eBay sales were down 10% in the third quarter of 2021 (July, August, September), year-over-year, while revenue rose 11%. The company processed 90% of payments volume on its platform and saw 12% more revenue from Promoted Listing ads in Q3.
One would have expected eBay to have provided a 2-year comparison of third-quarter sales, given the pandemic-effect in 2020, to see how Q3 2021 compared to Q3 2019.
The same number of sellers are chasing active buyers: eBay said annual active sellers were flat at 19 million global active sellers, while annual active buyers declined by 5%, for a total of 154 million global active buyers.
An excerpt of eBay’s third-quarter earnings press release follows:
eBay Inc. Reports Better Than Expected Third Quarter 2021 Results
Q3 Revenue of $2.5 billion; GMV of $19.5 billion.
- Revenue of $2.5 billion, up 11% on an as-reported basis and up 10% on an FX-Neutral basis
- Gross Merchandise Volume of $19.5 billion, down 10% on an as-reported basis and down 12% on an FX-Neutral basis
- GAAP and Non-GAAP EPS per diluted share of $0.43 and $0.90, respectively, on a continuing operations basis
- GAAP and Non-GAAP operating margin of 26.5% and 31.7%, respectively
- Returned $2.4 billion to shareholders in Q3, including $2.3 billion of share repurchases and $116 million paid in cash dividends
eBay Inc. (Nasdaq: EBAY), a global commerce leader that connects millions of buyers and sellers around the world, today reported financial results for its third quarter ended September 30, 2021.
“Our team delivered another strong quarter, once again meeting or surpassing our expectations for all key business metrics, making further progress on our multi-year strategy,” said Jamie Iannone, Chief Executive Officer of eBay. “Our Q3 results, driven by the near completion of our managed payments migration, expansion of our advertising portfolio, and volume growth in our focus categories, demonstrate that our strategic playbook continues to work. I’m proud that we’ve been able to increase customer satisfaction, build trust, and drive steady innovation, all while continuing to set and make progress toward our ambitious goals tied to climate action.”
Third Quarter Financial Highlights
- Revenue was $2.5 billion, up 11% on an as-reported basis and up 10% on a foreign exchange (FX) neutral basis.
- Gross merchandise volume (GMV) was $19.5 billion, down 10% on an as-reported basis and down 12% on an FX-Neutral basis.
- GAAP net income from continuing operations was $283 million, or $0.43 per diluted share.
- Non-GAAP net income from continuing operations was $591 million, or $0.90 per diluted share.
- Generated $661 million of operating cash flow and $502 million of free cash flow from continuing operations.
- Returned $2.4 billion to shareholders in Q3, including $2.3 billion of share repurchases and $116 million paid in cash dividends.
- Annual active buyers declined by 5%, for a total of 154 million global active buyers.
- Annual active sellers were flat at 19 million global active sellers.(1)
Business Highlights
- eBay updated its capital allocation plans for 2021 by increasing its estimated share buyback from $5.0 billion to $7.0 billion.
- In October, the company announced its ambitious greenhouse gas (GHG) target was approved by the Science Based Targets initiative (SBTi). The company committed to reduce its own (scope 1 and scope 2) emissions 90% by 2030 from a 2019 base year, in line with limiting global temperature warming to 1.5°C, the most ambitious designation available through the SBTi process and aligned with the Paris Agreement. eBay also commits to reduce value chain (scope 3) emissions from downstream transportation and distribution by 20% in the same timeframe.
- eBay has also committed to being carbon neutral for its offices and data centers (scope 1 and 2) by the end of 2021, making it one of the first ecommerce companies to do so. With this commitment eBay will continue to prioritize reducing its footprint and will offset any remaining emissions to be carbon neutral from this year forward.
Revenue Initiatives
- eBay continues to scale its management of payments to all sellers globally and remains on track to complete the transition this year. In Q3, more than 90% of global on-platform volume was processed through managed payments and eBay exited the quarter with over 18 million sellers migrated globally.
- With eBay managing payments, the company aims to further enhance the customer experience and remove friction for sellers. During the quarter, the company accelerated the timing of payouts to trusted sellers in the U.K., who will now get paid on the next business day after confirming the buyer’s payment.
- Promoted Listings delivered over $207 million of revenue in Q3, up 12% on an as-reported basis and up 9% on an FX-Neutral basis.
