The conference operator introduces the speakers and welcomes participants to the eBay Second Quarter 2024 Earnings Conference Call. The Vice President of Investor Relations reminds listeners of the non-GAAP measures that will be discussed and provides a link to the accompanying slide presentation. He also cautions listeners about forward-looking statements and directs them to the company's periodic reports for more information.

In the second quarter of 2024, eBay saw growth in gross merchandise volume, revenue, and non-GAAP operating margin. The company also made progress in its focus categories, particularly in collectibles after closing transactions with Collectors and integrating Goldin. eBay has also expanded its relationship with PSA and improved the collectibles experience for customers. The transfer of trading card assets to the PSA vault was completed ahead of schedule, allowing PSA customers to easily sell on eBay at the time of grading.

In the third paragraph, the article discusses the success of the PSA storefront on eBay, which has already sold thousands of trading cards. The eBay refurbished category has also seen significant growth, with partnerships with companies like Dyson and Seagate. The sustainability collaboration with Seagate has also been successful, and the luxury focus categories have seen positive growth for the sixth quarter in a row. Additionally, the Authenticity Guarantee Program has reached a milestone of authenticating 10 million items since its inception in 2024.

In Q2, eBay introduced optional authentication for luxury handbags in the U.S. and formed partnerships to showcase its modernized experiences and connect with enthusiasts. In Germany, the company repurposed its strategic playbook for focus categories, leading to sustained growth in C2C volume and a healthier customer acquisition funnel for its B2C business.

eBay has seen success in Germany with their initiative to improve the experience for pre-owned apparel, leading to an investment in a similar initiative in the UK. This includes a new selling flow and AI-powered buying experiences. The new selling flow has shown positive results, with an increase in CSAT and listings per seller. The AI and machine learning investments are also improving the overall shopping experience on eBay, with plans for enhanced personalization and filtering in the future. eBay has also deployed a supercomputer to train and fine-tune large language models for even more advanced innovations.

eBay's supercomputer has comparable computing speed to some of the top 50 supercomputers in the world. The company is using AI to improve the eBay experience for customers, including a magical listing initiative that helps sellers list items faster and with better quality. They are also using AI to enhance product imagery and have received positive feedback from customers. The company is expanding the use of AI to more sellers and is also using it for advertising purposes.

In Q2, eBay's first-party advertising grew by 12% and reached 2.2% of GMV. 3.1 million sellers adopted a single ad product and there were 1 billion live promoted listings out of 2.1 billion total listings. A new, simplified advertising platform was launched in July, allowing sellers to make data-driven decisions and receive personalized campaign recommendations. The first-party advertising portfolio was also simplified into three solutions, and sellers can now pay on a cost per action or cost per click basis. Additionally, promoted offsite ads allow sellers to reach a wider audience through channels such as Google.

Promoted Offsite has a dynamic CPC model and automated targeting for easy campaign setup. The new Promoted Stores format helps increase brand visibility. The redesigned experience aims to help more sellers grow their businesses with a full suite of advertising solutions and actionable insights. eBay's payments platform, which includes popular and locally relevant options, continues to be a strategic growth driver. The addition of Venmo as a payment option has shown promising results, with a significant portion of GMV coming from new or reactivated buyers. eBay also launched a seller capital offering in partnership with Liberis, providing eligible sellers with fast and flexible financing options.

In the few weeks since its launch, eBay has already funded over 1,000 sellers and dispersed millions of dollars in working capital. The company remains on track towards its sustainability goals and has published reports showcasing its impact on creating economic opportunities and promoting a sustainable future. The recent Rocket Man Resale event, a partnership with Elton John, was a success, with proceeds benefiting the Elton John AIDS Foundation. eBay for charity also raised over $47 million last quarter, and the eBay Foundation granted nearly $7 million to nonprofits addressing barriers to entrepreneurship for historically excluded groups.

eBay has been recognized by Fortune and Forbes for their innovation and opportunities for new graduates. The company had a strong Q2, with positive GMV growth, a robust advertising business, and advancements in their payments capabilities. They also made disciplined investments for the future and delivered double-digit earnings per share growth. The company's CFO, Steve, will provide more details on their financial performance, including exceeding expectations in key metrics despite a challenging market.

