eBay's Q3 results - Wall st. pukes on Q4 - What will Amazon bring tomorrow?
eBay's results are out and the stock is down 5% or so in after hours trade. Q3 looked like a good solid 'meet/beat' Q, so let's dig in and see what's up.
Q3 - the turnaround in marketplaces seems to be working.
The metrics we watch most closely showed continued positive trends in Q3.
- Y/Y GMV (ex-autos) grew 10% compared to a trend that was as low as -16% in Q1
- Fixed price GMV is now 56% of GMV - up from 51% last Q 46% in the year ago period
- Sold items were up 30% y/y
The only concerning marketplace datapoint is the active user data which remains anemic - still topped out around 89m users. This is up only 2% y/y.
Other interesting tidbits:
- eBay is previewing a diamond ring builder at http://diamonds.ebay.com
- Management seemed pretty up-beat during the call
- Donahoe mentioned they are going to launch a substantial Q4 campaign this year which sellers will like to hear.
Q4 - Hmm - storm ahead or conservatism?
So this sounds pretty good, what could be wrong? Analysts were forecasting eBay's Q4 revenue to be $2.26b and eBay's guidance released today suggests a $2.25b mid-point. This is clearly below expectations (albeit slightly) and some expectations were hoping to raise that mid-point which clearly won't happen.
Additionally margins came down due to a change in mix between the core business, BML and other lower-margin lines of business (Skype).
The big question from today's results are: Is eBay being conservative and managing expectations or are they seeing a grinchy holiday ahead?
We'll report the Amazon results via sister-site Amazon Strategies.
SeekingAlpha disclosure: I am long Amazon and Google. eBay is an investor in ChannelAdvisor where I am CEO.
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Posted by: kachingkaching | October 30, 2009 at 07:29 AM
I would like to revise my previous comment. The one below that starts "Being an armchair quarterback and nothing more".
I think Ebay is in a mess and I now don't think sellers are going to "list their way out of it". Your chart that projects where Amazon will surpass Ebay in GMV, I think that is going to happen much sooner. Recently I have tried to purchase an old nintendo NES system. Ebay is the place to go for that right. It was so difficult and time consuming looking for a system that I got frustrated and gave up looking. Went to Amazon and bingo. First results returned several very qualified results of used systems.
Amazon has so much momentum right now. I think the timing of this hiccup Ebay is having with BM2, will force sellers on Ebay who are not diversified to become more so. 1st and 2nd quarter next year I think will be very damaging for Ebay. Could bring more clients to the 3rd party providers like CA that are not so ebay centric.
Posted by: Paul | October 28, 2009 at 08:43 AM
Scot,
Eager to hear your team's thoughts about
Best Match 2: Electric Boogaloo!
Bad movies make even worse sequels. Seems the case with Best Match, as well.
Search seems really broken; highest volume, pennies net margin commodity sellers and uneffected diamonds probably disagree. Yet, buyers still prefer Amazon for widgets. Amazon is going to absolutely kill in the years to come; they have been building this for years and years now...
Collectibles/Non sku-product on ebay are winding up on page 13...that were once on page one.
Funny, we all thought it was bad in the old days, how we were wrong!
Posted by: Dan 2 | October 21, 2009 at 11:17 PM
Scot,
If revenue goes up but profit goes down is, as anyone who has been in business knows, a very bad sign and it is telling every one to get out now.
They are wasting money and energy on the wrong things. Yes the revenue goes up because the listings have gone up and Skype and PayPal have gone up but they are not selling the same percentage of listings as before so the profit goes down. eBay is loosing their market share and they are wasting money and effort trying to get it back by going in the wrong direction.
It is a rusty old ship that keeps on springing leaks and how long are the pumps (investors on Wall Street) going to keep it afloat.
Many of the crew (workers and sellers) see it and they are jumping ship.
The Captain still goes on like nothing is wrong and the crew look at him like he is a complete idiot.
Our eBay sales are still down y/y but they are coming back.
Example of our sales:
Q1-09 was down 36.5% from Q1-08
Q2-09 was down 55.4% from Q2-08
Q3-09 was down 21.8% from Q3-08
Q3-09 was up 2.5% from Q1-09
Q3-09 was up 35.2% from Q2-09
We deal in Hobby items and not the run of the mill CD's, DVD's and Electronic items that you can find any where but that is what the Captain is pushing for eBay when it was originally built on collectible's and hobby related type things. People are not going to go to eBay to find the general run of the mill type items and they never will. They can find it all a lot easier and cheaper on Amazon.
Until the management at eBay realizes that they will still keep sailing a rusty old ship that will eventually sink or run aground.
Bill
Posted by: Bill | October 21, 2009 at 09:44 PM
All I know is that our sales are down drastically from this time last year and we are now an esteemed TRS. October has always been one of our best months and this month looks like it will be one of the slowest ever.
My gut tells me that something is very wrong at eBay, and if you ask other sellers (I read the blogs) they will tell you the same thing.
But, there will be those who will continue to tell us that everything is rosy at eBay, just like the folks in fall of 2008 who told us the economy was sound.
Posted by: Steve | October 21, 2009 at 06:02 PM
Being an armchair quarterback and nothing more, I believe Ebay is just managing expectations. I believe the new best match will increase insertions fees greatly in quarter 4 pushing the revenue figure over the top. The set it and forget it doesn't work with FP anymore so sellers are having to LIST to adapt. A good advertising campaign would be the icing on the cake. Keep an eye out for insider buying over the next month. Not in too much of a trading mood right now so I am not buying anything. Just being an armchair QB.
Posted by: paul | October 21, 2009 at 05:07 PM
Re: [eBay Strategies] Henrietta submitted a comment to 'eBay's Q3 results - Wall st. pukes on Q4 - What will Amazon bring tomorrow?'.
Actually no, that was actually ahead of expectations, but it does make for an interesting headline (wsj)
Posted by: Scot Wingo | October 21, 2009 at 02:55 PM
Do you think the fact that third-quarter profit fell 29% to $349.7 million, compared with the year-earlier period, while revenue rose 5.7% to $2.24 billion has anything to do with Wall Street's reaction?
Posted by: Henrietta | October 21, 2009 at 02:42 PM