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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2023ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For

2、the transition period from _ to _Commission file number 001-37713 eBay Inc.(Exact name of registrant as specified in its charter)Delaware77-0430924(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)2025 Hamilton AvenueSan Jose,California95125(Address of pr

3、incipal executive offices)(Zip Code)Registrants telephone number,including area code:(408)376-7108Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbolName of exchange on which registeredCommon stockEBAYThe Nasdaq Global Select MarketIndicate by check mark wheth

4、er 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 periodthat the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past

5、90 days.Yes 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 thepreceding 12 months(or for such shorter period that the registrant was required to s

6、ubmit such files).Yes 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“largeaccelerated filer,”“accelerated filer,”“smaller reporting company”and

7、“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for com

8、plying with any new or revised financial accounting standards providedpursuant 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 Exchange Act).Yes No As of April 24,2023,there were 534,503,131 shares of the registrant

9、s common stock,$0.001 par value,outstanding,which is the only class of common or voting stock of the registrant issued.eBay Inc.TABLE OF CONTENTSPagePART I:FINANCIAL INFORMATIONItem 1Financial Statements(unaudited)3Item 2Managements Discussion and Analysis of Financial Condition and Results of Opera

10、tions42Item 3Quantitative and Qualitative Disclosures About Market Risk54Item 4Controls and Procedures57PART II:OTHER INFORMATIONItem 1Legal Proceedings58Item 1ARisk Factors58Item 2Unregistered Sales of Equity Securities and Use of Proceeds59Item 3Defaults Upon Senior Securities59Item 4Mine Safety D

11、isclosures59Item 5Other Information59Item 6Exhibits60Signatures612Table of ContentsPART I:FINANCIAL INFORMATIONItem 1:Financial Statements(unaudited)IndexPageCondensed Consolidated Balance Sheet as of March 31,2023 and December 31,20224Condensed Consolidated Statement of Income for the three months

12、ended March 31,2023 and 20225Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31,2023 and 20226Condensed Consolidated Statement of Stockholders Equity for the three months ended March 31,2023 and 20227Condensed Consolidated Statement of Cash Flows for the thr

13、ee months ended March 31,2023 and 20228Notes to Condensed Consolidated Financial Statements10Note 1 The Company and Summary of Significant Accounting Policies10Note 2 Net Income(Loss)Per Share12Note 3 Business Combinations13Note 4 Goodwill and Intangible Assets14Note 5 Segments15Note 6 Investments16

14、Note 7 Derivative Instruments21Note 8 Fair Value Measurement of Assets and Liabilities25Note 9 Debt29Note 10 Supplemental Consolidated Financial Information32Note 11 Commitments and Contingencies34Note 12 Stockholders Equity37Note 13 Employee Benefit Plans38Note 14 Income Taxes39Note 15 Accumulated

15、Other Comprehensive Income40Note 16 Restructuring413Table of ContentseBay Inc.CONDENSED CONSOLIDATED BALANCE SHEET March 31,2023December 31,2022(In millions,except par value)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents$2,082$2,154 Short-term investments1,922 2,625 Equity investment in A

16、devinta2,866 2,692 Customer accounts and funds receivable779 763 Other current assets949 1,056 Total current assets8,598 9,290 Long-term investments1,657 1,797 Property and equipment,net1,235 1,238 Goodwill4,287 4,262 Operating lease right-of-use assets486 513 Deferred tax assets3,111 3,169 Other as

17、sets630 581 Total assets$20,004$20,850 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt$1,150 Accounts payable280 261 Customer accounts and funds payable792 768 Accrued expenses and other current liabilities1,829 1,866 Income taxes payable305 226 Total current liabilities3,206

18、4,271 Operating lease liabilities395 418 Deferred tax liabilities2,226 2,245 Long-term debt7,721 7,721 Other liabilities1,069 1,042 Total liabilities14,617 15,697 Commitments and Contingencies(Note 11)Stockholders equity:Common stock,$0.001 par value;3,580 shares authorized;536 and 539 shares outsta

19、nding2 2 Additional paid-in capital17,364 17,279 Treasury stock at cost,1,191 and 1,186 shares(46,954)(46,702)Retained earnings34,744 34,315 Accumulated other comprehensive income231 259 Total stockholders equity5,387 5,153 Total liabilities and stockholders equity$20,004$20,850 The accompanying not

20、es are an integral part of these condensed consolidated financial statements.4Table of ContentseBay Inc.CONDENSED CONSOLIDATED STATEMENT OF INCOME Three Months EndedMarch 31,20232022(In millions,except per share amounts)(Unaudited)Net revenues$2,510$2,483 Cost of net revenues700 689 Gross profit1,81

21、0 1,794 Operating expenses:Sales and marketing511 478 Product development352 301 General and administrative297 226 Provision for transaction losses84 96 Amortization of acquired intangible assets8 1 Total operating expenses1,252 1,102 Income from operations558 692 Gain(loss)on equity investments and

22、 warrant,net198(2,291)Interest and other,net(26)(50)Income(loss)from continuing operations before income taxes730(1,649)Income tax benefit(provision)(161)310 Income(loss)from continuing operations569(1,339)Income(loss)from discontinued operations,net of income taxes(2)(2)Net income(loss)$567$(1,341)

23、Income(loss)per share-basic:Continuing operations$1.06$(2.28)Discontinued operations Net income(loss)per share-basic$1.06$(2.28)Income(loss)per share-diluted:Continuing operations$1.05$(2.28)Discontinued operations Net income(loss)per share-diluted$1.05$(2.28)Weighted-average shares:Basic537 587 Dil

24、uted541 587 The accompanying notes are an integral part of these condensed consolidated financial statements.5Table of ContentseBay Inc.CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEThree Months EndedMarch 31,20232022(In millions)(Unaudited)Net income(loss)$567$(1,341)Other comprehensive i

25、ncome(loss),net of reclassification adjustments:Foreign currency translation gains(losses)1(34)Unrealized gains(losses)on investments,net19(51)Tax benefit(expense)on unrealized gains(losses)on investments,net(6)13 Unrealized gains(losses)on hedging activities,net(53)20 Tax benefit(expense)on unreali

26、zed gains(losses)on hedging activities,net11(4)Other comprehensive income(loss),net of tax(28)(56)Comprehensive income(loss)$539$(1,397)The accompanying notes are an integral part of these condensed consolidated financial statements.6Table of ContentseBay Inc.CONDENSED CONSOLIDATED STATEMENT OF STOC

27、KHOLDERS EQUITY Three Months EndedMarch 31,20232022(In millions,except per share amounts)(Unaudited)Common stock:Balance,beginning of period$2$2 Common stock issued Common stock repurchased Balance,end of period2 2 Additional paid-in-capital:Balance,beginning of period17,279 16,659 Common stock and

28、stock-based awards issued 1 Tax withholdings related to net share settlements of restricted stock units and awards(48)(61)Stock-based compensation128 111 Forward contract for share repurchases 188 Other5 6 Balance,end of period17,364 16,904 Treasury stock at cost:Balance,beginning of period(46,702)(

29、43,371)Common stock repurchased(252)(1,438)Balance,end of period(46,954)(44,809)Retained earnings:Balance,beginning of period34,315 36,090 Net income(loss)567(1,341)Dividends and dividend equivalents declared(138)(134)Balance,end of period34,744 34,615 Accumulated other comprehensive income:Balance,

30、beginning of period259 398 Foreign currency translation adjustment1(34)Change in unrealized gains(losses)on investments19(51)Change in unrealized gains(losses)on derivative instruments(53)20 Tax benefit(provision)on above items5 9 Balance,end of period231 342 Total stockholders equity$5,387$7,054 Di

31、vidends and dividend equivalents declared per share or restricted stock unit$0.25$0.22 The accompanying notes are an integral part of these condensed consolidated financial statements.7Table of ContentseBay Inc.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Three Months EndedMarch 31,20232022(In mil

32、lions)(Unaudited)Cash flows from operating activities:Net income(loss)$567$(1,341)Loss from discontinued operations,net of income taxes2 2 Adjustments:Provision for transaction losses84 96 Depreciation and amortization107 118 Stock-based compensation128 111 Loss(gain)on investments and other,net(4)6

33、 Deferred income taxes33(376)Change in fair value of warrant(38)115 Change in fair value of equity investment in Adevinta(174)1,643 Change in fair value of equity investment in Adyen 246 Change in fair value of equity investment in Gmarket11 182 Change in fair value of equity investment in KakaoBank

34、3 99 Changes in assets and liabilities,net of acquisition effects122(272)Net cash provided by continuing operating activities841 629 Net cash used in discontinued operating activities(16)Net cash provided by operating activities841 613 Cash flows from investing activities:Purchases of property and e

35、quipment(132)(83)Purchases of investments(3,543)(5,475)Maturities and sales of investments4,404 6,827 Proceeds from the sale of shares in Adyen 473 Proceeds from the sale of shares in KakaoBank 27 Other(28)3 Net cash provided by continuing investing activities701 1,772 Net cash provided by discontin

36、ued investing activities Net cash provided by investing activities701 1,772 Cash flows from financing activities:Proceeds from issuance of common stock 1 Repurchases of common stock(242)(1,069)Payments for taxes related to net share settlements of restricted stock units and awards(92)(61)Payments fo

37、r dividends(134)(129)Repayment of debt(1,150)(750)Net funds receivable and payable activity229 56 Other1 Net cash used in continuing financing activities(1,388)(1,952)Net cash used in discontinued financing activities Net cash used in financing activities(1,388)(1,952)Effect of exchange rate changes

38、 on cash,cash equivalents and restricted cash5(18)Net increase in cash,cash equivalents and restricted cash159 415 Cash,cash equivalents and restricted cash at beginning of period2,272 1,406 Cash,cash equivalents and restricted cash at end of period$2,431$1,821 Less:Cash,cash equivalents and restric

