eBay's earnings outshine expectations and spark a dividend delight

$EBAY(EBAY)

eBay, the well-known online marketplace, outperformed expectations in its fourth quarter 2023 earnings, surpassing both earnings per share (EPS) and revenue forecasts. Following this announcement, the company revealed an 8% hike in its quarterly cash dividend and green-lighted an additional $2 billion for stock repurchases, leading to a surge in its stock price during after-hours trading.

For Q4 2023, eBay recorded an adjusted EPS of $1.07 from revenues of $2.56 billion, overtaking analyst predictions of $1.03 per share and $2.51 billion in sales. The firm also lifted its dividend by two cents and endorsed a further $2 billion stock buyback.

Looking ahead, eBay anticipates revenues between $2.5 billion and $2.54 billion for the forthcoming quarter, aligning closely with analyst expectations of $2.53 billion. The projected adjusted EPS ranges from $1.19 to $1.23 for the first quarter, substantially above the analyst forecast of 99 cents.

eBay's gross merchandise volume (GMV) for the quarter saw a 2% increase to $18.6 billion, surpassing the anticipated $18.1 billion. Our consistent year-over-year improvement in organic GMV throughout 2023, despite economic hurdles, underscores our strategic resilience, remarked CEO Jamie Iannone. He highlighted the company's commitment to innovation and customer experience enhancement on eBay.

The report also underscored eBay's plans to double its GPU capacity in the first quarter to bolster AI initiatives, with stable active buyer numbers and improved reactivation and engagement metrics contributing to growth. This progress was further propelled by the strength in first-party advertising, expansion of financial services, and the introduction of eBay International Shipping, with a focused category strategy driving core growth.

Post-earnings, eBay's stock witnessed a 4% increase in after-hours trading. Despite a modest 1% gain this year and a 3% decline over the past year, significantly lagging behind the S&P 500's 27% growth, the company's strategic investments in AI and other innovative technologies aim to refine customer experiences and foster organic growth.

Facing formidable rivals like Amazon and Walmart, and after reducing its workforce by over 1,000 employees earlier in the year, eBay continues to concentrate on its growth strategy. This approach, emphasizing organic growth, service expansion, and platform enhancement, positions eBay well for sustained performance.