eBay

To our stockholders,

As the Board Chairman, I continue to be proud of the meaningful impact eBay makes
around the globe. With every buyer we delight and every seller we empower, we manifest our
belief that technology and commerce can be forces for good.

As I reflect on 2018, I see an eBay that is evolving to strengthen its business for the next
25 years. In 2018, we grew our active buyer base to 179 million, drove $95 billion in Global
Merchandise Volume (GMV) and delivered record earnings. As evidence of our leaders’
continued confidence in eBay’s future, we returned $4.5 billion of capital to shareholders
through the repurchase of common stock.

I’m deeply proud of the decisions our Board and leadership team made in response to the
challenges of positioning an established yet dynamic and innovative technology business to
thrive over the long term. We made investments that set up the company for future success,
focusing people and resources on our priority initiatives: buyer growth, conversion, payments
and advertising. And we adjusted revenue and GMV expectations accordingly. As we shape
eBay, I feel fortunate to work with such a stellar and diverse cross-section of leaders.

On behalf of the entire Board, thank you for your ongoing support of eBay and our mission.
With your help, we’ll continue to galvanize inspiration and economic opportunity around the
world.

Thomas Tierney
Chairman of the Board

To Our Stockholders,

The past year has brought remarkable challenges and opportunities for both the
It was a year of reckoning for many consumer tech
technology industry and for eBay.
companies, with a breakout of societal issues around privacy, trust, trade and immigration. In
an age of profound shifts — in technology, society, and consumer expectations — the only
choice is to transform or be left behind.

For eBay, this means making the tough foundational changes needed to deliver on
customer expectations now. Our path is simple. We are fiercely loyal in protecting eBay’s
unique advantage as a true marketplace in service of small
independent businesses,
consumer sellers, and buyers, and working to dramatically simplify the buyer and seller
experience.

Unlike other digital commerce businesses, we don’t compete with our sellers and we
refuse to compromise the shopping experience to push “house brands” and irrelevant posts.
Millions of small businesses and consumers sell only on eBay. I believe it’s because of our
purpose and policies — this matters to customers. We fundamentally object to unnaturally
bundling services to overcome barriers to competition. At eBay, we empower third party
sellers to thrive, which actually serves consumers seeking value and selection. We are a
benchmark on this. We always have been.

This was a year of decisions that we expect will fundamentally change our company. In
many ways eBay grew up as a loosely coupled marketplace where your experience was largely
defined by your interactions with each other more than the company. That spirit of connection
must always remain core to our experience, but it is also clear that this should not come with
complexity. Today customers demand more, and our imperative is to evolve to a managed
marketplace where uniqueness and value is delivered in parallel with elegant simplicity.
Managing our marketplace means building a foundational product catalog, increasingly playing
a role in package delivery and returns, and managing the end-to-end payment process. We
have strong conviction in the journey we are on, but no misconception of the challenges this
brings. This evolution is happening at massive scale. In 2018, $95 billion worth of goods and
services were bought and sold on our marketplace. eBay is not only the second largest
ecommerce business in the US but also second largest in the world outside of China.

Our marketplace is growing, resilient and steadily profitable in a hypercompetitive
industry, and not many can claim this. It would be easy to rest on those accomplishments, and
quite frankly it would be easier to transform if we were just beginning. But we don’t have that
choice, and it would be an enormous strategic mistake to not transform the business. And
because eBay plays such an important role in the world, because it’s one of the most iconic
companies ever created, and because it provides economic independence to tens of millions
of people, it’s worth the hard work even if the path isn’t always smooth.

In the three years after completing the spin-off of PayPal, we have added 20 million new
buyers to a total of 179 million and grew our inventory to 1.2 billion listings from 850 million. In
those three years, the volume of transactions on our platform — gross merchandise volume
(GMV) — increased to $95 billion, up 16% from $82 billion. Over the same period, we have
returned $11.3 billion to shareholders, which is 140 percent of our free cash flow.

That said, 2018 was not always smooth. After several years of steadily accelerating growth
and progress on transformation, our growth slowed in the second half of the year, and we saw
some challenges with the pace of adoption of some of our transformational changes. This
doesn’t change the fact that what we are doing is critical and we will only win if we are
persistent but nimble in adapting to what we have learned and what our customers need.

Purpose-Driven and Profitable

We are innovating,

investing and transforming the business not only to win in the
marketplace, but also to level the playing field for tens of millions of people who operate on our
platform and depend on it for their livelihood. Many have successfully pursued their dreams of
starting and scaling a business on eBay.

Since our founding, we have used the power of technology to create an inclusive and
accessible marketplace. This mission has been a driving force for us for the last two decades
and is still what inspires us every day. As an example, we are proud of our work in
re-invigorating small businesses through the launch of our Retail Revival initiative. As part of
this program we partnered with select cities to bring their local brick-and-mortar businesses
online, providing access to new customers around the world. These businesses received
in-depth training, dedicated coaching and promotional support designed to enable their
expansion into the digital marketplace. Our first city was Akron, Ohio, and we expanded the
program to include Lansing, Michigan, and the City of Wolverhampton, U.K. Two more Retail
Revival cities — Halifax, Nova Scotia, Canada, and Greensboro, North Carolina — were
announced in early 2019. To date, Akron and Lansing sellers have sold over 40,000 items to
more than 32,000 customers in all 50 states and 110 countries — demonstrating the incredible
reach this program enables. Wolverhampton sellers hit the $2.6 million mark in gross
merchandise volume (GMV) in just five months of the program, which is a deeply meaningful
result for the participating small businesses, and they’re just getting started.

eBay has always been an enabler of a better and sustainable form of commerce — where
people are empowered, and opportunities are open to everyone. We continue to advocate on
behalf of entrepreneurs around the world who grow their businesses, support their families and
connect to communities on our platform. In particular, we continue to support free and fair
trade, tax structures that do not penalize small businesses, and responsible immigration that
allows us to foster innovation by attracting the best and brightest talent from around the world.

And above all these important issues, we focus on building trust with our consumers every
single day. That means ensuring that a customer gets a quality product on time, but it also
means ensuring that the customer’s data privacy is protected, and eBay is a trusted partner.

Highlights from 2018

I’m proud of our work on behalf of our customers, employees and shareholders. We made
our product and customer experience the best it’s ever been, we invested in our brand, and
we sharpened our focus across the board. We had plenty of wins, both big and small. 2018 was
a transition year in our complex journey, and there were many highlights along the way.

• Platform Innovation: We continued to make the shopping journey simple,
personalized and discovery-based for buyers. We provided enhanced tools and
insights for sellers. We simplified the experience across multiple points in the
shopping journey, including at checkout and for new buyers. Last year, we introduced
Best Price Guarantee, which offers buyers 110 percent of price difference between
eBay and a competitor’s offer, and we expanded our Guaranteed Delivery service. We
also expanded eBay Authenticate, which gives buyers greater confidence in their
purchases, to include luxury watches and jewelry.

As we continued to drive our most powerful selling platform, we made the Seller Hub
— a central place for all sellers to manage their information and accounts — more
robust with analytics and merchandising tools. These resources help sellers with
insights on what to sell, when to sell it and at what price. To help small businesses and
entrepreneurs manage their capital, we partnered with Square Capital to help provide

financing. And we continue to scale our new consumer
listing and selling
process. Sellers are also taking advantage of our promoted listings offering with
hundreds of thousands of active sellers promoting millions of listings.

• Payments Debut: Last year, we began a multi-year rollout of a new payments
experience, where we manage the entire payments flow on our platform, simplifying
the process for all. We are off to a good start, processing $143 million in gross
merchandise volume through our new payments flow and saving participating sellers
$1.2 million as of the end of 2018. We’ve increased choice for consumers by adding
Apple Pay at checkout. We’ve streamlined how our sellers manage their business, and
we are saving them money. We look forward to accelerating this transition in 2019 and
beyond.

• Geographic Expansion: We continue to explore opportunities to reach more buyers
and sellers around the world. In 2018, we completed our acquisition of Giosis’ Japan
business, including the Qoo10.jp platform. Giosis is helping us carve a meaningful
niche in a very large ecommerce market, and we are excited about its potential. We
also reintroduced eBay India marketplace after selling our equity investment in
Flipkart.

• StubHub & Classifieds: 2018 saw more than 240 million unique visitors from
64 countries use StubHub to buy or sell tickets to live sports, music, theater and other
events. We remain focused on customer experience and are investing to drive loyalty
to the StubHub brand. For eBay Classifieds, a world-leading platform enabling people
to buy and sell at a local level, our main initiative remained focused on the motors
vertical and expansion across several markets, including UK and Canada. In Germany
— where we have eBay Kleinanzeigen and the motors vertical mobile.de — the
Classifieds brands are market leaders, powerfully advancing the way people buy, sell
and connect. In UK, we acquired leading classifieds site Motors.co.uk, helping us
expand our reach. The Motors.co.uk team has joined Gumtree UK, an eBay Classifieds
business, and, together with eBay Motors UK, will offer more than 620,000 car listings
seamlessly across these platforms.

representing about

• Capital Allocation: In 2018, we returned $4.5 billion of capital to shareholders through
the repurchase of common stock,
11 percent of shares
outstanding. We made some significant changes to our capital allocation strategy
early this year, including instituting a dividend for the first time in our history and
increasing our planned share repurchases to $5 billion in 2019. We expect to return
$7 billion through repurchases and dividends over the next two years. The purpose of
these changes is to return more capital to our shareholders in a balanced way,
highlighting our confidence in the free cash flow resiliency of our business and the
opportunities ahead of us, and to significantly reduce our share count ahead of 2020.

• Employee Experience, Diversity and Inclusion: eBay has hundreds of millions of
customers around the world from diverse backgrounds, races, ethnicities, genders
and sexual orientations. The more inclusive and diverse we are in our workforce, the
more we reflect our customers, and this enables us to make better decisions as a
business. Our workforce is one of the most valuable assets we have as we drive our
business forward. For the 12th year in a row, we have earned 100% on the 2019 Human
Rights Campaign Corporate Equality Index and we have been named one of the Best
Places to Work for LGBTQ employees. Gender pay equity is another important issue
for our company, our industry and the economy as a whole. For the third year in a row,
we completed a global study of gender pay equity at eBay and found that we have
99.8% gender pay equity in the U.S. and 99.7% globally. We remain committed to
achieving pay equity and are taking steps needed to ensure that gender is not a factor
in compensation. Our employees are also supported and empowered through our

robust benefits program, whether they are pursuing wellness, navigating life changes,
or confronting health challenges. As an example, we provide comprehensive
maternity and parental support program — regardless of the path to parenthood —
which helps employees welcome new additions to the family and return to work with
ease.

The Year Ahead

In 2019, we are focused on transforming the user experience further by leveraging the
foundation we have built over the past few years. For existing customers, this means focusing
on conversion and frequency, removing friction, leveraging our vast user data, and providing
additional ways to compare value and surface unique inventory. Sellers will gain access to
more data and tools, with enhanced protections. We are also working to grow our customer
base, through delivering new experiences and messaging to encourage first purchases. All
customers will benefit from enhanced delivery and returns, through broader coverage of
guaranteed shipping and our new returns experience. We believe this will lead to an improved
experience for both buyers and sellers.

In addition, we will continue to invest aggressively in our key growth initiatives —
advertising and payments — which are already showing great promise and represent a huge
opportunity for the company. We will ensure we achieve the right balance between user
experience and monetization as we build towards $1 billion advertising revenue opportunity.
And we continue to expect to begin a full rollout of Payments in 2020, building toward a
$2 billion revenue opportunity at scale.

We are in the process of conducting a review of operations and a review of our portfolio,
including StubHub and eBay Classifieds, following a constructive dialogue with some of our
major shareholders. We will consider all options that will be in the best interest of our company,
customers, shareholders and employees.

We’re all working hard to bring the best of eBay to our buyers and sellers around the world.
I’m as energized as ever about the possibilities and potential of this great company. I see
firsthand the impact we have on a world that needs a company like ours. Together we will
create more opportunity for people from all walks of life and make a bigger difference around
the world. And we will continue to grow our company, while making the evolution required to
ensure that eBay thrives well into the future.

As always, I thank you for your support.

Devin Wenig

President and CEO

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018.

OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from

to

.

Commission file number 001-37713

eBay Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

2025 Hamilton Avenue
San Jose, California
(Address of principal
executive offices)

77-0430924
(I.R.S. Employer
Identification No.)

95125
(Zip Code)

Registrant’s telephone number, including area code:
(408) 376-7008

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common stock
6.00% Notes due 2056

Name of exchange on which registered
The Nasdaq Global Select Market
The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained
herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes È No ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer È
Non-accelerated filer ‘

‘
Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
As of June 30, 2018, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was

$33,679,134,490 based on the closing sale price as reported on The Nasdaq Global Select Market.

914,880,451 shares of common stock issued and outstanding as of January 25, 2019.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference from the definitive proxy statement for the registrant’s Annual Meeting of

Stockholders expected to be held on May 30, 2019.

eBay Inc.
Form 10-K

For the Fiscal Year Ended December 31, 2018

TABLE OF CONTENTS

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Part I

Part II

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information

Part III

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services

Item 15.
Item 16.

Exhibits and Financial Statement Schedule
Form 10-K Summary

Part IV

i

Page

1
8
28
28
29
30

31
33
35
55
57
57
57
57

58
58

58
58
58

59
59

FORWARD-LOOKING STATEMENTS

PART I

ThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27A
oftheSecuritiesActof1933andSection21EoftheSecuritiesExchangeActof1934,includingstatementsthat
involve expectations, plans or intentions (such as those relating to future business, future results of
operations or financial condition, new or planned features or services, or management strategies). You can
identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,”
“expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These forward-
lookingstatementsinvolverisksanduncertaintiesthatcouldcauseouractualresultstodiffermateriallyfrom
those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among
others, those discussed in “Item 1A: Risk Factors” of this Annual Report on Form 10-K, as well as in our
consolidatedfinancialstatements,relatednotes,andtheotherinformationappearingelsewhereinthisreport
and our other filings with the Securities and Exchange Commission, or the SEC. We do not intend, and
undertake no obligation, to update any of our forward-looking statements after the date of this report to
reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are
cautionednottoplaceunduerelianceonsuchforward-lookingstatements.

ITEM 1: BUSINESS

Overview

eBay Inc. was formed as a sole proprietorship in September 1995 and was incorporated in California in
May 1996. In April 1998, we reincorporated in Delaware, and in September 1998, we completed the initial public
offering of our common stock. Our principal executive offices are located at 2025 Hamilton Avenue, San
Jose, California 95125, and our telephone number is (408) 376-7400. Unless otherwise expressly stated or the
context otherwise requires, when we refer to “we,” “our,” “us” or “eBay” in this Annual Report on Form 10-K,
we mean eBay Inc. and its consolidated subsidiaries. When we refer to “eBay Inc.” we mean our Marketplace,
StubHub and Classifieds platforms.

eBay Inc.

is a global commerce leader, which includes our Marketplace, StubHub and Classifieds
platforms. Collectively, we connect millions of buyers and sellers around the world, empowering people and
creating opportunity for all. Our technologies and services are designed to give buyers choice and a breadth
of relevant inventory and to enable sellers worldwide to organize and offer their inventory for sale, virtually
anytime and anywhere. Our Marketplace platforms include our online marketplace located at www.ebay.com,
its localized counterparts and the eBay suite of mobile apps. We believe that these are among the world’s
largest and most vibrant marketplaces for discovering great value and unique selection. Our StubHub
platforms include our online ticket platform located at www.stubhub.com, its localized counterparts and the
StubHub mobile apps. These platforms connect fans with their favorite sporting events, shows and artists and
enable them to buy and sell millions of tickets annually, whenever and wherever they want. Our Classifieds
platforms include a collection of brands such as mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen
and others. Offering online classifieds around the world, these platforms help people find what they are
looking for in their local communities.

Our platforms are accessible through a traditional online experience (e.g., desktop and laptop
computers), mobile devices (e.g., smartphones and tablets) and our application programming interfaces or
APIs (platform access for third party software developers). Our multi-screen approach offers downloadable,
easy-to-use applications for iOS and Android mobile devices that allow access to ebay.com and some of our
other websites and vertical shopping experiences. In addition, our platform is increasingly based on open
source technologies that provide industry-standard ways for software developers and merchants to access
our APIs and develop software and solutions for commerce.

1

OurStrategy

Deliveringthebestchoice,themostrelevanceandthemostpowerfulsellingplatform

Our strategy is to drive the best choice, the most relevance and the most powerful selling platform for our
buyers and sellers. We focus on connecting buyers and sellers through simplified experiences to make it
easier for users to list, buy and sell items.

On our Marketplace platform, our strategy is to drive the best choice by attracting and retaining sellers
and brands that bring differentiated inventory to eBay and provide our consumers with great selection and
value. This includes new, everyday items as well as rare and unique goods, many of which are available with
free shipping and delivery in three business days or less. We are in the midst of a multi-year transformation of
our platform to deliver a shopping experience that is designed to attract new buyers and that is highly
personalized, modern and engaging for users. To help deliver the most relevance to buyers, we are innovating
shopping experiences tailored to each user’s interests, passions and shopping history. Leveraging a
foundation of structured data — our initiative to better understand, organize and leverage inventory on eBay —
we are progressing toward a more personalized, discovery-based user experience and making it easier for
customers to find inventory both on and off eBay. We focus on offering a powerful selling platform for our
business and consumer sellers by continuing to expand adoption of our Seller Hub product, a tool that helps
sellers run their eBay business, while adding new capabilities to enable sellers to build their businesses and
drive profitable sales on eBay.

As one of the world’s largest ticket marketplaces, StubHub brings the joy of live events to fans around the
world. In 2018, more than 240 million unique visitors came from 64 countries to StubHub to buy or sell tickets
to live sports, music, theater and other events. StubHub business partners include more than 150 leagues,
teams, venues, events or other major third party companies in the U.S. and internationally across major sports
leagues such as the NFL, MLB, NBA, NHL, and the NCAA. We aim to continue extending StubHub’s reach by
focusing on supply expansion, which includes increasing consumer selling on our site, and broadening
StubHub’s international footprint.

A world leader in online classifieds, eBay Classifieds is designed to help people list their products and
services, generally for free, find what they are looking for in their local communities and trade at a local level.
eBay Classifieds Group’s brands offer both horizontal and vertical experiences, such as motors, real estate
and jobs. We offer a personalized classifieds experience and focus on expanding our value proposition by
leveraging data and analytics to improve customer relevance and grow the classifieds opportunity on mobile.

Businessmodelandpricing

On our eBay and StubHub platforms, our business model and pricing are designed so that our business is
successful primarily when our sellers are successful. We make money primarily through fees collected on
successfully closed sales. On our Classifieds platform, we monetize our business primarily through
advertising.

The size and scale of our platforms are designed to enable our buyers and sellers to leverage our
economies of scale and capital investments, such as in sales and marketing, mobile, customer acquisition
and customer service.

Ourofferingsforbuyersandsellers

We provide a number of features for our buyers and sellers that are designed to build trust, help users feel

more comfortable buying and selling on our platforms and reward our top sellers for their loyalty.

For our buyers we offer:

• Breadth of inventory and spectrum of value

• Multiple delivery options through eBay Guaranteed Delivery

• eBay’s 110% Best Price Guarantee across select products in the United States

2

• Under $10 offerings

• Confidence in purchasing products through Money Back Guarantee and eBay Authenticate

We believe that, through our sellers, eBay offers some of the best value and deals available for a number
of consumer products. The majority of our transactions on the eBay Marketplace in the U.S., the U.K. and
Germany include free shipping, and we encourage sellers to offer free returns. Through eBay Guaranteed
Delivery, we provide faster and more precise delivery dates on more than 100 million eligible items. In 2018,
we introduced Best Price Guarantee, which offers shoppers in the United States 110 percent of the price
difference if they find an item for less on a competitor’s website, replacing our former Price Match Guarantee
offering. In 2018, we also launched a new shopping destination called Under $10, which features millions of
new items in more than a hundred categories, all priced for $10 or under with free shipping, no bidding
required.

In order to further strengthen our buyers’ confidence and trust in our services, in late 2017, we unveiled
eBay Authenticate, in which sellers can have their high-end handbags authenticated by eBay. In 2018, we
expanded the service to apply to luxury watches and jewelry. Through the service, thousands of watches and
handbags from sought-after brands are marked with an “Authenticity Verified” label. The program has also
expanded beyond the United States into several European markets, including the United Kingdom and
Germany. Another feature intended to secure our customers’ confidence is eBay Money Back Guarantee,
which allows buyers to get their money back if the item they ordered does not arrive, is faulty or damaged, or
if it does not match the listing. eBay Money Back Guarantee covers most items purchased on the eBay
platform in a number of countries, including the U.S., the U.K., Germany and Australia, through a qualifying
payment method. Some purchases, including some vehicles, are not covered.

We continue to explore new tools and features that are intended to create a better buying experience on
eBay. We launched Interests in 2018, allowing users to personalize their shopping experience. To assist
consumers looking to buy automotive parts on eBay, we launched our Shop by Diagram feature, which lets
shoppers use interactive schematics to determine which parts are necessary for their vehicles and then
makes the items they need available for purchase. We also enhanced our My Garage experience last year,
allowing buyers to shop a personalized “virtual garage” of parts and accessories tailored specifically to their
vehicles.

Foroursellersweoffer:

• Choice to list products and services through fixed price listings or an auction-style format on our

platforms.

• Ability to list items that are new, refurbished and used, and common and rare on our Marketplace

platforms.

• Offerings that improve the visibility of item listings so that items have a better chance of standing out

and selling faster, such as Promoted Listings.

• Fee discounts and improved search standing for qualifying listings through eBay’s Top Rated Seller

program.

•

Insights about optimal listing and pricing approaches through our Seller Hub portal.

At eBay, we only win when our sellers succeed. We partner with them but do not compete, investing in the
tools and technologies they can leverage to grow and thrive. For example, eBay’s Top Rated Seller program
rewards qualifying sellers with fee discounts and improved search standing for qualifying listings if they are
able to maintain excellent customer service ratings and meet specified criteria for shipping and returns. We
believe that sellers who fulfill these standards help promote our goal of maintaining an online marketplace that
is safe and hassle-free. In 2018, we also added analytics tools and merchandising tools to our Seller Hub portal
for sellers that are designed to make selling on eBay even easier so that sellers know what to sell, when to sell
it and at what price. eBay regularly evaluates pricing relative to alternatives in the market in order to remain
competitive, and we continue to invest in more tools and new programs intended to help grow the overall
seller ecosystem.

3

OurImpactandResponsibility

eBay is committed to creating economic opportunity for all. We work to generate this opportunity

through a variety of means, both on our platform and in our communities around the world.

For more than two decades, we have worked to create a dynamic online marketplace that is inclusive and
fair, fosters global trade and empowers entrepreneurship. By connecting buyers and sellers around the world,
we are creating tools designed to enable them to extend the reach of their businesses far beyond their local
markets, enriching their lives, livelihoods and communities in the process.

We embrace the potential of eCommerce to level the playing field and fuel sustainable growth for all
businesses, regardless of their size or location. We also embrace our responsibility to help businesses
access the technology and tools they need to sell online and effectively compete in this ever-changing
economy. This is the driving motivation behind Retail Revival, which launched in early 2018, where we partner
with select cities to bring their local brick-and-mortar businesses online, providing access to new customers
around the world. Participating businesses receive in-depth training, dedicated coaching and promotional
support designed to enable their successful expansion into the digital marketplace. To date we have
partnered with Akron, Ohio, and Lansing, Michigan, in the United States and Wolverhampton in the United
Kingdom. We plan to launch 2to 3 new cities during 2019 to further scale this initiative.

We also enable eBay users to support over 60,000 nonprofit organizations in the U.S. and internationally
through our eBay for Charity platform. Since its inception approximately 17 years ago, eBay for Charity has
helped raise nearly $912 million for nonprofits. Our goal is to increase this number to $1.0 billion by 2020.

Finally, we strive to operate in an environmentally and socially sustainable way. For example, eBay is
working to protect the world’s most endangered and threatened species from illegal trade. We are proud to
be a founding member of the Global Coalition to End Wildlife Trafficking Online, which aims to reduce illegal
trafficking online by 80 percent by 2020. To reduce our company’s environmental impact, we are focused on
moving to 100 percent renewable energy in our electricity supply at eBay data centers and offices by
2025. This initiative is designed to not only substantially cut the energy consumption at our data centers, but
also reduce the environmental impact of transactions on eBay.

FinancialInformation

We measure our footprint in our addressable market according to Gross Merchandise Volume (“GMV”).
GMV consists of the total value of all successfully closed transactions between users on our Marketplace or
StubHub platforms during the applicable period, regardless of whether the buyer and seller actually
consummated the transaction. In 2018, we generated $95 billion in GMV, of which approximately 60 percent
was generated outside the U.S.

At the end of 2018, our Marketplace and StubHub platforms had more than 179 million active buyers and
over one billion live listings globally. The term “active buyer” means, as of any date, all buyers who
successfully closed a transaction on our Marketplace or StubHub platforms within the previous 12-month
period. Buyers may register more than once and, as a result, may have more than one account.

We generate revenue primarily from the transactions we successfully enable and through marketing
services, including classifieds and advertising. The majority of our revenue comes from a take rate on the
GMV of transactions closed on our Marketplace and StubHub platforms. We define “take rate” as net
transaction revenues divided by GMV.

NotableBusinessTransactionsin2018

We regularly review and manage our investments to ensure that they support eBay’s strategic direction
and complement our disciplined approach to value creation, profitability and capital allocation. In the second
quarter of 2018, we completed the acquisition of Giosis Pte. Ltd.’s (“Giosis”) Japan business, including the
Qoo10.jp platform, in exchange for $306 million in cash and the relinquishment of our existing equity method

4

investment in Giosis, which allows us to offer Japanese consumers access to more inventory and grows our
international presence. In the third quarter of 2018, we sold our equity investment in Flipkart, for cash
proceeds of approximately $1.0 billion. In the fourth quarter of 2018, we announced our intention to acquire
the U.K.-based classifieds site, Motors.co.uk. We believe the acquisition will
increase our international
presence and give buyers access to more listings. We expect to close this transaction in the first half of 2019,
subject to customary closing conditions and regulatory approvals.

Competition

We encounter vigorous competition in our business from numerous sources. Our users can list, buy, sell
and pay for similar items through a variety of competing online, mobile and offline channels. These include,
but are not limited to, retailers, distributors, liquidators, import and export companies, auctioneers, catalog
and mail-order companies, classifieds, directories, search engines, commerce participants (consumer-to-
consumer, business-to-consumer and business-to-business), shopping channels and networks. As our
product offerings continue to broaden into new categories of items and new commerce formats, we expect
to face additional competition from other online, mobile and offline channels for those new offerings. We
compete on the basis of price, product selection and services.

For more information regarding risks of competition, see the information in “Item 1A: Risk Factors” under
the captions “Substantial and increasingly intense competition worldwide in ecommerce may harm our
business” and “We are subject to regulatory activity and antitrust litigation under competition laws.”

To compete effectively, we will need to continue to expend significant resources in technology and
marketing. These efforts require substantial expenditures, which could reduce our margins and have a
material adverse effect on our business, financial position, operating results and cash flows and reduce the
market price of our common stock and outstanding debt securities. Despite our efforts to preserve and
expand the size, diversity and transaction activity of our buyers and sellers and to enhance the user
experience, we may not be able to effectively manage our operating expenses, to increase or maintain our
revenue or to avoid a decline in our consolidated net income or a net loss.

GovernmentRegulation

Government regulation impacts key aspects of our business. In particular, we are subject to laws and
regulations that affect the ecommerce industry in many countries where we operate. For more information
regarding regulatory risks, see the information in “Item 1A: Risk Factors” under the caption “Our business is
subject to extensive government regulation and oversight.”

Seasonality

We expect transaction activity patterns on our platforms to mirror general consumer buying patterns.
Please see the additional information in “Item 7: Management’s Discussion and Analysis of Financial Condition
and Results of Operations” under the caption “Seasonality.”

Technology

eBay Inc.’s platforms use a combination of proprietary technologies and services as well as technologies
and services provided by others. We have developed intuitive user interfaces, buyer and seller tools and
transaction processing, database and network applications that help enable our users to reliably and securely
complete transactions on our sites. Our technology infrastructure simplifies the storage and processing of
large amounts of data, eases the deployment and operation of large-scale global products and services and
automates much of the administration of large-scale clusters of computers. Our infrastructure has been
designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic
occurrences.

For information regarding technology-related risks, see the information in “Item 1A: Risk Factors” under
the caption “Systems failures or cyberattacks and resulting interruptions in the availability of or degradation in
the performance of our websites, applications, products or services could harm our business.”

5

In support of our ongoing commitment to innovation and a better customer experience, we have been on
a multi-year evolution to modernize our marketplace. Our aim is to create a fully relevant and personalized
shopping experience, built on a foundation of structured data and leveraging advanced technologies
like artificial intelligence and computer vision. Our goal is to make every product image on the Internet
shoppable, with features such as Image Search, Find It On eBay, and our drag-and-drop search capabilities.

To ensure that the technology supporting these features and capabilities is as efficient, scalable, and
secure as possible, we are also undergoing an ambitious three-year effort to re-platform our backend
infrastructure. As part of that effort, in 2018, we announced that we are developing our own custom-designed
servers, built by eBay, for eBay.

IntellectualProperty

We regard the protection of our intellectual property,

including our trademarks (particularly those
covering the eBay name), patents, copyrights, domain names, trade dress and trade secrets as critical to our
success. We aggressively protect our intellectual property rights by relying on federal, state and common law
rights in the U.S. and internationally, as well as a variety of administrative procedures. We also rely on
contractual restrictions to protect our proprietary rights in products and services. We routinely enter into
confidentiality and invention assignment agreements with our employees and contractors and nondisclosure
agreements with parties with whom we conduct business to limit access to and disclosure of our proprietary
information.

We pursue the registration of our domain names, trademarks and service marks in the U.S. and
internationally. Additionally, we have filed U.S. and international patent applications covering certain aspects
of our proprietary technology. Effective trademark, copyright, patent, domain name, trade dress and trade
secret protection is typically expensive to maintain and may require litigation. We must protect our
intellectual property rights and other proprietary rights in an increasing number of jurisdictions, a process that
is expensive and time consuming and may not be successful.

We have registered our core brands as trademarks and domain names in the U.S. and a large number of
other jurisdictions and have in place an active program to continue to secure trademarks and domain names
that correspond to our brands in markets of interest. If we are unable to register or protect our trademarks or
domain names, we could be adversely affected in any jurisdiction in which our trademarks or domain names
are not registered or protected. We have licensed in the past, and expect to license in the future, certain of
our proprietary rights, such as trademarks or copyrighted material, to others.

From time to time, third parties have claimed—and others will likely claim in the future—that we have
infringed their intellectual property rights. We are typically involved in a number of such legal proceedings at
any time. Please see the information in “Item 3: Legal Proceedings” and in “Item 1A: Risk Factors” under the
captions “We are subject to patent litigation,” “The listing or sale by our users of items that allegedly infringe
including pirated or counterfeit items, may harm our
the intellectual property rights of rights owners,
business,” and “We may be unable to adequately protect or enforce our intellectual property rights, or third
parties may allege that we are infringing their intellectual property rights.”

Employees

As of December 31, 2018, we employed approximately 14,000 people globally. Approximately 7,100 of our

employees were located in the U.S.

AvailableInformation

Our Internet address is www.ebay.com. Our investor relations website is located at investors.ebayinc.com.
We make available free of charge on our investor relations website under the heading “Financial Information—
SEC Filings” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and amendments to those reports as soon as reasonably practicable after such materials are electronically filed
with (or furnished to) the SEC.

6

We webcast our earnings calls and certain events we participate in or host with members of the
investment community on our investor relations website. Additionally, we provide notifications of news or
announcements regarding our financial performance,
investor events, press and
earnings releases, and blogs on our investor relations website. Further corporate governance information,
including our governance guidelines for our Board of Directors (“Board”), board committee charters and code
of conduct, is also available on our investor relations website under the heading “Corporate Governance.”

including SEC filings,

The contents of our websites and webcasts and information hat can be accessed through our websites
and webcasts are not incorporated by reference into this Annual Report on Form 10-K or in any other report or
document we file with (or furnish to) the SEC, and any references to our websites and webcasts are intended
to be inactive textual references only.

7

Item 1A: RISKFACTORS

You should carefully review the following discussion of the risks that may affect our business, results of
operations and financial condition, as well as our consolidated financial statements and notes thereto and the
other information appearing in this report, for important information regarding risks that affect us.

RiskFactorsThatMayAffectourBusiness,ResultsofOperationsandFinancialCondition

Our operating and financial results are subject to various risks and uncertainties that could adversely
affectourbusiness,financialcondition,resultsofoperationsandcashflows,aswellasthetradingpriceofour
commonstockanddebtsecurities.

Our operating and financial results have varied on a quarterly basis during our operating history and may
continue to fluctuate significantly as a result of a variety of factors, including as a result of the risks set forth in
this “Risk Factors” section. It is difficult for us to forecast the level or source of our revenues or earnings (loss)
accurately. In view of the rapidly evolving nature of our business, period-to-period comparisons of our
operating results may not be meaningful, and you should not rely upon them as an indication of future
performance. We do not have backlog, and substantially all of our net revenues each quarter come from
transactions involving sales during that quarter. Due to the inherent difficulty in forecasting revenues, it is also
difficult to forecast expenses as a percentage of net revenues. Quarterly and annual expenses as a
percentage of net revenues reflected in our consolidated financial statements may be significantly different
from historical or projected rates. Our operating results in one or more future quarters may fall below the
expectations of securities analysts and investors. The trading price of our common stock and debt securities
could decline, perhaps substantially, as a result of the factors described in this paragraph.

Substantialandincreasinglyintensecompetitionworldwideinecommercemayharmourbusiness.

The businesses and markets in which we operate are intensely competitive. We currently and potentially
compete with a wide variety of online and offline companies providing goods and services to consumers and
merchants. The Internet and mobile networks provide new, rapidly evolving and intensely competitive
channels for the sale of all types of goods and services. We compete in two-sided markets, and must attract
both buyers and sellers to use our platforms. Consumers who purchase or sell goods and services through us
have more and more alternatives, and merchants have more channels to reach consumers. We expect
competition to continue to intensify. Online and offline businesses increasingly are competing with each
other and our competitors include a number of online and offline retailers with significant resources, large
user communities and well-established brands. Moreover, the barriers to entry into these channels can be
low, and businesses easily can launch online sites or mobile platforms and applications at nominal cost by
using commercially available software or partnering with any of a number of successful ecommerce
companies. As we respond to changes in the competitive environment, we may, from time to time, make
pricing, service or marketing decisions or acquisitions that may be controversial with and lead to
dissatisfaction among sellers, which could reduce activity on our platform and harm our profitability.

We face increased competitive pressure online and offline. In particular, the competitive norm for, and
the expected level of service from, ecommerce and mobile commerce has significantly increased, due to,
among other factors, improved user experience, greater ease of buying goods, lower (or no) shipping costs,
faster shipping times and more favorable return policies. In addition, certain platform businesses, such as
Alibaba, Amazon, Apple, Facebook and Google, many of whom are larger than us or have greater
capitalization, have a dominant and secure position in other industries or certain significant markets, and offer
other goods and services to consumers and merchants that we do not offer. If we are unable to change our
products, offerings and services in ways that reflect the changing demands of ecommerce and mobile
commerce marketplaces, particularly the higher growth of sales of fixed-price items and higher expected
service levels (some of which depend on services provided by sellers on our platforms), or compete
effectively with and adapt to changes in larger platform businesses, our business will suffer.

Competitors with other revenue sources may also be able to devote more resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and devote more resources to website,

8

mobile platforms and applications and systems development than we can. Other competitors may offer or
continue to offer faster and/or free shipping, delivery on Sunday, same-day delivery, favorable return policies
or other transaction-related services which improve the user experience on their sites and which could be
impractical or inefficient for our sellers to match. Competitors may be able to innovate faster and more
efficiently, and new technologies may increase the competitive pressures by enabling competitors to offer
more efficient or lower-cost services.

Some of our competitors control other products and services that are important to our success, including
credit card interchange, Internet search, and mobile operating systems. Such competitors could manipulate
pricing, availability, terms or operation of service related to their products and services in a manner that
impacts our competitive offerings. For example, Google, which operates a shopping platform service, has
from time to time made changes to its search algorithms that reduced the amount of search traffic directed
to us from searches on Google. If we are unable to use or adapt to operational changes in such services, we
may face higher costs for such services, face integration or technological barriers or lose customers, which
could cause our business to suffer.

Consumers who might use our sites to buy goods have a wide variety of alternatives, including traditional
department, warehouse, boutique, discount and general merchandise stores (as well as the online and mobile
operations of these traditional retailers), online retailers and their related mobile offerings, online and offline
classified services and other shopping channels, such as offline and online home shopping networks. In the
United States, these include Amazon.com, Facebook, Google, Wal-Mart, Target, Macy’s, JC Penney, Costco,
Office Depot, Staples, OfficeMax, Sam’s Club, Rakuten, MSN, QVC and Home Shopping Network, among
others. In addition, consumers have a large number of online and offline channels focused on one or more of
the categories of products offered on our site.

Consumers also can turn to many companies that offer a variety of services that provide other channels
for buyers to find and buy items from sellers of all sizes, including social media, online aggregation and
classifieds platforms, such as craigslist, Oodle.com and a number of international websites operated by
Schibsted ASA or Naspers Limited. Consumers also can turn to shopping-comparison sites, such as Google
Shopping. In certain markets, our fixed-price listing and traditional auction-style listing formats increasingly
are being challenged by other formats, such as classifieds.

Our Classifieds platforms offer classifieds listings in a variety of international markets. In many markets in
which they operate, our Classifieds platforms compete for customers and for advertisers against more
established online and offline classifieds platforms or other competing websites.

We use product search engines and paid search advertising to help users find our sites, but these
services also have the potential to divert users to other online shopping destinations. Consumers may
choose to search for products and services with a horizontal search engine or shopping comparison website,
and such sites may also send users to other shopping destinations. In addition, sellers are increasingly
utilizing multiple sales channels, including the acquisition of new customers by paying for search-related
advertisements on horizontal search engine sites, such as Google, Naver and Baidu.

Consumers and merchants who might use our sites to sell goods also have many alternatives, including
general ecommerce sites, such as Amazon, Alibaba and 11Street, and more specialized sites, such as Etsy.
Our international sites also compete for sellers with general and specialized ecommerce sites. Sellers may
also choose to sell their goods through other channels, such as classifieds platforms. Consumers and
merchants also can create and sell through their own sites, and may choose to purchase online advertising
instead of using our services. In some countries, there are online sites that have larger customer bases and
greater brand recognition, as well as competitors that may have a better understanding of local culture and
commerce. We increasingly may compete with local competitors in developing countries that have unique
advantages, such as a greater ability to operate under local regulatory authorities.

In addition, certain manufacturers may limit or cease distribution of their products through online
channels, such as our sites. Manufacturers may attempt to use contractual obligations or existing or future
limit ecommerce in certain categories of goods or services.
government

regulation to prohibit or

9

Manufacturers may also attempt to enforce minimum resale price maintenance or minimum advertised price
arrangements to prevent distributors from selling on our platforms or on the Internet generally, or at prices
that would make us less attractive relative to other alternatives. The adoption by manufacturers of policies, or
their use of laws or regulations, in each case discouraging or restricting the sales of goods or services over
the Internet, could force our users to stop selling certain products on our platforms, which could result in
reduced operating margins, loss of market share and diminished value of our brands.

The principal competitive factors for us include the following:

• ability to attract, retain and engage buyers and sellers;

•

•

volume of transactions and price and selection of goods;

trust in the seller and the transaction;

• customer service;

• brand recognition;

• community cohesion, interaction and size;

• website, mobile platform and application ease-of-use and accessibility;

•

•

•

system reliability and security;

reliability of delivery and payment, including customer preference for fast delivery and free shipping
and returns;

level of service fees; and

• quality of search tools.

We may be unable to compete successfully against current and future competitors. Some current and
potential competitors have longer operating histories, larger customer bases and greater brand recognition
in other business and Internet sectors than we do.

Globalandregionaleconomicconditionscouldharmourbusiness.

Our operations and performance depend significantly on global and regional economic conditions.
Adverse economic conditions and events (including volatility or distress in the equity and/or debt or credit
markets) have in the past negatively impacted regional and global financial markets and will likely continue to
do so from time to time in the future. These events and conditions, including uncertainties and instability in
economic and market conditions caused by the United Kingdom’s vote to exit the European Union and any
outcomes resulting from that vote, could have a negative and adverse impact on companies and customers
with which we do business or cause us to write down our assets or investments. In addition, financial turmoil
affecting the banking system or financial markets could cause additional consolidation of the financial
services industry, or significant financial service institution failures, new or incremental tightening in the credit
markets, low liquidity, and extreme volatility in fixed income, credit, currency, and equity markets. Adverse
impacts to the companies and customers with which we do business, the banking system, or financial
markets could have a material adverse effect on our business, including a reduction in the volume and prices
of transactions on our commerce platforms.

Weareexposedtofluctuationsinforeigncurrencyexchangerates.

Because we generate the majority of our revenues outside the United States but report our financial
results in U.S. dollars, our financial results are impacted by fluctuations in foreign currency exchange rates, or
foreign exchange rates. The results of operations of many of our internationally focused platforms are
exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are
translated from the local currency into U.S. dollars for financial reporting purposes. If the U.S. dollar weakens
against foreign currencies, the translation of these foreign currency denominated revenues or expenses will
result in increased U.S. dollar denominated revenues and expenses. Similarly, if the U.S. dollar strengthens

10

against foreign currencies, particularly the euro, British pound, Korean won or Australian dollar, our translation
of foreign currency denominated revenues or expenses will result in lower U.S. dollar denominated net
revenues and expenses. In addition to this translation effect, a strengthening U.S. dollar will typically adversely
affect the volume of goods being sold by U.S. sellers to Europe and Australia more than it positively affects
the volume of goods being sold by sellers in those geographies to buyers in the United States, thereby further
negatively impacting our financial results.

While from time to time we enter into transactions to hedge portions of our foreign currency translation
it is impossible to predict or eliminate the effects of this exposure. Fluctuations in foreign
exposure,
exchange rates could significantly impact our financial results, which may have a significant impact on the
trading price of our common stock and debt securities.

Ourinternationaloperationsaresubjecttoincreasedrisks,whichcouldharmourbusiness.

Our international businesses, especially in the United Kingdom, Germany, Australia and Korea, and cross-
border business from greater China, have generated a majority of our net revenues in recent years. In addition
to uncertainty about our ability to generate revenues from our foreign operations and expand into
international markets, there are risks inherent in doing business internationally, including:

• uncertainties and instability in economic and market conditions caused by the United Kingdom’s vote

to exit the European Union and any outcomes resulting from that vote;

• uncertainty regarding how the United Kingdom’s access to the European Union Single Market and the
legal, regulatory and labor environments, especially in the United Kingdom and
wider trading,
European Union, will be impacted by the United Kingdom’s vote to exit the European Union and any
outcomes resulting from that vote, including the resulting impact on our business and that of our
clients;

• expenses associated with localizing our products and services and customer data, including offering
customers the ability to transact business in the local currency and adapting our products and
services to local preferences (e.g., payment methods) with which we may have limited or no
experience;

•

trade barriers and changes in trade regulations;

• difficulties in developing, staffing, and simultaneously managing a large number of varying foreign

operations as a result of distance, language, and cultural differences;

•

stringent local labor laws and regulations;

• credit risk and higher levels of payment fraud;

• profit repatriation restrictions, foreign currency exchange restrictions or extreme fluctuations in

foreign currency exchange rates for a particular currency;

• political or social unrest, economic instability, repression, or human rights issues;

• geopolitical events, including natural disasters, public health issues, acts of war, and terrorism;

•

import or export regulations;

• compliance with U.S. laws such as the Foreign Corrupt Practices Act, and foreign laws prohibiting
corrupt payments to government officials, as well as U.S. and foreign laws designed to combat
money laundering and the financing of terrorist activities;

• antitrust and competition regulations;

• potentially adverse tax developments and consequences;

• economic uncertainties relating to sovereign and other debt;

• different, uncertain, or more stringent user protection, data protection, privacy, and other laws;

•

risks related to other government regulation or required compliance with local laws;

11

• national or regional differences in macroeconomic growth rates;

•

•

local licensing and reporting obligations; and

increased difficulties in collecting accounts receivable.

Violations of the complex foreign and U.S. laws and regulations that apply to our international operations
may result in fines, criminal actions, or sanctions against us, our officers, or our employees; prohibitions on
the conduct of our business; and damage to our reputation. Although we have implemented policies and
procedures designed to promote compliance with these laws, there can be no assurance that our
employees, contractors, or agents will not violate our policies. These risks inherent in our international
operations and expansion increase our costs of doing business internationally and could harm our business.

Anyfactorsthatreducecross-bordertradeormakesuchtrademoredifficultcouldharmourbusiness.

Cross-border trade is an important source of both revenue and profits for us. Cross-border trade also
represents our primary (or in some cases, only) presence in certain important markets, such as Brazil/Latin
America, China, and various other countries. In addition, our cross-border trade is also subject to, and may be
impacted by, foreign exchange rate fluctuations.

The interpretation and application of specific national or regional

laws, such as those related to
intellectual property rights of authentic products, selective distribution networks, and sellers in other
countries listing items on the Internet, and the potential interpretation and application of laws of multiple
jurisdictions (e.g., the jurisdiction of the buyer, the seller, and/or the location of the item being sold) are often
extremely complicated in the context of cross-border trade. The interpretation and/or application of such
laws could impose restrictions on, or increase the costs of, purchasing, selling, shipping, or returning goods
across national borders.

The shipping of goods across national borders is often more expensive and complicated than domestic
shipping. Customs and duty procedures and reviews, including duty-free thresholds in various key markets,
the interaction of national postal systems, and security related governmental processes at international
borders, may increase costs, discourage cross-border purchases, delay transit and create shipping
uncertainties. Any factors that increase the costs of cross-border trade or restrict, delay, or make cross-
border trade more difficult or impractical would lower our revenues and profits and could harm our business.

Our business may be adversely affected by geopolitical events, natural disasters, seasonal factors and
other factors that cause our users to spend less time on our websitesormobile platforms and applications,
includingincreasedusageofotherwebsites.

Our users may spend less time on our websites and our applications for mobile devices as a result of a
variety of diversions, including: geopolitical events, such as war, the threat of war, or terrorist activity; natural
disasters; power shortages or outages, major public health issues, including pandemics; social networking or
other entertainment websites or mobile applications; significant local, national or global events capturing the
attention of a large part of the population; and seasonal fluctuations due to a variety of factors. If any of these,
or any other factors, divert our users from using of our websites or mobile applications, our business could be
materially adversely affected.

Oursuccessdependstoalargedegreeonourabilitytosuccessfullyaddresstherapidlyevolvingmarket

fortransactionsonmobiledevices.

Mobile devices are increasingly used for ecommerce transactions. A significant and growing portion of
our users access our platforms through mobile devices. We may lose users if we are not able to continue to
meet our users’ mobile and multi-screen experience expectations. The variety of technical and other
configurations across different mobile devices and platforms increases the challenges associated with this
environment. In addition, a number of other companies with significant resources and a number of innovative
startups have introduced products and services focusing on mobile markets.

12

Our ability to successfully address the challenges posed by the rapidly evolving market for mobile
transactions is crucial to our continued success, and any failure to continuously increase the volume of
mobile transactions effected through our platforms could harm our business.

If we cannot keep pace with rapid technological developments or continue to innovate and create new
initiativesto provide new programs, products and services, the useof our productsand our revenuescould
decline.

Rapid, significant technological changes continue to confront the industries in which we operate and we
cannot predict the effect of technological changes on our business. We also continuously strive to create
new initiatives and innovations that offer growth opportunities, such as our new payments and advertising
offerings. In addition to our own initiatives and innovations, we rely in part on third parties, including some of
our competitors, for the development of and access to new technologies. We expect that new services and
technologies applicable to the industries in which we operate will continue to emerge. These new services
and technologies may be superior to, or render obsolete, the technologies we currently use in our products
and services.
Incorporating new technologies into our products and services may require substantial
expenditures and take considerable time, and ultimately may not be successful. In addition, our ability to
adopt new services and develop new technologies may be inhibited by industry-wide standards, new laws
and regulations, resistance to change from our users, clients or merchants, or third parties’ intellectual
property rights. Our success will depend on our ability to develop new technologies and adapt to
technological changes and evolving industry standards.

Ourbusinessissubjecttoextensivegovernmentregulationandoversight.

including consumer protection, data privacy requirements,

We are subject to laws and regulations affecting our domestic and international operations in a number of
areas,
intellectual property ownership and
infringement, prohibited items and stolen goods, resale of event tickets, tax, anti-competition, export
requirements, anti-corruption, labor, advertising, digital content, real estate, billing, ecommerce, promotions,
quality of services, telecommunications, mobile communications and media, environmental, and health and
safety regulations, as well as laws and regulations intended to combat money laundering and the financing of
terrorist activities. In addition, we are, or may become, subject to further regulation in some of the above-
mentioned areas or new areas as a result of our new payments capabilities.

Compliance with these laws, regulations, and similar requirements may be onerous and expensive, and
variances and inconsistencies from jurisdiction to jurisdiction may further increase the cost of compliance
and doing business. Any such costs, which may rise in the future as a result of changes in these laws and
regulations or in their interpretation, could individually or in the aggregate make our products and services
less attractive to our customers, delay the introduction of new products or services in one or more regions, or
cause us to change or limit our business practices. We have implemented policies and procedures designed
to ensure compliance with applicable laws and regulations, but there can be no assurance that our
employees, contractors, or agents will not violate such laws and regulations or our policies and procedures.

Regulationintheareasofprivacyandprotectionofuserdatacouldharmourbusiness.

We are subject to laws relating to the collection, use, retention, security, and transfer of personally
identifiable information about our users around the world. Much of the personal information that we collect,
especially financial information, is regulated by multiple laws. User data protection laws may be interpreted
and applied inconsistently from country to country. In many cases, these laws apply not only to third-party
transactions, but also to transfers of information between or among ourselves, our subsidiaries, and other
parties with which we have commercial relations. These laws continue to develop in ways we cannot predict
and that may harm our business.

Regulatory scrutiny of privacy, user data protection, use of data and data collection is increasing on a
global basis. We are subject to a number of privacy and similar laws and regulations in the countries in which
we operate and these laws and regulations will likely continue to evolve over time, both through regulatory
and legislative action and judicial decisions. For example, the General Data Protection Regulation (“GDPR”)

13

was approved by the European Union Parliament in April 2016 and became effective in May 2018. The GDPR
was designed to harmonize and enhance data privacy laws across Europe. Some of these laws impose
requirements that are inconsistent with one another, yet regulators may claim that both apply. Complying with
these varying national requirements could cause us to incur substantial costs or require us to change our
business practices in a manner adverse to our business and violations of privacy-related laws can result in
significant penalties. In addition, compliance with these laws may restrict our ability to provide services to our
customers that they may find to be valuable. A determination that there have been violations of laws relating
to our practices under communications-based laws could expose us to significant damage awards, fines and
other penalties that could, individually or in the aggregate, materially harm our business. In particular, because
of the enormous number of texts, emails and other communications we send to our users, communications
laws that provide a specified monetary damage award or fine for each violation (such as those described
below) could result in particularly large awards or fines.

For example, the Federal Communications Commission amended certain of its regulations under the
Telephone Consumer Protection Act, or TCPA, in 2012 and 2013 in a manner that could increase our exposure
to liability for certain types of telephonic communication with customers, including but not limited to text
messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages
of $500 per violation, whichever is greater, and courts may treble the damage award for willful or knowing
violations. We are regularly subject to class-action lawsuits, as well as individual
lawsuits, containing
allegations that our businesses violated the TCPA. These lawsuits, and other private lawsuits not currently
alleged as class actions, seek damages (including statutory damages) and injunctive relief, among other
remedies. Given the enormous number of communications we send to our users, a determination that there
have been violations of the TCPA or other communications-based statutes could expose us to significant
damage awards that could, individually or in the aggregate, materially harm our business.

We post on our websites our privacy policies and practices concerning the collection, use and disclosure
of user data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any
regulatory requirements or orders or other federal, state or international privacy or consumer protection-
related laws and regulations could result in proceedings or actions against us by governmental entities or
others (e.g., class action privacy litigation), subject us to significant penalties and negative publicity, require
us to change our business practices, increase our costs and adversely affect our business. Data collection,
privacy and security have become the subject of increasing public concern. If Internet and mobile users were
to reduce their use of our websites, mobile platforms, products, and services as a result of these concerns,
our business could be harmed. As noted above, we are also subject to the possibility of security breaches,
which themselves may result in a violation of these laws.

Otherlawsandregulationscouldharmourbusiness.

It is not always clear how laws and regulations governing matters relevant to our business, such as property
ownership, copyrights, trademarks, and other intellectual property issues, parallel imports and distribution
controls, taxation, libel and defamation, and obscenity apply to our businesses. Many of these laws were
adopted prior to the advent of the Internet, mobile, and related technologies and, as a result, do not
contemplate or address the unique issues of the Internet and related technologies. Many of these laws,
including some of those that do reference the Internet are subject to interpretation by the courts on an ongoing
basis and the resulting uncertainty in the scope and application of these laws and regulations increases the risk
that we will be subject to private claims and governmental actions alleging violations of those laws and
regulations.

As our activities, the products and services we offer, and our geographical scope continue to expand,
regulatory agencies or courts may claim or hold that we or our users are subject to additional requirements
(including licensure) or prohibited from conducting our business in their jurisdiction, either generally or with
respect to certain actions. Financial and political events have increased the level of regulatory scrutiny on
large companies, and regulatory agencies may view matters or interpret laws and regulations differently than
they have in the past and in a manner adverse to our businesses. Our success and increased visibility have
driven some existing businesses that perceive us to be a threat to their businesses to raise concerns about
our business models to policymakers and regulators. These businesses and their trade association groups

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employ significant resources in their efforts to shape the legal and regulatory regimes in countries where we
have significant operations. They may employ these resources in an effort to change the legal and regulatory
regimes in ways intended to reduce the effectiveness of our businesses and the ability of users to use our
products and services. These established businesses have raised concerns relating to pricing, parallel
imports, professional seller obligations, selective distribution networks, stolen goods, copyrights, trademarks
and other intellectual property rights and the liability of the provider of an Internet marketplace for the
conduct of its users related to those and other issues. Any changes to the legal or regulatory regimes in a
manner that would increase our liability for third-party listings could negatively impact our business.

Numerous U.S. states and foreign jurisdictions,

including the State of California, have regulations
regarding “auctions” and the handling of property by “secondhand dealers” or “pawnbrokers.” Several states
and some foreign jurisdictions have attempted to impose such regulations upon us or our users, and others
may attempt to do so in the future. Attempted enforcement of these laws against some of our users appears
to be increasing and we could be required to change the way we or our users do business in ways that
increase costs or reduce revenues, such as forcing us to prohibit listings of certain items or restrict certain
listing formats in some locations. We could also be subject to fines or other penalties, and any of these
outcomes could harm our business.

A number of the lawsuits against us relating to trademark issues seek to have our platforms subject to
unfavorable local
laws. For example, “trademark exhaustion” principles provide trademark owners with
certain rights to control the sale of a branded authentic product until it has been placed on the market by the
trademark holder or with the holder’s consent. The application of “trademark exhaustion” principles is largely
unsettled in the context of the Internet, and if trademark owners are able to force us to prohibit listings of
certain items in one or more locations, our business could be harmed.

As we expand and localize our international activities, we are increasingly becoming obligated to comply
In addition, because our services are
with the laws of the countries or markets in which we operate.
accessible worldwide and we facilitate sales of goods and provide services to users worldwide, one or more
jurisdictions may claim that we or our users are required to comply with their laws based on the location of our
servers or one or more of our users, or the location of the product or service being sold or provided in an
ecommerce transaction. For example, we were found liable in France, under French law, for transactions on
some of our websites worldwide that did not involve French buyers or sellers. Laws regulating Internet, mobile
and ecommerce technologies outside of the United States are generally less favorable to us than those in the
United States. Compliance may be more costly or may require us to change our business practices or restrict
our service offerings, and the imposition of any regulations on us or our users may harm our business. In
addition, we may be subject to multiple overlapping legal or regulatory regimes that impose conflicting
requirements on us (e.g., in cross-border trade). Our alleged failure to comply with foreign laws could subject
us to penalties ranging from criminal prosecution to significant fines to bans on our services, in addition to the
significant costs we may incur in defending against such actions.

Weareregularlysubjecttogenerallitigation,regulatorydisputes,andgovernmentinquiries.

We are regularly subject to claims, lawsuits (including class actions and individual lawsuits), government
intellectual property, privacy,
investigations, and other proceedings involving competition and antitrust,
labor and employment, commercial disputes,
consumer protection, accessibility claims, securities, tax,
content generated by our users, services and other matters. The number and significance of these disputes
and inquiries have increased as our company has grown larger, our businesses have expanded in scope and
geographic reach, and our products and services have increased in complexity.

The outcome and impact of such claims, lawsuits, government investigations, and proceedings cannot
be predicted with certainty. Regardless of the outcome, such investigations and proceedings can have an
adverse impact on us because of legal costs, diversion of management resources, and other factors.
Determining reserves for our pending litigation is a complex, fact-intensive process that is subject to
judgment calls. It is possible that a resolution of one or more such proceedings could require us to make
substantial payments to satisfy judgments, fines or penalties or to settle claims or proceedings, any of which
could harm our business. These proceedings could also result in reputational harm, criminal sanctions,

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consent decrees, or orders preventing us from offering certain products, or services, or requiring a change in
our business practices in costly ways, or requiring development of non-infringing or otherwise altered
products or technologies. Any of these consequences could harm our business.

Wearesubjecttoregulatoryactivityandantitrustlitigationundercompetitionlaws.

We are subject to scrutiny by various government agencies under U.S. and foreign laws and regulations,
including competition laws. Some jurisdictions also provide private rights of action for competitors or
consumers to assert claims of anti-competitive conduct. Other companies and government agencies have in
the past and may in the future allege that our actions violate the antitrust or competition laws of the United
individual states, the European Commission or other countries, or otherwise constitute unfair
States,
competition. An increasing number of governments are regulating competition law activities,
including
increased scrutiny in large markets such as China. Our business partnerships or agreements or arrangements
with customers or other companies could give rise to regulatory action or antitrust litigation. Some regulators,
particularly those outside of the United States, may perceive our business to be used so broadly that
otherwise uncontroversial business practices could be deemed anticompetitive. Certain competition
authorities have conducted market studies of our industries. Such claims and investigations, even if without
involve negative publicity and substantial diversion of
foundation, may be very expensive to defend,
management time and effort and could result in significant judgments against us or require us to change our
business practices.

Wearesubjecttopatentlitigation.

We have repeatedly been sued for allegedly infringing other parties’ patents. We are a defendant in a
number of patent suits and have been notified of several other potential patent disputes. We expect that we
will increasingly be subject to patent infringement claims because, among other reasons:

• our products and services continue to expand in scope and complexity;

• we continue to expand into new businesses, including through acquisitions; and

•

the universe of patent owners who may claim that we, any of the companies that we have acquired, or
our customers infringe their patents, and the aggregate number of patents controlled by such patent
owners, continues to increase.

Such claims may be brought directly against us and/or against our customers whom we may indemnify
either because we are contractually obligated to do so or we choose to do so as a business matter. We
believe that an increasing number of these claims against us and other technology companies have been,
and continue to be, initiated by third parties whose sole or primary business is to assert such claims. In
addition, we have seen significant patent disputes between operating companies in some technology
industries. Patent claims, whether meritorious or not, are time-consuming and costly to defend and resolve,
and could require us to make expensive changes in our methods of doing business, enter into costly royalty
or licensing agreements, make substantial payments to satisfy adverse judgments or settle claims or
proceedings, or cease conducting certain operations, which would harm our business.

Weareexposedtofluctuationsininterestrates.

Some of our borrowings bear interest at floating rates and we have entered into agreements intended to
convert the interest rate on some of our fixed rate debt instruments to floating rates. To the extent that
prevailing rates increase, our interest expense under these debt instruments will increase.

Investments in both fixed-rate and floating-rate interest-earning instruments carry varying degrees of
interest rate risk. The fair market value of our fixed-rate investment securities may be adversely impacted due
to a rise in interest rates. In general, fixed-rate securities with longer maturities are subject to greater interest-
rate risk than those with shorter maturities. While floating rate securities generally are subject to less interest-
rate risk than fixed-rate securities, floating-rate securities may produce less income than expected if interest
rates decrease and may also suffer a decline in market value if interest rates increase. Due in part to these

16

factors, our investment income may decline or we may suffer losses in principal if securities are sold that have
declined in market value due to changes in interest rates. In addition, relatively low interest rates limit our
investment income. Fluctuations in interest rates that increase the cost of our current or future indebtedness,
cause the market value of our assets to decline or reduce our investment income could adversely affect our
financial results.

Ourticketsbusinessissubjecttoregulatory,competitiveandotherrisksthatcouldharmthisbusiness.

Our tickets business, which includes StubHub, is subject to numerous risks, including:

• Some jurisdictions, in particular jurisdictions outside the United States, prohibit the resale of event
tickets (anti-scalping laws) at prices above the face value of the tickets or at all, or highly regulate the
resale of tickets, and new laws and regulations or changes to existing laws and regulations imposing
these or other restrictions could limit or inhibit our ability to operate, or our users’ ability to continue
to use, our tickets business.

• Regulatory agencies or courts may claim or hold that we are responsible for ensuring that our users

comply with these laws and regulations.

•

In many jurisdictions, our tickets business depends on commercial partnerships with event
organizers or licensed ticket vendors, which we must develop and maintain on acceptable terms for
our tickets business to be successful.

• Our tickets business is subject to seasonal fluctuations and the general economic and business

conditions that impact the sporting events and live entertainment industries.

• A portion of the tickets inventory sold by sellers on the StubHub platform is processed by StubHub in
digital form. Systems failures, security breaches, theft or other disruptions that result in the loss of
such sellers’ tickets inventory, could result in significant costs and a loss of consumer confidence in
our tickets business.

•

Lawsuits alleging a variety of causes of actions have in the past, and may in the future, be filed against
StubHub and eBay by venue owners, competitors, ticket buyers, and unsuccessful ticket buyers.
Such lawsuits could result in significant costs and require us to change our business practices in
ways that negatively affect our tickets business.

• Our tickets business also faces significant competition from a number of sources, including ticketing
service companies, event organizers, ticket brokers, and online and offline ticket resellers. Some
ticketing service companies, event organizers, and professional sports teams have begun to issue
event tickets through various forms of electronic ticketing systems that are designed to restrict or
prohibit the transferability (and by extension, the resale) of such event tickets either to favor their own
resale affiliates or to discourage resale or restrict resale of season tickets to a preferred, designated
website. Ticketing service companies have also begun to use market-based pricing strategies or
dynamic pricing to charge much higher prices, and impose additional restrictions on transferability,
for premium tickets.

• Some sports teams have threatened to revoke the privileges of season ticket owners if they resell

their tickets through a platform that is not affiliated with, or approved by, such sports teams.

• To the extent that StubHub holds ticket inventory, we may be exposed to losses associated with

such inventory.

The listing or sale by our users of items that allegedly infringe the intellectual property rights of rights

owners,includingpiratedorcounterfeititems,mayharmourbusiness.

The listing or sale by our users of unlawful, counterfeit or stolen goods or unlawful services, or sale of
goods or services in an unlawful manner, has resulted and may continue to result in allegations of civil or
criminal liability for unlawful activities against us (including the employees and directors of our various entities)
involving activities carried out by users through our services. In a number of circumstances, third parties,
including government regulators and law enforcement officials, have alleged that our services aid and abet

17

violations of certain laws, including laws regarding the sale of counterfeit items, laws restricting or prohibiting
the transferability (and by extension, the resale) of digital goods (e.g., event tickets, books, music and
software), the fencing of stolen goods, selective distribution channel laws, customs laws, distance selling
laws, anti-scalping laws with respect to the resale of tickets, and the sale of items outside of the United States
that are regulated by U.S. export controls.

In addition, allegations of infringement of intellectual property rights,

including but not limited to
counterfeit items, have resulted in threatened and actual
litigation from time to time by rights owners,
including the following luxury brand owners: Tiffany & Co. in the United States; Rolex S.A. and Coty Prestige
Lancaster Group GmbH in Germany; Louis Vuitton Malletier and Christian Dior Couture in France; and L’Oréal
SA, Lancôme Parfums et Beauté & Cie, and Laboratoire Garnier & Cie in several European countries. Plaintiffs
in these and similar suits seek, among other remedies, injunctive relief and damages. Statutory damages for
copyright or trademark violations could range up to $150,000 per copyright violation and $2,000,000 per
trademark violation in the United States, and may be even higher in other jurisdictions. In the past, we have
paid substantial amounts in connection with resolving certain trademark and copyright suits. These and
similar suits may also force us to modify our business practices in a manner that increases costs, lowers
revenue, makes our websites and mobile platforms less convenient to customers, and requires us to spend
substantial resources to take additional protective measures or discontinue certain service offerings in order
to combat these practices. In addition, we have received significant media attention relating to the listing or
sale of illegal or counterfeit goods, which could damage our reputation, diminish the value of our brand
names, and make users reluctant to use our products and services.

Wearesubjecttorisksassociatedwithinformationdisseminatedthroughourservices.

Online services companies may be subject to claims relating to information disseminated through their
services, including claims alleging defamation, libel, breach of contract, invasion of privacy, negligence,
copyright or trademark infringement, among other things. The laws relating to the liability of online services
companies for information disseminated through their services are subject to frequent challenges both in the
United States and foreign jurisdictions. Any liabilities incurred as a result of these matters could require us to
incur additional costs and harm our reputation and our business.

Our potential liability to third parties for the user-provided content on our sites, particularly in jurisdictions
outside the United States where laws governing Internet transactions are unsettled, may increase. If we
become liable for information provided by our users and carried on our service in any jurisdiction in which we
operate, we could be directly harmed and we may be forced to implement new measures to reduce our
exposure to this liability, including expending substantial resources or discontinuing certain service offerings,
which could harm our business.

Changestoourprogramstoprotectbuyersandsellerscouldincreaseourcostsandlossrate.

Our eBay Money Back Guarantee program represents the means by which we compensate users who
believe that they have been defrauded, have not received the item that they purchased or have received an
item different from what was described. In addition, as we roll out our new payments capabilities, we may be
exposed to losses associated with compensating our sellers for fraudulent payments. We expect to continue
to receive communications from users requesting reimbursement or threatening or commencing legal action
against us if no reimbursement is made. Our liability for these sort of claims is slowly beginning to be clarified
in some jurisdictions and may be higher in some non-U.S. jurisdictions than it is in the United States. Litigation
involving liability for any such third-party actions could be costly and time consuming for us, divert
management attention, result in increased costs of doing business, lead to adverse judgments or settlements
or otherwise harm our business. In addition, affected users will likely complain to regulatory agencies that
could take action against us, including imposing fines or seeking injunctions.

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Wemay be unable to adequatelyprotect or enforce our intellectualproperty rights, or third partiesmay

allegethatweareinfringingtheirintellectualpropertyrights.

We believe the protection of our intellectual property, including our trademarks, patents, copyrights,
domain names, trade dress, and trade secrets, is critical to our success. We seek to protect our intellectual
property rights by relying on applicable laws and regulations in the United States and internationally, as well as
a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary
rights when offering or procuring products and services, including confidentiality and invention assignment
agreements entered into with our employees and contractors and confidentiality agreements with parties
with whom we conduct business.

However, effective intellectual property protection may not be available in every country in which our
products and services are made available, and contractual arrangements and other steps we have taken to
protect our intellectual property may not prevent third parties from infringing or misappropriating our
intellectual property or deter independent development of equivalent or superior intellectual property rights
by others. Trademark, copyright, patent, domain name, trade dress and trade secret protection is very
expensive to maintain and may require litigation. We must protect our intellectual property rights and other
proprietary rights in an increasing number of jurisdictions, a process that is expensive and time consuming
and may not be successful in every jurisdiction. Also, we may not be able to discover or determine the extent
of any unauthorized use of our proprietary rights. We have licensed in the past, and expect to license in the
future, certain of our proprietary rights, such as trademarks or copyrighted material, to others. These
licensees may take actions that diminish the value of our proprietary rights or harm our reputation. Any failure
to adequately protect or enforce our intellectual property rights, or significant costs incurred in doing so,
could materially harm our business.

As the number of products in the software industry increases and the functionality of these products
further overlap, and as we acquire technology through acquisitions or licenses, we may become increasingly
subject to infringement claims, including patent, copyright, and trademark infringement claims. Litigation may
be necessary to determine the validity and scope of the patent and other intellectual property rights of
others. The ultimate outcome of any allegation is uncertain and, regardless of the outcome, any such claim,
with or without merit, may be time-consuming, result in costly litigation, divert management’s time and
attention from our business, require us to stop selling, delay roll-out, or redesign our products, or require us to
pay substantial amounts to satisfy judgments or settle claims or lawsuits or to pay substantial royalty or
licensing fees, or to satisfy indemnification obligations that we have with some of our customers. Our failure
to obtain necessary license or other rights, or litigation or claims arising out of intellectual property matters,
may harm our business.

Failuretodealeffectivelywithfraudulentactivitiesonourplatformswouldincreaseourlossrateandharm

ourbusiness,andcouldseverelydiminishmerchantandconsumerconfidenceinanduseofourservices.

We face risks with respect to fraudulent activities on our platforms and periodically receive complaints
from buyers and sellers who may not have received the goods that they had contracted to purchase or
payment for the goods that a buyer had contracted to purchase. In some European and Asian jurisdictions,
buyers may also have the right to withdraw from a sale made by a professional seller within a specified time
period. While we can, in some cases, suspend the accounts of users who fail to fulfill their payment or delivery
obligations to other users, we do not have the ability to require users to make payment or deliver goods, or
otherwise make users whole other than through our buyer protection program, which in the United States we
refer to as the eBay Money Back Guarantee, or as we roll out our new payments capabilities, by compensating
our sellers for fraudulent payments. Although we have implemented measures to detect and reduce the
occurrence of fraudulent activities, combat bad buyer experiences and increase buyer satisfaction, including
evaluating sellers on the basis of their transaction history and restricting or suspending their activity, there
can be no assurance that these measures will be effective in combating fraudulent transactions or improving
overall satisfaction among sellers, buyers, and other participants. Additional measures to address fraud could
negatively affect the attractiveness of our services to buyers or sellers, resulting in a reduction in the ability to
attract new users or retain current users, damage to our reputation, or a diminution in the value of our brand
names.

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We have substantial indebtedness, and we may incur substantial additional indebtedness in the future,
and we may not generate sufficient cash flow from our business to service our indebtedness. Failure to
complywiththetermsofourindebtednesscouldresultintheaccelerationofourindebtedness,whichcould
haveanadverseeffectonourcashflowandliquidity.

