Adjusted results beat expectations but the company offered weak second-quarter guidance and shares fell 4.2 percent in aftermarket trading.
The results come as PayPal, which eBay bought for $1.3 billion in late 2002, gained 5.8 million new active registered accounts to end the quarter up 16 percent to 148 million.
The business is now growing faster than the company's core marketplaces business: Payments revenue rose 19 percent to $1.85 billion, about 43 percent of total revenue. Meanwhile, its core marketplaces revenue rose 10 percent to $2.16 billion.
The business also was the subject of an acrimonious tussle between eBay and billionaire activist investor Carl Icahn earlier this month. Icahn, who owns about 2 percent of eBay's shares, said repeatedly that the company should spin off all or part of PayPal. But eBay has said the company is better as a whole.
Icahn ultimately said that he would drop the PayPal strategy and withdraw his proposal to put two nominees on the board. In return, eBay will make David Dorman, chairman of CVS Caremark Corp. and founding partner of Centerview Capital Technology, the 10th independent director on the 12-member board. But Icahn said he still believes eBay should spin off PayPal and said in a statement that he'll seek confidential talks with the company.
"Our company is better together for now," said CEO John Donahoe. "EBay and PayPal are both great businesses, and they support and reinforce each other."
Overall, eBay lost $2.33 billion, or $1.82 per share, in the three months that ended March 31. That compares with net income of $677 million, or 51 cents per share, last year. Excluding a $3 billion tax charge, net income totaled 70 cents per share. Analysts expected net income of 67 cents per share.
The tax charge relates to freeing up about $6 billion in available cash in the U.S. to increase "financial flexibility."
That could indicate eBay is considering a big acquisition, although the company made it clear there was no specific announcement yet.
"We are not announcing any large U.S.-based acquisition, nor are we committing to finance our share buyback with offshore cash," said CFO Robert Swan. "What we are doing is ensuring we have the capital available for U.S. needs."
Revenue rose 14 percent to $4.26 billion from $3.75 billion. Analysts expected $4.23 billion.
For the second quarter, the company expects adjusted net income of 67 cents to 69 cents per share on revenue of $4.325 billion to $4.425 billion. Analysts expect net income of 70 cents per share on revenue of $4.4 billion.
For the year it expects adjusted net income of $2.95 to $3 on revenue of $18 billion to $18.5 billion. Analysts expected net income of $2.99 per share on revenue of $18.25 billion.
Shares fell $2.29, or 4.2 percent, to $52.25 in aftermarket trading. They ended the day up 90 cents at $54.54. The stock is down less than 1 percent since the beginning of the year.