eBay reports Q3 growth, but outlook gets chopped

Despite growing revenue by 13 percent, the e-commerce giant lowered its revenue guidance for the fiscal year.
Written by Natalie Gagliordi, Contributor

The decision to split eBay and PayPal into two separate, publicly traded companies was widely expected by analysts to be the focal point of eBay's third quarter earnings report, published after the bell Wednesday. But now the outlook may take over. 

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    The San Jose, Calif.-based company reported a net income of $673 million, or 54 cents per share (statement). Non-GAAP earnings were 68 cents per share on a revenue of $4.4 billion, up 13 percent year-over-year.

    Wall Street was looking for eBay to report earnings of 67 cents per share on a revenue of $4.37 billion.

    The solid quarter was eclipsed by the company's outlook. For the current quarter, analysts were expecting earnings of 91 cents per share on revenue of $5.16 billion.

    But eBay followed up with a revenue guidance range between $4.8 billion and $4.9 billion with earnings projected to land between 88 and 91 cents a share. 

    For the year, eBay lowered its revenue forecast to a range of $17.84 to $17.95, down from the previously projected $18 billion to $18.3 billion.

    eBay CEO John Donahoe addressed the pending PayPal split, admitting that competition in the payments space has heated up and reiterating eBay's view that the benefits of the separation will come in the form of increased agility and innovation for each company.

    Rapidly changing competitive environments in commerce and payments underscore the opportunities for eBay and PayPal, and highlight how each business will benefit from the focus and agility of being an independent company.

    PayPal had another strong quarter, and its mobile payments leadership and momentum continued with mobile volume up 72 percent to $12 billion. PayPal is on track to process 1 billion mobile transactions in 2014. And eBay continues to focus on enhancing its competitive position, improving the experience for buyers and sellers and investing in consumer engagement. As we prepare to separate eBay and PayPal in 2015, our teams are focused on strong execution to ensure each business is set up for long-term success.

    All three of eBay's business segments posted growth for the quarter. PayPal revenue grew to $2 billion, bolstered by 4.4 million new active registered accounts, ending the quarter at 157 million, up 14 percent.

    The Enterprise group grew sales by 14 percent and brought in $259 million in revenue. 

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    Marketplaces rounded out the quarter, accounting for $2.2 billion in revenue. The segment gained 3.4 million new buyers, ending the quarter with 152 million active buyers, an increase of 13 percent.

    In after hours trading the stock was down more than 3 percent.

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