Ebay Inc. reported that Ebay Enterprise, formerly GSI Commerce, contributed $238 million in revenue for the third
quarter, a 5 percent increase. Its Commerce Technologies generated $787 million
in Merchandise Sales, a 13 percent increase, but revenue was pressured by a
reduction in take rate. Ebay Enterprise's clients grew same-store sales 13 percent, decelerating sequentially, but broadly in line
with e-commerce growth rates.
The company said expects its broad omnichannel
product portfolio, including complementary eBay Inc. assets, to be
increasingly adopted by merchants seeking opportunities to grow their
businesses while seamlessly meeting the needs of the connected consumer. It also noted that Ebay Enterprise launched four brands on its new suite of modular
Commerce Technologies during the quarter.
Overall, Ebay Inc. reported that revenue for the third quarter ended September 30, 2013, increased 14 percent to $3.9 billion, compared to the same period of 2012. The company reported third quarter net income on a GAAP basis of $689 million, or $0.53 per diluted share, and non-GAAP net income of $837 million, or $0.64 per diluted share. Third quarter non-GAAP earnings per diluted share increased 17 percent driven primarily by strong top-line growth. GAAP earnings per diluted share increased 16 percent, driven by revenue growth and the sale of our investments in RueLaLa and ShopRunner.
Total company Enabled Commerce Volume (ECV) grew 21 percent for the quarter, to $52 billion. The growth demonstrates the power of the company’s global commerce platforms, technology assets and mobile commerce capabilities across Marketplaces, PayPal and Ebay Enterprise. In the third quarter, cross-border trade, another competitive strength of the company, was $11 billion, representing 22 percent of the company’s total ECV. Mobile enabled commerce volume was up 75 percent in the quarter, with downloads since inception exceeding 200 million and the company's suite of mobile apps attracting 3.2 million new customers.
“We delivered strong third quarter results, with mobile driving a significant portion of our new user growth and continuing to transform how consumers shop and pay around the world,” said John Donahoe, President and CEO, Ebay Inc. “Our scale and experience, the strength of our global commerce platforms, our technology assets and our mobile commerce capabilities strongly position us to be a leader in the commerce revolution under way. In the past 12 months we have enabled $200 billion of commerce volume, a 20 percent increase in a fairly lackluster macro environment. That growth demonstrates the strength of our core businesses and our power as a partner, not a competitor, to merchants, brands and retailers.”
In its other segments, PayPal delivered a strong third quarter performance with revenue increasing 19 percent to $1.6 billion. PayPal gained 5.0 million active registered accounts and ended the quarter with 137 million, a 17 percent increase. PayPal's net total payment volume (TPV) grew 25 percent to $44 billion driven by consumer and merchant use of PayPal both on and off Ebay. Merchant Services net TPV increased 30 percent with a sequential acceleration of payment volume. PayPal continues to invest in leading payments innovation, growing its addressable market, and driving global consumer and merchant acquisition through seamless and simple experiences. Key developments in the third quarter included the launch of a fully localized offering in Russia and PayPal’s enhanced consumer app for iOS and Android. PayPal also delivered innovation offline by helping consumers save time and money through closed loop offers where merchants can put coupons directly into consumers' digital wallets. The enhanced PayPal consumer app gives customers in the U.S. and Australia convenient order-ahead and pay-at-table capabilities as well as the ability to check in and pay with the PayPal digital wallet at thousands of retail locations in the U.S., U.K., Canada and Australia.
Marketplaces also delivered a strong third quarter performance with revenue increasing 12 percent to $2.0 billion. Marketplaces gained 3.9 million active users in the period and ended the quarter with 124 million, a 14 percent increase. Gross merchandise volume (GMV), excluding vehicles, increased 13 percent to $18 billion. Fixed price GMV grew 18 percent globally and represented 71 percent of total GMV. U.S. GMV, excluding vehicles, increased 15 percent to $7.4 billion and international GMV, excluding vehicles, increased 12 percent to $11 billion driven by mobile and investment in buyer experience. The selection of items available on Marketplaces grew to over 500 million listings reflecting the success of consumer selling initiatives, particularly on mobile. Free shipping was provided on more than half of U.S. transactions in the quarter and the global shipping program continued to expand. In addition, the introduction and expansion of several local initiatives enabled customers to access local merchant inventory through apps to improve choice and reduce fulfillment time.
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Third Quarter 2013 Financial Highlights (presented in millions, |
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Third Quarter |
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| 2013 | 2012 | Change | ||||||||||
| eBay Inc. | ||||||||||||
Net revenue |
$3,892 |
$3,404 |
$488 |
14% |
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Enabled commerce volume (ECV) |
$51,507 |
$42,593 |
$8,914 |
21% |
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| GAAP | ||||||||||||
Net income |
$689 |
$597 |
$92 |
15% |
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Earnings per diluted share |
$0.53 |
$0.45 |
$0.07 |
16% |
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| Non-GAAP | ||||||||||||
Net income |
$837 |
$718 |
$119 |
17% |
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Earnings per diluted share |
$0.64 |
$0.55 |
$0.09 |
17% |
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Third Quarter |
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| 2013 | 2012 | Change | ||||||||||
| Business Units | ||||||||||||
| Payments | ||||||||||||
Net revenue |
$1,620 |
$1,367 |
$253 |
19% |
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Net total payment volume |
$43,837 |
$35,159 |
$8,678 |
25% |
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| Marketplaces | ||||||||||||
Net revenue |
$2,027 |
$1,806 |
$221 |
12% |
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Gross merchandise volume (GMV), excl. vehicles |
$18,360 |
$16,281 |
$2,079 |
13% |
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| Enterprise | ||||||||||||
Net revenue |
$238 |
$226 |
$12 |
5% |
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Merchandise Sales |
$787 |
$698 |
$89 |
13% |
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Other Selected Financial Results
- Operating margin – GAAP operating margin increased to 20.5% for the third quarter of 2013, compared to 19.6% for the same period last year. Non-GAAP operating margin increased to 26.8% in the third quarter, compared to 26.3% for the same period last year.
- Taxes – The GAAP effective tax rate for the third quarter of 2013 was 21%, compared to 11% for the third quarter of 2012. The increase in the company's GAAP effective tax rate was due to an increase in earnings in higher tax jurisdictions and the repayment of the Kynetic note receivable and the sale of our investments in RueLaLa and ShopRunner. For the third quarter of 2013 and 2012, the non-GAAP effective tax rate was 19% and 20%, respectively.
- Cash flow – The company generated $1.3 billion of operating cash flow and $1.0 billion of free cash flow during the third quarter of 2013. The company's investing activities benefited from proceeds of $485 million from the repayment of the Kynetic note receivable and the sale of our investments in RueLaLa and ShopRunner.
- Stock repurchase program – The company repurchased approximately $146 million of its common stock in the third quarter of 2013.
- Cash and cash equivalents and non-equity investments – The company's cash and cash equivalents and non-equity investments portfolio totaled $13.0 billion at September 30, 2013, up from $11.5 billion at December 31, 2012.
Business Outlook
Fourth quarter 2013 – the company expects net revenues in the range of $4,500 – $4,600 million with GAAP earnings per diluted share in the range of $0.67 – $0.69 and non-GAAP earnings per diluted share in the range of $0.79 – $0.81. The company’s fourth quarter outlook assumes that the pending acquisition of Braintree will close late in the fourth quarter of 2013.
