EBay Drops PayPal as Default Payments Processor: Newsletter February 9, 2018

ImagePayPal and eBay have announced another milestone in the ending of their partnership this week. Since 2015, PayPal has been strategically extricating itself from eBay and it has now been announced that eBay will be using a new default payment processor, Adyen, over PayPal. From a user perspective, the main benefit of Adyen on eBay is that it allows users to stay on eBay’s website while checking out, unlike PayPal, which redirects the user. This announcement comes after PayPal’s Q4’17 earnings report showed an increase in income to $620 million, up from $390 million a year earlier, but a rather underwhelming outlook for the first quarter of the new year. PayPal has made several strategic shifts in line with their divergence from eBay in the last several years, as they have prioritized the acquisition of small companies like Swift Financial and moved into B2C functions like facilitating payments between family and friends, as well as strategic partnerships with big names like Apple, Google and Mastercard.

In digital news this week, Google has announced that they are building a team of engineers devoted to optimizing the Internet’s WordPress ecosystem for speed. WordPress boasts a 59% CMS market share, which is approximately one third of all web content published and 29% of all websites on the Internet. The search engine’s recent partnership with the content management platform comes as part of Google’s attempt to build a “healthy, flourishing and vibrant web.” What does this mean? Primarily, an update to SEO guidelines. Starting July 2018, Google will factor in a website’s mobile loading speed to mobile SERP rankings, and will soon roll out its larger mobile speed initiative, which will mean mobile loading speeds will affect a website’s overall indexing and ranking in traditional search results. Website businesses will want to ensure that they optimize their site load speed for mobile to ensure that their SERP positioning isn’t demoted. For more details, read about how to prepare for mobile-first rankings here.

In entrepreneurial news, Founder Thomas Smale was recently featured on DigitalCommerce360 in “Three Ways to Increase the Value of Your E-Commerce Business”, where he discusses three key practical improvements e-commerce owners can make to increase the value of their business. In the article, he also shares the unique metrics we consider when arriving at a valuation for an e-commerce business, as well as insight into the practices for e-commerce store owners to increase the value of their businesses.

New in SaaS business listings this week we have a $1.85M B2B SaaS business in the Web Design and Productivity Niche, with rapid revenue growth reaching a c.78% CAGR for the 2014 to 2017 period, diversified earnings across two main products (both with dozens of 5-star reviews), an authoritative brand with a leadership position in a growing niche, hundreds of thousands of downloads to date and high, stable margins creating a scalable business model.

New in content business listings this week we have a $344K direct advertising business in the photography niche, with website rankings for c.8,000 keywords, strong and stable traffic with over 750K sessions driving 1.6 million page views in the last 12 months, years of operational history resulting in an authoritative and well-known brand and low owner involvement with a VA prepared to transfer with the business. If you are interested in either of the above businesses, follow the links to request a Prospectus.

In events news this week, Thomas had a great time attending the expert talks at SaaStr, and enjoyed hosting a get-together for valued clients and attendees. Thank you to everyone who came out! E-commerce owners: have you figured out the secret to customer targeting using personalization? No? Not to worry–that’s what our expert panel is for! Our February Boston E-Commerce Meetup is coming up on Wednesday the 21 from 6-8pm, and we will have a panel of experts discussing how to use data and personalize e-commerce marketing to target specific prospective clients and leads with a message that speaks directly to them. Click here to RSVP. If you’re curious about the event but were not able to attend the last one, check out the official panel video from January’s meetup here.

