EBay Results Beat Expectations as PayPal Expands

Online auction giant eBay has reported better-than-expected profits, its PayPal online payment service and marketplaces business grew swiftly during the second quarter, helping its results beat analyst expectations, although charges from its recent purchase of retail website operator GSI Commerce cut its profit.

Second-quarter net income was $283.4m (£176m), down from $412m for the same period a year ago.

EBay has been working to improve the buying and selling experience on eBay.com by doing things such as removing duplicate item listings and adding products that users can buy locally to search results. The company is also slowly rolling out a feature called eBay Shopping Cart that works like the digital shopping carts at many online retailers, allowing consumers to put several items in an online “cart” and pay for them all at once.

The value of all goods sold during the quarter on eBay, excluding vehicles, climbed 17 percent to $14.68 billion. Though eBay’s roots are in the online auction business, more than half of the transactions on the site these days are fixed-price sales.

Revenue from eBay’s second-largest business, PayPal, shot up 31 percent to $1.07 billion — the first time the business has reported over $1 billion in revenue. This business, which includes the PayPal instant payment service and a short-term credit service called Bill Me Later, has grown rapidly over the past several years as merchants and consumers use it both on eBay and elsewhere.

The company expects revenue from the PayPal unit to surpass that from the marketplaces unit within several years. The amount of money processed through PayPal climbed 34 percent to $28.74 billion. PayPal also passed a milestone during the quarter, with more than 100 million active accounts.

But the fall in earnings was largely due to eBay’s takeover of GSI Commerce, a digital marketing and e-commerce firm, earlier this year.

Ebay’s main online Marketplace business showed signs of a turnaround and its PayPal division grew well.

PayPal gained members and the value of merchandise sold through its eBay.com website rose.

Taking out one-off cost – including those of acquiring GSI – income was 19% higher than last year’s $530m.

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