eBay (EBAY) 7 Nov 232023 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Bhavesh, and I'll be your conference operator today. At this time, I would like to welcome everyone to the eBay Q3 2023 Earnings Call. [Operator Instructions] I will now hand the call over to Mr. John Egbert Vice President of Investor Relations.

conference. your begin may You

Good afternoon. Third us eBay's for you XXXX Earnings all Quarter joining Conference for Thank Call.

Officer. Priest, Joining website me Chief Chief presentation Steve our available our which eBay commentary the Jamie are a during Financial to our the accompany today on the Executive Investor the Officer; Relations at call of We're investors.ebayinc.com. slide providing is call, Iannone, through and section

measures will related remind I'll that this discuss you certain we non-GAAP our Before we begin, to conference during performance. call,

You of nearest can presentation. measures comparable these GAAP slide the accompanying find reconciliation to measures the in our

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

management statements make without expected call, including, known statements and performance uncertainties. will regarding future results. unknown statements, limitation, These financial forward-looking and involve forward-looking During this and our risks conference

from reasons. for may results forecast a our actual of variety differ Our materially

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

not of should information in as call the statements. not forward-looking XXXX. Jamie. duty November update undertake and All X, that, rely We is presentation You I'll turn no this on do to intend information. With any this over to

for today. us you joining Good John. all and everyone, Thanks, thank afternoon,

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pace is innovation accelerating eBay Our fundamentally driving new opportunities. of paving higher the for revenue satisfaction way customer and experience, growth and the changing

uncertain, environment in on provide I'll over investments future, in over to be invest financial to order generate our details remains how As long-term shareholder to in Steve balanced we'll highest-ROI that, call Steve, our the the we value. With prioritizing the performance. to you. more turn macro

XX joining thank earnings all Thank with our the you you, on quarter third today. Jamie, I'll on begin highlights and presentation. for us Slide of

detail. and our I'll greater Next, financial metrics operating in key discuss

the provide for and our fourth I'll outlook Q&A. before begin some we thoughts quarter closing Finally,

billion, volume exceeded comparisons As $X.XX comments economy. usual, of generated repurchasing otherwise. QX note across Non-GAAP of billion. we all reflect of organic uncertainty outpacing approximately or share, year-over-year to global unless shareholders returning expectations quarter will I free X million non-GAAP solid key million $XXX another while an FX-neutral for $X.X through eBay by was on merchandise down earnings grew my we in per metrics the Revenue basis, volume X% to $XX our margin despite was X% Gross to as operating points. We financial ongoing was delivered met XX.X%. flow cash and $XXX dividends.

quarter. at FX-neutral our Gross was look volume or performance to organically closer a flat a take total Let's basis. $XX third merchandise on approximately down financial billion during the roughly X% year-over-year

tailwind GMV to growth. Foreign a exchange X-point represented nearly reported

customers has current while on and categories of created with straight remainder than in segment economic appreciation our well versus However, straight basis, our growth of third the U.S. the QX maintained GMV the rate million in fastest-growing line market continue value outlook. Focus in to third categories percentage a combination our a more e-commerce. eBay quarter, served roughly largest environment. for our was once GMV dollar again Refurbished during drive quarter positive of points rates for quarter growth in the and for than this contributor momentum headwind to focus $XXX category of marketplace. P&A the growth focus X mid-single-digit implied of quality luxury was as underlying GMV the the in our growth business, growing was faster the

GMV Next, basis. a an in I'll improvement walk sequentially. was QX, basis, GMV of On through on geographic over a was X total X%. X% down down our U.S. FX-neutral points results U.S. organically

highest by impacted has basis U.S. was than on elevated economy sellers. International some demand value, GMV reported. to and an rates over increasingly consumers more resilient as by roughly X% demand flat interest and to discretionary U.S. up seeking has decade. offered our for inventory a inflation FX-neutral goods in are the the be which nearly shifted CBT continues Although of burden our other been markets, observed cumulative the

pressure more the multiple U.S. Europe. severe to experience by has while with of mitigated far which cross-border continue U.K. since early trends the e-commerce consistently weaker trade, markets pressure faced seeing than macroeconomic in This in negative international strength been economic XXXX, quarters growth Our Germany now has continued offset contraction.

at also XXX stable million quarter-over-quarter was at approximately was stable buyers Spend spite straight buyers active XXX million. XX annually year-over-year. basis, at On XX-month flat third organic Trailing sequentially quarter. for but at the around an points remained buyers. modestly to quarter-over-quarter Moving active million. $X,XXX Confused

