Instead of combining results and thoughts on the call, this quarter, I tried to separate them out somewhat so refer to this 'first thoughts' post for a quick view of the results.
I'm putting comments/observations from the call into three buckets as opposed to doing a chronological transcript as those are available all over the b-sphere now.
- Body language - What's the mood? Any tips on positives/negatives around eBay core?
- eBay core - All eyes are on the marketplace business, so I tend to focus on this.
- PayPal/Skype - Anything interesting that came up around PayPal/Skype.
Body language
- JD hinted that the early results from the MP changes are positive/exciting.
- Strong set of assets, bold changes
- Changes needed for collective good
- Rajiv is retiring and Lorrie will take his place. This effectively seems to take a 'layer' out of the management structure and while I think Rajiv is an asset, I'm a big fan of a flatter org and I know eBayers will appreciate this. Steph has an expanded role, details are here.
- During one Q+A, Youssef asked about Q3 and any softness in guidance. Swan talked about the economic concerns, they are impacted by unit volume in vehicle. Format changes in vehicles and Motors impact.
- Consumers are migrating to lower-ASP items across all categories (ASPs were cited as a big factor to GMV slow-down - see slide 10). eBay encouraged Wall St. to watch sold-item trends as ASP/GMV girate around based on economy and changes.
- We will continue to coupon and do less marketing.
- We will likely make category-based changes.
- We WANT to have more poweseller discounts.
eBay Core
- In the accompanying presentation, I noticed there's more data on GMV growth.
- In the US, Q207 was $6.7b and Q208 was $7b - a .3b increase or a 4% y/y growth (not negative as I originally feared).
- For Intl, Q207 was $7.8b and Q208 was $8.7b - a .9b increase or 11.5% growth.
- This is before FX comes out so the GMV growth slow-down appears to be international.
- According to the slides, Active user growth was 6% y/y ex-china, that appears to be an about the same as Q1.
- JD covered some of the changes eBay has made to the marketplace business and talked about the buyer focus.
- DSRs, BM, etc. working
- Number of powersellers with DSRs > 4.8 have doubled
- Bob Swan went through a neat slide here.
- Couponing - during the Q+A, the question was asked about how much they are doing. Marketplaces revenue was impacted by 3 points - a) lower take rate, b) higher discounting for powersellers and c) coupons. coupons are contra-revenues.
- Large seller discounting - (I think the questioner was talking about buy.com, but Bob answered around powerseller discounts)
- Bob also mentioned that sales+marketing are down as they are using coupons (this could be around google spend).
- Q: Any category specific pricing, timeline?
- A: Evaluating results.
- Q: Buy.com - how do the economics work?
- A: Buy has great service and is an example of incenting and rewarding all sellers (small to buy).
- Q: GMV growth was 4% - lowest in years, what did you put into your guidance?
- A: Swan: focused on velocity (back to slide 10 essentially) and long-term that will lead to gmv growth. Making progress on successful item growth. GMV growth was hit by lower ASPs.
- Q: If you strip out motors, GMV growth was 12%, if you look at FX, is it 4% impact?
- Q: Will we continue to see slowness of Motors,etc.? around Korea, etc?
- A: Implications going forward - GMV from vehicles will continue to be weak, long-term the model is changing.
- Shipping costs are down 10%.
- NPS is up.
- Swan hinted that they will monetize things in different ways and thus sold items can also have different monetizations. Mentioned paypal penetration and advertising as beneficiaries of velocity.
Paypal/Skype/Misc
- Nothing really to add here, the call (Q+A) was almost 100% focused on the MP biz.
Conclusions
Some good color on the marketplace change. I can see eBay's conservative 2H08 stance given all the macro-economic issues out there. Given Wall Street's short-term nature, I think they'll view the quarter as mostly negative in that there were some increasingly negative trends around GMV growth and active users. I'll keep an eye on analyst notes tomorrow and post a summary of what they are thinking.
This article has 2 comments:
No, they weren't.
"DSRs, BM, etc. working"
No, they aren't.
"Consumers are migrating to lower-ASP items across all categories"
Another theory would be, there are less higher-ASP items available, than ever before!
Why?
See the above two Q&A's?
They equal less Quality-sellers and less Quality-items.
"We will continue to coupon and do less marketing."
They bribed 10%, but only got 6% to come take a look-see and take the bait. When there's less to see, 'cept for that Buy.com stuff, no one cares. Not even a bribe works.
Less marketing = we hate Google. Expect less traffic with this myopic 'reasoning'.
"Bob Swan went through a neat slide here."
With the price down approx. $4, it looks like ebay as a whole, is taking a slide. Not so "neat", though.
At this point, even Tim Boyd is saying the same things that ebay sellers have been saying. Of course, those sellers have been saying it for a couple years or so. Maybe they're clairvoyant, whatcha think?
"Boyd added the company's 8 percent growth in gross merchandise volume show it is "hemorrhaging market share to competitors like Amazon ." He also noted that consumers' spending patterns are deteriorating and, meanwhile, eBay is trying to "alter the form, function and functionality of its core marketplace."
Brute!