***** Quarterly Letter from Meg *****

Dear eBay community:

At the end of each quarter, eBay holds an earnings telephone call to share our quarterly results with our investors. Earlier today, we shared our Fourth Quarter 1999 results. Although some of our community members were present at this call, we wanted to share our quarterly results with everyone in the eBay community. This is the first time we've done this, but I hope that it is far from the last.

This is what I told the investors today.

As I mentioned in my Letter to the Community in December, 1999 was a historic year for eBay, filled with astonishing growth and rapid change. We began the year with 2.2 million users, a vibrant community about the size of Portland, and ended the year with over 10 million confirmed registered users -- more than Michigan, the eighth largest state in the country. And that phenomenal growth reflected itself in every measure of our business: the number of items listed in 1999 totaled 129.6 million compared to 33.7 million in 1998. In the fourth quarter of 1999, every two tenths of a second, someone, somewhere was listing an item for sale on eBay - that translates to $113 dollars of gross merchandise sales per second. And, most impressive, gross merchandise sales grew an astounding 276 percent from $745 million in 1998 to $2.8 billion in 1999. During 1999, our users generated more economic activity on eBay than on any other consumer e-commerce site.

Today, new users continue to flock to the site in record numbers as eBay has become one of the most recognizable Internet brands around the world. Our community spans the globe and offers up an incredible array of merchandise that includes not only a vast selection of collectibles, the first categories of products on eBay, but increasingly automobiles, consumer electronics, sports equipment, jewelry and even services, further establishing eBay as a global trading platform that knows no bounds.

In the fourth quarter, eBay's average daily reach numbers hit an all time high of 6.7% for the week of January 16, according to Media Metrix, and ranks first amongst ALL e-commerce sites. (These are the most recent Media Metrix numbers published.) This reach number translates to an average of 1.8 million unique visitors who come to the eBay site each and every day.

We continue to grow the eBay marketplace, bringing new users to the site through online advertising, public relations, relationships with partners such as AOL and the continued support of our members who tell their friends and families about eBay.

Our efforts resulted in a number of successes. Over the Thanksgiving weekend alone, eBay was mentioned as a holiday shopping destination in 220 TV reports. eBay was featured in various high-profile publications including Forbes, the Washington Post and Time Magazine. In Time magazine, eBay was voted number one in their "Best of 1999" in the Cybertech area. eBay continues to be mentioned on television shows including "Who Wants to be a Millionaire?", "The Simpsons", "The Tonight Show", "Drew Carey", "Suddenly Susan", "Sports Night" and of course, "David Letterman's Top Ten List".

In Q4, we focused on improving the site, introducing a number of new and innovative tools to keep eBay at the forefront of usability and product experience. We introduced a "gift-giving guide" on our homepage over the holiday season to give our community the ability to search for gift suggestions for just about anyone on their shopping list. We rolled out more theme pages to correspond with events in and interests of our community, including the golf, fashion, comic and millennium areas. The millennium area, celebrating the last 100 years' most memorable events, people and things, is particularly popular.

We added nearly 750 new categories to reflect the increasing range of items on the site. These additional categories make locating items easier for our users both by adding new categories such as "Home and Garden" as well as adding detailed subcategories to existing areas such as "Computers."

In addition to new features for our buyers, we also introduced several seller tools. In December we announced the acquisition of Blackthorne, the maker of Auction Assistant, that provides back office automation for eBay sellers. And just in time for the busy shopping season, we introduced a special offer from E-stamp to our community to purchase postage online.

We strengthened our efforts to create the safest and most secure online trading community in the world through a number of initiatives including a new level of user verification with the credit card requirement for new sellers. We took these initiatives proactively to ensure the strength of our community and further improve the already strong safety and security on the site. We are now more convinced than ever that our efforts in trust and safety are barriers that others must meet in order to compete in this space.

A key piece of our success remains minimizing service disruptions. As we outlined in the summer of 1999, ensuring high quality service for our users is, and will, remain a top priority. In November, our high-availability system became operational. Although this system will not prevent all future technical problems, it is a big step in our journey towards site stability which has improved dramatically. This is borne out by all metrics of site availability and capacity. Even while delivering a peak of over 100 million page views per day, up from 64 Million page views just six months ago, average response time actually decreased to sub one second levels, while at the same time, CPU utilization now routinely runs at less than 20%, representing a 2x improvement.

For 2000, we will continue scaling the system significantly faster than user and site growth to ensure excess capacity. This is an extremely cautious approach, but one that we feel is prudent and necessary to prepare the company for the growth that is to come.

In Q4, we also saw growth in the new business initiatives that we began in 1999. These were Premiums, Regionals, International, Autos and Payments.

Since its launch in October, Great Collections has added 14 auction houses and 45 dealers from around the world. The Great Collections site has hosted several exclusive premium auctions including the Millenium Dress charity auction for ovarian cancer and the New Langton Arts charity auction for emerging artists. And the site is gaining traction. Just yesterday, Butterfield & Butterfield sold an historic watch once owned by Sheriff Pat Garret, the man who captured Billy the Kid, for $62,000!

We launched 53 new US regional sites in the second half of 1999 encompassing the 50 largest markets in the US. Now, a browse through these regional pages will reveal a multitude of listings of more practical items such as ski equipment, washers & dryers and furniture, among others.

In 1999, eBay went truly global with the launch of eBay U.K., Canada, Germany, and Australia in our quest to build a global person-to-person trading community. Our vision for eBay has always been that of a global trading platform, enabling trade both within and between countries in a multi currency and multi language basis. This will continue to be a cornerstone of our strategy in 2000. Our next market is Japan, where we have already established a local presence and will shortly be launching a Japanese language site.

During 1999, we witnessed the dramatic growth in the trading of used and some new automobiles on the site. We further enabled this trend with the acquisition of Kruse, which is the brand name for collector cars. Since, then the growth of this category has been powerful. Recently, we had a call from a leading business magazine reporter who wanted to test the eBay auto site by selling her parents' 1983 Mercedes Benz 380 SL. The car is valued on the Kelly Blue Book at between $6,000 and $10,000. Between Christmas and New Years, the slowest week of the year, we had over 100 Mercedes Benzs' listed. This reporter's vehicle attracted 16 bids and sold for $14,325!

We are also focused on making the payment process on eBay faster and easier. The majority of our $2.8 billion of Gross Merchandise Sales in 1999 was, quite amazingly, settled by check or money order. In the fourth quarter, we offered the beta version of the Billpoint payment solution to 5,000 eBay sellers. Billpoint enables individuals to pay other individuals using their credit card, even if the seller does not have a merchant credit card account. The next step is to rollout the payment solution to the rest of the 10 million plus eBay users and then ultimately as a payments solution for the entire Internet.

So, now, more than ever, eBay is rapidly establishing the infrastructure for a global trading platform for almost anything, anywhere. At the same time, we have stayed true to our roots and have tried to nurture and protect our existing community of buyers and sellers even as we add new members at unprecedented rates. This trading platform is constantly renewed and enriched by our innovative and entrepreneurial community that continues to expand the definition of eBay. The future is truly exciting and limitless.

Thank you for helping to create the world's largest online personal trading community.

Regards,
Meg