Item 1. Financial Statements (unaudited)

Index

			Page
Condensed Consolidated Balance Sheet as of March 31, 2023 and December 31, 2022			4
Condensed Consolidated Statement of Income for the three months ended March 31, 2023 and 2022			5
Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2023 and 2022			6
Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2023 and 2022			7
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2023 and 2022			8
Notes to Condensed Consolidated Financial Statements			10
Note 1 — The Company and Summary of Significant Accounting Policies			10
Note 2 — Net Income (Loss) Per Share			12
Note 3 — Business Combinations			13
Note 4 — Goodwill and Intangible Assets			14
Note 5 — Segments			15
Note 6 — Investments			16
Note 7 — Derivative Instruments			21
Note 8 — Fair Value Measurement of Assets and Liabilities			25
Note 9 — Debt			29
Note 10 — Supplemental Consolidated Financial Information			32
Note 11 — Commitments and Contingencies			34
Note 12 — Stockholders’ Equity			37
Note 13 — Employee Benefit Plans			38
Note 14 — Income Taxes			39
Note 15 — Accumulated Other Comprehensive Income			40
Note 16 — Restructuring			41

eBay Inc.

CONDENSED CONSOLIDATED BALANCE SHEET

			March 31, 2023						December 31, 2022
			(In millions, except par value)
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	2,082					$	2,154
Short-term investments			1,922						2,625
Equity investment in Adevinta			2,866						2,692
Customer accounts and funds receivable			779						763
Other current assets			949						1,056
Total current assets			8,598						9,290
Long-term investments			1,657						1,797
Property and equipment, net			1,235						1,238
Goodwill			4,287						4,262
Operating lease right-of-use assets			486						513
Deferred tax assets			3,111						3,169
Other assets			630						581
Total assets			$	20,004					$	20,850
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt			$	—					$	1,150
Accounts payable			280						261
Customer accounts and funds payable			792						768
Accrued expenses and other current liabilities			1,829						1,866
Income taxes payable			305						226
Total current liabilities			3,206						4,271
Operating lease liabilities			395						418
Deferred tax liabilities			2,226						2,245
Long-term debt			7,721						7,721
Other liabilities			1,069						1,042
Total liabilities			14,617						15,697
Commitments and Contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.001 par value; 3,580 shares authorized; 536 and 539 shares outstanding			2						2
Additional paid-in capital			17,364						17,279
Treasury stock at cost, 1,191 and 1,186 shares			(46,954)						(46,702)
Retained earnings			34,744						34,315
Accumulated other comprehensive income			231						259
Total stockholders’ equity			5,387						5,153
Total liabilities and stockholders’ equity			$	20,004					$	20,850

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

eBay Inc.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

			Three Months Ended March 31,
			2023						2022
			(In millions, except per share amounts)
			(Unaudited)
Net revenues			$	2,510					$	2,483
Cost of net revenues			700						689
Gross profit			1,810						1,794
Operating expenses:
Sales and marketing			511						478
Product development			352						301
General and administrative			297						226
Provision for transaction losses			84						96
Amortization of acquired intangible assets			8						1
Total operating expenses			1,252						1,102
Income from operations			558						692
Gain (loss) on equity investments and warrant, net			198						(2,291)
Interest and other, net			(26)						(50)
Income (loss) from continuing operations before income taxes			730						(1,649)
Income tax benefit (provision)			(161)						310
Income (loss) from continuing operations			569						(1,339)
Income (loss) from discontinued operations, net of income taxes			(2)						(2)
Net income (loss)			$	567					$	(1,341)
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:
Basic			537						587
Diluted			541						587

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

eBay Inc.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

			Three Months Ended March 31,
			2023						2022
			(In millions)
			(Unaudited)
Net income (loss)			$	567					$	(1,341)
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation gains (losses)			1						(34)
Unrealized gains (losses) on investments, net			19						(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 unrealized gains (losses) on hedging activities, net			11						(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.

eBay Inc.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

			Three Months Ended March 31,
			2023						2022
			(In millions, except per share amounts)
			(Unaudited)
Common stock:
Balance, beginning of period			$	2					$	2
Common stock issued			—						—
Common stock repurchased			—						—
Balance, end of period			2						2
Additional paid-in-capital:
Balance, beginning of period			17,279						16,659
Common stock and stock-based awards issued			—						1
Tax withholdings related to net share settlements of restricted stock units and awards			(48)						(61)
Stock-based compensation			128						111
Forward contract for share repurchases			—						188
Other			5						6
Balance, end of period			17,364						16,904
Treasury stock at cost:
Balance, beginning of period			(46,702)						(43,371)
Common stock repurchased			(252)						(1,438)
Balance, end of period			(46,954)						(44,809)
Retained earnings:
Balance, beginning of period			34,315						36,090
Net income (loss)			567						(1,341)
Dividends and dividend equivalents declared			(138)						(134)
Balance, end of period			34,744						34,615
Accumulated other comprehensive income:
Balance, beginning of period			259						398
Foreign currency translation adjustment			1						(34)
Change in unrealized gains (losses) on investments			19						(51)
Change in unrealized gains (losses) on derivative instruments			(53)						20
Tax benefit (provision) on above items			5						9
Balance, end of period			231						342
Total stockholders’ equity			$	5,387					$	7,054
Dividends 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.

