The operator welcomes attendees to eBay's First Quarter 2024 Earnings Conference Call and introduces the speakers. The call will be recorded and a slide presentation will accompany the commentary. Non-GAAP measures and forward-looking statements will be discussed, with a reminder to refer to the accompanying slide presentation for reconciliation and more information on risks and uncertainties. The information in the presentation is as of May 1, 2024, and will not be updated.

In the first quarter, eBay saw strong results despite challenges in the global economy. Gross merchandise volume was flat at $18.6 billion, revenue grew 2% to $2.56 billion, and non-GAAP earnings per share increased by 13%. The company is on track for GMV growth to turn positive by Q3 or Q4 of this year. Focus categories, particularly Motors Parts & Accessories, were a significant driver of growth, with a 5% increase in GMV. The company continues to innovate and improve the P&A shopping experience, with a focus on fitment and working closely with large sellers to expand inventory.

In the third paragraph, the speaker discusses the company's efforts to improve the fitment data for auto parts, which has resulted in a significant increase in conversion rates. They also mention recent updates to the self-service experience for sellers and the addition of a Motors DIY guides page for buyers. The company's marketing strategy has also been successful, as evidenced by their partnership with the McLaren Racing Formula One team. In the collectibles category, eBay has been focusing on trading cards and has introduced new features and partnerships to enhance the user experience. In Q1, they launched a simplified listing flow for sports trading cards for all U.S. sellers.

eBay is leveraging its technology to improve the trading card selling experience, resulting in reduced listing time and increased sales. They have seen a rise in customer satisfaction and volume in trading cards. They have also announced a deal with Collectors and Ken Goldin to streamline and improve the trading card hobby experience. eBay has acquired Goldin, a leading auction house for high-value collectibles, which will expand the range of inventory available and provide a more well-rounded collecting experience for customers.

eBay has made agreements with Collectors and PSA to make the authentication and grading of trading cards easier. They have also divested the eBay Vault to PSA and plan to launch a joint program for buying, selling, grading, and storing trading cards. This allows each company to focus on their strengths. eBay has also made improvements to their eBay Live experience, expanding coverage to new categories and improving discoverability. They are excited to continue scaling this experience throughout the year. Additionally, eBay has reached a milestone with pre-owned and refurbished goods making up 40% of total GMV on their marketplace.

In 2024, eBay's main focus is on strengthening their pre-owned fashion market and promoting sustainability. They have partnered with Love Island in the U.K. to raise awareness and educate consumers on the benefits of e-commerce. They have also streamlined the buying and selling process for pre-owned fashion, introduced new AI-powered tools such as Explore and Shop the Look, and eliminated fees for C2C sellers in the U.K. These features are currently in beta in the U.K. and small pilots in other countries, with plans to expand later this year.

eBay's Shop the Look feature showcases a variety of styles and outfits, with plans to expand and improve based on customer feedback. The company is also utilizing AI technology, specifically generative AI, to improve efficiency and productivity within their organization. One example is implementing generative AI in their Global Customer Experience Organization to analyze and summarize customer communications for faster and more effective responses.

The company has implemented generative AI tools to improve customer support and developer productivity, resulting in cost-savings and improved efficiency. They have also introduced proprietary tools for code migration and internal documentation. In the advertising sector, the company has seen healthy growth and improved velocity and price realization for sellers, with over 3 million sellers adopting a single ad product and $950 million in live promoted listings.

In Q1, eBay's standard cost per acquisition units and cost per click advanced product were the main contributors to ad revenue growth, followed by successful beta testing of promoted listing products like Offsite Ads. eBay for charity raised $46 million in the last quarter and the company published its 8th Annual DE&I report, highlighting their efforts towards diversity and inclusion. The launch of the inclusion Index and the active involvement of their 11 communities of inclusion were also mentioned.

