Ebay Inc. (Exact Name of Registrant As Speciñed in Its Charter) Delaware 77-0430924 (State Or Other Jurisdiction of (I.R.S
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To Our Stockholders, Partners, Employees and the eBay Community: A Year of Accomplishments The year 2000 was a time of great accomplishments at eBay. In just 12 months, we dramatically expanded our marketplace in several important ways. For starters, we added thousands of new product categories as well as dozens of new services and site features. Our marketing and promotions eÅorts produced growing ubiquity for eBay, both on and oÅ the Internet, making more people in more places aware of eBay and bringing them to the site in greater numbers than ever before. We introduced Ñxed-price trading to our community, reaching a whole new type of user for the Ñrst time. And we continued to extend the eBay marketplace to the most productive e-commerce markets on the planet. Perhaps what makes our accomplishments in 2000 even more impressive is that they were achieved during a period of great turmoil in our industry and in a manner that signiÑcantly improved our already solid Ñnancial base. Come what may, eBay and its community prospered in 2000, and we are extremely pleased by the momentum we have going into 2001. A Thriving Marketplace At eBay we do one thing. We work every day to be the world's largest and most compelling Internet commerce platform. To further that goal in 2000, our seasoned management team stayed focused on attracting more customers, expanding the goods traded on the site, making the user experience easier, safer, more fun and exciting, and spreading the eBay marketplace to more places around the world. eBay ended the year with over 22 million registered users, representing 125 percent growth over the 10 million users we had at the end of 1999. To put that in perspective, eBay's community is now larger than the population of Texas, the second largest state in the Union. And our community is more diverse than ever, featuring homemakers, major corporations and everyone in between, buying and selling practically anything. Our users listed more than 265 million items on the site in 2000, up 104 percent from 1999. Our deepening integration into AOL's site throughout the year, as well as our enhanced aÇliates program, which in Q4 reached 13,000 partners, helped drive user growth by putting eBay in front of more people than ever before. Marketing promotions with such powerful and diverse brands as AOL Time Warner, Disney, Visa, The History Channel and General Motors, to name just a few, were also critical in reaching new users and in user retention. In 2000, eBay stepped up its oÉine marketing eÅorts by running its Ñrst national advertising campaign. And on the public relations front, eBay continued to be at the center of popular culture, receiving attention in hit TV shows, movies, and in thousands of local, regional and national news stories. One of the reasons so many people come to eBay is the variety of goods and services they can Ñnd in our marketplace. During 2000, eBay added more than 5,000 new categories, including new meta-categories such as personal care, clothing and accessories and home and garden. In the fourth quarter alone, eBay users in the clothing and accessories category transacted over $40 million in gross merchandise sales. And people are just beginning to realize that in 2000, eBay became the largest online destination for computers and electronics, used cars, toys, sporting goods, and jewelry and gemstones. The acquisition of Half.com in July was an important milestone in our history. With the acquisition, eBay formally introduced Ñxed-price trading to its community. In just a few short months, Half.com achieved tremendous results. By December, Half had more than 10 million items listed on the site and was the #3 online retailer in terms of traÇc, according to Media Metrix. Half's success, combined with the early success of our new ""Buy-It-Now'' feature, makes it clear that Ñxed-price trading will play a growing role in eBay's future. Another important milestone for eBay in 2000 was the introduction of eBay's API (application programming interface). The API will allow eBay to be fully integrated into other sites across the Internet. In addition, the API will make it possible for our commercial partners to more easily and quickly expand our services to new devices, such as wireless telephones and handhelds. Finally, the API will improve the user experience by allowing developers to create new and more robust services for eBay users. In March of 2001, eBay and Microsoft agreed to an alliance that is intended to supercharge eBay's API, extending it to Microsoft's legions of developers worldwide. Microsoft will also integrate eBay's marketplace into a number of its web properties, including select MSN sites worldwide, CarPoint, bCentral and WebTV. Throughout 2000, eBay introduced dozens of features to make the site easier and more fun to use. We added new ways for our users to list, search, trade and pay for items. Our eÅorts were rewarded with increased trading velocity. We also saw the number of transactions that closed using Billpoint, eBay's payment service, signiÑcantly increase during the second half of the year, indicating that more buyers are relying on the safety and convenience of the Billpoint payment service than ever before. Customer support was again a priority for eBay in 2000. We're happy to report that our latest surveys show that once again more than 90 percent of our users would recommend eBay to a friend. And eBay recently received the ""Best Customer Satisfaction'' award from Satmetrix. All of our accomplishments in 2000 were achieved on a strong and robust technology platform that consistently delivered at least 99 percent up time. While we are very pleased with our technology progress this past year, we know that our job is never done. We will continue to make signiÑcant investments to expand and strengthen our technology infrastructure and will begin rolling out the third generation of our platform in 2001. International Expansion To create a truly global trading platform, eBay is establishing a strong presence in countries whose populations generate the majority of the world's e-commerce revenue. In 2000, we entered four new markets Ì Japan, Canada, France and Austria. In the Ñrst eight weeks of 2001, we announced the launch of our Italian site and our entry into South Korea through the acquisition of a controlling interest in Internet Auction, South Korea's largest auction-style web site. eBay also announced the acquisition of iBazar, the pioneer in online auction-style trading in Europe. With the close of the iBazar acquisition, currently scheduled for the second quarter of 2001, as well as the recent launches of sites in Ireland, Switzerland and New Zealand, eBay will have a strong leadership position in 15 of the top 20 global markets which represent approximately 90 percent of the world's e-commerce dollars and a vast majority of the world's Internet users. Financial Stability In 2000, eBay again had record bottom line proÑts, which were driven by record user growth, revenues and gross merchandise sales. For the year, eBay reported consolidated net revenues of $431.4 million, a 92 percent increase over 1999. Consolidated pro forma net income for the full year, which excludes certain non-cash, merger and stock related charges, reached $58.6 million, or 21 cents per diluted share. This represents a more than three-fold increase in pro forma net income compared to 1999. Online net revenues totaled $392 million for the year, a 115% increase over 1999. With strong growth in the core U.S. business, rapidly growing international operations, and continuing success in adding value for both buyers and sellers, we continue to be pleased with the diversity of our revenue streams. eBay's balance sheet ended the year at $1.2 billion in total assets, including approximately $901 million in cash and Ñnancial instruments. Our Future As we push into 2001, eBay will stay focused on attracting a broad range of buyers and sellers to the site. We will introduce more categories and services to eBay as we identify relevant opportunities in the estimated $1.7 trillion market we address today. We will continue to enhance our technology infrastructure, making it possible for an ever-growing number of users to reliably transact increasing amounts of business. And we will continue to expand across the U.S. and the world, increasing our presence in both local and international markets that will ultimately enable seamless worldwide trading. eBay's goal is to be the Internet's marketplace. We strive to provide the best and most eÇcient way for our community of users to buy and sell almost anything, anytime, anywhere. We hope that our success in 2000 demonstrates that we're on our way! In 2001, eBay will continue to develop all parts of its culture. That culture includes a belief that we must contribute to the communities around us and help those who are less fortunate. The eBay Foundation will continue its eÅorts to assist non-proÑt organizations as they struggle to serve people in need of important services. And we will move forward with our eÅorts to help the nation's senior citizens overcome the ""digital divide'' by helping to provide easy access to technology and education. eBay has pledged to bring more than one million seniors online, working with its partner, SeniorNet, the largest non-proÑt trainer of seniors in the country. We have also promised to help SeniorNet establish ten education centers nationwide. As always, we want to extend our profound thanks to eBay's stockholders, partners, employees and the eBay community.