- eBay expanded its advertising portfolio with the launch of Promoted Listings Advanced and Promoted Listings Express. Currently in beta, Promoted Listings Advanced is a cost-per-click model where sellers determine their daily budget, choose how much a click is worth to them then pay for each click. Additionally, Promoted Listings Express allows sellers to boost visibility of auction listings for a one-time fee regardless of whether the item is sold.
Tech-led Reimagination of the Platform
- eBay continues to expand its Authenticity Guarantee program, launching sneaker authentication in Germany during the third quarter. The company also added 30 brands to its catalog and improved search engine optimization performance for top sneaker brands.
- The company introduced Price Guide and Collection for trading cards, new features designed to provide a single destination for enthusiasts to view, manage and track the value of their trading card portfolios on eBay. To date, close to 4 million cards purchased on and off eBay have been added to customer collections. In addition, close to a quarter million buyers have used the Price Guide tool in search to visualize trends for their favorite trading cards.
- To further support trading card sellers, the company adjusted its eBay Money Back Guarantee policies to better align with their return policies.
- eBay’s Certified Refurbished products are also seeing growth, with top brands like Samsung, Dyson and KitchenAid joining the program in the U.S. in Q3.
- The company launched a new seller refurbished experience for cell phones that standardizes item condition grading, vets sellers and backs purchases with one year warranties, offering buyers more trusted products at great values.
- eBay’s coded coupons continue to drive repeat purchases in the new stores experience. Since April, more than 2.5 million buyers have made a repeat purchase to a store through seller funded coupons.
Impact
- To continue to deliver on the company’s commitment to climate action, eBay announced agreements with McDonald’s Corporation and Lightsource bp to purchase power from what will be Louisiana’s largest solar project. Once complete, the project will generate over 600,000 megawatt-hours (MWh) of clean energy annually, equivalent to the average annual consumption of 59,000 US homes.
- As part of the eBay Foundation’s commitment to supporting inclusive entrepreneurship, this summer the company kicked off its annual employee grantmaking initiative: Global Give, through which a total of $3 million in grants will be awarded to nonprofit organizations that are dedicated to meeting the needs of historically marginalized entrepreneurs.
- eBay for Charity contributed approximately $35 million globally in Q3, up 11% year-over-year.
(1) All sellers who successfully closed a transaction on our platforms within the previous 12-month period. Sellers may register more than once, and as a result, may have more than one account.
Dividend Declaration
eBay’s Board of Directors has declared a cash dividend of $0.18 per share of the company’s common stock. The dividend is payable on December 17, 2021 to stockholders of record as of December 1, 2021.
See the full press release, including tables and guidance, on the eBay website.
Update 10/27/2021: More news came out of the post-earnings call, see the EcommerceBytes Blog for details.
Ebay doesn’t sell anything.
I suspect a big part of what appears to be a lopsided sales-to-revenue number is due to the fact that eBay continues to lay off “non-essential” employees. As customer services has gotten slower (those “One Minute” callbacks have resulted in “75 minute waits”, for example), and fewer U.S.-based CS reps available for for Top-Rated Sellers as was promised, eBay’s expenditures have decreased. This has maximize eBay’s profit while frustrating those who must deal with their “management” or nearly-nonexistent support.
Ebay has been skilled at making the company look good to Wall Street over the years, even while sellers are leaving the venue and sales have been down, as they are now.
In another story, Ira mentions that eBay is raising fees for the “holiday season”, which of course isnt really announced to sellers, as seller might then raise their prices – something eBay abhors, especially during the holidays.
We decided to branch out to other venues (as well as having our own website) years ago, shortly after Donahoe’s debacle, and we’re still so glad we did!
U.S. Data released today…..
The U.S. economy grew at a 2% rate in the third quarter, its slowest gain of the pandemic-era recovery, as supply chain issues and a marked deceleration in consumer spending stunted the expansion, the Commerce Department reported today (Thursday).
Etsy reports earnings next week and I suspect it will be more of the same. I follow many Etsy jewelers and it’s been very slow for many, while it’s been difficult to find quality minerals/stones as mining explorations came to a screeching halt, due to Covid. It was the Delta variant that caused the economy to take another hit. However, it’s expected that consumers will spend heavy for the holiday season. Time will tell…