Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Jan 27 2016 16:33:16

eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

By: Ina Steiner

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eBay's conference call with analysts is at 4:30 pm EST today, here is the company's press release announcing fourth quarter 2015 earnings, you can view the full release with tables on the eBay investor relations website.

eBay Inc. Reports Fourth Quarter and Full Year 2015 Results

Q4 2015 Highlights:

Gross Merchandise Volume of $21.9 billion
Revenue of $2.3 billion
Active buyer base grew 5% to 162 million
Non-GAAP and GAAP EPS per diluted share of $0.50 and $0.43, respectively, on a continuing operations basis
Repurchased $550 million of common stock

January 27, 2016 SAN JOSE, Calif. - eBay Inc. (NASDAQ: EBAY), a global commerce leader, today reported that gross merchandise volume (GMV) for the quarter ended December 31, 2015 was $21.9 billion, increasing 5% on a foreign exchange (FX) neutral basis and was flat year over year on an as-reported basis, reflecting the continued impact of a strong U.S. dollar. 

Revenue for the quarter was $2.3 billion, up 5% on an FX-Neutral basis and flat year over year on an as-reported basis, driving non-GAAP net income from continuing operations of $600 million, or $0.50 per diluted share, and GAAP net income from continuing operations of $523 million, or $0.43 per diluted share. During the quarter, the company generated $1.1 billion of operating cash flow from continuing operations and $1.0 billion of free cash flow from continuing operations. eBay also repurchased $550 million of its common stock and completed the divestiture of its Enterprise business on November 2, 2015.

“We delivered solid fourth quarter results and continued to make progress against our key priorities,” said Devin Wenig, President and CEO of eBay Inc. “The quarter also marked the end of an extraordinary year during which we completed the spin-off of PayPal. We continue to grow our business and customer base while executing our plan to reposition eBay for long-term success.”

Underlying total eBay Inc. performance, the Marketplace platform delivered $20.7 billion of GMV, resulting in $1.9 billion in revenue for the fourth quarter, up 1% on an FX-Neutral basis and down 3% on an as-reported basis. During the 2015 holiday shopping season, the Marketplace platform saw over 265 million transactions across 190 markets, as consumers around the world shopped for great deals and sought-after gifts. StubHub ended the year with strong momentum, driving GMV of $1.2 billion in the fourth quarter and $232 million of revenue, up 34%, aided by strength in the sports and concerts categories. Classifieds delivered another quarter of accelerating growth with revenue of $183 million, up 15% on an FX-Neutral basis and up 2% on an as-reported basis with strong performance in Germany and the United Kingdom.

For the full year 2015, eBay Inc.'s commerce platforms continued to connect buyers and sellers around the world, with an active buyer base that grew by 8 million, to 162 million total active buyers, representing 5% growth. Total GMV was $82 billion, up 5% on an FX-Neutral basis and down 1% on an as-reported basis, reflecting the impact of a strong U.S. dollar. Revenue was $8.6 billion, growing 5% on an FX-Neutral basis and down 2% on an as-reported basis. The company delivered strong operating and free cash flow on a continuing operations basis, generating $2.9 billion and $2.2 billion, respectively, during 2015.

The results of eBay Enterprise and PayPal are presented as discontinued operations, appearing net of tax in a single line in the company's statement of income.

Other Selected Financial and Operational Results
Operating margin — GAAP operating margin decreased to 28.5% for the fourth quarter of 2015, compared to 31.5% for the same period last year. Non-GAAP operating margin decreased to 34.4% in the fourth quarter, compared to 36.7% for the same period last year.

Taxes — The GAAP effective tax rate for continuing operations for the fourth quarter of 2015 was 19.5%, compared to 1.2% for the fourth quarter of 2014. The non-GAAP effective tax rate for continuing operations for the fourth quarter of 2015 was 23.8%, compared to 20.3% for the fourth quarter of 2014.

Cash flow — The company generated $1.1 billion of operating cash flow from continuing operations and $1.0 billion of free cash flow from continuing operations during the fourth quarter of 2015.

