Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Apr 29 2014 15:25:06

eBay Releases First Quarter 2014 Earnings

By: Ina Steiner

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eBay's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing first quarter 2014 earnings, you can view the full release with tables on the eBay investor relations website.

eBay Inc. Reports First Quarter Results:
    Enabled Commerce Volume Growth 24%
    Revenue Growth 14%
    Non-GAAP Earnings Growth 11%
    Company Buys Back $1.8 Billion in Stock; Takes GAAP Tax Charge On Foreign Earnings To Increase Available U.S. Cash By $6.0 Billion

April 29, 2014 04:15 PM Eastern Daylight Time
SAN JOSE, Calif.-Global commerce platform and payments leader eBay Inc. (Nasdaq: EBAY) today reported that revenue for the first quarter ended March 31, 2014, increased 14% to $4.3 billion, compared to the same period in 2013. Non-GAAP earnings increased 11%, to $899 million or $0.70 per diluted share, over the prior year, driven by strong top line growth. A first quarter GAAP loss of ($2.3) billion or ($1.82) per diluted share, was due to a discrete tax charge of approximately $3.0 billion.

The role the company plays in global commerce continued to grow, with total company enabled commerce volume (ECV) increasing 24% in the first quarter to $58 billion. Mobile ECV advanced 70% to $11 billion representing 19% of volume. Mobile downloads since inception exceeded 240 million and attracted 6.5 million new customers in the quarter. Cross-border trade grew 24%, representing $13 billion, or 22%, of total company ECV.

“We delivered a strong first quarter, with enabled commerce volume up 24 percent and revenue up 14 percent,” said eBay Inc. President and CEO John Donahoe. “We are committed to delivering sustainable shareholder value and focusing on what matters most to our investors. We are executing our growth plans, capitalizing on the synergies in our portfolio and aggressively executing our $5.0 billion share buyback program. Today, we also announced a non-cash tax charge to facilitate repatriation of $6.0 billion net in foreign earnings, increasing our available U.S. cash and enhancing our financial flexibility."

PayPal net total payment volume (TPV) grew 27% with Merchant Services volume up 32% and on-eBay volume up 15%. Revenue grew to $1.8 billion. PayPal gained 5.8 million new active registered accounts to end the quarter at 148 million, up 16%. Global on-eBay penetration increased to 78.9%. PayPal continued to invest in its credit offerings, providing flexibility for consumers and merchants while improving its ability to manage transaction expense and reinvest in the business to accelerate growth.

eBay Marketplaces gross merchandise volume (GMV) grew 12%, with the U.S. up 11% and International up 13%. Revenue grew to $2.2 billion. Marketplaces gained 4.7 million new buyers to end the quarter with 145 million active buyers, up 14%. Top rated sellers in the company’s three largest markets grew their same-store-sales 19% and offered free shipping on 53% of transactions across those markets. The selection of items available on Marketplaces grew to over 650 million listings, including both platform and non-platform offerings, reflecting the success of improved selling initiatives, particularly on mobile.

eBay Enterprise gross merchandise sales (GMS) grew 16%. Revenue grew to $269 million. Enterprise enabled its clients to grow same-store sales 11%. eBay’s Magento business, which primarily services small to medium-sized businesses, was integrated into eBay Enterprise’s offerings, providing merchants of all sizes a highly flexible end-to-end solution.

Other Selected Financial and Operational Results
    Operating margin — GAAP operating margin decreased to 20.6% for the first quarter of 2014, compared to 21.3% for the same period last year. Non-GAAP operating margin decreased to 26.9% in the first quarter, compared to 27.4% for the same period last year.

    Taxes — The GAAP effective tax rate for the first quarter of 2014 was 366%, compared to 16% for the first quarter of 2013. The company recorded a discrete tax charge of approximately $3.0 billion taken on $9.0 billion of foreign earnings from the prior years that were previously not subject to U.S. tax. This increases available U.S. cash by approximately $6.0 billion (net of the tax charge) providing greater U.S. financial flexibility. Excluding the effect of this discrete tax charge, our effective tax rate for the quarter would have been 18%. The remaining two percentage point increase in the company’s GAAP effective tax rate compared to the same period of the prior year was due to an increase in current year foreign earnings subject to U.S. tax and the expiration of the federal R&D credit. For the first quarter of 2014 and 2013, the non-GAAP effective tax rate was 21% and 20%, respectively.

    Cash flow — The company generated $1.2 billion of operating cash flow and $968 million of free cash flow during the first quarter of 2014.

    Stock repurchase programs — The company repurchased 33.1 million shares of its common stock for approximately $1.8 billion in the first quarter of 2014. As of March 31, 2014, the company’s remaining share repurchase authorization was $3.8 billion.

    Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $11.9 billion at March 31, 2014, down from $12.8 billion at December 31, 2013.

    As previously announced, the company has settled its proxy fight with investor Carl Icahn. Icahn has withdrawn both his proposal to separate the company's PayPal business and his two nominees to the company's Board of Directors. The company has agreed to appoint David Dorman as an independent director to its Board of Directors. This will expand the number of independent directors on the board to 10.

Business Outlook
    Second quarter 2014 — The company expects net revenues in the range of $4,325 - $4,425 million with GAAP earnings per diluted share in the range of $0.51 - $0.53 and non-GAAP earnings per diluted share in the range of $0.67 - $0.69.

    Full year 2014 — The company now expects net revenues in the range of $18,000 - $18,500 million with GAAP earnings per diluted share in the range of $0.04 - $0.09 and non-GAAP earnings per diluted share in the range of $2.95 - $3.00.

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Readers Comments

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This user has validated their user name. by: Philip Cohen
Web Site

Wed Apr 30 14:07:57 2014

StubHub? Is that not simply a site where scalpers sell tickets, that they have sourced at face value, for greatly inflated prices? And, of course, eBay would be involved in such amoral business up to its neck; and if the scalpers are making big money, why would Johnny Ho not be trying to take as big a slice as he possibly can?

eBay Inc, where the incompetent mingle with the malevolent and the criminal ... http://bit.ly/11F2eas

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by: gutspiller This user has validated their user name.

Wed Apr 30 14:31:50 2014

If they say there's a growth I don't know where it comes from. My own sales have gone from bad to worse so just left Ebay.

No more fees, no more PayPal.

Turned over more than half a million dollar in the last 5 years. The day before I closed my shop my turnover was 0,0000000000.

Yes Ebay certainly changed something. Since last February sales that already had been more than halved the last 2 years went further down to come to a full stop.

The last month was terrible. Hardly any sales and never before I had so many orders that were never paid. Next to that from out of nothing bad feedbacks came rolling in. All for the most stupid reasons, buyers just leaving bad feedback systematically. Neutral feedback for things you can't even imagine.

From 100% Ebay 2,5 years ago, now Ebay – although we still needed the sales – had become 30% our total sales. So decided to jump ship so we can focus for the full 200% on our own website.

Thriving a few years ago and now hardly any sales. At the same time are own website sales increase, increase and continue to increase. The same items we sell on items, the same prices (often even more expensive). Especially the last year we pulled more and more of our items from Ebay. They used to sell well. No they still do... On our own website. We no longer bothered listing them on Ebay. No sales whatsoever.

I've been lied to,  listings have been manipulated,... Ebay has done everything in its power to sabotage my sales and the sales of many other sellers. If this company continues to exist I eat my hat.

I believe big companies as Google, Microsoft,... haven't made a move because they know all they need is some more patience. Wait another 2 years or so and they will be able to buy Ebay at a bargain. Nobody will want it because all sellers will have jumped the ship. And just the name Ebay will be as poison.

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This user has validated their user name. by: Basset

Wed Apr 30 14:48:43 2014

Thanks for the info on fees Windsorbear.

Those must be the most popular / profitable categories if eBay is forgoing the ''free listings'' in them unless folks have a store.

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This user has validated their user name. by: Al G

Wed Apr 30 15:18:17 2014

I'm having a bit of trouble with English as a First Language over the latest eBay announcement:

If you do not subscribe to an eBay Store, you’ll enjoy up to 100 FREE listings*—pay no insertion fees—every month.

   50 of these will be dedicated auction-style listings, which can be used only in the categories listed below. There will no longer be an allotment of free fixed price listings for items listed in these 14 categories, unless you subscribe to an eBay Store.
   You’ll also receive 50 free listings* which can either be additional auction-style listings in the categories listed below, or auction-style or fixed price listings in most other categories.


So - if I dont have a store I will be able to

1. List 50 auctions in the 14 categories listed below (not shown, not that it really matters)

2. List an additional 50 auction/fixed listings in the catagories listed below.



To sum up then I can list 50 auctions PLUS 50 auctions and/or fixed price listings.

Yes? Or is my logic as confusing as the announcement.


And, naturally, you will find out the price AFTER you list an item. Weird.

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This user has validated their user name. by: windsorbear

Wed Apr 30 15:23:07 2014

If you list in those 14 categories, then your monthly free listings will increase from 50 to 100... as long as they are auctions or auctions with "Buy It Now."  They cannot be "fixed price" listings as there will no longer be free "fixed price" listings in those categories.  So you will continue to get your 50 free listings that you can use as "auctions" in any category, or as "fixed price" in any category EXCEPT those 14 categories.  And then you will get 50 more listings that you can use as ONLY auctions (or auctions with Buy It Now) in ONLY those 14 categories!  Hope that helps.

