eBay INC 2011 First Quarter Earnings Call Numbers Of Interest To Small Business Sellers
27 April 2011
eBay INC "is showing signs of progress", according to the Wall Street Journal. Which brings up the quarterly question asked by many small businesses on eBay, 'How did the Marketplaces section eBay.com do?'.
Numbers from eBay's 04/17/2011 SEC 8-K filing, show net total Marketplaces revenue growth up an anemic "2%" from the previous quarter. Down from the previous quarter growth of "6%".
Marketplaces revenue is up "10%", compared to the poorly performing first quarter of 2010.
Marketplace revenues are principally generated through fees paid by users of eBay.com. That is the business who use eBay.com to sell products.
Here is another eBay Marketplaces revenue chart.
eBay shows an anemic "2%" current quarter versus prior quarter increase.
There is a robust "12%" current quarter to prior year quarter increase. Compared to the "13%" increase of a year ago, there appears to be some slow down in year to year revenue.
And what of the number of products that eBay's "2%" came from?.
According to Medved.net eBay started the first quarter with close to 123 million listings per day.
The first quarter numbers peaked at close to 134 million listings. The number of products are down from the fourth quarter peak of 142 million.
If you were selling on eBay.com, were you using PayPal?
The number of PayPal payments made and the amount of those PayPal payments, were down compared to fourth quarter's "18%" and "20%." A tepid increase of "1%" and "2%" respectively.
According the eBay.com numbers, "Transaction revenue rate" has remained stable for the past year. The current quarter Marketplace loss rate, part of which includes fraud, stands at "3.45%". Compared to VISA, who reported a fraud rate of "$5 per $10,000" in 2005. Which is 0.05%.
eBay reports Bill Me Later losses are decreasing. The Net charge-off rate has slid to "4.86%", and the 90-day delinquency rate has dropped to "2.16%".
The declining fraud rates are interesting given eBay has increased the amount of funds held from eBay's customers. Going from fourth quarter's $2,550,731,000 to $2,746,079,000.
What about seller and buyer claims that there is less merchandise on eBay.com. Have products moved off eBay.com?
There was a quarter to quarter Gross Merchandising Volume (GMV) decrease of "(4%), excluding vehicles. But a year to year increase of "8%."
GMV represents "Total value of all successfully closed items between users on eBay Marketplaces trading platforms during the quarter, regardless of whether the buyer and seller actually consummated the transaction."
The GMV for vehicles increased "7%" quarter to quarter. A significant improvement from the "(11%)" decline of the previous quarter.
While eBay sellers will continue to make that call, here's the non-seller stock market view.
At the start of John Donahoe's tenure, eBay INC's stock price was 29.84 (31 March 2008). Between then and now, the stock reached a top price of 35.35. It is currently trading at 34.03.
Which means for the average investor to materially benefit from eBay INC stock, they must sell and/or buy the stock. In other words, 'buy low, sell high', short, stock options, et al.
In three years the eBay Pop & Mom investor made $5.51 per share or 19% return on investment. Had they sold when the stock peaked.
Then there's the competition.
Amazon closed at 71.30 on 31 March 2008, and in the same three year period peaked at 197.80. Amazon closed today at 197.00. Meaning the Amazon Mom & Pop investor made $126.50 per share or 177% return on investment.
Hmmm. $5.51 versus $126.50. Perhaps we're not understanding the Wall Street insider view.
"Amazon's a very competitive company, and I think they are a very good competitor, and we take them very, very seriously. I think the proof will be in the pudding. You know, we are still looking for signs of momentum, and so far, they have not gotten traction."
Meg Whitman, eBay CEO, 31 May 1999
"Amazon can be successful, and eBay can be successful too."
John Donahoe, eBay CEO, June 2010