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AuctionBytes Blog
Covering auctions, collectibles and marketplace selling.

AuctionBytes Blog The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.
Wed Jan 18 2012 16:21:12

eBay Releases Fourth Quarter and Full Year Earnings for 2011

By: Ina Steiner
Sponsored Link
eBay's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing fourth quarter and full year 2011 earnings, you can view the full release with tables on the eBay investor website.

eBay Inc. Reports Strong Fourth Quarter and Full Year 2011 Results
Net Income up Double Digits in 2011 on Record Revenue
eBay Tightens Range on Three-Year Outlook Reflecting Increased Confidence

SAN JOSE, Calif.-(BUSINESS WIRE)-eBay Inc., a global commerce platform and payments leader (NASDAQ:EBAY), today reported that revenue for the fourth quarter ended December 31, 2011, increased 35% to $3.4 billion, compared to the same period of 2010. The company reported fourth quarter net income on a GAAP basis of $2.0 billion, or $1.51 per diluted share, and non-GAAP net income of $788.6 million, or $0.60 per diluted share. The year-over-year increase in the fourth quarter GAAP earnings per diluted share was driven primarily by a gain on the sale of the company's remaining investment in Skype. The year-over-year increase in the fourth quarter non-GAAP earnings per diluted share was driven primarily by strong top-line growth and improved productivity partially offset by a higher tax rate.

Fourth Quarter and Full Year 2011 Financial Highlights
(presented in millions, except per share data and percentages)




For the full year, revenue increased 27% to $11.7 billion, compared to 2010. The company generated net income on a GAAP basis of $3.2 billion, or $2.46 per diluted share, and non-GAAP net income of $2.7 billion, or $2.03 per diluted share.

"We had a strong fourth quarter finish to an excellent year, increasing our confidence in our three-year outlook," said eBay Inc. President and CEO John Donahoe. "Across eBay, PayPal, GSI and X.commerce, we have a robust portfolio of global commerce platforms and innovative mobile, local and social commerce technology assets. We are well-positioned to compete in the emerging new retail environment, and to help retailers of all sizes grow and engage their customers anytime, anywhere. We are a different eBay today, no longer just an ecommerce leader but a stronger, more diverse global commerce company shaping the future of shopping and payments."

The company's PayPal business continued to expand its leadership position in global payments. PayPal ended the quarter with 106.3 million active registered accounts, a 13% increase year over year. On average, PayPal added a million new accounts every month in 2011. PayPal revenue for the quarter increased 28% year over year driven primarily by continued merchant and consumer adoption as well as increased penetration on eBay. In the fourth quarter, revenue from PayPal's international markets exceeded revenue from the U.S. for the first time, reflecting the company's strong global footprint and growth in emerging markets. PayPal's net total payment volume (TPV) grew 24% to $33.4 billion in the fourth quarter of 2011. The company's mobile payment volume reached $4.0 billion in 2011, more than five times the mobile payment volume in the prior year, as more consumers used their smartphones and tablets to pay online.

The company's Marketplaces business also delivered strong fourth quarter performance. Marketplaces revenue for the quarter was up 16% year over year, due primarily to increased buying and selling on our platforms and growth from acquisitions. Gross merchandise volume (GMV), excluding vehicles, increased 10% to $16.5 billion with sold items up 11% globally year over year. U.S. GMV, excluding vehicles, increased 10% year over year, reflecting the success of eBay's tailored shopping experiences, the strong results delivered by eBay's top-rated sellers and the benefits of site enhancements. International GMV, excluding vehicles, increased 9% year over year, driven primarily by stable growth in Europe and improved performance in Asia. eBay mobile reached a record $5 billion transacted through mobile devices during 2011 as increased adoption of eBay's mobile apps and product innovation drove deeper customer engagement across all platforms.

The company's GSI business, which was acquired in the second quarter of 2011, contributed $363.6 million in revenue for the fourth quarter. GSI generated $1.4 billion in global ecommerce (GeC) merchandise sales during the quarter, driven by strong performance by top merchants, where same store sales grew 26% year over year, outpacing ecommerce growth rates in the fourth quarter.

