eBay

Annual 
Report

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, 2019.

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

Trading symbol
EBAY
EBAYL

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 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, 2019, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was

$31,354,367,947 based on the closing sale price as reported on The Nasdaq Global Select Market.

796,080,826 shares of common stock issued and outstanding as of January 27, 2020.

eBay Inc.
Form 10-K

For the Fiscal Year Ended December 31, 2019

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
7
29
29
30
31

32
34
36
57
59
59
59
59

60
60

60
60
60

61
61

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 financialcondition, new or plannedfeaturesor services,management strategiesor timingand
other expectations regarding our sale of StubHub to viagogo). 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-looking statements involve risks
and uncertainties that could cause our actual results to differ materially from those expressed or implied in
our forward-looking statements. Such risks and uncertainties include, among others, those discussed in
“Item1A:RiskFactors”ofthisAnnualReportonForm10-K,aswellasinourconsolidatedfinancialstatements,
related notes, and the other information appearing elsewhere in this report and our other filings with the
SecuritiesandExchangeCommission,ortheSEC.Wedonotintend,andundertakenoobligation,toupdate
anyofourforward-lookingstatementsafterthedateofthisreporttoreflectactualresultsorfutureeventsor
circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on
suchforward-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) 376-7008. 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. On November 24, 2019, we entered into a definitive agreement for eBay to sell
StubHub to viagogo, with closing of the transaction expected to occur in the first quarter of 2020.

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. 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, including off-platform businesses in Korea, Japan and Turkey 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. StubHub platforms include the 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. 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. In 2019, we launched new API capabilities to give third-
party developers access to eBay programs like managed payments.

1

AgreementtoSellStubHub

On November 24, 2019, following a strategic review of our assets, we entered into a definitive agreement
to sell StubHub to viagogo for a purchase price of $4.05 billion in cash. Please see the information in “Item 1A:
Risk Factors” under the caption “The closing of the proposed sale of StubHub is subject to various risks and
uncertainties, may not be completed in accordance with expected plans or on the currently contemplated
timeline, or at all, and the pending sale may be disruptive to StubHub.”

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, and we are working to serve our customers in an authentically eBay
way.

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. Our vision is to provide buyers with value and
selection through the spectrum of value of the inventory. We continue to invest in product and initiatives to
evolve the customer experience, making it easier for buyers to find inventory on the platform.

As a trusted ticket marketplace, StubHub brings the joy of live events to fans globally. In 2019, over
268 million visitors came to StubHub to buy or sell tickets to live sports, music, theater and other events.
StubHub business partners include more than 100 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, MLS, NBA, NHL,
and the NCAA. StubHub is a leader in mobile innovation, with roughly 60% of its orders coming from mobile in
2019.

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 eBay and StubHub, 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.

In 2019, managed payments adoption accelerated in the U.S. and the service launched in Germany. Since
we began intermediating payments in 2018, we processed over $2.0 billion in payments for nearly 25,000
sellers through December 31, 2019. Our advertising business remains focused on growing our promoted
listing fees (first-party advertising business) while reducing non-strategic third-party advertising in a manner
that is conducive to growth in our core Marketplace; over 1 million sellers used the product, promoting over
320 million live listings in 2019.

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. We believe
that, through our sellers, eBay offers some of the best value and deals available for a number of consumer
products. Buyers seek out eBay because they can find an enormous breadth of inventory and a spectrum of
value from the brand new to the hard-to-find.

2

On the Marketplace platform, we continue to explore new tools and features that are intended to create a
better buying experience on eBay, including Visual Shopping via Computer Vision, Right Offer at the Right
Time, and Buy Again.

In order to remain competitive and create a vibrant seller experience, eBay continuously invests in tools
and programs to grow the seller ecosystem because we only win when our sellers succeed. In 2019, we
added analytics and merchandising tools to our Seller Hub that are designed so that sellers know what to sell,
when to sell it and at what price. The 2019 additions of Multi-User Account Access, along with the Terapeak
integration, enable sellers to better manage their business and add additional analytics insights into the
platform. We also established new seller protections, including two new financial protections for top-rated
sellers located in the U.S. who offer 30-day returns. First, eBay will issue a seller invoice credit to cover return
label cost if a buyer makes a false “item not as described” claim. Second, eBay now allows these sellers to
issue partial refunds for all items that are returned damaged. eBay also has processes that allow sellers to
report buyers who violate policies.

eBay is committed to maintaining a safe and trusted marketplace. In order to further strengthen our
buyers’ confidence and trust in our services, we offer 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 also offer eBay Authenticate, through which sellers
can have their high-end handbags, luxury watches and jewelry authenticated. The program is available in the
United States as well as in the U.K. and Germany. We also provide our customers with a Best Price Guarantee,
which offers buyers in the United States 110 percent of the price difference if they find an item for less on a
competitor’s website within 48 hours of making a purchase. In Australia, Best Price Guarantee beats deals
from approved retailers by 5%, and in U.K., offers price matching.

For buyers, we want to create greater confidence in our ability to meet their delivery and buying
expectations and to improve the reliability of our shipping times and tracking. 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
millions of eligible items.

OurImpactandResponsibility

eBay’s purpose is to empower people and create economic opportunity for all. Every day, people build
businesses on eBay, and we are driven to support them. Both in our community and through our technology,
we work to create economic opportunity. Our impact efforts are divided into four programs that align with our
purpose: eBay for Charity, eBay Foundation, Retail Revival, and Responsible Business.

eBay for Charity empowers eBay buyers and sellers to support charities around the world. Since its

inception, eBay for Charity has raised more than $1 billion for more than 83,000 charities.

eBay’s Foundation helps build economically vibrant and thriving communities through several key
initiatives like Global Give, which is an annual employee-led grantmaking program that deploys the talents
and passions of eBay employees. Through the program, employees come together to create teams, partner
with local nonprofits, and develop projects that support small businesses and entrepreneurs in their
communities. In 2019, the eBay Foundation awarded approximately $1 million through Global Give.

Retail Revival, which launched in early 2018, also demonstrates eBay’s commitment to economic
development and entrepreneurialism. Retail Revival empowers local businesses to compete on a global scale
and thrive in an online economy.
In close partnership with local governments and stakeholders, eBay
onboards cohorts of small businesses and supports their growth through months of in-depth training,
individual coaching, and promotional support, all provided at no cost to the participants or partner cities.
Since launch, eBay has welcomed new U.S. cities to the Retail Revival program, including: Lansing, Michigan;
Greensboro, North Carolina; and Baton Rouge, Louisiana; and scaled the program internationally to Canada,
the UK, Ireland, Italy, Israel, Russia, and Bulgaria.

3

Finally, as a part of the company’s Responsible Business efforts, eBay strives to operate in an
environmentally and socially sustainable way—creating a safe, trusted, and diverse environment in which our
employees, buyers, sellers, suppliers, and partners can thrive.
In 2019, eBay made several partnership
announcements, working to reach its goal of 100% renewable energy by 2025. This includes two local
renewable energy programs with energy providers in Draper, Utah, and San Jose, California. These two
locations join Dreilinden, Germany; Dublin, Ireland; and Portland, Oregon in 100% renewable energy sourcing.

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
completed the transaction. In 2019, we generated over $90 billion in GMV, of which approximately 60 percent
was generated outside the U.S. Despite GMV’s divergence from revenue during 2019, we still 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.

At the end of 2019, our Marketplace and StubHub platforms had more than 180 million active buyers and
over one billion live listings globally. The term “active buyer” means, as of any date, all buyer accounts that
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 our growth initiatives of payments 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.

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,
technology innovation and customer service.

NotableBusinessTransactionsin2019

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 first quarter of
2019, we completed the acquisition of Motors.co.uk, a U.K.-based classifieds site, for $93 million. The
Motors.co.uk team joined Gumtree UK, an eBay Classifieds business. In the second quarter of 2019, we invested
$160 million in Paytm Mall, an eCommerce marketplace in India. In the fourth quarter of 2019, we entered into a
definitive agreement to sell StubHub; see “Agreement to Sell StubHub” section for more details.

Competition

We encounter vigorous competition in our business from numerous sources. Our users can list, sell, buy,
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
participants
directories,
(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, and global scale.

companies,

classifieds,

commerce

engines,

search

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 that could
adversely impact our business.”

4

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. With the continued state
adoption of Internet sales tax laws in 2019, more buyers across the U.S. are encountering sales tax for the first
time on the eBay platform. To date, more than 30 states have implemented Internet sales tax and digital
service tax legislation. Tax 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.

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” and “Our business and
its users are subject to Internet sales tax and sales reporting and record-keeping obligations.”

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, seller and developer
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 captions “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” and
“Regulation in the areas of privacy and protection of user data could harm our business.”

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. Through technologies like artificial intelligence, which is
woven into all aspects of the eBay marketplace, we are anticipating the needs of buyers, sellers and
developers empowering entrepreneurs looking to grow their business, and making the platform more
accessible to everyone. We aim to create highly personalized and inspiring shopping experiences powered
by advanced technologies.

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

5

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 “The listing or sale by our users of items that allegedly infringe the intellectual property rights of
rights owners, including pirated or counterfeit items, may harm our business,” and “We may be unable to
adequately protect or enforce our intellectual property rights and face ongoing risk from patent litigation and
allegations by third parties that we are infringing their intellectual property rights.”

Employees

As of December 31, 2019, we employed approximately 13,300 people globally. Approximately 6,600 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.

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. Company sustainability information for
investors is available on our investor relations website under the heading “ESG Investors.” 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 that 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.

6

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. Current
global economic events and conditions may amplify many of these risks. These risks are not the only risks that
may affect us. Additional risks that we are not aware of or do not believe are material at the time of this filing
may also become important factors that adversely affect our business.

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 percentages. 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 and the
other risks set forth in this “Risk Factors” section.

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.

7

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,
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, but are not limited to, Amazon, Facebook, Google, Walmart, Target, Macy’s, Etsy,
Shopify, Wayfair, Costco, Rakuten, QVC and HSN, 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 websites operated by Schibsted ASA or Naspers Limited and others such as
craigslist, Oodle.com, Facebook. 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, Zalando and Coupang 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 may increasingly 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

8

regulation to prohibit or

government
limit ecommerce in certain categories of goods or services.
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 drive
distributors to sell 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 adversely affect our results of operations and result in 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.
Economic conditions, including inflation, recession, or other adverse economic events or changes, could
have a negative and adverse impact on companies and customers with which we do business and could have
a material adverse effect on our business, including a reduction in the volume and prices of transactions on
our commerce platforms. 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 (known as “Brexit”)
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. Because we have
global operations,
including in the United Kingdom and the European Union, we face risks due to the
uncertainty and the potential disruptions surrounding Brexit, including potential financial, legal, tax and trade
implications.

We are exposed to fluctuations in foreign currency exchange rates, which could negatively impact our

financialresults.

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

9

result in increased U.S. dollar denominated revenues and expenses. Similarly, if the U.S. dollar strengthens
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
exposure,
it is impossible to predict or eliminate the effects of this exposure. Fluctuations in foreign
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
wider trading,
legal, regulatory and labor environments, especially in the United Kingdom and
European Union, will be impacted by the United Kingdom’s vote to exit the European Union and any
outcomes resulting from that vote, including the resulting impact on our business and that of our
clients;

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

•

trade barriers and changes in trade regulations;

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

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

•

stringent local labor laws and regulations;

• credit risk and higher levels of payment fraud;

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

foreign currency exchange rates for a particular currency;

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

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

•

import or export regulations;

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

• antitrust and competition regulations;

• potentially adverse tax developments and consequences;

• economic uncertainties relating to sovereign and other debt;

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

•

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

10

• national or regional differences in macroeconomic growth rates;

• payment intermediation regulations;

•

•

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 or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and
sea level rise); 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 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.

11

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, antitrust and 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 the continued development and expansion of our
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

12

and legislative action and judicial decisions. In addition, compliance with these laws may restrict our ability to
provide services to our customers that they may find to be valuable. For example, the General Data
Protection Regulation (“GDPR”) became effective in May 2018. The GDPR, which applies to all of our activities
conducted from an establishment in the European Union or related to products and services offered in the
European Union, imposes a range of new compliance obligations regarding the handling of personal data. The
GDPR imposes significant new obligations and compliance with these obligations depends in part on how
particular regulators interpret and apply them. If we fail to comply with the GDPR, or if regulators assert we
have failed to comply with the GDPR, it may lead to regulatory enforcement actions, which can result in
monetary penalties of up to 4% of worldwide revenue, private lawsuits, or reputational damage. In the U.S.,
California has adopted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective
January 1, 2020 and which provides a new private right of action for data breaches and requires companies
that process information on California residents to make new disclosures to consumers about their data
collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties.
In addition to the CCPA, several other U.S. states are considering adopting laws and regulations imposing
obligations regarding the handling of personal data. Compliance with the GDPR, the CCPA, and other current
and future applicable international and U.S. privacy, cybersecurity and related laws can be costly and time-
consuming. Complying with these varying national and international 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.

A determination that there have been violations of laws relating to our practices under communications-
based laws could also 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, including the GDPR and the CCPA, could result in proceedings or actions
against us by governmental entities or others (e.g., class action privacy litigation), subject us to significant
increase our costs and
penalties and negative publicity, require us to change our business practices,
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
imports and
property ownership, copyrights, trademarks, and other intellectual property issues, parallel
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

13

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
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.

14

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 other 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 and other proceedings 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,
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.

We are subject to regulatory activity and antitrust litigation under competition laws that could adversely

impactourbusiness.

