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eBay Revenue Flat, GMV Down in Q3 2019

eBay
eBay Revenue Flat, GMV Down in Q3 2019

eBay Inc. reported third quarter 2019 results on Wednesday, showing revenue of $2.6 billion – flat, on an as-reported basis and increasing 2% on a foreign exchange (FX) neutral basis.

Gross merchandise volume (GMV) of $21.7 billion was down 4% on an as-reported basis and down 2% on a FX-Neutral basis.

After pressured by activist investors in January to consider breaking up the company, eBay said it had concluded the operating review, “resulting in three-year plan to improve margins and reinvest in customer initiatives.”

However, it also indicated there will be an update on one of its divisions: “eBay continues to review the role and value of StubHub and Classifieds in its portfolio to determine the best path forward and anticipates sharing an update on the StubHub business before the next earnings release.”

In related news, PayPal revealed today that in the third quarter of 2019, it grew revenue by 19%, but said PayPal volume from eBay Marketplaces declined 3% on an FX-neutral basis versus growth of 3% in Q3-18, and represented 8% of TPV (Total Payment Volume) for the quarter versus 11% a year ago, indicating less reliance on eBay.

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Excerpt of press release follows:

eBay Inc., a global commerce leader, delivered revenue for the quarter ended September 30, 2019 of $2.6 billion, remaining flat, on an as-reported basis and increasing 2% on a foreign exchange (FX) neutral basis. Gross merchandise volume (GMV) of $21.7 billion, was down 4% on an as-reported basis and down 2% on a FX-Neutral basis.

During the quarter, eBay delivered GAAP net income from continuing operations of $310 million, or $0.37 per diluted share and non-GAAP net income from continuing operations of $563 million, or $0.67 per diluted share. The company generated $1.0 billion of operating cash flow and $913 million of free cash flow from continuing operations while also repurchasing approximately $1.0 billion of its common stock and paying $115 million in cash dividends in the quarter. In addition, $400 million of floating rate notes and $1.15 billion of 2.200% fixed rate notes matured and were paid during the quarter.

“We performed in line with expectations in Q3 while improving the Marketplace experience, creating better customer outcomes, and maintaining momentum in advertising and payments,” said Scott Schenkel, interim Chief Executive Officer of eBay Inc. “We also made progress on our portfolio review and completed a thorough operating review that has resulted in a three-year plan to drive margin improvement while enabling reinvestment in critical customer initiatives.”

In the third quarter, eBay grew active buyers by 4% across its platforms, for a total of 183 million global active buyers. Underlying total eBay performance, the Marketplace platforms delivered $2.1 billion of revenue and $20.5 billion of GMV. Marketplace revenue was down 1% on an as-reported basis and was up 1% on a FX-Neutral basis, and GMV was down 5% on an as-reported basis and down 2% on a FX-Neutral basis. StubHub platforms drove revenue of $306 million, up 5% on both an as-reported and FX-Neutral basis, and GMV of $1.2 billion, flat on both an as-reported and FX-Neutral basis. Classifieds platforms delivered revenue of $265 million, up 4% on an as-reported basis and up 8% on a FX-Neutral basis.

Based on these results and increased confidence in the year, eBay raised non-GAAP EPS guidance and narrowed GAAP EPS guidance for the full year.

Momentum of Growth Initiatives

Since launching the managed payments offering approximately one year ago, eBay has processed over $1.1 billion in payments for more than 20,000 sellers, with over $500 million of those payments processed in Q3. In September, the service reached 9.4% of volume in the U.S. and successfully launched in a second market, Germany. First-party advertising also continued its momentum. More than one million sellers now leverage promoted listings, promoting over 300 million listings on the marketplace, which has resulted in revenue of $103 million, up 119% on an as-reported basis and up over 120% on a FX-Neutral basis.

Improving the Marketplace Experience

During the quarter, eBay introduced new tools and features that enhance the customer experience. Terapeak, a suite of features that help sellers identify what to sell, when to sell, and how to price inventory, was integrated into Seller Hub in major markets. The company also introduced additional seller protections, continued to enhance the new buyer experience, announced a Managed Delivery fulfillment service in the U.S., and bolstered its grocery partnership with Coles in Australia. Additionally, Multi-User Account Access became available for sellers in the U.S., with a planned expansion to Germany in 2020.

Commitment to Responsible Business Practices

eBay continued to demonstrate its dedication to responsible business practices. During the quarter, Retail Revival launched in Baton Rouge, Louisiana, and a version of the program was also brought to Plovdiv, Bulgaria, connecting local businesses to the global marketplace. Approximately 400 businesses across 12 cities globally have participated in the program, collectively selling nearly 600,000 items to buyers in 162 countries. In recognition of Retail Revival, eBay was named to Fortune’s 2019 Change the World list. eBay also announced 100% renewable energy sourcing at its two largest locations – San Jose, California, and Draper, Utah. These sites join the company’s locations in Dreilinden, Germany; Dublin, Ireland; and Portland, Oregon for 100% renewable energy sourcing. Additionally, eBay was ranked by both the Dow Jones World and North America Sustainability Indices for responsible business practices in 2019.

