EBay allays slowing growth concerns

Listen to this article

00:00
00:00

A renewed burst of growth in its core US market in the most recent quarter helped eBay to inch past Wall Street revenue and earnings expectations and counter some of the concerns about a slowdown in its more mature markets, according to figures released on Wednesday.

The online auction company also raised its forecasts for next year and reiterated its confidence that Skype, the internet telephone service for which it paid $2.6bn, would produce $200m of revenues in 2006.

Ebay has been dogged this year by concerns that it faces both slowing revenue growth and higher costs as it spends more to expand in new international markets, especially China.

Meg Whitman, chief executive officer, said Germany, the company’s second-biggest market, had seen revenue growth pick up again in the three months to the end of September, while China, which had experienced slowing growth in the first half of the year, had also seen an acceleration.

Ebay said that revenues in the US had risen by 29 per cent to $450m – the strongest growth rate recorded in the past four quarters and a rebound from the 20 per cent seen in the first three months of the year. That contributed to overall revenues in the quarter of $1.1bn, an increase of 37 per cent from the previous year.

However, while US growth has rebounded, the growth rate in eBay’s international and payments businesses continued to decelerate, as expected.

International revenues grew by 43 per cent to $409m, a slowdown from the 83 per cent advance seen in the same period a year ago. Revenues for the PayPal payments service rose by 44 per cent to $247m, a slowdown from 59 per cent in the corresponding period.

The revenue increase pushed eBay’s profit margins higher, despite an increase in sales and marketing expenses as it pushes more aggressively into international markets and faces higher costs to advertise on search engines.

Pro forma net income, excluding a 1 cent a share tax charge, came to 21 cents, ahead of forecasts of 20 cents. On a reported basis, eBay said net income reached $255m, or 18 cents a share, up from $182m, or 13 cents a share, the year before.

Excluding the impact of acquisitions made this year, which include Skype as well as Rent.com and Shopping.com, revenues would have grown by 33 per cent, eBay said.

Rajiv Dutta, chief financial officer, is set to move to London in the newly-created position of president of the Skype business, but will remain in his current position until a replacement was found, eBay said.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.