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Wed Oct 15 2008 16:26:52

eBay Inc. Reports Third Quarter 2008 Results

By: Ina Steiner

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eBay posted its third-quarter 2008 earnings after market close today. Here's an excerpt of its press release, full release on its website here (in PDF format). Conference call with analysts commences at 5 pm Eastern.

SAN JOSE, Calif.--(BUSINESS WIRE) - eBay Inc. (Nasdaq:EBAY) today reported financial results for its third quarter ended September 30, 2008. The ecommerce company posted third quarter revenue of $2.12 billion, up $228 million from the same period last year. Net income on a GAAP basis was $492 million, or $0.38 per diluted share, and non-GAAP net income was $592 million, or $0.46 per diluted share.

"Overall, we are pleased with the performance of the portfolio this past quarter," said eBay Inc. President and CEO John Donahoe. "We took a number of steps during the quarter to further strengthen our business and better align our cost structure to invest and compete. We will continue to stay focused on connecting consumers on our various ecommerce platforms, maintaining financial discipline and capitalizing on new opportunities for growth."

eBay continues to benefit from an increasingly diversified portfolio of businesses. While Marketplaces transaction revenue still represents a majority of revenue for the company, revenue growth rates were helped by growth in PayPal, Skype and global classifieds. The company's global footprint helped it benefit year over year from strength in other currencies relative to the U.S. dollar.

GAAP operating margin increased to 24.7% for the quarter, compared to (49.6%) for the same period last year. Non-GAAP operating margin increased to 31.8% for the quarter, compared to 31.4% for the same period last year. The year-over-year increase in non-GAAP operating margin is due primarily to higher margins from each of the business units, which more than offset the growth from lower-margin businesses, primarily PayPal and Skype.

eBay Inc. generated $693 million of operating cash flow during the third quarter. Free cash flow during the quarter was $543 million.

Quarterly Business Unit Discussion

Marketplaces

The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had a solid third quarter, generating $1.38 billion in revenue, representing 4% year-over-year growth, 53% of which was generated outside the U.S. The business unit saw strong growth in advertising, StubHub and classifieds. Revenue from our text and graphical advertising partnerships grew 127% year over year. Gross merchandise volume was $14.28 billion for the quarter, a decrease of 1% over the third quarter of 2007. Marketplaces continues to focus on customer-facing initiatives designed to make transactions on the eBay platform safer and its various global sites easier to use, while enhancing selection in a uniquely eBay way.

Payments

PayPal had a strong quarter with $597 million in net revenue, an increase of 27% year-over-year. Net total payment volume (TPV) for the quarter was $14.81 billion, an increase of 28% year over year. The net revenue and net TPV growth was driven primarily by the continued excellent growth of merchant services globally and increased penetration on eBay. Global active registered accounts increased to 65.3 million, representing 19% year over year growth. Globally, PayPal will continue to focus on greater penetration into the Marketplaces business and the acquisition of new merchants.

Communications

Skype continued its robust growth trajectory, reporting $143 million in revenue for the quarter, representing 46% year-over-year growth. Skype added 32 million registered users in the quarter, ending the period with more than 370 million registered users around the world. In addition to growing its user base, Skype is focused on product strategies to enhance customer engagement.




Comments (18) | Permalink

Readers Comments

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Jeff S

Wed Oct 15 17:26:27 2008

Strong Euro.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: republican voting democratic

Wed Oct 15 17:33:59 2008

Yep and stock market is tanking.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: ss

Wed Oct 15 18:44:27 2008

And the world is supposed to feel sorry for Donna and co-horts. They should be thrown in jail for impersonating someone with a brain.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: tiredofebaygames

Wed Oct 15 18:45:04 2008

Sure they made a bit of money...

They raised our fees and have not provided us with the buyers they promised that would have required the site to pay for advertising.

We are being charged more for less services.

All of the glitches that have cost sellers money and all of the PayPal holds that are probably artificially inflating those profits als.

It would be easier to state how much honest profit (no ill gotten gain) they have made. Shall we be generous and say it has been, maybe, pennies?

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Mike

Wed Oct 15 18:56:08 2008

With the double digit increase in total fees, why should eBay and their stockholders expect any different?

eBay was overpriced in the market before the recession. With 15% in listing/FVF/PayPal fees and poor sell thru, I'm surprised that people even bother to list items on eBay anymore!

Good deal for a company to easily take over the auction online business.  

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: mamacita

Wed Oct 15 20:04:06 2008

The stock market is tanking, but eBay had already sunk this ship LONG ago when they ran off all the buyers and sellers of the "garage sale stuff". If they hadn't run the company into the ground, they might still have a fighting chance in this current economic climate.

Think about it: Maybe the garage sale atomosphere would actually THRIVE in a recession!!

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: mamacita

Wed Oct 15 20:05:28 2008

sorry, I spelled "atmosphere" wrong...

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Another Wronged Seller

Wed Oct 15 21:14:26 2008

jesse James had good profits too!

Good Q3 earnings in the core business is only because ebay is taking a bigger piece of a shrinking pie. They are simply transferring revenue from the sellers bottom line to their bottom line through increased fees. we are paying more for less.

Paypals good performance is likely due to increased penetration in off ebay venues.

Foreign performance equates to a weak dollar and stronger foreign currencies. the euro for example.

Skype had nowhere to go but up.