In the first quarter of 2024, the company reported a consistent gender pay ratio and exceeded financial targets. They are focusing on innovation in various categories and expanding their value proposition. The employees are credited for the company's momentum and success. The financial highlights were discussed, followed by a breakdown of key financial and operating metrics. Despite a challenging demand environment, the company exceeded expectations in Q1.

In the first quarter, gross merchandise volume was flat at $18.6 billion, with revenue growing by 2%. Non-GAAP operating margin was at 30.3%, and non-GAAP earnings per share increased by 13%. The company returned $638 million to shareholders through repurchases and dividends. Focus categories saw a 5% increase in GMV, driven by positive volume growth in various categories. U.S. GMV was nearly flat, with P&A being the main contributor to growth. International GMV grew by 1% on an FX-neutral basis, but increased by 3% due to FX tailwinds. The Germany C2C initiative had a positive impact on growth in the region.

The paragraph discusses the positive growth of Germany's C2C volume and the challenges faced by the U.K. due to new digital sales reporting requirements. The number of active buyers and enthusiast buyers remained stable, with growth in new and reactivated buyers. Revenue for the quarter was $2.56 billion, with a take rate of 13.7%. Foreign exchange was a headwind for revenue growth, but the take rate expanded by nearly 10 basis points. Advertising revenue grew by 20%, with first-party ads growing faster than volume. Legacy third-party display ads were a headwind for total advertising growth.

In the first quarter, the company has continued to reduce non-core ads on certain pages to improve user experience, which now make up less than 4% of total ad revenue. Non-GAAP gross margin improved by 60 basis points year-over-year, offsetting headwinds from eBay International shipping, offsite adds, and FX. Operating margin also improved by 70 basis points year-over-year, thanks to workforce reduction, accounting change, and cost efficiencies. However, foreign exchange and reinvestment in sales and marketing partially offset this improvement. Non-GAAP earnings per share grew by 13% to $1.25, while GAAP earnings per share was $0.85 due to stock-based compensation and a reduction in equity investment portfolio value. The company's free cash flow was $472 million in Q1, with cash and non-equity investments of $4.9 billion and gross debt of $7.7 billion.

In the first quarter, eBay repurchased $499 million of its own shares and paid a quarterly dividend of $139 million. They have also returned $6.2 billion to shareholders since the beginning of 2022. Their equity investments and warrants were valued at over $5 billion, with their Adevinta stake valued at over $4 billion. The pending acquisition of Adevinta is expected to close on May 29. The company's Adyen warrants were valued at over $500 million. They forecast Q2 GMV between $17.8 billion and $18.2 billion, with expected FX-neutral growth between negative 2% and flat year-over-year. They also expect to generate revenue between $2.49 billion and $2.54 billion in Q2, with FX-neutral growth between negative 1% and positive 1% year-over-year.

The forecast for the company's revenue growth implies a 1 point increase on an FX-neutral basis. However, FX is expected to have a negative impact on spot revenue growth in the second quarter. First-party ad revenue is expected to slow down in Q2 due to lapping and one-time factors. The company expects a recovery in advertising growth in the second half of the year. The non-GAAP operating margin is expected to improve year-over-year in Q2, but will decline sequentially due to seasonal factors and investments. Non-GAAP EPS is expected to grow between 6% and 11% in Q2. FX is expected to have a negative impact on EPS. For the full year, the company expects FX-neutral GMV to turn positive in Q3 or Q4 and revenue to outpace GMV growth by 2 points. FX is expected to have a negative impact on total spot revenue growth.

eBay maintains its outlook for non-GAAP operating margin to expand by 60-100 basis points for the full year, with FX and accounting estimate changes offsetting each other. Capital expenditures are expected to be in line with historical average, while the non-GAAP tax rate is expected to remain stable at 16.5%. eBay expects just under $2 billion of free cash flow in 2024, with the majority generated in the second half of the year. The company is targeting share repurchases of over $2 billion for the full year and is increasing its forecast for non-GAAP earnings per share growth to 9-11% in 2024. Q1 was a strong quarter for eBay, highlighting the resilience of its marketplace and business model.

