eBay Inc.

Good day, everyone. My name is Layla, and I will be your conference operator today. At this time, I would like to welcome you to the eBay first quarter 2025 earnings 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, and if you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. At this time, I would like to turn the call over to your speaker.

Good afternoon. Thank you all for joining us for eBay's first quarter 2025 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 a 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 forecasts 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 April 30, 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. We started off 2025 on a strong note, as our Q1 results came in ahead of expectations across all key financial metrics, despite a dynamic operating environment. Our gross merchandise volume grew by nearly 2% to approximately $18.8 billion, marking our fourth consecutive quarter of positive GMV growth. Revenue increased over 1% to $2.58 billion. Non-GAAP earnings per share grew by 10% to $1.38. And we returned approximately $760 million of capital to shareholders through repurchases and cash dividends. Before I discuss our Q1 results in greater detail, I'd like to acknowledge the significant developments around cross-border trade since we last spoke with you. Tariffs and changes to certain custom requirements in the U.S. have created significant uncertainty for small businesses, while concerns over escalating prices for imported goods have weighed on consumer confidence. As more of these new trade policies are implemented, we are focused on helping sellers and buyers navigate these changes with as little disruption as possible. Our Speedpack shipping program manages much of the complexity of international shipping for CBT sellers across several of our largest corridors, while ensuring compliance with customs regulations in both origin and destination countries. Items shipped through Speedpack also have tariff duties included in the total price at checkout, creating greater transparency for buyers. For non-speedpack purchases, we are managing expectations for buyers by educating them on the new costs, information requirements, and potential delays associated with international shipments. This includes messaging on the view item and checkout pages on eBay, as well as localized information pages with up-to-date guidance amid rapidly changing policy. While our business is not immune to increased costs and friction associated with tariffs, our dynamic global supply and demand is an advantage in this environment. Our extensive selection of pre-loved and non-new and seasoned goods across a variety of categories can also help mitigate the pressure on consumers' discretionary budgets during periods of rising costs. Now let's turn to the key drivers of our Q1 results. Focus category GMV grew by over 6% in Q1 and now makes up more than one-third of our total volume globally. Collectibles was the largest contributor to growth for the second straight quarter as year-over-year GMV growth in trading cards accelerated for the ninth straight quarter. This growth was supported by continued innovation on behalf of trading card hobbyists, building on what we believe is the industry's leading value proposition. Our strategic partnership with collectors and its subsidiary PSA continues to yield benefits for our marketplace. The PSA storefront on eBay has already sold more than half a million trading cards since PSA launched a seamless integration, enabling its customers to consign cards on eBay in Q3 of last year. In January, we incorporated PSA data directly into the item page for graded trading cards, enabling potential buyers to see the full population of cards at each grade level, allowing them to more easily evaluate their rarity. This delivered on a key request from hobbyists, and feedback to this change has been extremely positive. At the end of March, we launched an entirely new capability for buyers looking to purchase trading cards on eBay and have them shipped directly to PSA for grading. This saves the buyer time and effort spent on submitting grading paperwork themselves and reduces costs as one shipping lag is eliminated. Grading services from trusted third parties like PSA are a key use case for trading card enthusiasts as grading helps them maximize the value of their collections. Our fashion category generates more than $10 billion of GMV for eBay annually. Over the past year, we've significantly improved the customer experience for luxury fashion, pre-loved apparel, and streetwear enthusiasts. We launched AI-powered shopping experiences like Explore and Shop the Look. We expanded our inventory coverage for authenticity guarantee and tapped into new sources of supply in international markets. And we continue to drive consideration of eBay in fashion and reinforce our value proposition of trust and selection through full funnel marketing, including earned media reach through our cast of eBay influencers and partnership with Condé Nast. In Q1, we launched U.S. Pre-Loved Apparel as a new focus category on eBay as we made significant improvements for sellers and buyers in this category. We continue to increase trust by introducing enhanced condition grading standards for apparel during Q1. We recently launched a new AI-powered discovery experience for fashion shoppers in the U.S. and U.K., which offers a more immersive and engaging browsing experience. We replaced static browse pages with endless feeds organized by theme or subcategory with dynamic visuals and interactive elements. These feeds progressively load content as users scroll down the page and are flexible in accommodating varying content formats, such as autoplay video, curated compositions, eBay live events, promotions, and relevant eBay storefronts. Throughout 2025, you'll see more innovation in fashion as we work towards solidifying our platform as the trusted destination for pre-loved branded fashion products. where customers can truly shop head-to-toe across a breadth of brands and price points. Our geo-specific initiatives are another key building block for growth in 2025, most notably our consumer-to-consumer initiative in the UK. As a reminder, in Q4, we introduced a suite of new capabilities to upgrade the UK C2C experience, including significantly reducing friction to stimulate consumer selling. This initiative has materially improved our C2C GMV trends versus our pre-launch baseline and has outperformed our internal expectations to date. We reached a major milestone in Q1 with the introduction of our UK buyer protection fee in February, which significantly narrowed the initial monetization gap. After introducing buyer-facing fees in the UK, C2C GMV growth and other KPIs have remained significantly higher than their pre-launch baselines. We continue to ramp our managed shipping offering in the U.K., which dramatically simplifies shipping for C2C sellers, while reducing costs and improving trust for buyers. In Q1, we enabled sellers to offer