eBay (EBAY) reported its earnings for Q3 2012 on Wednesday. Revenue grew 15% year-over-year to $3.4 billion and net profit increased to $718 million, up 14% year-over-year. The company credits its m-commerce and mobile payment initiatives as the primary driver of growth. Payment revenue once again led the growth with a 23% increase while marketplace followed at 10%. eBay competes primarily with Google (GOOG), Square, Intuit GoPayment and other competitors in the payments space, and Amazon (AMZN) in e-commerce.
PayPal leads from the front
U.S. accounts for almost 48% of total PayPal revenue, which increased by 23% to $1.4 billion. It was partly due to a 20% rise in TPV (Total Payment Volume) to $35 billion. The number of active accounts on PayPal jumped 14% to 117 million. We expect it to reach nearly 121 million by the end of 2012. PayPal Mobile also continued its strong momentum in Q3, and the company expects to do over $10 billion of mobile payments volume in 2012.
The company has been testing offline modes through its PayPal Here device and announced a tie-up with Discover Financial Services in Q3. It is currently present across 10 major U.S. retailers and 7,000 locations and is targeting 20 additional major retailers by year-end. The growing popularity and adoption of PayPal Mobile bodes well for the company which has often being accused of not being innovative with its products. PayPal is currently working to accelerate innovation by simplifying its product organization and creating more agile development teams. A recent announcement of it trimming its workforce by 400 was another step in this direction [eBay’s PayPal Said to Cut as Many as 400 Jobs, Bloomberg, October 2012 ].
Marketplaces pick up pace
Though Marketplaces still contributes a majority of eBay’s total revenue, it has been overshadowed by PayPal’s blinding pace of growth. Marketplaces’ total gross merchandise volume including vehicles increased to more than $18.3 billion, growing about 9% year-over-year. The number of active users grew 10% year-over-year to 108 million, the fastest growth since 2007.
Mobile was the fastest growing segment within Marketplaces with 800,000 new users making purchases on eBay Mobile during Q3. Downloads of eBay Mobile apps topped 100 million, and the number of items listed on eBay via Mobile also surpassed the 100 million milestone during the quarter. Sellers are now listing 2 million items per week from their smartphones on eBay.
In order to get rid of its image as an unorganized marketplace and project itself as a provider of personalized, curated, consistent and contemporary shopping experience, the company recently refreshed its website and launched a new logo. The new website contains innovative new features such as the eBay Feed, which provides personalized recommendations and we’d be looking for its impact during Q4.
We currently have a $50 Trefis price estimate for eBay, which is being revised.
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