EBay Profit Top Estimates; Stock Down On Weak Outlook

(RTTNews) - Online auctioneer eBay Inc. (EBAY), on Wednesday reported a 15 percent increase in third-quarter profit, driven by continued growth in its PayPal payment systems business and marketplaces sites. Results also reflect the sale of its investments in RueLaLa and ShopRunner sites, with quarterly earnings topping Wall Street estimates by a penny and revenues in line with expectations.

Moving forward, eBay provided a weak guidance for the fourth quarter, sending its shares down 4 percent in after-hours trade on the Nasdaq.

eBay is a leading e-commerce site and also owns payment processor PayPal, while its results broadly reflect consumer sentiment. Since a large part of transactions on its websites are fixed-price, it rivals those like Amazon.com Inc. and retail giant Wal-Mart Stores.

During the quarter, revenue from eBay's PayPal unit grew 19 percent to $1.6 billion year-over-year. PayPal gained 5 million active registered accounts and ended the quarter with 137 million accounts, a 17 percent increase.

eBay also benefited from growing demand for online merchandise. Revenue from marketplaces business, which includes its namesake online e-commerce website, rose 12 percent to $2 billion. Marketplaces gained 3.9 million active users and ended the quarter with 124 million, a 14 percent increase.

On the whole, eBay's third-quarter revenue grew 14 percent to $3.9 billion from $3.4 billion last year. On average, 36 analysts polled by Thomson Reuters estimated revenue of $3.9 billion for the quarter.

The San Jose, California-based company posted quarterly net income of $689 million or $0.53 per share, compared with $597 million or $0.45 per share last year.

Results for the recent quarter included $75 million gains related to the sale of its investments in RueLaLa and ShopRunner sites.

Excluding items, adjusted earnings for the quarter were $837 million or $0.64 per share, compared with $718 million or $0.55 per share a year ago. Thirty-eight analysts had a consensus earnings estimate of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

Operating margin for the quarter climbed to 20.5 percent from 19.6 percent last year.

For the fourth quarter, eBay expect earnings in the range of $0.67 to $0.69 per share, adjusted earnings of $0.79 to $0.81 per share and revenue of $4.5 billion to $4.6 billion. Analysts expect earnings of $0.83 per share on revenue of $4.64 billion for the quarter.

Last month, eBay agreed to buy global payments platform Braintree for about $800 million. Braintree will join eBay's PayPal business unit and is expected to enhance PayPal's presence in the mobile payments market.

eBay stock closed Wednesday at $53.52, down $0.45 or 0.83%, on a volume of 17.5 million shares on the Nasdaq. In after hours, the stock dropped $2.52 or 4.71%, to trade at $51.00. In the past 52-week period, the stock trended in a range of $45.66 - $58.04, with a three-month average volume of 9.42 million shares.