The company is on track to achieve positive growth in Q3 or Q4, driven by innovation and cost discipline. They expect margin expansion and double-digit earnings growth this year. The Q2 guide implies margin expansion of 0-70 basis points, with some seasonality and FX headwinds. The first quarter is typically the strongest for operating margin.

The company is continuing to invest in growth opportunities and sees potential for good return on investment. There have been changes in advertising and revenue recognition, but the outlook remains positive and the company is confident in margin expansion. The CEO mentions three factors contributing to growth acceleration: focus on specific categories, investments in certain geographies, and product innovations.

The speaker discusses three factors that contribute to the company's success: their work in Germany on C2C, their efforts in horizontal innovations, and their strong cross-border commerce. They have seen positive results from their work in Germany, and are investing in search, CRM, and other initiatives. They have also launched new AI capabilities in fashion to improve browsing. Cross-border commerce is a major strength for the company, with 20% of GMV coming from international transactions. The company is also facing competition in this area, particularly in Europe.

The company's payments team is investing in buyer and seller FX to make transactions easier for customers. The parts and accessories category is performing well due to a healthy CBT business. The luxury category is also positive, thanks to the launch of an authentication center in Japan. The company believes it is unique in its global marketplace capabilities for sellers and is pleased with the growth of CBT overall. During a Q&A session, the CEO was asked about the health of the consumer and he stated that the company operates in a dynamic environment and that the U.S. is in better shape than Europe. The company's e-commerce model is successful due to global demand.

The speaker is excited about the company's investments in AI and the potential for revenue growth in the future. They mention the success of Magical Listing and the rollout of new features in the fashion category. They also highlight the value of the company's inventory and the potential for buyers to put together outfits on eBay.

eBay is excited about the potential of using AI to make the shopping experience easier for consumers. They have seen a high acceptance rate for their Magical listing feature and are financially prepared to invest in generative AI. The company's strong balance sheet and financial architecture give them an advantage in this area. The investments in AI are included in their earnings and margin projections for 2024 and will continue to benefit the platform in the future. In terms of trading cards, eBay has seen an increase in volume and expects it to remain elevated in the coming months.

In the paragraph, Jamie Iannone, CEO of eBay, discusses the success of trading cards on the platform and the company's recent partnerships and investments in the collectibles market. He mentions the three-part agreement with Collectors and the acquisition of Goldin, which will bring unique and valuable inventory to the platform. This will also provide a high-touch white glove experience for sellers and expand the global reach for Goldin sellers on eBay.

Jamie Iannone and Steve Priest discuss eBay's plans to make it easier for collectors to buy, sell, trade, and grade cards on their platform. This will help grow the industry and satisfy the requests of collectors. They also address concerns about seller defections and explain how eBay offers unique value propositions to keep sellers loyal. They mention the cost-savings from headcount reductions and how this supports margin expansion.

The company has been working on a product called offsite ads which helps bring traffic back to their website. They have received positive feedback from sellers and see the fashion category as a gateway to recommence. They have made changes to make the selling process easier and have launched Explore and Shop the Look for a better shopping experience. The company also made a difficult decision to reduce headcount for cost-savings and increased agility and decision-making.

eBay's cross-border business has been a strong driver of growth, thanks to their efforts to lower friction and make it easier for sellers to ship internationally. This has resulted in increased customer satisfaction and improved performance. The company sees continued potential for growth in this area, especially with the reopening of markets like China.

The company has implemented features like buyer and seller FX to make it easy for buyers and sellers to transact in their preferred currency. They have a focus category strategy and offer a wide range of products, including unique items from different parts of the world. The company's scale and global demand allow for a diverse range of inventory on their platform, and they have made efforts to simplify cross-border transactions for their customers.

This summary was generated with AI and may contain some inaccuracies.