eBay's Q3 results first impressions...

When eBay pre-announced that they would come in at the low end of their Q3 revenue guidance and on the high end of EPS, most Wall St. folks started to think more about Q4/09.

Personally, I was impressed with this performance given some of the GMV slowness we saw on eBay and was wondering where the revenue+profits would come from to hit those numbers.  Today eBay announced Q3 results here and the answer is what I had guessed (hint - it isn't GMV).

In the marketplace business, revenue was up 4% y/y.  GMV was down 1% y/y and here's the catch - advertising was up a whopping 127% y/y.

I don't know what the FX-adjusted GMV was, but won't be surprised if it's ex-fx down 4-6% y/y globally and I'd bet 10% in the USA.

The bulk of this comes from the increased monetization of eBay pageviews with banner ads, skyscrapers, home page placements, and the increase of paid links on the site.

I want to do a lengthy post on this after the Q3 dust settles as I (and many sellers) scratch our heads on why eBay is taking such a short-term view of these ads and really sacrificing GMV (and placement that sellers have paid for) vs. removing the buyer-distracting ads and

The way we're going, I'm very concerned eBay will become an advertising site with some GMV on the side and that's definitely NOT the way to fix this marketplace.

Q4 looks very light
The street has Q4 at $2.3bn/.43 and eBay's press release has guidance of $2.02-2.17 and .39-.41.  The stock is getting hammered down to $15 and lower in AH trading, but we'll have to wait and see what analysts think and also if eBay gives any view into 2009.

More to come
I'll have some more thoughts after the conference call. Here's a tip - you can see the presentation already here.

SeekingAlpha Disclosure: I am long google and eBay

Comments

[Patricia]

Amazon also has ads and I think that it is so wrong. We work hard to be a good partner and then they send potential clients to other websites. At least their search engine works...

[Paolo]

You state: The way we're going, I'm very concerned eBay will become an advertising site with some GMV on the side and that's definitely NOT the way to fix this marketplace.

What WON'T they do for another nickle?

[Joe Imhof]

Scot,
You said couple weeks back you were going to come back with more in depth info on how the FP30 is going, all about that etc etc. Still waiting. I'm eager to hear your insights, and how other sellers are doing with the FP30.....hope that post is still coming???

[correction]

"advertising was up a whopping 127% y/y"

This is incorrect. Advertising in Marketplaces was up 29% from last year and that includes the mega-growth on non-GMV Marketplaces. Advertising on EBAY.com was probably up but nowhere near 127%.

[TekGems]

This to me explains it all:

http://www.nytimes.com/2008/10/12/business/12giants.html?pagewanted=3&_r=1&partner=rssnyt&emc=rss

Compensation at the two companies also reflects core differences. Amazon evaluates its executives annually and gives performance-based stock grants. Until this year, when Mr. Donahoe became chief executive, eBay gave cash and stock bonuses based on quarterly performance, rewarding managers for meeting Wall Street’s short-term expectations.