EBay Forecast Beats Estimates as Traffic Efforts Pay Off

eBay's Revenue Stagnates as Amazon Turns Up the Heat
  • Barcode scanning and more searchable catalog lures traffic
  • Raises low end of 2016 revenue forecast to $8.6 bln-$8.8 bln

EBay Inc. projected sales on its marketplace for the second quarter and full year that will meet or exceed analysts’ estimates, suggesting efforts to boost traffic, such as using barcode scanning and a more searchable catalog, are gaining traction.

Since separating from PayPal last year, Chief Executive Officer Devin Wenig has been under pressure to reverse sluggish growth at EBay in the face of competition from Amazon.com Inc., which continues to woo shoppers with fast delivery, and after Google changed its search algorithm in a way that hurt EBay traffic.

"Even low single digit growth is positively received because there’s a lot of concern about EBay’s ability to grow its business at all," Gil Luria, an analyst at Wedbush Securities Inc., said before the results.

The shares rose 2.1 percent to $24.98 in extended trading after the results were announced. They ended the day at $24.49, up 1.1 percent, and are down 11 percent so far this year.

Revenue in the second quarter will be $2.14 billion to $2.19 billion EBay said in a statement Tuesday. The average analyst estimate was for $2.14 billion. For the full year, EBay said it expects revenue of $8.6 billion to $8.8 billion, compared with analysts’ estimates of $8.73 billion.

Profit, excluding certain items, will be 40 cents to 42 cents a share in the current quarter, EBay said Tuesday, compared with analysts’ estimates of 44 cents.

For the three months ending March 31, EBay posted revenue of $2.14 billion, up 3.7 percent from a year earlier, excluding PayPal Holdings Inc., which became a standalone company in July. Analysts were looking for sales of $2.08 billion on average, according to data compiled by Bloomberg. Earnings excluding some costs were 47 cents a share in the first quarter, compared with estimates for 45 cents.

EBay’s Gross Merchandise Volume -- the total value of goods sold on the marketplace -- of $20.5 billion in the quarter was up 1 percent from a year earlier.

Amazon dominates e-commerce by offering customers in some areas delivery as quick as same-day, while EBay focuses on deals and difficult-to-find items. EBay is standardizing how merchants list products on the site hoping to improve its search engine results and draw more shoppers. That’s difficult because product listings come and go on EBay more often than on Amazon sites -- and search engines generally reward longer-lasting listings.

Now merchants can use their smartphones to scan the barcodes on new products, which EBay uses to automatically fill in descriptions and specifications. The barcodes also link to consumer reviews and product images, information that search engines typically reward with higher placement in relevant search results.

U.S. e-commerce sales will reach $385 billion this year, up 13 percent from a year ago, according to EMarketer.

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