We have a substantial amount of outstanding indebtedness and we may incur substantial additional
indebtedness in the future, including under our commercial paper program and revolving credit facility or
through public or private offerings of debt securities. Our outstanding indebtedness and any additional
indebtedness we incur may have significant consequences, including, without limitation, any of the following:

•

requiring us to use a significant portion of our cash flow from operations and other available cash to
service our indebtedness, thereby reducing the amount of cash available for other purposes,
including capital expenditures and acquisitions;

• our indebtedness and leverage may increase our vulnerability to downturns in our business, to

competitive pressures, and to adverse changes in general economic and industry conditions;

• adverse changes in the ratings assigned to our debt securities by credit rating agencies will likely

increase our borrowing costs;

• our ability to obtain additional financing for working capital, capital expenditures, acquisitions, share

repurchases, dividends or other general corporate and other purposes may be limited; and

• our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.

Our ability to make payments of principal of and interest on our indebtedness depends upon our future
performance, which will be subject to general economic conditions, industry cycles and financial, business
and other factors affecting our consolidated results of operations and financial condition, many of which are
beyond our control. If we are unable to generate sufficient cash flow from operations in the future to service
our debt, we may be required to, among other things:

•

•

•

•

•

incur the tax cost of repatriating funds to the United States;

seek additional financing in the debt or equity markets;

refinance or restructure all or a portion of our indebtedness;

sell selected assets; or

reduce or delay planned capital or operating expenditures.

Such measures might not be sufficient to enable us to service our debt. In addition, any such financing,

refinancing or sale of assets might not be available on economically favorable terms or at all.

Our revolving credit facility and the indenture pursuant to which certain of our outstanding debt securities
were issued contain, and any debt instruments we enter into in the future may contain, financial and other
covenants that restrict or could restrict, among other things, our business and operations. If we fail to pay
amounts due under, or breach any of the covenants in, a debt instrument, then the lenders would typically
have the right to demand immediate repayment of all borrowings thereunder (subject in certain cases to
grace or cure period). Moreover, any such acceleration and required repayment of or default in respect of any
of our indebtedness could, in turn, constitute an event of default under other debt instruments, thereby
resulting in the acceleration and required repayment of that other indebtedness. Any of these events could
materially adversely affect our liquidity and financial condition.

Adowngradeinourcreditratingscouldmateriallyadverselyaffectourbusiness.

Some of our outstanding indebtedness has received credit ratings from certain rating agencies. Such
ratings are limited in scope and do not purport to address all risks relating to an investment in those debt
securities, but rather reflect only the view of each rating agency at the time the rating was issued. The credit
ratings assigned to our debt securities could change based upon, among other things, our results of
operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies,

20

and there can be no assurance that such ratings will not be lowered, suspended or withdrawn entirely by a
rating agency or placed on a so-called “watch list” for a possible downgrade or assigned a negative ratings
outlook if, in any rating agency’s judgment, circumstances so warrant. Moreover, these credit ratings are not
recommendations to buy, sell or hold any of our debt securities. Actual or anticipated changes or
including any announcement that our ratings are under review for a
downgrades in our credit ratings,
downgrade or have been assigned a negative outlook, would likely increase our borrowing costs, which could
in turn have a material adverse effect on our financial condition, results of operations, cash flows and could
harm our business.

Our credit ratings were downgraded as a result of the distribution of 100% of the outstanding common
stock of PayPal to our stockholders (the “Distribution”), pursuant to which PayPal became an independent
company. As of January 1, 2014, our long-term debt and short-term funding were rated investment grade by
Standard and Poor’s Financial Services, LLC (long-term rated A, short-term rated A-1, with a stable outlook),
Moody’s Investor Service (long-term rated A2, short-term rated P-1, with a stable outlook), and Fitch Ratings,
Inc. (long-term rated A, short-term rated F-1, with a stable outlook). All of these credit rating agencies lowered
their ratings in connection with the Distribution, which occurred on July 17, 2015. Since July 20, 2015, we have
been rated investment grade by Standard and Poor’s Financial Services, LLC (long-term rated BBB+, short-
term rated A-2, with a stable outlook), Moody’s Investor Service (long-term rated Baa1, short-term rated P-2,
with a stable outlook), and Fitch Ratings, Inc. (long-term rated BBB, short-term rated F-2, with a stable outlook).
We disclose these ratings to enhance the understanding of our sources of liquidity and the effects of these
ratings on our costs of funds. Our borrowing costs depend, in part, on our credit ratings and any further
actions taken by these credit rating agencies to lower our credit ratings, as described above, will likely
increase our borrowing costs.

Ourbusinessmaybesubjecttosalesandothertaxes.

The application of indirect taxes (such as sales and use tax, value-added tax (“VAT”), goods and services
tax (including the “digital services tax”), business tax and gross receipt tax) to ecommerce businesses is a
complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were
established before the adoption and growth of the Internet and ecommerce. In many cases, it is not clear how
existing statutes apply to ecommerce services.
In addition, many state and foreign governments are
increasingly looking for ways to increase revenues, which has resulted in legislative action, including new
taxes on services and gross revenues and through other indirect taxes. There are many transactions that
occur during the ordinary course of business for which the ultimate tax determination is uncertain.

From time to time, some taxing authorities in the United States have notified us that they believe we owe
them certain taxes imposed on our services. These notifications have not resulted in any significant tax
liabilities to date, but there is a risk that some jurisdiction may be successful in the future, which would harm
our business.

Similar issues exist outside of the United States, where the application of VAT or other indirect taxes on
ecommerce providers is complex and evolving. While we attempt to comply in those jurisdictions where it is
clear that a tax is due, some of our subsidiaries have, from time to time, received claims relating to the
applicability of indirect taxes to our fees. Additionally, we pay input VAT on applicable taxable purchases
within the various countries in which we operate. In most cases, we are entitled to reclaim this input VAT from
the various countries. However, because of our unique business model, the application of the laws and rules
that allow such reclamation is sometimes uncertain. A successful assertion by one or more countries that we
are not entitled to reclaim VAT could harm our business.

In certain jurisdictions, we collect and remit indirect taxes on our fees and pay taxes on our purchases of
goods and services. However, tax authorities may raise questions about our calculation, reporting and
collection of these taxes and may ask us to remit additional taxes. Should any new taxes become applicable
to our services or if the taxes we pay are found to be deficient, our business could be harmed.

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Wemayhaveexposuretogreaterthananticipatedtaxliabilities.

The determination of our worldwide provision for income taxes and other tax liabilities requires estimation
and significant judgment, and there are many transactions and calculations where the ultimate tax
determination is uncertain. Like many other multinational corporations, we are subject to tax in multiple U.S.
and foreign jurisdictions and have structured our operations to reduce our effective tax rate. Our
determination of our tax liability is always subject to audit and review by applicable domestic and foreign tax
authorities, and we are currently undergoing a number of investigations, audits and reviews by taxing
authorities throughout the world, including with respect to our business structure. Any adverse outcome of
any such audit or review could harm our business, and the ultimate tax outcome may differ from the amounts
recorded in our financial statements and may materially affect our financial results in the period or periods for
which such determination is made. While we have established reserves based on assumptions and estimates
that we believe are reasonable to cover such eventualities, these reserves may prove to be insufficient.

In addition, our future income taxes could be adversely affected by a shift in our jurisdictional earning mix,
by changes in the valuation of our deferred tax assets and liabilities, as a result of gains on our foreign
exchange risk management program, or changes in tax laws, regulations, or accounting principles, as well as
certain discrete items.

In light of continuing fiscal challenges in certain U.S. states and in many countries in Europe, various levels
of government are increasingly focused on tax reform and other legislative action to increase tax revenue,
including corporate income taxes. A number of U.S. states have attempted to increase corporate tax
revenues by taking an expansive view of corporate presence to attempt to impose corporate income taxes
and other direct business taxes on companies that have no physical presence in their state, and taxing
authorities in foreign jurisdictions may take similar actions. Many U.S. states are also altering their
apportionment formulas to increase the amount of taxable income or loss attributable to their state from
certain out-of-state businesses. Similarly, in Europe, and elsewhere in the world, there are various tax reform
efforts underway designed to ensure that corporate entities are taxed on a larger percentage of their
earnings. Companies that operate over the Internet, such as eBay, are a target of some of these efforts. If
more taxing authorities are successful in applying direct taxes to Internet companies that do not have a
physical presence in their respective jurisdictions, this could increase our effective tax rate.

Our business and its users are subject to internet sales tax and sales reporting and record-keeping

obligations.

The application of sales tax and other indirect taxes on cross border sales by remote sellers is continuing
to change and evolve. On June 21, 2018, the U.S. Supreme Court decided South Dakota v. Wayfair, Inc. et al, a
case challenging the current law under which online retailers are not required to collect sales and use tax
unless they have a physical presence in the buyer’s state. This decision will now allow states to adopt new or
enforce existing laws requiring sellers to collect and remit sales and use tax, even in states in which the seller
has no presence. The adoption or enforcement of any such legislation could result in a sales and use tax
collection responsibility for certain of our sellers. This collection responsibility and the additional costs
associated with complex sales and use tax collection, remittance and audit requirements could create
additional burdens for buyers and sellers on our websites and mobile platforms and could harm our business.
Similar laws imposing tax collection responsibility on foreign sellers are being consider in other countries as
well. We are now jointly liable for U.K. VAT for certain non-U.K. sellers who fail to fulfill their U.K. VAT
obligations unless we suspend their eBay activity until the seller resolves the matter with the U.K. VAT
authority. Other jurisdictions are considering similar legislation.

Some jurisdictions have enacted laws which require marketplaces to report user activity or collect and
remit taxes on certain items sold on the marketplace. For example, we are collecting Australian GST on
certain imports into Australia and remitting the GST to the Australian Tax Office. Several U.S. states have
enacted laws that require marketplace facilitators to collect and remit sales tax for some or all sellers using
these marketplaces. The cost of complying with these new rules and the addition of taxes on certain items
may harm our business.

22

One or more states, the U.S. federal government or foreign countries may seek to impose reporting or
record-keeping obligations on companies that engage in or facilitate ecommerce. Such an obligation could
be imposed by legislation intended to improve tax compliance or if one of our companies was ever deemed
to be the legal agent of the users of our services by a jurisdiction in which it operates. Certain of our
companies are required to report to the IRS and most states on customers subject to U.S. income tax if they
reach certain payment thresholds. As a result, we are required to request tax identification numbers from
certain payees, track payments by tax identification number and, under certain conditions, withhold a portion
of payments and forward such withholding to the IRS. Our systems are able to meet these requirements.
These obligations can increase operational costs and change our user experience. Any failure by us to meet
these requirements could result in substantial monetary penalties and other sanctions and could harm our
business. Imposition of an information reporting requirement could decrease seller or buyer activity on our
sites and would harm our business.

We have periodically received requests from tax authorities for information regarding the transactions of
large classes of sellers on our sites, and in some cases we have been legally obligated to provide this data.
The imposition of any requirements on us to disclose transaction records for all or a class of sellers to tax or
other regulatory authorities or to file tax forms on behalf of any sellers, especially requirements that are
imposed on us but not on alternative means of ecommerce, and any use of those records to investigate,
collect taxes from or prosecute sellers or buyers, could decrease activity on our sites and harm our business.

Ourbusinessissubjecttoonlinesecurityrisks,includingsecuritybreachesandcyberattacks.

Our businesses involve the storage and transmission of users’ personal financial information. In addition, a
significant number of our users authorize us to bill their payment card accounts directly for all transaction and
other fees charged by us. An increasing number of websites, including those owned by several other large
Internet and offline companies, have disclosed breaches of their security, some of which have involved
sophisticated and highly targeted attacks on portions of their websites or infrastructure. The techniques used
to obtain unauthorized access, disable, or degrade service, or sabotage systems, change frequently, may be
difficult to detect for a long time, and often are not recognized until launched against a target. Certain efforts
may be state sponsored and supported by significant financial and technological resources and therefore
may be even more difficult to detect. As a result, we may be unable to anticipate these techniques or to
implement adequate preventative measures. Unauthorized parties may also attempt to gain access to our
systems or facilities through various means, including hacking into our systems or facilities, fraud, trickery or
other means of deceiving our employees, contractors and temporary staff. A party that is able to circumvent
our security measures could misappropriate our or our users’ personal information, cause interruption or
degradations in our operations, damage our computers or those of our users, or otherwise damage our
reputation. In addition, our users have been and likely will continue to be targeted by parties using fraudulent
“spoof” and “phishing” emails to misappropriate user names, passwords, payment card numbers, or other
personal information or to introduce viruses or other malware through “trojan horse” programs to our users’
computers. Our information technology and infrastructure may be vulnerable to cyberattacks or security
incidents and third parties may be able to access our users’ proprietary information and payment card data
that are stored on or accessible through our systems. Any security breach at a company providing services to
us or our users could have similar effects.

In May 2014, we publicly announced that criminals were able to penetrate and steal certain data, including user
names, encrypted user passwords and other non-financial user data. Upon making this announcement, we
required all buyers and sellers on our platform to reset their passwords in order to log into their account. The
breach and subsequent password reset have negatively impacted the business. In July 2014, a putative class
action lawsuit was filed against us for alleged violations and harm resulting from the breach. The lawsuit was
recently dismissed with leave to amend. In addition, we have received requests for information and are subject to
investigations regarding this incident from numerous regulatory and other government agencies across the world.

We may also need to expend significant additional resources to protect against security breaches or to
redress problems caused by breaches. These issues are likely to become more difficult and costly as we
expand the number of markets where we operate. Additionally, our insurance policies carry low coverage
limits, which may not be adequate to reimburse us for losses caused by security breaches and we may not be
able to fully collect, if at all, under these insurance policies.

23

Systems failures or cyberattacks and resulting interruptions in the availability of or degradation in the

performanceofourwebsites,applications,productsorservicescouldharmourbusiness.

Our systems may experience service interruptions or degradation due to of hardware and software
defects or malfunctions, computer denial-of-service and other cyberattacks, human error, earthquakes,
hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud,
military or political conflicts, terrorist attacks, computer viruses, or other events. Our systems are also subject
to break-ins, sabotage and intentional acts of vandalism. Some of our systems are not fully redundant and our
disaster recovery planning is not sufficient for all eventualities.

We have experienced and will likely continue to experience system failures, denial of service attacks and
other events or conditions from time to time that interrupt the availability or reduce the speed or functionality
of our websites and mobile applications. These events have resulted and likely will result in loss of revenue. A
prolonged interruption in the availability or reduction in the speed or other functionality of our websites and
mobile applications could materially harm our business. Frequent or persistent interruptions in our services
could cause current or potential users to believe that our systems are unreliable, leading them to switch to
our competitors or to avoid our sites, and could permanently harm our reputation and brands. Moreover, to
the extent that any system failure or similar event results in damages to our customers or their businesses,
these customers could seek significant compensation from us for their losses and those claims, even if
unsuccessful, would likely be time-consuming and costly for us to address. We also rely on facilities,
components and services supplied by third parties and our business may be materially adversely affected to
the extent these components or services do not meet our expectations or these third parties cease to
provide the services or facilities. In particular, a decision by any of our third party hosting providers to close a
facility that we use could cause system interruptions and delays, result in loss of critical data and cause
lengthy interruptions in our services. We do not carry business interruption insurance sufficient to
compensate us for losses that may result from interruptions in our service as a result of systems failures and
similar events.

Acquisitions,dispositions,jointventures,strategicpartnershipsandstrategicinvestmentscouldresultin

operatingdifficultiesandcouldharmourbusinessorimpactourfinancialresults.

We have acquired a significant number of businesses of varying size and scope, technologies, services,
and products and have in July 2015 distributed 100% of the outstanding common stock of PayPal to our
stockholders, pursuant to which PayPal became an independent company, and sold our Enterprise business
in November 2015. We also expect to continue to evaluate and consider a wide array of potential strategic
transactions as part of our overall business strategy, including business combinations, acquisitions, and
dispositions of businesses, technologies, services, products, and other assets, as well as strategic
investments and joint ventures.

These transactions may involve significant challenges and risks, including:

•

the potential loss of key customers, merchants, vendors and other key business partners of the
companies we acquire, or dispose of, following and continuing after announcement of our transaction
plans;

• declining employee morale and retention issues affecting employees of companies that we acquire
or dispose of, which may result from changes in compensation, or changes in management, reporting
relationships, future prospects or the direction of the acquired or disposed business;

• difficulty making new and strategic hires of new employees;

• diversion of management time and a shift of focus from operating the businesses to the transaction,

and in the case of an acquisition, integration and administration;

•

•

the need to provide transition services to a disposed of company, which may result in the diversion of
resources and focus;

information,
the need to integrate the operations, systems (including accounting, management,
human resource and other administrative systems), technologies, products and personnel of each
acquired company, which is an inherently risky and potentially lengthy and costly process;

24

•

•

the inefficiencies and lack of control that may result if such integration is delayed or not
implemented, and unforeseen difficulties and expenditures that may arise as a result;

the need to implement or improve controls, procedures and policies appropriate for a larger public
company at companies that prior to acquisition may have lacked such controls, procedures and
policies or whose controls, procedures and policies did not meet applicable legal and other
standards;

•

risks associated with our expansion into new international markets;

• derivative lawsuits resulting from the acquisition or disposition;

•

•

•

liability for activities of the acquired or disposed of company before the transaction,
including
intellectual property and other litigation claims or disputes, violations of laws, rules and regulations,
commercial disputes, tax liabilities and other known and unknown liabilities and, in the case of
dispositions, liabilities to the acquirors of those businesses under contractual provisions such as
representations, warranties and indemnities;

the potential loss of key employees following the transaction;

the acquisition of new customer and employee personal information by us or a third party acquiring
assets or businesses from us, which in and of itself may require regulatory approval and or additional
controls, policies and procedures and subject us to additional exposure; and

• our dependence on the acquired business’ accounting, financial reporting, operating metrics and
similar systems, controls and processes and the risk that errors or irregularities in those systems,
controls and processes will lead to errors in our consolidated financial statements or make it more
difficult to manage the acquired business.

At any given time, we may be engaged in discussions or negotiations with respect to one or more of
these types of transactions and any of these transactions could be material to our financial condition and
results of operations. In addition, it may take us longer than expected to fully realize the anticipated benefits
of these transactions, and those benefits may ultimately be smaller than anticipated or may not be realized at
all, which could adversely affect our business and operating results. Any acquisitions or dispositions may also
require us to issue additional equity securities, spend our cash, or incur debt (and increased interest
expense), liabilities, and amortization expenses related to intangible assets or write-offs of goodwill, which
could adversely affect our results of operations and dilute the economic and voting rights of our
stockholders.

We have made certain investments, including through joint ventures, in which we have a minority equity
interest and/or lack management and operational control. The controlling joint venture partner in a joint
venture may have business interests, strategies, or goals that are inconsistent with ours, and business
decisions or other actions or omissions of the controlling joint venture partner or the joint venture company
may result in harm to our reputation or adversely affect the value of our investment in the joint venture. Our
strategic investments may also expose us to additional risks. Any circumstances, which may be out of our
control, that adversely affect the value of our investments, or cost resulting from regulatory action or lawsuits
in connection with our investments, could harm our business or negatively impact our financial results.

In connection with a commercial agreement, we entered into a warrant agreement with a service provider
that entitles us to acquire a fixed number of shares of the service provider’s common stock subject to certain
milestones being met. This warrant is accounted for as a derivative instrument under ASC Topic 815,
Derivatives and Hedging. Changes in the service provider’s common stock price and equity volatility may
have a significant impact on the value of this warrant. We report this warrant on a quarterly basis at fair value in
our consolidated balance sheets, and changes in the fair value of this warrant are recognized in our
consolidated statement of income. Fluctuations in the service provider’s common stock or other changes in
assumptions could result in material changes in the fair value that we report in our consolidated balance
sheets and our consolidated statement of income, which could have a material impact on our financial results.

25

Our success largely depends on key personnel. Because competition for our key employees is intense,
we may not be able to attract, retain, and develop the highly skilled employees we need to support our
business.Thelossofseniormanagementorotherkeypersonnelcouldharmourbusiness.

Our future performance depends substantially on the continued services of our senior management and
other key personnel, including key engineering and product development personnel, and our ability to attract,
retain, and motivate key personnel. Competition for key personnel is intense, especially in the Silicon Valley
where our corporate headquarters are located, and we may be unable to successfully attract, integrate, or
retain sufficiently qualified key personnel. In making employment decisions, particularly in the Internet and
high-technology industries, job candidates often consider the value of the equity awards they would receive
in connection with their employment and fluctuations in our stock price may make it more difficult to attract,
retain, and motivate employees. In addition, we do not have long-term employment agreements with any of
our key personnel and do not maintain any “key person” life insurance policies. The loss of the services of any
of our senior management or other key personnel, or our inability to attract highly qualified senior
management and other key personnel, could harm our business.

Problemswithorpriceincreasesbythirdpartieswhoprovideservicestousortooursellerscouldharm

ourbusiness.

A number of third parties provide services to us or to our sellers. Such services include seller tools that
automate and manage listings, merchant tools that manage listings and interface with inventory management
software, storefronts that help our sellers list items and shipping providers that deliver goods sold on our
lockouts, or work
platform, among others. Financial or regulatory issues,
stoppages), or other problems that prevent these companies from providing services to us or our sellers
could harm our business.

labor issues (e.g., strikes,

Price increases by, or service terminations, disruptions or interruptions at, companies that provide services
to us and our sellers and clients could also reduce the number of listings on our platforms or make it more
difficult for our sellers to complete transactions, thereby harming our business. Some third parties who provide
services to us or our sellers may have or gain market power and be able to increase their prices to us without
competitive constraint. While we continue to work with global carriers to offer our sellers a variety of shipping
options and to enhance their shipping experience, postal rate increases may reduce the competitiveness of
certain sellers’ offerings, and postal service changes could require certain sellers to utilize alternatives which
could be more expensive or inconvenient, which could in turn decrease the number of transactions on our sites,
thereby harming our business.

We have outsourced certain functions to third-party providers, including some customer support and
product development functions, which are critical to our operations. If our service providers do not perform
satisfactorily, our operations could be disrupted, which could result in user dissatisfaction and could harm our
business.

There can be no assurance that third parties who provide services directly to us or our sellers will
continue to do so on acceptable terms, or at all. If any third parties were to stop providing services to us or
our sellers on acceptable terms, including as a result of bankruptcy, we may be unable to procure alternatives
from other third parties in a timely and efficient manner and on acceptable terms, or at all.

Our developer platforms, which are open to merchants and third-party developers, subject us to

additionalrisks.

We provide third-party developers with access to application programming interfaces, software
development kits and other tools designed to allow them to produce applications for use, with a particular
focus on mobile applications. There can be no assurance that merchants or third-party developers will
develop and maintain applications and services on our open platforms on a timely basis or at all, and a number
of factors could cause such third-party developers to curtail or stop development for our platforms. In
addition, our business is subject to many regulatory restrictions. It is possible that merchants and third-party
developers who utilize our development platforms or tools could violate these regulatory restrictions and we
may be held responsible for such violations, which could harm our business.

26

Wecannotassurethatwewillcontinuetopaydividendsonourcommonstock.

In January 2019, we initiated a quarterly cash dividend on our common stock. The timing, declaration,
amount and payment of any future dividends fall within the discretion of our Board of Directors and will
including our available cash, working capital, financial condition, results of
depend on many factors,
operations, capital requirements, covenants in our debt instruments, applicable law and other considerations
that our Board of Directors considers relevant. A reduction in the amount of cash dividends on our common
stock, the suspension of those dividends or a failure to meet market expectations regarding potential
dividend increases could have a material adverse effect on the market price of our common stock. If we do
not pay cash dividends on our common stock in the future, realization of a gain on an investment in our
common stock will depend entirely on the appreciation of the price of our common stock, which may not
occur.

WecouldincursignificantliabilityiftheDistributionisdeterminedtobeataxabletransaction.

We have received an opinion from outside tax counsel to the effect that the Distribution qualifies as a
transaction that is described in Sections 355 and 368(a)(1)(D) of the Internal Revenue Code. The opinion relies
on certain facts, assumptions, representations and undertakings from PayPal and us regarding the past and
If any of these facts,
future conduct of the companies’ respective businesses and other matters.
assumptions, representations or undertakings are incorrect or not satisfied, our shareholders and we may not
be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities. Notwithstanding
the opinion of tax counsel we have received, the IRS could determine on audit that the Distribution is taxable if
it determines that any of these facts, assumptions, representations or undertakings are not correct or have
been violated or if it disagrees with the conclusions in the opinion. If the Distribution is determined to be
taxable for U.S. federal income tax purposes, our shareholders that are subject to U.S. federal income tax and
we could incur significant U.S. federal income tax liabilities.

WemaybeexposedtoclaimsandliabilitiesasaresultoftheDistribution.

We entered into a separation and distribution agreement and various other agreements with PayPal to
govern the Distribution and the relationship of the two companies. These agreements provide for specific
indemnity and liability obligations and could lead to disputes between us and PayPal. The indemnity rights we
have against PayPal under the agreements may not be sufficient to protect us. In addition, our indemnity
obligations to PayPal may be significant and these risks could negatively affect our results of operations and
financial condition.

27

ITEM 1B: UNRESOLVEDSTAFFCOMMENTS

Not applicable.

ITEM 2: PROPERTIES

We own and lease various properties in the U.S. and 33 other countries around the world. We use the
properties for executive and administrative offices, data centers, product development offices, fulfillment
centers and customer service offices. Our headquarters are located in San Jose, California and occupies
approximately 0.5 million square feet. Our owned data centers are solely located in Utah. As of December 31,
2018, our owned and leased properties provided us with aggregate square footage as follows (in millions):

Owned facilities

Leased facilities

Total facilities

United States Other Countries

Total

1.3

0.8

2.1

—

4.3

4.3

1.3

5.1

6.4

From time to time we consider various alternatives related to our long-term facilities needs. While we
believe that our existing facilities are adequate to meet our immediate needs, it may become necessary to
develop and improve land that we own or lease or acquire additional or alternative space to accommodate
any future growth.

28

ITEM 3: LEGALPROCEEDINGS

Overview

We are involved in legal and regulatory proceedings on an ongoing basis. Many of these proceedings are
in early stages and may seek an indeterminate amount of damages. If we believe that a loss arising from such
matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial
statements. If only a range of estimated losses can be determined, we accrue an amount within the range
that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better
estimate than any other amount, we accrue the low end of the range. For those proceedings in which an
unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the
reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible
loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in
judgment or settlement) is not material. If we cannot estimate the probable or reasonably possible loss or
range of losses arising from a proceeding, we have disclosed that fact. In assessing the materiality of a
proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the
potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to
change our business practices in a manner that could have a material adverse impact on our business. With
respect to the matters disclosed in this Item 3, we are unable to estimate the possible loss or range of losses
that could potentially result from the application of such non-monetary remedies.

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable were not
material for the year ended December 31, 2018. Except as otherwise noted for the proceedings described in
this Item 3, we have concluded, based on currently available information, that reasonably possible losses
arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in
excess of our recorded accruals are also not material. However,
legal and regulatory proceedings are
inherently unpredictable and subject to significant uncertainties. If one or more matters were resolved against
us in a reporting period for amounts in excess of management’s expectations, the impact on our operating
results or financial condition for that reporting period could be material.

General Matters

Third parties have from time to time claimed, and others may claim in the future, that we have infringed
their intellectual property rights. We are subject to patent disputes, and expect that we could be subject to
additional patent infringement claims involving various aspects of our business as our products and services
continue to expand in scope and complexity. Such claims may be brought directly or indirectly against our
companies and/or against our customers (who may be entitled to contractual indemnification under their
contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions and
divestitures and in cases where we are entering new lines of business. We have in the past been forced to
litigate such claims. We may also become more vulnerable to third-party claims as laws such as the Digital
Millennium Copyright Act, the Lanham Act and the Communications Decency Act are interpreted by the
courts, and as we expand the scope of our business (both in terms of the range of products and services that
we offer and our geographical operations) and become subject to laws in jurisdictions where the underlying
laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less
favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark
laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and
costly to defend and resolve, could require expensive changes in our methods of doing business or could
require us to enter into costly royalty or licensing agreements on unfavorable terms.

From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary
course of business, including suits by our users (individually or as class actions) alleging, among other things,
improper disclosure of our prices, rules or policies, that our practices, prices, rules, policies or customer/user
agreements violate applicable law or that we have acted unfairly and/or not acted in conformity with such
practices, prices, rules, policies or agreements. Further, the number and significance of these disputes and
inquiries are increasing as the political and regulatory landscape changes and, as we have grown larger, our
businesses have expanded in scope (both in terms of the range of products and services that we offer and
our geographical operations) and our products and services have increased in complexity. Any claims or

29

regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation,
damage awards (including statutory damages for certain causes of action in certain jurisdictions), injunctive
relief or increased costs of doing business through adverse judgment or settlement, require us to change our
business practices in expensive ways, require significant amounts of management time, result in the diversion
of significant operational resources or otherwise harm our business.

Indemnification Provisions

We entered into a separation and distribution agreement and various other agreements with PayPal to
govern the separation and relationship of the two companies. These agreements provide for specific
indemnity and liability obligations and could lead to disputes between us and PayPal, which may be
significant. In addition, the indemnity rights we have against PayPal under the agreements may not be
sufficient to protect us and our indemnity obligations to PayPal may be significant.

In addition, we have entered into indemnification agreements with each of our directors, executive
officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest
extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their
affiliation with us.

In the ordinary course of business, we have included limited indemnification provisions in certain of our
agreements with parties with which we have commercial relations,
including our standard marketing,
promotions and application-programming-interface license agreements. Under these contracts, we generally
indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the
indemnified party in connection with claims by a third party with respect to our domain names, trademarks,
logos and other branding elements to the extent that such marks are applicable to our performance under the
subject agreement. In certain cases, we have agreed to provide indemnification for intellectual property
loss under these indemnification
infringement.
provisions due to our limited history of prior indemnification claims and the unique facts and circumstances
involved in each particular provision.

It is not possible to determine the maximum potential

To date, losses recorded in our consolidated statement of income in connection with our indemnification

provisions have not been significant, either individually or collectively.

ITEM 4: MINESAFETYDISCLOSURES

Not applicable.

30

PART II

ITEM 5: MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUER

PURCHASESOFEQUITYSECURITIES

CommonStock

Our common stock has been traded on The Nasdaq Global Select Market under the symbol “EBAY” since
September 24, 1998. As of January 25, 2019, there were approximately 3,661 holders of record of our common
stock, although we believe that there are a significantly larger number of beneficial owners of our common
stock.

DividendPolicy

To date, we have not paid cash dividends on our stock. In January 2019, our Board of Directors initiated a
quarterly cash dividend of $0.14 per share of common stock to be paid on or about March 20, 2019 to
shareholders of record as of March 1, 2019. The timing, declaration, amount and payment of any future cash
dividends are at the discretion of the Board of Directors and will depend on many factors, including our
available cash, working capital, financial condition, results of operations, capital requirements, covenants in
our credit agreement, applicable law and other business considerations that our Board of Directors considers
relevant. See “We cannot assure that we will continue to pay dividends on our common stock” under “Item 1A.
Risk Factors.”

PerformanceMeasurementComparison

The graph below shows the cumulative total stockholder return of an investment of $100 (and the
reinvestment of any dividends thereafter) on December 31, 2013 (the last trading day for the year ended
December 31, 2013) in (i) our common stock, (ii) the Nasdaq Composite Index, (iii) the S&P 500 Index and
(iv) the S&P 500 Information Technology Index. For the purpose of this graph, the distribution of 100% of the
outstanding common stock of PayPal Holdings, Inc. (“PayPal”) to our stockholders, pursuant to which PayPal
became an independent company, is treated as a non-taxable cash dividend of $41.46, an amount equal to
the opening price of PayPal common stock on July 20, 2015 which was deemed reinvested in eBay common
stock at the opening price on July 20, 2015.

Our stock price performance shown in the graph below is not indicative of

future stock price
performance. The graph and related information shall not be deemed “soliciting material” or be deemed to be
“filed” with the SEC, nor shall such information be incorporated by reference into any past or future filing with
the SEC, except to the extent that such filing specifically states that such graph and related information are
incorporated by reference into such filing.

r
a
l
l

o
D

.

.

S
U

$250

$200

$150

$100

$50

$0

12/31/13

12/31/14

12/31/15

12/31/16

12/31/17

12/31/18

eBay

S&P North America Technology Internet Index

Nasdaq Composite Index

S&P 500 Index

31

 
PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasers

Stock repurchase activity during the three months ended December 31, 2018 was as follows:

Period Ended

October 31, 2018

November 30, 2018

December 31, 2018

Total Number of
Shares Purchased

Average Price Paid per
Share (2)

—

28,893,212

22,930,017

51,823,229

$ —

$28.96

$ 28.91

Total Number of
Shares Purchased as
Part of Publicly
Announced Programs

Maximum Dollar Value
that May Yet
be Purchased Under
the Programs (1)

—

28,893,212

22,930,017

51,823,229

$4,650,996,317

$ 3,814,130,578

$ 3,151,117,766

(1)

In January 2018 our Board authorized a $6.0 billion stock repurchase program. The stock repurchase program has no expiration from the date of
authorization.

Our stock repurchase program is intended to programmatically offset the impact of dilution from our equity compensation programs and, subject to
market conditions and other factors, to make opportunistic and programmatic repurchases of our common stock to reduce our outstanding share
count. Any share repurchases under our stock repurchase program may be made through open market transactions, block trades, privately negotiated
transactions (including accelerated share repurchase transactions) or other means at times and in such amounts as management deems appropriate
and will be funded from our working capital or other financing alternatives.

During the three months ended December 31, 2018, we repurchased approximately $1.5 billion of our common stock under our stock repurchase
program. As of December 31, 2018, a total of approximately $3.2 billion remained available for future repurchases of our common stock under our stock
repurchase program. In January 2019, our Board authorized an additional $4.0 billion stock repurchase program, with no expiration from the date of
authorization.

We expect, subject to market conditions and other uncertainties, to continue making opportunistic and programmatic repurchases of our common
stock. However, our stock repurchase programs may be limited or terminated at any time without prior notice. The timing and actual number of shares
repurchased will depend on a variety of factors, including corporate and regulatory requirements, price and other market conditions and management’s
determination as to the appropriate use of our cash.

(2) Excludes broker commissions.

32

ITEM 6: SELECTEDFINANCIALDATA

The following selected consolidated financial data should be read in conjunction with the consolidated
financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K. The consolidated
statement of income data for the years ended December 31, 2018, 2017 and 2016 are derived from our audited
consolidated financial statements. The consolidated balance sheet data as of December 31, 2018 and 2017 are
derived from our audited consolidated financial statements. The consolidated balance sheet data as of
December 31, 2016 has been derived from our audited consolidated financial statements adjusted for the
adoption of the ASC 606, RevenuefromContractswithCustomers(ASC 606). The consolidated statement of
income data and consolidated balance sheet data as of and for the years ended December 31, 2015 and 2014
are derived from our audited consolidated financial statements, which have not been adjusted for ASC 606.

