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Jan. 28, 2020, 8:32 p.m. EST

EBay profit slips amid ongoing strategic review

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By Kimberly Chin

EBay Inc. reported a decline in profit on weak sales in the latest quarter, amid a strategic review that led the online marketplace to shake up its leadership ranks and sell off part of its business.

Net revenue for the e-commerce giant fell 2% from a year ago to $2.82 billion, marking the first year-over-year quarterly decline since eBay spun out payments company PayPal Holdings Inc. in 2015. Still, revenue pulled slightly ahead of analysts' estimates of $2.81 billion.

The company also gave a weaker first-quarter revenue outlook, anticipating $2.55 billion to $2.60 billion, below analysts' estimates of $2.64 billion. Per-share earnings are projected to be around 50 cents to 53 cents, and 70 cents to 73 cents on an adjusted basis.

EBay said active buyers grew by 2% to about 183 million in the December quarter, the eighth straight quarter of gains, though gross merchandise volume, or the amount of business transacted on its platforms, fell 5.4% from the comparable period a year earlier to $23.3 million.

Its shares, which closed Tuesday at $36.21, fell 5.3% in after-hours trading.

EBay has spent much of 2019 in an operations review after a clash with activist investors over the company's strategic focus.

Late last year, eBay agreed to sell its ticketing business StubHub to Geneva-based Viagogo Entertainment Inc. for $4.05 billion. EBay has owned StubHub since 2007, when it bought the business from StubHub co-founders Eric Baker and Jeff Fluhr for $310 million.

EBay decided to explore selling StubHub shortly after two activist investors surfaced last year and urged it to exit from businesses unrelated to its core marketplace. The company agreed to sell StubHub as well as its internationally focused classified-advertising business. It also added board members as part of a settlement with the investors, Elliott Management Corp. and Starboard Value LP.

As part of its deal with the investors, eBay agreed to return more money to shareholders, beginning with its first-ever dividend payment last year. On Tuesday, the company bumped up its quarterly cash dividend to shareholders by 14% to 16 cents a share. Ebay also increased its current buyback program by $5 billion, adding to the $2.2 billion it had already authorized. The company said it repurchased about $1 billion in shares in the fourth quarter.

Scott Schenkel, who was eBay's finance chief, assumed the reins of the company in September after Devin Wenig resigned over conflicts with a reshaped board of directors.

EBay was founded in 1995 -- the same year that Amazon.com launched as an online bookstore -- and became a success story during the dot-com heyday. However, it has struggled to match Amazon in recent years.

Overall, the e-commerce giant's fourth-quarter profit fell 27% from a year earlier to $556 million, or 69 cents a share. On an adjusted basis, profit was 81 cents a share. Analysts were expecting adjusted per-share earnings of 76 cents.

Write to Kimberly Chin at kimberly.chin@wsj.com

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