We are subject to scrutiny by various government agencies under U.S. and foreign laws and regulations,
including antitrust and 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 States, individual states, the European Union or other countries, or otherwise constitute unfair
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
foundation, may be very expensive to defend,
involve negative publicity and substantial diversion of
management time and effort and could result in significant judgments against us or require us to change our
business practices.

Fluctuations in interest rates, and changes in regulatory guidance related to such interest rates, could

adverselyimpactourfinancialresults.

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
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.

15

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
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

16

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 expand our 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 sorts 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.

Development of our payments system requires ongoing investment, is subject to evolving laws,
regulations, rules, and standards, and involves risk, including risks related to our dependence on third-party
providers.

We have invested and plan to continue to invest internal resources into our payments tools in order to
maintain existing availability, expand into additional markets and offer new payment methods and tools to our
buyers and sellers. If we fail to invest adequate resources into payments on our platform, or if our investment
efforts are unsuccessful or unreliable, our payments services may not function properly or keep pace with
competitive offerings, which could negatively impact their usage and our marketplaces. Further, our ability to
expand our payments services into additional countries is dependent upon the third-party providers we use
to support this service. As we expand the availability of our payments services to additional markets or offer
new payment methods to our sellers and buyers in the future, we may become subject to additional
regulations and compliance requirements, and exposed to heightened fraud risk, which could lead to an
increase in our operating expenses.

17

We rely on third-party service providers to perform services related to compliance, credit card
processing, payment disbursements, currency exchange, identity verification, sanctions screening, and fraud
analysis and detection. As a result, we are subject to a number of risks related to our dependence on third-
party service providers. If any or some of these service providers fail to perform adequately or if any such
service provider were to terminate or modify its relationship with us unexpectedly, our sellers’ ability to use
our platform to receive orders or payments could be adversely affected, which would increase costs, drive
sellers away from our marketplaces, result in potential legal liability, and harm our business. In addition, we
and our third-party service providers may experience service outages from time to time that could adversely
impact payments made on our platform. Additionally, any unexpected termination or modification of those
third-party services could lead to a lapse in the effectiveness of certain fraud prevention and detection tools.

Our third-party service providers may increase the fees they charge us in the future, which would
increase our operating expenses. This could, in turn, require us to increase the fees we charge to sellers and
cause some sellers to reduce listings on our marketplaces or to leave our platform altogether by closing their
accounts.

Payments are governed by complex and continuously evolving laws and regulations that are subject to
change and vary across different jurisdictions in the United States and globally. As a result, we are required to
spend significant time and effort to determine whether various licensing and registration laws relating to
payments apply to us and to comply with applicable laws and licensing and registration regulations. In
addition, there can be no assurance that we will be able to obtain or retain any necessary licenses or
registrations. Any failure or claim of failure on the part of the Company or its third-party service providers to
comply with applicable laws and regulations relating to payments could require us to expend significant
resources, result in liabilities, limit or preclude our ability to enter certain markets and harm our reputation. In
addition, changes in payment regulations, including changes to the credit or debit card interchange rates in
the United States or other markets, could adversely affect payments on our platform and make our payments
systems less profitable.

to agreements with our

Further, we are indirectly subject to payment card association operating rules and certification
requirements pursuant
third-party payment processors. These rules and
requirements, including the Payment Card Industry Data Security Standard and rules governing electronic
funds transfers, are subject to change or reinterpretation, making it difficult for us to comply. Any failure to
comply with these rules and certification requirements could impact our ability to meet our contractual
obligations to our third-party payment processors and could result in potential fines. In addition, changes in
these rules and requirements, including any change in our designation by major payment card providers,
could require a change in our business operations and could result in limitations on or loss of our ability to
accept payment cards, any of which could negatively impact our business. Such changes could also increase
our costs of compliance, which could lead to increased fees for us or our sellers and adversely affect
payments on our platform or usage of our payments services and marketplaces.

We may be unable to adequately protect or enforce our intellectual property rights and face ongoing
risks from patent litigation and allegations by third parties that we are infringing their intellectual property
rights.

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

18

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.

Additionally, 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 licenses; 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.

As the number of patent owners and products in the software industry increases and the functionality of
these products further overlap, and as we acquire technology through acquisitions or licenses, litigation may
be necessary to determine the validity and scope of the intellectual property rights of others and we may
become increasingly subject to patent suits and other infringement claims,
including copyright, and
trademark infringement claims. 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

The ultimate outcome of any allegation or litigation is uncertain and, regardless of the outcome, any of the
claims described above, 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

19

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.

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, dividends, share repurchases, 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.

These risks increase as the level of our debt increases. Our ability to make payments of principal of and
interest on our indebtedness depends upon our future performance, which will be subject to general
industry cycles and financial, business and other factors affecting our results of
economic conditions,
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.

20

Adowngradeinourcreditratingscouldmateriallyadverselyaffectourbusiness.

The credit ratings assigned to our debt securities could change based upon, among other things, our
results of operations, financial condition or dispositions and acquisitions. These ratings are subject to
ongoing evaluation by credit rating agencies, 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. Actual or anticipated changes or downgrades in our credit ratings, including any
announcement that our ratings are under review for a 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.

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 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.

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

21

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 SouthDakotav.Wayfair,Inc.etal, 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 allows 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. Moreover, the
application of such taxes on our commerce platforms could cause a marketplace to be less attractive to
current and prospective buyers, which could adversely impact our business, financial performance, and
growth. The majority of U.S. states have enacted laws or have pending legislation that require marketplace
facilitators to collect and remit sales tax for some or all sellers using these marketplaces.

Similar laws imposing tax collection responsibility on foreign sellers are being considered in other
countries as well. We are now jointly liable for U.K. VAT and German VAT for certain sellers who fail to fulfill
their VAT obligations unless we suspend their eBay activity until the seller resolves the matter with the
corresponding VAT authority. Other jurisdictions are considering similar legislation.

Multiple 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. The European Union has also
adopted a VAT reform package which starting in 2021 requires marketplaces such as eBay to collect and
remit VAT on most imports from outside the European Union.

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 Internal Revenue Service (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. 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.

22

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 or, in certain cases, third-party service providers utilized in our payment services.
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, or those of our third-party service providers, 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
usernames, 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 dismissed with leave to amend. In addition, we have received requests for information and became
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.

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.

23

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, including our payments services. 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 or payments services 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
their businesses, these customers could seek significant
results in damages to our customers or
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.

The closing of the proposed sale of StubHub is subject to various risks and uncertainties, may not be
completed in accordance with expected plans or on the currently contemplated timeline, or at all, and the
pendingsalemaybedisruptivetoStubHub.

As previously announced, on November 24, 2019, we entered into a stock purchase agreement with an

affiliate of viagogo to sell StubHub.

The sale is expected to close by the end of the first quarter of 2020. The completion, on our expected
timeline, of the proposed sale of StubHub is subject to closing conditions and viagogo’s ability to obtain debt
and equity financing on a timely basis. If the conditions to the closing of the sale of StubHub are neither
satisfied nor, where permissible, waived on a timely basis or at all, we may be unable to complete the sale of
StubHub or such completion may be delayed beyond our expected timeline. We are also subject to risks
regarding the failure of the buyer to obtain the necessary financing to complete the transactions
contemplated by the stock purchase agreement and risks related to the equity and debt financing and
related guarantee arrangements entered in connection with the stock purchase agreement.

Whether or not the proposed sale of StubHub is completed, the announcement and pendency of the
StubHub sale may be disruptive to StubHub and may adversely affect StubHub’s relationships with current
and prospective employees and business partners and buyers and sellers on its platform. Uncertainties
related to the pending sale of StubHub may impair StubHub’s ability to attract, retain and motivate key
personnel and could divert the attention of StubHub’s management and other employees from its day-to-day
business and operations in preparation for and during the sale. If we are unable to effectively manage these
risks, StubHub’s business, results of operations, financial condition and prospects would be adversely
affected.

If the proposed sale of StubHub is delayed or not completed for any reason, including due to the inability
to satisfy the closing conditions or due to the buyer’s inability to obtain the necessary financing or industry or
economic conditions outside of our control, investor confidence could decline and we could face negative
publicity and possible litigation. In addition, in the event of a failed transaction, we will have expended
significant management resources in an effort to complete the sale and, although in some circumstances the
buyer may be obligated to pay us a termination fee of $200 million, will have incurred significant transaction
costs. Accordingly, if the proposed sale of StubHub is not completed on the terms set forth in the stock
purchase agreement or at all, our business, results of operations, financial condition, cash flows and stock
price may be adversely affected.

24

Acquisitions,dispositions,jointventures,strategicpartnershipsandstrategicinvestmentscouldresultin

operatingdifficultiesandcouldharmourbusinessorimpactourfinancialresults.

We have acquired a significant number of businesses of varying size and scope, technologies, services,
and products, disposed of significant businesses (including PayPal and our Enterprise business in 2015), and in
November 2019 we have entered into an agreement to sell our StubHub business to viagogo. We 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;

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

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

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

•

risks associated with our expansion into new international markets;

• derivative lawsuits resulting from the acquisition or disposition;

•

•

•

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

the potential loss of key employees following the transaction;

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

• our dependence on the acquired business’ accounting, financial reporting, operating metrics and
similar systems, controls and processes and the risk that errors or irregularities in those systems,
controls and processes will lead to errors in our 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

25

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.

We entered into a warrant agreement in conjunction with a commercial agreement with Adyen that
entitles us to acquire a fixed number of shares of the Adyen’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 Adyen’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 Adyen’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.

Wearesubjectto risksanduncertaintiesrelatedtothestrategicreviewofourassetportfolio,aswellas

theexecutionofourplanforoperatingefficiency.

In March 2019, we announced that we initiated, with the assistance of external financial advisors, a strategic
review of our asset portfolio, including but not limited to StubHub and eBay Classifieds Group. In November
2019, as an outcome of our strategic review, we entered into an agreement to sell our StubHub business to
viagogo. Our strategic review efforts continue, however, there can be no assurance that the strategic review will
result in any further sale, spin-off or other business combination involving our assets. We will incur expenses in
connection with the review and our future results may be affected by the pursuit or consummation of any
specific transaction or other strategic alternative resulting from the strategic review. While this review is
ongoing, we are exposed to certain risks and uncertainties, including retaining and attracting employees during
the review process; the diversion of management’s time to the review; and exposure to potential litigation in
connection with the review process or any specific transaction or other strategic alternative resulting therefrom,
all of which could disrupt and negatively affect our business. Speculation regarding any developments related
to the review of strategic alternatives and perceived uncertainties related to the future of the Company could
cause our stock price to fluctuate significantly. There is no finite timetable for completion of the strategic
review, and we can provide no assurance that any transaction or other strategic alternative we pursue will have a
positive impact on our results of operations or financial condition.

In addition, we announced that our operating review has resulted in a three-year plan for operating
efficiency, which is expected to enhance our operating margins and create capacity for reinvestment
initiatives. The execution of this plan is subject to various risks and uncertainties, and there can be no
assurance that we will be able to achieve the anticipated results of this plan.

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

26

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.

On September 25, 2019, we announced the appointment of an interim Chief Executive Officer. Our Board
of Directors is actively undertaking a search for our next Chief Executive Officer. This search and any eventual
transition to a Chief Executive Officer may result in disruptions to our business and uncertainty among
investors, employees and others concerning our future direction and performance. Any such disruptions and
uncertainty, as well as a delay or failure in successfully identifying, attracting or retaining a permanent Chief
Executive Officer, could have an adverse effect on our business and financial results.

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.

27

Wecannotprovideassurancethatwewillcontinuetopaydividendsonourcommonstock.

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 our distribution of 100% of the
outstanding common stock of PayPal to our stockholders on July 17, 2015 (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
future conduct of the companies’ respective businesses and other matters.
If any of these facts,
assumptions, representations or undertakings are incorrect or not satisfied, our stockholders 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 stockholders 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.

28

ITEM 1B: UNRESOLVEDSTAFFCOMMENTS

Not applicable.

ITEM 2: PROPERTIES

We own and lease various properties in the U.S. and 31 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,
2019, 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

—

3.9

3.9

1.3

4.7

6.0

From time to time we consider various alternatives related to our long-term facilities needs. While we
believe that our existing facilities, which are used by all of our reportable segments, 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.

29

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, 2019. 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. Legal fees are expensed as incurred.

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 us
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

30

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.

31

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 27, 2020, there were approximately 3,524 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

During 2019, the company paid a total of $473 million in cash dividends. In January 2020, we declared a
quarterly cash dividend of $0.16 per share of common stock to be paid on March 20, 2020 to stockholders of
record as of March 2, 2020. 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 provide
assurance 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, 2014 (the last trading day for the year ended
December 31, 2014) 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

$300

$250

$200

$150

$100

$50

$0

12/31/14

12/31/15

12/31/16

12/31/17

12/31/18

12/31/19

eBay

S&P 500 Information Technology Index

Nasdaq Composite Index

S&P 500 Index

32

 
PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasers

Stock repurchase activity during the three months ended December 31, 2019 was as follows:

Period Ended

October 31, 2019

November 30, 2019

December 31, 2019

Total Number of
Shares Purchased

Average Price Paid per
Share (2)

9,212,301

8,942,446

9,475,674

27,630,421

$ 37.77

$35.29

$35.50

Total Number of
Shares Purchased as
Part of Publicly
Announced Programs

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

9,212,301

8,942,446

9,475,674

27,630,421

$2,803,012,054

$2,487,397,753

$ 2,150,987,394

(1)

In January 2018 our Board authorized a $6.0 billion stock repurchase program and in January 2019 our Board authorized an additional $4.0 billion stock
repurchase program. These stock repurchase programs have no expiration from the date of authorization.

