Ebay (EBAY): Revenue and EPS beat consensus, but outlook only in-line despite strong quarter. Core marketplace business showed good strength in listings, revenue, and GMV, but active users grew only 1% year over year. eBay needs to get this metric moving in the right direction soon, or the turnaround will not be sustainable. Business in UK and US hurt by weak economy. PayPal and Skype ahead of expectations. Outlook for Q2 revenue and EPS only in-line with consensus, which may worry investors. Full-year guidance slightly above consensus despite significant upside this quarter.
- Revenue: $2.19 billion, up 24%, well ahead of consensus and guidance of +16%).
- Adjusted EPS: $0.42, vs. $0.38 consensus. Revenue strong, sales and marketing lower than expected.
- eBay Marketplace Revenue: $1.48 billion, up 19%
- Gross Merchandise Value (GMV): $16.04 billion, up 12% (vs. 11% est)
- Active Users: 84mm, up 1%. THIS IS A DISAPPOINTMENT.
- Total listings: Approximately 647 million, up 10%
- PayPal: $582 million, up 32%
- Skype: $126 million, up from $113mm in Q4
- Outlook: June: Guidance in line with current consensus despite strong quarter. 2008: Guidance slightly ahead of current consensus: $8.7-$9.0 billion revenue vs. $8.79 consensus, $1.70-$1.75 EPS guidance vs. $1.68 consensus. This will likely spook some analysts.
- June: Guidance in line with current consensus despite strong quarter.
- 2008: Guidance slightly ahead of current consensus: $8.7-$9.0 billion revenue vs. $8.79 consensus, $1.70-$1.75 EPS guidance vs. $1.68 consensus. This will likely spook some analysts.
CONFERENCE CALL NOTES
Making breaks with past (translation: Meg Whitman)
- -easier and safer to use
- -improve buyer experience, auctions and incentives
- -extend PayPal’s leadership
Marketplace off to good start, core business and StubHub
PayPal very strong: +32%, ebay Paypal up 17%, off-ebay 61%
Skype user metrics strong (but revenue decelerating rapidly).
Fee changes…rebalanced pricing model to encourage greater selection
Moving forward toward BestMatch search
For first time, rewarding sellers who provide best buyer experience
LOTS of feedback from sellers…we tweaked, moved to category specific pricing.
How are changes impacting? “Encouraged”
- Global listings growth improved to 10%, no loss conversions
- Early progress BestMatch
- Some evidence buyer experience getting better, sellers getting better at customer satisfaction
eBay becoming easier safer, etc. to use. Some sellers say has improved. BUT…we still have a lot more work to do. We will make additional changes through year. Improve trust, better finding experience, etc.
Donahoe good: Realistic, acknowledges lots of work to do. Encouraging. Should inspire confidence. Breath of fresh air.
PayPal...international strong. Merchant services (off eBay) +69%. Continues to accelerate in Europe.
Skype: Does not say he’s putting it on block (unfortunately)
Bob Swan (CFO):
GMV growth driven by pricing changes, but negatively hit by economy in US and UK
Operating margin as expected.
$632mm cash flow, up 32%
Classifieds +60% y/y
Marketing services now 15% of Marketplace revenue
Skype decelerating, but still growing nicely.
Raising outlook, but cautious about environment.
Adjusting for FOREX and share repo, guidance similar to Q4 (i.e., no increase despite strong quarter).
Our changes may hurt business short-term, guidance captures this.
Please elaborate on economic impact:
Some of our growth in GMV was cross-border trade. Toward end of quarter, saw slowing.
What is impact of economic slowdown?
First, the changes. Only 6 weeks in. We’re encouraged: increased listings, etc.
Economy: traffic held up, but we’re not immune.
Using it for biggest buyers to encourage multiple categories, re-incent those who are slowing.
BestMatch: Sellers with good feedback getting more exposure, this leads to higher conversion rates.
Will be testing synergy this year. (And then, please o please just sell it)
Yawn…descending into irrelevance. A good evening to all.
eBay’s stock has rallied off low on stronger-than-expected listings growth. The company’s recent fee changes to its core marketplace appear to have helped–despite the screams of buyers–but the proof will be in the actual sales figures (cutting listing fees should obviously stimulate more listings, but these may not be sustainable and may not have translated to conversions).
In our opinion, however, the most important metric for eBay proper will be Active Users. As the accompanying chart (from the WSJ) shows, eBay’s user growth has fallen to near zero. If the company is to turn its core business around, it has to find a way to draw more users (buyers and sellers) to the site. If it can’t do this, the near-term listings growth is irrelevant.
PayPal is a different business, and its performance should be solid. Same for Skype, which we hope will soon be sold. Guidance should increase for the balance of the year, as eBay always lowballs guidance. (If it doesn’t increase, the company will have missed its own expectations).
- Revenue: $2.06 billion, up 17% (above company guidance of +16%). FX will add at least 500 basis points.
- EPS: $0.39 (high end of guidance, at least a penny of upside)
- eBay Marketplace Revenue: $1.35 billion (Doug Anmuth, Lehman)
- Gross Merchandise Value (GMV): $15.8 billion, up 11% (Goldman)
- Active Users: 87mm, up 5% (acceleration)
- Total listings: Approximately 650 million
- PayPal: Lehman Brothers’ analyst Doug Anmuth estimates revenue of $550 million, up 27%
- Skype: $120 million-ish (up from $113mm in Q4)
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