EBay Q1 Profit Beat Estimates, Outlook Strong, Shares Up

by Ike Obudulu Posted on April 24th, 2019

eBay Inc. (EBAY) Tuesday reported a first-quarter profit that trumped Wall Street analysts’ estimates, as did revenues. The company also forecast a second-quarter outlook above current estimates, sending shares up nearly 5% in extended trading session.

eBay’s first-quarter profit rose to $518 million or $0.57 per share from $407 million or $0.40 per share last year.

Excluding one-time items, income from continuing operations were $0.67 per share, up from $0.53 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.63 per share for the quarter.

Revenues for the quarter grew 2 percent to $2.64 billion from $2.58 billion last year. Analysts had a consensus revenue estimate of $2.58 billion for the quarter.

“We delivered a solid first quarter with revenue and EPS,” said CEO Devin Wenig. “Our initiatives to create a next generation payment and advertising experience are on track, we saw healthy buyer growth and disciplined cost control, and we continue to simplify the buying process while remaining focused on seller’s success.”

In the first quarter, the company grew active buyers by 4 percent to a total of 180 million active buyers on the site. Gross merchandise volume for the quarter was down 4 percent to $22.6 billion.

Looking forward to the second quarter, the company expects revenues between $2.64 billion and $2.69 billion and adjusted earnings of $0.61 to $0.63 per share. Analysts currently expect earnings of $0.60 per share on revenues of $2.65 billion.

For full year 2019, the company expects revenues between $10.83 billion to $10.93 billion and adjusted earnings of $2.64 to $2.70 per share. Analysts currently estimate earnings of $2.66 per share and revenues of $10.85 billion.

EBAY closed Tuesday ‘s trading at $36.67, up $0.52 or 1.44%, on the Nasdaq. The stock further gained $1.52 or 4.15% in the after-hours trade.

The company, facing intense competition from Amazon.com Inc and Walmart Inc, has focused on its promoted listings program and payments business, as well as worked to make its platform simpler to use through the introduction of grouped listings and personal recommendations.

More than 800,000 active sellers took advantage of the promoted listings in the first quarter, helping more than double advertising revenue to over $65 million, the company said.

Chief Executive Officer Devin Wenig on a post-earnings call reiterated that the company was reducing third-party ads that are not accretive and remained on track toward a $1 billion advertising revenue opportunity.

The results come as eBay is in the middle of a review of its StubHub and eBay Classifieds businesses following activist investor pressure.

The San Jose, California-based company has also agreed to appoint two new directors to its board as part of an agreement with activist investors Starboard Value and Elliott Management.

“We see the beat and raise as a positive reflection of management’s efforts, prior to the involvement of the activist, to improve its operating results – including expanding its efforts in advertising and payments,” said Tom Forte, an analyst with D.A. Davidson.

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