eBay (EBAY) announced solid first quarter results. Revenue jumped 14% year-over-year to $3.7 billion, slightly below consensus estimates, but not materially, in our view. Earnings per share rose 16% year-over-year to $0.63, a penny above consensus expectations.
The firm saw solid results across all of its major business segments. The Payments segment, which includes PayPal and Bill Me Later, saw revenue increase 18% year-over-year to $1.5 billion. We saw the power of PayPal's network expand during the quarter, with total transaction volumes rising 21% year-over-year to $41 billion. Total accounts were 16% higher than a year ago, and the payment service added 5 million accounts sequentially. We're not surprised by the growth, and we still believe the network has some expansion ahead of it, particularly internationally. However, we're seeing take rates fall and margins compress. Transaction take-rates declined 10 basis points to 3.77%, leading transaction margins to fall 120 basis points year-over-year to 64.4%. We see further compression ahead as competition intensifies, but as we've see from the Visa (V)/Mastercard (MA) duopoly, there could be plenty of room for industry economic profit generation. Although online payment competition could intensify, we believe barriers to entry remain high.
Among our favorite aspects of the PayPal business is management's willingness to push for unconventional payments growth. During the quarter, PayPal announced a partnership with LG to integrate payments into smart TVs. Additionally, the firm's alliance with Discover (DFS) will likely go online in the second quarter, which will materially boost PayPal's bricks and mortars acceptance. As long as the company spreads the message, we think PayPal will see some share gains against the larger players.
As for the online marketplace, eBay's revenue increased 13% year-over-year to $1.96 billion. Gross merchandise volume also increased 13% year-over-year, totaling $18.3 billion. This occurred in spite of weak currency and traffic in Europe. We remain pleased with eBay's ability to revamp its marketplace into a destination and successfully compete with the likes of Amazon (AMZN). Although eBay recently altered its fee structure, we don't believe it had any material impact on first quarter results, but we do think it could lead to long-term market share gains. The move to change the seller fee structure is very positive, in our view, as we think it can help drive a stronger network of fixed price sellers to eBay. After becoming associated with auctions since its inception, eBay is in the process of becoming a destination for buyers of everything, much like Amazon has done successfully over the past several years. While Amazon may look slightly more attractive in the near-term because more buyers are on the site, we believe the cost savings at eBay could help drive sellers to the eBay marketplace.
Strong earnings growth flowed into eBay's coffers as the firm generated $638 million in free cash flow, 120% higher than during the same period a year ago. As a result, the firm aggressively repurchased 8.5 million worth of stock for $476 million. Both of eBay's businesses benefit from operating leverage which we think will drive free cash flow growth in the coming years.
Looking ahead, the company held firm with its guidance of 14%-17% revenue growth, driving earnings per share growth of 14%-16% ($3.8-$3.9 billion and $2.70-$2.75, respectively). We believe management guides conservatively, but regardless, we're pleased with eBay's current growth trajectory, and we believe its long-term growth story is full intact. We continue to hold shares in the portfolio of our Best Ideas Newsletter.