eBay's Q3: Earnings beat estimates but Q4 forecast looks weak
eBay reported third quarter earnings after the bell on Wednesday, and the report was saved by revenue increases across the portfolio.
Collectively, the online retail giant reported a net income of $689 million, or 53 cents per share (statement).
Non-GAAP earnings were 64 cents per share on a revenue of $3.9 billion, up 14 percent annually.
Wall Street was looking for earnings of 63 cents per share on a revenue of $3.9 billion.
The bright spot during Q3 was mobile, reaffirming once again CEO John Donahoe's big bet on the medium.
Mobile commerce volume jumped by 75 percent in Q3 with 3.2 million new customers to boot. eBay has also seen its apps downloaded more than 200 million times since inception.
Donahoe reflected further in prepared remarks:
We delivered strong third quarter results, with mobile driving a significant portion of our new user growth and continuing to transform how consumers shop and pay around the world. Our scale and experience, the strength of our global commerce platforms, our technology assets and our mobile commerce capabilities strongly position us to be a leader in the commerce revolution under way. In the past 12 months we have enabled $200 billion of commerce volume, a 20 percent increase in a fairly lackluster macro environment. That growth demonstrates the strength of our core businesses and our power as a partner, not a competitor, to merchants, brands and retailers
On a unit level, PayPal revenue grew by 19 percent on a year-over-year basis to $1.6 billion, bringing along five million more active members during the three-month period. PayPal's user base now stands at roughly 137 million, up 17 percent.
The eBay Enterprise department also grew its revenue, albeit by only five percent y-o-y, contributing $238 million to the total Q3 pot.
The core fixture, Marketplaces, gained 3.9 million more users during the quarter as well as $2 billion in revenue. eBay Marketplaces now has 124 million members, up 14 percent y-o-y.
The pressure is undoubtedly on for the fourth quarter with the holiday season nearly underway.
However, eBay shares dropped immediately by approximately four percent in after-hours trading. That is likely due to the weak outlook.
Wall Street is expecting eBay to deliver a revenue of at least $4.64 billion with earnings of 83 cents per share in Q4.
eBay itself offered a Q4 revenue guidance range of $4.5 billion to $4.6 billion with non-GAAP earnings slated to fall between 79 and 81 cents per share. The company attributed the softer forecast to the pending $800 million acquisition of digital payments platform Braintree, which is expected to close during the fourth quarter of the calendar year.
Chart via eBay Investor Relations