eBay Inc.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

			Three Months Ended March 31,
			2023						2022
			(In millions)
			(Unaudited)
Cash flows from operating activities:
Net income (loss)			$	567					$	(1,341)
Loss from discontinued operations, net of income taxes			2						2
Adjustments:
Provision for transaction losses			84						96
Depreciation and amortization			107						118
Stock-based compensation			128						111
Loss (gain) on investments and other, net			(4)						6
Deferred income taxes			33						(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 Gmarket			11						182
Change in fair value of equity investment in KakaoBank			3						99
Changes in assets and liabilities, net of acquisition effects			122						(272)
Net cash provided by continuing operating activities			841						629
Net cash used in discontinued operating activities			—						(16)
Net cash provided by operating activities			841						613
Cash flows from investing activities:
Purchases of property and equipment			(132)						(83)
Purchases of investments			(3,543)						(5,475)
Maturities and sales of investments			4,404						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 activities			701						1,772
Net cash provided by discontinued investing activities			—						—
Net cash provided by investing activities			701						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 for dividends			(134)						(129)
Repayment of debt			(1,150)						(750)
Net funds receivable and payable activity			229						56
Other			1						—
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 on cash, cash equivalents and restricted cash			5						(18)
Net increase in cash, cash equivalents and restricted cash			159						415
Cash, cash equivalents and restricted cash at beginning of period			2,272						1,406
Cash, cash equivalents and restricted cash at end of period			$	2,431					$	1,821
Less: Cash, cash equivalents and restricted cash of discontinued operations			—						—
Cash, cash equivalents and restricted cash of continuing operations at end of period			$	2,431					$	1,821

eBay Inc.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS—(Continued)

			Three Months Ended March 31,
			2023						2022
			(In millions)
			(Unaudited)
Supplemental cash flow disclosures:
Cash paid for:
Interest			$	60					$	80
Income taxes			$	29					$	35

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

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — The Company and Summary of Significant Accounting Policies

The Company

eBay Inc. is a global commerce leader that connects people and builds communities to create economic opportunity for all. Our technology empowers millions of buyers and sellers in more than 190 markets around the world, providing everyone the opportunity to grow and thrive. Founded in 1995 in San Jose, California, eBay is one of the world's largest and most vibrant marketplaces for discovering great value and unique selection.

When we refer to “we,” “our,” “us,” the “Company” or “eBay” in this Quarterly 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.

Use of Estimates

The 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, investments including level 3 investments in Gmarket Global LLC (“Gmarket”), warrants and the recoverability of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

Principles of Consolidation and Basis of Presentation

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

Upon the transfer of our Classifieds business to Adevinta in 2021, shares in Adevinta were included as part of total consideration received under the definitive agreement. The equity interest in Adevinta is accounted for under the fair value option. Additionally, upon completion of the sale of 80.01% of the outstanding equity interests of eBay Korea LLC (“eBay Korea”) to Emart Inc. (“Emart”) in 2021, we retained 19.99% of the outstanding equity interests of the new entity, Gmarket, which is accounted for under the fair value option. Subsequent changes in fair value for these equity investments are included in gain (loss) on equity investments and warrant, net on our consolidated statement of income.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. We have evaluated all subsequent events through the 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 for the fair statement of the condensed consolidated financial position, results of operations and cash flows for these interim periods.

Significant Accounting Policies

There were no significant changes to our significant accounting policies disclosed in “Note 1 — The Company and Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board (“FASB”) issued new guidance to clarify the fair value measurement guidance for equity securities subject to contractual restrictions that prohibit the sale of an equity security. Further, the guidance introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The standard will be effective for annual reporting periods beginning after December 15, 2023, including interim reporting periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 2 — Net Income (Loss) Per Share

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

The following table presents the computation of basic and diluted net income (loss) per share for the periods indicated (in millions, except per share amounts):

			Three Months Ended March 31,
			2023						2022
Numerator:
Income (loss) from continuing operations			$	569					$	(1,339)
(Loss) from discontinued operations, net of income taxes			(2)						(2)
Net income (loss)			$	567					$	(1,341)
Denominator:
Weighted average shares of common stock - basic			537						587
Dilutive effect of equity incentive awards			4						—
Weighted average shares of common stock - diluted			541						587
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)
Common stock equivalents excluded from income (loss) per diluted share because their effect would have been anti-dilutive			12						7

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 3 — Business Combinations

Acquisition of TCGplayer

In 2022, we completed the acquisition of TCGplayer, a trusted marketplace for collectible card game enthusiasts. In 2023, we recorded measurement period adjustments related to the revised valuation of the intangible assets acquired. The following table presents the revised allocation of the aggregate purchase consideration (in millions):

			TCGplayer
Goodwill			$	148
Purchased intangible assets			109
Deferred taxes			(18)
Total			$	239

The goodwill recognized is primarily attributable to expected synergies and the assembled workforce of TCGplayer. We generally do not expect 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 operating results and pro forma results of operations for the acquisition above have not been presented as the effect of this acquisition is not material to our financial results.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 4 — Goodwill and Intangible Assets

Goodwill

The following table presents goodwill activity for the period indicated (in millions):

			December 31, 2022						Goodwill Acquired						Adjustments						March 31, 2023
Goodwill			$	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-based marketplace compliance solutions, on February 13, 2023 and the revised valuation of the intangible assets acquired from the 2022 acquisition of TCGplayer. The adjustments to goodwill during the three months ended March 31, 2023 were primarily due to foreign currency translation.

