EBay reported its Q4 and full-year earnings after market close today, where it reported sales of $2.6 billion and adjusted earnings per share of $0.59 for the quarter (versus $0.54 a year ago), and $9.6 billion in revenues for the year. While the holiday season, which fell into the quarter that ended December 31, is traditionally a huge time for e-commerce companies, in the case of this e-commerce giant, it fell just short of meeting estimates: analysts were expecting sales of $2.61 billion and earnings per share of 59 cents.
Notably, eBay posted a GAAP net loss of $2.6 billion from continuing operations, “primarily driven by a $3.1 billion tax charge attributable to the enactment of the Tax Cuts and Jobs Act.”
Still, the company tried to sound an upbeat tone, pointing to active buyer growth of five percent to 170 million. Gross Merchandise Volume, or the total amount spent on its platform, was $24.425 billion versus $22.275 billion for the same quarter a year ago.
“Q4 was a record quarter for eBay, representing the fifth quarter in a row of volume acceleration in our US Marketplace,” said Devin Wenig, president and CEO of eBay, in a statement. “We have made great progress transforming eBay while delivering meaningful growth and we expect further acceleration in 2018 as we continue to execute our strategy.”
Still, the earnings guidance that eBay is providing for the next quarter, Q1 of 2018, and the full year are not particularly aggressive. The company expects net revenue between $2.57 billion and $2.61 billion in Q1 but with lowered EPS versus this quarter of between $0.52 and $0.54. It expects full-year sales of between $10.9 billion and $11.1 billion. The company repurchased $922 million of stock in the last quarter, and has now set out a plan to repurchase $6 billion more.
As you might expect, eBay’s Marketplace business accounted for the vast majority of its GMV and overall revenues in Q1, respectively $23 billion and $2.1 billion. The GMV was up 9 percent over a year ago in terms of reported numbers, but with currency exchange adjustments it was up only 6 percent.
StubHub, the company’s ticketing business that many keep expecting to see play a bigger role in the business, remains a marginal but growing part of it. Its GMV was $1.4 billion, up 16 percent on reported numbers and 15 percent with currency adjustments. Classifieds were an even smaller part of the eBay’s earnings, with revenues of $244 million, with Germany (eBay’s second largest market after the U.S.) the strongest market for classifieds.
The earnings come on the heels of a lackluster Q3 for eBay, where sales of $2.4 billion and EPS $0.48 fell well within analyst estimates but didn’t underscore any dramatic growth for the company, which added 2 million customers in that quarter.
It’s interesting to compare eBay to the likes of Amazon and Alibaba. Once a stablemate and potential rival of eBay’s in the first wave of large e-commerce hits, Amazon has gone on to diversify massively into a multi-service loyalty program, artificial intelligence and gadgets to make AI a part of everyone’s home life, original content, cloud services targeting enterprises and other businesses, and more. Alibaba has followed a similar trajectory, piggybacking on the massive growth of its home market of China, to boot.
eBay’s biggest and most successful expansion beyond its core auction business and marketplace was probably acquiring PayPal, which it later divested and, as you can see from its earnings earlier today, is now bigger than the company that once owned it. Even in its core business of selling goods online, some have described it as eBay struggling for relevancy as consumer and sellers in categories like fashion have moved beyond its own efforts.
More to come.