eBay shares tumble as sales outlook beats estimates

Over the past few years, eBay has consistently sold non-essential operations. During the last quarter, the company completed the sale of its Korean business to eMart for $3 billion, while retaining a 20% stake, and completed the sale of part of its small business stake. online ads.

Advinta

for more than 2.3 billion dollars to the investment company Permira, reducing its stake in Adevinta to 33%. These and other transactions have refocused the company on its core business, Marketplace, which is not growing as investors would like.

For the December quarter, eBay reported revenue of $2.6 billion, up 5% from a year ago, and is in the middle of the company’s guidance range from $2.57 billion to $2.62 billion. Non-GAAP earnings of $1.05 per share beat both the company’s forecast range of 97 cents to $1.01 per share and Street’s consensus forecast of 99 events per share. Under generally accepted accounting principles, the company on a continuing operations basis lost $1.47 per share during the quarter.

The company also announced a 22% increase in its quarterly dividend rate to 22 cents per quarter from 18 cents. And eBay said its board had authorized a $4 billion increase in its share buyback plan.

For the full year, eBay reported revenue of $10.4 billion, up 17%, with non-GAAP earnings of $4.02 per share. The company repurchased $7 billion in stock during the year.

The problem for the stock is clearly the high level guidance. For the March quarter, eBay forecast revenue of $2.43 billion to $2.48 billion, down 5% to 7% adjusted for currency, with non-GAAP earnings of 1. 01 to $1.05 per share. Street consensus had called for $2.62 billion and $1.10 per share.

The company forecasts annual revenue of $10.3 billion to $10.5 billion, roughly flat from 2021, with non-GAAP earnings of $4.20 to $4.40 per share, in below Street consensus at $10.95 billion and $4.51 per share.

eBay said active buyers in the fourth quarter were 147 million, down 9% from a year ago. Gross merchandise value was $20.7 billion, down 11% from a year ago, with gross merchandise value down 2% in the United States and 17% in the United States. international. Free cash flow in the fourth quarter was $372 million, down 45% from a year ago.

For 2022, the company said it expects gross merchandise value in the first half to be in the negative averages, returning to flat growth to slightly higher growth in the second half.

“By investing in our sustainable growth strategy, we have increased customer satisfaction, improved the experience for sellers and buyers, and returned value to our shareholders,” eBay CEO Jamie Iannone said in a statement. a statement. “During the quarter, we completed the transition of our multi-year payments and generated growth in both our advertising businesses and our targeted categories. As we continue to accelerate our strategy, we are well positioned for future growth. »

Write to Eric J. Savitz at eric.savitz@barrons.com