Intangible Assets

Intangible assets are reported within other assets in our condensed consolidated balance sheet. The following table presents components of identifiable intangible assets as of the dates indicated (in millions, except years):

			March 31, 2023																								December 31, 2022
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Weighted Average Useful Life (Years)						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Weighted Average Useful Life (Years)
Intangible assets:
Customer lists and user base			$	246					$	(196)					$	50					8						$	190					$	(190)					$	—					0
Marketing related			81						(55)						26						6						68						(53)						15						7
Developed technologies			235						(179)						56						4						275						(177)						98						5
All other			159						(157)						2						3						159						(157)						2						3
Total			$	721					$	(587)					$	134											$	692					$	(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, 2023
Remaining 2023						$	25
2024						33
2025						30
2026						21
Thereafter						25
Total						$	134

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 5 — Segments

We have one operating and reportable segment. Our reportable segment is Marketplace, which includes our online marketplace located at www.ebay.com, its localized counterparts and the eBay suite of mobile apps. Our management and our chief operating decision maker review financial information presented on a consolidated basis for purposes of allocating resources and evaluating performance and do not evaluate using asset information.

The accounting policies of our segment are the same as those described in “Note 1 — The Company and Summary of Significant Accounting Policies.”

The following table summarizes the allocation of net revenues based on geography for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
U.S.			$	1,261					$	1,226
United Kingdom			381						418
Germany			252						273
Rest of world			616						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 primarily based upon the country in which the seller, platform that displays advertising, other service provider or customer, as the case may be, is located.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 6 — Investments

The following tables summarize the unrealized gains and losses and estimated fair value of our investments classified as available-for-sale debt securities and restricted cash as of the dates indicated (in millions):

			March 31, 2023
			Gross Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
Short-term investments:
Restricted cash			$	41					$	—					$	—					$	41
Corporate debt securities			1,649						—						(6)						1,643
Government and agency securities			141						—						(4)						137
			$	1,831					$	—					$	(10)					$	1,821
Long-term investments:
Restricted cash			$	5					$	—					$	—					$	5
Corporate debt securities			515						—						(30)						485
Government and agency securities			625						—						(39)						586
			$	1,145					$	—					$	(69)					$	1,076

			December 31, 2022
			Gross Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
Short-term investments:
Restricted cash			$	36					$	—					$	—					$	36
Corporate debt securities			2,355						—						(5)						2,350
Government and agency securities			141						—						(6)						135
			$	2,532					$	—					$	(11)					$	2,521
Long-term investments:
Restricted cash			$	13					$	—					$	—					$	13
Corporate debt securities			686						—						(40)						646
Government and agency securities			604						—						(47)						557
			$	1,303					$	—					$	(87)					$	1,216

We consider cash to be restricted when withdrawal or general use is legally restricted. Restricted cash is held in interest bearing accounts for letters of credit related to our global sabbatical program and for certain amounts related to other compensation arrangements held in escrow. Our fixed-income investments consist of predominantly investment grade corporate debt securities and government and agency securities. The corporate debt and government and agency securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies.

The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We regularly review investment securities for other-than-temporary impairment using both qualitative and quantitative criteria. Investments classified as available-for-sale debt securities are carried at fair value with changes reflected in other comprehensive income. Where there is an intention or a requirement to sell an impaired available-for-sale debt security, the entire impairment is recognized in earnings with a corresponding adjustment to the amortized cost basis of the security. From time to time, we sell available-for-sale debt securities in an unrealized loss position and recognize an immaterial loss.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We regularly review investment securities for credit impairment using both qualitative and quantitative criteria. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses will be recorded through interest 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 not been recorded through an allowance for credit losses is recognized in other comprehensive income. We did not recognize any credit-related impairment 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 $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 unrealized 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. Refer to “Note 15 — Accumulated Other Comprehensive Income” for amounts reclassified to earnings from unrealized gains and losses.

The following table presents estimated fair values of our short-term and long-term investments classified as available-for-sale debt securities and restricted cash by date of contractual maturity as of the date indicated (in millions):

			March 31, 2023
One year or less (including restricted cash of $41)			$	1,821
One year through two years (including restricted cash of $5)			639
Two years through three years			307
Three years through four years			130
Total			$	2,897

Equity Investments

The following table summarizes our equity investments as of the dates indicated (in millions):

			Balance Sheet Location						March 31, 2023						December 31, 2022
Equity investments with readily determinable fair values			Short-term investments						$	101					$	104
Equity investment in Adevinta			Equity investment in Adevinta						2,866						2,692
Equity investments under the fair value option			Long-term investments						460						461
Equity investments under the equity method of accounting			Long-term investments						35						34
Equity investments without readily determinable fair values			Long-term investments						86						86
Total equity investments									$	3,548					$	3,377

Equity investment in Adevinta

We account for equity investments through which we exercise significant influence but do not have control over the investee under the fair value option or under the equity method. Our equity investment in Adevinta is accounted for under the fair value option.

eBay 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 investment of 44% in Adevinta valued at $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 in Adevinta to Permira, inclusive of the option exercised by Permira to purchase additional voting shares, for total cash consideration 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 reported in the long-term assets section on the condensed consolidated balance sheet to reflect our contractual requirement to retain at least 25% of the total number of issued and outstanding equity securities of Adevinta until October 14, 2023, subject to certain exceptions specified in the agreement. As of December 31, 2022 and March 31, 2023, our equity investment in Adevinta is reported in the short-term assets section on the condensed consolidated 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 in earnings. The investment is classified within Level 1 in the fair value hierarchy as the valuation can be obtained from real time quotes in active markets. The fair value of the equity investment is measured based on Adevinta’s closing stock price and prevailing foreign exchange rate at each balance sheet date and the changes in fair value are reflected in gain (loss) on equity investments and warrant, net in the condensed consolidated statement 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 million 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 of unrealized losses recorded during the same period in 2022. The fair value of the investment was $2,866 million and $2,692 million as of March 31, 2023 and December 31, 2022, respectively.