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 the three months ended December 31, 2019, we repurchased approximately $1.0 billion of our common stock under our stock repurchase
program. As of December 31, 2019, a total of approximately $2.2 billion remained available for future repurchases of our common stock under our stock
repurchase program. During January 2020, our Board authorized an additional $5.0 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.

33

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, 2019, 2018, 2017 and 2016 are derived from our audited
consolidated financial statements. The consolidated balance sheet data as of December 31, 2019 and 2018 are
derived from our audited consolidated financial statements. The consolidated balance sheet data as of
December 31, 2017 and 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 year ended December 31, 2015 is 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,

2019

2018 (6)

2017 (4)(7)

2016 (4)(8)

2015

(In millions, except per share amounts)

$10,800 $10,746 $9,927 $9,298 $8,592

8,292

2,321

2,207

1,792

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

$

$

2.11 $ 2.58 $ (0.95) $ 6.43 $

1.61

2.10 $ 2.55 $ (0.95) $ 6.37 $ 1.60

849

856

980

991

1,064

1,064

1,133

1,144

1,208

1,220

34

Consolidated Balance Sheet Data: (1)

Cash and cash equivalents

Short-term investments

Long-term investments

Working capital—continuing operations

Working capital total (2)(3)

Total assets—continuing operations

Total assets

Short-term debt

Long-term debt

Total stockholders’ equity (5)

Dividends declared per share:

As of December 31,

2019

2018 (6)

2017 (4) (7)

2016 (4) (8)

2015

(In millions)

$ 975 $ 2,202 $ 2,120 $ 1,816 $ 1,832

1,850

1,316

640

640

18,174

18,174

1,022

6,738

2,870

2,713

3,778

2,672

2,672

22,819

22,819

1,546

7,685

6,281

3,743

6,331

4,185

4,185

25,986

25,986

781

9,234

8,049

5,333

3,969

5,010

5,010

23,851

23,851

1,451

7,509

10,526

4,299

3,391

5,641

5,641

17,785

17,785

—

6,779

6,576

$ 0.56 $

—

$

—

$

—

$

—

(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 lease accounting standard in 2019 which was adopted prospectively.
(4) Reflects the impact of the adoption of the new revenue recognition accounting standard in 2018. Periods prior to 2016 have not been revised.
(5)
(6) 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.

(7) 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.

(8) 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.

35

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 financialcondition, new or plannedfeaturesor services,management strategiesor timingand
other expectations regarding our sale of StubHub to viagogo). 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-looking statements involve risks
and uncertainties that could cause our actual results to differ materially from those expressed or implied in
our forward-looking statements. Such risks and uncertainties include, among others, those discussed in
“Item1A:RiskFactors”ofthisAnnualReportonForm10-K,aswellasinourconsolidatedfinancialstatements,
related notes, and the other information appearing elsewhere in this report 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 Discussion and Analysis of
Financial Condition and Results of Operations in conjunction with the consolidated financial statements and
therelatednotesincludedinthisreport.

OVERVIEW

Business

eBay Inc., a global commerce leader,

includes Marketplace, StubHub and Classifieds platforms.
Collectively, eBay connects millions of buyers and sellers around the world, empowering people and creating
opportunity for all. Founded in 1995 in San Jose, California, eBay is one of the world’s largest and most vibrant
marketplaces for discovering great value and unique selection. 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. In 2019, eBay enabled over $90 billion of Gross
Merchandise Volume.

Presentation

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.

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, 2019, 2018 and 2017, we
are subject to the risks related to doing business in foreign countries as discussed under “Item 1A: Risk
Factors.”

The effect of foreign currency exchange rate movements during 2019 was primarily attributable to the

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

36

FiscalYearHighlights

Net revenues increased 1% to $10.8 billion in 2019 compared to 2018, primarily driven by Marketplace net
transaction revenues and Classifieds marketing services and other revenues. FX-Neutral net revenue (as
defined above) increased 2% in 2019 compared to 2018. Operating margin increased to 21.5% in 2019
compared to 20.7% in 2018.

We generated cash flow from continuing operating activities of $3.1 billion in 2019 compared to $2.7

billion in 2018, ending the year with cash, cash equivalents and non-equity investments of $3.8 billion.

In the first quarter of 2019, we completed the acquisition of the U.K. based classifieds site, Motors.co.uk
for $93 million in cash. During the third quarter of 2019, $400 million of floating rate notes and $1.15 billion of
2.200% fixed rate notes matured and were repaid. During the year ended December 31, 2019 we paid
$473 million in cash dividends.

In the fourth quarter of 2019, we entered into a definitive agreement to sell StubHub to viagogo for a
purchase price of $4.05 billion in cash. The sale is expected to close in the first quarter of 2020, subject to
regulatory approval and closing conditions.

Diluted earnings per share from continuing operations was $2.10 in 2019 compared to diluted earnings per
share of $2.55 in 2018. In January 2020, we declared a quarterly cash dividend of $0.16 per share of common
stock to be paid on March 20, 2020 to stockholders of record as of March 2, 2020.

37

RESULTS OF OPERATIONS

NetRevenues

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):

2017

Net revenues

March 31

June 30

September 30

December 31

Quarter Ended

$2,303

$ 2,419

$2,498

$2,707

Percent change from prior quarter

(7)%

5%

3 %

8%

2018

Net revenues

$2,580

$2,640

$2,649

$2,877

Percent change from prior quarter

(5)%

2%

0 %

9%

2019

Net revenues

$2,643

$ 2,687

$2,649

$ 2,821

Percent change from prior quarter

(8)%

2%

(1)%

7%

Net Revenues by Geography

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. The following table presents net revenues by geography for the periods presented (in millions,
except percentages):

U.S.

Year Ended December 31,

2019

% Change

2018

% Change

2017

$ 4,337

(1)%

4,373

4%

$ 4,187

Percentageofnetrevenues

40%

41%

42%

International

Percentageofnetrevenues

Total net revenues

6,463

1 %

6,373

11%

5,740

60%

59%

58%

$10,800

1 %

$10,746

8%

$ 9,927

Net revenues included $81 million of hedging gains and $8 million and $28 million of hedging losses
during the years ended December 31, 2019, 2018 and 2017, respectively. The hedging activity in net revenues
specifically relates to hedges of net transaction revenues generated by our Marketplace segment. Foreign
currency movements relative to the U.S. dollar had an unfavorable impact of $211 million, a favorable impact of
$174 million and unfavorable impact of $39 million on net revenues for the years December 31, 2019, 2018 and
2017, respectively. The effect of foreign currency exchange rate movements in 2019 compared to 2018 was
primarily attributable to the strengthening of the U.S. dollar against the euro, British pound and Korean won.
The effect of foreign currency exchange rate movements in 2018 compared to 2017 was primarily attributable
to the weakening of the U.S. dollar against the euro, British pound and Korean won.

38

NetRevenuesbyTypeandSegment

We generate two types of net revenues:

Net transaction revenues primarily include final value fees, feature fees, including fees to promote
listings, and listing fees from sellers on our Marketplace platforms 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, including discounts, coupons and rewards, provided to our customers.

Marketing services and other (“MS&O”) revenues consist of Marketplace, StubHub and Classifieds
revenues principally from the sale of advertisements, classifieds fees, revenue sharing arrangements
and first-party inventory programs.

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

Year Ended December 31,

2019

% Change

2018

% Change

2017

$ 7,578

1,057

8,635

1,060

1,061

64

(20)

2,165

$10,800

2%

(1)%

2%

(13)%

4%

**

**

(4)%

1%

$ 7,416

1,068

8,484

1,225

1,022

15

—

2,262

$10,746

9%

6%

8%

3%

14%

(17)%

— %

7%

8%

$6,809

1,011

7,820

1,192

897

18

—

2,107

$ 9,927

Net transaction revenues:

Marketplace

StubHub

Total net transaction revenues

Marketing services and other revenues:

Marketplace

Classifieds

StubHub

Elimination of inter-segment net revenues

Total marketing services and other revenues

Total net revenues

** Not meaningful

NetTransactionRevenues

KeyOperatingMetrics

Gross Merchandise Volume (“GMV”) and take rate are significant factors that we believe affect our net

transaction revenues.

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. Despite GMV’s divergence from revenue during 2019,
we still 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.

Take rate is defined as net transaction revenues divided by GMV.

39

The following table presents GMV and take rate by segment for the periods presented (in millions, except

percentages):

GMV:

Marketplace

StubHub

Total

Transaction take rate:

Marketplace

StubHub

Total transaction take rate

MarketplaceNetTransactionRevenues

Year Ended December 31,

2019

% Change

2018

% Change

2017

$ 85,510

(5)% $ 89,829

4,700

(1)%

4,751

$ 90,210

(5)% $ 94,580

7%

5%

7%

$ 83,883

4,520

$ 88,403

8.86%

22.49%

0.61%

0.01%

9.57% 0.60%

8.25%

22.48%

8.97%

0.13%

0.11%

0.12%

8.12%

22.37%

8.85%

Year Ended
December 31,

2019

2018

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

Marketplace net transaction revenues (1)

7,578

7,416

85,510 89,829

2 %

(5)%

4 %

7,416

6,809

(2)% 89,829 83,883

9%

7%

7%

5%

8.86% 8.25% 0.61 %

8.25% 8.12% 0.13%

Marketplace GMV

Marketplace take rate

(1) Marketplace net transaction revenues were net of $81 million, $8 million and $28 million hedging activity during the years ended December 31, 2019, 2018

and 2017 respectively.

Marketplace net transaction revenues increased in 2019 compared to 2018 primarily due to growth in
promoted listing fees and a higher take rate. Marketplace transaction take rate was higher in 2019 compared
to 2018, primarily due to growth in promoted listing fees, which along with final value fees are calculated as a
percentage of an item’s sale price, and category mix. The increase in Marketplace net transaction revenues in
2019 compared to 2018 was due to take rate considerations discussed above, despite declining Marketplace
GMV. We expect that the divergence between Marketplace net transaction revenues and Marketplace GMV
will continue. Despite GMV’s divergence from net transaction revenues during the year, we still believe the
metric provides a useful measure of overall volume of closed transactions that flow through the platform in a
given period.

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.

40

StubHubNetTransactionRevenues

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

millions, except percentages):

StubHub net transaction revenues

StubHub GMV

StubHub take rate

Year Ended
December 31,

2019

2018

1,057

4,700

1,068

4,751

% Change

As
Reported

FX-
Neutral

(1)%

(1)%

(1)%

(1)%

Year Ended
December 31,

2018

2017

1,068

4,751

1,011

4,520

% Change

As
Reported

FX-
Neutral

6%

5%

6%

5%

22.49% 22.48% 0.01 %

22.48% 22.37%

0.11%

StubHub net transaction revenues in 2019 compared to 2018 decreased slightly primarily driven by lower
GMV from concerts and theater, partially offset by an increase in sporting events and a slightly higher take
rate. The slight increase in StubHub transaction take rate in 2019 compared to 2018 was primarily due to
pricing changes partially offset by event mix.

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.

MarketingServicesandOtherRevenues

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

Marketplace

Classifieds

StubHub

Elimination of inter-segment net

revenues

Year Ended
December 31,

2019

2018

$1,060 $ 1,225

1,061

1,022

64

15

$ (20) $ —

% Change

As
Reported

FX-
Neutral

Year Ended
December 31,

2018

2017

% Change

As
Reported

FX-
Neutral

(13)%

4 %

**

**

(11)% $ 1,225 $ 1,192

9 %

**

1,022

15

897

18

**

$ —

$ —

3 %

14 %

(17)%

— %

7 %

1 %

10 %

(18)%

— %

5 %

Total MS&O revenues

$ 2,165 $2,262

(4)%

(1)% $2,262 $2,107

Percentageofnetrevenues

20%

21%

21% 21%

** Not meaningful

MarketplaceMS&ORevenues

The decrease in Marketplace MS&O revenues during 2019 compared to 2018 was primarily due to a
decrease in advertising revenues that was driven by our ongoing shift to promoted listing fees, which are
recognized in net transaction revenues and lower revenues resulting from the sale of brands4friends. These
decreases were partially offset by increases in first-party inventory program in Korea in 2019 compared to
2018.

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.

41

ClassifiedsMS&ORevenues

The increases in Classifieds MS&O revenues in 2019 compared to 2018 and in 2018 compared to 2017 was
primarily driven by increased revenue from our Classifieds horizontal and vertical motors platforms primarily
in Germany.

StubHubMS&ORevenues

The increase in StubHub MS&O revenues in 2019 compared to 2018 primarily related to growth in
revenues from first-party inventory sales from sporting events. The change in StubHub MS&O revenue in 2018
compared to 2017 was relatively flat.

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,

2019

% Change

2018

% Change

2017

$ 2,508

5%

$ 2,382

7%

$ 2,221

23.2%

22.2%

22.4%

The increase in cost of net revenues in 2019 compared to 2018 and 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.

Cost of net revenues, net of immaterial hedging activities, was favorably impacted by $56 million
attributable to foreign currency movements relative to the U.S. dollar in 2019 compared to 2018. Cost of net
revenues was unfavorably impacted by $34 million attributable to foreign currency movements relative to the
U.S. dollar in 2018. There was no hedging activity within cost of net revenues in 2018.

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,

2019 % Change

2018 % Change

2017

$3,194

(6)%

$3,391

18%

$2,878

30%

1,240

11%

1,189

11%

300

3%

48

$ 5,971

(4)%

5%

5%

(1)%

(3)%

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

42

Foreign currency movements relative to the U.S. dollar had a favorable impact of $118 million on operating
expenses in 2019 compared to 2018. Operating expenses were unfavorably impacted by $68 million
attributable to foreign currency movements relative to the U.S. dollar in 2018 compared to 2017. There was no
hedging activity within operating expenses in 2019 and 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 decrease in sales and marketing expense in 2019 compared to 2018 was primarily due to a favorable
impact from foreign currency movements relative to the U.S. dollar and decreases in offline advertising spend
and employee-related costs. These costs were partially offset by online marketing spend and user coupons
and rewards largely driven by our Japan platform acquired in the second quarter of 2018.

