On Wednesday, Apr. 18, eBay Inc. reported strong results for the first quarter of 2012. Revenues were up 29 percent compared to Q1 2011, and non-GAAP earnings-per-share rose 18 percent. The earnings news prompted insightful reactions from many analysts and media outlets. Here are some of the notable responses.
Firing on All Cylinders. In the wake of the Q1 earnings report, numerous articles and analyst reports focused on the fact that the Marketplaces, PayPal and GSI Commerce businesses all showed strong growth. “The company’s myriad ecommerce arms fired on all cylinders,” reported CNET. "Both PayPal and the Marketplaces were very healthy in the quarter," said Colin Sebastian, an analyst at Robert W. Baird & Co. “[GSI Commerce’s] same store sales grew 26 percent year-over-year,” reported ZDNet.
Marketplaces Playing Offense. In his conference call with analysts following the Q1 report, eBay CEO and President John Donahoe said that eBay’s Marketplaces business has steadily invested in improving user experiences and trust, including incentives for sellers to provide conveniences such as free shipping and easier returns. He said that the improvements have paid off, and that Marketplaces “has turned the corner.”
Several media outlets and analysts reported on the Marketplaces results. “eBay's online marketplace added two million active users during the first quarter, the most in three years,” reported Reuters. "Marketplaces is improving,” noted Colin Sebastian.
PayPal’s Steady Growth. Numerous articles and analyst reports focused on PayPal’s steady growth and expansion into new channels. Reuters reported on “the expansion of PayPal from its online roots into physical stores.”
“PayPal saw its total payment volume increase 24 percent to $34 billion, driven primarily by increased penetration on eBay and merchant and consumer adoption,” wrote Forbes, adding that PayPal has a growing, strong international presence. PayPal has launched PayPal Here in the U.S., Australia, Canada and Hong Kong, allowing small businesses to process PayPal payments made through smartphones. Overall, PayPal expects to process $7 billion in mobile TPV in 2012.
Mobile Mojo. eBay Inc. has focused heavily onmobile technology innovation across all of its business units, and media outlets and analysts picked up on the success of this effort. “Gene Munster of Piper Jaffray highlighted eBay's PayPal gains, saying that the business ‘gives it a leg up’ in the company's efforts to expand more into mobile payment services,” The Wall Street Journal noted.
In addition to print and online coverage from the media, broadcast outlets covered the Q1 results. CNBC interviewed John Donahoe in this video, where he discussed “mobile commerce leadership,” and “the new eBay Marketplaces.”
Seeking Alpha has also provided a complete transcript of John’s Q&A with analysts following the earnings call. Below are highlights from his discussion with analysts:
Heath P. Terry - Goldman Sachs Group Inc., Research Division
John, I was wondering if you could give us a little bit more color in terms of the rollout plan for point-of-sale beyond Home Depot.
We continue to be very excited about the offline opportunity for PayPal. It expands PayPal's served market from a $500 million market to a $10 trillion market. And if we just capture 2 percent of the offline retail, it's another PayPal.
… This year is a test and learn year, so that we'll be ready in 2013 and 2014 to roll out across different industry categories and globally.
Ronald Josey - ThinkEquity LLC, Research Division
What gives you confidence that Marketplaces has turned a corner?
The data I look at is buyer retention. And buyer retention is up in the U.S. and across the globe.
… Devin was showing me some data yesterday where our active buyer growth is up 9.5 percent in the core Marketplace business.
… I'll also say we have … a nice series of product enhancements during the year. You're going to see some really, really good stuff around the checkout experience on eBay.
Benjamin A. Schachter - Macquarie Research
John, you mentioned some of the growth coming from mobile. I was wondering if you could just parse that out a bit more and talk about the differences in consumer behavior on tablets versus smartphones and really how that's driving.
Mobile is fundamentally changing the retail landscape, and there's no going back. And I'm thrilled we're at the front end of that, in two ways. First, we have applications and products that allow you to actually close a transaction on a mobile device. eBay Mobile volume and PayPal mobile payments volume continue to be on fire.
… Our applications are compelling, and I think we will certainly beat some of the goals we set out for the year on those two fronts. The other story, though, is consumers are using mobile devices as part of their shopping experience even if they don't actually close the transaction on a mobile device. And some of the innovations that we're driving are quite interesting on that front.