3 Cheers for eBay

Things continue to improve at eBay (NAS: EBAY) , though it's important to make sure that investors aren't pitting oranges against apples.

The online auction and financial-transactions leader posted better-than-expected quarterly results tonight. Revenue climbed 29% to $3.28 billion. That's a solid performance -- especially when stacked against Wall Street expectations of merely 24% top-line growth -- but it's not an organic number, either.

Since eBay didn't complete its acquisition of e-commerce enabler GSI until the second quarter of last year, the $237 million in revenue contributed there during the first three months of this year is a bit of an illusion. Back that out, and revenue for eBay and PayPal combined to grow at a more modest 19% clip.

Adjusted earnings of $0.55 a share landed comfortably ahead of the $0.47 it rang up a year earlier and the $0.52 that the pros were targeting.

Regardless of whether you bake GSI into the results or not, beating analyst forecasts on the top and bottom line is a welcome sight. After all, the analysts knew full well the timing of the GSI deal.

PayPal continues to be the workhorse here. There are now 109.8 million active registered PayPal accounts, 12% ahead of last year. Payment volume climbed 24% to $34 billion, and that's really good to see. The average account is relying on PayPal more to seal the deal. Revenue climbed 32%, and that's a great sign for shareholders.

Then again, that metric is going to be blurry as PayPal strikes deals with real-world merchants. PayPal recently became available as a payment platform at all of the nearly 2,000 Home Depot (NYS: HD) stores around the country.

Last summer, eBay revealed that a major retailer would be adding point-of-sale integration with PayPal. If things panned out, as many as 20 different retailers would be accepting PayPal alongside cash and plastic options at the registers by the end of this year. We obviously know now that the major retailer was Home Depot.  We'll see how the rest of eBay's goal plays out.

Growth at eBay's namesake marketplace business isn't as impressive. The 11% year-over-year revenue spurt is the segment's weakest showing in four quarters, but it's certainly better than when the segment was slumping in the single digits a couple of years ago. Gross merchandise volume excluding vehicle sales rose 12% to $16 billion.

There's certainly glitzier growth to be had than eBay's 19% organic revenue pop.  E-tail leader Amazon.com (NAS: AMZN) reports next week, and analysts are holding out for a 31% surge. Analysts are also banking on a 38% gain in revenue when Latin American marketplace champ MercadoLibre (NAS: MELI) reports.

However, unlike Amazon and its Kindle-crunched margins, at least eBay is growing on the bottom line. eBay also trades at a lower earnings multiple than either Amazon or MercadoLibre.

Guidance calls for adjusted earnings of $0.53 to $0.55 a share during the current quarter on $3.25 billion and $3.35 billion in revenue. The EPS outlook for all of 2012 stands between $2.30 and $2.35 on $13.8 billion to $14.1 billion in revenue. Sequential flatness for the new quarter isn't very inspiring, though Wall Street's perched at the low end of eBay's range for the entire year.

Bottom line: As long as PayPal continues to hold up as the workhorse here, eBay will be just fine.

eBay rocks your world
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At the time this article was published The Motley Fool owns shares of Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of MercadoLibre, Amazon.com, eBay, and Home Depot and writing puts on eBay. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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