eBay Inc. Reports Better Than Expected Q2 Results

• Revenue of $2.5 billion, up 5% on an as-reported basis and up 6% on an FX-Neutral basis
• Gross Merchandise Volume of $18.2 billion, down 2% on an as-reported basis and down 1% on an FX-Neutral basis
• GAAP and Non-GAAP EPS per diluted share of $0.32 and $1.03, respectively, on a continuing operations basis
• GAAP and Non-GAAP operating margin of 20.4% and 26.9%, respectively
• Returned $383 million to shareholders in Q2, including $250 million of share repurchases and $133 million paid in cash dividends

eBay Inc., a global commerce leader that connects millions of buyers and sellers around the world, today reported financial results for its second quarter ended June 30, 2023.

"In Q2, we exceeded expectations on all key metrics while investing in sustainable growth," said Jamie Iannone, Chief Executive Officer at eBay. "Three years ago, I set our ambition of becoming the best global marketplace to buy and sell through a tech-led reimagination. Now, we're raising the bar for innovation and have evolved our vision – to reinvent the future of ecommerce for enthusiasts, only at eBay. This work is already producing compelling results, and we are confident the sharper focus will deliver long-term returns to our shareholders."

"Q2 was another solid quarter for eBay," said Steve Priest, Chief Financial Officer at eBay. "Our GMV, revenue and EPS exceeded expectations, and came in at or above the high-end of our guidance ranges despite ongoing macroeconomic uncertainty. I am proud of our team for their continued focus and execution on our long-term objectives and strategy."

Second Quarter Financial Highlights

• Revenue was $2.5 billion, up 5% on an as-reported basis and up 6% on a foreign exchange (FX) neutral basis.
• Gross Merchandise Volume (GMV) was $18.2 billion, down 2% on an as-reported basis and down 1% on an FX-Neutral basis.
• GAAP net income from continuing operations was $172 million, or $0.32 per diluted share.
• Non-GAAP net income from continuing operations was $555 million, or $1.03 per diluted share.
• GAAP and Non-GAAP operating margin was 20.4% and 26.9%, respectively.
• Generated $605 million of operating cash flow and $492 million of free cash flow from continuing operations.
• Returned $383 million to shareholders, including $250 million of share repurchases and $133 million paid in cash dividends.

Business Highlights

Revenue Initiatives

• eBay's first-party advertising products, primarily driven by Promoted Listings, delivered $341 million of revenue in the second quarter, up 47% on an as-reported basis and up 49% on an FX-Neutral basis.
• The company's total advertising offerings generated over $367 million in revenue in the second quarter, representing roughly 2.0% of GMV.

Strategic Initiatives

• eBay launched Authenticity Guarantee for streetwear in the U.S. The company also expanded Authenticity Guarantee to kids' sneakers in the U.S. and U.K., and trading cards in Canada.
• During the quarter, eBay launched the Certified by Brand program, which provides shoppers with access to a wider selection of luxury goods by partnering directly with brands to scale their presence in the secondary market.
• In July, eBay acquired Certilogo, an AI-powered authentication provider for fashion. This acquisition further solidifies eBay as a trusted destination for consumers to shop pre-loved apparel with confidence.
• Coinciding with the premiere of "Air," a new movie set in 1985 about the origin story of the Air Jordan 1, eBay partnered with several top sneaker sellers to host The '85 Shop in Chicago. This retail pop-up store featured a complete collection of original Air Jordan 1s in every colorway, a never-before-released Air Jordan 1 sample and other iconic 1980s sneakers.
• eBay U.K. relaunched the Certified Recycled program for used parts and accessories, providing an added layer of trust for shoppers looking for tested and graded vehicle parts.
• eBay Motors held a "Renew Your Ride" event in Atlanta, offering in-person consultations with expert builders on how drivers can extend the life of a vehicle using eBay Guaranteed Fit purchase protections.
• eBay is beta testing a generative AI tool on its mobile app that helps sellers create detailed item descriptions based on the title or keywords they enter.
• On iOS, eBay launched a Live Commerce Streaming experience, allowing sellers to stream live commerce events directly through the eBay app. The company also introduced Extended Auctions on eBay Live, the most highly requested live commerce feature from sellers. This feature extends an auction's time by five seconds if a new bid is received in the last five seconds of an auction.
• eBay Ventures invested in sports resale marketplace, Sideline Swap, and luxury fashion rental marketplace, The Volte, furthering the company's commitment to recommerce.

Impact

• The company published its seventh annual Diversity, Equity and Inclusion Report, highlighting the progress and lessons learned around four strategic objectives: increasing representation, cultivating belonging, engaging communities and building inclusive technology.
• eBay also published its 2022 Impact Report, which recognizes the progress the company has made toward its environmental and social goals, celebrates the positive impact of eBay's marketplace and looks ahead to its ambitious 2025 and 2030 impact goals.
• In the U.K., the eBay Foundation partnered with grantees to launch a new inclusive entrepreneurship program focused on supporting refugee entrepreneurs.
• During the quarter, eBay for Charity contributed more than $38 million globally.

Other Selected Financial and Operational Results

• Operating margin – GAAP operating margin decreased to 20.4% for the second quarter of 2023, compared to 21.7% for the same period last year. Non-GAAP operating margin decreased to 26.9% for the second quarter of 2023, compared to 28.7% for the same period last year.
• Taxes – The GAAP effective tax rate for continuing operations for the second quarter of 2023 was 39.7%, compared to 26.3% for the second quarter of 2022. The non-GAAP effective tax rate for continuing operations for the second quarter of 2023 was 16.5%(1).
• Cash flow – The company generated $605 million of operating cash flow and $492 million of free cash flow from continuing operations during the second quarter of 2023.
• Capital returns – The company repurchased $250 million of its common stock, or nearly 6 million shares, in the second quarter of 2023. The company's total repurchase authorization remaining as of June 30, 2023 was approximately $2.3 billion. The company also paid cash dividends of $133 million during the second quarter of 2023.
• Cash and cash equivalents and non-equity investments – The company's cash and cash equivalents and non-equity investments portfolio totaled $5.3 billion as of June 30, 2023.

Business Outlook

eBay is providing the following guidance for continuing operations for Q3 2023.

Dividend Declaration

• eBay's Board of Directors has declared a cash dividend of $0.25 per share of the company's common stock. The dividend is payable on September 15, 2023 to stockholders of record as of September 1, 2023.

(1) We use a non-GAAP effective tax rate for evaluating our operating results. Based on our current long-term projections, we are using a non-GAAP tax rate of 16.5%. This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate.

Source : eBay, Inc

Image : Valeriya Zankovych / shutterstock.com (1251361531)

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