eBay’s profit dropped 31% year on year to USD283m during its latest quarter as costs from the firm’s recent acquisitions begin to eat into its income. Revenues rose 25% year on year to USD2.76bn, above analyst expectations. eBay is attributing the dip in profit to charges relating to the USD2.4bn purchase of GSI Commerce in March, the firm’s largest since it bought Skype for USD2.6bn in 2005. However, eBay claims that GSI, which will operate as a standalone unit, contributed USD23.8m in revenue in just two weeks at the tail-end of the quarter. eBay has bought six firms in total so far this year as it attempts to challenge online rivals such as Amazon.
PayPal yet again boosted eBay’s revenues, generating more than USD1bn during the quarter ending in June, while the payment service also surpassed 1bn active users. eBay says that some USD28.7bn payments were processed during the quarter and forecasts PayPal to record some USD3bn in mobile payments before the end of the year, up from just USD750m in 2010. The mobile payments space appears set for explosive growth, with a raft of firms, including Visa and Google, developing services. But eBay CEO John Donahoe is bullish on PayPal’s mobile prospects, saying: “While others talk about the promise of mobile payments, PayPal is delivering.”
Mobile continues to be key to eBay’s future growth as the online marketplace seeks to stay ahead of the growing competition in e-commerce. The firm claims its marketplaces division, including eBay.com and other properties, generated USD1.66bn during the quarter and is on course to double its gross merchandise volume on its mobile marketplace to USD4bn this year, with its smartphone app receiving some 45m downloads to date. eBay’s total merchandise volume grew 17% year on year to USD14.7bn, while volume in the US grew for the third consecutive quarter.
Donahoe says that the firm is set to increase its marketing spend during the second half of the year, including a large push offline into TV in an attempt to snare new users. The firm forecasts revenues of between USD2.85bn and USD2.95bn for Q3, with full-year earnings to rise as much as 31%. The firm adds that it is on course to generate annual revenue of USD15bn by 2013, as the company continues its turnaround to revive sales growth under Donahoe.
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