Would it be another eBay financial report if it didn’t include the words “Better than expected”? Well fear not as their Q2 2022 financial report naturally featured that exact phrase.
Rather than just posting their financial report, which can be very in-depth and in all honesty, not that relevant to marketplace sellers, instead we are giving you the deep dive into the most important information that is relevant to your business.
If you are interested in the nitty-gritty details of eBay’s Q2 2022 then you can see their full release here.
eBay Q2 2022 Deep Dive
Firstly let’s take a look at the most important numbers from eBay’s Q2 that will give us a point of reference.
- $18.5 Billion Gross Merchandise Volume
- $2.42 Billion Revenue
- 17 Million Enthusiast Buyers
*Enthusiast buyers are defined as having at least 6 buyer days and over $800 of annual spend on the marketplace.
Whilst I made a joke at the beginning about the term “better than expected” for eBay’s Q2 this could actually be the case from a financial perspective, whereas previously this certainly wasn’t the case.
The guidance they set at the end of Q1 estimated a GMV of between $18.02- $18.42 Billion for GMV and $2.35 – $2.40 Billion in Revenue. So as you can see they did just creep over the guidance, which looks great to investors.
However back in Q1 it was apparent to many that in their projections for Q2 they had been noticeably reserved, which at the time led to a share price fall. After the release of their Q2 report and just before their earnings call the eBay share price has risen just under 5%. Signifying that Wall St agrees that eBay is reporting stronger results than anticipated.
“Once again I am pleased to report another strong quarter. Our team delivered better than expected financial results across the board while continuing to make significant progress on our long-term initiatives,”
“Our focus category strategy is working, and payments and advertising are driving further growth. eBay is in a stronger position today than it was when we entered the pandemic. Despite rising inflation and an uncertain macro environment, we remain on track to deliver on our 2022 commitments.”Jamie Iannone, Chief Executive Officer, eBay.
It is clear that eBay is sticking to its game plan of appealing to the high-value buyer that they announced late last year. Their key focus categories include Motors parts and accessories, luxury items including handbags, and now jewelry which has recently been added to the eBay authentication guarantee.
eBay’s Innovation Focus
eBay has doubled down on the trading card market which it has seen impressive growth in over recent years. A large part of their investment has included their eBay Vault and most recently its acquisition of NFT marketplace Known Origin. This shows that eBay is committed to not only the high-value trading card market that has grown so well but also the newer NFT market which continues to gain headlines.
Whilst it might not be a large portion of their business right now, this is a shrewd move from eBay to attempt to ride the wave of newer technologies and trends in the market.
Challenges for Q3
eBay was keen to note that they are not immune from the wider market pressures that are outside of their control. Namely the ongoing war in Ukraine, global supply chain issues, and ongoing inflation and recession worries affecting consumer confidence.
With that being said they are confident that they are able to withstand the pressures and meet their goals for the full year 2022. With that said they have set guidance for Q3 as:
- $17 – $17.6 Billion in GMV
- $2.29 – $2.37 Billion in Revenue
Q&A From The Q2 2022 Earnings Call
CEO Jamie Iannone and CFO Steve Priest faced some tough questions from investors on their earnings call. I have included a brief summary of some of the questions and answers from the investor call below. None of the below are word-for-word quotes and could be open to interpretation.
Q. To start with Jamie and Steve were pushed about the declining markets eBay are seeing in both the UK and Germany which were glossed over in the report, but as major markets outside of the US, they were asked to comment on these trends.
A. Steve took the question and reverted back to the ongoing war in Ukraine affecting shipping and global supply chains in Europe.
Q. What got better in Q2?
A. Steve took this question and summarised that eBay has continued to grow with regards to its operational efficiencies and its focus on investing in the long term.
Q. How are you Continuing to grow Focus Categories?
A. We are continuing to invest in the focus categories, partnership with GIA in Jewelry, expanding refurbished products to more categories, and expanding handbag authentication in Germany.
With the launch of the eBay vault and incremental expansion of valuables, we plan to continue expanding those markets in Q3.
Q. What has engagement and growth been on eBay Vault?
A. It’s early days but we are excited by initial feedback, it has so far had the intended impact, of encouraging sellers to use it, as expected when we get items into the vault they don’t usually move from there which is good for retention.
It’s a good early start to the program and we are looking to expand it over time.
Q. Is the marketplace benefiting from consumers trading down due to current pricing pressures?
A. We are really happy that we started focusing on the non-new and refurbished categories 2 years ago as that has made the platform more resilient and made the platform more attractive to sellers who want to free up capital by selling on the platform.
Q. There is a lot of comparison to 2019. Do you think focusing on pre-pandemic numbers could lead to problems in the current economic climate regarding your GMV estimates?
We believe we as a company are coming out of the pandemic stronger than when we went into it. We are no longer focusing on the new in-season items, and focusing on what eBay is strong at, the focus categories of refurbished and non-new items.
This plays right into our strengths right now in the current economic climate. Our pace of innovation is much quicker than it was pre-pandemic which is why we believe we can continue seeing the growth we have seen this quarter and are optimistic about the future.
Throughout the investor call, it was clear that eBay is holding strong on its mid to long-term focus. They were asked numerous questions regarding the future of the company and how they planned on regaining users, and they reiterated numerous times that they are aware of the macro environment which they have no control over.
However in the long run, with refurbished and used products as a key focus category for them, they are confident they are in a good position to make the most of the current market, but long term they are making the necessary investments to start regaining some ground after they lost a lot of their audience when the pandemic started to die down.
eBay still sound laser-focused on the mid to long-term goals and their key focus categories, but they cannot afford to ignore the everyday usability of their site for its sellers, otherwise they will continue running the risk of losing sellers to one of many new up and coming competitors.
You can see all of the Q2 results materials on the eBay Investor Relations page here.
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