Consolidated Statement of Income Data: (1)

Net revenues

Gross profit

Income from operations

Income from continuing operations before income taxes

Income (loss) from continuing operations

Income (loss) per share from continuing operations:

Basic

Diluted

Weighted average shares:

Basic

Diluted

Year Ended December 31,

2018 (5)

2017 (3)(6)

2016 (3)(7)

2015

2014 (8)

(In millions, except per share amounts)

$10,746 $9,927 $9,298 $8,592 $8,790

8,364

2,222

2,718

2,528

7,706

2,264

2,275

7,294

2,325

3,651

(1,013)

7,285

6,821

2,197

2,406

1,947

7,127

2,476

2,515

(865)

$ 2.58 $ (0.95) $ 6.43 $

1.61 $ (0.69)

$ 2.55 $ (0.95) $ 6.37 $ 1.60 $ (0.69)

980

991

1,064

1,064

1,133

1,144

1,208

1,220

1,251

1,251

33

Consolidated Balance Sheet Data: (1)

Cash and cash equivalents

Short-term investments

Long-term investments

Working capital—continuing operations

Working capital—discontinued operations

Working capital total (2)

Total assets—continuing operations

Total assets—discontinued operations

Total assets

Short-term debt

Long-term debt

Total stockholders’ equity (4)

2018 (5)

2017 (3)(6)

2016 (3)(7)

2015

2014 (8)

As of December 31,

(In millions)

$ 2,202 $ 2,120 $ 1,816

$ 1,832 $ 4,105

2,713

3,778

2,672

—

3,743

6,331

4,185

—

5,333

3,969

5,010

—

4,299

3,391

5,641

—

2,672

4,185

5,010

5,641

22,819

25,986

23,851

17,785

—

—

—

—

22,819

25,986

23,851

17,785

1,546

7,685

6,281

781

9,234

8,049

1,451

7,509

10,526

—

6,779

6,576

3,730

5,736

4,463

4,537

9,000

21,716

23,416

45,132

850

6,777

19,906

(1)

Includes the impact of acquisitions and dispositions. For a summary of recent significant acquisitions and dispositions, please see “Note 3—Business
Combinations” to the consolidated financial statements included in this report.

Includes the impact of the Distribution of PayPal on July 17, 2015.

(2) Working capital is calculated as the difference between total current assets and total current liabilities.
(3) Reflects the impact of the adoption of the new revenue recognition accounting standard in 2018. Periods prior to 2016 have not been revised.
(4)
(5) The consolidated balance sheet data as of December 31, 2018 includes the impact of a $463 million reduction to the provisional current and deferred tax
liabilities recorded in the fourth quarter of 2017 and a $120 million reduction in 2018 to the deferred tax asset recognized in 2017 as a result of a tax rate
change. The consolidated statement of income data for the year ended December 31, 2018 includes a $463 million income tax benefit and $120 million
tax expense associated with such current and deferred tax liabilities and assets, respectively.

(6) The consolidated balance sheet data as of December 31, 2017 includes the impact of a $695 million deferred tax asset recognized in 2017 as a result of
our voluntary domiciling our Classifieds intangible assets into a new jurisdiction. The consolidated statement of income data for the year ended
December 31, 2017 includes a $695 million income tax benefit associated with such deferred tax asset, $376 million caused by the foreign exchange
remeasurement of our deferred tax assets and a $3.1 billion provisional tax expense associated with the enactment of the Tax Cuts and Jobs Act.

(7) The consolidated balance sheet data for the year ended December 31, 2016 includes the impact of a $4.6 billion deferred tax asset recognized in 2016 as
a result of our election to terminate an existing tax ruling and finalize a new agreement with the foreign tax authority. The consolidated statement of
income data for the year ended December 31, 2016 includes a $4.6 billion income tax benefit associated with such deferred tax asset.

(8) The consolidated statement of income data for the year ended December 31, 2014 includes an income tax provision of approximately $3.0 billion to

recognize deferred tax liabilities on $9.0 billion of undistributed foreign earnings of certain of our foreign subsidiaries for 2013.

34

ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

FORWARD-LOOKING STATEMENTS

ThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27A
oftheSecuritiesActof1933andSection21EoftheSecuritiesExchangeActof1934,includingstatementsthat
involve expectations, plans or intentions (such as those relating to future business, future results of
operations or financial condition, new or planned features or services, or management strategies). You can
identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,”
“expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These forward-
lookingstatementsinvolverisksanduncertaintiesthatcouldcauseouractualresultstodiffermateriallyfrom
those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among
others, those discussed in “Item 1A: Risk Factors” of this Annual Report on Form 10-K, as well as in our
consolidatedfinancialstatements,relatednotes,andtheotherinformationappearingelsewhereinthisreport
and our other filings with the Securities and Exchange Commission. We do not intend, and undertake no
obligation, to update any of our forward-looking statements after the date of this report to reflect actual
results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. You should read the following Management’s
DiscussionandAnalysisofFinancialConditionandResultsofOperationsinconjunctionwiththeconsolidated
financialstatementsandtherelatednotesincludedinthisreport.

OVERVIEW

Business

eBay Inc.

is a global commerce leader, which includes our Marketplace, StubHub and Classifieds
platforms. Our Marketplace platforms include our online marketplace located at www.ebay.com, its localized
counterparts and the eBay suite of mobile apps. Our StubHub platforms include our online ticket platform
located at www.stubhub.com, its localized counterparts and the StubHub mobile apps. Our Classifieds
platforms include a collection of brands such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen
and others.

Seasonality

We expect transaction activity patterns on our platforms to mirror general consumer buying patterns and
expect that these trends will continue. The following table sets forth, for the periods presented, our total net
revenues and the sequential quarterly movements of these net revenues (in millions, except percentages):

2016

Net revenues

Percent change from prior quarter

2017

Net revenues

Percent change from prior quarter

2018

Net revenues

Percent change from prior quarter

March 31

June 30 September 30 December 31

Quarter Ended

$ 2,216

$2,309

$2,299

(5)%

4%

0%

$2,303

$ 2,419

$2,498

(7)%

5%

3%

$2,580

$2,640

$2,649

(5)%

2%

0%

$2,474

8%

$2,707

8%

$2,877

9%

35

ImpactofForeignCurrencyExchangeRates

Our commerce platforms operate globally, resulting in certain revenues that are denominated in foreign
currencies, primarily the euro, British pound, Korean won and Australian dollar, subjecting us to foreign
currency risk which may impact our financial results. Because of this and the fact that we generate a majority
of our net revenues internationally, including during the years ended December 31, 2018, 2017 and 2016, we
are subject to the risks related to doing business in foreign countries as discussed under “Item 1A: Risk
Factors.”

In addition to the corresponding measures under generally accepted accounting principles (“GAAP”),
management uses non-GAAP measures in reviewing our financial results. The foreign exchange neutral (“FX-
Neutral”), or constant currency, net revenue amounts discussed below are non-GAAP financial measures and
are not in accordance with, or an alternative to, measures prepared in accordance with GAAP. Accordingly,
the FX-Neutral information appearing in the following discussion of our results of operations should be read in
conjunction with the information provided below in “Non-GAAP Measures of Financial Performance,” which
includes reconciliations of FX-Neutral financial measures to the most directly comparable GAAP measures.
We calculate the year-over-year impact of foreign currency movements using prior period foreign currency
rates applied to current year transactional currency amounts.

The effect of foreign currency exchange rate movements during 2018 was primarily attributable to the

weakening of the U.S. dollar against the euro, British pound and Korean won.

FiscalYearHighlights

Net revenues increased 8% to $10.7 billion in 2018 compared to 2017, primarily driven by Marketplace net
transaction revenues and Classifieds marketing services and other revenues. FX-Neutral net revenue (as
defined below) increased 6% in 2018 compared to 2017. Operating margin decreased to 20.7% in 2018
compared to 22.8% in 2017.

In the third quarter of 2018, we sold our investment in Flipkart and received gross proceeds of $1.0 billion.
We generated cash flow from continuing operating activities of $2.7 billion in 2018 compared to $3.1 billion in
2017, ending the year with cash, cash equivalents and non-equity investments of $8.6 billion.

In the fourth quarter of 2018, we completed our analysis of the impacts of U.S. tax reform in the fourth
quarter and recognized a $463 million reduction to the provisional tax amounts recorded in the fourth quarter
of 2017, which is included as a component of income tax expense from continuing operations.

Diluted earnings per share from continuing operations was $2.55 in 2018 compared to diluted loss per
share of $0.95 in 2017. In January 2019, our Board of Directors initiated a quarterly cash dividend of $0.14 per
share of common stock to be paid on or about March 20, 2019 to shareholders of record as of March 1, 2019.

36

RESULTS OF OPERATIONS

NetRevenues

We generate two types of net revenues: net transaction revenues and marketing services and other
(“MS&O”) revenues. Net transaction revenues are derived principally from final value fees (which are fees
payable on transactions closed on our Marketplace and StubHub platforms), listing fees and other service
fees. MS&O revenues consist of Marketplace, StubHub and Classifieds revenue principally from the sale of
advertisements, vehicles classifieds listing on Marketplace platforms, revenue sharing arrangements,
classifieds fees and marketing service fees. Revenues are attributed to U.S. and international geographies
primarily based upon the country in which the seller, platform that displays advertising, other service provider
or customer, as the case may be, is located. To drive traffic to our platforms, we provide incentives to our
users, including discounts, coupons and rewards. If an incentive is considered a payment to a customer it is
treated as a reduction in revenue.

The following table presents net revenues by type and geography (in millions, except percentages):

Net Revenues by Type:

Net transaction revenues:

Marketplace (1)

StubHub

Total net transaction revenues

Marketing services and other revenues:

Marketplace

Classifieds

StubHub, Corporate and other

Total marketing services and other

revenues

Total net revenues

Net Revenues by Geography:

U.S.

International

Total net revenues

2018

% Change

2017

% Change

2016

Year Ended December 31,

$ 7,416

1,068

8,484

1,225

1,022

15

2,262

$10,746

$ 4,373

6,373

$10,746

9 %

6 %

8 %

3 %

14 %

(17)%

7 %

8 %

4 %

11 %

8 %

$6,809

1,011

7,820

1,192

897

18

2,107

$ 9,927

$ 4,187

5,740

$ 9,927

6%

8%

6%

5%

13%

**

9%

7%

6%

8%

7%

$6,425

938

7,363

1,137

791

7

1,935

$9,298

$3,967

5,331

$9,298

** Not meaningful
(1) Marketplace net transaction revenues were net of $8 million and $28 million of hedging activity in 2018 and 2017, respectively. There were no hedging
activities within net revenues during 2016. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk for further discussion of our hedging
activity.

37

The following table presents certain key operating metrics that we believe are significant factors affecting

our net transaction revenues (in millions, except percentages):

Supplemental Operating Data:

GMV (1):

Marketplace

StubHub

Total GMV

Transaction take rate:

Marketplace (2)

StubHub (3)

Total transaction take rate (4)

Year Ended December 31,

2018

% Change

2017

% Change

2016

$ 89,829

4,751

$ 94,580

7%

5%

7%

$ 83,883

6% $ 79,178

4,520

5%

4,310

$ 88,403

6% $83,488

8.25%

22.48%

8.97%

0.13%

0.11%

0.12%

8.12%

0.01%

22.37% 0.60%

8.85% 0.03%

8.11%

21.77%

8.82%

(1) We define Gross Merchandise Volume (“GMV”) as the total value of all successfully closed transactions between users on our Marketplace and StubHub
platforms during the applicable period regardless of whether the buyer and seller actually consummated the transaction. We believe that GMV provides
a useful measure of the overall volume of closed transactions that flow through our platforms in a given period, notwithstanding the inclusion in GMV of
closed transactions that are not ultimately consummated.

(2) We define Marketplace transaction take rate as Marketplace net transaction revenues divided by Marketplace GMV.
(3) We define StubHub transaction take rate as StubHub net transaction revenues divided by StubHub GMV.
(4) We define total transaction take rate as total net transaction revenues divided by GMV.

NetTransactionRevenues

The following table presents total net transaction revenues and supplemental operating data (in millions,

except percentages):

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2017

2016

% Change

As
Reported

FX-
Neutral

Total net transaction revenues

8,484

7,820

8%

7%

7,820

7,363

6%

7%

Percentageofnetrevenues

79% 79%

79% 79%

Total GMV

94,580 88,403

7%

5%

88,403 83,488

6%

6%

Total transaction take rate

8.97% 8.85% 0.12%

8.85% 8.82% 0.03%

The changes in net transaction revenues and total transaction take rate were primarily driven by our

Marketplace platform as further discussed below.

Net transaction revenues earned internationally totaled $4.7 billion, $4.2 billion and $4.0 billion in 2018,
2017 and 2016, respectively, representing 55%, 54% and 55% of total net transaction revenues in the
respective periods. The increase in net transaction revenues earned internationally as a percentage of total
net transaction revenues in 2018 compared to 2017 was primarily driven by a favorable impact from foreign
currency movements relative to the U.S. dollar. The decrease in net
transaction revenues earned
internationally as a percentage of total net transaction revenue in 2017 compared to 2016 was primarily driven
by an unfavorable impact from foreign currency movements relative to the U.S. dollar.

38

MarketplaceNetTransactionRevenues

The following table presents Marketplace net transaction revenues and supplemental operating data (in

millions, except percentages):

Marketplace net transaction

revenues

Marketplace GMV

Marketplace take rate

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2017

2016

% Change

As
Reported

FX-
Neutral

7,416

6,809

89,829

83,883

9%

7%

7%

5%

6,809

6,425

83,883

79,178

6%

6%

7%

6%

8.25%

8.12%

0.13%

8.12%

8.11%

0.01%

The increase in Marketplace net transaction revenues in 2018 compared to 2017 was primarily due to an
increase in Marketplace GMV and a favorable impact from foreign currency movements relative to the U.S.
dollar. Marketplace transaction take rate was higher in 2018 compared to 2017, primarily due to growth in
promoted listing fees, which along with final value fees are calculated as a percentage of an items sale price,
and a decrease in seller incentives, partially offset by a decrease in revenues from final value fees attributable
to pricing and category mix.

The increase in Marketplace net transaction revenues in 2017 compared to 2016 was primarily due to
Marketplace GMV growth, partially offset by hedging activity and an unfavorable impact from foreign
currency movements relative to the U.S. dollar. Marketplace transaction take rate in 2017 compared to 2016
was relatively flat.

StubHubNetTransactionRevenues

The following table presents StubHub net transaction revenues and supplemental operating data (in

millions, except percentages):

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2017

2016

% Change

As
Reported

FX-
Neutral

StubHub net transaction

revenues

StubHub GMV

1,068

4,751

1,011

4,520

6%

5%

6%

5%

1,011

4,520

938

4,310

8%

5%

8%

5%

StubHub take rate

22.48% 22.37%

0.11%

22.37% 21.77%

0.60%

The increase in StubHub net transaction revenues in 2018 compared to 2017 was primarily due to an
increase in StubHub GMV. The increase in StubHub GMV in 2018 compared to 2017 was primarily driven by
concerts and sporting events. The increase in StubHub transaction take rate in 2018 compared to 2017 was
primarily due to pricing changes on the platform.

The increase in StubHub net transaction revenues in 2017 compared to 2016 was primarily due to an
increase in StubHub take rate and StubHub GMV. The increase in StubHub transaction take rate in 2017
compared to 2016 was primarily due to pricing changes and a decrease in our buyer incentives, which are
accounted for as a reduction of revenue. The increase in StubHub GMV in 2017 compared to 2016 was
primarily driven by theater and concerts, partially offset by sporting events.

39

MarketingServicesandOtherRevenues

The following table presents MS&O revenues (in millions, except percentages):

MS&O revenues:

Marketplace

Classifieds

StubHub, Corporate and other

Total MS&O revenues

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2017

2016

% Change

As
Reported

FX-
Neutral

$ 1,225 $ 1,192

1,022

15

897

18

$2,262 $2,107

3 %

14 %

(17)%

7 %

1 % $ 1,192 $ 1,137

10 %

(18)%

897

18

791

7

5 % $2,107 $1,935

5%

13%

**

9%

5%

12%

**

8%

Percentageofnetrevenues

21% 21%

21% 21%

MarketplaceMS&ORevenues

The increase in Marketplace MS&O revenues in 2018 compared to 2017 was primarily driven by an
increase in revenues attributable to our first-party inventory program in Korea and revenue sharing
arrangements, particularly shipping, partially offset by a decrease in advertising revenues that was driven by
our ongoing shift to promoted listing fees, which are recognized in net transaction revenues. The increase in
Marketplace MS&O revenues in 2017 compared to 2016 was primarily driven by an increase in revenues
attributable to our first-party inventory program in Korea and, to a lesser extent, our Brands4friends online
shopping community.

ClassifiedsMS&ORevenues

The increases in Classifieds MS&O revenues in 2018 compared to 2017 and in 2017 compared to 2016 was
primarily driven by increased revenue from our Classifieds horizontal and vertical motors platforms primarily
in Germany.

CostofNetRevenues

Cost of net revenues primarily consists of costs associated with customer support, site operations, costs
of goods sold and payment processing. Significant components of
these costs include employee
compensation, contractor costs, facilities costs, depreciation of equipment and amortization expense, first
party inventory costs, bank transaction fees, and credit card interchange and assessment fees. The following
table presents cost of net revenues (in millions, except percentages):

Cost of net revenues

As a percentage of net revenues

Year Ended December 31,

2018

% Change

2017

% Change

2016

$ 2,382

7%

$ 2,221

11%

$2,004

22.2%

22.4%

21.6%

The increase in cost of net revenues in 2018 compared to 2017 was primarily due to an increase in site
operation and payment processing costs as we increased our investments in our business, and an increase in
costs of goods sold driven by our first-party inventory program in Korea.

The increase in cost of net revenues in 2017 compared to 2016 was primarily due to an increase in costs of
goods sold driven by our first-party inventory program in Korea and our Brands4friends online shopping
community and increased investments in site operations.

Cost of net revenues was unfavorably impacted by $34 million attributable to foreign currency
movements relative to the U.S. dollar in 2018. Cost of net revenues, net of $3 million from hedging activities,
was unfavorably impacted by $19 million attributable to foreign currency movements relative to the U.S. dollar
in 2017 compared to 2016. There was no hedging activity within cost of net revenues in 2018.

40

OperatingExpenses

The following table presents operating expenses (in millions, except percentages):

Sales and marketing

Percentageofnetrevenues

Product development

Percentageofnetrevenues

General and administrative

Percentageofnetrevenues

Provision for transaction losses

Percentageofnetrevenues

Amortization of acquired intangible assets

Total operating expenses

Year Ended December 31,

2018 % Change

2017

% Change

2016

$3,391

18%

$2,878

7%

$ 2,691

32%

1,285

12%

1,131

11%

286

3%

49

$6,142

5%

10%

5%

27%

13%

29%

1,224

12%

1,030

10%

272

3%

38

$5,442

10%

15%

18%

12%

10%

29%

1,114

12%

899

10%

231

2%

34

$4,969

Operating expenses were unfavorably impacted by $68 million attributable to foreign currency
movements relative to the U.S. dollar in 2018 compared to 2017. Operating expenses, net of $8 million from
hedging activities, were unfavorably impacted by $14 million attributable to foreign currency movements
relative to the U.S. dollar in 2017 compared to 2016. There was no hedging activity within operating expenses
in 2018.

SalesandMarketing

Sales and marketing expenses primarily consist of advertising and marketing program costs (both online
and offline), employee compensation, certain user coupons and rewards, contractor costs, facilities costs
and depreciation on equipment. Online marketing expenses represent traffic acquisition costs in various
channels such as paid search, affiliates marketing and display advertising. Offline advertising primarily
includes brand campaigns and buyer/seller communications.

The increase in sales and marketing expense in 2018 compared to 2017 was primarily due to an increase
in user coupons and rewards and traffic acquisition costs. The increase in sales and marketing expense in
2017 compared to 2016 was primarily due to an increase in brand spend and employee-related costs.

ProductDevelopment

Product development expenses primarily consist of employee compensation, contractor costs, facilities
costs and depreciation on equipment. Product development expenses are net of required capitalization of
major platform and other product development efforts, including the development and maintenance of our
technology platform. Our top technology priorities include payment intermediation capabilities and improved
seller tools and buyer experiences built on a foundation of structured data and leveraging artificial
intelligence and computer vision.

Capitalized internal use and platform development costs were $147 million and $140 million in 2018 and

2017, respectively, and are primarily reflected as a cost of net revenues when amortized in future periods.

The increase in product development expenses in 2018 compared to 2017 was primarily due to an
increase in employee-related costs, partially offset by a decrease in depreciation on equipment. The increase
in product development expenses in 2017 compared to 2016 was primarily due to an increase in employee-
related costs.

41

GeneralandAdministrative

General and administrative expenses primarily consist of employee compensation, contractor costs,
facilities costs, depreciation of equipment, employer payroll taxes on stock-based compensation, legal
expenses, restructuring, insurance premiums and professional fees. Our legal expenses, including those
related to various ongoing legal proceedings, may fluctuate substantially from period to period.

The increase in general and administrative expenses in 2018 compared to 2017 was primarily due to
restructuring costs related to our global workforce reduction and an increase in employee-related costs. For
additional details related to the restructuring, refer to “Note 17 – Restructuring” to the consolidated financial
statements included in this report.

The increase in general and administrative expenses in 2017 compared to 2016 was primarily due to
increased data, information security and employee-related costs, as well as costs related to the integration of
prior period acquisitions and realignment of our legal structure.

ProvisionforTransactionLosses

Provision for transaction losses primarily consists of transaction loss expense associated with our buyer
protection programs, fraud and bad debt expense associated with our accounts receivable balance. We
expect our provision for transaction losses to fluctuate depending on many factors, including changes to our
protection programs and the impact of regulatory changes.

The increase in provision for transaction losses in 2018 compared to 2017 was not significant. The
increase in provision for transaction losses in 2017 compared to 2016 was primarily due to higher customer
protection program costs and an increase in costs related to uncollectible accounts.

InterestandOther,Net

Interest and other, net primarily consists of interest earned on cash, cash equivalents and investments, as
well as foreign exchange transaction gains and losses, gains and losses due to changes in fair value of the
warrant received from a service provider, our portion of operating results from investments accounted for
under the equity method of accounting, investment gain/loss on acquisitions or disposals and interest
expense, consisting of interest charges on any amounts borrowed and commitment fees on unborrowed
amounts under our credit agreement and interest expense on our outstanding debt securities and
commercial paper,
if any. The following table presents interest and other, net (in millions, except
percentages):

Interest income

Interest expense

Gains on investments and sale of business

Other

Total interest and other, net

Year Ended December 31,

2018 % Change

2017 % Change

2016

$ 176

(326)

663

(17)

$ 496

(1)%

12%

**

**

**

$ 177

(292)

115

11

11

$

42%

30%

(91)%

(87)%

(99)%

$ 125

(225)

1,343

83

$1,326

The increase in interest and other, net in 2018 compared to 2017 was primarily attributable to the $313
million gain recognized on the sale of our investment in Flipkart and $266 million gain recognized upon
relinquishment of our existing equity method investment in Giosis and $104 million gain recognized due to the
change in fair value of the warrant.

The decrease in interest and other, net in 2017 compared to 2016 was primarily due to the $1.3 billion pre-

tax gain from the sale of our equity holdings of MercadoLibre, Inc. in 2016.

42

IncomeTaxProvision

The following table presents provision for income taxes (in millions, except percentages):

Income tax provision (benefit)

Effectivetaxrate

Year Ended December 31,

2018

2017

2016

$ 190

$ 3,288 $ (3,634)

7.0% 144.5% (99.5)%

The decrease in our effective tax rate in 2018 compared to 2017 was primarily due to the $3.1 billion
provisional tax charge related to the Tax Cuts and Jobs Act (the “Act” or “U.S. tax reform”) recorded in 2017.
In 2018, as we completed our analysis of U.S. tax reform, we recorded a $463 million reduction to the
provisional tax amounts recorded in 2017. Further, the 2018 effective tax rate was favorably impacted by U.S.
tax reform and the gain recognized from the relinquishment of our existing equity method investment in
Giosis in the second quarter 2018 that is not subject to U.S. federal income tax on a current basis.

The increase in our effective tax rate in 2017 compared to 2016 was primarily due to a $3.1 billion
provisional tax charge for the impacts of U.S. tax reform. Additionally, the 2017 effective tax rate was
impacted by the increase in our foreign tax rate as we no longer benefit from certain tax rulings and a noncash
income tax charge of $376 million due to the foreign exchange remeasurement of our deferred tax assets,
partially offset by the recognition in the first quarter of 2017 of deferred tax assets of approximately $695
million.

As a result of the realignment of our legal structure in 2016 and 2017, we no longer benefit from tax rulings
previously concluded in several different jurisdictions. Without the benefit of the rulings, the noncash tax
impacts of the realignment in our foreign eBay and Classifieds platforms have increased our income tax rate
in certain foreign jurisdictions, most significantly Switzerland. The higher rate results from eBay being subject
to a higher enacted tax rate for the foreseeable future.

While our tax rate is higher, the realignment allows us to achieve certain foreign cash tax benefits due to
the step-up in tax basis achieved in certain foreign jurisdictions. We expect these cash tax benefits to remain
consistent, subject to the performance of our foreign platforms, for a period in excess of 10 years. The
realignment was substantially completed in 2018 and primarily impacted our international entities. However,
U.S. tax reform and the new U.S. minimum tax on foreign earnings has reduced our expected consolidated
cash tax benefits.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. U.S. tax reform, among other things,
reduces the U.S. federal income tax rate from 35% to 21% in 2018, instituted a dividends received deduction
for foreign earnings with a related tax for the deemed repatriation of unremitted foreign earnings in 2017 and
created a new U.S. minimum tax on earnings of foreign subsidiaries. We recognized a provisional income tax
charge of $3.1 billion in the fourth quarter of 2017, which was included as a component of the income tax
provision on our consolidated statement of income. We completed our analysis of the impacts of U.S. tax
reform in the fourth quarter of 2018 and recognized a $463 million reduction to the provisional tax amounts
recorded in the fourth quarter of 2017, which is included as a component of income tax expense from
continuing operations.

Included in the provisional amount was $1.4 billion for the income tax on the deemed repatriation of
unremitted foreign earnings. We completed the computation of this amount as part of the 2017 income tax
return filing and reduced the provisional amount by $18 million. Additionally, we utilized $213 million of foreign
tax credits to reduce the net liability.

The remaining provisional amount of $1.7 billion was for the deferred income tax effects of the Act,
primarily the impact of the new U.S. minimum tax on foreign earnings, partially offset by the reversal of our
existing deferred tax liability associated with repatriation of unremitted foreign earnings. We completed our
analysis of the components of the deferred tax computation in the fourth quarter of 2018 and recognized a tax
benefit of $445 million as a reduction to the provisional amounts recorded in the fourth quarter of 2017 for the

43

deferred income tax effects of the Act. This amount includes a $389 million tax benefit as a result of
clarification by Swiss tax authorities regarding the applicability of withholding tax to repatriated earnings in
October 2018.

As a result of U.S. tax reform, our earnings in foreign jurisdictions are taxed at substantially the same rate
as the U.S. federal statutory tax rate of 21%. In prior years, our provision for income taxes differed from the
provision computed by applying the U.S. federal statutory rate of 35% primarily due to lower tax rates
associated with certain earnings from our operations in jurisdictions outside the U.S. The impact on our
provision for income taxes of foreign income being taxed at different rates that the U.S. federal statutory rate
was a benefit of approximately $217 million in 2017 and $451 million in 2016. In those years, the foreign
jurisdictions with lower tax rates that had the most significant impact on our provision for income taxes in the
periods presented include Switzerland. See “Note 14 — Income Taxes” to the consolidated financial
statements included in this report for more information on our tax rate reconciliation.

Our relative pretax earnings and revenues attributable to the U.S. as compared to the rest of the world
may differ over time. In general, these differences are attributable to higher amortization of U.S. based
intangible assets, larger stock-based compensation expense recorded in the U.S. for U.S. based employees,
overhead related to our corporate operations which are primarily U.S. based and higher average margins
earned by non-U.S. businesses. Our U.S. share of pretax income and net revenues was 11.0% and 40.7%,
respectively for 2018 and 18.4% and 42.8% for 2017. The difference in relative pretax income and net revenues
attributable to the U.S. as compared to the rest of the world for 2018 and 2017 was primarily due to the general
drivers discussed above.

From time to time we engage in certain intercompany transactions. We consider many factors when
evaluating these transactions. These transactions may impact our tax rate and/or result in additional cash tax
payments. The impact in any period may be significant. These transactions are complex and the impact of
such transactions on future periods may be difficult to estimate.

We are regularly under examination by tax authorities both domestically and internationally. We believe
that adequate amounts have been reserved for any adjustments that may ultimately result from these
examinations, although we cannot assure you that this will be the case given the inherent uncertainties in
these examinations. Due to the ongoing tax examinations, it is generally impractical to determine the amount
and timing of these adjustments. However, we expect several tax examinations to close within the next
twelve months. See “Note 14 — Income Taxes” to the consolidated financial statements included in this report
for more information on estimated settlements within the next twelve months.

Non-GAAPMeasuresofFinancialPerformance

To supplement our consolidated financial statements presented in accordance with generally accepted
accounting principles we use FX-Neutral net revenues, which are non-GAAP financial measures. Management
uses the foregoing non-GAAP measures in reviewing our financial results. We define FX-Neutral net revenues
as net revenues minus the exchange rate effect. We define exchange rate effect as the year-over-year
impact of foreign currency movements using prior period foreign currency rates applied to current year
transactional currency amounts, excluding hedging activity.

These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in
accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition,
these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-
GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP. These measures should only be used to evaluate our
results of operations in conjunction with the corresponding GAAP measures.

These non-GAAP measures are provided to enhance investors’ overall understanding of our current
financial performance and its prospects for the future. Specifically, we believe these non-GAAP measures
provide useful information to both management and investors by excluding the foreign currency exchange
rate impact that may not be indicative of our core operating results and business outlook. In addition,
because we have historically reported certain non-GAAP results to investors, we believe that the inclusion of
these non-GAAP measures provide consistency in our financial reporting.

44

The following tables set forth a reconciliation of FX-Neutral GMV and FX-Neutral net revenues (each as
defined below) to our reported GMV and net revenues for the periods presented (in millions, except
percentages):

GMV:

Marketplace

StubHub

Total GMV

Net transaction revenues:

Marketplace

StubHub

Total net transaction revenues

Marketing services and other revenues:

Marketplace

Classifieds

StubHub, Corporate and other

Total marketing services and other

revenues

Year Ended
December 31, 2018

Year Ended
December 31, 2017

As
Reported

Exchange
Rate

Effect(1)(3) FX-Neutral(2)

$89,829

$1,659

$88,170

4,751

5

4,746

$94,580 $1,664

$ 92,916

As
Reported

$83,883

4,520

$88,403

$ 7,416

$ 118

$ 7,298

$ 6,809

1,068

8,484

1,225

1,022

15

2,262

1

119

22

33

—

55

1,067

8,365

1,203

989

15

2,207

1,011

7,820

1,192

897

18

2,107

Total net revenues

$ 10,746

$ 174

$10,572

$ 9,927

As
Reported
%
Change

FX-Neutral
%
Change

7%

5%

7%

9%

6%

8%

3%

14%

(17)%

7%

8%

5%

5%

5%

7%

6%

7%

1%

10%

(18)%

5%

6%

Year Ended
December 31, 2017

Year Ended
December 31, 2016

As
Reported

Exchange
Rate

Effect(1)(3) FX-Neutral(2)

As Reported

As
Reported
%
Change

FX-Neutral
% Change

GMV:

Marketplace

StubHub

Total GMV

Net transaction revenues:

Marketplace

StubHub

Total net transaction revenues

Marketing services and other revenues:

Marketplace

Classifieds

StubHub, Corporate and other

Total marketing services and other

revenues

$83,883

$(224)

$ 84,107

$ 79,178

4,520

(5)

4,525

4,310

$88,403

$(229)

$88,632

$83,488

$ 6,809

$ (52)

$ 6,861

$ 6,425

1,011

7,820

—

(52)

1,192

897

18

2,107

—

13

—

13

1,011

7,872

1,192

884

18

938

7,363

1,137

791

7

2,094

1,935

Total net revenues

$ 9,927

$ (39)

$ 9,966

$ 9,298

6%

5%

6%

6%

8%

6%

5%

13%

**

9%

7%

6%

5%

6%

7%

8%

7%

5%

12%

**

8%

7%

(1) We define exchange rate effect as the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to

current year transactional currency amounts, excluding hedging activity.

(2) We define FX-Neutral GMV as GMV minus the exchange rate effect. We define the non-GAAP financial measures of FX-Neutral net revenues as net

revenues minus the exchange rate effect.

(3) Marketplace Exchange Rate Effect was net of $8 million and $28 million of hedging activity in 2018 and 2017, respectively.

45

LiquidityandCapitalResources

CashFlows

Net cash provided by (used in):

Continuing operating activities

Investing activities

Financing activities

Effect of exchange rates on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash — discontinued

operations

Net increase (decrease) in cash, cash equivalents and restricted cash

Year Ended December 31,

2018

2017

2016

(In millions)

$ 2,661

$ 3,146

$2,827

2,894

(5,398)

(75)

(1,295)

(1,784)

238

(2,017)

(744)

(90)

(3)

79

$

—

(1)

$ 305

$ (25)

ContinuingOperatingActivities

Cash provided by continuing operating activities of $2.7 billion in 2018 was primarily attributable to net
income of $2.5 billion with adjustments of $696 million in depreciation and amortization, $538 million in stock-
based compensation and $286 million in provision for transaction losses, partially offset by a decrease of
$577 million in changes in assets and liabilities, net of acquisition effects, and adjustments of $572 million for
gain on investments, $153 million for deferred income taxes and $104 million for changes in fair value of the
warrant.

The net cash provided by continuing operating activities of $3.1 billion in 2017 was primarily due to $1.1
billion of changes in assets and liabilities, net of acquisition effects, and a net loss of $1.0 billion offset by
adjustments of $1.7 billion in deferred income taxes, $676 million in depreciation and amortization and $483
million in stock-based compensation.

The net cash provided by continuing operating activities of $2.8 billion in 2016 was primarily due to net
income of $7.3 billion with adjustments for $682 million in depreciation and amortization, $416 million in stock-
based compensation and $20 million in changes in assets and liabilities, net of acquisition effects, partially
offset by a decrease of $4.6 billion related to deferred income taxes and $1.2 billion related to gain on sale of
investments.

Cash paid for income taxes in 2018 was $597 million, which included tax payments related to our liability
for deemed repatriation of foreign earnings under U.S. tax reform of $168 million, including a prepayment of
$72 million. Cash paid for income taxes in 2017 and 2016 was $308 million and $492 million, respectively.

InvestingActivities

Cash provided by investing activities of $2.9 billion in 2018 was primarily attributable to proceeds of $30.9
billion from the maturities and sales of investments and $1.0 billion from the sale of equity investment in
Flipkart, partially offset by cash paid for purchases of investments of $28.1 billion, property and equipment of
$651 million and acquisitions of $302 million.

The net cash used in investing activities of $1.3 billion in 2017 was primarily due to cash paid for property

and equipment of $666 million and cash paid for our equity investment in Flipkart of $514 million.

The net cash used in investing activities of $2.0 billion in 2016 was primarily due to cash paid for
investments of $11.2 billion, property and equipment of $626 million and net cash paid for acquisition of
businesses of $212 million, partially offset by proceeds of $10.1 billion from the maturities and sales of
investments.

46

The largely offsetting effects of purchases of investments and maturities and sale of investments results
from the management of our investments. As our immediate cash needs change, purchase and sale activity
will fluctuate.

FinancingActivities

Cash used in financing activities of $5.4 billion in 2018 was primarily used to repurchase $4.5 billion of

common stock and repay $750 million of our outstanding senior notes.

The net cash used in financing activities of $1.8 billion in 2017 was primarily due to $2.7 billion of cash used
to repurchase common stock and $1.5 billion of cash used to repay outstanding debt, partially offset by $2.5
billion of cash proceeds from debt issuances.

The net cash used in financing activities of $744 million in 2016 was primarily due to $2.9 billion of cash

paid to repurchase common stock, partially offset by $2.2 billion of proceeds from debt issuances.

The negative effect of exchange rate movements on cash and cash equivalents was due to the
strengthening of the U.S. dollar against other currencies, primarily the euro, Korean won and British pound,
during 2018. The positive effect of exchange rate movements on cash and cash equivalents was due to the
weakening of the U.S. dollar against other currencies, primarily the euro and Korean won, during 2017. The
negative impact of currency exchange rates on our cash and cash equivalents during 2016 was due to the
strengthening of the U.S. dollar against other currencies, primarily the euro.

StockRepurchases

In July 2017, our Board authorized a $3.0 billion stock repurchase program and in January 2018, our Board
authorized an additional $6.0 billion stock repurchase program. These stock repurchase programs have no
expiration from the date of authorization. Our stock repurchase programs are intended to programmatically
offset the impact of dilution from our equity compensation programs and, subject to market conditions and
other factors, to make opportunistic and programmatic repurchases of our common stock to reduce our
outstanding share count. Any share repurchases under our stock repurchase programs may be made through
open market transactions, block trades, privately negotiated transactions (including accelerated share
repurchase transactions) or other means at times and in such amounts as management deems appropriate
and will be funded from our working capital or other financing alternatives.

During 2018, we repurchased approximately $4.5 billion of our common stock under our stock
repurchase programs. As of December 31, 2018, a total of approximately $3.2 billion remained available for
future repurchases of our common stock under our stock repurchase programs. In January 2019, our Board
authorized an additional $4.0 billion stock repurchase program, with no expiration from the date of
authorization.

We expect, subject to market conditions and other uncertainties, to continue making opportunistic and
programmatic repurchases of our common stock. However, our stock repurchase programs may be limited
or terminated at any time without prior notice. The timing and actual number of shares repurchased will
depend on a variety of factors, including corporate and regulatory requirements, price and other market
conditions and management’s determination as to the appropriate use of our cash.

Dividends

In January 2019, our Board of Directors initiated a quarterly cash dividend of $0.14 per share of common

stock to be paid on or about March 20, 2019 to shareholders of record as of March 1, 2019.

ShelfRegistrationStatementandDebt

As of December 31, 2018, we had an effective shelf registration statement on file with the Securities and
Exchange Commission that allows us to issue various types of debt securities, as well as common stock,

47

preferred stock, warrants, depositary shares representing fractional interest in shares of preferred stock,
purchase contracts and units from time to time in one or more offerings. Each issuance under the shelf
registration statement will require the filing of a prospectus supplement identifying the amount and terms of
the securities to be issued. The registration statement does not limit the amount of securities that may be
issued thereunder. Our ability to issue securities is subject to market conditions and other factors including,
in the case of our debt securities, our credit ratings and compliance with the covenants in our credit
agreement.

SeniorNotes

As of December 31, 2018, we had floating- and fixed-rate senior notes outstanding for an aggregate
principal amount of $9.3 billion. The net proceeds from the issuances of these senior notes were used for
general corporate purposes,
including, among other things, capital expenditures, share repurchases,
repayment of indebtedness and possible acquisitions. The floating rate notes are not redeemable prior to
maturity. On and after March 1, 2021, we may redeem some or all of the 6.000% fixed rate notes due 2056 at
any time and from time to time prior to their maturity, at a redemption price equal to 100% of the principal
amount of the notes to be redeemed, plus accrued and unpaid interest. We may redeem some or all of the
other fixed rate notes of each series at any time and from time to time prior to their maturity, generally at a
make-whole redemption price plus accrued and unpaid interest. If a change of control triggering event
occurs with respect to the 2.150% fixed rate notes due 2020, the 3.800% fixed rate notes due 2022, the
floating rate notes due 2023, the 2.750% fixed rate notes due 2023, the 3.600% fixed rate notes due 2027 or
the 6.000% fixed rate notes due 2056, we must, subject to certain exceptions, offer to repurchase all of the
notes of the applicable series at a price equal to 101% of the principal amount plus accrued and unpaid
interest. For additional details related to our senior notes, please see “Note 10 — Debt” to the consolidated
financial statements included in this report.

To help achieve our interest rate risk management objectives, in connection with the previous issuance of
certain senior notes, we entered into interest rate swap agreements that effectively converted $2.4 billion of
the fixed rate notes to floating rate debt based on the London InterBank Offered Rate (“LIBOR”) plus a spread.
These swaps were designated as fair value hedges against changes in the fair value of certain fixed rate
senior notes resulting from changes in interest rates.

The indenture pursuant to which the senior notes were issued includes customary covenants that, among
other things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens
on specified assets or enter into sale and lease-back transactions with respect to specified properties, and
also includes customary events of default.

CommercialPaper

We have a commercial paper program pursuant to which we may issue commercial paper notes in an
aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397
days from the date of issue. As of December 31, 2018, there were no commercial paper notes outstanding.

CreditAgreement

In November 2015, we entered into a credit agreement that provides for an unsecured $2 billion five-year
revolving credit facility. We may also, subject to the agreement of the applicable lenders, increase the
commitments under the revolving credit facility by up to an aggregate amount of $1 billion. Funds borrowed
under the credit agreement may be used for working capital, capital expenditures, dividends, acquisitions
and other general corporate purposes.

As of December 31, 2018, no borrowings were outstanding under our $2 billion credit agreement.
However, as described above, we have an up to $1.5 billion commercial paper program and therefore maintain
$1.5 billion of available borrowing capacity under our credit agreement in order to repay commercial paper
borrowings in the event we are unable to repay those borrowings from other sources when they become
due. As a result, $500 million of borrowing capacity was available as of December 31, 2018 for other purposes
permitted by the credit agreement.

48

Loans under the credit agreement bear interest at either (i) LIBOR plus a margin (based on our public debt
credit ratings) ranging from 0.875 percent to 1.5 percent or (ii) a formula based on the agent bank’s prime rate,
the federal funds effective rate plus 0.5 percent or LIBOR plus 1.0 percent, plus a margin (based on our public
debt credit ratings) ranging from zero percent to 0.5 percent. The credit agreement will terminate and all
amounts owing thereunder will be due and payable on November 9, 2020, unless (a) the commitments are
terminated earlier, either at our request or, if an event of default occurs, by the lenders (or automatically in the
case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request,
subject to the agreement of the lenders. The credit agreement includes customary representations,
including financial covenants, events of default and
warranties, affirmative and negative covenants,
indemnification provisions in favor of the banks. The negative covenants include restrictions regarding the
incurrence of liens and subsidiary indebtedness, in each case, subject to certain exceptions. The financial
covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest
coverage ratio and a maximum consolidated leverage ratio. The events of default include the occurrence of a
change of control (as defined in the credit agreement) with respect to us.

We were in compliance with all covenants in our outstanding debt instruments for the period ended

December 31, 2018.

CreditRatings

As of December 31, 2018, we were rated investment grade by Standard and Poor’s Financial Services, LLC
(long-term rated BBB+, short-term rated A-2, with a stable outlook), Moody’s Investor Service (long-term rated
Baa1, short-term rated P-2, with a stable outlook), and Fitch Ratings, Inc. (long-term rated BBB, short-term
rated F-2, with a stable outlook). We disclose these ratings to enhance the understanding of our sources of
liquidity and the effects of our ratings on our costs of funds. Our borrowing costs depend, in part, on our
credit ratings and any further actions taken by these credit rating agencies to lower our credit ratings, as
described above, will likely increase our borrowing costs.

CommitmentsandContingencies

We have certain fixed contractual obligations and commitments that include future estimated payments
for general operating purposes. Changes in our business needs, contractual cancellation provisions,
fluctuating interest rates, and other factors may result in actual payments differing from the estimates. We
cannot provide certainty regarding the timing and amounts of these payments. The following table
summarizes our fixed contractual obligations and commitments (in millions):

Payments Due During the Year Ending December 31,

2019

2020

2021

2022

2023

Thereafter

Debt

Leases

Purchase
Obligations

Total

$ 1,841 $ 136

$209

$ 2,186

1,259

983

1,935

1,284

104

91

76

51

147

128

116

38

1,510

1,202

2,127

1,373

5,220

119
$12,522 $577

—
$638

5,339
$13,737

The significant assumptions used in our determination of amounts presented in the above table are as

follows:

• Debt amounts include the principal and interest amounts of the respective debt instruments. For
additional details related to our debt, please see “Note 10 – Debt” to the consolidated financial
statements included in this report. This table does not reflect any amounts payable under our $2
billion revolving credit facility or $1.5 billion commercial paper program, for which no borrowings were
outstanding as of December 31, 2018.

49

•

Lease amounts include minimum rental payments under our non-cancelable operating leases for
office space, data centers, as well as fulfillment centers and other corporate assets that we utilize
under lease arrangements. The amounts presented are consistent with contractual terms and are not
expected to differ significantly from actual results under our existing leases, unless a substantial
change in our headcount needs requires us to expand our occupied space or exit an office facility
early.

• Purchase obligation amounts include minimum purchase commitments for advertising, capital
expenditures (computer equipment, software applications, engineering development services,
construction contracts) and other goods and services entered into in the ordinary course of business.

As we are unable to reasonably predict the timing of settlement of liabilities related to unrecognized tax
benefits, net, the table does not include $466 million of such non-current liabilities included in other liabilities
on our consolidated balance sheet as of December 31, 2018. The gross amount of unrecognized tax benefits
expected to be reduced within the next twelve months is approximately $196 million. See “Note 14 — Income
Taxes” to the consolidated financial statements included in this report for more information on unrecognized
tax benefits.

LiquidityandCapitalResourceRequirements

As of December 31, 2018 and December 31, 2017, we had assets classified as cash and cash equivalents,
as well as short-term and long-term non-equity investments, in an aggregate amount of $8.6 billion and $11.3
billion, respectively. As of December 31, 2018, this amount included assets held in certain of our foreign
operations totaling approximately $7.8 billion. As a result of U.S. tax reform, the $7.8 billion held by our non-
U.S. subsidiaries was subject to current tax in the U.S. in 2017. As of December 31, 2018, we have repatriated a
portion of these funds to the U.S. As we repatriate these funds to the U.S., we will be required to pay income
taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation
occurs. We have accrued deferred taxes for the tax effect of repatriating the funds to the U.S.

We actively monitor all counterparties that hold our cash and cash equivalents and non-equity
investments, focusing primarily on the safety of principal and secondarily on improving yield on these assets.
We diversify our cash and cash equivalents and investments among various counterparties in order to reduce
our exposure should any one of these counterparties fail or encounter difficulties. To date, we have not
experienced any material
loss or lack of access to our invested cash, cash equivalents or short-term
investments; however, we can provide no assurances that access to our invested cash, cash equivalents or
short-term investments will not be impacted by adverse conditions in the financial markets. At any point in
time we have funds in our operating accounts and customer accounts that are deposited and invested with
third party financial institutions.

In October 2018, we announced our acquisition of the UK-based classifieds site, Motors.co.uk. We
believe the acquisition will increase our international presence and give buyers access to more listings. We
expect to close this transaction in the first half of 2019, subject to customary closing conditions and
regulatory approvals. The purchase price payable at closing is subject to adjustment. Accordingly, we are
unable to estimate the financial statement impact of the acquisition at this time

We believe that our existing cash, cash equivalents and short-term and long-term investments, together
with cash expected to be generated from operations, borrowings available under our credit agreement and
commercial paper program, and our access to capital markets, will be sufficient to fund our operating
activities, anticipated capital expenditures, repayment of debt, stock repurchases and dividends for the
foreseeable future.

Off-BalanceSheetArrangements

As of December 31, 2018, we had no off-balance sheet arrangements that have, or are reasonably likely to
have, a current or future material effect on our consolidated financial condition, results of operations, liquidity,
capital expenditures or capital resources.

50

We have a cash pooling arrangement with a financial institution for cash management purposes. This
arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating
cash balances held within the same financial institution (“Aggregate Cash Deposits”). This arrangement also
allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net
balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis
for calculating our net interest expense or income under the arrangement. As of December 31, 2018, we had a
total of $2.7 billion in aggregate cash deposits, partially offset by $2.4 billion in cash withdrawals, held within
the financial institution under the cash pooling arrangement.

IndemnificationProvisions

We entered into a separation and distribution agreement and various other agreements with PayPal to
govern the separation and relationship of the two companies. These agreements provide for specific
indemnity and liability obligations and could lead to disputes between us and PayPal, which may be
significant. In addition, the indemnity rights we have against PayPal under the agreements may not be
sufficient to protect us and our indemnity obligations to PayPal may be significant.

In addition, we have entered into indemnification agreements with each of our directors, executive
officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest
extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their
affiliation with us.

In the ordinary course of business, we have included limited indemnification provisions in certain of our
agreements with parties with which we have commercial relations,
including our standard marketing,
promotions and application-programming-interface license agreements. Under these contracts, we generally
indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the
indemnified party in connection with claims by a third party with respect to our domain names, trademarks,
logos and other branding elements to the extent that such marks are applicable to our performance under the
subject agreement. In certain cases, we have agreed to provide indemnification for intellectual property
infringement.
loss under these indemnification
provisions due to our limited history of prior indemnification claims and the unique facts and circumstances
involved in each particular provision. To date, losses recorded in our consolidated statement of income in
connection with our indemnification provisions have not been significant, either individually or collectively.

It is not possible to determine the maximum potential

CriticalAccountingPolicies,JudgmentsandEstimates

General

The preparation of our consolidated financial statements and related notes requires us to make
judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on
historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Our senior management has discussed the
development, selection and disclosure of these estimates with the Audit Committee of our Board of
Directors. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based
on assumptions about matters that are highly uncertain at the time the estimate is made, and if different
estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the consolidated financial statements. We believe the
following critical accounting policies reflect the more significant estimates and assumptions used in the
preparation of our consolidated financial statements. The following descriptions of critical accounting
policies, judgments and estimates should be read in conjunction with our consolidated financial statements
and related notes and other disclosures included in this report.

51

RevenueRecognition

We may enter into certain revenue contracts that include promises to transfer multiple goods or services
including discounts on future services. We also may enter into arrangements to purchase services from
certain customers. As a result, significant interpretation and judgment is sometimes required to determine
the appropriate accounting for these transactions including: (1) whether services are considered distinct
performance obligations that should be accounted for separately or combined; (2) developing an estimate of
the stand-alone selling price of each distinct performance obligation; (3) whether revenue should be reported
gross (as eBay is acting as a principal), or net (as eBay is acting as an agent); (4) evaluating whether a
promotion or incentive is a payment to a customer; and (5) whether the arrangement would be characterized
as revenue or reimbursement of costs incurred. Changes in judgments with respect to these assumptions
and estimates could impact the timing or amount of revenue recognition.

IncomeTaxes

Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to
us in the various jurisdictions in which we operate. Tax laws are complex and subject to different
interpretations by the taxpayer and respective government taxing authorities. Significant judgment is
including evaluating
required in determining our
uncertainties. We review our tax positions quarterly and adjust the balances as new information becomes
available. Our income tax rate is significantly affected by the tax rates that apply to our foreign earnings. In
addition to local country tax laws and regulations, our income tax rate depends on the extent that our
earnings are indefinitely reinvested outside the U.S. Indefinite reinvestment is determined by management’s
judgment about and intentions concerning our future operations. As a result of U.S. tax reform and the current
U.S. taxation of deemed repatriated earnings, management has no specific plans to indefinitely reinvest the
undistributed earnings of our foreign subsidiaries at the balance sheet date.

tax expense and in evaluating our

tax positions,

Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in
future years. Such assets arise because of temporary differences between the financial reporting and tax
bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the
recoverability of these future tax deductions and credits by assessing the adequacy of future expected
taxable income from all sources, including reversal of taxable temporary differences, forecasted operating
earnings and available tax planning strategies. These sources of income rely heavily on estimates that are
based on a number of factors, including our historical experience and short-range and long-range business
forecasts. As of December 31, 2018, we had a valuation allowance on certain net operating loss and tax credit
carryforwards based on our assessment that it is more likely than not that the deferred tax asset will not be
realized.

We recognize and measure uncertain tax positions in accordance with generally accepted accounting
principles in the U.S., or GAAP, pursuant to which we only recognize the tax benefit from an uncertain tax
position if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statements from such positions are then measured based on the largest benefit that has a greater than 50
percent likelihood of being realized upon ultimate settlement. We report a liability for unrecognized tax
benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. GAAP further
requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be
recognized in earnings in the quarter in which such change occurs. We recognize interest and penalties, if
any, related to unrecognized tax benefits in income tax expense.

We file annual income tax returns in multiple taxing jurisdictions around the world. A number of years may
elapse before an uncertain tax position is audited by the relevant tax authorities and finally resolved. While it is
often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position,
we believe that our reserves for income taxes reflect the most likely outcome. We adjust these reserves, as
well as the related interest, where appropriate in light of changing facts and circumstances. Settlement of any
particular position could require the use of cash.

52

The following table illustrates our effective tax rates for 2018, 2017 and 2016:

Year Ended December 31,

2018

2017

2016

Income tax provision (benefit)

Effectivetaxrate

(In millions, except percentages)
$ 3,288

$(3,634)

$ 190

7.0%

144.5%

(99.5)%

Our future effective tax rates could be adversely affected by earnings being lower than anticipated in
countries where we have lower statutory rates and higher than anticipated in countries where we have higher
statutory rates, by changes in the valuation of our deferred tax assets or liabilities, or by changes or
interpretations in tax laws, regulations or accounting principles. In addition, we are subject to the continuous
examination of our income tax returns by the Internal Revenue Service, as well as various state and foreign tax
authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to
determine the adequacy of our provision for income taxes.

Based on our results for the year ended December 31, 2018, a one-percentage point change in our
provision for income taxes as a percentage of income before taxes would have resulted in an increase or
decrease in the provision of approximately $27 million, resulting in an approximate $0.03 change in diluted
earnings per share.

We accounted for the tax effects of The Tax Cuts and Jobs Act, enacted on December 22, 2017, on a
provisional basis in our 2017 consolidated financial statements. We completed our accounting in the fourth
quarter of 2018, within the one year measurement period from the enactment date.

GoodwillandIntangibleAssets

The purchase price of an acquired company is allocated between intangible assets and the net tangible
assets of the acquired business with the residual of the purchase price recorded as goodwill. The
determination of the value of the intangible assets acquired involves certain judgments and estimates. These
judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the
future and the appropriate weighted average cost of capital.

As of December 31, 2018, our goodwill totaled $5.2 billion and our identifiable intangible assets, net
totaled $92 million. We assess the impairment of goodwill of our reporting units annually, or more often if
events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is
tested for impairment at the reporting unit level by first performing a qualitative assessment to determine
whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the
reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared
to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow
approaches. Goodwill
is considered impaired if the carrying value of the reporting unit exceeds its fair
value. The discounted cash flow approach uses expected future operating results. The market approach uses
comparable company information to determine revenue and earnings multiples to value our reporting units.
Failure to achieve these expected results or market multiples may cause a future impairment of goodwill at
the reporting unit. We conducted our annual impairment test of goodwill as of August 31, 2018 and 2017. As of
December 31, 2018, we determined that no impairment of the carrying value of goodwill for any reporting units
was required. See “Note 4 — Goodwill and Intangible Assets” to the consolidated financial statements
included in this report.

LegalContingencies

In connection with certain pending litigation and other claims, we have estimated the range of probable
loss, net of expected recoveries, and provided for such losses through charges to our consolidated
statement of income. These estimates have been based on our assessment of the facts and circumstances at
each balance sheet date and are subject to change based upon new information and future events.

53

From time to time, we are involved in disputes and regulatory inquiries that arise in the ordinary course of
business. We are currently involved in legal proceedings, some of which are discussed in “Item 1A: Risk
Factors,” “Item 3: Legal Proceedings” and “Note 11 - Commitments and Contingencies” to the consolidated
financial statements included in this report. We believe that we have meritorious defenses to the claims
against us, and we intend to defend ourselves vigorously. However, even if successful, our defense against
certain actions will be costly and could require significant amounts of management’s time and result in the
diversion of significant operational resources. If the plaintiffs were to prevail on certain claims, we might be
forced to pay significant damages and licensing fees, modify our business practices or even be prohibited
from conducting a significant part of our business. Any such results could materially harm our business and
could result in a material adverse impact on the financial position, results of operations or cash flows.

RecentAccountingPronouncements

See “Note 1 — The Company and Summary of Significant Accounting Policies” to the consolidated
regarding the impact of certain recent accounting

financial statements included in this report,
pronouncements on our consolidated financial statements.

54

ITEM 7A: QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

InterestRateRisk

We are exposed to interest rate risk relating to our investments and outstanding debt. In addition,
adverse economic conditions and events (including volatility or distress in the equity and/or debt or credit
markets) may impact regional and global
including
uncertainties and instability in economic and market conditions caused by the United Kingdom’s vote to exit
the European Union and any outcomes resulting from that vote, could cause us to write down our assets or
investments. We seek to reduce earnings volatility that may result from adverse economic conditions and
events or changes in interest rates.

financial markets. These events and conditions,

As of December 31, 2018, approximately 25% of our total cash and investments was held in cash and cash
equivalents. As such, changes in interest rates will impact interest income. As discussed below, the fair
values of our fixed rate securities may be adversely affected due to a rise in interest rates, and we may suffer
losses in principal if we are forced to sell securities that have declined in market value due to changes in
interest rates.

As of December 31, 2018, the balance of our corporate debt and government bond securities was $6.3
billion, which represented approximately 73% of our total cash and investments. Investments in both fixed-
rate and floating-rate interest-earning instruments carry varying degrees of interest rate risk. The fair market
value of our fixed-rate investment securities may be adversely impacted due to a rise in interest rates. In
general, fixed-rate securities with longer maturities are subject to greater interest rate risk than those with
shorter maturities. While floating rate securities generally are subject to less interest rate risk than fixed-rate
securities, floating-rate securities may produce less income than expected if interest rates decrease and
may also suffer a decline in market value if interest rates increase. Due in part to these factors, our investment
income may fall short of expectations or we may suffer losses in principal if we sell securities that have
declined in market value due to changes in interest rates. A hypothetical 100 basis point increase in interest
rates would have resulted in a decrease in the fair value of our investments of $44 million and $93 million as of
December 31, 2018 and 2017, respectively.

As of December 31, 2018, we had an aggregate principal amount of $9.3 billion of outstanding senior
notes, of which 91% bore interest at fixed rates. We entered into $2.4 billion of interest rate swap agreements
that have the economic effect of modifying the fixed interest obligations associated with $1.15 billion of our
2.200% senior notes due July 2019, $750 million of our 2.875% senior notes due July 2021, and $500 million of
our 3.450% senior notes due July 2024 so that the interest payable on those notes effectively became
variable based on LIBOR plus a spread. Further changes in interest rates will impact interest expense on any
borrowings under our revolving credit facility, which bear interest at floating rates, and the interest rate on any
commercial paper borrowings we make and any debt securities we may issue in the future and, accordingly,
will
impact interest expense. For additional details related to our debt, see “Note 10 – Debt” to the
consolidated financial statements included in this report.

EquityPriceRisk

Investments

The primary objective of our investment activities is to preserve principal while at the same time
improving yields without significantly increasing risk. To achieve this objective, we maintain our cash
equivalents and short-term and long-term investments in a variety of asset types, including bank deposits,
government bonds and corporate debt securities.

As of December 31, 2018, our equity investments totaled $143 million, which represented approximately
2% of our total cash and investments, and were primarily related to equity investments without readily
determinable fair values. We review our investments for impairment when events and circumstances indicate
a decline in fair value of such assets below carrying value is other-than-temporary. Our analysis includes a
review of recent operating results and trends, recent sales/acquisitions of the securities in which we have
invested and other publicly available data.

55

Warrant

We entered into a warrant agreement with a service provider, which subject to meeting certain
conditions, entitles us to acquire a fixed number of shares up to 5% of the service providers fully diluted
issued and outstanding share capital. The warrant is accounted for as a derivative instrument under ASC
Topic 815, Derivatives and Hedging. Changes in the service provider’s common stock price and equity
volatility may have a significant impact on the value of the warrant. As of December 31, 2018, a one dollar
change in the service provider’s common stock, holding other factors constant, would increase or decrease
the fair value of the warrant by approximately $1 million. For additional details related to the warrant, please
see “Note 7 — Derivative Instruments” to our consolidated financial statements included in this report.

ForeignCurrencyRisk

Our commerce platforms operate globally, resulting in certain revenues and costs that are denominated
in foreign currencies, primarily the euro, British pound, Korean won and Australian dollar, subjecting us to
foreign currency risk, which may adversely impact our financial results. We transact business in various
foreign currencies and have significant international revenues as well as costs. In addition, we charge our
international subsidiaries for their use of intellectual property and technology and for certain corporate
services we provide. Our cash flow, results of operations and certain of our intercompany balances that are
exposed to foreign exchange rate fluctuations may differ materially from expectations and we may record
significant gains or losses due to foreign currency fluctuations and related hedging activities.

We have a foreign exchange exposure management program designed to identify material foreign
currency exposures, manage these exposures and reduce the potential effects of currency fluctuations on
our reported consolidated cash flows and results of operations through the purchase of foreign currency
exchange contracts. The effectiveness of the program and resulting usage of foreign exchange derivative
contracts is at times limited by our ability to achieve cash flow hedge accounting. For additional details
related to our derivative instruments, please see “Note 7 — Derivative Instruments” to our consolidated
financial statements included in this report.

We use foreign exchange derivative contracts to help protect our forecasted U.S. dollar-equivalent
earnings from adverse changes in foreign currency exchange rates. These hedging contracts reduce, but do
not entirely eliminate, the impact of adverse currency exchange rate movements. Most of these contracts are
designated as cash flow hedges for accounting purposes. For qualifying cash flow hedges, the derivative’s
gain or loss is initially reported as a component of accumulated other comprehensive income (“AOCI”) and
subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. For
contracts not designated as cash flow hedges for accounting purposes, the derivative’s gain or loss is
recognized immediately in earnings in our consolidated statement of income. However, only certain revenue
and costs are eligible for cash flow hedge accounting.

The following table illustrates the fair values of outstanding foreign exchange contracts designated as
cash flow hedges and net investment hedges, and the before-tax effect on fair values of a hypothetical
adverse change in the foreign exchange rates that existed as of December 31, 2018. The sensitivity for foreign
currency contracts is based on a 20% adverse change in foreign exchange rates, against relevant functional
currencies.

Foreign exchange contracts — Cash flow hedges

Foreign exchange contracts — Net investment hedges

Fair Value
Asset/(Liability)

Fair Value
Sensitivity

(In millions)

$76

$ (1)

$ (118)

$(160)

Since our risk management programs are highly effective, the potential loss in value described above

would be largely offset by changes in the value of the underlying exposure.

Beginning in the third quarter of 2017, due to the realignment of our legal structure, more currency flows
met the GAAP criteria for cash flow hedge accounting. Accordingly, $28 million in qualifying hedging activity

56

was netted against marketplace net transaction revenues in the second half of 2017 as compared to $8 million
for the full year of 2018.

In addition, we use foreign exchange contracts to offset the foreign exchange risk on our assets and
liabilities denominated in currencies other than the functional currency of our subsidiaries. These contracts
reduce, but do not entirely eliminate, the impact of currency exchange rate movements on our assets and
liabilities. The foreign currency gains and losses on the assets and liabilities are recorded in interest and
other, net, which are offset by the gains and losses on the foreign exchange contracts.

We considered the historical trends in currency exchange rates and determined that it was reasonably
possible that adverse changes in exchange rates of 20% for all currencies could be experienced in the near
term. These changes would have resulted in an adverse impact on income before income taxes of
approximately $26 million as of December 31, 2018 taking into consideration the offsetting effect of foreign
exchange forwards in place as of December 31, 2018.

ITEM 8: FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA

The consolidated financial statements and accompanying notes listed in Part IV, Item 15(a)(1) of this Annual

Report on Form 10-K are included elsewhere in this Annual Report on Form 10-K.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

DISCLOSURE

None.

ITEM 9A:CONTROLSANDPROCEDURES

Evaluation of disclosure controls and procedures: Based on the evaluation of our disclosure controls and
procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended, or the Exchange Act) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our principal executive
officer and our principal financial officer have concluded that our disclosure controls and procedures were
effective as of December 31, 2018.

Changes in internal controls: There were no changes in our internal control over financial reporting as
defined in Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that
have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

Management’s annual report on internal control over financial reporting: Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. Our management,
including our principal executive officer and principal financial officer, conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the framework in Internal Control —
Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on its evaluation under the framework in Internal Control — Integrated Framework, our
management concluded that our internal control over financial reporting was effective as of December 31,
2018.

The effectiveness of our internal control over financial reporting as of December 31, 2018 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their
report which appears in Item 15(a) of this Annual Report on Form 10-K.

ITEM 9B: OTHERINFORMATION

Not applicable.

57

PART III

ITEM 10: DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE

Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2018.

CodeofEthics,GovernanceGuidelinesandCommitteeCharters

We have adopted a Code of Business Conduct and Ethics that applies to all eBay employees and
directors. The Code of Business Conduct and Ethics is posted on our website at https://
investors.ebayinc.com/corporate-governance/governance-documents/.We will post any amendments to or
waivers from the Code of Business Conduct and Ethics at that location.

We have also adopted GovernanceGuidelinesfortheBoardofDirectorsand a written committee charter
for each of our Audit Committee, Compensation Committee and Corporate Governance and Nominating
Committee. Each of these documents is available on our website at https://investors.ebayinc.com/
corporate-governance/governance-documents/.

ITEM 11: EXECUTIVECOMPENSATION

Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2018.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDERMATTERS

Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2018.

ITEM 13: CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE

Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2018.

ITEM 14: PRINCIPALACCOUNTANTFEESANDSERVICES

Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2018.

58

PART IV

ITEM 15: EXHIBITSANDFINANCIALSTATEMENTSCHEDULE

(a) The following documents are filed as part of this report:

1.ConsolidatedFinancialStatements:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Stockholders’ Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements

2.FinancialStatementSchedule

Schedule II — Valuation and Qualifying Accounts

Page
Number

F-1
F-3
F-4
F-5
F-6
F-7
F-9

F-49

All other schedules have been omitted because the information required to be set forth therein is

not applicable or is shown in the financial statements or notes thereto.

3.ExhibitsRequiredbyItem601ofRegulationS-K

The information required by this Item is set forth in the Index to Exhibits that precedes the
signature page of this Annual Report.

F-50

ITEM 16: FORM10-KSUMMARY

None.

59

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of eBay Inc.

OpinionsontheFinancialStatementsandInternalControloverFinancialReporting

We have audited the accompanying consolidated balance sheets of eBay Inc. and its subsidiaries (the
“Company”) as of December 31, 2018 and 2017, and the related consolidated statements of
income,
comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended
December 31, 2018, including the related notes and schedule of valuation and qualifying accounts for each of the
three years in the period ended December 31, 2018 appearing under Item 15(a)(2) (collectively referred to as the
“consolidated financial statements”). We also have audited the Company’s internal control over financial reporting
as of December 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its
operations and cash flows for each of the three years in the period ended December 31, 2018 in conformity
with accounting principles generally accepted in the United States of America. Also in our opinion, the
Company maintained,
in all material respects, effective internal control over financial reporting as of
December 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by
the COSO.

ChangeinAccountingPrinciple

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in

which it accounts for revenues from contracts with customers in 2018.

BasisforOpinions

The Company’s management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
included in the accompanying Management’s annual report on internal
control over financial reporting,
control over financial reporting. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company’s internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

F-1

DefinitionandLimitationsofInternalControloverFinancialReporting

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations,

internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

San Jose, California
January 30, 2019

We have served as the Company’s auditor since 1997.

F-2

ITEM 8: FINANCIALSTATEMENTS

PART II: FINANCIAL INFORMATION

eBay Inc.

CONSOLIDATED BALANCE SHEET

ASSETS

Current assets:

Cash and cash equivalents
Short-term investments
Accounts receivable, net
Other current assets

Total current assets

Long-term investments
Property and equipment, net
Goodwill
Intangible assets, net
Deferred tax assets
Other assets

Total assets

Current liabilities:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Short-term debt
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Income taxes payable

Total current liabilities

Deferred tax liabilities
Long-term debt
Other liabilities

Total liabilities

Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.001 par value; 3,580 shares authorized; 915 and 1,029 shares

outstanding

Additional paid-in capital
Treasury stock at cost, 763 and 632 shares
Retained earnings
Accumulated other comprehensive income
Total stockholders’ equity

Total liabilities and stockholders’ equity

December 31,

2018

2017

(In millions, except par value)

$ 2,202
2,713
712
1,499
7,126
3,778
1,597
5,160
92
4,792
274
$ 22,819

$ 1,546
286
2,335
170
117
4,454
2,925
7,685
1,474
16,538

$ 2,120
3,743
696
1,185
7,744
6,331
1,597
4,773
69
5,199
273
$25,986

$

781
330
2,134
137
177
3,559
3,424
9,234
1,720
17,937

2
15,716
(26,394)
16,459
498
6,281
$ 22,819

2
15,293
(21,892)
13,929
717
8,049
$25,986

The accompanying notes are an integral part of these consolidated financial statements.

F-3

eBay Inc.

CONSOLIDATED STATEMENT OF INCOME

Net revenues

Cost of net revenues

Gross profit

Operating expenses:

Sales and marketing

Product development

General and administrative

Provision for transaction losses

Amortization of acquired intangible assets

Total operating expenses

Income from operations

Interest and other, net

Income from continuing operations before income taxes

Income tax benefit (provision)

Income (loss) from continuing operations

Year Ended December 31,

2018

2017

2016

(In millions, except per share amounts)
$ 9,298
$ 9,927
$10,746

2,382

8,364

2,221

7,706

2,004

7,294

3,391

1,285

1,131

286

49

6,142

2,222

496

2,718

2,878

1,224

1,030

272

38

5,442

2,264

11

2,275

(190)

(3,288)

2,691

1,114

899

231

34

4,969

2,325

1,326

3,651

3,634

$ 2,528

$ (1,013)

$ 7,285

Income (loss) from discontinued operations, net of income taxes

2

(4)

(19)

Net income (loss)

$ 2,530

$ (1,017)

$ 7,266

Income (loss) per share — basic:

Continuing operations

Discontinued operations

Net income (loss) per share — basic

Income (loss) per share — diluted:

Continuing operations

Discontinued operations

Net income (loss) per share — diluted

Weighted average shares:

Basic

Diluted

$ 2.58

$ (0.95)

$ 6.43

—

—

(0.02)

$ 2.58

$ (0.95)

$ 6.41

$ 2.55

$ (0.95)

$ 6.37

—
$ 2.55

—

$ (0.95)

(0.02)
$ 6.35

980

991

1,064

1,064

1,133

1,144

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

eBay Inc.

Year Ended December 31,

Net income (loss)

Other comprehensive income (loss), net of reclassification adjustments:

Foreign currency translation adjustment

Unrealized gains (losses) on investments, net

Tax benefit (expense) on unrealized gains (losses) on investments, net

Unrealized gains (losses) on hedging activities, net

Tax benefit (expense) on unrealized gains (losses) on hedging activities,

net

Other comprehensive income (loss), net of tax
Comprehensive income (loss)

2018

2017
(In millions)
$2,530 $(1,017) $7,266

2016

(286)

978

(41)

10

125

(66)

23

(111)

(185)

(794)

314

18

(27)
(219)

(3)
(650)
$ 2,311 $ (176) $ 6,616

17
841

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

eBay Inc.