Stock repurchase program — The company repurchased approximately $550 million of its common stock, or 19.9 million shares, in the fourth quarter of 2015. The company's total repurchase authorization remaining as of December 31, 2015 was $1.8 billion.
Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $8.5 billion as of December 31, 2015.

Business Outlook
First quarter 2016 — The company expects net revenue between $2.05 billion and $2.10 billion, representing FX-Neutral growth of 3% - 5%, with non-GAAP earnings per diluted share from continuing operations in the range of $0.43 - $0.45 and GAAP earnings per diluted share from continuing operations in the range of $0.37 - $0.39.

Full year 2016 — The company expects net revenue between $8.5 billion and $8.8 billion, representing FX-Neutral growth of 2% - 5%, with non-GAAP earnings per diluted share from continuing operations in the range of $1.82 - $1.87 and GAAP earnings per diluted share from continuing operations in the range of $1.55 - $1.60.

Note: You can view PayPal's 4th quarter 2015 earnings on the PayPal website.

Update: See EcommerceBytes Newsflash for a recap of earnings and what eBay CEO Devin Wenig had to say in a post-earnings conference call with Wall Street analysts.




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Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: FeelingFroggy This user has validated their user name.

Wed Jan 27 16:48:41 2016

What ya mean they couldn't cook the books better than that.

Shame on the head donkeys.

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by: pace306 This user has validated their user name.

Wed Jan 27 18:58:31 2016

eBay has no proper business plan for the future - thats why its only %5.

Each and every 10k filing says the same exact thing (almost to the letter). All of them outline the deep trouble eBay "may face", yet none of them provide any solutions. (Well when you have a moron, excuse me, MORONS running the company it what you should expect).

As an example, entry intro BRIC countries never happened, and so eBay kept any negotiated USPS savings.

When you have no real world experience, you cant grow your business and so eBay doesnt grow.

eBay also DOESNT pay dividends - so whats the point of owning a stock that 1) you cant really make money on unless your a day trader and 2) never really goes anywhere - its stays between 25$ to 30$ ... ?

Im not surprised at this news - %99 of all eBay sellers here will tell yo how bad business on eBay is .... %5? LORD, ITS A MIRACLE!

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This user has validated their user name. by: toolguy

Wed Jan 27 19:45:04 2016

It's up 5%, could be worse and be down 5%

eBay's making money and lots of it. . .

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This user has validated their user name. by: Rexford

Wed Jan 27 20:56:39 2016

Toolguy, that must be why Forbes, Reuters and Bloomberg are all reporting disappointing eBay results and shares are falling. eBay shares are down 9% in late trading.

Do you have any experience reading a financial report? If you did, you'd see everything isn't so rosy in eBayland.

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

This user has validated their user name. by: Rexford

Wed Jan 27 21:13:27 2016

Oh my, and still falling.

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

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

Wed Jan 27 22:47:37 2016

In his conference call, Wenig says "we intend to innovate and improve upon our C2C experience to reaccelerate our sell-to-buy flywheel."

C2C I know. But what is a "sell-to-buy flywheel"? Increasing turnover?

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by: alaska This user has validated their user name.

Thu Jan 28 03:47:21 2016

All of the numbers are not as important as whether buyers and sellers like eBay. Most buyers and sellers are disgusted with eBay which is a sign that something is very wrong with the company.

The only thing that is worse than trying to search on eBay is trying to sell something on eBay. Simple fixes that will save eBay.
For buyers:
1.) Bring back the wildcard search.
2.) Allow us to filter out, or segregate, relisted items. Relists have completely ruined eBay for buyers of antiques and vintage collectibles.
3.) Stop including the boilerplate in the words that are searched. Search should only include words describing the item.
4.) Stop allowing fake items on eBay. Concerned people alert you to fakes and you do nothing.
5.) Allow a search across multiple categories at the same time, like art, antiques, & collectibles, but no others.
6.) Get rid of Private Auctions. It just makes it easier to sell fakes.
7.) Lower seller fees to bring back the sellers who quit eBay over high fees, which will bring in more quality items for buyers.
8.) Bring back subcategories for non-fiction books.
9.) Get rid of Best Match.
10.) Stop changing the keywords that we search to the keywords that you think we really meant.
11.) Bring back the ability for us to see what other bidders are buying.

