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eBay (EBAY) Q4 Earnings Match Estimates, Revenues Surpass
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eBay Inc. (EBAY - Free Report) reported decent fourth-quarter 2017 results, with earnings matching the Zacks Consensus Estimate and revenues beating the same by a slight margin. Pro forma earnings of 59 cents improved 9% year over year.
Gross revenues of $2.6 billion were up 9% on a year-over-year basis (up 7% on an Fx-neutral basis) and within the guided range of $2.58-$2.62 billion.
Shares gained 8.4% in after-hours trading in response to the company’s strong revenue growth. The stronger-than-expected growth in core Marketplace and strong full-year guidance also helped the share price to surge.
On the call, management sounded impressed with the progress of the company’s transformation and the positive response of customers to it. eBay is leveraging on its structured data and Artificial Intelligence (AI) strength to build product catalogs, enhance mobile platform, roll out new browse-inspired shopping journeys, enhance customer-to-customer (C2C) business and strengthen its brand.
It accelerated its AI efforts through structured data, personalization, image search technology, and customer support initiatives in several areas.
Overall, we remain positive about eBay’s replatforming and brand enhancement initiatives. Its unique capabilities backed by technological improvements give it an edge over competitors such as Etsy (ETSY - Free Report) , Alibaba (BABA - Free Report) and Facebook .
However, expected results may take some time to show up due to weak global economy, slow e-commerce growth and increasing competition. In the past 12-months, the stock has gained 29% underperforming its industry’s growth of 67.9%.
Revenues and GMV
In the fourth quarter, the Marketplace platform contributed $23 billion of gross merchandise volume (GMV) and $2.1 billion of revenues. Marketplace GMV grew 9% year over year on a reported basis and 6% on an FX-Neutral basis. StubHub contributed $1.4 billion of GMV, up 16% on a year-over-year basis, and revenues of $307 million, up 10% year over year.
Classifieds platforms also performed well with contribution of $244 million of revenues, up 7% both on a year-over-year as well as on a FX-Neutral basis, driven primarily by strength in Germany.
Total GMV of $24.4 million in the fourth quarter grew 10% year over year on a reported and 7% on a Fx-neutral basis.
During the quarter, global active buyers/customers increased 5% from the year-ago quarter to 170 million.
Margins and Income
Pro forma gross margin for the quarter was 78.1%, down 20 basis points (bps) year over year. Cost of revenues increased 9.8% on a year-over-year basis primarily due to first-party inventory program in Korea.
Adjusted operating expenses of $1.2 billion increased 11.1% from the prior-year quarter. Pro-forma operating margin was 30.9%, down 100 bps year over year.
GAAP net income was ($2.6) billion ($2.51 cents per share) compared with $5.9 million ($5.30 per share) in the year-ago quarter.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with total debt of $10 billion eclipsing cash and short-term investments balance of $5.9 billion.
eBay generated $988 million in cash from operating activities and spent $192 million on capex. Free cash flow during the quarter was $796 million and the company repurchased shares worth $922 million.
Outlook
For the first quarter of 2018, eBay expects revenues to grow 7-9% on an Fx-neutral basis to $2.57-$2.61 billion, better than the Zacks Consensus Estimate of $2.39 billion. Non-GAAP earnings are expected within 52-54 cents. The mid-point of the range is lower than the Zacks Consensus Estimate of 51 cents. GAAP earnings per share from continuing operations are expected in the range of 37-41 cents.
eBay increased its full-year guidance. The company now expects full-year revenues between $10.9 billion and $11.1 billion, up from its previous range of $9.53 billion to $9.57 billion and better than the Zacks Consensus Estimate of $9.57. Adjusted earnings per share are expected between $2.25 and $2.30 compared with its previous range of $1.99-$2.01. The Zacks Consensus Estimate is pegged at $2.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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eBay (EBAY) Q4 Earnings Match Estimates, Revenues Surpass
eBay Inc. (EBAY - Free Report) reported decent fourth-quarter 2017 results, with earnings matching the Zacks Consensus Estimate and revenues beating the same by a slight margin. Pro forma earnings of 59 cents improved 9% year over year.