Common stock:

Balance, beginning of year
Common stock issued
Common stock repurchased/forfeited

Balance, end of year

Additional paid-in-capital:

Balance, beginning of year
Common stock and stock-based awards issued
Tax withholdings related to net share settlements of restricted stock

awards and units

Stock-based compensation
Stock-based awards tax impact
Other

Balance, end of year

Treasury stock at cost:

Balance, beginning of year
Common stock repurchased
Balance, end of year

Retained earnings:

Balance, beginning of year
Net income (loss)
Cumulative effect of accounting change
Distribution of PayPal

Balance, end of year

Accumulated other comprehensive income (loss):

Balance, beginning of year
Change in unrealized gains (losses) on investments
Change in unrealized gains (losses) on derivative instruments
Foreign currency translation adjustment
Tax benefit (provision) on above items

Balance, end of year

Total stockholders’ equity

Number of shares:
Common stock — shares outstanding:

Balance, beginning of year
Common stock issued
Common stock repurchased/forfeited

Balance, end of year

Year Ended December 31,

2018

2017

2016

(In millions)

$

2 $

2 $

—
—

2

—
—

2

2

—
—

2

15,293
109

14,907
120

14,538
102

(225)
538
—

1
15,716

(219)
484
—

1
15,293

(121)
416
5
(33)
14,907

(21,892)
(4,502)
(26,394)

(19,205)
(2,687)
(21,892)

(16,203)
(3,002)
(19,205)

13,929
2,530
—
—
16,459

14,946
(1,017)
—
—
13,929

7,713
7,266
(13)
(20)
14,946

717
(41)
125
(286)
(17)
498

526
(794)
18
(185)
311
(124)
$ 6,281 $ 8,049 $ 10,526

(124)
(66)
(111)
978
40
717

1,029
17
(131)
915

1,087
24
(82)
1,029

1,184
22
(119)
1,087

The accompanying notes are an integral part of these consolidated financial statements.

F-6

eBay Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,

2018

2017

2016

(In millions)

Cash flows from operating activities:

Net income (loss)
(Income) loss from discontinued operations, net of income taxes
Adjustments:

Provision for transaction losses
Depreciation and amortization
Stock-based compensation
(Gain) Loss on investments, net
Gain on sale of business
Deferred income taxes
Change in fair value of warrant
Other
Changes in assets and liabilities, net of acquisition effects

Accounts receivable
Other current assets
Other non-current assets
Accounts payable
Accrued expenses and other liabilities
Deferred revenue
Income taxes payable and other tax liabilities

Net cash provided by continuing operating activities
Net cash used in discontinued operating activities
Net cash provided by operating activities
Cash flows from investing activities:

Purchases of property and equipment
Purchases of investments
Maturities and sales of investments
Equity investment in Flipkart
Proceeds from sale of equity investment in Flipkart
Acquisitions, net of cash acquired
Other

Net cash provided by (used in) investing activities
Cash flows from financing activities:

Proceeds from issuance of common stock
Repurchases of common stock
Tax withholdings related to net share settlements of restricted stock

awards and units

Proceeds from issuance of long-term debt, net
Repayment of debt
Other

Net cash used in financing activities

F-7

$ 2,530 $ (1,017) $ 7,266
19

(2)

4

286
696
538
(572)
—
(153)
(104)
19

(98)
(143)
108
(47)
(437)
33
7
2,661
(3)
2,658

(651)
(28,115)
30,901
—
1,029
(302)
32
2,894

272
676
483
49
(167)
1,728
—
—

(195)
(148)
19
19
206
8
1,209
3,146
—
3,146

(666)
(14,599)
14,520
(514)
—
(34)
(2)
(1,295)

231
682
416
(1,236)
—

(4,556)

—
(15)

(48)
23
94
(28)
(130)
4
105
2,827
(1)
2,826

(626)
(11,212)
10,063
—
—
(212)
(30)
(2,017)

109
(4,502)

120
(2,746)

102
(2,943)

(225)
—
(750)
(30)
(5,398)

(219)
2,484
(1,452)
29
(1,784)

(121)
2,216
(20)
22
(744)

Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash of continuing operations at end of

period

Supplemental cash flow disclosures:

Cash paid for:

Interest
Income taxes

Noncash investing activities:

Year Ended December 31,

2018

2017

2016

(In millions)

(75)
79
2,140

238
305
1,835

(90)
(25)
1,860

$ 2,219 $2,140 $1,835

$ 314 $ 285 $ 220
$ 597 $ 308 $ 492

Relinquishment of equity method investment
Sale of business in exchange for ownership interest in Flipkart

$ 266 $ —
$ —

$ —
$ 211 $ —

The accompanying notes are an integral part of these consolidated financial statements.

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

eBay Inc.

Note 1 – The Company and Summary of Significant Accounting Policies

TheCompany

eBay Inc.

is a global commerce leader, which includes our Marketplace, StubHub and Classifieds
platforms. Our Marketplace platforms include our online marketplace located at www.ebay.com, its localized
counterparts and the eBay suite of mobile apps. Our StubHub platforms include our online ticket platform
located at www.stubhub.com, its localized counterparts and the StubHub mobile apps. Our Classifieds
platforms include a collection of brands such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen
and others.

When we refer to “we,” “our,” “us” or “eBay” in this document, we mean the current Delaware corporation
(eBay Inc.) and its California predecessor, as well as all of our consolidated subsidiaries, unless otherwise
expressly stated or the context otherwise requires.

UseofEstimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted
accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction
losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, investments,
goodwill and the recoverability of intangible assets. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the circumstances. Actual results could
differ from those estimates.

PrinciplesofConsolidationandBasisofPresentation

The accompanying financial statements are consolidated and include the financial statements of eBay
Inc., our wholly and majority-owned subsidiaries and variable interest entities (“VIE”) where we are the primary
beneficiary. All
intercompany balances and transactions have been eliminated in consolidation. Minority
interests are recorded as a noncontrolling interest. A qualitative approach is applied to assess the
consolidation requirement for VIEs. Investments in entities where we hold at least a 20% ownership interest
and have the ability to exercise significant influence, but not control, over the investee are accounted for
using the equity method of accounting. For such investments, our share of the investees’ results of operations
is included in interest and other, net and our investment balance is included in long-term investments.
Investments in entities where we hold less than a 20% ownership interest are generally accounted for as
equity investments to be measured at fair value or, under an election, at cost if it does not have readily
determinable fair value, in which case the carrying value would be adjusted upon the occurrence of an
observable price change or impairment.

Certain prior period amounts have been reclassified on our consolidated financial statements to conform
with current year presentation. We have evaluated all subsequent events through the date the consolidated
financial statements were issued.

SignificantAccountingPolicies

Revenuerecognition

We recognize revenue when we transfer control of promised goods or services to customers in an
amount that reflects the consideration to which we expect to be entitled in exchange for those goods or
services. Revenue is recognized net of any taxes collected, which are subsequently remitted to
governmental authorities.

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Nettransactionrevenues

Our net transaction revenues primarily include final value fees, feature fees, including fees to promote
listings, and listing fees from sellers in our Marketplace and final value fees from sellers and buyers on our
StubHub platforms. Our net transaction revenues also include store subscription and other fees often from
large enterprise sellers. Our net transaction revenues are reduced by incentives provided to our customers.

We identified one performance obligation to sellers on our Marketplace platform, which is to connect
buyers and sellers on our secure and trusted Marketplace platforms. Final value fees are recognized when an
item is sold on a Marketplace platform, satisfying this performance obligation. There may be additional
services available to Marketplace sellers, mainly to promote or feature listings, that are not distinct within the
context of the contract. Accordingly, feature and listing fees associated with these services are recognized
when the single performance obligation is satisfied when an item is sold, or when the contract expires. On our
StubHub platform, our performance obligation extends to both buyers and sellers. We made the policy
election to consider delivery of tickets in our StubHub platform to be fulfillment activities and, consequently,
the performance obligation is satisfied, and final value fees are recognized, upon payment to sellers.

Store subscription and other nonstandard listing contracts may contain multiple performance obligations,
including discounts on future services. Determining whether performance obligations should be accounted
for separately or combined may require significant judgment. The transaction price is allocated to each
performance obligation based on its stand-alone selling price (“SSP”). In instances where SSP is not directly
observable, we generally estimate selling prices based on when they are sold to customers of a similar nature
and geography. These estimates are generally based on pricing strategies, market factors, strategic
objectives and observable inputs. Store subscription revenues are recognized over the subscription period,
and discounts offered through store subscription or nonstandard listing contracts are recognized when the
options are exercised or when the options expire.

Further, to drive traffic to our platforms, we provide incentives to buyers and sellers in various forms
including discounts on fees, discounts on items sold, coupons and rewards. Evaluating whether a promotion
or incentive is a payment to a customer may require significant judgment. Promotions and incentives which
are consideration payable to a customer are recognized as a reduction of revenue at the later of when
revenue is recognized or when we pay or promise to pay the incentive. Promotions and incentives to most
buyers on our Marketplace platforms, to whom we have no performance obligation, are recognized as sales
and marketing expense. In addition, we may provide credits to customers when we refund certain fees.
Credits are accounted for as variable consideration at contract inception when estimating the amount of
revenue to be recognized when a performance obligation is satisfied to the extent that it is probable that a
significant reversal of revenue will not occur and updated as additional information becomes available.

Marketingservicesandotherrevenues

Our marketing services and other revenues are derived principally from the sale of advertisements,
classifieds fees, and revenue sharing arrangements. Advertising revenue is derived principally from the sale
of online advertisements which are based on “impressions” (i.e., the number of times that an advertisement
appears in pages viewed by users of our platforms) or “clicks” (which are generated each time users on our
platforms click through our advertisements to an advertiser’s designated website) delivered to advertisers.
We use the output method and apply the practical expedient to recognize advertising revenue in the amount
to which we have a right to invoice. For contracts with target advertising commitments with rebates,
estimated payout is accounted for as a variable consideration to the extent it is probable that a significant
reversal of revenue will not occur.

We generate net revenues related to fees for listing items on our Classifieds platforms, which are
recognized over the estimated period of the classifieds listing and fees to feature the listing that are
recognized over the feature period or a point in time depending on the nature of the feature purchased.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Discounts offered through purchase of packages of multiple services are allocated based on the SSP of each
respective feature.

Revenues related to revenue sharing arrangements are recognized based on whether we are the principal
and are responsible for fulfilling the promise to provide the specified services or whether we are an agent
arranging for those services to be provided by our partners. Determining whether we are a principal or agent
in these contracts may require significant judgment. If we are the principal, we recognize revenue in the gross
amount of consideration received from the customer, whereas if we are an agent, we recognize revenue net
of the consideration due to our partners at a point in time when the services are provided. Our most
significant revenue share arrangements are with shipping service providers. We are primarily acting as an
agent in these contracts and revenues are recognized at a point in time when we have satisfied our promise
of connecting the shipping service provider to our customer.

Refer to “Note 5 — Segments” for further information, including revenue by types and geographical

markets.

Contractbalances

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable
represents amounts invoiced and revenue recognized prior to invoicing when we have satisfied our
performance obligation and have the unconditional right to payment. The allowance for doubtful accounts and
authorized credits is estimated based upon our assessment of various factors including historical experience,
the age of the accounts receivable balances, current economic conditions and other factors that may affect
our customers’ ability to pay. The allowance for doubtful accounts and authorized credits was $106 million and
$102 million as of December 31, 2018 and December 31, 2017, respectively.

Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of
the period. Due to the generally short-term duration of contracts, the majority of the performance obligations
are satisfied in the following reporting period. The amount of revenue recognized for the twelve months
ended December 31, 2018 that was included in the deferred revenue balance at the beginning of the period
was $96 million. The amount of revenue recognized for the twelve months ended December 31, 2017 that was
included in the deferred revenue balance at the beginning of the period was $88 million.

Internalusesoftwareandplatformdevelopmentcosts

Direct costs incurred to develop software for internal use and platform development costs are capitalized
and amortized over an estimated useful life of one to five years. During the years ended December 31, 2018
and 2017, we capitalized costs, primarily related to labor and stock-based compensation, of $147 million and
$140 million, respectively. Amortization of previously capitalized amounts was $160 million, $156 million and
$149 million for 2018, 2017 and 2016, respectively. Costs related to the design or maintenance of internal use
software and platform development are expensed as incurred.

Advertisingexpense

We expense the costs of producing advertisements at the time production occurs and expense the cost
of communicating advertisements in the period during which the advertising space or airtime is used, in each
case as sales and marketing expense. Internet advertising expenses are recognized based on the terms of
the individual agreements, which are generally over the greater of the ratio of the number of impressions
delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis
over the term of the contract. Advertising expense totaled $1.4 billion, $1.3 billion and $1.2 billion for the years
ended December 31, 2018, 2017 and 2016, respectively.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Stock-basedcompensation

We have equity incentive plans under which we grant equity awards, including stock options, restricted
stock units (“RSUs”), performance-based restricted stock units, and performance share units, to our
directors, officers and employees. We primarily issue RSUs. We determine compensation expense
associated with RSUs based on the fair value of our common stock on the date of grant. We determine
compensation expense associated with stock options based on the estimated grant date fair value method
using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line
amortization method over the respective vesting period for awards that are ultimately expected to vest.
Accordingly, stock-based compensation expense for 2018, 2017 and 2016 has been reduced for estimated
forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of
actual option forfeitures. We recognize a benefit or provision from stock-based compensation in earnings as
a component of income tax expense to the extent that an incremental tax benefit or deficiency is realized by
following the ordering provisions of the tax law. In addition, we account for the indirect effects of stock-based
compensation on the research tax credit and the foreign tax credit through our consolidated statement of
income.

Provisionfortransactionlosses

Provision for transaction losses consists primarily of losses resulting from our buyer protection programs,
fraud and bad debt expense associated with our accounts receivable balance. Provisions for these items
represent our estimate of actual losses based on our historical experience and many other factors including
changes to our protection programs, the impact of regulatory changes as well as economic conditions.

Incometaxes

We account for income taxes using an asset and liability approach, which requires the recognition of
taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax
consequences of events that have been recognized in our financial statements or tax returns. The
measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the
effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred
tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on
available evidence.

We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected
to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in
income tax expense.

We accounted for the tax effects of The Tax Cuts and Jobs Act, enacted on December 22, 2017, on a
provisional basis in our 2017 consolidated financial statements. We completed our accounting in the fourth
quarter of 2018 within the one year measurement period from the enactment date.

Cashandcashequivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three

months or less when purchased and are primarily comprised of bank deposits and certificates of deposit.

Investments

Short-term investments, which may include marketable equity securities, time deposits, certificates of
deposit, government bonds and corporate debt securities with original maturities of greater than three
months but less than one year when purchased, are classified as available-for-sale and are reported at fair
value using the specific identification method. Unrealized gains and losses related to equity securities are

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

recognized in interest & other, net, with all other unrealized gains and losses reported as a component of
other comprehensive income (loss), net of related estimated income tax provisions or benefits.

Long-term investments may include marketable government bonds and corporate debt securities, time
deposits, certificates of deposit and equity investments. Debt securities are classified as available-for-sale
and are reported at fair value using the specific identification method. Unrealized gains and losses on our
available-for-sale debt securities are excluded from earnings and reported as a component of other
comprehensive income (loss), net of related estimated income tax provisions or benefits.

Our equity investments are primarily investments in privately-held companies. Our consolidated results
of operations include, as a component of interest and other, net, our share of the net income or loss of the
equity investments accounted for under the equity method of accounting. Our share of investees’ results of
operations is not significant for any period presented. Equity investments without readily determinable fair
values are accounted for at cost, less impairment and adjusted for subsequent observable price changes
obtained from orderly transactions for identical or similar investments issued by the same investee. Such
changes in the basis of the equity investment are recognized in interest & other, net.

We assess whether an other-than-temporary impairment loss on our investments has occurred due to
declines in fair value or other market conditions. With respect to our debt securities, this assessment takes
into account the severity and duration of the decline in value, our intent to sell the security, whether it is more
likely than not that we will be required to sell the security before recovery of its amortized cost basis, and
whether we expect to recover the entire amortized cost basis of the security (that is, whether a credit loss
exists).

Propertyandequipment

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation for
equipment, buildings and leasehold improvements commences once they are ready for our intended use.
Depreciation is computed using the straight-line method over the estimated useful
lives of the assets,
generally, one to three years for computer equipment and software, up to thirty years for buildings and
building improvements, the shorter of five years or the term of the lease for leasehold improvements and
three years for furniture, fixtures and vehicles. Land is not depreciated.

Goodwillandintangibleassets

Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at
the reporting unit level. A qualitative assessment can be performed to determine whether it is more likely than
not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the
qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of
the reporting units are estimated using income and market approaches. Goodwill is considered impaired if
the carrying value of the reporting unit exceeds its fair value. The discounted cash flow method, a form of the
income approach, uses expected future operating results and a market participant discount rate. The market
approach uses comparable company prices and other relevant information generated by market transactions
(either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to
historical and expected future operating results of our reporting units. Failure to achieve these expected
results, changes in the discount rate or market pricing metrics may cause a future impairment of goodwill at
the reporting unit. We conducted our annual impairment test of goodwill as of August 31, 2018 and 2017 and
determined that no adjustment to the carrying value of goodwill for any reporting units was required.

Intangible assets consist of purchased customer lists and user base, marketing related, developed
technologies and other intangible assets, including patents and contractual agreements. Intangible assets
are amortized over the period of estimated benefit using the straight-line method and estimated useful lives
ranging from one to five years. No significant residual value is estimated for intangible assets.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Impairmentoflong-livedassets

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in
circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is
considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is
expected to generate. In 2018, 2017 and 2016, no impairment was noted.

Foreigncurrency

Most of our foreign subsidiaries use the local currency of their respective countries as their functional
currency. Assets and liabilities are translated into U.S. dollars using exchange rates prevailing at the balance
sheet date, while revenues and expenses are translated at average exchange rates during the year. Gains and
losses resulting from the translation of our consolidated balance sheet are recorded as a component of
accumulated other comprehensive income.

Gains and losses from foreign currency transactions are recognized as interest and other, net.

Derivativeinstruments

We use derivative financial instruments, primarily forwards, options and swaps, to hedge certain foreign
currency and interest rate exposures. We may also use other derivative instruments not designated as
hedges, such as forwards to hedge foreign currency balance sheet exposures. We do not use derivative
financial instruments for trading purposes.

We also entered into a warrant agreement in addition to a commercial agreement with a service provider
that, subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of the
service provider’s fully diluted issued and outstanding share capital at a specific date. The warrant is
accounted for as a derivative instrument under ASC Topic 815, DerivativesandHedging.

See “Note 7 — Derivative Instruments” for a full description of our derivative instrument activities and

related accounting policies.

Concentrationofcreditrisk

Our cash, cash equivalents, accounts receivable and derivative instruments are potentially subject to
concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management
believes are of high credit quality. Our accounts receivable are derived from revenue earned from customers.
In each of the years ended December 31, 2018, 2017 and 2016, no customer accounted for more than 10% of
net revenues. Our derivative instruments expose us to credit risk to the extent that our counterparties may be
unable to meet the terms of the agreements.

RecentlyAdoptedAccountingPronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to
revenue recognition. This new standard replaces all current GAAP guidance on this topic and eliminates all
industry-specific guidance. The new revenue recognition guidance provides a unified model to determine
when and how revenue is recognized. The core principle is that a company should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration
for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued
several amendments to the standard, including principal versus agent considerations when another party is
involved in providing goods or services to a customer and the application of identifying performance
obligations. We adopted the standard effective January 1, 2018 using the full retrospective transition method
and recast each prior reporting period presented. The cumulative adjustment to retained earnings as of
January 1, 2016 was immaterial.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Under the new standard, we identified one performance obligation related to the core service offered to
sellers on our Marketplace platform and believe additional services, mainly to promote or feature listings at
the option of sellers, are not distinct within the context of the contract. Accordingly, certain fees paid by
sellers for these services will be recognized when the single performance obligation is satisfied or when the
contract expires resulting, in some cases, in a change in the timing of recognition. In addition, we made the
policy election to consider delivery of tickets in our StubHub business to be fulfillment activities and,
consequently, the performance obligation is considered to be satisfied upon payment to sellers. The impact
of this policy election will allow an acceleration of revenue recognition for certain users. The total impact
resulting from the change in timing of recognition for both the Marketplace and StubHub platforms was an
immaterial net change in transaction revenue for both the twelve month periods ended December 31, 2017
and 2016, and an increase in deferred revenue of $20 million and $19 million as of December 31, 2017 and 2016,
respectively.

Further, certain incentives, such as coupons and rewards provided to certain users from which we do not
earn revenue within the context of the identified contract, of $363 million and $323 million for the twelve
months ended December 31, 2017 and 2016, respectively, was recognized as sales and marketing expenses,
which historically was recorded as a reduction of revenue.

Adoption of this guidance impacted our previously reported results as follows (in millions, except per

share data):

Year Ended
December 31, 2017

Year Ended
December 31, 2016

As Reported As Adjusted As Reported As Adjusted

Net revenues

Cost of net revenues

Sales and marketing

Net income (loss)

Net income (loss) per share — basic

$9,567

$2,222

$ 2,515

$ (1,016)

$ (0.95)

$9,927

$ 2,221

$2,878

$ (1,017)

$ (0.95)

$8,979

$2,007

$2,368

$ 7,266

$ 6.41

Net income (loss) per share — diluted

$ (0.95)

$ (0.95)

$ 6.35

$ 9,298

$2,004

$ 2,691

$ 7,266

$ 6.41

$ 6.35

In 2016, the FASB issued new guidance related to accounting for equity investments, financial liabilities
under the fair value option, and the presentation and disclosure requirements for financial instruments. In
addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing
deferred tax assets resulting from unrealized losses on available-for-sale debt securities. In 2018, the FASB
issued certain clarifications related to the application of the new guidance. We adopted this guidance in the
first quarter of 2018 with no material
impact on our consolidated financial statements at adoption. We
anticipate that the standard will increase the volatility of our other income (expense), net, as a result of the
remeasurement of equity investments.

In 2016, the FASB issued new guidance that clarifies the classification of certain cash receipts and cash
payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of
contingent consideration arising from a business combination,
insurance settlement proceeds, and
distributions from certain equity method investees. Additionally, the FASB issued new guidance to include
restricted cash with cash and cash equivalents when reconciling the beginning-of-the-period and end-of-the-
period total amounts shown on the statement of cash flows. The new standards are effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15, 2017. We adopted this guidance in
the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2016, the FASB issued new guidance that requires the recognition of the income tax consequences of
an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This removes the exception

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

to postpone recognition until the asset has been sold to an outside party. This standard is effective for annual
reporting periods beginning after December 15, 2017, including interim reporting periods within those annual
reporting periods, with early adoption permitted. It is required to be applied on a modified retrospective basis
through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of
adoption. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated
financial statements at adoption.

In 2017, the FASB issued new guidance that narrows the application of when an integrated set of assets
and activities is considered a business and provides a framework to assist entities in evaluating whether both
an input and a substantive process are present to be considered a business. It is expected that the new
guidance will reduce the number of transactions that would need to be further evaluated and accounted for
as a business. This standard is effective for annual reporting periods beginning after December 15, 2017,
including interim reporting periods within those annual reporting periods, with early adoption permitted. We
adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial
statements at adoption; however, adoption of the new guidance will impact management’s consideration of
strategic investments.

In 2017, the FASB issued new guidance to clarify the scope and application of the sale or transfer of
including partial sales and also defines what constitutes an “in
nonfinancial assets to noncustomers,
substance nonfinancial asset” which can include financial assets. The new guidance eliminates several
accounting differences between transactions involving assets and transactions involving businesses. Further,
the guidance aligns the accounting for derecognition of a nonfinancial asset with that of a business. This
standard is effective for annual reporting periods beginning after December 15, 2017,
including interim
reporting periods within those annual reporting periods. We adopted this guidance in the first quarter of 2018
with no material impact on our consolidated financial statements at adoption.

In 2017, the FASB issued new guidance to amend the scope of modification accounting for share-based
payment arrangements. The amendments in the update provide guidance on types of changes to the terms
or conditions of share-based payment awards would be required to apply modification accounting under ASC
718, Compensation-Stock Compensation. The amendments are effective for annual reporting periods
beginning after December 15, 2017 with early adoption permitted. We adopted this guidance in the first
quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2017, the FASB issued new guidance to simplify the application of the hedge accounting guidance in
current GAAP and improve the financial reporting of hedging relationships by allowing entities to better align
its risk management activities and financial reporting for hedging relationships through changes to both
designation and measurement for qualifying hedging relationships and the presentation of hedge results.
Further, the new guidance allows more flexibility in the requirements to qualify and maintain hedge
accounting. The new standard is effective for fiscal years beginning after December 15, 2018, and interim
periods with early adoption permitted. We early adopted this guidance in the first quarter of 2018 with no
material impact on our consolidated financial statements at adoption.

In 2018,

the FASB issued new guidance that allows a reclassification from accumulated other
comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs
Act, eliminating the stranded tax effects resulting from the Tax Cuts and Jobs Act. However, the new
guidance only applies to the tax effects resulting from the Tax Cuts and Jobs Act and does not change the
underlying guidance to recognize the effect of a change in tax laws or rates in income from continuing
operations. The amendments are effective for all entities for fiscal years beginning after December 15, 2018,
and interim periods within those fiscal years, with early adoption permitted. We have elected to not reclassify
the stranded tax effects resulting from the Tax Cut and Jobs Act to retained earnings. Accordingly, the
standard does not have an impact on our consolidated financial statements.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

RecentAccountingPronouncementsNotYetAdopted

In 2016, the FASB issued new guidance related to accounting for leases. The new guidance requires the
recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as
operating leases under previous guidance. In 2018, the FASB also approved an amendment that would permit
the option to adopt the new standard prospectively as of the effective date, without adjusting comparative
periods presented. The new standard will be effective for us beginning January 1, 2019. In preparation for the
adoption of the new standard, we have implemented internal controls and a new lease accounting information
system to enable the preparation of financial information. We will elect the optional transition approach to not
apply the new lease standard in the comparative periods presented and the package of practical expedients.
We will also elect the practical expedient to not account for lease and non-lease components separately for
data center operating leases. We expect adoption of the standard will result in the recognition of ROU assets
and lease liabilities for operating leases of approximately $700 million to $800 million at January 1, 2019, with
the most significant impact from recognition of ROU assets and lease liabilities related to our office space,
data center, fulfillment center and other corporate asset operating leases. The adoption of the new standard
will not have a material impact on our consolidated statement of income, stockholders’ equity and cash flows.

In 2016, the FASB issued new guidance that requires credit losses on financial assets measured at
amortized cost basis to be presented at the net amount expected to be collected, not based on incurred
losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance
for credit losses limited to the amount by which fair value is below amortized cost. The new standard is
effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.
Early adoption for fiscal years, and interim periods within those fiscal years, beginning after December 15,
2018 is permitted. We are evaluating the impact of adopting this new accounting guidance on our
consolidated financial statements.

In 2017, the FASB issued new guidance to simplify the subsequent measurement of goodwill by removing
the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of
goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting
unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the
guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to
perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill
impairment test. This standard is effective for annual or any interim goodwill impairment test in fiscal years
beginning after December 15, 2019, with early adoption permitted for impairment tests performed after
January 1, 2017. We do not expect the adoption of this standard to have a material impact on our consolidated
financial statements.

In 2017, the FASB issued new guidance that will shorten the amortization period for certain callable debt
securities held at a premium to the earliest call date to more closely align with expectations incorporated in
market pricing. The new guidance will not impact debt securities held at a discount. Adoption of this standard
will be made on a modified retrospective basis through a cumulative-effect adjustment directly to retained
earnings as of the beginning of the period of adoption. This standard is effective for annual reporting periods
beginning after December 15, 2018, including interim reporting periods within those annual reporting periods,
with early adoption permitted. We do not expect the adoption of this standard to have a material impact on
our consolidated financial statements.

In 2018, the FASB issued new guidance to simplify the accounting for nonemployee share-based payment
transactions by expanding the scope of ASC Topic 718, Compensation — Stock Compensation, to include
share-based payment transactions for acquiring goods and services from nonemployees. Under the new
standard, most of the guidance on stock compensation payments to nonemployees would be aligned with
the requirements for share-based payments granted to employees. This standard is effective for annual
reporting periods beginning after December 15, 2018, including interim reporting periods within those annual
reporting periods, with early adoption permitted. We do not expect the adoption of this standard to have a
material impact on our consolidated financial statements.

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

In 2018, the FASB issued new guidance on a customer’s accounting for implementation, set-up, and other
upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service
contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation
costs as they would for an arrangement that has a software license. This standard will be effective for annual
reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal
years, with early adoption permitted. We do not expect the adoption of this standard to have a material
impact on our consolidated financial statements.

In 2018, the FASB issued guidance to permit use of the Overnight Index Swap (“OIS”) rate as a U.S.
benchmark interest rate for hedge accounting purposes in addition to the UST, the London InterBank Offered
Rate (“LIBOR”) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and
Financial Market Association Municipal Swap Rate. This guidance will be effective for annual reporting periods
beginning after December 15, 2018, including interim reporting periods within those annual reporting periods.
While we continue to assess the potential impact of this standard, we do not expect the adoption of this
standard to have a material impact on our consolidated financial statements.

In 2018, the FASB issued new guidance to clarify the interaction between Collaborative Arrangements and
Revenue from Contracts with Customers standards. The guidance (1) clarifies that certain transactions
between collaborative arrangement participants should be accounted under revenue guidance; (2) adds unit
of account guidance to the collaborative arrangement guidance to align with the revenue standard; and
(3) clarifies presentation guidance for transactions with a collaborative arrangement participant that is not
accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning
after December 15, 2019, including interim reporting periods within those annual reporting periods, with early
impact on our
adoption permitted. We do not expect the adoption of this standard to have a material
consolidated financial statements.

Note 2 — Net Income (loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the
weighted average number of common shares outstanding during the period. Diluted net income (loss) per
share is computed by dividing net income (loss) for the period by the weighted average number of shares of
common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of
outstanding options and equity incentive awards is reflected in diluted net income (loss) per share by
application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all
anti-dilutive common shares.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The following table presents the computation of basic and diluted net income (loss) per share (in millions,

except per share amounts):

Numerator:

Income (loss) from continuing operations

$2,528 $(1,013) $7,285

Income (loss) from discontinued operations, net of income taxes

2

(4)

(19)

Year Ended December 31,

2018

2017

2016

Net income (loss)

Denominator:

Weighted average shares of common stock — basic

Dilutive effect of equity incentive awards

Weighted average shares of common stock — diluted

Income (loss) per share—basic:

Continuing operations

Discontinued operations

Net income (loss) per share—basic

Income (loss) per share—diluted:

Continuing operations

Discontinued operations

Net income (loss) per share—diluted

$2,530 $(1,017) $7,266

980

1,064

1,133

11

991

—

11

1,064

1,144

$ 2.58 $(0.95) $ 6.43

—

—

(0.02)

$ 2.58 $(0.95) $ 6.41

$ 2.55 $(0.95) $ 6.37

—

—

(0.02)

$ 2.55 $(0.95) $ 6.35

Common stock equivalents excluded from income per diluted share because

their effect would have been anti-dilutive

12

46

8

Note 3 — Business Combinations

BusinessCombinations

In 2018, we completed the acquisition of 100% of Giosis Pte. Ltd.’s (“Giosis”) Japan business, including
the Qoo10.jp platform, in exchange for $306 million in cash and the relinquishment of our existing equity
method investment in Giosis. We believe the acquisition allows us to offer Japanese consumers more
inventory and grow our international presence. Refer to “Note 6 — Investments” for further details on the
relinquishment of our equity method investment in Giosis’ non-Japanese business. The aggregate purchase
consideration was allocated as follows (in millions):

Goodwill

Purchased intangible assets

Net liabilities

Total

Giosis

$532

91

(50)

$573

These allocations were prepared on a preliminary basis and changes to these allocations may occur as
information becomes available. The goodwill recognized is primarily attributable to expected
additional
synergies and the assembled workforce of Giosis. We generally do not expect goodwill to be deductible for
income tax purposes.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Acquisition activity in 2017 was immaterial.

During 2016, we completed six acquisitions — Cargigi Inc., Expertmaker, SalesPredict, Ticketbis, Ticket
Utils and Corrigon Ltd. — for an aggregate purchase consideration of approximately $212 million in cash. We
believe these acquisitions will help us build a better user experience, improve discoverability and grow our
international presence.

The aggregate purchase consideration of our 2016 acquisitions was allocated as follows (in millions):

Purchased intangible assets
Goodwill
Net liabilities
Total

$ 48
128
(35)
$ 141

Ticketbis Other

Total
$28 $ 76
185
(49)
$ 71 $212

57
(14)

These allocations have been prepared on a preliminary basis and changes to these allocations may occur
as additional information becomes available. We generally do not expect goodwill to be deductible for
income tax purposes.

Our consolidated financial statements include the operating results of acquired businesses from the date
of acquisition. Separate operating results and pro forma results of operations for the acquisition above have
not been presented as the effect of these acquisitions is not material to our financial results.

Note 4 – Goodwill and Intangible Assets

Goodwill

The following table presents goodwill activity for the years ended December 31, 2018 and 2017 (in

millions):

Goodwill

$4,501

10

262

$4,773

532

(145)

$5,160

December 31,
2016

Goodwill
Acquired Adjustments

December 31,
2017

Goodwill
Acquired Adjustments

December 31,
2018

The adjustments to goodwill during the years ended December 31, 2018 and 2017 were primarily due to

foreign currency translation. There were no impairments to goodwill in 2018 and 2017.

IntangibleAssets

The components of identifiable intangible assets are as follows (in millions, except years):

December 31, 2018

December 31, 2017

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Weighted
Average
Useful Life
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Weighted
Average
Useful Life
(Years)

Intangible assets:

Customer lists and user base $ 519
584
Marketing-related
278
Developed technologies
160
All other
$1,541
Total

$ (445)
(578)
(269)
(157)
$(1,449)

$74
6
9
3
$92

5
5
3
4

$ 458
607
273
156
$1,494

$ (430)
(587)
(258)
(150)
$(1,425)

$28
20
15
6
$69

5
5
3
4

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Amortization expense for intangible assets was $63 million, $64 million and $56 million for the years

ended December 31, 2018, 2017 and 2016, respectively.

Expected future intangible asset amortization as of December 31, 2018 is as follows (in millions):

Fiscal year:

2019

2020

2021

Thereafter

Total

Note 5 — Segments

$49

34

9

—

$92

We have one operating and reportable segment. Our chief operating decision maker reviews financial
information presented on a consolidated basis for purposes of allocating resources and evaluating financial
performance. The following table sets forth the breakdown of net revenues by type for the periods presented
(in millions):

Net revenues by type:

Net transaction revenues:

Marketplace

StubHub

Total net transaction revenues

Marketing services and other revenues:

Marketplace

Classifieds

StubHub, Corporate and other

Total marketing services and other revenues

Total net revenues

Year Ended December 31,

2018

2017

2016

$ 7,416

$6,809

$6,425

1,068

8,484

1,011

7,820

938

7,363

1,225

1,022

15

2,262

1,192

897

18

2,107

1,137

791

7

1,935

$10,746

$ 9,927

$9,298

The following tables summarize the allocation of net revenues and long-lived tangible assets based on

geography (in millions):

Net revenues by geography:

U.S.
Germany
United Kingdom
South Korea
Rest of world

Total net revenues

F-21

Year Ended December 31,

2018

2017

2016

$ 4,373
1,591
1,481
1,195
2,106
$10,746

$ 4,187
1,464
1,368
1,061
1,847
$9,927

$3,967
1,359
1,331
957
1,684
$9,298

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Long-lived tangible assets by geography:

U.S.
International

Total long-lived tangible assets

As of December 31,

2018

2017

$1,661
151
$1,812

$1,603
160
$1,763

Net revenues, inclusive of the effects of foreign exchange during each period, are attributed to U.S. and
international geographies primarily based upon the country in which the seller, platform that displays
advertising, other service provider, or customer, as the case may be, is located. Long-lived assets attributed
to the U.S. and international geographies are based upon the country in which the asset is located or owned.

