eBay Inc. (EBAY) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Q2 Results: eBay reported a 1% growth in Gross Merchandise Volume (GMV) to $18.4 billion, a 2% increase in revenue to $2.57 billion, and a 15% rise in non-GAAP earnings per share to $1.18. Non-GAAP operating margin also improved by 1.0% to 27.9%.

• Focus Category Growth: GMV in focus categories grew by over 4%, outpacing the rest of the marketplace. Notable growth was seen in Motors Parts & Accessories, collectibles, and eBay refurbished items.

• Strategic Partnerships and Acquisitions: The acquisition of Goldin and partnerships with Collectors and PSA have significantly enhanced eBay's collectibles category, driving innovation and sales.

• AI and Machine Learning Investments: eBay's investments in generative AI and machine learning are simplifying the selling and buying experiences, leading to more efficient marketplace operations and improved customer satisfaction.

• Advertising and Payments Platform Growth: Advertising revenue grew 8% to $398 million, and the launch of Venmo as a payment option is tapping into a new user base, showing early encouraging results.

Pessimistic Highlights

• Macroeconomic and Geopolitical Challenges: eBay's performance is being achieved amid ongoing macroeconomic headwinds, geopolitical uncertainty, and an evolving regulatory landscape.

• Uneven International Performance: While there has been growth, certain markets like the UK have faced challenges, particularly in consumer-to-consumer (C2C) volumes due to new digital sales reporting requirements.

Company Outlook

• Continued Investment in Growth: eBay plans to continue investing in focus categories, geospecific initiatives, and horizontal innovation to drive sustainable long-term growth. The company expects GMV growth between flat and up 2% year-over-year in Q4 and forecasts modest revenue growth faster than GMV on an FX-neutral basis.

• Capital Allocation and Share Repurchases: eBay is raising its share repurchase target for the year to at least $2.5 billion, reflecting confidence in its financial position and commitment to returning value to shareholders.

Q & A Highlights

• Q: Can you discuss the adoption within the unified ad platform and smart targeting? (Nathan Feather, Morgan Stanley)

  A: eBay is seeing momentum in advertising, with new features rolling out and daily recommendations for advertisers. The company sees a long runway for ads growth, with a line of sight to 3% penetration. (Jamie Iannone)

• Q: What are the areas of interest or focus for potential M&A? (Colin Sebastian, Baird)

  A: eBay's first priority is investing in long-term growth through the Build Buy Partner framework, with a balanced approach to capital allocation. The company's strong balance sheet provides the ability to invest in the business and return capital to shareholders. (Steve Priest)

• Q: How do you feel about your ability to improve active buyer metrics in the coming quarters? (Nikhil Devnani, Bernstein)

  A: eBay's active buyer count has been fractionally positive year-over-year for the first time since early 2021, driven by growth in new or reactivated buyers and improved retention. The company is focused on attracting and retaining active buyers to drive its enthusiast buyer strategy. (Jamie Iannone)

• Q: Can you provide more color on the situation with one of your trading card power sellers moving to fanatics? (Alex Hughes, Barclays)

  A: eBay does not comment on individual sellers but is excited about the innovation and partnerships in the collectibles category, including the acquisition of Goldin and partnerships with Collectors and PSA. eBay Live events in collectibles have grown 50% quarter-over-quarter. (Jamie Iannone)