eBay Shocks Victoriously

That Meg Whitman sure knows how to make something out of nothing. It could have been a devastating quarter for Motley Fool Stock Advisor pick eBay (Nasdaq: EBAY  ) . It suffered the first sequential dip in active eBay.com users in its history. Auction listings fell, year over year, for the second consecutive quarter. Its costly purchase of Skype found it posting a $1.4 billion goodwill impairment charge.

Despite all of the spitballs hurled its way, eBay lived up to its new "Shop Victoriously" ad campaign by coming through with better-than-expected earnings. Revenues surged 30% higher to hit $1.89 billion. Non-GAAP earnings, which back out the Skype charge as well as smaller line items like stock-based compensation, soared 53% higher to $0.41 a share.

The results blew past Wall Street expectations of $0.33 a share in earnings on $1.83 billion in revenues, although the bottom line showing isn't as rosy once you factor out a favorable tax benefit. Pre-tax profits on a non-GAAP basis actually rose by just 25% for the quarter.

It's still healthy growth. It's still a relief.

So what's the secret sauce at eBay.com? Despite a 5% decrease in listings, they are converting better and at higher prices -- $14.4 billion in gross merchandise value swapped hands during the quarter, a healthy 14% advance.

PayPal was another workhorse, with related revenues climbing 35% during the third quarter. Revenue growth at PayPal has actually accelerated throughout the year. Even with Google's (Nasdaq: GOOG  ) Checkout in the mix, eBay's popular payment platform isn't slowing down for anybody.

Year-over-year revenue growth is decelerating at Skype, but it's hard to get disappointed when that ultimately means that the top line grew by "only" 96% on an 81% spike in users. (Last quarter's revenue growth was 103%.)

Also worth noting is that this is the second quarter in a row in which international revenues clocked in higher than stateside revenues. eBay is truly a global company. Sure, a killer app like Skype is bigger overseas than it is domestically, but Skype is still a small piece of the revenue mix pie here. This is eBay growing -- on all fronts -- throughout the world.

That might be news to you. Clearly there are major players in foreign markets. Whether it's Gmarket (Nasdaq: GMKT  ) in Korea, MercadoLibre (Nasdaq: MELI  ) in Argentina and Brazil, or Alibaba's Taobao in China, eBay is still a force (if not a partner, as it is with MercadoLibre throughout Latin America) as a globetrotter. Even yesterday's announcement that Baidu.com (Nasdaq: BIDU  ) is making a push to enter the consumer-to-consumer e-commerce marketplace in a suddenly crowded China won't dent eBay's global plans.

Sure, eBay is human on the world stage. It bowed out of Japan when Yahoo!'s (Nasdaq: YHOO  ) partnership with Softbank proved too powerful. It's hooking up with Tom Online to see if it can finally take on Taobao in China.

If chief executive Whitman can make something out nothing like she did this past quarter, just imagine what she can make out of something.

Bid on this Foolishness:


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 538725, ~/Articles/ArticleHandler.aspx, 9/23/2014 4:37:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement