eBay Inc. (NASDAQ:EBAY) reported stronger-than-expected second-quarter earnings and revenue, although the stock posted only modest gains in premarket trading on Thursday after the online marketplace issued mixed guidance for the current quarter.
The results mark the company’s first earnings release since it rejected an unsolicited multibillion-dollar takeover proposal from GameStop, led by Ryan Cohen.
Adjusted earnings per share came in at $1.60, comfortably ahead of analysts’ consensus estimate of $1.51. Revenue increased 15% year over year to $3.1 billion, also surpassing market expectations. Gross merchandise volume (GMV) rose 15% on a reported basis to $22.4 billion.
Revenue outlook beats forecasts while earnings guidance disappoints
For the third quarter, eBay expects revenue of between $3.07 billion and $3.12 billion. The midpoint of $3.095 billion is above Wall Street’s consensus forecast of $2.99 billion.
However, the company’s adjusted earnings per share guidance of $1.36 to $1.42, with a midpoint of $1.39, fell below analysts’ expectations of $1.44.
Analysts at Wolfe Research said, “Q3 guides assume continued broad based growth from core eBay marketplace as their strategic priorities continue to drive durable growth.”
The brokerage also highlighted the impact of costs associated with eBay’s recent $1.4 billion acquisition of Depop, the consumer-to-consumer fashion marketplace focused on Gen Z and Millennial shoppers.
Strategic initiatives continue to support profitability
Despite the additional acquisition-related costs, eBay continued to improve profitability. Adjusted operating margin increased to 28.5% during the second quarter, up from 28.3% in the same period last year.
The company also maintained its focus on shareholder returns, distributing $448 million during the quarter through $310 million in share repurchases and $138 million in dividends.
Meanwhile, first-party advertising products generated $570 million in revenue, representing annual growth of 25%.
Chief Executive Jamie Iannone said, “eBay’s second quarter delivered meaningful, broad-based momentum driven by continued innovation and focused execution against our strategic roadmap.”
Chief Financial Officer Peggy Alford added that the company is “increasing our full-year top- and bottom-line outlook” in response to continued business momentum.
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