eBay sales decline for the third quarter in a row, but at a slower rate

Sales declined for the third quarter in a row at eBay Inc.’s online marketplaces, but the rate of decline slowed. The company’s payments unit, including PayPal and Bill Me Later, continued to register strong growth.

• The value of goods sold through eBay’s online marketplaces, excluding autos, declined 10% in the second quarter to $11.1 billion from $12.3 billion in the same quarter last year. That gross merchandise value figure had declined 16% in the first quarter and 12% in the last quarter of 2008. 57% of marketplace volume was from outside the U.S.
  
• Sales of items at fixed price grew 19% year over year and 7% from the first quarter, reflecting eBay’s ongoing shift away from the auction format as more large retailers use eBay as a sales platform. Fixed price represented 51% of marketplace volume vs. 43% a year earlier. Auction sales were down 17% year over year, but up 3% from Q1.
  
• Active users of eBay’s marketplaces totaled 88.4 million as of June 30, up 2% from 86.4 million a year earlier, but little changed from 88.3 million at the end of the second quarter. (Active users are those who have listed or bought on eBay in the previous 12 months.)
  
• Payment volume increased 12% year over year to $16.7 billion, of which 55% came from the company’s merchant services unit that handles online payments for e-retailers. Payments with eBay’s PayPal online payment service account for most of the rest, with Bill Me Later accounting for 1% of total payment volume. EBay last year acquired Bill Me Later, which enables merchants to offer delayed payment options, such as paying in 90 days without interest charges.
  
• Active users of eBay’s payment services, which includes consumers with PayPal or Bill Me Later accounts, increased 20% year over year to 75.4 million. Bill Me Later will become an option in the PayPal wallet, available to all U.S. PayPal users, in time for this year’s holiday season, eBay CEO John Donahoe told analysts yesterday. He also said 54 of the top online retailers in the U.S. offer either PayPal or Bill Me Later, and 22 offer both.
  
• EBay’s total Q2 revenue declined 4.5% to $2.10 billion from $2.20 billion in the second quarter last year. Q2 net income was $327 million, a 29% decline from $460 million a year earlier.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” Donahoe says. “We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I’m pleased with our pace, our progress and our performance.”

Analyst Colin Sebastian, who follows eBay and other e-commerce stocks for Lazard Capital Markets, says eBay’s Q2 results show the “needle beginning to turn in the right direction.” “Longer term, we expect eBay will emerge as a smaller, more nimble and highly profitable platform for online commerce,” Sebastian wrote in a note to clients today.

He also said eBay is likely to announce next week more changes aimed at attracting larger merchants to sell on eBay. EBay on Monday will unveil changes planned for the fall, one of two releases each year of eBay platform upgrades.