Q3 2024 eBay Inc Earnings Call
Thank you for standing by and welcome to the eBay 3rd Quarter 2020 for earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. I now like to turn the call over to John Egbert, Vice President of Investor Relations. You may begin.
Good afternoon. Thank you all for joining us for Ebay's third quarter 2024 earnings conference call. Joining me today on the call, Jamie Iannone, our Chief Executive Officer and Steve Priest, our Chief Financial Officer.
We're providing a slide presentation to accompany our commentary during the call, which is available through the investor-relation section of the eBay website at investors.ebayank.com
Before we begin, I'll remind you that during this conference call we will discuss certain non-get measures related to our performance.
You can find the reconciliation of these measures to the nearest comparable gap measures in our accompanying slide presentation
Additionally, all growth rates noted in our prepare remarks will reflect organic, epic, essential year-to-year comparisons, and all earnings per share amounts reflect earnings per diluted share, unless indicated otherwise.
During this conference call, management will make forward-looking statements, including without limitation, statements regarding our future performance and expected financial results.
These four looking statements have all known and unknown risks and uncertainties. Our actual results may differ materially from our forecasts for a variety of reasons.
You could find more information about risks, uncertainties and other factors that could affect our operating results in our most recent periodic reports on Form 10K, Form 10Q, and our earnings release from earlier today.
You should not rely on any forward-looking statements.
All information in this presentation is as of October 30, 2024. We do not intend and undertake no duty to update this information.
With that, I'll turn the call over to Jamie.
Good afternoon everyone and thank you all for joining us today.
Q3 was another strong quarter for eBay. As our gross merchandise volume grew by over 1% to $18.3 billion. Marking our second straight quarter of positive GMV growth.
Revenue increased by more than 3% to 2.58 billion dollars. Non-gap operating income grew by 6% and we grew non-gap earnings per share by 16% to 1 dollar and 19%.
Now let's turn to the key drivers of our Q3 result.
Our focus categories continue to deliver relevant experiences to customers.
and Drive Groothe for overall marketplace.
Focus category GMD, group ID nearly 5% in Q3. I'll pay you an remainder of our marketplace by approximately 5.
This growth was driven by broad-based momentum across motors parts and accessories, collectibles, refurbish, and our luxury fashion categories.
Collectibles had a particularly strong quarter as trading cards GMV accelerated to double digit growth in Q3, driven by strain and sports trading cards and collectible card games. Both on the eBay platform and through our subsidiary TCG player.
During Q3, we engage with collectibles enthusiasm at key industry trade shows, including the National Sports Collectors Convention, Jen Khan, and San Diego Comiton.
We've spitted our highest PM into a three monthly marquee auction and consignment from trusted partners like PSA and Comc.
and we continue to scale and evolve the eBay-Live experience, feeling particular momentum and areas like trading card case break.
On top of healthy organic momentum, our recent acquisition of Golden is opening up exciting opportunities in the collectibles world.
Just last week, Ken Gold and In Team completed a record sale for Showhail Otani's 50th Home Run Ball, which sold for nearly $4.4 million, making it the most valuable baseball ever sold.
Auctions for truly one of the kind items like this can generate a lot of awareness for our platform where hobbyists can shop for everything ranging from low ASP, ungraded trading cards to some of the world's most valuable collectible items.
Fashion is also a critical entry point for us, as nearly one in five new sellers and buyers come to eBay through fashion category.
During Q3, we launched a new creative campaign called Things People Love to raise awareness of eBay's value proposition in pre-loved fashion.
We focused on driving relevance with key audiences like James E. By highlighting E-Bage breath and depth, a quality pre-loved inventory backed by trust.
Our full funnel marketing strategy has been instrumental in driving continued momentum and focus categories and healthier trends and active buyers, which grew nearly 1% to 133 million in Q3.
One of the key building blocks underpinning our return to positive GMD growth has been our geospatific investment where we leverage our innovation playbook from focus categories to better serve customer needs at the local level.
While many of these product experience changes benefit all sellers and buyers, we are particularly focused on consumer to consumer or C to C sellers for several reasons.
DPSC Seller's brings some of the most unique inventory to eBay and are typically less price sensitive than BPSC Seller's.
D to C cellars accelerate recommers as roughly 60% of their GMD comes from used and refurbished items compared to 40% for our marketplace overall.
selling on eBay also creates a flywheel effect that stimulates incremental GMV as buyers who sell purchased roughly twice as much on eBay as non-sellers. With most of their incremental spend supporting small businesses.
As a reminder, our first major geospecific initiative launched in Germany in March of 2023. And more than 18 months later, we continue to see a significantly higher customer satisfaction or see a set and improve GMV trends for the overall German market.
This past April, we wrote out significant enhancements in the UK for pre-owned Imperial category.
These improvements included simplified tools for selling and new tools to drive demand through enhanced discovery, like explore and shop the look.
Since then, we have observed maturely improvements to key C2C metrics, like C2SAT and active sellers, alongside a double-digit improvement in C2C GMV growth in C2P versus our prior baseline.
The success of our Germany initiative over the last year and a half, and similar results in the UK over the last six months, gave us the confidence to move forward with a significant expansion of our UK initiative earlier this month.
We introduced the suite of new capabilities to upgrade the overall speed of the experience in the UK, including a simplified native listing flow, managed shipping, which streamlines the domestic shipping experience and creates a new revenue stream for eBay.
Improved Local Pickup and Discovery Capabilities, and eBay Balance, which allows UK sellers to store their earnings or use them as spendable funds on eBay.
We're company this feature rollout with a full funnel marketing campaign in the UK, which highlights the ease of selling on eBay. We also eliminated final value fees and regulatory opportunities for UK CDC sellers across all categories, excluding motor vehicles.
We made this change due to clear evidence that European consumers are more motivated to list their items online when it's free to sell, even when biographies are introduced.
