QUICK TAKE: Revenue and EPS slightly better than expected. Both the marketplace and PayPal businesses seem solid–PayPal, especially. Most important, the core marketplace business continues to recover, although organic growth decelerated from last quarter.
Gross merchandise value (GMV) jumped 24% year over year, matching last quarter’s increase. However, on an adjusted basis (Gmarket acquisition, forex), however, GMV growth decelerated from last quarter, which is disappointing. Until two quarters ago, GMV had been flat or declining for a year. Marketplace revenue growth declined slightly from last quarter, presumably due to a lower take rate (this is a concern, but ultimately GMV is the best measure of the company’s momentum).
Total payment volume (equivalent for GMV for payments) increased 35% year over year, a modest acceleration from last quarter and the fastest growth in a long while. Year over year revenue growth decelerated modestly, from 28% to 26%.
Overall, solid if unspectacular results. The recovery continues.
Conference call starts at 5PM/2PM. You can listen here: http://investor.ebay.com/events.cfm.
Here’s a quick take from JP Morgan’s Imran Khan:
eBay has announced its 1Q’10 results. Our key takeaways, prior to the 5PM conference call:
- Non-vehicles US GMV up 6% Y/Y. Our incoming model called for a 7% increase, as we believe eCommerce trends continue to improve, and indeed became stronger in March.
- Non-vehicles Int’l GMV up 38%. Our forecast was for a 36% Y/Y improvement, aided by FX. On an FX-neutral basis and excluding the impact of the GMarket acquisition, Int’l non-vehicles GMV was up 9% (compared to 11% growth ex-FX and ex-GMKT in 4Q’09).
- Marketplace take rate at 7.62%. Our forecast was for a 7.55% take rate, compared to 8.03% in the year-ago quarter and 7.47% in 4Q. Regional mix shift (including the addition of GMKT Y/Y) and seller discounting can contribute to take rate declines, and we don’t view take rate declines as inherently negative, assuming Marketplace volume growth is robust.
- PayPal TPV up 35% Y/Y; growth accelerates. We had modelled a 33% Y/Y improvement. On-eBay TPV was 67.8% of addressable GMV, a solid improvement from 65.9% in 4Q. Merchant Services TPV was up 49% Y/Y (or 47% ex FX).
- PayPal take rate at 3.59%. We had modelled 3.65%, and 4Q saw the take rate at 3.54%. We continue to expect take rate declines, which should drive revenue growth to be less rapid than TPV growth. PayPal revenue margin was 63.5%, an improvement vs. last quarter.
- Revenue $2.20B. This compares to our $2.20B estimate and the top end of guidance also at $2.20B.
- Pro forma EPS of $0.42. A 1c beat on the EPS line. The company repatriated ~$1.1B in cash as part of a legal entity restructuring, and paid $207M in additional taxes as a result of that restructuring.
- Guidance implies revenue growth 12% to 14%, excluding Skype from 2Q’09 comps. Our estimate was for 14% growth. The company sees 2Q revenue of $2.15B-$2.2B, and EPS of $0.37-$0.39, compared to consensus of $0.40.
- F’10 Guidance unchanged, implies revenue growth of 9% to 12%, excluding Skype. The company expects revenue of $8.8B-$9.1B, compared to our estimate of $9.0B. The company sees full-year EPS of $1.63-$1.68, vs. our estimate of $1.71.
Here’s a quick preview from Imran Khan at JP Morgan:
eBay is scheduled to report 1Q’10 results after the close today. The live webcast for the 5:00 PM conference call can be accessed via the company’s site, http://investor.ebay.com/events.cfm, or at (877)844-0840. Key things to look for:
- We see revenue of $2.2B, at the top end of guidance range. eBay guided to 1Q revenue of $2.1B-$2.2B, and the company has reported revenue above the top end of its guidance range 10 of the last 13 quarters. Given that eCommerce trends appeared to accelerate in March, we think the report is more likely than not to come in ahead of guidance. Consensus is at $2.19B.
- We’re modelling 23% non-Vehicles GMV growth. This would represent a slight deceleration from 4Q’s 24% growth. On the non-Vehicles GMV, we expect 7% growth in the US, and 36% growth internationally, driven in part by FX. For the total GMV number (including Vehicles), we are modelling 19% growth Y/Y, down slightly from 4Q’s 20% growth. Our take rate estimate is 7.55%, roughly flat Q/Q.
- We see 41c pro forma EPS. This is at the top end of guidance of $0.39 to $0.41, and in line with consensus at $0.41. eBay has posted pro forma EPS at or above the top end of guidance in each of the past 13 quarters.
- Our model calls for TPV up 33%, in line with 34% growth last quarter. We continue to expect PayPal to post moderate growth in the on-eBay portion of the business and more rapid growth (49%) in the Merchant Services segment.
- We expect the Payments take rate to increase sequentially. In 4Q’09, the Payments take rate was 3.54%, the lowest since F’03. Our 1Q estimate is 3.65%, an increase from 4Q, but down from 3.81% in the year-ago quarter. We expect business mix as well as promotional activity to be a headwind for the Payments take rate going forward.
- The outlook for 2Q’10. Our current forecast is for 2Q revenue of $2.20B, up 5% Y/Y, and roughly in line with Bloomberg consensus at $2.21B. Our 2Q pro forma EPS estimate is also in line with consensus, both at $0.40.
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