Jul 21, 2017
Ebay's profit plunges 94 percent
Jul 21, 2017
EBay Inc on Thursday reported a nearly 94 percent fall in quarterly profit, hurt by higher expenses as well as income tax provisions.
Net income fell to $27 million, or 2 cents per share, in the second quarter ended June 30, from $435 million, or 38 cents per share, a year earlier.
During the quarter, the company recorded an income tax provision of more than $400 million, which dented profit.
The company had already warned on Thursday that adjusted profit this quarter could fall below analysts' estimates, as it continues to invest in marketing and revamping its platforms to attract more shoppers, which sent its shares down more than 5 percent.
San Jose, California-based eBay forecast third-quarter adjusted earnings of 46 cents to 48 cents per share. Analysts on average were expecting 48 cents, according to Thomson Reuters I/B/E/S.
The online marketplace is making a big push to catch up with major rivals like Amazon.com Inc with three-day guaranteed delivery and a more user-friendly website. Spending millions of dollars on marketing campaigns, it is working to distinguish itself as a haven for unique items rather than commodity products.
"Our focus continues to be on improving the customer experience, and we won't hesitate to trade off short-term results when necessary," eBay Chief Executive Devin Wenig said on a call with analysts.
Shoppers so far have responded well to eBay's new home page, showing lower bounce rates and better engagement, he said.
EBay's gross merchandise volume (GMV), or the total value of goods sold on its websites, rose to $21.47 billion in the second quarter. Analysts had expected $21.46 billion, according data and analytics firm FactSet.
Revenue for the just-ended quarter rose 4.4 percent to $2.33 billion, beating analysts' estimates of $2.31 billion. Excluding items, eBay earned 45 cents per share, in line with estimates.
"Results and guidance suggest the year is 'on track,' although there will be some disappointment without a solid beat and raise," Baird Equity Research analyst Colin Sebastian said in a research note. "There is unlikely a 'quick fix' to eBay's slow volume growth profile."
Sales and marketing costs weighed on the quarter, rising 2.4 percent to $637 million. GMV at subsidiary ticket exchange StubHub fell 5 percent from a year ago as there were fewer U.S. events than the company had expected, Wenig said.
Shares of the company, up about 25 percent so far this year, dipped 5.2 percent to $35.23 in after-hours trading.
"I think the stock was running hot into the quarter, though, and I think eBay is signaling they are going to market aggressively heading into Q4, and maybe some were looking for a guidance raise," said Daniel Kurnos, Benchmark Company analyst.
EBay also announced a $3 billion share repurchase program.
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