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Wed Apr 16 2008 20:51:10

eBay Profits up 22 Percent in First Quarter 2008

By: Ina Steiner

Sponsored Link

eBay reported financial results for its first quarter, ended March 31, 2008. I picked out the things I found most interesting, below, and added a few comments in italics. Note this is not an investment blog, and you should use eBay filings if you want to ensure you get the full story about its financials.

eBay profits were up 22 percent in Q1-08, year-over year. The company said revenue growth was driven primarily by Marketplaces net transaction revenues, the ongoing expansion at PayPal, Skype and the company's global classifieds business. (Interesting they mentioned classifieds prominently.)

eBay posted Q1-08 revenue of $2.19 billion, up $424 million (24%) from the same period last year. Net income on a GAAP basis was $460 million, up 22 percent from the same quarter last year.

The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had $1.48 billion in revenue, equating to 19% year-over-year growth. Revenue growth was driven primarily by advertising, classifieds and StubHub. Net revenues generated outside the U.S. were 55% of total Marketplaces net revenues for the quarter. Gross merchandise volume was $16.04 billion for the quarter, an increase of 12% over the first quarter of 2007.

eBay breaks out "Marketing Services and Other Revenue" for the first time. Marketplace Net Transaction Revenue = $1.267 billion, Marketplace Marketing Services and Other Revenue = $216 million (a 56% increase year over year) = $1.48 billion in total Marketplace revenue. I wish eBay broke out its ad revenue numbers. John Donahoe said on the conference call that ad revenue was up 151%, I need to check this on the transcript.

This reclassification is interesting. According to a slide in the conference call presentation, it consists of Ad revenues; Revenues from lead referral arrangements; Revenues from third party arrangements; Interest earned on certain PayPal customer account balances. (What are third party arrangements, anyone know?)

PayPal had $582 million in net revenue, an increase of 32% year-over-year. Net total payment volume (TPV) for the quarter was $14.42 billion, an increase of 34% year-over-year. The net revenue and net TPV growth was driven primarily by the continued strong growth of Merchant Services globally and increased penetration on eBay internationally. Growth in global active accounts increased to 60.2 million, representing 17% year-over-year growth. Globally, PayPal will continue to focus on greater penetration into the Marketplaces business and the acquisition of new merchants.

Contrast the 19% growth in Marketplaces versus 32% growth in PayPal.

eBay's new President and CEO John Donahoe said in the company's press release, "This was a very strong financial quarter for the company. The results reflect the strength provided by our diverse portfolio of businesses. Our stability and growth continues to give us the confidence to make innovative changes to our products to keep customers engaged for years to come."

Interesting factoids:

The company's global portfolio of classifieds businesses reported a 101% increase in unique visitors year over year, with an average of 70 million monthly unique visitors.

The company completed the reorganization of select North American and European functional groups to align more closely with strategic priorities.

Growth in active users each quarter year-over-year is declining:

Q4-06 14%; Q1-07 10%; Q2-07 7%; Q3-07 4%; Q4-07 2%; Q1-08 1%

Conversely, number of listings did well in the first quarter. This is likely attributable to change in fee structure with lower listing fees, but higher commission fees - wish it was broken out by category!:

Q1-07 2%; Q2-07 (6%); Q3-07 (5%); Q4-07 4%; Q1-08 10%

Gross Merchandise Volume growth year-over-year is stable, between 12 - 14%. (see eBay's charts for more detailed data).

And the percentage of Fixed Price trading as a percentage of GMV remained flat at 42%.

The new revenue category I mentioned above - called "Marketing Services and Other Revenue," is explained in a footnote:

Beginning with the first quarter of 2008, we reclassified revenue generated primarily from our Marketplaces non-gross merchandise volume based businesses (which includes Shopping.com, Rent.com and our classified websites) from "Net Transaction Revenues" to "Marketing Services and Other Revenues" in order to more closely align our net transaction revenue presentation with our key operating metrics. "Marketing Service and Other Revenues" also includes amounts previously reflected under "Advertising and Other Revenue." Prior period amounts have been reclassified to conform to the current presentation. Consolidated revenues, as well as total segment revenues, are unchanged

Here's a link to the release.

