Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed July 18 2012 16:20:54

eBay Revenue up 23 Percent in Second Quarter 2012

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

eBay Inc. Reports Strong Second Quarter 2012 Results

Revenue and Net Income up Double Digits Year Over Year; Marketplaces Business Delivers Strongest Growth Since 2006

SAN JOSE, Calif.- eBay Inc., a global commerce platform and payments company (Nasdaq: EBAY), today reported that revenue for the second quarter ended June 30, 2012 increased 23% to $3.4 billion, compared to the same period of 2011. The company reported second quarter net income on a non-GAAP basis of $730 million, or $0.56 per diluted share, up 16% year over year primarily due to strong top-line growth partially offset by increased investment in the shopping experience and the impact of acquisitions. GAAP net income of $692 million, or $0.53 per diluted share, reflected a gain on the divestiture of a business in 2012 and increased significantly year over year due to a loss from the divestiture of certain GSI businesses and GSI transaction-related expenses in the second quarter of 2011.



"We delivered a great second quarter, driven by eBay Marketplaces' best performance in years, strong growth at PayPal and strong same-store-sales growth for GSI's large retail customers," said John Donahoe, eBay Inc. President and CEO. "Our entire company is strong, but we're particularly pleased with eBay Marketplaces, which delivered its strongest organic growth in gross merchandise volume, excluding vehicles, since 2006. And mobile continues to be a game changer. We now expect eBay and PayPal mobile to each transact $10 billion in volume in 2012 -- that's more than double 2011, a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago. Retail is at an inflection point, and we are helping to reshape how people around the world shop and pay."

PayPal delivered a strong second quarter performance. PayPal ended the quarter with 113.2 million active registered accounts, a 13% increase over the second quarter of 2011. PayPal revenue increased 26% year over year, driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption and strong growth in Bill Me Later. PayPal's net total payment volume (TPV) grew 20% year over year to $34.5 billion. PayPal continues to focus on innovation, delivering on its vision of anytime, anywhere payments and growing its business in mobile and point of sale. This quarter, the company announced a joint venture with SoftBank in Japan, extending its global expansion strategy for small business payment solution PayPal Here. Sixteen large brand-name U.S. retailers have announced their intent to work with PayPal on point of sale initiatives. The PayPal point of sale payment solution, which gives shoppers the opportunity to pay using just their mobile phone number or PayPal payment card and PIN, was rolled out in Abercrombie & Fitch and Jos. A. Bank stores in the U.S. beginning in the quarter.

eBay's Marketplaces business delivered its strongest organic growth rate in gross merchandise volume (GMV), excluding vehicles, since 2006, at 15% on a year-over-year basis, excluding the effects of foreign currency (FX). Also excluding FX, international GMV, excluding vehicles, increased 16% and fixed price GMV, excluding vehicles, increased 20% year over year.

Marketplaces GMV, excluding vehicles, increased 10% year over year to $16 billion in the second quarter of 2012. Marketplaces revenue increased 9% year over year, driven by strong growth across all regions. Sold items increased 20% compared to the second quarter of 2011, a 2.5 percentage point acceleration, reflecting a better customer experience and improved selection. U.S. GMV, excluding vehicles, in the second quarter increased 14% year over year, driven by growth in active users, mobile engagement and strong performance in key verticals, including fashion, tickets and parts & accessories. International GMV, excluding vehicles, increased 8% year over year to $10 billion, driven by strong growth in Europe and Asia-Pacific. Fixed price GMV, which represented 65% of total GMV in the second quarter, grew 13% globally year over year. Downloads of eBay's suite of mobile apps have surpassed 90 million globally since the launch of mobile in the third quarter of 2008.

The company's GSI business, which was acquired in the second quarter of 2011, contributed $221 million in revenue for the second quarter. GSI generated $674 million in global ecommerce (GeC) merchandise sales during the second quarter. Same store sales grew 21% year over year, reflecting strong ecommerce sales from retail clients.

