Acquisition of Skype

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This presentation contains non-GAAP measures relating to the company's performance. You can find the reconciliation of those measures to GAAP measures in the tables of our earnings release which is available through our investor relations website located at http://investor.ebay.com/downloads/Reconciliation.pdf. In addition, this presentation may contain forward-looking statements regarding matters that involve risk and uncertainty, including those relating to the future financial results of Skype and eBay, and the impact of the acquisition of Skype on eBays financial results. Our actual financial results could differ materially from those represented in this presentation. Factors that could cause or contribute to such differences include, but are not limited to, the receipt and timing of the closing of the transaction, the possibility that the transaction may not close, the reaction of the users of Skypes services, the future growth of Skypes user base, the reaction of competitors and regulatory agencies to the transaction, developments in the regulation of voice-over-Internet protocol (VoIP) services including those provided by Skype, and the possibility that integration following the transaction may be more difficult than expected. More information about factors that could affect the companys operating results is included under the captions Risk Factors That May Affect Results of Operations and Financial Condition and Managements Discussion and Analysis of Financial Condition and Results of Operations in the companys annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, copies of which may be obtained by visiting the companys investor relations site at http://investor.ebay.com. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof eBay assumes no obligation to update such statements.

The acquisition of Skype

eBay is evolution

1996 1998: US only, collectibles only 1999 Moving beyond collectibles 1999 Going global 2000 Introducing Fixed Price and eBay Stores 2002 PayPal: removing friction and building a huge new business 2004 2005: Creating other marketplaces Shopping.com, Kijiji, ProStores Marktplaats, Mobile, Rent.com,

Common theme expanding our vision, our market and our opportunity Aspirational goal of growing faster than e-commerce

High performance company

(Real 2003 $M)

1,000,000 100,000 10,000 1,000 100 10 1

1 5 9 13 17 21 25 29 33 37 41

Years Since Incorporation

High performance company

(Real 2003 $M)

1,000,000 100,000
GMV

10,000 1,000 100 10 1

1

TPV

13

17

21

25

29

33

37

41

Years Since Incorporation

Expanding eBays share of e-commerce

Skype will accelerate commerce on eBay Skype opens up new lines of business, new monetization models, new geographies A great standalone communications business eBay + PayPal + Skype = Unparalleled e-commerce and communications engine

Agenda

What is Skype? Expanding eBays share of e-commerce A great standalone business Financials

Simply powerful

Any Skype user in the World (Free)

Internet

Simply powerful

Any Skype user in the World (Free)

Internet

Any Regular Telephone in the World (Low cost) 10

Easy to set up and use

1 Download and install Skype client from website, get headset

11

Easy to set up and use

1 Download and install Skype client from website, get headset 2 Look up and add buddies

12

Easy to set up and use

1 Download and install Skype client from website, get headset 2 Look up and add buddies 3 Start talking with other Skype users

13

Rich functionality
Find other Skype users

Skype Me

Advanced Instant Messaging

Send any kind of file

Make conference calls Are you available?

Call any phone Wallet

Get calls from any phone on your Skype number

Leave voicemail Forward calls to any number

14

Viral growth
44.1

On track for 57M registered Users in Q3!

19.8

32.9

11.5 6.8 4.1

Q104

Q204

Q304

Q404

Q105

Q205

Skype Registered Users (M)

15

Viral usage
3.9

67% CQGR!
2

3.3

0.9 0.3 0.5

Q104

Q204

Q304

Q404

Q105

Q205

Skype Quarterly Minutes Served (B)

16

Historic success
Number of Reg Users (MM) 60

50

40

30

20

10

0 1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 17 (IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003

Historic success
Number of Users (MM)

60

50

Adding 150K registered users / day

40

30

20

10

0 1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 18 (IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003

A truly global community

SKYPE users Non SKYPE users

Skype has a presence in 225 countries and independent territories worldwide

Skype is a market leader in every major country(1)

(1) Skype estimates

19

Significant buzz all over the world

To Skype is to call someone over your computer

USAToday (17 December 2004)

20

Agenda

What is Skype? Expanding eBays share of e-commerce A great standalone business Financials

21

Accelerating e-commerce

Accelerate existing categories Create a new way to monetize e-commerce Remove a key friction Expand into new categories Monetize new marketplaces Expand the global footprint
22