 




Comments (20) | Permalink

Readers Comments

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Randy Smythe

Wed Apr 16 22:45:03 2008

Why not just rename the company to PayStubHubPal?

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Julie

Wed Apr 16 23:04:43 2008

Amazing how profits rise when the paying customers get charged more.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: donnellwells

Wed Apr 16 23:07:46 2008

FORGIVE ME FOR MY COMPLETE IGNORANCE OF WHAT THEY ARE TRYING TO SAY -
WHAT I AM ABLE TO COMPREHEND IS A VERY SMALL SLIDE BY VERBALLY OF TELLING US LESS THAN ZERO ABOUT WHAT THE REAL GOALS AND OPTIONS WE ARE FINDING OURSELVES IN WHILE IN BUSINESS WITH EBAY.
HOW COMPLETELY AND UTTERLY INVALID..

MERCI FOR YOUR INSIGHT AND FACTUAL STATEMENTS. WE ALL OWE YOU A GREAT DEBT.

DONNELL WELLS ET CIE
POWER SELLER
DALLAS, TEXAS

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: logan

Wed Apr 16 23:41:31 2008

I remember reading last year that once ''profits'' were adjusted for the money Meg Whitman and the other execs had paid themselves, that Ebay was actually in the RED.  Are they still incorrectly reporting ''profits'' that don't show what the excutives are stealing from the company?

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

This user has validated their user name. by: Bill

Thu Apr 17 02:33:52 2008

Well here are some peliminary figures on our eBay business for the first quarter:

Sales are up 32%

Fees are down 17%

Profit is up 276%

Very interesting to say the least. Obviously we have been doing better marketing on the site. The best match has been helping somewhat (I believe but there are no metrics available at this time to be able to pinpoint that) but sales have been up on all 3 months so it is not just the best match. It will be interesting to see what the next quarter brings.

Bill

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: renee

Thu Apr 17 02:34:52 2008

Of course PayPal profits are up.  When you force someone to use the service what do they expect to show, a loss.  Thing is with Best Match and forced low shipping the only one making any profit is eBay.

Don't think they will ever tell that to their stock holders.

This isn't funny any more and I have already moved my sales to points beyond the Bay.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: yvette

Thu Apr 17 04:03:58 2008

Also interesting: in the NYT, Donahue says it's his plan to introduce the Paypal-ONLY policy not only in Australia, but globally
:
''Mr. Donahoe outlined some more coming changes to the site. In Australia, the company is testing a program that requires sellers to accept only PayPal payments. Mr. Donahoe said that if the test was successful, the company would introduce it in other countries “in months, not years.” ''

See NYT article ''EBay Chief Says Change Isn’t Over'' 17 April 2008

Or see the post in the link to my name (if that works ;-)

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: BeBopDeluxe

Thu Apr 17 06:31:10 2008

"Revenue growth was driven primarily by advertising, classifieds and StubHub."
=NOT by increased seller activity.....
"Interest earned on certain PayPal customer account balances."
=This will certainly rise when they start holding seller's receipts for the 21 days!

I see eBay's stock rising daily and wonder when the other shoe will drop.  With so many sellers leaving or boycotting, their has to be a negative result showing somewhere.  

I would like to see a full list of all of eBay's subsidiary companies and affiliates so that I can stay away from all of them.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: desperate4alternative

Thu Apr 17 07:19:33 2008

Great post yvette!

Oh well!  It IS an election year.  Perhaps Mr. Donahoe just ''misspoke''

eBay around April 10th:

eBay spokesperson Nichola Sharpe said the new policy applies only to eBay in Australia. ''There are no plans to go to a PayPal-only model for eBay in the US and we haven't announced any other markets at this time.''

eBay April 16th:

''In Australia, the company is testing a program that requires sellers to accept only PayPal payments. Mr. Donahoe said that if the test was successful, the company would introduce it in other countries “in months, not years.''

How does one believe ANYTHING these people say?

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Mike

Thu Apr 17 08:19:20 2008

As Donahoe stated, "eBay still has much work to do." So far that work has included raising fees, turning off sellers from selling, changing search criteria and revamping the feedback system. This not work as much as it is a total re-organization of eBay itself. A few earnings quarters from now will tell the story as to how these changes have affected revenues. With another boycott scheduled for May 1st it'll be interesting see how the next quarter adds up.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: tula

Thu Apr 17 08:52:42 2008

Interesting.  These numbers will likely give eBay the confidence to keep making changes.  I wonder how marketing numbers will hold up if new user numbers continue to decline?  

Ina, I wonder if third-party arrangements include the referral or affiliate fees people pay to list on a search site like Shopping.com?  Or perhaps eBay is selling its demographic/customer profile information to companies wanting to advertise on the platform?  

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Sucked Dry Day by Day

Thu Apr 17 09:41:58 2008

It's going to take a good year to see if there is any impact on ebay as a result of all of these changes. One thing is obvious, the boycott/strike didn't do a damn thing. Nor, I fear to say, will the threatened May 1 event. ebay is just too big to hurt. As much as I wish we could bring them down, or whip them back into shape, I'm afraid that just is not going to happen. Oh sure, other sites are growing, and sellers are moving, but with profits UP by 22%, it apparently doesn't make any difference. Will it one day? I don't know, but as of now, I think we're just wasting our time screaming, complaining, bitching and moaning.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Mike

Thu Apr 17 09:44:04 2008

Profits will eventually plateau as sellers move away and eBay has exhausted new ideas and revenues streams. When eyeballs decline, numbers will as well.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: clarence

Thu Apr 17 12:36:09 2008

Since ebay fails to enforce their listing policy rule that prohibits listing counterfeits and they profit from allowing these counterfeits to be listed and sold on ebay, perhaps it would be appropriate for a disclosure of just how much money they do receive from these illegal and fraudulent sales.  Every day thousands of ebay bidders are ripped off for thousands of dollars and ebay takes their share of these dollars and then brags about how much money they make each quarter or each year, do you know of any other criminal enterprise that does this?  Hopefully the judge presiding over the Tiffany lawsuit against ebay for ebay allowing the thousands of illegal tiffany counterfeit sales will actually rule in favor of Tiffany and the buying public and stop this blatant criminal activity.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: angyjim

Thu Apr 17 12:44:23 2008

As Mr. Donahoe should well know, boosting profits in the short term is easy.  It also did not take any great act of genius to boost the total number of listings. What's his strategy for the long term? To use the first quarter 08 results as a barometer of how well the company will do in the long term is myopic and down right risky.  eBay under its current leadership is heading down a reckless path.  As they absolutely refuse to listen to their client base (THE SELLERS) the current management might as well wreck the site as quickly as possible and be done with it.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Patricia

Thu Apr 17 15:27:53 2008

"EBay Inc., the world's largest Internet auctioneer, posted first-quarter profit that beat analysts' estimates on increased selling fees and higher revenue from its PayPal payment service."

Its amazing how every year its another raise in fees - more nickel and diming to death and then a great looking quarter.  Its like a house of cards ready to blow over.  They don't claim new buyers have been lured to the site and they don't confess that many sellers are leaving every day.  Unless they do something drastic, fair and above board, its only a matter of time.  When my landlord raised the rent so high I could no longer afford it....I was FORCED to move!

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: Gee

Thu Apr 17 16:05:38 2008

Re: Thu Apr 17 2008 017:33:52

Gee Bill, you must be a powerseller.  After all, isn't that what these changes were all about?  Aren't powersellers the only sellers with whom eBay spoke about the proposed changes?  I'm sure eBay will be very proud to hold you up as a fine example of how their stategy is working.

