EBay plans to spin off Paypal in third quarter

EBay painted a mixed financial picture for the first quarter, with lower revenue from its marketplaces division and higher revenue from its Paypal division, which the company said it plans to spin off later this year.

The company reported net income of $626 million, or 51 cents a share, compared with a year-earlier loss of $2.33 billion, or $1.82 a share.The payments unit, which includes PayPal, posted revenue of $2.11 billion, up 14%. Marketplaces revenue slid 4% to $2.07 billion. Enterprise revenue was $288 million, up 7%.Revenue rose 4 percent to $4.45 billion.

We had a strong first quarter, with eBay and PayPal off to a good start for the full year,” said eBay Inc. President and CEO John Donahoe. “I feel very good about the performance of our teams at eBay and PayPal. Each business is executing well with greater focus and operating discipline as we prepare to separate eBay and PayPal into independent publicly traded companies. We are moving forward with clarity and speed, with a smooth separation expected in the third quarter. We are deeply committed to setting up eBay and PayPal to succeed and to deliver sustainable value to our shareholders.”

EBay said its planned spinoff of PayPal will happen in the third quarter this year. It previously disclosed in September that the split would occur sometime in the second half of the year.

The e-commerce giant said that its PayPal division picked up 3.6 million new “active accounts” in the quarter, up 11% to a total of 165 million. In contrast, eBay’s Marketplaces segment saw its gross merchandise volume (GMV) fall 2% year-over-year, although the company did attribute some of that to "negative impacts from foreign currency translation."

EBay said the steady growth of PayPal’s customer base coupled with rising engagement reflects the growing popularity and relevance of the PayPal value proposition globally. The company said its acquisition of Paydiant "helps PayPal extend its mobile value proposition to the offline world for merchants and consumers while its acquisition of CyActive strengthens PayPal's security capabilities and will act as the foundation of PayPal's new security center of excellence."

For the current quarter, eBay expects net revenues to total $4.4 billion to $4.5 billion. Adjusted profit should land between 71 and 73 cents, the company said.