Magazine article American Banker

2Q Earnings: PayPal Growth Quickening as Parent's Volume Slows

Magazine article American Banker

2Q Earnings: PayPal Growth Quickening as Parent's Volume Slows

Article excerpt

Byline: Daniel Wolfe

Though tough economic times are slowing sales growth on eBay Inc.'s auction Web site, its payment business remains strong.

The San Jose parent of PayPal Inc. said Wednesday that 49% of the unit's second-quarter transaction volume came from outside eBay, the result of a multiyear campaign to win business from large merchants such as airlines and computer manufacturers that do not sell through auctions.

PayPal's payment volume grew 35% from a year earlier, to $14.9 billion. The number of transactions grew 26%, to 210.9 million.

The parent company highlighted the number of active PayPal accounts, which grew 19%, to 62.6 million. It was the second straight quarter the growth rate accelerated after stalling at 16% for three straight quarters. (PayPal defines "active" accounts as those that have handled at least one transaction in the past 12 months.)

"Across e-commerce, more people than ever are using PayPal," because "online retailers increasingly recognized PayPal's ability to deliver customers and increase conversion and sales," John Donahoe, eBay's chief executive, said during a conference call with analysts.

Its Marketplaces business line, which includes the flagship auction site as well as other e-commerce units like Half.com and StubHub, fared well but not as well as it has in previous quarters.

Worldwide gross merchandise volume in the business line grew just 8%, to $15.7 billion, after growing at least 12% in each of the previous four quarters.

Bob Swan, eBay's chief financial officer, said the growth in that business line was slowed by some promotional efforts, such as discounts and coupons that cut into revenue.

The average price of items sold on eBay has also declined, in part because of specific promotions but also for reasons beyond eBay's control, Mr. …

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