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EBay beats quarterly profit on cost cut efforts, shares rise

EBay beats quarterly profit on cost cut efforts, shares rise
The eBay app is seen on a mobile phone in this illustration photo October 16, 2017. REUTERS/Thomas White/Illustration   -   Copyright  THOMAS WHITE(Reuters)
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By Sonam Rai

(Reuters) – EBay Inc beat analysts’ estimates for third-quarter profit by managing costs at a time when bigger rival Inc missed revenue estimates and forecast sales below expectations for the holiday quarter.

Shares of EBay, which also expects fourth-quarter profit marginally above analysts’ estimates, rose as much as 6.0 percent in after-hours trading. The shares have fallen 27 percent so far in 2018.

The San Jose, California-based company has been splurging on product developments, brand marketing and making its website more user-friendly to better compete with increased competition in the online shopping sphere, while also cutting jobs to rein in costs.

“Effective expenses management has resulted in consistent EPS upside,” said D.A. Davidson & Co analyst Thomas Forte.

EBay’s initiatives like grouped listings that let buyers see all identical items grouped together, personal recommendations, and a simplified payment process have also helped lure more online shoppers. The company said it had 177 million active buyers in the third quarter, compared to 175 million in the second.

EBay forecast fourth-quarter adjusted profit of 67 cents to 69 cents per share and revenue of $2.85 billion (£2.24 billion) to $2.89 billion.

Analysts on average were expecting a profit of 67 cents per share and revenue of $2.90 billion, according to Refinitiv data.

Revenue from StubHub, EBay’s marketplace for event tickets, rose 6.0 percent to $286 million, setting aside some fears of slowing growth in the business and showing that a strategy of expanding into international and non-traditional ticket markets was bearing fruit.

“StubHub delivered modest volume acceleration in Q3, driven primarily by strength in concerts, partially offset by a weaker NFL performance,” Chief Executive Officer Devin Wenig said on a post-earnings call.

However, EBay’s total gross merchandise volume (GMV), the value of goods sold on its websites within a certain timeframe, rose 4.8 percent to $22.72 billion in the third quarter, but missed Refinitiv estimates of $23.40 billion.

The company’s profit rose to $721 million, or 73 cents per share, in the third quarter ended Sept. 30, from $520 million, or 48 cents per share, a year earlier.

Excluding items, the company earned 56 cents per share, beating estimates of 54 cents.

Net revenue rose 6 percent to $2.65 billion, in line with analyst expectations.

(Reporting by Sonam Rai in Bengaluru; editing by Shounak Dasgupta)

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