Q2 2024 eBay Inc Earnings Call

Operator: Ladies and gentlemen, good afternoon, and thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the eBay second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Ladies and gentlemen, good afternoon and thank you for standing by.

Abby: My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the eBay second quarter 2024 earnings conference call.

Operator: And after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 a second time.

Speaker Change: All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question during that time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 a second time.

Operator: Thank you, and I would now like to turn the conference over to John Egbert, Vice President of Investor Relations. You may begin. Good afternoon.

Thank you, and I would now like to turn the conference over to John Egbert, Vice President of Investor Relations. You may begin.

John Egbert: Thank you all for joining us for eBay's second quarter 2024 Earnings Conference. Joining me today on the call are Jamie Iannone, our Chief Executive Officer, and Steve Priest, our Chief Financial Officer.

John Egbert: Good afternoon. Thank you all for joining us for eBay's second quarter 2024 earnings conference call. Joining me today on the call are Jamie Iannone, our Chief Executive Officer, and Steve Priest, our Chief Financial Officer.

John Egbert: We're providing a slide presentation to accompany our commentary during the call, which is available through the investor relations section of the eBay website at investors.ebayinc.com. Before we begin, I'll remind you that during this conference call, we will discuss certain non-GAAP measures related to our program. You can find the reconciliation of these measures to the nearest comparable gap measures in our accompanying slides. Additionally, all growth rates noted in our prepared remarks will reflect an organic FX-neutral year-over-year comparison. And all earnings per share amounts reflect earnings per diluted share unless indicated otherwise.

Speaker Change: We're providing a slide presentation to accompany our commentary during the call, which is available through the Investor Relations section of the eBay website at investors.ebayinc.com.

Before we begin, I'll remind you that during this conference call, we will discuss certain non- GAAP measures related to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in our accompanying slide presentation.

Speaker Change: Additionally, all growth rates noted in our prepared remarks will reflect organic FX-neutral year-over-year comparisons, and all earnings per share amounts reflect earnings per diluted share unless indicated otherwise.

John Egbert: During this conference call, management will make forward-looking statements, including, without limitation, statements regarding our future performance and expected These four forward-looking statements involve known and unknown risks and, our actual results may differ materially from our forecast for a variety of reasons, including Form 10-K, Form 10-Q, and our earnings released earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of July 31st, 2024. We do not intend and undertake no duty to update this information. With that, I'll turn the call over to John. Good afternoon, everyone, and thank you all for joining us today.

John Egbert: During this conference call, management will make forward-looking statements, including, without limitation, statements regarding our future performance and expected financial results.

These forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from our forecast for a variety of reasons.

You can find more information about risks, uncertainties, and other factors that could affect our operating results in our most recent periodic reports on Form 10-K , Form 10-Q , and our earnings released from earlier today.

You should not rely on any forward-looking statements.

Jamie Iannone: All information in this presentation is as of July 31st, 2024. We do not intend and undertake no duty to update this information. With that, I'll turn the call over to Jamie.

Jamie Iannone: Our strong Q2 results marked a notable step toward our goal of achieving sustainable, profitable growth over the long term. Gross merchandise volume grew 1% to $18.4 billion in Q2. Revenue increased 2% to $2.57 billion. Non-GAAP operating margin rose by one point to 27.9%.

Jamie Iannone: Thanks, John . Good afternoon, everyone. And thank you all for joining us today.

Jamie Iannone: Our strong Q2 results marked a notable step toward our goal of achieving sustainable, profitable growth over the long term.

Jamie Iannone: Our gross merchandise volume grew 1% to $18.4 billion in Q2. Revenue increased 2% to $2.57 billion.

Jamie Iannone: non-GAAP operating margin rose by 1 point to 27.9 percent.

Jamie Iannone: Our non-GAAP earnings per share rose by approximately 15% to $1.18, and we turned over $1.1 billion to shareholders through repurchases and dividends during the quarter. I'm proud of our teams for delivering these results amid continued macroeconomic headwinds, ongoing geopolitical uncertainty, and an evolving regulatory landscape. Now, let's walk through some of the key drivers of our Q2 results. Focus Category GMV grew by over 4% in Q2, outpacing the remainder of our marketplace by approximately 5%.

Jamie Iannone: Our non-GAAP earnings per share rose by approximately 15% to $1.18.

Jamie Iannone: And we've turned over $1.1 billion to shareholders through repurchases and dividends during the quarter.

Speaker Change: I'm proud of our teams for delivering these results amid continued macroeconomic headwinds, ongoing geopolitical uncertainty, and an evolving regulatory landscape.

Jamie Iannone: Now let's walk through some of the key drivers of our Q2 results.

Jamie Iannone: Focus category GMV grew by over 4% in Q2, outpacing the remainder of our marketplace by approximately 5 points.

Jamie Iannone: After Motors, Parts, and Accessories, or P&A, which continued its trend of healthy growth, collectibles was the second-largest contributor to GMV growth among focus categories and consumers. In mid-May, we closed a series of transactions with Auto Trader, the parent company of PSA, and a leading provider of authentication and grading services for collectors.

After motors, parts, and accessories, or P&A, which continued its trend of healthy growth, collectibles was the second largest contributor to GMV growth among focus categories in Q2.

Jamie Iannone: In mid-May, we closed a series of transactions with collectors, parent company of PSA, and a leading provider of authentication and grading services for collectibles.

Jamie Iannone: Since then, we've made significant progress toward integrating Golden, expanding our relationship with PSA, and elevating the eBay collectibles experience. We support the latest Golden 100 auction, and help drive awareness for the successful global premiere of King of Collectibles Season 2 on Netflix. And the Golden Team began hosting events on eBay Live. During Q2, we completed the transfer of trading card assets to the PSA vault ahead of schedule. And all PSA customers can now easily sell on eBay at the time of grading without having their cards shipped back to them.

Jamie Iannone: Since then, we've made significant progress toward integrating Golden, expanding our relationship with PSA, and elevating the eBay collectibles experience.

Jamie Iannone: We supported the latest Golden 100 auction, helped drive awareness for the successful global premiere of King of Collectibles Season 2 on Netflix, and the Golden team began hosting events on eBay Live.

Jamie Iannone: During Q2, we completed the transfer of trading card assets to the PSA vault ahead of schedule, and all PSA customers can now easily sell on eBay at the time of grading without having their cards shipped back to them.

Jamie Iannone: Since going live in late June, the PSA storefront has already sold tens of thousands of trading cards on eBay, and I'm excited for our companies to jointly drive innovation on behalf of hobbyists for years. eBay Refurbished was also a significant contributor to GMV growth and was our fastest growing focus category year over year, as our combination of trust, value, and quality continues to resonate with customers. Our selection of refurbished inventory continues to grow as we expand existing partnerships with OEMs like Dyson, provide on-board CBT sellers with access to unique items, and extend the program to new categories.

Speaker Change: Since going live in late June , the PSA storefront has already sold tens of thousands of trading cards on eBay, and I'm excited for our companies to jointly drive innovation on behalf of hobbyists for years to come.

Speaker Change: Refurbished was also a significant contributor to GMV growth and was our fastest growing focus category year over year, as our combination of trust, value, and quality continues to resonate with customers.

Speaker Change: Our selection of refurbished inventory continues to grow as we expand existing partnerships with OEMs like Dyson, onboard CBT sellers with access to unique items, and extend the program to new categories.

Jamie Iannone: During Q2, we expanded eBay refurbish to golf clubs, bringing warranties and hassle-free returns to thousands of previously owned golf clubs from the world's top brands. In June, we announced a sustainability collaboration with Seagate, a global leader in data storage solutions.

Jamie Iannone: During Q2, we expanded eBay refurbished to golf clubs, bringing warranties and hassle-free returns to thousands of previously owned golf clubs from the world's top brands.

Jamie Iannone: In June , we announced a sustainability collaboration with Seagate, a global leader in data storage solutions.

Jamie Iannone: We launched Seagate's official storefront on eBay for direct sales of factory recertified hard drives. Not only are these refurbished products a great value for consumers, but this partnership can also eliminate a significant amount of e-waste by extending the product life cycles of quality hard drives. Consumers' desire to shop sustainably has also benefited our luxury focus categories, which delivered positive year-over-year GMV growth for the sixth straight quarter. As we acquire more sellers with well-priced luxury inventory, we have observed a strong correlation with incremental GMB.

Jamie Iannone: We launched Seagate's official storefront on eBay for direct sales of factory recertified hard drives.

Jamie Iannone: Not only are these refurbished products of great value for consumers, but this partnership can also eliminate a significant amount of e-waste by extending the product life cycles of quality hard drives.

Jamie Iannone: Consumer's desire to shop sustainably has also benefited our luxury focus categories, which delivered positive year-over-year GMV growth for the sixth straight quarter.

Jamie Iannone: As we acquire more sellers with well-priced luxury inventory, we have observed a strong correlation with incremental GMB. For instance, we saw a significant acceleration in cross-border demand after the opening of our Tokyo Authentication Center, which led to a meaningful expansion of our luxury handbag inventory.

Jamie Iannone: For instance, we saw a significant acceleration in cross-border demand after the opening of our Tokyo authentication center, which led to a meaningful expansion of our luxury handbag business. We reached a major milestone for our Authenticity Guarantee Program in Q2. We authenticated our 10th millionth item since the inception of the program in 2020. A pair of Air Jordan 1 Low Lucky Green sneakers was authenticated in our Las Vegas facility. During Q2, we also introduced optional authentication for luxury handbags priced between $200 and $500 in the U.S., which enables even more buyers and sellers to enjoy the benefits of our Authenticity Guarantee Program.

Jamie Iannone: We've reached a major milestone for our Authenticity Guarantee Program in Q2. We authenticated our 10th millionth item since the inception of the program in 2020, a pair of Air Jordan 1 Low Lucky Green sneakers authenticated in our Las Vegas facility.

Jamie Iannone: During Q2 we also introduced optional authentication for luxury handbags priced between $200 and $500 in the U.S., which enables even more buyers and sellers to enjoy the benefits of our Authenticity Guaranteed Program.

Jamie Iannone: As our value proposition continues to grow, it's been exciting to see how partnerships have enabled eBay to show up in so many culturally relevant moments. These opportunities help us to evolve perceptions of eBay by showcasing our modernized experiences and connecting with more enthusiasts shopping in pursuit of their passions. Just in the last quarter, Lala Anthony and Madeline Klein showcased their pre-loved luxury accessories from eBay on the Met Gala red carpet. We saw eBay logos on the cockpits of Lando Norris and Oscar Piazza. As the McLaren Formula One team took the checkered flag at the Miami Grand Prix,

Jamie Iannone: As our value proposition continues to grow, it's been exciting to see how partnerships have enabled eBay to show up in so many culturally relevant moments recently.

Jamie Iannone: These opportunities help us to evolve perceptions of eBay by showcasing our modernized experiences and connect with more enthusiasts shopping in pursuits of their passions.

Jamie Iannone: Just in the last quarter, Lala Anthony and Madeline Klein showcased their pre-loved luxury accessories from eBay on the Met Gala red carpet.

Jamie Iannone: We saw eBay logos in the cockpits of Lando Norris and Oscar Piastri as the McLaren Formula One team took the checkered flag at the Miami Grand Prix.

Jamie Iannone: We partnered with Disney to create a customized destination for May the 4th, enabling us to engage with Star Wars enthusiasts around the world as they explored the more than 1 million Star Wars-related collectible products on eBay. And in June, eBay returned as the headline sponsor for Love Island in the UK, showcasing the power of pre-loved fashion to millions of households nationwide. Next, I'd like to update you on some of the geospecific investments we've made. In March of 2023, we repurposed our strategic playbook for focus categories to better serve the needs of German consumers.