Continue reading below for more on Monday’s stock market meltdown, Google’s update to SEO ranking considerations, and PayPal’s increasingly definitive split from eBay.
Image

Deal Highlights

New:

Software – B2B Web Design & Productivity – $27K gross/mo

  • Rapid revenue growth, reaching a 78% CAGR for the period 2014 to 2017
  • Diversified earnings across two main products, each boasting dozens of 5-star reviews
  • Hundreds of thousands of downloads to-date
  • Authoritative brand with a leadership position in a growing niche
  • High and stable margins creating a scalable business model

Yearly net profit: $293,000
Asking price: $1,085,000

Direct Advertising – Photography – $11K gross/mo

  • Years of operational history resulting in an authoritative and well-known brand
  • Rapid revenue growth reaching a c.29% CAGR for the period 2014 to 2017
  • Strong and stable traffic with over 750,000 sessions driving 1.6 million page views in the last 12 months
  • Website ranks for 8,000 keywords
  • Low owner involvement with a VA willing to stay on post-sale

Yearly net profit: $104,000
Asking price: $344,000

Sold:
Display Advertising – Lifestyle – $2.3K gross/mo

In the News…

Major SaaS Businesses Hold Their Own in Stock Market Decline

Major names in the SaaS industry appear to be some of the better performers to withstand Monday’s stock market fiasco.

Cloud service businesses Workday, Servicenow and Salesforce were among the companies to best withstand the market downdraft, which reached as much as 6%. Out of all IT names in the market, these major SaaS companies appeared to perform the best. Within software companies, enterprise-scale cloud computing software vendors are performing above Nasdaq’s 2% drop, with Salesforce down 1.7%, ServiceNow down 0.6%, and Workday down just 1%. The valuation multiples on all three businesses have stayed relatively unaffected: Salesforce is currently valued at 82 times this year’s projected earnings, ServiceNow 76 times, and Workday (which Wall Street expects not to be profitable this year) is up to 99 times this coming year’s projected earnings. While the larger SaaS companies have remained pretty insulated, smaller software businesses appear to have been hit a little harder.

Companies like Appian (down +4%), SendGrid (down 2.7%), and Twilio (down 3.4%) are all falling worse than the Nasdaq’s.

Google Sets Sights on Improving WordPress Ecosystem

Google is dedicating an engineering team to ramp up development of the internet’s WordPress “ecosystem.”

WordPress is one of, if not the, largest open-source content management system, with a market share approaching 58% as well as an estimated 1/3 of all web content published through them. Google’s recent partnership with the content management behemoth is part of their initiative to ensure that certain regulatory practices get adopted on the web to ensure that it’s a “healthy, flourishing and vibrant web.” Their investment has centered mostly around the SEO community’s adoption of technologies and practices to that end. Recently, Google announced that page load speed would be a factor taken into consideration for SEO rankings. The thinking is that data points to most searches being conducted on mobile devices, and when pages load poorly, this creates a negative user experience. Google is trying to regulate this by showing faster-loading sites more highly on SERPs. More specifically, Google uses the mobile version of a website to determine site rankings, meaning no matter how optimized the desktop version of your site, if the mobile version falls short of expectations, the ranking will nonetheless be affected. In addition, their Speed Update means that mobile page speed will affect ranking in mobile search results.

The growing team at Google will be geared towards improving performance of the WordPress platform and bringing its ecosystem up to current web experience standards as fast as possible.

PayPal and eBay Parting Ways

Ebay has announced this week that it will opt for Dutch payments processor Adyen over PaylPal.

The shift means that customers will be able to process payments directly on eBay’s site when checking out, rather than PayPal’s method of redirecting the user. According to PayPal, shoppers on eBay will be able to select PayPal as a payment option until July of 2023. Recent earnings reports showed PayPal beating Wall Street estimates, but with a rather bleak outlook for the first quarter. Shares initiall dropped 5% following the news of the quarterly results. This is not out of the blue, however, as PayPal had been removing itself slowly from eBay since 2015 to shift from mostly processing payments for the parent company, to processing payments for other large companies and their customers, as well as for transactions between individuals. Analysts predicted that revenues would be $15.16 billion for 2018, and PayPal’s estimates fall somewhere between $15 and $15.25 billion. Their emphasis on partnering with major companies like Google, Apple, Mastercard, Visa and JPMorgan Chase, as well as some strategic acquisitions, have led to growth in both payment volume and users.

Payments processed are up 32% from one year ago, to $131 billion, along with 8.7 million active users added.