EBay (EBAY) reported narrowly better-than-expected first-quarter earnings late Wednesday, but the company faced higher across-the-board costs that partially offset improvements in its Marketplace and PayPal businesses, and unveiled a tepid outlook.

Looking toward the current quarter, eBay said it sees non-GAAP earnings in the range 61 cents to 63 cents on sales between $3.8 billion and $3.9 billion. Analysts on average are calling for stronger EPS of 66 cents on revenue of $3.95 billion.

For the full year it anticipates non-GAAP EPS between $2.70 and $2.75 on revenue of $16 billion to $16.5 billion, the mid-point of which are both below Wall Street’s view of $2.74 a share on $16.38 billion in sales.  

Shares of eBay slumped more than 2.5% after hours to $54.66 following the results.

The San Jose, Calif.-based online marketplace known for its auction service reported quarterly net income of $677 million, or 63 cents a share excluding one-time costs, compared with a year-earlier profit of $570 million, or 55 cents.

Non-GAAP EPS topped average analyst estimates in a Thomson Reuters poll by a penny.

Revenue for the three-month period ended March 31 climbed 14% to $3.75 billion, virtually matching the Street’s view.

"We had a strong first quarter, with accelerating user growth across both Marketplaces and PayPal, and with GSI enabling their retail clients to grow faster than ecommerce," eBay CEO John Donahoe said in a statement.

The improvement was led by its payments group PayPal, which saw sales grow 18% to $1.5 billion on an increase of five million active registered accounts, while revenue in its core Marketplace business jumped 13% to $2 billion.

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