EBay Inc. said costs tied to the $2.4 billion purchase of GSI Commerce Inc., completed in June, cut into net income in the second quarter. But management indicated that integration is going according to plan and conversations with many of GSIs clients are giving management more confidence on the mergers opportunities.
Ive had the pleasure of meeting with many of GSI’s top customers over the last several weeks, and I can tell you theyre excited about their growth potential online with GSI and the additional value that eBay brings to the table, said John Donahoe, eBays president and CEO, on the companys conference call with analysts. All of my conversations reinforce what we already believed — retailers need partners who will help them compete, innovate, and grow in a multichannel commerce environment. And were well-positioned to help.
Bob Swan, eBays SVP of finance and CFO, added the integration of GSI, now led by Chris Saridakis, is well underway, and were very excited about the opportunities that the combined capabilities of GSI, eBay, and PayPal will open for large retailers and brands in this new retail environment.
GSI totaled $24 million in revenues in the two-weeks eBay owned the company and the impact on non-GAAP EPS was negligible. But Swan said the GSI team is making good progress on its V11 technology platform, and we plan to increase spending, so we can accelerate the deployment schedule and create capacity for new clients.
Swan said cross-business unit integration has started and eBay is on track to realize the projected $60 million in total revenue synergies and cost savings by 2013.
Five GSI clients use eBay currently and 56 clients now use PayPal.
Adjusted for divested businesses, GSIs global e-commerce merchandise sales, or GMS, grew at 20 percent on a comp store basis, driven by the continued retail shift from offline to online, Swan said. Total revenue is up 16 percent year-on-year in Q2, as organic growth was offset by the shift away from the owned inventory model and the global e-commerce business. The marketing services business increased 33 percent year-on-year in Q2, driven by continued adoption across GSI clients.
Companywide, eBays earnings declined 31 percent to $283.4 million, or 22 cents per share, as growth in its online marketplace and PayPal payment service was overshadowed by charges related to its GSI acquisition. Excluding one-time items, the company earned 48 cents per share, 2 cents more than Wall Streets consensus estimate. Revenue climbed 24.3 percent to $2.76 billion.
