EBay's (EBAY) Q4 Earnings Beat Estimates, Revenues Down Y/Y
Zacks Investment Research | Jan 28, 2020 10:00PM ET
eBay Inc. (NASDAQ:EBAY) reported fourth-quarter 2019 non-GAAP earnings of 81 cents, beating the Zacks Consensus Estimate by 8%. The reported figure also improved 14.1% year over year and 20.9% sequentially.
Net revenues of $2.82 billion also surpassed the Zacks Consensus Estimate by 0.4%. The top line was up 6.5% from the prior quarter.
However, it was down 2% on a year-over-year basis (flat on an FX-neutral basis). This can be attributed to slowdown in gross merchandise volume (GMV) due to sluggish contribution from Marketplace platform and StubHub.
Nevertheless, the company witnessed solid momentum across its managed payments offerings. Further, eBay’s Promoted Listings delivered robust performance by generating revenues of $136 million, up 73% from the year-ago quarter.
Additionally, the company witnessed growth of 2.2% in the active buyer number. The active buyers base came in at 183 million at the end of the fourth quarter.
Coming to share price movement, eBay’s shares have plunged almost 4.7% in pre-market trading thanks to the weak revenue guidance for the current quarter and the full year.
Further, eBay has returned 6.3% in the past year, underperforming the eBay Inc. Quote
Operating Details
In the fourth quarter, eBay’s gross margin was 76.9%, contracting 160 bps year over year.
Operating expenses of $1.55 billion expanded 20 bps as a percentage of net revenues from the year-ago quarter. This was due to the 80 bps and 290 bps respective expansion in product development and general & administrative expenses.
However, sales and marketing expenses contracted 340 bps year over year.
Consequently, non-GAAP operating margin was 29.3% in the fourth quarter, up 10 bps year over year.
Balance Sheet and Cash Flow
As of Dec 31, 2019, cash equivalents and short-term investments came in at $2.8 billion, down from $3.1 billion as on Sep 30, 2019.
Further, eBay’s balance sheet is highly leveraged, with a long-term debt of $6.7 billion at the end of the fourth quarter.
The company generated $811 million of cash from operating activities and had free cash flow of $672 million during the reported quarter.
Further, the company returned $1.1 billion to shareholders, which includes dividend payments worth $113 million, in the fourth quarter.
Guidance
For first-quarter 2020, eBay expects revenues within $2.55-$2.60 billion. The Zacks Consensus Estimate for the same is pegged at $2.66 billion.
Non-GAAP earnings are expected within 70-73 cents and the Zacks Consensus Estimate for the same is pegged at 70 cents per share.
For 2020, the company expects revenues between $10.72 billion and $10.92 billion, indicating FX-neutral growth of 1-3%. The corresponding Zacks Consensus Estimate is pegged at $11.02 billion.
Get The News You Want
The company expects Marketplace GMV to be down low-single-digit in 2020.
Adjusted earnings per share are expected within $2.95-$3.05. The Zacks Consensus Estimate for the metric is pegged at $2.89 per share.
The company has considered StubHub in the full year guidance.
Zacks Rank & Stocks to Consider
Currently, eBay carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector are Zumiez Inc. (NASDAQ:ZUMZ) , Boot Barn Holdings, Inc. (NYSE:BOOT) and Booking Holdings Inc. (NASDAQ:BKNG) . While Zumiez sports a Zacks Rank #1 (Strong Buy), Boot Barn and Booking Holdings carry a Zacks Rank #2. You can see Zacks Investment Research
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