Discontinued Operations

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

StubHub

On November 24, 2019, we entered into a stock purchase agreement with an affiliate of viagogo to sell our StubHub business. On February 13, 2020, we completed the sale of our StubHub business for a purchase price of $4.05 billion in cash, subject to certain adjustments specified in the purchase agreement, including adjustments for indebtedness, cash, working capital and transaction expenses of StubHub at the closing of the transaction. The sale was completed for $4.1 billion in proceeds ($3.2 billion, net of income taxes of approximately $900 million) and a pre-tax gain of $3.9 billion within income from discontinued operations, both subject to working capital adjustments.

In connection with the sale of StubHub, we entered into a transition service agreement (“TSA”) with viagogo pursuant to which we are providing services, including, but not limited to, business support services for StubHub after the divestiture, for fees of $40 million. These agreements commenced with the close of the transaction and have minimum initial terms ranging from 12 to 18 months and can be extended by viagogo for a maximum of 12 months.

Classifieds

On July 20, 2020, we entered into a definitive agreement with Adevinta to transfer our Classifieds business to Adevinta for $2.5 billion in cash, subject to certain adjustments, and approximately 540 million shares in Adevinta. Together, the total consideration payable under the definitive agreement is valued at approximately $9.2 billion, based on the closing trading price of Adevinta’s outstanding shares on the Oslo Stock Exchange on July 17, 2020. We believe the transaction will close by the end of the first quarter of 2021. Completion of the transaction is subject to certain conditions, including receipt of certain regulatory approvals, and other risks and uncertainties, including general industry and economic conditions outside our control. We have classified the results of our Classifieds business as discontinued operations in our consolidated statement of income for the periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale in our consolidated balance sheet. The assets and liabilities as of December 31, 2020 are classified as current in our consolidated balance sheet as we expect to close the transaction discussed above within one year.

The following table presents financial results from discontinued operations, net of income taxes in our consolidated statement of income (in millions):


	Year ended December 31,
	2020 (1)		2019		2018
Classifieds income from discontinued operations, net of income taxes	$	197	$	217	$	322
StubHub income from discontinued operations, net of income taxes	2,930		59		78
PayPal and Enterprise income (loss) from discontinued operations, net of income taxes	(2)		(6)		2
Income from discontinued operations, net of income taxes	$	3,125	$	270	$	402

(1) Includes StubHub financial results from January 1, 2020 to February 13, 2020, and includes the gain on sale recorded for the StubHub transaction.

The following table presents cash flows for discontinued operations (in millions):


	Year ended December 31,
		2020 (1)		2019		2018
Classifieds net cash provided by discontinued operating activities		$	328	$	378	$	349
StubHub net cash provided by (used in) discontinued operating activities		(1,055)		153		102
PayPal and Enterprise net cash (used in) discontinued operating activities		—		—		(3)
Net cash provided by (used in) discontinued operating activities		$	(727)	$	531	$	448

Classifieds net cash (used in) discontinued investing activities		$	(54)	$	(114)	$	(14)
StubHub net cash provided by (used in) discontinued investing activities		4,067		(21)		(14)
Net cash provided by (used in) discontinued investing activities		$	4,013	$	(135)	$	(28)

Classifieds net cash provided by (used in) discontinued financing activities		$	(2)	$	2	$	—

Net cash provided by (used in) discontinued financing activities		$	(2)	$	2	$	—

(1) Includes StubHub financial results from January 1, 2020 to February 13, 2020, and includes the gain on sale recorded for the StubHub transaction.

The financial results of StubHub are presented as income from discontinued operations, net of income taxes on our consolidated statement of income. The following table presents the financial results of StubHub (in millions):


	Year ended December 31,
		2020(1)		2019		2018
Net revenues		$	100	$	1,121	$	1,083
Cost of net revenues		31		290		265
Gross profit		69		831		818
Operating expenses:
Sales and marketing		51		491		485
Product development		26		114		100
General and administrative		30		125		90
Provision for transaction losses		3		23		33
Amortization of acquired intangible assets		1		9		10
Total operating expenses		111		762		718
Income (loss) from operations of discontinued operations		(42)		69		100
Pre-tax gain on sale		3,868		—		—
Income from discontinued operations before income taxes		3,826		69		100
Income tax provision		(896)		(10)		(22)
Income from discontinued operations, net of income taxes		$	2,930	$	59	$	78

(1) Includes StubHub financial results from January 1, 2020 to February 13, 2020, and includes the gain on sale recorded for the StubHub transaction.

The financial results of Classifieds are presented as income from discontinued operations, net of income taxes on our consolidated statement of income. Each period presented below includes the impact of intercompany revenue agreements that will continue with eBay subsequent to the completion of the transfer of the Classifieds business. The impact of these intercompany revenue agreements to net revenues and cost of net revenues were $14 million, $20 million and $10 million for the years ended December 31, 2020, 2019 and 2018, respectively. The expected continuing cash flows are not considered to be significant. The following table presents the financial results of Classifieds (in millions):


	Year ended December 31,
		2020		2019		2018
Net revenues		$	980	$	1,043	$	1,013
Cost of net revenues		103		82		94
Gross profit		877		961		919
Operating expenses:
Sales and marketing		286		335		330
Product development		161		150		134
General and administrative		124		59		62
Provision for transaction losses		17		15		6
Amortization of acquired intangible assets		6		11		17
Total operating expenses		594		570		549
Income from operations of discontinued operations		283		391		370
Interest and other, net		—		(2)		(1)
Income from discontinued operations before income taxes		283		389		369
Income tax provision		(86)		(172)		(47)
Income from discontinued operations, net of income taxes		$	197	$	217	$	322

For the years ended December 31, 2020, 2019 and 2018, the discontinued operations activity related to our former PayPal and Enterprise businesses was immaterial.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations for StubHub in the consolidated balance sheet (in millions):


	December 31, 2019
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents	$	52
Accounts receivable, net	9
Other current assets	80
Total current assets of discontinued operations	$	141
Long-term investments	11
Property and equipment, net	26
Goodwill	224
Intangible assets, net	5
Operating lease right-of-use assets	29
Deferred tax assets	8
Other assets	3
Total long-term assets of discontinued operations	$	306

Carrying amounts of liabilities included as part of discontinued operations:
Accounts payable	$	19
Accrued expenses and other current liabilities	215
Deferred revenue	23
Income taxes payable	2
Total current liabilities of discontinued operations	$	259
Operating lease liabilities	20

Other liabilities	6
Total long-term liabilities of discontinued operations	$	26

The following table presents the aggregate carrying amounts of held for sale assets and liabilities related to Classifieds in the consolidated balance sheet (in millions):


	December 31, 2020		December 31, 2019
Carrying amounts of assets included as part of held for sale:
Cash and cash equivalents	$	23	$	22
Accounts receivable, net	117		136
Other current assets	30		37
Long-term investments	32		30
Property and equipment, net	31		24
Goodwill	465		396
Intangible assets, net	35		23
Operating lease right-of-use assets	20		16
Deferred tax assets	435		389

Total assets classified as held for sale in the consolidated balance sheet	$	1,188	$	1,073

Carrying amounts of liabilities included as part of held for sale:
Short-term debt	$	—	$	2
Accounts payable	18		22
Accrued expenses and other current liabilities	104		92
Deferred revenue	4		6
Income taxes payable	35		41
Operating lease liabilities	11		11
Deferred tax liabilities	278		291
Other liabilities	2		3
Total liabilities classified as held for sale in the consolidated balance sheet	$	452	$	468