2008-10-25

Skype certainly is profitable!

After publishing their Third Quarter results, eBay also published the SEC filings. There is some additional cost data in it. One interesting metric is “contribution”: this is more or less equal to “benefit before paying a management fee to eBay”, see the explanation in a previous blogpost.
The “contribution graph” shows a very interesting rising tendency.

I plotted the graph also in euro (€), because Skype is still mainly a European company. Quote from their sec filings: “Based on changes in foreign currency rates … net revenues were positively impacted by foreign currency translation of approximately $12.3 million (US$) and $46.6 million (US$) during the third quarter and first nine months of 2008, respectively, as compared to net revenues that would have been recorded had foreign currency rates remained constant.

Even in euro the rise of the last two quarters is very spectacular. How come? Let us quote eBay again: “… revenues are generated primarily from fees charged to users to connect Skype’s VoIP product to traditional telecommunication networks. These fees are charged on a per minute basis or on a subscription basis, and we refer to these minutes as SkypeOut minutes.”. Well, the next graph shows the evolution of SkypeOut minutes …
There seems to be an accelerating tendency in the last 3 quarters!
Another reason for the spectacular growth of contribution could be cost cutting and/or the focus on the revenue generating activities and stopping or putting lesser priority on some other activities, like what they did with SkypeCasts.
Conclusion: after all Skype seems to make it, even if eBay certainly paid too much for it!

2 comments:

Mr. M. said...

Another reason for Skype being profitable is,"The Oprah Effect."

As the writer pointed out,in the story,the last 3 months for Skype has taken off,in regards to revenue.

If I'm not mistaken,that's roughly about the time,Miss Winfrey introduced Skype on her show.

Jean Mercier said...

The "Oprah Effect" certainly helped, i don't doubt about it. However, the effect was probably quite minimal, because Oprah is mainly known and followed in the USA. The revenue of Skype is for 80% outside the USA however!