39、ted cash of discontinued operations Cash,cash equivalents and restricted cash of continuing operations at end of period$2,431$1,821 8Table of ContentseBay Inc.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(Continued)Three Months EndedMarch 31,20232022(In millions)(Unaudited)Supplemental cash flow di

40、sclosures:Cash paid for:Interest$60$80 Income taxes$29$35 The accompanying notes are an integral part of these condensed consolidated financial statements.9Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Note 1 The Company and Summary of Significant Accountin

41、g PoliciesThe CompanyeBay Inc.is a global commerce leader that connects people and builds communities to create economic opportunity for all.Our technologyempowers millions of buyers and sellers in more than 190 markets around the world,providing everyone the opportunity to grow and thrive.Founded i

42、n 1995 in San Jose,California,eBay is one of the worlds largest and most vibrant marketplaces for discovering great value and uniqueselection.When we refer to“we,”“our,”“us,”the“Company”or“eBay”in this Quarterly Report on Form 10-Q,we mean the current Delawarecorporation(eBay Inc.)and its consolidat

43、ed subsidiaries,unless otherwise expressly stated or the context otherwise requires.Use of EstimatesThe preparation of condensed consolidated financial statements in conformity with U.S.generally accepted accounting principles(“GAAP”)requires management to make estimates and assumptions that affect

44、the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during thereporting period.On an ongoing basis,we evaluate our estimates,including those

45、related to provisions for transaction losses,legal contingencies,income taxes,revenue recognition,stock-based compensation,investments including level 3 investments in Gmarket Global LLC(“Gmarket”),warrants and the recoverability of goodwill and intangible assets.We base our estimates on historical

46、experience and on various other assumptionsthat we believe to be reasonable under the circumstances.Actual results could differ from those estimates.Principles of Consolidation and Basis of PresentationThe accompanying financial statements are consolidated and include the financial statements of eBa

47、y Inc.,our wholly and majority-ownedsubsidiaries and variable interest entities(“VIE”)where we are the primary beneficiary.All intercompany balances and transactions have beeneliminated in consolidation.Minority interests are recorded as a noncontrolling interest.A qualitative approach is applied to

48、 assess the consolidationrequirement for VIEs.Generally,investments in entities where we hold at least a 20%ownership interest and have the ability to exercise significantinfluence,but not control,over the investee are accounted for using the equity method of accounting,including those in which the

49、fair value optionhas been elected.For equity method investments,our share of the investees results of operations is included in gain(loss)on equity investments and warrant,net and investment balances are included in long-term investments.For equity investments under the fair value option,the change

50、in fair value ofthe investment is included in gain(loss)on equity investments and warrant,net and investment balances are included in long-term investments,other than our equity interest in Adevinta ASA(“Adevinta”)which is included in the short-term assets section on the condensed consolidatedbalanc

51、e sheet.Investments in entities where we hold less than a 20%ownership interest are generally accounted for as equity investments to bemeasured 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 beadjusted upon the oc

52、currence of an observable price change in an orderly transaction for identical or similar instruments or impairment.Upon the transfer of our Classifieds business to Adevinta in 2021,shares in Adevinta were included as part of total consideration receivedunder the definitive agreement.The equity inte

53、rest in Adevinta is accounted for under the fair value option.Additionally,upon completion of the saleof 80.01%of the outstanding equity interests of eBay Korea LLC(“eBay Korea”)to Emart Inc.(“Emart”)in 2021,we retained 19.99%of theoutstanding equity interests of the new entity,Gmarket,which is acco

54、unted for under the fair value option.Subsequent changes in fair value forthese equity investments are included in gain(loss)on equity investments and warrant,net on our consolidated statement of income.10Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)These

55、condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidatedfinancial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31,2022.We haveevaluated all subsequent events through the

56、date these condensed consolidated financial statements were issued.In the opinion of management,these condensed consolidated financial statements reflect all adjustments,consisting only of normal recurring adjustments,which are necessary forthe fair statement of the condensed consolidated financial

57、position,results of operations and cash flows for these interim periods.Significant Accounting PoliciesThere were no significant changes to our significant accounting policies disclosed in“Note 1 The Company and Summary of SignificantAccounting Policies”in our Annual Report on Form 10-K for the year

58、 ended December 31,2022.Recent Accounting Pronouncements Not Yet AdoptedIn June 2022,the Financial Accounting Standards Board(“FASB”)issued new guidance to clarify the fair value measurement guidance forequity securities subject to contractual restrictions that prohibit the sale of an equity securit

59、y.Further,the guidance introduces new disclosurerequirements for equity securities subject to contractual sale restrictions that are measured at fair value.The standard will be effective for annualreporting periods beginning after December 15,2023,including interim reporting periods within those fis

60、cal years.We do not expect the adoption ofthis standard to have a material impact on our consolidated financial statements.11Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 2 Net Income(Loss)Per ShareBasic net income(loss)per share is computed by dividin

61、g net income(loss)for the period by the weighted average number of shares ofcommon stock outstanding during the period.Diluted net income(loss)per share is computed by dividing net income(loss)for the period by theweighted average number of shares of common stock and potentially dilutive common stoc

62、k outstanding during the period.The dilutive effect ofoutstanding options and equity incentive awards is reflected in diluted net income(loss)per share by application of the treasury stock method.Thecalculation of diluted net income(loss)per share excludes all anti-dilutive shares of common stock.Th

63、e following table presents the computation of basic and diluted net income(loss)per share for the periods indicated(in millions,except pershare amounts):Three Months EndedMarch 31,20232022Numerator:Income(loss)from continuing operations$569$(1,339)(Loss)from discontinued operations,net of income tax

64、es(2)(2)Net income(loss)$567$(1,341)Denominator:Weighted average shares of common stock-basic537 587 Dilutive effect of equity incentive awards4 Weighted average shares of common stock-diluted541 587 Income(loss)per share-basic:Continuing operations$1.06$(2.28)Discontinued operations Net income(loss

65、)per share-basic$1.06$(2.28)Income(loss)per share-diluted:Continuing operations$1.05$(2.28)Discontinued operations Net income(loss)per share-diluted$1.05$(2.28)Common stock equivalents excluded from income(loss)per diluted share because their effect would have beenanti-dilutive12 7 12Table of Conten

66、tseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 3 Business CombinationsAcquisition of TCGplayerIn 2022,we completed the acquisition of TCGplayer,a trusted marketplace for collectible card game enthusiasts.In 2023,we recordedmeasurement period adjustments related to the

67、 revised valuation of the intangible assets acquired.The following table presents the revisedallocation of the aggregate purchase consideration(in millions):TCGplayerGoodwill$148 Purchased intangible assets109 Deferred taxes(18)Total$239 The goodwill recognized is primarily attributable to expected

68、synergies and the assembled workforce of TCGplayer.We generally do notexpect goodwill to be deductible for income tax purposes.Our consolidated financial statements include the operating results of the acquired business from the date of acquisition.Separate operatingresults and pro forma results of

69、operations for the acquisition above have not been presented as the effect of this acquisition is not material to ourfinancial results.13Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 4 Goodwill and Intangible AssetsGoodwillThe following table presents

70、goodwill activity for the period indicated(in millions):December 31,2022GoodwillAcquired Adjustments March 31,2023Goodwill$4,262$20$5$4,287 Goodwill acquired during the three months ended March 31,2023 relates to the acquisition of 3PM Shield,a provider of AI-basedmarketplace compliance solutions,on

71、 February 13,2023 and the revised valuation of the intangible assets acquired from the 2022 acquisition ofTCGplayer.The adjustments to goodwill during the three months ended March 31,2023 were primarily due to foreign currency translation.Intangible AssetsIntangible assets are reported within other

72、assets in our condensed consolidated balance sheet.The following table presents components ofidentifiable intangible assets as of the dates indicated(in millions,except years):March 31,2023December 31,2022GrossCarryingAmountAccumulatedAmortizationNet CarryingAmountWeightedAverageUseful Life(Years)Gr

73、ossCarryingAmountAccumulatedAmortizationNet CarryingAmountWeightedAverageUseful Life(Years)Intangible assets:Customer lists and userbase$246$(196)$50 8$190$(190)$0Marketing related81(55)26 668(53)15 7Developed technologies235(179)56 4275(177)98 5All other159(157)2 3159(157)2 3Total$721$(587)$134$692

74、$(577)$115 Amortization expense for intangible assets was$10 million and$1 million for the three months ended March 31,2023 and 2022,respectively.The following table presents expected future intangible asset amortization as of the date indicated(in millions):March 31,2023Remaining 2023$25 202433 202

75、530 202621 Thereafter25 Total$134 14Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 5 SegmentsWe have one operating and reportable segment.Our reportable segment is Marketplace,which includes our online marketplace located ,its localized counterparts and

76、 the eBay suite of mobile apps.Our management and our chief operating decision maker reviewfinancial information presented on a consolidated basis for purposes of allocating resources and evaluating performance and do not evaluate usingasset information.The accounting policies of our segment are the

77、 same as those described in“Note 1 The Company and Summary of Significant AccountingPolicies.”The following table summarizes the allocation of net revenues based on geography for the periods indicated(in millions):Three Months EndedMarch 31,20232022U.S.$1,261$1,226 United Kingdom381 418 Germany252 2

78、73 Rest of world616 566 Total net revenues$2,510$2,483 Net revenues,inclusive of the effects of foreign exchange during each period,are attributed to U.S.and international geographies primarilybased upon the country in which the seller,platform that displays advertising,other service provider or cus

79、tomer,as the case may be,is located.15Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 6 InvestmentsThe following tables summarize the unrealized gains and losses and estimated fair value of our investments classified as available-for-saledebt securities

80、and restricted cash as of the dates indicated(in millions):March 31,2023 GrossAmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesEstimatedFair ValueShort-term investments:Restricted cash$41$41 Corporate debt securities1,649 (6)1,643 Government and agency securities141 (4)137$1,831$(10)$1,821 Long

