E-commerce company eBay (EBAY, Financial) released its fourth-quarter results on Jan. 28 after the market closed. The company’s earnings and revenue surpassed Wall Street’s projections.
Snapshot from the quarter
The marketplace platform posted diluted earnings per share of $0.81 in the fourth quarter. Revenue for the same period came in at $2.82 billion, down 2% on a year-over-year basis. Analysts had predicted earnings of 76 cents per share on $2.82 billion in revenue.
Gross merchandise value plunged 5% to to $23.3 billion. The company’s marketplace platforms accounted for $22 billion of total gross merchandise value. During the quarter, global active buyers rose 2% on a year-over-year basis to 183 million.
Efforts to improve profitability
The company is currently facing stiff competition from Amazon.com Inc (AMZN, Financial) and Wal-Mart (WMT, Financial) in the marketplace business. As a result of this, the company is emphasizing its payments and advertising businesses.
The company is also witnessing pressure from a group of activist investors who are want it to break off from some of its underperforming business units to improve profitability. eBay decided to dispose off its ticketing business StubHub, selling it for $4.05 billion to Viagogo in Nov. 2019 as it faced continued pressure from activist investors Elliott Management Corp and Starboard Value. The transaction is expected to close in the first quarter of 2020.
In addition, eBay is implementing several improvements in view of making its platform simpler. The company is adding features like grouped listings and personal recommendations.
Financial forecast
The company has provided 2020 guidance for revenue and earnings per share. eBay expects full-year revenue to be in the range of $10.72 billion to $10.92 billion. Earnings per share is expected to be between $2.95 and $3.05. The company’s interim CEO, Scott Schenkel, said:
“As we enter 2020, our priorities are clear - we will continue to drive revenue through our growth initiatives, deliver more seller tools, improve the buyer experience by leveraging our structured data foundation, all while driving more margin expansion. We believe these efforts will position us for sustainable, profitable long-term growth and I am excited by the opportunities ahead.”
Disclosure: I do not hold any positions in the stocks mentioned.
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