In the second quarter, the company saw positive growth in gross merchandise volume, revenue, and non-GAAP operating margin. They returned over $1.1 billion to shareholders through repurchases and dividends. On an organic FX neutral basis, gross merchandise volume grew 1%, with the acquisition of Goldin contributing to this growth. The company's focus on category expansion and country-specific investments helped offset pressure on discretionary spending. Focus category GMV grew over 4%, while the rest of the marketplace saw nearly flat growth. In the U.S., GMV grew by nearly 1%, with improved organic traffic and conversion narrowing the gap to U.S. eCommerce market growth.

The collectibles category has been a major contributor to U.S growth, particularly in trading cards. International growth has also been positive, with cross-border trade driving growth in Greater China and Japan. The company is working to mitigate any negative impacts from new digital sales reporting requirements in the U.K. and macro headwinds in Germany. The number of active buyers and enthusiast buyers has remained stable, with a slight increase in spend per enthusiast buyer. Revenue for the second quarter was $2.57 billion, up 2% from the previous quarter.

In the second quarter, foreign exchange had a negative impact on revenue growth, but the take rate remained steady. Advertising revenue grew by 8%, with first party ads driving most of the growth. Non-GAAP gross margin declined due to various factors, but operational efficiencies helped improve non-GAAP operating margin. Non-GAAP operating income and earnings per share also saw growth. On a GAAP basis, earnings per share were $0.45. The company will now discuss their balance sheet and capital allocation.

In the second quarter, eBay's free cash flow was $278 million, down from the previous year due to delayed tax payments. They ended the quarter with $6.3 billion in cash and investments and $7.7 billion in debt. They plan to repay $750 million in debt and issue $450 million in commercial paper. They also repurchased $1 billion in shares and paid a $135 million dividend. Their equity investments and warrants were valued at $2.8 billion, with a recent sale of Adevinta shares bringing in $2.4 billion in gross proceeds. They incurred $450 million in taxes related to the transaction. They currently hold 18% ownership of Adevinta and the consortium has the option to purchase an additional 10% for $1 billion. Their investment portfolio also includes Adyen warrants valued at $340 million.

Adyen's Adyen warrants value is determined by factors such as share price and probability of vesting. Their G market investment was valued at $300 million. In the third quarter, they expect to generate GMV between $17.8 billion and $18.2 billion, representing FX neutral growth of -1% to 1% year-over-year. They also forecast revenue between $2.5 billion and $2.56 billion, with a non-GAAP operating margin between 26.8% and 27.5%. For the remainder of the year, assuming no macro changes, they expect FX neutral GMV growth between 0% and 2% in Q4, with a tailwind of more than 1 point due to FX. They also forecast modestly faster revenue growth in Q4 compared to GMV.

In the fourth quarter, there is expected to be growth in first-party advertising, but there may be pressure on core take rates due to investments in C2C initiatives and changes in product and category mix. Foreign exchange is expected to have a positive impact on revenue growth. The company is maintaining its outlook for non-GAAP operating margin expansion and is exploring opportunities for additional investments for long-term growth. One-time expenses and capital expenditures are expected to remain consistent. The company is increasing its share repurchase target and declared a quarterly dividend. The forecast for non-GAAP earnings per share growth has been raised for the year. Despite macroeconomic challenges, the company had a strong quarter with positive GMV growth and double-digit earnings per share growth.

The company has seen strong growth in advertising and has recently rolled out new features to improve campaign performance. The new features include a redesigned interface, daily recommendations for advertisers, and trend-based suggestions driven by AI. The company is seeing positive results from these updates and is confident in its advertising growth for the future.

The speaker is excited about the early results of their ad products and expects a modest take rate expansion in the second half of the year. They are also focused on making it easier for sellers to list items on the platform with the help of their supercomputer and Gen AI features.

The speaker discusses the use of internal and open source tools to train on large data sets and improve the platform's appearance. They also mention new features like Shop the Look and Explore, and express excitement for future innovation. In response to a question, they mention the potential for growth in advertising and clarify that there is still room for expansion. The speaker also clarifies that they are keeping funds for potential M&A.