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.

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.

Capitalized internal use and platform development costs were $137 million and $147 million in 2019 and

2018, respectively, and are primarily reflected as a cost of net revenues when amortized in future periods.

The decrease in product development expenses in 2019 compared to 2018 was primarily due to
decreases in employee-related costs, foreign currency movement relative to the U.S. dollar and depreciation
on equipment. 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.

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 2019 compared to 2018 was primarily due to

severance costs incurred in 2019 related to our CEO transition.

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 18 – Restructuring” to the consolidated financial
statements included in this report.

43

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 2019 compared to 2018 was primarily due to an increase
in bad debt expense. The increase in provision for transaction losses in 2018 compared to 2017 was not
significant.

IncomefromOperations

The following table presents income from operations (in millions, except percentages):

Income from operations

Operatingmargin

Year Ended December 31,

2019 % Change

2018

% Change

2017

$ 2,321

4%

$ 2,222

(2)%

$ 2,264

21.5%

20.7%

22.8%

The increase in income from operations in 2019 compared 2018 was primarily due to an increase in
income from our Marketplace segment. Income from our StubHub and Classifieds segments was not a
income from operations in 2019 compared to 2018. The
significant contributor to the increase in total
decrease in income from operations in 2018 compared to 2017 was primarily due to global workforce
reduction and an increase in employee related costs, partially offset by an increase in income from our
Marketplace and Classifieds segments.

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 Adyen, 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,

2019 % Change

2018 % Change

2017

$120

(32)%

$ 176

(311)

80

(3)

$(114)

(5)%

**

**

**

(326)

663

(17)

$ 496

(1)%

12 %

**

**

**

$ 177

(292)

115

11

11

$

The decrease in interest and other, net in 2019 compared to 2018 was primarily attributable to the gain
recognized on the sale of our investment in Flipkart of $313 million and the relinquishment of our existing
equity method investment in Giosis of $266 million that did not occur in 2019, the loss recorded upon the
divestiture of brands4friends of $52 million partially offset by the gain recognized due to the change in fair
value of the Adyen warrant of $133 million that occurred in 2019.

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.

44

IncomeTaxProvision

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

Income tax provision (benefit)

Effectivetaxrate

Year Ended December 31,

2019

2018

2017

$ 415

$ 190

$ 3,288

18.8% 7.0% 144.5%

The increase in our effective tax rate in 2019 compared to 2018 was primarily due to a reduction in 2018 to
the provisional tax amounts recorded in 2017 related to the Tax Cuts and Jobs Act and the gain recognized
from the relinquishment of our existing equity method investment in Giosis that was not subject to U.S.
federal income tax on a current basis that did not recur in 2019, and certain expenses in 2019 including a
negotiated reduction in the tax basis of the intangible assets in our Classifieds platforms. These impacts were
partially offset in 2019 by the effective settlements of audits, reduction in the U.S. deferred tax liability for
minimum tax on foreign earnings, related to the above reduction in tax basis of intangible assets, and a
benefit due to the enacted New York state legislation regarding the taxability of foreign earnings.

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.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. U.S. tax reform, among other things,
reduced the U.S. federal income tax rate from 35% to 21% beginning 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 in 2018.

Included in the 2017 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 and we utilized $213 million of foreign tax
credits to reduce the net liability, both in 2018.

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.

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 2017, 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. The foreign jurisdictions with lower tax rates that had the most significant
impact on our provision for income taxes in 2017 include Switzerland. See “Note 15—Income Taxes” to the
consolidated financial statements included in this report for more information on our tax rate reconciliation.

45

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 15 — 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.

46

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 Revenues
Net transaction revenues:

Marketplace (3)
StubHub
Total

Marketing services and other revenues:

Marketplace
Classifieds
StubHub
Elimination of inter-segment net revenue

Total

Total net revenues

GMV:

Marketplace
StubHub

Total GMV

Net Revenues
Net transaction revenues:

Marketplace (3)
StubHub
Total

Marketing services and other revenues:

Marketplace
Classifieds
StubHub
Total

Total net revenues

Year Ended
December 31, 2019

Year Ended
December 31, 2018

As
Reported

Exchange
Rate
Effect (1)

FX-Neutral (2)

As Reported

As
Reported
%
Change

FX-Neutral
% Change

$ 85,510 $(2,745)
(17)
$ 90,210 $(2,762)

4,700

$88,255
4,717
$ 92,972

$ 89,829
4,751
$94,580

$ 7,578 $ (123)
(3)
(126)

1,057
8,635

$ 7,701
1,060
8,761

1,060
1,061
64
(20)
2,165
$ 10,800 $

(30)
(55)
—
—
(85)
(211)

1,090
1,116
64
(20)
2,250
$ 11,011

$ 7,416
1,068
8,484

1,225
1,022
15
—
2,262
$ 10,746

(5)%
(1)%
(5)%

2%
(1)%
2%

(13)%
4%
**
**
(4)%
1%

(2)%
(1)%
(2)%

4%
(1)%
3%

(11)%
9%
**
**
(1)%
2%

Year Ended
December 31, 2018

Year Ended
December 31, 2017

As
Reported

Exchange
Rate
Effect (1)

FX-Neutral (2)

As Reported

As
Reported
%
Change

FX-Neutral
% Change

$89,829 $ 1,659
5
$94,580 $ 1,664

4,751

$ 88,170
4,746
$ 92,916

$83,883
4,520
$88,403

$ 7,416 $
1,068
8,484

1,225
1,022
15
2,262
$ 10,746 $

118
1
119

22
33
—
55
174

$ 7,298
1,067
8,365

1,203
989
15
2,207
$ 10,572

$ 6,809
1,011
7,820

1,192
897
18
2,107
$ 9,927

7%
5%
7%

9%
6%
8%

3%
14%
(17)%
7%
8%

5%
5%
5%

7%
6%
7%

1%
10%
(18)%
5%
6%

** Not meaningful
(1) We define exchange rate effect as the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to

current year transactional currency amounts, excluding hedging activity.

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

revenues minus the exchange rate effect.

(3) Marketplace net transaction revenues were net of $81 million and $8 million of hedging activity in 2019 and 2018, respectively.

47

LiquidityandCapitalResources

CashFlows

Net cash provided by (used in):

Continuing operating activities

Investing activities

Financing activities

Year Ended December 31,

2019

2018

2017

(In millions)

$ 3,114

$ 2,661

$ 3,146

2,787

2,894

(7,091)

(5,398)

(1,295)

(1,784)

238

—

$ 305

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

Net increase (decrease) in cash, cash equivalents — discontinued operations

(33)

—

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

$(1,223)

$

(75)

(3)

79

ContinuingOperatingActivities

Cash provided by continuing operating activities of $3.1 billion in 2019 was primarily attributable to net
income of $1.8 billion with adjustments of $681 million in depreciation and amortization, $505 million in stock-
based compensation, $300 million in provision for transaction losses, $117 million for deferred income taxes,
$52 million loss on the sale of a business, partially offset by a decrease of $200 million in changes in assets
and liabilities, net of acquisition effects, and $133 million for changes in the fair value of the Adyen warrant.

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 Adyen 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.

Cash paid for income taxes in 2019, 2018 and 2017 was $333 million, $597 million and $308 million,
respectively. Cash paid for income taxes in 2018 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.

InvestingActivities

Cash provided by investing activities of $2.8 billion in 2019 was primarily attributable to proceeds of
$50.5 billion from the maturities and sales of investments, partially offset by cash paid for purchases of
investments of $47.0 billion, property and equipment of $554 million, equity investment in Paytm Mall of
$160 million and acquisitions of $93 million.

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 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.

48

FinancingActivities

Cash used in financing activities of $7.1 billion in 2019 was primarily used to repurchase $5.0 billion of

common stock, repay outstanding debt of $1.6 billion and pay $473 million of cash dividends.

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 negative effect of exchange rate movements on cash, cash equivalents and restricted cash was due
to the strengthening of the U.S. dollar against other currencies, primarily the Korean won, euro and British
pound during 2019. The negative effect of exchange rate movements on cash, cash equivalents and
restricted cash 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, cash
equivalents and restricted cash was due to the weakening of the U.S. dollar against other currencies, primarily
the euro and Korean won, during 2017.

StockRepurchases

In January 2018, our Board authorized a $6.0 billion stock repurchase program and in January 2019, our
Board authorized an additional $4.0 billion stock repurchase program. These stock repurchase programs
have no expiration from the date of authorization. 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 2019, we repurchased approximately $5.0 billion of our common stock under our stock repurchase
programs. As of December 31, 2019, a total of approximately $2.2 billion remained available for future repurchases
of our common stock under our stock repurchase programs.
In January 2020, our Board authorized an
additional $5.0 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

The company paid a total of $473 million in cash dividends during the year ended December 31, 2019. No
cash dividends were paid in 2018 and 2017. In January 2020, we declared a cash dividend of $0.16 per share of
common stock to be paid on March 20, 2020 to stockholders of record as of March 2, 2020.

ShelfRegistrationStatementandDebt

As of December 31, 2019, 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,
interest in shares of preferred stock,
preferred stock, warrants, depositary shares representing fractional
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

49

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, 2019, we had floating- and fixed-rate senior notes outstanding for an aggregate
principal amount of $7.8 billion. The net proceeds from the issuances of these senior notes are used for
including, among other things, capital expenditures, share repurchases,
general corporate purposes,
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. As of December 31, 2019, we had no interest rate swaps
outstanding as $1.15 billion related to our 2.200% senior notes of the $2.4 billion aggregate notional amount
matured. In addition, during the year ended December 31, 2019, we terminated the interest rate swaps related
to $750 million of our 2.875% senior notes due July 2021 and $500 million of our 3.450% senior notes due July
2024. As a result of the early termination, hedge accounting was discontinued prospectively and the gain on
termination was recorded as an increase to the long-term debt balance and is being recognized over the
remaining life of the underlying debt as a reduction to interest expense. The gain recognized during the year
ended December 31, 2019 was immaterial. For additional details related to the interest rate swap termination,
please see, “Note 10 — Debt” to the consolidated financial statements included in this report.

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, 2019, 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.

50

As of December 31, 2019, 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, 2019 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, 2019.

CreditRatings

As of December 31, 2019, 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 actions taken by these credit rating agencies to lower our credit ratings 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,

2020

2021

2022

2023

2024

Thereafter

Debt

Leases

Purchase
Obligations

Total

$ 1,257 $200

$ 140

$ 1,597

980

1,933

1,284

871

4,349

174

151

98

45

78

82

69

1

1

3

1,236

2,153

1,383

917

4,430

$10,674 $746

$296

$ 11,716

51

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, 2019.

•

Lease amounts include payments for our operating and finance 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 $285 million of such non-current liabilities included in other liabilities
on our consolidated balance sheet as of December 31, 2019. The gross amount of unrecognized tax benefits
expected to be reduced within the next twelve months is approximately $19 million. See “Note 15 — Income
Taxes” to the consolidated financial statements included in this report for more information on unrecognized
tax benefits.

LiquidityandCapitalResourceRequirements

As of December 31, 2019 and December 31, 2018, 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 $3.8 billion and
$8.6 billion, respectively. As of December 31, 2019, this amount included assets held in certain of our foreign
operations totaling approximately $3.4 billion. 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 on those amounts 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.

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, 2019, 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.

52

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, 2019, we had a
total of $4.8 billion in aggregate cash deposits, partially offset by $4.7 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.

53

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
required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties
and the complexity of taxes on foreign earnings. We review our tax positions quarterly and adjust the
balances as new information becomes available. Tax positions are evaluated for potential reserves for
uncertainty based on the estimated probability of sustaining the position under examination. Our income tax
rate is affected by the tax rates that apply to our foreign earnings including U.S. minimum taxes on foreign
earnings. The deferred tax benefit derived from the amortization of our intellectual property is based on the
fair value, which has been agreed with foreign tax authorities. The deferred tax benefit may from time to time
change based on changes in tax rates. 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.

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, 2019, 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.

54

The following table illustrates our effective tax rates for 2019, 2018 and 2017:

Income tax provision (benefit)

Effectivetaxrate

Year Ended December 31,

2019

2018

2017

(In millions, except percentages)
$3,288
$ 190
$ 415

18.8%

7.0%

144.5%

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, 2019, 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 $22 million, resulting in an approximate $0.03 change in diluted
earnings per share.

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, 2019, our goodwill totaled $5.2 billion and our identifiable intangible assets, net
totaled $67 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, 2019 and 2018. As of
December 31, 2019, 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.

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 12 – Commitments and Contingencies” to the consolidated

55

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.

56

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,

The primary objective of our investments 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 investments in a variety of asset types, including bank deposits, government bonds and corporate debt
securities. As of December 31, 2019, approximately 24% 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 market 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, 2019, the balance of our corporate debt and government bond securities was
$2.8 billion, which represented approximately 67% 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 $8 million and $44 million as of
December 31, 2019 and 2018, respectively.

As of December 31, 2019, we had an aggregate principal amount of $7.8 billion of outstanding senior
notes, of which 95% bore interest at fixed rates. In 2014, we entered into $2.4 billion of interest rate swap
agreements that had an 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. In July 2019, $1.15 billion of the $2.4 billion
aggregate notional amount matured. In addition, during the third quarter of 2019, we terminated the interest
rate swaps related to $750 million of our 2.875% senior notes due July 2021 and $500 million of our 3.450%
senior notes due July 2024, which were designated as fair value hedges. As a result of the early termination
hedge, accounting was discontinued prospectively and the gain on termination was recorded as an increase
to the long-term debt balance and is being recognized over the remaining life of the underlying debt as a
reduction to interest expense. The gain recognized during the year ended December 31, 2019 was immaterial.

