eBay’s Q3 results first impressions…

October 15, 2008

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

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