Jamie Iannone: We partnered with Disney to create a customized destination for May 4th, enabling us to engage with Star Wars enthusiasts around the world as they explore the more than 1 million Star Wars-related collectible products on eBay.

Jamie Iannone: And in June , eBay returned as the headline sponsor for Love Island in the UK, showcasing the power of pre-love fashion to millions of households nationwide.

Jamie Iannone: Next, I'd like to update you on some of the geospecific investments we've been making.

Jamie Iannone: In March of 2023, we repurposed our strategic playbook for focus categories to better serve the needs of German consumers.

Jamie Iannone: This endeavor has reinvigorated our C2C business in Germany and helped us navigate challenging economic conditions in the region. In Q2, we sustained positive year-over-year growth in C2C volume in Germany as we completed the full first quarter of this initiative. Healthier C2C trends have also supported our B2C business in the German market. The unique inventory lifted by consumer sellers has led to a healthier customer acquisition fund. When consumers begin selling, they also purchase twice as much on eBay as non-sellers, on average, with most of that incremental volume benefiting B2C sellers.

Jamie Iannone: This endeavor has reinvigorated our C2C business in Germany and helped us navigate challenging economic conditions in the region.

Jamie Iannone: In Q2, we sustained positive year-over-year growth in C2C volume in Germany as we lapped the full first quarter of this initiative.

Jamie Iannone: Healthier C2C trends have also supported our B2C business in the German market. The unique inventory listed by consumer sellers has led to a healthier customer acquisition funnel.

Jamie Iannone: When consumers begin selling, they also purchase twice as much on eBay as non-sellers, on average, with most of that incremental volume benefiting B2C sellers.

Jamie Iannone: The success of the German initiative influenced our decision to invest in an improved experience for pre-owned apparel in the UK last year. These changes, including a new selling flow that makes it considerably easier to list on eBay with image guidance, simpler item aspect collection, and a streamlined shipping module with a focused set of couriers and prims. For buyers, we introduced optimized vertical browsing pages for fashion and new generative AI-powered buying experiences like Shop the Look and Explore.

Jamie Iannone: The success of the German initiative influenced our decision to invest in an improved experience for pre-owned apparel in the UK last quarter.

Jamie Iannone: These changes include a new selling flow that makes it considerably easier to list on eBay, with image guidance, simpler item aspect collection, and a streamlined shipping module with a focused set of couriers and parameters.

Jamie Iannone: For buyers, we introduced optimized vertical browsing pages for fashion and new generative AI-powered buying experiences like Shop the Look and Explore.

Jamie Iannone: Although we're only a few months in, we're seeing positive leading indicators in this strategically important category. For users of the new selling flow, we have observed a 20-point increase in CC, a material reduction in average listing time, and an increase in listings and sold items per seller. A growing number of buyers have engaged with our new AI-powered fashion shopping and are eagerly awaiting the enhanced personalization and filtering we plan to bring to shop, look, and explore in the coming months.

Jamie Iannone: Although we're only a few months in, we're seeing positive leading indicators in the strategically important category.

Jamie Iannone: For users of the new selling flow, we have observed a 20-point increase in CSAT, a material reduction in average listing time, and an increase in listings and sold items per seller.

Jamie Iannone: A growing number of buyers have engaged with our new AI-powered fashion shopping features and are eagerly awaiting the enhanced personalization and filtering we plan to bring to shop the look and explore in the coming months.

Jamie Iannone: These shopping experiences are emblematic of the overall acceleration in the pace of innovation at eBay. Our investments in generative AI and machine learning are simplifying the selling and buying experience, making our marketplace more efficient and helping us better serve customers at all phases of their shopping journey. How are these experiences?

Jamie Iannone: These shopping experiences are emblematic of the overall acceleration in the pace of innovation at eBay.

Jamie Iannone: Our investments in generative AI and machine learning are simplifying the selling and buying experiences, making our marketplace more efficient, and helping us better serve customers at all phases of their shopping journey.

Jamie Iannone: Our core AI team is training and fine-tuning large language models using eBay's proprietary data to build even more magical innovations for customers. In Q2, we entered the high-performance computing realm by deploying our first supercomputer, which gave us the capacity to build and fine-tune even larger LLMs on trillions of tokens. Based on publicly available performance benchmarks, our supercomputer is on par with some of the top 50 supercomputers in the world in terms of petaflops of computing.

Jamie Iannone: To power these experiences, our core AI team is training and fine-tuning large language models using eBay's proprietary data to build even more magical innovations for customers.

Jamie Iannone: In Q2, we entered the high-performance computing realm by deploying our first supercomputer, which gave us the capacity to build and fine-tune even larger LLMs on trillions of tokens.

Jamie Iannone: Based on publicly available performance benchmarks, our supercomputer is on par with some of the top 50 supercomputers in the world in terms of petaflops of computing speed.

Jamie Iannone: Our growing AI capabilities are transforming the eBay experience for customers. For instance, our multi-phase magical Listing initiative is helping us solve the longstanding tradeoff between listing speed and quality. After fully rolling out generative AI descriptions, we are continuing to test and iterate on the next phase of our magical listing experience, which leverages user-uploaded product images to help sellers fill in the category, title, and other item aspects for a list.

Jamie Iannone: Our growing AI capabilities are transforming the eBay experience for customers.

Jamie Iannone: For instance, our multi-phase magical listing initiative is helping us solve the longstanding tradeoff between listing speed and quality.

Jamie Iannone: After fully rolling out generative AI descriptions, we are continuing to test and iterate on the next phase of our magical listing experience, which leverages user-uploaded product images to help sellers fill in the category, title, and other item aspects for a listing.

Jamie Iannone: A subset of sellers are testing this experience in beta, and we are leveraging their feedback and expertise to train our models and expand coverage to a broader range of categories. Seller CSAT for this beta experience remains extremely positive, and we plan to expand the beta to more sellers during Q3. We're also leveraging generative AI to help sellers improve the quality of their product images. In Q2, we rolled out generative AI-powered background enhancements to 100% of iOS and Android users in the US, UK, and Germany. This feature allows sellers to magically overlay their products on top of a variety of visually stunning backgrounds.

Jamie Iannone: A subset of sellers are testing this experience in beta, and we are leveraging their feedback and expertise to train our models and expand coverage to a broader range of categories.

Jamie Iannone: Seller CSAT for this beta experience remains extremely positive and we plan to expand the beta to more sellers during Q3.

Jamie Iannone: We are also leveraging generative AI to help sellers improve the quality of their product imagery.

Jamie Iannone: In Q2, we rolled out generative AI-powered background enhancements to 100% of iOS and Android users in the U.S., U.K., and Germany. This feature allows sellers to magically overlay their products on top of a variety of visually stunning backdrops.

Jamie Iannone: The customer response to this innovation has been outstanding. CSAT for this feature has reached 90%, and more than two-thirds of customers who've tried the feature have applied AI-generated backgrounds to their lists. Within seconds, sellers can easily stage their camping equipment against a beautiful forest backdrop, showcase their used skis atop a snow-capped mountain, or display their pre-loved sandals on a beach at sunset. It's exciting to see the creativity of our selling community as they embrace generative AI tools to make their listings more compelling. Turning next to an advertisement.

Jamie Iannone: The customer response to this innovation has been outstanding. CSAP for this feature has reached 90% and more than two-thirds of customers who've tried the feature have applied AI-generated backgrounds to their listings.

Jamie Iannone: Within seconds, sellers can easily stage their camping equipment against a beautiful forest backdrop, showcase their used skis atop a snow-capped mountain, or display their pre-loved sandals on a beach at sunset.

Jamie Iannone: It's exciting to see the creativity of our selling community as they embrace generative AI tools to make their listings more compelling.

Jamie Iannone: During Q2, first-party advertising grew 12% while total ad revenue approached 2.2% of GMV. Additionally, approximately 3.1 million sellers adopted a single ad product during Q2. And we ended the quarter with roughly 1 billion live promoted listings out of our nearly 2.1 billion total. In early July, we launched a complete redesign of our eBay advertising platform, which fundamentally changed how sellers create and manage their ad campaigns and made it simpler than ever to activate our full range of advertising solutions.

Jamie Iannone: Turning next to advertising.

Speaker Change: During Q2, first-party advertising grew 12% while total ad revenue approached 2.2% penetration of GMV.

Jamie Iannone: Approximately 3.1 million sellers adopted a single ad product during Q2, and we ended the quarter with roughly 1 billion live promoted listings out of our nearly 2.1 billion total listings.

Jamie Iannone: In early July , we launched a complete redesign of our eBay advertising platform, which fundamentally changed how sellers create and manage their ad campaigns, and made it simpler than ever to activate our full range of advertising solutions.

Jamie Iannone: This new interface is now available to all sellers across our major markets. It includes a centralized dashboard, enabling sellers to make data-driven decisions by leveraging near real-time performance metrics. Including impressions, clicks, and return on ads. For the first time, sellers can also see a list of personalized campaign recommendations aimed at helping them to achieve their sales goals. Such as adding new keywords to increase listing visibility or lowering bids for keywords that aren't driving performance.

Jamie Iannone: This new interface is now available to all sellers across our major markets.

Jamie Iannone: It includes a centralized dashboard enabling sellers to make data-driven decisions by leveraging near real-time performance metrics, including impressions, clicks, and return on ad spend.

Jamie Iannone: For the first time, sellers can also see a list of personalized campaign recommendations aimed at helping them to achieve their sales goals, such as adding new keywords to increase listing visibility or lowering bids for keywords that aren't driving performance.

Jamie Iannone: Additionally, we've enhanced suggested campaigns to highlight new ad strategies for sellers by identifying emerging marketplace trends relevant to their inventory with pre-built campaigns fully optimized by AI. As part of this redesign, we simplified our first-party advertising portfolio into three distinct solutions that more clearly align with the seller's campaign objectives. We unified our standard, advanced, and express products into a single promoted listing solution, serving both fixed price and auction format. When sellers launch a promoted listings campaign, they can pay on a cost-per-action basis for general places, or select cost-per-click pricing for priority places.

Jamie Iannone: Additionally, we've enhanced suggested campaigns to highlight new ad strategies for sellers by identifying emerging marketplace trends relevant to their inventory with pre-built campaigns fully optimized by AI.

Jamie Iannone: As part of this redesign, we simplified our first-party advertising portfolio into three distinct solutions that more clearly align with the seller's campaign objectives.

Jamie Iannone: We unified our standard, advanced, and express products into a single promoted listing solution, serving both fixed price and auction formats.

Jamie Iannone: When sellers launch a promoted listings campaign, they can pay on a cost-per-action basis for general placement, or select cost-per-click pricing for priority placement.

Jamie Iannone: In addition, promoted off-site ads enable sellers to tap into a wider audience through off-eBay channels such as Google. promoting off-site uses a dynamic CPC model and automated targeting, so users can set up campaigns in just a few clicks after setting a daily budget.

Jamie Iannone: In addition, promoted off-site ads enable sellers to tap into a wider audience through off-EBA channels such as Google.

Jamie Iannone: Promoted Offsite uses a dynamic CPC model and automated targeting, so users can set up campaigns in just a few clicks after setting a daily budget.

Jamie Iannone: And our newest format, Promoted Stores, enables sellers to increase their brand visibility when buyers are browsing or searching for contextually relevant items. Ultimately, we believe the redesign experience will help more sellers grow their businesses on eBay by broadening the appeal of our full suite of advertising solutions and Delivering Actionable Insights in a More Intuitive Interface. Our payments platform continues to be a strategic growth driver for our marketplace more than two years after the completion of our migration.

Jamie Iannone: And our newest format, Promoted Stores, enables sellers to increase their brand visibility when buyers are browsing or searching for contextually relevant items.

Jamie Iannone: Ultimately, we believe the redesign experience will help more sellers grow their businesses on eBay by broadening the appeal of our full suite of advertising solutions and delivering actionable insights in a more intuitive interface.

Jamie Iannone: Our payments platform continues to be a strategic growth driver for our marketplace more than two years after the completion of our migration.

Jamie Iannone: In recent years, we have added a breadth of popular and locally relevant payment options to offer even more choice and flexibility during the checkout experience. We were thrilled to launch Venmo as a payment option in the U.S. in Q2, enabling us to tap into its more than 90 million engaged users. Venmo's mobile-first checkout experiences and strong adoption among Gen Z and millennial audiences are particularly appealing as we continue to broaden our reach in younger demographics.

Jamie Iannone: In recent years, we have added a breadth of popular and locally relevant payment options to offer even more choice and flexibility during the checkout experience.

Jamie Iannone: We were thrilled to launch Venmo as a payment option in the U.S. in Q2, enabling us to tap into its more than 90 million engaged users.

Jamie Iannone: Venmo's mobile-first checkout experiences and strong adoption among Gen Z and millennial audiences are particularly appealing as we continue to broaden our reach in younger demographics.

Jamie Iannone: The early results of this partnership are encouraging as a significant portion of our GMV from Venmo is coming from new or reactivated biomes. Our research has shown us that timely access to affordable financing is a key enabler for small businesses, which makes seller capital a pathway to unlocking more great inventory on eBay. In July, we expanded our seller capital offering with the launch of Business Cash Advance on eBay, a revenue-based financing solution provided by Liberty.

Jamie Iannone: The early results of this partnership are encouraging as a significant portion of our GMV from Venmo is coming from new or reactivated buyers.

Jamie Iannone: Our research has shown us that timely access to affordable financing is a key enabler for small businesses, which makes seller capital a pathway to unlocking more great inventory on eBay.

Jamie Iannone: In July , we expanded our seller capital offering with the launch of Business Cash Advance on eBay, a revenue-based financing solution provided by Libris.

Jamie Iannone: This product connects eligible U.S. sellers with fast, flexible, and transparent financing for up to $1 million in working capital in as little as 24 hours. Sellers can tap into flexible payment schedules that scale with their sales cycle and easily track their payback progress within the seller hub.

Jamie Iannone: This product connects eligible U.S. sellers with fast, flexible, and transparent financing for up to $1 million in working capital in as little as 24 hours.

Jamie Iannone: Sellers can tap into flexible payment schedules that scale with their sales cycle and easily track their payback progress within the seller hub. In just a few weeks since launch, we've already funded over 1,000 sellers and dispersed millions of dollars of working capital.

Jamie Iannone: In just a few weeks since launch, we've already funded over 1,000 sellers and dispersed millions of dollars of working capital. Now, I'd like to share some highlights around eBay's impact as a company. Last quarter, we published our 2023 impact report showcasing how the company is creating economic opportunities and promoting a sustainable future. We remain on track toward our sustainability goals, reducing our Scope 1 and 2 carbon emissions by 59% compared to our 2019 baseline.

Speaker Change: Now I'd like to share some highlights around eBay's impact as a company.

Speaker Change: Last quarter, we published our 2023 Impact Report showcasing how the company is creating economic opportunities and promoting a sustainable future.

Speaker Change: We remain on track toward our sustainability goals, reducing our scope 1 and 2 carbon emissions by 59% compared to our 2019 baseline.

Jamie Iannone: We also published our 2024 e-commerce report, which analyzes the overall trends and sentiment around e-commerce at a global level. The report found that 86% of consumers surveyed have bought or sold preloved items, and 70% plan to purchase e-commerce items this year. Younger demographics are especially passionate about the circular economy, with more than 90% of millennial and Gen Z sellers saying they value eBay's ability to keep items out of landfills. And on the topic of e-commerce, one of the highlights of the second quarter was the Rocketman resale event, a partnership with Elton John, who released a personal collection of pre-loved fashion items exclusively on eBay. The event kicked off with a pop-up shop in the West Village of New York City, where Elton shared stories about items from his legendary closet during an eBay Live event.

Jamie Iannone: Fans around the world were able to pick up pieces of fashion history ranging from Gucci jackets and Versace robes to customized Prada loafers and vintage concert tees. All proceeds benefit the Elton John AIDS Foundation and its mission to be a powerful force in ending the AIDS epidemic. Our broader community also continues to support the causes most important to them. For example, Charity raised more than $47 million last quarter, up 22% year over year. Additionally, the eBay Foundation granted nearly $7 million in Q2 to strategic non-profits that are addressing and removing barriers to entrepreneurship for historically excluded groups.

Jamie Iannone: We also published our 2024 e-commerce report, which analyzes the overall trends and sentiment around e-commerce at a global level.

Jamie Iannone: The report found that 86% of consumers surveyed have bought or sold pre-loved items, and 70% plan to purchase e-commerce items this year.

Jamie Iannone: Younger demographics are especially passionate about the circular economy, with more than 90% of millennial and Gen Z sellers saying they value eBay's ability to keep items out of landfills.

Speaker Change: And on the topic of e-commerce, one of the highlights of the second quarter was the Rocket Man resale event, a partnership with Elton John , who released a personal collection of pre-loved fashion items exclusively on eBay.

Speaker Change: The event kicked off with a pop-up shop in the West Village of New York City Where Elton shared stories about items from his legendary closet during an eBay live event

Speaker Change: Fans around the world were able to pick up pieces of fashion history, ranging from Gucci jackets and Versace robes to customized Prada loafers and vintage concert tees.

Jamie Iannone: All proceeds benefit of the Elton John AIDS Foundation and its mission to be a powerful force in ending the AIDS epidemic.

Jamie Iannone: I'm proud to share that eBay was recently recognized by Fortune as one of America's most innovative companies. We were also acknowledged by Forbes as one of the best employers for new grads, recognizing companies that offer the best early career opportunities. In closing, Q2 was another strong quarter for eBay and an important step toward our goal of sustainable long-term growth. Our GMB growth turned positive due to continued momentum in focus categories. Investments in geospecific initiatives and horizontal innovation driven by our growing capabilities in artificial intelligence

Speaker Change: I'm proud to share that eBay was recently recognized by Fortune as one of America's most innovative companies.

Speaker Change: We were also acknowledged by Forbes as one of the best employers for new grads, recognizing companies who offer the best early career opportunities.

Speaker Change: Our GMV growth turned positive due to continued momentum in focus categories, investments in geospecific initiatives, and horizontal innovation driven by our growing capabilities in artificial intelligence.

Jamie Iannone: Our advertising business continues to deliver robust growth at scale, and we believe our redesigned ads platform will make it simpler to adopt our full range of ad solutions, helping more sellers grow their businesses. We continue to advance our payments capabilities by introducing new services. Expanding our breadth of trusted payment methods and reducing transaction costs. We delivered these results while layering disciplined investments for the future, generating double-digit earnings per share growth, and delivering compelling capital returns for shareholders. With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, it's over to you.

Speaker Change: Our advertising business continues to deliver robust growth at scale, and we believe our redesigned ads platform will make it simpler to adopt our full range of ad solutions, helping more sellers grow their businesses on eBay.

Speaker Change: We continue to advance our payments capabilities by introducing new services, expanding our breadth of trusted payment methods, and reducing transactional friction.

Speaker Change: And, we delivered these results while layering disciplined investments for the future, generating double-digit earnings per share growth, and delivering compelling capital returns for shareholders.

Speaker Change: With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you. Thank you, Jamie, and thank you all for joining us today.

Stephen J. Priest: Thank you, Jamie, and thank you all for joining us today. I'll begin with the financial highlights section of our earnings presentation. Next, I'll discuss our key financial and operating metrics in greater detail. Finally, I'll provide our outlook for the third quarter and context for the full year before we begin Q&A. My comments will reflect year-over-year comparisons on an organic, FX-neutral basis, unless I know otherwise. We exceeded expectations across our key financial metrics in Q2, driven by our execution against strategic initiatives despite an uneven discretionary demand environment in our major markets. Gross merchandise volume returned to positive growth at 1% to $18.4 billion, and revenue grew 2% to $2.57 billion.

Stephen J. Priest: The Non-Gap Operating Margin expanded by 1 point to 27.9%. We delivered $1.18 of non-GAAP earnings per share at nearly 15%, and we returned over $1.1 billion to shareholders through repurchasing dividends. Let's take a closer look at our financial performance during the second quarter. On an organic, FX-neutral basis, gross merchandise volume grew 1% to $18.4 billion. GMV would still have grown nearly 1% when adjusting for the roughly 50 basis points of impact from favourable ESA timing in 2024.

Stephen J. Priest: I'll begin with the financial highlights section of our earnings presentation. Next, I'll discuss our key financial and operating metrics in greater detail.

Stephen J. Priest: My comments will reflect year-over-year comparisons on an organic, FX-neutral basis, unless I know so otherwise.

Stephen J. Priest: We exceeded expectations across our key financial metrics in Q2, driven by our execution against strategic initiatives, despite an uneven discretionary demand environment in our major markets.

Stephen J. Priest: Gross merchandise volume returned to positive growth at 1% to $18.4 billion.

Stephen J. Priest: Revenue grew 2% to $2.57 billion.

Stephen J. Priest: We delivered $1.18 of non-GAAP earnings per share at nearly 15%.

Speaker Change: And we returned over $1.1 billion to shareholders through reposts and dividends.

Stephen J. Priest: Our acquisition of Golden contributed nearly 20 basis points to total FX-neutral GMV growth in Q2 after the deal closed on May 16th. In addition, foreign exchange was a headwind of roughly 20% to year-over-year GMB growth on a spot basis. Our teams continue to execute against our strategy.

Speaker Change: Let's take a closer look at our financial performance during the second quarter. On an organic, FX-neutral basis, gross merchandise volume grew 1% to $18.4 billion.

Speaker Change: In addition, foreign exchange was a headwind of roughly 20 basis points to year-over-year GMB growth on a spot basis.

Stephen J. Priest: Including Focus Category Expansion, Country Specific Investments, and Horizontal Initiatives. The culmination of these efforts over recent quarters, combined with consumers looking for value, helped offset continued pressure on discretionary spending across our three largest markets. Focus Category GMV grew over 4% in aggregate, or nearly 5 points faster than the remainder of our marketplace, driven by broad-based momentum. P&A, collectibles, refurbished, and luxury goods all contributed to growth. GMV for the rest of our marketplace was nearly flat in Q2, accelerating by more than one point from Q1, which reflects the continued progress of Horizontal Innovation and GS Pacific Product. Next, I'll walk through our results on a geographic basis.

Speaker Change: Our teams continue to execute against our strategy, including focus category expansion, country-specific investments, and horizontal initiatives.

Speaker Change: The culmination of these efforts over recent quarters, combined with consumers looking for value, helped offset continued pressure on discretionary spending across our three largest markets.

Speaker Change: Focus Category GMV grew over 4% in aggregate, or nearly five points faster than the remainder of our marketplace, driven by broad-based momentum as P&A, collectibles, refurbished and luxury goods, all contributed to growth.

Speaker Change: GMV for the rest of our marketplace was nearly flat in Q2, accelerating by more than one point from Q1, which reflects the continued progress of our horizontal innovation and geospecific product initiatives.

Stephen J. Priest: US GMV grew by nearly 1 point in Q2. Both organic traffic and conversion improved in the U.S., which helped us narrow our gap with U.S. e-commerce market growth. Selectables was a key contributor to U.S. growth, including trading cards, where organic trends have improved in recent quarters, although aided by our strategic investments and partners. International GMV grew by over 1% on an FX neutral basis, while FX was a 30 basis point headwind to spot growth.

Speaker Change: Next I'll walk through our results on a geographic basis.

Speaker Change: US GMV grew by nearly one point in Q2. Both organic traffic and conversion improved in the US, which helped us narrow our gap to US e-commerce market growth.