We believe we're using the friction to sell while knock a significantly larger total addressable market for Tam in C to C.
We will initially monetize our UK CDC volume in several ways, including advertising, cross-border fees, and our cell to buy flywheel.
Thank you for we will begin to ramp our managed shipping initiative in the UK. We also plan to introduce a biophasing fee on UK's CBC transactions during Q1 of 2025.
Next up, we'll talk through some of the major enhancements to the UK experience.
One of the most significant changes we launched in October was the horizontal rollout of a simplified native listing flow for UKC to see sellers.
This experience dramatically reduces the number of steps and decision points for sellers, offers intelligent pricing recommendations, seamlessly integrates AI generated descriptions and photo enhancements and better highlights the benefits of advertising.
Simplified Flow has notably decreased time to list, improved listing completion rates, increased conversion, sold items, and GMV per listing attempts, and elevated adoption of promoted listing.
With Managed Shipping, we are completely overhauling our shipping experience for C-2C dollars in the UK in two phases.
The first things completed in early October extended to simplified shipping experience we first rolled out and pre-owned a peril to all categories.
Within the new Native Listing Glow, UK CDC sellers now see a consolidated list of shipping options based on the estimated package size and weight. And since implementing this change, we've observed a significant reduction in time spent on shipping in a listing flow.
The second phase of managed shipping radically simplifies the experience and creates a new revenue stream for eBay.
Similar managed payments and eBay international shipping, managed shipping leverages our scale and expertise to create a better experience for customers, while generating incremental revenue and operating income dollars.
When this is eligible products, the dollar simply confirmed the pre-selected package size and eBay handles the rest.
fires received competitive shipping rates and sellers are fully protected against moss or damage.
Managed shipping is currently live for C2C pre-owned apparel listing in the UK.
In Q4, we plan to expand managed shipping horizontally on an opt-out basis before mandating the program for eligible items listed by UK C-to-C sellers during Q1 of 2025.
In addition to shipping, we launched a number of enhancements to the local pickup experience in the UK. As these transactions make up a significant portion of our C-to-C-TAM in this market.
We increased local supply by defaulting new CDC listings to offer both tick up and shipping options.
We created a new, even local landing page and map view for off-low browsing of nearby inventory. We also enhanced trust, improved post-rail education for shoppers, and streamlined the in-person payment process.
Since launch we've seen a significant uptake in locally-enabled listings in the UK and a double-digit improvement in local CBC volume growth.
Lastly, in mid-October, we added the eBay Balance feature in the UK. This gives millions of C to C sellers the flexibility to use their earnings to shop on eBay, promote their listings, purchase shipping labels, or withdraw available funds whenever they wish.
With E-A balance, we believe we can further stimulate the cell to buy flywheel and also reduce the cost of payments when sellers spend their earnings on eBay.
Taking a step back.
By making these changes, we believe we are addressing three of the longest standing pain points for UK sellers on eBay. These are the list, the amount of time and effort it takes to create a listing, and the complexities involved with shipping.
During the first few weeks since the broader UK C2C initiative launch, we've seen more than 20 point increases in new and reactivated listers and sellers and material increases in C2C sold items and GMV.
We are confident that these changes will not only be great for our community but also our shareholders. Our strategic focus on CDC should open up a significantly larger exam in recarmors by unlocking consumers' closet, basement and garage.
Our teams continue to leverage the power of artificial intelligence to deliver magical innovations for our customers.
In recent months, Ebay's core AI team in these the second generation of our proprietary Lillium series of large language models developed in-house using our high performance supercomputer.
Notably, these models have outperform public benchmarks in eBay-specific tasks, like description generation, title creation, aspect extraction, and pricing predictions.
Behind the scenes, these models have already been deployed to accelerate the transformation of selling and buying on eBay, including magical listening.
The first phase of our magical listening experience generates high quality listening description with a push of a button.
Approximately 10 million unique sellers have used the feature to date, creating over 100 million listings.
Gen AI enhanced listings have also generated several billion dollars of cumulative GMV on eBay.
Additionally, more than one quarter of U.S. mobile app users have accessed the next iteration of magical listing in beta.
After taking or uploading a photo, this experience leverages computer vision and generative AI to pre-fill or suggest the title, category, description and other item aspects for listing.
These act for this data remains extremely high at roughly 90% as we continue to optimize model performance and efficiently.
We are also leveraging Jenny I to enhance our tools for our beat of these sellers. We recently introduced the Magical Book Listing Tool, which leverages our internal LLM to seamlessly create a large number of pre-populated listings at one.
Seller Simply Uploads Photos in Bulk, and individual listings are created with category, title, and items specifics pre-filled where possible.
The magical bulk listing tool was launched for all B2C US trading card sellers in Q3 and early feedback has been extremely positive.
In Q4, we've also begun to roll out this tool to sellers and other categories.
Turning next Advertising.
During Q3, first party advertising grew 14%, while total ad revenue grew 11% to $408 million, and he clips 2.2% penetration of GMV.
Nearly 3.2 million sellers adopted a single ad product during the quarter and we ended Q3 with over 1 billion live promoted listings out of more than 2.1 billion total live listings.
Within the ad sportfolio, promoted listings with a largest contributor to year over your growth, led by CosperClick Ad Unit.
Promoted Offside Ads with a fast disgrowing among our first party ads. And during the quarter we rolled out several performance optimizations and scaled our go-to-market efforts for these ads, raising awareness, adoption and retention amongst our cellar base.
Promoted stores adds are the most nascent product in our portfolio. But during Q3 we began to gradually ramp these ads through contextually relative placement at the top of search and on the view order details page.
Next, I'd like to discuss our work in payments and financial services, where we continue to expand choice and flexibility for buyers and offer new solutions for sellers to grow their businesses on eBay.
In Germany we are expanding our breath of payment options through a partnership with RiverTee, a German FinTech company offering solutions used by 28 million consumers.
