eBay just turned in record eBay quarterly earnings with revenues of almost $2.9 billion and net profits of $670 million.
In what might be seen as a bribe against the ramifications of Elliott’s letter complaining about company performance (which eBay declined to discuss in the earnings call), eBay have announce their first ever quarterly dividend of $0.14 per share from March 2019 and the expectation that they will return approximately $7.0 billion to shareholders through dividends and repurchases over the next two years. eBay expect approximately $5.5 billion to be returned in 2019.
“We delivered record earnings for the fourth quarter and full year 2018. In 2019, our focus will be on further improvements to the eBay user experience, while pursuing significant long-term growth opportunities in advertising and payments. We are confident in the strength of our business and future growth prospects, as demonstrated by our decision to institute eBay’s first-ever dividend and increase our share repurchase program.”
– Devin Wenig, President and CEO, eBay Inc
eBay sting sellers for $80 million in additional fees
eBay revealed that part of their growth is due to stinging sellers for more fees. Revenue from eBay Promoted Listings has exploded with 150% growth and around $80 million revenue. Now, 600,000 sellers are paying additional fees to promote 200 million listings. To put that into perspective eBay have around 1.1 billion listings so sellers are coughing up an additional fee to promote almost 1 in every 5 listings live on eBay. eBay expect the adoption of Promoted Listings to increase further in 2019 describing the revenue stream as already ‘scaling nicely’ and ‘we expect it to continue to scale’.
eBay promoted listings are currently displayed in the 1st, 4th and 5th positions in eBay search. This means that a seller with a low quality listing can buy the 1st position in search results and be positioned to buyers ahead of the best quality most relevant listing from the highest quality seller in natural Best Match search results. One might ask why bother trying to get a quality listing when a low quality listing can buy its way to the top… and it looks like with almost 1 in 5 listings promoted plenty of sellers are prepared to pay.
The result of these additional fees to eBay have seen their net income running at around 23% of their revenues for the 4th quarter of 2018.