Equity investments with readily determinable fair values

Equity investments with readily determinable fair values are classified within Level 1 in the fair value hierarchy as the valuation can be obtained from real time quotes 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 foreign exchange 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 the change in fair value of the investment. During the three months ended March 31, 2022, we sold a portion of our shares in KakaoBank for $45 million and 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 fair value of the investment was $101 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, at a specified price per share upon meeting processing volume milestone targets on a calendar year basis. When a relevant milestone is reached, the warrant becomes exercisable with respect to the corresponding tranche of warrant shares up until the warrant expiration date of January 31, 2025. We met the processing volume milestone target to vest the first tranche of the warrant and in the third quarter of 2022, we sold the remainder of our shares in Adyen. Refer to “Note 7 — Derivative Instruments” for more information about the warrant.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Equity investments under the fair value option

We account for equity investments through which we exercise significant influence but do not have control over the investee under the fair value option or under the equity method. Our equity investment in Gmarket and certain other immaterial equity investments are accounted for under the 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 completion of the sale, we retained 19.99% of the outstanding equity interest of the new entity, Gmarket, over whom we are able to exercise significant influence based on the terms of the securities purchase agreement, including through our board representation. Our equity investment in Gmarket was valued at $728 million as of the transaction close date. At the initial recognition of this equity investment, we elected the fair value option where subsequent changes in fair value are recognized in gain (loss) on equity investments and warrant, net in the condensed consolidated statement of income. We believe the fair value option election creates more transparency of the current value in the equity investment in Gmarket. Our retained investment 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) on equity investments and warrant, net on our condensed consolidated statement of income related to the change in fair value of the investment. As of March 31, 2023 and December 31, 2022, the fair value of the investment was $420 million and $431 million, respectively and is reported within long-term investments in our condensed consolidated balance sheet.

The investment is classified as Level 3 in the fair value hierarchy as the valuation reflects management’s estimate of assumptions that market participants would use in pricing the equity investment. Certain other immaterial equity investments aggregating to $40 million as of March 31, 2023 are measured at fair value using the net asset value per share (or its equivalent) practical expedient, and have not been classified in the fair value hierarchy. Refer to “Note 8 — Fair Value Measurement of Assets and Liabilities” for more information.

Other equity method investments

We account for equity investments through which we exercise significant influence but do not have control over the investee under the fair value option or under the equity method. For equity investments accounted for under the equity method, our consolidated results of operations include, as a component of interest and other, net, our share of the net income or loss of the equity investments. For equity investments accounted for 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 equity investments and warrant, net.

Equity investments without readily determinable fair values

The following table summarizes the change in total carrying value related to equity investments without readily determinable fair values held for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Carrying value, beginning 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 equity investments and warrant, net were recorded on our condensed consolidated statement of income.

eBay 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 for observable price changes was $41 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 within gain (loss) on equity investments and warrant, net for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Net 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 of period			$	160					$	(2,003)

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 7 — Derivative Instruments

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

We use foreign currency exchange contracts to reduce the volatility of cash flows related to forecasted revenues, expenses, assets and liabilities, including intercompany balances denominated in foreign currencies. These contracts are generally one month to one year in duration but with maturities up to 24 months. The objective of the foreign exchange contracts is to ensure that ultimately the U.S. dollar-equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. We evaluate the effectiveness of our foreign exchange contracts designated as cash flow or net investment hedges on a quarterly basis.

In 2022, we entered into derivative instruments to hedge the variability of forecasted interest payments on anticipated debt issuance using forward-starting interest rate swaps. These interest rate swaps effectively fixed the benchmark interest rate and had the economic effect of hedging the variability of forecasted interest payments for up to ten years on an anticipated debt issuance. Similar to other cash flow hedges, we recorded changes in the fair value of these interest rate swaps in accumulated other comprehensive income (“AOCI”) until the anticipated debt issuance. As described in “Note 9 — Debt”, 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 interest expense over the term of our notes due in November 2032.

Cash Flow Hedges

For derivative instruments that are designated as cash flow hedges, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings in the same period the forecasted hedged transaction affects earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Unrealized gains and losses in AOCI associated with such derivative instruments are immediately reclassified into earnings. As of March 31, 2023, we have estimated that approximately $18 million of net derivative gains related to our foreign exchange cash flow hedges and $8 million of net derivative gains related to our interest rate cash flow hedges included in AOCI will be reclassified into earnings within the next 12 months. We classify cash flows related to our cash flow hedges as operating activities in our condensed consolidated statement of cash flows.

Non-Designated Hedges

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

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Warrant

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

The warrant is accounted for as a derivative under ASC Topic 815, Derivatives and Hedging. We report the warrant at fair value within other assets in our condensed consolidated balance sheet and changes in the fair value of the warrant are recognized in gain (loss) on equity investments and warrant, net in our condensed consolidated statement of income. The day-one value attributable to the other side of the warrant, which was recorded as a deferred credit, is reported within other liabilities in our condensed consolidated balance sheet and is amortized over the life of the commercial arrangement. See “Note 8 — Fair Value Measurements” for information about the fair value measurement of the warrant.

