EBay Inc (NASDAQ:EBAY) marketplace and payments segment both are illustrating opposite growth pattern prior to their strategic split into two separate companies. Paypal payment service generated more revenue than that of EBay’s core online shopping site marketplace, a thing that has never happened before. As PayPal segment is growing but for the first time since 2010, EBay’s marketplace business showed slump growth.
Investors on the other hand were still happy about quarterly results of eBay which posted a better than expected revenue and profit. This is possibly final progress report of eBay as a combined company ahead of its planned separation into two companies in the 2nd half of the current year. EBay said that the separation would provide greater opportunity to both companies to expand in their domains.
“It’s the story of two companies and that despite the emergence of new competitors to PayPal, it still has a valuable place in the world of digital commerce,” said R.J. Hottovy, a Morningstar analyst. “And it’s still evident that the marketplace business is trying to find its way.”
Turnover of marketplace business declined 4% to $2.07 billion, contrasting PayPal’s revenue which boosted 14% to $2.11 billion.
This is first case in thirteen years that PayPal’s revenue jump ahead of marketplace revenue and also the first drop in sales for eBay’s marketplace since the third quarter of 2009.
Overall sales growth stood at 4% to $4.45 billion and the company gained a profit of $626 million, or 51 cents per share compared to $2.33 billion, or $1.82 per share loss suffered by company in the previous year.
The adjusted profit was 77-cent per share performing better than the analysts’ estimates of 70 cents per share and scored better than the analysts’ forecasts of $4.2 billion sales.
EBay’s marketplace business will face strong competition in market as a solitude company, particularly in the presence of loss of aid in the form of cash from PayPal. Amazon.com, Inc. (NASDAQ:AMZN) has been eating up EBay’s marketplace business by increasing its third-party sales and new competitors like Jet.com Inc. bragging in market by offering economical products, providing more competition to marketplace.
On the other hand PayPal is still leading the digital pay service in the presence of strong competitors like Apple Inc.’s (NASDAQ:AAPL) Apple Pay and startups like Square Inc.
PayPal active users grew 2% while the marketplace unit accounts bolstered by 1% to 157.3 million.
EBay fired almost 2,400 workers as part of its separation plan and said that it is considering sale of its eBay Enterprise unit. That division saw a growth of 7% to $288 million in sales during the first quarter.
