eBay Inc. (EBAY +1.02%) announced record fourth-quarter 2017 results on Wednesday after the market closed, extending a more than yearlong streak of accelerating gross merchandise volume in the U.S. The online marketplace specialist also offered encouraging forward guidance, as well as an ambitious new share repurchase plan.
With shares up nearly 9% in after-hours trading as of this writing, let's dig deeper to see what drove eBay's business as it ended the year, as well as what investors can expect from the company in the coming quarters.
Image source: eBay.
eBay results: The raw numbers
| Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$2.613 billion |
$2.395 billion |
9.1% |
|
Adjusted (non-GAAP) net income from continuing operations |
$618 million |
$601 million |
2.8% |
|
Adjusted (non-GAAP) EPS |
$0.59 |
$0.54 |
9.3% |
Data source: eBay.
What happened with eBay this quarter?
- Based on generally accepted accounting principles (GAAP), eBay incurred a $2.6 billion (or $2.51 per-share) loss from continuing operations, driven by a $3.1 billion non-cash tax charge related to the recent enactment of the Tax Cuts and Jobs Act of 2017.
- These results are near the high end of eBay's guidance provided last quarter, which called for revenue of between $2.58 billion and $2.62 billion and adjusted earnings per share of $0.57 to $0.59.
- Revenue grew 7% on a constant currency basis.
- Active buyers across eBay's platforms increased to 170 million, up from 168 million last quarter and an increase of 5% year over year.
- Marketplace gross merchandise volume (GMV) climbed 9% (6% at constant currency) to $23 billion, while revenue grew 8% (6% at constant currency) to $2.1 billion, driven by a strong holiday performance in the United States and expansion of new user experiences.
- StubHub GMV grew 16% (15% at constant currency) to $1.4 billion, thanks to strength in both concerts and sporting events. StubHub revenue grew 10% to $307 million.
- Classifieds platform revenue grew 21% (13% at constant currency) to $244 million, driven by strength in Germany.
- Generated quarterly operating cash flow of $988 million and free cash flow of $796 million.
- Repurchased 25 million shares of common stock for $922 million during the quarter, leaving $1.7 billion remaining under its existing authorization.
- Subsequent to the end of the quarter, eBay authorized an additional $6.0 billion stock repurchase program with no expiration.
What management had to say
"Q4 was a record quarter for eBay, representing the fifth quarter in a row of volume acceleration in our U.S. marketplace," stated eBay CEO Devin Wenig. "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."
Looking ahead
eBay expects first-quarter 2018 revenue of between $2.57 billion and $2.61 billion, good for currency-neutral growth of 7% to 9%, which should translate to adjusted earnings per share of $0.52 to $0.54. For perspective -- and though we don't pay close attention to Wall Street's near-term expectations -- consensus estimates predicted revenue of just $2.41 billion and earnings near the low end of eBay's guidance range.
Finally, for the full year of 2018, eBay anticipates revenue between $10.9 billion and $11.1 billion, again representing currency-neutral growth of 7% to 9%, with full-year adjusted earnings per share of $2.25 to $2.30. Here again, eBay's outlook sits comfortably above investors' expectations for 2018 adjusted earnings of $2.23 per share on revenue of $10.28 billion.
In the end, it's hard to ask much more of eBay, as the company continues to play a central role fostering the thriving world of e-commerce. From its latest quarterly beat to continued capital returns and an optimistic view of the year ahead, it's no surprise to see eBay stock rallying to all-time highs right now.
