eBay, Inc. Picks Up the Pace

Image source: eBay.

eBay (EBAY +0.22%) released another stronger-than-expected quarter Wednesday after the market close, and shares of the online marketplace were up more than 6% in early after-hours trading. Before we dig deeper into eBay's latest outperformance, let's look at its headline numbers:

eBay results: The raw numbers

DATA SOURCE: EBAY INC.

What happened with eBay this quarter?

• These results were significantly above what eBay admitted last quarter was potentially conservative guidance, which called for revenue of $2.14 billion to $2.19 billion, and adjusted earnings per share of $0.40 to $0.42.
• Revenue climbed 7% on a currency-neutral basis.
• Gross merchandise volume (GMV) increased 4% year over year as reported, to $20.9 billion, and would have grown 6% excluding currencies.
• That included:
• A 1% increase (3% at constant currency) in marketplaces GMV, to $19.8 billion, which resulted in revenue of $1.8 billion.
• An accelerated 35% increase in StubHub GMV, to $1.1 billion, which resulted in revenue of $225 million, driven by broad strength across genres and continued product innovation.
• Classifieds platforms grew revenue 15%, to $207 million, thanks to strength in automotive and real estate verticals, with particular strength in Germany and Canada.
• eBay's active buyers increased 4% year over year, to 164 million, up from 162 million last quarter.
• eBay repurchased 20.8 million shares during the quarter for $500 million, leaving $0.3 billion remaining under its current repurchase authorization. However, eBay's board also approved an additional $2.5 billion stock-repurchase program with no expiration.
• The company generated $764 million in operating cash flow, and $617 million in free cash flow from continuing operations.
• It ended the quarter with $10.4 billion in cash, equivalents, and non-equity investments, and just over $9 billion in long-term debt.

What management had to say 

eBay CEO Devin Wenig stated:

Q2 was another good quarter where we delivered strong results and had acceleration in growth. We are now one year into executing our strategy to provide the best choice, the most relevance, and the most powerful selling platform, and there are signs of momentum in our business. We continue to invest in our platforms to ensure eBay is a global commerce leader for years to come.

Looking forward 

For the current quarter, eBay expects revenue between $2.16 billion and $2.19 billion, good for year-over-year currency-neutral growth of 6% to 7%. That should translate to adjusted earnings per share in the range of $0.42 to $0.44. For perspective, while we don't pay close attention to Wall Street's near-term demands, analysts' consensus estimates called for third-quarter revenue of just $2.14 billion, but also earnings per share near the high end of eBay's expected range.

For the full year of 2016, eBay now expects revenue between $8.85 billion and $8.95 billion (up from previous guidance for between $8.6 billion and $8.8 billion), or currency-neutral growth of 5% to 6% over 2015. eBay also anticipates full-year earnings per diluted share from continuing operations of $1.85 to $1.90. Thanks in part to eBay's outperformance in Q2, Wall Street was modeling lower full-year earnings of $1.86 per share, and revenue of $8.82 billion. 

To be fair, this is the fourth consecutive quarter eBay has beaten its own guidance since it split from PayPal (PYPL 1.62%) exactly one year ago. So few will be shocked if it's underpromising with the intention of once again overdelivering when next quarter's report rolls around. But considering its Q2 results and forward guidance are already more than enough to appease the market as it stands, it's no surprise to see shares of eBay flirting with a fresh 52-week high right now.

Editor's note: This article has been corrected to state that the company has approved an additional $2.5 billion stock-repurchase program.