EBay Inc's (EBAY.O) forecast for current-quarter profit and revenue missed Wall Street estimates as the ecommerce company invests heavily to beat the rising competition from the likes of Amazon.com Inc and Alibaba Group Holding Ltd.
EBay's total operating expenses rose 16.1 per cent to US$1.44 billion in the first quarter. The company's shares were down 4.5 per cent at US$39.11 in extended trading.
The company has been trying to woo shoppers by refurbishing the homepage of its website and making it easy for searches as well as by ensuring the authenticity of premium products that it sells.
"We are actively investing to build our product and capabilities related to intermediated payments and improving the customer experience," CFO Scott Schenkel said on a post-earnings call. "We expect the level of investment to increase over time."
EBay said it expects net revenue for the second quarter to be between US$2.64 billion and US$2.68 billion. Analysts were expecting it to be US$2.69 billion.
The company forecast second-quarter earnings per share in the range of 50 cents to 52 cents U.S. per share. The midpoint of the range came in below the average analyst estimate of 52 U.S. cents.
In the reporting quarter, 171 million active buyers used the company's website, missing the average analyst estimate of 173.4 million buyers, according to data and analytics firm Factset.
However, its gross merchandise volume — the total value of all goods sold on its websites — rose 13 per cent to US$23.6 billion, brushing past the analyst target of US$23.1 billion, according to FactSet.
The company's net income fell to US$407 million, or 40 cents U.S. per share, in the quarter ended March 31, from US$1.04 billion, or 94 cents U.S. per share, a year earlier when it booked a US$695 million tax gain.
Revenue rose to US$2.58 billion from US$2.30 billion.
Excluding one-time items, the San Jose, California-based company earned 53 cents U.S. per share, in line with analysts' estimates of 53.
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