Speaker Change: Selectables was a key contributor to U.S. growth, including trading cards, where organic trends have improved in recent quarters, aided by our strategic investments and partnerships.

Speaker Change: International GMV grew by over 1% on an FX neutral basis, while FX was a 30 basis point headwind to spot growth.

Stephen J. Priest: In the UK, we noticed some softness in C2C volumes to start the year when the new UK digital sales reporting requirements came into effect. We are working to mitigate this pressure by educating sellers on these reporting laws.

Speaker Change: In the UK, we noticed some softness in C2C volumes to start the year, when the new UK digital sales reporting requirements came into effect.

Speaker Change: We are working to mitigate this pressure by educating sellers on these reporting laws and through initiatives to improve the selling and buying experience in pre-owned apparel which Jamie touched on earlier.

Stephen J. Priest: And through initiatives to improve the selling and buying experience in pre-owned apparel, which Jamie touched on earlier. In Germany, our focus category is horizontal investment. Cupdash Set, Prevailing Macro, In addition, cross-border trade has been a key driver of international GMV growth in recent quarters. Greater China and Japan have powered this growth by providing great inventory for buyers across our major markets. In fact, our focus category coverage within CBT is even higher than our marketplace overall.

Jamie Iannone: In Germany, our focus category in horizontal investments helped us set prevailing macro headwinds.

Speaker Change: In addition, cross-border trade has been a key driver of international GMV growth in recent quarters.

Speaker Change: Greater China and Japan have powered this growth by providing great inventory for buyers across our major markets.

Jamie Iannone: In fact, our focus category coverage within CBT is even higher than our marketplace overall.

Stephen J. Priest: And Japan, in particular, has seen its volume growth accelerate since we opened our authentication center there last year. Looking forward, we see more opportunities to onboard quality sellers in these regions and make it easier for them to bring attractive inventory to our market. Moving on to files.

Jamie Iannone: And Japan, in particular, has seen its volume growth accelerate since we opened our authentication center there last year.

Jamie Iannone: Looking forward, we see more opportunities to onboard quality sellers in these regions and make it easier for them to bring attractive inventory to our marketplace.

Stephen J. Priest: Trading 12-month active buyers and enthusiast buyers are once again stable sequentially at approximately $132 million and $16 million, respectively, at the end of Q2. On a year-over-year basis, total active buyer growth was fractionally positive for the first time since early 2021, as new and reactivated buyers remained positive, and buyer retention continued to gradually improve. Spend Per Active Buyer was stable, while Spend Per Enthusiast Buyer grew slightly year over year to just over $3,100.

Jamie Iannone: Moving on to buyers, trading 12-month active buyers and enthusiast buyers are once again stable sequentially at approximately $132 million and $16 million respectively at the end of Q2.

Jamie Iannone: On a year-over-year basis, total active buyer growth was fractionally positive for the first time since early 2021, as new and reactivated buyers remained positive and buyer retention continued to gradually improve.

Jamie Iannone: Spend per active buyer was stable, while spend per enthusiast buyer grew slightly year over year to just over $3,100.

Stephen J. Priest: Turning to revenues, we generated revenue of $2.57 billion during the second quarter, up 2% as revenue outpaced volume by roughly 1 point. Foreign exchange was a one-point headwind to revenue growth.

Jamie Iannone: Turning to Revenue.

Jamie Iannone: We generated revenue of $2.57 billion during the second quarter, up 2% as revenue outpaced volume by roughly 1 point.

Stephen J. Priest: Our take rate in Q2 was approximately 14%, more than 20 basis points quarter-over-quarter, primarily driven by first-party advertising. On a year-over-year basis, our take rate was roughly flat. The tailwinds from first-party ads, eBay international shipping, and payments were offset by C2C initiatives and an FX headwind of approximately 10 basis points. Total advertising revenue grew 8% to $398 million in Q2 and represented nearly 2.2% of GMV. First party ads grew over 12% to $384 million, in line with our expectations.

Jamie Iannone: Foreign Exchange was a one-point headwind to spot revenue growth.

Jamie Iannone: Our take rate in Q2 was approximately 14% at more than 20 basis points quarter over quarter primarily driven by first party advertising.

Jamie Iannone: On a year-over-year basis, our take-away was roughly flat, as tailwinds from first-party ads, eBay international shipping and payments were offset by C2C initiatives and an FX headwind of approximately 10 basis points.

Jamie Iannone: Total advertising revenue grew 8% to $398 million in Q2 and represented nearly 2.2% penetration of GMB.

Jamie Iannone: First party ads grew over 12% to $384 million in line with our expectations.

Stephen J. Priest: As a reminder, we faced lapping dynamics this quarter due to extraordinary growth in first-party ads in Q2 of last year when we released CPC Ads Deferred Revenue as a result of the rollout of Halo Attributes. In addition, we continue to deprecate our legacy third-party display as in QT.

Jamie Iannone: As a reminder, we faced lapping dynamics this quarter due to extraordinary growth in first party ads in Q2 of last year when we released CPC Ads Deferred Revenue as a result of the rollout of Halo Attribution.

Speaker Change: In addition, we continue to deprecate our legacy third-party display as in Q2, with revenue declining roughly 49% to nearly $14 million.

Stephen J. Priest: With revenue declining roughly 49% to nearly $14 million. Shifting to profitability, Non-Gap Gross Margin declined roughly 30 basis points year-over-year in Q2, due to tax-related matters, including Canadian Digital Sales Tax Expenses, recognized retroactively in 2022.

Speaker Change: Shifting to profitability.

Speaker Change: non-GAAP gross margin declined roughly 30 basis points year-over-year in Q2 due to tax-related matters including Canadian digital sales tax expenses.

Speaker Change: recognized retroactively in 2022. Traffic acquisition costs associated with a ramping off site ads and foreign exchange headwinds.

Stephen J. Priest: Traffic acquisition costs associated with a ramping off-site ad. Foreign Exchange Headlines, These headwinds were partly offset by operational efficiency, including lower costs of payments and lower depreciation. Non-Gap Operating Margin was 27.9% in the quarter, improving one point year over year as operational efficiencies, including our structure cost program, more than offset the higher cost of revenue, the foreign exchange headwind of approximately 40 bases, and re-investments in our full-funnel market. As a result, non-GAAP operating income grew 5% year-over-year in Q2, and non-GAAP earnings per share grew by nearly 15% to $1.18. On a GAAP basis, we reported earnings per share of 45 cents in the quarter.

Speaker Change: These headwinds were partly offset by operational efficiencies, including lower costs of payments and lower depreciation expenses.

Speaker Change: Non-Gap Operating Margin was 27.9% in the quarter, improving one point year-over-year as operational efficiencies, including our Structured Cost Program, more than offset the higher cost of revenue of foreign exchange headwind of approximately 40 basis points.

Speaker Change: and re-investments in our full funnel marketing initiatives.

Speaker Change: As a result, non-GAAP operating income grew 5% year-over-year in Q2, and non-GAAP earnings per share grew by nearly 15% to $1.18.

Speaker Change: On a gap basis, we reported earnings per share of 45 cents in the quarter.

Stephen J. Priest: Next, I'll discuss our balance sheets and capital allocation. Free cash flow in the second quarter. $278 million annual over year due to the timing of cash tax payments. Last year, the majority of our tax payments were delayed from Q2 to Q4 due to California's Disaster Tax Relief Program.

Speaker Change: Next I'll discuss our balance sheets and capital allocations.

Speaker Change: Our free cash flow in the second quarter was $278 million, down year-over-year due to the timing of cash tax payments.

Speaker Change: Last year, the majority of our tax payments were delayed from Q2 to Q4 due to California's disaster tax relief program.

Stephen J. Priest: We ended the second quarter with cash and non-equity investment of $6.3 billion. The Gross Debt is $7.7 billion. As you will see in our 10-Q filing, on August 1st, we will repay $750 million of principal for our senior fixed-rate notes due this June. We plan to issue up to $450 million of commercial paper to refinance a portion of those notes over the coming weeks. During Q2, we repurchased $1 billion of eBay shares at an average price of approximately $52, and had roughly $1.9 billion remaining under our buyback authorization at the end of the period.

Speaker Change: We ended the second quarter with cash and non-equity investments.

Speaker Change: of $6.3 billion and gross debt of $7.7 billion.

Speaker Change: As you will see in our 10-Q filing, on August 1st, we will repay $750 million of principal for our senior fixed-rate notes coming due.

Speaker Change: We plan to issue up to $450 million of commercial paper to refinance a portion of those notes over the coming weeks.

Speaker Change: During Q2, we repurchased $1 billion of eBay shares at an average price of approximately $52 and had roughly $1.9 billion remaining under our buyback authorization at the end of the period.

Stephen J. Priest: In addition, we paid a quarterly cash dividend of $135 million in June, or $0.27 per share. Since the beginning of 2022, we have returned $7.3 billion to shareholders through repurchases and dividends, nearly 150% of cumulative free cash flow over this period. Turning to our investment report Friday, equity investments and warrants were valued at $2.8 billion at the end of the second quarter. The consortium led by Pemera and Blackstone completed their acquisition of Adventa on May 29th.

Speaker Change: In addition, we paid a quarterly cash dividend of $135 million in June , or $0.27 per share.

Speaker Change: Since the beginning of 2022, we have returned $7.3 billion to shareholders through repurchases and dividends, nearly 150% of cumulative free cash flow over this period.

Speaker Change: Turning to our investment portfolio.

Speaker Change: Equity investments and warrants were valued at $2.8 billion at the end of the second quarter.

Speaker Change: The consortium, led by Pemera and Blackstone, completed their acquisition of Ad Aventa on May 29th.

Stephen J. Priest: We sold approximately 227 million shares and received roughly $2.4 billion in gross proceeds. We incurred over $450 million in cash taxes related to this transaction, which we plan to pay next year. Following the deal, we hold approximately 177 million shares, or 18% ownership of the outstanding equity, valued at roughly $1.9 billion as of the closing date. The consortium has the option through November 29th.

Speaker Change: We sold approximately 227 million shares and received roughly $2.4 billion in gross proceeds.

Speaker Change: We incurred over $450 million in cash taxes related to this transaction, which we plan to pay next year.

Speaker Change: Following the deal, we hold approximately 177 million shares, or 18% ownership of the outstanding equity, valued at roughly $1.9 billion as of the closing date.

Stephen J. Priest: The purchase from eBay represents roughly 10% ownership of the private entity for just over $1 billion. In addition, our investment portfolio includes add-in warrants valued at nearly $340 million at the end of Q2. Our add-in warrant value is calculated based on several assumptions, including add-in share price and the probability of best. A Gmarket investment was valued at roughly $300 million at the end of the quarter.

Speaker Change: The consortium has the option, through November 29th, to purchase from eBay roughly 10% ownership of the private entity for just over $1 billion.

Speaker Change: In addition, our investment portfolio includes add-in warrants valued at nearly $340 million at the end of Q2.

Speaker Change: Our add-in warrant value is calculated based on several assumptions, including add-in share price and the probability of vesting.

Speaker Change: A Gmarket investment was valued at roughly $300 million at the end of the quarter.

Stephen J. Priest: Moving to our outlook, we expect to generate GMV between $17.8 and $18.2 billion in the third quarter, representing FX-neutral growth between negative 1 and positive 1% year-over-year. Total organic FXN growth will be similar as we expect Golden to contribute over 30 basis points to GMV growth in Q3. At current rates, foreign currency would represent a 10 basis point headwind to GMV growth. This outlook balances our strong execution year-to-date against an uncertain economic and regulatory environment.

Speaker Change: Moving to our outlook, we expect to generate GMV between $17.8 and $18.2 billion in the third quarter, representing FX-neutral growth between negative 1 and positive 1% year-over-year.

