eBay positive about imminent split with PayPal


E-commerce company giant eBay yesterday reported a higher-than-expected quarterly profit as revenue surged from its payments business that includes PayPal, which the company confirmed will be spun off in the third quarter. PayPal will run as its own publicly traded company but the two companies have agreed to continue working together, with PayPal expecting to handle about 80% of eBay.com’s merchandise sales.

Revenue from eBay’s payments business rose 14% to £140bn in the first quarter, accounting for nearly half of its total revenue.

“The upside all came from PayPal,” Benchmark Co analyst Daniel Kurnos told Reuters.

eBay has relied heavily on its payments division to offset stagnancy in its marketplace business, which involves core global e-commerce platform ebay.com, and took a hit from increasing competition and slowing customer additions.

PayPal said this month that it would continue charging eBay merchants less than it does other merchants and that the two companies would stay interdependent for the next five years.

The online payments system has benefited from a jump in payments made using mobile devices, as shopping across devices becomes increasingly popular amongst consumers.

PayPal’s mobile payment transactions, which account for nearly one-third of its total transactions, rose more than 40%. Average transactions per PayPal account rose to 23 in the quarter from 21, PayPal President Daniel Schulman, who is to be appointed Chief Exec of the spun-off company, said.

eBay, once an auction site for collectibles and such, has developed into an ever-growing marketplace for goods through third-party sellers, not dissimilar to Amazon’s third-party marketplace. In addition, it offers the PayPal payment service as well as a business that aids merchants in selling products online – the Enterprise unit.

“I feel very good about the performance of our teams at eBay and PayPal,” eBay CEO John Donahoe, who will step down post-split. “Each business is executing well with greater focus and operating discipline as we prepare to separate eBay and PayPal into independent publicly traded companies.”


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