EBay posts mixed quarter as advertising takes hold

Dive Brief:

• Ebay on Wednesday reported that third quarter revenue was flat year over year at $2.6 billion, as gross merchandise volume (GMV) fell 4% to $21.7 billion. Marketplace revenue fell 1% to $2.1 billion and GMV fell 5%; StubHub revenue rose 5% to $306 million, and the classifieds business revenue rose 4% to $265 million.
• The company grew its global active buyers base by 4% across platforms to 183 million, according to a [operating]. GAAP operating margin fell to 20.1% from 21% last year. 
• GAAP net income from continuing operations fell 57% or $410 million to $310 million from $720 million in the year-ago quarter, the company said.

Dive Insight:

As with Amazon and social media sites like Facebook and its Instagram business, eBay is looking to boost revenue with advertising dollars. 

Advertising “sustained momentum” in the quarter, with Promoted Listings driving $103 million of revenue, an increase of more than 120% year over year, interim CEO Scott Schenkel told analysts on a call Wednesday, according to a [operating]. More than a million eBay sellers promoted more than 300 million listings during the period, according to Schenkel. “All of these levers give us confidence in achieving our goal of $1 billion in total advertising revenue,” he said.

Schenkel [operating] upon the departure of CEO and President Devin Wenig, who had taken over four years ago after years at the company.

Analysts are taking note of the advertising potential. But all the moving parts made for a mixed performance in the quarter, according to a Wells Fargo client note. The GMV decline was 2% below the Wells Fargo forecast, and stemmed from “Korean competitive pressure and U.S. Internet sales tax roll-outs,” according to Senior Analyst Brian Fitzgerald. Revenue “was slightly ahead of those analysts’ estimates,” he noted, adding that the company is likely to disappoint expectations for operating margin set by activist investor Elliot Management. That investor in January had suggested that eBay “should be able to achieve 32% Non-GAAP [operating] margin in 2021,” Wells Fargo noted.

Schenkel said the company is reviewing its options regarding its StubHub ticketing business, one of its best performers, and would have an update next quarter. But he declined to say when the company would shed more light on the prospects for its classifieds business. Both lines of businesses are under review as the company mulls their long term options for them, he said. Unloading those businesses would allow the company to focus on its core marketplace and net some cash, but turn off their revenue spigots.