IP Democracy: Some Answers on Skype's Growth
eBay issued its Q2 06 earnings report yesterday and sparked a mini-controversy in the blogosphere regarding the lack of visibility into the online merchant’s prized “communications” arm, Skype. Om Malik, frustrated with the “softball” questions posed by analysts during the earnings call (transcript here), called Skype’s performance a “riddle wrapped in an enigma.”
Om complains that that all we know about Skype is the service’s quarterly revenues and registered users (which doesn’t translate into active users) and that revenue per registered user rose from $.37 to $.39 sequentially, an increase that Om suggests is tiny. Andy Abramson echoes Om’s complaint, noting the dearth of telecom analysts on the call.
In actuality, however, eBay released enough data to give comfort that the company will make its 2006 $200 million revenue goal for the VoIP service. And a rise in revenue of only $.02/registered user is actually excellent growth given that the number of registered users is rising simultaneously.
Look at the table below — if Skype keeps growing its revenue per registered user by only $.02/quarter, and the number of registered users keep growing at a rate of 18 million per quarter (below the 19.9 million net new registered users in Q1 06 and the 18.4 million net new registered users in Q2 06), Skype will surely come close to $200 million in revenue for the year. Using these numbers, Skype’s 2006 revenue will be $197 million, close enough to the $200 million goal.
| Skype Registered Users, Revenue (mil.) | ||||
| Total | Net Gain | Revenue | Rev/User | |
| Q104 | 4.1 | na | na | na |
| Q204 | 6.8 | 2.7 | na | na |
| Q304 | 11.5 | 4.7 | na | na |
| Q404 | 19.8 | 8.3 | na | na |
| Q105 | 32.9 | 13.1 | na | na |
| Q205 | 44.1 | 11.2 | na | na |
| Q305 | 54.0 | 9.9 | na | na |
| Q405 | 74.7 | 20.7 | na | na |
| Q106 | 94.6 | 19.9 | $ 35.20 | $ 0.37 |
| Q206 | 113.0 | 18.4 | $ 44.00 | $ 0.39 |
| Q306 (e) | 131.0 | 18.0 | $ 53.71 | $ 0.41 |
| Q406 (e) | 149.0 | 18.0 | $ 64.07 | $ 0.43 |
| Total | $197.00 | |||
Note that with only a $.02 quarterly increase in the revenue per registered user, Skype’s quarterly revenues could reach $64.07 million in Q4 06, 85% more than the $35.2 million Skype generated in Q1 06.
All this growth, by the way, is coming ahead of any positive impact generated by an alliance of eBay and Yahoo in terms of co-developing their respective web-based voice platforms. (Morgan Stanley analyst Mary Meeker said during the earnings call that “the combination of Skype and Yahoo! potentially adds up to $1 billion in ‘07 revenue and could help assist an accelerating rate of revenue growth for the Company in ‘07 versus what you report in ‘06.” This was the softball question that got Om going).
Posted by Cynthia Brumfield on July 20, 2006 1:05 PM to IP Democracy