We are introducing a monthly invoice payment option through RiverT. Enabling German buyers to pay for multiple purchases on eBay at a later date with no interest or fees if the payment is made on time.
According to an eBay consumer survey, more than three quarters of online shoppers in Germany prefer to use invoicing as a payment method for online shopping. So we are pleased to offer another locally-related payment option for our customers in this region.
For Small Business Sellers, we continue to expand the eBay Seller Capital Program through trusted partners.
In July, we launch Business Cash Advance, a revenue-based finance and solution provided by Librex.
In October, we expanded our partnership with Liberates to offer flexible cash advances to US sellers.
This program offers financing for sums of up to $2 million with the flexibility for sellers to tap into capital on demand and a lot more financing over time.
I'm pleased to share that through these programs with Libreys we have already enabled thousands of small business sellers accessed over $40 million of growth capital.
and an aggregate across all of our seller capital partnerships, we've connected eBay sellers with over $100 million of working capital year to date.
Next I'd like to share a few ways we're making an impact in our community.
E-based for charity raised more than $49 million in Q3, up 21% year every year. Additionally, the E-Bate Foundation awarded nearly $3 million to grant you the cross-the-globe for supporting entrepreneurship for historically excluded groups.
I'm always amazed by the generosity of our buyers and sellers and I'm proud we're able to support important causes around the world.
Inclusive, Q3 was another strong quarter for eBay.
We sustain positive GMD growth for the 2nd straight quarter amid a dynamic macro and operating environment. Lead by nearly 5% growth in our focus categories.
The rest of our marketplace was nearly flat for the second consecutive quarter, supported by horizontal innovation and our C-doc investments in key geography.
We continue to see strong growth in our first party ad products across our portfolio and brought in our range of payments and financial service offerings for sellers and buyers.
and importantly, we remain focused on operational discipline alongside our investments in long-term growth initiatives to ensure continued healthy growth in operating income and earnings per share.
With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.
Steve: Thank you Jamie and thank you all for joining us today. I'll begin with a financial highlight section of our earnings presentation.
Next I'll discuss our key financial and operating metrics in greater detail.
Steve: Finally I'll provide our outlook for the fourth quarter and initial thoughts on next year before we begin to announce. My comment to reflect your overyear comparison on an organic FX Digital basis, unless I know to the wife.
He made a little bit strong top and bottom line results in Q3, a focused category of geosycivicking investments and how is unfinished, which I was second consecutive quarter of positive year in V-growth, amid an uneven macroeconomic environment.
Gross Fashion Dars Volume, we're over 1% to 18.3 billion dollars.
Revenue grew up at 3% 2.58 billion dollars.
Nongap operating income grew 6% to 700 million dollars.
We delivered $1.19 of non-gap earnings to share up 16%.
and we return $881 million to shareholders to the week-person's endeavor.
Let's take a closer look that I find answer performance during the third quarter.
Gross merchandise volume, whoever wants a stand to 18.3 billion dollars on an organic, perfect digital pricing.
Golden Contributed Nearly 30 Basic Points, Total Effects, Neatual Volume Growth, and Phonak's The Tyrewing of nearly 30 Basic Points, his spot growth.
We continue to face the dynamic macro and consumer spending environment in the quarter. As we noted on the last earnings call, political news, thoughting events and elevated travelling July influenced consumer behaviour.
Drone Execution with the University of the United States, called this Navigate, these Headwind.
So it gets to be GMV, nearly 5%. Approximately 5.00% than we made of our marketplace.
I'm a man to be the focus catacrisis board base, but continued positive growth in P&A, collectables, refurbished, and I'll let you a catacrisis.
The remainder of our marketplace is nearly flat year over year for the second straight quarter, driven by cloth category shopping, horizontal innovation, geost specific initiatives and resilient growth in the re-comment.
Moving to our trends on the geographic basis.
Steve: You must be in vague with Iannone 1.1 in a third quarter.
The number to Q2 was showing true trends in organic traffic in the US. We continue and meant to be focused as task groups led by collectibles, refurbished and luxury fashion.
International GMV grew by nearly 2% on an FX neutral basis in Q3. While FX was a half-point pair with the spot growth.
and the UK and Germany, we continue to navigate more challenging macroeconomic conditions and lower consumer confidence by seeing strength in parts accessories and improve trends in CTC volume.
Costs for the trade can tend to be an important driver of international GMV growth, led by exports and greater China and a plan into our major markets.
DBT was also significant contribute to growth, and focus taskers, particularly PMI.
Next, let's take a look at Bios.
Training 12th and active buyers, goodbye nearly 1 to 10, 233 million in Q3.
As strategic initiatives in fourth one are marketing campaigns, how to drive continued growth in new and reactivating buyers and improved retention.
The Jesus Prize with Stable, about 16 million
Ben Perkins, who's just fire, who's slightly year over year to just over $3,100.
Moving to revenue, in Q3 we grew revenue by over 3% to 2.5x billion dollars. For next change, we're the 30 basis point headwind to spot revenue growth.
Our take rate was 14.1%, at nearly 20 basis points you over year, first part of the advertising, shipping and financial services, or contribute to our take rate expansion, which was slightly offset by a teacher's the initiative, and an effects headwind of nearly 10 basis points.
On a sequential basis, a take-away to expanded by over 10 basis points.
Total advertising revenue grew 11% to $408 million in the third quarter and represented over 2.2% penetration of GMV.
First party adds global 14% to $396 million and we accelerated modestly on Q2 level.
Third party display at revenue declined nearly 43% year over year, as we continue to take a look at the adjunct.
Next up is Kesa Poff Dipellet.
Nongat Grossmarging was flat year over year as a reduction in cost of claimants and lowered the appreciation expensive, but roughly offset by traffic acquisition cost, tax related matter in foreign exchange headland.
