eBay just reported its second quarter (Q2) 2007 earnings, and we are going to get to the details later, but lets just focus on Skype, that strangely seems to be making money even as it usage is flattening.
* New Registered Users, an ambiguous number at best, now stands at 220 million, versus 196 million at the end of the first quarter 2007. From Q4 2006 to Q1 2007, the new additions were 25 million. From Q1 to Q2 2007, the new additions were 24 million. Down One Million.
* Skype-to-Skype minutes: flat with Q2 2006 at 7.1 billion minutes, down about 8% from Q1 2007 (7.7 billion minutes.)
* Skype Out Minutes at the end of Q2 2007 came in at 1.3 billion for the quarter, flat with Q1 2007, even though up 57% year-over-year.
* The final and the most important metric revenues: $90 million up 18% vs $79 million in Q1 2007. That’s good.
But how is the revenue growing when everything is either trending down or flattening. More importantly, is the operation making any money?
They never-ever talk about that! Apparently it is making money, an eBay spokesperson tells us – and points to this line in the press release: “Skype continues to grow rapidly, while delivering segment profitability for the second quarter in a row.”
Oops! Talk about not reading the release carefully.
21 thoughts on “Skype losing its voice?”
guessing: advertising on Skype page views?
regardless, i still think the real money is in future Skype-PayPal integration… however, i am curious to hear the answers on the customer questions you bring up.
info i always hear is that customer #’s are very good. wonder what the story is there?
I don’t use skype for skype to skype because the call quality is quite poor when compared to msn messenger [or live.messenger] and google talk.
I’d recommend [and have been] google talk over anything!
[are there any stats released about that?]
Niklas needs to convince Meg to replace Skype’s US team. These guys have failed to take Skype to the next level.
If just 3 million of the 24 million new customes from Q1 2007 to Q2 2007 signed up for the $30 annual Skype-out plan, that totals to $90 millions! I hope I got that Math right.
I am a (former) Sunrocket customer who is seriously considering Skype, coupled with a Linksys CIT400 router and phone system. Skype works for about $100 lesser than Sunrocket’s annual plan. The only thing I am hesitating on is non-availability of E911 on Skype! If Skype could provide E911, they would have all dollars.
How’s the revenue growing?
Let me guess: extended services (SkypePro) finally available outside of USA, resulting in more signups for $3/month but therefore not necessarily more call minutes?
More hardware sold?
Hasn’t SkypeIn become more expensive ($18 for 3 months instead of $10 formerly or was $10 only the signup offer)?
love skype, use it all the time to keep contact with the global projects…it is awesome.
I think franky’s got it right, especially on SkypePro.
One can be disappointed in Skype’s ability to drive revenue and still be a fan of the Skype service. The problem with VoIP is one that’s hurting a lot of new online business models – how do you make money from free?
Agreed that Skype appears to have stagnated.
Revenue improvement may come from increased prices (Skype In has gone up around 50%, if I remember correctly), which makes me wonder if eBay understands that they can’t treat Skype customers like they treat eBay customers: If you put a phone number on your business card you are tied to its provider. If Skype jacks prices around, or doesn’t improve their product steadily, fewer people will trust them enough to buy the revenue-generating premium services.
The real money will be made when they succesfully push a search toolbar (stumbleupon?) to the install base…With a average $20 per user search revenue they can easily make close to 4 billion/yr with 70-80% gross margin!.
Skype is still the best VoIP application around, but they are missing a vital part of their business; the sysadmins.
i totally agree – love the product, but don’t pay in-out call prices. i think they need to simplify the client a bit. it has too much crud built into it, and consumes too many cycles.
What sort of “profit” does Skype generate. EBITDA? Operating profit. Or real profit? EBay is hidng the ball.
$30 million a month revenue run rate- 22o million registered users- ARPU is TINY. Less than 14 cents.
I’m mostly happy with my Skype experience. I paid for that flat-fee promotion in December for unlimited calls to US and Canada. I’ve been totally happy with the sound quality.
I also use it as my backup for calls to friends and family in Asia. VoipDiscount is my first option and Y! Voice is my second. They are both considerably cheaper than Skype, but the call quality isn’t quite as good or consistent in my experience.
I’m curious to see what Ooma’s international long-distance pricing will be.
Hey, they said the same thing about Enron at some point! err…
We look to sunrocket as a lesson, probably the reason why more customers have not signed up with skype is that the long-term viability outlook is not good in this LOW priced model. Cearly, customers DO NOT want to invest in hardware, establishing a phone number only in 1-3 years’ time worry about not being able to port the number to another provider if the service should IMPLODE… This is why many customers feel that if they move to a higher priced voip service they will remain viable.. but not all of these companies provide good service or are under their own death-watch of sorts(vonage being sued by Verizon namely)
Talk about giving vaporgear vendor Ooma an informercial and then turning around and trashing a direct competitor.
This sort of thing will trash your credibility if you’re not careful….
Skype could be great, they just need to keep pushing it to the main stream. I use Skype very little these days, but I still have a SkypeIn number that I consider to be my home telephone number.
I keep looking for better integration across the web. How about some click to dial features with CRM programs and computer address books?
90 million revenue does not sound like much when you figure they are paying PSTN termination fees for their revenue generating calls.
So, skype is making more money per user now, especially on the skypeout side due to fees per call, and the flat rate fees.
So, even though there was similar skypeout minutes, they probably were able to BOOK more revenue per month/quarter as a ratable portion of the annual fees. Their Monthly recurring revenue is going to look better with Quarterly and Annual contracts.
And, the per minute charges per call to International destinations DID go up, so revenues will rise on same volume of minutes.
Hardware could also be a portion, but that would have been called out and I don’t think skype actually SELLS any hardware. It is actually a pass through to the vendor, no?
I use Skype in and out for my home phone. It is the greatest. I do Skype in and out by the year. Fantastic price for a great product. Have a cell phone just for emergencies and use it for 911 services. I would and do recomend it to anyone.
Skype needs to pay more attention to its business users. These are the people willing to pay good money for a good VoIP service and usually have the bandwidth to make calls crystal clear.
Unfortunately Skype does not offer Grandstream-like IVR functions, the Skype for Business program is all about buying SkypeOut minutes and not offering real benefits.
Also, the interface is getting so bloated that you almost feel embarrassed to open Skype at a meeting (some customers might raise their eyebrows when seeing the way too playful Skype extra’s icons).