81、-term investments:Restricted cash$5$5 Corporate debt securities515 (30)485 Government and agency securities625 (39)586$1,145$(69)$1,076 December 31,2022 GrossAmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesEstimatedFair ValueShort-term investments:Restricted cash$36$36 Corporate debt securitie

82、s2,355 (5)2,350 Government and agency securities141 (6)135$2,532$(11)$2,521 Long-term investments:Restricted cash$13$13 Corporate debt securities686 (40)646 Government and agency securities604 (47)557$1,303$(87)$1,216 We consider cash to be restricted when withdrawal or general use is legally restri

83、cted.Restricted cash is held in interest bearing accounts forletters of credit related to our global sabbatical program and for certain amounts related to other compensation arrangements held in escrow.Ourfixed-income investments consist of predominantly investment grade corporate debt securities an

84、d government and agency securities.Thecorporate debt and government and agency securities that we invest in are generally deemed to be low risk based on their credit ratings from themajor rating agencies.The longer the duration of these securities,the more susceptible they are to changes in market i

85、nterest rates and bond yields.As interestrates increase,those securities purchased at a lower yield show a mark-to-market unrealized loss.The unrealized losses are due primarily tochanges in credit spreads and interest rates.We regularly review investment securities for other-than-temporary impairme

86、nt using both qualitativeand quantitative criteria.Investments classified as available-for-sale debt securities are carried at fair value with changes reflected in othercomprehensive income.Where there is an intention or a requirement to sell an impaired available-for-sale debt security,the entire i

87、mpairment isrecognized in earnings with a corresponding adjustment to the amortized cost basis of the security.From time to time,we sell available-for-saledebt securities in an unrealized loss position and recognize an immaterial loss.16Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINAN

88、CIAL STATEMENTS(Continued)We regularly review investment securities for credit impairment using both qualitative and quantitative criteria.In making this assessment,weconsider the extent to which fair value is less than amortized cost,any changes to the rating of the security by a rating agency,any

89、adverseconditions specifically related to the security,among other factors.If this assessment indicates that a credit loss exists,the present value of cashflows expected to be collected from the security are compared to the amortized cost basis of the security.If the present value of cash flowsexpec

90、ted to be collected is less than the amortized cost basis,a credit loss exists and an allowance for credit losses will be recorded throughinterest and other,net for the credit loss,limited by the amount that the fair value is less than the amortized cost basis.Any impairment that has notbeen recorde

91、d through an allowance for credit losses is recognized in other comprehensive income.We did not recognize any credit-relatedimpairment through an allowance for credit losses as of March 31,2023.Investment securities in a continuous loss position for less than 12 months had an estimated fair value of

92、$1.5 billion and unrealized losses of$2 million as of March 31,2023,and an estimated fair value of$2.8 billion and unrealized losses of$32 million as of December 31,2022.Investment securities in a continuous loss position for greater than 12 months had an estimated fair value of$1.4 billion and unre

93、alized losses of$77 million as of March 31,2023,and an estimated fair value of$952 million and unrealized losses of$66 million as of December 31,2022.Referto“Note 15 Accumulated Other Comprehensive Income”for amounts reclassified to earnings from unrealized gains and losses.The following table prese

94、nts estimated fair values of our short-term and long-term investments classified as available-for-sale debt securitiesand restricted cash by date of contractual maturity as of the date indicated(in millions):March 31,2023One year or less(including restricted cash of$41)$1,821 One year through two ye

95、ars(including restricted cash of$5)639 Two years through three years307 Three years through four years130 Total$2,897 Equity InvestmentsThe following table summarizes our equity investments as of the dates indicated(in millions):Balance Sheet LocationMarch 31,2023December 31,2022Equity investments w

96、ith readily determinable fair valuesShort-term investments$101$104 Equity investment in AdevintaEquity investment in Adevinta2,866 2,692 Equity investments under the fair value optionLong-term investments460 461 Equity investments under the equity method of accountingLong-term investments35 34 Equit

97、y investments without readily determinable fair valuesLong-term investments86 86 Total equity investments$3,548$3,377 Equity investment in AdevintaWe account for equity investments through which we exercise significant influence but do not have control over the investee under the fairvalue option or

98、 under the equity method.Our equity investment in Adevinta is accounted for under the fair value option.17Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Upon completion of the transfer of our Classifieds business to Adevinta in 2021,we received an equity inv

99、estment of 44%in Adevinta valuedat$10.8 billion at the close of the transfer.In the fourth quarter of 2021,we completed the sale of approximately 135 million of our voting shares inAdevinta to Permira,inclusive of the option exercised by Permira to purchase additional voting shares,for total cash co

100、nsideration of approximately$2.3 billion which reduced our ownership in Adevinta to 33%.Following the close of the share sale,our equity investment in Adevinta was reportedin the long-term assets section on the condensed consolidated balance sheet to reflect our contractual requirement to retain at

101、least 25%of thetotal number of issued and outstanding equity securities of Adevinta until October 14,2023,subject to certain exceptions specified in theagreement.As of December 31,2022 and March 31,2023,our equity investment in Adevinta is reported in the short-term assets section on thecondensed co

102、nsolidated balance sheet since our contractual requirement ends within twelve months of the balance sheet date.At the initial recognition of the equity investment,we elected the fair value option where subsequent changes in fair value are recognized inearnings.The investment is classified within Lev

103、el 1 in the fair value hierarchy as the valuation can be obtained from real time quotes in activemarkets.The fair value of the equity investment is measured based on Adevintas closing stock price and prevailing foreign exchange rate at eachbalance sheet date and the changes in fair value are reflect

104、ed in gain(loss)on equity investments and warrant,net in the condensed consolidatedstatement of income.We believe the fair value option election creates more transparency of the current value in the equity investment in Adevinta.For the three months ended March 31,2023,unrealized gains of$174 millio

105、n were recorded in gain(loss)on equity investments and warrant,net on our condensed consolidated statement of income related to the change in fair value of the investment compared to$1,643 million ofunrealized losses recorded during the same period in 2022.The fair value of the investment was$2,866

106、million and$2,692 million as of March 31,2023 and December 31,2022,respectively.Equity investments with readily determinable fair valuesEquity investments with readily determinable fair values are classified within Level 1 in the fair value hierarchy as the valuation can beobtained from real time qu

107、otes in active markets.Subsequent changes in fair value are reflected in gain(loss)on equity investments and warrant,net in the condensed consolidated statement of income.The fair value of the equity investment in KakaoBank Corp.(“KakaoBank”)is measured based on closing stock price and prevailing fo

108、reignexchange rate at each balance sheet date.For the three months ended March 31,2023 and 2022,unrealized losses of$3 million and$91 million,respectively,were recorded in gain(loss)on equity investments and warrant,net on our condensed consolidated statement of income related to thechange in fair v

109、alue of the investment.During the three months ended March 31,2022,we sold a portion of our shares in KakaoBank for$45 millionand recorded a realized gain on the change in fair value of shares sold of$8 million in gain(loss)on equity investments and warrant,net.The fairvalue of the investment was$10

110、1 million and$104 million as of March 31,2023 and December 31,2022,respectively,and is reported within short-term investments in our condensed consolidated balance sheet.We entered into a warrant agreement in conjunction with a commercial agreement with Adyen that vests in a series of four tranches,

111、at aspecified price per share upon meeting processing volume milestone targets on a calendar year basis.When a relevant milestone is reached,thewarrant becomes exercisable with respect to the corresponding tranche of warrant shares up until the warrant expiration date of January 31,2025.We met the p

112、rocessing volume milestone target to vest the first tranche of the warrant and in the third quarter of 2022,we sold the remainder of ourshares in Adyen.Refer to“Note 7 Derivative Instruments”for more information about the warrant.18Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL

113、STATEMENTS(Continued)Equity investments under the fair value optionWe account for equity investments through which we exercise significant influence but do not have control over the investee under the fairvalue option or under the equity method.Our equity investment in Gmarket and certain other imma

114、terial equity investments are accounted for underthe fair value option.In the fourth quarter of 2021,we completed the sale of 80.01%of the outstanding equity interests of eBay Korea to Emart.Upon completionof the sale,we retained 19.99%of the outstanding equity interest of the new entity,Gmarket,ove

115、r whom we are able to exercise significantinfluence based on the terms of the securities purchase agreement,including through our board representation.Our equity investment in Gmarketwas valued at$728 million as of the transaction close date.At the initial recognition of this equity investment,we el

116、ected the fair value option wheresubsequent changes in fair value are recognized in gain(loss)on equity investments and warrant,net in the condensed consolidated statement ofincome.We believe the fair value option election creates more transparency of the current value in the equity investment in Gm

117、arket.Our retainedinvestment in Gmarket is subject to a two year right held by Emart to purchase the remaining interest at or near the closing price of the sale.For the three months ended March 31,2023 and 2022,unrealized losses of$11 million and$182 million,respectively,were recorded in gain(loss)o

118、n equity investments and warrant,net on our condensed consolidated statement of income related to the change in fair value of theinvestment.As of March 31,2023 and December 31,2022,the fair value of the investment was$420 million and$431 million,respectively and isreported within long-term investmen

119、ts in our condensed consolidated balance sheet.The investment is classified as Level 3 in the fair value hierarchy as the valuation reflects managements estimate of assumptions that marketparticipants would use in pricing the equity investment.Certain other immaterial equity investments aggregating

120、to$40 million as of March 31,2023are measured at fair value using the net asset value per share(or its equivalent)practical expedient,and have not been classified in the fair valuehierarchy.Refer to“Note 8 Fair Value Measurement of Assets and Liabilities”for more information.Other equity method inve

121、stmentsWe account for equity investments through which we exercise significant influence but do not have control over the investee under the fairvalue option or under the equity method.For equity investments accounted for under the equity method,our consolidated results of operationsinclude,as a com

