eBay Inc. — 2024 Q1

Nathan, I'll take that. Steve here. Our Q2 guide implies margin expansion between 0 and 70 basis points year-over-year, depending on where we land in the range. That's really driven by underlying advertising growth efficiency gains, partly offset by some of the investments we've talked about and some FX headwinds that we're seeing. You're right, there's a bit of seasonality that we deal with as we go through the year. The second quarter does generally have sequential contraction. That's in line with the last few years because seasonally, Q1 is our strongest quarter for operating margin due to relatively higher GMV and low expenses.

Yes. I'd really say it's threefold, Colin. I'd say first is the focus category work that we're doing. You see us not only kind of expanding what we're doing there, but investing in categories that we've already launched before like what we announced in collectibles with the Collectors and Goldin this quarter, what we're seeing in terms of the growth of luxury, of P&A, refurbished at 5%. So that's probably the first thing I'd say.

Yes. Look, our cross-border is one of our great strengths as a business. 1 in 5 transactions or about 20% of GMV goes across borders on eBay, and it's very strategic for us in that for sellers, it opens up a very vast demand opportunity. We've talked for a couple of quarters about eBay International Shipping as an example of one of those things. We've talked about our payments team investing in buyer and seller FX to make that more easy and take the friction out for customers.

Yes. Tom, thanks for the question. Look, we continue to operate in a really dynamic environment given the macro challenges globally with inflationary pressures and interest rates. We talked about Q1 started off a bit softer because of some of the weather, but then we had a reasonably good tax period. I would say the backdrop remains weaker in Europe than it does in the U.S., where U.S. is in better shape. If you look at e-commerce growth rates in U.K. and Germany this quarter, they're negative, and that's overall, and obviously, we play more in discretionary than consumables.

It's Bryan Smilek on for Doug. Could you just talk about the velocity of investments across generative AI and any affiliated CapEx needs and then, I guess, on that same line of questioning too, just timing of when you could see revenue uplift from these investments over time?

Yes. Look, we're really excited by the advancements that we're making in AI. I feel somewhat of a privilege to be able to lead this company because when you think of the breadth of categories, the data that we have for over 20 years, the scale of the size of business, being able to put AI against those is really compelling. So on the consumer-facing side, we continue to see amazing traction with magical listing. It's now -- writes description for 100% of users across native, desktop, mWeb, and we're working on Phase 2 there. We've got that rolled out to a percentage of sellers, which is great.

Yes, of course. So Bryan, I think there's a couple of things I'd say. First of all, our size, our scale and our financial architecture with eBay with the strength of the balance sheet we have is a distinct advantage for us, particularly as we look to exploit generative AI and the benefits that come from that. With regards to how we're thinking about it from a CapEx and an OpEx standpoint, all of the investment that we've talked about in 2024 from a CapEx standpoint is embedded in the 4% to 5% of revenue, which we've guided for the full year.

Yes. Look, we're excited by what we're seeing in trading cards. What we saw is that there was obviously a lot of activity during the pandemic, and we were able to hold on to a lot of customers that we acquired and frankly, a lot of customers that got reactivated or reinterested into the hobby. When you look at collectibles, we've been investing in it over quite some time. We've launched a number of features, whether it's price guides, making it easier, [ My Collections ] on the marketplace, we've launched new shipping forms, we've introduced authentication in that product, et cetera, and really built the suite of what collectors were asking us to do.

Yes. Look, the reason that we have such good seller metrics and sellers are so loyal, Richard, is because we let them build a brand on eBay. They build an eBay store, they have a presence, and we bring them a lot of really unique value propositions. We bring them the scale and breadth of global buyers on the marketplace. We bring them all of the capabilities to market and advertise their products really easily. We just -- we've been working the last couple of quarters on this product I talked about with Offsite Ads, which helps them bring traffic back. And so it's really -- those are really, I think, important to sellers. And what we see is really good feedback from doing those.

Thanks, Jamie. Obviously, we made a difficult decision at the start of the year to go through the reduction in force. From the magnitude of the headcount and the restructuring charges, it's obviously a significant event for us. It was not just about sort of driving cost savings and creating capacity. It was also about sort of driving greater agility, speed in decision-making across the organization, so we can continue to deliver for our customers.

Yes. So look, it's been an important strategic area for us. One of the reasons we launched eBay International Shipping was the whole concept that we wanted you to be able to ship a product from LA to Norway, and it would be as easy as shipping it from LA to Chicago. And we built that product, and eBay takes care of all of the hard work and the background of customs, duties, et cetera. And we're seeing really great feedback in terms of the CSAT and the performance that we're getting from our sellers from that perspective. We built a lot of features like buyer and seller FX, so that the buyer can transact in their currency of choice to make that really easy for the -- for both the buyer and for the seller.