Now I'm going to go for operating margin expanded by over 80 basis points year over year, the 27.2% in Q3, driven by operation efficiencies, partly offset by investments in full funnel marketing and a far exchange headwind of roughly 20 basis points.
A non-gap operating income grew 6% in the quarter, one non-gap earned per share grew 16% to $1.19
On a gap basis, we reported earnings per share of $1.29 in Q3. The difference was primarily due to an increase in the value of our investment portfolio, partly offset by stock-based compensation.
Turns out Balancede is in Capital Allocation. I've free cash flow for the third quarter with $646 million. Down you over year due to the time of cash taxid.
Last year the majority of our cast-text payments were delayed until Q4 due to California's disaster tax relief program.
Steve: At the end of Q3, we had cash and non-equity investments, the $5.8 billion in gross debt, the $7.4 billion.
We re-perch the $750 million of eBay shares during Q3, the Navig price will put the $57. And I'd roughly $1.2 billion remaining into our buyback authorization at the end of the period.
In addition, we paid a 4K cash dividend of $131 million in September, for 27 cents cash.
Shifting to our investment portfolio, our continued investment to once, for valued at $3 billion at the end of the quarter, with a ruleier, adiant and g-market, a chance for the majority of the value.
We return the Potionally 18% ownership of a Rulia, which is the privatised add event to entity and our ownership is valid at roughly $1.9 billion based on the value as up the closed of the transaction.
You can sort him load by Camero and Blackstone to the option to November 29 to purchase some e-bath roughly 10% ownership of the private entity could just over $1 billion.
I didn't want to invalidate approximately half a billion dollars at the end of Tuesday.
On October 15th, we met the process in volume milestone necessary to invest in second launch the bad idea in volume.
We subsequently paid $15 million to exercise the charge for $444,000 shares of our income stock, which has valued at approximately $602 million based on the company's share price at the time.
Turning to our outlook.
We've expected to generate GMV between 18.9 and 19.3 billion dollars in the fourth quarter, representing our fractional growth between flats from 2% year over year.
We respect gold and to contribute at a 30 basis point to Jamie Gregg in the quarter
A current rate, violent currency would represent a roughly 2.21 to GNV growth in 24.
We expect continuing momentum in J&V to be driven by multiple strategic initiatives, because focus categories, the UK and Germany and horizontal areas.
Our look also contemplates the challenging operating environment due to persistent economic headwinds in several one-off dynamics in Q4, specifically greater consumer attention on your selection.
He's sure to holiday shopping period this year. And Hurricane Milton, in hurry up, Iber.
Steve: The forecast revenue between 2.53 and 2.59 billion dollars in the fourth quarter representing effect neutral growth of negative 1, the positive 1 per cent.
Current rates restimate effects would represent in the early 30 basis point towering to spot revenue growth.
The scientists are at UKCC and they are still, or modesty benefits, Hogor GMV, Grouting Cube 4.
While certain existing levers like advertising, costboard of fees, and are cell to buy flywheel, should continue to contribute revenue and UKC to see volume. We do not expect material revenue contribution in Q4 from our two major re-manetization efforts.
Managed shipping, which is ramping start to be Q4 through Q1 of 2025, on biofeed, which you plan to introduce in the back half of Q1.
We launched our UK initiative in October to provide the best experience for our sellers and buyers, and our second largest market ahead of the critical holiday season.
We also believe it is the right decision to fade in these new monetisation programme, to give our customers time to adjust to these changes.
The Q4 we forecast non-gap operating margin between 26.5 and 27%.
In addition to pressure from our UK initiative, expenses related to M&A and integration cost are the 30 basis points of impact so I can solidate it operating margin.
and Spartan currency is another 60 basis point of headwind year over year.
Steve: For the full year, there's implies 60 to 70 basis points of non-gap operating margin expansion.
We expect you to generate non-gap hands to share between $1.17 and $1.22 in the fourth quarter representing year over year growth between $9.14%.
The Simplights Polyere non-Gap EPS growth between 13 and 14%.
We thought as capital expenditure to be about 4.5% of revenue to the full year and an 1.5% of the total revenue to be about 16.5%.
We continue to expect free cash flow of just into $2 billion for the school year.
We are further raising our share repurchase target for $2024 to $3 billion, and applying $750 million of repurchase during Q4.
In addition, our board declare the courtly dividend of 27 cents per share for the fourth quarter to be paid in December.
Now I'd like to make a few initial comments on our financial priorities for 2025.
We plan to balance the need to reinvest for long-term growth against the near-term top and bottom line performance.
Steve: Shoe in an Enchanged Macloing environment, the planning out business of unpositive affects neutral GMV and revenue growth, non-gap operating income dollar growth, modesty ahead of GMV and high single digit growth in non-gap earnings per share year over year.
As it pertains to margins, we plan to target the optimal combination of GMV growth and operating margin to maximise operating income dollar growth.
There was some unique considerations for 2025 influencing our financial architecture.
Steve: Tim Latter-Eat by International Shipping Program, a managed shipping initiative in the UK, will recognise revenue on a gross basis.
Our current assumption is that UK managed shipping will pressure our consolidated non-gap operating margin by approximately 40 basis points in 2025, while contributing positively to operating income dollars.
In closing, Q3 was another strong quarter for eBay. A GMV group was second consecutive quarter, non-gap operating in from group 6% and non-gap operating for share group 16%.
The Jesus was clearly demonstrated that our strategy is working. I'm going to have the right balance between delivering robust learning, re-investing to drive long-term sustainable growth, and delivering healthy capital returns to shareholder.
With plant-apolleddy same principles and build on nichias momentum, as you finalize our plans for 2025.
with that Jamie Iannone, what I can say is a question.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We ask you, please let me yourself to one question and one follow up. Your first question comes from a line of a Iranian from city group.
Speaker Change: Your line is open.
Hey guys, good afternoon everyone. Once upon a time, I've gone to the Recommerce Initiative.
