eBay’s shares are on the rise in late trading on Tuesday after the online marketplace giant exceeded both guidance and Street estimates in its fourth-quarter results.
Financial Moves
CEO’s Vision
CEO Jamie Iannone expressed confidence in eBay’s performance, stating that the company anticipates free cash flow reaching approximately $2 billion this year. Furthermore, eBay is setting its sights on $2 billion in stock repurchases for the year.
Marketplace Success
Iannone highlighted eBay’s strong performance across all metrics in the quarter, with particular success in key categories such as sneakers, jewelry, and auto parts. He also mentioned the rollout of new AI software for sellers, enabling easy listing creation by simply taking a picture of an item.
Financial Results
In the fourth quarter, eBay reported revenue of $2.6 billion, a 2% increase, surpassing both the company’s projection of $2.47 billion to $2.53 billion and the Street consensus of $2.5 billion according to FactSet. Gross merchandise value (GMV) reached $18.6 billion, also up 2%, exceeding the Street forecast of $18.1 billion.
In late trading, eBay’s stock price soared 3.6% to $46 as investors responded positively to the strong quarterly performance.
eBay Surpasses Earnings Expectations
Quarterly Performance
In the recent quarter, eBay exceeded expectations by earning $1.07 per share, surpassing the projected range of $1 to $1.05 a share. According to Street consensus, the earnings were predicted to be $1.03 per share. Adhering to accounting principles, the company reported earnings of $1.40 per share.
Annual Results
eBay disclosed a revenue of $10.1 billion for the entire year of 2023, reflecting a 3% increase. The Gross Merchandise Value (GMV) stood at $18.6 billion, indicating a growth of 2%. The full-year non-GAAP profits were recorded at $4.24 per share.
Future Projections
For the upcoming March quarter, eBay forecasts revenue between $2.5 billion to $2.54 billion, reflecting a potential 0% to 2% growth. This estimation aligns closely with the Street consensus of $2.5 billion. The anticipated adjusted profits for the quarter fall within the range of $1.19 to $1.23 per share.
Growth Strategies
eBay anticipates a positive growth in gross merchandise value on a currency-neutral basis by the third or fourth quarter. The company foresees revenue growth for the year to exceed GMV growth adjusted with currency by two points. Additionally, eBay expects a non-GAAP operating margin expansion of 0.6 to 1.0 percentage points this year. The anticipated growth in non-GAAP EPS is projected to be between 8% and 10%, equating to roughly $4.62 per share, which is higher than the consensus at $4.46 per share.
Restructuring Efforts
In January, eBay unveiled a restructuring plan that involved a reduction in its workforce by 1,000 jobs, equivalent to approximately 9% of its staff, along with a decrease in the number of contractors employed. The decision was explained as necessary due to the company’s overall headcount and expenses outpacing business growth.
Overall, eBay’s performance demonstrates strength and resilience in navigating market dynamics and strategic adjustments.