eBay (NASDAQ:EBAY) saw its revenue grow around 27% in 2011, and nearly 35% in Q4 2011, with most of it driven by its two primary businesses – Marketplaces and PayPal. While its core e-commerce business – Marketplaces – continues to show steady growth, PayPal has been the showstealer, growing much faster than any of eBay’s other businesses.
In this earnings call, we will be looking closely at how eBay plans to extend its lead in the payments space as well as grow its e-commerce businesses. eBay competes primarily with Google (NASDAQ:GOOG), Square, Intuit GoPayment and other competitors in the payments space, and Amazon (NASDAQ:AMZN) in e-commerce.
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PayPal
If eBay plays its cards right, PayPal has the potential to become its most valuable business, surpassing Marketplaces. PayPal saw its total payment volume increase to $33.4 billion in Q4 2011, up 24% year-on-year, with over 106 million registered accounts. We expect an increase in the total registered accounts, payments per account as well as the average payment amount, which should lead to a significant increase in its total payment volume in the coming years.
The rise of mobile payments and PayPal’s increased focus on international markets should also drive revenue growth. PayPal also recently launch PayPal Here, a mobile card payment offering which enables small businesses to accept card payments, which will compete with Square, Google Wallet and Intuit GoPayment. If that takes off, it could drive further growth for PayPal. We expect to hear more on this in the earnings call.
Marketplaces
eBay has continued to improve its marketplaces. It acquired GSI Commerce as well as Hunch in 2011, in order to increase its share of the e-commerce pie which is set to get bigger in the coming years.
GSI Commerce will enable eBay to offer online shopping platforms for large brands/retailers, which could increase sales significantly. We will be watching the earnings call closely for any hints related to eBay’s growth strategy in this space.
PayPal accounts around 27%, while Marketplaces account for around 48% of eBay’s overall value. We currently have a $42 Trefis price estimate for eBay, which stands nearly 10% above the market price.
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