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Online marketplace eBay (NASDAQ:EBAY) reported Q2 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 1.3% year on year to $2.57 billion. The company expects next quarter's revenue to be around $2.53 billion, in line with analysts' estimates. It made a non-GAAP profit of $1.18 per share, improving from its profit of $1.03 per share in the same quarter last year.
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eBay (EBAY) Q2 CY2024 Highlights:
- Revenue: $2.57 billion vs analyst estimates of $2.53 billion (1.8% beat)
- EPS (non-GAAP): $1.18 vs analyst estimates of $1.12 (4.9% beat)
- Revenue Guidance for Q3 CY2024 is $2.53 billion at the midpoint, roughly in line with what analysts were expecting
- EPS (non-GAAP) Guidance for Q3 CY2024 is $1.17 at the midpoint, above analyst estimates of $1.13
- Gross Margin (GAAP): 71.4%, in line with the same quarter last year
- Free Cash Flow of $278 million, down 41.1% from the previous quarter
- Active Buyers: 132 million, in line with the same quarter last year
- Market Capitalization: $28.06 billion
Originally known as the first online auction site, eBay (NASDAQ:EBAY) is one of the world’s largest online marketplaces.
Online MarketplaceMarketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales GrowtheBay's revenue growth over the last three years has been unimpressive, averaging 0.7% annually. This quarter, eBay beat analysts' estimates but reported lacklustre 1.3% year-on-year revenue growth.
Guidance for the next quarter indicates eBay is expecting revenue to grow 1.2% year on year to $2.53 billion, slowing from the 5% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 2.2% over the next 12 months.
Usage Growth As an online marketplace, eBay generates revenue growth by increasing both the number of buyers on its platform and the average order size in dollars.
eBay has been struggling to grow its active buyers, a key performance metric for the company. Over the last two years, its buyers have declined 4.4% annually to 132 million. This is one of the lowest rates of growth in the consumer internet sector.
Revenue Per BuyerAverage revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like eBay because it measures how much the company earns in transaction fees from each buyer. Furthermore, ARPB gives us unique insights as it's a function of a user's average order size and eBay's take rate, or "cut", on each order.
eBay's ARPB growth has been decent over the last two years, averaging 5.6%. Although its active buyers have shrunk during this time, the company's ability to increase prices demonstrates its platform's value for existing buyers. This quarter, ARPB grew 1.3% year on year to $19.48 per buyer.
Key Takeaways from eBay's Q2 ResultsIt was good to see eBay narrowly top analysts' revenue expectations this quarter. On the other hand, its revenue growth regrettably slowed and its revenue guidance for next quarter came in slightly below Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 1% to $55 immediately following the results.
