues
Free services Premium services
SkypeIn and SkypeOut
Free Skype to
Skype calls Expressive content
(avatars, ringtones,
(cost nothing to ringbacks)
provide)
Hardware royalties
70
Voice services
71. Strong Revenue Growth
$259.0
Existing Lines
Of Business $200+
$103.8
$60
$47.4
$7 $12.6
(Dollars in millions)
$0.4 $5.7
2004 2005E 2006E 1996 1997 1998 2000 2001 2002
71
72. Strong Revenue Growth
$259.0
Existing Lines
Of Business $200+
$103.8
$60
$47.4
$7 $12.6
(Dollars in millions)
$0.4 $5.7
2004 2005E 2006E 1996 1997 1998 2000 2001 2002
72
73. Skype revenues
Premium services New eBay
Free services Opportunities
• Existing eBay Categories
SkypeIn and SkypeOut
Free Skype to
Skype calls
Expressive content
• Emerging markets
(cost nothing to (avatars, ringtones,
ringbacks) • New geographies
provide)
• Cross-border trade
Hardware royalties
• New categories
• New marketplaces
(classifieds, 73
Voice services shopping.com)
74. Leveraged cost structure
• Efficient customer acquisition
– Word of mouth significantly reduces user acquisition cost
• High operating leverage
– Minimal incremental cost for each user call
– Software business model with low fixed costs
• Infinitely scalable network infrastructure with low capex
– Peer to Peer technology requires minimal capex
– Distributed architecture eliminates single point of failure
– Centralized server(s) for authentication for basic services
– Centralized server(s) for premium services, e.g. voicemail
Outstanding cash generation capability
74
75. Financial impact
• Dilutive to Q4-05 pro-forma and GAAP EPS by
$0.01 and $0.04, respectively
• Dilutive to 2006 pro-forma and GAAP EPS(3) by
$0.04 and $0.12, respectively
• Breakeven on a pro-forma basis in Q4 2006
• Long term operating margins of 20-25%
(3) Not adjusted for FAS 123 75
76. eBay Inc Balance Sheet
• Funding acquisition through internally generated cash flows
• Balance sheet fundamentals remain unchanged:
– Cash reserves of >$1B
– Annualized free cash flows of >$1.5B
– Low capex requirements: ~$2M in 2006
– No long-term debt
• Long-term revenue and profit growth will continue to add to already
strong cash flow position
76
77. Summary
• A great standalone business with a very
complementary business model
• Significant growth opportunities:
– Build on Skype momentum
– Accelerate eBay existing and new businesses
– Create entirely new businesses
• The power of 3
77
78. The power of 3
Sellers go where
buyers are
Buyers go where
sellers are
Users invite More Sellers
other users Offer PayPal
New users invite More Buyers
more users use PayPal
78
