In its last quarter before the spin off of PayPal as a separate company, e-commerce giant eBay today reported its Q2 earnings for the quarter that ended June 30.
The company reported total revenues of $4.4 billion and diluted earnings per share (non-GAAP) of $0.76, excluding eBay Enterprise (which eBay says it is in the process of selling for $925 million). Analysts had expected sales of $4.5 billion with an EPS of $0.73, but eBay says those estimates included eBay Enterprise — meaning that eBay beat expectations on both revenue and EPS.
The company says that eBay Enterprise on its own made $300 million of revenue in the quarter. It is now being represented as discontinued operations. In a seperate statement, the company said that Sterling Partners, Longview Asset Management, and Innotrac Corporation, a Sterling Partners portfolio company, together in partnership with companies owned by the Permira Funds would pay $925 million for the division.
“Based on the expected sales proceeds, the Company recorded an impairment of eBay Enterprise goodwill in the amount of approximately $786 million,” the company noted.
GAAP net income excluding this was $682 million.
“We are very pleased with our overall Q2 performance. PayPal and eBay both delivered strong Q2 results and have strong momentum. Dan, Devin and their respective teams are executing well and are prepared to create the next great chapter for PayPal and eBay,” said eBay Inc. President and CEO John Donahoe in a statement.
Drilling down into specific segments, PayPal’s revenues were $2.3 billion on payment volume of $66 billion. The latter figure is up 20% on a year ago.
There is some evidence in PayPal’s numbers that speak to the company having continued to grow its business independent of eBay: merchant services were volume up 27% while interestingly on eBay volume it was down 1%. Volume in eBay Marketplaces is now 22% of PayPal’s total volume, or $14.5 billion. PayPal grew new active accounts 11% to 169 million and processed 1.1 billion transactions, the company noted.
That will also be underscored by the company moving deeper into new categories of payments like money transfers, specifically by way of its acquisition of Xoom.
“We anticipate that acquiring Xoom will help accelerate PayPal’s entry into the $600 billion global remittance market, and that adding additional services to our technology platform will allow PayPal to amplify its consumer flywheel, creating a more powerful network effect,” the company noted.
eBay itself, the bigger part of the business, didn’t fare as well. It noted that eBay Marketplaces gross merchandise value declined 2%, “with the continuing strength of the dollar significantly impacting results.” On an FX-neutral basis, eBay says it grew 6%. Total revenue for the quarter was $2.1 billion, down 3% (up 5% on an FX-neutral basis).
“I am encouraged by the state of our business and the progress against our strategy. As eBay celebrates its 20th anniversary this year, we are making rapid changes to position the company for the future,” said Devin Wenig, President of eBay, in a statement. “My goal, and that of the entire leadership team, is for eBay to be the best global marketplace and a great enduring Internet business. As we move into our next chapter, we also look forward to continuing our strong partnership with Dan and the PayPal team.”
eBay also gave an update on full year 2015 results:
It expects PayPal Holdings, Inc. net revenues to grow 15% – 18% on an FX-neutral basis with GAAP earnings per diluted share in the range of $0.89 -$0.95 and non-GAAP earnings per diluted share in the range of $1.23 – $1.27, not including the Xoom business.
Meanwhile, eBay expects net revenues to grow 3% – 5% on an FX-neutral basis with GAAP earnings per diluted share in the range of $1.40 – $1.45 and non-GAAP earnings per diluted share in the range of $1.72 – $1.77.
More to come after the call.
Updated with clarification on estimates and revenues in first paragraph.