The company’s stock increased 1 percent to $53.43 during after-hours trading after the announcement was made.
There were high expectations from analysts because third party forecasts regarding Ebay’s performance during the last quarter of 2012 showed big sales growth, especially on the company’s online marketplace, as well as a significant increase in online transaction done through Ebay-owned PayPal payments unit.
One of the largest e-commerce sites in the world, Ebay’s online marketplace has lagged behind Amazon.com Inc for the past few years. Under the guidance of Chief Executive John Donahue, Ebay focused its resources to the development of buying experience in the site through search capabilities upgrades and offering sellers more attractive terms and services like easier returns and free shipping.
The phenomenal increase in mobile shopping and surging popularity of mobile shopping apps have attracted millions of customers to eBay’s online marketplace and to use PayPal last year.
Bill Smead, a member of Smead Capital Management which owns eBay stocks, said, “These are great numbers. The marketplace business used to be a noose around their neck, but now it’s a key destination for people wanting to buy new goods as well as existing goods.”
Amazon’s own shares increased to less than 1 percent to $269.50 during the same time as eBay’s own went up. Amazon is due to submit its own quarterly results on January 29.
Yesterday, eBay said that its total quarterly revenue went up 18 percent to $3.99 billion. Its profit came in at $927 million, translating to 70 cents per share. During the same period last year, eBay’s profit logged at $789 million, or 60 cents per share.
Thomson Reuters expected that eBay was to earn 69 cents a share on revenue of $3.98 billion.
The e-commerce company expects that 2013 revenue will be $16 billion to $16.5 billion, while profit will be at $2.70 to $2.75 per share. Wall Street analysts believe eBay will hit $16.3 billion this year and a profit of $2.74 per share.
In a conference with analysts, Chief Financial Officer Bob Swan said, “We feel great about 2012 and are carrying that momentum into 2013.”
He mentioned that PayPal margin for profit will not change this year, but he underlined that eBay marketplace will be closer to the previous forecasts, as the company focuses more in its future development.
Results of eBay’s dramatic performance during the last quarter was partly driven by first time users of the site and PayPal.
CEO Donahoe said that 2012 saw an increase of more than 4.3 million new active users for the site.
eBay handled $13 billion worth of mobile transactions last year, which is more than double the volume in 2011. PayPal processed about $14 billion in payments, which is over triple the figure during 2011.
Donahoe expects that each site will handle about $20 billion transactions this year.
The rapid rise in mobile transactions, according to Donahoe, can be attributed to the fact consumers have their mobile phones and tablets with them most of the time, unlike their personal computer.
The CEO also added that the booming mobile business is a good opportunity to expand its business to other countries, mentioning the new eBay app designed for users in Russia and Brazil.
Donahoe said that many users in the so-called BRIC countries–Brazil, Russia, India, and China–will access the web in their mobile for the first time. This is also true for users in many emerging economies.
“In the BRIC and emerging markets, our new user growth is very significant. Our 2013 and ’14 plans really are stepping on the gas of leveraging our global platforms in those BRIC and emerging markets for new users… We think it’s a huge opportunity,” Donahoe added.
Currently, eBay is the largest e-commerce site in Russia. Online transactions like buying and selling happens on eBay’s English-language sites. In response, Donahue said that the company is launching a Russian version of the site this year.
Although eBay has not promoted cross-border commerce, it composed about 20 percent of the total transactions, said Donahoe.
Now, eBay makes it easier for buyers and sellers to conduct cross-border commerce by making it easier to ship products across countries, the CEO said.