Fair Value of Derivative Contracts

The following table presents fair values of our outstanding derivative instruments as of the dates indicated (in millions):

			Balance Sheet Location						March 31, 2023						December 31, 2022
Derivative Assets:
Foreign exchange contracts designated as cash flow hedges			Other current assets						$	49					$	89
Foreign exchange contracts not designated as hedging instruments			Other current assets						8						18
Interest rate contracts designated as cash flow hedges			Other current assets						—						2
Warrant			Other assets						252						214
Foreign exchange contracts designated as cash flow hedges			Other assets						5						13
Total derivative assets									$	314					$	336
Derivative Liabilities:
Foreign exchange contracts designated as cash flow hedges			Other current liabilities						$	10					$	12
Foreign exchange contracts not designated as hedging instruments			Other current liabilities						22						34
Foreign exchange contracts designated as cash flow hedges			Other liabilities						—						1
Total derivative liabilities									$	32					$	47
Total fair value of derivative instruments									$	282					$	289

Under the master netting agreements with the respective counterparties to our derivative contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheet. As of March 31, 2023, the potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both assets and liabilities 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 of rights of set-off associated with the interest rate contracts as there were no asset positions.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Effect of Derivative Contracts on Accumulated Other Comprehensive Income

The following tables present the activity of derivative instruments designated as cash flow hedges gross of tax as of March 31, 2023 and December 31, 2022, and the impact of these derivative contracts on AOCI for the periods indicated (in millions):

			December 31, 2022						Amount of Gain (Loss) Recognized in Other Comprehensive Income						Less: Amount of Gain (Loss) Reclassified From AOCI to Earnings						March 31, 2023
Foreign exchange contracts designated as cash flow hedges			$	52					$	(21)					$	28					$	3
Interest rate contracts designated as cash flow hedges			62						—						4						58
Total			$	114					$	(21)					$	32					$	61

			December 31, 2021						Amount of Gain (Loss) Recognized in Other Comprehensive Income						Less: Amount of Gain (Loss) Reclassified From AOCI to Earnings						March 31, 2022
Foreign exchange contracts designated as cash flow hedges			$	25					$	25					$	6					$	44
Interest rate contracts designated as cash flow hedges			40						2						1						41
Total			$	65					$	27					$	7					$	85

Effect of Derivative Contracts on Condensed Consolidated Statement of Income

The following table summarizes the total gain (loss) recognized in the condensed consolidated statement of income from our foreign exchange derivative contracts by location for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Foreign 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 designated as hedging instruments recognized in interest and other, net			(4)						15
Total gain (loss) recognized from foreign exchange derivative contracts in the condensed consolidated statement of income			$	24					$	21

The following table summarizes the total gain (loss) recognized in the condensed consolidated statement of income from our interest rate derivative contracts by location for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Gain (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) recognized in the condensed consolidated statement of income due to changes in the fair value of the warrant for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Gain (loss) attributable to changes in the fair value of warrant recognized in gain (loss) on equity investments and warrant, net			$	38					$	(115)

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Notional Amounts of Derivative Contracts

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

			March 31, 2023						December 31, 2022
Foreign exchange contracts designated as cash flow hedges			$	1,430					$	1,741
Foreign exchange contracts not designated as hedging instruments			2,169						2,181
Interest rate contracts designated as cash flow hedges			—						400
Total			$	3,599					$	4,322

Credit Risk

Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. To further limit credit risk, we also enter into collateral security arrangements related to certain interest rate derivative instruments whereby collateral is posted between counterparties if the fair value of the derivative instrument exceeds certain thresholds. Additional collateral would be required in the event of a significant credit downgrade by either party. We are not required to pledge, nor are we entitled to receive, collateral related to our foreign exchange derivative transactions.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 8 — Fair Value Measurement of Assets and Liabilities

The following tables present our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated (in millions):

			March 31, 2023						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents			$	2,082					$	2,082					$	—					$	—
Short-term investments:
Restricted cash			41						41						—						—
Corporate debt securities			1,643						—						1,643						—
Government and agency securities			137						—						137						—
Equity investments with readily determinable fair values			101						101						—						—
Total short-term investments			1,922						142						1,780						—
Equity investment in Adevinta			2,866						2,866						—						—
Derivatives			314						—						62						252
Long-term investments:
Restricted cash			5						5						—						—
Corporate debt securities			485						—						485						—
Government and agency securities			586						—						586						—
Equity investment under the fair value option			420						—						—						420
Total long-term investments			1,496						5						1,071						420
Total financial assets			$	8,680					$	5,095					$	2,913					$	672
Liabilities:
Other liabilities			$	24					$	—					$	—					$	24
Derivatives			$	32					$	—					$	32					$	—

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

			December 31, 2022						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents			$	2,154					$	2,154					$	—					$	—
Short-term investments:
Restricted cash			36						36						—						—
Corporate debt securities			2,350						—						2,350						—
Government and agency securities			135						—						135						—
Equity investments with readily determinable fair values			104						104						—						—
Total short-term investments			2,625						140						2,485						—
Equity investment in Adevinta			2,692						2,692						—						—
Derivatives			336						—						122						214
Long-term investments:
Restricted cash			13						13						—						—
Corporate debt securities			646						—						646						—
Government and agency securities			557						—						557						—
Equity investment under the fair value option			431						—						—						431
Total long-term investments			1,647						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 (Level 2) and little or no market activity (Level 3). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. Level 3 instrument valuations typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. We did not have any transfers of financial instruments between valuation levels during the three months ended March 31, 2023.

Other financial instruments, including accounts receivable and accounts payable, are carried at cost, which approximates their fair value because of the short-term nature of these instruments.