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

EquityInvestments

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

57

investments accounted for under the equity method of accounting. 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 and other, net. As of December 31, 2019,
our equity investments totaled $355 million, which represented approximately 9% of our total cash and
investments, and were primarily related to equity investments without readily determinable fair values.

Warrant

We entered into a warrant agreement in conjunction with a commercial agreement with Adyen that,
subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of Adyen’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, Derivatives and Hedging. Changes in Adyen’s common stock
price and equity volatility may have a significant impact on the value of the warrant. As of December 31, 2019, a
one dollar change in Adyen’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, 2019. 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

58

Fair Value
Asset/(Liability)

Fair Value
Sensitivity

(In millions)

$49

$ (2)

$(88)

$(40)

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.

We also 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 $18 million as of December 31, 2019 taking into consideration the offsetting effect of foreign
exchange forwards in place as of December 31, 2019.

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, 2019.

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, 2019.

The effectiveness of our internal control over financial reporting as of December 31, 2019 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.

59

ITEM 10: DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE

Incorporated by reference from our Proxy Statement for our 2020 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2019.

PART III

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 CodeofBusinessConductandEthicsat 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 2020 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2019.

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

STOCKHOLDERMATTERS

Incorporated by reference from our Proxy Statement for our 2020 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2019.

ITEM 13: CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE

Incorporated by reference from our Proxy Statement for our 2020 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2019.

ITEM 14: PRINCIPALACCOUNTANTFEESANDSERVICES

Incorporated by reference from our Proxy Statement for our 2020 Annual Meeting of Stockholders to be

filed with the SEC within 120 days after the end of the year ended December 31, 2019.

60

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-50

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-51

ITEM 16: FORM10-KSUMMARY

None.

61

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, 2019 and 2018, and the related consolidated statements of income, of
comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period
ended December 31, 2019, including the related notes and schedule of valuation and qualifying accounts for
each of the three years in the period ended December 31, 2019 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, 2019, 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, 2019 and 2018, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2019 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, 2019, 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 leases in 2019.

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
control over financial reporting, included in Management’s Annual Report on Internal Control over Financial
Reporting appearing under Item 9A. 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.

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

F-1

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.

CriticalAuditMatters

The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii)
involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

IncomeTaxes

As described in Notes 1 and 15 to the consolidated financial statements, significant judgment is required
in determining the Company’s tax expense and in evaluating management’s tax positions,
including
evaluating uncertainties and the complexity of taxes on foreign earnings. As disclosed by management, the
Company’s income tax rate is affected by the tax rates that apply to their foreign earnings including U.S.
minimum taxes on foreign earnings. The deferred tax benefit derived from the amortization of the Company’s
intellectual property is based on the fair value, which has been agreed with foreign tax authorities. The
deferred tax benefit may from time to time change based on changes in tax rates. Management recognizes
and measures uncertain tax positions in accordance with generally accepted accounting principles in the
U.S., or GAAP, pursuant to which management only recognizes 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 total provision for income taxes for the year ended December 31,
2019 was $415 million, and the effective tax rate was 18.8%.

The principal considerations for our determination that performing procedures relating to income taxes is
a critical audit matter are there is significant judgment applied by management when determining the tax
expense and in evaluating management’s tax positions, including analyzing uncertain tax positions and taxes
on foreign earnings, which in turn led to a high degree of auditor judgment, effort, and subjectivity in
performing audit procedures and evaluating audit evidence relating to income taxes.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to income taxes, including controls over uncertain tax positions and the
provision for income taxes. These procedures also included, among others, evaluating tax positions taken by
management, including evaluating the reasonableness of management’s determination of the probability of
sustaining the position under tax examination, evaluating communications with the relevant tax authorities,
testing applicable tax rates applied by management, and evaluating the impact of taxes on foreign earnings.

/s/ PricewaterhouseCoopers LLP

San Jose, California
January 31, 2020

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

F-2

PART II: FINANCIAL INFORMATION

ITEM 8: FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA

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
Operating lease right-of-use assets
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

Operating lease liabilities
Deferred tax liabilities
Long-term debt
Other liabilities

Total liabilities

Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.001 par value; 3,580 shares authorized; 796 and 915 shares

outstanding

Additional paid-in capital
Treasury stock at cost, 897 and 763 shares
Retained earnings
Accumulated other comprehensive income
Total stockholders’ equity

Total liabilities and stockholders’ equity

December 31,

2019

2018

(In millions, except par value)

$

975
1,850
700
1,181
4,706
1,316
1,510
5,153
67
628
4,377
417
$ 18,174

$ 1,022
270
2,404
158
212
4,066
492
2,646
6,738
1,362
15,304

$ 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
16,126
(31,396)
17,754
384
2,870
$ 18,174

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

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 provision

Year Ended December 31,

2019

2018

2017

(In millions, except per share amounts)
$ 9,927
$10,746
$10,800

2,508

8,292

2,382

8,364

2,221

7,706

2,878

1,224

1,030

272

38

5,442

2,264

11

2,275

3,194

1,240

1,189

300

48

5,971

2,321

(114)

2,207

(415)

3,391

1,285

1,131

286

49

6,142

2,222

496

2,718

(190)

(3,288)

Income (loss) from continuing operations

$ 1,792

$ 2,528

$ (1,013)

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

(6)

2

(4)

Net income (loss)

$ 1,786

$ 2,530

$ (1,017)

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

$

$

2.11

$ 2.58

$ (0.95)

(0.01)

—

—

2.10

$ 2.58

$ (0.95)

$

2.10

$ 2.55

$ (0.95)

(0.01)

—

—

$ 2.09

$ 2.55

$ (0.95)

849

856

980

991

1,064

1,064

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

F-4

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

eBay Inc.

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)

Year Ended December 31,

2019

2018

2017

(In millions)
$1,786 $2,530 $(1,017)

(99)

61

(16)

(77)

17

(114)

(286)

(41)

10

125

(27)

978

(66)

23

(111)

17

(219)

841

$1,672 $ 2,311 $ (176)

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

F-5

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

eBay Inc.

Year Ended December 31,

2019

2018
(In millions)

2017

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
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)
Dividends and dividend equivalents declared

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

$

2 $

2 $

—
—

2

15,716
104

(202)
505
3
16,126

—
—

2

2

—
—

2

15,293
109

14,907
120

(225)
538
1
15,716

(219)
484
1
15,293

(26,394)
(5,002)
(31,396)

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

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

16,459
1,786
(491)
17,754

13,929
2,530
—
16,459

14,946
(1,017)
—
13,929

498
61
(77)
(99)
1
384

(124)
(66)
(111)
978
40
717
$ 2,870 $ 6,281 $ 8,049

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

915
15
(134)
796

1,029
17
(131)
915

1,087
24
(82)
1,029

Dividends and dividend equivalents declared per share or restricted stock

unit

$

0.56 $

—

$

—

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,

2019

2018

2017

(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) loss 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
Equity investment in Paytm Mall
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
Payments for dividends
Repayment of debt
Other

Net cash used in financing activities

F-7

$ 1,786 $ 2,530 $ (1,017)
4

(2)

6

300
681
505
—
52
117
(133)
—

(124)
177
222
4
(391)
—
(88)
3,114
—
3,114

(554)
(46,977)
50,548
—
(160)
—
(93)
23
2,787

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)

106
(4,973)

109
(4,502)

120
(2,746)

(202)
—
(473)
(1,550)
1
(7,091)

(225)
—
—
(750)
(30)
(5,398)

(219)
2,484

—
(1,452)
29
(1,784)

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 at end of period

Supplemental cash flow disclosures:

Cash paid for:

Interest
Interest on finance lease obligations
Income taxes

Noncash investing activities:

Year Ended December 31,

2019

2018

2017

(In millions)
238
(75)
305
79
1,835
2,140
$ 996 $ 2,219 $2,140

(33)
(1,223)
2,219

$ 304 $ 314 $ 285
$
$ —
$ 333 $ 597 $ 308

1 $ —

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. Founded in 1995 in San Jose, California, eBay is one of the world’s largest and most vibrant
marketplaces for discovering great value and unique selection. 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.

When we refer to “we,” “our,” “us” or “eBay” in this Annual Report on Form 10-K, we mean the current
Delaware corporation (eBay Inc.) and its consolidated subsidiaries, unless otherwise expressly stated or the
context otherwise requires.

In the first quarter of 2019, we announced several organizational changes,

including bringing our
Marketplace geographic regions together under one global
leadership team. We changed from one
reportable segment to three reportable segments to reflect the way management and our chief operating
decision maker (“CODM”) review and assess performance of the business. Our three reportable segments
are Marketplace, StubHub and Classifieds. Marketplace includes our online marketplace located at
www.ebay.com, its localized counterparts and the eBay suite of mobile apps. StubHub includes our online
ticket platform located at www.stubhub.com,
its localized counterparts and the StubHub mobile
apps. Classifieds includes a collection of brands such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay
Kleinanzeigen and others. Prior period information has been reclassified to conform to the current period
segment presentation. For further information on our segments, refer to “Note 5 — Segments” to our
consolidated financial statements included in this report.

On November 24, 2019, we entered into a stock purchase agreement with an affiliate of viagogo to sell
StubHub for $4.05 billion, subject to certain adjustments. The completion, on our expected timeline, of the
proposed sale of StubHub is subject to closing conditions and viagogo’s ability to obtain debt and equity
financing on a timely basis, both of which have not been met as of December 31, 2019. If the conditions to the
closing of the sale of StubHub are neither satisfied nor, where permissible, waived on a timely basis or at all,
we may be unable to complete the sale of StubHub or such completion may be delayed beyond our
expected timeline. Given the uncertainty, we have determined as of December 31, 2019 the transaction is not
considered probable to close. As such, StubHub continues to be classified as held for use in our
December 31, 2019 consolidated financial statements.

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
intercompany balances and transactions have been eliminated in consolidation. Minority
beneficiary. All

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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 in an orderly transaction for identical or similar instruments or impairment.

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.

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, fees for these additional services are recognized when the single
performance obligation is satisfied. Promoted listing fees are recognized when the item is sold and feature
and listing fees are recognized 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

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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.
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 $128 million and
$106 million as of December 31, 2019 and December 31, 2018, 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, 2019 that was included in the deferred revenue balance at the beginning of the period
was $93 million. 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.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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, 2019
and 2018, we capitalized costs, primarily related to labor and stock-based compensation, of $137 million and
$147 million, respectively. Amortization of previously capitalized amounts was $150 million, $160 million and
$156 million for 2019, 2018 and 2017, 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, $1.4 billion and $1.3 billion for the years
ended December 31, 2019, 2018 and 2017, respectively.

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 2019, 2018 and 2017 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.

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

Significant judgment is required in determining our tax expense and in evaluating our tax positions,
including evaluating uncertainties and the complexity of taxes on foreign earnings. We review our tax
positions quarterly and adjust the balances as new information becomes available. Tax positions are
evaluated for potential reserves for uncertainty based on the estimated probability of sustaining the position
under examination. Our income tax rate is affected by the tax rates that apply to our foreign earnings
including U.S. minimum taxes on foreign earnings. The deferred tax benefit derived from the amortization of
our intellectual property is based on the fair value, which has been agreed with foreign tax authorities. The
deferred tax benefit may from time to time change based on changes in tax rates.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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.

Cashandcashequivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three
months or less when purchased, which may include bank deposits, US Treasury securities, time deposits, and
certificates of deposit.

Investments

Short-term investments are investments with original maturities of less than one year when purchased,
are classified as available-for-sale and are reported at fair value using the specific identification method.
Short-term investments are primarily comprised of corporate debt securities, commercial paper, and agency
securities.

Long-term investments are primarily comprised of corporate debt securities, agency securities, 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. We account for equity
investments through which we exercise significant influence but do not have control over the investee under
the equity method. 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. Our
equity investments not accounted for under the equity method are carried at under the measurement
alternative. Under the measurement alternative, the carrying value is measured at cost minus impairment, if
any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or
a similar investment of the same issuer. Such changes in the basis of the equity investment are recognized in
interest & other, net.

We periodically perform impairment assessment review of our debt and equity investments. For 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). If any impairment is considered other-than-temporary, we will write down
the security to its fair value and record the corresponding charge as interest & other, net. For equity
investments we perform a qualitative assessment on a quarterly basis and recognize an impairment if there
are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are
recorded in interest & other, net.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Leases

We determine if an arrangement is a lease or contains a lease at inception. Operating and finance lease
liabilities are recognized based on the present value of the remaining lease payments, discounted using the
discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily
determinable for our operating leases, we generally use an incremental borrowing rate based on information
available at the commencement date to determine the present value of future lease payments. Operating
right-of-use (“ROU”) assets and finance lease assets are generally recognized based on the amount of the
initial measurement of the lease liability. Our leases have remaining lease terms of up to ten years, some of
which include options to extend the leases for up to five years, and some of which include options to
terminate the leases within one year. Lease expense is recognized on a straight-line basis over the lease
term. We account for lease and non-lease components as a single lease component for our data center
leases. Lease and non-lease components for all other leases are accounted for separately.

Operating leases are included in operating lease right-of-use assets, other current liabilities and
operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and
equipment, net, short-term debt, and long-term debt on our consolidated balance sheet.

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 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, 2019 and 2018 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.

