- Brandon Checketts
- On February 18, 2014
- 0 Comments
The large E-commerce business, eBay, had a good 2013 fourth quarter performance. eBay’s income statements reported $4.5 billion in fourth quarter revenue which is a 13% increase during the same period in 2012. This year’s fourth quarter net income using GAAP was $850 million. eBay’s $850 million in net income resulted in earnings of 65 cents per diluted share. eBay’s fourth quarter GAAP diluted earnings per share is 14% higher than 2012’s fourth quarter GAAP diluted earnings per share.
eBay had slightly higher earnings this past fourth quarter than what Wall Street analysts predicted. Many people see this as a much needed win for eBay, but despite eBay’s better than expected fourth quarter performance, the stock still has fallen around 1% since the release of their financial statements.
While a lot of eBay’s fourth quarter success is due to top-line or sales growth, Paypal, eBay’s payment program, also played a large role. Paypal’s revenues increased 19% for both the 2013 fourth quarter and the whole year. This increase in revenue is most likely due to the 5.2 million newly registered accounts in the fourth quarter. Paypal reported $6.6 billion in revenues for all of 2013 and appears to be a strong component of eBay. Because of Paypal’s strong performance, the billionaire corporate-raider, Carl Icahn, is pressuring eBay to spin off Paypal into its own company. In response, eBay gave Icahn a resounding “no” because Paypal is eBay’s best performing asset, and eBay would take a big hit if Paypal was separated.
eBay Inc. CEO and President John Donahoe stated, “We feel good about our performance and strong finish in the fourth quarter, with the holiday shopping season clearly showing how online, mobile and other omni-channel commerce capabilities are changing how consumers shop and pay.”
eBay is a strong company with more growth ahead. For the full 2013 year, eBay reported $16.05 billion in revenue, $2.85 billion in GAAP net income, and $2.18 earnings per share. 2013 was a slightly better year for eBay than 2012. The only downside is that much of eBay’s increase in earnings per share was due to the company’s stock repurchase program where the company repurchased $254 million of its common stock in the fourth quarter.
Even though eBay’s revenue, net income, and earnings per share are increasing, some believe eBay’s overall growth could be slowing down. As of right now, most of eBay’s marketplaces revenue is coming from the take rate on gross merchandise volume or GMV. The take rate is pretty much just a transaction fee that eBay charges. Because a majority of eBay’s revenue is coming from transaction fees and not from merchandise sales, it appears sales on eBay are taking longer to pick up than people thought. CEO John Donahoe even stated, “offline is taking longer to become digitized than we initially thought.”
Many eBay Sellers complained that eBay’s new search engine Cassini hurt their business. Despite the change to Cassini, revenue has been up so it looks like buyers were able to find the merchandise they wanted. 2013 also saw the expansion of the global shipping program which made international sales easier. While some people complained it was too expensive, it gave eBay merchants another way to ship products internationally. With more changes sure to come in 2014, it should be an interesting year for eBay and their merchants.