The paragraph is the introduction to eBay's Fourth Quarter 2024 Earnings Conference Call. The operator welcomes participants and hands the call over to John Egbert, Vice President of Investor Relations. John introduces the call, noting that eBay's CEO, Jamie Iannone, and CFO, Steve Priest, will be presenting. A slide presentation is available on eBay's Investor Relations website to accompany their remarks. He mentions the use of non-GAAP measures and warns that forward-looking statements will be made, which involve uncertainties and risks, indicating that actual results may differ significantly. More details on these risks are available in eBay's recent reports and earnings release. All information is current as of February 26, 2025.

In the paragraph, Jamie Iannone discusses eBay's strong performance in 2024, highlighting positive growth in gross merchandise volume (GMV) and strategic improvements in their marketplace, such as the notable overhaul of the C2C experience in the U.K. He emphasizes the company's focus on transforming e-commerce for enthusiasts and outlines their innovation achievements, like deploying large language models and AI tools for sellers and buyers. These efforts have contributed to increased productivity, improved search efficacy, and enhanced buyer experiences. Additionally, eBay maintained operational efficiency, achieving a 4% increase in non-GAAP operating income and expanding their non-GAAP operating margin by 70 basis points.

The paragraph highlights eBay's financial and operational achievements, focusing on Q4 performance. The company increased non-GAAP earnings per share by 15% and returned $3.7 billion to shareholders through repurchases and dividends. Q4 saw a more than 2% growth in GMV to $19.3 billion, driven by strong execution and consumer demand during the holiday season. Focus categories, including trading cards and Motors Parts and Accessories, contributed significantly to growth, with trading cards showing double-digit growth due to innovations and partnerships. These efforts set eBay up well to meet increasing demand in 2024.

In the paragraph, eBay highlights its efforts to grow its market presence in the auto parts and accessories (P&A) sector, noting a double-digit increase in inventory and mid-single-digit growth in gross merchandise volume (GMV). A key development was the acquisition of Caramel, which enhances eBay's vehicle purchase experience by offering a secure, end-to-end checkout process. This initiative aims to strengthen eBay's reputation as a trusted platform for auto enthusiasts and to tap into the $75 billion total addressable market (TAM) for collectible cars in the U.S. The integration of Caramel is expected to create synergies across other categories as vehicle buyers also purchase other items. To boost awareness, eBay has partnered with influencers from various fields.

In 2025, eBay is focusing on enhancing its C2C (consumer-to-consumer) value proposition, especially in the U.K., and has introduced personalized storefronts curated by passionate eBay users. The company reported significant growth in C2C GMV and improvements in seller and listing metrics following the removal of seller fees and the introduction of a buyer protection fee. The new eBay balance feature, allowing sellers to manage their earnings effectively, has also been positively received, with adoption rates surpassing expectations. Overall, these changes are aimed at expanding eBay's market share in the U.K. e-commerce sector.

In the paragraph, eBay discusses several initiatives to enhance its marketplace and shipping program for U.K. C2C sellers. A majority of sellers have benefited by applying open balances to eBay purchases, reducing payment costs. The company is expanding its managed shipping program, initially with Royal Mail and Every, which simplifies shipping, lowers costs, and increases transparency and protection for sellers. Sellers can now choose preferred carriers, and a free shipping option with prepaid labels deducted from earnings will be available. Additional features like new carriers for heavy items and out-of-home pick-up/drop-off will be introduced. The program will be mandatory for U.K. C2C sellers in Q2, aiming to unlock market opportunity from unused household inventory. eBay is also enhancing its Gen AI capabilities with infrastructure improvements and optimized architectures for LLMs.

The paragraph discusses eBay's advancements in AI and collaborations with other companies to enhance the e-commerce experience. eBay has built larger AI models using its e-commerce data to develop specialized tools and customer-facing features powered by large language models (LLMs), improving buyer and seller experiences across various areas. The company has also partnered with OpenAI to create an agentic e-commerce channel and started a test with Meta to integrate eBay listings into Facebook Marketplace in the U.S., Germany, and France. This initiative aims to expand seller exposure and provide shoppers access to more listings, with eBay managing the checkout and post-transaction services.

The paragraph outlines eBay's strategic initiatives amidst the rapidly evolving ecommerce landscape. The company focuses on reducing friction and expanding global reach for sellers, enhancing advertising efforts, and optimizing payment options. In Q4, eBay saw significant growth in first-party advertising, with ad revenue rising nearly 12% to $445 million. The adoption of Promoted Listings and enhanced ad capabilities contributed to this growth. Additionally, eBay formed a global partnership with Klarna to offer Buy Now Pay Later options in the U.K. and Europe, leading to an increase in average order values. Committed to sustainability, eBay set a 2045 net-zero carbon emissions target validated by the Science Based Targets Initiative.

In 2024, eBay achieved its renewable energy target for its offices and data centers a year ahead of schedule and is building on this momentum to strengthen its e-commerce strategy for enthusiasts in 2025. The company will continue to innovate within its strategic pillars, focusing on enhancing customer experiences and expanding to new categories. In collectibles, eBay plans to enhance the hobby experience through partnerships and by scaling its eBay Live business. In parts and accessories (P&A), the company aims to automate fitment data and expand supply in key areas. The vehicle transaction process will be improved through Caramel, particularly for collectible cars. In Fashion, eBay plans to use AI for trend showcasing and improve merchandising, condition grading standards, and luxury supply sourcing. Geographically, enhancements will be made to the C2C experience in the U.K. and Germany, along with global buying hub improvements.

The paragraph outlines eBay's strategies for continued growth in advertising, financial services, and AI innovations. It plans to enhance Promoted Listings, expand payment options, and increase support for small and medium-sized businesses. By 2025, eBay aims to advance AI capabilities, including larger and more sophisticated models, to improve features like Magical Listing and Shop the Look. The company is focusing on integrating AI across operations, enabling employees to utilize AI tools. These strategies are expected to drive GMV growth, improve operating income, and increase earnings per share, benefiting shareholders.

In the earnings call, Steve Priest reported on eBay's financial performance for the fourth quarter, highlighting strong results that met or exceeded expectations. Key financial metrics showed organic FX-neutral growth, with GMV increasing over 2% to $19.3 billion, revenue up by 1% to $2.58 billion, and non-GAAP operating income rising 2% to $698 million. Non-GAAP earnings per share grew over 16% to $1.25, and eBay returned more than $1 billion to shareholders via share repurchases and dividends. GMV growth was supported by strategic initiatives and improved AI models, experiencing particularly strong performance in focus categories like Trading Cards, P&A, Luxury, and Refurbished. Efforts in horizontal innovation and geo-specific investments also contributed modestly positive growth across the marketplace.

In Q4, U.S. GMV rose by 1% due to improved traffic and strong holiday demand, with Trading Cards experiencing significant growth. International GMV increased by over 3% on an FX-neutral basis, supported by a 250-basis point boost from FX. Despite macroeconomic challenges in the U.K. and Germany, demand was strong during the holiday season, bolstered by the U.K. initiative that boosted volumes. Cross-border trade from Greater China and Japan also contributed to international growth. Active buyers grew over 1% to nearly 134 million, driven by new and reactivated buyers, with enthusiast buyer spending slightly increasing. Revenue grew by nearly 1% to $2.58 billion, with a 13.3% take rate impacted by FX and the U.K. C2C initiative. These challenges were offset by gains in first-party advertising, financial services, and shipping, with total ad revenue up nearly 12% to $445 million.

In the paragraph, the company reported a 54% decline in third-party display ad revenue in Q4. The non-GAAP operating margin improved by over 30 basis points to 27% due to operational efficiencies and lower transaction losses, despite some challenges like foreign exchange headwinds. Non-GAAP operating income increased by about 2%, and earnings per share grew by over 16% to $1.25, while GAAP earnings per share were $1.40 due to a one-time tax credit. The company generated $560 million in free cash flow in Q4 and nearly $2 billion for the year. By the end of 2024, the company had $7.2 billion in cash and non-equity investments, $7.4 billion in gross debt, and repurchased $900 million of its shares. A $3 billion addition to the stock repurchase plan was authorized, totaling $3.3 billion. A cash dividend of $128 million was paid, and the investment portfolio, including equity investments and warrants, was valued at over $1 billion, with a significant stake in Aurelia valued at nearly $900 million.