Instead of ebay growing revenue the right way by increasing overall sales on the site by making it easier for sellers to grow their sales, they do it by raising fees. Instead of taking the disastrous path they are on they could have just as easily made it even more attractive for sellers to list and sell product. More sales for the seller equals more revenue for ebay.

This remind me of shrinking food products. A pound of coffee now weighs 13 ozs. A 7 oz can of tuna weighs 5.5 ozs. 32 oz of spaghetti sauce now weighs 26 ozs. At least the food companies keep the price the same while reducing value. Ebay reduces the value, raises the cost and insults our intelligence by telling us they are actually reducing fees!

Less value, less sales, increased fees, decreased exposure, insult sellers intelligence by calling a fee increase a reduction, no respect for the sellers.

Remind me again why we are still selling here.........

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Ebay buyer/seller

Thu Oct 16 02:46:32 2008

I agree wholeheartedly. Fees are too high, and the people who ultimately pay for the escalating costs are buyers.

Ebay might have sellers held over a gun barrel, but buyers shop elsewhere (and they are doing exactly that).

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Daniel

Thu Oct 16 05:19:26 2008

Maybe that Diamond PowerSeller thing wasn't such a good idea after all.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: MERMAID

Thu Oct 16 09:21:48 2008

My favorite quote in another article (pointing the finger at John Donahoe:

“Your guidance indicates there is no Christmas,” said Goldman Sachs analyst James Mitchell during the company’s post-earnings conference call with analysts.

OUCH! Donahoe tries to tell the investor world eBay's economic woes are because of the severe economic meltdown we're facing, but we sellers know the TRUTH. Excrement in is excrement out! It's time the stockholders give Donahoe his pink slip for the holidays. Sellers deserve the respect they had in the founding years, and Donahoe's not giving it to them.

eBay will return when the company gives RESPECT to the people who made them great.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: eBay is Scum

Thu Oct 16 09:43:59 2008

LIARS. Listings are UP 1000% on other sites iOffer.com, Alibris.com etc., and buyers will follow.
The truth is eBay is no longer held in high esteem.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: E-bayer

Thu Oct 16 09:50:08 2008

@ MERMAID. You couldn't have said it better.RESPECT goes along way when  given.That word doesn't seem to click at all with Ebays agenda.I doubt much will change.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Mad Max

Thu Oct 16 12:49:09 2008

Their constant shakedown of sellers and removal of feedback for buyers created a hostile enviroment and an exodus to other venues. All they really have left is paypal and tanking stocks. Their site is loaded with cheap imports, counterfeits and ''wall-mart'' products. Act like a banana republic you become one. Time to put a stake into this greedy, arrogant monster. It's over.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: liarliar

Fri Oct 17 00:56:25 2008

It's easy to make up numbers.  There is no reality to that kind of accounting.  Ebay is in huge trouble and they are now manipulating numbers to hide the truth.  It's Enron all over again.  Don't believe me, just watch and wait.  The paid liars are working overtime.  We all know the facts...ebay is passe, and soon that will be something they can't hide.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Robert

Fri Oct 17 13:15:59 2008

As ebay continues to drive off the small volume sellers and caters to the larger online retailers, wholesalers, manufacturers and large volume ebay stores etc..(most of whom have their own websites and merchant accounts), it will be very interesting to see just how these big merchant collectively erode a larger percentage ebay buyer traffic since most of the business on ebay that do have send follow up emails after the intial ebay sale promoting their website rather than their ebay store.

Virtually any time we've made a purchase on ebay from a larger vendor, shortly after the purchase they'd send us an email encouraging us to check out their website and typically offered some type of discount or incentive to shop their website rather than their ebay store.

Let's face it, ebay fees are costly and come right out of bottom line profits, SO any seller with a website (regardless of business size) has a strong motivation to drive customers to their website rather than ebay to avoid paying 12-15% final value fees, plus have far more control over their business not contending with ebay's restrictions and policies.

Although our economy has strugggled in recent times, many discount online merchants have had large increases in online traffic....so it stands to reason that ebay's withering buyer traffic that has been declining fairly rapidly could be gettting eroded collectively by the very same larger companies ebay is giving alot of site exposure to.

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: Joe an Ebay seller

Sun Oct 19 06:32:23 2008

eBay's problem is best match and sellers items not showing up in search results properly. I sell under three ebay ID's, as a result of poor searches I have shut off my automation rules, closed my three stores, unsubscribed three selling manger pro subscriptions and have only 10 listings at fixed price on 30 day good till cancelled basis. If my items sell fine if not I'm out 3.50 cents every 30 days. My fee's to ebay averaged 2400.00 to 2600.00 per month before best match became the default search. Instead of growing my ebay business, I'm growing my business off ebay. Do the numbers, there are more doing the same thing I have and the poor marketplace performance reflects sellers withdrawing...Good Luck ebay you'll need it ...joe

eBay Inc. Reports Third Quarter 2008 Results   eBay Inc. Reports Third Quarter 2008 Results

by: EventHorizon1984

Wed Oct 22 03:58:12 2008

It's interesting that analysts tended to overlook the 9% quarter to quarter decrease in GMV. An important figure, as Q2 to Q3 changes relates directly to the fruition of eBay 2008 policies.

Then again no analyst selling eBay stock wants to highlight that sellers removed 1.4 BILLION DOLLARS of merchandise from eBay, due to implementation of John Donahoe's policies.

Maybe $1,400,000,000 is what Donahoe meant by ''noise.''


''The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.''
Princess Leia, Star Wars (1977)



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