$X.X points. reported third while volume was by revenue. impact de a M&A Turning billion revenue the had inclusive X%, outpacing up growth. of Total to of generated to X% quarter, X revenue FX-neutral during currency minimis We growth organically,

change. Our represented tailwind rate take rate a take was basis over year-over-year. recent our down for XX% rate XX grew X% the quarter-over-quarter X eBay up XX.X%, but basis reached adjusting on revenue QX The and of International advertising aggregate the ad accounting million of take headwind modestly to FX change in penetration nearly year-over-year combination points was $XXX sequentially. after over basis our added also of and XX recognition again the rate largest and just QX points take quarter-over-quarter a points to revenue in in GMV. QX. Advertising Total basis M&A sequential to and Shipping

First-party grew $XXX faster volume. or than XX% roughly ads points FX-neutral XX million to

deferral release headwind noted growth for first-party As sequential revenue the $X quarter, ad in in created revenue for CPC ads a last QX million QX. of

pleased year optimizations. robust notable Listings, we driven the performance during are the which of growth by a slightly continued as was with series growth in lack we While Promoted decelerated prior period, the acceleration year-over-year

quarters, experience. ads have actively combination have third-party decelerated user during impacted which a improve In by display further to headwinds and legacy been circumstances certain months, macro of deprecated recent ads, in in QX. Our secular third-party recent we the

quarters. on invest sequentially scaling, in services modestly in-house remain impact our focus our payments our and in a advanced capabilities optimizing automating as ads positive rate have continue recent as portfolio. Financial primary we had to take First-party our Listings Promoted

to GMV, services. financial strategic for Adyen partner for incredibly revenue and be opportunities continues more in an identified have We us optimization. cost

additional expanded to payment. Adyen's our will of implications positive This we for Adyen usage model acquiring development merchant shortly. I cover our of has which probability, QX, services forms discuss During

points Moving during of was points of Shipping this recent to was driven quarter, profitability. year-over-year. operating Roughly margin delta the M&A roughly X.X the International X.X XX.X% eBay Non-GAAP program. combination and down the by

of engineering margin Shipping. business was year-over-year represents operating XX basis exchange headwind ramp we variance investments expenses, a points. International the of margin points remainder across of the year-over-year as revenue offset QX year-over-year modest of nearly increase down from including innovation XX driven talent X-point and deleverage. Gross Foreign our drive down eBay The on Sales our our approximately also expense volume and a investments Within development efficiencies, basis product coupons in a primarily in was modestly was by and observed marketing in were we lower percentage as in to in product invested as initiatives and incentives. marketing full-funnel spend by eBay. cost

be we million is During additional on in the basis related pending additional $XX our quarter, provided in reflected expense G&A reconciliations, This also on our accrual details to to will accrued filing. legal matters. the adjustment an XX-Q GAAP a non-GAAP while

We And of able which savings that choose crucial we are continue expenses out driven do our program. where to invest, OpEx a cost the growth. we offset of to partially by with to on focus long-term path business, is sustainable to driving part structural our

to XX%. flow in sheet million of QX, our free up balance generated Turning cash We allocation. capital and $XXX

per $X.X X% from Adevinta. of repurchase. benefiting a had generated $X.X dividend authorization investment $X.XX billion beginning share a our current roughly from our up our quarter GAAP non-equity over driven of the the share. balance and investments $XXX end. We we count $X.XX shareholders primarily in reduction in year-over-year, $X.XX remains have debt QX on buyback dividends flow quarterly earnings Our with Since free of during of an We that $X.X and the robust price eBay shares position from We cash QX, over X% under of million at of returned September sheet portfolio delta cumulative $X.X million quarter unrealized billion nearly repurchasing delivered $XX of XXX% paid share or $XXX of gains ended cash XXXX, approximately share the in of non-GAAP period. to we repurchased nearly gross per through earnings average billion per remaining by We as of billion. and with equity at cash

is Our earnings investment our portfolio Slide detailed XX of on presentation.

investments equity QX. $X.X over valued major Our warrants at and were end billion of the

billion than prior at valued XXX Adevinta shares $X Our million more $X billion quarter. roughly at versus the were

have the portion holdings. of by under expressed we in late would the a we support As Adevinta, disclosed investors current made consortium we for our which proposal retain September, of to

implications today. are these eBay not transaction this discussions a any of a comments As the ongoing, we position provide further in are on to transaction such or to

