Earnings

eBay’s Rough Earnings Ride

eBay Q4 to Offer Managed Payments Insight

It wasn’t exactly an inspiring earnings report for eBay in the third financial quarter of 2017, and investors made their displeasure known by docking eBay’s stock price 6 percent in after-hours trading.

The report wasn’t a train wreck — by most accounts it was more or less in line with analyst expectations — but it didn’t have the kind of potential for take-off that Wall Street likes to see ahead of the always active fourth quarter.

On the upside, the eCommerce retailer has added an additional 2 million active buyers and now says it has 168 million global active buyers, which is certainly a base of customers not to be overlooked.

So, what was the play-by-play?

 

By the Numbers

E-Bay’s total revenue during the quarter was $2.4 billion, which was slightly ahead of Wall Street’s predictions of $2.37 billion. The numbers translate to an increase of 8.7 percent year on year, but that uptick was accompanied by an almost equal increase in operating expenses of 8.3 percent, to $1.28 billion.

Earnings per share logged in at $0.48, which was exactly what analysts were expecting. Digging into eBay, Inc.’s individual areas, its marketplace platform brought in $1.9 billion, while StubHub contributed another $275 million.

There was some growth across the board, but most units grew less than 10 percent year over year.

Notably, eBay’s stock has had a very strong run this year. The stock is up around 20 percent in 2017, despite facing constant pressure from Amazon as it continues to grow.

As for projections, eBay forecasts that Q4 earnings will log in at $0.57 to $0.59 a share. Analysts project $0.60. Revenue will be $2.58 billion to $2.62 billion, compared with analysts’ average estimate of $2.58 billion.

“Investors have been looking for sustained momentum in the eBay turnaround story, and, given the rather uninspiring results and guidance today, it looks like we may be waiting a little longer,” said Josh Olson, an analyst at Edward Jones & Co.

 

Rebuilding the Brand 

While still a growing concern, eBay is a minor growth concern when stacked up against eTailing pioneer Amazon. The company is working to rebrand itself from the internet’s favorite flea market into a buy anything anytime with one click and get it in a few days website — but that makes its comparison to Amazon more obvious, and more difficult.

Still, eBay remains positive about the scope and shape of its branding turnaround.

“In Q3, we drove acceleration across all three of our platforms, delivering strong top and bottom line financial results and our fastest volume growth in over three years,” CEO Devin Wenig said in the earnings release. “Our customers are responding to the significant product enhancements we have been making, and this is reflected in our results.”

Additionally, eBay has been hard at work upgrading and reorienting not just its offerings, but also the slate of options it offers in order to make those products more easily available to customers.

In June, eBay announced news of a price-match guarantee on more than 50,000 items to lure bargain hunters to its site. It is also in the process of rolling out free three-day shipping on millions of products this year to compete with Amazon’s two-day shipping pledge to subscribers of the $99-a-year Amazon Prime membership.

The eCommerce retailer also launched an authentication service in September, which makes it easier to discover real luxury handbags sold on its site.

Of late, eBay has also introduced a “group listings” feature so that products can be consolidated into categories so that shoppers avoid searches that bring up the same items over and over again.

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