Fair value measurement of derivative instruments

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

eBay 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 indicated (in millions):

			March 31, 2023						December 31, 2022
Opening balance at beginning of period			$	214					$	444
Change in fair value			38						(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 of the warrant as of March 31, 2023 (in millions, except percentages):

						Fair value						Valuation technique						Unobservable Input (1)						Range (weighted average)
Warrant						$	252					Black-Scholes and Monte Carlo						Probability of vesting						0.0% - 55.0% (48.2%)
																		Equity volatility						(51%)

(1) Probability of vesting was weighted by the unadjusted value of the tranches. For volatility, the average represents the arithmetic average of the points within the range and is not weighted by the relative fair value or notional amount.

Fair value measurement of equity investments

Certain equity investments are measured at fair value on a recurring basis, including our equity investment in Adevinta, equity investments with 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 the fair value is measured based on Adevinta’s closing stock price and prevailing foreign exchange rate at each balance sheet date. Our equity investments with readily determinable fair values are also classified within Level 1 in the fair value hierarchy as the valuation can be obtained from real time quotes in active 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 of disposal to purchase the remaining interest at or near the closing price of the sale.

The following table presents a reconciliation of the opening to closing balance of the equity investment in Gmarket measured using significant unobservable inputs (Level 3) as of the dates indicated (in millions):

			March 31, 2023						December 31, 2022
Opening balance at beginning of period			$	431					$	725
Change in fair value			(11)						(294)
Closing balance at end of period			$	420					$	431

eBay 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 management’s estimate of assumptions that market participants would use in pricing the asset. The following table presents quantitative information about Level 3 significant unobservable inputs used in the fair value measurement of the equity investment in Gmarket as of March 31, 2023 that may have a significant impact on the overall valuation (in millions, except multiples):

						Fair value						Valuation technique						Unobservable Input (1)						Range
Equity investment in Gmarket						$	420					Market multiples						Revenue multiple — GPC method						1.0x — 1.6x
																		Revenue multiple — GMAC method						1.0x — 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 Guideline 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 market multiples are derived from respective groups of guideline 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 fair value using the net asset value per share (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.

eBay Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 9 — Debt

The following table summarizes the carrying value of our outstanding debt as of the dates indicated (in millions, except percentages):

						Coupon						As of						Effective						As of						Effective
						Rate						March 31, 2023						Interest Rate						December 31, 2022						Interest Rate
Long-Term Debt
Floating Rate Notes:
Senior notes due 2023						LIBOR plus 0.87%						$	—					—		%				$	400					3.786		%
Fixed Rate Notes:
Senior notes due 2023						2.750		%				—						—		%				750						2.866		%
Senior notes due 2024						3.450		%				750						3.531		%				750						3.531		%
Senior notes due 2025						1.900		%				800						1.803		%				800						1.803		%
Senior notes due 2025						5.900		%				425						6.036		%				425						6.036		%
Senior notes due 2026						1.400		%				750						1.252		%				750						1.252		%
Senior notes due 2027						3.600		%				850						3.689		%				850						3.689		%
Senior notes due 2027						5.950		%				300						6.064		%				300						6.064		%
Senior notes due 2030						2.700		%				950						2.623		%				950						2.623		%
Senior notes due 2031						2.600		%				750						2.186		%				750						2.186		%
Senior notes due 2032						6.300		%				425						6.371		%				425						6.371		%
Senior notes due 2042						4.000		%				750						4.114		%				750						4.114		%
Senior notes due 2051						3.650		%				1,000						2.517		%				1,000						2.517		%
Total senior notes												7,750												8,900
Hedge accounting fair value adjustments (1)												4												5
Unamortized premium/(discount) and debt issuance costs												(33)												(34)
Less: Current portion of long-term debt												—												(1,150)
Total long-term debt												7,721												7,721
Short-Term Debt
Current portion of long-term debt												—												1,150
Total short-term debt												—												1,150
Total Debt												$	7,721											$	8,871

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

Senior Notes

In January 2023, we redeemed the $1.2 billion aggregate principal amount of the floating rate and 2.750% senior notes due 2023. Total cash consideration paid was $1.2 billion, as the redemption price was equal to 100% of the principal amount. In addition, we paid accrued and unpaid interest on the principal amount.

In 2022, we redeemed the $1.4 billion aggregate principal amount of the 2.600% and 3.800% senior notes due 2022. Total cash consideration paid 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 the principal amount.

In 2022, we issued senior notes of $1.2 billion aggregate principal amount, which consisted of $425 million of 5.900% fixed rate notes due 2025, $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 a make-whole redemption price, plus accrued and unpaid interest.

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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 5.900% fixed rate notes due 2025, the 1.400% fixed rate notes due 2026, the 3.600% fixed rate notes due 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% fixed rate notes due 2032, the 4.000% fixed rate notes due 2042, or the 3.650% fixed rate notes due 2051, we must, subject to certain exceptions, offer to repurchase all of the notes of the applicable series at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

The indenture pursuant to which the senior notes were issued includes customary covenants that, among other things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties, and also includes customary events of default with customary grace periods in certain circumstances, including payment 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 swap agreements that effectively converted $400 million of our LIBOR-based floating-rate debt to a fixed-rate basis. During the first quarter of 2023 we terminated the interest rate swap agreements upon redemption of the floating rate senior notes due 2023. During 2022, we entered into derivative instruments to hedge the variability of forecasted interest payments on anticipated debt issuance using forward-starting interest rate swaps. As described 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 interest expense over 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 of any original issue discount and premium on these senior notes. Interest on these senior notes is payable either quarterly or semiannually. Interest expense associated with these senior notes, including amortization of debt issuance costs, was approximately $67 million and $60 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, the estimated fair value of these senior notes, using Level 2 inputs, was approximately $7.1 billion and $8.0 billion, respectively.

