EBAY INC Q3 FY2024 earnings call

• Q3 was a strong quarter for eBay with GMV, revenue, non-GAAP operating income, and earnings per share growth.
• Focus category GMV grew nearly 5% driven by broad-based momentum in motors, parts and accessories, collectibles, refurbished, and luxury fashion categories. Collectibles had double-digit growth in trading GMV.
• Geo-specific investments in Germany and UK: Germany saw healthier trends, and UK C2C initiative launched with new capabilities to upgrade the experience.
• AI applications: Second generation of proprietary LiLiuM series models deployed, with benefits in listing descriptions, titles, etc. Magic listing features used by many sellers.
• Advertising: First-party advertising grew 14%, total ad revenue grew 11% to $408 million.
• Payments and financial services: Expanded payment options in Germany and seller capital programs.
• Community impact: eBay for Charity raised over $49 million in Q3.

Gross merchandise volume grew by over 1% to $18.3 billion. Revenue increased by more than 3% to $2.58 billion. Non-GAAP operating income grew by 6% and non-GAAP earnings per share grew by 16% to $1.19. Focus category GMV grew by nearly 5% in Q3, outpacing the remainder of the marketplace by approximately five points. The remainder of the marketplace was nearly flat for the second consecutive quarter. Trailing 12 month active buyers grew by nearly 1% to $133 million.

• Q4 GMV expected between $18.9 billion and $19.3 billion, FX-neutral growth flat to 2% y/y. Goldin to contribute over 30 basis points of GMV growth. FX could be a two-point tailwind. Revenue forecast $2.53 billion to $2.59 billion, FX-neutral growth -1% to 1%. FX could be a nearly 30 basis point tailwind. UK C2C initiative to modestly benefit GMV growth. Q4 non-GAAP operating margin between 26.5% and 27%. Full year non-GAAP EPS growth between 13% and 14%.

• Dynamic macro and consumer spending environment. Political news, sporting events, and lower consumer confidence in some regions. Execution risks of new initiatives like UK C2C initiative.

Q: On e-commerce initiatives and monetization efforts, how to think about catch-up to breakeven on fees given up and if new model is more monetizable, and expansion to US?

A: Jamie Iannone said they launched from a position of strength, started in Germany with strong results, and early UK results give confidence. Phasing in new initiatives to let sellers and buyers adjust. US has different market dynamics, no plans to launch free selling in US but may bring some product experience changes.

Q: On second-gen ROI and impact on volume growth?

A: Jamie Iannone said AI models outperform public benchmarks, over 10 million sellers used magic listing, generating several billion dollars of GMV, and Magical Bulk listings launched with positive feedback.

Q: On focus categories in 2025, expansion and larger categories without focus category investment?

A: Jamie Iannone said they have broad categories, put playbook against verticals with good ROI, and horizontal investments benefit core categories. Lee Horowitz's question about competition was answered with focus on innovation in collectibles.

Q: On whether platform initiatives convert to growth in enthusiast buyers and impact of Q4 distractions?

A: Jamie Iannone said initiatives convert to buyers and enthusiast buyers, with 1% growth in active buyers. Steve Priest said Q4 guide balances execution with macro environment and one-offs like US elections and shorter holiday season.

Q: On conviction in 2025 positive GMV growth and economics of UK managed shipping vs eBay International shipping?

A: Jamie Iannone said momentum in focused categories, horizontal work, and geo investments give conviction. Steve Priest said managed shipping is accretive to operating income but more dilutive than eBay International shipping.

Q: On healthier trends in Germany being top line or profitability?

A: Jamie Iannone said both, with improved revenue trends and healthy C2C business driving the trends.

Q: On GMV conversion rates improvement since marketplace improvements?

A: Jamie Iannone said CSAT is a leading indicator, with 20-point increase in Germany leading to healthier trends.

Q: On business in China and impact of sunsetting MX payment arrangement?

A: Jamie Iannone said cross-border trade from China is strong, most AMEX users migrated to other payment options. Steve Priest not involved in this specific question. Jamie Iannone talked about payment innovations.

Q: On strength in parts and accessories and inventory insulation from political changes?

A: Jamie Iannone said parts and accessories growth driven by Fitment enhancements, breadth of inventory, and forward deployment of inventory to reduce shipping times. Inventory is mostly forward deployed to insulate from political changes.