Earnings preview: eBay might see positive momentum in Q2

eBay Inc. (NASDAQ: EBAY) is scheduled to report second quarter 2019 earnings results on Wednesday, July 17, after market close. Analysts project earnings of $0.62 per share, reflecting an increase of nearly 17% year-over-year. Revenue is estimated to increase by 1.3% to $2.67 billion.

The top line results are expected to benefit from growth in active buyers as well as healthy momentum in the payments and advertising businesses. The company’s business model, which pushes costs to suppliers, is expected to help drive margins.

eBay’s efforts to control costs, such as the reduction in marketing
expenses, is likely to benefit earnings. However, the decline in gross
merchandise volume (GMV) remains a concern. The company also faces stiff
competition from larger rivals like Amazon (NYSE: AMZN) and Walmart (NYSE: WMT).

eBay has faced pressure from activist investors to take measures
to enhance shareholder value. These include efforts to improve the performance
of its StubHub and Classifieds businesses. Updates on this issue are worth
keeping an eye on.

In the first quarter of 2019, eBay topped revenue and earnings estimates, with revenue rising 2% to $2.64 billion and adjusted EPS jumping 26% to $0.67. The company had a total of 180 million global active buyers, reflecting an increase of 4%. GMV dropped 4% to $22.6 billion. Last quarter, StubHub revenues remained flat while Classifieds revenue rose 4% versus the prior year.

Also read: eBay Q1 2019 Earnings Conference Call Transcript

For the second quarter of 2019, eBay has guided for revenues in
the range of $2.64 billion to $2.69 billion. GAAP EPS is expected to be
$0.41-0.45 while adjusted EPS is expected to be $0.61-0.63.

Based on a strong performance last quarter, the company raised its guidance for full-year 2019 to a range between $10.83 billion and $10.93 billion. GAAP EPS from continuing operations is estimated to be $1.94-2.04. Adjusted EPS is projected to be $2.64-2.70.

Shares of eBay have gained 42% year-to-date and 10% over the past three months.

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