eBay logs its final quarter tied to PayPal
July 17, 2015 05:19 PM
The end is here for the eBay Inc. and PayPal marriage, and the companies’ last joint appearance together painted a picture of relative financial health. Overall, second-quarter revenue grew 6.8%to $4.38 billion from $4.10 billion, but there are differences when the numbers break out.
The online marketplace is in a less robust position than PayPal, its now-former payments unit that on Monday starts trading under the PYPL ticker. EBay, which retains the EBAY ticker symbol, reported a 2.1% drop in gross merchandise volume to $20.06 billion from $20.49 billion the same quarter a year ago, in part because of a strong U.S. dollar, which reduces the dollar value of items sold in other currencies.
Not counting the impact of the stronger dollar, GMV grew by 2% in the United States, 8% on international sites and 6% overall. But that U.S. growth lags far behind the roughly 15% U.S. e-commerce growth rate and Amazon’s 20% growth rate, ChannelAdvisor executive chairman Scot Wingo writes in a blog post: “This indicates that eBay is losing share of the total e-commerce wallet.”
Devin Wenig, CEO of the newly separate eBay, admits there are challenges but expressed optimism. “Six months into 2015, I'm encouraged by the state of our business and the progress we're making against our strategy. The year is shaping up well and I'm confident in our full-year outlook,” he told analysts Thursday.
“Our active buyers transacted $20 billion of GMV in the quarter with 41% of that closing on mobile. Our Q2 GMV revenue and active buyer growth are clearly steps in the right direction,” Wenig said.
The number of active buyers was 157 million, up 5.4% from 149 million in Q2 of 2014. While active buyers increased from the year-ago period, it was flat compared with the first quarter of this year. Looking at that metric historically, ChannelAdvisor, which helps merchants sells on such online marketplaces as Amazon and eBay, says active user growth has dropped notably since 2013 and 2014, when growth was regularly in the 11-14% range.
The online marketplace reported quarterly net revenue of $2.12 billion, down 2.3% from $2.17 billion a year ago.
Ebay is still feeling the effects of a security breach in 2014, when hackers accessed a database storing 145 million encrypted passwords and other “non-financial data,” including consumers’ names, addresses, email addresses and phone numbers. EBay told consumers that personal information may have been compromised and asked them to reset their passwords. The online marketplace also lost traffic when Google changed the way it ranks eBay’s pages in a way that hurt the online marketplace.
“Our absolute priority is to improve our competitiveness,” Wenig said.
Meanwhile, PayPal’s growth was robust, with the number of active registered accounts jumping to 169 million, up 11.2% from 152 million a year earlier. Active accounts are those that sent or received at least one payment or payment reversal within the past 12 months through its networks, including PayPal Credit and Venmo, but not users of Braintree’s unbranded payment checkout solutions.
The net number of payments for the quarter surged to 1.08 billion, up 27.1% from 849.7 million a year ago.
“We are making significant progress in our quest to become the world's leading open payments platform for merchants and consumers,” said Dan Schulman, president and CEO of PayPal. “PayPal was named as one of the top 100 brands throughout the world in a recent study; and in countries like Australia and the U.K. we rank as one of the top 10 most-trusted brands. This trust helps to drive both acquisition and engagement.”
For the PayPal unit, the company reported for the quarter ended June 30:
- Net revenue of $2.26 billion a 15.9% increase from $1.95 billion a year ago.
- Net total payment volume of $65.94 billion, up 19.8% from $55.04 billion a year ago.
eBay Inc. reported:
- Net income for the consolidated company of $83 million compared with $676 million in the year-ago period.
- Combined sales and marketing costs of $39 million, down 4.9%. But through the first six months of 2015, those costs are at $82 million, up 3.8% from $79 million in the first half of last year.