Ebay posts “record” earnings in Q4

EBay Q3 beats estimates with £2bn in revenue
EBay raises full year outlook on back of encouraging third quarter.
// Ebay saw sales jump 6.3% over the final quarter
// It also paid out its first ever quarterly dividend to investors
// It comes as pressure from activist investor Elliott Management to sell its non-core arms builds

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Ebay is set to pay out its first-ever quarterly dividend after achieving “record” earnings over its fourth quarter.

The online retail marketplace saw sales jump 6.3 per cent to $2.88 billion (£2.19 billion) year-on-year in the three months to December 2018, ahead of analysts estimates of $2.86 billion (£2.18 billion).

Net income from continuing operations came in at $736 million (£561.9 million), a significant improvement on the $2.6 billion (£1.98 billion) loss seen a year earlier after taking a one off hit of $3 billion (£2.29 billion) in relation to taxes.

In light of this it said it expected full year revenue to rise between one and three per cent to between $10.7 billion (£8.16 billion) and $10.9 billion (£8.31 billion).

This follows news that Elliott Management, the activist hedge fund worth £26 billion which bought Waterstones and Perfect Home last year, acquired a four per cent stake in Ebay for $1.4 billion (£1 billion).

It called for Ebay to offload its ticket selling platform StubHub, which it purchased for $310 million (£238 million) in 2007, and the UK classified advert platform Gumtree which it acquired in 2005, to focus on its core marketplace business.

In the fourth quarter Ebay said active buyers on its key marketplace were up four per cent to 179 million, accounting for $2.3 billion (£1.75 billion) of its total revenues.

This compares to $314 million (£239.6 million) and $263 million (£200.7 million) in revenues from its ticket selling and classified arms respectively.

“We delivered record earnings for the fourth quarter and full year 2018,” chief executive Devin Wenig said.

“In 2019, our focus will be on further improvements to the Ebay user experience, while pursuing significant long-term growth opportunities in advertising and payments.

“We are confident in the strength of our business and future growth prospects, as demonstrated by our decision to institute Ebay’s first-ever dividend and increase our share repurchase program.”

Thought to be a reaction to pressure from its new activist investors, Ebay said it is repurchased $1.5 billion of its common stock during the quarter, adding that it plans to “return approximately $7 billion to shareholders through dividends and repurchases over the next two years”.

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