Speaker Change: Total organic FXN growth will be similar as we expect Golden to contribute over 30 basis points to GMV growth in Q3.

Speaker Change: At current rates, foreign currency would represent a 10 basis point headwind to GMV growth. This outlook balances our strong execution year-to-date against an uncertain economic and regulatory environment.

Stephen J. Priest: We forecast revenue between 2.5 and 2.56 billion dollars in the third quarter, representing FX mutual growth of 1 to 3 percent. We estimate FX would represent more than half a point of headwind to spot revenue growth.

Speaker Change: We forecast revenue between $2.5 and $2.56 billion in the third quarter, representing FX mutual growth of 1% to 3%. We estimate FX would represent more than half a point of headwind to spot revenue growth.

Stephen J. Priest: We forecast Q3 non-gap operating margin between 26.8, This represents a sequential step down in operating margin due to normal seasonality, incremental organic investment, and a full quarter of M&A-related expenses, including integration.

Speaker Change: We forecast Q3 non-gap operating margin between 26.8% and 27.5%, representing year-over-year expansion between 40 and 110 basis points.

Speaker Change: This represents a sequential step down in operating margin due to normal seasonality, incremental organic investments, and a full quarter of M&A related expenses, including integration costs.

Stephen J. Priest: We expect to generate non-GAAP earnings per share between $1.15 and $1.20 in Q3, representing year-over-year growth between 12% and 17%. Now shifting to our expectations for the remainder of the year. Assuming no fundamental change in the macroenvironment, we expect FX-neutral GMV growth between flat and up 2% year-over-year in Q4, driven by continued execution in focus categories, and geospecific investment in Horizontal Product

Speaker Change: We expect to generate non-GAAP earnings per share between $1.15 and $1.20 in Q3, representing year-over-year growth between 12% and 17%.

Speaker Change: Now shifting to our expectations for the remainder of the year.

Speaker Change: Assuming no fundamental change in the macro environment, we expect FX neutral GMV growth between flat and at 2% year-over-year in Q4, driven by continued execution in focus categories, geospecific investments, and horizontal product delivery.

Stephen J. Priest: At current rates, FX would represent a tailwind of more than 1 point to spot GMV growth year-over-year in Q4. We forecast Q4 revenue to grow modestly faster than GMV on an FX-neutral basis, applying a narrow growth delta versus Q3. Although we expect similar growth in first party advertising during Q4, we anticipate modest pressure on core take rate from continued investments in C2C initiatives, and a makeshift towards higher ASP

Speaker Change: At current rates, FX would represent a tailwind of more than 1 point to spot GMV growth year over year in Q4.

Speaker Change: We forecast Q4 revenue to grow modestly faster than GMV on an FX-neutral basis, implying a narrow growth delta versus Q3.

Speaker Change: Although we expect similar growth in first-party advertising during Q4, we anticipate modest pressure on core take-rate from continued investments in C2C initiatives, mixed shifts towards higher ASP products, and seasonal category mix.

Stephen J. Priest: In addition, we estimate FX will be a year-over-year benefit of roughly $30 billion. Spot Revenue Growth in the Quarter due to Hedging Dynamics. We are maintaining our full-year outlook for non-GAAP operating margin expansion of between 60 to 100 basis points. As we have noted throughout the year, where we land in this range is not solely tied to Volume X.

Speaker Change: In addition, we estimate FX will be a year-over-year benefit of roughly 30 basis points.

Speaker Change: Spot revenue growth in the quarter due to hedging dynamics.

Speaker Change: We are maintaining our full year outlook for non-GAAP operating margin expansion of between 60 to 100 basis points.

Speaker Change: As we have noted throughout the year, where we land in this range is not solely tied to volume outcomes.

Stephen J. Priest: Our strategic investments in 2024 have been crucial to our return to positive GMV growth. Given our execution to date, we are exploring opportunities for incremental investment to drive durable, long-term growth. Additionally, we have absorbed one-time offsets to operating margin in 2024, notably about 20 basis points of headwind from M&A Expense, including integration.

Speaker Change: Our strategic investments in 2024 have been crucial to our return to positive GMV growth.

Speaker Change: Given our execution to date, we are exploring opportunities for incremental investments to drive durable, long-term growth.

Speaker Change: Additionally, we have absorbed one-time offsets to operating margin in 2024, notably about 20 basis points of headwind from M&A expenses, including integration costs.

Stephen J. Priest: Our forecasted capital expenditure remains unchanged at between 4-5% of revenue for the full year, in line with our historical average. We expect our non-GAAP tax rate to remain stable at 16.5%. We continue to expect free cash flow of just under $2 billion for the full year. Given our robust balance sheet position, we are raising our share repurchase target this year to at least $2.5 billion. In addition, our board declared a quarterly dividend of $0.27 per share for the third quarter, to be paid in September.

Speaker Change: Our forecasted capital expenditure remains unchanged at between 4-5% of revenue for the full year, in line with our historical average.

Speaker Change: We expect our non-GAAP tax rate to remain stable at 16.5%.

Speaker Change: We continue to expect free cash flow of just under $2 billion for the full year.

Speaker Change: Given our robust balance sheet position, we are raising our share repurchase target this year to at least $2.5 billion. In addition, our board declared a quarterly dividend of $0.27 per share for the third quarter to be paid in September .

Stephen J. Priest: Given our strong business performance to date, our outlook for the second half, and updated capital allocation plans, we are increasing our forecast for non-GAAP earnings per share growth to between 12, 14% year-over-year for 2024. In closing, Q2 was another strong quarter for eBay, despite the uneven macro backdrop. We achieved positive year-over-year GMV growth earlier than expected and maintained double-digit non-gap earnings-per-share growth. In addition, we monetized a significant portion of our Adaventa stake at an attractive price and increased our full year stock repurchase target.

Speaker Change: Given our strong business performance to date, our outlook for the second half and updated capital allocation plans, we are increasing our forecast for non-GAAP earnings per share growth to between 12% and 14% year-over-year for 2024.

Speaker Change: In closing, Q2 was another strong quarter for eBay, despite the uneven macro backdrop.

Speaker Change: We achieve positive year-over-year GMV growth earlier than expected and maintain double-digit non-gap earnings per share growth. In addition, we monetized a significant portion of our Adventa stake at an attractive price and increased our full-year stock repurchase target.

Stephen J. Priest: It is a testament to our strong financial model that we are able to deliver healthy, balanced growth while continuing to invest in our business for the long run, across focus categories, specific geographies, and horizontal and. With that, Jamie and I will now take your questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: It is a testament to our strong financial model that we are able to deliver healthy, balanced growth while continuing to invest in our business for the long run, across focus categories, specific geographies and horizontal initiatives.

Speaker Change: With that, Jamie and I will now take your questions.

Speaker Change: And thank you. We will now begin the question and answer session.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Stephen J. Priest: If you would like to withdraw your question, press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: If you would like to withdraw your question, press star 1 a second time.

Speaker Change: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: Again, it is Star One if you would like to join the queue. And your first question comes from the line of Nathan Feather with Morgan Stanley. Your line is: Hey, everyone.

Speaker Change: Again, it is star 1 if you would like to join the queue.

Speaker Change: And your first question comes from the line of Nathan Feather with Morgan Stanley . Your line is open.

Nathaniel Jay Feather: Thanks for taking the question. A few quick questions on the advertising. So first off, I'm interested to hear if you're seeing any green shoots and campaign adoption within the unified ad platform and also smart targeting. And then how should we think about advertising growth in the back half now that you're through the more difficult? Yeah, overall, we feel great about the momentum we're seeing in advertising. The new features that we just talked about, Nathan just rolled out, so it's really early in the experience for those. We did test them in Australia before rolling them out to all the other major markets.

Nathaniel Jay Feather: Hey everyone, thanks for taking the question.

Nathaniel Jay Feather: A few quick questions on the advertising side of business.

Nathaniel Jay Feather: So first off, I'm interested to hear if you're seeing any green shoots in campaign adoption within the unified ad platform and also smart targeting. And then how should we think about advertising growth in the back half now that you're through the more difficult competition?

Speaker Change: Thank you.

Speaker Change: Yeah, overall, we feel great about the momentum we're seeing in advertising. The new features that we just talked about, Nathan just rolled out. So it's really early in the experience for those.

Jamie Iannone: You know, when you ask about campaign adoption and other things, what's exciting about this new overhaul is, first, it gives you a great performance snapshot of all of your campaigns in a redesigned interface. But secondarily, we now have daily recommendations for advertisers about things they can do, add keywords, manage their business, and change a campaign to make it better. And we have new types of suggested campaigns as part of this as well, things like trend-based suggestions. So you're seeing, on the site, something popping up, whether it's, you know, around Christmastime or some other kind of event happening, tied to listings that a seller would have.

Speaker Change: We did test them in Australia before rolling them out to all the other major markets. When you ask about campaign adoption and other things, what's exciting about this new overhaul is, first, it gives you a great performance snapshot of all of your campaigns in a redesigned interface.

Nathan: But secondarily, we now have daily recommendations.

Nathan: for advertisers about things they can do, add keywords, manage their business, changing a campaign to make it better. And we have new types of suggested campaigns as part of this as well, things like trend-based suggestions. So you're seeing a.

Nathan: We're seeing on the site, you know, something popping, whether it's, you know, around Christmastime or some other kind of event happening, tied to listings that a seller would have. And we're now doing trend-based suggested campaigns, all driven by AI.

Stephen J. Priest: And we're now doing trend-based suggested campaigns, all driven by AI. So we're excited about what we're seeing from the early results, but it's really kind of early stage for this. In general, though, every time we've made it easier and simpler to adopt our ad products, it's resonated with sellers and helped drive the penetration up to what we're seeing today. Steve, maybe you just want to comment on our overall ad business. Yeah. Hi Nathan.

Nathan: So we're excited about what we're seeing from the early results, but it's really kind of early stages in this.

Stephen J. Priest: In general, though, every time we've made it easier and simpler to adopt our ad products, it's resonated with sellers and helped drive the penetration up to what we're seeing today. Steve, maybe you just want to comment on our overall ad business? Yeah. Hi, Nathan. Despite some of the lapping, we do expect...

Stephen J. Priest: Despite some of the lapping, we do expect some modest take rate expansion in the second half, driven by our 1P ads business, where, again, we see some modest acceleration as we go forward. Really, you know, continuing to drive momentum in the existing products but also ramping up our promoted off-site products as well. I'm so pleased with the momentum we're seeing, and that should continue to drive momentum in the back half of the year. Okay, great. Thanks. And then I'll do one more quick one.

Stephen J. Priest: Some modest take rate expansion in the second half, driven by our 1P ads business, where again we see some modest acceleration as we go forward.

Speaker Change: continuing to drive momentum in the existing products but also ramp up our promoted off-site products as well so pleased with the momentum we're seeing and that should continue to drive momentum in the back half of the year.

Jamie Iannone: Now that you have the first supercomputer fully online, and have made a lot of improvements from the seller side of things, it's interesting to think, you know, over the next 12-24 months, what are the key friction points you think are really immediately addressable with the help of some of the gen. Yeah, look, on the selling side, Nathan, the key is, we have this vision of making it easier to list than to throw out. So, you know, making it really seamless to onboard a new listing, any item in your closet, your garage, your home, etc., for a C2C listing.

Speaker Change: Okay, great. Thanks. And then one more quick one. Now that you have First Supercomputer fully online, have made a lot of improvements from the seller side of things, you know, interesting to think, you know, over the next 12, 24 months, what are the key friction points do you think are really immediately addressable with the help of some of the Gen AI features?

Speaker Change: Yeah, look, on the selling side, Nathan, the key is, we have this vision of making it easier to list than to throw out. So, you know, making it really seamless to onboard a new listing, any item in your closet, your garage, your home, etc., for a C2C listing.