Fourth Quarter and Full Year 2011 Financial Highlights (presented in millions, except per share data and percentages)

Other Selected Financial Results
    Operating margin - GAAP operating margin decreased to 22.3% for the fourth quarter of 2011 compared to 23.7% for the same period last year. Non-GAAP operating margin decreased to 28.7% for the quarter, compared to 29.5% for the same period last year. The decrease in non-GAAP operating margin was due primarily to the impact of acquisitions and business mix. All three business segment margins increased during the fourth quarter of 2011 with Marketplaces, Payments and GSI generating segment margins of 40.6%, 24.7% and 21.4%, respectively, compared to 38.5%, 19.5% and 2.8%, respectively, in the third quarter of 2011.
    Taxes - The GAAP effective tax rate for the fourth quarter of 2011 was 19%, compared to 5% for the fourth quarter of 2010. For the fourth quarter of 2011, the non-GAAP effective tax rate was 20% compared to 8% for the fourth quarter of 2010. The increase in the effective tax rate was due primarily to the settlement of uncertain tax positions in the fourth quarter of 2010.
    Cash flow - The company generated $982 million of operating cash flow and $691 million of free cash flow during the fourth quarter.
    Stock repurchase program - The company repurchased approximately $250 million of its common stock in the fourth quarter.
    Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $7.5 billion at December 31, 2011, compared to $7.8 billion at December 31, 2010.

Business Outlook
    First quarter 2012 - eBay expects net revenues in the range of $3,050 - $3,150 million with GAAP earnings per diluted share in the range of $0.37 - $0.38 and non-GAAP earnings per diluted share in the range of $0.50 - $0.51.
    Full year 2012 - eBay expects net revenues in the range of $13,700 - $14,000 million with GAAP earnings per diluted share in the range of $1.76 - $1.81 and non-GAAP earnings per diluted share in the range of $2.25 - $2.30.

Quarterly Conference Call
eBay will host a conference call to discuss fourth quarter and full year 2011 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company's Investor Relations website at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

UPDATE: See EcommerceBytes coverage of eBay's post-earnings conference call with Wall Street analysts! News: eBay is launching new products to Marketplaces in 2012, and expect an influx of inventory from GSI's 500 large merchants & brands - a must-read report for eBay sellers!




Comments (33) | Permalink
Readers Comments

eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Ina
       
Wed Jan 18 16:43:59 2012
eBay Gross Merchandise Volume was up 10% year over year in Q4, - that growth is down from 16% in Q3 and 17% in Q2.

Amazon reports on January 31, always interesting to compare the two online marketplaces.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Ina
       
Wed Jan 18 17:03:46 2012
Scratch that - when foreign exchange is removed, eBay GMV growth rate for Q2-2011 is 10%, Q3-2011 is 11%, and Q4-2011 is 10%.

But U.S. non-vehicles growth is 10% for Q4 compared to 14% in Q3 and Q2. (Year over year growth)
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Philip Cohen
       Web Site
Wed Jan 18 17:36:58 2012
So, the eBay marketplace is stagnating. Who but a Wall Street “analyst” and eBay’s Dept of Spin could have thought otherwise?

And, just wait until Visa’s V.me is properly underway this year and then see how quickly PreyPal atrophies outside of eBay …

Amongst the analysts, Deutsche Bank is still the only one that has over time been consistently wary of eBay and yesterday said, "sell".

eBay / PayPal / Donahoe: Dead Men Walking.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: pete
       
Wed Jan 18 19:25:17 2012
thank goodness we are now fully moved onto Amazon...eBay is dead and I wish anyone still holding on to eBay the best of luck.
I wonder what nice little changes they have lined up in the next couple of months for the under $1 million sellers

It's like watching a train wreck in slow motion, while our Amazon sales keep breaking all our eBay records
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Ric
       
Wed Jan 18 19:32:52 2012
eBay's reported growth fails to take into account the tremendous numbers of sellers who began including shipping costs into the selling price of their items in order to escape eBays torturous Final Value Fee on Shipping Costs not included in the selling price.

Going forward, it would seem as though eBay's plan will be to increase that fee every year in order to assure that more sellers will include shipping costs into their selling price and enable eBay to conjure more artificial growth statistics.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Philip Cohen
       Web Site
Wed Jan 18 22:28:57 2012
“Why would eBay say you can list 5,000 things?” he asks, referring to eBay’s increasingly frequent free listing days leading up to the holidays. “Either there’s not enough stuff to prime the pump, or they didn’t have enough for the holiday season. Sales on Amazon are up 83 percent, whereas eBay sales are about flat.”—John “ColderICE” Lawson

http://www.theonlineseller.com/2012/01/17/rev-up-sales-in-your-web
-store-in-2012/


eBay / PayPal / Donahoe: Dead Men Walking
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: Digmen1
       Web Site
Thu Jan 19 00:49:52 2012
Once again JD is able to produce a report that on the face of it looks good.

Paypal is way up adding millions of new accounts. (take note Philip)

And JD says they are repositioning ebay as an ecommerce facilitator. No mention of auctions or small sellers.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Philip Cohen
       Web Site
Thu Jan 19 01:59:05 2012
@Digmen1,

Visa's V.me is not up and running yet. Let's see how well PreyPal keeps doing then ...

It appears that Scott Thompson was smarter than we thought; after all, he would know the real situation at the clunky PreyPal and he undoubtedly recognized that PreyPal was on the cusp of commencing its journey down the gurgler, and he has jumped off the tired old scow “eBay” before it finally goes submarine. Anyone that thinks that Thompson has abandoned eBay (and the headless turkey, Donahoe) for the struggling Yahoo notwithstanding that PreyPal supposedly “has a great future ahead of it outside of eBay”, is obviously delusional.

It appears that Donahoe was genuinely surprised by Thompson’s departure. Who then will now take charge of PreyPal? Surely, only a fool would take charge of this clunky entity now. Regardless, the real question now is, when is the “eBafia Don” also going to abandon ship, or be thrown overboard by the owners of the ship when they finally wake up to the fact that, all along, they have had “Captain Queeg” at the tiller?

eBay / PayPal / Donahoe: Dead Men Walking
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: Rich
       
Thu Jan 19 02:01:38 2012
In the summer of 2005, both Ebay and Amazon were $40/share.  Neither has split since the summer of 2005.  And today Amazon sits close to $200/share while Ebay sits at $34/share.  Amazon stock holders rewarded with close to a 500% jump in stock price while ebay stockholders have lost 14% in share price.  Ebay stock holde have lost 14% in 6 1/2 years and Ebay stock pays no dividend.  While Ebay has raised seller fees every year since 2005; Amazon hasn't raised seller fees in 5 years.  Amazon grows by adding members and keeping their existing members happy.  This includes their sellers.  Ebay's growth is attempted through greed--raising seller fees yearly--.  But Ebay stock is flat while Amazon stock is a winner.  Greed rarely pays off.  Amazon has a much smarter CEO and business model.  Ebay copied a lot from Amazon but still hasn't caught on that raising seller fees causes prices to rise which ruins both the selling and buying experience
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Philip Cohen
       Web Site
Thu Jan 19 02:45:58 2012
“When Do We Start Calling eBay A Payments Company?”

http://www.businessinsider.com/ebays-transformation-when-do-we-sta
rt-calling-ebay-a-payments-company-2012-1


This article contains a very nice graph of eBay revenues since 2003. It shows quite starkly how eBay’s marketplace revenue has stagnated since 2007, about the time that the headless turkey, John Donahoe, got hold of the tiller and started his “destructive” innovations.

The graph also shows the increase in revenue received from PreyPal during the same period, that is, from when Donahoe effectively mandated its use on the eBay marketplace.

Unfortunately for the chief headless turkey, Visa’s V.me, when it is up and running later this year, will undoubtedly put paid to any small success the clunky PreyPal’s has had outside of its mandated use on the eBay marketplace, and thereafter both these unscrupulous and clunky entities shouldl commence their long-deserved journeys down the gurgler.

eBay / PayPal / Donahoe: Dead Men Walking
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: WhatIsTheBottmLine
       
Thu Jan 19 03:00:03 2012
If you eliminate the fee increases especially the new shipping fees aren't they going backwards instead of forwards? In order to report better earnings each year it seems they have to continuously raise fees, hold accounts, and encourage complaints so they can pony up the number of paypal deposits. How long can this continue and if everything is so great why did their stock close at pitiful $30.34 after their announcement?
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Stockmiser
       
Thu Jan 19 07:54:22 2012
@WhatIsTheBottmLine - these announcements always come after close of market.  So the real reaction comes today.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: massachusetts howler
       
Thu Jan 19 09:56:06 2012
Ebay is directing the majority of buyers into GSI, that's what's going on here.
More LIES from John Donahoe, more manipulation of Wall Street, more payment holds on new sellers.
I WILL TELL EVERY RETAILER SUCH AS HOME DEPOT THAT IF THEY ACCEPT PAYPAL THAT THEY WILL LOSE MY BUSINESS.
I will NEVER SHOP AT HOME DEPOT OR ANY OTHER STORE THAT ACCEPTS PP AGAIN. AND I WILL LET THEM KNOW WHY.
Mass Howler
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Anonymous Annie
       
Thu Jan 19 10:30:30 2012
@Philip... Thank you! That's a great article and an EVEN BETTER graphic! (Thus proving again the old adage about the worth of a picture.)

As you and others have pointed out, a great deal of the recent eBay ''sales'' revenue has been generated NOT by increased sales, but instead by a NEW FEE on shipping charges. Of course this creates the ILLUSION that year-over-year sales have held steady... but a closer examination of ALL the facts and the ACTUAL source of the income will reveal something entirely different.

Indeed sales at eBay are stagnant and declining, and unless they come up with some other stealthy fee increase (that will no doubt be heralded as a fee decrease) it will be another year before we can get an good comparison snapshot of year-over-year figures.

