eBay Inc (EBAY) 2024 Q4 法說會逐字稿

Thank you for standing by, and welcome to the eBay fourth-quarter 2024 earnings conference call.

(Operator Instructions) After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

I'd now like to turn the call over to John Egbert, Vice President of Investor Relations.

You may begin.

Good afternoon.

Thank you all for joining us for eBay's Fourth Quarter 2024 Earnings Conference Call.

Joining me today on the call are Jamie Iannone, our Chief Executive Officer; and Steve Priest, our Chief Financial Officer.

We're providing a slide presentation to accompany our commentary during the call, which is available through the Investor Relations section of the eBay website at investors.ebayinc.com.

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

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

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

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

These forward-looking statements involve known and unknown risks and uncertainties.

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

You can find more information about risks, uncertainties and other factors that could affect our operating results in our most recent periodic reports on Form 10-K, Form 10-Q, and our earnings release from earlier today.

You should not rely on any forward-looking statements.

All information in this presentation is as of February 26, 2025.

We do not intend and undertake no duty to update this information.

With that, I'll turn the call over to Jamie.

Thanks, John.

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

Our strong Q4 results capped off a transformative year for eBay.

We executed our 2024 plan with precision and took significant steps toward our vision of reinventing the future of e-commerce for enthusiasts.

I'll begin with some highlights from the full year.

We ended 2024 with three consecutive quarters of positive growth in gross merchandise volume despite continued challenges in the global economy.

For the full year, GMV grew by more than 1% to $75 billion.

Our focused category volume grew 5% in 2024 and accelerated gradually over the course of the year despite increasingly difficult comps.

The rest of our marketplace for our core categories also stabilized and were nearly flat year over year in 2024, benefiting from our horizontal and geo-specific investments.

Building on our success in Germany in 2023, we executed a significant overhaul of our C2C experience in the UK, leading to a notable improvement in GMV trends in Q4.

2024 was also a transformative year from an innovation standard, as our enhanced core AI platform enabled us to launch our first proprietary large language models, boost productivity in key areas like engineering and customer service and improve the efficacy of search.

The majority of our sellers are now using GenAI tools like magical listing, AI-enhanced product backgrounds, and automated social media posting.

We also wrote out exciting AI-powered experiences for buyers such as Explore and Shop the Look that enhance Discovery, particularly for long tail inventory.

We balance these disciplined investments in long-term growth initiatives with continued operational efficiency, enabling us to grow non-GAAP operating income by over 4% year over year, while expanding non-GAAP operating margin by 70 basis points.

Lastly, we created significant shareholder value by growing non-GAAP earnings per share by 15% to $4.88 while returning nearly $3.7 billion of cattle through repurchases and dividends.

I'm proud of our teams for achieving these results and laying the groundwork for us to further accelerate innovation for customers in 2025 while remaining on the path towards sustainable long-term growth.

Now I'll discuss some of the key highlights from Q4 before providing insights into our strategic priorities for 2025.

We saw continued top line growth in Q4 as GMV grew by more than 2% to $19.3 billion, an acceleration of over 1 point sequentially.

These results were driven by strong execution against our Q4 road map, and solid consumer demand during the shortened holiday shopping season.

Focused categories remained a key driver of overall growth as they accelerated to over 6% GMV growth in Q4.

This was nearly 6 points faster than our core categories, which were modestly positive in Q4 after accelerating by 1 point versus Q3.

Trading cards volume accelerated to healthy double-digit growth, making this category the largest contributor to GMV growth in Q4.

We drove significant innovation for trading card enthusiasts in the past year, including rolling out magical bulk listing, expanding our authentication and grading partnership, scaling up eBay Live, and improving our catalog data across multiple sports and genres.

We also added consignment through PSA as its customers can start auction and fixed price listings with just a few clicks.

Overall, these enhancements position eBay well to capitalize on research and demand for trading cards throughout 2024.

Motors and accessories or P&A was also a significant driver of focused category growth as Q4 GMV trends were consistent with prior quarters of 2024.

Our growth benefited from continued investment in building our assortment, including connecting with professional sellers in the UK and Germany, sourcing more certified green parks in the US, and expanding our access to private label inventory overseas.

On a global basis, our P&A inventory grew by double digits during Q4, and we now have over 700 million live P&A listings on eBay. 2024 marked our second consecutive year of mid-single-digit GMV growth in P&A, our largest focused category.

A major driver of this turnaround was reestablishing eBay as a trusted place to shop for auto parts.

Earlier this month, we further enhanced the trust equation for millions of auto enthusiasts on eBay with our acquisition of Caramel which enables a secure end-to-end online vehicle purchase experience across all 50 US states.

Caramel's technology simplifies complexities of a vehicle sale including identity and title verification, ownership transfer, financing, insurance, warranty, and transportation.

Starting in Q1, US sellers will be able to list cars, trucks and motorcycles on eBay with Caramel's secure end-to-end checkout solution.

We're excited to welcome the Caramel team to eBay, as we transform the level of trust for vehicle purchases on our platform.

We believe eBay's scaled audience of auto enthusiasts combined with Caramel's innovative technology enables us to better tap into the estimated $75 billion TAM for collectible cars in the US.

We also expect an improved vehicle transaction experience to drive synergies within other categories, as our average vehicle buyer also spends thousands of dollars annually on P&A and non-motor items across the eBay marketplace.

A key lever for driving awareness and consideration with enthusiasts has been telling the eBay story in new and different ways.

In Q4, began partnering with a captive influencers across industries to reinforce eBay's position as the trusted marketplace for things people love, including YouTuber, Emma Chamberlain; Olympic Gold Medalist, Chloe Kim; Fashion Designer, Margherita Missoni; and many more.

As passionate eBay customers themselves, these cast members are curating personalized storefronts, adding their favorite eBay product.

Throughout 2025, you'll see this cast amplify our value proposition to their audiences across various forms of media.

In October, we made a significant investment in our second largest market through an overhaul of our C2C value proposition in the UK.