122、ponent of interest and other,net,our share of the net income or loss of the equity investments.For equity investments accountedfor under the fair value option,the change in fair value is included in our consolidated results of operations as a component of gain(loss)on equityinvestments and warrant,n

123、et.Equity investments without readily determinable fair valuesThe following table summarizes the change in total carrying value related to equity investments without readily determinable fair values heldfor the periods indicated(in millions):Three Months EndedMarch 31,20232022Carrying value,beginnin

124、g of period$86$85 Downward adjustments for observable price changes and impairment(7)Carrying value,end of period$86$78 For the three months ended March 31,2023,no downward adjustments to the carrying value of a strategic investment in gain(loss)on equityinvestments and warrant,net were recorded on

125、our condensed consolidated statement of income.19Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)For such equity investments without readily determinable fair values held as of March 31,2023,the cumulative upward adjustment forobservable price changes was$41

126、million and cumulative downward adjustment for observable price changes and impairments was$298 million.The following table summarizes unrealized gains and losses related to equity investments held as of March 31,2023 and presented withingain(loss)on equity investments and warrant,net for the period

127、s indicated(in millions):Three Months EndedMarch 31,20232022Net gains(losses)recognized during the period on equity investments$160$(2,177)Less:Net gains(losses)recognized during the period on equity investments sold during the period(174)Total unrealized gains(losses)on equity investments held,end

128、of period$160$(2,003)20Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 7 Derivative InstrumentsOur primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currencyexchange rates a

129、nd interest rates.These hedging contracts reduce,but do not entirely eliminate,the impact of adverse foreign exchange rate andinterest 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

130、 related to forecasted revenues,expenses,assets andliabilities,including intercompany balances denominated in foreign currencies.These contracts are generally one month to one year in duration butwith maturities up to 24 months.The objective of the foreign exchange contracts is to ensure that ultima

131、tely the U.S.dollar-equivalent cash flowsare not adversely affected by changes in the applicable U.S.dollar/foreign currency exchange rate.We evaluate the effectiveness of our foreignexchange contracts designated as cash flow or net investment hedges on a quarterly basis.In 2022,we entered into deri

132、vative instruments to hedge the variability of forecasted interest payments on anticipated debt issuance usingforward-starting interest rate swaps.These interest rate swaps effectively fixed the benchmark interest rate and had the economic effect of hedgingthe variability of forecasted interest paym

133、ents for up to ten years on an anticipated debt issuance.Similar to other cash flow hedges,we recordedchanges in the fair value of these interest rate swaps in accumulated other comprehensive income(“AOCI”)until the anticipated debt issuance.Asdescribed in“Note 9 Debt”,in 2022,we issued$1.2 billion

134、of senior unsecured notes,which consisted of notes maturing in 2025,2027 and 2032.As a result,we terminated the interest rate swaps and the gain associated with the termination of approximately$25 million is amortized to interestexpense over the term of our notes due in November 2032.Cash Flow Hedge

135、sFor derivative instruments that are designated as cash flow hedges,the derivatives gain or loss is initially reported as a component of AOCIand subsequently reclassified into earnings in the same period the forecasted hedged transaction affects earnings.Derivative instrumentsdesignated as cash flow

136、 hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in theinitially identified time period or within a subsequent two-month time period.Unrealized gains and losses in AOCI associated with such derivativeinstruments are immediately reclassified

137、 into earnings.As of March 31,2023,we have estimated that approximately$18 million of net derivativegains related to our foreign exchange cash flow hedges and$8 million of net derivative gains related to our interest rate cash flow hedges includedin AOCI will be reclassified into earnings within the

138、 next 12 months.We classify cash flows related to our cash flow hedges as operating activities inour condensed consolidated statement of cash flows.Non-Designated HedgesOur derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge

139、monetaryassets or liabilities,including intercompany balances and equity investments denominated in non-functional currencies.The gains and losses onour derivatives not designated as hedging instruments are recorded in interest and other,net,which are offset by the foreign currency gains andlosses o

140、n the related assets and liabilities that are also recorded in interest and other,net.We classify cash flows related to our non-designatedhedging instruments in the same line item as the cash flows of the related assets or liabilities,which is generally within operating activities in ourcondensed co

141、nsolidated statement of cash flows.Cash flows related to the settlement of non-designated hedging instruments related to equityinvestments are classified within investing activities in our condensed consolidated statement of cash flows.21Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINA

142、NCIAL STATEMENTS(Continued)WarrantWe 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 Adyens fully diluted issued and outstanding share capital at a specific da

143、te.The warranthas a term of seven years and vests in a series of four tranches,at a specified price per share(fixed for the first two tranches)upon meetingprocessing volume milestone targets on a calendar year basis.When or if a relevant milestone is reached,the warrant becomes exercisable withrespe

144、ct to the corresponding tranche of warrant shares up until the warrant expiration date of January 31,2025.The maximum number of tranchesthat can vest in one calendar year is two.The warrant is accounted for as a derivative under ASC Topic 815,Derivatives and Hedging.We report the warrant at fair val

145、ue within otherassets in our condensed consolidated balance sheet and changes in the fair value of the warrant are recognized in gain(loss)on equityinvestments and warrant,net in our condensed consolidated statement of income.The day-one value attributable to the other side of the warrant,which was

146、recorded as a deferred credit,is reported within other liabilities in our condensed consolidated balance sheet and is amortized over thelife of the commercial arrangement.See“Note 8 Fair Value Measurements”for information about the fair value measurement of the warrant.Fair Value of Derivative Contr

147、actsThe following table presents fair values of our outstanding derivative instruments as of the dates indicated(in millions):Balance Sheet LocationMarch 31,2023December 31,2022Derivative Assets:Foreign exchange contracts designated as cash flow hedgesOther current assets$49$89 Foreign exchange cont

148、racts not designated as hedging instrumentsOther current assets8 18 Interest rate contracts designated as cash flow hedgesOther current assets 2 WarrantOther assets252 214 Foreign exchange contracts designated as cash flow hedgesOther assets5 13 Total derivative assets$314$336 Derivative Liabilities

149、:Foreign exchange contracts designated as cash flow hedgesOther current liabilities$10$12 Foreign exchange contracts not designated as hedging instrumentsOther current liabilities22 34 Foreign exchange contracts designated as cash flow hedgesOther liabilities 1 Total derivative liabilities$32$47 Tot

150、al fair value of derivative instruments$282$289 Under the master netting agreements with the respective counterparties to our derivative contracts,subject to applicable requirements,weare allowed to net settle transactions of the same type with a single net amount payable by one party to the other.H

151、owever,we have elected topresent the derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheet.As of March 31,2023,thepotential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both assets and liabilities

152、 by$22 million,resulting in net derivative assets of$40 million and net derivative liabilities of$10 million.As of March 31,2023,there was no potential effect ofrights of set-off associated with the interest rate contracts as there were no asset positions.22Table of ContentseBay Inc.NOTES TO CONDENS

153、ED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Effect of Derivative Contracts on Accumulated Other Comprehensive IncomeThe following tables present the activity of derivative instruments designated as cash flow hedges gross of tax as of March 31,2023 andDecember 31,2022,and the impact of these deriv

154、ative contracts on AOCI for the periods indicated(in millions):December 31,2022Amount of Gain(Loss)Recognized in OtherComprehensive IncomeLess:Amount of Gain(Loss)Reclassified From AOCI toEarningsMarch 31,2023Foreign exchange contracts designated as cashflow hedges$52$(21)$28$3 Interest rate contrac

155、ts designated as cash flowhedges62 4 58 Total$114$(21)$32$61 December 31,2021Amount of Gain(Loss)Recognized in OtherComprehensive IncomeLess:Amount of Gain(Loss)Reclassified From AOCI toEarningsMarch 31,2022Foreign exchange contracts designated as cashflow hedges$25$25$6$44 Interest rate contracts d

156、esignated as cash flowhedges40 2 1 41 Total$65$27$7$85 Effect of Derivative Contracts on Condensed Consolidated Statement of IncomeThe following table summarizes the total gain(loss)recognized in the condensed consolidated statement of income from our foreignexchange derivative contracts by location

157、 for the periods indicated(in millions):Three Months EndedMarch 31,20232022Foreign exchange contracts designated as cash flow hedges recognized in net revenues$29$6 Foreign exchange contracts designated as cash flow hedges recognized in cost of net revenues(1)Foreign exchange contracts not designate

158、d as hedging instruments recognized in interest and other,net(4)15 Total gain(loss)recognized from foreign exchange derivative contracts in the condensed consolidatedstatement of income$24$21 The following table summarizes the total gain(loss)recognized in the condensed consolidated statement of inc

159、ome from our interest ratederivative contracts by location for the periods indicated(in millions):Three Months EndedMarch 31,20232022Gain(loss)from interest rate contracts designated as cash flow hedges recognized in interest and other,net$4$1 The following table summarizes the total gain(loss)recog

160、nized in the condensed consolidated statement of income due to changes in the fairvalue of the warrant for the periods indicated(in millions):Three Months EndedMarch 31,20232022Gain(loss)attributable to changes in the fair value of warrant recognized in gain(loss)on equity investments andwarrant,net

161、$38$(115)23Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Notional Amounts of Derivative ContractsDerivative transactions are measured in terms of the notional amount,but this amount is not recorded on the balance sheet and is not,whenviewed in isolation,a m

162、eaningful measure of the risk profile of the instruments.The notional amount is generally not exchanged,but is used only asthe basis on which the value of foreign exchange payments under these contracts are determined.The following table presents the notionalamounts of our outstanding derivatives as

163、 of the dates indicated(in millions):March 31,2023December 31,2022Foreign exchange contracts designated as cash flow hedges$1,430$1,741 Foreign exchange contracts not designated as hedging instruments2,169 2,181 Interest rate contracts designated as cash flow hedges 400 Total$3,599$4,322 Credit Risk

