Driven By PayPal, eBay Q3 Revenue Up 32 Percent To $3 Billion; Net Income Up 18 Percent To $628M

eBay reported third quarter earnings today, which were in-line with Wall Street expectations. Revenue for the third quarter increased 32% to $3 billion, compared to the same period of 2010. This was actually a record quarter for revenue, says the company. Net income on a GAAP basis was $490.5 million, or $0.37 per diluted share, and non-GAAP net income came in at $628.2 million, or $0.48 per diluted share, up 18 percent from 2010. Analysts expected $0.48 cents per share, and revenue was expected to hit $2.9 billion.

The company’s PayPal business continued to help buoy the company’s earnings. PayPal ended the quarter with 103 million active registered accounts, a 14% increase year over year. PayPal revenue increased 32% year over year driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption. PayPal’s net total payment volume grew 31% to $29.3 billion in the third quarter of 2011 compared to the same period of last year. PayPal had its first billion dollar quarter last quarter but exceeded this, bringing in $1.1 billion in revenue, which is up over 30 percent from 2010. And PayPal expects to generate more than $3.5 billion in mobile TPV in 2011, up from $750 million in 2010.

The company’s Marketplaces business also grew, bringing in $1.7 billion in revenue, which is up 17 percent from the previous year. Gross merchandise volume (GMV) excluding vehicles increased by 16% year over year to $14.7 billion. U.S. GMV excluding vehicles increased 14% year over year, and nternational GMV excluding vehicles increased 18% year over year to $9.1 billion, reflecting solid growth in Europe, continued improved performance in Korea, as well as a positive impact from foreign exchange. eBay expects to generate almost $5 billion in mobile GMV in 2011, more than double mobile GMV in 2010.

The company’s GSI Commerce business, which was acquired earlier this year, contributed $202.6 million in revenue for the third quarter. GSI generated $608 million in global ecommerce (GeC) merchandise sales during the quarter.

The year-over-year increase in third quarter GAAP and non-GAAP earnings per diluted share was driven primarily by strong top-line growth, says eBay, and partially offset by continued investment in strategic initiatives and the impact of acquisitions.

eBay Inc. President and CEO John Donahoe, said in a statement, “Our company reported another strong quarter, with eBay, PayPal and GSI each performing well…Mobile commerce continues to accelerate as consumers change the way they shop and pay. We expect eBay mobile commerce to generate almost $5 billion in merchandise volume this year and PayPal mobile to exceed $3.5 billion in payment volume. Mobile is one way online and offline shopping are blending into a single commerce environment. We are focused on enabling commerce, helping consumers shop anytime, anywhere, and being the commerce partner of choice for retailers of all sizes.”

In the Fourth quarter, eBay expects revenues in the range of $3.2 to $3.35 billion million with GAAP earnings per diluted share in the range of $1.47 – $1.53 and non-GAAP earnings per diluted share in the range of $0.55 – $0.58. GAAP earnings per diluted share will include the gain from eBay’s sale of its remaining equity interest in Skype. For the full year, eBay expects revenue in the range of $11.5 to $11.6 billion with GAAP earnings per diluted share in the range of $2.42 – $2.48 and non-GAAP earnings per diluted share in the range of $1.98 – $2.01.

The company has had a pretty significant few weeks. Last week eBay debuted its brand new developer business tomorrow, X.commerce, which stitched together technologies from eBay, PayPal, Magento and GSI. The company also teamed up with Facebook to integrate the social network’s Open Graph into the Magento and GSI global commerce platforms. PayPal also revealed PayPal Access, a payments identity technology that would allow you to carry your payments identity to various retailers on the web.

Facebook Platform Marketing Chief Katie Burke Mitic just joined eBay’s board. PayPal is also expected to debut a new payments platform for merchants as well as in-store integrations.


Donahoe says that the company is focused on ‘enabling commerce,’ giving users a seamless experience across channels. “Retail must be technology enabled and consumer-led”

“We are at an inflection point in global commerce,” Donahoe added. “We believe we’ll see more change in how people shop and pay in next 3 years than in the last decade.”

PayPal’s mobile payments are expected to exceed $3.5 billion, five times what it was in 2010. PayPal’s technology will soon be extended to retailer point of sale locations. In Q4 these in-store innovations will be tested on a ‘friends and family’ basis in a national retailer in two markets.

eBay mobile MGV will be more than double from last year, to $5 billion. Consumers are making on average 3 purchases per second via the company’s mobile apps.

Mobile payments is a fundamentally risky thing, says the company, but PayPal is going to provide a great mobile payments solution that is secure.