Note 6 — Investments

The following tables summarize the unrealized gains and losses and estimated fair value of our

investments classified as available-for-sale as of December 31, 2018 and 2017 (in millions):

Short-term investments:
Restricted cash
Corporate debt securities
Government and agency securities

Long-term investments:

Corporate debt securities

Short-term investments:
Restricted cash
Corporate debt securities

Long-term investments:

Corporate debt securities

December 31, 2018

Gross
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

$

17
2,615
90
$ 2,722

$ —
—
—
$ —

3,682
$3,682

1
1

$

$ —

(9)
—
$ (9)

(48)
$(48)

$

17
2,606
90
$ 2,713

3,635
$3,635

December 31, 2017

Gross
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

$

20
3,726
$ 3,746

5,458
$5,458

$ —

1
1

$

12
$ 12

$ —

(4)
$ (4)

(24)
$(24)

$

20
3,723
$ 3,743

5,446
$5,446

Restricted cash is held primarily in interest bearing accounts for letters of credit primarily related to our
global sabbatical program and various lease arrangements. Our fixed-income investments consist of
predominantly investment grade corporate debt securities and government and agency securities. The
corporate debt and government and agency securities that we invest in are generally deemed to be low risk
based on their credit ratings from the major rating agencies.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The longer the duration of these securities, the more susceptible they are to changes in market interest
rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-
market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest
rates. We regularly review investment securities for other-than-temporary impairment using both qualitative
and quantitative criteria. We presently do not intend to sell any of the securities in an unrealized loss position
and expect to realize the full value of all these investments upon maturity or sale.

Investment securities in a continuous loss position for greater than 12 months had an estimated fair value
$2.7 billion and unrealized losses of $41 million as of December 31, 2018 and an estimated fair value of $360
million and an immaterial amount of unrealized losses as of December 31, 2017. As of December 31, 2018,
these securities had a weighted average remaining maturity of approximately 17 months. Refer to “Note 16 —
Accumulated Other Comprehensive Income” for amounts reclassified to earnings from unrealized gains and
losses.

The estimated fair values of our short-term and long-term investments classified as available-for-sale by

date of contractual maturity as of December 31, 2018 are as follows (in millions):

One year or less (including restricted cash of $17)

One year through two years

Two years through three years

Three years through four years

Four years through five years

Thereafter

Total

Equityinvestments

December 31,
2018

$ 2,713

1,922

1,123

473

117

—

$6,348

Our equity investments are reported in long-term investments on our consolidated balance sheet. The
following table provides a summary of our equity investments as of December 31, 2018 and December 31, 2017
(in millions):

Equity investments without readily determinable fair values

Equity investments under the equity method of accounting

Total equity investments

December 31,
2018

December 31,
2017

$137

6

$143

$872

13

$885

In 2018, we sold our investment in Flipkart and relinquished our existing equity method investment in
Giosis as part of the exchange for the acquisition of Giosis’ Japan business. The $313 million gain upon sale of
our investment in Flipkart and the $266 million gain upon relinquishment of our equity method investment in
Giosis were recorded in interest and other, net on our consolidated statement of income. Refer to “Note 3 —
Business Combinations” for further details on the Giosis acquisition.

In 2017, we made a cost method investment of $50 million. In addition, we received a 5.44% ownership
interest in Flipkart in exchange for our eBay India business and a $500 million cash investment, resulting in a
cost method investment of $725 million. The gain on disposal of our eBay India business of $167 million was
recorded in interest and other, net on our consolidated statement of income. In addition, we recorded a $61
million impairment charge to write-down our cost method investment in Jasper Infotech Private Limited

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

(“Snapdeal”). The investment was measured at fair value due to events and circumstances that we identified
as having significant impact on its fair value. The fair value measurement of the impaired investment was
measured using significant unobservable inputs. The impairment charge, representing the difference
between the net book value and the fair value, was recorded to interest and other, net.

The following table provides a summary of unrealized gains and losses recorded in interest and other, net
during the twelve months ended December 31, 2018 related to equity investments without readily
determinable fair values still held at December 31, 2018.

Net gains/(losses) recognized during the period on equity investments

Less: Net gains/(losses) recognized during the period on equity investments sold during

the period

Total unrealized gains/(losses) on equity investments still held at December 31, 2018

Year Ended
December 31, 2018

$ 313

(313)

$ —

The following table summarizes the total carrying value of equity investments without

readily

determinable fair values during the twelve months ended December 31, 2018 (in millions):

Carrying value, beginning of period

Additions

Sales

Downward adjustments for observable price changes and impairment

Foreign currency translation and other

Carrying value, end of period

Year Ended
December 31, 2018

$872

23

(718)

(20)

(20)

$ 137

For such equity investments without readily determinable fair values as of December 31, 2018, cumulative
downward adjustments for price changes and impairment was $81 million. As of December 31, 2018, there
have been no upward adjustments for price changes to our equity investments without readily determinable
fair values.

Note 7 — Derivative Instruments

Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows
associated with changes in foreign currency exchange rates and interest rates. These hedging contracts
reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate
movements. We do not use any of our derivative instruments for trading purposes.

We use foreign currency exchange contracts to reduce the volatility of cash flows related to forecasted
revenues, expenses, assets and liabilities,
including intercompany balances denominated in foreign
currencies. These contracts are generally one month to one year in duration, but with maturities up to 18
months. The objective of the foreign exchange contracts is to better ensure that ultimately the U.S. dollar-
equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar/foreign currency
exchange rate. We evaluate the effectiveness of our foreign exchange contracts designated as cash flow or
net investment hedges on a quarterly basis.

We use interest rate swaps to manage interest rate risk on our fixed rate notes issued in July 2014 and
maturing in 2019, 2021 and 2024. These interest rate swaps had the economic effect of modifying the fixed

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

interest obligations associated with $2.4 billion of these notes so that the interest payable on these senior
notes effectively became variable based on LIBOR plus a spread. The duration of these interest rate contracts
matches the duration of the fixed rate notes due 2019, 2021 and 2024.

CashFlowHedges

For derivative instruments that are designated as cash flow hedges, the derivative’s gain or loss is initially
reported as a component of accumulated other comprehensive income (“AOCI”) and subsequently
reclassified into earnings in the same period the forecasted transaction affects earnings. Derivative
instruments designated as cash flow hedges must be de-designated as hedges when it is probable the
forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-
month time period. Unrealized gains and losses in AOCI associated with such derivative instruments are
immediately reclassified into earnings. As of December 31, 2018, we have estimated that approximately $64
million of net derivative gain related to our cash flow hedges included in accumulated other comprehensive
income will be reclassified into earnings within the next 12 months. We classify cash flows related to our cash
flow hedges as operating activities in our consolidated statement of cash flows.

NetInvestmentHedges

For derivative instruments that are designated as net investment hedges, the derivative’s gain or loss is
initially reported in the translation adjustments component of AOCI and is reclassified to net earnings in the
period in which the hedged subsidiary is either sold or substantially liquidated.

FairValueHedges

We have designated the interest rate swaps used to manage interest rate risk on our fixed rate notes
issued in July 2014 and maturing in 2019, 2021 and 2024 as qualifying hedging instruments and are accounting
for them as fair value hedges. These transactions are designated as fair value hedges for financial accounting
purposes because they protect us against changes in the fair value of certain of our fixed rate borrowings due
to benchmark interest rate movements. Changes in the fair values of these interest rate swap agreements are
recognized in other assets or other liabilities with a corresponding increase or decrease in long-term debt.
Each quarter we pay interest based on LIBOR plus a spread to the counterparty and on a semi-annual basis
receive interest from the counterparty per the fixed rate of these senior notes. The net amount is recognized
as interest expense in interest and other, net.

Non-DesignatedHedges

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that
we primarily use to hedge monetary assets or liabilities, including intercompany balances denominated in
non-functional currencies. The gains and losses on our derivatives not designated as hedging instruments are
recorded in interest and other, net, which are offset by the foreign currency gains and losses on the related
assets and liabilities that are also recorded in interest and other, net. We classify cash flows related to our
non-designated hedging instruments as operating activities in our consolidated statement of cash flows.

Warrant

We entered into a warrant agreement in conjunction with a commercial agreement with a service provider
that, subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of the
service providers fully diluted issued and outstanding share capital at a specific date. The warrant has a term
of seven years and will vest in a series of four tranches, at a specified price per share upon meeting significant
processing volume milestone targets on a calendar year basis. If and when the relevant milestone is reached,
the warrant becomes exercisable with respect to the corresponding tranche of warrant shares up until the
warrant expiration date of January 31, 2025. The maximum number of tranches that can vest in one calendar
year is two.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The warrant is accounted for as a derivative under ASC Topic 815, DerivativesandHedging. We report the
warrant at fair value within other assets in our consolidated balance sheets and changes in the fair value of the
warrant are recognized in interest and other, net in our consolidated statement of income. The day-one value
attributable to the other side of the warrant, which was recorded as a deferred credit, is reported within other
liabilities in our consolidated balance sheets and will be amortized over the life of the commercial
arrangement.

FairValueofDerivativeContracts

The fair values of our outstanding derivative instruments as of December 31, 2018 and 2017 were as

follows (in millions):

Derivative Assets:

Balance Sheet Location

December 31,
2018

December 31,
2017

Foreign exchange contracts designated as cash flow

hedges

Other Current Assets

$ 72

Foreign exchange contracts not designated as

hedging instruments

Warrant

Foreign exchange contracts designated as cash flow

hedges

Other Current Assets

Other Assets

Other Assets

Interest rate contracts designated as fair value hedges Other Assets

Total derivative assets

Derivative Liabilities:

38

148

4

—

$262

$ 16

10

—

—

2

$28

Foreign exchange contracts designated as cash flow

hedges

Other Current Liabilities

$ —

$ 18

Foreign exchange contracts designated as net

investment hedges

Other Current Liabilities

Interest rate contracts designated as fair value hedges Other Current Liabilities

Foreign exchange contracts not designated as

hedging instruments

Other Current Liabilities

Interest rate contracts designated as fair value hedges Other Liabilities

Total derivative liabilities

Total fair value of derivative instruments

1

7

30

10

$ 48

$ 214

—

—

11

—

$29

$ (1)

Under the master netting agreements with the respective counterparties to our derivative contracts,
subject to applicable requirements, we are allowed to net settle transactions of the same type with a single
net amount payable by one party to the other. However, we have elected to present the derivative assets and
derivative liabilities on a gross basis on our consolidated balance sheet. As of December 31, 2018, the
potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both
assets and liabilities by $30 million, resulting in net derivative assets of $84 million and net derivative liabilities
of $1 million.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

EffectofDerivativeContractsonAccumulatedOtherComprehensiveIncome

The following tables present the activity of derivative instruments designated as cash flow hedges as of
December 31, 2018 and 2017, and the impact of these derivative contracts on AOCI for the years ended
December 31, 2018 and 2017 (in millions):

Foreign exchange contracts

designated as cash flow hedges

$(57)

117

(8)

$68

December 31, 2017

Amount of Gain (Loss)
Recognized in Other
Comprehensive Income

Amount of Gain (Loss)
Reclassified From
AOCI to Earnings

December 31, 2018

Foreign exchange contracts

designated as cash flow hedges

$54

(104)

7

$(57)

December 31, 2016

Amount of Gain (Loss)
Recognized in Other
Comprehensive Income

Amount of Gain (Loss)
Reclassified From
AOCI to Earnings

December 31, 2017

EffectofDerivativeContractsonConsolidatedStatementofIncome

The following table provides a summary of the total gain (loss) recognized in the consolidated statement

of income from our foreign exchange derivative contracts by location (in millions):

Foreign exchange contracts designated as cash flow hedges recognized in net

revenues

Foreign exchange contracts designated as cash flow hedges recognized in

cost of net revenues and operating expenses

Foreign exchange contracts designated as cash flow hedges recognized in

interest and other, net

Foreign exchange contracts not designated as hedging instruments

recognized in interest and other, net

Year Ended December 31,

2018

2017

2016

$ (8)

$(28)

$ —

—

—

11

24

9

(16)

7

101

11

Total gain (loss) recognized from foreign exchange derivative contracts in

the consolidated statement of income

$ 1

$ (9)

$ 119

The following table provides a summary of the total gain (loss) recognized in the consolidated statement

of income from our interest rate derivative contracts by location (in millions):

Gain (loss) from interest rate contracts designated as fair value hedges recognized

in interest and other, net

Gain (loss) from hedged items attributable to hedged risk recognized in interest and

other, net

Total gain (loss) recognized from interest rate derivative contracts in the

consolidated statement of income

Year Ended December 31,

2018

2017

2016

$ (19) $ (21) $ (18)

19

21

18

$ —

$ —

$ —

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The following table provides a summary of the total gain recognized in the consolidated statement of

income due to changes in the fair value of the warrant (in millions):

Gain attributable to changes in the fair value of warrant recognized in interest and

other, net

Year Ended December 31,

2018

2017

2016

$104 $ —

$ —

NotionalAmountsofDerivativeContracts

Derivative transactions are measured in terms of the notional amount, but this amount is not recorded on
the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the
instruments. The notional amount is generally not exchanged, but is used only as the basis on which the value
of foreign exchange payments under these contracts are determined. The following table provides the
notional amounts of our outstanding derivatives as of December 31, 2018 and 2017 (in millions):

Foreign exchange contracts designated as cash flow hedges

Foreign exchange contracts designated as net investment hedges

Foreign exchange contracts not designated as hedging instruments

Interest rate contracts designated as fair value hedges

Total

CreditRisk

December 31,

2018

2017

$ 1,510 $ 1,990

804

3,517

2,400

—

2,349

2,400

$ 8,231 $ 6,739

Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the
terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading
the risk across, major financial institutions. In addition, the potential risk of loss with any one counterparty
resulting from this type of credit risk is monitored on an ongoing basis. To further limit credit risk, we also
enter into collateral security arrangements related to certain interest rate derivative instruments whereby
collateral is posted between counterparties if the fair value of the derivative instrument exceeds certain
thresholds. Additional collateral would be required in the event of a significant credit downgrade by either
party. We are not required to pledge, nor are we entitled to receive, collateral related to our foreign exchange
derivative transactions. As of December 31, 2018, we had neither pledged nor received collateral related to
our interest rate derivative transactions.

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 8 — Fair Value Measurement of Assets and Liabilities

The following tables present our financial assets and liabilities measured at fair value on a recurring basis

as of December 31, 2018 and 2017 (in millions):

December 31,
2018

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

Assets:

Cash and cash equivalents

$2,202

$2,052

$ 150

$ —

Short-term investments:

Restricted cash

Corporate debt securities

Government and agency

securities

Total short-term investments

Derivatives

Long-term investments:

Corporate debt securities

Total long-term investments

Total financial assets

Liabilities:

Derivatives

Assets:

Cash and cash equivalents

Short-term investments:

Restricted cash

Corporate debt securities

Total short-term investments
Derivatives
Long-term investments:

Corporate debt securities

Total long-term investments
Total financial assets

Liabilities:

Derivatives

17

2,606

90

2,713

262

3,635

3,635

$ 8,812

17

—

—

17

—

—

—

$2,069

—

2,606

90

2,696

114

3,635

3,635

$6,595

—

—

—

—

148

—

—

$148

$

48

$

—

$

48

$ —

December 31,
2017

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

$ 2,120

$2,120

$

20

3,723
3,743
28

5,446
5,446
$ 11,337

20

—
20
—

—
—

$2,140

—

—

3,723
3,723
28

5,446
5,446
$ 9,197

$ —

—

—
—
—

—
—
$ —

$

29

$ —

$

29

$ —

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Our financial assets and liabilities are valued using market prices on both active markets (Level 1), less
active markets (Level 2) and little or no market activity (Level 3). Level 1 instrument valuations are obtained
from real-time quotes for transactions in active exchange markets involving identical assets. Level 2
instrument valuations are obtained from readily available pricing sources for comparable instruments,
identical instruments in less active markets, or models using market observable inputs. Level 3 instrument
valuations typically reflect management’s estimate of assumptions that market participants would use in
pricing the asset or liability. We did not have any transfers of financial instruments between valuation levels
during 2018 or 2017.

The majority of our derivative instruments are valued using pricing models that take into account the
contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves,
option volatility and currency rates. Our warrant, which is accounted for as a derivative instrument, is valued
using a Black-Scholes model. Key assumptions used in the valuation include risk-free interest rates; the
service provider’s common stock price, equity volatility and common stock outstanding; exercise price; and
details specific to the warrant. The value is also probability adjusted for management assumptions with
respect to meeting the processing volume milestone targets. Refer to “Note 7 — Derivative Instruments” for
further details on our derivative instruments.

Other financial instruments, including accounts receivable and accounts payable, are carried at cost,

which approximates their fair value because of the short-term nature of these instruments.

The following table presents a reconciliation of the opening to closing balance of assets measured using

significant unobservable inputs (Level 3) as of December 31, 2018 (in millions):

Opening balance as of January 1, 2018

Recognition of warrant

Change in fair value

Closing balance as of December 31, 2018

Note 9 – Balance Sheet Components

OtherCurrentAssets

Customer accounts and funds receivable

Other

Other current assets

F-30

December 31,
2018

$ —

44

104

$148

December 31,

2018

2017

(In millions)
$ 670 $ 662

829

523

$ 1,499 $ 1,185

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

PropertyandEquipment,Net

Computer equipment and software

Land and buildings, including building improvements

Leasehold improvements

Furniture and fixtures

Construction in progress and other

Property and equipment, gross

Accumulated depreciation

Property and equipment, net

December 31,

2018

2017

(In millions)
$ 4,933 $4,609

713

399

169

130

620

370

169

239

6,344

6,007

(4,747)

(4,410)

$ 1,597 $ 1,597

Total depreciation expense on our property and equipment for the years ended December 31, 2018, 2017

and 2016 totaled $626 million, $612 million and $605 million, respectively.

AccruedExpensesandOtherCurrentLiabilities

Customer accounts and funds payable

Compensation and related benefits

Advertising accruals

Other current tax liabilities

Other

Accrued expenses and other current liabilities

December 31,

2018

2017

(In millions)
$ 681 $ 629

410

264

229

751

469

236

—

800

$2,335 $2,134

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 10 — Debt

The following table summarizes the carrying value of our outstanding debt (in millions, except

percentages):

Long-Term Debt

Floating Rate Notes:

Coupon Rate

As of
December 31,
2018

Effective
Interest Rate

As of
December 31,
2017

Effective
Interest Rate

Senior notes due 2019

Senior notes due 2023

LIBOR plus 0.48% $ 400

3.123%

$ 400

LIBOR plus 0.87%

400

3.499%

400

1.955%

2.349%

Fixed Rate Notes:

Senior notes due 2018

Senior notes due 2019

Senior notes due 2020

Senior notes due 2020

Senior notes due 2021

Senior notes due 2022

Senior notes due 2022

Senior notes due 2023

Senior notes due 2024

Senior notes due 2027

Senior notes due 2042

Senior notes due 2056

Total senior notes

Hedge accounting fair value

adjustments

Unamortized discount and debt

issuance costs

Less: Current portion of long-term debt

Total long-term debt

Short-Term Debt

Current portion of long-term debt

Hedge accounting fair value

adjustments

Unamortized discount and debt

issuance costs

Other indebtedness

Total short-term debt

Total Debt

2.775%

2.346%

3.389%

2.344%

2.993%

3.989%

2.678%

2.866%

3.531%

3.689%

4.114%

6.547%

— %

2.346%

3.389%

2.344%

2.993%

3.989%

2.678%

2.866%

3.531%

3.689%

4.114%

6.547%

750

1,150

500

500

750

750

1,000

750

750

850

750

750

10,050

2

(68)

(750)

9,234

750

—

—

31

781

$ 10,015

—

1,150

500

500

750

750

1,000

750

750

850

750

750

9,300

(10)

(55)

(1,550)

7,685

1,550

(7)

(1)

4

1,546

$ 9,231

2.500%

2.200%

3.250%

2.150%

2.875%

3.800%

2.600%

2.750%

3.450%

3.600%

4.000%

6.000%

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

SeniorNotes

In 2018, $750 million of 2.500% fixed rate notes due 2018 matured and were repaid. In 2017, we issued
senior unsecured notes, or senior notes, in an aggregate principal amount of $2.5 billion. The issuance
consisted of $400 million of floating rate notes due 2023, $500 million of 2.150% fixed rate notes due 2020,
$750 million of 2.750% fixed rate notes due 2023 and $850 million of 3.600% fixed rate notes due 2027. In
addition, $1.0 billion of 1.350% fixed rate notes due 2017 and $450 million of floating rate notes due 2017
matured and were repaid in 2017.

None of the floating rate notes are redeemable prior to maturity. On and after March 1, 2021, we may
redeem some or all of the 6.000% fixed rate notes due 2056 at any time and from time to time prior to their
maturity at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest. We may redeem some or all of the other fixed rate notes of each series at any
time and from time to time prior to their maturity, generally at a make-whole redemption price, plus accrued
and unpaid interest.

If a change of control triggering event occurs with respect to the 2.150% fixed rate notes due 2020, the
3.800% fixed rate notes due 2022, the floating rate notes due 2023, the 2.750% fixed rate notes due 2023,
the 3.600% fixed rate notes due 2027 or the 6.000% fixed rate notes due 2056, we must, subject to certain
exceptions, offer to repurchase all of the notes of the applicable series at a price equal to 101% of the
principal amount, plus accrued and unpaid interest.

The indenture pursuant to which the senior notes were issued includes customary covenants that, among
other things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens
on specified assets or enter into sale and lease-back transactions with respect to specified properties, and
also includes customary events of default.

To help achieve our interest rate risk management objectives, in connection with the previous issuance of
certain senior notes, we entered into interest rate swap agreements that effectively converted $2.4 billion of
our fixed rate notes to floating rate debt based on LIBOR plus a spread. These swaps were designated as fair
value hedges against changes in the fair value of certain fixed rate senior notes resulting from changes in
interest rates. The gains and losses related to changes in the fair value of interest rate swaps substantially
offset changes in the fair value of the hedged portion of the underlying debt that are attributable to changes in
market interest rates.

The effective interest rates for our senior notes include the interest payable, the amortization of debt
issuance costs and the amortization of any original issue discount on these senior notes. Interest on these
senior notes is payable either quarterly or semiannually. Interest expense associated with these senior notes,
including amortization of debt issuance costs, during the years ended December 31, 2018, 2017 and 2016 was
approximately $318 million, $307 million and $254 million, respectively. As of December 31, 2018 and 2017, the
estimated fair value of these senior notes, using Level 2 inputs, was approximately $9.0 billion and $10.1 billion,
respectively.

CommercialPaper

We have a commercial paper program pursuant to which we may issue commercial paper notes in an
aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397
days from the date of issue. As of December 31, 2018, there were no commercial paper notes outstanding.

CreditAgreement

In November 2015, we entered into a credit agreement that provides for an unsecured $2 billion five-year
revolving credit facility. We may also, subject to the agreement of the applicable lenders, increase the

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

commitments under the revolving credit facility by up to an aggregate amount of $1 billion. Funds borrowed
under the credit agreement may be used for working capital, capital expenditures, dividends, acquisitions
and other general corporate purposes.

As of December 31, 2018, no borrowings were outstanding under our $2 billion credit agreement.
However, as described above, we have an up to $1.5 billion commercial paper program and therefore maintain
$1.5 billion of available borrowing capacity under our credit agreement in order to repay commercial paper
borrowings in the event we are unable to repay those borrowings from other sources when they become
due. As a result, $500 million of borrowing capacity was available as of December 31, 2018 for other purposes
permitted by the credit agreement.

Loans under the credit agreement bear interest at either (i) LIBOR plus a margin (based on our public debt
credit ratings) ranging from 0.875 percent to 1.5 percent or (ii) a formula based on the agent bank’s prime rate,
the federal funds effective rate plus 0.5 percent or LIBOR plus 1.0 percent, plus a margin (based on our public
debt credit ratings) ranging from zero percent to 0.5 percent. The credit agreement will terminate and all
amounts owing thereunder will be due and payable on November 9, 2020, unless (a) the commitments are
terminated earlier, either at our request or, if an event of default occurs, by the lenders (or automatically in the
case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request,
subject to the agreement of the lenders. The credit agreement includes customary representations,
warranties, affirmative and negative covenants,
including financial covenants, events of default and
indemnification provisions in favor of the banks. The negative covenants include restrictions regarding the
incurrence of liens and subsidiary indebtedness, in each case, subject to certain exceptions. The financial
covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest
coverage ratio and a maximum consolidated leverage ratio. The events of default include the occurrence of a
change of control (as defined in the credit agreement) with respect to us.

We were in compliance with all covenants in our outstanding debt instruments for the period ended

December 31, 2018.

FutureMaturities

Expected future principal maturities as of December 31, 2018 are as follows (in millions):

Fiscal Years:

2019

2020

2021

2022

2023

Thereafter

Total future maturities

$ 1,550

1,000

750

1,750

1,150

3,100

$9,300

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 11 — Commitments and Contingencies

Commitments

LeaseArrangements

We have lease obligations under certain non-cancelable operating leases. Future minimum rental

payments under our non-cancelable operating leases as of December 31, 2018 are as follows (in millions):

2019

2020

2021

2022

2023

Thereafter

Total minimum lease payments

Leases

$ 136

104

91

76

51

119

$577

Rent expense for the years ended December 31, 2018, 2017 and 2016 totaled $118 million, $105 million and

$84 million, respectively.

Off-BalanceSheetArrangements

As of December 31, 2018, we had no off-balance sheet arrangements that have, or are reasonably likely to
have, a current or future material effect on our consolidated financial condition, results of operations, liquidity,
capital expenditures or capital resources.

We have a cash pooling arrangement with a financial institution for cash management purposes. This
arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating
cash balances held within the same financial institution (“Aggregate Cash Deposits”). This arrangement also
allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net
balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis
for calculating our net interest expense or income under the arrangement. As of December 31, 2018, we had a
total of $2.7 billion in aggregate cash deposits, partially offset by $2.4 billion in cash withdrawals, held within
the financial institution under the cash pooling arrangement.

LitigationandOtherLegalMatters

Overview

We are involved in legal and regulatory proceedings on an ongoing basis. Many of these proceedings are
in early stages and may seek an indeterminate amount of damages. If we believe that a loss arising from such
matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial
statements. If only a range of estimated losses can be determined, we accrue an amount within the range
that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better
estimate than any other amount, we accrue the low end of the range. For those proceedings in which an
unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the
reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible
loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in
judgment or settlement) is not material. If we cannot estimate the probable or reasonably possible loss or
range of losses arising from a proceeding, we have disclosed that fact. In assessing the materiality of a
proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to
change our business practices in a manner that could have a material adverse impact on our business. With
respect to the matters disclosed in this Note 11, we are unable to estimate the possible loss or range of losses
that could potentially result from the application of such non-monetary remedies.

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable were not
material for the twelve months ended December 31, 2018. Except as otherwise noted for the proceedings
described in this Note 11, we have concluded, based on currently available information, that reasonably
possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or
legal and regulatory
settlement)
proceedings are inherently unpredictable and subject to significant uncertainties. If one or more matters were
resolved against us in a reporting period for amounts in excess of management’s expectations, the impact on
our operating results or financial condition for that reporting period could be material. Legal fees are
expensed as incurred.

in excess of our recorded accruals are also not material. However,

GeneralMatters

Third parties have from time to time claimed, and others may claim in the future, that we have infringed
their intellectual property rights. We are subject to patent disputes, and expect that we could be subject to
additional patent infringement claims involving various aspects of our business as our products and services
continue to expand in scope and complexity. Such claims may be brought directly or indirectly against our
companies and/or against our customers (who may be entitled to contractual indemnification under their
contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions and
divestitures and in cases where we are entering new lines of business. We have in the past been forced to
litigate such claims. We may also become more vulnerable to third-party claims as laws such as the Digital
Millennium Copyright Act, the Lanham Act and the Communications Decency Act are interpreted by the
courts, and as we expand the scope of our business (both in terms of the range of products and services that
we offer and our geographical operations) and become subject to laws in jurisdictions where the underlying
laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less
favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark
laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and
costly to defend and resolve, could require expensive changes in our methods of doing business or could
require us to enter into costly royalty or licensing agreements on unfavorable terms.

From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary
course of business, including suits by our users (individually or as class actions) alleging, among other things,
improper disclosure of our prices, rules or policies, that our practices, prices, rules, policies or customer/user
agreements violate applicable law or that we have acted unfairly and/or not acted in conformity with such
practices, prices, rules, policies or agreements. Further, the number and significance of these disputes and
inquiries are increasing as the political and regulatory landscape changes and, as we have grown larger, our
businesses have expanded in scope (both in terms of the range of products and services that we offer and
our geographical operations) and our products and services have increased in complexity. Any claims or
regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation,
damage awards (including statutory damages for certain causes of action in certain jurisdictions), injunctive
relief or increased costs of doing business through adverse judgment or settlement, require us to change our
business practices in expensive ways, require significant amounts of management time, result in the diversion
of significant operational resources or otherwise harm our business.

IndemnificationProvisions

We entered into a separation and distribution agreement and various other agreements with PayPal to
govern the separation and relationship of the two companies. These agreements provide for specific
indemnity and liability obligations and could lead to disputes between us and PayPal, which may be

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

significant. In addition, the indemnity rights we have against PayPal under the agreements may not be
sufficient to protect us and our indemnity obligations to PayPal may be significant.

In addition, we have entered into indemnification agreements with each of our directors, executive
officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest
extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their
affiliation with us.

In the ordinary course of business, we have included limited indemnification provisions in certain of our
including our standard marketing,
agreements with parties with which we have commercial relations,
promotions and application-programming-interface license agreements. Under these contracts, we generally
indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the
indemnified party in connection with claims by a third party with respect to our domain names, trademarks,
logos and other branding elements to the extent that such marks are applicable to our performance under the
subject agreement. In certain cases, we have agreed to provide indemnification for intellectual property
infringement.
loss under these indemnification
provisions due to our limited history of prior indemnification claims and the unique facts and circumstances
involved in each particular provision.

It is not possible to determine the maximum potential

To date, losses recorded in our consolidated statement of income in connection with our indemnification

provisions have not been significant, either individually or collectively.

Note 12 — Stockholders’ Equity

PreferredStock

We are authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or
more series; to establish the number of shares included within each series; to fix the rights, preferences and
limitations or
privileges of the shares of each wholly unissued series and any related qualifications,
restrictions; and to increase or decrease the number of shares of any series (but not below the number of
shares of a series then outstanding) without any further vote or action by our stockholders. As of
December 31, 2018 and 2017, there were 10 million shares of $0.001 par value preferred stock authorized for
issuance, and no shares issued or outstanding.

CommonStock

Our Amended and Restated Certificate of Incorporation authorizes us to issue 3.6 billion shares of

common stock.

StockRepurchasePrograms

Our stock repurchase programs are intended to programmatically offset the impact of dilution from our
equity compensation programs and, subject to market conditions and other factors, to make opportunistic
and programmatic repurchases of our common stock to reduce our outstanding share count. Any share
repurchases under our stock repurchase programs may be made through open market transactions, block
trades, privately negotiated transactions (including accelerated share repurchase transactions) or other
means at times and in such amounts as management deems appropriate and will be funded from our working
capital or other financing alternatives. Our stock repurchase programs may be limited or terminated at any
time without prior notice. The timing and actual number of shares repurchased will depend on a variety of
factors,
including corporate and regulatory requirements, price and other market conditions and
management’s determination as to the appropriate use of our cash.

In July 2017, our Board of Directors (“Board”) authorized a $3.0 billion stock repurchase program, and in
January 2018, our Board authorized an additional $6.0 billion stock repurchase program. These stock

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

repurchase programs have no expiration from the date of authorization. The stock repurchase activity under
our stock repurchase programs during 2018 was as follows (in millions, except per share amounts):

Balance as of January 1, 2018

Authorization of additional plan in January 2018

Repurchase of shares of common stock

131

$34.31

$4,500

Balance as of December 31, 2018

Shares
Repurchased (1)

Average Price
per Share (2)

Value of Shares
Repurchased (2)

Remaining
Amount
Authorized

$ 1,651

6,000

(4,500)

$ 3,151

(1) These repurchased shares of common stock were recorded as treasury stock and were accounted for under the cost method. None of the repurchased

shares of common stock have been retired.

(2) Excludes broker commissions.

In January 2019, our Board authorized an additional $4.0 billion stock repurchase program, with no
expiration from the date of authorization. In addition, our Board of Directors initiated a quarterly cash dividend
of $0.14 per share of common stock to be paid on or about March 20, 2019 to shareholders of record as of
March 1, 2019.

Note 13 — Employee Benefit Plans

EquityIncentivePlans

We have equity incentive plans under which we grant equity awards, including stock options, restricted
stock units (“RSUs”), performance-based restricted stock units (“PBRSUs”), stock payment awards and
performance share units, to our directors, officers and employees. As of December 31, 2018, 755 million
shares were authorized under our equity incentive plans and 66 million shares were available for future grant.

Stock options granted under these plans generally vest 12.5% six months from the date of grant (or 25%
one year from the date of grant for grants to new employees) with the remainder vesting at a rate of 2.08% per
month thereafter, and generally expire seven to ten years from the date of grant. RSU awards granted to
eligible employees under our equity incentive plans generally vest in annual or quarterly installments over a
period of three to five years, are subject to the employees’ continuing service to us and do not have an
expiration date.

In 2018, 2017 and 2016, certain executives were eligible to receive PBRSU. PBRSU awards are subject to
performance and time-based vesting requirements. The target number of shares subject to the PBRSU award
are adjusted based on our business performance measured against the performance goals approved by the
Compensation Committee at the beginning of the performance period. Generally, if the performance criteria
is satisfied, one-half of the award vests in March following the end of the performance period and the other
half of the award vests in March of the following year.

DeferredStockUnits

Prior to December 31, 2016, we granted deferred stock units to each non-employee director (other than
Mr. Omidyar) at the time of our annual meeting of stockholders and to new non-employee directors upon their
election to the Board. Each deferred stock unit award granted to a new non-employee director upon election
to the Board vests 25% one year from the date of grant, and at a rate of 2.08% per month thereafter. In
addition, directors were permitted to elect to receive, in lieu of annual retainer and committee chair fees and
at the time these fees would otherwise be payable, fully vested deferred stock units with an initial value equal
to the amount based on the fair market value of common stock at the date of grant. Following termination of a
non-employee director’s service on the Board, deferred stock units granted prior to August 1, 2013 are

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

payable in stock or cash (at our election), while deferred stock units granted on or after August 1, 2013 are
payable solely in stock. As of December 31, 2018, there were approximately 207,179 deferred stock units
outstanding, which are included in our restricted stock unit activity below. As of December 31, 2016, we no
longer grant deferred stock units.

EmployeeStockPurchasePlan

We have an Employee Stock Purchase Plan (“ESPP”) for all eligible employees. Under the plan, shares of
our common stock may be purchased over an offering period with a maximum duration of two years at 85% of
the lower of the fair market value on the first day of the applicable offering period or on the last day of the six-
month purchase period. Employees may purchase shares having a value not exceeding 10% of their eligible
compensation during an offering period. During 2018, 2017, and 2016, employees purchased approximately
4 million, 4 million and 4 million shares under this plan at average prices of $23.82, $22.32 and $18.97 per
share, respectively. As of December 31, 2018, approximately 12 million shares of common stock were
reserved for future issuance.