We are confident that with these changes, we will capture more of the total addressable market in e-commerce.

While it's still early, I'm extremely encouraged by the results we've observed to date.

In Q4, we saw a double-digit improvement in C2C GMV growth versus our prelaunch baseline in the UK alongside 20-plus point improvements in C2C first-generation listers, new and reactivated sellers and local pickup GMV.

Notably, sales within focus categories and other mid- to high ASP items were the biggest beneficiaries of these changes, lifting our UK C2C ASP overall in Q4.

Following the removal of seller fees for C2C listing across most our categories in October, we introduced the buyer protection fee for UK C2C transactions earlier this month.

This fee allows us to offer the same protection to buyers that they receive when purchasing from business sellers.

We rolled out buyer fees progressively over roughly two weeks in February, listening closely to our community to ensure these were transparent and well understood.

While we expected some of elasticity following the addition of bioprotection fees, encouragingly, the early results were slightly better than our expectations.

In Q4, we also launched the eBay balance feature to millions of C2C sellers in the UK, which enables them to use their earnings to purchase products on eBay, cover selling needs like shipping and Promoted Listings or withdraw their funds. eBay balance has been well received thus far, and adoption rates have exceeded our expectations.

The majority of sellers with an open balance have applied it to their eBay purchases which is also beneficial to our marketplace as it carries zero cost of payments.

During Q4, we also began to gradually ramp up our managed shipping program for UK C2C sellers, which is live on an opt-out basis with Royal Mail and Everi as our initial carriers.

Managed shipping, which is shown to UK customers as simple delivery offer simplicity, lower cost improved transparency and greater protection against loss or damage, while generating incremental revenue and operating income for eBay.

We have been listening to our sellers feedback during the ramp phase and are launching multiple enhancements to make this program's value proposition even stronger in the coming months.

For instance, we recently gave sellers the ability to select which carriers they are comfortable shipping with.

We will soon add a free shipping option, with the cost of prepaid labels automatically deducted from sellers' earnings.

We are in the process of adding new carriers support bulky and heavier items.

And we plan to introduce out-of-home pickup and drop-off capabilities, which many UK customers value due to their convenience, lower cost, privacy, security, and environmental benefits.

We will continue to manage shipping throughout Q1 as we add features and fine-tune the program and plan to begin mandating it for UK C2C sellers during Q2.

As we look at our UK initiative overall, based on the results and behaviors we're seeing so far, we are even more confident the changes we're making across key parts of the C2C experience will allow us to unlock the sizable market opportunity from the vast array of unique inventory sitting in UK consumers' homes.

In 2024, we upgraded our GenAI capabilities by increasing our GPU capacity, deploying our first supercomputer, improving our hardware utilization, and developing architectures optimized for LLMs.

Our enhanced AI platform enabled us to build and run models approximately 100 times larger than the prior year.

We leveraged our decades of e-commerce data to build our proprietary [Lillian] models from scratch to accomplish specialized e-commerce task at greater levels of efficiency.

We also pretrained leading open source models on our data set to improve their accuracy on specific eBay use cases.

By the end of the year, we have launched dozens of customer-facing features powered by LLMs across the buyer and seller experiences, search, payments, marketing, and specific focus categories.

In addition to innovating on platform, we've been increasingly focused on meeting customers where they are to drive greater awareness of the breadth and depth of quality inventory on eBay.

In January, we became one of the first companies to collaborate with OpenAI's operator, which can direct users to eBay for many of their shopping needs.

This agentic approach to commerce could create an entirely new channel for discovery and shopping online.

Although it's early days, we anticipate this collaboration could expand the reach of our sellers giving more buyers exposure to eBay's unique and differentiated inventory.

Last month, we also launched the test with Meta in the US, Germany, and France that enable Facebook Marketplace users to browse and purchase eBay listings without leaving the app. eBay sellers should benefit as they gain exposure to Facebook's scaled audience, while marketplace shoppers can discover a broader array of listings from the eBay community.

The checkout experience and post-transaction services are powered by eBay, fully leveraging the on-platform capabilities we've built including protections, like authenticity guarantee.

The test initially started with a small percentage of users and a subset of our inventory in these three markets, as our company's focus on optimizing the experience within this new surface for third-party listings.

As the e-commerce landscape undergoes swift transformation due to rapidly advancing technology, we are focused on positioning eBay at the forefront of emerging shopping paradigms like these.

We continue to focus on reducing friction and maximizing the global reach of our sellers' inventory connecting them with more enthusiast buyers around the world.

Turning next to advertising.

During Q4, first-party advertising accelerated to 16% and while ad revenue grew nearly 12% to $445 million, eclipsing 2.3% of GMV.

Approximately 3.4 million sellers adopted a single ad product during the quarter, we ended Q4 with more than 1.1 billion live Promoted Listings out of nearly $2.3 billion total listings on eBay.

First-party advertising growth was broad-based across products during Q4.

Promoted Listings general ads were the largest contributor to year-over-year growth in Q4 on the back of continued ad rate, algorithm and placements optimization.

Adoption of Promoted Listings priority and promoted off-site units also increased as we introduced enhanced capabilities for campaign and budget management.

In Payments and Financial Services, we continue to focus on adding new and locally relevant ways to pay on eBay to expand by our choice, drive conversion, and optimize our payment mix.

During Q4, we announced a global strategic partnership with Klarna to offer buy now pay later solutions in the UK and several new European markets, expanding on our successful launch in Germany.

We've been extremely pleased with the early results as we've observed average order values on Klarna transactions to be roughly 3% to 4% higher than the average basket size in these markets.

As a pioneer of e-commerce, sustainability continues to be a core part of our purpose as a company.

I am pleased to announce that eBay has set a 2045 net zero carbon emissions target that has been recently validated by the science-based targets initiative.

I'm also proud that in 2024, we sourced 100% of our energy consumption for eBay controlled offices and data centers from renewable sources, reaching our 2025 renewable energy target one year early.

Looking forward, our investments across our strategic pillars in 2024 laid a strong foundation for us to build upon in 2025, as we continue to work toward reinventing the future of e-commerce for enthusiasts.

