eBay posted second quarter revenues of $2.2 billion this week (£1.45 billion), beating analysts' expectations, with the company's PayPal business boosting profits with a record performance.

eBay is reporting profits of 40 cents a share ($530.2 million) on this $2.2 billion revenue, with net income increasing by 18 per cent compared with the same quarter last year.

PayPal growth spurt

Most notably, PayPal has been adding a million new accounts each month throughout this quarter, which gives a good idea of where this growth is coming from.

PayPal's merchant services business has grown by over 40 per cent year over year, with merchant services' total payment coming in at $13.1 billion for the quarter.

eBay CEO John Donohoe said of the latest financial results: "We delivered strong second quarter results, demonstrating the global strength and increasing diversity of our business.

"PayPal is strong and getting stronger, building a robust and innovative global footprint serving all of ecommerce. And our eBay turnaround remains on track, with strong performance in Europe, significant changes in the U.S. and continued improvements to the buying and selling experience.

"We continue to focus on delivering strong financial results, managing a healthy balance sheet and making the necessary investments to compete, win and satisfy our customers."

PayPal now has a total of 87 million active accounts.

A Tale Of Two Cities

Citi analyst Mark Mahaney's gives the following eBay breakdown:

"Per our March 31st report, "A Tale Of Two Cities," we continue to view EBAY as containing a very robust Payments business and a competitively & structurally challenged Marketplace business.

"Given that eBay's Marketplace accounts for over 80% of overall profits, it has to grow its Marketplace segment in-line with overall eCommerce — without sacrificing its operating margin – in order to sustain solid double-digit EPS growth.

"We believe that's a Tall Order given: a declining U.S. user base, an Auction Format anchor, a still sub-par user experience (our latest eShopping Cart analysis showed Amazon with comparable prices for Fixed Price items and arguably greater selection), and increased high-end, low-end competition from Amazon, multi-channel retailers, Craigslist, etc."

Via eBay