EBay Beats Expectations with Strong Q4 Results

Online marketplace eBay Inc. reported strong earnings and revenue growth in the fourth quarter, ended Dec. 31, 2005, exceeding analysts’ expectations in both areas.

Net revenue came in at US$1.33 billion, an increase of 42 percent year over year and slightly above the consensus estimate of $1.3 billion from analysts polled by Thomson First Call.

Meanwhile, net income grew 36 percent to $279.2 million, or $0.20 per share, the San Jose, California, company announced Wednesday.

Pro forma net income, which excludes certain items, increased 50 percent to $340.1 million, or $0.24 per share, exceeding financial analysts’ consensus expectation of $0.22.

Activity in eBay’s core marketplace generated $1 billion in net revenue, with the rest coming from the PayPal online payments unit ($304.4 million) and from the Skype Internet telephony unit ($24.8 million).

EBay closed the quarter with 180.6 million registered marketplace users, up 33 percent, and with 71.8 million active users, up 28 percent, compared with last year’s fourth quarter. Active users are those who bid, bought or listed at least one item within the previous 12-month period. New listings reached 546.4 million, a 35 percent increase from last year’s fourth quarter.

Gross merchandise volume, the total value of all successfully closed items on eBay’s trading platforms, was $12 billion, up 22 percent year over year. The company ended the quarter with about 383,000 eBay stores worldwide.

The PayPal online payment unit reached 96.2 million total payment accounts at the end of the quarter, up 51 percent from the fourth quarter of 2004. Total payment volume, the dollar volume of payments initiated through the PayPal system, was a $8.1 billion, a 45 percent increase.

The Skype unit ended the quarter with 74.7 million total registered users.

For the full year, eBay generated net revenue of $4.55 billion, an increase of 39 percent, while net income also grew 39 percent to $1.08 billion, or $0.78 per share. On a pro forma basis, net income increased 45 percent to $1.20 billion, or $0.86 per share.

Looking ahead, eBay expects net revenue for all of 2006 to be in the range of $5.7 billion and $5.9 billion. It expects full 2006 earnings per share in the range of $0.65 and $0.71, and pro forma earnings per share in the range of $0.96 and $1.01.

On Wednesday, eBay also announced eBay Express, a new shopping site that will offer a different shopping experience from an eBay auction and an eBay store.

Slated for launch in the second quarter, eBay Express will feature only new items with fixed prices and available for immediate purchase. EBay Express will have a shopping cart and buyers will pay for items on the spot via credit card or PayPal, eliminating the possibility that sellers will not be paid, according to the company.

“EBay Express was designed with the input of thousands of real-life shoppers who wanted a quicker and easier way to find and pay for new, fixed priced items on eBay.com,” according to a frequently-asked-questions (FAQ) Web page about the new site.

Although it will be a different site, eBay Express will be part of the eBay marketplace, in that listings from eBay stores and individual eBay listings with fixed prices can qualify to appear in eBay Express at no additional cost, according to eBay. “As a seller, your existing eBay listings will be automatically submitted for consideration for eBay Express, unless you choose to opt out,” according to the FAQ page.

Not all sellers will qualify to have their items appear on eBay Express. More information about the requirements can be found in the FAQ page. The new site will be located at http://express.ebay.com.

By Juan Carlos Perez, IDG News Service (Miami Bureau)