eBay Raises Outlook as Profit Climbs, Growth Cools
Operating margin expanded four percentage points to 21.6% in the second quarter.
The online marketplace eBay Inc. (EBAY) reported 15% revenue growth as higher U.S. merchandise volume and advertising sales powered another quarter of double-digit expansion, though growth eased from the start of the year.
Revenue reached $3.134 billion, up 1.5% sequentially, after rising 19% year over year in the first quarter. Gross merchandise volume increased 15% to $22.398 billion, slowing from 18% growth in the prior period.
U.S. GMV rose 24% to $11.688 billion, while international growth cooled to 6% from 10% in the first quarter. Active buyers held at 136 million sequentially and increased 2% from a year earlier, an improvement from 1% growth in each of the preceding four quarters. International markets contributed 44% of revenue, down from 49% a year earlier.
Continuing-operations net income increased 51% to $552 million, and diluted earnings rose 56% to $1.21 a share. Adjusted earnings climbed 17% to $1.60 a share as non-GAAP operating margin edged up to 28.5%. Gross profit increased 16% to $2.302 billion, with gross margin rising about one percentage point to 73.5%.
First-party advertising revenue rose 25% to $570 million, helping total advertising revenue reach $596 million, or 2.7% of GMV. eBay Live GMV grew roughly eightfold and posted another record quarter. Transaction losses increased 55% to $133 million, outpacing revenue growth.
Continuing-operations cash flow swung to a $549 million inflow from a $340 million outflow a year earlier, while free cash flow totaled $326 million. Capital spending more than doubled to $223 million. The company repurchased $310 million of shares, down from $624 million, and paid $138 million in dividends.
eBay raised its full-year revenue and earnings outlook and projected third-quarter revenue of $3.07 billion to $3.12 billion, representing 8% to 10% FX-neutral growth. Its GMV forecast of $22.0 billion to $22.4 billion implies 10% to 12% growth, below the second quarter’s 14% FX-neutral pace. Adjusted earnings are expected at $1.36 to $1.42 a share.
The forecast includes Depop, which eBay acquired after the quarter for $1.4 billion in cash, including preliminary adjustments, compared with the previously announced $1.2 billion purchase price. The acquisition adds another growth engine as eBay’s core revenue and merchandise-volume gains moderate.