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What Drove eBay’s 2Q16 Bottom Line?

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Share buybacks and lower tax rate aided bottom line

eBay (EBAY) reported better-than-expected 2Q16 bottom line results, thanks to the share buybacks that boosted the company’s bottom-line results by $0.03. eBay’s adjusted EPS (earnings per share) of $0.43 per share surpassed the analysts’ expectations by $0.01 and increased by 2% YoY (year-over-year).

In 2Q16, eBay repurchased $500 million worth of shares under its current repurchase plan. The company also approved an additional $2.5 billion share repurchase authorization.

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Its revamped online marketplace allowed eBay to grow the number of active buyers on its platform both quarter-over-quarter and year-over-year. Moreover, eBay’s quarterly results got a significant boost from the strong performance of StubHub, the fast-growing ticket selling business, and a lower effective tax.

Until recently, eBay has been struggling to attract new buyers following its separation from PayPal (PYPL), as well as increased competition from Amazon (AMZN) and Walmart (WMT).

On a GAAP[1. generally accepted accounting principles] basis, eBay’s EPS came in at $0.38, up by $0.03 when compared with prior year quarter.

Currency headwinds

eBay (EBAY) generates about 60% of its gross merchandise volume and revenues from the international market and thus remains susceptible to adverse currency movements. The strong US dollar (UUP) and stand-up costs related to separation from PayPal negatively impacted eBay’s 2Q16 bottom line by $0.01.

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