Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Jan 21 2015 16:31:17

eBay GMV Stutters to 2 Percent Growth in Q4

By: Ina Steiner

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eBay Marketplaces gross merchandise volume (GMV) grew a measly 2% in the all-important fourth quarter of 2014, with the U.S. up 3% and International up 1%. eBay said it would prioritize its resources towards "core shoppers" and its Deals business for its Marketplaces business.

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


eBay Inc. Reports Fourth Quarter and Full Year Results
Global commerce platform and payments leader eBay (Nasdaq:EBAY) today reported that revenue for the fourth quarter ended December 31, 2014 increased 9% to $4.9 billion, compared to the same period in 2013. GAAP earnings were $936 million or $0.75 per diluted share, and Non-GAAP earnings were $1.1 billion or $0.90 per diluted share, driven by enabled commerce volume growth of 21%.

eBay Inc.’s commerce and payments ecosystems continued to increase the role they play in global commerce with mobile gaining share. Mobile payment volume grew 58% in the fourth quarter to $45.6 billion for the full year representing 20% of total volume. Mobile commerce volume grew 30% in the fourth quarter to $27.9 billion for the full year representing 34% of total volume. In the fourth quarter, cross-border trade grew 20%, representing 21% of total company ECV.

"In a year of unexpected events and distractions, we ended 2014 with double-digit revenue growth, solid earnings growth and strong cash flow, reflecting the fundamental strengths of our company," said John Donahoe, president and CEO of eBay Inc. "PayPal had another strong quarter, finishing an excellent year. eBay, while facing challenges, continues to be a great business and is focused on stabilizing performance and engaging its core customers. Looking ahead, our plans are on track to separate eBay and PayPal into independent companies in the second half of 2015, and we are confident this is the right strategic path for each business."

PayPal net total payment volume (TPV) grew 24% in the fourth quarter with Merchant Services volume up 33% and on-eBay volume up 3%. Revenue grew to $2.2 billion. PayPal gained 4.6 million new active registered accounts in the quarter and 18.9 million for the full year, up 13% to 162 million. Global on-eBay penetration increased to 80.8%. PayPal product innovations and investment to make payments simple and easier resulted in accelerating transaction growth, up 25% in the quarter, representing more than 3.6 billion transactions for the full year.

eBay Marketplaces gross merchandise volume (GMV) grew 2%, with the U.S. up 3% and International up 1%. Revenue grew to $2.3 billion. Marketplaces gained 2.9 million new buyers in the quarter and 14.9 million for the full year, up 11% to 155 million. Traffic was impacted by both the decline in new users due to SEO changes and the occasional buyer not returning to our site or being met with increased friction due to the password reset when they did come. In addition, the rising dollar negatively impacted export volume in the U.S. We are taking decisive action to focus the business in an effort to simplify and speed up decision making while re-aligning the cost structure to create capacity to invest. We are prioritizing our resources towards our core shoppers and we are doubling down on areas of strength like our $2 billion GMV Deals business.

eBay Enterprise gross merchandise sales (GMS) grew 9% in the quarter. Revenue grew to $443 million. Enterprise enabled its clients to grow same-store sales 12%. Enterprise signed up more than one thousand new clients and renewed or extended its relationship with more than 1,700 additional clients in 2014. It continues to expand its omnichannel capabilities, delivering $1 billion in ship from store sales in 2014, and broaden Magento's reach and global ecosystem. Enterprise supports merchants across the entire customer experience journey - from getting new shoppers into clients’ brick-and-mortar and online stores and inspiring them to buy - to delivering the goods and turning customers into loyal repeat buyers.

Looking forward to 2015, we will be simplifying organizational structures to focus the businesses and ensure that we are set-up to compete and win. During the first quarter, we plan to reduce our workforce globally by approximately 2,400 positions which a represents about 7% of our total workforce across eBay Marketplaces, PayPal, and eBay Enterprise. We will also be exploring strategic options for eBay Enterprise, including a sale or IPO. Enterprise is a strong business and a leading partner for large retailers, managing mission critical components of their e-commerce initiatives. However, it has become clear that it has limited synergies with either business and a separation will allow both to focus exclusively on their core markets, as we create two independent world class companies.

The company also announced today that it has entered into a standstill agreement with investor Carl Icahn, the company’s largest active shareholder. In addition to certain corporate governance provisions to be adopted by PayPal as an independent company at the time of its spin-off from eBay Inc., the agreement also appoints Icahn Capital executive Jonathan Christodoro to eBay Inc.’s current Board of Directors. On September 30, 2014, eBay Inc. announced that its board of directors had approved a plan to separate the company’s eBay and PayPal businesses into two independent publicly traded companies in 2015, subject to customary conditions. The agreement with Mr. Icahn allows him to determine which board Mr. Christodoro will serve on at the time of separation.

In a separate press release today, the company also announced the appointment of seasoned Wall Street executives Frank Yeary and Perry Traquina to its board of directors. These appointments bring the total number of directors to 15, 13 of whom are independent.

Other Selected Financial and Operational Results
    Operating margin - GAAP operating margin decreased to 21.6% for the fourth quarter of 2014, compared to 22.6% for the same period last year. Non-GAAP operating margin decreased to 27.7% in the fourth quarter, compared to 29.2% for the same period last year.
    Taxes - The GAAP effective tax rate for the fourth quarter of 2014 was 11.2%, compared to 17.3% for the fourth quarter of 2013. The non-GAAP effective tax rate for the fourth quarter of 2014 was 18.7% compared to 19.7% for the fourth quarter of 2013.
    Cash flow - The company generated $1.6 billion of operating cash flow and $1.3 billion of free cash flow during the fourth quarter of 2014.
    Stock repurchase program - The company repurchased approximately $1.2 billion of its common stock in the fourth quarter.
    Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $14.6 billion at December 31, 2014, up from $12.8 billion at December 31, 2013.

Business Outlook 2015
    First quarter 2015 - The company expects net revenues in the range of $4,350 - $4,450 million with GAAP earnings per diluted share in the range of $0.37 - $0.43 and non-GAAP earnings per diluted share in the range of $0.68 - $0.71. GAAP earnings include an estimate of separation and restructuring costs of $210 - $240 million.
    Full year 2015 - The company expects net revenues in the range of $18,600 - $19,100 million with GAAP earnings per diluted share in the range of $2.17 - $2.32 and non-GAAP earnings per diluted share in the range of $3.05 - $3.15. GAAP earnings include an estimate of separation and restructuring costs of $350 - $400 million.

In January 2015, the company's board of directors authorized an additional $2 billion stock repurchase program. Together with the $1 billion remaining under the company’s prior stock repurchase program authorized in January 2014, the company's total repurchase authorization as of January 21, 2015 is $3 billion. In addition to offsetting dilution from its equity compensation programs, the company expects, subject to market conditions and other factors, to make opportunistic repurchases of its common stock to reduce outstanding share count. Any share repurchases under the company’s stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means.

Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss fourth quarter and full year 2014 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company's Investor Relations website at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

eBay Inc. uses its Investor Relations website at http://investor.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.

See accompanying Newsflash article.

Comments (156) | Leave Comment | Permalink
Readers Comments

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Bidonmine

Thu Jan 22 10:55:15 2015

Why don't the eBay powers make nice with Google? Why re-create the wheel by trying to invent their own catalog internet search system?

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Bidonmine

Thu Jan 22 10:58:13 2015

The best description of what has gone on (quoted from another poster on this article)

'JD believed one seller who could post 100,000 items was more valuable then 1000 sellers posting 100 items and acted accordingly .'

I have been with eBay from the first month. Never have I seen a business run into the ground with such deliberate and overt/covert intentions (Radio-Shack is suffering a similar fate)!

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: dr shock This user has validated their user name.

Thu Jan 22 11:18:00 2015

I used to spend $10-15 thousand a year on ebay buying vintage & collectibles for my collection and resale. The money I made selling on ebay was used to finance my collection.

Last year I spent less than $5000. Donahoe has chased away many of the smaller sellers who posted interesting and unique items.

Buyers like me aren't going to shift their buying to the Chinese sellers or big merchants. We're going to go elsewhere.
 

