Xmas shopping helps eBay to record Q4 results

25 Jan 2007

EBay today announced record fourth-quarter revenues for 2006 of US$1.7bn, representing a growth rate of 29pc year over year.

GAAP (generally agreed accounting principles) operating income was US$459m for the quarter, an increase of 21pc year over year, representing 26pc of net revenues.

Excluding stock-based compensation, operating income increased 33pc year over year to US$525 million, or 30pc of net revenues, the company said.

GAAP net income in Q4 2006 was US$346m, or US$0.25 earnings per diluted share, an increase of 24pc year over year. Excluding stock-based compensation, (net of tax effects), net income increased 35pc year over year to US$397m, or US$0.28 earnings per diluted share.

For the full year, eBay generated consolidated net revenues of US$6bn, a 31pc increase over the US$4.6bn generated in 2005. Consolidated net income increased 4pc year over year to US$1.1bn, or US$0.79 earnings per diluted share.

EBay said it repurchased approximately 31 million shares of its common stock at a total cost of approximately US$1bn during the quarter, for a cumulative total cost of approximately US$1.7bn since the stock repurchase programme was announced in July 2006.

The company may purchase up to an additional US$300m of the company’s common stock under this programme. As well as this, the company’s board of directors has authorised an expansion of the stock repurchase programme to provide for the repurchase of up to an additional US$2bn of the company’s common stock within the next two years.

“Q4 was an excellent quarter for eBay, bringing 2006 to a very good close,” said Meg Whitman, president and CEO of eBay Inc. “All three of the company’s business units delivered impressive results this quarter, including record net revenues from our Marketplaces business, strong total payment volume on PayPal and a triple-digit increase in the number of Skype users.”

The Christmas online shopping rush helped eBay generate revenue in Q4 due to an increase in the average selling price on the auction site.

The auction site had a registered user base at the end of the quarter, totalling 222 million, a 23pc increase over the 181 million registered users reported at the end of Q4 2005. Between them these users generated a total of 610 million listing in Q4 2006, the company said, 12pc higher than the 546 million listings in Q4 2005.

PayPal’s on-eBay business benefited from strong eBay sales and increased global
penetration, while PayPal’s Merchant Services business posted another quarter of strong growth, aided by further penetration of top online merchants around the world, eBay said.

PayPal had 133 million accounts at the end of Q4 2006, a 38pc increase from the 96 million reported in Q4 2005. Those accounts helped drive record total payment volume of US$11b in Q4 2006, a 36pc increase from the $8.1b reported in Q4 2005. Overall, PayPal net revenues totaled US$417m for the quarter, a growth rate of 37pc over the US$304m reported in Q4 2005.

Skype continued to grow fast, with 171 million registered users at the end of Q4 2006, a 129pc increase from 75 million users at the end of Q4 2005.

This division brought in net revenues of US$66m for eBay in Q4 2006. Overall, full-year revenues for Skype fell short of the US$200m target set by eBay for the service, coming in at US$195m.

The conversion of users of Skype’s free services into paying customers has not been as good as anticipated. “While Skype continues to experience stellar growth in terms of its user and adoption rates, the monetisation efforts we outlined at the time of the acquisition are not developing as quickly as we had hoped,” Whitman said.

By Niall Byrne