Update on Operating Review and Portfolio Review

The company completed an extensive operating review resulting in a multi-year plan for operating efficiency. These efficiencies, combined with 2019 margin expansion and reinvestment, are expected to drive 3 points of additional operating margin by 2022 and create capacity to reinvest in critical customer initiatives. eBay continues to review the role and value of StubHub and Classifieds in its portfolio to determine the best path forward and anticipates sharing an update on the StubHub business before the next earnings release.

See the full press release for charts, additional financial information, guidance, and dividend information.

SOURCE: eBay Press Release

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Ina Steiner
Ina Steiner
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.

7 thoughts on “eBay Revenue Flat, GMV Down in Q3 2019”

  1. I’m actually surprised they didn’t claim the usual 2-3% revenue growth again lol. Now they claim they’re only slightly down or flat eh? No surprise that GMV declines yet again. Also no surprise for lower guidance. This company is in serious decline folks and it’s worse than their numbers and much worse than everyone thinks. It will continue to get worse and eventually they won’t be able to fudge their numbers any longer. That’s when the investor lawsuits and executive fraud convictions begin.

    1. The 10% is of total revenue which means the amount they can process drops right along with their business. That is why they were forcing the Power Sellers in now, trying to get more consistent processing dollars in from Sellers who they do not think can afford to leave them. I may be wrong but I believe they are finding that forcing the Power Sellers in has not been the best idea as many of them already sell on other platforms including Amazon and many of them are just moving their focus to these other platforms. Ebay is going to become less and less important to their revenue stream which is going to really start hurting Ebay because Wenig was so confident that his plan was foolproof because all Sellers need Ebay, but as Ebay is finding out that is no longer the case.

      I really cannot wait to see what happens when Ebay tries to force Seller Hub on the Chinese along with Mangled Payments. They are still operating on the old Ebay platform and at some point they are going to have to make the move and I do not believe the Chinese will tolerate the glitch ridden crap that Ebay has continued to force down our throats.

  2. Seems on the Motley Fool, the One on One Discussion Call on Ebay’s wonderful future is – well wonderful!
    — ——————– ———————–
    Scott Schenkel — Interim Chief Executive Officer
    “Sellers continue to share positive feedback on the more simple experience that pay them directly into their bank account while saving them money.”

    “Moving to payments. Adoption is accelerating in the U.S. and was recently launched in Germany. Since we began intermediating payments on our site approximately a year ago, we have processed over $1.1 billion in payments for over 20,000 sellers. In September, in the U.S., we processed more than 9% of volume on our payment rails, accelerating close to the limit of our operating agreement.”

    Question: Stephen Ju of Credit Suisse — Analyst
    Okay. Thank you. So it looks like a number of sellers using your payment rails has accelerated. So wondering if we should assume that this is signaling a greater comfort around the stability of the platform and you will be looking to move even faster from here….? Thanks.

    Scott Schenkel — Interim Chief Executive Officer
    Yes. Look, first off on payments. Look, we feel great about our execution. Quite frankly, we’ve seen accelerated adoption,…… Since a year ago, it’s quite amazing. We have actually enabled over $1 billion of GMV as we talked about and as you called out. 20,000 sellers is a lot. Now we processed really up to the limit that we can for the next six months, seven months, until we get to the a little bit longer until we get the to the end of the operating agreement in July of next year.

    The feedback, you know the feedback remains strong. Look sellers love a simpler experience that’s paying them directly into their bank account and saving them money, right? I MEAN WHAT’S NOT TO LIKE.
    ———————– ————————————— ——————————————————-
    So my take is – MEANING:
    So – petty little non-receipt of payment in Managed Payments from small sellers is nothing to report really (?) (Sarc) for big-wigs from the corp to their fellow analysts in the stock-flow – ALL IS WELL and ON PLAN.

    So you see – the big growth is well – Ads
    ——————————————————————
    …(Scott Schenkel) Our near-term priorities are unchanged. We are delivering our 2019 commitments, including our growth initiatives of advertising and payments; improving seller capabilities and growing the buyer base. In addition, we improved our ability to vary the number of ads that appear in search results,…. There is incremental opportunity to grow Promoted Listings to adoption and conversion gains and we see more untapped growth in ad rates and product formats. All of these levers give us confidence in achieving our goal of $1 billion in total Advertising revenue.

    In Q3, we exposed new buyers to popular eBay features after their first purchase and are encouraging app downloads with more aggressive calls to action to migrate users to our best customer experience.

    Related to the long-term health of the marketplaces business, we are continuing on a path, started a few years ago to organize one of the world’s largest sets of unstructured inventory to power unique and compelling experiences. While progress has been made, we have changed our approach to make it EASIER FOR SELLERS TO PROVIDE PRODUCT DETAILS or aspects when they list items for sale. This is particularly relevant in categories like fashion and home where product aspects are not specific to a catalog ID.
    ———————————-

    Yes, be aware – their BIG Growth will be Ads, so look forward to everything BUT the seller’s description to appear on the listing…

    LInk to the Ebay CALL transcript:
    https://www.fool.com/earnings/call-transcripts/2019/10/23/ebay-inc-ebay-q3-2019-earnings-call-transcript.aspx

    1. Once it’s forced on everyone is when they will see the sellers leaving in groves.

      They have to hope that between ads and interest collected by holding money it will make up for the lost revenue of sellers leaving.

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