eBay released their quarterly earnings for Q3 2017. Going into the busy holiday season, the company was mostly flat during Q3 and is expecting a modest increase for Q4.
Investors were not totally thrilled with the numbers, but fundamentally, the company is on sound footing.
Press Release from eBay
Q3 Revenue of $2.4 billion; GMV of $21.7 billion.
- Gross Merchandise Volume of $21.7 billion
- Revenue of $2.4 billion
- Both GAAP and Non-GAAP EPS per diluted share of $0.48 on a continuing operations basis
- Repurchased $907 million of common stock
eBay Inc., a global commerce leader, delivered gross merchandise volume (GMV) for the quarter ended September 30, 2017 of $21.7 billion, increasing 8% on an as-reported basis and 7% on a foreign exchange (FX) neutral basis. Revenue for the quarter was $2.4 billion, up 9% on an as-reported basis and 8% on an FX-Neutral basis.
During the quarter, eBay delivered GAAP net income from continuing operations of $523 million, or $0.48 per diluted share, and Non-GAAP net income from continuing operations of $514 million, or $0.48 per diluted share. The company generated $877 million of operating cash flow and $720 million of free cash flow from continuing operations while also repurchasing $907 million of its common stock in the quarter.
“In Q3, we drove acceleration across all three of our platforms, delivering strong top and bottom line financial results and our fastest volume growth in over three years,” said Devin Wenig, President and CEO of eBay Inc. “Our customers are responding to the significant product enhancements we have been making, and this is reflected in our results.”
Underlying total eBay Inc. performance, the Marketplace platforms delivered $20.5 billion of GMV and $1.9 billion of revenue. Marketplace GMV was up 9% on an as-reported basis and 7% on an FX-Neutral basis, driven by acceleration in the U.S. and Europe, which led to revenue growth of 8% on an as-reported basis and 7% on an FX-Neutral basis. StubHub drove GMV of $1.2 billion, up 2%, and revenue of $275 million, up 5%, driven by continued growth in its international business. Classifieds growth accelerated in the quarter with revenue of $235 million, up 19% on an as-reported basis and 13% on an FX-Neutral basis, driven primarily by strength in Germany.
In the third quarter, eBay added nearly two million active buyers across its platforms, for a total of 168 million global active buyers. This figure has been adjusted to exclude domestic active buyers in India following the sale of eBay’s India business to Flipkart. Marketplace continued to enhance user experiences with product changes including grouped listings, simplified selling flows and eBay Authenticate. eBay activated its brand platform with campaigns across the U.S., U.K. and Australia during the quarter and was once again recognized in Interbrand’s Best Global Brands report. StubHub continued to strengthen its partnership with Major League Baseball and is now integrated with all 30 teams. Additionally, the company will now serve as the official secondary ticketing partner to the T-Mobile Arena, Las Vegas’ newest sports and entertainment venue.
Third Quarter Financial Highlights (presented in millions, except per share data and percentages)
|GAAP – Continuing Operations|
|Income from continuing operations||$523||$418||$105||25%|
|Earnings per diluted share from continuing operations||$0.48||$0.36||$0.12||32%|
|Non-GAAP – Continuing Operations|
|Earnings per diluted share||$0.48||$0.45||$0.03||7%|
Other Selected Financial and Operational Results
- Operating margin — GAAP operating margin decreased to 24.0% for the third quarter of 2017, compared to 24.4% for the same period last year. Non-GAAP operating margin decreased to 29.6% in the third quarter of 2017, compared to 29.9% for the same period last year.
- Taxes — The GAAP effective tax rate for continuing operations for the third quarter of 2017 was 25%, compared to 22% for the third quarter of 2016. The non-GAAP effective tax rate for continuing operations for the third quarter of 2017 was 23%, compared to 22% for the third quarter of 2016.
- Cash flow — The company generated $877 million of operating cash flow from continuing operations and $720 million of free cash flow from continuing operations during the third quarter of 2017.
- Stock repurchase program — The company repurchased approximately $907 million of its common stock, or 25 million shares, in the third quarter of 2017. The company’s total repurchase authorization remaining as of September 30, 2017 was $2.6 billion.
- Cash and cash equivalents and non-equity investments — The company’s cash and cash equivalents and non-equity investments portfolio totaled $11.4 billion as of September 30, 2017.
- Fourth quarter 2017 — The company expects net revenue between $2.58 billion and $2.62 billion, representing FX-Neutral growth of 6% – 8%, with GAAP earnings per diluted share from continuing operations in the range of $0.40 – $0.45 and non-GAAP earnings per diluted share from continuing operations in the range of $0.57 – $0.59.
- Full year 2017 – The company expects net revenue between $9.53 billion and $9.57 billion, representing Organic FX-Neutral growth of approximately 7%, with GAAP earnings per diluted share from continuing operations in the range of $1.85 – $1.90 and non-GAAP earnings per diluted share from continuing operations in the range of $1.99 – $2.01.
Quarterly Conference Call and Webcast
eBay Inc. will host a conference call to discuss third quarter 2017 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company’s Investor Relations website at https://investors.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.
eBay Inc. uses its Investor Relations website at https://investors.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.
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