As more consumers turned to their smartphones and tablets to make purchases during the 2012 holiday shopping season, the rising popularity of mobile commerce turned into a huge windfall for eBay Inc. In its latest earnings report, the online retail giant announced its fourth-quarter revenues beat analysts’ estimates, boosted by record holiday sales on the Web and mobile devices.
EBay mobile ended the 2012 fiscal year with deal volume worth $13 billion, more than double its level in 2011, according to CEO John Donahoe, who issued the earnings report last Wednesday. Use of smartphones as a payment option has increased dramatically as well. Mobile deal volume for eBay’s online payments service PayPal rose to approximately $14 billion in 2012, tripling what the division recorded a year earlier. EBay anticipates its mobile payment volume will exceed $20 billion in 2013.
EBay’s standout performance in mobile business is seen as a breakthrough year for the leading online marketplace. During its fourth quarter, the company earned $751 million, or 57 cents a share, on $4 billion, compared with a profit of $1.98 billion, or $1.51 a share, on $3.38 billion in sales. EBay’s sale of Skype to Microsoft contributed to the gain in last year’s earnings results.
Much of the growth in eBay’s mobile business relies heavily on the popularity of its mobile app suite. More than 120 million users have downloaded eBay’s mobile apps. That’s more than half of the 235 million combined users of the company’s marketplace and PayPal account holders.
Pacific Crest Securities equity research analyst Chad Bartley, who has an outperform rating on eBay’s stock, is not surprised with the company’s dominating performance in the mobile commerce sector. Bartley forecasted eBay’s mobile growth over the past year as “very strong, in our view,” given that mobile commerce makes up about 10 percent of the total e-commerce market in the U.S.
Donahoe expects mobile commerce opportunities to widen even further, with both eBay mobile and Paypal to each handle more than $20 billion worth of commerce this year. The executive has been pursuing efforts to generate more money from big retailers selling goods on eBay, while capitalizing on growth opportunities from consumers shopping on smartphones and tablets.
So far, Donahoe’s hard work has been paying off, leading to 14 straight quarters of sales growth and 75 percent share rally since he became CEO in March 2008. Shares of eBay, which advanced 68 percent in 2012, closed at $54.21 on Friday.