eBay Inc (NASDAQ:EBAY) is currently trading near its all-time high on its earnings announcement. EBay has appreciated by nearly 6% in 2013, on the back of staggering 59% returns in 2012. The global commerce platform functions across three segments: Marketplaces, Payments and GSI Commerce (GSI). The revenues have grown more than 21% from 2011 to reach a staggering $14.07 billion, and the EPS has grown by nearly 16% to $2.36. On the cash flow front, it has raked up a mammoth $2.6 billion of free cash flow, up from the $2.3 billion it generated in 2011. These huge cash flows into the company have left eBay sitting on a gigantic cash hoard of $11.5 billion.
Marketplaces Supposedly Plateaued Out
Marketplace contributes slightly more than half of eBay’s total revenues, amounting to $7.4 billion, with mobile commerce volumes topping $13 billion for 2012. It has also added more than 12 million customers in 2012, taking the total tally to 112.3 million active users. Marketplace also has a high segment margin of 41% up from 40% in 2011. Marketplace is strong across all geographies it operates in, and is driven by investments in innovations to enhance the buyer and seller experience.
The company’s mobile penetration has helped it maintain its aggressive growth rate and remain at the top of the altering retail horizon over the coming years. One in every three global purchases on eBay has been through a mobile device, driven by the growing popularity of mobile devices as Internet access points.
PayPal the Growth Driver
PayPal accounts for majority of the remaining revenues of $5.57 billion, with Total Payment Volume topping $125 billion. Here again mobile payments have raked in a considerable $14 billion. It has also added more than 16.4 million accounts in 2012, taking the total tally to 122.7 million active accounts. The net number of payments has increased to 691 million transactions, with a segment margin of nearly 24%.
PayPal continues to grow strongly with an increasing focus on simplifying and improving customer experience. The division appears to have grown out of its dependence on eBay with TPV on eBay constituting less than 32% of the overall TPV.
GSI has been performing in line with expectations, continuing to invest in technology and build its client portfolio while investing for the long-term, with a special focus on delivering next generation technology and commerce solutions to a much larger market.