Earnings

eBay Teases Sale Of Classifieds As Q4 Earnings Slide

As eBay seeks to right its ship with its search for new leaders, as well as new revenue from its recent sale of StubHub (and perhaps even the sale of its classifieds unit or other assets), the online marketplace operator reported an earnings slide for the fourth quarter of 2019.

In eBay’s latest earnings statement, it reported that Q4 net income decreased 2 percent year over year to $661 million. For the full year 2019, net income increased about 5 percent to $2.42 billion. As for revenue in Q4, eBay decreased by 2 percent to approximately $2.8 billion. For the full year 2019, eBay revenue increased 1 percent to about $10.8 billion.

As for eBay marketplace platforms, they reported a 3 percent year-over-year revenue decline in Q4 to some $2.2 billion. As for StubHub, its Q4 revenue declined 2 percent, the eBay earnings release said. Among other negative factors that could follow eBay into 2020 is the impact of online sales taxes imposed by states in the U.S., according to company officials on a webcast on Tuesday (Jan. 28) following the earnings release.

Tax Impact

“The [tax] rollout happened much faster than expected,” said eBay Interim CEO Scott Schenkel in his webcast presentation. He noted that those new taxes are not only hurting small businesses, but dampening sales for eBay sellers. For the fourth quarter of 2019, in fact, eBay reported a 5 percent year-over-year decline in gross merchandise volume (GMV) for its marketplace business, not including StubHub which also reported a 5 percent GMV slide.

As for how long the tax impact might last, Interim CFO Andy Cring said that this period would likely span at least four more months before easing off. “Our seller sales volume was negatively impacted by sales taxes,” he said, “but we expect recovery. The negative impact of the internet sales taxes will be moderately larger in the first half of the year, as more states are launching [such programs.]” At least some relief should follow in the second half of 2020.

As for StubHub, its sale to Viagogo Entertainment Inc. is expected to close in the first quarter of 2020. “It was a weak landscape for events and concerts,” Cring said of that unit of the eBay business in late 2019. However, there were some bright spots that could carry into 2020, according to executive comments.

“Advertising continues to drive revenue growth,” Schenkel said during the webcast. In addition, the increased collection, analysis and use of unstructured data continues to improve what he called the buyer experience at eBay — leading to better, more efficient and faster search results for buyers.

“In 2020, we will provide sellers with more tools to optimize their ad spend,” Schenkel said. “We will also work to remove friction from the customer experience, particularly on mobile.”

More Questions

The online marketplace operator faces some big tasks and choices this year. It will keep looking for a permanent CEO — former CEO and President Devin Wenig stepped down in September. Wenig's tenure stretched from the spin-off of PayPal to reports in October that the company was looking to sell its stakes in StubHub and the company’s classifieds business.

The company continues to consider the sale of some of its other assets besides StubHub, which could include the classifieds unit. A decision — or at least an update — on classifieds could come in the middle of the year, according to Schenkel on the earnings webcast. Then again, eBay took its time before offering more clarity about StubHub last year.

In any case, it promises to be an eventful next few months for eBay.

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