eBay Q2 Earnings Up 50%, Listings Down 2%, Store Listings Dive 25% Y/Y

[mandy]

EBay Inc. is trying to milk more money out of every customer—a strategy that has resulted in record revenue but makes some analysts nervous about the company's long-term prospects.

The online auction company reported Wednesday that second-quarter profit surged 50 percent, easily beating Wall Street expectations thanks to strong sales on online auctions, the automobile classified section and e-commerce sites such as shopping.com.

But the number of items for sale on the site declined for the third consecutive quarter. Individual listings dropped 2 percent from a year ago, and eBay store listings plunged 25 percent from a year ago.

EBay shares fell 53 cents in extended trading after the results were released...

full article: http://www.mercurynews.com/breakingnews/ci_6410533

Sales from eBay's core auctions business rose 26 percent in the quarter to $1.29 billion, with eBay's users posting a total of 559 million listings in the period. However, total listings globally were down 6 percent from the year-earlier period.

These listings generated Gross Merchandise Volume (GMV) of $14.46 billion in the period, or a 12 percent year-over-year increase. Ebay's GMV growth in the U.S. and Germany has been slowing over the past few years...

Whitman told analysts that eBay would redesign its home page in time for the fourth-quarter holiday shopping season.

"We will also enhance support for buyers and sellers and revamp our community section with a social networking component," Whitman said...

full article: http://money.cnn.com/2007/07/18/news/com...2007071817

[amy]

We will also ...revamp our community section with a social networking component

Translation: we'll be upgrading to the latest version of LiveWorld's software which includes a social networking component.

[amy]

83 million active users. 150 million inactive users (defined as those who haven't bid/bought or listed/sold on eBay in the past 12 months)

I'm officially counted in the inactive column.  :turkey2:

[FiberGuy]

Am I the only one who finds it rather odd that their stock took a hit on a positive earnings report?

[BellisimaJ.]

Am I the only one who finds it rather odd that their stock took a hit on a positive earnings report?

Yes.   The analysts also appear concerned. See below.

"One concern in the back of my mind is that the company is milking more out of each transaction. There comes a point where the end user isn't going to like being nickeled and dimed, so this could backfire," Munarriz said. "It's not a perfect report card, but for now they're making it work."

[sneakymagenta]

Some of the datapoints on the core marketplace business that are concerning are:

    * GMV's y/y growth was 12%, but revenue grew 26%.
    * Confirmed registered users grew 19% y/y
    * ACTIVE registered users grew 7% y/y
    * Non-store listings were down 2% y/y
    * Store listings were down 25% y/y

The one thing that I get concerned about is the fact that if marketplace revenue is growing at 2x the rate of GMV, does that mean that sellers are essentially paying double the effective take rate?  If not, then where is the additional revenue coming from?  Yahoo! Search Marketing/Adwords?  If so, is that really driving shareholder value?  I'm sure some of that comes from the better non-store/store mix shift, but that can't be more than 10-20% of the delta.

Wingo http://ebaystrategies.blogs.com/ebay_str...-stro.html

[mandy]

Cowen analyst Jim Friedland, who maintains a Neutral rating on the stock, Thursday notes that the majority of the upside in the quarter’s results were driven by a beneficial shift in foreign exchange rates and a lower tax rate. He also notes that there was a decline in total listings.

Derek Brown, of Cantor Fitzgerald, repeated his sell rating and $30 price target on the stock. “We strongly encourage investors to look through this beat-and-raise quarter and focus on the persistent sluggishness of eBay’s core Marketplace franchise, which ultimately drives 70%-80% of total corporate revenue by our estimate,” he writes. “We see little tangible evidence that eBay’s ‘fixes’ have fundamentally altered the trajectory of its core business and believe eBay continues losing mind share and market share at a rapid pace.”

full article: http://internet.seekingalpha.com/article/41777

[bargainbloodhound]

“We see little tangible evidence that eBay’s ‘fixes’ have fundamentally altered the trajectory of its core business and believe eBay continues losing mind share and market share at a rapid pace.”

eBay can't fix the average buyer's preference for fixed price over auctions.

[I want 1 2]

eBay continues losing mind share

That, coupled with the ever-increasing fees, is what made me decide to open my own site. Sales are the same (in less than 3 months) as they were on ebay, but now I'm not paying ebay anymore. Count me as 1 store, and about 1000 items, that attribute to ebay's y/y drop in numbers.
Ebay store closed July 2, 2007.