Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Oct 17 2012 16:21:15

eBay Grows Gross Merchandise Volume 11% in Q3

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 third quarter 2012 earnings, you can view the full release with tables on the eBay investor website.

eBay Inc. Reports Strong Third Quarter 2012 Results
Revenue, Net Income and Active Users up Double Digits Year over Year

eBay Inc., a global commerce platform and payments company (Nasdaq: EBAY), today reported that revenue for the third quarter ended September 30, 2012 increased 15% to $3.4 billion, compared to the same period of 2011. The company reported third quarter net income on a GAAP basis of $597 million, or $0.45 per diluted share, and non-GAAP net income of $718 million, or $0.55 per diluted share. GAAP and non-GAAP net income were up 22% and 14%, respectively, year over year due primarily to strong top-line growth. Segment margin in each of our three business segments expanded on a year-over-year basis.

"We had a great third quarter across our company, with Marketplaces and PayPal accelerating customer growth," said John Donahoe, eBay Inc. President and CEO. "Mobile continues to be a game changer for us, and we continue to be a clear leader in mobile commerce and payments. With our strong portfolio and global reach, we are consistently demonstrating our capabilities to help consumers shop anytime, anywhere. And we are enabling retailers of all sizes to compete in a rapidly evolving, multichannel commerce environment."

PayPal delivered a strong third quarter performance. It ended the quarter with 117.4 million active registered accounts, a 14% increase over the third quarter of 2011. Revenue increased 23% year over year and net total payment volume (TPV) grew 20% year over year to $35.2 billion. PayPal continues to innovate on a global scale while expanding its addressable market to offline. PayPal's offline initiative is following a three-pronged approach: soliciting direct merchant relationships; partnering with Discover to access its 7 million retail locations in the United States; and using a direct and indirect approach to distribute its small business payment solution, PayPal Here, both domestically and internationally.

Marketplaces delivered another strong quarter with accelerating user growth. Gross merchandise volume (GMV), excluding vehicles, increased 11% year over year to $16 billion in the third quarter of 2012. Marketplaces revenue increased 9% year over year, driven by strong growth in the United States and Asia Pacific. Active user growth continued to accelerate during the quarter, reaching 10% year over year, the fastest growth since 2007, with 800,000 new users coming from mobile. This helped boost sold items growth, which was up 19% year over year in the third quarter of 2012. U.S. GMV, excluding vehicles, increased 16% year over year, while International GMV, excluding vehicles, increased 8% year over year, in both cases driven by investment in the customer experience, growth of mobile as a channel and continued strong performance in key verticals. Downloads of eBay's suite of mobile apps have now surpassed 100 million globally, becoming an increasing point of differentiation and engagement.

GSI revenue increased 12% year over year to $226 million, driven primarily by a 16% year over year increase in global ecommerce (GeC) merchandise sales. Same store sales grew 19% year over year, reflecting strong ecommerce sales from retail clients. GSI is winning new clients and bringing eBay's innovative technology solutions and services to merchants of all sizes.



Other Selected Financial Results
    Operating margin — GAAP operating margin increased to 19.6% for the third quarter of 2012, compared to 18.1% for the same period last year. Non-GAAP operating margin increased to 26.3% in the third quarter, compared to 25.3% for the same period last year.
    Taxes — The GAAP effective tax rate for the third quarter of 2012 was 11%, compared to 20% for the third quarter of 2011. The decrease was due primarily to increased earnings in low tax jurisdictions and the favorable impact of discrete items, primarily related to stock-based compensation. For the third quarter of 2012 and 2011, the non-GAAP effective tax rate was 20% and 21%, respectively.
    Cash flow — The company generated $1.2 billion of operating cash flow and $792 million of free cash flow during the third quarter of 2012.
    Stock repurchase programs — The company repurchased approximately $47 million of its common stock in the third quarter of 2012.
    Debt issuance — The company issued senior unsecured notes in an aggregate principal amount of $3 billion during the third quarter of 2012.
    Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $10.8 billion at September 30, 2012, up from $7.5 billion at December 31, 2011.

