Company Update (NASDAQ:EBAY): eBay Inc Reports First-Quarter 2016 Results


EBAY

eBay Inc (NASDAQ:EBAY), a global commerce leader, today reported that gross merchandise volume (GMV) for the quarter ended March 31, 2016 was $20.5 billion, increasing 5% on a foreign exchange (FX) neutral basis and 1% on an as-reported basis, reflecting the continued impact of a strong U.S. dollar. Revenue for the quarter was $2.1 billion, up 6% on an FX-Neutral basis and 4% on an as-reported basis, driving non-GAAP net income from continuing operations of $550 million, or $0.47 per diluted share, and GAAP net income from continuing operations of $482 million, or $0.41 per diluted share. During the quarter, the company generated $641 million of operating cash flow and $483 million of free cash flow from continuing operations while also repurchasing $1.0 billion of its common stock.

“Q1 represents another quarter of solid results, as we continue to position eBay for long-term success,” said Devin Wenig, President and CEO of eBay Inc. “We are executing our plan and making progress on our strategic priorities to ensure our buyers have the best choice of products and a simple, personalized shopping experience, while sellers benefit from our powerful selling platform.”

Underlying total eBay Inc. performance, the Marketplace platforms delivered $19.6 billion of GMV and $1.8 billion in revenue for the first quarter. Marketplace revenue was up 3% on an FX-Neutral basis and flat year over year on an as-reported basis, driven by stable GMV growth and strong performance in Marketing Services & Other. StubHub had another quarter of strong performance, driving GMV of $869 million and revenue of $177 million, up 34%, aided by strength in sports and concerts in addition to a number of product innovations. The Classifieds platforms delivered another quarter of accelerating growth with revenue of $186 million, up 17% on an FX-Neutral basis and up 15% on an as-reported basis, primarily driven by strong performance in Germany and the United Kingdom.

In Q1, eBay continued to increase the amount of inventory on its platforms, with over 900 million live listings available at any time. eBay also leveraged its structured data initiative to launch improved user experiences on its Marketplace platform, such as the ability to search by product ID and a newly redesigned browse experience that enables shoppers to find great deals and top-selling products in an easy-to-navigate way. During the quarter, StubHub introduced several new product innovations, including a ticket recommendation engine, as well as the ability for fans to use virtual reality to enable an immersive view from available seats. Finally, Classifieds launched several user enhancements, including in-app chat on mobile, allowing buyers and sellers to message each other and facilitate an easier, faster buying experience.

           
First Quarter 2016 Financial Highlights (presented in millions, except per share data and percentages)
             
    First Quarter        
    2016   2015   Change
eBay Inc.                
Net revenues   $2,137   $2,061   $76   4%
GAAP – Continuing Operations                
Income from continuing operations   $482   $449   $33   7%
Earnings per diluted share from continuing operations   $0.41   $0.37   $0.04   13%
Non-GAAP – Continuing Operations                
Net income   $550   $586   $(36)   (6)%
Earnings per diluted share   $0.47   $0.48   $(0.01)   (1)%

Other Selected Financial and Operational Results

  • Operating margin — GAAP operating margin increased to 28.7% for the first quarter of 2016, compared to 25.7% for the same period last year. Non-GAAP operating margin decreased to 33.4% in the first quarter, compared to 35.6% for the same period last year.
  • Taxes — The GAAP effective tax rate for continuing operations for the first quarter of 2016 was 18.4%, compared to 16.7% for the first quarter of 2015. The non-GAAP effective tax rate for continuing operations for the first quarter of 2016 was 20.4%, compared to 20.2% for the first quarter of 2015.
  • Cash flow — The company generated $641 million of operating cash flow from continuing operations and $483 millionof free cash flow from continuing operations during the first quarter of 2016.
  • Stock repurchase program — The company repurchased approximately $1.0 billion of its common stock, or 42.3 million shares, in the first quarter of 2016. The company’s total repurchase authorization remaining as of March 31, 2016 was$0.8 billion.
  • Cash and cash equivalents and non-equity investments — The company’s cash and cash equivalents and non-equity investments portfolio totaled $10.3 billion as of March 31, 2016.

Business Outlook

  • Second quarter 2016 — The company expects net revenue between $2.14 billion and $2.19 billion, representing FX-Neutral growth of 4% – 6%, with non-GAAP earnings per diluted share from continuing operations in the range of $0.40 -$0.42 and GAAP earnings per diluted share from continuing operations in the range of $0.32 – $0.34.
  • Full year 2016 — The company expects net revenue between $8.6 billion and $8.8 billion, representing FX-Neutral growth of 3% – 5%. (Original Source)

Shares of eBay are up 2% to $24.98 in after-hours trading. EBAY has a 1-year high of $66.73 and a 1-year low of $21.52. The stock’s 50-day moving average is $24.27 and its 200-day moving average is $25.86.

On the ratings front, EBAY has been the subject of a number of recent research reports. In a report released today, Goldman Sachs analyst Heath Terry maintained a Buy rating on EBAY, with a price target of $30, which represents a potential upside of 22.5% from where the stock is currently trading. Separately, yesterday, Canaccord Genuity’s Michael Graham reiterated a Hold rating on the stock and has a price target of $26.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Heath Terry and Michael Graham have a total average return of 16.5% and 7.9% respectively. Terry has a success rate of 60.8% and is ranked #69 out of 3829 analysts, while Graham has a success rate of 54.4% and is ranked #251.

Overall, 2 research analysts have rated the stock with a Sell rating, 12 research analysts have assigned a Hold rating and 7 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $27.64 which is 12.9% above where the stock opened today.

eBay, Inc. operates as a commerce leader company including Marketplace, StubHub, and Classifieds platforms. It engages in the provision of investments and acquisitions to help enable commerce on platforms for buyers and sellers online or on mobile devices. It includes marketing services, including classifieds, and advertising. The company was founded by Pierre M. Omidyar in September 1995 and is headquartered in San Jose, CA.