StockOptionActivity

No stock options were granted in 2018 and 2017, and an immaterial amount of stock options were granted

during 2016. The weighted average grant-date fair value of options granted during 2016 was $5.40.

During 2018, 2017 and 2016, the aggregate intrinsic value of options exercised under our equity incentive
plans was $18 million, $26 million and $16 million, respectively, determined as of the date of option exercise.
As of December 31, 2018, options to purchase 2 million shares of our common stock were outstanding and in-
the-money.

RestrictedStockUnitActivity

The following table presents RSU activity (including PBRSUs that have been earned) under our equity

incentive plans as of and for the year ended December 31, 2018 (in millions except per share amounts):

Outstanding as of January 1, 2018

Awarded and assumed

Vested

Forfeited

Outstanding as of December 31, 2018

Expected to vest as of December 31, 2018

Weighted Average
Grant-Date Fair
Value (per share)

$28.54

$39.05

$28.57

$32.47

$33.59

Units

42

19

(18)

(9)

34

28

During 2018, 2017 and 2016, the aggregate intrinsic value of RSUs vested under our equity incentive plans

was $684 million, $635 million and $418 million, respectively.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Stock-BasedCompensationExpense

The following table presents stock-based compensation expense for the years ended December 31,

2018, 2017 and 2016 (in millions):

Cost of net revenues

Sales and marketing

Product development

General and administrative

Total stock-based compensation expense

Capitalized in product development

Year Ended December 31,

2018

$ 59

111

197

171

$538

$ 14

2017

$ 53

94

178

158

$483

$ 14

2016

$ 34

95

158

129

$416

$ 13

As of December 31, 2018, there was approximately $820 million of unearned stock-based compensation
that will be expensed from 2019 through 2022. If there are any modifications or cancellations of the underlying
unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining
unearned stock-based compensation expense. Future unearned stock-based compensation will increase to
the extent we grant additional equity awards, change the mix of grants between stock options and restricted
stock units or assume unvested equity awards in connection with acquisitions.

EmployeeSavingsPlans

We have a defined contribution plan, which is qualified under Section 401(k) of the Internal Revenue Code.
Participating employees may contribute up to 50% of their eligible compensation, but not more than statutory
limits. In 2018, 2017 and 2016, we contributed one dollar for each dollar a participant contributed, with a
maximum contribution of 4% of each employee’s eligible compensation, subject to a maximum employer
contribution of $11,000, $10,800 and $10,600 per employee for each period, respectively. Our non-
U.S. employees are covered by various other savings plans. Total expense for these plans was $60 million,
$57 million and $49 million in 2018, 2017 and 2016, respectively.

Note 14 — Income Taxes

The components of pretax income for the years ended December 31, 2018, 2017 and 2016 are as follows

(in millions):

United States

International

Year Ended December 31,

2018

2017

2016

$ 299 $ 417 $1,529

2,419

1,858

2,122

$2,718 $2,275 $3,651

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The provision (benefit) for income taxes is comprised of the following (in millions):

Current:

Federal

State and local

Foreign

Deferred:

Federal

State and local

Foreign

Year Ended December 31,

2018

2017

2016

$ 73 $ 1,426 $ 689

25

245

(17)

151

55

178

$ 343 $ 1,560 $ 922

$(488) $ 1,788 $

77

—

4

(10)

345

(153)

(64)

(4,633)

1,728

(4,556)

The following is a reconciliation of the difference between the actual provision for income taxes and the
provision computed by applying the federal statutory rate of 21% for 2018 and 35% for 2017 and 2016 to
income before income taxes (in millions):

$ 190 $3,288 $(3,634)

Provision at statutory rate

Foreign income taxed at different rates

Other taxes on foreign operation

Stock-based compensation

State taxes, net of federal benefit

Research and other tax credits

Tax basis step-up resulting from realignment

Impact of tax rate change

U.S. tax reform

Other

Year Ended December 31,

2018

2017

2016

$ 571 $ 797 $ 1,278

(217)

330

(33)

(13)

(35)

(451)

105

24

55

(16)

(695)

(4,621)

(16)

26

(3)

13

(30)

(9)

108

—

(463)

3,142

(7)

12

—

—

(8)

$ 190 $3,288 $(3,634)

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between
the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect
for the year in which the differences are expected to be reversed. Significant deferred tax assets and
liabilities consist of the following (in millions):

As of December 31,

2018

2017

Deferred tax assets:

Net operating loss, capital loss and credits
Accruals and allowances
Stock-based compensation
Amortizable tax basis in intangibles
Net deferred tax assets
Valuation allowance

Deferred tax liabilities:

Unremitted foreign earnings
Acquisition-related intangibles
Depreciation and amortization
Net unrealized gain
Available-for-sale securities

$

136 $
168
22
4,757
5,083
(65)

86
129
40
5,164
5,419
(19)
$ 5,018 $5,400

$(2,930) $ (3,514)
(24)
(89)
(2)
(2)
(3,631)
$ 1,868 $ 1,769

(46)
(132)
(27)
(15)
(3,150)

As of December 31, 2018, our federal, state and foreign net operating loss carryforwards for income tax
purposes were approximately $12 million, $55 million and $247 million, respectively. The federal and state net
operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue
Code and applicable state tax laws. If not utilized, the federal and state net operating loss carryforwards will
begin to expire in 2021 and 2020, respectively. The carryforward periods on our foreign net operating loss
carryforwards are as follows: $64 million do not expire, $132 million are subject to valuation allowance and
begin to expire in 2019, and $51 million are not subject to valuation allowance but will begin to expire in 2024.
As of December 31, 2018, state tax credit carryforwards for income tax purposes were approximately $129
million. Most of the state tax credits carry forward indefinitely.

As of December 31, 2018 and 2017, we maintained a valuation allowance with respect to certain of our
deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions and certain state tax
credits that we believe are not likely to be realized.

During the fourth quarter of 2016, we began the process of realigning our legal structure, subsequent to
the distribution of PayPal Holdings, Inc., to better reflect how we manage and operate our platforms. We
consider many factors in effecting this realignment, including foreign exchange exposures, long-term cash
flows and cash needs of our platforms, capital allocation considerations and the associated tax effects. As a
result, we achieved a substantial step-up in the tax basis of the intangible assets in our foreign eBay platforms
in 2016. The step-up in tax basis of our foreign eBay platforms resulted from our election to terminate an
existing tax ruling and finalize a new agreement with the foreign tax authority. In the fourth quarter of 2016, we
recognized a tax benefit of $4.6 billion, which represented the income tax effect of this step-up in tax basis.
During the first half of 2017, we recognized a noncash income tax charge of $376 million caused by the foreign
exchange remeasurement of the associated deferred tax asset. In the first quarter of 2017, we achieved a

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

step-up in the tax basis of the intangible assets in our foreign Classifieds platforms as a result of voluntary
domiciling our Classifieds intangible assets into a new jurisdiction and recognized a tax benefit of $695
million.

As a result of the realignment of our legal structure in 2016 and 2017, we no longer benefit from tax rulings
previously concluded in several different jurisdictions. Without the benefit of the rulings, the noncash tax
impacts of the realignment in our foreign eBay and Classifieds platforms have increased our income tax rate
in certain foreign jurisdictions, most significantly Switzerland. The higher rate results from eBay being subject
to a higher enacted tax rate for the foreseeable future.

While our tax rate is higher, the realignment allows us to achieve certain foreign cash tax benefits due to
the step-up in tax basis achieved in certain foreign jurisdictions. We expect these cash tax benefits to remain
consistent, subject to the performance of our foreign platforms, for a period in excess of 10 years. The
realignment was substantially completed by the end of 2018 and primarily impact our international entities.
However, U.S. tax reform and the new U.S. minimum tax on foreign earnings has reduced our expected
consolidated cash tax benefits.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. U.S. tax reform, among other things,
reduces the U.S. federal income tax rate from 35% to 21% in 2018, instituted a dividends received deduction
for foreign earnings with a related tax for the deemed repatriation of unremitted foreign earnings in 2017 and
created a new U.S. minimum tax on earnings of foreign subsidiaries. We recognized a provisional income tax
charge of $3.1 billion in the fourth quarter of 2017, which was included as a component of the income tax
provision on our consolidated statement of income. We completed our analysis of the impacts of U.S. tax
reform in the fourth quarter of 2018 and recognized a $463 million reduction to the provisional tax amounts
recorded in the fourth quarter of 2017, which is included as a component of income tax expense from
continuing operations.

Included in the provisional amount was $1.4 billion for the income tax on the deemed repatriation of
unremitted foreign earnings. We completed the computation of this amount as part of the 2017 income tax
return filing and reduced the provisional amount by $18 million. Additionally, we utilized $213 million of foreign
tax credits to reduce the net liability. We elected to pay the liability for the deemed repatriation of foreign
earnings in installments, as specified by the Act. Accordingly, as of December 31, 2018 and 2017, $968 million
and $1.2 billion of our liability for deemed repatriation of foreign earnings was included in other liabilities on our
consolidated balance sheet.

The remaining provisional amount of $1.7 billion was for the deferred income tax effects of the Act,
primarily the impact of the new U.S. minimum tax on foreign earnings, partially offset by the reversal of our
existing deferred tax liability associated with repatriation of unremitted foreign earnings. We completed our
analysis of the components of the deferred tax computation in the fourth quarter of 2018 and recognized a tax
benefit of $445 million as a reduction to the provisional amounts recorded in the fourth quarter of 2017 for the
deferred income tax effects of the Act. This amount includes a $389 million tax benefit as a result of
clarification by Swiss tax authorities regarding the applicability of withholding tax to repatriated earnings in
October 2018.

We completed our analysis of the impacts of U.S. tax reform in the fourth quarter of 2018. Accordingly, we
have recognized the tax consequences of all foreign unremitted earnings and management has no specific
plans to indefinitely reinvest the unremitted earnings of our foreign subsidiaries as of the balance sheet date.
We have not provided for deferred taxes on outside basis differences in our investments in our foreign
subsidiaries that are unrelated to unremitted earnings. These basis differences will be indefinitely reinvested.
A determination of the unrecognized deferred taxes related to these other components of our outside basis
difference is not practicable.

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The following table reflects changes in unrecognized tax benefits for the years ended December 31, 2018,

2017 and 2016 (in millions):

Gross amounts of unrecognized tax benefits as of the beginning of the period

$487

$458 $440

2018

2017

2016

Increases related to prior period tax positions

Decreases related to prior period tax positions

Increases related to current period tax positions

Settlements

64

(10)

28

(18)

37

(28)

58

(38)

24

(20)

47

(33)

Gross amounts of unrecognized tax benefits as of the end of the period

$ 551

$487 $458

Included within our gross amounts of unrecognized tax benefits of $551 million as of December 31, 2018 is
$100 million of unrecognized tax benefits indemnified by PayPal. If total unrecognized tax benefits were
realized in a future period, it would result in a tax benefit of $466 million. Of this amount, approximately $95
million of unrecognized tax benefit is indemnified by PayPal and a corresponding receivable would be
reduced upon a future realization. As of December 31, 2018, our liabilities for unrecognized tax benefits were
included in other liabilities on our consolidated balance sheet.

We recognize interest and/or penalties related to uncertain tax positions in income tax expense. In 2018,
$14 million was included in tax expense for interest and penalties. The amount of interest and penalties
accrued as of December 31, 2018 and 2017 was approximately $61 million and $43 million, respectively.

We are subject to both direct and indirect taxation in the U.S. and various states and foreign jurisdictions.
We are under examination by certain tax authorities for the 2008 to 2016 tax years. We believe that adequate
amounts have been reserved for any adjustments that may ultimately result from these or other examinations.
The material jurisdictions where we are subject to potential examination by tax authorities for tax years after
2007 include, among others, the U.S. (Federal and California), Germany, Korea, Israel, Switzerland, United
Kingdom and Canada.

Although the timing of the resolution and/or closure of audits is highly uncertain, it is reasonably possible
that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given
the number of years remaining subject to examination and the number of matters being examined, we are
unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.
We do expect the gross amount of unrecognized tax benefits to be reduced within the next twelve months by
at least $196 million.

On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion invalidating the
regulations relating to the treatment of stock-based compensation expense in an intercompany cost-sharing
arrangement. A final decision was issued by the Tax Court in December 2015. The IRS appealed the decision
in June 2016. On July 24, 2018, the Ninth Circuit Federal Court issued a decision that was subsequently
withdrawn and a reconstituted panel has conferred on the appeal. No decision had been made at the time of
the release of these financial statements. Due to the uncertainty surrounding the status of the current
regulations, questions related to the scope of potential benefits or obligations, and the risk of the Tax Court’s
decision being overturned upon appeal, we have not recorded any benefit or expense as of December 31,
2018. We will continue to monitor ongoing developments and potential impacts to our consolidated financial
statements.

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 15 — Interest and Other, Net

The components of interest and other, net for the years ended December 31, 2018, 2017 and 2016 are as

follows (in millions):

Interest income

Interest expense

Gains on investments and sale of business (1)

Other

Total interest and other, net

Year Ended December 31,

2018

2017

2016

$ 176

$ 177

$ 125

(326)

663

(17)

$ 496

$

(292)

115

11

11

(225)

1,343

83

$1,326

(1) Gains on investments and sale of business includes: (i) a $313 million gain on the sale of our equity investment in Flipkart, a $266 million gain recognized
upon the relinquishment of our equity investment in Giosis and a $104 million gain recognized due to the change in fair value of the warrant in 2018; (ii) a
$167 million gain on disposal of our eBay India business in 2017; and (iii) $1.3 billion of pre-tax gains recognized from the sale of our equity holdings of
MercadoLibre, Inc. in 2016.

Note 16 — Accumulated Other Comprehensive Income

The following tables summarize the changes in AOCI for the years ended December 31, 2018 and 2017 (in

millions):

Balance as of December 31, 2017

$ (57)

$ (15)

$ 748

$ 41

Unrealized
Gains
(Losses) on
Derivative
Instruments

Unrealized
Gains (Losses)
on Investments

Foreign
Currency
Translation

Estimated Tax
(Expense)
Benefit

Total

$ 717

Other comprehensive income (loss) before

reclassifications

Less: Amount of gain (loss) reclassified

from AOCI

Net current period other comprehensive

income (loss)

Balance as of December 31, 2018

117

(8)

125

$ 68

Unrealized
Gains
(Losses) on
Derivative
Instruments

(42)

(1)

(41)

$(56)

(286)

(15)

(226)

—

2

(7)

(286)

$ 462

(17)

$24

(219)

$ 498

Unrealized
Gains (Losses)
on Investments

Foreign
Currency
Translation

Estimated Tax
(Expense)
Benefit

Balance as of December 31, 2016

$ 54

$ 51

$(230)

$ 1

Other comprehensive income before

reclassifications

Less: Amount of gain (loss) reclassified

from AOCI

Net current period other comprehensive

income

Balance as of December 31, 2017

(59)

7

(66)

$ (15)

978

—

978

$ 748

40

—

40

$ 41

(104)

7

(111)

$ (57)

F-45

Total

$ (124)

855

14

841

$ 717

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

The following table provides a summary of

reclassifications out of AOCI

for

the years ended

December 31, 2018 and 2017 (in millions):

Details about AOCI Components

Gains (losses) on cash flow hedges — foreign

exchange contracts

Unrealized gains (losses) on investments

Total reclassifications for the period

Note 17 — Restructuring

Affected Line Item in the
Statement of Income

Amount of Gain (Loss)
Reclassified from AOCI

2018

2017

Net Revenues
Cost of net revenues
Sales and marketing
Product development
General and administrative
Interest and other, net
Total, from continuing operations
before income taxes
Income tax provision
Total, from continuing operations
net of income taxes
Total, from discontinued
operations net of income taxes
Total, net of income taxes
Interest and other, net
Total, before income taxes
Income tax provision
Total, net of income taxes
Total, net of income taxes

$ (8)
—
—
—
—
—

(8)
2

(6)

—
(6)
(1)
(1)

—

(1)
$ (7)

$(28)
3
1
5
2
24

7

—

7

—

7
7
7

—

7
$ 14

The following table summarizes restructuring reserve activity during 2018 (in millions):

Accrued liability as of January 1, 2018

Charges

Payments

Other

Accrued liability as of December 31, 2018

Employee
Severance and
Benefits

$ —

86

(61)

(17)

$ 8

In June 2018, management approved a plan to implement a strategic reduction of our existing global
workforce. The reduction was substantially completed in the second quarter of 2018. We incurred pre-tax
restructuring charges of approximately $86 million. The restructuring charges, which primarily related to
employee severance and benefits, were aggregated in general and administrative expenses in the
consolidated statement of income. Other adjustments were primarily related to settlements of previous
contractual commitments in the second quarter of 2018. No restructuring charges were recognized during
2017 and 2016.

F-46

SupplementaryData—QuarterlyFinancialData—Unaudited

The following tables present certain unaudited consolidated quarterly financial information for each of the
eight quarters in the two year period ended December 31, 2018. This quarterly information has been prepared
on the same basis as the Consolidated Financial Statements and includes all adjustments necessary to state
fairly the information for the periods presented. 2017 has been recast to reflect Accounting Standards
Codification Topic 606, RevenuefromContractswithCustomers.

Quarterly Financial Data

(Unaudited, in millions, except per share amounts)

2018
Net revenues

Gross profit

Income from continuing operations

Income (loss) from discontinued operations, net of

income taxes

Net income (loss)

Income (loss) per share — basic:
Continuing operations
Discontinued operations

Net income (loss) per share — basic

Income (loss) per share — diluted:

Continuing operations
Discontinued operations

Net income (loss) per share — diluted

Weighted-average shares:

Basic
Diluted

March 31

June 30

September 30

December 31

Quarter Ended

$2,580

$ 2,021

$ 407

$2,640

$2,043

$ 638

$2,649

$ 2,041

$ 720

$2,877

$2,259

$ 763

—

4

1

(3)

$ 407

$ 642

$ 721

$ 760

$ 0.40
—
$ 0.40

$ 0.40
—
$ 0.40

$ 0.64
—
$ 0.64

$ 0.64
—
$ 0.64

1,010
1,029

992
1,004

$ 0.74
—
$ 0.74

$ 0.73
—
$ 0.73

974
983

$ 0.81
—
$ 0.81

$ 0.80
—
$ 0.80

945
950

F-47

2017
Net revenues

Gross profit

Income (loss) from continuing operations

Income from discontinued operations, net of income

taxes

Net income

Income per share — basic:
Continuing operations
Discontinued operations

Net income (loss) per share — basic

Income (loss) per share — diluted:

Continuing operations
Discontinued operations

Net income (loss) per share — diluted

Weighted-average shares:

Basic
Diluted

March 31

June 30

September 30

December 31

Quarter Ended

$2,303

$ 1,789

$ 1,035

$2,419

$1,859

$

29

$2,498

$ 1,941

$ 520

$ 2,707

$ 2,117

$(2,597)

—

—

—

(4)

$ 1,035

$

29

$ 520

$ (2,601)

$ 0.96
—
$ 0.96

$ 0.94
—
$ 0.94

1,083
1,102

$ 0.03
—
$ 0.03

$ 0.03
—
$ 0.03

1,076
1,091

$ 0.49
—
$ 0.49

$ 0.48
—
$ 0.48

1,062
1,078

$ (2.51)

—

$ (2.51)

$ (2.51)

—

$ (2.51)

1,035
1,035

F-48

eBay Inc.

FINANCIAL STATEMENT SCHEDULE

The Financial Statement Schedule II — VALUATION AND QUALIFYING ACCOUNTS as of and for the years
ended December 31, 2018, 2017 and 2016.

Allowances for Doubtful Accounts and Authorized Credits

Year Ended December 31, 2016

Year Ended December 31, 2017

Year Ended December 31, 2018

Allowance for Transaction Losses

Year Ended December 31, 2016

Year Ended December 31, 2017

Year Ended December 31, 2018

Tax Valuation Allowance

Year Ended December 31, 2016

Year Ended December 31, 2017

Year Ended December 31, 2018

Balance at
Beginning
of Period

Charged/
Credited
to Net
Income

Charged
to Other
Account

Charges
Utilized/
Write-offs

Balance
at End
of Period

(In millions)

$ 84

81

$102

$ 34

23

$ 25

$ 41

37

$ 19

$ 68

91

$ 92

$162

181

$194

$ —

—

$ —

$ —

—

$ —

$ (71)

(70)

$ (88)

$(173)

(179)

$ (191)

$ (6)

(20)

$ 33

$ 2

2

$ 13

$ —

—

$ —

$ 81

102

$106

$ 23

25

$ 28

$ 37

19

$ 65

F-49

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

8-K 000-24821

6/30/2015

8-K 000-24821 4/27/2012

S-1

333-59097

8/19/1998

8-K 000-24821

10/28/2010

8-K 000-24821

10/28/2010

8-K 000-24821

10/28/2010

8-K 000-24821

7/24/2012

No.

2.01

3.01

3.02

4.01

4.02

4.03

4.04

4.05

4.06

4.07

INDEX TO EXHIBITS

Exhibit Description

Separation and Distribution Agreement by and
between Registrant and PayPal Holdings, Inc. dated
as of June 26, 2015.

Registrant’s Amended and Restated Certificate of
Incorporation.

Registrant’s Amended and Restated Bylaws.

X

Form of Specimen Certificate for Registrant’s
Common Stock.

Indenture dated as of October 28, 2010 between
Registrant and Wells Fargo Bank, National
Association, as trustee.

Supplemental Indenture dated as of October 28,
2010 between Registrant and Wells Fargo Bank,
National Association, as trustee.

Form of 3.250% Note due 2020.

Forms of 2.600% Note due 2022 and 4.000% Note
due 2042.

Indenture dated as of July 2, 2007 between GSI
Commerce, Inc. and The Bank of New York, as
trustee (filed as Exhibit 4.2 to GSI Commerce, Inc.’s
Current Report on Form 8-K filed with the
Commission on July 5, 2007 and incorporated
herein by reference).

First Supplemental Indenture dated as of June 17,
2011 to the Indenture dated as of July 2, 2007
between GSI Commerce, Inc. and The Bank of New
York Mellon, as trustee (filed as Exhibit 10.1 to GSI
Commerce, Inc.’s Current Report on Form 8-K filed
with the Commission on June 17, 2011 and
incorporated herein by reference).

4.08

Forms of Floating Rate Note due 2019, 2.200% Note
due 2019, 2.875% Note due 2021 and 3.450% Note
due 2024.

4.09

Form of 6.00% Note due 2056.

4.10

4.11

4.12

4.13

4.14

4.15

Form of 3.800% Note due 2022.

Officers’ Certificate dated June 6, 2017.

Form of Floating Rate Note due 2023 (included in
Exhibit 4.11).

Form of 2.150% Note due 2020 (included in Exhibit
4.11).

Form of 2.750% Note due 2023 (included in Exhibit
4.11).

Form of 3.600% Note due 2027 (included in Exhibit
4.11).

F-50

8-K 000-24821

7/28/2014

8-K 000-24821

2/29/2016

8-K

8-K

8-K

001-37713

3/9/2016

001-37713

6/6/2017

001-37713

6/6/2017

8-K

001-37713

6/6/2017

8-K

001-37713

6/6/2017

8-K

001-37713

6/6/2017

No.

10.01+

10.02+

10.03+

10.04+

10.05+

10.06+

10.07+

10.08+

10.09+

10.10+

10.11+

10.12+

10.13+

10.14+

10.15+

10.16+

Exhibit Description

Form of Indemnity Agreement entered into by
Registrant with each of its directors and
executive officers.

Registrant’s Amended and Restated 1998
Employee Stock Purchase Plan.

Registrant’s 1999 Global Equity Incentive Plan, as
amended.

Form of Stock Option Agreement under
Registrant’s 1999 Global Equity Incentive Plan.

Form of Restricted Stock Unit Agreement under
Registrant’s 1999 Global Equity Incentive Plan.

Registrant’s 2001 Equity Incentive Plan, as
amended.

Form of Stock Option Agreement under
Registrant’s 2001 Equity Incentive Plan.

Registrant’s 2003 Deferred Stock Unit Plan, as
amended.

Amendment to Registrant’s 2003 Deferred
Stock Unit Plan, effective April 2, 2012.

Form of Director Award Agreement under
Registrant’s 2003 Deferred Stock Unit Plan.

Form of Electing Director Award Agreement
under Registrant’s 2003 Deferred Stock Unit
Plan.

Form of New Director Award Agreement under
Registrant’s 2003 Deferred Stock Unit Plan.

Form of 2003 Deferred Stock Unit Plan
Restricted Stock Unit Grant Notice and
Agreement.

Registrant’s 2008 Equity Incentive Award Plan,
as amended and restated.

Amendment to the Registrant’s 2001 Equity
Incentive Plan and Registrant’s 1999 Global
Equity Incentive Plan.

Form of Restricted Stock Unit Award Agreement
(and Performance-Based Restricted Stock Unit
Agreement) under Registrant’s 2003 Deferred
Stock Unit Plan, Registrant’s 2008 Equity
Incentive Award Plan and GSI Commerce, Inc.
2010 Equity Incentive Plan.

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

S-1

333-59097

7/15/1998

10-Q 000-24821

7/27/2007

10-Q 000-24821

7/27/2007

10-Q 000-24821

10/27/2004

10-K 000-24821

2/28/2007

10-K 000-24821

2/28/2007

10-Q 000-24821

10/27/2004

10-K 000-24821

2/28/2007

10-Q 000-24821

7/19/2012

10-Q 000-24821

7/19/2012

10-Q 000-24821

7/19/2012

10-Q 000-24821

7/19/2012

10-Q/A 000-24821 4/24/2008

8-K

001-37713

4/27/2016

10-Q 000-24821

7/29/2009

10-Q 000-24821

7/19/2012

10.17+

Form of Restricted Stock Unit Award Agreement
(with Modified Vesting) under Registrant’s 2008
Equity Incentive Award Plan.

10-Q 000-24821

7/19/2012

F-51

No.

10.18+

10.19+

10.20+

10.21+

10.22+

10.23+

10.24+

10.25+

10.26+

10.27+

10.28+

10.29+

10.30+

10.31+

10.32+

10.33+

Exhibit Description

Form of Stock Option Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Stock Option Agreement (with
Modified Vesting) under Registrant’s 2008
Equity Incentive Award Plan.

Form of Performance Share Unit Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Director Deferred Stock Unit Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Restricted Stock Unit Agreement (and
Performance-Based Restricted Stock Unit
Agreement) under Registrant’s 2008 Equity
Incentive Award Plan.

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

10-Q

File No.

Date Filed

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

8-K

000-24821 6/25/2008

Amended and Restated eBay Incentive Plan.

8-K

000-24821

5/5/2015

Amendment to eBay Incentive Plan, effective
April 2, 2012.

eBay Inc. Deferred Compensation Plan, as
amended and restated effective April 1, 2018

X

10-Q

000-24821

7/19/2012

GSI Commerce, Inc. 2010 Equity Incentive Plan
(filed as Appendix A to GSI Commerce, Inc.’s
Definitive Proxy Statement on Schedule 14A
filed with the Commission on April 13, 2010 and
incorporated herein by reference).

Amendment to GSI Commerce, Inc. 2010
Equity Incentive Plan, effective April 2, 2012.

Form of Restricted Stock Unit Award
Agreement under GSI Commerce, Inc. 2012
Equity Incentive Plan.

GSI Commerce, Inc. Leadership Team
Incentive Plan (Filed as Appendix B to GSI
Commerce, Inc.’s Definitive Proxy Statement
on Schedule 14A filed with the Commission on
April 25, 2008 and incorporated herein by
reference).

Amendment to GSI Commerce, Inc.
Leadership Team Incentive Plan, effective
April 2, 2012.

Form of Restricted Stock Unit Agreement (and
Performance-Based Restricted Stock Unit
Agreement) under GSI Commerce, Inc. 2010
Equity Incentive Plan, as amended.

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/22/2011

eBay Inc. Employee Stock Purchase Plan.

DEF 14A 000-24821

3/19/2012

Offer Letter dated August 30, 2011 and
executed on September 2, 2011 between
Registrant and Devin Wenig.

F-52

8-K

000-24821

9/6/2011

No.

10.34

10.35+

10.36+

10.37+

10.38+

10.39+

10.40+

10.41+

10.42+

10.43+

10.44+

10.45+

10.46+

10.47+

10.48+

10.49

Exhibit Description

Credit Agreement, dated as of November 9, 2015,
by and among Registrant, JPMorgan Chase Bank,
N.A., as Administrative Agent, and the other
parties thereto.

Form of New Director Award Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Director Annual Award Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Electing Director Quarterly Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Performance Share Unit Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Global Stock Option Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Global Restricted Stock Unit Agreement
(and Performance-Based Restricted Stock Unit
Agreement) under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Performance Based Restricted Stock Unit
Award Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Stock Payment Award Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Director Restricted Stock Unit Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Form of Performance Based Restricted Stock Unit
Award Grant Notice and Performance Based
Restricted Stock Unit Award Agreement under
Registrant’s 2008 Equity Incentive Award Plan.

Form of Restricted Stock Unit Award Grant Notice
and Restricted Stock Unit Award Agreement
under Registrant’s 2008 Equity Incentive Award
Plan.

Notice Regarding Payment of Dividend
Equivalents on Restricted Stock Units and
Performance-Based Restricted Stock Units under
Registrant’s 2008 Equity Incentive Award Plan.

Letter Agreement dated September 29, 2014
between Registrant and Devin Wenig.

Written Description of Transaction Success and
Retention Program.

Nomination and Standstill Agreement, dated as of
January 21, 2015, by and among the persons and
entities listed on Schedule A thereto and
Registrant.

F-53

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

8-K 000-24821

11/12/2015

10-Q 000-24821 4/19/2013

10-Q 000-24821 4/19/2013

10-Q 000-24821 4/19/2013

10-Q 000-24821 4/19/2013

10-Q 000-24821

7/18/2014

10-Q 000-24821

7/18/2014

10-Q 001-37713

4/27/2016

10-Q 001-37713

7/21/2016

10-Q 001-37713

7/21/2016

10-Q 000-24821

10/16/2014

10-K 000-24821

2/6/2015

8-K 000-24821

1/23/2015

X

X

X

No.

10.5

10.51

10.52

10.53+

10.54

10.55+

10.56+

10.57+

10.58+

10.59+

10.60+

10.61+

10.62+

10.63+

10.64+

21.01
23.01
24.01
31.01

Exhibit Description

Amended and Restated eBay Inc. Change in
Control Severance Plan for Key Employees,
effective January 1, 2016.
Amended and Restated eBay Inc. SVP and Above
Standard Severance Plan, effective January 1, 2016.
Amendment dated June 30, 2016, to the Operating
Agreement by and among Registrant, eBay
International AG, PayPal Holdings, Inc., PayPal,
Inc., PayPal Pte. Ltd. and PayPal Payments Pte.
Holdings S.C.S.
Operating Agreement, dated as of July 17, 2015, by
and among Registrant, eBay International AG,
PayPal Holdings, Inc., PayPal, Inc., PayPal Pte. Ltd.
and PayPal Payments Pte. Holdings S.C.S.
Transition Services Agreement, dated as of July 17,
2015, by and between Registrant and PayPal
Holdings, Inc.
Tax Matters Agreement, dated as of July 17, 2015,
by and between Registrant and PayPal Holdings,
Inc.
Employee Matters Agreement, dated as of July 17,
2015, by and between Registrant and PayPal
Holdings, Inc.
Intellectual Property Matters Agreement, dated as
of July 17, 2015, by and among Registrant, eBay
International AG, PayPal Holdings, Inc., PayPal,
Inc., PayPal Pte. Ltd. and PayPal Payments Pte.
Holdings S.C.S.
Letter dated September 30, 2014 from Registrant
to Scott Schenkel.
Offer Letter dated September 2, 2014 between
Registrant and Steve Fisher.
Offer Letter dated April 2, 2015 between
Registrant and Marie Oh Huber.
Offer Letter dated September 26, 2013 between
Registrant and R.J. Pittman.
Offer Letter dated December 20, 2017 between
Registrant and Jae Hyun Lee.
Offer Letter dated March 27, 2013 between
Registrant and Jae Hyun Lee.
Offer Letter dated June 13, 2018 between
Registrant and Steve Fisher.
List of Subsidiaries.
PricewaterhouseCoopers LLP consent.
Power of Attorney (see signature page).
Certification of Registrant’s Chief Executive
Officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002.

F-54

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

10-Q 001-37713 4/27/2016

10-Q 001-37713 4/27/2016

10-Q 001-37713

7/21/2016

8-K 000-24821 7/20/2015

8-K 000-24821 7/20/2015

8-K 000-24821 7/20/2015

8-K 000-24821 7/20/2015

8-K 000-24821 7/20/2015

10-Q 000-24821

7/21/2015

10-Q 001-37713 4/27/2016

10-Q 001-37713 4/27/2016

10-Q 001-37713 4/20/2017

10-Q 001-37713 4/26/2018

10-Q 001-37713 4/26/2018

10-Q 001-37713

7/19/2018

X
X
X
X

No.

31.02

32.01

32.02

101.INS

Exhibit Description

Certification of Registrant’s Chief Financial Officer, as
required by Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of Registrant’s Chief Executive Officer, as
required by Section 906 of the Sarbanes-Oxley Act of
2002.

Certification of Registrant’s Chief Financial Officer, as
required by Section 906 of the Sarbanes-Oxley Act of
2002.

XBRL Instance Document- the instance document does
not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase
Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase
Document

* Omitted schedules will be furnished supplementally to the SEC upon request.
+ Indicates a management contract or compensatory plan or arrangement.

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form File No. Date Filed

X

X

X

X

X

X

X

X

X

F-55

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on January 30, 2019.

SIGNATURES

eBay Inc.

By: /S/ DEVIN N. WENIG

Devin N. Wenig
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Devin N. Wenig, Scott F. Schenkel, Brian J. Doerger and Marie Oh Huber and each or any one of
them, each with the power of substitution, his or her attorney-in-fact, to sign any amendments to this report,
with exhibits thereto and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been
signed below by the following persons on behalf of the registrant and in the capacities indicated on
January 30, 2019.

Principal Executive Officer and Director:

Principal Financial Officer:

By:

/s/ DEVIN N. WENIG

By:

/s/ SCOTT F. SCHENKEL

Devin N. Wenig
President and Chief Executive Officer

Scott F. Schenkel
Senior Vice President, Chief Financial Officer

Principal Accounting Officer:

By:

/s/ BRIAN J. DOERGER

Brian J. Doerger
Vice President, Chief Accounting Officer

F-56

By:

/s/ PIERRE M. OMIDYAR

By:

/s/

THOMAS J. TIERNEY

Pierre M. Omidyar
Founder and Director

Thomas J. Tierney
Chairman of the Board and Director

Additional Directors

By:

/s/

FRED D. ANDERSON

By:

/s/ ANTHONY J. BATES

Fred D. Anderson
Director

Anthony J. Bates
Director

By:

/s/ ADRIANE BROWN

By:

/s/ DIANA FARRELL

Adriane Brown
Director

Diana Farrell
Director

By:

/s/

LOGAN D. GREEN

By:

/s/ BONNIE S. HAMMER

Logan D. Green
Director

Bonnie S. Hammer
Director

By:

/s/ KATHLEEN C. MITIC

By:

/s/ PAUL S. PRESSLER

Kathleen C. Mitic
Director

Paul S. Pressler
Director

By:

/s/ ROBERT H. SWAN

By:

/s/ PERRY M. TRAQUINA

Robert H. Swan
Director

Perry M. Traquina
Director

F-57