Blog Post

Skype Revenues Up, but Usage Flat

Are Skype’s plans to push users into higher-revenue calling plans starting to take hold? That might be one explanation for a surge in revenue during the past quarter, from $66 million in Q4 2006 to $79 million in the first quarter of 2007, while total minutes of both Skype-to-Skype and Skype-out usage stayed flat.

Here are some quick numbers from the eBay report today, comparing Q4 2006 to Q1 2007:

  • Revenues: Q4 2006 $66, million; Q1 2007, $79 million
  • Registered Users: Q4 2006, 171.2 million; Q1 2007, 195.5 million
  • Skype to Skype minutes: Q4 2006, 7.6 billion; Q1 2007, 7.7 billion
  • SkypeOut minutes: Q4 2006, 1.5 billion; Q1 2007, 1.5 billion
  • Quick quotes from the call, where eBay said Skype just achieved its first quarter of profitability (!): “Skype continues to grow at a rapid pace… Europe continues to drive [business] and we are pleased with our traction in North America… The adoption of paid subscription plans [in North America] is ahead of our expectations.”

    The expiration of free promotions in both the U.S. and Asia, eBay execs said, contributed to the flattening of traffic.

    9 Responses to “Skype Revenues Up, but Usage Flat”

    1. Steven Duong

      Maybe Skype has already tried this, but in case they haven’t, I think the best way for them to generate revenues is to open up and integrate with SaaS providers where they would charge for this extra integration. I’ve used and tried out a few sites such as Salesforce, SugarCRM and Central Desktop. The scenario that seems to happen is that I have Skype mainly for personal use, but often times, someone will Skype me (call or chat) about business and there’s no way for me to capture and store the information easily onto my SaaS application.

      Aside from Skype, this would be true for other SaaS applications, such as online mind mapping apps, desktop sharing apps, online accounting apps like Quickbooks Online Edition, etc. For me, the main application would be centered around a CRM system that is flexible by letting me build different modules and allow for many to many relationships between modules. I guess Salesforce has already done this, so nothing new, but it seems like there are a lot of online apps that can’t easily integrate with each other. It would be wonderful where everything was open with standards and everything could be easily hooked in to each other without the help of a developer.

    2. Vaughn Buck

      Skypes prices are similar to landline prices. UK mobile, 25 cents is same as many of the international long distance. You don’t need to have special equipment or be near a computer. $30 per year unlimited US/Canada isn’t bad if you’re a heavy user but given how often people use their cell phones for FREE calls after peak and weekends, who cares. At $66m of income, Skype wasn’t profitable, at $79m it was, Ebay needs a HUGE increase in volume to make the cost they paid reasonable. As Vonage is finding VOIP (which is all Skype is) is a commodity.

    3. Jesse Kopelman

      “Skype drops calls, produces terrible, garbled voice quality … do you think people have tolerance for this kind of crap?”

      Well, the billion plus who use cellphones seem to have good tolerance for it . . .

    4. Disclaimer: I worked at PayPal many moons ago.

      I am actually surprised that growth hasn’t been stronger for Skype. As someone that started using the service late, I wish I had started using it earlier for international calls (generally speaking, cheaper than most calling cards & far more convenient). I also wonder if adoption is slower because of equipment issues?

      I wonder if Skype will have some pickup because of the Vonage issues?

    5. honza83

      I’d also suspect that people would talk more over Christmas, as our family did. This would obviously push Q4 results up. It might be good to look at year on year growth for each respective quarter.