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EBAY INC (EBAY)

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EBay Reports Higher Profits, Outlook On PayPal Growth

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04/18/2012 | 05:44pm EST

--EBay earnings rise 20% on 29% increase in revenue

--Quarter driven by continued momentum in PayPal

--Shares trading near multiyear highs

(Updated with additional details throughout.)

 
   By Drew FitzGerald 
   of  
 

EBay Inc.'s (>> eBay Inc) first-quarter profit rose 20% on continued strength in the company's payments business, prompting the company to boost its outlook for the year.

The strong quarter, which included better-than-expected revenue growth of 29%, reflects the company's recent transformation under Chief Executive John Donahoe, who has turned eBay into a more traditional retail site that offers new as well as used goods, while rapidly growing its PayPal payments unit.

The San Jose, Calif., e-commerce operator also raised its 2012 forecast. EBay shares, up 18% this year through the close Wednesday, added another 6.9% to $38.36 in after-hours trading, which would be a multiyear high if those gains carry to the regular session Thursday.

In the first quarter, eBay said PayPal revenue rose 32%, "driven primarily by increased penetration on eBay as well as continued merchant and consumer adoption." PayPal ended the quarter with 109.8 million active registered accounts, a 12% increase from a year ago.

EBay is trying to expand PayPal to brick-and-mortar stores to enable the service to tap into the far larger network of sales at traditional retail locations. While PayPal has made in-roads with stores--the service is available in all of Home Depot's roughly 2,000 U.S. locations--some have said it could be tough to displace the well-entrenched credit cards.

Another challenge for the division is the loss of Scott Thompson, who left as head of PayPal earlier this year to become Yahoo Inc.'s (YHOO) chief executive. The division is now led by David Marcus, who joined the company when eBay acquired his start-up Zong Inc. last year for $240 million.

EBay's marketplaces segment--its largest division--posted 11% higher revenue. Gross merchandise volume, the total value of goods sold on the website, grew 12% excluding vehicle sales.

The company has spent several years overhauling its online marketplace to increase its emphasis on fixed-price, high-volume merchants. The effort positions it more squarely as a competitor to Amazon.com Inc. (>> Amazon.com, Inc.), which has benefited along with eBay from growing demand for online merchandise.

Overall, eBay reported a profit of $570 million, or 44 cents a share, up from $476 million, or 36 cents a share, a year earlier. Excluding stock-based compensation and other items, per-share earnings rose to 55 cents from 47 cents

Revenue increased to $3.28 billion from $2.55 billion.

For 2012, eBay raised its 2012 adjusted earnings forecast by 5 cents a share and lifted its full-year revenue target by $100 million, calling for a profit of $2.30 to $2.35 a share with revenue between $13.8 billion and $14.1 billion. The midpoints of both forecasts surpass the average analyst estimates on Thomson Reuters.

For the second quarter, eBay projected profits between 53 cents and 55 cents a share on $3.25 billion to $3.35 billion of revenue. As has been the case in recent quarters, the quarterly outlook appears light in comparison to Wall Street estimates. Analysts polled by Thomson Reuters were projecting a profit of 54 cents a share on revenue of $3.36 billion.

In January, EBay projected a first-quarter profit between 50 cents and 51 cents a share with $3.05 billion to $3.15 billion of revenue. Those numbers were below analysts' average estimates at the time.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com

--George Stahl contributed to this report.

Stocks mentioned in the article : eBay Inc, Amazon.com, Inc.
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Financials ($)
Sales 2016 8 990 M
EBIT 2016 2 778 M
Net income 2016 2 336 M
Finance 2016 1 113 M
Yield 2016 -
P/E ratio 2016 14,09
P/E ratio 2017 15,49
EV / Sales 2016 3,38x
EV / Sales 2017 3,27x
Capitalization 31 537 M
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Number of Analysts 38
Average target price 32,6 $
Spread / Average Target 16%
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Devin N. Wenig President, Chief Executive Officer & Director
Thomas J. Tierney Non-Executive Chairman
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Stephen Fisher Chief Technology Officer & Senior Vice President
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