Jamie Iannone: And so, you know, with the computing capability we have, now with 2.1 billion listings and 28 years of history in data, we're able to build these really sophisticated models that do a better job at predicting what an item is, filling in all the item attributes associated with it, creating the title, obviously writing the description since we do that, and to be able to do this at scale and very cost-effectively, because we're using a Similarly, you know, things like enhanced background images, now live for 100% of customers, make items look better on the platform, make them stand out, and you can take them on a, you know, your bedspread or your desk, your rug, and then put them on this beautiful background, and it really helps merchandise items from that perspective. Finally, I'd say we're launching new features on the buy side. I've talked about Shop the Look, which we continue to scale up, which gives the ability in the fashion category to see outfits together.

Speaker Change: And so with the computing capability we have, now with 2.1 billion listings, with 28 years of history of data, we are able to build these really sophisticated models that do a better job at predicting what an item is, filling in all the item attributes associated with it, creating the title, obviously writing the description since we do that, and to be able to do this at scale and very cost-effectively, because we are using a lot of tools that we built on an internal LLM or open source LLMs that we have.

Speaker Change: which makes us able to train on these massive data sets that we have.

Speaker Change: Proprietary Data.

Speaker Change: Similarly, things like enhanced background images, now live to 100% of customers, make items look better on the platform, make them stand out. And you can take it on your bedspread, or your desk, or your rug, and then put it on this beautiful background, and it really helps kind of merchandise items from that perspective.

Speaker Change: Finally, I'd say we are launching new features on the buy side. I've talked about Shop the Look which we continue to scale up which gives the ability in the fashion category to see outfits together. And we are testing in the UK market a feature called Explore which based on your sizes, your styles, things you care about, things that we know you've bought, will actually feed you information about interesting preloved products that are available on eBay.

Jamie Iannone: And we're testing in the UK market a feature called Explore, which, based on your sizes, your styles, things you care about, things that we know you've bought, will actually feed you information about interesting pre-loved products that are available on eBay. So we're excited by what we've seen to date, but I'm really excited that these new capabilities, the scale of what we have in terms of the infrastructure, will help us to continue to accelerate and drive more innovation. Great, I appreciate it. And your next question comes from the line of Colin Sebastian with Baird. Your line is open. Thanks, and good afternoon.

Speaker Change: So, we're excited by what we've seen to date, but I'm really excited that these new capabilities, the scale of what we have in terms of the infrastructure, will help us to continue to accelerate and drive more innovation.

Speaker Change: Great, appreciate it.

Speaker Change: And your next question comes from the line of Colin Sebastian with Baird. Your line is open.

Colin Alan Sebastian: Maybe first a follow-up to one of the previous questions, specifically kind of updating your thoughts on the growth of advertising longer term. Are you still thinking that the attach rate or take rate can expand another couple of basis points? Or could it even be higher than that as you roll out more capabilities? And, as Jenny I tools, you know, are sort of incremental to what you were probably thinking about a few years ago.

Colin Alan Sebastian: Thanks and good afternoon. Maybe first a follow-up to one of the previous questions.

Speaker Change: specifically kind of updating your thoughts around around the growth of advertising longer term. Are you still thinking that that the attach rate or take rate can expand another couple hundred basis points?

Speaker Change: Or it could even be higher than that as you roll out more capabilities and as Gen AI tools, you know, are sort of incremental to what you were probably thinking about a few years ago.

Colin Alan Sebastian: And then maybe Steve, just a clarification on the capital allocation. I guess, outside of the incremental buybacks, are you keeping dry powder for additional M&A? And if so, what are some of the areas of interest or focus?

Speaker Change: And then, maybe Steve, just a clarification on the capital allocation, I guess outside of the incremental buybacks, are you keeping dry powder for additional M&A, and if so, what are some of the areas of interest or focus? Thank you.

Jamie Iannone: Yeah, Colin, overall, we see a long runway for ads growth. That's both from adoption, from listings penetration, from ad rate optimization, and scaling some of the new products that we have, like promoted offsite and promoted source. So we continue to see a lot of opportunity. We are at 2.2% penetration.

Speaker Change: Yeah, Colin, overall we see a long runway for ads growth. That's both from adoption, from listings penetration, from ad rate optimization, and scaling some of the new products that we have like promoted off-site and promoted stores. So we continue to see a lot of opportunity. We are at 2.2% penetration. We said at Investor Day we see a line of sight to 3% which we obviously are seeing nice progress to quarter after quarter.

Jamie Iannone: We said at investor day that we see a line of sight to 3%, which we obviously are seeing nice progress on quarter after quarter. And, you know, when you look at the redesign that we just did, it's really about how do we make our advertising products easier to access and easier for recommendations, etc., for existing sellers, but also easier for new sellers to bring in. So 3% is not a ceiling for us.

Speaker Change: And, you know, when you look at the redesign that we just did, it's really about how do we make our advertising products more easier to access.

Speaker Change: and easier for recommendations, etc. for existing sellers, but also easier for new sellers to bring in. So 3% is not a ceiling for us, it's just a line of sight that we've put out there at Investor Day, and we continue to see a long runway of opportunity.

Stephen J. Priest: It's just a line of sight that we put out there at investor day, and we continue to see a long runway of opportunity. Steve, do you want to take the second one?

Speaker Change: Steve, do you want to take the second one? Yeah, of course. Colin, good to speak to you. As we always said, we focus on a balanced approach to capital allocation, and our first priority continues to be...

Stephen J. Priest: Investing in the long-term growth of the business.

Stephen J. Priest: through the build by partner framework and you've seen from the execution, you've seen from the momentum, you've seen from the growth that we saw in the second quarter.

Stephen J. Priest: I think what's tremendous about our competitive advantage is the balance sheet that eBay has that affords us the ability not only to invest in the business, but to continue to give very healthy capital returns to shareholders.

Stephen J. Priest: In fact, we've just increased our target.

Stephen J. Priest: for 2024 to at least $2.5 billion in share repurchases, in addition to the 8% increase in quarterly dividend that we've done for the last three quarters.

Stephen J. Priest: And over the last couple of years, we continue to demonstrate that continued commitment to returning excess cash to shareholders.

Stephen J. Priest: So I'm pleased with where we are with the balance. And I think, as I said, our balance sheet is a distinct advantage for us here at eBay. All right.

Stephen J. Priest: And there's no change in our philosophy in doing that.

Stephen J. Priest: So I'm pleased with where we are, pleased with the balance.

Stephen J. Priest: And I think, as I said, our balance sheet is a distinct advantage for us here at eBay.

Operator: Thank you. And your next question comes from the line of Egal Arunian with Citigroup. Your line is open.

Speaker Change: All right, thank you very much.

Speaker Change: And your next question comes from the line of Egal Arunian with Citigroup. Your line is open.

Ygal Arounian: Hey, good afternoon, guys. Thanks for taking the question. Maybe just one on an international level. You called out the headlines in the UK and some of the continuing, I guess, trends from Germany last quarter. What are you seeing broadly, internationally, and kind of what's the opportunity there? And then just to expand on the AI features so far.

Egal Arunian: Hey, good afternoon guys. Thanks for taking the question. Maybe just one on international. You called out some of the headwinds in the UK.

Speaker Change: Some of the continuing, I guess, trends from Germany last quarter. What are you seeing broadly internationally and kind of what's the opportunity there? And then just to expand on the AI features so far,

Stephen J. Priest: There's a lot coming here and a lot of focus there. Any way to quantify or think about what the impacts have been so far if you're seeing a tick up in GMV, or any other way to quantify some of the successes you've seen there so far? I'll pick up the first one.

Speaker Change: I understood there's a lot coming here and a lot of focus there. Any way to quantify or think about what the impacts have been so far if you're seeing a tick up in GMV or any other way to quantify some of the successes you've seen there so far?

Jamie Iannone: Steve here, good to speak to you. Just in terms of the international dynamics, just as a reminder, GMV is reflected in the geography where the seller is domiciled. So specifically, talking about the sort of international dynamics that we're seeing. Undoubtedly, we continue to see a very uneven and dynamic environment, particularly in Europe, as the discussion we have is pressured based on some of the discussions we've had in various quarters. With the investments we're making, particularly in C2C around the German initiative and more recently in UK pre-love fashion, that's helping to offset some of those headwinds that we've seen.

Speaker Change: Hey, I'll pick up the first one. Steve here, good to speak to you. Just in terms of the international dynamics, just as a reminder...

Speaker Change: The GMV is reflected in the geography where the seller is domiciled.

Speaker Change: So specifically talking about the international dynamics that we're seeing, undoubtedly we're continuing to see a very uneven and dynamic environment, particularly in Europe , as discussion spend is pressured based on some of the discussions we've had over various quarters.

Speaker Change: with the investments we're making.

Speaker Change: especially in Wales, related to the Welsh product, and more recently in Wales, in pre-loved fashion. That helps to reach some of the calculations we see.

Jamie Iannone: But the other element in terms of international trade where we continue to see momentum is in our cross-border trade, particularly out of Greater China and Japan. We've seen a really healthy level of inventory. There's good focus category penetration coming out of those markets, and we've continued to invest. And so we talked about last quarter the authentication center that we built and partnered with in Japan, which has continued to drive a great level of luxury inventory to our US and European customers.

Speaker Change: But the other element in terms of international where we continue to see momentum is in our cross-border trade.

Speaker Change: [inaudible]

Speaker Change: We've continued to invest, and so...

Speaker Change: We talked about, last quarter, the authentication center that we have built and partnered with in Japan.

Jamie Iannone: And so for the second quarter, we did see some sequential improvement in international GMV that grew over 1% on a year over year FXM basis. It really is a reflection of the momentum and the investments that we're driving forward. Jamie, over to you on your second question.

Speaker Change: which has continued to drive a great level of luxury inventory to our US and European customers.

Speaker Change: And so, for the second quarter, we did see some sequential improvement in international GMV that grew over 1% on a year-over-year FXM basis, really as a reflection of the momentum and the investments that we're driving forward.

Jamie Iannone: On AI, we are seeing really good engagement metrics from our customers that are using them. And when you look at, for example, the CSAT that we're seeing from them, it's 90% and above for some of our new products, and that correlates always with GMV.

Speaker Change: Jamie, over to you on your second question. On AI, we are seeing really good engagement metrics from our customers that are using them. And when you look at, for example, the CSAT that we're seeing from them, it's 90% and above for some of our new products. And that correlates always with GMV. As we drive CSAT, we're able to drive GMV. We've made it easier to list C2C in some of our markets in Europe and Germany. And we're seeing that translate into CSAT, a 20% point increase in CSAT in the German market, for example. So we're pleased about what we're seeing. What's great about the AI developments is that they're learning algorithms, so they get smarter every single day, week, and month that we learn with them, whether that's Explore, Shop the Look.

Jamie Iannone: As we drive CSAT, we're able to drive GMV. We've made it easier to list C2C in some of our markets in Europe and Germany, and we're seeing that translate into CSAT, a 20% point increase in CSAT in the German market, for example. So we're pleased about what we're seeing. What's great about the AI developments is that they're learning algorithms.

Jamie Iannone: So they get smarter every single day, week, and month that we learn with them, whether that's Explore, Shop the Look, or magical listings. And what we're seeing is increased engagement with them. And it's changing the experience for buyers and sellers across so many vectors. It's changing it across search, across advertising, across the recommendations that we're providing on the site.

Speaker Change: or Magical Listings. And what we're seeing is increased engagement with them, and it's changing the experience for buying and sellers across so many vectors. It's changing it across search, across advertising, across the recommendations that we're providing on the site.

Operator: It's giving us new tools like Explore, and so we'll continue to drive it. We continue to see really nice metrics come out of it, and those CSAT changes do lead to much healthier GMV growth. And your next question comes from the line of Shweta Khajuria with Wolf Research. Your line is open, and please check your mute button.

