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eBay -- liveblogging third quarter results

Posted Oct 18th 2006 4:54PM by Melly AlazrakiMelly Alazraki RSS Feed
Filed under: After the Bell, Earnings Reports, Live Coverage, eBay (EBAY)


Okay, so eBay Inc. (NASDAQ: EBAY) is about to start the webcast soon. You can see quick results here, more comprehensive ones here, and the company's own presentation here. So far so good, the stock is trading up in after market trading.

(All times are p.m. Eastern.)

4:55 I'm all ready, the headphones are on, I keep checking the after market trading and reading the results intermittently. The webcast should begin in a few minutes. Too bad about fourth quarter but good stuff on auction growth. PayPal revenue actually rose by over 40% this quarter. Part of the reason for the better profits is lower tax rate.

[[For some reason the webcast didn't work for me and it took me a while until I tracked down the phone number with Amey Stone's help.]]

5:09 Meg is speaking. Internationally GMV growth of 21%. Europe GMV growth accelerated. Asia the markets are competitive.

5:10 eBay Express - launched in Germany and the UK. Seems a success.

5:11 eBay Motors - also growing. Shopping.com is the #1 comparison site in US, UK, Australia.

5:13 PayPal - 24% of total revenue. $9.1 billion. Excellent quarter. The presentation is "marketing heavy." Meg is talking fast and tries to convince.

5:15 Skype - 26 million users now, growing daily. Users are using WiFi phones to make Skype calls.

5:17 Synergies -- Skype and PayPal. Expects to add synergies. She sees great promise. Testing the buttons in many markets and sellers are asking for more. It helps establishing buyer/seller trust. 20% of Skype users user PayPal.

5:19 Yahoo! and Google partnership. Testing with Yahoo! in early 07 they'll test Google text ads.

Now Bob Swan is talking about financials.

5:20 Acquisitions and weaker dollar added to bottom line. EPS strength due to higher interest income, lower tax rate, higher revenue growth.

5:22 Bob lists growth numbers. They all sound impressive, especially new users and GMV.

5:23 Seller activity - in the US Store listings declined and make 77% of all listings. Fewer store closures than originally anticipated. It's hard to tell going forward as new fees came to effect in September 21.

5:24 Internationally - Europe - some slowdown but in some markets are impressive. Asia - progress in face of tough competition. Korea - growing (really?). China - maintaining share (says that with effort). Australia - standout performance.

5:26 Shopping.com was strong. Marketplace is in better shape.

5:27 PayPal - 127 million accounts. 41% revenue growth. They're happy about PayPal. High penetration rates also in N.America. PPV growth of 27%.

5:28 Transaction expense at PayPal was down (nice).

5:29 Fraud management capabilities improve.

5:30 20% increase q/q in Skype, over 120% y/y. Free SkypeOut promotions were responsible for Skype strong growth.

5:31 Now Bob is going down the P&L statement. I'll bring the exact numbers later, but seems they're doing well. 18% growth in operating income.

5:33 Excellent cash flow over $530 million in Q3. Free cash flow also increased. Share repurchase - 24 million shares at $67 million. $3.8 billion of cash on BS.

5:35 27-28 cents EPS for Q4. $1.01-1.02 FY.

5:36 Business becoming more seasonal. They will be able to know better about Skype by next Q to give better guidance for 2007.

5:38 Summary - happy with Q3 results. And it's question time.

5:39 JPMorgan - next year guidance includes Yahoo!? Bob answers - yes. Second question - Asia - partnership? Joint venture. Meg - healthy growth in listings and GMV. Believes eBay's maintaining share but feels pretty good about where they are. They charge very low fees in China. PayPal and eBay are very close there, like in Korea, so they're looking at that. 3rd q - SkypeMe buttons. Meg - indications are positive. Higher conversion rates when buttons are used.

5:42 Lehman analyst asked a question about Skype in 2007. Meg - she cautiously optimistic and will give better guidance at end of Q4. Bob jumps in and says they'll expand product offering.

5:44 Deceleration in listings. Meg says they're still seeing the effect of fee changes. And the ad campaign, is it the same time, same effect? Meg - yes. Re testing with Yahoo! - what's going on there? Meg - eBay and Yahoo! are working well together (got disconnected, back on). Contextual ads are positive and non-cannibalizing. Graphical ads in Motors and it looks good. Bob - couple more months of testing. They're going to be cautious the ads won't detract from shopping experience. Tests will run until January ? - yes. Skype - how would you monetize users? Meg - variety of incremental revenue streams. Will bring to market in first part of 2007.

5:49 Stifel Nikolaus: GMV growth - what drove it? eBay Express, shopping. com? Meg - rebalancing efforts had a disproportionate effect on that. Nothing in the quarter that was unique in these categories.

5:50 Morgan Stanley Mary Meeker - Skype growth, PayPal, Yahoo! breakdown for 2007. Bob - they weren't sure they should give 2007 guidance but wanted to be transparent. They will give more insight after holiday season. The want to get more insight themselves first.

Stock repurchase - how much of what you could do, you did. Bob - they were opportunistic about the repurchase, especially at today's level.

Meg - PayPal integration onto Yahoo! is very important for 2007

5:55 Anthony Noto, Goldman Sachs - who are the intended users for eBay express (missed the first part of question).

Bob - better operations after the quarter. Decent acceleration going forward.

Meg - eBay Express - the focus will be around getting eBay users.

Anthony - Pay per call. Meg - will see more in 2007.

5:58 Credit Suisse - more about the success of eBay Express. Meg - existing consumers seem to spend more on eBay Express rather than new users but too early to tell.

5:59 UBS about classified and fixed price. Meg - very satisfied with classified. Rolling out similar programs in classifieds. Fixed price - no target. They're going where buyer is taking them.

6:01 Justin Post Merrill Lynch - GMV growth, and Skype - revenue per user going forward. Meg - eBay is aspiring to grow faster than other ecommerce. Rebalancing marketplace and revitalize auction, advertising campaign. Re-accelerate GMV growth in largest markets. Re Skype - development of echosystem and growth of new active users are main points. Revenue per user isn't the focus for 2007 (why not?). Bob is adding about tailored shopping experience, they would look at new categories to expand that.

6:04 Mark Mahaney Citygroup - are you worried about mixed messages between eBay and eBay Express especially later with IT campaign. Meg - trying to introduce core users to Express. IT is the umbrella she is saying and laughing. It is important for people to understand the difference.

6:06 Missed who's asking but it's about China the first part, second about shopping.com. Meg - China - reiterating that they're seeing good GMV growth in a highly competitive market. We ARE committed to China in the long term (phew). Shopping.com is different than other ecommerce site - innovation is what is driving shopping.com great results.

eBay shares are up 61 cents in after hours trading, or 2.14% to $28.49.

And that was that!

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