A new way to monetize e-commerce

eBay Today

eBay with Skype

Transactionbased monetization

Transaction and lead-generation monetization

Listing fees Final value fees Feature fees PayPal fees

Listing fees Final value fees Feature fees PayPal fees

Pay per call

23

Communication is key to e-commerce

The online transaction process requires various communication points along the way Steve the seller
Q+A before purchase Closing transaction Order status

Bob the buyer

24

Communication is key to e-commerce

The online transaction process requires various communication points along the way Steve the seller Bob the buyer

5M e-mail messages are initiated per day between eBay buyers & sellers

30% of eBay bids take place in the last 2 hours!

25

Skype is a leap forward in communication

In transaction flow Instantaneous and private Free with rich experience Advanced functionality

26

eBay has historically removed friction

Friction point Solution

Trust & safety

Feedback

Description

Pictures

Payments

Shipping
27

Removing friction is powerful

$1.4B
$1.4B

eBay UK GMV (USD)

Q1 Q1

Q2 Q2

Q3 Q3

Q4 Q4

Q1 Q1

Q2 Q2

Q3 Q3

Q4 Q4

Q1 Q1

Q2 Q2

Q3 Q3

Q4 Q4

Q1 Q1

Q2 Q2

Q3 Q3

Q4 Q4

Q1 Q1

2001

2002

2003

2004

2005 28

Accelerating e-commerce

Accelerate existing categories Create a new way to monetize e-commerce Remove a key friction Expand into new categories Monetize new marketplaces Expand the global footprint
29

Skype accelerates certain existing categories

Motors

Business and industrial

Communications can accelerate categories that are: High involvement Expensive Complex

Collectibles

Sporting goods

Music instruments

Jewelry and watches

Motors, collectibles, and B&I alone represent ~40% of eBay GMV

30

Skype accelerates certain existing categories: Example

Future motors listing

Firstclassauto currently online!

Firstclassauto currently online!

31

Communications enables expansion into new categories

Skype allows superior access to categories that Require significant communication Are less suited to transaction-based monetization

Source: Jupiter, Borrell, NADA, Manheim, eBay estimates

32

Communications enables expansion into new categories

Skype allows superior access to categories that Require significant communication Are less suited to transaction-based monetization

Source: Jupiter, Borrell, NADA, Manheim, eBay estimates

33

Pay Per Call enables monetization of new marketplaces

Pay Per Call on Local Classifieds
Paris

Listing Sponsoris Charles de Gaulle Renault

Les meilleurs voitures!

Skype moi! Bagnolet Peugeot Skype moi! BelleVille Audi Skype moi!

34

Expanding the global footprint

Emerging markets New markets Cross-border trade

India

China

Japan Nordic

Poland

Brazil

Russia

Large grey markets Limited trust on Internet Culture of haggling Culture of IM/mobile Price sensitivity

Limited eBay presence Large growth in Skype users

Limited trust Buyers need more interaction and information from sellers
35

Skype on eBay China

36

Agenda

What is Skype? Expanding eBays share of e-commerce A great standalone business Financials

37

A great standalone business

A large and growing opportunity A strong leadership position Competitive advantage

38

An important consumer activity

Minutes per user 500 per 450 month(1)
400 350 300 250 200 150 100 50 0 Search eBay marketplace Web Email IM Phone

480

44% of all user time online is spent communicating(2)

435 Calls from home(3) Share of VOIP calls expected to increase significantly over time 45 Skype today

195 127 80 16

Communications
Source: (1) Nielsen Netratings averages for biggest sites in each category, (2) eBay estimates from Comscore data, (3) Yankee Group as of April 2003

39

Increasing penetration
Global Broadband subscribers (M)
350
'04-'09 CAGR

317.3
300

287.8 256.9

21.6%

250

223.1
200

13.8%

185.4 145.7
18.1%

150

100

50

18.8%

0 2004 2005 2006 2007 2008 2009 ROW

United States

Europe

Asia/Pacific

Source: IDC

40

Increasing penetration
Global Broadband subscribers (M)
350
'04-'09 CAGR

US Broadband and VOIP households (M)

