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Full-Year Outlook Underwhelms Market, but New Verticals and Payments Position EBay for Growth

R.J. Hottovy, CFA Sector Strategist

Analyst Note

| R.J. Hottovy, CFA |

Narrow-moat eBay's updated full-year outlook may have fallen short of market expectations--revenue of $10.04 billion-$10.11 billion and adjusted EPS of $3.34-$3.40 versus CapIQ consensus estimates of $10.2 billion and $3.43--but we took away several positives from its third-quarter update. Total currency-neutral GMV increased 21% to $25.0 billion, including 33% growth in the U.S. and 14% international. This was a slight decrease from last quarter's 29%--partly tied to the expiration of consumer stimulus in the U.S.--but still signals healthy engagement among both new buyers and sellers. We were also encouraged by continued progress with eBay's managed payments (used for 20% of on-platform GMV and representing approximately $130 million in incremental revenue in the quarter) and advertising efforts (that increased 77% to $186 million in revenue), which helped drive revenue growth of 26%, a 40-basis-point increase in the take rate (9.4%) versus last quarter, and a 4 point increase in adjusted operating margins to 30.7%.

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Company Profile

Business Description

With almost $86 billion in marketplace gross merchandise volume, or GMV, generated in 2019, eBay's Marketplace facilitated more than 2% of the $3.5 trillion global online commerce market (based on eMarketer estimates). EBay's strategic priorities include revitalizing its Marketplace platform by emphasizing its unique product assortment and value proposition, improving the seller and buyer experience, utilizing structured data/artificial intelligence for listing searches, promoted listing advertising, and improving its mobile commerce capabilities. EBay partnered with Netherlands-based Adyen for payment intermediation beginning in 2018.

Contact
2025 Hamilton Avenue
San Jose, CA, 95125
T +1 408 376-7008
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 13,300

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