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EBay profits beat projections, but reopening the economy is slowing growth

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Ecommerce and auction giant eBay’s earnings exceeded expectations in the second quarter, but stocks are down on worries about slowing growth.

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Ebay

a slightly chaotic but better-than-expected second quarter result as the e-commerce and auction giant is close to closing a series of deals that have sharpened the company’s focus on its core e-commerce business. Results were also affected by a difficult comparison with the year-ago quarter at the height of the pandemic – and pressure from the company to cut down on the site’s sales of some low-priced, low-margin items.

For the quarter, eBay (ticker: EBAY) posted revenue of $ 2.7 billion, up 14% year over year, excluding the company’s Korean operations, which will be reported as a discontinued operation. In June, eBay announced an agreement to sell 80% of the shares in the entity to Korean retailer eMart for approximately $ 3 billion in cash.

Adjusted for this business, the company had expected sales of 2.58 to 2.63 billion US dollars for the quarter, eBay said in a presentation on the quarterly results.

EBay bought back $ 1.5 billion of common stock in the quarter. The company increased its full year buyback program from $ 2 billion to $ 5 billion.

Non-GAAP earnings were 99 cents per share excluding Korea; the adjusted guidance to reflect the Korea deal was for non-GAAP earnings of 89 cents to 94 cents per share. According to generally accepted accounting principles, the company earned 43 cents per share.

“On an apple-to-apple basis, all key business metrics met or exceeded expectations, and revenue growth was driven by the acceleration of our payments migration and the growth of advertising,” eBay CEO Jamie Iannone said in a statement. “We’re simplifying our portfolio and growing our core while delivering significant shareholder value.”

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Gross merchandise value was $ 22.1 billion, down 7% as reported and 11% in constant currency. In an interview with Barron’s, Iannone said the decline reflected a combination of a difficult year-on-year comparison and a concerted push to remove some low-value items from the site. He also noted that growth slowed over the quarter with some constraints on consumer mobility – the same pattern as

Amazon.

com (AMZN) recently noted in the release of the June quarter results.

For the third quarter, eBay forecasts revenue of $ 2.42 billion to $ 2.47 billion, with non-GAAP earnings of 86 cents to 90 cents per share and GAAP earnings of between 64 cents and 68 cents per share.

Iannone said the underlying business is healthy and growing – he says the company is now a year after a multi-year turnaround and that the strategy is working. For example, he notes that 71% of transactions are now being processed through the company’s payment platform, with a target of 90% of all transactions in the September quarter.

“Our innovation playbook really works,” he says, with sustained strong growth in categories such as watches, sneakers, trading cards and certified refurbished electronics.

EBay stock is down 1.3% in late trading to $ 67.16.

Write to Eric J. Savitz at [email protected]

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