EBay faces year of transition

Dive Brief:

EBay on Tuesday said that fourth quarter net revenue rose 6% to $2.9 billion, primarily driven by gross merchandise volume, which rose 1% (2% currency neutral) to $24.6 billion. Non-GAAP net income from continuing operations in the quarter reached $670 million from $618 million in the year-ago quarter.
The marketplace's active buyers base grew 4% across platforms to 179 million globally. Its marketplace delivered $2.3 billion in revenue (up 7%) and $23.2 billion of GMV; StubHub delivered revenue of $314 million (up 2%) and GMV of $1.4 billion, (down 2%); and its classifieds delivered revenue of $263 million (up 8%). In all it was a "mixed quarter," according to a Wells Fargo client note emailed to Retail Dive.
For the full year 2018, revenue rose 8% (6% currency neutral) to $10.7 billion, primarily driven by GMV growth of 7% to $95 billion. For the current year, the company said it expects net revenue of between $10.7 billion and $10.9 billion and organic growth of 1% to 3%.

Dive Insight:

EBay last year trotted out a range of changes to its delivery, user and seller experiences, and CEO Devin Wenig told analysts Tuesday that some of those experiments will stick while others will be tamped down or abandoned.

That makes this year one of transition, as eBay smooths that over and recovers in some areas. "GMV has dipped before and then reaccelerated. I've seen it several times in my time here at eBay and ... I always go to buyer growth and traffic, both of which are healthy and stable," Wenig said, according to a transcript from Seeking Alpha. He also said the company will "focus intensely" on conversion, traffic and "buyer grow," and "resetting marketing."

He brushed aside the notion that luxury resale site The RealReal or resale marketplace Poshmark are grabbing much share. "Look, it's an intensely competitive industry," he said. "We are competing for $11 trillion of commerce. There is nothing fundamentally that changed in the last 30 or 60 or 90 days. It makes for a good headline, but the fact is there's no incremental competitive pressure that changed our results materially."

Indeed, what may be more disruptive to the company's plans are recent pushes from activist investors Elliott Management (which owns more than 4% of shares) and (per a report from CNBC) Starboard Value, which both recently urged the company to extract value from its profitable StubHub and Classified units. In a Jan. 22 letter to eBay executives, Elliott Partner Jesse Cohn urged the company to spin them off, strengthen the remaining marketplace and boost efficiencies.

"While we believe that execution missteps and unclear focus have impaired value, eBay is far from broken, and its future should be bright," Cohn wrote. "eBay's inimitable Marketplace continues to enjoy sustained growth in both Gross Merchandise Volume ("GMV") and users while StubHub and eBay Classifieds are thriving. However, change is urgently needed to address real business issues, which we believe will unlock long-term shareholder value."

In response, eBay the same day said it would entertain Elliott's ideas "as we do with all shareholders." But on Tuesday Wenig said both businesses already have synergies integral to the marketplace that are poised to grow.

The marketplace has been here before — 12 years after its 2002 acquisition of PayPal, the company ultimately bowed to months of intense pressure to spin it off. "I think our actions on the last three years proved that we are constantly reevaluating our portfolio and we will and we have taken actions that are in the best interest of our shareholders and will continue to do that," Wenig told analysts Tuesday.