EBay’s Net Income Soars 92%; It Boosts Full-Year Forecasts
EBay Inc. offered fresh evidence Wednesday that the Internet economy’s recovery has really taken hold.
The online auctioneer said its first-quarter profit nearly doubled as shoppers flocked to its online marketplace. And it raised its forecasts for full-year sales and profit, saying its international marketplaces and transaction-fees business were growing faster than expected.
EBay had anticipated more of a drop-off in business after the holiday season, when it had advertised heavily, but U.S. shoppers kept buying everything from toys to office supplies to automobiles.
The larger message was clear: More and more people are skipping the malls in favor of online shopping sites, especially as broadband connections become commonplace. More than 45 million people bid on, bought or listed an item on EBay in the 12 months that ended March 31, a 45% increase from a year before.
“E-commerce is becoming more mainstream every day, and EBay has become a primary shopping destination for almost any kind of item,” said EBay Chief Executive and President Meg Whitman.
The San Jose company reported profit of $200.1 million, or 30 cents a share, up 92% from $104.2 million, or 16 cents, in the same period last year. Helped by a $47-million boost from the weak dollar, sales rose 59% to $756.2 million.
The results pushed EBay’s stock up 3% in after-hours trading to $77.10. In regular Nasdaq trading, shares rose 81 cents to $74.78.
There has been a string of positive reports by Internet companies. Yahoo Inc., EarthLink Inc. and Ask Jeeves Inc. have handily beaten Wall Street’s predictions this month and boosted their forecasts for the full year. And as the domestic market continues to grow, many companies are seeing their international expansions pay off more rapidly.
“The international opportunities are becoming very material,” said Steve Weinstein, a vice president with Pacific Crest Securities. “Companies with a global footprint can do really well over the next few years.”
For example, 44% of EBay’s $583.3-million transaction-fee revenue came from international markets. (EBay also collected $155.5 million in fees from its PayPal payment system.) International revenue grew 87% year over year, compared with 39% growth in the U.S.
Christa Sober, an analyst with Thomas Weisel Partners, noted that EBay’s international growth sped up in every country except Germany.
“We look at where the pockets of hyper-growth are, and right now they’re definitely centered internationally,” she said.
EBay raised its 2004 revenue forecast by $150 million and now expects sales of as much as $3.15 billion. It intends to report an annual profit of up to $1.06 a share, boosting its earlier forecast by 7 cents.
Some analysts questioned EBay’s forecasting abilities, noting that it has surpassed its previous guidance by more than $50 million in each of the last two quarters.
After congratulating EBay executives during a conference call on a “stellar quarter,” Piper Jaffray analyst Safa Rashtchy jokingly asked: “Should we just take your guidance, add $50 million and publish it?”
Other analysts said EBay had long been financially conservative. But they noted that the company had only been underestimating its growth so dramatically since late last year, when business on the Internet started to take off again.
Analysts said EBay’s growing popularity among corporate buyers makes the company less susceptible to seasonal fluctuations in sales than e-commerce companies that cater to mostly consumers, such as Amazon.com Inc. The Seattle-based online retailer is scheduled to report its first-quarter earnings today.
