eBay avoids Europe woes as online marketplaces grow

eBay avoids Europe woes as online marketplaces grow

EBay Inc posted better-than-expected quarterly results as more consumers shopped on its online marketplaces and paid with its PayPal payment service, and the operator of the world's largest online marketplace stuck to its full-year forecasts as it avoided a hit from Europe's economic woes.

EBay said on Wednesday second-quarter revenue jumped 23 per cent to $3.4 billion, while profit climbed 16 per cent to $730 million, or 56 cents per share. That topped Wall Street estimates.

EBay's third-quarter revenue and profit forecasts were slightly below analyst expectations. But the e-commerce giant stuck with its full-year guidance from earlier this year.

EBay shares have slipped in recent weeks on concern a weak European economy might dent buying and selling on the company's online marketplace -- and lucrative cross-border transactions in particular.

However, eBay said its Marketplaces business generated its strongest organic growth since 2006 - and highlighted strong growth in Europe and the Asia-Pacific region.

"The results were very good," said Gil Luria, an analyst at Wedbush Securities. "I don't think anybody in their wildest dreams thought Marketplaces would be growing this fast."

Shares of eBay rose 5.7 per cent to $42.74 in extended trading after the results.

Marketplaces Turnaround

EBay shares have gained more than 30 per cent so far this year, outpacing those of rival Amazon.com, on optimism that growth has resumed at the Marketplaces business and an expansion of PayPal from its online roots into physical stores.

EBay's online marketplaces, the largest in the world, have lagged the growth of e-commerce and Amazon.com for several years. But under Chief Executive John Donahoe, eBay has invested a lot to improve the buying experience on the sites, partly by prodding sellers to provide more services such as free shipping and easier returns.

Earlier this year, Donahoe said Marketplaces had turned the corner.

On Wednesday, eBay said second-quarter gross merchandise volume, or GMV, on its US marketplace was $6.24 billion, excluding vehicle sales. That was up 14 per cent from a year earlier. Mark Mahaney, an analyst at Citi Research, had expected $6.04 billion.

International Marketplaces GMV rose 8 per cent to $9.93 billion in the second quarter, driven by strong growth in Europe and Asia-Pacific.

"Some of the initiatives in the last couple of years have definitely helped," said Aaron Kessler, an analyst at Raymond James. "International was fairly strong - they actually saw an acceleration in International GMV for Marketplaces."

Wedbush's Luria said European consumers may be turning to eBay to save money as the region's economy weakens.

"When consumers are in a pinch they often accelerate the shift of spending online," the analyst added. "They don't go out shopping and stay home and look for the best deals online. eBay is a way to get a deal - the same item at a lower price."

Share this Post