EBay finished last year with a flourish as bargain hunters flocked to its website and digital payment service to help lift the company's fourth quarter earnings above analyst projections.

Last night's results showed that 2012 was the best year yet for eBay, an e-commerce pioneer founded in 1995 when the concept of buying merchandise online seemed absurd. 

EBay said it earned $757m, or 57 cents per share, during the final three months of last year. 

That represented a 62% decrease from net income of $2 billion, or $1.51 per share, at the same time in 2011.

But the 2011 numbers were inflated by a windfall from eBay's $8.5 billion sale of online communications service Skype to Microsoft.

If not for certain one-time items, eBay said it would have earned 70 cents a share. That figure was a penny above the average forecast among analysts surveyed by FactSet.

The most recent quarter's earnings were up by 17% from 2011, on an adjusted basis. Revenue climbed 18% from the previous year to nearly $4 billion, in line with what analysts forecast.

Online shopping has since become a staple for hordes of consumers, turning eBay into a thriving business and a Wall Street favourite.

But the growing popularity of smartphones and tablet computers is once again changing the way many people shop.

EBay is trying to remain at the forefront of the shift by restructuring its online market and popular payment service, PayPal, to work better with mobile devices.

The company, based in San Jose in California, said its mobile applications have been downloaded onto more than 120 million devices, putting its services in easy reach of consumers even as they peruse the aisle of brick-and-mortar stores.

"Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay," eBay's chief executive John Donahoe told investors during a conference call.

He predicted that PayPal and eBay's marketplaces division, where most of eBay's shopping activity occurs, will each process over $20 billion in mobile transactions this year.

EBay does not keep all the revenue that passes through its services. PayPal charges merchants a fee to deliver payments from customers, and eBay collects fees for products listed and sold online.

The strides that eBay has made in the mobile market have impressed investors, helping to propel the company's stock price to a 68% gain last year.

As has been the case for some time, PayPal generated the greatest growth. Fourth-quarter revenue from the payment service totaled $1.54 billion, a 24% increase from the previous year.

PayPal, which eBay bought a decade ago, added 5 million more accountholders in the fourth quarter, its biggest three-month gain in eight years. The service now has about 123 million accountholders, many of whom contributed to the roughly 700 million payments processed by PayPal during the fourth quarter.

EBay is now trying to extend PayPal's reach offline. The company already has struck agreements with 23 retailers, including Abercrombie & Fitch, Barnes & Noble, RadioShack and Home Depot, to accept PayPal in their stores.

For all of 2012, eBay earned $2.6 billion, or $1.99 a share, on revenue of $14.1 billion. With the Skype sale, eBay earned $3.2 billion, or $2.46 per share, in 2011. Revenue for that year totaled $11.7 billion.