EBay Tops Q4 Views As Mobile Shoppers Help Lift Its Growth

Investor's Business Daily

EBay (EBAY) narrowly beat fourth-quarter earnings and revenue estimates, led by its Marketplaces and mobile businesses. Shares rose late Wednesday even though the payments and e-commerce giant's Q1 outlook was shy of views.

San Jose, Calif.-based eBay earned 70 cents a share excluding items such as stock-based compensation, up 17% vs. Q4 2011. That was a penny above the consensus estimate of 35 analysts polled by Thomson Reuters.

Revenue advanced 18% to $3.99 billion, just above views of $3.98 billion. That snapped a three-quarter string of decelerating sales growth.

The online auction pioneer sees adjusted Q1 EPS of 60-62 cents and revenue of $3.65 billion to $3.75 billion. Analysts were expecting EPS of 63 cents and sales of $3.796 billion.

EBay shares initially retreated after hours, but recovered to rise 1.5%. During the regular session, the stock rose 40 cents to 52.90, near an eight-year high.

Amazon.com (AMZN), which reports Jan. 29, edged up late.

PayPal Robust

EBay's PayPal unit, the No. 1 online payments service, saw revenue surge 24% to $1.54 billion.

"A big positive for eBay going into the fourth-quarter results is a longer holiday shopping season, its strength online and PayPal doing pretty well," said S&P Capital IQ equity analyst Scott Kessler. "PayPal is the big story, the big driver for eBay.

PayPal added nearly 2 million accounts a month in Q4, its most active account growth in years, eBay CEO John Donahoe said in a post-earnings conference call with analysts.

U.S. revenues surged 49% to $1.949 billion. International revenues rose 25% to $2.043 billion.

Q4 revenue for eBay's Marketplaces unit, including auctions, surged 16% to $2.1 billion. Gross merchandise volume — the value of all goods and services sold on eBay, excluding vehicles — rose 16% to $19.1 billion.

Mobile Motor

"Our mobile focus is delivering exceptional mobile volume growth," Donahoe said. He predicted that eBay mobile and Pay Pal mobile to each exceed $20 billion in payment volume in 2013.

JPMorgan analyst Doug Anmuth said in a Monday note that mobile has been a key growth driver, particularly in getting younger people to buy and sell at Marketplaces. He said more than 100 million eBay apps have been downloaded so far by users and mobile apps currently add an average of 2.4 million listings per week in Marketplaces.

Nomura Equity Research analyst Brian Nowak wrote Tuesday that he expects mobile purchases to account for 18% of eBay Marketplaces' total GMV in 2013, up from 13%.

S&P's Kessler says eBay managed to offset softer late season holiday shopping with special pre-Christmas promotions tied to faster deliveries. He also says the company benefited from a longer holiday shopping season this year that kicked off on Thanksgiving, Black Friday and Cyber Monday, and which made up for any December shortfalls.

U.S. online holiday shopping spending in 2012 fell short of initial expectations due to a notable drop in consumer confidence in December on fiscal cliff concerns, tracker comScore reported. Spending grew 14% from a year earlier to $42.3 billion.

ChannelAdvisor, a company that helps third-party retailers sell on websites like eBay, says eBay's sales rose 22.2% in December from a year earlier. November's growth was 27.4%.

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