Web commerce company eBay Inc beat Wall Street's quarterly profit estimates, helped by a record performance at its PayPal online payments unit and strong marketplace sales in Europe.
Shares in the company jumped 3.6 percent after-hours as it predicted PayPal would maintain its strong results through the year. At the same time, it warned that the negative effect of a stronger U.S. dollar would hurt full-year results and trimmed the high end of its 2010 forecast.
The solid earnings reflects both the recovery in the economy and the company's effort to move toward fixed price offerings, said Benchmark Capital's Fred Moran.
The fact that eBay's top line has rebounded to a mid-teens revenue growth rate is representative of the recovery being seen in e-commerce, and clearly reflects well on Amazon showing powerful growth in its report tomorrow, he said.
That mid-teens revenue growth rate excludes Skype, eBay's former web telephone unit that it recently sold.
Net profit in eBay's second quarter rose to $412 million, or 31 cents per share, from $327 million, or 25 cents per share, a year earlier.
On an adjusted basis, earnings per share were 40 cents versus 37 cents in the year-ago period. Analysts, on average, had been expecting adjusted earnings of 38 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $2.2 billion, ahead of Wall Street estimates of $2.16 billion.
EBay said it now expects full-year revenue of $8.8 billion to $9.0 billion -- a tad lower than an earlier forecast of up to $9.1 billion -- on adjusted earnings of $1.60 to $1.65 per share.
Earlier, the company had projected full-year adjusted earnings of $1.63 to $1.68 per share. Currency exchange rates are expected to hurt 2010 earnings per share by 9 cents to 11 cents, eBay said.
Shares of eBay are down 27 percent from a 2010 high of $27.56 in March. Analysts had predicted that the strengthening U.S. dollar against the euro would take a toll on the global company, where over half of revenues come from abroad.
They've also been concerned about weak e-commerce sales trends and the pace of a turnaround at the eBay marketplaces unit despite strong growth at PayPal.
EBay said its PayPal unit was gaining market share, adding 1 million new accounts during each month in the quarter, and cited strength in Europe for its marketplaces unit.
But growth in the United States in its main marketplaces unit was slower than expected, the company said.
Gross merchandise volume, which measures the total value of goods sold on eBay, rose 2 percent in the quarter, excluding vehicle sales.
For the third quarter, eBay said it expects net revenues to rise 4 percent to 6 percent to $2.13 billion to $2.18 billion on adjusted earnings of 35 cents to 37 cents per share.
The consensus estimate for Q3 EPS is $0.39, comparable to eBay's non-GAAP EPS guidance of $0.35 to $0.37, according to Thomson Reuters I/B/E/S.
Shares of eBay closed down 3 percent to $20.17 on the Nasdaq but rose to $20.90 after it reported earnings.
(Reporting by Alexandria Sage; Editing by Michele Gershberg and Phil Berlowitz)