Deceiving quarterly results

Skype published its quarterly results, and i am not convinced we can call this good results!

Indeed, the quarterly revenue raised from 115 million US$ to 126 million US$, therefore an increase of about 10%, but …
  1. Calculated in Euro (€) this is a quarterly increase of only 2%!
  2. And … registered users have gone up by 12%!
Worse is the revenue per user account. In US$ it still seems to have an upward tendency, but in Euro it has definitely a downward tendency!Why is a conversion of the revenue in Euro worth to do?
  1. Only 18% of the revenue is generated in the USA (therefore US$ revenue!);
  2. Skype is still a European company registered in Luxemburg;
  3. Most Skype staff are located in Europe, therefore the costs are also accountable in Euro (€).
Hmmm …


Anonymous said...

comparing Q1 to Q4 mixes in seasonal differences. you need to compare Q1 08 to Q1 07.

Jean Mercier said...

I do NOT NEED TO compare Q1 with the same quarter last year.

I may compare today with yesterday, or any period with any period, if i have enough information.

Apart from the summer period where i clearly see a seasonal effect, please tell me which seasonal effects you perceive?

Therefore i may compare quarter 1 to the previous!

Anonymous said...

How about Christmas, or any other holiday you may not even know about.

Of course you CAN compare an apple and an orange.

Jean Mercier said...

Hey Anonymous (and it is a pity you dare to stay anonymous):

Yes i am aware about the small Christmas and New year and other Holidays!

But, instead of trying to convince me that i am comparing apples and oranges, look at the graphs, and you will NOT SEE important seasonal fluctuations! So what?

I am comparing pears and pears, but from different seasons indeed!

Anonymous said...

So what is the deceiving part? I think the results are very straightforward.

Jean Mercier said...

the deceiving part is the 12% user account growth, and only 2% growth in euro, or "only" 10% in US dollar!

Anyway ... it is my personal feeling based on the numbers and trends, and you are free to have another opinion.

Leonard said...

If only 18% of their revenue is in dollars, then Skype seems like a brilliant dollar hedge to me for US-owner eBay... Labor costs hardly seem to matter as much as traffic costs do, which are mostly paid in the local currency of the networks the telephone traffic terminates. Anyway, I'm more interested in their net earnings, but those are unfortunately undisclosed.

Jean Mercier said...

OK Leonard, right for the "dollar hedge", but it is only a very small hedge.

I would also like to have some more information like net earnings or earnings per "earning segment": SkypeOut, Skype certification, SkypeIn, etc.

Leonard said...

Margins could be substantial, from industry insiders I understand that US traffic can be purchased in bulk for as little as $0.0025/min or 0.25 cents/minute (wholesale). Even at $2.95/month that only becomes unprofitable over 1,200 minutes per month (or 20 hours), and my guess is that most SkypeOut users average a much lower number of minutes. Any idea how much of their revenue is selling minutes versus hardware?

Jean Mercier said...


Very interesting your "bulk purchasing" number.

Honestly, i don't have any clue concerning the proportion of minutes versus hardware.

In my opinion, but this is 100% guessing, it is less then 5%!