eBay shares are headed higher late Wednesday after the online marketplace posted an upbeat earnings report, which nonetheless demonstrated the impact of both a postpandemic slowdown and ongoing macro pressures.
For the quarter, eBay (ticker: EBAY) posted revenue of $2.4 billion, down 9% as reported, or 6% lower adjusted for currency. That was about in line with the Street consensus at $2.37 billion, and at the high end of the company's guidance range of $2.35 billion to $2.4 billion.
Gross merchandise value was $18.5 billion, down 18% as reported, or 14% adjusted for currency, but above the guidance range of $18.02 billion to $18.42 billion.
Adjusted profits were 99 cents a share, a dime better than the Street had expected, and ahead of the target range of 87 to 91 cents a share. Under generally accepted accounting principles, the company lost 96 cents a share. Non-GAAP operating margin was 28.7%, ahead of the target range of 26.5% to 27.5%. Advertising revenue inched up 4% from a year ago, to $275 million.
The company raised $242 million in the quarter from a sale of a portion of its stake in Kakao Bank, a South Korean fintech company, reducing its stake to $100 million. The company also raised $129 million from reducing its holdings in Ayden, a Dutch digital payments company, leaving it with a position worth $300 million. In the quarter, eBay bought back $1.4 billion of its common stock.
For the third quarter, eBay is projecting revenue of $2.29 billion to $2.37 billion, which would be down 2% to 5% from a year ago on a constant currency basis. The company sees profits of 89 to 95 cents a share on an adjusted basis, and 59 to 63 cents under GAAP accounting. Street consensus estimates have called for $2.3 billion in revenue and non-GAAP profits of 92 cents a share.
For the full year, eBay now sees revenue of $9.6 billion to $9.9 billion, off between 3% and 6% from 2021 on a constant currency basis, with profits on an adjusted basis of $3.95 to $4.10 a share. Under GAAP rules, the company expected to post a loss of between $1.83 and $1.98 a share. Current Street estimates call for $9.7 billion in revenue and adjusted profits of $3.98 a share.
"We had another strong quarter," eBay CEO Jamie Iannone said in an interview with Barron's. "The quarter was better than expected across the board, and we are on track with our guidance for the quarter and the year." He notes that the year-over-year declines in revenue and GMV reflect "lapping the strong period last year," with many people stuck at home due to Covid restrictions, as well as ongoing macro factors, including the war in Ukraine, the strong dollar and higher interest rates and inflation.
Iannone notes that the company continues to successfully expand its position in "focused categories," like collectible watches, trading cards, sneakers and jewelry. He also notes that the company in the quarter announced the acquisition of KnownOrigin, a marketplace for NFTs, or nonfungible tokens. He said that while it is "very, very early," eBay sees long-term opportunities in both physical and digital asset collecting.
eBay shares in late trading are 0.63% higher at $50.8.
August 03, 2022 17:36 ET (21:36 GMT)
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