164、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 tomitigate such risk by limiting our counterparties to,and by spreading the risk across,major financial institutions.In addition,the potential risk of losswith an

165、y one counterparty resulting from this type of credit risk is monitored on an ongoing basis.To further limit credit risk,we also enter intocollateral security arrangements related to certain interest rate derivative instruments whereby collateral is posted between counterparties if the fairvalue of

166、the derivative instrument exceeds certain thresholds.Additional collateral would be required in the event of a significant credit downgradeby either party.We are not required to pledge,nor are we entitled to receive,collateral related to our foreign exchange derivative transactions.24Table of Conten

167、tseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 8 Fair Value Measurement of Assets and LiabilitiesThe following tables present our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated(inmillions):March 31,2023Quoted Pri

168、ces inActive Markets forIdentical Assets(Level 1)Significant OtherObservable Inputs(Level 2)SignificantUnobservable Inputs(Level 3)Assets:Cash and cash equivalents$2,082$2,082$Short-term investments:Restricted cash41 41 Corporate debt securities1,643 1,643 Government and agency securities137 137 Equ

169、ity investments with readilydeterminable fair values101 101 Total short-term investments1,922 142 1,780 Equity investment in Adevinta2,866 2,866 Derivatives314 62 252 Long-term investments:Restricted cash5 5 Corporate debt securities485 485 Government and agency securities586 586 Equity investment u

170、nder the fair valueoption420 420 Total long-term investments1,496 5 1,071 420 Total financial assets$8,680$5,095$2,913$672 Liabilities:Other liabilities$24$24 Derivatives$32$32$25Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)December 31,2022Quoted Prices in

171、Active Markets forIdentical Assets(Level 1)Significant OtherObservable Inputs(Level 2)SignificantUnobservable Inputs(Level 3)Assets:Cash and cash equivalents$2,154$2,154$Short-term investments:Restricted cash36 36 Corporate debt securities2,350 2,350 Government and agency securities135 135 Equity in

172、vestments with readily determinablefair values104 104 Total short-term investments2,625 140 2,485 Equity investment in Adevinta2,692 2,692 Derivatives336 122 214 Long-term investments:Restricted cash13 13 Corporate debt securities646 646 Government and agency securities557 557 Equity investment unde

173、r the fair value option431 431 Total long-term investments1,647 13 1,203 431 Total financial assets$9,454$4,999$3,810$645 Liabilities:Other liabilities$14$14 Derivatives$47$47$Our financial assets and liabilities are valued using market prices on both active markets(Level 1),less active markets(Leve

174、l 2)and little orno market activity(Level 3).Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involvingidentical assets.Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments,identical i

175、nstrumentsin less active markets,or models using market observable inputs.Level 3 instrument valuations typically reflect managements estimate ofassumptions that market participants would use in pricing the asset or liability.We did not have any transfers of financial instruments betweenvaluation le

176、vels during the three months ended March 31,2023.Other financial instruments,including accounts receivable and accounts payable,are carried at cost,which approximates their fair valuebecause of the short-term nature of these instruments.Fair value measurement of derivative instrumentsThe majority of

177、 our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputswhere applicable,such as equity prices,interest rate yield curves,option volatility and currency rates.Our warrant,which is accounted for as aderivative instrument,is value

178、d using a Black-Scholes model.Key assumptions used in the valuation include risk-free interest rates,Adyenscommon stock price,equity volatility and common stock outstanding,exercise price,and details specific to the warrant.The value is also probabilityadjusted for managements assumptions with respe

179、ct to vesting of the remaining three tranches which are each subject to meeting processingvolume milestone targets.These assumptions and the probability of meeting processing volume milestone targets may have a significant impact onthe value of the warrant.Refer to“Note 7 Derivative Instruments”for

180、further details on our derivative instruments.26Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)The following table presents a reconciliation of the opening to closing balance of assets measured using significant unobservable inputs(Level 3)as of the dates in

181、dicated(in millions):March 31,2023December 31,2022Opening balance at beginning of period$214$444 Change in fair value38(230)Closing balance at end of period$252$214 The following table presents quantitative information about Level 3 significant unobservable inputs used in the fair value measurement

182、of thewarrant as of March 31,2023(in millions,except percentages):Fair valueValuation techniqueUnobservable Input Range(weighted average)Warrant$252 Black-Scholes and MonteCarloProbability of vesting0.0%-55.0%(48.2%)Equity volatility(51%)(1)Probability of vesting was weighted by the unadjusted value

183、 of the tranches.For volatility,the average represents the arithmetic average of the points within the range and is notweighted by the relative fair value or notional amount.Fair value measurement of equity investmentsCertain equity investments are measured at fair value on a recurring basis,includi

184、ng our equity investment in Adevinta,equity investmentswith readily determinable fair values and equity investments under the fair value option.Our equity investment in Adevinta is accounted for under the fair value option and classified within Level 1 in the fair value hierarchy as thefair value is

185、 measured based on Adevintas closing stock price and prevailing foreign exchange rate at each balance sheet date.Our equityinvestments with readily determinable fair values are also classified within Level 1 in the fair value hierarchy as the valuation can be obtained fromreal time quotes in active

186、markets.Our equity investment in Gmarket is accounted for under the fair value option and is subject to a two year right held by Emart from the date ofdisposal to purchase the remaining interest at or near the closing price of the sale.The following table presents a reconciliation of the opening to

187、closing balance of the equity investment in Gmarket measured using significantunobservable inputs(Level 3)as of the dates indicated(in millions):March 31,2023December 31,2022Opening balance at beginning of period$431$725 Change in fair value(11)(294)Closing balance at end of period$420$431(1)27Table

188、 of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)This investment is classified within Level 3 in the fair value hierarchy as valuation of the investment reflects managements estimate ofassumptions that market participants would use in pricing the asset.The followin

189、g table presents quantitative information about Level 3 significantunobservable inputs used in the fair value measurement of the equity investment in Gmarket as of March 31,2023 that may have a significantimpact on the overall valuation(in millions,except multiples):Fair valueValuation techniqueUnob

190、servable Input RangeEquity investment in Gmarket$420 Market multiplesRevenue multiple GPC method1.0 x 1.6xRevenue multiple GMAC method1.0 x 4.1x(1)The primary unobservable inputs used in the fair value measurement of our equity investment in Gmarket under the fair value option,when using the Guideli

191、ne Public Company(GPC)method and the Guideline Merged and Acquired Company(GMAC)method under the market multiple approach,are the respective revenue multiples.Significant increases(decreases)in the revenue multiples in isolation would result in significantly higher(lower)fair value measurement.The m

192、arket multiples are derived from respective groups ofguideline public companies and guideline merged and acquired companies.Certain other immaterial equity investments under the fair value option aggregating to$40 million as of March 31,2023 are measured at fairvalue using the net asset value per sh

193、are(or its equivalent)practical expedient,and have not been classified in the fair value hierarchy.Refer to“Note 6 Investments”for further details about our equity investments.(1)28Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 9 DebtThe following table

194、 summarizes the carrying value of our outstanding debt as of the dates indicated(in millions,except percentages):CouponAs ofEffectiveAs ofEffective RateMarch 31,2023 Interest RateDecember 31,2022 Interest RateLong-Term DebtFloating Rate Notes:Senior notes due 2023LIBOR plus 0.87%$%$400 3.786%Fixed R

195、ate Notes:Senior notes due 20232.750%750 2.866%Senior notes due 20243.450%750 3.531%750 3.531%Senior notes due 20251.900%800 1.803%800 1.803%Senior notes due 20255.900%425 6.036%425 6.036%Senior notes due 20261.400%750 1.252%750 1.252%Senior notes due 20273.600%850 3.689%850 3.689%Senior notes due 2

196、0275.950%300 6.064%300 6.064%Senior notes due 20302.700%950 2.623%950 2.623%Senior notes due 20312.600%750 2.186%750 2.186%Senior notes due 20326.300%425 6.371%425 6.371%Senior notes due 20424.000%750 4.114%750 4.114%Senior notes due 20513.650%1,000 2.517%1,000 2.517%Total senior notes7,750 8,900 He

197、dge accounting fair value adjustments 4 5 Unamortized premium/(discount)and debtissuance costs(33)(34)Less:Current portion of long-term debt(1,150)Total long-term debt7,721 7,721 Short-Term DebtCurrent portion of long-term debt 1,150 Total short-term debt 1,150 Total Debt$7,721$8,871(1)Includes the

198、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 therelated notes.Senior NotesIn January 2023,we redeemed the$1.2 billion aggregate principal amount of the floating rate and 2.750%seni

199、or notes due 2023.Total cashconsideration paid was$1.2 billion,as the redemption price was equal to 100%of the principal amount.In addition,we paid accrued and unpaidinterest on the principal amount.In 2022,we redeemed the$1.4 billion aggregate principal amount of the 2.600%and 3.800%senior notes du

200、e 2022.Total cash considerationpaid was$1.4 billion,as the redemption price was equal to 100%of the principal amount.In addition,we paid accrued and unpaid interest on theprincipal amount.In 2022,we issued senior notes of$1.2 billion aggregate principal amount,which consisted of$425 million of 5.900

201、%fixed rate notes due2025,$300 million of 5.950%fixed rate notes due to 2027 and$425 million of 6.300%fixed rate notes due 2032.We may redeem some or all of the fixed rate notes of each series at any time and from time to time prior to their maturity,generally at amake-whole redemption price,plus ac

202、crued and unpaid interest.(1)29Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)If a change of control triggering event(as defined in the applicable senior notes)occurs with respect to the 3.450%fixed rate notes due 2024,the 1.900%fixed rate notes due 2025,the