Other Selected Financial Results
    Operating margin - GAAP operating margin increased to 20.5% for the second quarter of 2012, compared to 18.8% for the same period last year. The increase in GAAP operating margin was due primarily to the impact of GSI transaction-related expenses incurred in the second quarter of 2011. Non-GAAP operating margin decreased to 27.3% in the second quarter, compared to 27.6% for the same period last year.
    Taxes - The GAAP effective tax rate for the second quarter of 2012 was 19%, compared to 3% for the second quarter of 2011. The increase was due primarily to the tax benefit received in 2011 for the loss on the divestiture of certain GSI businesses immediately following the acquisition of GSI. For the second quarter of 2012 and 2011, the non-GAAP effective tax rate was 24% and 19%, respectively.
    Cash flow - The company generated $768 million of operating cash flow and $411 million of free cash flow during the second quarter of 2012.
    Stock repurchase programs - The company repurchased approximately $355 million of its common stock in the second quarter of 2012. In addition, the company's board of directors authorized an additional $2 billion stock repurchase program, continuing to offset dilution from the company's equity compensation programs.
    Cash and cash equivalents and non-equity investments - The company's cash and cash equivalents and non-equity investments portfolio totaled $7.6 billion at June 30, 2012, up from $7.5 billion at December 31, 2011.
    Capital allocation - The company believes that it has a strong balance sheet and free cash flow that will allow it to finance its organic needs and stock repurchase programs over the near to medium term, and the company does not anticipate meaningful mergers and acquisitions activity in the near term. However, most of the company's cash is generated and resides offshore. The company intends to remain opportunistic when assessing sources of additional liquidity, and to the extent it increases liquidity above current levels, the company expects that its net income and earnings per share will be negatively affected.

Business Outlook
    Third quarter 2012 - eBay expects net revenues in the range of $3,300 - $3,400 million with GAAP earnings per diluted share in the range of $0.42 - $0.44 and non-GAAP earnings per diluted share in the range of $0.53 - $0.55.
    Full year 2012 - eBay expects net revenues in the range of $13,800 - $14,100 million with GAAP earnings per diluted share in the range of $1.91 - $1.96 and non-GAAP earnings per diluted share in the range of $2.30 - $2.35.

Quarterly Conference Call
eBay will host a conference call to discuss second 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.

Also see EcommerceBytes Newsflash news story.




Comments (47) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: Jsac This user has validated their user name.

Wed Jul 18 16:33:19 2012

Sadly with major brands coming on board and killing the "small" sellers seems to have worked so far

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

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

Wed Jul 18 17:45:17 2012

Smoke, mirrors, revenue shifting, and over reliance on a payments platform facing stiff competition in the near future.

Rating: SELL.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: mylifeisgood This user has validated their user name.

Wed Jul 18 18:18:34 2012

Donut isn't going anywhere in the near future...

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: Digmen1 This user has validated their user name.
Web Site

Wed Jul 18 19:09:56 2012

As someone who uses ebay reluctantly and would like to see it fairer on small sellers...(or disappear)...

I have been watching the Q reports for the last 2 or 3 years.
Every time posters come on here saying its all smokescreens and mirrors and that next quarter ebay's figures will be worse.

But they seem to be getting better each quarter.

So this just goes to show that they think they are on the right track with big box sellers, new merchandise, Paypal and mobile.

Auctions did not even get a mention.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: Ric

Wed Jul 18 19:32:31 2012

As expected, eBay continues to claim GMV growth despite the fact that the most significant part of that growth is not driven by sales but is instead artificially inflated by the ever increasing numbers of sellers who include shipping costs into their selling price.

Increasing numbers of sellers are converting to the 'free shipping' model to escape eBay's penalty fee on shipping costs which are not included in selling prices.

After years of failing to grow GMV, eBay imposed the final value fee on shipping costs in order to motivate sellers to help artificially inflate GMV to make eBay's marketplace unit appear healthier than it really is.

Sellers are given a choice - either pay the penalty fee or roll shipping costs into the selling price to accomplish the CEO's goal of giving the appearance that sales are growing.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: Spartacus

Wed Jul 18 20:12:27 2012

Ric is correct. It's all smoke and mirrors. The addition of FVF's on shipping alone would account for the increase between quarters in 2011 and 2012.

Anybody with half a brain knows the reports that retail has been down 3 months in a row. Isn't it strange that only eBay is up? You have to dig deeper to find the real truth because eBay corporate are a bunch of fat cats in their litter box and they bury those stinkers from prying eyes.

On another note, if sales are so strong at eBay, why are big box sellers practically giving things away?

Over the last few months, I've scored quite a lot of high end electronics from big box sellers for deep discounts over retail. One big box accepted my best offer at 25% off on a $3700 item. That's nearly $1000 off retail at the local outlet, plus the eBay seller tossed in a free $200 carrying case and free shipping. Not to mention, That was during 4x eBay bucks, so it was $150 in eBay bucks PLUS double points on my Paypal reward Visa.

You'd have to be a fool to sell on eBay unless you're a Chinese seller who thinks single digit profit margins are where it's at... or unless you're desperate to move inventory just to cover costs of selling on eBay.

... ( Read between the lines here )...

eBay sellers are desperate for sales. You can find plenty of merchandise to flip on other venues. Heck, Paypal will even lend you the funds via their Paypal credit card so you never have to lay out a dime of your own if you know what you're doing.

As much as I despise eBay, I'm taking my revenge by liberating merchandise at huge discounts from eBay suckers, on Paypal's dime and flipping it elsewhere.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Wed Jul 18 20:25:16 2012

Yep smoke and mirrors.  Going after big retail  is just a revenue source shift. The addition of FVF on shipping is the still working for them as growth. Growth like that won't sustain.  Let's see what the 'growth' looks like after the FVF addition filters out. It's amazing no one calls them on this.  They also said Q3 would be lower than expected but of course, are keep the full year on target.  That meaans they are going to stick it to sellers again so they can keep their 'growth' figures.  

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

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

Wed Jul 18 20:45:53 2012

PreyPal? I still can't figure out were they are getting all the hot air to inflate these quarterly figures; possibly the same place as Enron ...

From an observer of the clunky PreyPal on eBay’s own forums:

“I just ordered an item [online] from Buy.com. When I completed the “fill in the blanks” stuff, I had a choice of payment. There was the usual charge card form and then three offerings with logos:

Pay by Visa V.me
Pay by Google Checkout
Pay by PayPal

“Funny, isn't it, which one was last. I thought there was some kind of arrangement between eBay and buy.com, a platinum-like anchor store on eBay.”

Even funnier is which one Buy put at the top of the list; major online retailers apparently are smart enough to distinguish the wheat from the chaff, after all. But, the real question is, now that Visa’s online digital wallet, V.me, is available (MasterCard’s offering still on the way), how much longer will that PreyPal logo continue to appear at all? Any one want to take bets on a time frame?
 
And as for PreyPal at physical point-of-sale, starting at Home Depot, next time you drop into Home Depot, ask the cashier how PreyPal "mobile" is going—LOL.
 
Goodbye clunky PreyPal, it has not been nice knowing you …

And then there is the little ongoing matter of the eDropOff affair; hopefully, that will eventually scald the world's greatest facilitator of wire fraud, eBafia ...
 
eBay / PayPal / Donahoe: Dead Men Walking

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

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

Wed Jul 18 20:50:02 2012

@Spartacus,

Don't overlook the fact that the eBafia takes a FVF on auctions sales whether the sales are real or faux; the only one making any money on eBay these days is probably eBay; but it simply can't last ...

The real problems will surface when Visa and MasterCard put the clunky PreyPal back into its eBay box ...

eBay / PayPal / Donahoe: Dead Men Walking

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: Ric

Wed Jul 18 22:38:27 2012

John Donahoe joined eBay as President of eBay Marketplaces in March of 2005.

eBay's stock price in March 2005 was $41.75

At Market Close Today eBay's share price was $40.76

Almost seven and a half years after JD started at eBay, and shares are $1.00 below their price before he joined the company.

If you remained an eBay investor through John Donahoe's tenure, you are still facing a loss of $1.00 per share.

That outcome speaks volumes for the many failures which have plagued eBay throughout John Donahoe's tenure.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

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

Wed Jul 18 23:28:11 2012

The free shipping forced on sellers and final value fees on shipping is what is showing up, if there were actually a strong marketplace those numbers would be much higher. JD is actually in the hole. He could not.screw up GSI or PayPal not yet anyhow. Ask a broker they will fill you in, do not let the JD paid Blogs fool you.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: pace306 This user has validated their user name.

Wed Jul 18 23:40:45 2012

Gross margins are up because of people like Skullcandy and Monster. Its just that simple.

For every few hundred of us to leave, another deal deep in the bowels of eBay is being made to replace them with another manufactorer/Diamond Seller or Chinese Mega Seller.

