EBay results: uninspiring, once again

21 Jul 2017

It’s not nice to say this of one of the “Big Six” companies* worldwide in the classifieds and marketplaces industry, but EBay Inc.’s classifieds and marketplaces are simply not going anywhere fast. Low, single-digit revenue growth rates simply can’t be called exciting. Not in the new world of the internet.

This is cause for concern, also because the moves of the big guys — Amazon, Google, Facebook etc. — on classifieds have only just started.  

EBay Inc. reported earnings for Q2 and H1 of FY2017 this week. Total revenue grew 4 percent to $4.5 billion from $4.4 billion in H1 of FY2016. Rather uninspiring. The company’s estimate for revenue growth in the full FY2017: 6 to 8 percent. That’s nothing to write home about. 

The “uninspiringness” was spread equally over the three divisions — the EBay marketplace, the classifieds portfolio and the ticketing site StubHub. Classifieds revenue was up 6.4 percent at $418 million from $393 million year-over-year; marketplace revenue was up 3.1 percent at $3.1 billion from $3 billion, and StubHub revenue was up 7.2 percent at $431 million from $402 million.

Note that U.S. ticketing site StubHub (it earned 95 percent of its revenue in the U.S.) generates more revenue than the entire classifieds portfolio around the world.

The earnings report split out the revenue earned outside the U.S. from total revenue. This was done for each of the three divisions. According to the report, in H1 all classifieds revenue was earned outside the U.S.. In other words, EBay Inc. earns nothing material from its classifieds effort in the U.S.. That’s quite a revelation – one which should warm the hearts of the LetGos and Mercaris of the classifieds world. (EBay Motors, one of its few classified money-generators in the U.S., is considered part of the Marketplace portfolio rather than the EBay Classifieds Group.)

In H1, the EBay marketplace generated 61 percent of its total revenue outside the U.S. – a number which has remained stable for many quarters.

Detail of performances of individual sites in the classifieds portfolio was not provided.

Not only the recent past looks bleak; the future also looks pedestrian for EBay Inc.’s classifieds and marketplace. Unlike other big contenders (specifically thinking of Naspers and Schibsted), which are frantically, massively and constantly investing in, rethinking, reworking and reshuffling their classified portfolios, nothing of the kind seems to be happening at EBay. (Not talking of a new app here, or a reworked EBay site there.)

In short, there is nothing substantially new on the EBay horizon that could decisively break it out of its “uninspiringness”. At least, not inside the company, or nothing that’s visible in its reports to shareholders and the public.  

No wonder, EBay Inc. spent $507 million buying back its own shares in Q2. To keep the price from dropping, and so keep unwanted suitors from the door, who will no doubt come knocking at lower share prices.

      * — Besides EBay, the Big Six classified advertising companies worldwide are Axel Springer, Craigslist, Naspers, Schibsted and Recruit Holdings Co. Ltd. of Japan, owner of Indeed.com and many Japanese classified businesses.

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Christo Volschenk

Christo Volschenk is managing editor of the news on Aimgroup.com and our senior analyst covering Naspers. He brings more than 31 years of experience in business journalism to the team - the last 18 years focused on classifieds and e-commerce. Apart from working closely with the AIM Group, Christo is a freelance journalist, content manager, and copy editor. Before branching out on his own, he spent 15 years with Naspers in South Africa as journalist, economics editor and online project manager. He now spends most his day editing the news reported by 23 colleagues in 23 countries from his base in Stuttgart, Germany.