The FINANCIAL -- eBay Inc. delivered gross merchandise volume (GMV) for the quarter ended June 30, 2017 of $21.5 billion, increasing 3% on an as-reported basis and 5% on a foreign exchange (FX) neutral basis. Revenue for the quarter was $2.3 billion, up 4% on an as-reported basis and 7% on an FX-Neutral basis.
During the quarter, eBay delivered GAAP net income from continuing operations of $27 million, or $0.02 per diluted share, which was negatively impacted by a non-cash income tax charge of $311 million related to the ongoing realignment of its legal structure. Non-GAAP net income from continuing operations was $493 million, or $0.45 per diluted share. During the quarter, the company generated $699 million of operating cash flow and $517 million of free cash flow from continuing operations. The company also repurchased $507 million of its common stock in the quarter, according to eBay.
"In Q2, eBay delivered strong top and bottom line financial results, led by Marketplace acceleration," said Devin Wenig, President and CEO of eBay Inc. "During the past two years, we have made significant progress to modernize eBay and drive growth by improving the customer experience, creating a product catalog that covers more than half of our inventory, and sharpening the eBay brand. We are on track and focused on creating an even stronger eBay for years to come."
Underlying total eBay Inc. performance, the Marketplace platforms delivered $20.5 billion of GMV and $1.9 billion of revenue. Marketplace GMV was up 3% on an as-reported basis and 6% on an FX-Neutral basis, driven by the continued expansion of new user experiences and marketing efforts, which led to revenue growth of 4% on an as-reported basis and 7% on an FX-Neutral basis. StubHub drove GMV of $1.0 billion, down 5%, and revenue of $236 million, up 5%, driven by a softer U.S. events landscape compared to last year, partially offset by strong international growth. Classifieds accelerated growth in the quarter, delivering revenue of $219 million, up 6% on an as-reported basis and 11% on an FX-Neutral basis, primarily driven by healthy traffic growth and strong user engagement.
In the second quarter, eBay added two million active buyers across its platforms, for a total of 171 million global active buyers. Marketplace exposed an increasing share of its traffic to new product-based experiences as part of its structured data initiative, and stepped up its efforts to market a more sharply defined brand. Increased marketing activity in the U.S. included a nation-wide fashion campaign as well as the launch of the "Fill Your Cart with Color" brand platform in June with activations across television, digital and social channels. The company also recently announced a Price Match Guarantee on more than 80,000 deals in markets around the world as well as strategic partnerships with Channel Advisor and Shopify. StubHub launched an enhanced suite of tools for ticket sellers in North America, including a new price setting recommendation tool, making the process to sell tickets easier. Classifieds, a leader in eight markets around the world, continued to grow its eBay inventory integration across multiple regions.
Other Selected Financial and Operational Results
Operating margin — GAAP operating margin decreased to 20.5% for the second quarter of 2017, compared to 23.8% for the same period last year. Non-GAAP operating margin decreased to 27.3% in the second quarter of 2017, compared to 29.1% for the same period last year.
Taxes — The GAAP effective tax rate for continuing operations for the second quarter of 2017 was 94%, primarily attributable to the negative impact of a non-cash income tax charge of $311 million related to the ongoing realignment of the company's legal structure, compared to 16% for the second quarter of 2016. The non-GAAP effective tax rate for continuing operations for the second quarter of 2017 was 20%, compared to 18% for the second quarter of 2016.
Cash flow — The company generated $699 million of operating cash flow from continuing operations and $517 million of free cash flow from continuing operations during the second quarter of 2017.
Stock repurchase program — The company repurchased approximately $507 million of its common stock, or 15 million shares, in the second quarter of 2017. The company's total repurchase authorization remaining as of June 30, 2017 was $479 million.
Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $13.6 billion as of June 30, 2017.
Third quarter 2017 — The company expects net revenue between $2.35 billion and $2.39 billion, representing Organic FX-Neutral growth of 6% - 8%, with non-GAAP earnings per diluted share from continuing operations in the range of $0.46 - $0.48 and GAAP earnings per diluted share from continuing operations in the range of $0.30 - $0.32.
Full year 2017 - The company expects net revenue between $9.3 billion and $9.5 billion, representing Organic FX-Neutral growth of 6% - 8%, with non-GAAP earnings per diluted share from continuing operations in the range of $1.98 - $2.03 and GAAP earnings per diluted share from continuing operations in the range of $1.65 - $1.75.
In July 2017, eBay's board of directors authorized an additional $3.0 billion stock repurchase program, with no expiration from the date of authorization. The company's stock repurchase program is intended to programmatically offset the impact of dilution from its equity compensation programs and, subject to market conditions and other factors, to make opportunistic repurchases of its common stock to reduce its outstanding share count. Any share repurchases under the company's 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 the company's working capital or other financing alternatives.