eBay (NASDAQ:EBAY) reported earnings after the market close on Tuesday, April 23, but there was more at stake than the usual financial metrics. In the wake of its slowing growth, the company has been working to reinvigorate its business. eBay recently came under the gaze of activist investors, intent on shaking up the stodgy company to accelerate change. Over the past several months, eBay has been the target of not one, but two hedge funds -- Elliott Management and Starboard Value. 

The company responded by saying it would undertake a review of its business, with the goal of creating value for shareholders and positioning eBay for future success. As a concession, the company added two independent directors to the board, but it gave no assurance that the review would "result in a sale, spin-off or other business combination," something that was pushed for by the activist investors.

It appears the initial actions eBay has taken may be yielding some early results.

eBay's headquarters building in San Jose, Calif.

Image source: eBay.

Edging higher

eBay reported revenue of $2.6 billion, up 2% year over year and at the high end of management's range, though it was up 4% when eliminating the impact of foreign currency exchange rates. The company reported adjusted diluted earnings per share (EPS) of $0.67, surpassing the high end of its expectations, which topped out at $0.64. Both numbers were comfortably ahead of analysts' consensus estimates, which called for revenue of $2.58 billion and EPS of $0.63.

The eBay Marketplace delivered revenue of $2.2 billion, up 3% year over year and up 4% adjusting for changes in exchange rates. Gross merchandise volume (GMV) of $21.6 million fell 4% year over year, though it was only down 1% on a constant currency basis. On the conference call to discuss the results, eBay CEO Devin Wenig said the company focused on driving positive buyer growth, while reducing promotional advertising on high-priced, low-ROI (return on investment) products, which led to the slightly lower GMV. StubHub revenue was $230 million, flat compared to the prior-year quarter, with GMV of about $1 billion, down 3% year over year, and down 2% adjusting for currency headwinds.

Global active buyers over the trailing-12-month period topped 180 million, up 4% year over year.

Advertising continued its solid growth as ad sales grew to $256 million, up 4% year over year, but up 12% adjusting for exchange rates. Revenue from promoted listings grew to $65 million, up 110% year over year.

Show me the money

The company's move to process its own payments continued to gain momentum, as eBay continued its gradual divorce from longtime partner PayPal (NASDAQ:PYPL). eBay's new main squeeze is global payment processor Adyen (OTC:ADYYF), who will assist the company in its payment ambitions.

eBay intermediated (processed) $220 million in GMV during the first quarter, up from $140 million in the fourth quarter, an increase of 61% sequentially. The company is still constrained by its agreement with PayPal, which doesn't officially end until 2020. eBay said Germany will be the second market where it will process its own payments, subject to regulatory approval.

With regard to the operational and portfolio review to quiet activist investors, Wenig briefly addressed the matter on the call, commenting, "The process is under way. While we do not have material updates to share at this time, we remain on track with what we've communicated previously." 

What the future holds

For the second quarter, eBay is forecasting revenue in a range of $2.64 billion to $2.69 billion, which would represent growth of 3% at the midpoint of its guidance -- excluding the effects of exchange rates. The company is expecting adjusted EPS of between $0.61 and $0.63.

eBay also raised its full-year guidance, guiding for revenue in a range of $10.83 billion to $10.93 billion, up from its previous estimates of $10.7 billion to $10.9 billion. Its EPS forecast also edged higher, to a range of $2.64 to $2.70, up from its initial estimates of $2.62 to $2.68. 

The combination of better-than-expected results and its more bullish forecast gave investors a boost of confidence, bidding the shares up as much as 5% in the wake of its report.