Ebay has reported third-quarter earnings largely in line with analyst expectations. However, shares still fell more than four per cent after the US-based e-commerce company lowered its annual profit outlook for the second consecutive quarter.
The online marketplace now expects net revenue to reach as high as US$9.57 billion in FY2017, with non-GAAP earnings per diluted share from continuing operations in the range of US$1.99 – US$2.01. It previously forecast earnings per share in the range of US$1.98 – US$2.03 on up to US$9.5 billion in sales.
Ebay cited its investment in marketing and technology as the reasons behind its revised forecast. The company recently rolled out a major branding campaign – ‘Fill Your Cart with Colour’ – which aims to position Ebay as a destination for brand-new products, rather than second-hand goods.
The company has also invested heavily in technology to improve the user experience, with new tools including image search, guaranteed delivery within three days and reportedly a price-match guarantee.
In the US, Ebay is testing a new authentication program to combat the problem of fraud, and Down Under, the marketplace recently partnered with ParcelPoint to offer more delivery options.
These steps are seen as critical to the company’s ability to compete with Amazon, which – unlike Ebay – takes a hands-on approach to the warehousing and fulfilment of goods sold by sellers on its platform, as well as customer service.
Nevertheless, Ebay largely met analyst expectations in Q3, reporting non-GAAP earnings per share of US$0.48 on revenue of US$2.4 billion, compared to analyst expectations of earnings of US$0.48 per share on US$2.37 billion.
Gross merchandise volume in the quarter rose 8 per cent compared to the same period last year, to US$21.7 billion. That is the fastest growth Ebay has reported in three years, according to Ebay president and CEO Devin Wenig.
“In Q3, we drove acceleration across all three of our platforms, delivering strong top and bottom line financial results and our fastest volume growth in over three years. Our customers are responding to the significant product enhancements we have been making, and this is reflected in our results,” he said.
Net income rose 27 per cent to US$523 million, while operating profit margin decreased slightly to 24 per cent, from 24.4 per cent a year ago. The number of active buyers grew by 2 million to reach 168 million in the quarter ending September 30, 2017.
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