EBay Increases Profit Outlook Amid Sluggish Revenue Growth--Update
July 17 2019 - 6:26PM
Dow Jones News
By Sebastian Herrera
EBay Inc. raised its profit outlook and notched
better-than-expected quarterly results, but continued to show
sluggish revenue growth.
The online marketplace said on Wednesday its second-quarter
revenue rose 2% to $2.7 billion, slightly ahead of its own forecast
and Wall Street estimates as it benefited from having 4% more
buyers on the site. It also beat profit estimates, and for the
second-straight quarter raised its earnings projection for the
year.
The results and outlook sent eBay's shares up more than 5% in
after-hours trading Wednesday. Overall this year, the stock has
risen roughly 40%, as the company is in the process of returning
about $7 billion to shareholders via stock repurchases and
dividends over the next two years.
But eBay's growth prospects are in doubt. The company has
struggled to contend with much-bigger rival Amazon.com Inc.,
pushing it to introduce new features for sellers and buyers and
alter its image away from being an auction site. The total value of
goods sold on its site has been falling, dropping another 4% in the
quarter to $22.6 billion.
Under pressure from activist investors, eBay is undergoing an
internal review of its assets, including a possible sale or spinoff
of its online ticket platform StubHub and its classifieds business.
On a call with analysts, eBay President and Chief Executive Devin
Wenig said the company is making significant progress with the
review, without providing more details.
The company also announced two separate overseas deals as it
focuses on its core retail business. It is partnering with Indian
e-commerce startup Paytm Mall to make eBay's goods available for
purchase on the South Asian nation's shopping platform -- taking a
5.5% stake in Patym as part of the deal.
EBay also said it sold its flash-sale site in Germany called
brands4friends, without naming the buyer. The company bought the
business in 2010 for about $200 million in cash.
As eBay's growth has slowed, the company has sought to transform
its advertising business and improve its payments system.
The marketplace recently shut down its third-party ad network
that let merchants advertise on other sites in an effort to focus
on promoted listings on its own site. EBay said growth in promoted
listings has helped stabilize its revenue as the value of goods
sold has dropped.
During the second quarter, about 940,000 sellers used eBay's
promoted listings, resulting in its revenue in that area more than
doubling to $89 million.
"Sellers are increasingly choosing to invest in promoted
listings," Mr. Wenig said on the call.
EBay has also made alterations to its managed payment system,
providing sellers a one-stop shop for their transactions and
expanding payment options on its site. EBay said $270 million in
gross merchandise volume was moved through the managed payment
platform during its second quarter as more sellers moved to the new
system, a 24% year-over-year increase.
EBay's profit fell about 37% to $402 million. Excluding certain
expenses, its income from continuing operations rose by 11% to $589
million, or 68 cents a share. Analysts had predicted adjusted
earnings of 62 cents a share.
EBay projects revenue between $2.61 billion and $2.66 billion
for the current quarter and earnings between 62 cents a share and
65 cents.
The company said it paid $120 million in dividends during the
quarter. The company plans to spend $5.5 billion on share buybacks
and dividends this year.
Newley Purnell contributed to this article.
Write to Sebastian Herrera at Sebastian.Herrera@wsj.com
(END) Dow Jones Newswires
July 17, 2019 18:11 ET (22:11 GMT)
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