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by: Massachusets Howler This user has validated their user name.

Wed Apr 30 16:02:30 2014

Tell us you are having good sales over their windsorbear.
Can we double-list on those sites- list the SAME item on both and kill the unsold ad when the other sells- this may actually be an ADVANTAGE. If their is no restriction of doing this, listing the same item "free" in 2-3 places could be an advantage.
MB (Thinking of ebid and etsy actually, for my stuff).

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This user has validated their user name. by: windsorbear

Wed Apr 30 16:41:09 2014

I can't say my sales are good there... in fact, I haven't sold anything on eBid since relisting there a few weeks ago.  I did sell something on UniSquare today... but still waiting on payment.  And yes... I do have mostly the same things listed on both sites, so when one sells, I kill the ad on the other site.  Both sites have interesting interfaces... each one unique in its own way.

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This user has validated their user name. by: Puck

Wed Apr 30 16:50:21 2014

"StubHub? Is that not simply a site where scalpers sell tickets, that they have sourced at face value, for greatly inflated prices? And, of course, eBay would be involved in such amoral business up to its neck; and if the scalpers are making big money, why would Johnny Ho not be trying to take as big a slice as he possibly can?"

@Phillip:

A corporation that is comfortable with being the largest purveyor of smut on the planet wouldn't miss a wink of sleep over ticket scalping.

Compared to selling dirty pictures, facilitating ticket scalping is almost a Christian pursuit.

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This user has validated their user name. by: Puck

Wed Apr 30 17:05:40 2014

Windsorbear has it right.

If you sell in the collectibles category (and/or any of the others specified) and DO NOT cough up for a store, all your free fixed price listings will go bye, bye in May.

For sellers who prefer fixed price listings, such as myself, sell in the collectibles category, such as myself, and do not pay for a 'store', again such as myself, will be forced to:
A) Pay 30¢ a pop for fixed price listings, OR,
B)Pay for a 'store' to keep some 'Free' fixed price listings, OR,
C) Change to auction style listings.

This entire move is nothing more than a fee increase wolf in "Great News For Sellers!"sheep's clothing.

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This user has validated their user name. by: Al G

Wed Apr 30 17:17:16 2014

Thanks for the analysis.

Oh well, free is free, I'll just get effectively 14 days of listing via auction vs 30 days of fixed price.

And I thought Chinese was a difficult language to learn - try to learn eBay English instructions.

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This user has validated their user name. by: Puck

Wed Apr 30 17:48:10 2014

"And I thought Chinese was a difficult language to learn - try to learn eBay English instructions."

eBay execs wouldn't come out and just plainly ask for a glass of water if they were dying of thirst.

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by: Massachusets Howler This user has validated their user name.

Wed Apr 30 20:20:42 2014

Thanks Windsorbear.
That is about the same luck I had at ecrater- 1 sale, and a PP dispute.
Hmmmmmm......
I want to go to etsy, ebid, ecrater at the same time? Perhaps the cross-promotion would help?
Got to be better than this!
MH

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by: ebay refugee camp This user has validated their user name.

Thu May 1 07:23:09 2014

Ebay's stock price continues to drag along compared to Amazon which has in creased mightily since John Donahoe took over ebay.
The facts are all online shopping has increased as a whole every year since Donahoe took over ebay. That means all online commerce sites benfited from this increase sort of automatically.
Ebay has barely kept pace with that! One only has to look at Amazon to see the difference
I my opinion Ebay has been severly hurt badly by John Donahoe's policies.
Paypal is the star keeping this company afloat.
Ebay's shareholders have been cheated. Ebay sellers have been cheated and many have fled.
The constant spin and their aggressive stock buy back program is a clue also.
Ebay just took a 3 billion tax billion to get cash that was off shore, my God what company does this?
Really come on I am not a financial wizard but it sure looks smells.
Jeff Bezos at Amazon deserves a pat on the back, look what he has done compared to Donahoe. It sure makes Donahoe look like a failure
Wake up wall street or maybe they already have.
11 main is coming and ebay better make sure the life rafts are ready, Does 6 billion float?

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by: BargainzBabylon This user has validated their user name.

Thu May 1 18:07:48 2014

11 main isn't going to do anything for most eBay sellers. They want the same thing eBay wants, except dressed up with cutesy 'story' and mom and pop feel - large traders.  They're still Alibaba.  

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