Monday, 21 October 2013

eBay has a bigger addressable market, the $10 trillion commerce market.

eBay had a strong third quarter enabling $52 billion of commerce volume, up 21%. Revenue was up 14% and non-GAAP EPS was up 17%. Both, PayPal and eBay marketplaces saw double-digit growth in new users and eBay continues to lead in mobile with 36% of new customers in the quarter acquired via mobile.

Reiterate eBay’s strengths and opportunities.

First, with technology accelerating change in how consumers shop, eBay has a bigger addressable market, the $10 trillion commerce market. As the management shared at their Analyst Day, by 2015, the company expects to enable 300 billion in commerce volume, up from 175 billion in 2012, and the company is well on its way with trailing 12-month commerce volume up 20% and now reaching 200 billion.

Second, eBay’s core businesses are strong. The company has proven models for monetization, and has built a powerful set of technology and innovation capabilities. Third, global commerce platforms, technology assets, and innovation capabilities strongly positions eBay’s to lead and compete in the four emerging commerce battlegrounds, mobile, local, global, and data.

The company is a mobile commerce leader both at PayPal and eBay and continues to expect that each will do $20 billion of mobile volume this year. eBay is innovating in local with new experiences such as eBay Now, buy online pick up in store, and PayPal Check-In and Order Ahead. The company is leveraging its cross-border trade advantages in new markets such as Russia and Brazil, and enabling merchants in China to grow by reaching consumers worldwide.

eBay’s core businesses are strong, and over the past 12 months, have enabled over $200 billion in commerce volume for its merchant, brand, and retail partners. That's more than a 20% increase in what's been a fairly lackluster macro environment.


In Q3, PayPal continued to expand its footprint, increasing merchant coverage and share of checkout. Finishing the quarter with 137 million active accounts globally, PayPal added 5 million new active accounts during the period.

Merchant Services generated strong TPV growth of 30%, accelerating 1 point from Q2 and representing almost $31 billion payment volume. Penetration on eBay increased to 78% accelerating 100 basis points from the prior quarter.

PayPal rolled out significant enhancements to its mobile app in Q3. With the updated app, consumers can now check in and pay with their PayPal digital wallet at thousands of retail locations in the U.S., Canada, U.K., and Australia. Consumers can also order ahead at participating restaurants or pay for their meal via mobile without having to wait for the check in the U.S. and Australia. In the U.S. alone, PayPal mobile users can now order ahead at almost 9,000 restaurants.

eBay believes its pending acquisition of Braintree will help accelerate PayPal's global leadership in mobile payments. Braintree is powering the next generation of leading online and mobile first startups. Braintree will also strengthen PayPal's commitment on supporting developers who are creating innovative solutions for the next generation of commerce startups.

PayPal also expanded its geographic reach in Q3 launching domestically in Russia. In the first two weeks after launch, 2,000 Russian merchants applied for Russian PayPal merchant accounts, and PayPal already has 1 million active accounts in Russia.

PayPal continues to innovate at point-of-sale announcing Beacon in Q3. PayPal Beacon, which utilizes Bluetooth low energy technology, is simple for merchants to use with existing point-of-sale systems. Beacon will enable consumers to easily pay at their favorite stores handsfree without having to open their PayPal app or take out their smartphone. It's another way PayPal is reinventing the shopping experience.


Marketplaces had a strong quarter with net revenues of $2 billion, up 12% on an FX neutral basis. Revenue growth was driven by 12% growth on an FX neutral basis for both transactions and marketing services and other.

Active users grew 14%, FX neutral non-vehicle GMV grew 12% driven primarily by improvements in mobile and the customer experience. Geographically eBay saw the EU and Korea stabilize in the quarter but experienced deterioration in the U.S. e-commerce market. Transaction take rate excluding vehicles and StubHub was roughly flat with last year and marketplaces segment margin was 38.9% in the quarter, down 10 bps from last year primarily due to investments in trust and technology, partially offset by the OpEx leverage.

eBay Enterprise

In Q3, eBay Enterprise grew same-store sales 13% for its retail customers, and eBay Enterprise continued to evolve its omnichannel capabilities and solutions. At its customer summit in September, eBay Enterprise announced a new suite of Commerce Technologies including its recently launched platform. These technologies were deployed in Q3 to another four brands and Sony went live with its online store in North America last week.

eBay Enterprise has also partnered with PayPal to pilot a free two-day shipping program with nine retailers. Launched earlier this month, initial results are strong, showing increased share of checkout and sharp uptakes in conversion. Share of checkout is significantly greater than competing offers on sites where both exist. This is a great example of how eBay can leverage its portfolio to deliver compelling offers and experiences to merchants and consumers.

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