PayPal’s Gains Lead eBay’s Q2 Growth

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7:00 AM EST July 17th, 2014

The results are in for eBay Inc. in the second quarter, and they are a decidedly mixed bag.

On the upside, PayPal continues to push overall corporate revenue, as the payments side of eBay’s business strong performance during Q2 offsets some of the difficulties on the e-commerce side.  However, the difficulties eBay’s retail as faced during Q2 was also evident with yesterday’s earnings release—battered by a cyber attack in May, a payments head David Marcus moving to eBay and slump in search traffic, even eBay’s CEO noted that there were elements of the second quarter that were…difficult.

“In a challenging second quarter, our commerce and payments platforms delivered strong enabled commerce volume growth of 26 percent,” said eBay President and CEO John Donahoe in a statement.“PayPal generated another strong quarter while eBay’s growth was hampered by its global password reset for all users. We continued our momentum in the four competitive commerce battlegrounds of mobile, local, global and data.”

Donahoe had good reason to tout PayPal’s performance in Q2.  The payments company saw it’s over all revenue rise by 20 percent, with a total payment volume growth up 29 percent, as opposed to 27 percent in Q1.  The number of registered users also grew by 4 million, a 15 percent increase that brings PayPal’s active user base to 152 million.

Donahoe attributed PayPal’s success to it efforts towards expansion and recruitment in both the consumer and business sectors in the Q2 earnings call with investors.

“Increased consumer adoption and expanded merchant coverage help drive strong results. Braintree had a strong quarter gaining new merchants and accelerating growth. And Braintree just launched a new set of software tools that allow developers to integrate both Braintree and PayPal in a single integration into apps in less than 10 minutes.”

The only area of PayPal’s business that saw growth of less than 20 percent was payment made on eBay using the service—those only grew by 13 percent during the quarter, as opposed to non-eBay payments, which were up 35 percent.

The slower growth seen in in-site commerce on eBay reflects the larger issue with Q2 for the online retailer—sluggish growth tipped off by a breach in May that left the majority of eBay users changing their passwords, and some too concerned about security to ever come back.

eBay’s revenue was up in Q2 by about 13 percent which did manage to beat analyst expectations.  The company however, in light of Q2 revised down it sales estimates for 2014, CFO Bob Swan forecast a high of $18.3 billion in sales for the year, down from $18.5 billion.  The numbers reflect the devastating effect on the May’s breach on the company; though one eBay is hoping will be short lived.

“People changed their passwords and moved on,” said Scot Wingo, chief executive of ecommerce advisory ChannelAdvisor, reports The Financial Times. “The Target data breach was on the front page for months.”

eBay plans to focus on bringing back customers who may have move on after the breach.  The company also plans to continue it push to enable mobile, as it represented one of the company’s stronger areas for growth in Q2.

eBay reported a 26 percent rise in enabled commerce to $62 billion, with mobile increasing 68 percent and contributing to 20 percent of the volume.

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