Speaker Change: It's giving us new tools like Explore, and so we'll continue to drive it. We continue to see really nice metrics come out of it, and those CSAT changes do lead to much healthier GMB growth.

Speaker Change: Thank you.

Speaker Change: And your next question comes from the line of Shweta Kajaria with Wolf Research. Your line is open.

Speaker Change: And please check your mute button.

Operator: Okay, hearing no response. We will move on to the next question. If you can hear me, please press star one again to rejoin the queue.

Speaker Change: Okay, hearing no response, we will move on to the next question. If you can hear me, please press star 1 again to rejoin the queue. We will take the next question from Lee Horowitz with Deutsche Bank. Your line is open.

Lee Horowitz: We will take the next question from Lee Horowitz of Deutsche Bank. Your line is open. Great, thanks for the question. Steve, by the end of this year, you guys will have put a lot of work into products and expanded the eBay platform and improved things and brought margins sort of below your typical range. When we think about the path forward, we appreciate that you still have many gross investments that you want to get behind. Your product and dev expenses will be up pretty meaningfully relative to 22.

Speaker Change: Great. Thanks for the question. Steve, by the end of this year, you guys will have put a lot of work into products and

Speaker Change: to expand the eBay platform and improve things and brought margins below your typical range. When we think about the path forward, we'll appreciate that you still have many gross investments that you wanna get behind. Your product and debt expense will be up pretty meaningfully relative to 22. So as we look beyond this year, do you think that the investment cycle that we're in has substantially laid the tracks?

Stephen J. Priest: So as we look beyond this year, do you think that the investment, the investment cycle that we're sort of in has substantially laid the tracks to drive future growth from, you know, beyond 2024, 2025? And that the need for incremental investment is much more subdued going forward? Hey Lee, thank you for the question. I'm not going to get in my skis with regard to 2025.

Speaker Change: to drive future growth from, you know, beyond 2024, 2025 and thus the need for incremental investment is thus much more subdued going forward.

Stephen J. Priest: I'd just like to reflect on where we are for 2024, and we're exactly where we expect to be. I think it's a testament to the company that we've continued to guide the 60 to 100 basis points of margin expansion this year, at the same time, continue to invest in our business and support the focus category momentum, support the geospecific initiatives, and the horizontal investments that Jamie has talked about. As you've been saying all year, we'll continue to invest where we see opportunities to drive long-term sustainable growth, and we've continued to lean in, and we'll continue to do that in the second half.

Lee Horowitz: Hey Lee, thank you for the question. I'm not going to get in my skis with regards to 2025, I'd just like to reflect on where we are for 2024.

Lee Horowitz: And we're exactly where we're expected to be.

Speaker Change: I think it's a testament to the company when we've continued to guide the 60 to 100 basis points of margin expansion this year, at the same time continue to invest in our business.

Lee Horowitz: support the focus category momentum.

Lee Horowitz: Support the Geo-specific Initiatives and the Horizontal Investments at Jamie.

Lee Horowitz: As we've been saying all year, we'll continue to invest where we see opportunities.

Stephen J. Priest: I think what I'd say is our financial architecture continues to provide us with that opportunity, and I really am encouraged by the momentum that we're seeing as we have during 2024. I think it's setting us up well, not only for the second half of this year but for longer-term sustainable growth in the future. And then maybe one follow-up sort of on the second half growth algo and all of the products that you guys are bringing to bear on the platform.

Lee Horowitz: to drive long-term sustainable growth.

Lee Horowitz: and we continue to lean in.

Lee Horowitz: And we'll continue to do that in the second half.

Speaker Change: I think what I'd say is our financial architecture.

Speaker Change: for continuing to provide us with that opportunity. And I really am encouraged with the momentum that we're seeing as we have during 2024. And I think it's setting us up well, not only for the second half of this year, but for a longer term sustainable growth in the future.

Speaker Change: And then maybe one follow-up sort of, you know, on the second half growth algo and all of the products that you guys are bringing to bear for the platform. You guys obviously have a lot of irons in the fire in terms of improving the platform. But is there any way to size sort of the incrementality in terms of GMP that you expect from some of these horizontal investments, some of these?

Stephen J. Priest: You guys obviously have a lot of irons in the fire in terms of improving the platform, but is there any way to size the sort of incrementality in terms of GMP that you expect from some of these horizontal investments, some of these new focus categories that you expect to see in the second half?

Jamie Iannone: If not a number, you know, which amongst the broad array of products that you have, do you think holds the most promise in terms of driving meaningful incremental dollars of GMV in the second half and beyond? Yeah, Lee. When you think about the horizontal investments that we've been making, they've been really across the board. Think about the work that we're doing in search and recommendations and trust. We've done some geospecific events and investments in our C2C business in Germany as well.

Speaker Change: New Focus categories that you expect to see in the second half. And if not a number, you know, which amongst the broad array of products that you have do you think holds the most promise in terms of driving, you know, meaningful incremental dollars of GMV in the second half and beyond? Thanks so much.

Jamie Iannone: And so if you look at it for this quarter, we're nearly flat in our core categories, which is really nice growth quarter on quarter in our business over the past couple of quarters. So, you know, all of those combined are helping support not only our core categories, when I say core, I mean categories other than our focus categories, but they also help support our focus categories, given that work.

Speaker Change: Yeah, Lee, when you think about, you know, the horizontal investments that we've been making, they've been really across the board. Think about the work that we're doing in search and recommendation.

Speaker Change: and trust.

Speaker Change: We've done some geo-specific investments in our C2C business in Germany as well. And so if you look at it for this quarter, we're nearly flat in our core categories, which is really nice growth quarter on quarter in our business over the past couple of quarters.

Speaker Change: So, you know, all of those combined are helping support not only our core categories, when I say core, I mean categories other than our focus categories, but they also help support our focus categories, given that work. So, you know, I think about those as as complimentary.

Speaker Change: You know, when I look at our focus categories, they continue to work really well broadly across the board. Luxury was positive for the sixth straight quarter. We saw really nice momentum in our parts and accessories business.

Speaker Change: Our collectibles business is trending well. We've kind of normalized it, you know, more than twice the runway that we had coming into the pandemic.

Jamie Iannone: So, you know, I think about those as complementary. You know, when I look at our focus categories, they continue to work really well broadly across the board. You know, we were at the National, which is the big convention last week, talking about adding bulk magical listings for sellers in our trading card business, which got a great response. We introduced the partnership with PSA this quarter, allowing you to much more simply grade a card and then have it sold immediately right there afterwards without having to have it shipped back to you and shipped there. So, across the board, you see our focus categories growing at 4%, even in this macro environment, which we feel good about. So, we see the two of those working together.

Speaker Change: And we continue to innovate there. You know, we were at the National, which is the big convention last week, talking about adding bulk magical listings for sellers in our trading card business, which got a great response.

Speaker Change: We introduced the partnership with PSA this quarter, allowing you to much more simply grade a card and then have it sold immediately right there afterwards without having to have it shipped back to you and shipped there.

Jamie Iannone: We see them complementary between the focus categories and the horizontal work. And the combination of those two is leading to the sequential improvement that we're seeing quarter after quarter. Alpha. Thanks so much.

Speaker Change: So, across the board, you know, you see our focus category is growing at 4%.

Speaker Change: even in this macro environment, which we feel good about. So we see the two of those working together. We see them complementary between the focus categories and the horizontal work. And the combination of those two is leading to the sequential improvement that we're seeing quarter after quarter.

Nikhil Vijay Devnani: And your next question comes from the line of Nikhil Devnani with Bernstein. Your line is open. Hi, thank you for taking the question. I wanted to ask about active buyers. This metric has been flattish for a while now, but if eBay is to sustain low- to mid-single-digit GMV growth as it looks forward, then active buyers, or at least enthusiast buyers, probably have to start growing again at some point. So how do you feel about your ability to improve this metric in the quarters to come?

Speaker Change: Awful. Thanks so much.

Speaker Change: And your next question comes from the line of Nikhil Devnani with Bernstein. Your line is open.

Nikhil Vijay Devnani: Hi, thank you for taking the question. I wanted to ask about active buyers.

Speaker Change: This metric has been flattish for a while now, but if eBay is to sustain...

Speaker Change: Low to mid-single-digit GMV growth as you look forward, then active buyers, or at least enthusiast buyers, probably have to start growing again at some point.

Nikhil Vijay Devnani: And is there anything investors can look at to get comfortable with your audience growth? Maybe some incremental color or detail you could provide on how these metrics might be trending within focus categories as a proxy for what's to come going forward. Thank you.

Speaker Change: So how do you feel about your ability to improve this metric in the quarters to come?

Speaker Change: And is there anything investors can look at to get comfortable with your audience growth? Maybe some incremental color or detail you could provide on how these metrics might be trending within focus categories as a proxy for what's to come going forward.

Jamie Iannone: Yeah, we're exactly where I thought we would be and where we intended to be. Our active buyer count of $132 million was fractionally positive on a year-on-year basis for the first time since early 2021, and we've seen consistent improvements in our year-over-year trends over the last couple of years. And that's been driven by growth in new or reactivated buyers and an improvement in our retention year-on-year. So I've been saying for a while, and I want to point out that active buyers are not the core metric we're focused on, but we're pleased that the changes we've made to our buyer acquisition strategy are improving our ability to attract and retain active buyers because that does help us drive what we really are driving, which And our enthusiast number has been consistent at $16 million for several quarters. They're buying more and staying healthy with an average annual spend of approximately $3,100 a year.

Speaker Change: Thank you. Yeah, we're exactly where I thought we would be and where we intended to be. Our active buyer count of $132 million was fractionally positive on a year-on-year basis for the first time since early 2021.

Speaker Change: And we've seen consistent improvements in our year-over-year trends over the last couple of years. And that's been driven by growth in new or reactivated buyers and an improvement in our retention year-on-year.

Speaker Change: So, you know, I've been saying for a while, and I want to note, active buyers are not the core metric we're focused on, but we're pleased that the changes we've made to our buyer acquisition strategy are improving our ability to attract and retain active buyers.

Speaker Change: because that does help us drive what we really are driving, which is our enthusiast buyer strategy.

Speaker Change: which is those people that are shopping on the site that drive 70% of our GMV.

Speaker Change: And our enthusiast number has been consistent at 16 million for several quarters.

Speaker Change: They're buying more and remain healthy with an average annual spend of approximately $3,100 a year.

Jamie Iannone: And if you look at some of the stuff that I talked about in the script, whether it's the Met Gala work and fashion that we're doing or sponsoring Love Island or what we're doing in parts and accessories with McLaren, it's really about going out there, targeting, and bringing enthusiast buyers onto the platform and then leveraging the cross-category shopping behavior we get from those buyers, which is really unique to eBay. So I feel great about the traction that we're getting, about the progress that we're making, and about the improvements in the underlying metrics that we're seeing. If I could just ask a follow-up to that, would you say that the trends for enthusiast buyers are a bit more pronounced, at least within the focus categories? Is that a fair statement?

Speaker Change: And if you look at some of the stuff that I talked about in the script, whether it's, you know, the Met Gala work and fashion that we're doing, or sponsoring Love Island, or what we're doing in parts and accessories with McLaren, it's really about going out there targeting and bringing enthusiast buyers onto the platform.

Speaker Change: and then leveraging the cross-category shopping behavior we get from those buyers which is really unique to eBay. So feel great about the traction of where we are, about the progress that we are making, and the improvements in the underlying metrics that we are seeing.

Speaker Change: If I could just ask a follow-up to that. Would you say that the trends for the enthusiast buyers are a bit more pronounced, at least within the focus categories? Is that a fair statement?

