eBay Shares Drop On Q2 Miss, Weak Guidance (EBAY)

Shares of eBay EBAY fell in after-market trading as the company reported worse than expected second quarter results. Also, guidance for the third quarter was below analyst forecasts and shares fell sharply.

Second Quarter Highlights

For the second quarter of 2013, eBay reported earnings per share of $0.63 vs. the expected $0.64, a miss of 1.56 percent. Earnings per share rose 12.5 percent from a year ago.

"We had a strong second quarter, with $51 billion of enabled commerce volume across Marketplaces, PayPal and eBay Enterprise driving double-digit revenue and earnings growth," said eBay Inc. President and CEO John Donahoe. "Macroeconomic headwinds in Europe and Korea will continue to be a challenge in the second half of the year. But our core businesses are strong and we continue to attract millions of new customers each quarter through mobile innovation. We remain confident in our ability to meet our goals and drive global commerce innovation and leadership."

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Revenues in the quarter also missed forecasts at $3.87 billion vs. $3.89 billion estimate, a slight miss. Revenues rose 13.82 percent from the same period a year ago.

Weak Guidance

For the third quarter of 2013, eBay now projects earnings per share between $0.61 and $0.63, below the analyst forecasts of $0.65. eBay sees revenue in the quarter between $3.85 billion and $3.95 billion, also below forecasts of $3.97 billion.

Segment Breakdown

PayPal delivered a strong second quarter performance with revenue increasing 20 percent to $1.6 billion. PayPal gained 4.7 million active registered accounts in the period and ended the quarter with 132 million, a 17 percent increase. PayPal's net total payment volume grew 24 percent to $43 billion driven by consumer and merchant use of PayPal both on and off eBay. Payment velocity increased with a sequential acceleration of both the number of transactions and payment volume.

Marketplaces delivered a strong second quarter performance with revenue of $2.0 billion, increasing 10 percent, or 12 percent excluding the gain from the resolution of an indirect tax dispute in 2012. Marketplaces gained 3.5 million active users in the period and ended the quarter with 120 million, a 14 percent increase. Gross merchandise volume, excluding vehicles, increased 13 percent to $18 billion. Fixed price GMV grew 17 percent globally and represented 69 percent of total GMV. U.S. GMV, excluding vehicles, increased 16 percent to $7.3 billion driven by mobile and momentum in the parts & accessories and home & garden categories.

International GMV, excluding vehicles, increased 11 percent to $11 billion, showing stable growth while facing a tougher macroeconomic environment. Marketplace's new search engine, which went live in North America in the second quarter, will help to enable smarter, faster and more intuitive search experiences.

eBay Enterprise contributed $246 million in revenue for the second quarter, an 11 percent increase. Its enterprise commerce platform generated $815 million in global ecommerce Merchandise Sales, a 21 percent increase.

Shares Drop

eBay shares fell as much as 6.97 percent after hours to $53.86 before recovering to $54.66, a decline of 5.6 percent.