Online auctioneer eBay Inc posted second-quarter results that edged out expectations as it saw strong growth in both the number of auctions and the value of goods sold despite a costly site outage last month. Net income for the quarter was $816,000, or $0.01 per share, on revenue that rose 154% year-over-year to $49.5m. Excluding the effect of non-cash and one-time merger- related charges of $5.1m, net earnings per share amounted to $0.04, a penny better than the First Call consensus. In the year- ago period, the company posted net income of $2.7m, or $0.02 per share – $0.05 excluding one-time charges. EPS comparisons were affected by a 24% increase in the number of diluted shares outstanding.
The top line for the quarter was impacted by $3.9m in credits to users stemming from the 22-hour June 10 site outage but revenue growth was fueled by a surge in auctions. Total auctions hosted rose 28% sequentially to 29.4 million from 22.9 million in the first quarter, while registered users jumped by 1.7 million in the quarter to 5.6 million. Gross merchandise sales reached $622m, up 15% from the first quarter’s $541m. Gross margins, meanwhile, declined to 77% from 85% in the prior quarter as increased investments in infrastructure and customer support staff, as well as the user credits, took their toll. Sales and marketing and products development costs also increased significantly during the quarter.
The quarter’s results were not as strong as they might appear, however, as some analysts had lowered their estimates after the technical problems last month, when eBay warned that it would see lost revenue of roughly $3m to $5m. The company posted a loss from operations of $4.6m and would have seen a net loss for the period but for the effect of $6.0m in interest and other income. For the six-month period, net income rose 9.8% to $4.6m on revenue up 176% at $92.3m, while EPS dropped to $0.04 from $0.12. The balance sheet looked stronger as of June 30, mostly due to the proceeds from a secondary offering completed in April, with cash and equivalents of $347.6m – up from $37.3m as of December 31.
