eBay Inc. Earnings Cheat Sheet: Margins Shrink as Net Income Drops

Rising costs hurt S&P 500 (NYSE:SPY) component eBay Inc. (NASDAQ:EBAY) in the second quarter as profit dropped from a year earlier. eBay Inc. is an Internet company that, together with its subsidiaries, provides online marketplaces for the sale of goods and services. It also provides other online commerce platforms, online payment solutions and communication offerings to a diverse community of individuals and businesses.

Don’t Miss: Wall St. Cheat Sheet’s newest Feature Trades of the Month!

eBay Earnings Cheat Sheet for the Second Quarter

Results: Net income fell to $283.4 million (22 cents per share) vs. $412.2 million (31 cents per share) a year earlier. This is a decline of 31.2% from the year earlier quarter.

Revenue: Rose 24.6% to $2.76 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: EBAY reported adjusted net income of 48 cents per share. By that measure, the company beat the mean estimate of 39 cents per share. It beat the average revenue estimate of $2.61 billion.

Quoting Management: “Second quarter revenue and earnings were strong, with PayPal surpassing 100 million active registered accounts and reporting its first billion-dollar revenue quarter, and eBay growth in the U.S. accelerating,” said eBay Inc. President and CEO John Donahoe. “We also strengthened our portfolio in Q2 with acquisitions that we believe will more broadly position us to enable the future of commerce. We will partner with retailers of all sizes to help them grow in a rapidly shifting, technology-driven multichannel commerce environment, and we will help consumers shop and pay anytime, anywhere, any way.”

Key Stats:

From the first quarter, the company’s current liabilities rose to $6.14 billion from $4.76 billion.

Gross margin shrank 0.2 percentage point to 72%. The contraction appeared to be driven by increased costs, which rose 25.7% from the year earlier quarter while revenue rose 24.6%.

Revenue has risen the past four quarters. Revenue increased 15.9% to $2.55 billion in the first quarter. The figure rose 5.2% in the fourth quarter of the last fiscal year from the year earlier and climbed 0.5% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 40 cents per share.

While the company has been profitable for the last nine quarters, income has fallen year over year by an average of 4.2% over the past five quarters. The quarter hit the hardest was the fourth quarter of the last fiscal year, that saw a 58.7% drop.

Competitors to Watch: Amazon.com, Inc. (NASDAQ:AMZN), GSI Commerce, Inc. (NASDAQ:GSIC), Liquidity Services, Inc. (NASDAQ:LQDT), Google Inc. (NASDAQ:GOOG), Overstock.com, Inc. (NASDAQ:OSTK), BIDZ.com, Inc. (NASDAQ:BIDZ), Gaiam, Inc. (NASDAQ:GAIA), U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), HSN, Inc. (NASDAQ:HSNI), Wal-Mart (NYSE:WMT) and Target (NYSE:TGT).

Don’t Miss Wall St. Cheat Sheet’s newest Feature Trades of the Month!

(Source: Xignite Financials)