free shipping and added the flexibility for them to select carrier preferences. In Q2, we plan to add pickup and drop-off capabilities that are very popular among U.K. consumers, as well as support for larger, bulkier items. In recent weeks, we began to gradually mandate adoption of managed shipping in the UK, starting with new and occasional C2C sellers. At full scale, we expect managed shipping to close the remainder of the monetization gap in C2C, drive significant value for customers, and create a new source of revenue and operating income for eBay. Our teams continue to leverage artificial intelligence to make our marketplace more efficient and intuitive. At the end of Q1, we rolled out a simplified AI-powered listing flow to all C2C sellers in the U.S., U.K., and Germany, which integrates our magical listing technology and product knowledge graph. Sellers now start their listing with photos and a title, and we leverage generative AI to identify the exact product in our catalog or fill in relevant item aspects wherever possible, including the description. This listing flow also includes a more intuitive step-by-step process to review product details, pricing, and shipping information before finalizing the listing. This new listing tool is resonating well with sellers as customer satisfaction rates are 90% or higher across each market, and it's also having a positive impact on our business. We've observed significant increases in completion rates and new and reactivated listers while meaningfully reducing the average time spent on listing. We've also seen measurable increases in sold items and GMV per listing attempter. Our magical bulk listing tool also continues to drive powerful results for B2C sellers after launching in the U.S. for all categories. This tool has more than halved the average listing time versus our previous bulk listing tool, giving sellers more time to run their businesses. Magical Bulk Listing has already emerged as the most commonly used tool for listing sports trading cards, contributing to a significant increase in the average weekly listings in that category. In February, we expanded this tool to B2C sellers in the U.K. and Germany and have seen similar improvements in average listing times. We're focused on making listing on eBay as simple and as easy as possible because we believe it will unlock a significantly larger total addressable market in e-commerce. Advancements like Magical Listing have demonstrated significant progress toward that goal, and we will continue to invest in making listing even more seamless in the quarters ahead. Turning next to advertising. In Q1, our first-party advertising revenue grew 14%. Active promoted listings increased sequentially and made up over 1.1 billion of the more than 2.3 billion total listings on eBay at the end of Q1. Over 3.7 million sellers adopted a single promoted listing product during Q1. Our first-party ad revenue growth remained broad-based during Q1. Promoted listings general ads were the largest contributor to year-over-year growth, as we launched several optimizations to make ads on the view item page more personalized and relevant, driving increased engagement. Promoted off-site ads continue to gain adoption, and during Q1, we launched several improvements like automated image optimization technology to maximize impressions for a seller's listings. Promoted listings priority ads also contributed to growth as we increased coverage of cost-per-click units across more of our existing ad services. Within payments and financial services, we continue to focus on adding new forms of payment on eBay to expand buyer choice, improve conversion, and optimize our payments mix. In April, we expanded our partnership with Klarna to offer buy now, pay later solutions to our U.S. customers. We're seeing encouraging early results with average order values on U.S. Klarna transactions more than three times the market average. In the U.K., adoption of eBay Balance continues to ramp among C2C customers and has already captured a low single-digit share of wallet for U.K. GMB overall. In addition to carrying zero cost of payments, eBay Balance is driving incremental purchase behavior as it encourages sellers to spend more of their earnings on eBay. We also recently announced the addition of Checkout.com as a new payments partner. Additional acquiring partners make our payments platform more resilient and enable us to optimize our authorization rates. And importantly, they strengthen our ability to deliver fast, reliable, and frictionless payment experiences to our 134 million customers globally. In closing, in Q1, we delivered our fourth consecutive quarter of positive GMB growth amid ongoing uncertainty in the global economy. Our strategy is working and has put us on a path towards sustainable long-term growth. Today, we also announced some changes to our leadership team. This will be Steve's last earnings call with eBay. I want to personally thank Steve as he has been an exceptional partner during a period of significant transformation. His leadership helped guide us through the uncertainty of the pandemic and laid the foundation for the strength and resilience we see in the business today. I am deeply grateful for his contributions and wish him the best. As Steve transitions, we're excited to welcome Peggy Alford as eBay's incoming CFO on May 12th. Peggy brings more than 20 years of experience leading finance, operations, and global teams in the technology sector. Peggy has a proven track record of building strong organizations and driving operational excellence. Her leadership and expertise will be tremendous assets as we continue to position eBay for the future. In addition to the CFO change, eBay is evolving its leadership structure designed to fuel faster innovation, deepen cross-functional collaboration, and position the company for long-term growth in a rapidly evolving digital and AI-powered landscape. We are bringing together product and market teams into a more integrated agile structure designed to enhance speed, alignment, and customer centricity across the organization. This new organization will be led by Jordan Sweetnam, Chief Commercial Officer. We are also consolidating engineering into a single organization, reflecting a broader ambition to operate with greater speed and drive operational scale. This new combined engineering and technology organization will be led by Mazen Rawashde, our Chief Technology Officer. I want to congratulate both Jordan and Mazen on their expanded roles. As part of this evolution, Eddie Garcia, Chief Product Officer, will be leaving eBay. I am deeply grateful to Eddie for his outstanding partnership and visionary leadership in shaping our product strategy, which has significantly advanced eBay's offerings and customer experience. He has built a world-class team, and his legacy positions us well for future success. Before passing to Steve, I want to reiterate my gratitude for his leadership and contributions over the last four years. Thank you, Steve. Over to you.