Commercial Paper

We have a commercial paper program pursuant to which we may issue commercial paper notes in an aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397 days from the date of issue. As of March 31, 2023 and December 31, 2022, there were no commercial paper notes outstanding.

Credit Agreement

In March 2020, we entered into a credit agreement that provides for an unsecured $2 billion five-year credit facility. We may also, subject to the agreement of the applicable lenders, increase commitments under the revolving credit facility by up to $1 billion. Funds borrowed under the credit agreement may be used for working capital, capital expenditures, acquisitions and other general corporate purposes.

As of March 31, 2023, no borrowings were outstanding under our $2 billion credit agreement. However, as described above, we have an up to $1.5 billion commercial paper program and are required to maintain available borrowing capacity under our credit agreement in order to repay commercial paper borrowings in the event we are unable to repay those borrowings from other sources when they become due, in an aggregate amount of $1.5 billion. As of March 31, 2023, no borrowings were outstanding under our commercial paper program; therefore, $2 billion of borrowing capacity was available for other purposes permitted by the credit agreement, subject to customary conditions to borrowing. The credit agreement includes a covenant limiting our consolidated leverage ratio to no more than 4.0:1.0, subject to, upon the occurrence of a qualified material acquisition, if so elected by us, a step-up to 4.5:1.0 for the four fiscal quarters completed following such qualified material acquisition. The credit

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agreement includes customary events of default, with corresponding grace periods in certain circumstances, including payment defaults, cross-defaults and bankruptcy-related defaults. In addition, the credit agreement contains customary affirmative and negative covenants, including restrictions regarding the incurrence of liens and subsidiary indebtedness, in each case, subject to customary exceptions. The credit agreement also contains customary representations and warranties.

We were in compliance with all financial covenants in our outstanding debt instruments during the three months ended March 31, 2023.

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Note 10 — Supplemental Consolidated Financial Information

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represents amounts invoiced and revenue recognized prior to invoicing when we have satisfied our performance obligation and have the unconditional right to payment. The allowance for doubtful accounts and authorized credits is estimated based upon our assessment of various factors including historical experience, the age of the accounts receivable balances, current economic conditions reasonable and supportable forecasts, and other factors that may affect our customers’ ability to pay. The allowance for doubtful accounts and authorized credits was $45 million and $42 million as of March 31, 2023 and December 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 March 31, 2023. As of December 31, 2022, we reported an allowance for doubtful 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 obligations are satisfied in the following reporting period. The amount of revenue recognized 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 March 31, 2022 that was included in the deferred revenue balance at the beginning of the period was $37 million.

Cash, cash equivalents and restricted cash

			March 31, 2023						December 31, 2022
			(In millions)
Cash and cash equivalents			$	2,082					$	2,154
Customer accounts			303						69
Restricted cash included in short-term investments			41						36
Restricted cash included in long-term investments			5						13
Cash, cash equivalents and restricted cash			$	2,431					$	2,272

Customer accounts and funds receivable

			March 31, 2023						December 31, 2022
			(In millions)
Customer accounts			$	303					$	69
Funds receivable			476						694
Customer accounts and funds receivable			$	779					$	763

Other current assets

			March 31, 2023						December 31, 2022
(In millions)
Payment processor advances			$	353					$	336
Prepaid expenses			115						120
Accounts receivable, net			80						90
Short-term derivative assets			57						112
Income and other tax receivable			44						122
Other			300						276
Other current assets			$	949					$	1,056

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Accrued expenses and other current liabilities

			March 31, 2023						December 31, 2022
(In millions)
Compensation and related benefits			$	393					$	426
Sales and use tax and VAT accruals			386						346
Advertising accruals			214						229
Operating lease liabilities			125						131
Transaction loss reserve			101						101
Uninvoiced general and administrative expenses			95						111
Accrued interest expense			74						67
Deferred revenue			45						34
Other			396						421
Accrued expenses and other current liabilities			$	1,829					$	1,866

Gain (loss) on equity investments and warrant, net

			Three Months Ended March 31,
			2023						2022
			(In millions)
Unrealized 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 warrant			38						(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)

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Note 11 — Commitments and Contingencies

Off-Balance Sheet Arrangements

As of March 31, 2023, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

We have a cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the same financial institution (“Aggregate Cash Deposits”). This arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the arrangement. As of March 31, 2023, we had a total of $168 million in aggregate cash deposits and no cash withdrawals held within the financial institution under the cash pooling arrangement.

Litigation and Other Legal Matters

Overview

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

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable were not material for the three months ended March 31, 2023. We have concluded, based on currently available information, that reasonably possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals are also not material. However, legal and regulatory proceedings are inherently unpredictable and subject to significant uncertainties. If one or more matters were resolved against us in a reporting period for amounts in excess of management’s expectations, the impact on our operating results or financial condition for that reporting period could be material. Legal fees are expensed as incurred.

