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Can Strong Marketplace Propel eBay's (EBAY) Q2 Earnings?

eBay’s EBAY expanding marketplace business is expected to reflect on second-quarter results, slated to release on Jul 28.

The company’s marketplace platform is a major contributor to top-line growth. The coronavirus-induced shelter-in-place situation is expected to continue benefiting the Marketplace platform.

eBay’s revenues are classified into two types: Net Transaction, and Marketing Services and Other.

In the last reported quarter, the company reported net transaction revenues of 1.9 billion, which was entirely generated by the Marketplace platform. The figure accounted for 80% of total net revenues and improved 1% year over year.

On the contrary, eBay generated $474 million of total marketing services and other revenues (20% of total revenues), which fell 10% from the year-ago quarter.

Additionally, the company’s active buyers grew 2% year over year. The active buyer base was 174 million at first quarter-end.

For the to-be-reported quarter, the Zacks Consensus Estimate for net transaction revenues is pegged at 2.4 billion, indicating an increase of 0.5% from the prior-year reported figure. The same for revenues from marketing services and other is pegged at $408 million, indicating a decline of 13.9% from the year-ago reported figure.

The Zacks Consensus Estimate for active Marketplace users is pegged at 181 million for the quarter to be reported, indicating an increase of 4% from the year-ago reported figure.

Click here to know how eBay’s overall second-quarter results are expected to be.

Delving Deeper

The company stated that Marketplace platforms performed well during the quarter in all the key metrics — traffic, buyer acquisition, conversion, sold items and GMV — due to shelter-in-place dynamics in many countries.

The Marketplace platforms also experienced improved acquisition of small business sellers. In addition, its buyer base expanded during the quarter. These factors should help expand the company’s top-line growth.

eBay’s accelerated Artificial Intelligence efforts through personalization, image search technology and customer support are expected to have enhanced the Marketplace platform.

The company has been providing more data to marketplace sellers, including price and restocking guidance, as well as more insight into inventory such as demand signals for the right products, price, and timing.

Given the strong position of eBay’s businesses amid the coronavirus pandemic, the marketplace platform is expected to have been one of the major growth drivers in the quarter to be reported.

eBay Inc. Revenue (TTM)

eBay Inc. Revenue (TTM)

eBay Inc. revenue-ttm | eBay Inc. Quote

Zacks Rank & Other Key Picks

Currently, eBay carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Microchip Technology Incorporated MCHP, Etsy ETSY and Wayfair Inc. W. While Microchip Technology sports a Zacks Rank #1, Etsy and Wayfair carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Microchip Technology, Etsy, and Wayfair is currently projected at 14.5%, 22.4% and 23%, respectively.

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