eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites

eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites

Summary: eBay today reported solid second quarter financial results that were slightly better than Wall Street's expectations but revenue growth of PayPal and Skype was offset, in part, by declines in the Marketplaces business.For the quarter ending June 30 (statement), the company reported net income of $479 million, or 37 cents per share, on revenue of $2.

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eBay today reported solid second quarter financial results that were slightly better than Wall Street's expectations but revenue growth of PayPal and Skype was offset, in part, by declines in the Marketplaces business.

For the quarter ending June 30 (statement), the company reported net income of $479 million, or 37 cents per share, on revenue of $2.1 billion, down 4 percent from a year ago but ahead of Wall Street's expectations of 36 cents per share on revenue of $1.99 billion. In a statement, company president and CEO John Donahoe said:

We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business. We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I’m pleased with our pace, our progress and our performance.

Looking ahead, the company forecast third quarter net revenue in the range of $2.050 billion to $2.150 billion with earnings per share of 34 cents to 36 cents. Here's eBay's closer-look chart for the current quarter:

Highlights from the quarter:

  • The Payments business unit, which consists of PayPal and Bill Me Later, saw revenue grow 11 percent in the quarter, compared to a year ago. At the end of the quarter, there were 75.4 million active registered accounts, a 20 percent increase over last year.
  • The Marketplaces business unit - which consists of eBay, Shopping.com, Kijiji and other e-commerce sites - saw revenue decline 14 percent from a year ago. The company blamed the drop on a stronger dollar and the sluggish global economy. Online classifieds revenue was up 19 percent
  • The Communications business unit - aka Skype - saw revenue jump 25 percent from a year ago. At the end of the quarter, the business had more than 480 million registered users.

Marketplaces remains the weak link in the business and has been on the decline in recent quarters. But for the second quarter, revenue - while still weak - was actually up from the first quarter - a result of the work that the company is doing as part of a larger growth strategy.

During a call with analysts, Donahoe said the company is being managed with "discipline and focus" but noted that these tough economic times are "not times to be timid. Decisions we make today will determine leadership tomorrow." Specifically, the company is leveraging its cash flow to make smart investments in its core businesses.

Finally, execs said the company will make an announcement tomorrow about opening PayPal to third-party developers. Shares of eBay were up nearly 3 percent in regular trading Wednesday, closing at $19.45. In after-hours trading, shares initially tumbled but rebounded quickly and were on the rise.

Topics: E-Commerce, Banking, Collaboration, Enterprise Software, Social Enterprise

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  • Ebay

    I rarily use ebay anymore. I honestly believe ebay (and paypal) has become greedy money hungry has-beens. The only thing that is worthwhile on ebay is finding unique items or antiques. Otherwise prices have become so competetive with vendors and the vendors offering better shipping... no one that I know wastes their time with ebay. I use to be a casual seller on ebay and I have to say they are a ripoff! By the time you ran your auction for 7 days and hopefully you receive payment, the fees that ebay and paypal STEAL is criminal! So I completely stopped using them! Until they bring their fees within reason, i hope they die-off and go away!
    SpankyFrost
  • RE: eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites

    I completely agree! In addition eBay is full of scam artist and deadbeat bidders with very little in place to protect the community. I have been a Power Seller, and a frequent buyer in the past, and now I rarely do either. eBay fees are by far more expensive than they need to be, and as a seller you get very little in return for those fees. I find myself selling my items on Amazon, who's fees are similar to eBay's, but you have less competition so you can fetch a better price for your item. With Amazon your buyers can use their major credit cards without going through some abortion payment service such as Paypal; making it easier for them to buy your item. eBay on the other hand has limited the types of payment methods you can accept on their site, essentially forcing the average seller to use Papal as their only payment method. This was a recent change in their policy that I feel is unethical, and bordering on criminal.
    VidEng
  • RE: eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites

    Ebay and Paypal will keep your money! A sender and I did a deal over their network, then we agreed the item would not work for me. I sent the item back. Ebay and Paypal kept my $49.99. All they have done is send me a bunch of stupid questions, but not my money!!!
    roberts_theodore@...
  • RE: eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites

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