eBay said Gross Merchandise Volume - the total value of all successfully closed items on the eBay trading platforms - was $12.6 billion in the third quarter of 2006, representing a 17 percent year-over-year increase from the $10.8 billion reported in the third quarter of 2005. eBay users generated a total of 584 million new listings in Q3-06 (which included 95 million new Store Inventory Listings), 27% higher than the 459 million new listings reported in Q3-05 (which included 52 million new Store Inventory Listings).

eBay announced third quarter 2006 results on Wednesday and reported record consolidated Q3-06 net revenues of $1.449 billion, representing a growth rate of 31% year-over-year. Gross profit was $1.132 billion in the third quarter, up from $905 million in the same quarter last year.

"Q3 was a very good quarter for the company and a continuation of the strong earnings growth we delivered throughout the first half of the year," stated eBay President and CEO Meg Whitman in a press release. "As our results demonstrate, we are executing on our strategy to grow our Marketplaces, PayPal and Skype businesses individually and collectively to deliver greater value to our community of users and to our shareholders."

In a conference call on Wednesday, Whitman addressed the company's efforts to "rebalance" the marketplace through reduced visibility and higher fees for eBay Store listings, a move that was announced to users in July. "While price increases are never met with cheers from those affected, our community and customer support teams spent considerable time explaining the pricing changes to our sellers. We found that many sellers actually recognized the need to restore balance to their marketplace and were supportive of our efforts. Since most actions were initiated late in Q3, we expect to have more visibility after the fourth quarter, but we are cautiously optimistic and remain confident that these changes will help rebalance our marketplace, which means an optimum experience for buyers and maximized cash flow for sellers."

Whitman and eBay CFO Bob Swan addressed a question regarding Google and Yahoo advertisements that are appearing on the eBay platform. Whitman said the Yahoo ads on null search results "appear to be quite positive and non-cannibalizing." eBay is extending the test to complementary searches, and Whitman called the early results "good." She said eBay has also launched graphical ads served by Yahoo in the Motors category, but Swan said those tests have just started. Swan said, "We feel pretty good, but we're not going to be able to provide a heck of a lot more visibility of this until we get to January."

According to eBay's press release on third-quarter earnings, PayPal net revenues totaled $350 million in Q3-06, a growth rate of 41% over the $247 million reported in Q3-05. PayPal had nearly 123 million total accounts at the end of Q3-06, a 41% increase from the 87 million reported in Q3-05. Those accounts helped drive record Total Payment Volume (TPV) of $9.1 billion in Q3-06, a 37% increase from the $6.7 billion reported in Q3-05. PayPal Merchant Services posted a record $3.3 billion in global TPV in Q3-06, representing a 59% increase from the $2.1 billion reported in Q3-05.

Skype net revenues totaled $50 million in Q3-06, representing a 13% increase from the $44 million reported in Q2-06. Skype had 136 million registered users at the end of Q3-06, representing a 20% increase from the 113 million users at the end of Q2-06.

eBay said it repurchased approximately 24 million shares of its common stock at a total cost of $667 million during the quarter, completing one-third of its previously announced stock repurchase program.

eBay held a conference call to discuss earnings on Wednesday afternoon, a transcript is available on the SeekingAlpha.com website.

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