Excluding charges, operating income for the quarter ended December 31, 1998 was $2.8 million, or 7 cents per share. Wall Street analysts were expecting profits of 4 cents a share, according to First Call. Including $773,000 for amortization of stock compensation and $515,000 for acquisition expenses, net income was 4 cents per share.
Quarterly revenues totaled $19.5 million, a gain of 642 percent over the same quarter last year, when revenues were $2.6 million. The company said that increased auction activity was the biggest contributor to revenue growth.
eBay investors, who saw the stock add 3.38 to 220.88 today ahead of the earnings news, have something else to cheer about: The company also announced a 3-for-1 stock split for shareholders of record on February 9, 1999. The split will be effective on March 1. The stock price has steadily climbed from a 52-week low of 25.50 reached in October.
eBay, a darling of the e-commerce crowd, was expected to do well because of the rising popularity of Internet shopping in general and auction sites in particular. Earlier this month, Amazon.com reported a huge increase in sales, while America Online said its members spent more than $1.2 billion holiday shopping online.
At the end of the fourth quarter, eBay had more than 2.1 million registered users, up 72 percent from 1.2 million at the end of September. Gross merchandise sales, or the value of all goods sold on eBay during the quarter, topped $307 million, an 57 percent increase over the third quarter.
For fiscal 1998, eBay posted operating profits of $7.9 million, or 21 cents per share. 3 cents ahead of the First Call consensus estimate. Last year, profits were $899,000, or 3 cents a share. Annual revenues were $47.4 million, a 724 percent increase over $5.7 million in fiscal 1997.
Goldman Sachs analyst Rakesh Sood estimated in a report issued earlier this month that the consumer-to-consumer online auction market, which eBay leads, could grow to $3.8 billion in 2001, from $107 million in 1997.
There is one small cloud on the horizon. Recent reports of fraud among eBay users led to legal action in Pennsylania last week and an investigation by the New York City Department of Consumer Affairs of whether the company can be held responsible for its members' activities.
eBay has introduced new measures to protect its users in recent weeks, including offering free insurance coverage up to $200 and a plan to give "Verified eBay User" status to those willing to provide additional identifying information, such as Social Security number and a driver's license.
Yesterday, the Chicago Board Options Exchange said it will begin trading eBay options on February 1.