PayPal, mobile commerce fuel strong quarter for eBay

Aided by growth in its PayPal business and mobile commerce, EBay (s EBAY) recorded a strong quarter with revenue up 32 percent and income up 14 percent. In the third quarter ending Sept. 30, eBay generated $3 billion in revenue while earnings hit $490.5 million, or 37 cents a share with non-GAAP earnings coming in at 48 cents a share.

The results met expectations of analysts who predicted earnings of 48 cents a share on revenue of $2.91 billion. The company, however, saw its GAAP operating margin decrease to 18.1 percent for the third quarter of 2011, compared to 21.8 percent for the same period last year.

EBay was propelled by its PayPal business which generated $1.1 billion in revenue, up 32 percent year over year. CEO John Donohoe said mobile was key to the company’s growth with mobile commerce expected to bring in almost $5 billion in revenue this year. EBay also upped its estimate of mobile payments volume this year to $3.5 billion, up from $3 billion earlier this year after recording $750 million all of last year.

PayPal now claims 103.0 million active registered accounts, up 14 percent year over year. PayPal’s net total payment volume increased 31 percent to $29.3 billion in the quarter.

The eBay Marketplace also contributed to the bottom line with with $1.7 billion in revenue. Gross merchandise volume not including vehicles increased by 16 percent year over year to $14.7 billion. EBay’s GSI business, which was acquired this year, added $202.6 million in revenue for the third quarter.

Looking ahead, eBay forecast revenues $3.2 billion to $3.35 billion at the end of the fourth quarter with non-GAAP earnings between 55 to 58 cents a share. The company, as we noted last week, is transitioning from being an end-seller to becoming a commerce enabler with its new X.commerce platform, a sales operating system for merchants and developers. PayPal’s move into handling offline transactions is part of this new push. Donahoe has talked of the blending of offline and online commerce and how mobile phones are forcing merchants to react. That’s an opportunity worth $10 trillion, he said last week and that’s where eBay and PayPal are headed.

Donahoe said PayPal will test its in-store, point-of-sale payment system with an unnamed retailer this quarter with friends and family participating. He said the full launch will follow in the second quarter next year.

“I think this is an enormous opportunity for payments,” said Donahoe. “It’ s a huge market and it’s the next chapter in PayPal’s playbook.”