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eBay bids higher in 2Q
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July 26, 1999: 5:49 p.m. ET
Online auction site beats estimates by a penny as user base rises 46%
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NEW YORK (CNNfn) - eBay Inc. Monday edged out Wall Street estimates for its second-quarter earnings as the virtual auction house added 1.7 million registered users to its site during the period.
For the quarter ended June 30, the San Jose, Calif.-based company posted a pro-forma profit of $5.1 million, or 4 cents a share. Analysts polled by First Call expected eBay (EBAY) to earn 3 cents a share. Revenue jumped 327 percent to $38.2 million.
The results exclude merger-related costs. Including those items, eBay earned $816,000, or a penny a share.
In the year-ago quarter, eBay posted a pro-forma profit of $2.5 million, or 2 cents a share, on $8.9 million in revenue.
Prior to the earnings announcement, eBay shares fell 3-7/16 to close at 104-3/8 on the Nasdaq stock market. Its stock soared as high as 109-1/2 in after-hours trading on the Instinet system before plunging to 100 shortly after 5:30 p.m. ET.
eBay shares since going public last year
eBay saw its revenue climb 327 percent despite a $3.9 million hit due to auction extensions and refunds as a result of a 22-hour site outage last month.
eBay attributed much of its revenue spike to a 46 percent increase in registered users during the quarter. The site now counts 5.6 million registered users, up from 3.8 million at the end of the first quarter.
The company also hosted 29.4 million auctions during the quarter, up 28 percent from the 22.9 million auctions in the first quarter.
"We have tremendous momentum in our flagship business," said Meg Whitman, eBay president and chief executive officer. "Our customers now transact well over $200 million in gross merchandise sales per month, making this the most vibrant consumer e-commerce site on the entire Internet."
Increased spending on operations and customer support, however, cut eBay's gross margins to 77 percent from 88 percent in the year-ago period.
Gary Bengier, eBay chief financial officer, said the company expects gross margins to climb above 80 percent next year.
eBay made several deals during the quarter, most notably its $260 million acquisition of auction house Butterfield & Butterfield. The company also acquired German online trading community alando.de.
Whitman said eBay "will continue to invest prudently, but aggressively," particularly in the international person-to-person online trading market.
For the first half of 1999, eBay reported a profit of $12.1 million, or 9 cents a share, on $72.2 million in revenue, compared with first-half 1998 earnings of $3 million, or 3 cents a share, on $14.9 million in revenue.
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