eBay enjoys solid Q2 sales, buyer number gains but shares fall on tepid Q3 forecast
eBay warned on Thursday that current Q3 adjusted profit could fall below analysts’ estimates, as it continues to invest heavily in marketing and revamping its platforms to attract more shoppers. Despite Q2 sales and earnings coming in just ahead of analysts’ view, the negative Q3 news sent its shares down more than 5% after hours.
The online retailer and auction giant said the total of goods sold on its websites (gross merchandise volume, or GMV) and number of active buyers grew in Q2.
For the quarter ended June 30, GMV increased 3% (up 5% currency neutral) to $21.5bn. Analysts had expected $21.46bn. Revenue for the quarter lifted 4.4% (+7% currency neutral) to $2.3bn, beating analysts’ estimates of $2.31bn.
In Q2, eBay added 2m active buyers across its platforms, for a total of 171m global active buyers.
However, Q2 net income from continuing operations slumped 93.8% to $27m/$0.02 per diluted share, negatively impacted by a non-cash income tax charge of $311m related to the ongoing realignment of its legal structure. Excluding items, eBay earned 45 cents per share, in line with estimates.
Sales and marketing costs weighed on the quarter, rising 2.4% to $637m.
The online marketplace is making a big push to catch up with major rivals such as Amazon, spending big on marketing campaigns as it works to distinguish itself as a go-to destination for unique items rather than commodity products.
“Our focus continues to be on improving the customer experience, and we won’t hesitate to trade off short-term results when necessary,” chief executive Devin Wenig said on a call with analysts.
Earlier he said: ”In Q2, eBay delivered strong top and bottom line financial results, led by Marketplace acceleration.
”During the past two years, we have made significant progress to modernise eBay and drive growth by improving the customer experience, creating a product catalogue that covers more than half of our inventory, and sharpening the eBay brand. We are on track and focused on creating an even stronger eBay for years to come.”
eBay is in the process of rebuilding its online platform with listings that now use highly organised data to improve search relevancy and conversion rates. The effort also aims to stimulate faster user-growth and lower the cost of traffic acquisition.
Shoppers so far have responded well to eBay’s new home page, showing lower bounce rates and better engagement, Wenig added.
For the current Q3 ending in October, eBay expects its per-share earnings to range 46-48 cents, with revenue ranging $2.35bn-$2.39bn. Analysts expected revenue of $2.32bn. eBay expects full-year earnings to range $1.98-$2.03 per share, with revenue of $9.3bn-$9.5bn. Analysts expect earnings of $2.00