Look For m-commerce Growth In eBay’s Q3 Earnings

by Trefis Team
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eBay (NASDAQ:EBAY) finished the first half of the current fiscal year on a strong note with the revenues growing 23% in Q2. The growth was primarily driven by PayPal which added one million new active per month in Q2 even as the Total Payment Volume (TPV) grew to $34.5 billion, up 20 percent year over year. Meanwhile, the gross merchandise volume on Marketplaces grew at 15% year over year. The 15% growth excludes the vehicles segment and effects of foreign currency.

In the Q3 earnings call due October 17th, we will be watching closely how eBay plans to extend its lead in the payments space as well as grow its e-commerce businesses. We will look out for any announcements regarding performance in the last quarter of Paypal Here, its mobile card payment offering which enables small businesses to accept card payments. eBay competes primarily with Google (NASDAQ:GOOG), Square, Intuit GoPayment and other competitors in the payments space, and Amazon (NASDAQ:AMZN) in e-commerce.

Check out our complete analysis of eBay


Marketplaces

eBay continues to improve its Marketplaces and recently launched a new logo and a redesigned interface. The new site draws inspiration from social photo-sharing site Pinterest. The most noticeable new feature is the eBay Feed, a section dedicated to providing improved product discovery features. The company has acquired some start-ups to supplement its efforts in this direction, the most notable being Hunch in 2011 and Svpply in September this year.

The company has also increased its efforts in the direction of mobile commerce with its apps reaching the 100 million download milestone last month. Available in eight languages, and in more than 190 different countries around the world, eBay apps have been downloaded 25 million times in the last six months alone, making them some of the most popular and successful shopping apps anywhere. The growth of eBay’s mobile properties also aligns with the milestone of 100 million listings via mobile, as a record number of sellers choose to list their products on eBay through devices that didn’t exist just a few years ago. We will be watching the earnings call closely for any hints related to eBay’s growth strategy in the m-commerce space.

PayPal

PayPal delivered a strong second quarter performance with revenues rising 26% to $1.4 billion. The growth was driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption and strong growth in Bill Me Later. The number of active paying accounts grew to 113 million in Q2.

It continued its efforts to expand its offline presence through a tie-up with Discover Financial Services (NYSE:DFS) which gives it access to nearly 7 million merchant locations in the U.S. and potentially many more worldwide in the future. The “PayPal Here” device continues to make in-roads as a replacement for cash payment registers. Cross selling is also helping PayPal push it services. For example, Office Depot not only signed up for PayPal’s point-of-sale, but also signed up for PayPal Online and PayPal Mobile.

We currently have a $50 Trefis price estimate for eBay, which is at a 5% premium to the market price.

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