Market Overview

Some Highlights from eBay's Q4 Conference Call, Icahn Proposal Discussed In Depth

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Comment from CEO John Donahoe: “The fourth quarter was a tough competitive season. In this dynamic environment Ebay feels good about their position. Ebay Marketplace and Paypal are driving volume growth and mobile is beating our expectations. Mobile payment accounted for 88% of payments and we gained 14 million new customers through mobile.”

Comments from CFO:

  • The fastest growing business Paypal, has the lowest take rate.
  • Much of Ebay's success this year comes from solid top-line growth, and leverage in operating expenses.
  • Revenue is lead by growth in PayPal, and 40% of active PayPal accounts come from Ebay. Returning the favor, PayPal increased penetration on Ebay by 170 basis points.
  • Paypal mobile payments volume was 8.1 billion with 51.5% coming from ebay.
  • As we drive greater adoption on ebay we are able to accelerate usage off of ebay.
  • Ebay's active users grew 14%
  • 97% percent of Ebay Enterprises use Paypal.
  • Operating expenses went down 165 basis points.
  • Ebay enabled 212 billion in transactions a growth of 21% from the last year.
  • “Paypal will have a disproportionate amount of investment.”
  • Investments will be higher in PayPal next year.
  • Ebay is investing for the long term, focused on mobile, global, local, and data.

Related to Icahn Proposal:

  • Donahoe: “I spoke with Icahn earlier this week. The governance committee will look over the proposal. We have a world-class board, who will evaluate the proposal. When we see a path that unlocks value we pursue it. We make rational decisions that are in the long term interest of the company and shareholders.”
  • “We believe that Paypal and Ebay should stay together.”
  • “Payments are essential in commerce, no other competitor has achieved the same success as PayPal because they do not have a marketplace like Ebay.”
  • Three reasons why Ebay and PayPal should stay together 1. Ebay accelerates PayPal success 2. Ebay data helps PayPal. 3. Ebay funds PayPal's growth.
  • “Paypal's success in mobile payments came from ebay which helped it gain traction.”
  • In 2010 PayPal had a mobile payments volume of 600 million and 80% came from Ebay.
  • In 2013 PayPal had a mobile payments volume of 27 billion which came from on and off Ebay.
  • Donahoe: “Why in an era of big data should we reduce the amount of data available to Paypal?”
  • The economic foundation provided by Ebay, allows PayPal to be more aggressive as it pursues targets other than Ebay.
  • Separation of Ebay and Paypal will create distraction.
  • Donahoe: “We cannot afford a distraction.”

Q&A:

  • Higher investment in our core, sales and marketing will bring and convert more traffic.
  • Paypal's take rate is expected to go down.
  • Ebay is looking at expanding their global footprint by investing in emerging markets.
  • There is going to be higher investment in data so Ebay can leverage a deeper engagement.
  • CFO: Expects 11 billion dollar cash flow through next year.
  • Ebay has 130 million active consumers and 50-60 million are overseas.
  • Donahoe: The common ground that Ebay and Icahn have is interest in long-term shareholder value.
  • Our money back-guarantee is directly tied to Paypal, by expanding Paypal we can build trust with new consumers.

Posted-In: Earnings News Hedge Funds General

 

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