It's easy to hate on eBay (Nasdaq: EBAY ) . There's never a shortage of disgruntled sellers who've moved on after having enough of eBay's creeping fee increases and ever-changing seller policies.
However, what if the numbers paint an entirely different picture of the company?
eBay's latest quarter is encouraging. Revenue climbed 25% to $2.76 billion. Adjusted earnings climbed 19% to $631 million, or $0.48 on a per share basis. Investors cringe when they see a company's top line growing faster than even its tweaked bottom line, but this is still a beat for eBay on both ends of the income statement. Wall Street was expecting a non-GAAP profit of $0.46 a share on $2.61 billion in revenue.
PayPal has been carrying the load in recent years. There are now more than 100 million active registered accounts. Net total payment volume increased 34%, greater than the 15% spike in users. In other words, the average PayPal account is being used more often.
What about eBay's namesake marketplace business? It's doing a lot better than you might expect. Revenue and total payment volume posted year-over-year growth in the teens, and that goes for both domestic and international revenue. If no one is using eBay -- as some who have bailed may have you believe -- why is eBay not only gaining ground but also accelerating its growth? This isn't the kind of marketplace octane that investors will find in Latin America speedster MercadoLibre (Nasdaq: MELI ) , but eBay can also be had at a much more reasonable earnings multiple.
This doesn't mean PayPal is ready to pass the baton. In fact, PayPal is about to take things to the next level.
During last night's call, eBay indicated that it will begin testing point-of-sale integration with a major U.S. retailer later this year. If successful, PayPal plans to add as many as 20 national chains by the end of next year.
Visa (NYSE: V ) , MasterCard (NYSE: MA ) , and American Express (NYSE: AXP ) may not lose any sleep over this move. They, too, have spent the past few years fortifying their online and mobile payment positions. However, it will get interesting when folks with funds in their PayPal accounts have real-world options. Isn't this found money? It's true that eBay took a step back there when it nixed the PayPal Money Market Fund last month, but things will get interesting if it becomes a bricks-and-mortar staple. If eBay is going to cut merchants a break on fees to the point where they may encourage PayPal over other forms of payment, don't undersell the platform's shot. Remember that we're talking about 100.3 million active registered PayPal accounts.
eBay is happening again. Time to let go of those fading memories of a 2003 auction for a Beanie Babies plush gone wrong.
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