eBay Beats The Street; Q4 Revenue Up 35 Percent To $3.4B, Net Income Up 15 Percent To $789M

eBay just reported fourth quarter and fiscal year 2011 earnings today, which were above analysts expectations. eBay posted revenue of $3.4 billion, up 35 percent from the same quarter in 2010. The company reported fourth quarter net income on a GAAP basis of $2.0 billion, or $1.51 per diluted share, and non-GAAP net income of $788.6 million, or $0.60 per diluted share. Net income was up 15 percent to $789 million. Analysts expected earnings per share of $0.57 on revenue of $3.32 billion.

eBay says the year-over-year increase in the fourth quarter GAAP earnings per diluted share was driven primarily by a gain on the sale of the company’s remaining investment in Skype. The year-over-year increase in the fourth quarter non-GAAP earnings per diluted share was driven primarily by strong top-line growth and improved productivity partially offset by a higher tax rate.

For the full year, revenue increased 27% to $11.7 billion, compared to 2010. The company generated net income on a GAAP basis of $3.2 billion, or $2.46 per diluted share, and non-GAAP net income of $2.7 billion, or $2.03 per diluted share.

eBay President and CEO (and interim PayPal president) John Donahoe said this of the quarter: “We had a strong fourth quarter finish to an excellent year, increasing our confidence in our three-year outlook…Across eBay, PayPal, GSI and X.commerce, we have a robust portfolio of global commerce platforms and innovative mobile, local and social commerce technology assets. We are well-positioned to compete in the emerging new retail environment, and to help retailers of all sizes grow and engage their customers anytime, anywhere. We are a different eBay today, no longer just an ecommerce leader but a stronger, more diverse global commerce company shaping the future of shopping and payments.”

The company’s PayPal business continued to be the crown jewel in eBay’s earnings. PayPal ended the year with 106.3 million active registered accounts, a 13% increase year over year. On average, PayPal added a million new accounts every month in 2011.

PayPal revenue for the quarter increased 28% year over year driven primarily by continued merchant and consumer adoption as well as increased penetration on eBay. In the fourth quarter, revenue from PayPal’s international markets exceeded revenue from the U.S. for the first time. PayPal’s net total payment volume (TPV) grew 24% to $33.4 billion in the fourth quarter of 2011. PayPal brought in $1.2 billion for the quarter, up 29 percent.

The marketplace business also grew in the fourth quarter, up 16 percent year over year to $1.77 billion, due primarily to increased buying and selling on the platform as well as growth from acquisitions. Gross merchandise volume (GMV), excluding vehicles, increased 10 percent to $16.5 billion with sold items up 11% globally year over year. U.S. GMV, excluding vehicles, increased 10 percent year over year. International GMV, excluding vehicles, increased 9 percent year over year, driven primarily by growth in Europe and in Asia. The company’s GSI business contributed $363.6 million in revenue for the fourth quarter.

In terms of expectations, eBay expects net revenues in the range of $3.05 to $3.15 billion with GAAP earnings per diluted share in the range of $0.37 – $0.38 and non-GAAP earnings per diluted share in the range of $0.50 – $0.51 for the first quarter 2012.

For eBay, 2011 was really the year of mobile and local. Via both acquisitions and strategic product launches, the company pushed mobile payments in both its marketplaces and PayPal businesses. PayPal surpassed its expectation of $3.5 billion in mobile payments in 2011, reaching $4 billion for the year. And eBay reached $5 billion in mobile GMV (gross merchandise volume) in 2011.

The company is projecting that eBay would reach $8 billion in mobile GMV in 2012, and PayPal will reach $7 billion in transactions in 2012.

With Donahoe at the helm of both eBay and PayPal, it should be interesting to see how 2012 shapes up for the e-commerce giant. We know that PayPal is debuting an in-store payments technology both via mobile and point of sale systems that is currently being tested on a ‘friends and family’ basis at Home Depot. And we could also see a new PayPal CEO as well.

We’ll be covering the earnings call below, so stay tuned.


Donahoe says that the company has a strong fourth quarter. “2011 marked an inflection point for shopping; Online and offline retail are rapidly blending into a seamless multichannel world.”

PayPal is generating excitement about it’s in-store offerings. For retailers, this will give them opportunities to not only engage consumers at checkout but throughout the shopping experience. We will be launching a pilot to 50 Home Depot Stores in San Francisco this week.

Donahoe: We’ve added more new users to eBay in the fourth quarter than we’ve had in the past few years.

In light of Scott Thompson’s recent departure, Donahoe says the PayPal management team has never been stronger. He says Thompson’s departure was a surprise, but he wishes him well. “I feel better about this leadership team than any time in the company’s history.”