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Peeling The Onion On Ebay's 2011 Q4 Results

 January 19, 2012 08:05 PM
 


Last evening, January 18, 2012, eBay released their Q4 2011 results.  

Here is how eBay did across the metrics we follow in the World of eBay Marketplaces:

Ebayq4_11_results.jpg

 

While we don't cover it, PayPal continues to do very well and the GSI unit over-performed as well.   And with the eBay Marketplace, everything about the Q was very solid and ahead of expectations, with the exception of GMV growth in the US (in-line at 10% and below e-commerce's 15%) and Intl (below expectations at 9%).  I'm sure these results will continue the drum beat of people suggesting the company should split eBay marketplaces and Paypal.

[Related -eBay Inc (EBAY) Q4 Earnings Preview: About to Be Bid Lower?]

A deep-dive on eBay marketplace growth

One interesting part of the Q that sellers are already picking up on is this: "If GMV grew at 10% how did revenue grow at 16%?"  The answer is that eBay's effective 'take rate' (the % of revenue they make on GMV) went up pretty strongly for the Q - coming in at 7.9% (marketplaces) and 3.71% (paypal) for a total take rate of 11.61%.  There are a couple of factors that drive this:

  • As covered historically, eBay's July 2011 fee changes moved S+H into the take rate umbrella
  • FP vs. Auction - that mix of formats will cause a change
  • Category changes - some categories like CE have lower fees and as they decrease in mix for categories with higher take rates (e.g. jewelry and CSA), then you'll see the take rate nudge up.

[Related -ETF Periscope: Sentiment On Main Street At Odds With Jubilation On Wall Street]

That explains the disconnect between revenue and GMV, now let's look at why GMV came in at/below expectations for the Q.

Whenever we look at GMV growth we find it helpful to look at the category data.  Here's the eBay category data for Q4 - sorted by y/y category growth and color-coded - green grew faster than e-comm, yellow grew around e-comm and red was below 10%.


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