EBay posted a 22 per cent rise in quarterly net profit last night, topping Wall Street's average estimate, as pricing changes increased online auction listings and pushed revenue above all forecasts.
While we are raising our full-year outlook, we still remain cautious about the economic environment eBay chief financial officer Bob Swan
The company also raised its 2008 revenue target, but its stock barely rose as executives said the softening US and UK economies had modestly slowed demand and that auction customers at the end of the quarter were less inclined to buy.
"While we are raising our full-year outlook, we still remain cautious about the economic environment," Chief Financial Officer Bob Swan told investors on a conference call following the report today.
"We saw a slowing in terms of buyers' propensity to buy toward the end of the first quarter," Mr Swan said.
EBay is in the midst of a long-term plan to revive growth in its core auctions business that involve sweeping changes to how buyers and sellers deal with one another on the site.
Chief Executive John Donahoe said eBay sellers had responded to pricing changes and stepped-up customer service requirements by increasing the volume of new auction listings during the last six weeks of the first quarter.
Buyers are trusting eBay more as a result, he said. EBay also has begun using discount coupons to reward frequent top buyers. These offers will expand through 2008, Mr Donahoe said.
First-quarter net income rose to $459.7 million, or 34 cents a share - buoyed by a buyback of 3 per cent of its shares - compared with the year-earlier-quarter's $377.1 million, or 27 cents per share. Revenue rose 24 per cent to $2.19 billion.
EBay raised its projected 2008 growth rate by 2 to 3 percentage points from a downbeat January forecast, setting its net revenue target at $8.7 billion to $9.0 billion.
Following the earnings, eBay shares edged up to $32.15 in extended trade from a close of $32.12, up 1.7 per cent yesterday. In anticipation of the results, the stock has jumped 25 per cent since mid-March, when it traded at two-year lows.
EBay got a lift from international businesses, which made up 55 per cent of revenue. Translating foreign sales to dollars lifted revenue by $110 million alone.
While US revenue grew 16 per cent, overseas sales grew at twice that rate.