203、 5.900%fixed rate notes due 2025,the 1.400%fixed rate notes due 2026,the 3.600%fixed rate notesdue 2027,the 5.950%fixed rate notes due 2027,the 2.700%fixed rate notes due 2030,the 2.600%fixed rate notes due 2031,the 6.300%fixedrate notes due 2032,the 4.000%fixed rate notes due 2042,or the 3.650%fixe

204、d rate notes due 2051,we must,subject to certain exceptions,offerto 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,amo

205、ng other things and subject toexceptions,limit our ability to incur,assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactionswith respect to specified properties,and also includes customary events of default with customary grace periods in certain c

206、ircumstances,includingpayment defaults and bankruptcy-related defaults.To help achieve our interest rate risk management objectives,during the second quarter of 2020,we entered into interest rate swapagreements that effectively converted$400 million of our LIBOR-based floating-rate debt to a fixed-r

207、ate basis.During the first quarter of 2023 weterminated the interest rate swap agreements upon redemption of the floating rate senior notes due 2023.During 2022,we entered into derivativeinstruments to hedge the variability of forecasted interest payments on anticipated debt issuance using forward-s

208、tarting interest rate swaps.Asdescribed above,in 2022 we issued$1.2 billion of senior unsecured notes,which consisted of notes maturing in 2025,2027 and 2032.As a result,we terminated the interest rate swaps and the gain associated with the termination of approximately$25 million is amortized to int

209、erest expenseover the term of our notes due in November 2032.The effective interest rates for our senior notes include the interest payable,the amortization of debt issuance costs and the amortization ofany original issue discount and premium on these senior notes.Interest on these senior notes is p

210、ayable either quarterly or semiannually.Interestexpense associated with these senior notes,including amortization of debt issuance costs,was approximately$67 million and$60 million duringthe three months ended March 31,2023 and 2022,respectively.As of March 31,2023 and December 31,2022,the estimated

211、 fair value of thesesenior notes,using Level 2 inputs,was approximately$7.1 billion and$8.0 billion,respectively.Commercial PaperWe have a commercial paper program pursuant to which we may issue commercial paper notes in an aggregate principal amount at maturityof up to$1.5 billion outstanding at an

212、y time with maturities of up to 397 days from the date of issue.As of March 31,2023 and December 31,2022,there were no commercial paper notes outstanding.Credit AgreementIn March 2020,we entered into a credit agreement that provides for an unsecured$2 billion five-year credit facility.We may also,su

213、bject tothe agreement of the applicable lenders,increase commitments under the revolving credit facility by up to$1 billion.Funds borrowed under thecredit agreement may be used for working capital,capital expenditures,acquisitions and other general corporate purposes.As of March 31,2023,no borrowing

214、s were outstanding under our$2 billion credit agreement.However,as described above,we have an upto$1.5 billion commercial paper program and are required to maintain available borrowing capacity under our credit agreement in order to repaycommercial paper borrowings in the event we are unable to repa

215、y those borrowings from other sources when they become due,in an aggregateamount of$1.5 billion.As of March 31,2023,no borrowings were outstanding under our commercial paper program;therefore,$2 billion ofborrowing capacity was available for other purposes permitted by the credit agreement,subject t

216、o customary conditions to borrowing.The creditagreement includes a covenant limiting our consolidated leverage ratio to no more than 4.0:1.0,subject to,upon the occurrence of a qualifiedmaterial acquisition,if so elected by us,a step-up to 4.5:1.0 for the four fiscal quarters completed following suc

217、h qualified material acquisition.Thecredit30Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)agreement includes customary events of default,with corresponding grace periods in certain circumstances,including payment defaults,cross-defaults and bankruptcy-relat

218、ed defaults.In addition,the credit agreement contains customary affirmative and negative covenants,includingrestrictions regarding the incurrence of liens and subsidiary indebtedness,in each case,subject to customary exceptions.The credit agreementalso contains customary representations and warranti

219、es.We were in compliance with all financial covenants in our outstanding debt instruments during the three months ended March 31,2023.31Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 10 Supplemental Consolidated Financial InformationContract BalancesTim

220、ing of revenue recognition may differ from the timing of invoicing to customers.Accounts receivable represents amounts invoiced andrevenue recognized prior to invoicing when we have satisfied our performance obligation and have the unconditional right to payment.Theallowance for doubtful accounts an

221、d authorized credits is estimated based upon our assessment of various factors including historical experience,the age of the accounts receivable balances,current economic conditions reasonable and supportable forecasts,and other factors that may affectour customers ability to pay.The allowance for

222、doubtful accounts and authorized credits was$45 million and$42 million as of March 31,2023 andDecember 31,2022,respectively.As of March 31,2023,we reported an allowance for doubtful accounts of$17 million reflecting an increase of$1 million,net of write-offs of$3 million for the three months ended M

223、arch 31,2023.As of December 31,2022,we reported an allowance fordoubtful accounts of$16 million.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 obl

224、igations are satisfied in the following reporting period.The amount of revenuerecognized for the three month period ended March 31,2023 that was included in the deferred revenue balance at the beginning of the period was$31 million.The amount of revenue recognized for the three month period ended Ma

225、rch 31,2022 that was included in the deferred revenue balanceat the beginning of the period was$37 million.Cash,cash equivalents and restricted cashMarch 31,2023December 31,2022(In millions)Cash and cash equivalents$2,082$2,154 Customer accounts303 69 Restricted cash included in short-term investmen

226、ts41 36 Restricted cash included in long-term investments5 13 Cash,cash equivalents and restricted cash$2,431$2,272 Customer accounts and funds receivableMarch 31,2023December 31,2022(In millions)Customer accounts$303$69 Funds receivable476 694 Customer accounts and funds receivable$779$763 Other cu

227、rrent assetsMarch 31,2023December 31,2022(In millions)Payment processor advances$353$336 Prepaid expenses115 120 Accounts receivable,net80 90 Short-term derivative assets57 112 Income and other tax receivable44 122 Other300 276 Other current assets$949$1,056 32Table of ContentseBay Inc.NOTES TO COND

228、ENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Accrued expenses and other current liabilitiesMarch 31,2023December 31,2022(In millions)Compensation and related benefits$393$426 Sales and use tax and VAT accruals386 346 Advertising accruals214 229 Operating lease liabilities125 131 Transaction los

229、s reserve101 101 Uninvoiced general and administrative expenses95 111 Accrued interest expense74 67 Deferred revenue45 34 Other396 421 Accrued expenses and other current liabilities$1,829$1,866 Gain(loss)on equity investments and warrant,netThree Months EndedMarch 31,20232022(In millions)Unrealized

230、change in fair value of equity investment in Adevinta$174$(1,643)Unrealized change in fair value of equity investment in Adyen(80)Unrealized change in fair value of equity investment in Gmarket(11)(182)Unrealized change in fair value of equity investment in KakaoBank(3)(91)Change in fair value of wa

231、rrant38(115)Realized change in fair value of shares sold in Adyen(166)Realized change in fair value of shares sold in KakaoBank(8)Gain(loss)on other investments(6)Total gain(loss)on equity investments and warrant,net$198$(2,291)33Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL ST

232、ATEMENTS(Continued)Note 11 Commitments and ContingenciesOff-Balance Sheet ArrangementsAs of March 31,2023,we had no off-balance sheet arrangements that have,or are reasonably likely to have,a current or future materialeffect on our consolidated financial condition,results of operations,liquidity,cap

233、ital expenditures or capital resources.We have a cash pooling arrangement with a financial institution for cash management purposes.This arrangement allows for cashwithdrawals from the financial institution based upon our aggregate operating cash balances held within the same financial institution(“

234、AggregateCash Deposits”).This arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit.Thenet balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interestexpense or

235、income under the arrangement.As of March 31,2023,we had a total of$168 million in aggregate cash deposits and no cashwithdrawals held within the financial institution under the cash pooling arrangement.Litigation and Other Legal Matters OverviewWe are involved in legal and regulatory proceedings on

236、an ongoing basis.Many of these proceedings are in early stages and may seek anindeterminate amount of damages.If we believe that a loss arising from such matters is probable and can be reasonably estimated,we accrue theestimated liability in our financial statements.If only a range of estimated loss

237、es can be determined,we accrue an amount within the range that,inour judgment,reflects the most likely outcome;if none of the estimates within that range is a better estimate than any other amount,we accrue thelow end of the range.For those proceedings in which an unfavorable outcome is reasonably p

238、ossible but not probable,we have disclosed anestimate of the reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range oflosses arising directly from the proceeding(i.e.,monetary damages or amounts paid in judgment or settlement)is not

239、 material.If we cannotestimate the probable or reasonably possible loss or range of losses arising from a proceeding,we have disclosed that fact.In assessing themateriality of a proceeding,we evaluate,among other factors,the amount of monetary damages claimed,as well as the potential impact of non-m

240、onetary remedies sought by plaintiffs(e.g.,injunctive relief)that may require us to change our business practices in a manner that could have amaterial adverse impact on our business.With respect to the matters disclosed in this Overview,we are unable to estimate the possible loss orrange of losses

241、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 three months endedMarch 31,2023.We have concluded,based on currently available information,that reas

242、onably 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 andregulatory proceedings are inherently unpredictable and subject to significant uncertainties.If one o

243、r more matters were resolved against us in areporting period for amounts in excess of managements expectations,the impact on our operating results or financial condition for that reportingperiod could be material.Legal fees are expensed as incurred.34Table of ContentseBay Inc.NOTES TO CONDENSED CONS

244、OLIDATED FINANCIAL STATEMENTS(Continued)General MattersThird parties have from time to time claimed,and others may claim in the future,that we have infringed their intellectual property rights.Weare subject to patent disputes,and expect that we could be subject to additional patent infringement clai

245、ms involving various aspects of ourbusiness as our products and services continue to expand in scope and complexity.Such claims may be brought directly or indirectly against usand/or against our customers(who may be entitled to contractual indemnification under their contracts with us),and we are su

