Revenue rises to $2.5 billion; eBay's holiday forecast looks less than bright with waning pandemic-induced online shopping boom.

Total gross merchandise volume (GMV) for eBay Inc., which includes sales on its international marketplaces, fell 10% to $19.45 billion in the third quarter 2021.

The marketplace said the decline in GMV was tied to shoppers returning to in-store buying as the pandemic wanes. “The macro benefits to our business from mobility was significantly diminished in Q3 as restrictions faded across the globe, where we continue to see modestly positive underlying growth in our business,” Steve Priest, senior vice president, chief financial officer for eBay, said in the earnings call Oct. 27. Compared with Q3 of 2019, GMV grew 9% on an FX-neutral basis.

Revenue in Q3, which ended Sept. 30, 2021, reached $2.50 billion, up 11%  from a year earlier. EBay’s revenue figures reflect the fees paid by eBay’s sellers on the marketplace, which are roughly 12% to 13%.

Ebay is ranked No. 5 in the 2021 Digital Commerce 360 Top 100 Online Marketplaces report.

The number of active users on the online marketplace dropped 5.5% to 154 million from 163 million a year earlier, and well below the 166 million expected by Wall Street analysts. This is the third consecutive quarter in which the number of active users on the platform declined. The company has said previously it was seeking to lower the number of low-value buyers on the platform. 

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The average spend per buyer dropped to $126 from $142 in the third quarter. 

Managed Payments gain traction

Ebay also said that in Q3 more than 90% of its global sales was processed through its managed payments initiative, which is aimed at reducing friction for sellers and giving the company greater control over payments on the marketplace. Under managed payments, sellers use a centralized platform that lets sellers cash out their payment balances in a single place. The program also gives buyers more payment options, including Apple Pay, Google Pay, PayPal and PayPal Credit.

By the end of the quarter, more than 18 million sellers across the globe had migrated to managed payments. As part of the initiative, the marketplace said it accelerated the timing of payouts to trusted sellers in the U.K., who will now get paid on the next business day after confirming the buyer’s payment.

EBay says it remains on track to complete the transition to managed payments this year. 

“Our team delivered another strong quarter, once again meeting or surpassing our expectations for all key business metrics, making further progress on our multi-year strategy,” Jamie Iannone, CEO of eBay, said in a written statement “Our Q3 results, driven by the near completion of our managed payments migration, expansion of our advertising portfolio, and volume growth in our focus categories, demonstrate that our strategic playbook continues to work.” 

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The company’s forecast for Q4, which includes the holiday period, is sales of $2.57 billion to $2.62 billion. That’s below the $2.65 billion expected by analysts, according to Bloomberg. The marketplace’s tepid forecast suggests the company, which was boosted by the surge in online shopping during the COVID-19 pandemic, is concerned that shoppers are returning to in-store buying.

“Management’s Q4 outlook suggests both revenue growth and margins slightly below consensus expectations, which is a little surprising as it implies lower-than-normal holiday season sequential growth (low single-digit) despite eBay likely being relatively insulated from broader supply chain issues,” Colin Sebastian, senior research analyst with Baird Equity Research, said in a written statement.

In the third quarter ended Sept. 30, eBay reported:

  • Annual active sellers were flat in Q3 at 19 million global active sellers.
  • Non-GAAP net income from continuing operations was $591 million, up 1.19% from $584 million a year earlier.
  • Promoted Listings, paid ad programs available to top performers on the marketplace, delivered more than $207 million of revenue in Q3, up 12% from $184 million in Q3 2020. Also in Q3, eBay launched Promoted Listings Advanced,  a cost-per-click model in which sellers determine their daily budget.
  • The online marketplace expanded its Authenticity Guarantee and launched sneaker authentication in Germany during the third quarter. eBay also added 30 sneaker brands to its catalog.
  • The marketplace introduced Price Guide and Collection for trading cards, new features designed to provide a single destination for enthusiasts to view, manage and track the value of their trading card portfolios on eBay. To date, eBay users have added nearly 4 million cards purchased on and off eBay to their collections. 

In the first nine months, eBay reported:

  • Net revenue of $7.80 billion, up 21.6% from $6.41 billion the year-earlier period.
  • Net income of $11.64 billion, up 58.9% from the $4.82 billion in the first nine months of 2020.

Percentage changes may not align exactly with dollar figures due to rounding.

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