eBay's fourth quarter earnings soar after solid holiday season

eBay's fourth quarter earnings soar after solid holiday season

Summary: eBay manages to meet Wall Street's expectations and surpass them thanks to boosts from PayPal, other subsidiaries, and a strong holiday season.

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Following strong results this past holiday season from online (and offline) retailers, eBay was expected to deliver strong earnings for the fourth quarter of 2011 -- and it did.

eBay reported a fourth quarter net income of $2.0 billion, or $1.51 a share (statement). Non-GAAP earnings were 60 cents a share on a revenue of $3.38 billion and a non-GAAP net income of $788.6 million.

Wall Street was expecting eBay to report fourth quarter earnings of 57 cents a share on revenue of $3.32 billion.

For 2011 overall, eBay produced $11.7 billion in revenue -- a 27 percent increase from 2010 -- at $2.03 per share on a non-GAAP basis.

CEO John Donahue reflected on the quarter in prepared remarks:

We had a strong fourth quarter finish to an excellent year, increasing our confidence in our three-year outlook.

Across eBay, PayPal, GSI and X.commerce, we have a robust portfolio of global commerce platforms and innovative mobile, local and social commerce technology assets. We are well-positioned to compete in the emerging new retail environment, and to help retailers of all sizes grow and engage their customers anytime, anywhere. We are a different eBay today, no longer just an ecommerce leader but a stronger, more diverse global commerce company shaping the future of shopping and payments.

PayPal, in particular, proved to be one of eBay's strongest asset -- if not the most valuable one at the end of the day. The digital wallet business increased its revenue by 28 percent, and it now retains 106.3 million active registered accounts.

Revenue from PayPal's international markets also exceeded revenue from the U.S. for the first time.

Furthermore, PayPal's mobile business is doing much better as it reached a volume of $4.0 billion in 2011 -- five times more than what it saw in 2010.

For the outlook, eBay is predicting a revenue of $3.05 billion to $3.15 billion at the end of Q1 2012 with non-GAAP earnings between 50 to 51 cents a share. Wall Street wants more at an estimate of $3.16 billion and 54 cents per share.

For the year, eBay expects to achieve a net revenue in the range of $13.7 billion to $14 billion with non-GAAP earnings between $2.25 to $2.30.

Wall Street is slightly more conservative for 2012 as a whole, looking for $13.6 billion but with $2.32 per share.

By the numbers:

  • Marketplaces revenue was up 16 percent year-over-year during the fourth quarter. (eBay attributes this to "increased buying and selling on our platforms and growth from acquisitions.")
  • GSI, which was acquired during the second quarter of 2011, contributed $363.6 million in revenue for Q4.
  • eBay mobile topped $5 billion in transactions on mobile devices throughout 2011.

Related:

Topics: E-Commerce, Banking, Google

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