Speaker Change: Thanks for being out.
Speaker Change: creator, focus here at May 1st, just something on...
On the monetization efforts, I actually think about the catch-up to break even on the fees that you're giving up.
Do you think that?
Over time, the new month's edition model can be more...
Speaker Change: More monetizable than the previous one.
Speaker Change: How do we think about how do you think about this opportunity and expanding it to the US?
It's a works in the UK and it's a work in Germany and how this could expand to eBay more broadly.
Yeah, look, we're launching this from a position of strength. Let me tell you kind of how we're thinking about it.
We've delivered positive GMV growth in the past two quarters and we have strong conviction. We started a year and a half ago in Germany and saw really strong results there. And our early results in pre-owned apparel in the UK give us the confidence to move forward.
We made the decision to launch this in October 1 to really take advantage of the holiday period.
In our second largest market, we believe it's the right decision to phase this in for our sellers and buyers.
Because the other thing you've got to remember here, you're going to change to the marketplace and we want to give sellers and buyers time to adjust their processes. So that's why we're going to ramp up managed shipping through Q4 and Q1 and why we decided to introduce the buyer fees in the back half of Q1.
So, you know, the pressure that you're seeing on revenue in Q4 is primarily a timing dynamic, given that ramp of managed shipping over Q4 and through Q1, and then introducing the the biography and the back-app that Q1.
Speaker Change: So some of that remodels nationwide will likely spill over to Q1.
But we believe that these changes are clear. We believe based on where biophys are in the UK, we have the ability to re-monetize these moving those feeds around.
and members not just those two but it's also advertising if the cross border fees that we charge as well as the seller buy off fly well that we see.
Speaker Change: But the strategic benefits of doing this are really clear. We're going to unlock a significant portion of time in our second largest market and ultimately generate long-term growth for eBay and value for our shareholders.
and Steve said Steve gave some preliminary commentary on FY25 and as we expect to grow GMV in revenue year on year, grew operating in commodestly faster than GMV and increased our EPS by high single digits year over year.
Dear question on the U.S. We have no plans to launch free selling in the U.S. is a different market.
from the UK, buyers and sellers are more open to buy or fees, it's more standard of the market. There may be certain aspects of the product experience that streamline selling, that we bring to other markets. And as you know, we look at each market and categories and think about the specifics.
of what the optimal set of initiatives to unlock more supply and demand for that specific market.
Thanks and take a follow up on the second gen of L.O.I.M. as you guys.
are releasing in some of what you're seeing. He talked about the performing of the public benchmarks.
Anyway, to frame how that's impacting volume growth, are you seeing it roll through yet? Is there anyone to quantify that?
Yeah, we are, you know, it's been really great to see how sellers and buyers respond to this. In that new model, we're outperforming the public benchmarks on things like descriptions, titles.
Speaker Change: Aspect.
We've seen a better job at precision pricing, increasing by double digits through these new models that we have on the platform. And what's great about the AI that we're launching is it's having a major impact at scale.
So if I look at it just since we've launched these tools
Over 10 million sellers have taken advantage of it and over 100 million listings have adapted it and teamatively that we've generated several billion dollars of COO of G&V from Gen AI and Hans Listing since launch.
and we're still, you know, we're still continuing to ramp up and prove the models.
and I'm exposed more and more people to magical listings so I feel really good about it. The other thing is we saw some demand from our small business and our B2C sellers.
and have access to the tools that we have built. So this quarter we launched magical bulk listings.
Speaker Change: and essentially what that does is if I'm a business seller and let's say I've got 25 watches or trading cards that I want to list I can just upload a couple of photos of each.
and Will in the background, use our large language models and the product knowledge graph to fill in all the description, title and aspect information for those.
Speaker Change: You know, using that same technology that we built for single-estings to do bulk listings. So still early stages but really excited by the performance of what we're seeing in AI.
Speaker Change: Thank you guys.
You are next question comes from a line of just imposed from Bank of America. Your line is open.
Great, thanks for providing that framework for 25 very helpful. A couple questions on that. So first on focus categories within the positive GMV is just a room to a gross growth faster there and what are some of the initiatives that you're most excited about. And then on take rates, maybe I know you're going to miss a revenue growth, but some of the puts and takes for revenue take rates on GMV next year. Thank you.
Yeah, so I'll start with the first one and then Steve, we'll talk about the take rate. So on Focus Categories, yeah, look, another solid quarter we delivered 5% growth.
Parks and Accessories continues to be a big growth driver of our focus categories, but we saw some momentum in other areas. Specifically, I would talk about collectibles. We saw double digit growth and collectibles this quarter. You've probably been seeing a number of things that we were doing, but the combination of the work that we're doing with TCG player.
Our Golden, which is Golden provides from the world's most desirable inventory that's out there on the marketplace.
If you're on Golden Right now, you see that we're doing, you know, Luke Combs, and Eric Church are doing raising money for the Carolinas and that's all being driven by
Speaker Change: are family at Golden.
and then when you look at trading cards in particular, we've had this healthy run rate off of it, I said, as double digit growth.
really based on all of the innovations that we've done over time like my collections, price guides, authentication.
But also the grading partnership that we put in place with PSA, where now instead of sending an item in to be graded and described it on the way into grading and then getting it back and then listing it again on eBay and then having to ship it to the buyer. That's all one seamless process now where I just ship it to PSA.
and it's get sold. So, you know, we're really seeing strength across the board and all of our focus categories, you know, refurbished continues to do well in this marketplace where people are consumers are challenged.
Speaker Change: and our luxury has also been contributing positively to year over year growth for the eighth straight quarter. So the work that we're doing with our new Authentication Center is there. So we have lots of momentum in our focus categories. We continue to expand the work we've done there.
and I'm also just excited because the work that we've done for focused categories by verticals, we've been able to apply these geospacific areas.
to see the C to great effect. I mean if you look at Germany for example.
