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Payments business drives eBay’s profit beat

April 22, 2015, 9:09 PM UTC
Ebay Reports Quarterly Earnings
SAN JOSE, CA - JANUARY 22: A sign is posted in front of the eBay headquarters on January 22, 2014 in San Jose, California. eBay Inc. will report fourth quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images)
Photo by Justin Sullivan—Getty Images

(Reuters) – E-commerce company eBay Inc reported a quarterly profit well ahead of Wall Street estimates as revenue from its payments business rose 14%, and said it will spin off its key electronic-payment business PayPal in the third quarter.

The company’s shares rose 5% in extended trading on Wednesday.

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.

Some analysts have pegged the spun off company’s market value at about $40 billion.

PayPal’s net total payment volume jumped 18% to $61 billion in the first quarter ended March 31.

Revenue from eBay’s payments business, which had about 162 million active registered accounts as of Dec. 31, rose to $2.11 billion.

EBay’s net revenue rose to $4.45 billion from $4.26 billion, versus analysts’ average estimate of $4.42 billion, according to Thomson Reuters I/B/E/S.

EBay (EBAY) reported net income of $626 million, or 51 cents per share, for the first quarter, compared with a loss of $2.33 billion, or $1.82 per share, a year earlier.

Excluding items, the company earned 77 cents per share in the quarter, ahead of analysts’ average estimate of 70 cents per share.

For more about eBay and PayPal, watch this Fortune video: