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eBay (EBAY) Q2 Earnings Meet Estimates, Revenues Rise Y/Y

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eBay Inc. EBAY reported second-quarter 2021 non-GAAP earnings of 99 cents per share, which meet the Zacks Consensus Estimate. The bottom line also remained flat year over yearbut declined 9.2% sequentially.

Net revenues of $2.67 billion surpassed the Zacks Consensus Estimate of $2.64 billion. Further, the figure increased 14% from the year-ago quarter on a reported basis and 11% on a FX-neutral basis. However, the figure fell11.7% sequentially.

Year-over-year top-line growth was driven by the growing adoption of its managed payments. The number of sellers migrated to managed payments exceeded 13 million in the reported quarter. Notably, managed payment offering processed 71% of on-platform volumes globally in the second quarter.

eBay’s Promoted Listings delivered robust performance by generating revenues of $224 million, which grew 14% on a reported basis and 8% on a FX-neutral basis from the prior-year quarter.

The growing number of sellers remained a positive. The company’s active seller number stood at 19 million, up 5%.

However, the company witnessed a year-over-year decline of 2% in the active buyer base, which stood at 159 million at the end of the second quarter.

eBay witnessed declining gross merchandise volume (“GMV”) inthe second quarter, which remained an overhang.

The company’s initiatives toward strengthening managed payment offerings remain major positives. Further, eBay remains optimistic regarding growth initiatives, which are based on enhancing the seller experience by offering innovative seller tools and delivering a better buyer experience by utilizing structured data.

At the end of the second quarter, eBay signed a definite agreement to sell 80.01% of its Korean business to Emart in exchange for$3 billion. Notably, the business now reports as discontinued operations.

eBay completed the Classifieds transaction, for which it has received $2.5 billion in cash and a 44% equity stake in Adevinta.

eBay Inc. Price, Consensus and EPS Surprise

eBay Inc. Price, Consensus and EPS Surprise
eBay Inc. Price, Consensus and EPS Surprise

eBay Inc. price-consensus-eps-surprise-chart | eBay Inc. Quote

GMV Details

The company’s total GMV of $22.12 billion in the reported quarter exhibited a year-over-year decline of 7% and 11% on a reported and an FX-neutral basis, respectively. This was attributed to sluggish B2C and C2C GMV, which were down 12% and 7% from the prior-year quarter.

The reported GMV missed the Zacks Consensus Estimate of $25.25 billion.

Notably, eBay’s GMV is entirely generated by the Marketplace platform after the sale of StubHub.Marketplace GMV is categorized into two parts.

U.S. GMV totaled $9.96 billion, which accounted for 45.1% of total GMV, down 5% from the year-ago quarter.

International GMV was $12.14 billion, which accounted for 54.9% of total GMV. It fell 8% 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 $2.5 billion in the quarter under review, accounting for 93.6% of the total revenues. Further, the figure was up 14% from the year-ago quarter. Notably, net transaction revenues are completely generated by the Marketplace platform.

Marketing Services and Other: eBay generated $172 million of total marketing services and other revenues (6.4% of total revenues), which were up 13% from the year-ago quarter.

Operating Details

In the second quarter, eBay’s gross margin was 74.8%, contracting 730 basis points (bps) year over year.

Operating expenses of $1.3 billion rose 9.3% year over year. As a percentage of net revenues, the figure contracted 200 bps to 47.4% from the year-ago quarter.

Non-GAAP operating margin was 32.8% in the second quarter, contracting620 bps year over year.

Balance Sheet & Cash Flow

As of Jun 30, 2021, cash equivalents and short-term investments were $6.9 billion, up from $3.4billion as of Mar 31, 2021.

Long-term debt was $8.3 billion at the end of the reported quarter compared with $5.9 billion at the end of the last reported quarte
The company generated $1.07 billion of cash from operating activities in the second quarter, up from $1.04 billion in the first quarter.

Its free cash flow stood at $910 million in the reported quarter.

The company repurchased $1.5 billion worth of shares and paid out dividends of $121 million in the reported quarter.

Guidance

For third-quarter 2021, eBay expects net revenues of $2.42-$2.47 billion. On a FX-neutral basis, year-over-year growth in revenues is anticipated to be 6-8%. The Zacks Consensus Estimate for revenues is pegged at $2.52 billion.

Non-GAAP earnings are anticipated to be 86-90 cents per share. Notably, the Zacks Consensus Estimate for the same is pegged at 96 cents per share.

Zacks Rank & Stocks to Consider

Currently, eBay carries a Zacks Rank #2 (Buy).

AutoNation, Inc. AN, Revolve Group, Inc. RVLV and Dollar General Coporation TGT are some other top-ranked stocks in the broader Retail-Wholesale sector. While AutoNation and Revolve sport a Zacks Rank #1 (Strong Buy) at present, Dollar General carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rankstocks here.

Long-term earnings growth rates for AutoNation, Revolve and Dollar General are pegged at 20.16%, 20.71% and 11.31%, respectively.


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