eBay posts first-quarter revenue of US$2.19bn

17 Apr 2008

Internet auction company eBay posted first-quarter revenue of US$2.19bn, up US$424m over the same period last year.

The company recorded net income of US$460m or US$0.34 per diluted share.

GAAP operating margin decreased to 25.2pc for the quarter, compared to 26.5pc for the same period last year. The decrease in operating margins was caused primarily by eBay’s faster growing lower-margin businesses such as PayPal and Skype.

Revenue growth was driven primarily by marketplaces net transaction revenues, the ongoing expansion at PayPal, Skype and the global classifieds business, the company said.

EBay generated US$766m of operating cash flow during the first quarter. Free cash flow during the quarter was US$632m.

“This was a very strong financial quarter for the company,” said John Donahoe, who assumed the role of eBay CEO on 31 March and is also president of the company. “The results reflect the strength provided by our diverse portfolio of businesses.

“Our stability and growth continues to give us the confidence to make innovative changes to our products to keep customers engaged for years to come.”

During the quarter, eBay rolled out several initiatives in an effort to enhance user experience on the site, primarily by restructuring fees for sellers and introducing a default search order based on relevance and seller quality.

The company spent approximately US$1bn repurchasing approximately 37 million shares of its outstanding common stock.

EBay subsidiary PayPal completed the acquisition of Fraud Sciences to accelerate the development of its fraud detection tools during the quarter.

The company’s global portfolio of classifieds businesses reported a 101pc increase in unique visitors year-over-year, with an average of 70 million monthly unique visitors, eBay said.

“We are pleased with our first-quarter results. We generated strong revenue growth, even stronger earnings growth and excellent free cash flow. During the quarter, we opportunistically repurchased approximately 3pc of eBay shares outstanding,” said Bob Swan, chief financial officer, eBay.

“We are seeing some positive early indicators based on our key initiatives but there is still much work to be done. For the remainder of 2008, we’ll continue to focus on the strategies we’ve put into motion, and we believe our guidance will allow us to invest in and make the necessary changes to our business, while still delivering on our financial commitments.”

By Niall Byrne