What are eBay’s (EBAY) expectations going into fiscal year 2024?

Shares of eBay Inc. (NASDAQ: EBAY) dropped over 1% on Tuesday. The stock has gained 23% over the past three months. The ecommerce company delivered revenue and gross merchandise volume (GMV) growth in the fourth quarter of 2023 despite softness in demand earlier in the period. Demand remained relatively uneven at the start of 2024 amidst a dynamic operating environment.

Revenue and GMV

eBay’s revenue increased 2%, on a reported basis, and 3%, on an FX-neutral basis, to $2.6 billion in Q4 2023 compared to the same period a year ago. GMV was $18.6 billion, up 2% on a reported basis, and nearly flat on an FX-neutral basis.

As stated on the quarterly call, demand remained soft for discretionary goods at the beginning of the fourth quarter in an inflationary environment, but business picked up towards the end of November, especially in the US, as consumers searched for value to make the most of their tight holiday budgets. Focused categories continued to drive momentum, with the refurbished and luxury categories contributing significantly to GMV growth.

US GMV was nearly flat in the fourth quarter, as consumer demand remained resilient. International GMV dropped around 1% on an FX-neutral basis, but rose 4% on a reported basis, helped by FX tailwinds.

Looking ahead to 2024, eBay witnessed relatively uneven demand across its major markets at the beginning of the year, with weaker-than-expected retail sales in the US in January. The company expects revenue to range between $2.50-2.54 billion in the first quarter of 2024, representing year-over-year growth of 0-2% on an FX-neutral basis. GMV is expected to range between $18.2-18.5 billion in Q1, representing an FX-neutral decline of 2% to flat year-over-year.

Assuming the macroeconomic environment remains unchanged, eBay expects its FX-neutral GMV growth rate to turn positive in the third or fourth quarter of 2024. Revenue is expected to outpace GMV growth by about two points on an FX-neutral basis.

Profitability

In Q4 2023, eBay’s GAAP net income from continuing operations rose 8% YoY to $728 million and EPS grew 13% to $1.40. Adjusted EPS remained flat at $1.07. Adjusted operating margin decreased to 26.7% from 29.9% last year.

For the first quarter of 2024, eBay expects GAAP EPS to range between $0.86-0.90 and adjusted EPS to range between $1.19-1.23. Adjusted EPS is expected to grow 7-11% YoY. Adjusted operating margin is expected to range between 29.6-30% in Q1.

For the full year of 2024, adjusted EPS is expected to grow 8-10% YoY while adjusted operating margin is expected to expand by 60-100 basis points.