Ric et al are correct in where the money is comming from:

Freebays, Shipping (kickbacks from USPS  for volume shipments and gross unrecorded revenue - money thats made from the amounts between what USPS charges eBay and what eBay charges sellers, Non payment(s) of the %20 phantom seller discount(s) and Paypal's ripping off of sellers.

With out those, eBay wouldnt be where it is today - because as a whole - its not growing.

Most eBay sellers I know - thier sales are down, which should translate into LESS revenue - but here its NOT!

Unfortunately JD & Co are not going anywhere (even if it is all smoke n mirrors) and thier agressive tactics of replacing mid size sellers is continuing.

While Skullcandy and Monster have gone for it, Denon, Klipsch, Sennheiser and others havent been convinced yet to ''come on board'' (but not for the lack of trying - its simply that the dont want to loose control over thier ''brand''). Other manufactorers are being courted - I spoke to 2 that I cant name who are in the ''decision stage'' about it.

LOL I guess giving customers thier money back but keeping the fees is a money maker for eBay. Shame they cant do an honest days work (they havent since 2005? 2001?)

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: Digmen1 This user has validated their user name.
Web Site

Thu Jul 19 07:33:46 2012

OK, I see what you mean about the revenue being up due to fvfs on shipping etc.
So when the yearly anniversary of that comes round JD will find another way to increase revenue.
As for the hundreds that leave, I'd be willing to bet that of every 100 that "leave" 80 of them go back in some from or other.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: JustTheFacts This user has validated their user name.

Thu Jul 19 10:14:18 2012

As mentioned before and is a BIG deal especially when they are showing sales "growth" is the fact that they DO automatically count sales which are not TRUE sales because people have not actually PAID for the item and all of the RETURNS.

eBay still counts them in our sales numbers.

So even DEADBEATS make eBay look better than they are, and makes sense why eBay does little to NOTHING to help avoid them.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

by: tkg This user has validated their user name.

Thu Jul 19 10:38:22 2012

Of course they are making more money.  With the change to 1 day handling time for top rated sellers to save 20% - I've lost at least $200 per month.  Multiple that times how many other sellers out there that are like me who cannot commit to 1 day handling (even though 99% of my packages ship within 1 day - I just can't guarantee that).

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: TrentDep

Thu Jul 19 10:41:53 2012

I'm sorry, but FVFs on shipping did not account for even a portion of the 23% increase... Four percent?  maybe, but certainly not 23.

Is it not possible that whatever plan these multi-million dollar salaried execs are implementing is working?...

Ric?  Spartacus?  Others?   Anyone else that is being paid a multi million dollar salary?...

Clearly they have no clue what they are doing, but you guys do... Based on...  what exactly?  The fact that they are being payed vast sums of money, or that 23% increase thing?  Which of those suggests to you guys that these clowns are clueless?...

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: Rexford

Thu Jul 19 11:29:25 2012

Ric says:  "John Donahoe joined eBay as President of eBay Marketplaces in March of 2005.

eBay's stock price in March 2005 was $41.75

At Market Close Today eBay's share price was $40.76"

That more than anything speaks volumes Ric.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Thu Jul 19 12:04:09 2012

Trent,

My fees went up over 30%.  And I completly forgot about the 20% many people are now losing by not being TRS anymore. Its ALL smoke and mirrors.  As soon as they stop taking fees from sellers, lets see what the growth looks like.

Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

This user has validated their user name. by: Spartacus

Thu Jul 19 12:52:40 2012

@TrentDep - A lot of hot air coming from someone who is scalping a few event tickets per month on eBay.

Listen kiddo, when you get to the point when you have over $1mil in inventory, let me know, been there for years. So no, I don't collect a multi-million dollar CEO salary, I pay salaries. I guess maybe I don't have an MBA from Harvard but 23 years in business might qualify me as having some experience.

FYI, some of the other sellers commenting here are also pulling in excess of $10-20K per month shipping real products. Not selling scalped concert tickets that cost pennies to ship.

You wouldn't understand how fast those FVF's on shipping really add up. My last month on eBay, it raised my FVF's by over $2900 and I was only a Gold Powerseller.



Perminate Link for eBay Revenue up 23 Percent in Second Quarter 2012   eBay Revenue up 23 Percent in Second Quarter 2012

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

Thu Jul 19 14:39:58 2012

How much does ebayia pay the deps of the world to write such  sarcastic garbage?

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