Yahoo Finance eBay (NASDAQ:EBAY) Surprises With Q1 Sales But Stock Drops
Online marketplace eBay (NASDAQ:EBAY) beat analysts' expectations in Q1 CY2024, with revenue up 1.8% year on year to $2.56 billion. On the other hand, next quarter's revenue guidance of $2.52 billion was less impressive, coming in 1.6% below analysts' estimates. It made a non-GAAP profit of $1.25 per share, improving from its profit of $1.11 per share in the same quarter last year.
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eBay (EBAY) Q1 CY2024 Highlights:
Revenue: $2.56 billion vs analyst estimates of $2.53 billion (small beat)
EPS (non-GAAP): $1.25 vs analyst estimates of $1.20 (4% beat)
Revenue Guidance for Q2 CY2024 is $2.52 billion at the midpoint, below analyst estimates of $2.56 billion
EPS (non-GAAP) Guidance for Q2 CY2024 is $1.13 at the midpoint, below analyst estimates of $1.14
Gross Margin (GAAP): 72.6%, in line with the same quarter last year
Free Cash Flow of $472 million is up from -$4 million in the previous quarter
Active Buyers: 132 million
Market Capitalization: $26.1 billion
"eBay's Q1 results marked a strong start to 2024 as we continue to make progress toward our goal of sustainable GMV growth," said Jamie Iannone, Chief Executive Officer at eBay.
Originally known as the first online auction site, eBay (NASDAQ:EBAY) is one of the world’s largest online marketplaces.
Online Marketplace
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales Growth
eBay's revenue growth over the last three years has been unimpressive, averaging 1.8% annually. This quarter, eBay reported lacklustre 1.8% year-on-year revenue growth, in line with analysts' expectations.
eBay is expecting next quarter's revenue to decline 1% year on year to $2.52 billion, a reversal from the 4.9% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 2.1% over the next 12 months.
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Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like eBay because it measures how much the company earns in transaction fees from each buyer. Furthermore, ARPB gives us unique insights as it's a function of a user's average order size and eBay's take rate, or "cut", on each order.
eBay's ARPB growth has been decent over the last two years, averaging 5.5%. Although its active buyers have shrunk during this time, the company's ability to increase prices demonstrates its platform's value for existing buyers. This quarter, ARPB declined NaN% year on year to $19.36 per buyer.
Key Takeaways from eBay's Q1 Results
Results in the quarter were fine, with revenue and EPS exceeding expectations. However, revenue growth was quite weak. Adding to the bad news is the fact that both the company's revenue and EPS guidance for next quarter missed analysts' expectations. Overall, the results could have been better. The company is down 6% on the results and currently trades at $48 per share.
eBay may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