In the fourth quarter, the company sold a 10% ownership stake to a consortium led by Permira and Blackstone for over $1 billion and exited its investment in Adyen, gaining approximately $600 million. It also sold a 20% stake in Apollo Korea, generating over $320 million. Looking ahead to the first quarter, the company predicts GMV between $18.3 billion and $18.6 billion, with FX-neutral growth between flat and 1%, despite a 140 basis point FX headwind. Revenue is forecasted between $2.52 billion and $2.56 billion, indicating negative 1% to positive 1% FX-neutral growth, with a 60 basis point FX headwind. The outlook considers various factors, such as macroeconomic challenges, potential tariffs, and calendar effects like Easter timing and the absence of a leap day.

In the first quarter, C2C initiatives will slightly reduce the take rate due to the introduction of buyer protection fees. The company plans to mandate managed shipping in the U.K. in Q2 to enhance C2C seller services. The non-GAAP operating margin is forecasted between 29% and 29.4%, with contributions from ads, financial services, and buyer protection fees, though offset by increased depreciation and M&A expenses. The useful life extension of service equipment benefits margins temporarily but poses a future challenge. Non-GAAP EPS is expected to grow by 6% to 9%. Looking at the full year, GMV is projected to grow modestly in 2025, with FX presenting a minor headwind. The outlook accounts for potential tariff impacts on demand. Revenue growth is anticipated to slightly outpace GMV growth, excluding FX impacts. Additionally, vehicle sales through Caramel will begin contributing to GMV reporting.

The paragraph outlines the financial outlook and key factors affecting revenue and operating margins for the company. Advertising, shipping, and financial services are driving revenue, and managed shipping in the U.K. is expected to increase take rates slightly by the end of 2024. Non-GAAP operating income is expected to grow in line with revenue, with foreign exchange (FX) providing a small boost. However, depreciation, U.K.-managed shipping, and M&A activities are expected to negatively impact margins. Capital expenditures are projected to be 4-5% of revenue, with an increase in GPU capacity planned for 2025. The non-GAAP tax rate should remain stable, while unique tax considerations and obligations, including payments related to past transactions and a repatriation tax, will impact free cash flow in 2025. Changes in R&D tax treatment will also pose a financial headwind.

The paragraph discusses eBay's financial outlook and capital allocation strategy. It notes that despite some unique financial impacts this year, normalized free cash flow is expected to exceed $2 billion, with these impacts not expected to repeat in 2026, except for a less significant R&D cost. eBay plans to repurchase at least $2 billion in shares in 2025 and has increased its quarterly dividend to $0.29 per share for Q1 2025. Overall, eBay expects high single-digit growth in non-GAAP EPS for 2025 and reports strong financial performance in 2024, boosting GMV, operating income, and EPS. The company remains confident in its growth initiatives despite challenging macroeconomic conditions. The paragraph concludes with preparations for a Q&A session, where Michael Morton from MoffettNathanson raises a question about eBay's exposure to changes in de minimis shipping and its impact on their operations, particularly in connection to China, noting that many eBay items already seem to be in U.S. warehouses.

The paragraph discusses eBay's approach to handling changes in tariff policies and advancements in e-commerce technology. eBay's sales volume from China, notably impacted by tariffs, is partially managed through a program called Speedback to help sellers cope with associated challenges. The company is actively supporting buyers and sellers to minimize disruptions from tariff changes. Additionally, eBay is embracing technological advancements by collaborating with OpenAI and incorporating AI-driven features like Magical Listing and Shop the Look Explore to enhance product visibility. By partnering with platforms like Facebook Marketplace, eBay aims to broaden its reach and provide sellers with greater exposure to diverse buyers.