246、bject to increasedexposure 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 thepast been forced to litigate such claims.We may also become more vulnerable to third-party claims as laws such as the Digital MillenniumCo

247、pyright 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 jurisdictionswhere the underlying law

248、s with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable.Webelieve that additional lawsuits alleging that we have violated patent,copyright or trademark laws will be filed against us.Intellectual propertyclaims,whether meritorious or not,

249、are time consuming and costly to defend and resolve,could require expensive changes in our methods of doingbusiness 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

250、the ordinary course of business,including suits by ourusers(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/

251、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 andregulatory landscape changes and,as we have grown larger,our businesses have expanded in scope(both in terms of th

252、e range of products andservices that we offer and our geographical operations)and our products and services have increased in complexity.Any claims or regulatoryactions against us,whether meritorious or not,could be time consuming,result in costly litigation,damage awards(including statutory damages

253、 forcertain 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 ofsignificant oper

254、ational resources or otherwise harm our business.From time to time,the Company receives subpoenas or requests for information from various government agencies,typically for potentialmisconduct by sellers on the Companys Marketplace platforms.More recently,the Company has received subpoenas or reques

255、ts for informationfrom government agencies related to potential liability of the Company for products sold by sellers on the Marketplace platforms.The Companygenerally responds to government subpoenas and requests in the ordinary course of business and in a cooperative,thorough and timely manner.The

256、se responses sometimes require time and effort and can result in considerable costs being incurred by the Company.In this regard,the Company has responded to inquiries from the U.S.Department of Justice(“DOJ”)regarding products sold on theMarketplace platforms alleged to violate certain laws and reg

257、ulations,including regulations of the Environmental Protection Agency(“EPA”)and,separately,regulations of the Drug Enforcement Agency.The inquiries relate to whether and to what extent the Company should be liable for thesale of regulated or illicit products manufactured and sold by others who liste

258、d such products on Marketplace platforms in a manner that evadedand/or was designed to evade detection by the Company.With respect to the inquiries regarding EPA regulations,the EPA,DOJ and the Companyhave begun discussions relating to allegations of noncompliance arising under the Clean Air Act,amo

259、ng other alleged violations,which discussionsinclude a potential settlement.If the Company is found to be liable for such activities on the Marketplace,it likely will be subject to monetarydamages,changes in our business practices,or other remedies that could have a material adverse impact on our bu

260、siness.The Company is also responding to inquiries from the U.S.Attorney for the District of Massachusetts regarding potential criminal liability ofthe Company arising from the stalking and harassment in 2019 of the editor and publisher of Ecommercebytes,a website that publishesecommerce news and in

261、formation.Six former Company employees and one former contractor have pleaded guilty to crimes arising from theconduct.The Company has35Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)begun discussions with the U.S.Attorneys Office,which discussions include a

262、 potential settlement.We expect any such settlement may includefines,other payments,and non-monetary remedies,such as additional remediation,compliance and reporting requirements.Although the Companyhas concluded that losses in the U.S.Attorney matter are probable,we are unable at this time to estim

263、ate the losses that may be incurred becausethe matter is still under investigation and involves open questions relevant to the Companys potential liability for conduct of its former employees.The editor and publisher also have a pending civil action against the Company,which seeks unspecified damage

264、s arising from the above-describedconduct.In connection with the government matters and civil action described above,the Company to date has accrued for probable losses ofapproximately$64 million in the aggregate.Given the uncertainties involved,the ultimate resolution of these matters could result

265、in additionallosses that may be material to our financial results for a particular period,depending on,among other factors,the size of the loss or liability imposedand the level of our net income or loss for that period.Indemnification ProvisionsWe entered into a separation and distribution agreemen

266、t and various other agreements with PayPal to govern the separation and relationshipof 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 agains

267、t PayPal under the agreements may not be sufficient to protect us and ourindemnity 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.Theseagreements require us to indemnify suc

268、h individuals,to the fullest extent permitted by Delaware law,for certain liabilities to which they may becomesubject 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 whichwe

269、 have commercial relations,including our standard marketing,promotions and application programming interface license agreements.Underthese contracts,we generally indemnify,hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by theindemnified party in connection

270、 with claims by a third party with respect to our domain names,trademarks,logos and other branding elements tothe extent that such marks are applicable to our performance under the subject agreement.In certain cases,we have agreed to provideindemnification for intellectual property infringement.It i

271、s not possible to determine the maximum potential loss under these indemnificationprovisions due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.Todate,losses recorded in our consolidated statement of income in conne

272、ction with our indemnification provisions have not been significant,eitherindividually or collectively.36Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 12 Stockholders EquityStock Repurchase ProgramOur stock repurchase programs are intended to programma

273、tically 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 ouroutstanding share count.Any share repurchases under our stock repurchase programs may be

274、made through open market transactions,blocktrades,privately negotiated transactions(including accelerated share repurchase transactions)or other means at times and in such amounts asmanagement deems appropriate and will be funded from our working capital or other financing alternatives.Our stock rep

275、urchase programs may belimited 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 managements determination as to the appropriate u

276、se ofour cash.The following table summarizes stock repurchase activity under our stock repurchase programs for the period indicated(in millions,exceptper share amounts):SharesRepurchased Average Priceper Share Value of SharesRepurchased RemainingAmountAuthorizedBalance as of January 1,2023$2,848 Rep

277、urchase of shares of common stock5$45.53$250(250)Balance as of March 31,2023$2,598(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 stockhave been retired.(2)Excludes broker commissions an

278、d excise tax accruals.DividendsThe Company paid a total of$134 million and$129 million in cash dividends during the three months ended March 31,2023 and 2022,respectively.In April 2023,our Board of Directors declared a cash dividend of$0.25 per share of common stock to be paid on June 16,2023 tostoc

279、kholders of record as of June 1,2023.(1)(2)(2)37Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 13 Employee Benefit PlansRestricted Stock Unit ActivityThe following table presents restricted stock unit(“RSU”)activity under our equity incentive plans for

280、the period indicated(in millions):UnitsOutstanding as of January 1,202321 Awarded1 Vested(3)Forfeited(1)Outstanding as of March 31,202318 The weighted average grant date fair value for RSUs awarded during the three months ended March 31,2023 was$42.98 per share.Stock-Based Compensation ExpenseThe fo

281、llowing table presents the impact on our results of continuing operations of recording stock-based compensation expense for theperiods indicated(in millions):Three Months EndedMarch 31,20232022Cost of net revenues$13$12 Sales and marketing20 20 Product development59 45 General and administrative36 3

282、4 Total stock-based compensation expense$128$111 Capitalized in product development$4$4 38Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 14 Income TaxesWe are subject to both direct and indirect taxation in the U.S.and various states and foreign jurisdi

283、ctions.We are under examination bycertain tax authorities for the 2010 to 2021 tax years.We believe that adequate amounts have been reserved for any adjustments that mayultimately result from these or other examinations.The material jurisdictions where we are subject to potential examination by tax

284、authorities for taxyears after 2009 include,among others,the U.S.(Federal and California),Germany,India,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 grossunrecognized tax ben

285、efits could significantly change in the next 12 months.However,given the number of years remaining subject to examinationand the number of matters being examined,we are unable to estimate the full range of possible adjustments to the balance of gross unrecognizedtax benefits.We have recognized the t

286、ax consequences of all foreign unremitted earnings and management has no specific plans to indefinitely reinvestthe unremitted earnings of our foreign subsidiaries as of the balance sheet date.We have not provided for deferred taxes on outside basisdifferences in our investments in our foreign subsi

287、diaries that are unrelated to unremitted earnings.These basis differences will be indefinitelyreinvested.A determination of the unrecognized deferred taxes related to these other components of our outside basis difference is not practicable.39Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED

288、 FINANCIAL STATEMENTS(Continued)Note 15 Accumulated Other Comprehensive IncomeThe following tables summarize the changes in AOCI for the periods indicated(in millions):Unrealized Gains(Losses)onDerivativeInstrumentsUnrealizedGains(Losses)onInvestmentsForeignCurrencyTranslationEstimated Tax(Expense)B

289、enefitTotalBalance as of December 31,2022$114$(98)$222$21$259 Other comprehensive income(loss)beforereclassifications(21)19 1(2)(3)Less:Amount of gain(loss)reclassified from AOCI32 (7)25 Net current period other comprehensive income(loss)(53)19 1 5(28)Balance as of March 31,2023$61$(79)$223$26$231 U

290、nrealized Gains(Losses)onDerivativeInstrumentsUnrealizedGains(Losses)onInvestmentsForeignCurrencyTranslationEstimated Tax(Expense)BenefitTotalBalance as of December 31,2021$65$(7)$328$12$398 Other comprehensive income(loss)beforereclassifications27(51)(34)8(50)Less:Amount of gain(loss)reclassified f

291、rom AOCI7 (1)6 Net current period other comprehensive income(loss)20(51)(34)9(56)Balance as of March 31,2022$85$(58)$294$21$342 The following table summarizes the reclassifications out of AOCI for the periods indicated(in millions):Details about AOCI Components Affected Line Item in the Statement of

292、 IncomeAmount of Gain(Loss)Reclassified From AOCIThree Months EndedMarch 31,20232022Gains(losses)on cash flow hedges:Foreign exchange contractsNet revenues$29$6 Foreign exchange contractsCost of net revenues(1)Interest rate contractsInterest and other,net4 1 Total,from continuing operations before i

293、ncome taxes32 7 Provision for income taxes(7)(1)Total,from continuing operations net of income taxes25 6 Total reclassifications for the periodTotal,net of income taxes$25$6 40Table of ContentseBay Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Note 16 RestructuringThe following

294、table summarizes restructuring reserve activity for the period indicated(in millions):Three Months Ended March31,2023Accrued liability,beginning of period$Charges42 Payments(14)Accrued liability,end of period$28 During the first quarter of 2023,management announced plans that included the reduction

