eBay Inc. EBAY reported second-quarter 2022 non-GAAP earnings of 99 cents per share, which beat the Zacks Consensus Estimate by 10%. Notably, the bottom line remained flat year over year.
Net revenues of $2.42 billion surpassed the Zacks Consensus Estimate of $2.37 billion. However, the figure decreased 9% from the year-ago quarter on a reported basis and 6% on a FX-neutral basis.
This was attributed to the softness in transactional activities on eBay’s platform and sluggish marketing services. The company witnessed a year-over-year decline of 12% in the active buyer base, which stood at 138 million at the end of the second quarter.
eBay witnessed declining gross merchandise volume (“GMV”) in the second quarter, which remained an overhang.
Weakening momentum in online shopping, as a result of normalization to the pre-pandemic levels, remained a major headwind.
Nevertheless, strengthening momentum across advertising offerings of the company was a tailwind.
Notably, eBay’s Promoted Listings generated revenues of $232 million, which was up 2% on a reported and 6% on a FX-neutral basis from the prior-year quarter. This remained a positive.
eBay Inc. Price, Consensus and EPS Surprise
eBay Inc. price-consensus-eps-surprise-chart | eBay Inc. Quote
The company’s total GMV of $18.55 billion in the reported quarter exhibited year-over-year declines of 18% and 14% on a reported and an FX-neutral basis, respectively.
Nevertheless, reported GMV surpassed the Zacks Consensus Estimate of $18.21 billion.
The total GMV is categorized into two parts.
U.S. GMV totaled $8.98 billion, which accounted for 48.4% of the total GMV, down 13% from the year-ago quarter.
International GMV was $9.6 billion, which accounted for 51.6% of the total GMV. It fell 22% on a year-over-year basis.
Revenues in Detail
eBay’s revenues are classified into two types.
Net Transaction: The company reported net transaction revenues of $2.3 billion in the quarter under review, accounting for 94.8% of the total revenues. The figure was down 8% from the year-ago quarter.
Marketing Services and Other: eBay generated $125 million of total marketing services and other revenues (5.2% of total revenues), down 27% from the year-ago quarter.
In the second quarter, eBay’s gross margin was 72.6%, contracting 220 basis points (bps) year over year.
Operating expenses of $1.2 billion fell 2.4% year over year. As a percentage of net revenues, the figure expanded 350 bps to 50.9% from the year-ago quarter.
The non-GAAP operating margin was 28.7% in the second quarter, contracting 410 bps year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash equivalents and short-term investments were $3.2 billion, down from $5.6 billion as of Mar 31, 2022.
Long-term debt was $6.579 billion at the end of the reported quarter, down from $6.578 billion at the end of the last reported quarter.
The company generated $577 million of cash from operating activities in the second quarter, down from $629 million in the first quarter.
Its free cash flow stood at $466 million in the reported quarter.
The company repurchased $1.3 billion worth of shares and paid out dividends of $121 million in the reported quarter.
For third-quarter 2022, eBay expects revenues of $2.29-$2.37 billion. On a FX-neutral basis, the year-over-year decline in revenues is anticipated to be 5-2%. The Zacks Consensus Estimate for revenues is pegged at $2.29 billion.
Non-GAAP earnings per share are anticipated to be between 89 cents and 95 cents. The Zacks Consensus Estimate for the same is pegged at 93 cents per share.
For 2022, the company reiterates its revenue expectations at $9.6-$9.9 billion, suggesting a decline of 6-3% on a FX-neutral basis from that reported in 2021. The Zacks Consensus Estimate for revenues is pegged at $9.66 billion.
The company expects non-GAAP earnings per share between $3.95 and $4.10. Notably, the Zacks Consensus Estimate for the same is pegged at $3.98 per share.
Zacks Rank & Stocks to Consider
Currently, eBay carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the retail-wholesale sector are Dollar General DG, Costco Wholesale COST and Dollar Tree DLTR, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dollar General has gained 6.8% on a year-to-date basis. The long-term earnings growth rate for the DG stock is currently projected at 12.2%.
Costco Wholesale has lost 3.6% on a year-to-date basis. The long-term earnings growth rate for the COST stock is currently projected at 9.2%.
Dollar Tree has returned 17.5% on a year-to-date basis. The long-term earnings growth rate for the DLTR stock is currently projected at 15.5%.
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