eBay Fourth Quarter Earnings Edge Out Analyst Expectations

Andrew Klips  |

eBay Inc. (EBAY) saw shares fall below $10 per share during the financial collapse in late 2008 and into early 2009.  Shares have held steadfast since, rising back to near all-time highs of $59.21 just over 8 years ago.  Those hoping for a big earnings release Wednesday to push the world’s biggest online marketplace owner over the top didn’t get stellar news, but the company did nip past Wall Street expectations on the back of double-digit user growth and gains in mobile usage.

The San Jose, California-based commerce platform and payment company reported fourth-quarter revenue of $4.0 billion, an 18 percent climb from the year prior quarter.  GAAP-basis net income totaled $751 million, or 57 cents per share, compared to $1.98 billion, or $1.51 per share, in Q4 2011.  Net income the year prior period got a huge lift from the sale of Skype to Microsoft (MSFT) in a transaction valued at $8.5 billion.  eBay, who still held a 35% ownership of Skype at the time, made a return of about $1.4 billion on the buy and sell of Skype.

Adjusted (non-GAAP) net income of $927 million, or 70 cents per share, was recorded in the recent quarter.  Analysts were expecting earnings of 69 cents per share and revenue of $3.98 billion.

For the full year, revenue grew to $14.1 billion, a 21 percent improvement from $11.65 billion in 2011.  The company reported net income on a GAAP basis of $2.6 billion, or $1.99 per diluted share, and net income on a non-GAAP basis of $3.1 billion, or $2.36 per diluted share.

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The company’s ECV – the total commerce and payment volume across its Marketplaces GMV, PayPal and GSI global commerce businesses - enabled more than $175 billion of commerce volume in 2012; 18 percent more than the year earlier.

eBay’s mobile business surged more than 100% to $13 billion in 2012 compared to 2011.  Its mobile PayPal segment processed about $14 billion in payment volume, more than 250% greater than 2011’s total.  eBay expects the number to reach $20 billion in 2013, according to Chief Executive Officer and President John Donahoe.

"We had a great finish to an excellent year, with fourth quarter results exceeding our expectations," said Donahoe,. "eBay Marketplaces in particular had a terrific fourth quarter, with growth in the U.S. accelerating three points, outpacing ecommerce."

The company repurchased approximately $256 million of its common stock in the fourth quarter.

Looking ahead, eBay said that it expects first quarter 2013 net revenues in the range of $3.65 billion to $3.75 biillion with GAAP earnings per diluted share in the range of $0.48 - $0.50 and non-GAAP earnings per diluted share in the range of $0.60 - $0.62.  For the full year 2013, eBay guided net revenues in the range of $16.0 billion to $16.5 billion with GAAP earnings per diluted share in the range of $2.23 - $2.29 and non-GAAP earnings per diluted share in the range of $2.70 - $2.75.  Analysts were calling for earnings of $2.74 per share and revenue of $16.3 billion.

The afternoon report was enough to keep shares of EBAY off lows of the day to close at $52.90, representing a gain of 40 cents per share, or 0.75 percent.  It’s not looking like it will be taking the old highs out of Thursday, but shares have still risen 35 percent in the past six months.

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