eBay reported financial results on Wednesday for the first quarter ended March 31, 2007. The company said consolidated net revenues increased 27% year over year to $1.77 billion, and net profits for the quarter increased 52% year over year to $377 million. During a conference call with Wall Street analysts, eBay CEO Meg Whitman indicated that January would be the earliest eBay might increase fees.
"This first quarter of 2007 was a very strong one for the company," Whitman stated in a press release. "The strength of our core businesses, as well as the significant traction we're beginning to see across our newer businesses, helped us deliver great results across the board."
Marketplaces net revenues totaled a record $1.25 billion in Q1-07, a growth rate of 23% over the $1.02 billion reported in Q1-06. eBay's users generated a total of 588 million listings in Q1-07, 2% higher than the 575 million listings reported in Q1-06. These listings led to eBay GMV of $14.28 billion in Q1-07, representing a 14% year-over-year increase from the $12.50 billion reported in Q1-06.
PayPal net revenues totaled $439 million in Q1-07, a growth rate of 31% over the $335 million reported in Q1-06. PayPal had 143 million total accounts at the end of Q1-07, a 36% increase from the 105 million reported at the end of Q1-06. Those accounts helped drive record TPV of $11.36 billion in Q1-07, a 30% increase from the $8.77 billion reported in Q1-06. PayPal Merchant Services contributed a record $4.38 billion to the $11.36 billion in global TPV in Q1-07, representing a 51% increase from the $2.91 billion reported in Q1-06.
Skype net revenues totaled $79 million in Q1-07, a growth rate of 123% over the $35 million reported in Q1-06.
Skype had 196 million registered users at the end of Q1-07, representing a 107% increase from the 95 million users at the end of Q1-06.
eBay purchased approximately 10 million shares of its common stock at a total cost of approximately $333 million during the quarter and said it may purchase up to an additional $2 billion of common stock through January 2009 under its stock repurchase program.
During the investor call with analysts, eBay executives said they were dissatisfied with the GMV growth in the US and German, but said they believe it will improve with the company's focus on improving the buyer experience.
According to Whitman, the factors contributing to the growth rates are, first, the move to "advantage" auction listing and discourage lower quality, poorly-priced listings. "This is absolutely having the desired effect of a cleaner site; however, as expected, this is putting some pressure on our listings and GMV growth in the U.S. and Germany; but, we still think this initiative will continue to substantially improve the buyer experience." And the second factor is trust and safety initiatives. "We have aggressively stepped up our efforts around the identification and removal of bad sellers with a variety of new measures. Some of these initiatives are impacting GMV growth, but based on feedback we have heard from our buyers and rights owners alike, they are having an overall positive effect on the health of the marketplace."
During a Question & Answer session, Bob Peck of Bear Stearns asked whether there would be a price increase coming up. Meg Whitman said, "As we think about fees - as you know, we typically do something once a year, January would be sort of the time that we would do something, and we have not made any decisions at this juncture. But I would not be putting fee increases necessarily into your model for 2008 and 2009. I think it is really our job to drive revenue per listing and GMV growth through conversion rates, successful items and ASPs."
Other quotes of interest from CEO Whitman follow.
On eBay Motors: "With regard to Motors 2.0, we have seen some nice early results here, particularly around local and we have also been testing - about 5% of all eBay Motors users are seeing Motors 2.0, and we're actually getting ready to expand. So we're excited about it."
On eBay's Paid Search Activity: "We see a continued improvement in the efficiency of our ability to buy keywords, largely through our proprietary technology, which you've heard us refer to as Triton, where we know precisely the ROI of many, many, many hundreds and thousands, millions of keywords."
On the "fun" of the marketplace: "We were the original social networking site. We think around the buyer experience, adding fun and getting the next generation of fun on eBay is a really important thing. We have not lost sight of that."
On the youth demographic: "The North American team in particular is looking at, is there a younger product that we could introduce that would enable that to have younger people use eBay, because we have that question and that demand all the time."
On the evolution of the site and re-engaging users: "But if I had to say - and this is qualitative, not quantitative - I would say we are maybe 20% of the way towards being where we would like to be in terms of user engagement and the rollout of the new features and functionality that we think will change the trajectory."
A transcript of Wednesday's conference call with investors is available on Seeking Alpha:
http://internet.seekingalpha.com/article/32757