Gross revenues of $2.6 billion were up 9% on a year-over-year basis (up 7% on an Fx-neutral basis) and within the guided range of $2.58-$2.62 billion.
Shares gained 8.4% in after-hours trading in response to the company’s strong revenue growth. The stronger-than-expected growth in core Marketplace and strong full-year guidance also helped the share price to surge.
On the call, management sounded impressed with the progress of the company’s transformation and the positive response of customers to it. eBay is leveraging on its structured data and Artificial Intelligence (AI) strength to build product catalogs, enhance mobile platform, roll out new browse-inspired shopping journeys, enhance customer-to-customer (C2C) business and strengthen its brand.
It accelerated its AI efforts through structured data, personalization, image search technology, and customer support initiatives in several areas.
Overall, we remain positive about eBay’s replatforming and brand enhancement initiatives. Its unique capabilities backed by technological improvements give it an edge over competitors such as Etsy (ETSY - Free Report) , Alibaba (BABA - Free Report) and Facebook .
However, expected results may take some time to show up due to weak global economy, slow e-commerce growth and increasing competition. In the past 12-months, the stock has gained 29% underperforming its industry’s growth of 67.9%.
Revenues and GMV
In the fourth quarter, the Marketplace platform contributed $23 billion of gross merchandise volume (GMV) and $2.1 billion of revenues. Marketplace GMV grew 9% year over year on a reported basis and 6% on an FX-Neutral basis. StubHub contributed $1.4 billion of GMV, up 16% on a year-over-year basis, and revenues of $307 million, up 10% year over year.
Classifieds platforms also performed well with contribution of $244 million of revenues, up 7% both on a year-over-year as well as on a FX-Neutral basis, driven primarily by strength in Germany.
Total GMV of $24.4 million in the fourth quarter grew 10% year over year on a reported and 7% on a Fx-neutral basis.
During the quarter, global active buyers/customers increased 5% from the year-ago quarter to 170 million.
Margins and Income
Pro forma gross margin for the quarter was 78.1%, down 20 basis points (bps) year over year. Cost of revenues increased 9.8% on a year-over-year basis primarily due to first-party inventory program in Korea.
Adjusted operating expenses of $1.2 billion increased 11.1% from the prior-year quarter. Pro-forma operating margin was 30.9%, down 100 bps year over year.
GAAP net income was ($2.6) billion ($2.51 cents per share) compared with $5.9 million ($5.30 per share) in the year-ago quarter.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with total debt of $10 billion eclipsing cash and short-term investments balance of $5.9 billion.
eBay generated $988 million in cash from operating activities and spent $192 million on capex. Free cash flow during the quarter was $796 million and the company repurchased shares worth $922 million.
Outlook
For the first quarter of 2018, eBay expects revenues to grow 7-9% on an Fx-neutral basis to $2.57-$2.61 billion, better than the Zacks Consensus Estimate of $2.39 billion. Non-GAAP earnings are expected within 52-54 cents. The mid-point of the range is lower than the Zacks Consensus Estimate of 51 cents. GAAP earnings per share from continuing operations are expected in the range of 37-41 cents.
eBay increased its full-year guidance. The company now expects full-year revenues between $10.9 billion and $11.1 billion, up from its previous range of $9.53 billion to $9.57 billion and better than the Zacks Consensus Estimate of $9.57. Adjusted earnings per share are expected between $2.25 and $2.30 compared with its previous range of $1.99-$2.01. The Zacks Consensus Estimate is pegged at $2.
eBay Inc. Price, Consensus and EPS Surprise
eBay Inc. Price, Consensus and EPS Surprise | eBay Inc. Quote
Zacks Rank
Currently, eBay carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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