Touting its tech-led transformation under new CEO Jamie Iannone, eBay reported dramatically higher earnings and revenues for the third quarter on Wednesday (Oct. 28) and expressed enough optimism in the digital-first economy to revise its full-year guidance.
Net income was $664 million compared to $310 million in Q3 2019. Driving the bottom-line growth was an increase in gross merchandise volume, which pushed net revenues up 25 percent annually to $2.61 billion. The company also logged 5 percent growth in the number of annual active buyers for a total of 183 million globally and reported progress in moving users onto its managed payments platform as well as progress in advocating for small businesses.
“Our vision is to become the platform of choice for sellers,” Iannone said. “Over the past three months, in addition to enhancements to managed payments and advertising, we’ve continued to scale and even benefit small businesses.”
One of the keys to that small- to medium-sized business (SMB) support is the company’s recently announced deal with UPS to offer new shipping services for sellers on the platform. In addition, direct integration with eBay gives sellers access to discounted rates, order details, customer information label printing, and shipment tracking. Iannone said he expects this to add up to lowered shipping costs and increased traffic.
Additionally, he said the company is supporting seller profitability during the upcoming holiday season by working with the carriers on the platform to eliminate shipping surcharges. Many companies have reported concerns with getting packages fulfilled and shipped due to what is expected to be a record season for the digital-first economy.
“Part of why we did the UPS deal this year was to open up more flexibility and more options for our sellers,” he told the post-announcement earnings call. “So not only are they going to save a bunch on the rate, but the integration is going to make it really easy for sellers and provide all that tracking for buyers. So, now you have multiple options, even as a small consumer seller between USPS, UPS and FedEx, and one of the things we have worked on is deals that actually protect them from peak shipping charges or surcharges over the holiday. So, we think the combination of that flexibility of choices plus the negotiating on behalf of our community will work out well for them.”
The company had several initiatives to report on. It remains on track to complete the transfer of its Classifieds business to Adevinta in Q1 2021, subject to regulatory approvals. It also continued to scale its management of payments globally, migrating more than 340,000 sellers during the quarter, which represented over 20 percent of on-platform volume.
The earnings call also addressed the company’s expanded reCommence marketplace with brand in addition to seller participation. The company launched authentication on all watches sold over $2,000 in the U.S. with the new “Authenticity Guarantee” service and quickly followed with plans to expand into the sneaker category. The sneakers authentication program will scale to include all collectible sneakers over $100 by early 2021.
“We actually think this is the start of really leveraging our technology, where horizontal plus and vertical focus brings together a much different experience on eBay,” Iannone said. “You think about the level of trust that we just put in place, and it’s really game changing versus where we were before. And on the marketing side, we’re using a lot of things that we’re doing specifically in paid, social, and using other new channels that we haven’t used before. That’s the key part of it for us.”