eBay profits up 22% as mobile shopping grows

Mobile users increasing

eBay‘s profits rose to USD597 million during its latest quarter, up 22% year on year, surprising many analysts as the company’s turnaround efforts continue. John Donahoe, the company’s CEO attributed this rise to the growth in mobile users and improved performance in its core shopping business, Marketplaces, according to StrategyEye. Even though revenues were up 15% year on year to USD3.4 billion during the quarter ending September 30, the firm is maintaining a cautious outlook for the fourth quarter, It predicts revenues between USD3.85billion and USD4billion, with CFO Bob Swan expecting an “OK holiday season.”

A significant portion of the firm’s revenues comes from PayPal, with eBay’s recent e-commerce performance somewhat lacklustre in comparison. However, revenue growth at eBay’s core business indicates the firm’s turnaround attempts appear to be paying off, and the firm recently unveiled a major website redesign as it attempts to up user engagement.

Mobile is transforming eBay’s Marketplaces, Donahoe added, and boosting the number of shoppers making purchases. The firm claims it saw more than 800,000 new users make their first eBay purchase via a smartphone, with its mobile apps downloaded more than 100m times globally.

Mobile continues to be a game changer for us, and we continue to be a clear leader in mobile commerce and payments,” says Donahoe.

PayPal however, continues to grow faster than Marketplaces, up 23% year on year to bring in USD1.37bilion in revenues. Marketplaces grew a more modest 9% to bring in USD1.8billion, and it appears likely that PayPal will eventually surpass eBay’s core shopping business in terms of revenues within the next three to five years, according to Donahoe. Slower than expected growth in Marketplaces, plus eBay’s cautious forecast for its next quarter led to guarded analyst optimism.

[The results are] not as overpowering a beat as the last couple of quarters, but they do appear on track,” says Wedbush Securities analyst Gil Luria.

The firm says it will focus on bolstering relationships with retailers and fleshing out its mobile offering next year. Donahoe predicts that eBay’s active users will “double” within the next five years, as the company expands to growing markets such as Russia and Brazil.

eBay By The Numbers

¤ Profits up 22% to USD597, driven by new mobile shoppers
¤ Revenues grow 15% year on year to USD3.4billion
¤ Some 800,000 new mobile shoppers for the quarter
¤ PayPal revenues rise to USD1.37bn
¤ Core Marketplaces business up 9% to USD1.8billion in revenues


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