EBay Profit Falls as Strategic Review Continues
October 23 2019 - 7:31PM
Dow Jones News
By Maria Armental
EBay Inc. is bracing for its first quarterly revenue decline in
four years, as the online marketplace works through a strategic
review that prompted a leadership shake-up and could reshape its
overall business.
The December quarter's forecast -- typically bolstered by the
holiday shopping season -- came as the company on Wednesday said
its third-quarter profit fell 57% from a year ago, driven by higher
costs and sluggish sales of merchandise through its main
platform.
EBay, which also owns ticketing business StubHub and has a
classified-advertising business, has spent much of 2019 in an
operations review after a clash with some investors over the
company's strategic focus. On Wednesday, the California company
said it expects to give an update on StubHub before the next
earnings release and that it has a three-year plan to improve
margins and invest in customer initiatives to drive growth.
Interim Chief Executive Scott Schenkel said the company was
committed to changing its marketplace to make sure buyers and
sellers are served "in an authentically eBay way."
As for the classified-ad business, Mr. Schenkel said during a
conference call with analysts that the company is continuing to
consider its long-term options. Asked about why the review of the
classified business was taking longer and whether there were no
interested parties, Mr. Schenkel said eBay has a record of
divesting businesses when it makes sense to shareholders. He
declined to comment further.
Shares, which closed Wednesday at $39.20, fell 6% in after-hours
trading.
Mr. Schenkel, who had been eBay's finance chief, assumed the
reins of the company in September after Devin Wenig resigned over
conflicts with a reshaped board of directors.
EBay, facing pressure from Elliott Management Corp. and
Starboard Value LP to get rid of StubHub and the classified-ad
business, agreed to add new board members and started paying
quarterly dividends.
EBay was founded in 1995 -- the same year that Amazon.com
launched as an online bookstore -- and became a success story
during the dot-com heyday but it has struggled to match Amazon.
On Wednesday, eBay said active buyers reached about 183 million
in the September quarter, the seventh straight quarter of gains,
though gross merchandise volume, or the amount of business
transacted on its platforms, fell 4% from the comparable period a
year earlier to $21.72 billion. Analysts expected about $22 billion
in gross merchandise volume.
Overall, eBay's quarterly profit dropped to $310 million, or 37
cents a share. On an adjusted basis, profit rose to 67 cents a
share from 56 cents a share a year earlier.
Net revenue was flat at $2.65 billion but would have increased
2% excluding the impact of currency fluctuations.
In the current quarter, eBay expects revenue to fall to a range
of $2.77 billion to $2.82 billion, which would be the first
year-over-year quarterly decline since eBay spun out payments
company PayPal Holdings Inc. in 2015.
EBay on Wednesday tempered its full-year outlook for revenue and
profit. The company expects to earn a profit between $1.97 and
$2.02 a share on $10.75 billion to $10.80 billion in revenue,
compared with the $1.97 to $2.07 a share in profit on $10.75
billion to $10.83 billion in revenue as it previously expected.
However, the company boosted its adjusted annual profit view to
a range of $2.75 to $2.78 a share from $2.70 to $2.75 a share.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
October 23, 2019 19:16 ET (23:16 GMT)
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