Our at $XXX Adyen at of quarter. million the valued warrants the were nearly end

a several reminder, is including tranches the on value probability assumptions, remaining calculated adding warrant warrant price share and our of As based vesting. our

carry of Adyen's ranging XX%. by the During probability remaining usage probabilities of services. our evolution an vesting between impacted tranches on The was and positively QX, X products warrant X% and now

more the increase by during than decline the was Adyen probability offset shares in price However, third a in quarter.

outlook. our Moving on to

Although were the trends softening third observe September markets, softness quarter through in particularly and slightly carried we Germany, in and October. our volume most demand that did consumer respectively. pronounced largest second Europe, third in better our was U.K. than This expected, macro

also have demand tapering in quarter-to-date. U.S. the market We seen

trends, a during Given expectation pressure is demand relatively volumes our a continued holiday to uptick on discretionary in seasonal will these season. muted the lead base-case

pressure to sequential will million and between GMV. On will X GMV QX headwind anticipate point growth. we represent to QX revenue We and X-point negative FX a representing X% organic quarter, estimate basis, spot growth X% FX an we X% revenue to to $XX.X GMV, and a between generate nearly between of over in between growth headwind guidance to strength $XX.X $X.XX FX billion than and FX-neutral spot on volume For fourth organic expect creates incremental flat. of $X.XX X% growth in and implies the basis X year-over-year billion on fourth to also or X between of outpace positive U.S. $XXX on by The organic top of a revenue of year-over-year. points This negative $XXX headwind prior billion represents versus FX-neutral an FX-neutral dollar more is basis. million quarter our roughly and This billion QX. GMV decline X% an

our basis been reminder, XX trend take this ASP typically recent by As QX past. in ads rate XX category in is payments although down core and points by and to the due to masked growth sequentially seasonal mix, a has occasionally

Given outlook lean this QX protect to continued heavily earnings in $X between negative prudent full for of the FX in XX.X% EPS XX.X% it hedging more our economy, for end the would headwind and QX, prior we range margins We our which and gains is into $X.XX, QX between in X-point represent X% uncertainty forecast guidance and year. We meaningful environment. to yield period. growth per non-GAAP share tempered forecast rates, earnings efficiencies believe prior during the negative operating non-GAAP At global margins would and to year representing volume cost the margin between in current EPS to lap growth high year-over-year. year-over-year as a and X% we in

Our flow just $X billion free unchanged. under outlook for cash of remains this year

XXXX. of due in As I delayed the tax timing flow cash noted QX minimis free de last in payments quarter, to cash we expect

in ensure we the committed are and find to in an process. X%, growth profitability Our capital we the specific tax commentary ahead. balance while are years XX.X%. In planning durable and of offer midst remain full expenditures to it non-GAAP premature is relation XXXX, We financial year our the returns between rate at as for between to appropriate positioned expected to are X% unchanged remain to should our

the leverage As the grow years. next more expenses than last slowly and investments to made such, over scale we've we we year few plan revenue as

repurchases of target free good XXX% as cash cumulative stewards to continue to We shareholders dividends of through we and capital returning will flow XXXX. through remain

amid maintaining the global marketplace closing, in level We results to highlight certain will the economy. in target capital model a returns of our and QX from the flexibility when resilience quarter-to-quarter lean of challenges appropriate. In our while business continued opportunistically

fortress and will to meaningful sheet demand adapt take protecting for I'm staying long-term balance and focused environment to return on and the to us future, our that, while now enabled to extremely capital shareholders. invest delivering this for laying our Our operational have for discipline earnings Jamie proud your growth. With sustainable continuing and rapidly the questions. strategic I groundwork of further uncertainty amid pillars teams evolving

question from [Operator line comes Instructions] of first Sebastian Baird. Colin from Our the

was extending first seller at some guess about focus few Jamie, more the categories verticals. back weeks I discussion off, there a conference to

I home volume to to a reviewed. just that I true, And wanted just mentioned, growth of discuss hoping is you couple should see electronics focus through on I revenues some the quickly And XXXX? And and the of shift back drive grow in those how total think, of CBT. towards if I discussion. then, that listings. something margins. factors think wonder coverage in we could were proportion you and to of go Steve, implications could macro you that shift And a some that's

thanks Colin, for the question. Yes,

back So with of cetera. preannounce don't categories, for et the into the we invest we're business. continue that focus as you going areas know reasons, to We as new into do categories competitive next roll out areas well as

jewelry is at opening or an actually look our Guaranteed for Fit launched great. center for in authentication program. U.K. authentication which quarter. allow business. this a Japan, in of U.K. our So P&A We out -- cross-border We up to trade We're in have expanded launched Japan

U.S. the and great seen creating category, and those to that U.K. that Germany by We've impact game-changing in excited we're level of a expanded that just launched in and trust now that this to So on quarter, of results markets. see had the we've

place in double-digit from cards the trading new We classification new direct system Our submission well. like we've put growth new and We've in Vault. quarter in with launched categories do refurbished that the perspective. this to that other seen enhancements some continue

in we to we and and recently So investing as what's like to second going other did continue investments. Steve, ROI those with categories with expansion the category new the part? in streetwear like to back want we're the in focus opportunities balance U.K. like do of take jewelry you focus because well categories as we the working did

so that there's of of we saw we growth are on a Colin, a from that the in at. FX GMV standpoint, terms organic definitely. Yes, looking negative number macro impacts

helped little I U.K. our e-commerce consumer through softening as market we're went market, and some the holidays more imply and some and the has So in which expect would we the continued early A starting our we to has carried be see Germany, couple we that of demand, the to observed would softness, 'XX. faced growth biggest period largest multiple has say, I to pronounced third markets, the And most been economic Europe. muted. since experience negative quarters contraction. said, in a first second largest with. This in to forward that September, thing guide October, has of now U.S., bit is

that dynamics third are X% back organic helped flat. the of So was Think seen the we've GMV quarter and some of consumers declined GMV is FX play, European and the value, Far CBT out when I on community, more the look at been where been resilient. looking for softness the a the trade the East coming has helped measured trade has U.S. is for seller our about that resilient. And that cross-border roughly domiciled. international as by basis -- reminder, been and The on an investor has

some has Europe. softness the But you in helped strength of sort the so dynamic CBT We're lapping got of dynamic. that in QX. through And in international

Barclays. from of comes the question next from Sandler Our Ross line

a just on comment. follow-up that Steve, macro

consumer and second end guys flagged? And just to Or question price new the look margin are categories these your operating peers at competitors the is different mostly GDP, pleasantly the year. conditions you and of of described As the low think it's some you across hear with surprised around cetera? the then as having happy points, Shein like you next increase discretionary any about macro do and weakening like an Timo have impact et

and Shipping next that us? year? of some increase discrete the op out other kind that So investments? drive of investments of bit function might a International that can R&D for margin factors you Is a What flesh just lapping little

the Thanks, and Ross. I'll kick off Jamie the then and then can margin macro one add, cover question. I'll

through is from a been inflation see sentiment a spend obviously softness consumer really the that the see. The overall macro board. softening maybe U.S., did at So an question... and continued impact down, to continue September, function on basis, Jamie, based from some have softer that up reiterate, see We of level to Ross' macro will And of data macro just October. we discretionary we we rates. But a Europe across interest the has as it's describe perspective seeing in is

specific Yes. No. thing. particular, it's, other think don't competitive any I in

we Shein differentiated on continues or from strategy and question trade, a T-Mo, as impact Steve we our Your our believe seen business. cross-border remain at talked healthy. approach. about, it significant look T-Mo have When our because on not to of our that's We

If for and remember, this low-quality, a moving been we've about a from us been been We've for low-ASP you hasn't strategically that for focus while. years. away talking items,

Ross, platform, our a for vast difference big is that we're other the vast, our of is think -- traffic majority organic. I

driven as by less think is traffic So implicated spend we're marketing and search others the I just so in more are our of market, the kind much resilient other platform. the of organically out there on because paid or so

thing I at balance be And the continue to moment. which leverage last then between number with to obviously, get making disciplined profitability. growth regards over 'XX, the scale few been we takes question, to the into the say puts investments Ross, We're XXXX. middle years, your of we will as will that and we and on impact continue The would will We've will very get planning various there a of of and sort in is and 'XX. be right

year in operation support structure. are lean we cost to operating sort of we we really control area next our with with and in can cost mean cost We our are rather environment. external of forward. And very a suppliers, looking in in influx at as program that the of structural measured benefits of been we've I every AI dynamic spending terms help macro to the Obviously, the that the our go structure. approach of this us of year will terms use

we've will said, so And lean we as our XXXX. revenue in than costs make more and in, sure that slowly grow

the Bernstein. Our next question Nikhil from of line comes Devani from

I had please. couple, a

Just that leverage operating on following up theme.