Business Outlook
    Fourth quarter 2012 — eBay expects net revenues in the range of $3,850 - $4,000 million with GAAP earnings per diluted share in the range of $0.55 - $0.58 and non-GAAP earnings per diluted share in the range of $0.66 - $0.69.
    Full year 2012 — eBay now expects net revenues in the range of $13,950 - $14,100 million with GAAP earnings per diluted share in the range of $1.95 - $1.99 and non-GAAP earnings per diluted share in the range of $2.32 - $2.35.

Quarterly Conference Call
eBay will host a conference call to discuss third quarter 2012 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.
 




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Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Philip Cohen
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Wed Oct 17 16:59:10 2012

The eBafia does not care whether or not a merchant shill bids, or can get a fair price, as long as eBafia gets its percentage—just like the Mafia of old …

eBay / PayPal / Donahoe: Dead Men Walking

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Spartacus

Wed Oct 17 20:55:21 2012

It never ceases to amaze me how eBay has gotten away with the smoke and mirrors since John Donahoe took over and began his cycle of disruptive innovation.

I read several articles today on Bloomberg and Marketwatch where the authors were questioning the new site design and logo change so close to the holiday shopping season.

They also stated that Donahoe has been picking the low hanging fruit and there was little room for growth because fees on merchants have been maxxed out and were driving merchants (and their customers) to alternative marketplaces.

Studies were cited showing that mobile growth reported by eBay is not in line with other retailers figures suggesting an exaggeration.

Paypal's mobile payments are also on a slippery slope as the vast majority of payments processed on mobile devices is by people playing games to purchase credits. Most popular RPG game apps for Android and iPhone allow players to ''power up'' by purchasing credits which is done by dropping the user into a web browser with a typical Paypal ''pay now'' button. Several startups are working to corner the mobile gaming market payments and offer integrated payments for game credits. Paypal will lose here because of lack of trust in the developer community over Paypal freezes and holds.

It seems Donahoe is bending and stretching the truth until it's going to finally break but by that time, he'll have his golden parachute to fly away.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: Digmen1 This user has validated their user name.
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Wed Oct 17 22:53:25 2012

You have to hand it to JD and the ebay board.
Each quarter we predict or hope for a negative sales and profit.
And each quarter JD pulls off an increase.
This time he reports increases in merchandise and paypal.



Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Ming the Merciless

Wed Oct 17 23:50:08 2012

Of course their GMV is higher.

Whose wouldn't be with ebafia ever escalating policy driven encouraged and forced merchandise returns they can count multiple times as "volume" when in fact it nothing but re sales of the same item.

It makes me wonder whether most of these Wall Street analysts even passed 8th grade math.

Wall Street for Dummies.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: blaumann This user has validated their user name.

Wed Oct 17 23:51:28 2012

Does that increase in "merchandise" include fees on shipping? I bet it does.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: Digmen1 This user has validated their user name.
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Wed Oct 17 23:55:14 2012

In which quarter will the shipping included figures drop out ? (year on year)


Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: Grandma_Fish This user has validated their user name.

Thu Oct 18 00:17:07 2012

My first reaction on reading this was "Finally, someone's calling him (Donahoe) on it!" Maybe the analysts are finally wising up. Ya think?!

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Ric

Thu Oct 18 00:59:33 2012

Top 10 Ways John Donahoe has artificially inflated GMV and revenue figures without any real growth in completed transactions.

 1) Pressures sellers into including shipping costs into the selling price of their items - shipping costs now count as part of the price of the item when sold.

 2) Waits a few quarters and increases the pressure by making so called free shipping part of the qualification for Top Rated Seller Status.

 3) Waits another few quarters and ratchets up the pressure again by imposing a 9% Final Value Fee on shipping costs not included in the selling price. The message to sellers - either you help us artificially inflate GMV so we can bamboozle Wall Street and claim our sales are growing or pay the penalty fee to help us build our revenue figure.

