SAN FRANCISCO (Reuters) - E-commerce company eBay Inc reported a higher-than-expected quarterly profit as revenue surged from its payments business that includes PayPal, which the company said would be spun off in the third quarter.
Revenue from eBay's payments business rose 14 per cent to US$2.11 billion in the first quarter, accounting for nearly half of its total revenue. EBay's shares rose 5 per cent in extended trading on Wednesday.
"The upside all came from PayPal," Benchmark Co analyst Daniel Kurnos said.
EBay has relied heavily on its payments business to offset sluggishness in its marketplace business, which includes its core global e-commerce platform ebay.com.
Increasing competition and slowing customer additions have hurt the company's marketplace business, which reported a 4 per cent fall in quarterly revenue.
PayPal said in April it would continue charging eBay merchants less than it does other merchants and the two companies would stay interdependent for the next five years.
The business has benefited from a surge in payments using mobile devices as customers increasingly use their smartphones and tablets for online shopping.
PayPal's mobile payment transactions, which account for nearly one-third of its total transactions, rose more than 40 per cent.
Average transactions per PayPal account rose to 23 in the quarter from 21, said PayPal President Daniel Schulman, who is set to be appointed the chief executive of the spunoff company.
EBay forecast revenue of US$4.40 billion-US$4.50 billion for the second quarter, below the average analyst estimate of US$4.57 billion, according to Thomson Reuters I/B/E/S.
The company's full-year revenue forecast of US$18.35 billion-US$18.85 billion also missed analysts' expectations of US$18.96 billion, which EBay blamed on a strong dollar.
EBay, which gets more than half of its revenue from markets outside the United States, said most of the impact of a strong dollar on the company would be in its marketplace business.
The dollar has risen about 23 per cent against a basket of major currencies in the past year.
EBay reported net income of US$626 million, or 51 cents per share, for the first quarter ended March 31 compared with loss a year earlier .
Excluding items, the company earned 77 cents per share.
Net revenue rose 4.4 per cent to US$4.45 billion.
Analysts on average had expected earnings of 70 cents per share and revenue of US$4.42 billion.