eBay sells unit ahead of PayPal spin-off; beats Street in Q2

San Jose, Calif. -- eBay is selling its enterprise business as it continues streamline operations in anticipation of its separation from PayPal Holdings Inc. on Friday.



In announcing its second quarter results, eBay said it was selling its eBay Enterprise division, which helps retailers enhance their online presence and e-commerce capabilities, to a consortium led by private equity firm Permira for $925 million.



The company beat Wall Street expectations for profit in the second quarter of fiscal 2015, even as net income fell 88% to $83 million from $676 million the same period a year earlier. The discontinuation of income from eBay Enterprise primarily drove the steep decline in profits.



However, revenues fared better thanks to strong performance across both the eBay and PayPal divisions. Net revenue rose 7% to $4.38 billion from $4.1 billion, including $2.3 billion in revenue from PayPal. This is the last quarter when PayPal can help boost eBay revenue, as the digital payment provider is scheduled to spin off into a separate company on July 17.



"We are very pleased with our overall second quarter performance,” said John Donahoe, president and CEO of eBay. “PayPal and eBay both delivered strong second quarter results and have strong momentum. Dan (Schulman, president of PayPal), Devin (Wenig, president of eBay) and their respective teams are executing well and are prepared to create the next great chapter for PayPal and eBay.”



Looking ahead, for fiscal 2015, eBay expects net revenues to grow 3% - 5% with earnings per diluted share in the range of $1.40 - $1.45. For the full fiscal year, PayPal Holdings Inc. expects net revenues to grow 15% - 18%, with earnings per diluted share in the range of $0.89 - $0.95. PayPal’s guidance does not include its pending acquisition of Xoom Corp.



In January, eBay said it would explore “strategic alternatives” for its enterprise division, which evolved from eBay’s $2.4 billion purchase of GSI Commerce in 2011. Recently, private equity firm Thomas H. Lee Partners LP was rumored to be a leading suitor for the enterprise division.



eBay’s current stock repurchase authorization is $3 billion.