 4) Fails to address Unpaid Items. This one has two benefits for eBay. First, they count the unpaid items as part of GMV. Second, when the item is relisted, they generate additional revenue on the listing fees.

 5) Forces sellers to accept returns for up to 45 days. Another multi pronged benefit for eBay. First, they do not deduct the value of returns from GMV so when the item is relisted and sells again, the same item is counted twice toward GMV. Second, sellers who participate in the managed return program see the value of the item that is being returned billed to their eBay seller account in the form of a fee which eBay to reports as revenue when in fact it is not revenue at all. Watch for eBay to slowly increase pressure on sellers over time to participate in the program so that eBay can gradually increase revenue.

 6) Within 6 - 12 Months, eBay will make managed returns mandatory to qualify for Top Rated Seller discounts. This will serve eBay two ways. First many sellers will refuse the managed return requirement and knowingly forfeit their 20% discounts resulting in a higher revenue hold for eBay. And second, it will give eBay an incremental boost in fee revenue as mentioned above.

 7) Within 24 months, expect eBay to make managed returns mandatory for all sellers claiming higher buyer satisfaction. Truth is the satisfaction will be all eBay's as they will then be able to claim all returns billed as fees and count that as revenue.

 8) After eBay has made managed returns mandatory, eBay will expand the return window to 60 days in order to increase the number of returns. They will claim this is being done to increase buyer confidence when in fact the only confidence will be on the part of eBay who knows return activity will increase and revenue from the return fee charged to sellers will also grow.

 9) eBay started forcing sellers to process shipping labels through eBay instead of PayPal. This amounts to a revenue shift as commissions PayPal once received are now counted on eBay's books.

10) Since many sellers do not conform and do not process their labels through eBay shipping, eBay will announce that they are shutting down PayPal shipping in order to complete the revenue shift from PayPal's books onto eBay's books. This one has the potential to backfire as sellers who refuse to use eBay's often broken shipping process will open accounts with third parties rather than risk their business on eBay's glitchy shipping process. This could end up costing eBay revenue instead of giving them the boost they anticipated.

Wall Street analysts only look at the numbers they are spoon fed, and choose not to delve into how eBay cooks the books to manipulate and boost reported figures.

If eBay were ever audited for the accuracy of the figures they report, the house of cards will collapse, and the MBA's (Masters of Business Assassination) misleading accounting practices would be seen for the fraud they are.

eBay and PayPal obviously fear this day will come sooner rather than later which is why they have taken steps to eliminate as many users as possible from being able to participate in Class Action law suits against the company.  

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: eBankrupted

Thu Oct 18 01:39:06 2012

I don't believe any of it. Bernard Madoff showed a profit for years until his shell game was exposed.

Why hasn't PayPal been regulated as a bank yet? How can PP not be a bank if B&M stores are taking PP at the register like a credit card?

Bill me later payments APR at 19.99% from the date of purchase if the payment is late. That loan shark interest rate is obscene.

Dodging taxes by moving the company around and offshore could be the smoking gun for Feds to check for possible pyramiding/laundering.

It's just a matter of time until the truth is exposed.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

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

Thu Oct 18 01:53:25 2012

Beautiful Job Ric.
MH

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Rexford

Thu Oct 18 07:45:15 2012

Dance for the analysts Donahoe!   Dance!

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: FREDDY This user has validated their user name.

Thu Oct 18 08:20:07 2012

Wait till they follow Amazon - 90 day return policy.(in place on Amazon for baby products) No question asked. Ebay follows Amazon and tries to one up.  

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: Beth This user has validated their user name.

Thu Oct 18 08:40:52 2012

Freddy - check your facts. Amazon REDUCED the return time on Baby items from 1 (ONE)YEAR or 365 days to 90 days.  When was the last time eBay reduced anything except my profit??