We increased our C-to-C seller C-Sat by 20% at points
and that's led to a real change into Jackrey of our German business.
versus the prior baseline. So we will continue to push forward with our strategy we like what we're seeing.
Speaker Change: Hey Justin, good to speak to you this afternoon. Obviously we provide you the fair bit of colour on our 2025 architecture in the preparing marks and believe this is a really robust financial outlook for 2025 and the continuation of the progress.
Speaker Change: and we're not going to get provided any more specific precise guidance around.
Take this point because we're finalising our budgets but I can talk to a few factors that you can consider for 2025.
The first one is on shipping.
Obviously Jamie just elaborated on our UK C to C initiative.
UK's Our Second Largest Markiplier Volume, and has a higher C2C penetration in Germany. While it's this near term impact on take rate.
has eliminated final value feed for sellers.
We will be running the monetizing that through the managed shipping which is ramping now and more concerned.
into the first quarter and the via fees which is planned for the back half of the F21. The second item is really around advertising and financial services.
We do expect advertisers to continue to grow faster than GMV.
Driven by the momentum in first party promoted listings and also I add.
and obviously the improved fellow experience coming from that. Until last week's event, we do expect some incremental revenue associated to financial services as we get into 2025.
Speaker Change: Thank you.
Now, next question comes from the line of Lee Horowitz from Deutsche Bank. Your line is open.
Great, thanks. Maybe just thinking with the 25th framework does the 25th framework assume expansion of focus categories next year? Can you remind us some of the larger categories on the platform that have yet to get focus category investment at this point? And then maybe just one on competition. You know, you have a scale that sports-related, collectible competitors with direct relationships with leagues, and maybe some supply of inches there, Walmart, partnering in the fashion and sneaker vertical. Can you comment at all what you see as some of the most important strategic most in those two categories specifically to find out competition from some of the larger competitors moving in there?
Yeah, as you know Lee, we don't pre-announce kind of anything that we're doing on focus categories for competitive reasons. I will say we have five categories that are over 10 billion on eBay, fashion, home and garden collectibles, electronics and motors, parts and accessories.
and so shows you kind of the breath of what we have on there.
We did purposely take some of the playbooks that we've had going against verticals.
Speaker Change: and put it against geos to great effect and we really like the ROI that we've seen against that.
Speaker Change: The second thing I would say is that the horizontal investments that we've been making to drive our core categories have been really beneficial and that's because of all the, you know, general device AI capabilities we've been able to apply those help both our focus categories but also on our core categories.
Speaker Change: and it's the second quarter in a row where we've had nearly flat growth in our core categories.
Dear question on collectibles business and competitive positioning, we feel great about the innovation that we're driving quarter after quarter from that standpoint.
I mentioned this quarter as a very scale player in the market we continue to see double digit growth.
Speaker Change: and trading cards.
We put together a really nice collection of assets when you think about, you know, from TCG player in collectible card games to what we do on eBay to now golden. We sell everything from, you know, ungrated trading cards to...
and the highest value of products in the hobby, and that's valuable because collectors are generally looking kind of across that span to do so.
and all the innovation that we've been driving in that category with collections, price guides, authentication products that we've launched with PSA.
This new partnership that we've put in place with collectors. I mean, just think about it. All the things that we've been innovating are the exact things that collectors have asked us to do for years. They've asked us to say, make it easy for us to descend a carton for grading and sell it on eBay. And now that's really seamless and the sea sat on that is very, very high.
When you look at the innovation that we're driving in eBay live.
Speaker Change: Yeah, we've done more and more case breaks every single quarter and added new capabilities there.
We recently added last quarter of the ability to do by spot, which is essentially to purchase your favorite team and track that through a case breaks.
and we continue to grow it. And the last thing I'd say is that look, we've had had and we still have incredible relationships with top collectible sellers and we've always been a champion of the hobby shop. It's why we did the TCG player deal.
and we believe in open marketplace where enthusiasts can buy and sell the things that they love.
Speaker Change: Your next question comes from a line of Collins Sebastian from Beard. Your line is open.
Thanks guys appreciate the questions. I guess first Jamie given these platform initiatives, do you think any of these will convert into growth in enthusiasts buyers or is it really about increasing spending or share of wallet among the existing buyer base?
Speaker Change: and then the follow-up would be, I guess, the regarding the Q4, one-off factors, could you maybe quantify the impact and growth you're embedding in guidance from those distractions, and if we should think about that as maybe potential upside-up consumers end up spending in normal levels during the holidays. Thank you.
Speaker Change: Yeah, great question, Colin. So first off, absolutely. We see that converting into buyers and enthusiast buyers.
Speaker Change: You'll know that this quarter we were up 1% in our Active Fire Count to 133 million. And while that's not a core KPI of it, it is an output of the strategy and the strategic initiative that we've been driving and a healthy fire funnel is important to our growth and enthusiast fires.
You know when you look specifically at the Cdc initiative that we did in Germany and that we're talking about in the UK, it's great for the buying perspective for a couple reasons.
First is when we convert a buyer into seller they become at least twice as valuable as a buyer as previously on the platform.
Speaker Change: and that's really great for buying.
Speaker Change: The second thing is, Stephen C has really, you know, I call it the inventory gold on the platform.
Speaker Change: In general they're bringing on things that aren't sold by a B2C seller or by a small business.
You know, think about all the stuff that you have around the house.
That's not available from a B2C seller.
and so you know when I look at the overall platform we're about 40% used to refurbish.
but in our C-to-C sellers it's 60%. And so that unique inventory drives demand and drives demand amongst enthusiasts buyers who find that partner, that card or that thing they couldn't otherwise find on eBay.
and the other great thing is that a little over three quarters of our volume is B to C.
But the vast majority of our sellers is C to C.
and so what you see happening there is that that flywheel of those C to C buying more from once they become buyers.