Jamie Iannone and Steve Priest of eBay discuss the company's potential for growth in advertising and their balanced approach to capital allocation. They see a long runway for ads growth and have a line of sight to 3% penetration. They also mention their recent redesign and the ease of access for both existing and new sellers. They prioritize investing in the long-term growth of the business and have increased their target for share repurchases and quarterly dividends. They remain committed to returning excess cash to shareholders.

The speaker is pleased with where eBay is currently at and believes their balance sheet is a strong advantage. They discuss the challenges in the international market, particularly in Europe, but note that investments in certain areas are helping to offset these headwinds. They also mention the success of cross border trade, particularly in Greater China and Japan.

The company has made investments, such as the authentication center in Japan, which have helped drive an increase in international GMV in the second quarter. The company's AI developments have also led to positive engagement metrics and higher CSAT, resulting in healthier GMV growth. These AI tools are improving the overall buying and selling experience for customers and are constantly learning and improving. The company will continue to focus on driving AI initiatives to further improve GMV growth.

During the Q&A portion of the earnings call, an analyst asked about the company's investment cycle and whether the current investments will drive future growth beyond 2024. The speaker, Steve Priest, did not provide a specific answer but emphasized that the company is on track for their expected margin expansion in 2024 and will continue to invest in opportunities for long-term sustainable growth. He also mentioned that their financial architecture allows for continued investments.

The speaker discusses the investments that the company has made to improve their platform and how they are expected to impact GMV (gross merchandise value) in the second half of the year. They have made investments in search, recommendations, trust, and geospecific areas. The company's core categories have seen growth in the past few quarters and their focus categories, such as luxury, parts and accessories, and collectibles, are also performing well. The company is also innovating in their trading card business, which received positive feedback at a recent convention.

eBay's partnership with PSA has allowed for easier grading and selling of cards, leading to a 4% growth in focus categories despite the current macro environment. The company sees this partnership as complementary to their horizontal work and believes it has contributed to the sequential improvement seen quarter-after-quarter. When asked about active buyers, eBay's CEO stated that they are where they intended to be and have seen consistent improvements in their year-over-year trends, driven by growth in new or reactivated buyers and improved retention.

The speaker notes that active buyers are not the main metric they are focused on, but they are pleased with the improvements in their buyer acquisition strategy, which is helping to attract and retain active buyers. The company's main focus is on enthusiast buyers, who make up 70% of their GMV and have been consistent at 16 million for several quarters. These buyers spend an average of $3,100 per year and the company is targeting them through various initiatives such as sponsoring events and partnering with brands. The speaker also mentions that 90% of enthusiast buyers shop in focus categories, but their purchases also support non-focus categories.

The paragraph discusses the impact of consumer spending on the marketplace, particularly in the luxury and enthusiast buyer categories. The company has seen shifts in consumer spend due to the current economic climate and is focusing on offering value through used or refurbished goods. While some categories are performing well, there is more pressure on less affluent customers. The company remains resilient and is seeing positive results in the luxury category.

The company has been focused on improving the customer experience and providing great values for non-new and seasonal products, as well as making it easier for customers to sell products on their platform. This has helped them compete effectively in the current macro environment. The positive growth seen in the second quarter is a reflection of the investments made over the past 18 months. The company has seen some benefits from Easter timing, but even without that, there has been positive GMV growth. The current economic and regulatory environment is uncertain, but the company remains confident in their long-term sustainable growth. They are seeing strong execution and momentum, despite the uneven and dynamic environment. The third quarter guide takes this uncertainty into account.

The speaker discusses a recent news about a trading card power seller moving to fanatics and the impact of the Goldin deal on this decision. They also mention the success of collectibles on the platform and partnerships with Goldin and PSA to simplify the process of grading and selling items. They highlight eBay's continuous innovation in this category.

In the second quarter, eBay Live events saw a 50% increase in growth. The company introduced new features such as Buy Spot and expanded to the U.K. This has helped accelerate partnerships and improve the collectibles business. The call has now ended.

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