EBay Beats On EPS Of $0.68, Misses On Sales Of $4.35B; Shares Fall On Lower Forecasts

E-commerce giant EBay, soon to be split into two businesses, today reported its third-quarter earnings. The company reported revenues of $4.4 billion (or, $4.353 billion, to be exact), growing 12% on a year ago, on non-GAAP earnings per share of $0.68.

This beat estimates on EPS but narrowly missed on sales (but, yes, beat if you rounded up, as eBay has). Analysts were expecting revenues of $4.37 billion and earnings per share of $0.67. This met on sales and beat on EPS eBay’s own expectations that it announced: it had been anticipating sales of $4.3 to $4.4 billion and non-GAAP EPS between $0.65 and $0.67.

The company is currently seeing shares falling, currently down 3.46% in after-hours trading, on the back of the revenue miss and lowered forecasts for the fourth quarter and the full year. Full-year sales it says will be between $17.85 billion and $17.95 billion; versus earlier estimates of $18 billion to $18.3 billion. Q4 sales will be $5 billion; analysts expect $5.16 billion.

“Rapidly changing competitive environments in commerce and payments underscore the opportunities for eBay and PayPal, and highlight how each business will benefit from the focus and agility of being an independent company,” said eBay Inc. President and CEO John Donahoe in a statement. “As we prepare to separate eBay and PayPal in 2015, our teams are focused on strong execution to ensure each business is set up for long-term success.”

Nevertheless, the company is now bracing itself for a trickier holiday season.

Breaking out performance of the company’s two main segments:

— PayPal continues to put its best mobile foot forward. It is now on track to process 1 billion mobile transactions in 2014, with mobile payments this quarter at $12 billion, up 72%. Its net total payment volume for the quarter was up 29% and revenues were $2 billion. It now has 157 million registered accounts, growth of 14%. Mobile is still very small, regardless, with only 2.9 million active mobile accounts.

— Marketplaces gross merchandise volume (GMV) was up 9%, with the international leading that at 11% and U.S. up 7%. Revenue was at $2.2 billion. Marketplaces now has 152 million active buyers, up 13%.eBay Enterprise gross merchandise sales (GMS) grew 14%. Revenue grew to $259 million. Enterprise enabled its clients to grow same-store sales 13%.

In the last quarter, Q2, eBay had mixed results, with sales of $4.366 billion and non-GAAP earnings per share of $0.69 — missing on revenues but beating on profits.

eBay announced at the end of September that its payments division PayPal would become a publicly traded company separated from Marketplace and eBay Enterprise to give the divisions “sharper strategic focus,” targeting the process to be completed by the middle of 2015. Activist investor Carl Icahn had advocated hard for the split, arguing that it would help the two parts of the company grow faster.

While eBay regularly resisted his calls, in the end it announced the decision itself. There is some logic to the argument that as a very large company, with two distinct parts, eBay was not very good at growth. As a point of comparison, Amazon’s business growth rates have been at around 25%, while eBay’s have been around 10%.

“eBay and PayPal are two great businesses with leading global positions in commerce and payments,” said eBay Inc. President and CEO John Donahoe in a statement at the time of the announcement. “For more than a decade eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value. However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.”