eBay Inc. (EBAY)

eBay generates net transaction revenues primarily from final value fees and listing fees paid by sellers. Final value fee revenues are recognized at the time that the transaction is successfully closed, while listing fee revenues are recognized ratably over the estimated period of the listing. An auction transaction is considered successfully closed when at least one buyer has bid above the seller's specified minimum price or reserve price, whichever is higher, at the end of the transaction term.

eBay's marketing services revenues are derived principally from the sale of advertisements, revenue sharing arrangements, classifieds fees, marketing service fees and lead referral fees. eBay's advertising revenues are derived principally from the sale of online advertisements. The duration of eBay's advertising contracts has ranged from one week to five years, but is generally one week to one year. Advertising revenues on contracts are recognized as "impressions" (i.e., the number of times that an advertisement appears in pages viewed by users of eBay's platforms) are delivered, or as "clicks" (which are generated each time users on the platforms click through the advertisements to an advertiser's designated website) are provided to advertisers. For contracts with minimum monthly or quarterly advertising commitments where the fee and commitments are fixed throughout the term, eBay recognizes revenue ratably over the term of the agreement. eBay also may enter into arrangements to purchase services from certain customers and if the service is not considered an identifiable benefit that is separable from the customer's purchase of the services or for which eBay cannot reasonably estimate fair value, the fees paid to the customer are recorded as a reduction in revenue. Some of eBay's advertising contracts consist of multiple elements which generally include a blend of various impressions and clicks as well as other marketing deliverables. Where neither vendor-specific objective evidence nor third-party evidence of selling price exists, eBay uses management's best estimate of selling price ("BESP") to allocate arrangement consideration on a relative basis to each element. BESP is generally based on the selling prices of the various elements when they are sold to customers of a similar nature and geography on a stand-alone basis or estimated stand-alone pricing when the element has not previously been sold on a stand-alone basis. These estimates are generally based on pricing strategies, market factors and strategic objectives. Revenues related to revenue sharing arrangements are recognized based on revenue reports received from eBay's partners, provided that collectability is reasonably assured. Revenues related to fees for listing items on eBay's Classifieds platforms are recognized over the estimated period of the classified listing. Lead referral fee revenue is generated from lead referral fees based on the number of times users click through to a merchant's website from eBay's platforms. Lead referral fees are recognized in the period in which a user clicks through to the merchant's website.

eBay's other revenues are derived principally from contractual arrangements with third parties that provide services to the users. Revenues from contractual arrangements with third parties are recognized as the contracted services are delivered to end users.

To drive traffic to the platforms, eBay provides incentives to the users in the form of coupons and buyer and seller rewards. These incentives are generally treated as reductions in revenue.

Source: eBay Inc., Annual Report

eBay Inc., Income Statement, Revenues

USD $ in millions

Source: eBay Inc. Annual Reports

Item	Description	The company
Net revenues	Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains.	eBay Inc.'s net revenues increased from 2015 to 2016 and from 2016 to 2017.