How Will eBay Perform Through 2018 After A Strong First Half?

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eBay (NASDAQ:EBAY) announced its second quarter results on July 18, reporting a 9% year-over-year increase in net revenue to $2.6 billion for the quarter. Growth came from both the transaction and marketing services businesses, which were both up 9-10% to $2.1 billion and $563 million, respectively. Within the transactions segment, marketplaces revenues rose 9% to $1.8 billion, which was complemented by a 5% increase in StubHub revenues to $240 million. Similarly, within the marketing services segment, marketplaces revenues were up 6% y-o-y to $298 million with classifieds revenues surging 18% to $259 million. Growth in transaction revenues was driven by a 11% increase in gross merchandise volume (GMV) to $22.6 billion. On the other hand, GMV for StubHub was up only 5% to $1.1 billion.

However, the strong revenue growth was offset by an increase in operating expenses that led eBay’s non-GAAP operating profit margin to compress by around 1 percentage point over the prior year period to to 25.2%. A similar trend was observed in the March quarter as well. However, share repurchases worth approximately $1 billion through each of the two quarters this year helped push EPS  higher.

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Going forward, we expect both segments to sustain 10-12% revenue growth through the year. On the other hand, we expect full year margins to be slightly lower than 2017 levels due to a limited increase in marketing and promotion expenses. We have summarized our full year expectations on an interactive earnings dashboard for eBay, based on the recent trends and the company’s own guidance. You can change expected segment revenue and margin figures for eBay to gauge how it will impact expected EPS for the year.

See our complete analysis for eBay

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