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eBay Eyeing International Markets

Posted on Tuesday, Jun 5th 2018

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Amazon’s continued leadership in the retail sector, coupled by Walmart’s push in the e-commerce segment is raising significant concerns for eBay (Nasdaq: EBAY). eBay is fighting back by looking at international markets for growth.

eBay’s Financials

eBay’s first quarter revenues grew 12% over the year to $2.58 billion, marginally short of the Street’s expectations of $2.60 billion. Adjusted EPS grew 9% over the year to $0.53, and was in line with the market’s forecast for the quarter.

During the quarter, the Marketplace platform brought in $2.1 billion in revenues. eBay recorded a 13% growth in the gross merchandise volume (GMV) to $22.5 billion driven by the continued focus on new user experiences. StubHub contributed revenues of $232 million, and GMV of $1 billion. The increase for the segment was driven by a record Super Bowl and strong international growth. Finally, revenues from Classifieds platforms grew 24% over the year to $246 million.

Among operating metrics, global active buyers and customers increased 4% to 171 million. The market was looking for active buyers and consumers to grow to 173 million for the quarter.

For the current quarter, eBay forecast revenues of $2.64-$2.68 billion with an EPS of $0.50-$0.52. The market was looking for revenues of $2.68 billion for the quarter with an EPS of $0.52. eBay expects full-year revenues of $10.9-$11.1 billion with earnings of $2.25 to $2.30 per share. The Street was looking for revenues of $11.02 billion for the year with an EPS of $2.29.

eBay’s User Experience Enhancements

eBay continued to invest in the improvement of the users’ experience. It recently launched a new Interests feature which is expected to help simplify the search process for shoppers significantly. It will gather details on the customer’s interests, hobbies, and style and then use algorithms to offer merchandise that best meets those insights. The feature is currently available on the eBay mobile app in the US for both iOS and Android devices. It plans on bringing the service to the rest of the world during the coming months.

Last year, eBay had launched its Authenticate service that offers an authentication service for luxury products. eBay’s reports reveal that conversion to a sale on authenticated inventory is twice that of similar non-authenticated inventory. Driven by the results, it recently expanded this service to several European markets and into the luxury watch category.

eBay’s International Expansion

eBay is also trying to improve its international presence. Earlier this year, it announced the acquisition of Giosis Japan, a leading e-commerce platform in the country. eBay was already an investor in Giosis prior to the acquisition. Giosis operates several localized marketplaces in Asia, including Giosis’ Japan business.  As part of the transaction, eBay will relinquish its investment in Giosis’ non-Japanese businesses. It did not disclose the terms of the deal. Giosis’s financials are not known, but it had raised $82.1 million in funding.

The recent Walmart and Flipkart acquisition also made eBay change its India strategy. The sale of Flipkart will imply that eBay would receive an approximate $1.1 billion from Walmart for eBay’s 5.4% stake in Flipkart. eBay plans to use those funds to relaunch eBay India. As part of the process, eBay will focus on cross-border trade by bringing imported inventory to India and allowing Indian merchants access to the worlds’ market.

Its stock is trading at $39.07 with a market capitalization of $38.8 billion. It touched a 52-week high of $46.99 earlier this year. It has recovered from the 52-week low of $33.89 in June last year.

Photo Credit: Mike Knell/Flickr.com

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