Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Jan 29 2019 16:26:35

eBay Reports Two Percent GMV Growth in Q4 2018

By: Ina Steiner

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eBay reported 2% growth in GMV (the value of sales on its marketplace) in the fourth quarter of 2018. CEO Devin Wenig said the company would issue a dividend for the first time ever, as he and the Board of Directors face pressure from activist investor Elliott Management to show better performance.

Update 1/30/2019: See our take on the post-earnings conference call with analysts in today's Newsflash story.

Press release follows (see eBay website for full release):

eBay Inc. (NASDAQ: EBAY), a global commerce leader, delivered revenue for the quarter ended December 31, 2018 of $2.9 billion, increasing 6% on both an as-reported basis and a foreign exchange (FX) neutral basis, primarily driven by gross merchandise volume (GMV) of $24.6 billion, up 1% on an as-reported basis and 2% on a FX-Neutral basis.

During the quarter, eBay delivered GAAP net income from continuing operations of $763 million, or $0.80 per diluted share and Non-GAAP net income from continuing operations of $670 million, or $0.71 per diluted share. The company generated $1.2 billion of operating cash flow and $1.1 billion of free cash flow from continuing operations while also repurchasing approximately $1.5 billion of its common stock in the quarter.

"We delivered record earnings for the fourth quarter and full year 2018," said Devin Wenig, President and CEO of eBay Inc. "In 2019, our focus will be on further improvements to the eBay user experience, while pursuing significant long-term growth opportunities in advertising and payments. We are confident in the strength of our business and future growth prospects, as demonstrated by our decision to institute eBay's first-ever dividend and increase our share repurchase program."

In the fourth quarter, eBay grew active buyers by 4% across its platforms, for a total of 179 million global active buyers. Underlying total eBay performance, the Marketplace platforms delivered $2.3 billion of revenue and $23.2 billion of GMV. Marketplace revenue growth was 7% on an as-reported basis and 6% on a FX-Neutral basis, and GMV was up 1% on an as-reported basis and 3% on a FX-Neutral basis. StubHub drove revenue of $314 million, up 2% on both an as-reported and FX-Neutral basis, and GMV of $1.4 billion, down 2% on an as-reported basis and down 1% on a FX-Neutral basis. Classifieds platforms delivered revenue of $263 million, up 8% on an as-reported basis and 11% on a FX-Neutral basis.

During the quarter, eBay continued strong execution of its advertising and payments growth priorities. The company experienced nearly 150% revenue growth in promoted listings, with 600 thousand active sellers promoting 200 million listings. The multi-year rollout of eBay's managed payments capability, which was initially launched in the third quarter, marks an important shift in strategic direction and a commitment to enhancing the customer experience. During the fourth quarter, eBay intermediated nearly $140 million in GMV.

eBay continued introducing new or expanded programs that improve buying and selling throughout the fourth quarter. Enabling an easier buying experience, eBay partnered with leading service providers to allow shoppers the ability to select and schedule professional auto, home and electronics installation services for eBay purchases. The company also continued to improve purchase confidence when shopping high-priced luxury items by expanding eBay Authenticate into the jewelry category. Additionally, the launch of eBay Instant Selling allows consumers to sell their smartphone devices and get paid instantly with an eBay voucher, without having to manage the selling process.

For the full year 2018, eBay delivered revenue of $10.7 billion, growing 8% on an as-reported basis and 6% on a FX-Neutral basis, primarily driven by GMV of $95 billion, up 7% on an as-reported basis and 5% on a FX-Neutral basis. The company delivered strong operating and free cash flow on a continuing operations basis, generating $2.7 billion and $2.0 billion, respectively, during 2018. eBay also returned $4.5 billion of capital to shareholders through repurchases of its common stock.

Other Selected Financial and Operational Results
Operating margin — GAAP operating margin decreased to 23.7% for the fourth quarter of 2018, compared to 24.5% for the same period last year. Non-GAAP operating margin decreased to 29.2% in the fourth quarter of 2018, compared to 29.8% for the same period last year.

Taxes — The GAAP effective tax rate for continuing operations for the fourth quarter of 2018 was (47.9)%, compared to 563.4% for the fourth quarter of 2017. The non-GAAP effective tax rate for continuing operations for the fourth quarter of 2018 was 16.4%, compared to 19.4% for the fourth quarter of 2017.

