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6 Months : From Apr 2019 to Oct 2019
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 Mall as part of the deal.
A person familiar with the matter said the funding amounts to between $150 and $200 million, valuing Paytm Mall at $3 billion. Paytm Mall is the e-commerce arm of Noida, India-based One97 Communications Ltd., which runs India's largest mobile-payment system. It launched Paytm Mall in 2017. Among Paytm Mall's backers are Warren Buffett's Berkshire Hathaway Inc., Japan's SoftBank Group Corp. and Chinese tech giant Alibaba Group Holding Ltd.
EBay also said it sold its flash-sale site in Germany called brands4friends, without naming the buyer or citing any other details about the transaction. The company bought the business in 2010 for about $200 million in cash.
As eBay's growth has slowed, the company has sought profits from 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 19:11 ET (23:11 GMT)
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