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Analyzing Skype’s Q2, Updated Financial Model

Jason Jones was kind enough to update our Skype model with last night’s Q2 results.  Feel free to view here:

Analyzing Skype's Q2

Key points:

  • Skype’s revenue and registered users continue to grow nicely year-over-year, up 105% and 95% respectively.  With $90 million of revenue in Q2, the company is now closing in on a $400 million run-rate.  The bad news is that revenue is likely a lagging indicator, and Skype’s usage is flattening.
  • Skype-to-Skype minutes were flat year-over-year, suggesting that the market for PC-to-PC calls has largely been tapped.  This will always be a niche market, so this isn’t surprising.
  • Skype’s Skype-to-Telephone minutes increased 53% year-over-year, but this was a drastic slowdown from the 131% growth in Q1.  This explains why Skype is desperately casting around for other sources of revenue (e.g., the ludicrous SkypeFind and SkypePrime).

In my opinion, Skype has lost focus, allowing other companies to capture markets it should have owned (Google’s new acquisition Grand Central, for example).  Skype has yet to roll out a satisfactory small-business solution (main number, PBX, extensions, etc.) and has yet to penetrate the much larger phone-to-phone market.  Skype’s forays into community and commerce, meanwhile, smack of the core expertise of its parent, eBay, which has no strategic reason for owning the company.  eBay should sell Skype to Yahoo, Microsoft, or Google, and focus on its core commerce business.

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