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July 19, 2012

Mobile Payments Propel EBay to Sky-High Q2 Earnings

By Jacqueline Lee, Contributing Writer

EBay’s stock soared six percent after the company released its Q2 results. The company doubled its revenue from previous years thanks to mobile payments, PayPal (News - Alert) expansion and revenue from traditional e-commerce websites.

EBay CEO, John Donahoe commented on the results, crediting “a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago.”

“We have been able to compensate for the softness in Europe with strong performance everywhere else,” said Donahoe.

PayPal has expanded its business beyond online payments to include the mobile payments service PayPal Here. Customers can pay using credit cards, PayPal accounts or, in the U.S., personal checks using merchants’ mobile phones.

PayPal ended the year with a 13 percent increase in its number of accounts with a total of 113.2 million active accounts. Analysts expect the online payment processing site to conduct over $10 billion in mobile transactions this year, which is double the total of mobile transactions conducted in 2011.

The real surprise of Q2 was the strong performance of eBay’s marketplace websites including eBay, StubHub, Shopping.com and GSI Commerce (News - Alert). Gross merchandise volume, which excludes the sales of vehicles on eBay, grew 10 percent to $16 billion.

Overall, marketplace revenue grew nine percent to $1.81 billion, and payments revenue increased 26 percent to $1.36 billion.

EBay’s primary sources of revenue are fees generated from PayPal transactions as well as fees charged to list items for sale on its commerce sites. New sources of revenue include both PayPal Here and payment services for brick-and-mortar stores.

In March, after former PayPal CEO, Scott Thompson left for his ill-fated venture at Yahoo, eBay (News - Alert) named former PayPal mobile unit chief David Marcus (News - Alert) as its new CEO. Marcus’s appointment seems to emphasize the role that mobile technology will play in eBay’s continued growth.



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Edited by Brooke Neuman
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