80

317.3
300

287.8 256.9

21.6%

70

30M VOIP households in US by 2009

58.5 50.1

72.3 66.9

Total BB

250

60
13.8%

223.1
200

50

185.4
40

41.1 32.6
18.1%

150

145.7
30 24.6

100 20 29% 50
18.8%

38%

% VoIP

10 1% 3% 8% 13%

20%

0 2004 2005 2006 2007 2008 2009 ROW

2003 2004 2005 2006 2007 2008 2009 VoIP subscribers Broadband households

United States

Europe

Asia/Pacific

Source: IDC

41

Increasing usage
VOIP Annual Minutes of Use (B)
1,495

760

367 183 10 2001 17 2002 27 2003 42 2004 72

2005E

2006E

2007E

2008E

2009E

Source: IDC

42

A leadership position
Skypes global revenue base

Other 12% EU 48% NA 13% Asia 27% % of total

Source: Skype, Sandvine

43

A leadership position
Skypes global revenue base Skype segment share in North America

Other 12% EU 48% NA 13% Asia 27% % of total

VOIP Minutes

46.2%

Skype is #1

VOIP Users

35.8%

Skype is #1

0
Estimated ~25% of Skype users are businesses

20

40

60

Percent of total (%)

Source: Skype, Sandvine

44

Strong team

Founders created Kazaa, were executives at Tele2 Entrepreneurial senior management team from Tele2, Microsoft, Yahoo!, OpenWave Developers pioneered peerto-peer technology
Janus Friis Co-Founder
45

Niklas Zennstrm CEO & Co-Founder

Focus matters
Commerce Payments

46

Focus matters
Commerce Payments

Search Content
47

Focus matters
Commerce Payments Communications Search Content
48

Advanced technology
Virtual, peer-to-peer architecture brings key advantages
System is massively scalable No single point of failure Low CapEx

In addition, Skype has

Better firewall tunneling that allows more calls to be completed Advanced security and encryption technology

49

Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration

Voice Marketplace

Interactive voice response

Language learning tools

Homework tutoring

50

Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration

Voice Marketplace

Interactive voice response

Language learning tools

Homework tutoring

51

Many great applications

52

Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration

Voice Marketplace

Interactive voice response

Language learning tools

Homework tutoring

53

Many great applications

54

Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration

Voice Marketplace

Interactive voice response

Language learning tools

Homework tutoring

55

Many great applications

Internet Explorer Toolbar Integration with Outlook

Picture share with Kodak

Web Presence Integration

56

Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration

Voice Marketplace

Interactive voice response

Language learning tools

Homework tutoring

57

Many great applications

Valuable content and services

Voice Marketplace

Create and share innovative voice services Content providers get a share of call revenue

Interactive voice response (eg. traffic reports)

Language learning tools

Homework tutoring

Key partners

58

Reinforcing ecosystem

1000+ Developers

200+ Hardware devices labeled as Skype-compatible

200+ Skype-enabled Applications

30+ partnerships with world-class companies

59

The power of three

Users invite other users

New users invite more users

60

The power of three

Users invite other users Sellers go where buyers are More sellers offer PayPal

New users invite more users

Buyers go where sellers are

More buyers use PayPal

61

The power of three

Users invite other users Sellers go where buyers are More sellers offer PayPal

New users invite more users

Buyers go where sellers are

More buyers use PayPal

eBay Users eBay Usage PayPal Wallet

PayPal Wallet Skype Users Skype-Enabled Commerce

eBay Users Skype Users eBay & Skype Usage

62

Agenda

What is Skype? Expanding eBays share of e-commerce A great standalone business Financials

63

Valuation considerations
Traditional financial valuation methods
Precedent transactions Value per user Discounted cash flow

Earn out structure based on aggressive goals A great standalone business, not just VOIP functionality
Leading market position with considerable momentum Technology leadership Considerable monetization potential

Synergistic opportunities with existing businesses

64

The power of three: synergistic opportunities

eBay + Paypal Users 157M eBay registered users 79M PayPal accounts 1% overlap between Skype and eBay US users today(1) eBay Usage 5M email messages/day 1.4B new listings/year

PayPal Wallet Boosts sales of premium services

(1) Nielsen Netratings

65

The power of three: synergistic opportunities

eBay + Paypal Users 157M eBay registered users 79M PayPal accounts 1% overlap between Skype and eBay US users today(1) eBay Usage 5M email messages/day 1.4B new listings/year

