Ebay generated $2.02 billion in revenue during first quarter 2009, down from the $2.91 billion it pulled in during first quarter 2008. The company’s net income slipped as well, from $460 million a year ago to $357 million. The most recent quarter ended March 31.
The company’s Marketplaces business unit, which consists of eBay, Shopping.com, StubHub, Kijiji and other e-commerce sites, generated $1.22 billion in revenue, an 18% decline from first quarter 2008. The revenue drop was attributed to the impact of the strengthening dollar and the decline of the core business during difficult economic conditions. Roughly 54% of this unit’s revenue came from markets outside of the U.S.
The Payments business unit, which includes PayPal Merchant Services and the contribution made by Bill Me Later, reported $643 million in revenue, an increase of 11% from a year ago. Active registered accounts reached 73.1 million, an increase of 22% year-over-year.
Within its Communications arm, Skype contributed $153.2 million in revenue for the quarter, 21% higher than in first-quarter 2008. Skype added 37.9 million new users during the quarter and ended the period with more than 443.2 million registered users. On April 14, eBay announced plans to separate Skype into an independent company commencing with an initial public offering during the first half of 2010.
The Eavesdropper’s Take: Here’s an exchange from eBay’s earnings call between Heath Terry, an analyst with FBR Capital Markets, and John Donahoe, eBay’s president and CEO. It gives an interesting perspective on the impact of free shipping on operations. The exchange comes courtesy of Seeking Alpha transcription services:
Terry: “I was wondering if you could give us a sense of the impact that you’re seeing from the proliferation and free shipping on repeat customers. Is there anything more that you can do with what your free shipping among sellers to the extent that maybe at some point you start to require it in certain categories?”
Donahoe: “Clearly free shipping is becoming more prevalent in shopping online. Our best sense is that roughly 40% of e-commerce in the United States is free shipping. And we’re now up to 30% on eBay. And our strategy, consistent with our philosophy, has been not to dictate it but to provide the right incentives and words for sellers to make the right tradeoffs.
“And what we see is, it’s a very different picture, category by category, where there are certain categories now where it’s almost a given it’s going to be free shipping. Books, music, and video, a lot of the smaller consumer electronics categories. And any seller that doesn’t offer it won’t succeed. So we have provided incentives to do it, we have provided advantages in search to sort of get it kick-started.
“But you’ve seen other categories, items that are of heavier value or often in an auction situation, people charge for shipping. They charge their costs. And we try to drive out excessive shipping but what they have found, and again, our sellers are very shrewd, they are optimizing to what’s working for them and what’s helping them in their conversion, and those categories they are continuing to charge for shipping.
“So we are going to continue to sort of provide the carrots and incentives and rewards for those that provide free shipping and the best value and we think our marketplace will find its natural landing point. My guess is there’s probably 10 points more. I would guess we will be 30% to 40% by the end of the year. And that is what overall e-commerce is. I mean, it’s important to remember that 60% of e-commerce still charges for shipping. And I think once we get to the right equilibrium we will continue to moderate and self-correct.”
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