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 2019, 2018 and 2017, no impairment was noted.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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 Adyen that,
subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of Adyen’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, 2019, 2018 and 2017, 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 2016, the Financial Accounting Standards Board (“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. We adopted this guidance in
the first quarter of 2019 using the modified retrospective approach, electing the package of practical
expedients, and the practical expedient to not separate lease and nonlease components for data center
operating leases. We also elected the optional transition method that permits adoption of the new standard
prospectively, as of the effective date, without adjusting comparative periods presented. Adoption of the
standard resulted in the recognition of $728 million of ROU assets and $744 million of lease liabilities on our
consolidated balance sheet at adoption related to office space, data and fulfillment centers, and other
corporate assets. The difference of $16 million represented deferred rent for leases that existed as of the date
of adoption, which was an offset to the opening balance of right-of-use assets. The adoption of the standard
on January 1, 2019 did not have a material impact on our consolidated statements of income, stockholders’
equity and cash flows.

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

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

market pricing. The new guidance will not impact debt securities held at a discount. Adoption of this standard
was 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.
The adoption of the standard in the first quarter of 2019 did not have a material impact on our consolidated
financial statements at adoption.

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. The adoption of the standard in the first quarter of 2019 did not have an 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 is effective for annual reporting periods
beginning after December 15, 2018, including interim reporting periods within those annual reporting periods.
The adoption of the standard in the first quarter of 2019 did not have a material impact on our consolidated
financial statements at adoption.

RecentAccountingPronouncementsNotYetAdopted

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. This
standard impacts the Company’s accounting for allowances for doubtful accounts, available-for-sale
securities and other assets subject to credit risk. In preparation for the adoption of this standard, we will
update our credit loss models as needed. The Company has completed its analysis of the impact of this
guidance and the adoption of this standard will not have a material impact 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. 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 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 is effective for annual
reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal
years. The adoption of this standard will not have a material impact on our consolidated financial statements.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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. We do not
expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain
exceptions to the general principles and also simplification of areas such as franchise taxes, step-up in tax
basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate
changes. The standard will be effective for our annual reporting periods beginning after December 15, 2020,
including interim reporting periods within those fiscal years. We are evaluating the impact of adopting this
new accounting guidance on our 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.

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

except per share amounts):

Year Ended December 31,

2019

2018

2017

Numerator:

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

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

$1,792 $2,528 $(1,013)
(4)
$1,786 $2,530 $(1,017)

(6)

2

849
7
856

980
11
991

1,064
—
1,064

$ 2.11 $ 2.58 $(0.95)

(0.01)

—

—

$ 2.10 $ 2.58 $(0.95)

$ 2.10 $ 2.55 $(0.95)

(0.01)

—

—

$ 2.09 $ 2.55 $(0.95)

Common stock equivalents excluded from income per diluted share because

their effect would have been anti-dilutive

18

12

46

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 3 — Business Combinations

BusinessCombinations

In February 2019, we completed our acquisition of the U.K.-based classifieds site, Motors.co.uk for
$93 million in cash. We believe the acquisition will increase our international presence and give buyers access
to more listings.

The aggregate purchase consideration was allocated as follows (in millions):

Goodwill

Purchased intangible assets

Net liabilities

Total

Motors.co.uk

$65

30

(2)

$93

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

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

The goodwill recognized is primarily attributable to expected synergies and the assembled workforce of
Giosis. We have assigned the goodwill to our Marketplace segment. We generally do not expect goodwill to
be deductible for income tax purposes.

Acquisition activity in 2017 was immaterial.

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.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 4 — Goodwill and Intangible Assets

Goodwill

The following table presents goodwill activity by reportable segment for the years ended December 31,

2019 and 2018 (in millions):

Marketplace

StubHub

Classifieds

Total

December 31,
2017

Goodwill
Acquired Adjustments

December 31,
2018

Goodwill
Acquired Adjustments

December 31,
2019

$ 4,186

$532

$(124)

$4,594

233

354

—

—

(6)

(15)

227

339

$4,773

$532

$(145)

$ 5,160

$—

—

65

$65

$(60)

$4,534

(4)

(8)

223

396

$ (72)

$ 5,153

The adjustments to goodwill during the years ended December 31, 2019 and 2018 were primarily due to

foreign currency translation. There were no impairments to goodwill in 2019 and 2018.

IntangibleAssets

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

December 31, 2019

December 31, 2018

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Weighted
Average
Useful Life
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Weighted
Average
Useful Life
(Years)

Intangible assets:

Customer lists and user base $ 502

$ (448)

$54

Marketing-related

Developed technologies

All other

Total

540

272

161

(535)

(267)

(158)

5

5

3

5

5

3

4

$ 519

$ (445)

$74

584

278

160

(578)

(269)

(157)

6

9

3

5

5

3

4

$1,475

$(1,408)

$67

$1,541

$(1,449)

$92

Amortization expense for intangible assets was $55 million, $63 million and $64 million for the years

ended December 31, 2019, 2018 and 2017, respectively.

Expected future intangible asset amortization as of December 31, 2019 is as follows (in millions):

Fiscal year:

2020

2021

2022

2023

2024

Total

$45

18

2

2

—

$67

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 5 — Segments

In the first quarter of 2019, we announced several organizational changes,

including bringing our
Marketplace geographic regions together under one global
leadership team. We changed from one
reportable segment to three reportable segments to reflect the way management and our chief operating
decision maker (“CODM”) review and assess performance of the business. Our three reportable segments
are Marketplace, StubHub and Classifieds. Marketplace includes our online marketplace located at
www.ebay.com, its localized counterparts and the eBay suite of mobile apps. StubHub includes our online
ticket platform located at www.stubhub.com,
its localized counterparts and the StubHub mobile apps.
Classifieds includes a collection of brands such as mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen
and others. The accounting policies of our segments are the same as those described in “Note 1 — The
Company and Summary of Significant Accounting Policies”. Prior period segment information has been
reclassified to conform to the current period segment presentation.

Our reportable segments reflect the way management and our CODM review and assess performance of
the business. Our CODM reviews revenue and operating income (loss) for each reportable segment. Our
CODM does not evaluate reportable segments using asset information. Corporate and other costs includes:
(i) corporate management costs, such as human resources, finance and legal, that are not allocated to our
segments; (ii) amortization of intangible assets; (iii) restructuring charges; (iv) stock-based compensation; and
(v) results of operations of various initiatives that support all of our reportable segments.

Segment net revenue and operating income for the years ended 2019, 2018 and 2017 were as follows (in

millions):

Net Revenues
Marketplace

Net transaction revenues
Marketing services and other revenues

Total Marketplace

StubHub

Net transaction revenues
Marketing services and other revenues

Total StubHub

Classifieds (1)
Elimination of inter-segment net revenue (2)

Total consolidated net revenue

Operating income (loss)
Marketplace
StubHub
Classifieds
Corporate and other costs
Total operating income
Interest and other, net

Income before income taxes

(1) Classifieds net revenues consists entirely of marketing services and other revenue.
(2) Represents revenue generated between our reportable segments.

F-20

Year ended December 31,

2019

2018

2017

$ 7,578 $ 7,416 $6,809
1,192
8,001

1,060
8,638

1,225
8,641

1,057
64
1,121
1,061
(20)

1,011
18
1,029
897
—
$10,800 $10,746 $ 9,927

1,068
15
1,083
1,022
—

$ 2,814 $ 2,673 $ 2,626
161
314
(837)
2,264
11
$ 2,207 $ 2,718 $ 2,275

139
420
(1,052)
2,321
(114)

149
401
(1,001)
2,222
496

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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

Long-lived tangible assets by geography:

U.S.

International

Total long-lived tangible assets

Year Ended December 31,

2019

2018

2017

$ 4,337 $ 4,373 $ 4,187

1,506

1,441

1,221

2,295

1,591

1,481

1,195

2,106

1,464

1,368

1,061

1,847

$10,800 $10,746 $9,927

December 31,

2019

2018

$1,786

$1,661

352

151

$2,138

$1,812

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.
Depreciation and amortization expense was primarily recorded in the Marketplace segment.

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, 2019 and 2018 (in millions):

Short-term investments:

Restricted cash

Corporate debt securities

Government and agency securities

Long-term investments:

Corporate debt securities

December 31, 2019

Gross
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

$

21

$ —

$ —

$

21

1,653

175

1

—

—

—

1,654

175

$1,849

$ 1

$ —

$1,850

957

4

$ 957

$ 4

—

$ —

961

$ 961

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Short-term investments:

Restricted cash

Corporate debt securities

Government and agency securities

Long-term investments:

Corporate debt securities

December 31, 2018

Gross
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

$

17

$ —

$ —

$

17

2,615

90

—

—

(9)

—

2,606

90

$2,722

$ —

$ (9)

$ 2,713

3,682

$3,682

1

$ 1

(48)

3,635

$(48)

$3,635

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.

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 less than 12 months had an estimated fair value of
$774 million and an immaterial amount of unrealized losses as of December 31, 2019, and an estimated fair
value of $2.9 billion and an immaterial amount of unrealized losses as of December 31, 2018. Investment
securities in a continuous loss position for greater than 12 months had an estimated fair value of $92 million
and an immaterial amount of unrealized losses as of December 31, 2019 and an estimated fair value of
$2.7 billion and unrealized losses of $41 million December 31, 2018. As of December 31, 2019, these securities
had a weighted average remaining maturity of approximately 2 months. Refer to “Note 17 — 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, 2019 are as follows (in millions):

One year or less (including restricted cash of $21)

One year through two years

Two years through three years

Three years through four years

Total

F-22

December 31,
2019

$1,850

676

198

87

$ 2,811

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

EquityInvestments

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, 2019 and December 31, 2018
(in millions):

Equity investments without readily determinable fair values

Equity investments under the equity method of accounting

Total equity investments

December 31,
2019

December 31,
2018

$337

18

$355

$137

6

$143

In 2019, we invested $160 million in cash in exchange for an equity interest in Paytm Mall and $40 million in
other investments. These investments are accounted for as equity investments without readily determinable
fair value.

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 an
investment of $725 million accounted for as an equity investment without readily determinable fair value. 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 (“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 summarizes the total carrying value of equity investments without

readily
determinable fair values during the twelve months ended December 31, 2019 and 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, 2019

Year Ended
December 31, 2018

$ 137

200

—

—

—

$ 337

$872

23

(718)

(20)

(20)

$ 137

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

For such equity investments without readily determinable fair values still held at December 31, 2019,
cumulative downward adjustments for price changes and impairment was $81 million. As of December 31,
2019, 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 24
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 used 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
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. There were no interest rate swaps
outstanding as of December 31, 2019.

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 hedged 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, 2019, we have estimated that approximately
$2 million of net derivative loss 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 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 accounted for them as
fair value hedges. These transactions were designated as fair value hedges for financial accounting purposes
because they protected us against changes in the fair value of certain of our fixed rate borrowings due to
benchmark interest rate movements. In 2019, $1.15 billion related to our 2.200% senior notes due 2019 of the

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

$2.4 billion aggregate notional amount matured. In addition, during the three months ended September 30,
2019, we terminated the interest rate swaps related to $750 million of our 2.875% senior notes due July 2021
and $500 million of our 3.450% senior notes due July 2024. As a result of the early termination, hedge
accounting was discontinued prospectively and the gain on termination was recorded as an increase to the
long-term debt balance and is being recognized over the remaining life of the underlying debt as a reduction
to interest expense. The gain recognized during the year ended December 31, 2019 was immaterial.

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 Adyen that,
subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of Adyen’s
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.

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.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

FairValueofDerivativeContracts

The fair values of our outstanding derivative instruments as of December 31, 2019 and 2018 were as

follows (in millions):

Balance Sheet Location

December 31,
2019

December 31,
2018

Derivative Assets:

Foreign exchange contracts designated as cash flow

hedges

Other Current Assets

$ 36

$ 72

Foreign exchange contracts not designated as

hedging instruments

Warrant

Foreign exchange contracts designated as cash flow

hedges

Total derivative assets

Derivative Liabilities:

Other Current Assets

Other Assets

Other Assets

17

281

15

$349

38

148

4

$262

Foreign exchange contracts designated as cash flow

hedges

Other Current Liabilities

$

2

$ —

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

2

—

21

—

$ 25

$324

1

7

30

10

$ 48

$ 214

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, 2019, the
potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both
assets and liabilities by $25 million, resulting in net derivative assets of $43 million and net derivative liabilities
of less than $1 million.

EffectofDerivativeContractsonAccumulatedOtherComprehensiveIncome

The following tables present the activity of derivative instruments designated as cash flow hedges as of
December 31, 2019 and 2018, and the impact of these derivative contracts on AOCI for the years ended
December 31, 2019 and 2018 (in millions):

December 31, 2018

Amount of Gain (Loss)
Recognized in Other
Comprehensive
Income

Less: Amount of Gain
(Loss) Reclassified

From AOCI to Earnings December 31, 2019

Foreign exchange contracts

designated as cash flow hedges

$68

4

81

$(9)

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

December 31, 2017

Amount of Gain (Loss)
Recognized in Other
Comprehensive
Income

Less: Amount of Gain
(Loss) Reclassified

From AOCI to Earnings December 31, 2018

Foreign exchange contracts

designated as cash flow hedges

$(57)

117

(8)

$68

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

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,

2019

2018

2017

$ 81

$ (8)

$(28)

—

—

—

—

11

24

(11)

9

(16)

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

the consolidated statement of income

$70

$ 1

$ (9)

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,

2019

2018

2017

$ 34

$ (19) $ (21)

(34)

19

21

$ —

$ —

$ —

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,

2019

2018

2017

$133

$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

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

of foreign exchange payments under these contracts are determined. The following table provides the
notional amounts of our outstanding derivatives as of December 31, 2019 and 2018 (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,

2019

2018

$ 1,983 $ 1,510
804
3,517
2,400
$ 4,893 $ 8,231

200
2,710
—

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.