The paragraph discusses eBay's strategic plans and growth outlook. Michael Morton and Lee Horowitz discuss growth expectations for 2025 and beyond, focusing on focus categories, which have experienced healthy growth over the past two years. Jamie Iannone highlights that eBay has seen consistent mid-single-digit growth in its largest category, P&A, and expects continued momentum and innovation. eBay intends to invest in both existing and new categories, with a notable push in expanding focus categories like fashion, including the addition of U.K. fashion. They see opportunities for further growth in both core and focus categories despite macroeconomic conditions.

The paragraph discusses eBay's growth potential, highlighting that the non-new in-season category is growing faster than the new in-season. Lee Horowitz asks for details about eBay's partnership with Facebook Marketplace. Jamie Iannone explains that the partnership is beneficial for eBay sellers due to Facebook's large audience and demand. The partnership aims to increase sellers' reach by offering unique eBay listings on Facebook Marketplace, while maintaining benefits like trust and services for buyers. Although specific economic details of the partnership are not discussed, Iannone mentions that the collaboration is not merely an ad buy but is still in its early stages, with both companies working to optimize the experience as they gradually scale up.

In the paragraph, Eric Sheridan from Goldman Sachs asks about the current consumer health and future momentum in Focus Categories. Jamie Iannone responds by noting that the macroeconomic environment remains dynamic, with resilient demand in the U.S., but weaker trends in the U.K. and Germany due to lower consumer confidence and GDP growth. He mentions that more affluent customers, particularly in Luxury and Collectibles, are performing well, while less affluent consumers are under pressure. For 2025, Iannone plans to build on the 2024 momentum, notably in Collectibles, by leveraging partnerships with PSA and TCGplayer to exploit opportunities in this sector.

In the paragraph, eBay discusses its recent growth and innovations in various focus categories. It highlights the success of eBay Live, which includes new features like Case Breaks and Buy spot. The company is increasing visibility for eBay Live on its homepage and live hub. In the vehicles category, eBay sees opportunities for growth and synergies with its Parts & Accessories business. In fashion, despite generating over $10 billion, eBay believes it is just beginning to innovate, implementing features like saving size preferences and using AI for better inventory discovery. The speaker expresses optimism about momentum in these categories and outlines plans for continuing growth into 2025. Following this, Citi's Ygal Arounian asks about the GMV outlook, noting a deceleration between Q4 and Q1 and inquiring about expected acceleration later in the year, particularly concerning autos.

In the paragraph, Steve Priest and Jamie Iannone discuss the factors affecting the company's performance from Q4 to Q1, amidst a challenging macro environment, particularly due to issues like U.S. tariffs and de-minimis changes. Priest highlights a strong demand in Q4, ongoing challenges, and calendar timing dynamics, such as the leap year and Easter, affecting growth. They plan to counter headwinds through focused category investments and innovations. Iannone adds that neither the Caramel vehicles nor Facebook Marketplace significantly contribute to their growth projections for Q1 and the year overall. Overall, they are optimistic about future investments improving GMV growth through 2025.

The paragraph discusses the strong business momentum and strategic planning, including a focus on AI and proprietary LLMs, which have led to significant platform improvements and cost efficiencies. Jamie Iannone highlights the substantial increase in AI model size from 2023 to 2024 and the widespread adoption of Gen AI features by over 10 million unique sellers, resulting in over 100 million listings and several billion dollars in GMV. The AI improvements have also increased model accuracy by 30% while reducing model size and latency. Customer satisfaction is high, with ongoing enhancements to features like "Shop the Look" and "Explore" further improving customer experience.

The paragraph discusses the successful introduction of new features and initiatives in the U.K., particularly focusing on "Magical Listing," which has shown strong performance globally. The speaker highlights the rollout of a buyer fee in the U.K., which has exceeded expectations. Additionally, the "managed shipping" feature aims to simplify the process for sellers and improve tracking for buyers. The company is optimistic about perfecting these features over time and acknowledges that each market presents unique challenges, with the U.K. being particularly suited for managed shipping.

The paragraph features a conversation during an earnings call, where Colin Sebastian from Baird asks about advertising growth and new ad formats. John Egbert responds, highlighting a 16% growth in their 1P ad business and 17% growth overall in Q4. The main growth driver was Promoted Listings General in their CPA business, and there's still potential for more growth through optimization and increased seller usage. While their new products are launching, they're still not as impactful as the CPA business. They have an AI-first dashboard helping sellers with advertising, making it easier to manage CPC-based campaigns. Overall, there's significant opportunity and runway for further growth and optimization in their advertising segment. Colin also asks for a quick follow-up about the Magical Listing tools, though the paragraph does not include a response to that question.

The paragraph discusses the positive impact of innovations in the trading card category on eBay's platform. Significant advancements include better integration with partners like PSA, enabling seamless transfer of card data and easier auction or fixed price listings for graded cards. These enhancements, along with new features like Magical Listing, have contributed to a strong quarter for collectible card games by simplifying the listing process. The strategy aims to unlock the potential of household items worth $3,000 on average, encouraging buyers to become sellers, thus increasing their value and bringing unique inventory to the platform.

In the paragraph, Jamie Iannone and Steve Priest discuss the positive developments and momentum in the U.K. market, drawing parallels with the earlier experience in Germany. Iannone highlights improvements in customer satisfaction (CSAT) and growth in stats like C2C first-gen listers, new and reactivated sellers, and local pickup GMV, which align with their expectations. He expresses optimism that the U.K. will maintain strong momentum, similar to Germany a year after their launch. Steve Priest adds that recent introductions of bioprotection fees in the U.K. and ongoing managed shipping have created temporary headwinds for take rates, but these are largely balanced by income from ads and financial services according to their guidance.

The paragraph is a discussion between Ross Sandler and Steve Priest about the company's financial outlook for 2025. The company expects a take rate expansion, primarily driven by advertising, and for its U.K. C2C take rate to increase following the U.K. initiative. Steve Priest explains that while operating income growth is projected to modestly outpace GMV growth, the operating margin is expected to remain flat due to various headwinds, including depreciation and M&A pressures, partly offset by favorable foreign exchange. The company aims to balance GMV growth and operating margin to maximize operating income growth and plans to reinvest in the business to ensure long-term sustainable growth and robust earnings in 2025.

In the paragraph, Nick Jones from Citizens asks about eBay's strategy amid the growing dominance of Amazon and Walmart in ecommerce, the rise of Shopify-enabled businesses, and the broader retail environment. Jamie Iannone, the CEO of eBay, responds by highlighting the company's Focus Categories, which are designed to achieve ecommerce growth rates. He mentions that these categories are expected to grow by 5% in 2024 and that eBay has gained some market share. Iannone notes that while overall ecommerce growth in key markets like the U.K. and Germany has been stagnant, eBay's performance in discretionary commerce is more optimistic, even as consumable ecommerce, such as grocery pickup, grows due to inflation.

The paragraph discusses the positive performance and growth strategy of a company in a challenging macro-environment. Over the past three quarters, there's been positive growth in GMV (Gross Merchandise Value), and the company is focusing on strategic work in new Focus Categories. They've improved core categories and are investing in a non-new and seasonal area with potential faster market growth. The company is also launching new verticals like vehicles and eBay Live, expanding in the U.K. through C2C, and leveraging partnerships such as one with Klarna in Europe. Klarna is helping consumers purchase higher-priced products, with order values 3-4 times the market average, but the company does not comment on the specific economics of this partnership.

The paragraph discusses eBay's financial services strategy, highlighting the introduction of features like eBay balance and seller capital. By bringing payments in-house, eBay provides enhanced customer choices and synergies, encouraging buyers to also become sellers, thereby driving platform engagement and reducing payment costs. Using the example of a seller named Angie, it illustrates how eBay supports small businesses by offering quick loans through a partnership with Liberis, enabling sellers to manage challenges. The paragraph ends by expressing excitement for the partnership with Klarna and the ongoing work of the financial services team.

The paragraph indicates the conclusion of eBay's fourth quarter 2024 earnings conference call, with the operator thanking participants and informing them they can now disconnect.

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