eBay President and CEO John Donahoe greeted Wall Street analysts with bad news on Wednesday afternoon, telling them in a scheduled conference call, "This is eBay's first negative year-over-year quarter, and we're not happy about it." Later in the call, he defended his performance. "We met our financial commitments to you. Simply put, we did what we said we would do. We delivered double-digit revenue and earnings growth and generated 2.3 billion in free cash flow while maintaining a healthy balance sheet."
Donahoe took over from longtime CEO Meg Whitman last year, and made numerous changes to the marketplaces business designed to make for a better, safer, buying experience for shoppers. But it was a rocky year in part due to actions that alienated some long-time sellers, and capped by tough economic conditions. A former college basketball player, Donahoe told analysts, "All in all, we played a pretty decent game when most play books failed," and said that while he was frustrated that the changes were not working fast enough, eBay was on the right path.
eBay net revenue was down 7 percent in the fourth quarter year-over-year, and up 11 percent for the year. eBay said the year-over-year decrease in fourth quarter revenue was due "primarily to the impact on eBay of a stronger dollar and macroeconomic conditions globally." Net income was down 31 percent for the quarter.
eBay Marketplaces recorded $1.27 billion in revenue, equating to a 16% year-over-year decline. The Marketplaces business unit consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites. eBay did not separate out numbers for eBay versus the other marketplace properties, but eBay said online classifieds and text and graphical advertising revenue grew during the quarter. Approximately 55% of Marketplaces revenue came from markets outside the U.S.
eBay Gross Merchandise Volume (GMV) for eBay's marketplaces business excluding vehicles was down 12% in the fourth quarter of 2008 compared to the same quarter a year ago.
Fixed price trading as a percentage of total gross merchandise volume was 49 percent for the fourth quarter. There were 516,000 eBay Stores worldwide, down three percent from both the previous quarter and from the fourth quarter of 2007. Of that number, 43 percent were hosted internationally.
In 2008, for the first time, PayPal's Total Payment Volume TPV off eBay exceeded volume on eBay. And PayPal Merchant Services business is now a billion-dollar business.
The Payments business unit posted another solid quarter with $623 million in revenue, an increase of 11% year over year. Net total payment volume (TPV) for the quarter was $15.99 billion, an increase of 14% year over year. The revenue and net TPV growth was fueled by expanded adoption of PayPal Merchant Services across the Web and the inclusion of Bill Me Later, acquired on November 7, 2008. Active accounts reached 70 million, an increase of 23% year-over-year. The Payments business will continue to focus on greater penetration into the Marketplaces business as well as the acquisition of new merchants.
The press release and financials including Skype's results can be found on eBay's Investor Relations page along with the slide presentation it made to analysts.
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Edited 1/22/09 to correct quote in first paragraph.
