eBay earnings 2019 – A mixed bag of ups and downs

eBay Q3 2020 Earnings

eBay have reported their Q4 and full year eBay earnings 2019 and they beat investor expectations on earnings and met revenue expectations, but as they were already muted expectations it’s still wasn’t a stellar performance. In fact they saw the first quarterly drop in revenue (compared with same quarter a year ago) since the PayPal spin off in 2015.

Fourth quarter revenue was $2.8 billion, down 2% on an as-reported basis and remaining flat on a foreign exchange (FX) neutral basis. Gross merchandise volume (GMV) was $23.3 billion, down 5% on an as-reported basis and down 4% on a FX-Neutral basis.

For the full year, revenue was $10.8 billion, up 1% on an as-reported basis and up 2% on a FX-Neutral basis. GMV was $90.2 billion, down 5% on an as-reported basis and down 2% on a FX-Neutral basis.

Active buyers grew by 2% across eBay’s platforms, for a total of 183 million global active buyers.

“I am proud of how well our teams have executed over the past year and the innovative solutions we have provided for our buyers and sellers. As we enter 2020, our priorities are clear – we will continue to drive revenue through our growth initiatives, deliver more seller tools, improve the buyer experience by leveraging our structured data foundation, all while driving more margin expansion. We believe these efforts will position us for sustainable, profitable long-term growth and I am excited by the opportunities ahead.”
– Scott Schenkel, Interim Chief Executive Officer, eBay Inc

What will be of interest to eBay sellers is the marketplace performance – Marketplace platforms delivered $2.2 billion of revenue, down 3% on an as-reported basis and down 1% on a FX-Neutral basis, and $22.0 billion of GMV, down 5% on an as-reported basis and down 4% on a FX-Neutral basis.

Interim Chief Executive Officer, Scott Schenkel, is very clear about the priorities for 2020 insofar as sellers are concerned. Structured Data (Mandatory Item Specifics) are key and every piece of data eBay has suggests that they are working. Expect more mandates across more categories as they’ve already announced they will be coming in 2020.

The other piece of news which isn’t so good for sellers is his comment about driving “more margin expansion”. That means eBay taking a bigger cut of the pie and you paying more fees for the same amount of sales… although we’re hoping revenue (i.e. sales) will go up but eBay still want you to pay that higher percentage in fees. This is reflected in Promoted Listings – eBay’s add on fee opportunity in exchange for greater visibility. In Q4, Promoted Listings delivered $136 million of revenue, up 73% on an as-reported basis and up 75% on a FX-Neutral basis. Over 1.1 million sellers promoted more than 320 million listings in the quarter.

eBay’s other margin generating opportunity (which might actually save some sellers on fees compared to PayPal), is eBay Payments. The transition to eBay’s managed payments continued its momentum and since launch, eBay has processed more than $2 billion of GMV for almost 25,000 sellers. Expect eBay Payments to come to the UK within 18 months, definitely by the end of 2021, but we’re guessing we may hear an annoucement any time after July when the next step of the eBay-PayPal divorce agreement times out.

It’s fair to say that eBay has had a troubled year, forced to spin off StubHub (expected to complete in Q1 2020), forcing out their CEO and currently with Scott Schenkel as interim CEO, who has been left to pick up the pieces, make sense of them and drive eBay forward. eBay sellers won’t be impressed with declining revenue coupled with a desire to increase margins which can only mean a higher percentage of fees.

eBay sellers are also yet to be convinced that item specifics are the answer – if revenue is down are Item Specifics really driving more sales or are they just moving declining sales around from one seller to another? The good news is that eBay active buyers have been steadily growing throughout 2019, so now we need 2020 to be a stellar year for eBay with revenues rapidly rising as an early indicator that eBay’s turnaround plan is working and signalling that active buyers are loyal and starting to spend more on eBay as their defacto go to marketplace.

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Comments

...every eBay seller hopes for sales to go up meanwhile they are (the sellers) escaping the platform or planning to escape, whilst eBay continuing to play games. Lol

NorthCrystal • 29th January 2020 •

here is my take as an analyst covering EBAY - note: this is NOT investment advice!! EBAY is a shambles: management rolled out every excuse you can imagine, from Brexit to Internet sales tax, from FX headwinds to weaker display ads, from “more targeted marketing spend” and impacts of new programmes alongside hitting limits of how much Payments they can take over. US GMV was down 9% yoy (though 6% blamed on adding sales tax), vs. a 1% drop a year ago, meaning they are in shrinkage mode, and Intl GMV also accelerated on the downside to -4% (-1% FX neutral, so shrinking as well). Sold items down 4% yoy. Strip out Promoted Listings, and marketplace revs are down 5% despite a higher take rate. This is simply squeezing more from less. Classifieds is due now for a mid-year review, but at 6% growth was at its lowest in years, with only Germany still performing and EBAY quashing the idea of selling it off in pieces. They bought back another $1bn of stock, $5bn for the yr., with just $1.5bn buyback assumed for 2020, though closing SH would just mean handing back that cash as well. The outlook sees a bit of margin leverage, but no topline growth. Total FCF guidance is down yoy to $2.2-2.4bn; looks like an awful 1H20 with all the hope placed into a 2H20 uptick from Payments (adding 2ppts of growth) and trying to get GMV back up as they lap sales tax, but we see this as an effort at buying time. They are now walking back from getting new buyers and trying to turn the decline in active buyers into a virtue, claiming they will monetise them more in 2020. Seller feedback is just awful. The boost in non-GAAP margins came with 210bps from an asset sale. StubHub had a poor Q as well, and no one asked about the UK CMA inquiry into the deal. Despite an ever-increasing need for reinvestment into the core business, eBay now looks to squeeze cash out by boosting its recently issued dividend by 14%, and net debt remains around $3.8bn, against declining FCF guidance. The call was a hope-fest, ignoring the stock -5% AH, with everyone asking for “puts and takes” and “clarity” but overlooking the basic fact that this is what happens with a company run by a private equity Chairman, a caretaker Interim CEO (ex-CFO), and so-called activist who is now back to the same price at which they started buying in: it is just being drained of cash, and of life.

