EBay Inc's efforts to make its marketplaces more appealing to online shoppers paid off in the first quarter as more people bought items on its auction site, and its PayPal payment system was used by more merchants.
EBay said on Wednesday that first quarter revenue rose 15.9 percent to $2.55 billion, fueled by a 23 percent rise at PayPal and a 12 percent increase at its marketplaces, beating Wall Street forecasts of $2.48 billion.
The company's revenue forecast for the current quarter and 2011 also beat Wall Street expectations.
EBay is in the final stages of a three-year plan to revitalize its marketplaces unit, whose growth had slowed.
It's proof that eBay is doing a good job of matching buyers with quality sellers, said Colin Gillis, an analyst with BGC Partners.
The battle for online shoppers has grown fiercer. To fight online retailer Amazon.com Inc, eBay has made a number of deals in recent months, including a $2 billion purchase in March of e-commerce services firm GSI Commerce to get more businesses to sell to their customers using eBay's services.
We're focused on redefining retail and leading the next generation of commerce and payments, eBay Chief Executive John Donahoe told analysts on a conference call.
Donahoe pointed to the example of the New York Times, which recently began charging for online subscriptions and allows readers to pay with PayPal, to show the system's growing appeal.
During the first quarter, which ended March 31, active users rose 5 percent and Donahoe said they would hit the 100 million threshold in the current quarter.
MARKETPLACES GAIN POPULARITY
PayPal has led the company's revenue growth for years, while its marketplaces unit has matured. Last year, revenues at PayPal grew nearly three times faster.
Gross merchandise volume excluding vehicles, a closely watched measure of the total value of goods sold, rose 8 percent to $14.5 billion, faster than Gillis expected, helped by more transactions and more being spent per purchase.
The marketplaces' 12 percent revenue growth this quarter was markedly higher than any quarter last year.
Net income for the first quarter, which ended on March 31, was $476 million, or 36 cents per share, compared with $398 million, or 30 per share, a year earlier. On an adjusted basis, eBay earned 47 cents per share, beating analyst forecasts by a penny, according to Thomson Reuters I/B/E/S.
For the current quarter, eBay is expecting adjusted earnings of 45 cents to 46 cents per share on revenue between $2.55 billion and $2.65 billion. That compares to analyst forecasts of 46 cents per share on revenues of $2.52 billion.
For all of 2011, eBay raised its forecast $1.93 to $1.97 per share on revenues of $10.6 billion to $10.9 billion, above analyst forecasts of $1.94 per share on revenues of $10.48 billion.
EBay's Chief Financial Officer Bob Swan said the company had raised the full year sales forecast by $300 million on both ends because of a weaker U.S. dollar and improvements in its marketplaces.
Ebay's shares were up 1 percent in after-hours trading. They closed the day up 2.9 percent.
(Reporting by Phil Wahba, editing by Bernard Orr)