For sellers:
1.) Lower the fees to 5%, the way it used to be.
2.) Make selling easier. It's become so complicated with all of the rules, like having a minimum image size.
3.) Bring back the feedback that sellers can leave for buyers.
4.) Keep unsold items available for relist for up to 2 years.
5.) Stop constantly changing things that aren't necessary.
6.) Stop favoring buyers over sellers in disputes where the seller is in the right.
7.) Allow returns only for 7 days after the buyer recieves the item.
8.) Bring back the Level Playing Field that you promised sellers would have forever.

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: maxmad This user has validated their user name.

Thu Jan 28 06:00:12 2016




This sad fourth quarter earnings will only mean one thing, more bad for sellers will be coming down the pipe, they will find ways to take more money , get ready sellers, it's coming real soon guaranteed



Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: unknown This user has validated their user name.

Thu Jan 28 07:21:18 2016

@nsc, if you google the sell-to-buy-flywheel, it shows up 9 times in google search results - all from wenig about ebay.

"We will also promote within this subscription, the ability for consumers to sell without fees, hence driving not only buying velocity, but also the unique eBay sell to buy flywheel."

Sell to be able to buy?

At least it's not synergy...

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This user has validated their user name. by: Rexford

Thu Jan 28 07:54:17 2016

nsc says "But what is a "sell-to-buy flywheel"?

Sounds like gobbledegook MBA speech to me but what I hope he means is bringing back the ecosystem that was once eBay. The days when when sellers sold, and when they made a lot of money, they'd also buy on eBay.  I'm probably dreaming with this interpretation as something so logical always seems to be beyond eBay management's grasp.

Of course that will never work without a level playing field. They would have to fix search, end the practice of selling limits, and end the practice of rolling blackouts.

The ONLY thing that will save this company is for it to go back to its roots.

The literal definition of flywheel is "a heavy revolving wheel in a machine that is used to increase the machine's momentum and thereby provide greater stability or a reserve of available power during interruptions in the delivery of power to the machine".

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: Frank Abagnale This user has validated their user name.

Thu Jan 28 08:12:04 2016

Could be much worse--there could be two Toolguy's  

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: rhawk This user has validated their user name.

Thu Jan 28 09:25:16 2016

How much of the sales were made by Chinese vs. American sellers?

I bet the numbers would be very skewed to the chinese.

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: comments This user has validated their user name.

Thu Jan 28 09:44:06 2016

You cant really blame DW yet. He just inherited a massive mess and epic destruction from JD. Many of the people bringing value to the site though legitimate and high quality items stopped listing and selling to avoid having their products devalued and seller standings demoted due to the return defect lunacy. Whenever ebay discovers that above all else....when sellers bring quality and value to the site there will always be buyers to buy them.

When you have the current storm of amazon/walmart drop ships, harsh and pointless requirements, unreasonable standards, 1 sides disputes, buyer rentals, and a crew of upper ebay staff finding ways to work against seller members you can not grow or move forward. Ebay has to work hand and hand with its sellers to get them to provide quality items are fair prices. Buyers will go where the deals are. Buyers are savvy, educated, and well researched. When they are not getting value then they go to amazon.

I am fairly certain buyers DO want tracking within 24hrs. But SERIOUSLY doubt that it is more important then getting a good deal. The good deal is the carrot, not the hoops you made the seller jump though. If I had a 50% feedback score and listed a $100 item for $50 someone is still going to buy it. Value is EVERYTHING.

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

This user has validated their user name. by: Ric

Thu Jan 28 11:24:05 2016

eBay's disastrous growth rate is due wholly to eBay's decades long assault on their sellers many of whom were eBay's highest volume buyers.

eBay has punished, denigrated and alienated their once loyal sellers, and in so doing is now reaping what the negative benefits of their efforts.

eBay has destroyed and will be unable to rebuild the sense of community which once existed between their buyers and sellers. The resulting antagonistic relationship eBay has encouraged by inserting themselves so deeply into the transaction mechanics needs to be significantly scaled back. Even if eBay were to heed the advice and scale back their involvement, it will be years before buyers and sellers will feel the relief.

