E-commerce giant eBay Inc. said profit rose 50% in the second quarter, as the company's PayPal payments unit and several newer Web businesses put up strong performances and the push to revitalize the core auctions business showed fresh success.
"As we diversify our portfolio, we're seeing really strong growth from our non-(gross-merchandise-value) businesses," said Chief Financial Officer Bob Swan in an interview, citing Shopping.com, Rent.com, the classifieds business and advertising on eBay sites.
The encouraging trends led eBay to lift its forecast slightly for the rest of the year. The San Jose, Calif., company also said it bought back about 10 million shares worth $344 million during the quarter under a program that allows it to buy up to $2 billion in shares by January 2009.
EBay reported second-quarter net income of $375.8 million, or 27 cents a diluted share, up from $245 million, or 17 cents, a year ago. Revenue for the period totaled $1.83 billion, up 30% from $1.41 billion a year ago.
Profit was aided by a rise in generally accepted accounting principles operating margins to 24.9%, from 22.1% a year ago. However, non-GAAP operating margins were slightly lower at 32.4%, compared with 32.6% a year ago, as eBay's lower-margin, but faster-growing, PayPal and Skype units took larger shares of overall revenue.
EBay said total marketplaces revenue rose 26% to $1.29 billion, from $1.03 billion a year ago. The gains came despite a drop in product listings that had worried Wall Street. Listings fell 6% to 559 million, as eBay continued to drive out poor-quality listings as part of a "market rebalancing" effort that's aimed at re-energizing its core auctions business. More success selling listed merchandise and higher selling prices made the difference; the gross value of merchandise sold on eBay's sites rose 12% to $14.46 billion, from $12.9 billion last year.
"Our focus is on user experience to drive more conversions of our listings and higher selling prices, and in fact those efforts are paying off," Mr. Swan said. With this report, eBay has now shown three quarters of improvement on this score.
Meanwhile, revenue growth at PayPal accelerated, rising 34% to $454 million, driven by its merchant-services business. This off-eBay business contributed $4.92 billion of overall payment volume, up 57% from a year ago, to PayPal's total payment volume of $11.69 billion.
EBay's Skype Internet-calling service again showed rapid growth, producing $90 million in revenue, more than double the $44 million reported a year ago. EBay said Skype ended the quarter with 220 million registered users, nearly double its year-ago user number of 113 million.
Looking ahead to the rest of the year, eBay said it expects third-quarter revenue of $1.775 billion to $1.825 billion and non-GAAP earnings per share of 31 cents to 33 cents. For the full year, it lifted its forecast slightly to revenue of $7.3 billion to $7.45 billion and non-GAAP EPS of $1.34 to $1.38. Previously, eBay forecast revenue of $7.2 billion to $7.45 billion and non-GAAP EPS of $1.30 to $1.34.
How about that, Ebay grosses $7,450,000,000 a year? I give them a $150 a month average and I just won a $20 gift certificate in their transformer contest.