EcommerceBytes-NewsFlash, Number 3176 - October 17, 2013     3 of 4

eBay Cautious about Holidays after Reporting Q3 Earnings

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eBay announced its third-quarter earnings on Wednesday, reporting revenue of $3.9 billion, up 14% year-over-year, and net income of $689 million, but its Chief Financial Officer gave analysts pause during its post-earnings call.

In talking about guidance, eBay CFO Bob Swan said that while Europe and Asia Pacific regions (APAC) had stabilized after softness in the first half of the year, another geography became cause for concern: "the U.S. ecommerce softened considerably and we have a cautious outlook for the holiday season," he said.

Several analysts wanted to know more about why eBay thought the holiday might be weaker this year. Swan said they saw a dramatically decelerating U.S. ecommerce growth rate from the second quarter of 15 - 16% from comScore to closer to 13% in the third quarter.

"We went into the third quarter with a stable U.S. market," he said, and "we've seen rapid deceleration." Fifteen days into the fourth quarter and there are no more positive signs, and he referenced anxiety they felt from reading the newspapers. "I hope I am too conservative," Swan Said, "but the signs point to caution."

Asked by another analyst about his level of confidence, Swan said he was not expecting any improvement from what he's observed over the last 8 - 10 weeks.

The selection of items available on the eBay Marketplaces grew to over 500 million listings "reflecting the success of consumer selling initiatives, particularly on mobile." Swan said eBay had been at around 450 million items and then did a variety of things to increase selection, including fee simplification and expanding relationships with large merchants.

eBay emphasized its growth in new users for eBay and PayPal. eBay said the number of global active users for eBay Marketplaces was 123.6 million, up 14% from Q3-2012.

  • Marketplaces Gross Merchandise Volume (GMV), excluding vehicles, increased 13% to $18 billion.
  • Fixed price GMV grew 18% globally and represented 71% of total GMV.
  • US GMV, excluding vehicles, increased 15% to $7.4 billion.
  • International GMV, excluding vehicles, increased 12% to $11 billion.
  • Top Rated Sellers account for 46% of U.S. GMV, and their same-store sales rose 17%.
  • Free shipping was provided on more than half of U.S. transactions in the quarter.

Donahoe said 34 brands and retailers had signed agreements to open stores on eBay in the 3rd quarter (one major brand noticed by sellers was Levis). Swan described the companies as coming from verticals with higher gross margins, who could spend more to drive demand through channels like eBay. They start out with a narrow selection, test and learn, and then expand the selection. Then they expand into other formats such as Daily deals or fashion-type experiences, such as Fashion Vault. They want to leverage the traffic and the "full set of eBay Inc. assets," according to Donahoe.

PayPal revenue increased 19% to $1.6 billion and gained 5 million active registered accounts, ending the quarter with 137 million, a 17% increase.

A number of analysts asked about eBay's pending acquisition of online payment service Braintree. Donahoe said when he looked at PayPal and Braintree's respective developer products side by side, they decided to merge PayPal's into Braintree's.

While eBay breaks out metrics such as GMV and TPV for eBay and PayPal, respectively, in recent quarters it's been reporting a new corporate-wide metric called Enabled Commerce Volume. Third-quarter ECV grew 21% for the quarter to $52 billion.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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