Share “Strong PayPal growth boosts eBay's 2Q profit”

Strong PayPal growth boosts eBay's 2Q profit

Published on NewsOK Modified: July 16, 2014 at 5:14 pm •  Published: July 16, 2014

NEW YORK (AP) — EBay said Wednesday that its second-quarter net income rose 6 percent, as strong growth from its PayPal payments business offset lower-than-expected revenue that was hampered by a global password reset after a cyberattack.

Investors had been expecting muted results and shares rose slightly in aftermarket trading, even though the company lowered its sales guidance for the year.

PayPal, which eBay bought for $1.3 billion in late 2002, gained 4 million new active registered accounts to end the quarter up 15 percent to 152 million.

The business is growing faster than the company's e-commerce site: Payments revenue rose 20 percent to $1.95 billion, about 45 percent of total revenue. Meanwhile, its core marketplaces revenue rose 9 percent to $2.17 billion.

It was a tough quarter for eBay. In May, the company said a cyberattack compromised user passwords, email addresses and phone numbers, although no financial or credit card information was stolen. It asked all 145 million users to change their passwords.

A change in how Google runs its search engine during the quarter also made it harder for eBay results to come up during Web searches.

"We've got a couple of body blows in the second quarter with having to reset the passwords and the SEO change but we're continuing to invest in this business and we think that it's going to be one of the winners in e-commerce," said CEO John Donahoe in a call with analysts. SEO refers to search engine optimization, a technique companies use to appear more frequently online.

The San Jose, California-based company said net income increased to $676 million, or 53 cents per share, from $640 million, or 49 cents per share, in the same quarter a year ago.

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