EBay (EBAY)

 

A portion of our net revenues result from fees associated with advertising and other services. Net revenues from advertising are derived principally from the sale of online advertisements for cash and through barter arrangements. Other net revenues are derived principally from contractual arrangements with third parties that provide transaction services to eBay and PayPal users and interest earned from banks on certain PayPal customer account balances. Advertising and other net revenues, including barter transactions, totaled 4% of our consolidated net revenues for 2007 and 3% in 2005 and 2006, and were primarily generated by our Marketplaces segment. Revenue from barter arrangements totaled $1.4 million in 2006 and $6.7 million in 2005. Revenue from barter arrangements was not significant in 2007. Certain judgments are involved in the determination of the appropriate revenue recognition, including, but not limited to, the assessment and allocation of fair values in multiple element arrangements, the appropriateness of gross or net revenue recognition and, for barter transactions, the existence of comparable cash transactions to establish fair values. We evaluate whether payments made to customers or revenues earned from vendors have a separate identifiable benefit and whether they are fairly valued in determining the appropriate classification of the related revenues and expense.

 

 

A portion of our net revenues result from fees associated with
advertising and other services. Net revenues from advertising
are derived principally from the sale of online advertisements
for cash and through barter arrangements. Other net revenues are
derived principally from contractual arrangements with third
parties that provide transaction services to eBay and PayPal
users and interest earned from banks on certain PayPal customer
account balances. Advertising and other net revenues, including
barter transactions, totaled 4% of our consolidated net revenues
for 2007 and 3% in 2005 and 2006, and were primarily generated
by our Marketplaces segment. Revenue from barter arrangements
totaled $1.4 million in 2006 and $6.7 million in 2005.
Revenue from barter arrangements was not significant in 2007.
Certain judgments are involved in the determination of the
appropriate revenue recognition, including, but not limited to,
the assessment and allocation of fair values in multiple element
arrangements, the appropriateness of gross or net revenue
recognition and, for barter transactions, the existence of
comparable cash transactions to establish fair values. We
evaluate whether payments made to customers or revenues earned
from vendors have a separate identifiable benefit and whether
they are fairly valued in determining the appropriate
classification of the related revenues and expense.

 

 

A portion of our net revenues result from fees associated with advertising and other services. Net revenues from advertising are derived principally from the sale of online advertisements for cash and through barter arrangements. Other net revenues are derived principally from contractual arrangements with third parties that provide transaction services to eBay and PayPal users and interest earned from banks on certain PayPal customer account balances. Advertising and other net revenues, including barter transactions, totaled 3% of our consolidated net revenues for each of the years ended December 31, 2004, 2005 and 2006, and were primarily generated by our Marketplaces segment. Revenue from barter arrangements totaled $1.4 million in 2006, $6.7 million in 2005 and $13.3 million in 2004. Certain judgments are involved in the determination of the appropriate revenue recognition, including, but not limited to, the assessment and allocation of fair values in multiple element arrangements, the appropriateness of gross or net revenue recognition and, for barter transactions, the existence of comparable cash transactions to establish fair values. Our advertising and other net revenues may be affected by the financial condition of the parties with whom we have these relationships and by the success of online services and promotions in general. Unlike our transaction revenues, advertising and other net revenues are derived from a relatively concentrated customer base.