Wednesday 13 December 2017

EBay profits beat estimates

EBay: boosted by holiday shopping and the sale of its Skype. Photo: Getty Images
EBay: boosted by holiday shopping and the sale of its Skype. Photo: Getty Images

Joseph Galante

E-commerce site EBay rose in late trading after reporting quarterly profit that topped analysts’ estimates, boosted by holiday shopping and the sale of its Skype Internet-calling unit.

EBay jumped $1.80, or 8.1pc, to $24.03 in extended trading yesterday. Net income jumped to $1.35bn, or $1.02 a share, from $367.2m, or 29 cents, a year ago, the company said in a statement. Excluding some items, profit was $586m, or 44 cents. Analysts had estimated 40 cents on average in a survey by Bloomberg.

The quarter marked EBay’s first profit rise in more than a year, driven by growth in its PayPal payment processing unit and improvements to its main e-commerce site.

Chief Executive Officer John Donahoe also has made it easier for retailers to put excess inventory on EBay. He expects the company to keep pace with the broader e-commerce market in 2010 after slumping the past two years.

“We still have a lot of work to do,” Donahoe said in an interview. “This is not declaring victory. This is simply saying we’ve reached another milestone in what we said we’d do.”

Fourth-quarter sales climbed 16pc to $2.37bnn, compared with the $2.3bn predicted by analysts.

Revenue in the first quarter will be $2.1bn to $2.2 bn, EBay said. Profit will be 39 cents to 41 cents a share, excluding some items. Analysts had anticipated sales of $2.16bn and profit of 40 cents a share.

For the full year, EBay forecast revenue of $8.8bn to $9.1bn, representing growth of as much as 12pc -- excluding the impact of Skype. Earnings will be $1.63 to $1.68 a share, the company said. Analysts had projected sales of $9bn and profit of $1.61.

Turnaround plan

The quarter demonstrated that EBay is on pace with its turnaround plan and that its main Marketplaces business is continuing to improve, Donahoe said. EBay will benefit further this year as e-commerce continues to take market share from traditional retail, he said.

Total online retail spending for the November-December holiday season rose 4pc to $29.1bn from a year earlier, according to research firm ComScore. That contrasts with a 1.1pc gain in total retail holiday sales, according to the National Retail Federation.

Skype, the biggest provider of international calling services, contributed $112m in revenue through the midpoint of the quarter.

On November 19, the business was sold to a group of investors led by private-equity firm Silver Lake for about $2bn. EBay retained a 30pc stake in Skype.

Bloomberg

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