Instead of combining results and thoughts on the call, this Q, I tried to separate them out somewhat so refer to this ‘first thoughts’ post for a quick view of the results.
I’m putting comments/observations from the call into three buckets vs. doing a chronological transcript as those are available all over the b-sphere now.
- Body language – What’s the mood? Any tips on positives/negatives around eBay core?
- eBay core – All eyes are on the marketplace business, so I tend to focus on this.
- PayPal/Skype – Anything interesting that came up around PayPal/Skype.
- JD hinted that the early results from the MP changes are positive/exciting.
- Strong set of assets, bold changes
- Changes needed for collective good
- Rajiv is retiring and Lorrie will take his place. This effectively
seems to take a ‘layer’ out of the management structure and while I
think Rajiv is an asset, I’m a big fan of a flatter org and I know
eBayers will appreciate this. Steph has an expanded role, details are here.
- During one Q+A, Youssef asked about Q3 and any softness in guidance. Swan talked about the economic concerns, they are impacted by unit volume in vehicle. Format changes in vehicles and Motors impact.
- Consumers are migrating to lower-ASP items across all categories (ASPs were cited as a big factor to GMV slow-down – see slide 10). eBay encouraged Wall St. to watch sold-item trends as ASP/GMV girate around based on economy and changes.
- We will continue to coupon and do less marketing
- We will likely make category-based changes
- We WANT to have more poweseller discounts
- In the accompanying presentation, I noticed there’s more data on GMV growth.
- In the US, Q207 was $6.7b and Q208 was $7b – a .3b increase or a 4% y/y growth (not negative as I originally feared).
- For Intl, Q207 was $7.8b and Q208 was $8.7b – a .9b increase or 11.5% growth.
- This is before FX comes out so the GMV growth slow-down appears to be international.
- According to the slides, Active user growth was 6% y/y ex-china, that appears to be an about the same as Q1.
- JD covered some of the changes eBay has made to the marketplace business and talked about the buyer focus.
- DSRs, BM, etc. working
- Number of powersellers with DSRs > 4.8 have doubled
- Bob Swan went through a neat slide here.
- Couponing – during the Q+A, the question was asked about how much they are doing. Marketplaces revenue was impacted by 3 points – a) lower take rate, b) higher discounting for powersellers and c) coupons. coupons are contra-revenues.
- Large seller discounting – (I think the questioner was talking about buy.com, but Bob answered around powerseller discounts)
- Bob also mentioned that sales+marketing are down as they are using coupons (this could be around google spend).
- Q: Any category specific pricing, timeline?
- A: Evaluating results
- Q: Buy.com – how do the economics work?
- A: Buy has great service and is an example of incenting and rewarding all sellers (small to buy)
- Q: GMV growth was 4% – lowest in years, what did you put into your guidance?
- A: Swan: focused on velocity (back to slide 10 essentially) and long-term that will lead to gmv growth. Making progress on successful item growth. GMV growth was hit by lower ASPs.
- Q: If you strip out motors, GMV growth was 12%, if you look at FX, is it 4% impact?
- Q: Will we continue to see slowness of Motors,etc.? around Korea, etc?
- A: Implications going forward – GMV from vehicles will continue to be weak, long-term the model is changing.
- Shipping costs are down 10%
- NPS is up
- Swan hinted that they will monetize things in different ways and thus sold items can also have different monetizations. Mentioned paypal penetration and advertising as beneficiaries of velocity.
- Nothing really to add here, the call (Q+A) was almost 100% focused on the MP biz.
Some good colour on the marketplace change. I can see eBay’s conservative 2H08 stance given all the macro-economic issues out there. Given Wall St’s short-term nature, I think they’ll view the Q as mostly negative in that there were some increasingly negative trends around GMV growth and active users. I’ll keep an eye on analyst notes tomorrow and post a summary of what they are thinking.
Seeking Alpha Disclosure – I am long google.