EBay Inc. reported strong quarterly results on Wednesday, but the e-commerce company gave a cautious forecast for the crucial holiday season amid a brewing price war between big retailers and rival Amazon.com Inc.
EBay said third-quarter revenue rose 15 per cent to $3.4-billion (U.S.), while profit climbed 14 per cent to $718-million, or 55 cents a share, compared with 48 cents last year. The revenue matched Wall Street estimates, while profit beat by a penny.
EBay forecast fourth-quarter revenue of $3.85-billion to $4-billion and profit of 66 cents to 69 cents per share. Wall Street was looking for fourth-quarter earnings of 68 cents a share on revenue of $3.94-billion, according to Thomson Reuters I/B/E/S.
EBay shares were up 1 per cent, to $48.40, in after-hours trading following the results.
"Not as overpowering a beat as the last couple of quarters, but they do appear on track," said Gil Luria, an analyst at Wedbush Securities.
Some analysts expected eBay to lift its fourth-quarter forecast a lot, but that did not happen.
"Given that there had been a lot of momentum in eBay and PayPal's businesses, expectations may have gotten ahead of themselves," said R.J. Hottovy, an equity analyst at Morningstar.
EBay may be giving a cautious outlook for the holiday season because big retailers including Target Corp. and Best Buy Co. Inc. are planning to match Amazon's online prices, Mr. Hottovy noted. This price tussle may put more shoppers and revenue up for grabs during the fourth quarter, he added.
"It's probably wise for eBay to err on the side of caution because of this price competition," Mr. Hottovy added.
EBay shares have jumped so far this year, outpacing those of Amazon, on optimism that growth has resumed at the Marketplaces business and on hope for an expansion of PayPal from its online roots into physical stores.
EBay's online marketplace, one of the largest in the world, has lagged behind the growth of e-commerce and Amazon.com for several years. But under chief executive officer John Donahoe, eBay has invested to improve the buying experience by upgrading search capabilities and prodding sellers to provide more services such as free shipping and easier returns.
The explosive growth of mobile shopping has also attracted hundreds of thousands of new consumers to eBay's marketplace this year.
EBay unveiled a redesign of its website earlier this month, which included more personalized product recommendations and faster PayPal checkout – moves that could boost sales in coming quarters, according to analysts.