eBay Ups Guidance on Strong Quarter

Online auction king eBay reported a better than 50 percent rise in quarterly revenue from last year and profits that jumped by about 77 percent compared to last year, thanks in part to its PayPal unit and growth overseas.

But the $4.2 billion it expects to rake in for 2005 fell a bit short of analysts’ estimates.

The company reported a profit of $182.3 million (27 cents per share), compared to a profit of $103.3 million (16 cents per share) during the same time last year.

Revenues rose by 52 percent from the same time last year to $805.9 million. A big reason was PayPal, its payment service that collects “tolls” for every payment it helps make between buyers and sellers. The division contributed transaction revenue of more than $166 million, a 66 percent year-over-year increase.

CEO Meg Whitman apologized for the six days of outages that PayPal recently suffered. Ironically, they were caused by the rollout of new code designed to improve the scalability of the payment service. “We let our community down and I want to apologize to our users,” Whitman said. She added that developing PayPal Merchant Services for transactions not taking place on eBay, would be a top priority for 2005.

The San Jose, Calif.-based digital trading post had told analysts to expect $770 million for net revenues, or 24 cents per share (25 cents for pro forma earnings per diluted share). Analysts’ expectations ranged from 25 to 29 cents per share, averaging 27 cents.

The company ended the quarter with 125.0 million registered users, a 46 percent increase over the same quarter last year. 51.7 million were active users, pushing $8.3 billion in gross merchandise volume (GMV), a 44 percent year-over-year increase.

Last quarter, eBay’s net profit was $109.7 million, (33 cents per share); consolidated revenues were $509.3 million.

Of eBay’s twelve billion-dollar categories, Automotive once again far surpassed the others, delivering $10.7 billion for the quarter. The next highest-performing category –Consumer Electronics — brought in $2.5 billion.

Fixed price trading, which includes the “buy it now” function, accounted for about 29 percent of GMV.

increased its stake in Korea’s Internet Auction Company from 62.2 percent to approximately 99.7 percent.

CFO Rajiv Dutta said the company could end the year having achieved more than 50 percent growth. Were fortunate to have a business where we can invest significantly in growth while maintaining profit margins,” he said. The company will spend around $500 million on strategic projects next year. He said the money came from savings due to operational efficiencies, rather than from profits.

The company will invest aggressively in China, spending on marketing, building out customer support and advanced functionality. It will continue to expand PayPal internationally, and expand eBay’s global footprint, bringing foreign sites onto the main technology platform.

eBay once again raised its guidance for the quarter and the full fiscal year 2004, looking for Q4 consolidated net revenues of approximately $915 million, $29 million higher than the companys most recent guidance. For the whole of 2004, it said consolidated net revenues could soar as high as $3.25 billion.

The company also set its goals for 2005: consolidated net revenues of up to $4.2 billion, with Q1-05 consolidated net revenues of as much as $1.02 billion. Guidance for the rest of next year was $1.01 billion in Q2-05; $1.01 billion in Q3-05; and $1.16 billion in Q4. EBay estimates that GAAP earnings per diluted share could be as high as 34 cents in Q1-05, 33 cents in Q2-05, 33cents in Q3-05 and 41 cents in Q4-05, for a total of $1.41 per share. Analysts’ estimates ranged from $1.52 to $1.70, averaging $1.61 per share.

Shares on the Nasdaq closed at $91.36 on Wednesday, down 1.18 percent from the day’s high.

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