What: Shares of eBay (NASDAQ:EBAY) were up 12.9% as of 12:20 p.m. Thursday after the online auctioneer reported better-than-expected third-quarter 2015 results.
So what: Quarterly revenue fell 2% year over year to $2.1 billion, translating to a 9% decline in adjusted net income from continuing operations to $529 million. Remember, both eBay Enterprise (the sale of which eBay's board approved last quarter) and PayPal are being reported as discontinued operations. And thanks to eBay's share repurchase efforts -- including $599 million to buy back 21.9 million shares in Q3 -- adjusted net income per share fell a more modest 6% to $0.43.
Analysts, on average, were expecting roughly the same revenue to result in lower adjusted earnings of $0.40 per share.
"We drove solid results in the quarter in which we completed a complex separation," added eBay CEO Devin Wenig. "We also marked eBay's 20th anniversary and made progress on executing our strategy to reposition the company to deliver stable and profitable long-term growth."
Now what: For the current quarter, eBay expects revenue between $2.275 billion and $2.325 billion, good for currency-neutral growth of 3% to 5%, and adjusted earnings per diluted share (from continuing operations) of $0.47 to $0.49. Curiously, though, consensus estimates called for adjusted earnings and revenue near the high end of those ranges.
For the full year 2015, eBay reiterated its guidance for 3% to 5% currency-neutral growth, but simultaneously increased its outlook for adjusted earnings of $1.80 per share to $1.82 per share. During the subsequent conference call, management partly credited the increase to a combination of their third-quarter outperformance and incremental planned share repurchases.
All things considered, there's no denying eBay has plenty of work to do to successfully return to sustained long-term growth. But in the meantime, this report was a solid step in the right direction. And it's especially impressive considering eBay achieved these results while simultaneously navigating its time- and attention-consuming business separation from PayPal. As long as eBay can continue demonstrating positive momentum going forward, I see no reason eBay stock won't do the same for patient investors.