Weak User Growth Keeps Lid on eBay

The stock treads water despite a first-quarter earnings beat.
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Updated from April 16.

SAN FRANCISCO --

eBay

(EBAY) - Get Report

shares held their ground after the company's tepid first-quarter user growth offset a boost in profit that beat analysts' expectations.

The online auction giant said Wednesday that net income for the first quarter grew 22% to $460 million, or 34 cents a share, compared with $377 million, or 27 cents a share the year before.

Excluding charges, the company reported net income of $562 million or 42 cents a share.

Revenue rose 24% from a year earlier to $2.19 billion.

Analysts were expecting earnings before items of 39 cents a share on revenue of $2.08 billion.

Active users for the quarter rose 1% from the previous quarter to 82.9 million, while the number of new listings were up 4% from the previous quarter to 588.5 million.

However, most analysts were expecting active user growth of 5% to about 87 million users.

Shares of eBay were up 7 cents to $32.19 in recent after-hours trading.

Operating margin, excluding charges, decreased to 32% for the first quarter, compared with 33.6% a year earlier. The decrease in operating margins was caused largely by faster growing but lower-margin businesses, such as PayPal and Skype, said eBay.

Gross merchandise volume (GMV), which indicates the total value of all successfully closed listings between users on eBay, was up 12% to $16 billion globally.

But the growth was hurt by the economic environment in U.S. and U.K, the company said. GMV growth in the U.S increased 7% to $7.2 billion in the quarter, said eBay.

"The trend line in the U.S. for GMV was pretty stable during the course of the quarter," said Chief Financial Officer Robert Swan on the conference call. "Some of the growth came from strong cross border trade, but we also saw a slowing in the buyer's propensity to buy towards the end of the quarter."

For the second quarter, eBay forecast revenue $2.1 billion to $2.15 billion with earnings, excluding charges, in the range of 39 cents to 41 cents a share.

Analysts were expecting EPS of 40 cents on revenue of $2.11 billion for the quarter.

For the full fiscal year, the company forecast revenue in the range of $8.7 billion to $9 billion with earnings, excluding charges, in the range of $1.70 to $1.75 a share. Analysts were expecting revenue of $8.78 billion and EPS of $1.68.

The company said it repurchased approximately 37 million shares, or about 3% of its outstanding stock, at a cost of approximately $1 billion during the quarter.

In the first quarter, the marketplaces division of the company, which consists of eBay, Shopping.com, StubHub, Kijiji and other ecommerce sites, grew 19% and posted $1.48 billion in revenue. Gross merchandise volume increased 12% to $16.04 billion during the quarter.

"StubHub had a great quarter, grew very fast and had a higher take rate (percentage equivalent of gross merchandise value that eBay earns in revenue) than the rest of our business so that helped overall numbers," CEO John Donahoe told analysts in his first earnings call since taking over the top job earlier this month.

The company's payments unit, PayPal, reported $582 million in revenue during the first quarter, an increase of 32% from the year before. Net total payment volume for the quarter grew 34% to $14.42 billion. Growth in global active accounts increased 17% to 60.2 million.

PayPal's first-quarter global total payments volume comprised 9% of worldwide e-commerce, with one-third of the total coming from countries outside the U.S., said Donahoe.

eBay also plans to increase its focus and marketing around a new PayPal product in partnership with

General Electric

(GE) - Get Report

, called PayPal Later that lets merchants offer flexible and customized finance options to buyers.

The Skype division reported $126 million in revenue for the quarter, representing a 61% year-over-year growth. Skype added 33 million registered users in the quarter.

In the third quarter last year, eBay

took a writedown

of $1.4 billion on its $4.1 billion acquisition of Skype.

eBay is one of several earnings reports that will be effecting the market Thursday morning. Other stocks with pivotal earnings either released Wednesday night or pending Thursday include

Google

(GOOG) - Get Report

,

Nokia

(NOK) - Get Report

,

IBM

(IBM) - Get Report

,

Altera

(ALTR) - Get Report

. Altera might benefit from

Intel's

Tuesday night news that capital spending is going to stay level.