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General Matters

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

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

From time to time, the Company receives subpoenas or requests for information from various government agencies, typically for potential misconduct by sellers on the Company’s Marketplace platforms. More recently, the Company has received subpoenas or requests for information from government agencies related to potential liability of the Company for products sold by sellers on the Marketplace platforms. The Company generally responds to government subpoenas and requests in the ordinary course of business and in a cooperative, thorough and timely manner. These 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 the Marketplace platforms alleged to violate certain laws and regulations, 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 the sale of regulated or illicit products manufactured and sold by others who listed such products on Marketplace platforms in a manner that evaded and/or was designed to evade detection by the Company. With respect to the inquiries regarding EPA regulations, the EPA, DOJ and the Company have begun discussions relating to allegations of noncompliance arising under the Clean Air Act, among other alleged violations, which discussions include a potential settlement. If the Company is found to be liable for such activities on the Marketplace, it likely will be subject to monetary damages, changes in our business practices, or other remedies that could have a material adverse impact on our business.

The Company is also responding to inquiries from the U.S. Attorney for the District of Massachusetts regarding potential criminal liability of the Company arising from the stalking and harassment in 2019 of the editor and publisher of Ecommercebytes, a website that publishes ecommerce news and information. Six former Company employees and one former contractor have pleaded guilty to crimes arising from the conduct. The Company has

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begun discussions with the U.S. Attorney’s Office, which discussions include a potential settlement. We expect any such settlement may include fines, other payments, and non-monetary remedies, such as additional remediation, compliance and reporting requirements. Although the Company has concluded that losses in the U.S. Attorney matter are probable, we are unable at this time to estimate the losses that may be incurred because the matter is still under investigation and involves open questions relevant to the Company’s potential liability for conduct of its former employees. The editor and publisher also have a pending civil action against the Company, which seeks unspecified damages arising from the above-described conduct.

In connection with the government matters and civil action described above, the Company to date has accrued for probable losses of approximately $64 million in the aggregate. Given the uncertainties involved, the ultimate resolution of these matters could result in additional losses that may be material to our financial results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of our net income or loss for that period.

Indemnification Provisions

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

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

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

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Note 12 — Stockholders’ Equity

Stock Repurchase Program

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

The following table summarizes stock repurchase activity under our stock repurchase programs for the period indicated (in millions, except per share amounts):

			Shares Repurchased (1)						Average Price per Share (2)						Value of Shares Repurchased (2)						Remaining Amount Authorized
Balance as of January 1, 2023																					$	2,848
Repurchase of shares of common stock			5						$	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 stock have been retired.

(2) Excludes broker commissions and excise tax accruals.

Dividends

The 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 to stockholders of record as of June 1, 2023.

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Note 13 — Employee Benefit Plans

Restricted Stock Unit Activity

The following table presents restricted stock unit (“RSU”) activity under our equity incentive plans for the period indicated (in millions):

			Units
Outstanding as of January 1, 2023			21
Awarded			1
Vested			(3)
Forfeited			(1)
Outstanding as of March 31, 2023			18

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 Expense

The following table presents the impact on our results of continuing operations of recording stock-based compensation expense for the periods indicated (in millions):

			Three Months Ended March 31,
			2023						2022
Cost of net revenues			$	13					$	12
Sales and marketing			20						20
Product development			59						45
General and administrative			36						34
Total stock-based compensation expense			$	128					$	111
Capitalized in product development			$	4					$	4

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Note 14 — Income Taxes

We are subject to both direct and indirect taxation in the U.S. and various states and foreign jurisdictions. We are under examination by certain tax authorities for the 2010 to 2021 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these or other examinations. The material jurisdictions where we are subject to potential examination by tax authorities for tax years after 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 gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 15 — Accumulated Other Comprehensive Income

The following tables summarize the changes in AOCI for the periods indicated (in millions):

			Unrealized Gains (Losses) on Derivative Instruments						Unrealized Gains (Losses) on Investments						Foreign Currency Translation						Estimated Tax (Expense) Benefit						Total
Balance as of December 31, 2022			$	114					$	(98)					$	222					$	21					$	259
Other comprehensive income (loss) before reclassifications			(21)						19						1						(2)						(3)
Less: Amount of gain (loss) reclassified from AOCI			32						—						—						(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

			Unrealized Gains (Losses) on Derivative Instruments						Unrealized Gains (Losses) on Investments						Foreign Currency Translation						Estimated Tax (Expense) Benefit						Total
Balance as of December 31, 2021			$	65					$	(7)					$	328					$	12					$	398
Other comprehensive income (loss) before reclassifications			27						(51)						(34)						8						(50)
Less: Amount of gain (loss) reclassified from AOCI			7						—						—						(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 Income						Amount of Gain (Loss) Reclassified From AOCI
												Three Months Ended March 31,
												2023						2022
Gains (losses) on cash flow hedges:
Foreign exchange contracts						Net revenues						$	29					$	6
Foreign exchange contracts						Cost of net revenues						(1)						—
Interest rate contracts						Interest and other, net						4						1
						Total, from continuing operations before income taxes						32						7
						Provision for income taxes						(7)						(1)
						Total, from continuing operations net of income taxes						25						6
Total reclassifications for the period						Total, net of income taxes						$	25					$	6

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Note 16 — Restructuring

The following table summarizes restructuring reserve activity for the period indicated (in millions):

			Three Months Ended March 31, 2023
Accrued liability, beginning of period			$	—
Charges			42
Payments			(14)
Accrued liability, end of period			$	28

During the first quarter of 2023, management announced plans that included the reduction in workforce and other exit costs. The reduction was substantially completed in the first quarter of 2023 and resulted in a pre-tax charge of $42 million. There was no restructuring activity during the first quarter of 2022. Restructuring charges are included in general and administrative expenses in the condensed consolidated statement of income.