In support of the first pillar of our strategy, relevant experiences, we'll continue to innovate within existing focus categories and extend our playbook to new categories.

In Collectibles, we plan to continue innovating on behalf of the hobby by developing new experiences with PSA and realizing more synergies with TCG Player and Golden and meaningfully scaling our eBay Live business as we optimize the experience for enthusiasts.

In P&A, we are focused on automating the application of fitment data on new and existing listings, developing more experiences for do-it-for-me buyers, and expanding our access to well-priced supply in key areas like used in green parts.

We'll also invest in our enhanced transaction process for vehicles through Caramel to tap into the significant TAM within collectible cars and drive synergies across our marketplace.

In fashion, we plan to leverage AI to better showcase emerging trends, innovate on explore and Shop the look, and improve merchandising to highlight our sellers vast amount of desirable fashion inventory.

We are also focused on improving trust through enhanced consecrating standards and leading our global footprint to tap into new sources of luxury supply.

From a geographic perspective, we'll continue optimizing the C2C experience in the UK and Germany while also investing in significant enhancements to our global buying hub, which serves millions more buyers around the world.

Within our second pillar, scalable solutions.

We aim to continue driving healthy growth in advertising by increasing seller adoption of Promoted Listings priority and promoted off-site.

We plan to continue optimizing Promoted Listings general placements and recommendations.

We'll add new capabilities to promoted stores and allow brands to fund these ads for third-party sellers to promote e-commerce.

Within financial services, we'll continue to add more locally relevant payment options, streamline the checkout experience, and optimize our cost of payments.

We also plan to scale up our seller capital offering to serve the needs of more small- and medium-sized businesses, which make up the majority of volume on eBay.

And as it pertains to our third pillar, magical innovation.

In 2025, we'll build on our core AI foundations to train and deploy models significantly larger and more sophisticated than what we operated in 2024, including visual and multimodal models.

We'll also conduct pre-training and instruction tuning of existing models to distill them to smaller sizes optimized for specific tasks driving improved accuracy, reduced latency, and lower compute costs.

I'm excited to see how our enhanced AI capabilities will continue to improve experiences like magical listing, Shop the look, and explore in 2025.

We'll also leverage these models to touch more parts of the consumer experience this year to make it more modern and seamless.

I'm also energized by how much our company has embraced this new technology to change how we work and execute as a company.

This year, we are empowering every employee to leverage GenAI tools to fundamentally change the experience on eBay and deliver value to customers.

And importantly, we expect these strategic pillars to support continued GMV growth, healthy operating income trends, and robust growth in earnings per share in 2025 to ensure our road map continues to drive significant value for shareholders.

With that, I'll turn the call over to Steve to provide more details on our financial performance.

Steve, over to you.

Thank you, Jamie, and thank you all for joining us today.

I'll begin with the financial highlights section of our earnings presentation.

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

Finally, I'll provide our guidance for the first quarter and preliminary outlook for the rest of the year before we begin Q&A.

My comments will reflect year-over-year comparisons on an organic FX-neutral basis, unless I note otherwise.

eBay delivered strong results in the fourth quarter as we met or exceed expectations across our key financial metrics.

GMV grew over 2% to $19.3 billion.

Revenue grew 1% to $2.58 billion. Non-GAAP

operating income grew approximately 2% to $698 million.

We delivered $1.25 of non-GAAP earnings per share, up over 16% and we returned more than $1 billion to shareholders through repurchasing dividends.

Now let's take a closer look at our financial performance during the fourth quarter.

Gross merchandise volume grew over 2% and to $19.3 billion on an organic FX-neutral basis.

Golden added about 30 basis points to total FX into volume growth, while foreign exchange was 130 basis point tailwind to spot GMV growth.

Our strategic initiatives were instrumental to our GMV growth acceleration throughout 2024.

We saw better-than-expected shopping activity late in the holiday season as we benefited from improved AI models with the delivery day estimates and greater visibility of items with fast shipping.

Focused category GMV grew over 6% in Q4 and outpaced post categories by nearly 6 points.

We saw positive growth contributions across trading cards, P&A, luxury, and refurbished.

GMV growth across the remainder of our marketplace was modestly positive in the quarter, driven by our horizontal innovation, geo-specific investments, cross-category shopping, and the sell to buy flywheel.

Shifting to our geographic trends.

US GMV grew by 1% in Q4, driven by improved traffic trends and strong late-season holiday demand.

Trading cards had another strong quarter, posting the fastest quarterly GMV growth observed since 2021.

International GMV grew over 3% on an FX neutral basis in the quarter, while FX was a tailwind to spark GMV growth of 250 basis points.

Although underlying macro trends in the UK and Germany remain challenged, we saw resilient demand over the holiday season.

As Jamie discussed earlier, the successful launch of our UK initiative, providing an incremental boost to both our C2C and overall volumes.

International GMV growth also benefited from strong trends in cross-border trade, especially from Greater China and Japan.

Moving on to our trading 12-month biometrics.

Active buyers grew over 1% to nearly 134 million in Q4.

Our second straight quarter of sequential active buyer growth was driven by steady growth in new and reactivated buyers and improved retention.

Enthusiast buyers remained stable at roughly 16 million, and spend per enthusiast buyers [grew] slightly year over year to more than $3,100.

Next, let's take a closer look at revenue.

We grew revenue by nearly 1% to $2.58 billion in Q4.

Spot revenue growth was nearly 30 basis points lower due to foreign exchange headwinds.

Our take rate was 13.3% in the fourth quarter, about 40 basis points lower year over year.

Our UK C2C initiative was a headwind of approximately 50 basis points as we eliminated final value fees for C2C sellers in October.

FX also represented another 20 basis points impact the take rate in the quarter.

These headwinds were partly offset by tailwinds from first-party advertising, financial services, and shipping.

Total advertising revenue grew nearly 12% of $445 million in the quarter, as GMV penetration increased to 23%.

First-party ad growth accelerated 16% to $434 million.

