eBay posts profit as auctions stay strong
The online auction company reports a second-quarter profit, saying the site remained popular with consumers and businesses during the economic downturn.
The San Jose, Calif.-based auction giant posted net income of $24.6 million, or 9 cents per share, in the quarter on $180.9 million in revenue. For the same period last year, eBay earned $7.5 million, or 3 cents per share, on $98.2 million in revenue.
Excluding charges such as stock-based compensation and employer payroll taxes, eBay posted a pro forma profit of $33.5 million, or 12 cents per share. Wall Street analysts expected the company to earn 9 cents per share, according to a survey by First Call.
"We're seeing sustained growth across categories, trading formats and in our international operations," eBay Chief Executive Meg Whitman said in a statement.
eBay had a "stellar" quarter, said Jeetil Patel, who covers the company for Deutsche Banc Alex Brown. Patel noted that eBay seems to be having success both in its international operations and in getting buyers to purchase higher-priced items on its site.
"I think this shows that they continue to execute nicely," Patel said. "It's proof in the pudding that this company is doing exceptionally well, despite the economy."
eBay shares ended the regular session down $2.14 to $64.40 in Nasdaq trading. In after-hours trading on the Island electronic trading network, eBay shares increased $2.33 to $66.73.
Although the second quarter tends to be a weak one for eBay, the company's revenue and earnings were both up significantly from its first-quarter numbers. In the first quarter, eBay earned $21.1 million, or 8 cents per share, on $154.1 million in revenue.
The company also posted significant increases in a number of statistics watched by analysts. The total value of goods and services sold on eBay increased to $2.25 billion from $1.98 billion in the first quarter and from $1.29 billion in the second quarter last year.
Meanwhile, the number of registered users on eBay increased by 4.4 million during the quarter to 34.1 million. eBay spent about $14 on sales and marketing expenses to acquire each new person, the company said.
Outlook strong
The strong quarter prompted eBay to increase its revenue estimates for the second half of the year. The company expects its revenue for the second half of the year to be as much as $385 million to $400 million, about $15 million to $30 million higher than it had previously forecast, said Rajiv Dutta, eBay's chief financial officer, in a conference call with investors.
The company now expects its pro forma earnings to be as much as 21 cents to 22 cents per share, about 1 cent to 2 cents higher than it previously expected, Dutta said.
"We believe we're right on target," Dutta said.
Last year, Whitman predicted that eBay would reach $3 billion in yearly revenue by 2005. During the conference call, Whitman said eBay was ahead of schedule in the three initiatives the company has targeted for helping it reach that revenue number: growing its U.S. auction business, developing its international business, and expanding its fixed-price initiatives.
"We're even more confident that the $3 billion number is attainable," Whitman said.
Reuters contributed to this report.