eBay’s CEO Says It’s “Shifting From Defense to Offense”

Asa Mathat / AllThingsD.com

Watch out Amazon, eBay is coming for you.

Or, at least, that was the undertone of eBay’s conference call yesterday.

The company reported strong first-quarter results, beating both top- and bottom-line projections. It also raised guidance for the year, and said its business is stronger than it has been in five years.

“Our marketplaces business has turned the corner, shifting from defense to offense, and is delivering accelerating results,” said eBay’s CEO John Donahoe in the call.

This morning, the San Jose company’s stock was up nearly 16 percent, soaring to $41.58 a share. The rally easily pushes the company’s stock past its previous 52-week high of $38.18.

A number of years ago, eBay had hit rock bottom, sort of like Yahoo or AOL today.

Since then, Donahoe has been working hard to reinvent the entire eBay.com experience. He says the first quarter results are the first indication that the work is starting to pay off.

“It’s a significantly improved experience, and it’s not just current users, but it’s new users, who are coming to eBay and saying they really like it — maybe they haven’t been here in 10 years, but they are saying ‘Wow, this is different,’” Donahoe said in an interview. ”The pace of innovation is accelerating.”

The revival was fueled by a new TV advertising campaign around the holidays that had the tagline “Get it new, get it now,” which highlighted the company’s fixed price business. During the quarter, the company’s fixed priced business grew 18 percent. The company said the number of new buyers on the site also was up 9.5 percent in the quarter.

The company’s first quarter revenues totaled $3.3 billion, an increase of 29 percent year over year. For the same period, net income totaled $570 million, increasing 20 percent.

The strong results were attributable to the turnaround in its marketplaces business, but also PayPal and the recently acquired GSI Commerce division.

During the quarter, PayPal revenue increased 32 percent year over year to $1.3 billion, and GSI generated $715 million in merchandise sales, up 26 percent over the same period a year earlier.

In addition to conducting a turnaround, eBay is also aggressively pushing into new markets.

With PayPal, it’s rolling out new payments services, like mobile payments and in-store payments at check-out. With the help of GSI and a new division called X.commerce, the company is also concentrating on building tools that third-party offline and online retailers can use to more effectively compete against Amazon.

It is both of those businesses that Donahoe is tremendously excited about.

Yesterday, I reported that Square, which is a start-up in the mobile payments space, was attempting to raise capital at a $4 billion valuation — providing some validation to a similar PayPal product called Here.

“What I’m enormously excited about is I think PayPal Here has real capabilities that are even better than Square’s,” he said. “I think there’s enormous growth in that sector.”


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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google