eBay reported financial results for its first quarter, ended March 31, 2008, reporting profits up 22 percent year-over year. eBay posted Q1-08 revenue of $2.19 billion, up $424 million (24%) from the same period last year. Net income on a GAAP basis was $460 million, up 22 percent from the same quarter last year.
The company said revenue growth was driven primarily by Marketplaces net transaction revenues, the ongoing expansion at PayPal, Skype and the company's global classifieds business.
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, had $1.48 billion in revenue, equating to 19% year-over-year growth. Gross merchandise volume was $16.04 billion for the quarter, an increase of 12% over the first quarter of 2007.
eBay hosted a conference call with analysts after earnings were released. President and CEO John Donahoe said the company saw early progress with the company's Best Match search initiative in the US, UK, Germany and France. He said there is early evidence that that DSRs are working, as the average DSRs show signs of improvement, and average shipping cost is 2 percent lower. Buyers are telling eBay they are seeing better communication from sellers, as well. But, Donahoe said, "We still have a lot more work to do."
Donahoe opened the door to expanding its PayPal-only policy in Australia to other sites, and said the policy would increase transaction volume on the site.
The three areas eBay is focused on are improving trust, making finding easier, and expanding selection.
In answering questions from Wall Street analysts, Donahoe said he did not anticipate running an advertising campaign to tell shoppers about the improved buyer experience on eBay.
eBay CFO Bob Swan said three factors would lower eBay's "take rate": eBay will introduce more category-based pricing changes; eBay will give more to sellers through discounts tied to improving DSR feedback ratings; and eBay will "step up" its coupon program.
Donahoe said the coupon program had a very surprising ROI (return on investment). He said there was a very good redemption rate, and eBay would expand the coupon program in the second quarter. He called the program "targeted and focused," providing coupons to top buyers in the part of the life cycle with the biggest impact.
Donahoe talked about the testing eBay is doing on "split-screen" in which eBay presents fixed-price and auction listings side-by-side on the search results page (http://www.auctionbytes.com/cab/abn/y08/m02/i29/s01). He said there will be different formats of the split screen in different categories, and by the "pre-holiday season," the new split-screens would roll out. He said buyers have told eBay that getting good value is more important than the listing format.
Donahoe talked about the category-based pricing in the media category, and said listings have increased, while conversion rates (percentage of listings that sell) declined slightly. He said with Best Match, conversion rates should go up over time, because Best Match looks at historical data on key search terms.
The conference call was the first for Donahoe in his new role as President and CEO; he's had a low profile since taking the reigns from Meg Whitman on April 1, granting few - if any - media interviews.
http://investor.ebay.com/events.cfm
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