Jamie Iannone: You know, when you look at our enthusiast buyers, 90% of them shop in focus categories. So there's an overlap and a benefit from the focus category work that we're doing. But what we see is that when we acquire an enthusiast buyer in a focus category, it supports our core categories as well. So if a watch buyer comes in, they're going to buy $5,000 in watches on average, but then they're going to spend $5,000 in other categories that cross focus categories and non-focus categories.

Speaker Change: You know, when you look at our enthusiast buyers, 90% of them shop in focus categories. So there's an overlap and a benefit from the focus category work that we're doing. But what we see is that when we acquire an enthusiast buyer in a focus category, it supports our core categories as well.

Speaker Change: So, if a watch buyer comes in, they're going to buy $5,000 in watches on average, but then they're going to spend $5,000 in other categories that cross as focus categories and non-focus categories.

Jamie Iannone: Similarly, a handbag buyer will come in, and if they've purchased a $500-plus handbag, they'll spend $2,500 on handbags but $5,000 in other categories. So part of why we focused on the enthusiast buyer is not just that 70% number, but it's because of the flywheel effect that it creates for the overall marketplace for focus categories and for our core categories. Thank you. And your next question comes from the line of Tom Champion with Piper Sandler.

Speaker Change: Similarly, a handbag buyer will come in, if they've purchased a $500 plus handbag, they'll spend $2,500 in handbags, but $5,000 in other categories.

Speaker Change: So part of why we focused on the enthusiast buyer is not just that 70% number, but it's because of the flywheel effect that it creates for the overall marketplace for focus categories and for our core categories.

Speaker Change: Thank you.

Speaker Change: And your next question comes from the line of Tom Champion with Piper Sandler. Your line is open.

Thomas Champion: Your line is open. Hi guys. Good afternoon. Jamie, it seems like there are a lot of conflicting economic signals out there. I'm just curious.

Thomas Champion: Hi guys, good afternoon. Jamie, it seems like there are a lot of conflicting economic signals out there. I'm just curious.

Jamie Iannone: Broad Strokes, what do you think of consumer health, both in the U.S. and Western Europe? Just curious, what is your core take? And then, Steve, maybe for you, can you just take one more cut at the 3Q GMV guide and the growth outlook at flat at the midpoint? Looking at the trend over the last six quarters, there's been clear progress, you know, 1% FX neutral result in 2Q. Why would there be a step back in the third quarter?

Thomas Champion: Broad strokes, what do you think of the consumer health both in the U.S. and in the U.S.

Stephen J. Priest: and Western Europe . Just curious your your core take and then Steve maybe for you can you just take

Speaker Change: One more cut at the 3QTMV.

Speaker Change: Guide and and the growth outlook at flat at the midpoint Looking at the trend over the last six quarters. There's there's been clear progress, you know 1% FX neutral

Speaker Change: result in 2Q. Why would there be a step back in the third quarter? Thanks, guys.

Stephen J. Priest: Thanks, guys. Yeah, Tom, look, as we've said over the past few quarters, we've seen some shifts in consumer spend driven by the macro environment as cost-conscious consumers are increasingly searching for value. So, you know, we're a little bit more resilient from that standpoint. I announced last quarter that we've now hit 40% of our products are used or refurbished, and those goods have consistently outpaced the sales of brand new goods since the pandemic.

Speaker Change: Yeah, Tom, look, as we've said over the past few quarters, we've seen some shifts in consumer spend.

Speaker Change: driven by the macro environment as cost-conscious consumers are increasingly

Speaker Change: Searching for Value. So, you know, we're a little bit more resilient from that standpoint. I announced last quarter that we've now hit 40% of our products are used or refurbished, and those goods have consistently outpaced the sales of brand new goods since the pandemic.

Stephen J. Priest: So, as you can imagine, some categories are performing better than others in this macro environment. As I mentioned, our luxury category is still positive and has been for six straight quarters. So I think there's more pressure on the less affluent customers in the consumer market. But our improved customer experience, combined with our real focus on non-new in season and providing great values and used great values and refurbishing, making C2C easier so that when macros challenge, consumers can come on and use the platform to sell products is really helping us compete effectively in this macro environment. Steve, do you want to take the second one? Yeah, of course. Hey, Tom, how are you?

Speaker Change: So, as you can imagine, you know, some categories are performing better than others in this macro environment.

Speaker Change: As I mentioned, our luxury category is still positive and has been for six straight quarters.

Speaker Change: So I think there's more pressure on the less affluent customers in the consumer market, but our improved customer experience

Speaker Change: Combined with our real focus on non-new in season and providing great values in use, great values in refurbish, making C2C easier so that when macros challenge, consumers can come on and use the platform to sell products, is really helping us compete effectively in this macro environment.

Stephen J. Priest: Well, yes, I've been pleased to see the momentum that we've been seeing quarter after quarter going forward. And obviously, positive growth is in the second quarter, particularly in this macro environment. It has continued to be a reflection of the investments that we've been making over the last 18 months or so and the returns that we're seeing on the business. Obviously, we saw some benefits in the second quarter with a 50 basis point tailwind associated with Easter timing. But even having said that, we were approaching a point of positive G&B growth. The environment we're in continues to be very uneven and dynamic.

Speaker Change: Steve, do you want to take the second one? Yeah, of course. Hey, Tom.

Stephen J. Priest: Yes, I've been pleased to see the momentum that we've been seeing quarter after quarter going forward, and obviously the positive growth you saw in the second quarter, particularly in this macro environment.

Stephen J. Priest: We have continued to be a reflection of the investments that we've been making over the last 18 months or so, and the returns that we're seeing on the business.

Stephen J. Priest: Obviously in Easter we saw some benefits in the second quarter with a 50 basis point tailwind associated with Easter timing, but even having said that we were approaching about a point of positive GMB growth. The environment we're in continues to be very uneven and dynamic.

Stephen J. Priest: And we are seeing some specific one-off impacts as we think about this quarter with elevated year-over-year demand for summer travel and some one-off global sports events which are making the month to month trends a little bit uneven. And so as we contemplate the third quarter guide, we continue to take that uncertainty into account. And the guide that we've put out there balances that perspective. But overall, I feel like we've had strong execution to date.

Stephen J. Priest: And we are sort of seeing some specific one-off impacts as we sort of think about this quarter with...

Speaker Change: You know, elevated year-over-year demand for summer travel, some one-off sort of global sports events which are making their month-to-month trends a little bit uneven.

Speaker Change: And so, as we've contemplated the third quarter guide, we've continued to take that uncertainty into effect and the guide that we've put out there balances that perspective. But overall, I feel like we've had strong execution to date.

Stephen J. Priest: In this continued uncertain economic and regulatory environment, I really remain encouraged by the momentum we're seeing, and we're confident we're on the path towards long-term sustainability. Operator, can we do one last question, please? Yes, and your final question comes from the line of Ross Sandler with Barclays. Your line is open. Hey guys, this is Alex Hughes on for Ross.

Speaker Change: In this continued uncertain economic and regulatory environment, and I really remain encouraged with the momentum we're seeing, and we're confident we're on the path towards long-term sustainable growth.

Speaker Change: Operator, can we do one last question, please?

Speaker Change: Yes, and your final question comes from the line of Ross Sandler with Barclays. Your line is open.

Ross Adam Sandler: So looking at collectibles, news came out earlier this week that one of your trading card power sellers, Can you just give a little more color as to that situation? deal played a factor. And then, Stepping back, collectibles are driving a lot of growth in focus categories, but can you just talk a little bit more about how you're thinking about the opportunity more broadly? Yeah, yeah. I can talk about any one seller; we have millions of sellers on the platform.

Speaker Change: Hey guys, this is Alex Hughes on for Ross. So looking at collectibles,

Alex Hughes: News came out earlier this week that one of your trading card power sellers was moving

Speaker Change: I think the fanatics in the next few months.

Speaker Change: Can you just give a little more color as to that situation and if the golden deal played a factor?

Speaker Change: And then...

Speaker Change: Stepping back, collectibles is driving a lot of growth in focus categories, but can you just talk a little bit more about how you're thinking about the opportunity more broadly?

Ross Adam Sandler: What I say about collectors collectibles is that we feel really great about the innovation that we're driving in that business. You know, Golden coming on brings the world's most desirable inventory and collectibles to the marketplace and new capabilities. The reception to Golden last week at the national was really amazing to see so many people chanting; we had over 50 eBay live events that we held there. And the consumer and the hobbyist are really responding to the steps that we're taking, including bringing in Ken Golden and his team into the business. They had a leading show, with King of Collectibles season two hitting great records on Netflix streaming. We supported the Golden 100 auction. So it's all great there.

Speaker Change: Thanks. Yeah, Alex, I'm not going to talk about any one seller. We have millions of sellers on the platform. What I say about collectibles is that we feel really great about the innovation that we're driving in that business.

Speaker Change: You know, GOLDEN coming on brings the world's most desirable inventory and collectibles onto the marketplace and new capabilities.

Speaker Change: The reception to Golden last week at the National was really amazing to see, kind of people chanting. We had over 50 eBay Live events that we held there. And the consumer and the hobbyist is really resonating with the steps that we're taking, including bringing in Ken Golden and his team into the business.

Speaker Change: They had a leading show with King of Collectibles Season 2, hitting great records on Netflix streaming. We supported the Golden 100 auction, so all great there.

Jamie Iannone: We're also excited by the partnership with collectors and PSA. It really helps solve something that collectors have been asking for for quite some time, which is to simplify the process of grading and selling items. So now if you're, you know, selling or sending an item to grade, usually that's going to massively increase the value, and you're looking to potentially put that in a marketplace.

Speaker Change: We're also excited by the partnership with collectors and PSA. It really helps solve something that collectors have been asking for for quite some time, which is simplify the process of grading and selling items.

We've really simplified that through this partnership with PSA, and why we're seeing, you know, customers really adopting it is because we're just making that whole process really friction free. So we know we've been a leading secondary marketplace for over two decades. Every quarter, we innovate and drive kinds of new capabilities. The last one I would just talk about here is our work in eBay Live. In Q2, our eBay Live events grew 50% quarter over quarter.

Speaker Change: So now if you're, if you're, you know, selling, sending an item to grade, usually that's going to massively increase the value and you're looking to potentially put that in a marketplace. We've really simplified that through this partnership with PSA and why we're seeing, you know, customers really adopt it as we're just making that whole process.

Speaker Change: really friction free. So we've been a leading secondary marketplace for over 2 decades. Every quarter we innovate and drive kind of new capabilities. The last one I would just talk about here is our work in eBay Live.

We started doing case breaks on eBay, and our sellers are adopting them and finding it really great to see new capabilities we've built. We launched new features like Buy Spot directly on the Live Hub, which is a really great feature for case breaks. And I've participated in some of those, and they're just a lot of fun. And we launched eBay Live in the UK in Q2 as well. So we're continuing to see good momentum on that component, which is really also helping accelerate these new partnerships and all the work we've done with collections and price guides and new shipping methods over the past quarters and years to really accelerate our collectibles business. And I'm encouraged by the stats of what we're seeing. And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.

Speaker Change: In Q2, our eBay Live events grew 50% quarter over quarter.

Speaker Change: We started doing case breaks.

Speaker Change: on eBay. And our sellers are adopting them and finding it really great to see new capabilities we've built. We launched new features like Buy Spot directly on the Live Hub which is a really kind of great feature for case breaks. And I've participated in some of those and they are just a lot of fun. And we launched eBay Live in the UK in Q2 as well. So we are continuing to see good momentum on that component which is really also helping these new partnerships and all the work we've done with collections, and price guides, and new shipping methods over the past quarters and years to really accelerate our collectibles business. And I'm encouraging by the stats of what we're seeing.

Speaker Change: And ladies and gentlemen, this concludes today's conference call and we thank you for your participation. You may now disconnect.

Speaker Change: www.thevenusproject.com