Cash flow — The company generated $1.2 billion of operating cash flow from continuing operations and $1.1 billion of free cash flow during the fourth quarter of 2018. 

Stock repurchase program — The company repurchased approximately $1.5 billion of its common stock, or 52 million shares, in the fourth quarter of 2018. The company's total repurchase authorization remaining as of December 31, 2018 was $3.2 billion.

Cash and cash equivalents and non-equity investments — The company's cash and cash equivalents and non-equity investments portfolio totaled $8.6 billion as of December 31, 2018.

Business Outlook
First quarter 2019 — The company expects net revenue between $2.55 billion and $2.60 billion, representing Organic FX-Neutral growth of 0% - 2%, with GAAP earnings per diluted share from continuing operations in the range of $0.40 - $0.44 and non-GAAP earnings per diluted share from continuing operations in the range of $0.62 - $0.64.

Full year 2019 — The company expects net revenue between $10.7 billion and $10.9 billion, representing Organic FX-Neutral growth of 1% - 3%, with GAAP earnings per diluted share from continuing operations in the range of $1.83 - $1.93 and non-GAAP earnings per diluted share from continuing operations in the range of $2.62 - $2.68.

Capital Structure Evolution
In order to evolve eBay's capital structure given its strong cash generation profile and shareholder return objectives, the company today announced:

Initiation of a quarterly dividend of $0.14 per share, with the first quarterly dividend to be paid on or about March 20, 2019 to shareholders of record as of the close of business on March 1, 2019

Expect to exit 2019 with cash and investments of approximately $3.5 billion

Targeting mid-term leverage of approximately 1.5x net debt and gross debt below 3.0x EBITDA

Increase in share repurchase authorization by an additional $4.0 billion with no expiration, with an expected 2019 share repurchase of approximately $5.0 billion

Expect to return approximately $7.0 billion to shareholders through dividends and repurchases over the next two years, with approximately $5.5 billion in 2019 and approximately $1.5 billion in 2020

The company's stock repurchase program is intended to programmatically offset the impact of dilution from its equity compensation programs and, subject to market conditions and other factors, to make opportunistic and programmatic repurchases of its common stock to reduce its outstanding share count. Any share repurchases under the company's stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means at times and in such amounts as management deems appropriate and will be funded from the company's working capital or other financing alternatives.

See the following link to the full press release including charts.




Comments (37) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: ebayout This user has validated their user name.

Tue Jan 29 16:47:55 2019

Their goodwill, which was suspect to start, went up $500M.

Silver Ice King...what say you?

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: Frank Abagnale This user has validated their user name.

Tue Jan 29 16:49:19 2019

"We delivered record earnings for the fourth quarter and full year 2018," said Devin Wenig. Don;t get too excited Devin, only 2% GMV growth.

Quick, buy your ebay stock before March 1!!!!!!!

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

This user has validated their user name. by: Ina

Tue Jan 29 16:56:17 2019

Looking at numbers: eBay US GMV growth was actually DOWN 1% in Q4 year-over-year!!

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

This user has validated their user name. by: iheartjacksparrow

Tue Jan 29 17:21:16 2019

Up 2%? Isn't that the worst growth figure ever? Even with Managed Payments and all their money grabs, they couldn't manage to squeeze out a few more percentage points? I bet the Elliott Management people are high-fiving each other. I hope Devin is up-dating his C.V. because I don't think he's going to be around much longer.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: notfunanymore This user has validated their user name.

Tue Jan 29 17:23:34 2019

Wall st doesn’t move on eBay news. They have become so irrelevant it doesn’t matter  

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: ebayout This user has validated their user name.

Tue Jan 29 17:47:40 2019

"We are confident in the strength of our business and future growth prospects, as demonstrated by our decision to institute eBay's first-ever dividend and increase our share repurchase program," says eBay CEO Devin Wenig
Zero gloating over results...say what? Now down 1% AH at 5:45

"We are confident..." CEO-speak for "where's my parachute?"

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: pace306 This user has validated their user name.

Tue Jan 29 17:57:19 2019

When the CEO and BOD of a company have NO idea how to run it - you get %2.