I'd like to know if any of the smaller sellers can boast those percentages.  At this point, I'm not interested in how powersellers are doing.  I want to know if sellers of antiques or collectibles, of unique items, of items from estates can still survive on eBay.

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: BeBopDeluxe

Thu Apr 17 18:18:42 2008

Well, their stock began slipping today, so maybe not everyone buys into their "balance sheet BS".  If the boycotts don't get them, maybe all the pending lawsuits and possible investigations will.......

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: china714

Fri Apr 18 18:29:09 2008

you want to know why I think its up 22% first quarter? padded listings, imports from other countries are at an all time high, just look under the category wedding dresses, out of say 29,000 20,000 is from china and all new sellers, same with jewelry, and other categories, also the fee hikes should bring in a profit, as they are the highest ever. Paypal has that hold on funds for 21 days, thats gotta be a good interest especially as a monopoly that it is....first let me say...the numbers are deceiving as ebay is, it is a monopoly where people have sold for years to make a living, AS LONG TIME EBAY SELLERS BUILT A REPUTATION ON EBAY AND A RETURNING HIGH RATE OF BUYER SATISFACTION, HAVE LEFT,...THAT CHANGE WILL NOT BE IMMEDIATE... as i see the rush of China and other Countries run in to fill the VOID by DISSATISFIED long term sellers, yes you will see profits, but please don't kid yourself to think all is GREAT in ebay land, they have never effected more U.S. CITIZENS so harshly as they have with their changes in business practice this year, and the long term, you will see its numbers decline, as the other sellers from China and other countries will fill the void the customer satisfaction base will be lessoned. and more will never buy on ebay again. unless like Enron, they pull strings as they are, but TRULY, if another auction site ever started to advertise, like google, ect...you would see the FASTEST DECLINE IN NUMBERS and REALITY that you ever seen, as PAYPAL would not be required, BUYERS would know where the American sellers have went to,  and ebay would be a speck of dust, let it be known, their profits came from THE AMERICAN people that have stayed on ebay  out of DESPERATION in this last quarter,  not a good place to be, and out of a huge rise in China and other countries like thailand listing on ebay SUDDENLY. NOT BECAUSE EBAY HAS MADE GOOD CHOICES IN THE FIRST QUARTER WITH THEIR CHANGES....just waiting for another company to be an online auction site that does ADVERTISING and promotions, and ebay will be all China & Thailand imports, and you see how many sales will bring back more customers over the next 3 yrs....So does Boycotting help, YES....as the change wont be seen right away, its a way for us to say we don't want this, This will take time, as the change is being seen, 22% rise is from predominantly new sellers and other countries,...in time others will open doors, even if your like me and have to stay on ebay due to be handicapped, ect...KEEP SPEAKING OUT...bad press, will win over time. I have boycott ebay all over my car, MAY 1ST SHOW YOUR DISLIKE, and talk to your local papers, change is on the way!

eBay Profits up 22 Percent in First Quarter 2008   eBay Profits up 22 Percent in First Quarter 2008

by: steve watt

Tue Jul 29 18:35:08 2008

Ebay is heading for a collaspe. This is not a scare tactic to get the stock to move. this is reality. If you own any Ebay stock, please pull it out ASAP. With all of the recent changes to ebay sellers fee's, most power sellers are heading out. I'm a power seller and I list on Amazon instead.
I wasn't to sure how this would work at first, but I'm begging to sell a few hundred items now a month.

Did you know Amazon last year at Chritsmas had more hits than Ebay? Did you know Amazon has everything for sale that Ebay does, but for less?

I kid you not. Type in any product and make your comparisons...

Also, no one cares to bid anymore, when you can just buy it for less at Amazon anyway

check out my site for the full story
''Ebay's runaway train''
http://www.thejoyluckclub.com
thank Steve



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