EBay Profit Tops Estimate; Revenue Falls Shy

(RTTNews) - E-commerce giant eBay Inc. (EBAY) said Wednesday after the markets closed that its third quarter profit fell 2% from last year, as higher costs and expenses more than offset a 12% increase in revenue.

The company's quarterly earnings per share, excluding items, managed to beat analysts' estimate, but its quarterly revenue fell shy of analysts' forecast.

At the same time, the company gave a downbeat outlook for the fourth quarter, which includes the all important holiday season, and lowered its full year revenue guidance.

"Rapidly changing competitive environments in commerce and payments underscore the opportunities for eBay and PayPal, and highlight how each business will benefit from the focus and agility of being an independent company," said eBay President and CEO John Donahoe.

eBay shares are currently losing 1.47% in after hours trading after closing the day's regular trading session at $50.24, down 35 cents. The shares trade in a 52-week range of $48.06 to $59.70.

eBay said late last month that its Board of Directors has approved a plan to separate eBay and PayPal businesses into independent publicly traded companies in the second-half of 2015. Activist investor Carl Icahn had put pressure on the company earlier this year to spin off its PayPal unit.

Third quarter net revenues from the company's Marketplaces business, which consists of eBay, Shopping.com, StubHub, eBay Classifieds and other e-commerce sites, rose 6% to $2.2 billion.

Gross merchandise volume in the third quarter increased 9% year over year to $20.1 billion. Marketplaces mobile volume grew 41% to $7 billion.

Marketplaces gained 3.4 million new buyers to end the quarter with 152 million active buyers, up 13% from a year earlier.

Revenue from the company's PayPal business increased 20% to $1.95 billion in the third quarter. PayPal gained 4.4 million new active registered accounts in the period and ended the quarter with 157 million active registered accounts, a 14% increase over last year. PayPal's net total payment volume, or TPV, jumped 29% to $56.6 billion in the third quarter.

For the third quarter ended September 30, 2014, San Jose, California-based eBay reported net income for the third quarter of of $673 million or $0.54 per share, compared to $689 million or $0.53 per share for the year-ago quarter.

Excluding items, adjusted net income for the third quarter was $848 million or $0.68 per share, compared to $837 million or $0.64 per share in the prior year quarter.

On average, 38 analysts polled by Thomson Reuters expected the company to earn $0.67 per share for the third quarter. Analysts' estimates typically exclude special items.

Operating margin for the quarter narrowed to 17.9% from 20.5% a year ago, while adjusted operating margin shrank to 23.7% from 26.8% last year.

Net revenue for the third quarter rose 12% to $4.35 billion from $3.89 billion in the same quarter last year. Thirty-six analysts had a consensus revenue estimate of $4.37 billion for the third quarter.

Looking forward to the fourth quarter, the company forecasts net revenue of $4.85 billion to $4.95 billion, earnings of $0.73 to $0.76 per share and adjusted earnings of $0.88 to $0.91 per share. Analysts currently expect the company to earn $0.91 per share on revenue of $5.16 billion for the fourth quarter.

The company lowered its full year 2014 revenue guidance to a range of $17.85 billion to $17.95 billion from its prior guidance of $18.00 billion to $18.30 billion. Analysts currently expect the company to post revenue of $18.15 billion for the full year 2014.