SAN FRANCISCO (MarketWatch) - EBay Inc. said second-quarter profit rose 53% on sales that topped $1 billion for the second straight quarter, as the operator of the world's largest online marketplace saw its U.S. business and payment service grow faster than expected.
Late Wednesday, San Jose, Calif.-based eBay (EBAY: news, chart, profile) said it earned $291.6 million, or 21 cents per share, compared to $190.4 million, or 14 cents, a year ago. Excluding certain items, such as stock-based compensation expense and payroll taxes, eBay earned $307.2 million, or 22 cents per share, topping analyst estimates of 19 cents a share.
Quarterly sales grew by 40% to $1.086 billion, also topping expectations of $1.043 billion. Sales from U.S. transactions grew by 27% to $423.6 million, beating a couple estimates seeking growth between 20% and 24%. Online payments rose 51% to $243.9 million, exceeding some expectations.
Shares of eBay fell more than 1.5% to $34.80 in regular trading, ahead of the news.
"The accelerating revenue metrics in our key businesses are from acceleration in U.S. and Germany, and PayPal benefiting from the lift in gross merchandise volume on eBay," said eBay finance chief Rajiv Dutta. Additionally, half of PayPal's growth came from non-eBay transactions, Dutta said.
Outlook for Q3 and 2005
Going forward, eBay expects to earn 19 cents a share on sales of between $1.045 billion and $1.07 billion. That is in line with analysts' current expectations of 19 cents on sales of $1.06 billion.
In 2005, eBay expects to earn 82 cents to 83 cents a share. Annual sales are expected to be $4.34 billion to $4.41 billion. The profit outlook tops the consensus estimate of 79 cents a share while the revenue outlook is in line with the current estimate of $4.35 billion.
Details into Q2
EBay said that U.S. sales grew 27% to $423.6 million, higher than some analysts expected, and better than the 20% annual growth reported in the first quarter.
EBay's U.S. business accelerated because of marketing effectiveness, even though eBay saw an increase in keyword prices, Dutta said.
Fast growers
International sales grew by 51% to $418.8 million. The fastest growing sites were U.K., which was up 94%, and Korea was up 78%, said Dutta.
Sales in Germany grew by 21% percent, down from 24% growth in the first quarter. But gross merchandise volume accelerated in Germany, said Dutta.
Online payment revenue grew by 51% to $243.9 million, up from a growth rate of 47% in the first quarter. "We saw the rapid increase based on GMV growth, which accelerated, and the other business was off eBay, merchant service," said Dutta.
Meanwhile, eBay's EachNet business in China is doing well, said Dutta. But beginning this quarter, eBay is not disclosing details on this business.
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