eBay execs shed more light on Q2 hacking, look toward recovery

Despite early glimmers of recovery already, eBay's CFO lamented that “the Marketplaces business has to dig itself out of a hole."

Even though eBay managed to squeak out better-than-expected earnings after the bell on Wednesday, the impact was still obvious on the balance sheet.

"The cyber attack clearly impacted eBay’s performance in the second quarter,” admitted CEO John Donahoe during the quarterly shareholders call.

Donahoe asserted that eBay was performing above expectations for at least the first half of the second quarter.

"As John indicated, we got off to a good start, but we hit significant obstacles late May,” concurred eBay chief financial officer Bob Swan.

That month , the San Jose-headquartered corporation discovered unauthorized access on its network. Specifically, an eBay database hosting non-financial eBay user information, such as encrypted passwords, had been compromised.

Donahoe reassured there has been no evidence that the passwords were breached in any way. But it was the company’s “responsibility” and “right decision,” he continued, to ask sellers and buyers alike to change their passwords regardless.

The next step for eBay is to focus on recovery.

Donahoe cited approximately 80 percent of buyers have since changed their passwords, but not everyone in that pool has demonstrated previously seen activity levels.

"We're stepping up targeted marketing efforts in the second half to fully reengage these and other users who have not yet reset their password,” Donahoe said.

Swan outlined some of the measures eBay has taken to fuel re-engagement, such as coupling, seller incentives, and increased marketing spend.

"We began to see some recovery in the first half of July,” said Swan, positing that thanks to PayPal and the enterprise unit, eBay should be back on track to double-digit growth soon.

Yet, Swan also lamented that “the Marketplaces business has to dig itself out of a hole."

Furthermore, eBay was forced to cut its annual revenue guidance range by roughly $200 million as a result of the security breach and its lasting impact.

For the current quarter, analysts are expecting earnings of at least 71 cents per share on a revenue of $4.42 billion.

eBay followed up with a slightly softer revenue guidance range between $4.3 billion and $4.4 billion with earnings projected to fall between 65 and 67 cents a pop.

For the year, eBay's revenue forecast calls for a range of $18 billion to $18.3 billion with earnings between $2.95 and $3.00.