With expectations fairly low, EBAY has rallied to fresh highs after posting mixed Q2 results, announcing a $1B buyback hike, and offering soft full-year guidance ahead of a pending PayPal (Pending:PYPL) split. The company expects Marketplaces and PayPal to have 2015 EPS of $2.95-$3.04 between them ($1.72-$1.77 for Marketplaces, $1.23-$1.27 for PayPal), below a $3.12 consensus.
Also: Confirming an overnight WSJ report, eBay has announced it's selling its Enterprise unit (formerly GSI Commerce) to a consortium featuring P-E firms Permira and Sterling Partners for $925M in cash. The deal is expected to close in 2H15. eBay bought GSI Commerce for $2.4B in 2011.
PayPal metrics remained strong in Q2: Payment volume rose 20% Y/Y (+28% exc. forex) to $65.9B, with a 27% increase in merchant services volume offsetting a 1% drop in eBay-related volume. Many expect the eBay's breakup to open up more opportunities for PayPal to strike deals with eBay rivals.
Marketplaces, hurt by Google algorithm changes and tough competition from Amazon, saw GMV fall 2% Y/Y (+6% exc. forex) to $20.1B. U.S. GMV rose 2%, and international GMV fell 5%.
Reuters reports EBAY is in talks to sell its Enterprise unit to P-E firm Thomas H. Lee for close to $1B.
The news service cautions price disagreements remain and there's no guarantee a deal will be inked. Thomas H. Lee is said to have outbid other potential suitors in an auction process.
Bloomberg reported last month eBay is looking to sell Enterprise, which provides e-commerce and in-store software/services for retailers, before its PayPal split, which is now set for July 17. The business, previously known as GSI Commerce, was bought for $2.4B in 2011.
eBay closed up 1.3% to $61.78. Q2 results are due in a week.
Update: Reuters' report coincides with news Toy 'R' Us, a major eBay Enterprise client, plans to take its U.S. e-commerce ops in-house by mid-2016.
As it prepares for its July 17 split from eBay (NASDAQ:EBAY), PayPal (Pending:PYPL) is on the hunt for international acquisitions to drive growth and fend off predators, chief executive Dan Schulman told FT.
"The balance sheet affords us the opportunity to look opportunistically where it makes sense to acquire," said Schulman. "I think there is a tremendous opportunity to look across the world."
Last week PayPal announced it would spend nearly $1B to purchase Xoom, a digital money transfer provider, and more acquisitions now seem to be on the horizon.
EBAY closed up 2.4% following news PayPal (Pending:PYPL) is buying top online international money transfer service XOOM for $890M. With PayPal now just 18 days away from trading separately, eBay is within $1.50 of a 52-week high of $63.30. Western Union had a less favorable reaction to the deal.
Street reactions to the purchase have been largely positive. SunTrust's Bob Peck: "We see synergies/opportunity between Xoom and [mobile payments platform] Venmo inside the PayPal ecosystem enabling lower cost (ACH, or debit worse-case) wallet funding (PayPal, Paydiant) and in-market and cross-border [consumer-to-consumer] and [consumer-to-business] transactions. This could serve to sustain relevance on the consumer side and (interrelated) preserve/lower funding cost and strengthen the value proposition on the merchant side."
Baird's Colin Sebastian: "Both PayPal and Xoom have competitive advantages from fraud-detection technology underlying their respective products. While Xoom’s engine was initially built using concepts borrowed from PayPal, they have since extended the functionality to peer-to-peer international remittance..."
Keefe, Bruyette & Woods' Sanjay Sakhrani: "[I]nternational money transmittance is a highly adjacent business to P2P payments and digital wallets, which is PayPal's core business…Despite a fairly rich valuation, XOOM is growing quickly and brings to the table a scalable, bolt-on platform to help offer additional value-add..." Morgan Stanley's Brian Nowak sees an opportunity to significantly expand Xoom's op. margin (4% in 2014).
Xoom closed at $25.05, slightly above PayPal's $25/share buyout price. SunTrust's Andrew Jeffrey thinks Western Union and/or Internet companies could make a rival bid. Baird's Sebastian: "Higher bid from traditional money transfer company still plausible given a PayPal-Xoom combination presents a much greater (and better-capitalized) competitive threat."
PayPal (EBAY, PYPL) is acquiring leading online money transfer/remittance service provider XOOM for an enterprise value of $890M, or $25/share, in cash.
The price represents a 21% premium to Xoom's Wednesday close. The deal comes ahead of PayPal's mid-July spinoff into a separate, publicly-traded, company. XOOM has been halted.
PayPal president/soon-to-be-CEO Dan Schulman: "Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money ... Xoom's presence in 37 countries in particular, Mexico, India, the Philippines, China and Brazil will help us accelerate our expansion in these important markets."
The deal is expected to close in Q4, and be slightly dilutive to PayPal's 2016 EPS. PayPal plans to pay for it with existing cash. Xoom will operate as a separate service within PayPal.
Recent PayPal acquisitions include white-label mobile payments services provider Paydiant, cybersecurity software firm CyActive, and rival online/mobile payments service provider Braintree.