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, 2019 and 2018 (in millions):

Assets:

Cash and cash equivalents
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

December 31,
2019

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

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

$ 975

$975

$

—

$ —

21
1,654

175
1,850
349

961
961
$4,135

21
—

—
21
—

—
—
$996

—
1,654

175
1,829
68

961
961
$2,858

—
—

—
—
281

—
—
$281

$

25

$ —

$

25

$ —

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Assets:
Cash and cash equivalents
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

December 31,
2018

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

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)

$2,202

$2,052

$ 150

$ —

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

$ —

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 2019 or 2018.

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; Adyen’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. These assumptions and the probability of meeting processing volume
milestone targets may have a significant impact on the value of the warrant. 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, 2019 (in millions):

Opening balance as of January 1, 2019

Recognition of warrant
Change in fair value

Closing balance as of December 31, 2019

F-29

December 31,
2019
$148
—
133
$281

December 31,
2018
$ —

44
104
$148

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 9 — Balance Sheet Components

OtherCurrentAssets

Customer accounts and funds receivable

Other

Other current assets

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,

2019

2018

(In millions)
$ 632 $ 670

549

829

$ 1,181 $ 1,499

December 31,

2019

2018

(In millions)
$ 5,029 $ 4,933

740

421

175

104

713

399

169

130

6,469

6,344

(4,959)

(4,747)

$ 1,510 $ 1,597

Total depreciation expense on our property and equipment for the years ended December 31, 2019, 2018

and 2017 totaled $628 million, $626 million and $612 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,

2019

2018

(In millions)
$ 736 $ 681

500

195

38

935

410

264

229

751

$2,404 $2,335

F-30

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):

Coupon Rate

As of
December 31,
2019

Effective
Interest Rate

As of
December 31,
2018

Effective
Interest Rate

Long-Term Debt
Floating Rate Notes:

Senior notes due 2019
Senior notes due 2023

LIBOR plus 0.48%
LIBOR plus 0.87%

$

—
400

— %
2.913%

$ 400
400

3.123%
3.499%

Fixed Rate Notes:

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 (1)

Unamortized discount and debt

issuance costs

Other long-term borrowings
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 (1)

Unamortized discount and debt

issuance costs

Other short-term borrowings
Total short-term debt

Total Debt

2.346%
3.389%
2.344%
2.993%
3.989%
2.678%
2.866%
3.531%
3.689%
4.114%
6.547%

— %
3.389%
2.344%
2.993%
3.989%
2.678%
2.866%
3.531%
3.689%
4.114%
6.547%

2.200%
3.250%
2.150%
2.875%
3.800%
2.600%
2.750%
3.450%
3.600%
4.000%
6.000%

—
500
500
750
750
1,000
750
750
850
750
750
7,750

15

(44)
17

(1,000)
6,738

1,000

—

(1)
23
1,022
$ 7,760

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

(1)

Includes the fair value adjustments to debt associated with terminated interest rate swaps which are being recorded as a reduction to interest expense
over the remaining term of the related notes.

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

SeniorNotes

In 2019, $400 million of floating rate notes and $1.15 billion of 2.200% fixed rate notes matured and were

repaid. In 2018, $750 million of 2.500% fixed rate notes due 2018 matured and were repaid.

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. In 2019, $1.15 billion related to our 2.200% senior notes of the $2.4 billion aggregate
notional amount matured. In addition, during the three months ended September 30, 2019, we terminated the
interest rate swaps related to $750 million of our 2.875% senior notes due July 2021 and $500 million of our
3.450% senior notes due July 2024. As a result of the early termination, hedge accounting was discontinued
prospectively and the gain on termination was recorded as an increase to the long-term debt balance and is
being recognized over the remaining life of the underlying debt as a reduction to interest expense. The gain
recognized during the year ended December 31, 2019 was immaterial.

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, 2019, 2018 and 2017 was
approximately $301 million, $318 million and $307 million, respectively. As of December 31, 2019 and 2018, the
estimated fair value of these senior notes, using Level 2 inputs, was approximately $7.9 billion and $9.0 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, 2019 and 2018, there were no commercial paper notes
outstanding.

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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, 2019, 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, 2019 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,
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, 2019.

FutureMaturities

Expected future principal maturities as of December 31, 2019 are as follows (in millions):

Fiscal Years:

2020

2021

2022

2023

2024

Thereafter

Total future maturities

F-33

$ 1,000

750

1,750

1,150

750

2,350

$7,750

$628

31
$659

$ 170

11

492

16

$689

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 11 — Leases

We have operating and finance leases for office space, data and fulfillment centers, and other corporate

assets that we utilize under lease arrangements.

The following table provides a summary of leases by balance sheet location as of December 31, 2019 (in

Balance Sheet Location

As of
December 31, 2019

Operating lease right-of-use assets

Property and equipment, net (1)

millions):

Assets

Operating

Finance

Total leased assets

Liabilities

Operating — current

Accrued expenses and other current liabilities

Finance — current

Short-term debt

Operating — noncurrent

Operating lease liabilities

Finance — noncurrent

Long-term debt

Total lease liabilities

(1) Recorded net of accumulated amortization of $2 million as of December 31, 2019.

The components of lease expense for the year ended December 31, 2019 were as follows (in millions):

Lease Costs

Statement of Income Location

Finance lease cost:

Amortization of

right-of-use assets

Cost of net revenues

Interest on lease

liabilities

Operating lease

cost (2)

Total lease cost

Interest and other, net

Cost of net revenues, Sales and marketing, Product
development and General and administrative expenses

(2)

Includes variable lease payments and sublease income that were immaterial during the year ended December 31, 2019.

Year Ended
December 31, 2019

$ 2

1

214

$217

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Maturity of lease liabilities under our non-cancelable operating and financing leases as of December 31,

2019 are as follows (in millions):

2020

2021

2022

2023

2024

Thereafter

Total lease payments

Less interest

Present value of lease liabilities

Operating

Finance

$188

$ 12

162

146

98

45

78

717

(56)

$661

12

5

—

—

—

29

(2)

$27

Future minimum rental payments under our non-cancelable operating leases as of December 31, 2018

were as follows (in millions):

2019

2020

2021

2022

2023

Thereafter

Total minimum lease payments

Leases (3)

$ 136

104

91

76

51

119

$577

(3) Amounts are based on ASC 840, Leasesthat were superseded upon our adoption of ASC 842, Leaseson January 1, 2019.

Rent expense for the years ended December 31, 2019, 2018 and 2017 totaled $233 million, $118 million and
$105 million, respectively. Rent expense includes operating lease costs as well as expense for non-lease
components such as common area maintenance.

The following table provides a summary of our lease terms and discount rates for the year ended

December 31, 2019:

Weighted Average Remaining Lease Term

Operating leases

Weighted Average Discount Rate

Operating leases

F-35

Year Ended
December 31, 2019

4.66 years

3.11%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Supplemental information related to our leases for the year ended December 31, 2019 is as follows (in

millions):

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases

Finance leases

Note 12 — Commitments and Contingencies

Commitments

Off-BalanceSheetArrangements

Year Ended
December 31, 2019

$196

$ 1

$ 6

Year Ended
December 31, 2019

$99

$34

As of December 31, 2019, 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, 2019, we had a
total of $4.8 billion in aggregate cash deposits, partially offset by $4.7 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-36

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 12, 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, 2019. Except as otherwise noted for the proceedings
described in this Note 12, 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 us
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

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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.

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 13 — 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
privileges of the shares of each wholly unissued series and any related qualifications,
limitations or
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, 2019 and 2018, 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
including corporate and regulatory requirements, price and other market conditions and
factors,
management’s determination as to the appropriate use of our cash.

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

In January 2018, our Board of Directors (“Board”) authorized a $6.0 billion stock repurchase program, and
in January 2019, our Board authorized an additional 4.0 billion stock repurchase program. These stock
repurchase programs have no expiration from the date of authorization. The stock repurchase activity under
our stock repurchase programs during 2019 was as follows (in millions, except per share amounts):

Balance as of January 1, 2019

Authorization of additional plan in January 2019

Repurchase of shares of common stock

134

$37.26

$5,000

Balance as of December 31, 2019

Shares
Repurchased (1)

Average Price
per Share (2)

Value of Shares
Repurchased (2)

Remaining
Amount
Authorized

$ 3,151

4,000

(5,000)

$ 2,151

(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 2020, our Board authorized an additional $5.0 billion stock repurchase program, with no

expiration from the date of authorization.

Dividends

The company paid a total of $473 million in cash dividends during the year ended December 31, 2019. In
January 2020, we declared a cash dividend of $0.16 per share of common stock to be paid on March 20, 2020
to stockholders of record as of March 2, 2020.

Note 14 — 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, 2019, 755 million
shares were authorized under our equity incentive plans and 55 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 2019, 2018 and 2017, certain executives were eligible to receive PBRSUs. 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
are 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.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

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
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, 2019, 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 2019, 2018, and 2017, employees purchased
approximately 3 million, 4 million and 4 million shares under this plan at average prices of $25.24, $23.82 and
$22.32 per share, respectively. As of December 31, 2019, approximately 9 million shares of common stock
were reserved for future issuance.

StockOptionActivity

No stock options were granted in 2019, 2018 and 2017.

During 2019, 2018 and 2017, the aggregate intrinsic value of options exercised under our equity incentive
plans was $20 million, $18 million and $26 million, respectively, determined as of the date of option exercise.
As of December 31, 2019, options to purchase approximately 800 thousand 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, 2019 (in millions except per share amounts):

Outstanding as of January 1, 2019

Awarded and assumed

Vested

Forfeited

Outstanding as of December 31, 2019

Expected to vest as of December 31, 2019

F-40

Weighted Average
Grant-Date
Fair Value
(per share)

$33.59

$ 37.61

$ 31.67

$35.50

$36.82

Units

34

19

(17)

(8)

28

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

During 2019, 2018 and 2017, the aggregate intrinsic value of RSUs vested under our equity incentive plans

was $609 million, $684 million and $635 million, respectively.

Stock-BasedCompensationExpense

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

2019, 2018 and 2017 (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,

2019

2018

2017

$ 55 $ 59 $ 53

97

198

155

111

197

171

94

178

158

$505 $538 $483

$ 14 $ 14 $ 14

As of December 31, 2019, there was approximately $768 million of unearned stock-based compensation
that will be expensed from 2020 through 2023.
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 2019, 2018 and 2017, 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
$11,200, $11,000 and $10,800 per employee for each period, respectively. Our non-U.S. employees are covered by
various other savings plans. Total expense for these plans was $64 million, $60 million and $57 million in 2019, 2018
and 2017, respectively.

Note 15 — Income Taxes

The components of pretax income for the years ended December 31, 2019, 2018 and 2017 are as follows

(in millions):

United States

International

Year Ended December 31,

2019

2018

2017

$ 358 $ 299 $ 417

1,849

2,419

1,858

$2,207 $2,718 $2,275

F-41

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,

2019

2018

2017

$ 51 $ 73 $ 1,426

26

221

25

245

(17)

151

$ 298 $ 343 $ 1,560

$(269) $(488) $ 1,788

(45)

431

117

(10)

345

(153)

4

(64)

1,728

$ 415 $ 190 $3,288

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 2019 and 2018 and 35% for 2017 to
income before income taxes (in millions):

Year Ended December 31,

2019

2018

2017

$463 $ 571 $ 797

31

(155)

3

(20)

(33)

199

(19)

—

(71)

17

(16)

26

(3)

13

(30)

(9)

108

(217)

330

(33)

(13)

(35)

(695)

—

(463)

3,142

—

(7)

—

12

$ 415 $ 190 $3,288

Provision at statutory rate

Foreign income taxed at different rates

Other taxes on foreign operations

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

Effective settlement of audits

Other

F-42

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):

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

As of December 31,

2019

2018

$ 158 $

214

15

4,287

4,674

136

168

22

4,757

5,083

(102)

(65)

$4,572 $ 5,018

$(2,610) $(2,930)

(37)

(131)

(2)

(61)

(46)

(132)

(27)

(15)

(2,841)

(3,150)

$ 1,731 $ 1,868

As of December 31, 2019, our federal, state and foreign net operating loss carryforwards for income tax
purposes were approximately $11 million, $55 million and $361 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: $12 million do not expire, $246 million are subject to valuation allowance and
begin to expire in 2020, and $104 million are not subject to valuation allowance but will begin to expire in
2024. As of December 31, 2019, state tax credit carryforwards for income tax purposes were approximately
$140 million. Most of the state tax credits carry forward indefinitely.

As of December 31, 2019 and 2018, 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 first half of 2017, we recognized a noncash income tax charge of $376 million caused by the
foreign exchange remeasurement of a deferred tax asset related to intangible assets in our foreign eBay
platforms. In the first quarter of 2017, we achieved a 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.

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. U.S. tax reform, among other things,
reduced the U.S. federal income tax rate from 35% to 21% beginning 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 in 2018.

Included in the 2017 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 and we utilized $213 million of foreign tax
credits to reduce the net liability, both in 2018. 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, 2019 and
2018, $884 million and $968 million 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 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.

