By Patrick Thomas
EBay Inc. raised its revenue and profit outlook after posting stronger-than-expected results in its first quarter, sending shares up 5% in after-hours trading Tuesday.
The online marketplace said first-quarter revenue rose 2% from a year earlier to $2.64 billion, as it benefited from more people making purchases on its platforms. The number of active buyers, or those who made a transaction within the last year, grew 4% to 180 million.
EBay, which also operates ticket platform StubHub, projected revenue this year to be between $10.83 billion and $10.93 billion, compared with its prior forecast of between $10.7 billion and $10.9 billion. It expects per-share earnings from continuing operations to be between $1.94 and $2.04, up from a range of $1.83 to $1.93 previously.
The latest quarterly report comes as eBay is completing a strategic review of its operations after facing pressure from activist investors Elliott Management Corp. and Starboard Value LP. In an agreement with Elliott and Starboard, eBay added two new directors to its board in March, and pledged to add a third new director later this year.
In recent years, eBay shares have languished as the company has sought to distance itself from its reputation as an online auction house and has battled the likes of Amazon.com Inc. in the e-commerce arena. EBay's shares are up 30% this year, but still down about 12% over the past 12 months through Tuesday's close.
Gross merchandise volume, the value of goods sold on its websites, fell 4%. But eBay executives said on a conference call with analysts it will benefit more from higher-quality product listings and a more user-friendly website. The amount of money eBay earned from transactions rose from a year earlier.
About 800,000 sellers also took advantage of eBay's promoted listings in the quarter, more than doubling advertising revenue to $65 million, the company said.
"What we're seeing is that what matters to our existing customers is less a fully product-based experience, but more the richness of listings that the catalog and structured data brings," Chief Executive Devin Wenig said on the call.
In the latest quarter the San Jose, Calif., company's profit rose 27% to $518 million, or 57 cents a share. Earnings from continuing operations were 67 cents a share, ahead of estimates from analysts polled by FactSet of 63 cents a share.
EBay spent $125 million on dividends during the first quarter, the first in the 24-year-old company's history. The company plans to spend $5.5 billion on share buybacks and dividends this year.
For the current quarter, eBay said it expects revenue between $2.64 billion and $2.69 billion and earnings from continuing operations between 61 cents a share and 63 cents a share.
Write to Patrick Thomas at Patrick.Thomas@wsj.com