Speaker Change: Actually the majority of that new purchasing goes to small businesses and BTC sellers.
So, B2C sellers win as well from that increased buying activity on the platform.
and that's why we really like the synergy of what we're seeing overall. It's why when we look at the trends in our German business, there are much healthier than before we may be changes and we're excited both for what it does for sellers but importantly, the demand that it drives for buyers.
You'll also see across all of our markets a new marketing campaign that's called Things People Love.
and I think we had a link in the slide deck to show you some of the creative.
But I'm really excited by the storytelling because there's both a buying message in there but also a selling message about unlocking what's in your closet, your garage, your basement. And that's really healthy for us to kind of drive that new initiative and it's extremely well done and it tested well some excited for those campaigns.
Hey Colin, we do got to our assumptions in the fourth quarter that informed our guide on GMV. First thing I would say I'm really pleased with the position we're in and achieving another positive growth in the third quarter of GMV, our second consecutive quarter, while we continue to navigate a very dynamic macro environment.
Speaker Change: It's really a reflection of the investments that we've continued to make in focus categories.
Speaker Change: in UK and Germany and the horizontal areas which are continuing to drive health on the overall platform.
Speaker Change: and let's Jamie talk about our UKC to see proposition launched on the first October, ahead of the holidays and we believe that's going to provide a modest boost.
to the fourth quarter of the M.V. I'm pleased with the early results so far. Assuming no discernible change.
Speaker Change: in the macro environment. There are a number of one timers that we've contemplated as we think about the fourth course. The first is obviously the upcoming US elections. The second is the shorter holiday season with fewer days between Thanksgiving and Christmas.
Speaker Change: I did not tell you where we saw the impacts of Hogan Milton, which impacted the man's particularly in P&I and shipping and delivers.
So I firmly believe that our guide balances the strong execution that we've seen here today with the ongoing macro environment that we're expecting and a few of those one ask but really pleased with the momentum that we're seeing in the business.
Okay, thanks guys.
You are next question comes from a line of Nathan Feather from Morgan Stanley, your line is open.
Hey everyone, thanks for the question. Really encouraging to see the initial guide for positive GMB growth in 25. I think it's one of the one or two primary things that give you conviction that you've returned back to the sustainable growth area.
Speaker Change: Yeah, I think a couple of things. One is the momentum that we're seeing across the board in focus categories, you know, being at 5% growth here and kind of growing at market rates pretty consistently over the last couple of quarters.
Combined with the horizontal work that we've been doing, you know, we've now had two quarters of nearly flat and these are all kind of building blocks if you will of the momentum that we're seeing in the underlying business.
Speaker Change: I talked a little bit about where we are from a buyer's perspective, but we're happy to see exactly what we thought, which was a stabilization in a 1% growth in active buyers.
and the other thing is that the investments that we're making in these GEOs are significant opportunities for expansion in the town.
You know when you look at our opportunity in UK and C to C we think there's a big opportunity to go after really a massive dam in terms of what people have sitting in their garage as houses, etc. is pretty significant.
Speaker Change: and what we've seen in the past but we saw with the UK pre-loved fashion.
and what we saw in Germany is that we're able to bring on newer reactivated sellers onto the platform and then drive that ultimate buyer flywheel.
Speaker Change: So it's the combination of the momentum that we're seeing those elements and the new niches that we have in place that give us confidence to put out the commentary there about 25.
Great, that's helpful and then how should we think about the economics of the UK managed shipping, relative to eBay, international shipping and in-care mind us to what extent EIS drove uplifting in cross-water transactions. Thank you.
Yeah, it was very helpful for our cross-border trade business and you see that some of our cross-border trade numbers.
We had an incremental 400 million listings on the platform that were available to be shipped internationally. When you look at our shipping changes, the first thing we're doing is just simplifying shipping on the platform and that's pretty significant across our markets.
Speaker Change: But with minutes shipping it radically simplifies the experience.
Speaker Change: and creates a new revenue stream for eBay.
So historically when I had to say you were shipping a blazer to someone, you'd have to go from all the choices and figure out what you're going to list and then if there were issues you had to deal with it as a seller, the buyers on C to C items only really had tracking about 40% of the time and so through managed shipping, eBay kind of managed all of that for you and really simplifies the experience on the platform.
You know nearly all buyers will then have...
Tracking Information for eligible items.
Speaker Change: and frankly this creates a new revenue stream for us just like with payments and advertising. This is a new opportunity for eBay. So it's a win from an experienced standpoint. It's great on kind of generating, operating income for the business. But most importantly, it's another tool that unlocks kind of more tam in C to C.
What we've tested this, this is now live in pre-loved fashion in UK managed shipping. You know, historically it would have taken 90 seconds to get through that shipping section and receiving sellers get through it in under 30 seconds.
and so that's really powerful when you think about just taking friction out of the experience for selling.
Steve maybe you can talk a little bit more to the financial implications of the minute shipping. Yeah nice and that's what we talked about extensively last year. There's obviously an accounting shine just associated with.
EIS and the same applies to manage shipping, because we're leaning in, we're taking fishing off the platform, we're helping our buyers and sellers and we become the principal. So we recognize the growth revenues and the cost of shipping.
Speaker Change: You can imagine as a result of the scale of domestic shipping is a creative to operating income and that's really the focus that we have in terms of operating income dollars but because it's domestic in nature and has naturally lower operating margins because the competitive dynamics is more diluted than the I.S.
Speaker Change: The End
The End
More next question comes from a line of Nikhil Disney from Bernstein. Your line is open.
Hi there, thanks for taking the question. When you refer to health to your trends in Germany, is that predominantly a topline comment or have you been able to improve the profitability of the German business as well? Now that you've got more activity taking place on your marketplace over there.
