PayPal growth helps eBay beat the Street again

The auction giant's transaction and payments division continues to be a bright spot in what otherwise would have been flat financial performance.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
2 min read

Continued strong performance from its PayPal online commerce system led auction and retail giant eBay to surpass Wall Street's expectations once again in third-quarter earnings. Analysts had predicted $2.18 billion in revenue on earnings of 37 cents per share; eBay posted $2.25 billion on earnings of 40 cents per share. Net income was up 14 percent.

PayPal has been adding more than a million accounts per month, now with over 90 million active users worldwide. It's been eBay's strongest weapon for quite some time now, fueling better-than-expected performance in the company's past few quarterly reports. PayPal, which eBay acquired in 2002, also inked a crucial partnership with Facebook earlier this year that assured, at least for now, that the two would not be going head-to-head in e-commerce.

"We delivered strong third quarter results, with great performance at PayPal and stable results at eBay," eBay CEO John Donahoe said in a release. "PayPal gained share globally and eBay continued to improve key metrics. Our company is strong and we are managing our global portfolio to balance strengths, challenges and opportunities, invest in growth and deliver consistent performance."

In a conference call with investors, Donahoe emphasized the potential for PayPal's strategic expansion in markets in Asia and Latin America, specifically Brazil.

eBay's main auction business is no longer flagging as it was a few years ago, but the company has had to look to new markets and platforms to maintain growth. Mobile applications and commerce have been central to its strategy, launching and revamping smartphone and iPad apps as well as acquiring RedLaser, a barcode-scanning service that is gradually being worked into eBay apps in order to make price comparisons and on-the-fly buys more convenient and appealing to consumers.

eBay's iPhone app has been downloaded more than 13 million times, Donahoe said in the conference call.

This post was expanded at 2:12 p.m. PT.