eBay (NASDAQ:EBAY) sold its Enterprise business for $925 million and topped Wall Street expectations for its second-quarter earnings as the online retailer prepares to spin off PayPal.
The deal leaves eBay with its slow-growing marketplace business, which faces stiff competition from rivals such as Amazon.com.
eBay's enterprise business, the company's smallest, was formerly known as GSI Commerce. The business, which eBay purchased in 2011 for $2.4 billion, helps retailers strengthen their online presence and e-commerce capabilities.
The business has since lost customers and seen sluggish growth in the past few years as retailers increasingly move their online operations in-house.
The unit suffered a blow this month when ToysRUs Inc, one of its largest customers, ended a near decade-long contract to launch its own online platform.
The Permira-led consortium of buyers includes Sterling Partners, Longview Asset Management, Innotrac Corp and companies owned by Permira funds.
The sale was announced alongside eBay's second-quarter results. Net income fell to $83 million, or $0.07 cents per share, for the April-to-June period, from $676 million, or $0.53 per share, a year earlier.
Adjusted earnings, excluding a $786 million charge related to the Enterprise sale, amounted to $0.76 per share. That was $0.04 better than analysts had projected, according to a survey by Capital IQ.
Revenue rose to $4.38 billion from $4.10 billion. Including revenue from its discontinued enterprise unit, however, revenue totaled $4.65 billion. Thirteen analysts surveyed by Capital IQ expected $4.48 billion.
eBay said the stronger dollar hurt its results.
Looking ahead, eBay expects full-year earnings in the range of $1.72 to $1.77 per share.
The company also announced an additional $1 billion share buyback program.
eBay attracts 157 million buyers to its site and handles more than $80 billion in annual sales volume. The San Jose-based company last year announced plans to spin off PayPal following pressure from activist investor Carl Icahn, who said the slow-growing marketplace was holding back the payments business.
Global e-commerce sales will hit $1.59 trillion this year, up 21 percent, according to EMarketer. EBay’s marketplace sales growth has lagged behind that pace so far this year, coming in at 7 percent in June, 6.6 percent in May and 5.8 percent in April, according to e-commerce consultant ChannelAdvisor.
PayPal, which has 165 million accounts and gets 24 percent of its transactions on eBay, is due to begin trading separately on the Nasdaq on 20 July, creating a new company that some analysts say will be worth about $40 billion.