Speaker Change: Yeah both you know when you look at Germany and you look at kind of the trends before we were launching this to where we are now, we're seeing really nice improvement in the business and you can
You know what we don't break that mark it out specifically if you look in the tent here you can see kind of
Speaker Change: and improving revenue trends from that perspective and exactly what we intended to see as what we're seeing, right? Which is that healthier C2C business with a 20% greater C2C set is driving more new and reactivated sellers on the platform who end up buying more and that's leading to the healthy trend.
When Steve talked about this originally when we launched it, we quantified this as ten basis points of impact.
and we've been able to demonetize that business through things like ads, crossborder trays and we're seeing exactly the flywheel that I talked about from seller to buyer. So we're really pleased with what we saw and what we continued to see with our C-to-C business in Germany. We're really happy with the early results from UK pre-love fashion and that gave us the conviction that this was a real winning model to take to our second largest market where there's some unique dynamics. Thanks.
Speaker Change: Around how the sellers and buyers feel about buyer fees, which make this a really good opportunity for us to go after incremental time.
Great, thanks Jamie. You may be just to follow up. You've been talking about improved satisfaction scores, which is a helpful indicator. Now that you've got several quarters behind you on various marketplace improvements, can you maybe frame how much GMV conversion rates have improved since you started on this journey? Thank you.
Yeah, like you've heard me talk forever about GMV Follow Seats Act.
and I've always said, you know, CSAT is really the leading indicator there and if you look case by case, you know, we've seen CSAT increased 20 percentage points in what we did in our early focus categories and you know, look at the trends that we have now on focus categories growing at 5%.
Speaker Change: I would say the same exact thing happened in Germany where we had a 20 point increase in CSAT and much, much healthier trends.
So, you know, what we're doing is not only having impact on, you know, convergent and the health and growth of the business.
Speaker Change: But it's allowing us to bring on kind of new buyers and new sellers through these efforts which is helping. You know, the active bar growth that we're seeing is truly an output of the strategic initiatives that we've been driving.
and the new and reactivated sellers is not only good for the buying activity, but it's just bringing on more compelling inventory on the platform, which is really good for the long-term health of the business.
Speaker Change: Thanks for your me.
Speaker Change: New our next question comes from a line of Tom Champion from Piper Sandler. Your line is open.
Thank you, Good afternoon guys.
Jamie, perhaps for you, always a lot of helpful commentary on the business in Europe, but I think China is actually now your number three market by revenue. I'm wondering if you could just give us an update on the business and your customer that's there. And maybe for Steve just quickly any impact from...
The Sunsetting of the the MX payment arrangement. Thank you.
Yeah, so look, our crosswater trade business out of trying to continue to be strong.
It over indexes to focus categories.
Our business there and so it's performing well, you know specifically I would call out parts and accessories, has been a really good vector for our cross-border trade business and we've continued to make that easier for buyers and sellers. So with our shipping solutions that we've had we've helped them forward deploy from that perspective and we've also just made payments.
A whole lot easier from that perspective.
When you think about our relationship with MX, we've deprecated MX.
in August of last year and as expected there was no material impact to our business.
As the vast majority of our customers on eBay, they use more than one payment option. Most customers that were using MX, were able to migrate to one of our other options like PayPal or Venmo or non-AMX debit or credit cards.
and we're continuing to focus on launching new ways to pay, to cater buyers and sellers. You know, we launched River Tea this quarter.
and Germany.
28 million customers, they are used that invoicing solution, they do like 80 million transactions a month and it was one of those high demand areas for us to bring on to the platform and so we did. So really please be between that and the seller cash advance work that we talked about in payments this quarter, really good innovation that we're seeing from that team.
Operator Committee, one last question please.
Operator: During late year final question comes from a line of Michael Morton from Mothet, Nathanson. Your line is open.
Thank you for the question. I think it's probably for Jamie following up on Tom's question of bed. Just on the strengths that you've seen in parts and accessories, you can break down the key drivers to that for us. Is it the acquisition of my statement?
Following through the user experience now, I guess I'm like two years later, improving conversion rate around that, and then the second part is what you've talked about trying to...
Operator: Stores.
Operator: Inventory, into skewed towards...
Parks and Accessories, and it looks like it's most, is that a big contributor to having more inventory and that helps conversion then the second one is when you look at it.
Speaker Change: It appears that a lot of it has been straightforward, from what we see all of us straightforward. Do you feel comfortable that inventory is insulated from any political changes? I'll take a look at the next week. Thank you.
Yeah, so look, I think it's hard to say that there's one thing, because we've been working on parsnips accessories for a couple of years and we continue to innovate quarter after quarter.
What I would tell you is all the work that we've done to increase customer satisfaction there. Starting with the early work that we did in fitment, just in product finders and micro-rodge and enhancing that whole experience we now have over a hundred million cars and micro-rodge.
Speaker Change: followed by raising the trust level of what we did with guaranteed fit.
I was on with a reporter earlier today and he talked about buying a new front end for his Toyota Sienna and it fit perfectly and it's going to give him 10 more years. That's an example of just making those two products easier for customers.
The point you caught out the breath of inventory plays a huge role in that. We have over 600 million.
Speaker Change: Unique Listings in the marketplace and really unique inventory across a number of different segments of buyer enthusiasts.
and all of the acquisitions that my fitman has certainly added to the fitman experience, the work that we've been doing to enhance.
Speaker Change: Not just the purchase.
Speaker Change: But the eventual service, so you know we launched tire installation a couple of quarters ago and we launched that first in Germany and that's been performing well.
We just launched parts installations and now you can both buy the part on eBay and have it installed and P&A has really been the largest contributor to growth despite this year, despite laughing really strong ghosts that we have in 23.
To your question on the political environment, you know, the majority of our inventory is forward deployed from that perspective and that's been something that, you know, we've been working with our sellers to do to really reduce shipping times and make the overall experience better. So, excited by the innovation that we're seeing in PNA, the strength of it, and just the continued innovation of making the experience better and better.
On this concludes the A-Base 3rd Quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect.