eBay Inc. (EBAY -0.87%) released stronger-than-expected fourth-quarter 2016 results Wednesday after the market closed, and shares are up more than 9% in after-hours trading as of this writing. Let's take a closer look, then, at what drove the online marketplace's stellar holiday report.

View of eBay's Berlin office at night


eBay results: The raw numbers


Q4 2016 Actuals

Q4 2015 Actuals

Growth (YOY)


$2.395 billion

$2.322 billion


Adjusted net income from continuing operations

$601 million

$600 million


Adjusted EPS





What happened with eBay this quarter?

  • By comparison, these results were near the high end of eBay's guidance provided last quarter, which called for revenue of $2.36 billion to $2.41 billion and adjusted earnings per share of $0.52 to $0.54.
  • Based on generally accepted accounting principles, eBay's net income was $5.9 billion, or $5.31 per share, thanks to a combination of a $4.6 billion income tax benefit related to a legal structure realignment (which primarily affected its international businesses) and a $0.8 billion gain related to the sale of eBay's equity holdings of MercadoLibre.
  • The company added 2 million active buyers across its platforms on a sequential basis from last quarter, bringing its total number of active buyers to 167 million.
  • Gross merchandise volume (GMV) increased 5% on a constant-currency basis and climbed 2% year over year as reported, to $22.3 billion.
  • Consolidated GMV included:
    • 2% year-over-year growth in marketplaces GMV (5% at constant currency), to $21.1 billion, which resulted in flat revenue (up 4% at constant currency) of $1.9 billion, driven by a strong holiday season.
    • 5% growth in StubHub GMV, to $1.2 billion, which translated to a 20% increase in StubHub revenue, to $279 million, thanks to strength in the baseball and the theater segments.
  • Classifieds platforms increased revenue 10% year over year (13% at constant currency), to $201 million, with particularly strong results in Germany.
  • The company repurchased 34.6 million shares of common stock during the quarter for roughly $1.0 billion, leaving $1.3 billion remaining under eBay's current repurchase authorization at the end of 2016.
  • eBay generated $620 million in cash from operations, and free cash flow of $484 million. This includes a $272 million cash tax payment related to the MercadoLibre equity sale.
  • The quarter ended with $11.0 billion in cash, cash equivalents, and non-equity investments, and just under $9 billion in debt.

What management had to say

eBay CEO Devin Wenig stated:

Q4 was a record quarter highlighted by solid performance in our eBay business. During the holiday season, eBay was one of the top consumer shopping destinations in the world and the second most visited e-commerce site in the U.S. In 2017, we intend to accelerate the progress that we made last year as we continue to execute our business strategy.

Looking forward

For the current quarter, eBay anticipates revenue between $2.17 billion and $2.21 billion, good for steady year-over-year currency-neutral growth of between 4% and 6%. That should translate to adjusted earnings per share in the range of $0.46 to $0.48, the midpoint of which would be flat from the same year-ago period.

eBay also offered an early look at the full year 2017, with guidance calling for revenue between $9.3 billion and $9.5 billion, up between 6% and 8% year over year on a currency-neutral basis. On the bottom line, eBay expects full-year 2017 adjusted earnings per share in the range of $1.98 to $2.03. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- analysts' consensus estimates predicted that eBay would achieve higher 2017 adjusted earnings of $2.07 per share, but on revenue of $9.36 billion, slightly below the midpoint of eBay's guidance range.

In the end, eBay's modest growth might not seem particularly impressive at first glance. But it was an undeniably solid quarter, and a step in the right direction as eBay begins to see the fruits of its past strategic investments in branding and product development. As long as the company keeps making progress to that end, it will be no surprise to see eBay stock continue to climb from here.