eBay Earnings: Bullish Comments Not Supported by Data

eBay's (EBAY) Q1 results were out Wednesday evening and the company hosted a conference call with analysts to answer their questions.

Note that the PayPal and Skype businesses are doing very well - the focus on this post is the marketplace business.

The most interesting parts were the verbal comments of the call:

• JD talked about the changes to fees and BestMatch, and how the early indications are that they are working. Specifically, he said that listings are up, conversions are holding/down slightly, completed transactions are up, and thus GMV is up.
• In the Q+A they said they are focused less on getting new buyers, but more on generating more GMV/existing active user.
• They also talked a good bit about couponing whenever they see active buyers slow down or start to leave to keep them.

The bullish comments were not really supported by the Q1 marketplace data:

• While GMV grew 12% y/y, when you peel the onion, there were some negatives.
  
  • GMV Q/Q was down 1%.
  • The US marketplace business grew at 7% y/y.
  • The international marketplace business grew at 8% y/y when you take out the benefit of foreign exchange [FX]. I'll have to check, but I think this is a material deceleration on the international business.
  • Remember that e-commerce is growing at 17-20% y/y in the US and even faster internationally so this indicates that eBay is losing share overall (it will be interesting to see what Amazon (AMZN) reports).

Active users came in at a paltry 83.9m. You can see the active user trend in this chart:

More telling is the y/y growth expressed as a %:

Over the course of the year, it's going to be interesting to see if eBay can get the GMV to grow (using the existing active buyers) and then from there see if it can accelerate the active buyer growth again.

Comments

[Dean Procter:]

Ebay is attempting to get exemption from anti-monopoly and consumer protection laws in Australia in an attempt to force sellers and buyers to exclusively use paypal for transactions. It remains to be seen how the financial industry, regulators and consumer groups feel about that. It could influence their path. They obviously intend to do this everywhere. Is it a desperate and doomed move?

2008 Apr 17 09:46 AM

[Tony P.:]

Man-O-man, is ebay lucky, or what? If they didn't have Paypal and FX, investors would be saying that ebay is OK, at best. More than likely the investors would be clamoring for someone's head. Oh well, ebay did IT again. Beat and Raise. Way to go, ebay!

As an eCommerce seller, here's my take:


10% growth in Listing Totals (equals)..

12% growth in GMV (equals)...

14% growth in Revenue



The 10% growth in Listing Totals does seem reasonable, but I wonder how much of that is the inclusion of Shopping.com advertisers into the Ebay Express platform? Since there is no specific Metric that shows those sellers are NOT included elsewhere within any metric, I'm betting they are counted in the Listing Total.

The difference between the Listing Totals and the GMV is heralded as an increase in higher quality merchandise. Really? A whole 2% growth? The cost-of-living index is higher than that; which means that the majority of goods would have to be selling at *last year's prices or less*, so that the Higher Quality Merch would make this (spectacular?) 2% growth showing.

And finally, just how do you generate 2% more in revenue, than the amount of goods passed through the site? That answer is easy. Of these three metrics, and the questions they raise, this is the only one that has a definite answer. Increased Fees... aka... ebay's Take Rate.


One thing I did notice, ebay is 'making' more revenue by not spending as much as they have in the past. When they stopped buying Goggle Ads in March (oh yes, they simply stopped), they saved quite a bit. The Spin? uh, we're concentrating on Keeping Customers instead of Acquiring new ones.

And that's why you're not supposed to pay much attention to that flat 1% growth of Active Users. You hear? Do NOT look behind the curtain!

2008 Apr 17 10:31 AM

[John Pseudonym:]

"The Spin? uh, we're concentrating on Keeping Customers instead of Acquiring new ones. "

It's a ship of fools. None of the people at the top have ever ran a business through ebay.

Power Sellers are actively pursuing other venues.

Small sellers are giving up.

Scam artists are on a roll.

I few years all that will be left are big sellers selling chinese junk and scam artists ripping people off any way they can.

2008 Apr 17 02:32 PM