Thanks again for posting the link to the article! I love seeing things like this from mainstream sources that help to PROVE, BACK-UP and REINFORCE the reasons for our anger and disappointment. It's becoming more and more difficult for the eBay cheerleaders to successfully dismiss us a being merely disgruntled and irrationally fixated.

The truth continues to trickle out... bit by bit, drop by drop.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Ina
       
Thu Jan 19 10:57:22 2012
Be sure to see Thursday's EcommerceBytes Newsflash article on the earnings call where John Donahoe revealed eBay will launch new products to eBay marketplaces.

Link to story is at the bottom of the blog post, above.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: fallonthalia
       Web Site
Thu Jan 19 11:29:13 2012
I've just been watching eBay stock go from $31.48 to $31.50 a share the past few minutes. Now it just went to $31.56. So the blindness of what's really going on with the company continues . . . .
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Anonymous Annie
       
Thu Jan 19 12:01:59 2012
Ina writes:

[begin quoted text]

Fees on Shipping Added Less than 1% to U.S. Revenue Growth

eBay now charges fees on shipping costs in the U.S. as of last year, but eBay CEO John Donahoe said that change was ''take-rate neutral.'' He said he knew there were questions about the impact of the fee change on eBay's financials. ''Let me say it was immaterial globally and accounted for roughly less than 1 percent of the growth in the U.S.''

Explaining that the fee change encouraged sellers to offer free shipping, Donahoe said, ''It is the right thing to do, and sellers are responding, and we think consumers are responding to that.''

[end quoted text]

Really? ''Immaterial?'' ''Less than 1%?'' ~ I wonder what kind of math-magic they had to perform in order to be able to claim those numbers.

I think it's clear that nothing eBay says can be taken at face value. We must always look deeper to try and figure out the underlying truth of how they try to spin their numbers.

In this case, the claim of less-than-1% suggests to me that without this new source of stealth revenue, eBay's losses would have been much GREATER than we've been led to believe.

Common sense tells me that the FVF's on shipping are very likely to be much greater than a mere 1% of the FVF's on the sale price. In spite of the specious claims that this is what consumers want, a simple calculator reveals that it's NOT in the best interest of consumers. It's ONLY in eBay's interests in the short term... but in the long run, consumers will gradually drift elsewhere.

Why? Because eBay policies lead to higher prices for consumers. Sellers are forced to raise prices to compensate for the fee increase. Sellers are forced to offer ''free'' shipping (ie: built-in shipping) to comply with eBay's games. This, in turn, means that buyers are paying MORE when they buy more than one item because the ''built-in'' shipping costs for two items will generally cost MORE than the calculated shipping cost for the same items.

Buyers aren't dumb. They have been, and continue to, figure it out. There may be some who see the word ''free'' and assume that it's literally true. But more and more customers are looking at the bottom line... the final price... and that tells the TRUE story!

Ever since the coercive ''free'' shipping policies went into place, I've noticed that my multi-item purchases have DROPPED! ~ The mathematical reason is obvious.

When eBay ''wins'' the sellers and the customers lose. ~ The notion that eBay can benefit when the sellers are successful died long ago. eBay no longer exists to lift everyone up and benefit from our success... instead, their goal is to squeeze every last drop from sellers until the sellers have nothing left... and then discard the empty carcasses.
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: buck efay
       
Thu Jan 19 13:17:32 2012
Gross Merchandise Value means nothing. Only the volume of sales matters. When you list 500 items on a free listing day & only sell 10 it's FAILURE. Ebay had listing days where you could put up thousands of items in one day, so not surprising to see GMV dramatically rise. Sales however are WORSE THEN EVER. less then 5% sell thru since summer. 50,000 item free listing days, HAHAHAHA! I can see the spin already: "GMV dramatically increased this quarter" SALES ARE THE ONLY THING WE CARE ABOUT & THERE AREN'T ANY!
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
by: Planning a plan
       
Thu Jan 19 13:46:40 2012
''CEO John Donahoe called 2011 year-one of a three-year plan that they had outlined at last year's Analyst Day.''

So is this the second three-year plan or did JD hope no one noticed his three year disruptive innovation plan was really four years with 2011 as the 4th year?

Why are all Donahoe's plans three years? Is three years JD's stalling time to think of ways on getting out of this big mess he created and before everything comes crashing down?
eBay Releases Fourth Quarter and Full Year Earnings for 2011   eBay Releases Fourth Quarter and Full Year Earnings for 2011
This user has validated their user name. by: Anonymous Annie
       
Thu Jan 19 13:51:59 2012
''Why are all Donahoe's plans three years? Is three years JD's stalling time to think of ways on getting out of this big mess he created and before everything comes crashing down?''

In a word... Yes.

(And I'd noticed the same thing, too.)
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