eBay Meets Third-Quarter Expectations With Revenues Up 15 Percent

EBay released third-quarter results today, reporting revenues that were in line with expectations and profits that exceeded estimates by a penny.

Immediately following the earnings release, the online retailer’s stock was trading down nearly 2 percent, or 95 cents a share, to $47.25. Later, in after-hours trading the stock rebounded and was down only 14 cents to $48.06 a share.

In the third quarter, eBay reported revenue of $3.4 billion and net income of $597 million, or 45 cents a share. The company was forecasting revenue in the range of $3.3 billion to $3.4 billion, and a profit of 41 cents to 43 cents a share.

Analysts were expecting results to hit the high end of the range, including revenue of $3.4 billion and 54 cents in proforma earnings. Actual proforma results exceeded those expectations, totaling 55 cents a share during the quarter.

Some of the quarterly highlights:

  • PayPal: Revenue increased 23 percent year over year and net total payment volume (TPV) grew 20 percent year over year to $35.2 billion.
  • Marketplaces: Gross merchandise volume (GMV), excluding vehicles, increased 11 percent year over year to $16 billion in the third quarter. Marketplaces revenue increased 9 percent year over year, driven by strong growth in the U.S. and Asia Pacific.
  • GSI: Revenue increased 12 percent year over year to $226 million, driven by a 16 percent year over year increase in global e-commerce merchandise sales.
Last week, eBay redesigned the company’s Web site — including a new logo — for the first time in 17 years to offer a better shopping experience that doesn’t require users to start with a search bar and integrates a lot of social features. Given that those changes just took place, the results won’t be reflected in this quarter’s report, but it could affect shopping behaviors in the fourth quarter. The last three months of the year are critically important for the retailer due to the busy holiday shopping season. The company said for the final three months of the year, eBay expects revenues in the range of $3.85 billion to $4 billion in earnings per share in the range of 55 cents to 58 cents. Non-GAAP earnings per share are expected to fall between 66 cents and 69 cents a share.

Stay tuned for updates from the conference call starting at 2 pm PT.

  • Call has kicked off and eBay’s John Donahoe is running through the company’s performance, highlighting investments in brands, including a new logo and an online marketing campaign for PayPal.
  • He’s also talking about new areas for investment for its marketplace, including Russia and Brazil.
  • Donahoe hints at some restructuring going on at PayPal, which we will get more details on later, but includes combining nine different product teams, which he says will streamline product development to speed time to market and deliver better experiences.
  • On Mobile, he says: 800,000 new users made their first eBay mobile purchase on a mobile device. He continues to call mobile commerce and payments a “game changer.”
  • “I feel very good about our performance and future,” he says, before passing along the call to CFO Bob Swan for a recap of Q3 earnings.
  • Swan says eBay is raising its full-year guidance. EBay now expects net revenues in the range of $13.95 billion to $14.1 billion with GAAP earnings per diluted share in the range of $1.95 to $1.99 and non-GAAP earnings per diluted share in the range of $2.32 to $2.35.
  • EBay claims not to compete with other retailers, and that it wants to help enable commerce. Swan says 15 clients are now using eBay.com to expand their businesses domestically.
  • On guidance: Swan says they anticipate Q4 top-line growth in the high teens based on strong holiday sales and the adoption of mobile commerce. He also says the U.S. marketplace is performing better than expected, while there’s still some questions about the performance of Europe.
  • Opening it up for Q&A.
  • Donahoe says two things excite him about the new eBay: The new brand logo will attract new customers to a cleaner, simpler experience; and the “feed,” which was introduced as part of the Web site.
  • Headcount reductions at PayPal? Donahoe says PayPal is a very strong business and franchise, and while it’s true there will be reductions, “We are committed to accelerating the pace of innovation.” Since David Marcus has taken over as President, “he’s taken nine product organizations and consolidated it into one global product organization.” The employees know, he said, but they don’t know the final impact to the organization. “We aren’t seeking cost reductions — this is 100 percent about streamlining the creation of great products. You’ll see really strong evidence of that at PayPal in the weeks and months.” Swan clarifies that if there’s a one-time impact to financials tied to the changes, he’ll include it in GAAP results if it exceeds $10 million, or roll it into non-GAAP results if it falls below that.
  • On same-day shipping: Donahoe: “Customers want the choice. … On same-day delivery, rather than do this ourselves, our approach has been to partner. … We’ll continue to develop solutions that give customers choice.”

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