EBay lowers guidance, pledges more marketing, site investment
EBay Inc. Wednesday reported first quarter gross merchandise volume rose 2% on an as-reported basis and 5% on a currency neutral basis to $20.9 billion, driven by growth of active buyers, continued expansion of new user experiences and brand advertising. That fell short of FactSet analysts' average estimate of $21.06 billion, Reuters reports.
Q1 revenue rose 3.7% to $2.2 billion, up 4% on an as-reported basis and 7% on a currency-neutral basis, according to a press release, in line with analyst expectations cited by Reuters for $2.21 billion. Ebay's net income from continuing operations was $1.0 billion, up from $482 million in the year-ago period. The company added two million active buyers across its platforms, growing 4% for a total of 169 million global active buyers.
With continued investments in its homepage, mobile site and marketing, the company lowered its guidance for adjusted profit in its second quarter to between 43 cents and 45 cents per share, missing analysts expectations for a profit of 47 cents per share, according to Thomson Reuters I/B/E/S. With expectations that its efforts will bear fruit in the second half of the year, the company maintained its earlier forecast for full-year adjusted profit of $1.98 per share to $2.03 per share.
On a conference call with analysts late Wednesday, CEO Devin Wenig touted eBay’s recent changes, including a more discovery-based home page, updates to its mobile app, a new authentication program to help protect buyers from purchases of fakes and its amped-up delivery program.
Wenig also said the company is on the lookout for more partnership and acquisition opportunities, like its recent tie-up with Indian e-commerce company Flipkart. “We continue to believe there are significant opportunities to expand our business inorganically through our M&A and partnership strategy. We’re continually evaluating opportunities to broaden our reach and our capabilities,” Wenig told analysts, according to a transcript from Seeking Alpha. “We also constantly monitor our existing portfolio of assets, and we take action when we don't see a clear contribution to our strategy or a path to win.”
Partnership, though, doesn’t extend all that much to retailers; Wenig told analysts that brands are increasingly selling directly to consumers via resellers on eBay. “I think that the conversation with brands has definitely changed,” he said. “They’re now looking at a platform that is doing $20 billion a quarter, it has 169 million active buyers and … I expect that will accelerate the pace of brand acquisitions through this year, meaning there will be more brands that sell directly or through resellers on eBay directly.”
In a pointed shot to Amazon, Wenig also touted the company’s delivery prowess, noting that its customers enjoyed speedy shipping even before the launch this summer of expedited shipping for millions of products. “There will be a change in the user experience, where our customers can sort and filter by three days or two days, or even one day. And sometimes they will pay for that, but many times it will be free," he said. "We just think this is a way to stick our competitive advantage right out there and have no questions about why people shop on eBay and why they should.”
- press release via PR Newswire eBay Inc. Reports First Quarter 2017 Results
- Seeking Alpha Earnings Call Transcript eBay's CEO Devin Wenig on Q1 2017 Results
- Reuters EBay's second-quarter profit forecast falls short of estimates
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