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eBay reports 13% sales growth and rejects PayPal spinoff
The value of goods sold on eBay’s marketplaces for all of 2013 rose 13% in the fourth quarter and for all of 2013, eBay says. The company acknowledged a proposal from billionaire investor Carl Icahn to spin off PayPal, and rejected it, arguing that eBay and PayPal make each other stronger.
Managing Editor, International Research
The value of merchandise sold on eBay Inc.’s marketplaces, excluding vehicles, increased 13% year over year in the fourth quarter to reach $21.518 billion, up from $19.105 billion in Q4 2012, the online marketplace operator said today. Sales on eBay’s marketplaces also grew 13% for the full year, to $76.495 billion compared to $67.763 billion a year earlier.
The value of merchandise sold on eBay’s marketplace in the U.S. grew 14% in the fourth quarter and 15% for the full year, to reach $30.4 billion, excluding vehicles, for the year
"We feel good about our performance and strong finish in the fourth quarter, with the holiday shopping season clearly showing how online, mobile and other omni-channel commerce capabilities are changing how consumers shop and pay," says John Donahoe, president and CEO.
At the same time as releasing its financial results, eBay also disclosed that billionaire investor Carl Icahn had acquired a 0.82% stake in eBay, nominated two of his employees to the eBay board and proposed that eBay spin off its PayPal unit into a separate business.
Some observers view PayPal as the most profitable part of eBay. But spinning off PayPal is neither a new idea nor a good one, CEO John Donahue argued in a letter today to eBay employees that the company released along with its financial results.
“We believe strongly that PayPal and eBay are far more valuable together than apart,” Donahoe wrote. “The synergies are clear. PayPal has succeeded because it is a part of eBay, not in spite of it. eBay accelerates PayPal’s success, providing tens of millions of customers who then help PayPal grow off-eBay. The closed-loop global transaction data provided by eBay makes PayPal smarter, enhancing its world-class risk capabilities. And eBay funds PayPal’s growth. This enables PayPal to invest aggressively in mobile, credit and acquisitions such as Braintree.” EBay acquired Braintree, a processor of online payments, last fall.
Discussing the financial results, Donahoe says mobile commerce exceeded eBay’s expectations for the year. Total mobile commerce payments and sales volume grew 88% year over year in 2013, with eBay reaching $22 billion in mobile sales and PayPal hitting $27 billion. PayPal and eBay added more than 14 million new mobile customers during the year, Donahoe says. “PayPal and eBay together create an incredibly strong global commerce ecosystem for consumers and merchants, and we continue to see tremendous growth opportunities ahead."
For the fourth quarter ended Dec. 31, eBay reports:
• The value of merchandise sold on eBay Inc.’s marketplaces, excluding vehicles, increased nearly 13% year over year to reach $21.518 billion, up from $19.105 billion in Q4 2012.
• The value of merchandise sold on eBay’s marketplace in the U.S. grew 14% .
• Net revenue increased more than 13% to reach $4.530 billion compared to $3.992 billion a year earlier.
• EBay added 4.6 million active registered users in Q4 to reach 128 million active registered users at the end of 2013. Active registered users are consumers that bid, bought, listed or sold an item on eBay in the past year.
• PayPal gained 5.2 million active registered accounts in the quarter and ended the year with 143 million accounts, up 16% from a year earlier.
• PayPal’s revenue increased 19% year over year to $1.836 billion in Q4 compared with $1.541 billion in Q4 2012.
• PayPal’s net total payment volume grew 25% to $51.973 billion from $41.471 billion a year earlier.
• Net revenue for the former GSI Commerce Inc. now named eBay Enterprise totaled $392 million for the quarter, down slightly from $398 million for Q4 2012.
• EBay’s net income totaled $850 million, up 13% from $751 million a year earlier.
For the full year ended Dec. 31, eBay reports:
• The value of merchandise sold on eBay Inc.’s marketplaces, excluding vehicles, increased 13% to reach $76.495 billion compared to $67.763 billion a year earlier.
• The value of merchandise sold on eBay’s U.S. marketplace, excluding vehicles, grew 15% to reach $30.4 billion.
• Net revenue increased 14% to reach $16.047 billion compared to $14.072 billion a year earlier.
•PayPal’s revenue increased 19% in 2013 to reach $6.628 billion, up from $5.574 billion a year earlier.
• PayPal’s net total payment volume totaled $179.663 billion, up 24% from $144.937 billion a year earlier.
• Net revenue for eBay Enterprise totaled $1.112 billion for the year, up nearly 3% from $1.083 billion a year earlier.
EBay’s net revenue totaled $16.047 billion, up 14% from $14.072 billion a year earlier. Net income totaled $2.856 billion, up 9.5% from $2.609 billion a year earlier.
"EBay's quarter was mixed and came in at the low end of their expectations from a revenue perspective," Scot Wingo, CEO of online marketing firm ChannelAdvisor Corp., writes in a blog post. "We were pleased to see the U.S. gross merchandise value come in at 14% growth as we did see weakness toward the end of December." Other highlights include eBay adding 89 new brands and retailers to its marketplace during the quarter, and more than 55% of orders on eBay shipping for free during Q4.
However, eBay did hint at some problem areas this year, including that offline retailers are moving more slowly to digital than eBay expected. "In general, I’d say that offline is taking longer to become digitized than we initially thought, and I think frankly it’s happening with us and with everyone else in the digital world," Donahoe said in a conference call transcript obtained from Seeking Alpha. "But we’re staying with the investment and the adjustments we’re making. I would characterize (us) as focusing more in some smaller areas to prove out the model and get viral effects, and then we’ll expand."
EBay has invested significant resources in exploiting its mobile strength and acquisitions of local-focused companies to help retail chains compete with Amazon. In November eBay tested shoppable store windows for three retailers in the downtown Westfield San Francisco Centre mall, part of the Westfield Group of shopping centers. A shopper could walk up to the windows at the Sony, Toms and Rebecca Minkoff stores, touch her finger to the glass to browse through items as she would on a touchscreen and make a purchase by sending the order to her mobile phone.