eBay Inc. (NASDAQ:EBAY) announced non-GAAP earnings of $1.07 per share for the fourth quarter of 2022, beating the Consensus Estimate by 1.9%. Over the previous year, the bottom line climbed by 2%. eBay stock fell 7% following the results, as revenues and gross merchandise volume (GMV) declined.
The Consensus Estimate of $2.46 billion was surpassed by net revenues of $2.51 billion. Yet, on a reported basis, the figure fell 4% from the prior quarter’s figure and 1% on an FX-neutral basis.
This was ascribed to the malleability of the eBay Marketplace infrastructure and waning buyer activity. The number of active buyers on eBay, which totaled 134 million at the end of the fourth quarter, fell by 9% year over year.
Even taking into account the contributions from the purchases of GittiGidiyor and TCGplayer, we observe that there were 132 million active buyers.
Moreover, eBay had a decreasing gross merchandise volume (GMV) in the reporting quarter, which continued to be a concern.
Yet, EBAY’s advertising offers were gaining speed, which was a tailwind.
Revenues from eBay’s Sponsored Listings reached $276 million, an increase of 27% on an FX-neutral basis and 19% on a reported basis compared to the corresponding quarter last year. This helped EBAY’s first-party advertising offerings gain momentum.
Moreover, income from all advertising services reached $319 million, an increase of 11.9% from the previous year.
Notably, the company started presenting revenues from our Marketplace GMV and from non-GMV-based businesses as “net revenues” from the fourth quarter of 2022 onward. Previously, these revenues were broken down into two categories: “net transaction revenues” and “marketing services and other revenues.”
On a reported basis and on an FX-neutral basis, EBAY’s total GMV of $18.23 billion in the reported quarter showed year-over-year reductions of 12% and 6%, respectively.
Still, the reported GMV was higher than the $17.9 billion Consensus Estimate.
Two components make up the entire GMV.
$8.9 billion, or 48.8% of global GMV, was generated in the United States, a 9% decrease from the same quarter last year.
$9.3 billion in international GMV made up 51.2% of overall GMV. On a year-over-year basis, it decreased by 15%.
eBay’s gross margin for the fourth quarter was 72.9%, a decrease of 50 basis points (bps) from the previous year.
Operational costs totaled $1.3 billion, up 2.7% from the previous year. The figure increased by 320 bps to 50.3% of net revenues from the same period last year.
The non-GAAP operating margin decreased 170 bps year over year to 29.9% in the fourth quarter.
Financial Statement and Cash Flow
Cash equivalents and short-term investments increased to $4.8 billion as of December 31, 2022, from $3.5 billion as of September 30, 2022.
At the conclusion of the fourth quarter, long-term debt increased to $7.72 billion from $6.58 billion at the end of the third quarter.
In the fourth quarter, eBay generated $686 million in cash from operational activities, compared to $735 million in the third quarter.
In the quarter under review, it had $533 million in free cash flow.
In the reported quarter, eBay repurchased $300 million worth of shares and distributed $119 million in dividends.
eBay anticipates $2.46 to $2.50 billion in revenue for the first quarter of 2023. The sales growth over the previous year is predicted to be between 1% and 2% on an FX-neutral basis. The same is anticipated on a spot rate basis between 1% and 1%. The estimate for revenue is $2.37 billion.
A non-GAAP operating margin of between 29.1% and 29.7% is anticipated.
GMV is anticipated to fall between $18 billion and $18.3 billion for the first quarter, which would represent a reduction of 7%–6% on a spot rate basis and 5%–3% on an FX-neutral basis.
Between $1.05 and $1.09 in non-GAAP earnings per share are projected. The $1.06 per share Consensus Estimate is set for the same. eBay stock is up more than 5% year-to-date.
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