Ebay profit rises on international growth

John Donahoe, the new boss of Ebay, has notched up some early gains in his efforts to revive flagging growth in the company’s core e-commerce business, according to first-quarter figures released on Wednesday.

At the same time, however, Ebay registered little improvement on some important measures, particularly with its number of active users growing by only 1 per cent from a year before.

Mr Donahoe, who took over as chief executive from Meg Whitman at the end of last month, was responsible earlier this year for changes to Ebay’s marketplaces business, designed to stop the slide in its share of the overall e-commerce market.

These included reductions to listing fees to encourage more goods to be listed, accompanied by a new way of ranking items on the site to give more prominence to the higher quality sellers.

Thanks in part to these changes, Ebay said the total value of goods sold in its markets, known as gross merchandise volume, had reached $16bn in the first quarter, an increase of 12 per cent from a year before and a sign that the business had at least been stabilised after the decline of recent quarters.

The higher volume of trading pushed Ebay’s net transaction revenues from marketplaces up to nearly $1.3bn, an increase of 14 per cent. Though still a marked slowdown from the 21 per cent growth of the year-ago quarter, the performance was still better than some had feared.

The company’s overall growth in marketplace revenue of 19 per cent was boosted by faster growth from newer business like classified advertising. The PayPal and Skype divisions also both exceeded the growth projections of most analysts, lifting Ebay’s overall revenues for the period to $2.19bn, an increase of 24 per cent from the year before.

Net income rose 22 per cent to $377m and earnings per share were up 26 per cent at $34 cents a share as the company spent $1bn on stock buy-backs. On the pro forma basis on which Wall Street judges the company, earnings reached 42 cents a share compared with analysts’ estimates of 39 cents.

In spite of the comments about the weakening economy, Ebay also lifted its guidance for the rest of the year marginally from what had been seen as a very cautious forecast earlier in the year.

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