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EBay delivers modest Q4'16 beat on strong holiday sales

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EBay delivers modest Q4'16 beat on strong holiday sales

eBay Inc. is fighting for relevance in an e-commerce landscape dominated by Amazon.com Inc., and it seems to have taken a positive step in that direction during a critical fourth quarter 2016.

"During the holiday season, eBay was one of the top consumer shopping destinations in the world and the second most visited e-commerce site in the U.S.," eBay President and CEO Devin Wenig said in a Jan. 25 earnings release. "In 2017, we intend to accelerate the progress that we made last year as we continue to execute our business strategy."

EBay in the fourth quarter added 2 million active buyers across its platforms, for a total of 167 million global active buyers.

The company narrowly beat consensus estimates on more robust than expected holiday sales. Specifically, eBay reported fourth-quarter 2016 income from continuing operations of $5.9 billion, or $5.31 per share, compared to $523 million, or 43 cents per share, in the prior-year quarter.

The GAAP result included a $4.6 billion income tax benefit. Excluding that and other one-time items, non-GAAP adjusted net income came to $601 million, or 54 cents per share, compared to $600 million, or 50 cents per share, reported in the 2015 quarter. For the full-year, adjusted net income was $2.16 billion, or $1.88 per share, compared to $2.23 billion, or $1.83 per share, reported in 2015.

The consensus non-GAAP normalize EPS estimate was 53 cents for the fourth quarter and $1.88 for the full year, according to S&P Capital IQ.

Looking at the top line, fourth quarter net revenue clocked in at $2.40 billion, up 3% year over from $2.32 billion.

Looking ahead to the first quarter, the company expects net revenues of $2.17 billion to $2.21 billion, representing FX-neutral growth of 4% to 6%. The company forecasts non-GAAP EPS from continuing operations in the range of 46 cents to 48 cents and GAAP EPS from continuing operations of 25 cents to 40 cents.

For full year 2017, the company expects net revenue to be between $9.3 billion and $9.5 billion, representing FX-neutral growth of 6% to 8%. The company expects non-GAAP EPS from continuing operations in a range of $1.98 to $2.03, and GAAP EPS of $1.20 to $1.40.

The S&P Capital IQ consensus EPS estimate for the first quarter is 50 cents on a normalized basis and 42 cents on a GAAP basis. The consensus estimate for the full year 2017 is $2.06 on a normalized basis and $1.76 on a GAAP basis.

Executives on the call said they saw a good market in the fourth quarter and strong holiday-season shopping, and the company's guidance assumes the consumer will remain healthy.

"It's not without risks, but we're happy with where we are and we're heading in the right direction," Wenig said on a same-day earnings webcast.

On shareholder returns, the company repurchased approximately $1.0 billion of its common stock, or 34.6 million shares, in the fourth quarter of 2016, and its total repurchase authorization stood at $1.3 billion as of Dec. 31, 2016.

Shares of eBay traded up over 8% in after-hours trading.