EBay
shares are losing ground in late trading after the online e-commerce marketplace provided disappointing forecasts for the December holiday quarter, citing signs of weakness in its European business.
For the third quarter, eBay (ticker: EBAY) posted revenue of $2.5 billion, up 5% and in line with Wall Street estimates. On an adjusted basis, the company earned $1.03 a share, beating consensus estimates by three cents. Under generally accepted accounting principles, the company earned $2.46 a share. Gross merchandise value was $18 billion, up 2%, or flat adjusted for currency.
“Overall it was another quarter of strong delivery,” CEO Jamie Iannone said in an interview with Barron’s. “We’re seeing some nice resilience in our business, and we’re making some great innovations.”
He said eBay is seeing considerable traction for a feature that uses artificial intelligence to help sellers write product descriptions, and that it is testing a version that will do the same thing simply from a seller’s photograph.
At the same time, he said, the company is seeing substantial growth for eBay Live. The company’s live-events platform had 1,000 events over the last quarter, up four times from the June quarter. And he said eBay’s first-party ad platform continues to grow robustly, with $345 million in revenue in the quarter, up 39%.
The problem is that management’s fourth-quarter guidance disappointed the Street. EBay expects fourth-quarter revenue of between $2.47 billion and $2.53 billion, with growth on a currency- adjusted basis ranging from a 1% decline to a 2% increase. The company forecasts profits of $1 to $1.05 a share, while Street estimates had called for $2.6 billion in revenue and profits of $1.05 a share.
EBay shares were down 6.7% to $38.05 in late trading.
Iannone said eBay saw “a little bit of softening in September and October,” in particular in the U.K. and Germany, noting that eBay generates more than half of its revenue from outside the U.S.
Still, he said the company’s business is generally more resilient than those of other sellers, with a focus on used and refurbished goods.
EBay continues to aggressively return cash to shareholders, buying back $651 million of stock in the latest quarter. Iannone said the company has committed to returning 125% of free cash flow to holders through 2024. EBay has returned $5.2 billion to holders through a combination of buybacks and dividends since the start of 2022, he said.
Write to Eric J. Savitz at [email protected]
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