We further deprecated third-party display ads with revenue declining 54% in Q4 for

[less than $12 million].

Now turning to profitability.

Non-GAAP gross margin was approximately flat year over year as a reduction in cost of payments, authentication related costs and lower depreciation expenses were roughly offset by traffic acquisition costs foreign exchange headwinds and tax-related matters.

Non-GAAP operating margin expanded by over 30 basis points year over year to 27% in the quarter, driven by operational efficiencies and lower transaction losses, partly offset by full funnel marketing and a foreign exchange headwind of 70 basis points.

Our non-GAAP operating income grew approximately 2% in Q4 and non-GAAP earnings per share grew over 16% or $1.25. On a GAAP basis, earnings per share was $1.40. Our higher GAAP earnings were primarily due to a onetime tax credit, partly offset by stock-based compensation expense.

Next, I'll discuss our balance sheet and capital allocation.

We generated free cash flow of $560 million in the quarter and nearly $2 billion for the year, consistent with our guidance.

At the end of 2024, we had cash and nonequity investments $7.2 billion and gross debt of $7.4 billion.

We repurchased $900 million of eBay shares during Q4 at an average price of nearly $64.

In December, our Board authorized an incremental $3 billion under our stock repurchase plan, bringing our total authorization to roughly $3.3 billion at the end of the year.

In addition, we paid a quarterly cash dividend of $128 million in December or $0.27 per share.

Next, I'll give an update on our investment portfolio.

Our equity investments and warrants are valued at over $1 billion at the end of the quarter.

The majority of this value is in Aurelia, with our approximately 8% ownership valued at nearly $900 million.

This is our remaining stake after the consortium led by Permira and Blackstone exercised its option in Q4 to purchase roughly 10% of our ownership stake to just over $1 billion.

In Q4, we exited our equity investment in Adyen, realizing roughly $600 million in gross cash proceeds.

We no longer hold any warrants in Adyen and the remaining tranches expired at the end of January 2025.

On December 17, we sold our nearly 20% stake in Apollo Korea, the owner of Gmarket and generated over $320 million in gross cash proceeds from the transaction.

Moving on to our outlook.

For the first quarter, we expect GMV between $18.3 million and $18.6 billion, representing FX-neutral growth between flat and 1% year over year.

This includes an expected contribution of approximately 30 basis points from Golden.

Prevailing exchange rates, we expect FX to be nearly 140 base points of headwind to GMV growth in Q1.

Our guidance assumes continued momentum and focus categories, positive contributions from horizontal innovations, and continued benefits from our UK initiative.

However, our outlook is tempered by continued macroeconomic challenges in Germany, the potential impact of tariffs in calendar considerations.

We are contemplating a range of outcomes for tariffs in our guidance based on what we can see and forecast.

We also faced a net headwind of 50 basis points due to lapping the extra leap day in 2024, partly offset by Easter falling in April this year as opposed to March last year.

The Easter timing is a benefit this year, as we typically see less shopping activity during the holiday.

We expect to generate revenue between $2.52 billion and $2.56 billion in the first quarter, implying negative 1% to positive 1% FX-neutral growth.

We estimate FX would represent roughly 60 basis points of headwind to spot revenue growth at current rates.

The UK C2C initiative [are wearing] on our Q1 take rate on a year-over-year basis as bioprotection fees were rolled out midway through the quarter.

Additionally, we plan to begin mandating managed shipping in the UK during Q2 as we implement the enhancements to C2C sellers that Jamie discussed.

We forecast non-GAAP operating margin between 29% and 29.4% in the first quarter.

On a year-over-year basis, we expect ads and financial services to contribute to margins, along with a modest contribution from bioprotection fees.

These tailwinds are more than offset by a 70 basis point increase in depreciation expenses and 20 basis points of M&A-related expenses.

As a reminder, we extended the useful life of our servers and networking equipment from three to four years in 2024.

This change benefited our margins last year but created a headwind for 2025.

Based on these assumptions, we forecast non-GAAP earnings per share between $1.32 and $1.36 in the first quarter, representing year over year growth between 6% and 9%.

Next, I'll share some updated thoughts on the full year.

We expect to generate low single-digit GMV growth in 2025 on an FX-neutral basis.

Based on current exchange rates, FX will be over 1 point of headwind for full year spot growth.

This outlook is balanced against the risks and uncertainties surrounding tariffs and how they could change demand due to consumer elasticity.

Our outlook includes a modest volume contribution from vehicles following the Caramel acquisition, although we expect the impact to be immaterial in Q1 and gradually ramp throughout the year.

The existing vehicles business on eBay Motors was not included in reported GMV for many years since we did not charge transaction fees.

However, we will start reporting GMV for vehicle sales executed through Caramel's end-to-end service.

For the full year, we expect revenue growth modestly higher than GMV on an FX-neutral basis, with FX creating a 40 basis point headwind to spot growth.

Advertising, shipping and financial services are all key drivers of revenue and take rate this year.

Once managed shipping is fully ramped, we'd expect our UK C2C take rate to be slightly higher than our run rate prior to Q4 of 2024.

We expect non-GAAP operating income growth relatively in line with revenue on an FX-neutral basis.

We estimate FX would represent roughly 50 basis points of tailwind, spot operating income growth at current rates.

There were several headwinds embedded in this outlook that we expect to impact full year operating margins.

First, the servers and networking equipment, depreciation dynamics I called out for Q1 will be a 0.5 point headwind for full year gross and operating margins.

Second, based on our updated ramp schedule, UK-managed shipping should negatively impact operating margins by roughly 30 basis points due to gross revenue recognition.

We continue to expect positive operating income dollar contribution from this program in 2025.

Third, we estimate nearly 20 basis points of M&A related headwinds.

These headwinds are partly offset by an estimated 30-basis point tailwind from FX based on current rates.

We forecast capital expenditures to be between 4% and 5% of revenue for the full year.

We are significantly increasing our GPU capacity again in 2025.

I'm pleased to be able to do so within our historical average budget.

We expect our non-GAAP tax rate to remain stable at 16.5%.

As it pertains to free cash flow, we have a number of unique tax considerations in 2025.

In addition to our standard tax payments, in Q2 of 2025, we expect to pay net cash taxes of nearly $650 million related to our Adevinta, Aurelia, Adyen, and Gmarket transactions in 2024.

We will also pay the final year of our repatriation tax obligation for $292 million in Q2.

Additionally, changes to the tax treatment of R&D expenses represents a headwind of over $100 million in 2025.

While these unique items will weigh on reported free cash flow this year, excluding these impacts, normalized free cash flow is expected to be comfortably north of $2 billion.

None of these impacts are expected to peak in 2026 with the exception of the R&D headwind, which will be less material as we have built up for the five-year strip of capitalized on assets.

On the capital allocation front, we are targeting share repurchases of at least $2 billion in 2025.

Our Board also declared a quarterly dividend of $0.29 per share for Q1 of 2025 to be paid in March, an increase of $0.02 from the quarterly dividends paid out in 2024.

Based on these assumptions, we still expect non-GAAP earnings per share growth in the high single digits for 2025.

In closing, eBay delivered strong financial results in 2024, improving our GMV, operating income and EPS growth year over year.

We have created a solid foundation for 2025, and our outlook reflects our confidence in eBay's initiatives despite tariff on macro uncertainties and demonstrates our ability to generate sustainable, long-term growth and deliver healthy capital returns and robust earnings for shareholders.

With that, Jamie and I will now take your questions.

(Operator Instructions) Michael Morton, MoffettNathanson.

Hey there.

Thank you for the question.

I'll start with one.

I would love if you could size eBay's position and exposure to changes in de minimis shipping.

And maybe specifically to China, I know there's a lot of moving parts with that.

But from what we see, it appears that most of your large category offerings are already sitting in US warehouses when we look at shipping times.

So that would suggest they've gone through proper channels and tariffs.

Is that a reasonable assumption?

And then I have a follow-up after this.

Yes.

Michael, yes, it is.

So if you look at the China to US quarter, that makes up approximately 5% of total GMV for eBay.

China overall is a little less than 10% of GMV.

But approximately three-fourths of our Greater China volume is forward deployed.

So as you said, it's already subject to tariffs.

And of the remainder, about half of that is -- we manage that directly through a program we have called Speed back which obviously can help sellers handle the complexity of tariffs as cost is not the only challenge.

So overall, we're planning to do all we can to help sellers and buyers navigate these changes with as little disruption as possible and we feel confident in our diversified global marketplace can help them adapt to changes in tariff policies.

That's great.

And then another question.

You show the ChatGPT operator in the presentation.

And there's a view there's a lot of changes coming to the e-commerce discovery funnel.

Some retailers are treating this differently.

They want to wall off the agents or assistants and others want to open up to them.

Would love to know eBay -- you've obviously indicated one thing so far, but how you're thinking about this big picture over the long term as consumer behavior could be shifting?

Yeah.

Look, we were one of the first companies to collaborate with OpenAI on their research preview here.

And our feeling is that we're obviously building a lot of great agentic technology on eBay, whether that's in how products are sold with magical listing or how they're bought with Shop the look, explore.

But we've really focused on having a differentiated set of inventory, over 2.3 billion listings, and see an opportunity to allow our sellers to get greater exposure to more sets of diverse buyers.

So it's why you see us doing the preview with OpenAI.

You see the partnership that we've created with Facebook around marketplace is about opening up that inventory.

And if you think about what we've been doing for decades in buying Google placement ads or the SEO work that we're doing, that we've done, those have been good sources for us to acquire new buyers into eBay.

So we've been looking at it as another channel, another opportunity, but we've continued to build out all of our own agents and run our own pilots internally as well to just continually improve the shopping experience on eBay.

Thank you.

Lee Horowitz, Deutsche Bank.

Thank so much for the question.

Maybe as we look out to 2025 and sort of growth FX-neutral growth, that's maybe no better than where you're exiting 2024.

Can you perhaps break things down a little bit more in terms of what you're thinking about in terms of focus category growth next year?

Should that continue to improve?

Anything as it relates to expected focused category expansion or perhaps maybe step back in the core business around the macro, any help on those moving pieces would be great.

Yeah.

No, we can see continued momentum in the work that we're doing in focused categories.

So if you look back over the last two years, we've had really healthy growth there, 6% last quarter, 5% over the course of the year.

In our largest category in PMA, we've had mid-single-digit growth now for two years.

So we feel really good about the momentum in the business and what we're seeing and the continued pace of innovation.

We're going to continue to invest in existing categories as well as in new categories.

You see our core categories have gotten stronger as well over the course of '24.

We had a roughly 1 point growth in our core category business.

And we see a lot of opportunities in additional work in our focus categories.

So in fashion, we have the opportunity to go much deeper.

I talked about some of that on the call.

We added UK fashion to our focus categories, et cetera.

So we still have five categories that are over $10 billion of opportunity.

We see a lot of growth.

We actually think the non-new in season will grow faster than new in season, and that's what we've been seeing on our platform, which is really great and healthy for us for the long-term growth of the business.

Okay.

And then maybe one follow-up on the Facebook Marketplace partnership.

Any more details you can provide as it relates to just the specifics of how it works?

Any limiters as to how many listings you guys can maybe show on their marketplace, anything as it relates to sort of revenue share?

I know you're not going to give the details exactly, but sort of how the economics may work?

And anything you're seeing early or you expect to see in terms of relative ASP of what you may sell that marketplace versus sort of ASPs that you get on sort of your core eBay platform?

Yeah.

Look, we think the partnership is great for the eBay seller community as they can benefit from Facebook scaled audience and the large demand that they have.

And similar to what I talked about with OpenAI, where we see it as meeting customers where they are and helping our sellers broaden their reach.

So we'll continue to bring a broad array of unique eBay listings there.

We feel like it's great because we get all the benefits of the trust for the buyers there.

They get the authentic guarantee, the checkout process, and the post-transaction services.

On economics, we usually don't comment on specifics of partnerships.

But we're excited by the potential.

I'd say it's not.

We're not just simply buying ads on Marketplace.

And it's not an eBay off-site ad product.

But I'd also say, look, it's still early days.

So we're encouraged by the early learning, but we're gradually scaling up the test and each company is working to optimize the experience.

Great.

Thanks so much.

Eric Sheridan, Goldman Sachs.

Thanks so much for taking the question.

Maybe two, if I could.

First, I'm curious for your take on the overall health of the consumer.

There seems to be a bit of a renewed debate among investors on how to interpret the state of the consumer based on sort of income levels and discretionary versus non-discretionary spend.

We'd love to get a sense of what you guys are seeing across the platform and across some of your geographies.

And then in terms of focused categories, that momentum that you built coming out of 2024, how would you want folks to think about the potential for that momentum to continue?

And what are the building blocks of sustained focused category growth that you're most focused on executing on deeper into 2025?

Yeah.

I'd say, look, the macro environment continues to be dynamic out us through '24.

I'd say demand in the US has been more resilient, with trends in the UK and Germany still relatively weaker amid lower consumer confidence and lower GDP growth there.

And I'd just note that we've made significant progress last year despite these trends.

And in 2025, we're going to continue to remain nimble.

I would say the more affluent customers, our luxury businesses continue to perform well, handbag, I talked about collectibles being double-digit growth right now.

And so I think it's more of the less affluent consumer who is pressured in this environment.

When you think about the momentum in 2024 of focus categories, we see us building on a lot of the strengths that we've created and the momentum that we have in 2024 building off of non-new in season.

So I talked about collectibles, right?

We are just getting started.

And how we're working with PSA, how we're working with TCG player to take advantage of the opportunities in collectibles and build on the focused strategy that we have there, I'd say ditto for eBay Live and the growth that we're seeing and the new collectible based features we've launched there like case bricks and buy spot, et cetera.

We've been recently increasing the exposure of what we've done in eBay Live on the homepage and on our Live hub.

I talked about the work in P&A and we see vehicles as, not only another opportunity to drive growth in the business, but another opportunity to drive synergies with our parts and accessories business, which is one of our largest focused categories, as you know.

And then when I look at fashion, Eric, we do over $10 billion in fashion.

And in my opinion, eBay is just starting to innovate on this focused category, right?

It wasn't until twlo quarters ago that you could even save your size on eBay, which is a pretty simple feature.

And now we're using AI to do things like shop the look and explore, and build great discovery.

And what that does is it really shows off the amazing inventory.

And you can tell by the size of the category that we have amazing inventory on the platform, and that's what we hear from buyers.

And so being able to put our playbook against that category is exciting.

So I guess I'd just say, I feel really good about the momentum in focused categories, what we're seeing and the road map and the plans that we have for '25 to keep that going.

Ygal Arounian, Citi.

Hey, thanks, guys.

First, maybe just on the GMV outlook from 1Q and the full year.

Steve, I think you hit on some of the components like autos GMV coming in.

But maybe a little bit more color to help, a, just what's happening in the deceleration between 4Q and 1Q?

What are you seeing there?

And then as we work our way through the year, there's an implied acceleration in GMV.

Again, I know you gave some of the puts and takes around auto.

Is it mostly around autos?

Is there a contribution in your guidance from the Facebook Marketplace coming through?

Just how do we think about all the puts and takes between now and the end of the year?

Hey, Ygal.

I'll pick this one up.

Good to speak to you.

As Jamie alluded to earlier, we are continuing to operate in quite a challenged macro environment, particularly in Europe.

And now more recently, we're facing the uncertainty of our US tariffs and de minimis changes.

There's three factors I would call out with regards to the Q4 to Q1 decel.

First of all, I'd say we did have a particularly strong uptick in demand late in Q4 during the holiday season, which we're coming off the back of.

Secondly, we are, as I mentioned, to operate in this environment.

And we're looking at a number of scenarios, and we've implied some of that in our first quarter guide.

And then thirdly, there's some calendar timing dynamics.

Lapping the leap year in 2024, creates roughly 1 point of headwind for GMV growth for Q1, partly offset by the beneficial timing of Easter.

In terms of offsetting some of those headwinds, we obviously continue to drive momentum, across focus categories across the geo-specific investments, particularly the likes of the UK and the horizontal innovation that is driving greater trust across the platform and momentum for the rest of the year.

Jamie has talked a lot about the focus category momentum.

We're excited about the investments we continue to make in 2025.

That sequentially will improve GMV as we go through the year and gave us the confidence to talk about the positive GMV momentum for 2025.

Yeah, just to add, we don't see it as the caramel vehicles is what's driving the growth.

In Q1, that's going to be relatively immaterial.

And in the full year, that's going to be very modest.

And I would say the same about Facebook Marketplace.

We're excited by the test, but we're not baking in material contributions to the low single-digit color that we put out there.

It's really the strength and underlying momentum of the business that makes us feel good about the rest of the year and what we're doing.

And Steve talked about some of the onetime impacts in the calendar, et cetera, in Q1.

And overall, we feel like really good momentum off the back of the strategy that we've laid out and the plans that we have for '25.

Okay.

Thanks.

That's really helpful.

My follow-up, maybe back to AI and the primary LLMs, Jamie, that you called out.

It sounds like we're seeing benefits both here on, obviously, the platform improvements and then also on the cost side, you call that engineering, customer service.

And any way to quantify -- are you able to -- you guys even do that, the benefit that you're seeing from AI, whether it's on the top line or on the margins and what the -- particularly on the margins, maybe what the longer-term opportunity is and cost efficiencies that you could drive here?

Thanks.

Yeah.

Look, I mean, the level of change we're seeing kind of quarter after quarter is pretty significant.

As I mentioned, the models in 2024 or 100x larger than the ones that we're using for '23.

In terms of [quantisizing] the size of how our consumers are using this, over 10 million unique sellers have used our GenAI features to date and they've created well over 100 million listings and that generates several billion dollars of GMV.

And it's a product that has 90% customer satisfaction rates in terms of just the selling side.

On the buying side, we continue to roll out new features and enhance things like Shop the look and explore.

As you think about productivity of our models, in 2024, we achieved a 30% improved accuracy on five of our kind of core e-commerce task at an 8x smaller model size, 10 times lower latency.

So we've not only kind of been putting more features to change the experience out there, but we've been doing it in a much smarter way with kind of how we're consuming it, et cetera.

So we're really excited by the consumer-facing features.

We're excited by how our employees are embracing this across all the areas that you mentioned.

And I think we're going to see another step level change in how we leverage AI both for our consumers and internally next year in '25.

Thank you.

Nathan Feather, Morgan Stanley.

Hey, everyone.

Thanks for the question.

Made a lot of interesting feature enhancements in the UK, which seem to be driving some strong retraction.

Are there any features or initiatives that are working well, which you could roll out more broadly?

And thinking in particular, manage shipping?

Yeah.

Like the feature that we've rolled out globally, that's working well as magical listing.

Across all of our markets, what we're seeing is really great performance from sellers really good satisfaction, et cetera.

As it relates to the C2C approach in the UK, we feel really good about what we're doing there.

We rolled out the buyer fee, and that's been performing better than our expectations, as I talked about, although it's still early days.

And with manage shipping, we're really focused on how do we create environs where we're making a lot easier for sellers, because they don't have to go through kind of the choice of what services do I want to use and what do I have to choose from, et cetera.

And for buyers, we get better tracking.

And the early work on this.

I mean it's very early days, right?

We're just ramping up this business in the UK But what I would say is that we hope to perfect it over time, really get CSAT.

And every market is different as it relates to shipping.

There's very different dynamics, and there's some unique dynamics in the UK that make it specifically attractive to have managed shipping in that market.

So that's really where we're focused on growing that and really how it ties into the overall C2C value proposition that we put together, which so far, is working great.

Our UK C2C business is growing double digits faster than it was before these changes and so we're pleased with the results.

Great.

Thank you.

Colin Sebastian, Baird.

Hi, thanks, guys.

Good afternoon.

First off, on advertising as a follow-up and the uptick in the penetration rate, is that some of the newer ad formats driving that?

And I guess how are you thinking about the longer-term tax rate opportunity?

Yeah.

Look, we were really pleased with the growth.

We had 16% 1P growth in our ad business in Q4 and 17% overall, and really know it's still the strength of the core platform.

So our CPA business, Promoted Listings General was the largest driver in growth in the quarter.

And we still think that has a lot of runway and opportunity with optimization, with more seller using it, et cetera.

We continue to see nice growth in our C2C business and our newest products are launching, but they're still not the workhorse that the CPA is, and we continue to put new features out there.

I'd probably call out the AI-first dashboard that we launched last year is really helping sellers navigate advertising.

And I think about the same way as listings, right, which is what we're doing is using AI and other technologies to make it really easy to adopt, to manage, for example, C2C-based campaigns on the platform, et cetera, and that's what's been performing well.

So we continue to see a lot of runway, a lot of opportunity with advertising and excited both by the existing formats and the optimization and the new ad products that we've launched.

Okay.

And if I could just ask one quick follow-up on the magical listing tools.

Does that have a material impact on trading card selection and volumes?

And if it did, I guess, would you expect to see a similar tailwind as other categories start to adopt that?

Thanks.

Yeah.

Look, it's really great for that category because it's kind of seamless.

And if you've been paying close attention, it's not just that we've done magical listing in that category, which is great.

We've been doing better integrations with our partners like PSA, for example.

So now if I list a graded card, we will actually bring over all the data from PSA about kind of the history of that card right into the view item page on eBay.

A couple of weeks ago, we made it easier to kind of copy and do more research, et cetera, around those cards.

We've launched better integrations between PSA and eBay, so that I can now launch auction and fixed price listings right as I've had them graded onto the eBay platform.

So I would say, in general, what we're seeing is it was a strong quarter for collectible card games, et cetera, but it really leveraged all of the innovations that we have been driving in trading cards to make that successful.

But yes, we feel bullish that as we have expected in that category, we're rolling out continued enhancements to magical listing, which just make it easier and easier to list.

And the way I think about it is the average household has $3,000 of items that they could sell online, and less than 20% of that is online.

And if we make that incredibly easy through magical listing, we can bring on so much attractive inventory onto the platform.

And when we get those buyers to turn into sellers, they become 2 to 2.5x more valuable as buyers on the platform.

And they bring really unique inventory to the platform.

Think about all the stuff that's used, sitting in people's houses, garages, et cetera, to bring online.

And so that's why I'm really excited by the continued advancements that we're making in the progress, the satisfaction that we're getting from customers, and the just reception in general from the seller base.

Thank you.

Ross Sandler, Barclays.

Great.

Just one on the UK and then one on the operating margins.

So the UK C2C growth acceleration, how does that map to what you saw in Germany in the first few months?

And is the double-digit improvement -- is that kind of now at a new equilibrium?

Or should we increase further potentially?

And then on the revenue side over there, did that fully catch up to GMV once we have like a full quarter in 2Q, any color on that?

And then I'll ask the follow-up next.

Yeah, I'll take the first part, and then Steve can talk about what we're seeing on the take rate.

So yes, we're really pleased with the improvement that we've seen in the business, and it's similar to what we saw in Germany.

Remember that we launched there, I talked about a 20-point improvement in CSAT.

And we're seeing here 20-point improvements in C2C first-gen listers in new and reactivated sellers, in local pickup GMV.

So exactly what we intend to see.

Your question on fully ramped, what we saw in Germany was even a year post launching, we continue to see that strong momentum in the business.

And that's what I expect to see in the UK.

We've got a strong CSAT, it's really resonating with customers, et cetera.

Steve, maybe you want to talk about the overall take rate.

Yeah.

So with regards to the bioprotection fees, we've recently put those in into the UK, and we're still ramping managed shipping as we go through the quarter.

And this phasing is creating a temporary headwind for take rate, which obviously is mostly offset by ads and financial services in the guide that we've given.

As it pertains to your question about getting back to normalized levels in the full year, we are expecting a take rate expansion in 2025 overall.

We'd expect advertising to the biggest driver of that.

But as we sort of noticed as we get the full ramp out of the UK initiative with the buyer fees and the managed shipping goes through, we expect our UK C2C take rate to reach a run rate slightly higher than the level prior to the UK initiative.

Got it.

Okay.

And then on the op margin guidance for full year, Steve, I think the slide said that op inc will grow in line with revenue, but there was also like 100 bps of like those kind of headwind items around depreciation and a few other things offset by FX.

So I guess the question is our op margins, non-GAAP op margins going up?

Or are they flat?

Like I was just a little confused as to what we were saying in that slide.

Yeah.

So we continue to target the optimal combination of GMV growth and operating margin to maximize operating income dollar growth.

That's the key thing for us.

That's our North Star in terms of generating operating income dollar growth.

And we're obviously pleased with the progress that we made in 2024.

As you stated -- as we stated in the outlook, we've got our expectations is that our operating income dollar growth will modestly be ahead of our low single-digit GMV growth for 2025.

But it implies the operating margins relatively flat.

Despite headwinds of around 70 basis points net, which I outlined earlier, the depreciation around 50 basis points UK managed shipping because we're recognizing that growth about 30 basis points to M&A pressure of 20 bps, offset by some FX goodness of 30 basis points.

We'll continue to get the balance right.

We're going to continue to reinvest in the business, drive long-term sustainable growth while continuing to deliver robust earnings growth in 2025.

Thank you.

Nick Jones, Citizens.

Great.

I guess if I could ask maybe a bigger picture question.

As we look at all these kind of great innovations and investments you're making around products and focused categories, and kind of tie that to kind of the growth expecting?

And then maybe a step further, laying that against kind of the broader backdrop where e-commerce continues to grow.

Retail, it is more difficult.

Retail is kind of hanging in there.

And I guess philosophically, how are you thinking about eBay's position in a world where kind of wallet shares kind of consolidating to the Amazons and Walmarts of the world and then Shopify is enabling a bunch of kind of single product for any companies to come?

I guess how do you view e-commerce from here as you're making these investments and where a marketplace like eBay fits in?

Yeah.

Yeah.

Good question.

So when you look at -- let's start with our focus categories.

The whole thesis that we laid out was getting focused categories to grow at e-commerce rates of growth and they have been.

So our focus categories are growing 5% in 2024.

In aggregate, we actually think we picked up share in '24 in our focus categories by a bit.

And so we're seeing exactly what we intended to see.

When you look at the overall e-commerce numbers to your question, it's important to take into consideration that UK and Germany are our second and third largest markets.

And when you look at those e-commerce growth rates over the course of last year, they've been kind of hovering around the 0% range and that's overall e-commerce.

So that includes consumable e-commerce which is like grocery pickup, et cetera, is all in those numbers, which has been growing, especially with inflation, and we play more in the discretionary commerce.

So from a relative perspective in this macro environment, we feel really great about the performance that we're seeing.

The past three quarters, we've seen positive GMV growth.

But we're only partway through the strategic work that we're doing.

And as we get to new focus categories, as we've made improvements in the horizontal experience, leveraging GenAI, we've gone to the point where our core categories are growing as well.

And then we're continuing to invest really around this non-new in season area where we see market share growing potentially even faster than new and season over time.

So we're going to continue to launch new areas and new verticals and new categories like I talked about with vehicles and eBay Live.

We're unlocking a much bigger TAM opportunity in the UK with what we're doing in C2C.

And we feel good about building off the momentum that we have, even in this macro environment.

Operator, can we do one last question, please?

Stephen Ju, UBS.

Hey, thank you.

So Jamie, the slide in your deck about Klarna was interesting.

Just wondering if there's an opportunity for you to capture some of the economics that they might be generating because presumably, you're helping them source loans from the activity on eBay.

Or should we just view this as a potential accelerant to the GMV growth?

Yeah.

We don't ever comment on specific economics of specific partners.

What I'll tell you is that Klarna is actually -- it's a partnership that we announced in Q4 to expand to most of our countries in Europe.

And what is nice about it is it's really helping consumers lean into higher ASP products.

So when we see the average order value on Klarna, it's three to four times higher than the market average.

And it's a continuation of what we've been doing, which is providing more choice to customers, more forms of payment, et cetera.

And it's driving -- it's helping us drive incremental GMV on the platform.

If I take a step back, when I look at what's happening in financial services, it's not just about kind of the economics that we've created by bringing payments on the platform but it's the synergies that we've created with our strategy.

So one that I would call out recently is eBay balance.

So by bringing payments in-house, that's enabled us on our C2C strategy to basically help those buyers who turn into casual sellers, buy more on the platform.

And what we're seeing is that it actually stimulates the flywheel for us.

It helps drive more buying behavior.

The majority of them are using their eBay balance to purchase back on eBay.

And in that example, we end up with a cost of payments of zero.

And so it does help us on the expense side as well.

And it's another example of how we're leveraging our financial solutions product.

I'll end probably with Seller Capital, another example of what it does is it helps sellers get loans in a few minutes and grow their business on eBay.

And I was talking to Angie, who's one of our sellers, she runs a store called Green Go surplus.

And around the elections, her business was a little soft as she had to buy a truck for her business.

And she filled out -- we work with a partner called Libris, she fills out this form in a couple of minutes and then relatively quickly, has that loan.

And she was like, this helped me get through that tough time period of my business.

I've already paid off a third of the loan here really quickly.

And it's another example of how we're kind of supporting small business on the platform.

So excited for the Klarna deal, but also just excited more broadly with the work that's happening with our financial services team.

Thanks for the question, Stephen.

Thanks.

And this concludes eBay's fourth-quarter 2024 earnings conference call.

Thank you for your participation.

You may now disconnect.