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eBay Acquiring Companies to Improve User Experience and Conversion

Posted on Monday, Jul 25th 2016

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For some time now, eBay’s users have been a disgruntled lot. It has a poor feedback management system and there are issues in search and discoverability. eBay (NASDAQ: EBAY) is now focusing on improving these organically and through acquisitions.

eBay’s Financials

eBay’s second quarter revenues grew 6% over the year to $2.23 billion, ahead of the Street’s expectations of $2.17 billion. Net income was $435 billion or $0.38 per share. Non GAAP EPS was $0.43, beating market’s forecast of $0.42 for the quarter.

During the quarter, gross merchandise volume (GMV) grew 4% over the year to $20.9 billion. By segment, revenue from Marketplace Platforms declined 3% over the year to $1.5/1.8 billion and accounted for $19.8 billion of GMV. StubHub revenue grew 40% to $225 million and recorded a 35% growth in GMV to $1.1 billion driven by strength across multiple genres and product innovations. eBay’s Classifieds Platforms saw revenue grow 15% to $207 million driven by strong growth Automotive and Real Estate verticals.

Among operating metrics, active buyers grew 4% over the year to 164 million at the end of the quarter. However, the growth rate of active buyers has steadily declined. It crossed the one billion live listings mark for the first time.

For the third quarter, eBay forecast revenues of $2.16 billion-$2.19 billion with non GAAP EPS of $0.42-$0.44. The Street was looking for revenues of $2.14 billion for the quarter with an EPS of $0.44. eBay raised its full year guidance and now expects to end the current year with revenues of $8.85 billion-$8.95 billion compared to the earlier guidance of $8.6 billion-$8.8 billion. Analysts expect revenue of $8.81 billion.

eBay’s Recent Acquisitions

eBay has recently been making several acquisitions to enhance its search-related technology and improve the user experience.

In May, it acquired Sweden-based AI startup ExpertMaker for an undisclosed sum. ExpertMaker is expected to help eBay better manage its inventory and aggregate insights into supply and demand.

It recently announced its plans to acquire Israel-based predictive analytics startup SalesPredict for an undisclosed sum. SalesPredict had earlier raised $5.1 million in venture funding from investors including Yandex, RSL Venture Partners, KGC Capital, and Pitango Venture Capital. Founded in 2012, SalesPredict specializes in using analytics to identify ideal potential prospects and improve conversion to actual customers. eBay says it will help in its efforts to build the world’s most comprehensive product and pricing knowledge base.

eBay has also been focusing on StubHub. Earlier, it launched a new ticket recommendation feature that shows a “best value” option to users allowing fans to identify great deals and discover new events. It also introduced virtual reality capabilities to allow users to get an immersive view from available seats to make better decisions on what tickets they want to purchase.

In May, it announced its acquisition of TicketBis. The deal will expand StubHub’s international footprint to more than 47 countries, with an emphasis on Europe, Latin America and Asia Pacific. TicketBis had raised nearly $26 million from investors including Fabrice Grinda, Active Venture Partners, and Jose Marin. This TechCrunch article says it had projected a run rate of $45 million for 2016 after revenues of $25 million in 2015.

This month, eBay announced its plans to acquire New Jersey-based inventory distribution company Ticket Utils to provide large sellers with enhanced tools to better manage their inventory.

eBay’s efforts are clearly a work in progress and only time will tell how successful it is in its execution, but investors are pleased that it is finally listening to its disgruntled users. Its stock is currently trading around $30.49 with a market cap of $35 billion. Its 52-week range is $21.52 to $30.31.

Photo Credit: Mike Knell / Flickr.com

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