Skype Users 54M registered users ~25% of users are business accounts

PayPal Wallet Boosts sales of premium services

Skype Commerce (usage) Skype-enabled commerce 200+ Skype hardware applications

(1) Nielsen Netratings

66

The power of three: synergistic opportunities

eBay + Paypal Users 157M eBay registered users 79M PayPal accounts 1% overlap between Skype and eBay US users today(1) eBay Usage 5M email messages/day 1.4B new listings/year

Skype Users 54M registered users ~25% of users are business accounts

Skype Users >80% outside US

PayPal Wallet Boosts sales of premium services

Skype Commerce (usage) Skype-enabled commerce 200+ Skype hardware applications

Skype Usage Payment of call services Send money to buddies

(1) Nielsen Netratings

67

Transaction summary

Transaction Value and Structure

Pay $1.3B(1) in cash Deliver $1.3B(1) in eBay stock subject to certain sale restrictions Total of $2.6B (4.8% of market cap)

Performance-based earn out

Earn out of up to an additional $1.5B(1,2) based on high active user, gross profit, and revenue goals in 2008 Earn out participants received less up-front consideration All of management opted for the earn out Q4 2005
(1) Based on an exchange rate of 1.239 (2) Earn-out value presented on an undiscounted basis

Expected Closing

68

Strong Business Model

Large market opportunity Transaction-based revenues No inventory or warehouses Efficient customer acquisition High operating leverage Low capital requirements Outstanding cash generation Rapid revenue growth

(1) Nielsen Netratings

69

Skype revenues

Free services

Premium services

SkypeIn and SkypeOut

Free Skype to Skype calls (cost nothing to provide)

Expressive content (avatars, ringtones, ringbacks)

Hardware royalties

70 Voice services

Strong Revenue Growth

$259.0

Existing Lines Of Business

$200+

$103.8

$60 $47.4 $7 2004 2005E 2006E $5.7 1997 1998 $12.6

(Dollars in millions)

$0.4 1996

2000

2001

2002

71

Strong Revenue Growth

$259.0

Existing Lines Of Business

$200+

$103.8

$60 $47.4 $7 2004 2005E 2006E $5.7 1997 1998 $12.6

(Dollars in millions)

$0.4 1996

2000

2001

2002

72

Skype revenues
Free services Premium services New eBay Opportunities

Existing eBay Categories SkypeIn and SkypeOut Free Skype to Skype calls (cost nothing to provide)

Expressive content (avatars, ringtones, ringbacks)

Emerging markets New geographies Cross-border trade

Hardware royalties New categories New marketplaces (classifieds, shopping.com) 73

Voice services

Leveraged cost structure

Efficient customer acquisition
Word of mouth significantly reduces user acquisition cost

High operating leverage

Minimal incremental cost for each user call Software business model with low fixed costs

Infinitely scalable network infrastructure with low capex

Peer to Peer technology requires minimal capex Distributed architecture eliminates single point of failure Centralized server(s) for authentication for basic services Centralized server(s) for premium services, e.g. voicemail

Outstanding cash generation capability

74

Financial impact

Dilutive to Q4-05 pro-forma and GAAP EPS by $0.01 and $0.04, respectively Dilutive to 2006 pro-forma and GAAP EPS(3) by $0.04 and $0.12, respectively Breakeven on a pro-forma basis in Q4 2006 Long term operating margins of 20-25%

(3) Not adjusted for FAS 123

75

eBay Inc Balance Sheet

Funding acquisition through internally generated cash flows Balance sheet fundamentals remain unchanged: Cash reserves of >$1B Annualized free cash flows of >$1.5B Low capex requirements: ~$2M in 2006 No long-term debt Long-term revenue and profit growth will continue to add to already strong cash flow position

76

Summary

A great standalone business with a very complementary business model Significant growth opportunities:
Build on Skype momentum Accelerate eBay existing and new businesses Create entirely new businesses

The power of 3
77

The power of 3
Sellers go where buyers are

Buyers go where sellers are Users invite other users More Sellers Offer PayPal

New users invite more users

More Buyers use PayPal

78