eBay Q3 And Q4 Outlook In Line

eBay reported Q309 results were in-line with street expectations–which apparently disappointed the hell out of everyone.  Specifically:

  • Revenue of $2.2 billion versus estimates of $2.1 billion.
  • Pro forma EPS was $0.38 versus expectations of $0.37.

The company guided toward a Q409 that is in line with street expectations.  Specifically, Q4 guidance is:

  • Revenue of $2.2 billion to $2.3 billion versus street expectations of about $2.3 billion.
  • Pro forma EPS of $0.38 to $0.40 versus street expectations of $0.40.

Lower-margin growth businesses like PayPal and Skype continued to drive down overall margins.  Operating income margin decreased to 28.4% versus 31.8% in Q308.

As we mentioned in our earnings preview weakening margins are a big concern given that an increasing part of eBay’s business is coming from communications and transactions services, which have lower margins than the troubled Marketplace business.     

Here’s a quick take from Imran Khan at JP Morgan:

Our key takeaways, prior to the 5PM conference call:

  • Non-vehicles US GMV down 3%. Our incoming model called for a 4% decline; in our preview we thought US would be roughly flat.
  • Non-vehicles Int’l GMV up 16%. Our forecast, which did not fully include recent dollar weakness, was for a 1% Y/Y improvement. On an FX-neutral basis and excluding the impact of the GMarket acquisition, Int’l non-vehicles GMV was up 10%.
  • PayPal TPV up 19% Y/Y. We had modelled a 16% Y/Y improvement. On-eBay TPV was 65.7% of addressable GMV, an improvement from 64.4% in 2Q.
  • Revenue $2.24B. This compares to our $2.12B estimate and the top end of guidance at $2.15B.
  • Pro forma EPS of $0.38. A 2c beat on the EPS line.
  • Guidance implies revenue growth 8% to 13%. Our estimate was for 9% growth. The company sees 4Q revenue of $2.2B-$2.3B, and EPS of $0.38-$0.40, assuming the Skype deal closes by mid-4Q.

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