Q1 2019 eBay earnings delights investors but not marketplace sellers

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eBay have pulled a rabbit out of the hat and delighted investors with their Q1 2019 eBay earnings, as demonstrated by their share price jumping more than 5% from a close of $36.15 to over $38 as soon as their results were published.

eBay reported Revenue of $2.6 billion with GAAP and Non-GAAP EPS per diluted share of $0.57 and $0.67, respectively. Analysts had expected around $2.58 billion revenue and EPS of $0.63.

There is also plenty to like with eBay’s growing buyer engagement with latest figures showing eBay grew active buyers by 4% across its platforms to 180 million active buyers, up from 171 million at this time last year.

Q1 2019 eBay earnings increased 2% on an as-reported basis and 4% on a foreign exchange (FX) neutral basis.

“We delivered a solid first quarter with revenue and EPS. Our initiatives to create a next generation payment and advertising experience are on track, we saw healthy buyer growth and disciplined cost control, and we continue to simplify the buying process while remaining focused on seller’s success.”
– Devin Wenig, President and CEO, eBay Inc

We are not expecting any comment from activist investors as eBay entered into a cooperation agreement with affiliates of Elliott Associates and with affiliates of Starboard Value, each of which have agreed to certain standstill, voting, and other provisions with eBay.

eBay marketplace contracts

What won’t please marketplace sellers is that as revealed in their Q1 2019 eBay earnings, the eBay marketplace actually contracted slightly when compared with the same quarter last year but eBay made more money. That means sellers are paying higher fees for fewer sales.

  • Marketplace revenue growth was 3% on an as-reported basis and 4% on a FX-Neutral basis.
  • GMV was down 4% on an as-reported basis and down 1% on a FX-Neutral basis

Q1 2019 eBay earnings Marketplace Revenue

In simple terms, eBay marketplace GMV was $21,571 million in Q1 2019 compared with $22,547 in Q1 2018.

The problem for sellers (not just on eBay but also on Amazon) is that it’s becoming more expensive to sell on marketplaces. eBay intend to scale eBay advertising to become a billion dollar business and in the first quarter, there were more than 800 thousand active sellers who took advantage of the program, promoting over 200 million listings. This drove over $65 million of revenue in the quarter, up nearly 110% year-over-year.

There are only two ways to grow a business’ profits – grow total sales or grow margins. eBay aren’t growing revenues and they’re making it harder to grow margins due to their own increased revenues which come from a 3% increase in the total fees that sellers pay.

For Q2 2019, eBay expects net revenue between $2.64 billion and $2.69 billion, representing Organic FX-Neutral growth of 2% – 4%, with GAAP earnings per diluted share from continuing operations in the range of $0.41 – $0.45 and non-GAAP earnings per diluted share from continuing operations in the range of $0.61 – $0.63. What sellers will be looking for is for growth in the marketplace without further increases in fees, whether headline rates or stealth fees through eBay Promoted Listings in order to remain competitive.

17 Responses

  1. PAY more for less, shocker. They cannot grow the site it is done I would not be investing anything in eBay long term…short term thinking and short term profits…

    You keep biting the hand that feeds you.

    eBay treats it’s Army of sellers with contempt…the ranks are dispersing and have become disillusioned with it, the customers (buyers) have already left TBH.

    It is a pity was a great site in it’s time…just ran by the wrong people…

  2. Ebay has deliberately raised the bar to the extent that almost every seller has lost the top rated status meaning no more 15% FVF.

    We tried our best to keep up with it but have now lost the status too and now we are paying around £700 a month more.

    eBay figures are going up?……………….Humm…

    In the last two months we had a pleasure of talking to ebay support. It is very apparent that they have now been instructed to treat sellers like enemies.

    Now its ebay vs sellers.

    Advice for sellers, raise the prices up on ebay (you have to anyway) and drop them on your own website. We have tried it and are seeing a rise in sales.

  3. How desperately sad Ebay has gotten –
    ” eBay’s sold-item growth was again 0%, for the fourth consecutive quarter ”
    Fact – Ebay is only growing by itself because of the Promoted listings fees and other money grabs into the Sellers pockets.

    Thankfully since the GTC fiasco, more and more Ebay sellers are importing their inventory to the Ebid marketplace, which you never pay more than 3% FVF per sale.

  4. Sponsored listings is a long term bad thing. Just look at who is using it the most.

    You’ve got the Chinese location abusers. That means at the very least, deliveries will not be arriving on time and buyers will be unhappy with that.

    You’ve got overpriced items beating the well priced items, because sponsored listing costs are often passed onto the buyer. What will happen when buyers realise they are overpaying?

    You’ve got sellers who use ebay to advertise rather than sell, with website details plastered over their images and listings, diverting future sales and taking ebay buyers away from ebay. Once they know how cheap it is elsewhere, why would they come back?

    All of these factors are going to drive buyers away. Based on traffic since the start of the year, I think we’re maybe already seeing it.

  5. I’m a financial analyst covering EBAY for years. We are very sceptical about mgmt and the direction of the co – and esp about the Elliott plan to asset strip the business (for example, who will pay 4x sales for Stubhub when it declines for last 2 Qs, has failed to grow Intl sales, and has a decent margin only in 4Q). What you all likely miss is that EBAY is being drained of cash – $1.5bn went to buybacks and another $125m on a dividend – while product development cost dropped $37m to $297m (even with higher investment in Payments). If you’re interested in seeing our work on EBAY, feel free to reach out – this board is a great source of real world feedback that doesn’t seem to influence the CEO’s $18m pay package.

  6. Well, US marketplace was -6% or -7%+ yoy if you adjust for Promoted Listings business. That’s just dreadful.

    A 9% decline in avg. basket size (MP revs/active buyers) shows EBAY is getting picked off in the niche high-value categories it used to own (e.g. StockX in trainers).

    The pt. on the cash is that it takes away resource from innovation – and as you guys can see, EBAY is not trying to innovate now.

  7. For around SIX years we tried to steer ebay towards cataloging vehicle parts and reduce duplicates… Just as we’d get close to getting upper management to see the light they’d all either be laid off, moved or banned from leaving the office!
    Ebay have let opportunity after opportunity slip through their fingers.

  8. John Donahoe started the real demise of eBay with the “disruptive innovation” nonsense over 10 years ago and Devin Wenig has accelerated the platform into a tailspin the last 4 years. The site algorithm and Cassini search engine is a disaster and is far too involved in controlling item placements and the hiding of listings. This is the first thing that needs to changed. But the problem is, eBay wants to control listings and who sells, so there’s little hope for any change. Not to mention the ads and competing seller listings they’re now plastering all over the site to get ad-clicks. Send buyers away from items and even off-site. eBay really does not care.

    Seems to me that a vast majority of those on the net talk of plummeting sales YOY and MOM and it was nothing of their doing. Sales suddenly stopped and never recover no matter what the seller tried. All eBay does anymore is make constant and often sneaky changes to everything, seemingly in order to confuse/trick sellers into paying more fees. Making all listings GTC is the latest example.

    Sales on the platform are declining, sellers and buyers have left or leaving. eBay must be counting old buyer accounts that haven’t been used in years because there’s certainly far less buyers and traffic. The only way eBay makes revenue anymore is to keep taking more and more from the sellers. Every which way they can think of. Promoted Listings, Stores, “bad seller” punishments, now GTC listings, they only want to collect more money for doing nothing without regard to sales. This is not sustainable as sellers will continue to leave when they keep getting punished by eBay for more money and sales keep declining. Greed is in control at eBay and has been for a long time. In due time this is all gonna backfire on them and many will enjoy watching it happen.

    One last thing, isn’t getting really hard to believe the numbers eBay presents at earnings? Funny how they keep beating by just a little bit every time. Something is rotten in Denmark methinks…

  9. Can someone explain the sense of 3rd party ads on eBay?
    If eBay can make 10% on a £100 item sold from its site WHY would it want to get 30p for a click to a third party site where it’ll make nothing more?

  10. Surely that’s like someone walking into your ‘sells everything department store’ and then you’re promoting and directing them across the road to a competitor!


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