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: The End

Thu Jan 22 12:10:21 2015

RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins. RETRO ECONOMICS WINS. Retro economics wins.
Go back to the 2001 Ebay Rules and Layout.
GET RID OF DONAHOE COMPLETELY. Bar him from all aspects of eCommerce for all eternity.

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: shabbychick

Thu Jan 22 12:32:12 2015

Orwellwasright: That was a terrific summation of The rise and fall of a once great American company! Copy and paste like mad to the NYT and WSJ letters and comments etc etc.  

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Kitty Ninja

Thu Jan 22 12:40:41 2015

Many moons ago I had a job with a company where I typed their financial statements (P&L, Balance Sheets, etc.). With them, as I am SURE it is with eBay, they spent a LOT of time "tweeking" the numbers. 60% of my job was entering "new" revised 'numbers' over and over again until the P&L/Balance Sheet/etc. looked "GOOD" wherever possible. I wouldn't be surprised if eBay was audited by an outside firm that the numbers would show otherwise!!!

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: shabbychick

Thu Jan 22 12:40:54 2015

Rexford:
''Donahoe also said 'eBay's loyal customers are back, but our more occasional customers have not returned.''

How can loyal customers be ''back''. If they were so loyal why did they leave?  

This Donahoe guy must have a Masters in Doublespeak.  

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: JoJo This user has validated their user name.

Thu Jan 22 12:44:40 2015

eBay failed to understand their core business.   The "noise" was what made it interesting and fun.  They had something great and killed it.  How many of us no longer sell on there?  No longer shop there?  Honestly, I can't remember the last time I went to eBay for anything.

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Rexford

Thu Jan 22 12:51:18 2015

Bidonmine, it will not surprise me at all if Google is the company that actually ends up buying PayPal.

And the only reason that ANYBODY is buying this stock is because they hope to cash in when PayPal is sold. After than, watch eBay stock plummet.

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: Russ This user has validated their user name.

Thu Jan 22 12:57:42 2015

Title should read:

''eBay GMV Gutters to 2 Percent Growth in Q4.''

And the rose-colored glasses I mentioned in a previous post...well, that color changed to brown...

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Rexford

Thu Jan 22 13:30:02 2015

Years ago I knew someone who owned a very successful restaurant in a major US city.  Upon retirement, he sold the restaurant and he told the purchaser not to change one single thing as it related to the quality ingredients, the preparation, and the presentation of the dishes that were served.  The quality menu offerings were what kept people coming back for more.

The buyer did heed this advice and he made changes to the menu, skimped on the quality ingredients that were used, and within a year he was out of business.

While on a different scale, this is exactly what happened to eBay. Something that was not broken and did not need fixing was completely transformed into something that was no longer special nor wanted by the customers.

Instead of pleasing the customers, eBay management have tried to please themselves and Wall Street.  
 

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Beanie

Thu Jan 22 13:56:31 2015

Disruptive Innovation, How's that working for ya J.D. It's Destructive Innovation for sure. I would never, ever sell anything on ebay again. You have completely ruined a unique thing and have lost ALL seller confidence. I'm just glad I was able to find all kinds of cool things for many years. Most all my favorite sellers have gone. Just have the funeral for ebay, cause you finally killed it. SMH

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

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

Thu Jan 22 14:01:47 2015

eBay is only interested in one thing, making money for eBay; indeed you can refine that even further, the most senior executives of eBay are only interested in one thing, making money for themselves.

Now that Johnny Ho has effectively admitted that his “thinking day” delusion of making the eBay “flea market” into an international online “Westfield Mall” has failed, there will be a lot of scurrying about, shuffling of the pack, and fiddling of the books—no doubt, the Swan will have his hands full tweaking his Enron spreadsheet …

The reality is, the cretinous Johnny Ho has beaten the once proud old horse to death, it’s starting to smell; someone should quietly bury it …

But, what amazes me most of all is, the major shareholders and their representatives, the board of directors, have put up with this cretinous fool for so long, and have even chosen to pay him a $23 million retention fee—incomprehensible; well, maybe not, after all, the Ho’s only ever real skill was the breaking up of working companies …

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid ... http://bit.ly/11F2eas

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

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

Thu Jan 22 14:10:51 2015

@1beck3
Really! Haters! you got that right, after you work your rear end off and get screwed by ebay execs you are going to hate. This is the worst managed company I have seen in 50 years what a joke, it is all smoke and mirrors and bonus checks. These guys are crooks.

