eBay GMV down slightly but beats Q2 earnings estimates

eBay Campus San Jose California
Source: eBay

eBay delivered revenue for the quarter ended June 30, 2019 of $2.7 billion, increasing 2% on an as-reported basis and 4% on a foreign exchange (FX) neutral basis, primarily driven by gross merchandise volume (GMV) of $22.6 billion, down 4% on an as-reported basis and flat on a FX-Neutral basis.

During the quarter, eBay delivered GAAP net income from continuing operations of $403 million, or $0.46 per diluted share and Non-GAAP net income from continuing operations of $589 million, or $0.68 per diluted share.

Wall street was looking for earnings of 62 cents per share, but eBay beat those estimates at 68 cents per share despite lower GMV.

The company generated $744 million of operating cash flow and $607 million of free cash flow from continuing operations while also repurchasing approximately $1.5 billion of its common stock and paying $120 million in cash dividends in the quarter.

“We remained focused on building our active buyer base, delivering outstanding customer experiences, and accelerating our growth initiatives in the second quarter. Managed payments continues to exceed expectations, while first party advertising is providing significant benefits to sellers, and new features are making our marketplace easier to use.”

Devin Wenig, President and CEO of eBay Inc.

Buyers grew 4 percent across its platforms

In the second quarter, eBay grew active buyers by 4% across its platforms, for a total of 182 million global active buyers.

Underlying total eBay performance, the Marketplace platforms delivered $2.2 billion of revenue and $21.5 billion of GMV.

Marketplace revenue growth was 1% on an as-reported basis and 3% on a FX-Neutral basis, and GMV was down 5% on an as-reported basis and down 1% on a FX-Neutral basis.

StubHub platforms drove revenue of $264 million, up 7% on both an as-reported and FX-Neutral basis, and GMV of $1.1 billion, up 5% on an as-reported basis and up 6% on a FX-Neutral basis.

Classifieds platforms delivered revenue of $271 million, up 5% on an as-reported basis and up 12% on a FX-Neutral basis.

Based on these results and increased confidence in the year, eBay raised EPS guidance for the full year for the second quarter in a row.

Growth initiatives

eBay accelerated adoption of its new payments platform, with over 6,000 sellers opting into the program.

The company achieved more than $270 million of GMV during the quarter, an increase of 24% quarter-over-quarter that brings the total GMV since launch to $636 million.

The PayPal integration for all enrolled US sellers is complete and the offering in Germany is on track to be live by the end of 2019, pending regulatory approval.

First-party advertising continued its impressive growth trajectory. In the second quarter, over 940,000 sellers leveraged first-party advertising to promote over 250 million listings, resulting in $89 million of revenue, a year-over-year growth rate of over 130% on a FX-Neutral basis.

eBay also continued to simplify the buying experience and make the platform more powerful for sellers.

The company launched new pages that transformed previously unstructured listings into a more intuitive set of product results, unveiled Brand Outlet, and broadened the simplified returns process to more customers.

READ MORE: Is eBay becoming an online brand name outlet mall?

New seller features were announced to increase buyer conversion including Buy Again, Trending in Your Interests and an expanded Offers to Buyers.

The Volume Pricing user interface was dramatically improved, making it much easier for sellers to offer volume-based discounts and for buyers to act on those discounts.

In addition, eBay introduced new APIs that will give third-party developers access to managed payments, Promoted Listings and Login with eBay.

READ MORE: eBay releases new APIs allowing developers to innovate at scale

Portfolio update

eBay has taken two actions in the last several weeks to strengthen its portfolio.

First, the company has reached a commercial agreement with Paytm Mall to bring eBay’s global inventory onto one of the largest marketplaces in India.

Second, eBay has reached an agreement to sell its flash sale German business brands4friends.

The company is also actively reviewing the role and value of StubHub and Classifieds in its portfolio to determine the best path forward to maximize shareholder value.

This is the only reference to the StubHub report from earlier today.

For detailed information about eBay’s earning, please see eBay Investor Relations.

READ MORE: Report: eBay has multiple interested buyers for StubHub


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