PayPal enjoys the single life, but eBay's got post-divorce blues

Profile picture for user slauchlan By Stuart Lauchlan January 27, 2016
Summary:
Breaking up is hard to do if you're eBay, but PayPal's enjoying life as a singleton again.

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Mobile eBay

Life after divorce is proving good for PayPal, but somewhat less so for former partner eBay.

For the three months ending 31 December, PayPal reported fourth quarter income of $443 million, up year-on-year from $348 million, on revenue of $2.56 billion, up 17% from s$2.19 billion in the comparable quarter last year.

User numbers grew during the second half of 2015 to 179 million active users, up 10% year-on-year, although this was fuelled by the acquisition of Xoom back in July last year.

CEO Dan Schulman declared:

It’s becoming increasingly evident that payments is a hard business to crack. While many others are attempting to play in this space, PayPal continues to gain market share.

As money becomes digital and the world goes mobile, we see tremendous opportunity ahead to expand our leadership, transform the way people move and manage their money, and deliver increased value to shareholders.

Over at eBay there was no such upbeat mood as et income for the fourth quarter fell 12% year-on-year to $600 million on revenues of $2.3 billion. Ironically eBay was hit by higher cost of revenue - $493 million from $442 million a year ago - due to PayPal processing costs.

While PayPal pointed to significant mobile traction, eBay CEO Devin Wenig had to admit that his firm’s offering in this area still leaves room for improvement:

While reviews of the mobile experience we launched in September have significantly improved, it's not yet delivering results on par with the prior version. We're aggressively iterating it to enhance the user experience and to drive adoption and usage, and our new platform is enabling us to get new releases in front of our users more rapidly and efficiently than we have in the past.

Separating successfully from PayPal was always going to take time, he added:

We believe we can create a customer experience and a brand message that will sharpen the focus on what is unique about eBay. This year, I will be focused on stepping up our efforts to drive the best choice, the most relevant and a powerful selling platform in addition to further clarifying what our brand stands for. Having made many foundational investments, we expect to deliver significantly improved experiences for buyers and sellers across multiple dimensions this year.

We'll do this by improving discoverability, both on and off our site. We'll give buyers more choice, but also more data to facilitate better comparisons and will provide sellers with more effective tools, better service and fair policies to enhance their eBay businesses, incenting them to provide their best inventory and competitive prices on our platform.

Finally, we intend to innovate and improve upon our C2C experience to reaccelerate our sell-to-buy flywheel. In summary, we exit the year on plan and executing on the strategy and the financial framework we laid out six months ago. We're looking forward to a year of significant progress.

My take

Breaking up is hard to do.