EBay posts solid earnings in Q3: Revenues unaffected by Paypal dissection

Online retailing giant eBay (EBAY) sprang a surprise by reporting a strong third-quarter performance in terms of profit and strong growth in sales, beating the estimates of analysts. The power-packed performance raised its outlook for the year and showed that the company is on a solid ground despite hiving off PayPal (PYPL).

Consequently, the shares of eBay rose 12.8 percent on Thursday.

Number crunching

The profit was 43 cents a share on a revenue of US$2.10 billion (AU2.89 billion). The analysts’ projection was 40 cents and US$2.09 billion (AU$2.88 billion) respectively, according to data compiled by Bloomberg. The sales in the corresponding period in 2014 were US$2.15 billion (AU$2.96 billion), excluding PayPal, the San Jose-based company said in a statement.

It also said US$2.4 billion (AU$3.34 billion) remains on its share repurchase program.

“This is still a great business and it’s growing,” CEO Devin Wenig said.

eBay attracts 159 million buyers and is now streamlining its processes to boost the appeal on merchants. It disbanded its U.S. same-day delivery service E-Bay Now and struck a deal to sell the enterprise unit which was providing warehousing, delivery and customer support for web merchants for US$925 million (AU$1.3 billion).

Holiday shopping season

According to analysts, the strong results have shrugged off the setbacks faced by the online giant and added it a new confidence to face the holiday sales. It also confirmed its recovery from a data breach and slide in e-commerce traffic caused by Google’s search-engine changes in 2014.

"There were fears the company would miss estimates," said Mark Mahaney, an analyst at RBC Capital Markets.

The July split with Paypal was announced as an effort to make sure that each company to focus on their core businesses. EBay has been facing fierce competition from Amazon.com, Walmart stores and other retailers, Bloomberg reported.

For Wenig, the challenge is to catch up with the industry’s growth rate. The U.S. e-commerce sales are expected to hit US$79.4 billion (AU$109.4 billion) in November and December, that will be up by 14 percent from 2014, according to EMarketer.

Better search rankings

To boost user experience, eBay has asked for mandatory information from those selling products on its website regarding the goods on offer. That applies to all resellers across 18 product categories in the United States, Britain, Germany and Australia. This is helping E-Bay to better catalogue and market the products and making them easier to find online.

“Our plan is to expand the requirement where relevant across all sites and categories by the end of 2016," Wenig said, reports Reuters.

To boost traffic, the online marketplace is also adding more data to show the buyers' merchandise that consumers may be interested in than merely making them rely on online searches. Search engines had hit E-Bay because many of the listings will not stay for more than seven days, the CEO said.

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