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by: moto-science This user has validated their user name.

Thu Jan 22 16:21:44 2015

Ebay is so successful now, the CEO and his enablers are leaving and the company is being sold of in pieces.

This is the new definition of success....?

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: moto-science This user has validated their user name.

Thu Jan 22 16:23:41 2015

Plus millions of sellers hating and doing whatever they can to avoid selling or buying on Ebay.

Success......or Failure ?

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: Jbyron This user has validated their user name.

Thu Jan 22 17:34:55 2015

eBay destroyed millions of small sellers and now word of mouth is destroying eBay. What a stupid lot. There only hope is to end the stupid Cassani experiment with search and end Best Match. Show people listings they are searching for and give all sellers a equal shot at making a sale.

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Anonymous Annie

Thu Jan 22 17:49:56 2015

Another ''I-knew-it!'' moment... eBay dumps Magento.

I'm so so SO very VERY glad that my husband and I opted to stay with our ''clunky'' (semi-outdated) shopping cart instead of committing to Magento.

A couple of months prior to eBay announcing that it had bought Magento, we were *this-close* to choosing Magento as our self-hosted shopping cart solution. We decided that---with my husband's programming skills---it would be easier to simply KEEP what we had (Interspire) and he could continue to tweak, modify, and enhance our old cart as needed.

Back when eBay first announced its acquisition of Magento, I knew we had dodged a bullet. I perused various forums and of those Magento users, their common sentiment was one of groans, uncertainty and dread.

It appears that we ''haters'' and ''cynics'' ended up being right (once again) in our fears and suspicions.

Now that JD has grown tired of his little project, I wonder what will become of the product/s and support(?) and programmers.

Has it reached the dreaded ''end-of-life'' where no further development can be expected, and whatever support was offered has an absolute-certain expiration date?

It appears that JD really lacks ''the-Midas-Touch'' ... everything he gets his paws on turns to 5h1t.

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

by: Orwellwasright This user has validated their user name.

Thu Jan 22 17:54:00 2015

Want to Know how JD wrecked the site in six years ?
Heres my opinion :

1) Foolishly wooing hi volume name brand retailers who siphoned off the sales of their existing sellers by the thousands, while harvesting the information for millions of ebay users which they could then use to re-direct to their own website

2) Giving preferential treatment including scrubing feedback and steering customers to high volume out of country sellers who proferred an inferior product again siphoning off sales from their established USA sellers

3) Designing a search engine whose primary purpose is not to give customers the best possible results but rather is used as a steering mechanism to force feed buyers EBAYS preferred sellers

4) Constantly changing site designs and functionality leading to a state of perpetual confusion

5) Swamping the site and seller listings with paid advertising, leading to buyer confusion , leading to buyers being led off site, leading to buyers being lead away from item they were looking at, and overall making the once clean listings look sloppy and confusing

6) making it clear that the new regime despised the majority of sellers and Immediately instituting an increasingly onorous series of polices and practices designed to run off their most dedicated sellers including:

7) Making paypal mandatory and refusing to let sellers checks or money orders, thereby making every transaction high risk and forcing sellers to withdraw expensive and high value rare and desirable items for fear of being swindled by paypals fraud friendly practices

8) Claiming sellers could use their own merchant services account, yet never properly designing a portal for buyers all the while telling them they had no protection if they did not use paypal

9) Changing  sellers feedback  percentages based on one year as opposed to their entire ebay carear.

