Merchant Innovation

PayPal Volume, Registered Accounts Increase

Despite a very active first quarter of 2014 that included, among other things, a very public fight with investor Carl Icahn over the future of PayPal, eBay’s Q1 earning came in ahead of analyst predictions. PayPal also enjoyed a very strong Q 1, with total payments volume up 27 percent and 5.8 million new active registered accounts.

eBay’s first quarter earnings results are out and better than analyst expectations.  The eCommerce and payment leaders ended the quarter with revenues of $4.26 billion and an EPS of $0.70 – both up 14 percent over the same time period last year.

PayPal, the company’s payments arm also had a strong quarter one.  Total payment volume was up 27 percent and the number of active registered users increased by 5.8 million bring PayPal user total base to 148 million users. This represents a 16 percent increase over the previous quarter.

“We delivered a strong first quarter, with enabled commerce volume up 24 percent and revenue up 14 percent,” said eBay Inc. President and CEO John Donahoe in a release statement. “We are committed to delivering sustainable shareholder value and focusing on what matters most to our investors. We are executing our growth plans, capitalizing on the synergies in our portfolio and aggressively executing our $5.0 billion share buyback program. Today, we also announced a non-cash tax charge to facilitate repatriation of $6.0 billion net in foreign earnings, increasing our available U.S. cash and enhancing our financial flexibility."

The first quarter for eBay was particularly dramatic in2014 with a very public battle between it’s board and activist investor Carl Icahn who sought spin off the payment’s wing of the business to maximize shareholder value. Though a compromise was eventually reached wherein Icahn agreed to back off his aggressive pursuit of a PayPal sale in return for the appointments of David Dorman to eBay’s board.

In reference to the proxy fight, eBay CEO John Donahoe noted on yesterday’s earning call “despite the potential distractions of our proxy fight, our teams stayed focused and delivered strong results."

Apart from the uptick in overall payments volume, PayPal also saw particularly strong growth with its Merchant Services division, where transactions volumes were up 32 percent. On eBay PayPal transactions also increased in Q1 2014 by about 15 percent. Global on-eBay penetration saw a sharp increase to 78.9 percent. Q1 also saw the PayPal wing of the payments giant expanding its credit offerings, a path that CEO Donahoe says they will continue through out 2014.

The company generated $968 million of free cash flow and $1.2 billion of operating cash flow and during Q1.

Looking ahead, eBay forecasts revenues of $4.32 to $4.42 billion with non-GAAP EPS of between $0.67 and $0.69. That EPS estimate was below analyst expectation of $0.70 and left eBay’s stock down 4 percent in after hours trading. The company is also looking to move $6 billion of overseas profit back to the U.S.

 

 

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