eBay posts solid Q3, concludes operating review

While the e-commerce company is still reviewing the value of StubHub and its Classifieds business, eBay's finalized operating review resulted in a three-year plan to improve margins.

Ebay published its third quarter financial results on Wednesday, meeting market expectations. The company also announced that it has concluded an operating review, resulting in three-year plan to improve margins and reinvest in customer initiatives. 

In spite of the solid results, eBay's shares were down slightly in after-hours trading. 

A strategic review of eBay's assets, including StubHub and its Classifieds business, remains ongoing, the company said. It anticipates sharing an update on the StubHub business before the next earnings release.

In Q3, eBay's non-GAAP earnings came to 67 cents on revenue of $2.65 billion, flat on a year-over-year basis. 

Wall Street was looking for earnings of 64 cents on revenue of $2.64 billion. 

eBay also said it returned $1.1 billion to shareholders in Q3, comprising $1 billion of share repurchases and $115 million paid in cash dividends.

"We performed in line with expectations in Q3 while improving the Marketplace experience, creating better customer outcomes, and maintaining momentum in advertising and payments," interim CEO Scott Schenkel said in a statement. 

In March, eBay faced investor-led pressure to restructure and sell some of its businesses. In response, the company's board approved a strategic review of eBay's assets. At that point eBay began working with prominent shareholders Elliott Management and Starboard Value as it reviewed strategic options. eBay previously added two independent directors to its board as part of the review agreement with activist investors.

Meanwhile, a month ago, eBay announced CEO Devin Wenig was stepping down.

After concluding its operating review, eBay said its plan for operating efficiency, combined with reinvestments and 2019 margin expansion, should drive 3 points of additional operating margin by 2022 and create capacity to reinvest in customer initiatives. 

eBay's Q3 non-GAAP operating margin increased to 26.6 percent. 

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Gross merchandise volume (GMV) in Q3 came to $21.7 billion, down 4 percent. Still, eBay grew active buyers by 4 percent across its platforms, for a total of 183 million global active buyers. 

eBay's Marketplace platforms delivered $2.1 billion of revenue and $20.5 billion of GMV. Marketplace revenue was down 1 percent, and GMV was down 5 percent. 

StubHub platforms drove revenue of $306 million for the quarter, up 5 percent, and GMV of $1.2 billion, flat year-over-year. Classifieds platforms delivered revenue of $265 million, up 4 percent. 

For the fourth quarter, eBay expects net revenue between $2.77 billion and $2.82 billion, with non-GAAP earnings per diluted share from continuing operations in the range of 73 cents to 76 cents. For the full fiscal year 2019, it expects net revenue between $10.75 billion and $10.80 billion, with non-GAAP earnings per diluted share from continuing operations in the range of $2.75 to $2.78.