10) Removing Mutual feedback, one of the most important factors in making the original ebay so popular

11) Constantly changing policies forcing sellers to sometimes have to redo their entire inventories to comply with new rules ,

12) Creating an atmosphere of oppression and fear for sellers by constantly creating increasingly onorous punishment metrics including

13) The Dsr system which ebay swore would never be used against sellers, and of course it was immediately, and thousands of sellers disappeared

14) Once the DSRS had eliminated thousands, Ebay instituted the secret Guardrail program so any seller who hiits a bad patch or a cluster of bad customers gets thrashed , gets their visibility reduced to next to nothing and could even get suspended

15) Finally the defect system  there is clear proof these systems were designed not for buyer safety , but to eliminate sellers, No sane company would assign “defects” to a seller who promptly refunds a dissatisfied customer

16) Using all these methods in a heavy handed and oppressive manner so sellers with years of selling could be suspended overnight, sometimes because of a tiny percentage failing of a single metric  with virtually no chance of ever selling and no realistic evaluation or appeal

17) Refusing to provide a real customer service system so sellers who encountered issues and  who have made tens of thousands of dollars for ebay could only speak to a random employee who could not care less. It is well known that these representatives read from standard scripts, are often abusive, very often wrong and are well known to put sellers on perpetual hold . Calling back sellers find there was no record of any call and everything they were told was just to get them off the phone.

18) Refusing to establish an actual trust and safety fraud team so the site is rife with fakes, replicas , and frauds, It was reported in fact that ebay actually encouraged certain manufactures to produce period replicas for sale on the site

19) Refusing to establish an actual resolution and mediation center and instead telling sellers that receiving fraudulent returns and experiencing  outright cyber shoplifting are just a part of doing business on ebay so any buyer essentially has free reign to lie cheat and steal and sellers have NO protection from any savy swindler who knows how to work the one sided system

20 )  Installing a truly Insane 180 day dispute policy and claiming that’s who credit card companies work, ITS NOT

21) And of course lets not forget Rolling Backouts , Volicity limits,  Or thrashing
For Years Sellers such as myself have experienced ebays lights on , lights off policy. A cluster of sales often in the same geographic area or selling category followed by days of nothing. For years I have read postings on the ebay boards by mystified sellers who think something is broken, only to be immediately followed by obvious ebay plants who call anybody who points out the obvious manipulation paranoid.

22) in summary JD took a relatively balanced Marketplace and turned it into a dysfunctional disgrace, deliberately razing a successful business model in order to ?????????????????
23) Unfortunately you cannot regain the goodwill of the uncounted thousands of users whose liveliehoods were stolen or regain ebays  goodwill . Just one small example . Remember the Movie poster Guy? He ran Thousand of quality auctions. Brought who knows how many hundreds or thousands of buyers into the site.. He made who knows how many thousands of dollars for ebay .
In my estimation he was a GOLDEN asset, and one of the first to leave, Ebay just threw him away, no attempt to retain . Of course he went on to open a fantastically successful website on his own. Realistically this one departure alone cost ebay Millions of dollars all told, and yet they considered it a success . Who knows how many just like this?

You can only chip away at a foundation for so long before the entire edifice collapses

Perminate Link for eBay GMV Stutters to 2 Percent Growth in Q4   eBay GMV Stutters to 2 Percent Growth in Q4

This user has validated their user name. by: Anonymous Annie

Thu Jan 22 18:31:43 2015

A *STANDING OVATION* for Orwellwasright and the very well-written list of 23 points. Bravo!!

I'm nowhere near the volume and size that the movie-poster seller was, but I did the same as he did... ABANDON EBAY!

We know of his departure and subsequent success, but I can tell you that there are a lot of us small sellers who are ALSO finding success outside of eBay. Now... eBay may not miss the tiny little drop-in-the-bucket revenue that I once generated for them, BUT... multiply that by ALL the sellers (like myself) who abandoned eBay, and the negligible effect is magnified.

Add to that: the fact that we disgruntled ''haters'' will waste little time in letting others know what eBay has become... and (literally) WARNING others to stay away.

The cumulative effect is starting to show. eBay's smoke-and-mirrors and Bain-speak can no longer hide the truth of what is happening (HAS BEEN happening) to eBay for the time that JD has been at the helm.

In my opinion, JD is right at the bottom of the barrel with Kenneth Lay and Jeffrey Skilling.

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