rkarete • 29th January 2020 •

eBay earnings have been smoke and mirrors for years. No different here. Analysts should seriously be questioning eBay's provided "numbers", how they arrived at those "numbers", and their claims of marketplace improvements and active buyer growth. It's all 100% fabricated BS trying to make it look better than reality. eBay's schemes for money and support of all kinds of fraud aren't gonna work anymore when enough of it's users have gone away. This company is in decline because of their own actions and failed execution. Has absolutely nothing to do with their rolodex of excuses which they present every quarter.

Dav • 29th January 2020 •

So in a nut shell.... Ebay will ignore all the big issues as usual and instead increase the grip on sellers margins so they can claim all is good. Good luck with that... When all the honest decent sellers have gone and you have no choice but to act on scammers and dodgy chinese sellers... they will simply move on faster than you can say 'more fees!' So Glad we are already moving business away from ebay witha full withdrawal next year. Sad when a 11 year long relationship witha business gets so bad that one side has to walk away. Still ebay won't notice because their head is so far in the sand that they wouldn't know daylight it if burnt their skin! (Watch out for ebay payments becoming the new source of yearl;y price hikes!)

Toby • 29th January 2020 •

use to buy on eBay as they were cheaper than Amazon. Now even with prime, amazons are cheaper except in tools an Ink. Without report I can see they are going down and money guarantee and GSP (global shipping program) for the seller is just a joke. On the top of that they don't recognizes Amazon logistic as a logistic partner !!

JC • 29th January 2020 •

Footnotes: - Total marketplace revenue is down - CEO is proud of the team - ebay will continue to make selling more expensive Oh dear ebay, will you learn before it's too late?

Don • 29th January 2020 •

YAWN Scott Schenkel just another Corporate robot run of the production line. They want to increase margin ( with more Pay to Play of course) and continue to charge us all more for an even poorer service and poorer sales. They can have as many sign ups as they want, but they are failing to convert them into actual sales, hence all they can do is increase fees again. They will continue with their failed strategy of fake discounts for the fabled few, and sales from China of course legit and fake. If merchants actually GOT behind a new marketplace in the UK en masse they could really make a difference but they will not of course. Nothing will change.

SAM • 29th January 2020 •

Ebay's just a dump for chinese sellers. It doesnt really work for domestic sellers that want to be a business. A few tax evaiding domestic sellers get along, most, legit ones should start to execute an exit plan.

Ifellow • 29th January 2020 •

I am a simple small seller so all these eBay facts, figures & hype mean nothing to me. I only sell fully branded products sourced from authorised UK distributors so expect competition to be fierce. Over the past 10 years I have blacked two well-known brands because they put profit first and allow their products to be sold on ebay Hong Kong by reputable sellers, often cheaper than the UK wholesale price including shipping, other than that I have no problem with Chinese based sellers equally entitled to make a living. A couple of years ago one of my suppliers although proven innocent had to attend a court case the result, he stopped all warehouse cash sales. To cut a long story short not only was he laundering dirty money the business owner’s warehouse was home to 14 illegal immigrants only 3 were caught but only because they wanted to go back home. I’m sure many of us have been frustrated by continually proving who we are and linking bank accounts to Amazon etc but no such issue on eBay, Amazon have strict rules about multiple accounts I’m not sure eBay do? Perhaps Tamebay and the likes should start asking both platforms & Government officials some difficult questions on exactly how many human lives are exploited from dark UK warehouses ignorance should be no defence they also should be hit with heavy fines for proven cases just as the business owners are. eBay is by far the worst simply because they never ask all businesses difficult questions as Amazon often do but I’m sure Amazon could also do much more! This is by no means proof, as with all sellers I have to wait my turn to make a margin on Amazon very often it is end of UK stock lines I’ve just looked at 1 product line currently selling on Amazon there are only 3 sellers left standing yet same product on eBay there are 14 most of those are still selling way below Amazon current buy box price great for the bargain hunting customers but not so great if more poor souls are being exploited

Andy • 29th January 2020 •

I cancelled an order the other day from someone I knew was a scammer from past experience, and added his latest ID to the blocked list. If he and those like him, are having to abandon old IDs and create new ones each year, perhaps this accounts for the so called increase in active buyers.

Gav • 29th January 2020 •

When Managed Payments is introduced later this year i see a massive exodus of Ebay sellers going to other places like OnBuy, Ebuygumm and Ebid dot net...

Will • 30th January 2020 •