These are oft repeated realities from which eBay is unlikely to recover from as current management fails to accept the reality of how easily they could turn things around.

While not naming names, Mr Wenig places the blame where it belongs, on the ill fated reign of terror which was the tenure of John Donahoe.

What he fails to acknowledge is the challenge he now faces to reverse the decade long failures. Instead, Mr Wenig follows the same pattern as his predecessor by promoting long term programs which fail to address the root causes of eBay's steady decline.  By the time his so called new initiatives are proven to have no effect, he will likely be trumpeting other newer programs in order to distract Wall Street



If Mr Wenig is going to reverse eBay's failing fortunes, he needs to reverse the many negative changes imposed in the name of disruptive innovation.

His first step should be to address and correct the marketplace destruction created when eBay implemented the Cassini search engine and in that process, return to time ending soonest as the default search order.

The upside of impulse purchasing a search order reversal would generate should not be ignored if this management team truly wants to grow revenue.

Now, lets put current and future volume and revenue growth in perspective.  

While the US Postal Service seems unable to save themselves, their perpetual price increases make up the largest part of eBay's reported volume and revenue growth. This is a reality that neither eBay, nor Wall Street seems to acknowledge or accept.

Wall Street and eBay fail to address the fact that recent significant increases in US Postal rates is going to continue to artificially inflate eBay's 2016 sales volume.  Many sellers include shipping costs in the retail price of their listings which in turn reflects in an increase in GMV.

This is also leading to inflated revenue numbers based on Final Value fees assessed.  Let's not forget that eBay also charges FVF on postage costs not included in the selling price, so revenue is absolutely inflated due to higher postage charges.

The positive influence of higher postage rates on GMV and fee revenue also goes a long way to explain why eBay intentionally failed to negotiate better discounts for sellers while Amazon was able to negotiate much more favorable rates for their sellers.

If eBay had succeeded in negotiating a rate freeze for their sellers as Amazon was able to do, management knew that they would be hard pressed to generate GMV or revenue growth.

Bottom line, eBay's new management is willing to repeat the same failed processes of promising positive results over the long term while failing to make the simple system and policy reversals which would generate more success for their sellers.

eBay's plan to increase the amount of structured data is the same kind of smoke and mirrors past CEO's have offered in order to lead Wall Street to believe good things are coming while failing to correct the root causes of the marketplaces short comings.
 

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

by: queenfloraday This user has validated their user name.

Thu Jan 28 11:33:57 2016

eBay needs to do field research on the public's perception of it's brand. That should tell them everything they need to know about how they can grow. Everyone I speak to perceives eBay as a auction or OOAK selling site of 10 years ago. No one thinks of it as a site for big box brand type selling venue. Knock-offs just make them look cheap and unsavory.
Hard to change a brand's public perception once it is established.

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

Thu Jan 28 11:41:25 2016

These earnings are no surprise and a long time coming. Their smoke and mirrors could only put this off for so long. Given how bad sales are this month, it looks like they have no intention of fixing anything.  

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This user has validated their user name. by: toolguy

Thu Jan 28 11:41:25 2016

@Ric

eBay's doing something right, they made over $2 billion in profit for 2015.

Some of the biggest auto makers don't even make that much in profit.

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This user has validated their user name. by: toolguy

Thu Jan 28 11:46:56 2016

Actually eBay management is very SMART

They were able to squeeze more profit by doing NOTHING, they let the USPS do their dirty work.

eBay wins no matter what, that's SMART business.

Sellers have no choice but to pay higher fees and there's no getting around it unless you leave eBay and I'm not even close to doing that and eBay knows it. . .

Perminate Link for eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015   eBay Grows GMV a Mere 5 Percent in Fourth Quarter 2015

This user has validated their user name. by: iheartjacksparrow

Thu Jan 28 11:52:50 2016

Amazon usually releases their quarterly reports the day after eBay, so it will be interesting to compare their numbers (and read Toolguy's explanation for why eBay is actually in a better financial position).

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This user has validated their user name. by: toolguy

Thu Jan 28 12:10:07 2016

Does anyone think Amazon made over $2 billion in profit for 2015?

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