are about investments nice able focus that observe it's Or on you top prioritizing initiatives push which a focus you ones tougher? And those willing post more of bit market improving? categories? now to As to of you conversion the traffic share kind really better changed what's of also are highest to this to When the a function rates pre is are year, of ROI out your what maybe of improvements, functionally little then categories, think the get times kind kind stability. and list? if making drive hear next And you that

Yes.

in So year. obviously still first, I'd next say couple But we're a initiatives, on the planning for of things.

As as Steve how grows. grow structure, volume our of talked technologies don't the one about do we costs AI and that so cost looking the things we're is leverage our at

of of example I'll a is -- one areas been you customer give we've our the lot an So in investing support.

there the expenses, you really customer help if efforts volume greater customer we're rolling in of of we been our can our advancing more handling higher at the we've what over so a support few doing conversational bots And course lot calls expenses, out so into that focus GCX look like with our last quarters, satisfaction.

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Champion of comes Sandler. the next Piper question from Thomas Our from line

I'm performing just a talk EIS for cost wondering uptick Can is there. is performing behind if could the you noticed Steve, whether and the process And around you, that inventory you're you to maybe, relative drag bit the transactions and Steve, quarter. expectations about or or your little thought that? just how walk how Jamie specifically us buyback and then through making progress this

Thanks, Thomas. Yes.

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regard financial EIS, Yes. say, momentum, a from And expectations pleased architecture in with with just really standpoint. Tom, the with to to largely line our

we by this this the it the And As accretive with platform. will core in we said, margins operating on fragrance for profit line be expect year-end, to the year.

So pleased we're what seeing. with

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we're the right with that track So on we commitments made.

question next from from line Lee Bank. Our Deutsche of Horowitz the comes

Two, if I could.

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Yes.

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question MoffettNathanson. comes Our from next the line Michael from Morton of

could start authentication. we maybe with If

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one. first I'll the pick up Michael,

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Sheridan comes the question from next from Goldman Sachs. line Our of Eric

I if could. X, Maybe

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Eric, Yes. board. services, it's On seller really been the across

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Our comes from Deepak final the Wolfe of Mathivanan from question line Research.

any that shopping and discounts Is of of constraint environment, the outflow the incentivizing for during some of to own at deal volume. you color buyers Steve. this pressures to some are you for up something to year? And on Steve, on given do eBay product looking doing can And promos maybe that stay platforms for in a a Etsy with persists cadence opportunities your step see do? and react would inflationary pressures kind due quantify provide if be quick this also help macro e-commerce additional mitigate season great. sellers their the these kind can can XQ? this? other Do to initiatives XQ? buyback increasingly that consumers due to holiday to while drive next then Is you taxes one cash one to are Or macro like there Jamie, maybe of kind of your are that

of strategy also moved our that funding only products Yes, from away talking sellers. our Listings that finding do couponing external that refurbished. one eBay we've we did that's products. that we that those really We type point unhealthy and with partnership overall been about, new continuing focus real kind do the But it with inflationary sometimes sellers, Because does has was value. environments, to work to non-new and that they're been because the for used, ROI shift of promotion do, they're XXXX, these couponing we we ad when Promoted driving we eBay seasoned plans our customers Deepak, in have conjunction that And we with for type and in it bigger and on back of stuff our of better wanted. The look the no coupons. the reintroduce and at in to key wasn't where in face

XX% are because for people like getting up double Our off. business products is refurbished new digits

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our that's play about and resonating talk with customers. Steve, the of So new after want of what's we're what those you really on taxes? is value cash the to implications strategy of businesses, going our driving do

has really we cash flow October of of around are. that's to the cash which are free tax quarter-to-quarter talking the on that the QX, that California 'XX, basis. and our state at QX, our cash average about timing over really we on reference that's talked where during momentum got forecasting get about. the relief, tax we've pleased with impacted we about. We sort a the and into we we're paid talked and the payments cycle is track don't payments the disaster Obviously, continued But being XXX%. with by shifted Yes. buybacks of an And happy bang Really dynamics on

will you for conclude Thank conference you. today's gentlemen, Ladies call. Thank and we participating.

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