Globes reports PayPal (EBAY +1%) has bought CyActive, an Israeli provider of malware-protection software that relies on algorithms to predict future attacks, for $60M. ZDNet also reports of a deal; a source states it's "worth at least $60M."
CyActive's architecture relies on both client and cloud-based software; the former inspects client Web traffic and behavior, while the latter analyzes existing malware and uses it predict/stop future threats. Corporate interest in cybersecurity has been growing rapidly following a series of well-publicized breaches, including one at eBay.
PayPal recently struck a deal to buy white-label mobile payments platform Paydiant, reportedly for $280M. Back in 2008, the company bought Israeli fraud-detection software firm Fraud Sciences for $169M.
PayPal (EBAY +0.4%) is acquiring Paydiant, provider of a white-label platform that allows retailers to create their own mobile wallet apps, replete with payment, loyalty card, and digital coupon support. Multiple sources tell Re/code the purchase price is around $280M.
Paydiant's customer base includes Subway, CapitalOne, and (notably) MCX, a consortium of major retailers that plans to launch a QR-code based mobile payments platform (called CurrentC) later this year. MCX's backers include Wal-Mart, Target, Kmart, Best Buy, Dunkin' Donuts, CVS, and several large gas station chains.
The deal comes on the heels of the Apple Pay launch, Samsung's acquisition of mobile payments platform LoopPay, and Google's deals with U.S. carriers to pre-install Google Wallet on their Android phones. Google is also rumored to be working on Android Pay, an API for 3rd-party apps that can handle both online and in-store payments.
Though PayPal handled $45.6B worth of mobile transactions in 2014 (mostly online), the rise of mobile payments and authentication platforms backed by tech/Internet giants has been viewed as a long-term threat. Evercore last November: "[T]he convenience that mobile necessitates means that demand channels, including marketplaces, Search, Social and even the OS, are moving closer to sellers ... The result allows demand channels the opportunity to offer payment elements, including user authentication and stored payment credentials for the user on behalf of the merchant, a role traditionally reserved for payment players, most notably PayPal."
PayPal (EBAY) has acquired StackMob, owner of a platform that gives developers APIs, custom code, hosting services, and other tools for creating mobile apps. Terms are undisclosed.
PayPal, which has been introducing new features and services for its mobile apps at a heady pace, says StackMob's team will help it "move even faster in creating, testing and deploying products that aim to transform payments."
News of the acquisition comes on the heels of Amazon's purchase of mobile point-of-sale platform provider Gopago.
Amazon (AMZN -0.3%) has acquired Gopago, a startup that has developed a smartphone/tablet-based point-of-sale platform for retailers. Among other things, the platform allows consumers to pre-pay for goods via Android/iOS apps.
TechCrunch notes media reports don't make it clear if Gopago's team will be joining Amazon. On the other hand, a co-founder does say Amazon will use Gopago's technology for an "ambitious" new project.
Plenty of companies are already targeting the mobile POS software/services market. While mobile payments juggernaut Square (reportedly eying a 2014 IPO) has seen the most success, PayPal (EBAY +0.1%) is also moving aggressively in this space, and recently added support for swipe-free Bluetooth payments. Other players include Intuit, Groupon, and VeriFone.
Amazon's online/mobile payments ambitions appear to be expanding: Two months ago, the company launched a fully-fledged PayPal rival that's available to anyone with an Amazon account. PayPal, meanwhile, recently bought rival Braintree.
eBay (EBAY +0.1%) has acquired Shutl, a U.K.-based provider of online same-day delivery services that uses a network of carriers to fulfill orders. Terms are undisclosed. (PR)
Shutl's "technology, talent, and expertise" will be used to help eBay bring its Now same-day service to 25 markets by the end of 2014, including London (already announced) and other international markets.
eBay, which has relied on local retail partners rather than couriers for fulfillment, has already done same-day launches in NYC and SF, and is now launching in Chicago. The company is also offering a local pickup service called Click & Collect (it first launched in the U.K.)
Separately, eBay has overhauled its Marketplaces site and apps to improve item discovery (long a user complaint) and include social media-like tools. Users will be able to create Pinterest-like "collections" of items for sale, and the collections of 200 "curators" will be highlighted. eBay is also giving users the ability to create public profiles, and to follow other members.
The changes come after eBay provided soft Q4 guidance that was blamed on macro, but fueled concerns Marketplaces is again losing share following a recent growth pickup.
Declaring itself to be at the intersection of content and commerce, BoT tries to get users to recreationally browse its product image galleries, much as many people do on Pinterest. However, nearly all of the images are for items being sold through its site.
The purchase comes in a year where eBay rolled out a Web site overhaul that borrowed more than a little from Pinterest. eBay says the BoT team is contributing to additional eBay site updates that are on tap.
Decide.com uses predictive analytics to guess the future prices of various goods, and thereby allow buyers to make more informed decisions. The startup says its standalone services will be shut down as it focuses on integrating its tech with eBay's (EBAY +2%) marketplaces.
eBay has taken several steps to give Marketplaces users a better experience, and thereby prevent Amazon and its burgeoning 3rd-party merchant business (now responsible for 40% of its paid units) from gaining more ground. Recent changes include a new search engine (Cassini) and an image-heavy Web site redesign.
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