The following table reflects changes in unrecognized tax benefits for the years ended December 31, 2019,

2018 and 2017 (in millions):

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

$ 551 $487 $458

2019

2018

2017

Increases related to prior period tax positions

Decreases related to prior period tax positions

Increases related to current period tax positions

Settlements

44

(114)

28

(122)

64

(10)

28

(18)

37

(28)

58

(38)

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

$387 $ 551 $487

Included within our gross amounts of unrecognized tax benefits of $387 million as of December 31, 2019 is
$55 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 $285 million. Of this amount, approximately
$51 million of unrecognized tax benefit is indemnified by PayPal and a corresponding receivable would be

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

reduced upon a future realization. As of December 31, 2019, 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 2019,
$8 million was included in tax expense for interest and penalties. The amount of interest and penalties
accrued as of December 31, 2019 and 2018 was approximately $46 million and $61 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 2018 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 and the
United Kingdom.

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 expect the gross amount of unrecognized tax benefits to be reduced within the next twelve months by at
least $19 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. On June 7, 2019, the Ninth Circuit Federal
Court upheld the cost-sharing regulations and on November 11, 2019 the U.S. Tax Court of Appeals for the
Ninth Circuit released a court order denying an en banc rehearing of the case Altera Corp. v Commissioner
following Altera’s petition filed on July 22, 2019. It has not been determined if this ruling will be further
appealed as of the date of our filing. 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, 2019. We will
continue to monitor ongoing developments and potential impacts to our consolidated financial statements.

Note 16 — Interest and Other, Net

The components of interest and other, net for the years ended December 31, 2019, 2018 and 2017 are as

follows (in millions):

Interest income

Interest expense

Gains on investments and sale of business (1)

Other

Total interest and other, net

2019

$120

(311)

80

(3)

Year Ended December 31,

2018

2017

$ 176

$ 177

(326)

663

(17)

(292)

115

11

11

$(114)

$ 496

$

(1) Gains on investments and sale of business includes: (i) 2019 included a $52 million loss recorded on the divestiture of brands4friends and a $133 million
gain recognized due to the change in fair value of the Adyen warrant; (ii) 2018 included 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 Adyen warrant; and (iii) 2017 included a $167 million gain on disposal of our eBay India business.

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

eBay Inc.

Note 17 — Accumulated Other Comprehensive Income

The following tables summarize the changes in AOCI for the years ended December 31, 2019 and 2018 (in

millions):

Balance as of December 31, 2018

$ 68

$(56)

$ 462

$24

Unrealized
Gains
(Losses) on
Derivative
Instruments

Unrealized
Gains (Losses)
on Investments

Foreign
Currency
Translation

Estimated Tax
(Expense)
Benefit

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, 2019

4

81

(77)

$ (9)

Unrealized
Gains
(Losses) on
Derivative
Instruments

61

—

61

$ 5

(99)

—

(99)

$ 363

(16)

(17)

1

$25

Unrealized
Gains (Losses)
on Investments

Foreign
Currency
Translation

Estimated Tax
(Expense)
Benefit

Balance as of December 31, 2017

$(57)

$ (15)

$ 748

$ 41

Total

$ 498

(50)

64

(114)

$ 384

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

(42)

(286)

(15)

(226)

(1)

—

2

(7)

(41)

$(56)

(286)

$ 462

(17)

$24

(219)

$ 498

F-46

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, 2019 and 2018 (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 18 — Restructuring

Affected Line Item in the
Statement of Income

Net Revenues
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

Amount of Gain (Loss)
Reclassified from AOCI

2019

2018

$ 81

$ (8)

81
(17)

64

—
64
—
—
—
—
$64

(8)
2

(6)

—
(6)
(1)
(1)

—

(1)
$ (7)

The following table summarizes restructuring reserve activity during 2019 (in millions):

Accrued liability as of January 1, 2019
Charges
Payments
Accrued liability as of December 31, 2019

Employee
Severance and
Benefits
$ 8
77
(49)
$ 36

During the first quarter of 2019, management approved a plan to drive operational improvement that
included the reduction of workforce, primarily in our Marketplace segment. The reduction was substantially
completed in the first quarter of 2019 and resulted in pre-tax restructuring charges of approximately $41 million.
During the fourth quarter of 2019, management approved a plan to drive operational improvement that included
the reduction of workforce, primarily in our Marketplace segment. We incurred a pre-tax charge of $36 million,
which was primarily related to employee severance and benefits.

In June 2018, management approved a plan to implement a strategic reduction of our existing global
workforce, primarily in our Marketplace segment. The reduction was substantially completed in the second
quarter of 2018 and resulted in pre-tax restructuring charges of approximately $86 million.

No restructuring charges were recognized in 2017.

The restructuring charges incurred in 2019 and 2018 were aggregated in general and administrative

expenses in the consolidated statement of income.

F-47

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, 2019. 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.

Quarterly Financial Data

(Unaudited, in millions, except per share amounts)

2019

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

$2,643 $2,687

$2,649

$2,042 $2,057

$2,022

$ 521 $ 403

$ 310

$2,821

$ 2,171

$ 558

(3)

(1)

—

(2)

$ 518 $ 402

$ 310

$ 556

$ 0.58 $ 0.47

$ 0.37

$ 0.69

—

—

—

—

$ 0.58 $ 0.47

$ 0.37

$ 0.69

$ 0.57 $ 0.46

$ 0.37

$ 0.69

—

—

—

—

$ 0.57 $ 0.46

$ 0.37

$ 0.69

900

908

860

867

830

837

807

812

F-48

2018

Net revenues

Gross profit

Income from continuing operations

Income (loss) from discontinued operations, net of income

taxes

Net income (loss)

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

$2,580 $2,640

$2,649

$ 2,021 $2,043

$ 2,041

$ 407 $ 638

$ 720

$2,877

$2,259

$ 763

—

4

1

(3)

$ 407 $ 642

$ 721

$ 760

$ 0.40 $ 0.64

$ 0.74

$ 0.81

—

—

—

—

$ 0.40 $ 0.64

$ 0.74

$ 0.81

$ 0.40 $ 0.64

$ 0.73

$ 0.80

—

—

—

—

$ 0.40 $ 0.64

$ 0.73

$ 0.80

1,010

1,029

992

1,004

974

983

945

950

F-49

eBay Inc.

FINANCIAL STATEMENT SCHEDULE

The Financial Statement Schedule II — VALUATION AND QUALIFYING ACCOUNTS as of and for the years
ended December 31, 2019, 2018 and 2017.

Allowances for Doubtful Accounts and Authorized Credits

Year Ended December 31, 2017

Year Ended December 31, 2018

Year Ended December 31, 2019

Allowance for Transaction Losses

Year Ended December 31, 2017

Year Ended December 31, 2018

Year Ended December 31, 2019

Tax Valuation Allowance

Year Ended December 31, 2017

Year Ended December 31, 2018

Year Ended December 31, 2019

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)

$ 81

102

$106

$ 23

25

$ 28

$ 37

19

$ 65

$ 91

92

$122

$ 181

194

$178

$ —

—

$ —

$ —

—

$ —

$(20)

33

$ 45

$ 2

13

$ (1)

$ (70)

(88)

$(100)

$ (179)

(191)

$ (179)

$ —

—

$ (7)

$102

106

$128

$ 25

28

$ 27

$ 19

65

$102

F-50

No.

2.01

2.02*

3.01

3.02

4.01

4.02

4.03

4.04

4.05

4.06

4.07

4.08

4.09

4.10

4.11

4.12

4.13

4.14

INDEX TO EXHIBITS

Exhibit Description

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

Stock Purchase Agreement, dated as of
November 24, 2019 by and among eBay Inc., eBay
International AG, PUG LLC, and solely for the
purposes set forth therein, Pugnacious
Endeavors, Inc.

Registrant’s Amended and Restated Certificate of
Incorporation.

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

8-K 000-24821

6/30/2015

8-K

001-37713

11/25/2019

10-Q 001-37713

7/18/2019

Registrant’s Amended and Restated Bylaws.

10-Q 001-37713

7/18/2019

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 (included in
Exhibit 4.03).

Officer’s Certificate dated July 24, 2012.

Forms of 2.600% Note due 2022 and 4.000%
Note due 2042 (included in Exhibit 4.05).

Officer’s Certificate dated July 28, 2014.

Forms of 2.875% Note due 2021 and 3.450% Note
due 2024 (included in Exhibit 4.07).

Officer’s Certificate dated February 29, 2016.

Form of 6.00% Note due 2056 (included in Exhibit
4.09).

Officer’s Certificate dated March 9, 2016.

Form of 3.800% Note due 2022 (included in
Exhibit 4.11).

Officer’s Certificate dated June 6, 2017.

Form of Floating Rate Note due 2023, 2.150%
Note due 2020, 2.750% Note due 2023 and
3.600% Note due 2027 (included in Exhibit 4.13).

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

8-K 000-24821

7/24/2012

8-K 000-24821

7/28/2014

8-K 000-24821

7/28/2014

8-K 000-24821

2/29/2016

8-K 000-24821

2/29/2016

8-K

8-K

8-K

8-K

001-37713

3/9/2016

001-37713

3/9/2016

001-37713

6/6/2017

001-37713

6/6/2017

4.15

Description of Securities.

X

10-K

001-37713

1/31/2020

10.01+

Form of Indemnity Agreement entered into by
Registrant with each of its directors and executive
officers.

S-1

333-59097

7/15/1998

F-51

No.

10.02+

Exhibit Description

Registrant’s 2003 Deferred Stock Unit Plan, as
amended.

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

10-K

File No.

Date Filed

000-24821 2/28/2007

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+

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.

Form of Restricted Stock Unit Award
Agreement under Registrant’s 2003 Deferred
Stock Unit Plan and Registrant’s 2008 Equity
Incentive Plan.

Form of Restricted Stock Unit Award
Agreement (with Modified Vesting) under
Registrant’s 2008 Equity Incentive Award Plan.

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 Director Deferred Stock Unit Award
Agreement under Registrant’s 2008 Equity
Incentive Award Plan.

Amended and Restated eBay Incentive Plan.

eBay Inc. Deferred Compensation Plan, as
amended and restated effective April 1, 2018.

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

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

10-Q

000-24821

7/19/2012

8-K

10-K

000-24821

5/5/2015

001-37713

1/30/2019

10.16+

eBay Inc. Employee Stock Purchase Plan.

DEF 14A 000-24821

3/19/2012

10.17

10.18+

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.

8-K

000-24821

11/12/2015

10-Q

000-24821

4/19/2013

F-52

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

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-K 001-37713

1/30/2019

10-K 001-37713

1/30/2019

10-K 001-37713

1/30/2019

10-Q 000-24821

10/16/2014

10-Q 001-37713

4/27/2016

10-Q 001-37713

7/21/2016

No.

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

Exhibit Description

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.

Amended and Restated eBay Inc. Change in
Control Severance Plan for Key Employees,
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.

F-53

No.

10.33+

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+

Exhibit Description

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 April 2, 2015 between
Registrant and Marie Oh Huber.

Cooperation Agreement, dated February 28,
2019, by and among Elliott Associates, L.P.,
Elliott International, L.P., Elliott International
Capital Advisors Inc. and Registrant.

Agreement, dated February 28, 2019 by and
among Starboard Value LP and affiliates and
Registrant.

Offer Letter dated February 1, 2017, between
Registrant and Wendy Jones.

Offer Letter dated July 3, 2018, between
Registrant and Wendy Jones.

Amended and Restated eBay Inc, SVP and
Above Standard Severance Plan, effective
September 18, 2019.

Letter Agreement between Devin N. Wenig and
eBay Inc., dated September 24, 2019.

Letter Agreement between Scott Schenkel and
eBay Inc., dated October 11, 2019.

Letter Agreement between Andrew Cring and
eBay Inc., dated October 11, 2019.

Offer Letter dated June 25, 2019 between
Registrant and Jae Hyun Lee.

F-54

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

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

8-K

001-37713

2/28/2019

8-K

001-37713

2/28/2019

10-Q 001-37713

7/18/2019

10-Q 001-37713

7/18/2019

10-Q 001-37713

10/24/2019

8-K

001-37713

9/25/2019

8-K

001-37713

10/16/2019

8-K

001-37713

10/16/2019

10-Q 001-37713

10/24/2019

No.

Exhibit Description

Filed or
Furnished with
this 10-K

Incorporated by Reference

Form

File No.

Date Filed

21.01

23.01

24.01

31.01

31.02

32.01

32.02

101.INS

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

104

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.

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.

Inline XBRL Taxonomy Extension Schema
Document

Inline XBRL Taxonomy Extension Calculation
Linkbase Document

Inline XBRL Taxonomy Extension Definition
Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase
Document

Inline XBRL Taxonomy Extension Presentation
Linkbase Document

Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101).

X

X

X

X

X

X

X

X

X

X

X

X

X

X

*

Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any
omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.

+ Indicates a management contract or compensatory plan or arrangement.

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 31, 2020.

SIGNATURES

eBay Inc.

By: /S/ SCOTT F. SCHENKEL

Scott F. Schenkel
Interim Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Scott F. Schenkel, Andy Cring, 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 31, 2020.

Principal Executive Officer and Director:

Principal Financial Officer:

By:

/S/ SCOTT F. SCHENKEL

By:

/S/ ANDY CRING

Scott F. Schenkel
Interim Chief Executive Officer

Andy Cring
Interim 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/

JESSE A. COHN

Adriane Brown
Director

Jesse A. Cohn
Director

By:

/S/ DIANA FARRELL

By:

/S/

LOGAN D. GREEN

Diana Farrell
Director

Logan D. Green
Director

By:

/S/ BONNIE S. HAMMER

By:

/S/ KATHLEEN C. MITIC

Bonnie S. Hammer
Director

Kathleen C. Mitic
Director

By:

/S/ MATTHEW J. MURPHY

By:

/S/ PAUL S. PRESSLER

Matthew J. Murphy
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

2025 Hamilton Avenue
San Jose, California 95125
http://investors.ebayinc.com