295、in workforce and other exit costs.The reductionwas substantially completed in the first quarter of 2023 and resulted in a pre-tax charge of$42 million.There was no restructuring activity during thefirst quarter of 2022.Restructuring charges are included in general and administrative expenses in the

296、condensed consolidated statement ofincome.41Table of ContentsITEM 2:MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSFORWARD-LOOKING STATEMENTSThis Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities

297、 Act of 1933 andSection 21E of the Securities Exchange Act of 1934,including statements that involve expectations,plans or intentions(such as those relating tofuture business,future results of operations or financial condition,inflationary pressure,foreign exchange rate volatility and geopolitical e

298、vents,suchas the ongoing war in Ukraine,new or planned features or services,or management strategies).You can generally identify these forward-lookingstatements by words such as“may,”“will,”“would,”“should,”“could,”“expect,”“anticipate,”“believe,”“estimate,”“intend,”“plan”and other similarexpression

299、s.These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from thoseexpressed or implied in our forward-looking statements.Such risks and uncertainties include,among others,those discussed in“Part I Item 1A:Risk Factors”of the Company

300、s Annual Report on Form 10-K for the year ended December 31,2022(the“2022 Form 10-K”),as well as in ourunaudited condensed consolidated financial statements,related notes,and the other information appearing elsewhere in this report and our otherfilings with the Securities and Exchange Commission(“SE

301、C”).We do not intend,and undertake no obligation,to update any of our forward-lookingstatements after the date of this report to reflect actual results or future events or circumstances.Given these risks and uncertainties,readers arecautioned not to place undue reliance on such forward-looking state

302、ments.You should read the following Managements Discussion and Analysis ofFinancial Condition and Results of Operations in conjunction with the unaudited condensed consolidated financial statements and the related notesincluded in this report.When we refer to“we,”“our,”“us”or“eBay”in this Quarterly

303、Report on Form 10-Q,we mean the current Delaware corporation(eBay Inc.)and its consolidated subsidiaries,unless otherwise expressly stated or the context otherwise requires.OVERVIEW BusinesseBay Inc.is a global commerce leader,which includes our Marketplace platforms.Founded in 1995 in San Jose,Cali

304、fornia,eBay is one ofthe worlds largest and most vibrant marketplaces for discovering great value and unique selection.Collectively,we connect millions of buyers andsellers around the world,empowering people and creating opportunity.Our technologies and services are designed to provide buyers choice

305、 and abreadth of relevant inventory and to enable sellers worldwide to organize and offer their inventory for sale,virtually anytime and anywhere.In 2023,we are focused on our strategic playbook to understand the customer and their needs;build experiences they will love,at scale;and tell ourstory in

306、 new and different ways.In 2022,and extending into the first quarter of 2023,we experienced reduced traffic in most markets resulting from geopolitical events,inflationary pressure,foreign exchange rate volatility and lower consumer confidence.These factors negatively impacted discretionary consumer

307、spending,are uncertain in duration and we expect them to continue during 2023.42Table of ContentsPresentationIn addition to the corresponding measures under generally accepted accounting principles(“GAAP”),management uses non-GAAPmeasures in reviewing our financial results.The foreign exchange neutr

308、al(“FX-Neutral”),or constant currency,net revenue amounts discussedbelow 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 operat

309、ions should be read in conjunction with theinformation provided below in“Non-GAAP Measures of Financial Performance,”which includes reconciliations of FX-Neutral financial measures tothe most directly comparable GAAP measures.We calculate the year-over-year impact of foreign currency movements using

310、 prior period foreigncurrency rates applied to current year transactional currency amounts.Quarter HighlightsNet revenues increased 1%to$2,510 million during the three months ended March 31,2023 compared to the same period in 2022 primarilydue to the investment in focus categories and higher take ra

311、te as a result of the expansion of payment services and promoted listing products.Theincrease in net revenues was partially offset by a reduction in traffic in most markets resulting from geopolitical events,inflationary pressure,foreignexchange rate volatility and lower consumer confidence during t

312、he three months ended March 31,2023.FX-Neutral net revenues(as definedabove)increased 3%during the three months ended March 31,2023 compared to the same period in 2022.Operating margin decreased to 22.2%for the three months ended March 31,2023 compared to 27.9%for the same period in 2022.We generate

313、d cash flow from continuing operating activities of$841 million during the three months ended March 31,2023 compared to$629million in the same period in 2022.We recorded unrealized gains of$198 million in aggregate in gain(loss)on equity investments and warrant,net on our condensedconsolidated state

314、ment of income during the three months ended March 31,2023 compared to$2,291 million of unrealized losses recorded duringthe same period in 2022.In January 2023,we repaid debt of$1.2 billion consisting of the floating rate and 2.750%senior notes.During the three months ended March 31,2023,we paid$24

315、2 million cash for the purchase of common stock and paid$134 million in cashdividends.In April 2023,we declared a quarterly cash dividend of$0.25 per share of common stock to be paid on June 16,2023 to stockholders ofrecord as of June 1,2023.43Table of ContentsRESULTS OF OPERATIONSWe have one report

316、able segment to reflect the way management and our chief operating decision maker(“CODM”)review and assessperformance of the business.Our reportable segment is Marketplace,which includes our online marketplace located at ,its localizedcounterparts and the eBay suite of mobile apps.The accounting pol

317、icies of our segment are the same as those described in“Note 1 TheCompany and Summary of Significant Accounting Policies”in our condensed consolidated financial statements included elsewhere in this report.Net RevenuesBeginning in the fourth quarter of 2022,we present revenues generated from our Mar

318、ketplace GMV and from non-GMV based businesses as“Net revenues”in order to more closely align our presentation of net revenues with how our business is operated.We formerly presented suchamounts as“Net transaction revenues”and“Marketing services and other(MS&O)revenues,”and those line items for such

319、 prior periods have beenconformed to current period presentation.Consolidated net revenues are unchanged.Net revenues primarily include final value fees,feature fees,fees to promote listings,payment service fees,listing fees,and storesubscription fees from sellers on our platforms.Our net revenues a

320、lso include revenues from the sale of advertisements,revenue sharingarrangements and shipping fees.Our net revenues are reduced by incentives,including discounts,coupons and rewards,provided to ourcustomers.The following table presents net revenues for the periods indicated(in millions,except percen

321、tages):Three Months EndedMarch 31,20232022%ChangeNet revenues$2,510$2,483 1%SeasonalityWe expect transaction activity patterns on our platforms to trend with general consumer buying patterns and expect that these trends willcontinue.As we introduce and scale new products throughout the year,we expec

322、t net revenues to fluctuate.In addition,macroeconomic conditions,including the impact of COVID-19,disrupted seasonal patterns in net revenues,particularly in the first quarter of 2021.The following table presentsour total net revenues and the sequential quarterly movements of these net revenues for

323、the periods indicated(in millions,except percentages):Quarter Ended March 31June 30September 30December 312021Net revenues$2,638$2,668$2,501$2,613%change from prior quarter6%1%(6)%4%2022Net revenues$2,483$2,422$2,380$2,510%change from prior quarter(5)%(2)%(2)%5%2023Net revenues$2,510$%change from pr

324、ior quarter%Net Revenues by GeographyRevenues are attributed to U.S.and international geographies primarily based upon the country in which the seller,platform that displaysadvertising,other service provider or customer,as the case may be,is located.The following table presents net revenues by geogr

325、aphy for theperiods indicated(in millions,except percentages):44Table of Contents Three Months EndedMarch 31,20232022%ChangeU.S.$1,261$1,226 3%Percentage of net revenues50%49%International1,249 1,257(1)%Percentage of net revenues50%51%Total net revenues$2,510$2,483 1%Our commerce platforms operate g

326、lobally,resulting in certain revenues that are denominated in foreign currencies,primarily the British poundand euro.Year-over-year appreciation or depreciation of the U.S.dollar may have a material impact to our financial results,and we have seen andcould continue to see elevated foreign currency v

327、olatility in the future.Through our hedging programs,we actively monitor foreign currency volatilityand attempt to mitigate the risk.As shown in the table above,we generate approximately half of our net revenues internationally.Because of thesefactors,we are subject to the risks related to doing bus

328、iness in foreign countries as discussed in“Part I-Item 1A:Risk Factors”of the 2022 Form10-K.Net revenues included$29 million of hedging gains during the three months ended March 31,2023 as compared to$6 million of hedginggains during the same period in 2022.Foreign currency movements relative to the

329、 U.S.dollar had an unfavorable impact of$45 million on netrevenues during the three months ended March 31,2023 compared to an unfavorable impact of$58 million on net revenues during the same periodin 2022.The effect of foreign currency exchange rate movements during the three months ended March 31,2

330、023 compared to the same period in2022 was primarily attributable to the strengthening of the U.S.dollar against the British pound and euro.Key Operating MetricsGross Merchandise Volume(“GMV”)and take rate are significant factors that we believe affect our net revenues.GMV consists of the total valu

331、e of all paid transactions between users on our platforms during the applicable period inclusive ofshipping fees and taxes.Despite GMVs divergence from revenue,we still believe that GMV provides a useful measure of theoverall volume of paid transactions that flow through our platforms in a given per

332、iod.Take rate is defined as net revenues divided by GMV and represents net revenues as a percentage of overall volume on ourplatforms.We believe that take rate provides a useful measure of our ability to monetize volume through marketplace services onour platforms in a given period.We use take rate

333、to identify key revenue drivers on our marketplace.45Table of ContentsThe following table presents net revenues,GMV and take rate for the periods indicated(in millions,except percentages):Three Months EndedMarch 31,%Change 20232022As ReportedFX-Neutral(In millions,except percentages)Net revenues$2,510$2,483 1%3%Supplemental data:GMV$18,410$19,409(5)%(2)%Take rate 13.63%12.79%0.84%(1)Net revenues w