I PROMISE you that Paypal and Amazon (who are next to report) wont say THEIR growth was ONLY %2.

EVERY person here (well except maybe 2 or 3 people) said the same thing over the last quarter - sales just arent there - and the 4th quarter report will be MISERABLE.

And it was.

The reason(s) dont matter anymore. It doesnt matter if its the catalog failures, the FVF on shipping, poor returns policies, the war on sellers - none of it matters - simply because - eBay has NO plans on changing anything.

If GM, IBM, Coke, Addidas etc said that THEY ONLY GREW %2 - there would be blood on the WS trading floor.

eBay says %2 and theres silence. Imagine Walmart saying it ... or even Amazon.

Until changes are made (never mind Elliot) - it will continue to be this way - and eBays %2 growth - hurts us all as sellers.

Buying back your own stock is like a sinking ship bailing out water with a bucket - its stop gap - eventually you WILL sink.

Making no money means eBay has no money to invest in improving the company ... it will just limp along as it always does.

Lay off %20 of the do nothing staff, reform your take rate(s), improve your CS, improve your attitude towards sellers. If you dont .... what happens "is on you and you will loose".

Even for those here who feel it doesnt/wont impact them ..... you are wrong .... eBay needs to be a healthy vibrant marketplace - people may come for clothes or vintage or electronics - but they wont buy your "stuff" if the marketplace continues to go downhill.

AOL thought they had it sinched, so did Yahoo Auctions - so did MANY others ... no one is too big to fail.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: comments This user has validated their user name.

Tue Jan 29 20:22:15 2019

I was actually hoping for a really good quarter attributable to the promotions ebay ran. I had very good holiday sales and I know for a fact they helped, because promo days doubled or tripled my usual sales. Also had more then a few offers where the buyer requested a quick answer to pay in time for the promo deadline.

I guess at the end of the day the toxicity between buyers and sellers over the return of return defects, site issues, and a fee structure that doesn't make sense for big ticket items is still too growth prohibitive to  provide significant over all growth. Poor buyer experiences from amazon resellers forced more savvy buyers to go straight to the source and avoid the middle man.

As we go into this year with the same disadvantages we will start to see catastrophic losses from sales tax related issues, confusion, and complications. Ebay really dropped the ball here too by not lobbying against walmart to get ahead of the problem. They are further dropping the ball by not continuing to lobby the states or federal government to see common sense small business exemptions to protect micro businesses.

To add even more problems to 2019 we also saw a very confusing and expensive zone pricing for first class packages as the icing on top of the problem cake.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: Grady This user has validated their user name.

Tue Jan 29 21:37:28 2019

I wonder what the REAL numbers were?

Enron? Cooking the books as bad as they (Feebay) do and all they can proclaim is 2%? They must be in deep Khutta to call it 2% and start offering dividends.

In other news, buy a Buc Mac and get 10 shares of FeeBay stock FREE !!!!

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This user has validated their user name. by: Rexford

Wed Jan 30 06:31:00 2019

If you want to see how GREAT sales are, simply look at completed listings in various categories.  Sell thru rates are abysmal.

eBay has become nothing more than an advertising billboard.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

This user has validated their user name. by: NoMoreEbay

Wed Jan 30 08:44:46 2019

Down 14 cents in pre-market.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: ebayout This user has validated their user name.

Wed Jan 30 10:19:50 2019

ebay brain trust: "Hey...let's disable PayPal in the 4th (busiest) quarter for MP sellers."
Wenig: "Great idea! Now THAT'S disruptive innovation!"

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: P.Dorf This user has validated their user name.

Wed Jan 30 10:42:15 2019

ahhhhh...wenig's Jackanory....always incredulous

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: pace306 This user has validated their user name.

Wed Jan 30 11:35:50 2019

The explanation people tell me is that the report also says that 4Q sales were up (over last years) so HOORAY! DW's a genius and eBay is doing GREAT.

So.... "nothing to see here, move along"

Also - eBay stock is up above 32 (ish) , so they are as happy as a pig in slop.

eBay is also going to provide some kind of dividend - so "OBVIOUSLY" DWs ingenious innovations are working ...

Those of us "in the field" (sellers) know the real truth.

Shame no one on ANY financial site cares to be honest enough to tell the truth.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: Ebay Little Shop of Horrors This user has validated their user name.

Wed Jan 30 16:57:25 2019

Pace306, ebay's stock isn't up because they have faith in ebay.

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by: pace306 This user has validated their user name.

Wed Jan 30 17:49:40 2019

Shop - it’s brcause they believe it’s too cheap.

Of course it’s too expensive given it’s all smoke and mirrors, but eBay brass has FIRMLY convinced that it’s just crazy sellers who are at fault

If sellers like us would “just” listen to DW, institute 60 day free returns, use eBaypay, and lower prices another 30-50% then eBay would have 25% growth.

It’s all a fun house full of crazy mirrors.

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: iSueBuyers This user has validated their user name.

Wed Jan 30 17:51:08 2019

1. eBay's stock buybacks have been the only thing propping the stock up.
2. 2% growth is horrendous. Look for furthur earning reports to be even worse.
3. eBay is issuing dividends in another attempt to keep the stock price propped up.

Until eBay cleans house things are only going to get worse. eBay's return process, feedback, and seller performance policies are so prohibitive to sellers it simply isn't worth the trouble. We removed our ebay listings early last month and things have never been more smooth.

eBay's stock isnt going to die fast. I predict a slow bleed ala GE,Snapchat,Sears.  

Perminate Link for eBay Reports Two Percent GMV Growth in Q4 2018   eBay Reports Two Percent GMV Growth in Q4 2018

by: Snapped This user has validated their user name.

Wed Jan 30 20:55:53 2019

eBay reports 102 sales dollars over the 100 they 'boasted' last quarter.  But they decline to mention how many GMV bucks were 'returned'.  Doesn't really matter though.  GMV is a meaningless metric.  Because eBay dosn't sell product.  It sells services.  

eBay claims an intended focus on enhancing the ''user experience''.  So far that focus has resulted in a ceaseless increase of glitches and failures in both their technology and support, backed by an unprecedented lack of both external and internal communications and an increasing exodus of 'talent', much of it purposeful.  Hard to believe they can do so much 'more' with so much less resource.  

eBay boasts a 4% 'growth' in 'active' buyers - yet they don't really define that term.  How many of those came in only to never return once they found the site littered with page after page after page of cheap counterfeit trinkets.  And how many that WERE previously participants still are?  And all those 'new' listings - an average of 333.33333 per 'new seller' - All apparently 'promoted' via more monitized processes ntended to generate the income increases they claim to have also been a part of their revenue growth (duh), yet provide no real value except to lock out and obfuscate the quality listngs that don't NEED to be promoted - because those don't NEED to compete with same same items in order to BE (read seem) 'more desirable' - IF they could only be seen.  Meanwhile, how many sellers have had enough?  In what is supposed to have been the MOST profitable quarter - yet was actually the least in terms of growth this year...

Then in one breath they state promotions and managed payments are only a portion of this 'growth', yet in the next, they label them as ''priorities''.  Which indeed they clearly are - above any other that actually might result in increasing opportunity to sell something NOT so 'promoted'.  AND attract more sellers and buyers over the ''long term''.  

Finally, don'tcha just love how they catagorize their stock buybacks as 'returning capital' to shareholders?  How much of that was bought back for less that it was acquired for - out of desperation by both seller AND eBay?

That 'number' - along with all the others telling the REAL story of this mess that is today's (and tomorrow's) eBay, seems somehow missing.  

Imagine that.



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by: Ebay Little Shop of Horrors This user has validated their user name.

Wed Jan 30 21:01:35 2019

If you own a substantial amount of stock, you can force a vote for CEO.

If you can convince the shareholders to vote for you, and they know fully well that your intent is to break up the company for money, you're a corporate raider.

If a positioned shareholder says Feed Me or else, you sit up. Because....

If the buzz is a take-over or even the tiniest bzzz of a sale or take-over, the stock jumps up. All it takes is a rumor.



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by: Ebay Little Shop of Horrors This user has validated their user name.

Wed Jan 30 21:13:27 2019

There I go again. Incomplete sentences. As if everyone can read my mind.

He was putting Wenig on notice. Wenig is the bunny in the tall grass and he just heard click-click.

When one company buys another, the stock can triple or more. Overnight. Thats why the stock is up.

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