eBay Inc. Earnings: Higher-Than-Expected Net Income

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S&P 500 (NYSE:SPY) component eBay Inc. (NASDAQ:EBAY) reported net income above Wall Street’s expectations for the first quarter. eBay is an Internet company that, together with its subsidiaries, provides online marketplaces for the sale of goods and services. It also provides other online commerce platforms, online payment solutions, and communication offerings to a diverse community of individuals and businesses.

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eBay Earnings Cheat Sheet for the First Quarter

Results: Net income for the internet commerce rose to $570 million (44 cents per share) vs. $475.9 million (36 cents per share) in the same quarter a year earlier. This marks a rise of 19.8% from the year-earlier quarter.

Revenue: Rose 28.7% to $3.28 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: eBay Inc. reported adjusted net income of 55 cents per share. By that measure, the company beat the mean estimate of 43 cents per share. It beat the average revenue estimate of $3.15 billion.

Quoting Management: “The first quarter was a strong start to the year for us with momentum continuing in our Marketplaces, PayPal and GSI Commerce businesses,” said eBay Inc. President and CEO John Donahoe. “We believe that innovation in retail today is technology driven, and consumers are embracing smarter, easier, better ways to shop. We are enabling commerce in this new retail environment, supporting and partnering with sellers of all sizes and giving consumers worldwide the ability to shop anytime, anywhere, for whatever they want.”

Key Stats:

For the past five quarters, the company has seen double-digit year-over-year percentage revenue growth. Over that span, the company has averaged growth of 27.3%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 35.5% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.4 percentage points to 70% from the year-earlier quarter. Over that time, margins have contracted on average 1.5 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the fourth quarter of the last fiscal year, net income rose more than threefold and in the third quarter of the last fiscal year, the figure rose 13.6%.

The company beat estimates last quarter after being in line with expectations in the fourth quarter of the last fiscal year with net income of 55 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the second quarter has moved up from 45 cents a share to 46 cents over the last thirty days. For the fiscal year, the average estimate has moved down from $1.99 a share to $1.97 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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