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

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

Fri Oct 19 00:56:06 2012

As a matter of interest, Visa’s “V.me” digital wallet is out of it’s beta testing on buy.com and is now generally available for credit card users in the US and Canada (and Australia soon too, I hope). I anticipate that off-eBay online merchants in North America, who already have a credit card merchant accounts with a real bank, will surely dump the clunky PreyPal in favor of Visa’s V.me payment gateway—and John Donahoe’s performance bonuses will surely be coming to an end as PreyPal is no longer able to man the bilge pumps and  the rusting old hulk, eBay, slowly and finally sinks beneath the waves.
 
Online buyers can now open a professional “V.me” digital wallet account at:
https://www.v.me/enrollment/consumers/new
 
Let’s see how well the eBafia Don and the clunky PreyPal do in the next twelve months …

eBay / PayPal / Donahoe: Dead Men Walking

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: bitbybit

Fri Oct 19 01:06:31 2012

There are so many mobile wallets opening and multiple ways to pay. With ebay finishing off the small sellers, who were also buyers, I doubt Paypal will be long in the game. Laying off Paypal employees is surely a telltale sign.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: pace306 This user has validated their user name.

Fri Oct 19 07:48:00 2012

Its funny how accurate the people who post here are!

Ric is/was 100% correct - the #s are as fake as a $3 bill!

I KNOW (based on what I hear from eBay outside reps) that the return policy will be extended right after the holidays ''where there were so many emails from customers complaining that 14 days isnt enough time'' to 30 days and then longer then that when it starts to get ''really quiet'' in March.

As always with eBay - when ever ANYTHING goes wrong - its the sellers fault - and JD will say so as an excuse to once again change eBay policy.

Philip is correct about v.me - but eBay will simply once again do a TRS/TRS Plus game. If you dont use Paypal - we cant guarentee your payments/items are safe and covered under buyer protection AND sellers wont get the extra %20 and the TRS status!

We all know the games that these people play, Im just suprised Wall Street is so slow on the uptake!

Testing a major site change LIVE during the holidays? Are you crazy?!

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Rexford

Fri Oct 19 11:57:50 2012

eBay is just a venue.

A micro-managed venue.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Spartacus

Fri Oct 19 14:14:36 2012

I have a feeling most eBay merchants are holding on for this holiday season to see if they can recoup losses from this year.

It's funny, everywhere I go I've never run into a single person with something good to say about eBay. In fact, it's opposite. Mention eBay and most people respond that eBay is too expensive to sell on, variety is no longer there and/or eBay is full of scammers.

I'll be shocked if eBay reports growth from this point forward.

The sooner V.me starts rolling out for merchants, the sooner Paypal will flounder. In the future I see numerous legal problems, regulatory issues and other pitfalls for eBay/Paypal.

To quote Philip Cohen ''eBay / PayPal / Donahoe: Dead Men Walking''

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

This user has validated their user name. by: Tula

Fri Oct 19 15:26:01 2012

@Spartacus: Sad but true. I've been doing interviews for a new contract job (my ecommerce selling doesn't pay the bills yet) and I usually mention selling on ebay and other sites as a side business. I've had several interviewers ask me how ebay is doing these days. They've usually mentioned the scams they've seen or how expensive it is to try to sell anything.  

Only a few years ago, I would mention ebay and people would expound at great length about the fun things they bought or sold on there. I myself used to sing ebay's praises, back when I was actually making some money there and when nearly every item I listed would sell with multiple bids. I didn't mind paying listing fees then because things usually sold right away or with a relist or two. Wish I could say the same thing now. The truth is, most of the fun and unique thing I would sell (and buy) are simply not being listed on ebay any longer. I've never seen a company so eager to shoot itself in the foot before. It's inexplicable.

Perminate Link for eBay Grows Gross Merchandise Volume 11% in Q3   eBay Grows Gross Merchandise Volume 11% in Q3

by: mjr55 This user has validated their user name.

Fri Oct 19 21:07:16 2012

Some of the comments on here are getting so old.

Quarter after quarter Ebay has been showing increases it seems the last few years.....it's pretty obvious that although some of the changes haven't been popular....they seem to be working (maybe not for everyone....but people somewhere obviously are accounting for these numbers). I just can't believe some people still post about conspiracy theories still....like years later.  

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