eBay profits rose six percent

eBay profits rose by 6% to $676 million or $0.53 per diluted share, and revenue by 13% to $4.4 billion, beating some analysts’ predictions while disappointing others. The online consumer-to-consumer giant continued to gain share as its enabled commerce volume (ECV) grew by 26% to $62 billion. eBay said the strong results were mainly driven by payments unit PayPal.

John Donahoe, eBay’s President and CEO, said:

“In a challenging second quarter, our commerce and payments platforms delivered strong enabled commerce volume growth of 26 percent. PayPal generated another strong quarter while eBay’s growth was hampered by its global password reset for all users. We continued our momentum in the four competitive commerce battlegrounds of mobile, local, global and data.”

“We delivered new experiences for PayPal and eBay customers, extended PayPal and eBay into new markets, made it simple and easy for developers to integrate PayPal and offered new ways to help merchants grow.”

Gross merchandising volume (GMV) at eBay Marketplaces increased by 12%, ten percent in the United States and 14% in the rest of the world.

Revenue rose to $2.2 billion, there were 3.8 million new buyers (14% increase) at eBay Marketplaces, reaching 149 million active buyers by the end of Q2 2014.

Security breach and SEO problem

In May 2014, eBay’s systems were penetrated by hackers who exposed data on 150 million users. The company asked all of them to reset their passwords.

According to Chief Financial Officer, Bob Swan, the security breach undermined both user activity and revenue growth. He said the company was pleased, given the circumstances, that net revenue in Q2 grew by 9% to $2.7 billion in eBay’s marketplaces.

Google’s search engine algorithm upgrade – Panda 4 – which was launched in May, had a devastating effect on eBay, whose pages showed up much less prominently in search results.

Referring to eBay’s SEO (search engine optimization), Mr. Swan said “While we are confident we will work through the global password reset and S.E.O. changes, it will take longer and cost more.”

EBay outlook Q3 and whole year 2014

Q3 2014: the company forecasts net revenues between $4.3bn and $4.4 billion with earnings per diluted share between GAAP $0.51 (non-GAAP $0.65) and GAAP $0.53 (non-GAAP $0.67).

Full year 2014: eBay expects net revenues between $18 billion and $18.3 billion with earnings per diluted share between GAAP $0.04 (non-GAAP $2.95) and GAAP $0.09 (non-GAAP $3.00).

eBay Q2 2014 Financial Results

(Data source: eBay Inc.)

PayPal posted a strong Q2 2014

PayPal, an eBay subsidiary since 2002, reported total payment volume growth of 29%, with Merchant Services volume increasing by 35% and on-eBay volume rising by 13%.

With revenue growing to $1.9 billion, PayPal clocked up four million new active registered accounts, ending Q2 at 152 million (+15%).

Worldwide on-eBay penetration rose to 79.8%.

PayPal and General Electric (GE) signed a deal extending their relationship offering a retail credit card containing both brands. PayPal is committed to purchasing the loan portfolio in 2016 for an estimated $1 billion.

eBay Inc. is based in San Jose, California. It was founded in 1995 and employs more than 33,000 people worldwide.

Video – eBay Q2 2014 financial results