eBay Inc.

Good day, ladies and gentlemen, and welcome to the eBay Q1 2019 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press start and zero on your touch-tone telephone. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Joe Galante, Vice President of Investor Relations. Mr. Valanci, you may begin.

Thank you. Good afternoon, and thank you for joining us. And welcome to eBay's earnings release conference call for the first quarter of 2019. Joining me today on the call are Devin Wendig, our President and Chief Executive Officer, and Scott Schenkel, our Chief Financial Officer. We're providing a slide presentation to accompany Scott's commentary during the call. All revenue and GMV growth rates mentioned in Devin and Scott's remarks represent FX-neutral year-over-year comparisons. unless they indicate otherwise. This conference call is also being broadcast on the Internet, and both the presentation and call are available through the investor relations section of the eBay website at investors.ebayinc.com. You can visit our investor relations website for the latest company news and updates. In addition, an archive of the webcast will be accessible for at least three months through the same link. Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non-GAAP measures related to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call. In addition, management will make forward-looking statements that are based on our current expectations, forecasts, and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of eBay, Inc. and its consolidated subsidiaries, including expected financial results for the second quarter and full year 2019 and the future growth of our business. Our actual results may differ materially from those discussed in this call 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 annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's investor relations website at investors.ebayinc.com or the SEC's website at sec.gov. You should not rely on any forward-looking statements. All information in this presentation is as of April 23, 2019, and we do not intend and undertake no duty to update this information. With that, let me turn the call over to Devin.

Thanks, and before I start, let me just publicly thank Salim Freha, who's been our head of investor relations and done a great job over the last couple of years, and welcome, Joe. Thank you. We delivered a solid first quarter driven by healthy buyer growth, strong advertising performance, and disciplined cost control. GMV declined slightly year over year, which was in line with our short-term expectations, as we noted last quarter. We returned $1.6 billion in capital to investors through share buybacks and our first-ever dividend payment. In Q1 total, GMV was down 1% and revenue was up 4%, while our active buyer base grew 4% to $180 million. Underlying these results, GMV on our marketplace platform was down 1%, StubHub volume was down 2%, and our classified platform grew revenue at 12%. Scott will go into more detail on our financial results shortly. To begin, let me provide some context on our business. As we mentioned last quarter, we entered the year with the intention to reduce low ROI marketing spend while maintaining the focus on driving positive buyer growth with new product experiences and targeted marketing. In Q1, that's exactly what we did. We removed a significant amount of promotional spend that tended to subsidize higher-priced items at low ROI. The impact of this change was lower GMV driven by lower average price, but steady sold item growth. In addition, we saw an impact to our business from the adoption of Internet sales tax in the U.S., as well as value-added tax in international markets. A number of jurisdictions have enacted legislation requiring marketplace collection of tax. Without a small business exemption, this trend will increasingly impact small domestic sellers, making it harder for them to compete in an increasingly global and large merchant-dominated world. On our platform in Q1, we saw approximately one point of impact on U.S. GMV and less than a point internationally. This will be a headwind until we lap a fully rolled-out Internet tax landscape. However, it's worth noting that the global tax environment remains fluid and it will evolve. In Q1, we continue to make the product experience simpler and easier for new users. We scaled a better guest experience and reduced friction for a guest to become a fully registered customer. We also launched an expedited registration process at multiple points across our experience. Sellers are being provided new guidance to improve their product aspect coverage. which is improving our structured database catalog, and this is beginning to lead to product experiences such as search and product pages that deliver better conversion. Visual search is improving, and we're making it more accessible. Our customers are now doing 150,000 visual searches a day, and eBay guaranteed delivery continues to expand as we exited T1 at 25% volume coverage in the U.S., At the same time, we provided a series of enhancements to our sellers to make it easier to manage listings and provide value to buyers. Sellers now see competitive pricing data side-by-side when listing or managing their inventory. We also improved recommendations on items which would benefit most from promoted listings and expanded seller eligibility in Q1 by more than 20%. Going forward, our focus will remain on empowering seller success, not on competing with them. while maintaining one of the most competitive take rates in our industry. While our GMV is down slightly year on year, our revenue is growing, and the gap between GMV and revenue will likely continue. This growth was partly driven by promoted listings, where more sellers are opting to invest to grow their business. In Q1, we had more than 800,000 active sellers promote over 200 million listings. This helped drive over 65 million of revenue this quarter, up nearly 110%. As we've mentioned previously, as this business scales, we're reducing third-party ads, which are not accretive to our ecosystem. We're very pleased with our progress and remain on track towards a billion-dollar advertising revenue opportunity. Looking at payments, we continue to ramp sellers and volume in our intermediated experience. We launched Google Pay in early April, and its adoption is in line with expectations. We also completed the integration of PayPal on our new platform, which has been live for a couple of weeks with a small set of customers and will continue scaling. Since the late Q3 launch last year until the end of Q1, we've now enabled 363 million of GMV with over 4,300 active sellers who've opted into the program. To date, we've saved those sellers $2.7 million in payment-related costs. As we've said before, We expect to begin a full rollout in 2020, building to a $2 billion revenue opportunity at scale. Lastly, on payments subject to regulatory approval, we're preparing to launch in our second major market, which will be Germany. As one of our largest international markets, Germany will provide a diverse testing ground for more payment methods as we expand globally. At StubHub, Q1 volume was impacted by landscape softness with a weak college football championship game and Super Bowl. This was partially offset by better growth in the NBA. As part of improving the customer experience, we refreshed our merchandising and launched a new homepage in Q1. We're also driving cross-selling by merchandising more eBay items in checkout, plus we continue to direct ticket demand on eBay to StubHub's tailored vertical experience. In our classified platform, We saw continued strength in our motors verticals. Our leading position in Germany helped drive another quarter of double-digit revenue growth, and our expanded offering in the UK contributed one point of acceleration versus Q4. We're repeating this playbook in Canada, where we recently launched a Kijiji Autos vertical. We also delivered synergy with our core eBay integrations. which drove over 80 million of GMV to eBay in Q1, while delivering nearly two points of ad revenue to classifieds. During the quarter, eBay ad yields to classifieds crossed an important threshold by beating the next best third-party alternative, allowing even more meaningful contribution to ECG's results going forward. Finally, with respect to the operational and portfolio reviews, which we announced in March, the process is underway. While we do not have material updates to share at this time, we remain on track with what we've communicated previously. Summary. We will continue to focus on growing our customer base, delivering on our ads and payment initiatives, and returning capital throughout the year. We feel strongly about our ability to deliver value now and in the future to our customers, employees, and shareholders. And with that, I will turn it over to Scott to provide more details on the quarterly.