eBay posts 4Q18 earnings beat

eBay reported better-than-expected 4Q18 results on Tuesday (29 January), with revenue coming in at $2.88bn vs 4Q17’s $2.71bn. Net income of $763mn, or USc80/share, compared with losses of $2.6bn, or $2.51/share, in the year-ago period. Both earnings and revenue were above the Refinitiv consensus analyst expectations of $2.86bn in revenue and non-GAAP EPSof USc68/share for the quarter. 

eBay management announced what it referred to as a “capital structure evolution” that includes the firm initiating the payment of a new dividend of USc14/ share to be paid out beginning in March 2019. The firm also said that it expects to return c. $7bn to shareholders by way of dividends and stock repurchases over the next two years.

eBay’s CEO Devin Wenig said in a press release that this year the company’s focus will be “… on further improvements to the eBay user experience, while pursuing significant long-term growth opportunities in advertising and payments,”. 

The company also undertook to “carefully review” a letter by activist shareholder Elliott Management, which proposed spinning of eBay’s non-core businesses (online ticket seller StubHub and its Classifieds group), into separate businesses from its core Marketplace.

Looking ahead, for 2019, eBay guided for 1Q19 revenue between $2.55bn and $2.60bn and EPS between USc62 and USc64/share. For the full year, the company projects revenue between $10.7bn and $10.9bn. The March quarter (1Q19) revenue forecast was below Wall Street estimates and this, together with the online marketplace reporting disappointing growth in sales volumes on its platform during the key holiday quarter, seemed to overshadow news of its first-ever dividend.

EBay’s share price is up c. 18% YTD.

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