eBay Inc.

good afternoon my name is Cheryl and I will be your conference operator today at this time I would like to welcome everyone to the eBay Q2 2019 earnings conference call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star then the number one on your telephone keypad if you would like to withdraw your question press the pound key and Thank you. Joe Belante, Vice President, Investor Relations, you may begin your conference.

Good afternoon. Thank you for joining us and welcome to eBay's earnings release conference call for the second quarter of 2019. Joining me today on the call are Devin Wenig, 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 third 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 websites. and 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 July 17, 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, Joe, and good afternoon, everyone.

Our plan for this year is to deliver a great customer experience, grow our active buyer base, and scale our immediate growth initiatives, advertising, and payments. As we build on our strengths of value and unique selection in our marketplace, we are increasingly intermediating and managing that marketplace to better control both the consumer and the seller experience while creating new growth opportunities. In Q2, we executed that plan. We made tangible customer experience improvements, We delivered good active buyer growth, and we continued to scale ads and payments. In addition, we drove efficiency to fund our investments while making progress on our portfolio review. For the quarter, total GMV was flat. Revenue was up 4%, while our active buyer base grew 4% to $182 million. Underlying these results, GMV on our marketplace platform was down 1%, sub-up volume was up 6%, and our classified platform grew revenue at 12%. We also returned $1.6 billion in capital to investors through share repurchases and dividends. Scott will go into more detail on our financial results shortly. First, let me provide some context on our core business. We've been reducing and redeploying low ROI marketing spend, resulting in less GMV in the short term, but stable sold item and active buyer growth. Although we've reduced certain types of incentives, we've maintained our focus on on driving healthy customer growth while evolving our brand. We're seeing improvements in buyer acquisition, driven by a higher conversion of new and lapsed customers, in part due to product enhancements, and also from more targeted marketing and promotion. We have effective levers to acquire buyers and are expanding our effort to drive frequency and reduce churn. In Q2, we improved the buyer experience by increasing the number of ways buyers can discover value in unique selections. By leveraging data on existing listings, we launched new pages that transformed previously unstructured listings into a more intuitive set of product results. We also recently released our brand outlet, an experience that aggregates products from top consumer brands, all with fast and free shipping. Following changes to our returns experience introduced last year, more than one-third of our U.S. buyers are now able to instantly receive labels and track their returns. and we started rolling this out to more major markets in Q2. We also introduced significant seller improvements, including offers to buyers, buy again, and trending in your interest. We extended seller protection by making it easier to identify and take action against abusive buyers. We dramatically simplified volume pricing, offering more ways for sellers to offer discounts. And we provided better ways for sellers to contribute more complete structured product information to help buyers find their listings while building new capabilities to drive conversion by better leveraging this expanded catalog. One emerging challenge for our small business sellers in the U.S. is the rapidly evolving landscape for Internet sales tax. At the start of the year, only a handful of states had active legislation requiring marketplaces to collect sales tax. By the end of the year, that number will grow to more than 30 states, and it will cover the majority of U.S. GMV. In Q2, this impacted the U.S. business by more than one point, and we're taking active measures to mitigate this challenge. However, this headwind is likely to further pressure U.S. results until we lap a fully rolled out internet sales tax landscape. Looking at our international core markets, overall performance was relatively stable with some notable highlights. In Korea, we drove two points of GMV improvement in the quarter through investments in our loyalty platforms supported by promotions such as Big Smile Day. Our European markets were slightly down due to continued macroeconomic pressure in the UK, while Japan continues to gain share, primarily due to strong buyer acquisition and marketing investments. Our revenue growth continues to outpace GMV, in part due to acceleration in advertising and payments. For ads in Q2, promoted listings drove 89 million of revenue, up over 130% from a year ago. Over 940,000 sellers promoted over 250 million listings in the quarter. Sellers are increasingly choosing to invest in promoted listings and are seeing strong conversion and velocity. We plan to expand these capabilities further while always balancing the impact on the buyer experience. We expect to end the year with more than 700 million in total ad revenue and we're well on track towards our goal of a billion dollars in ad revenue over time. For payments, we continue to see accelerated adoption of managed payments in the US. Since the launch in late Q3 last year through the end of Q2, we've now processed over 636 million in payments for over 6,000 sellers participating the day. Sellers on eBay managed payments are seeing good conversion, and their buyers are able to pay using credit cards, Apple Pay, Google Pay, and PayPal. Most sellers are saving on payment fees, and they've simplified their experience with eBay by managing their business in one place. In Germany, we're on track, and subject to regulatory approval, we intend to be live by the end of the year. We're confident in our managed payment plan, and we look forward to realizing $2 billion in revenue and $500 million in operating income at scale. At StubHub, Q2 volume benefited from increased conversion, active buyer growth, first-party sales acceleration, and favorable market conditions, including the longer series for the NBA and NHL playoffs. In our international markets, a strong Champions League final and Women's World Cup help offset lapping pressure from the Men's World Cup. In addition, we launched a new loyalty program for top buyers. and we continue to improve fulfillment with more technology integration, leading to reduced service costs and improved margins. Turning to classifieds, we continue to execute our playbook of building market-leading horizontal marketplaces complemented by scaled vertical experiences and categories, including motors and real estate. In Q2, we generated another quarter of double-digit growth based on the execution of this strategy. In Germany, momentum in our motors platform has extended our leadership position, and our horizontal platform is rapidly increasing customer engagement, leading to advertising revenue growth. In the U.K., our expanded motors offering continues to scale and drive growth in both our organic and acquired businesses. Core eBay integration continued to deliver substantial synergies with over 85 million of GMV to eBay in Q2, while over one point of revenue growth to classifieds. Now let me update you on our portfolio review. We're making significant progress and actively reviewing the role and value of StubHub and classifieds in our portfolio. The review is underway and we're focused on determining the best path forward to create shareholder value. In addition to that ongoing work, today we are announcing two other actions aimed at further strengthening our portfolio. First, we've reached a commercial agreement with Paytm Mall to bring our global inventory onto one of the largest marketplaces in India. eBay will open a store on Paytm Mall, which will provide hundreds of millions of Paytm and Paytm Mall's customers with access to our global inventory. As part of this collaboration, eBay is making an investment in Paytm Mall for a stake of approximately 5.5%. Second, we've reached an agreement to sell our flash sale German business, Brands for Friends. Divesting this business will allow our German team to focus on the opportunities in the core business. Finally, throughout this year, we are continuing to drive margin improvement through disciplined cost management and reinvesting savings in our growth initiatives. Later this year, we'll further communicate our approach to drive growth in margins. In summary, we are executing our plan to deliver outstanding customer experiences now while scaling growth opportunities and driving meaningful shareholder value. Now let me turn it over to Scott to give you more details on our quarterly financial results.