July 19, 2007, 12:00 AM

eBay’s Q2 gross merchandise sales rise 12% to $14.5 billion

Gross merchandise sales—the value of all goods sold on eBay.com—rose 12% year-to-year to $14.46 billion in the second quarter, as the number of active users rose 7% to 83.3 million. But the number of product listings fell 7% to 559.1 million, eBay says.

Gross merchandise sales-the value of all products sold on eBay.com-rose 12% year-over-year to $14.46 billion for the second quarter ended June 30, as the number of active users rose 7% to 83.3 million, eBay Inc. says. The number product listings, meanwhile, dropped 7% to 559.1 million.

The growth in sales resulted in record Q2 revenue of $1.83 billion, up 30% from the year-ago quarter, as net income rose 50% to $376 million. Included in the revenue growth was a 32% year-over-year rise in Q2 revenue at Shopping.com, a shopping comparison site eBay acquired in 2005, a spokesman says.

EBay attributed its financial growth partly to continued improvements to the eBay selling platform and an expansion of its portfolio of businesses. Earlier this year, for example, it offered new software tools for providing access to eBay from social networks, blogs, and web-enabled cell phones and TV programs, and it recently acquired StumbleUpon, a web site that offers search technology that’s designed to learn what shoppers want. “Providing a great user experience has always been critical to our success and will remain part of our ongoing focus as we expand our business further,” president and CEO Meg Whitman says.

The number of active users, or those who have bid, purchased or listed an item on eBay within the past 12 months, rose 7% to 83.3 million from 77.7 million a year ago, as the number of registered users rose 19% to 241 million from 202.7 million.

But not all things are growing at eBay. While the number of designated stores on eBay.com rose 20% year-over-year in Q2 to 649,000 from 541,000, the number of listed products declined.

The number of inventory listings outside of eBay stores fell 2% year-over-year to 480 million from 490.5 million; the number of inventory listings in eBay stores fell 25% year-over-year to 79.1 million from 105.5 million. A year ago, the number of Q2 store inventory listings had grown 178% from the prior-year quarter and the number of non-store inventory listings had grown 22%. Combined store and non-store listings fell 7% to 559.1 million.

EBay attributes the decline in listings to three developments: an effort to thin out inventory that is poorly priced and listed in overabundance, a move to remove fraudulent listings, and new joint venture deals in China and Taiwan, where listings no longer count toward eBay’s own total. “We anticipated the drop in listings,” a spokesman says, adding that the decline coincides with increases in conversion rates and average selling prices.

As part of its plan to thin out listings, eBay raised its listing fees in August 2007. Under the new fee structure, eBay charges insertion fee tiers based on starting price for store inventory listings. The first tier charges five cents for a 30-day listing for items that start between one cent and $24.99. The second tier charges a 10-cent insertion fee for a 30-day listing for items that start at $25. Under the old schedule, all store inventory listings were charged a 2-cent fee for a 30-day listing.

In addition, eBay raised its fee from 5% of the final sale price to 7% for items that sell for under $25, and from 8% to 10% for items that ultimately sell for between $25 and $100. Those increases also accounted for part of eBay’s revenue gains.

Q2 revenue at EBay’s payments unit, PayPal, rose 34% year-over-year to $454 million. The Q2 global total payment volume handled by PayPal grew 32% year-over-year to $11.69 billion.

Skype, eBay’s Internet-based communications unit, had 220 million registered user accounts at the end of Q2, up 94% from a year ago, and its Q2 revenue grew 103% year-over-year to $89.7 million.

EBay’s consolidated Q2 international revenue of $938.6 million accounted for 51% of total revenue, up from 49% a year ago, eBay says.

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