eBay Inc. reported financial results for the second quarter ended June 30, 2009, posting revenue of $2.10 billion, a 4% year-over-year decrease. The year-over-year revenue growth of PayPal and Skype was offset by the effects of the stronger dollar and a 14% year-over-year decline in the Marketplaces business. The company recorded net income on a GAAP basis of $327.3 million., a 29% decrease year-over-year.
The Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, recorded $1.26 billion in revenue, a 14% year-over-year decline. The revenue drop was attributable to the impact of the stronger dollar and the impact of challenging macroeconomic conditions. eBay Marketplaces continues to make progress in stabilizing its core business as the year-over-year decline in revenue slowed versus the prior quarter.
Approximately 57% of Marketplaces revenue came from markets outside of the U.S. GMV (excluding vehicles) was $11.13 billion for the quarter, a decrease of 10%, compared to the second quarter of 2008. Online classifieds revenue increased 19% year over year. There was a 2% increase in the number of global active users year over year to 88.4 million.
The Payments business unit reported a strong quarter with $669.3 million in revenue, an increase of 11% year over year. Net total payment volume (TPV) for the quarter was $16.71 billion, an increase of 12%. The revenue and TPV growth was driven by continued momentum in PayPal Merchant Services and the contribution made by Bill Me Later. Continued increases in PayPal penetration on eBay helped offset the negative impact of lower addressable gross merchandise volume (GMV) on revenue and TPV. Active registered accounts reached 75.4 million, an increase of 20% year over year. The Payments business will continue to focus on the acquisition of new merchants, greater penetration into the Marketplaces business and the integration of Bill Me Later.
Skype contributed $170.0 million in revenue for the quarter, representing 25% year-over-year growth.
eBay President and CEO John Donahoe said, "We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business. We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I'm pleased with our pace, our progress and our performance."
Analyst reaction (excerpts from their reports, focusing on the Marketplace business):
Colin Sebastian, Lazard Capital Markets:
Needle beginning to turn in the right direction.
We note that Auction GMV improved sequentially for the first time since 4Q07, while fixed price GMV reached a record level.
Plenty of to-dos remain as Marketplace still losing share in the U.S. eBay did not quite reach an inflection point in the Marketplace turnaround, and plenty of work remains before the platform competes on an even playing field. However, we expect another round of platform enhancements to be announced on Monday that should offer higher ROI potential to larger and highly rated powersellers. We note that the biggest improvement was apparent in eBay's international segment, which suggests to us that at least a portion of stabilization is due to macro trends.
Jim Friedland, Cowen:
Q2 Results: Continued Signs Of Stabilization In Consumer Demand
Management indicated that consumer demand was stable from March to June, and improved somewhat in mid-June. Gross merchandise volume (GMV) ex-vehicles declined 1% y/y in Q2:09 (ex-the Gmarket acquisition), compared to a 5% y/y decline in Q1:09.
Sandeep Aggarwal, Collins Stewart LLC:
More Evidence of a Turnaround
We had upgraded eBay to a Buy on June 3rd because we believe that the changes eBay has been implementing to transform its Marketplaces are actually working (based on our detailed prop. studies). We believe that eBay is not only improving the experience with auction format to further strengthen its unique competitive advantage but also updating many legacy issues to let fixed price format compete more effectively with Amazon/others. There is far less information asymmetry on EBAY now vs. in the past (in terms of merchant quality, shipping cost, shipping time, fraud etc). In our view, Marketplace transformation has somewhat negative implications for AMZN (slowdown in prime membership likely).
Mark Mahaney, Citi:
Marketplace Clearly Improving, 'Tho Also Clearly Still Underperforming
Organic GMV decline of 1% Y/Y (ex-Vehicles) a material improvement vs. Q1's 5% Y/Y decline. But eBay still losing share in core markets - U.S. Non-Vehicle GMV down 8% Y/Y in a likely down 1% ecommerce mkt. PayPal remains a gem: organic growth for PayPal off-eBay remains an impressive 32% Y/Y.
Related Links
eBay Press Release (in PDF format)
eBay Webcast of earnings call (with link to slide presentation)
Transcript of Earnings Call via SeekingAlpha
Comment on the AuctionBytes Blog
