Yesterday, eBay released its third-quarter earnings for 2019 with mixed results. The stock plunged in after-hours trading and did not recover today as investors appear spooked by lower GMV numbers that impact the core marketplace.
Here are highlights from last night’s earnings call with Scott Schenkel, Interim CEO and Andy Cring, Interim CFO participating. All quotes here are from Scott Schenkel.
Overall eBay Bussiness
“We are delivering our 2019 commitments, including our growth initiatives of advertising and payments, improving seller capabilities, and growing the buyer base. In addition, we have completed an operating review and are implementing plans to expand margins.”
“Moving to payments, adoption is accelerating in the U.S. and was recently launched in Germany. Since we began intermediating payments on our site approximately a year ago, we have processed over $1.1 billion in payments for over 20,000 sellers. In September, in the U.S., we processed more than 9% of volume on our payment rails, accelerating close to the limit of our operating agreement. Sellers continue to share positive feedback on the more simple experience that pays them directly into their bank account while saving them money.”
“The feedback, the feedback remains strong. Look, sellers love a simpler experience that’s paying them directly into their bank account and saving them money, all right. I mean what’s not to like.”
“We’ll also be working on the managed delivery plan that Devin talked about at the eBay Live event. And then we’ll be working on structured data and kind of aspects as I covered, and all those will be priorities, and we’re also looking to do an overlay of what else we could do in the short-term to solve buyer and seller pain points on our platforms. So, we don’t have a finite list for 2020, but that’s, broadly speaking, how we’re thinking about it.”
“In Q3, we exposed new buyers to popular eBay features after their first purchase, and are encouraging app downloads with more aggressive calls to action to migrate users to our best customer experience.”
“Related to the long-term health of the marketplaces business, we are continuing on a path started a few years ago to organize one of the world’s largest sets of unstructured inventory to power unique and compelling experiences. While progress has been made, we have changed our approach to make it easier for sellers to provide product details or aspects when they list items for sale.”
Internet Sales Tax
“Moving on from our initiatives, one hit at headwind continuing to impact the U.S. is internet sales tax. As (the) law has taken effect, government officials have chosen to tax small out-of-state businesses with no local nexus, and are requiring marketplaces to collect. Buyers are seeing higher prices at checkout and are purchasing less, particularly large dollar items. In Q3, the impact of U.S. GMV was more than three points, and we expect that headwind to grow in Q4 as new laws in California, Texas, and nine other States take effect. While this impact is not unique to sellers on our platform, it is disproportionately affecting small businesses, many of whom sell on eBay.”
“So, the internet sales tax laws that have kind of rolled across the country over the past year, as we’ve called out the last few quarters, have been a headwind. And the U.S., and remember first off, the U.S. business is 40% of the Marketplace business so that’s where we’re feeling that pressure, and while it doesn’t fundamentally create a competitive disadvantage, what it does do is hurt small sellers whose buyers when they see the prices have to pay up to 9% more for their items.”
“Over one million sellers promoted more than 300 million listings in the quarter. This increased adoption was partly due to our integrated mobile experience, where sellers can opt-in, revenue recommendations, and manage Promoted Listing performance.”
“There is (an) incremental opportunity to grow Promoted Listings through adoption and conversion gains, and we see more untapped growth in ad rates and product formats. All of these levers give us confidence in achieving our goal of $1 billion in total advertising revenue.”
“…we don’t want it to become an all-encompassing promoted listings only type of search results.”
“We anticipate sharing an update on StubHub before our next earnings release. For the classifieds portfolio, we did not expect to have an update to share this year, but are considering long-term options.”
What do you think about where eBay is heading?
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