Michael Morton

Michael Morton from MoffettNathanson asked about the target audience for the new 3-month trials and increased marketing spend. He also inquired about changes in merchant traffic sources, particularly from LLMs, and a potential shift away from the traditional search ecosystem.

Answer

CFO Jeff Hoffmeister clarified that marketing spend remains performance-based across all segments and geographies, with no change in philosophy. President Harley Finkelstein addressed the AI question, stating Shopify sees LLMs as a major opportunity. He confirmed partnerships with firms like Perplexity and OpenAI, positioning Shopify to be the retail operating system wherever commerce occurs, thereby increasing its value.

Michael Morton of MoffettNathanson inquired about Shopify's perspective on the evolving search landscape, including AI overlays, and its potential impact on the e-commerce consumer funnel and merchant discovery.

Answer

President Harley Finkelstein acknowledged that consumer discovery flows are constantly changing, which is why Shopify integrates with various platforms like YouTube, TikTok, and Roblox. He assured that as consumer search and buying preferences shift, Shopify will ensure its merchants are present and discoverable on new channels, reinforcing its role as a central retail operating system.

Michael Morton inquired about the potential scale of eBay's vehicles business, its financial flow-through, and implications for take rates. He also asked about expectations for the Halo attribution rollout in the U.S. and Canada for advertising and take rate.

Answer

CEO Jamie Iannone highlighted the seamless end-to-end experience in the collectible car market via Caramel, noting synergies with the Parts & Accessories business. CFO Peggy Alford stated that vehicle volume contribution is modest with a low-to-mid single-digit effective take rate. Jamie Iannone added that Halo attribution, successful in Germany, aligns CPA ad value and helps calibrate ROAS, leading to its expansion to the U.S. and Canada.

Michael Morton inquired about the potential size and financial implications of eBay's vehicles business, including take rates, and the expected impact of the Halo attribution rollout in the U.S. and North American markets.

Answer

CEO Jamie Iannone highlighted the vehicles business's focus on the $75 billion collectible car market, offering a seamless end-to-end experience covering identity, title, payments, financing, insurance, warranty, and transportation, with strong customer resonance and synergies with the parts and accessories business. CFO Peggy Alford added that Caramel's effective take rate is in the low to mid-single digits, with immaterial revenue contribution currently. Jamie Iannone also explained that the Halo attribution change, successfully piloted in Germany and Europe, will roll out to the U.S. and Canada in the new year, aiming to better align CPA ad value with velocity and improve ads monetization while maintaining healthy ROAS for sellers.

Michael Morton from MoffettNathanson Research inquired about the expected drivers of future GMV growth beyond the successful collectibles and P&A categories, and whether buyers arriving from AI search platforms exhibit different behaviors.

Answer

President & CEO Jamie Iannone stated that growth will come from both existing focus categories, which grew 10% in the quarter, and new ones like fashion, supported by horizontal AI innovations. He noted that while traffic from AI search is currently small, it is growing and these users demonstrate high shopping intent, which aligns with eBay's strategy around unique and non-new inventory.

Michael Morton asked about eBay's exposure to potential changes in U.S. de minimis shipping rules for China-based sellers and the company's long-term strategy for integrating with AI agents like OpenAI's Operator for e-commerce discovery.

Answer

CEO Jamie Iannone explained that China-to-U.S. shipping is about 5% of total GMV, with three-quarters of that volume already forward-deployed in the U.S. and subject to tariffs. He stated that eBay views AI agents and partnerships like the one with Facebook Marketplace as new channels to give its sellers' unique inventory broader exposure, similar to historical investments in SEO and Google ads.

Michael Morton asked for a breakdown of the key drivers behind the strength in the Parts & Accessories category and inquired if the significant volume of China-sourced inventory is insulated from potential political changes.

Answer

CEO Jamie Iannone attributed the success in Parts & Accessories to a multi-year accumulation of innovations rather than a single factor. He cited improved fitment tools, the 'guaranteed fit' program, vast inventory breadth, and service additions like tire installation as key drivers. Regarding China-sourced inventory, he confirmed that the majority is 'forward deployed' to destination markets, which reduces shipping times and provides a degree of insulation from shipping-related disruptions.

Michael Morton asked about Chewy's competitive advantages beyond customer service that drive incremental market share gains, how the internal outlook reflects improving pet household formation, and specific details on the hardgoods recovery, distinguishing between volume and ASP contributions.

Answer

CEO Sumit Singh clarified that the hardgoods recovery is primarily volume-driven with minimal ASP benefit. He attributed this to rapid expansion of in-stock products (over 1,500 new brands onboarded), high in-stock levels maintained through Q2 inventory investments, and enhanced customer exposure. Singh emphasized Chewy's broader differentiation by credibly connecting food, supplies, and the entire health ecosystem (B2C, B2B, B2B2C), offering a scaled e-commerce experience with personalized service. He highlighted the growth in the $50 billion health TAM, including pharmacy and high-margin compounding business, along with the outperforming Chewy Vet Care network and the rapidly growing Chewy Plus membership program, which collectively position Chewy strongly against competition.

Michael Morton asked about Chewy's competitive advantages beyond customer service, the real opportunities for incremental share gain, how this is reflected in the outlook as pet household formation improves, and details on the hardgoods recovery, specifically regarding volume versus average selling price (ASP).

Answer

CEO Sumit Singh clarified that the hardgoods recovery is primarily volume-driven with little ASP benefit, fueled by rapid in-stock acceleration, onboarding over 1,500 new brands, and sustained high in-stock levels. He emphasized Chewy's differentiation in a $140 billion-$150 billion TAM by credibly connecting food, supplies, and the entire health ecosystem (B2C, B2B2C), offering a scaled e-commerce experience with personalized service. He highlighted the $50 billion health TAM growing at twice the rate of food and supplies, with significant headroom in pharmacy, high-margin compounding business, and ramping B2C/B2B software and Chewy Vet Care. He also noted Chewy+ is rapidly scaling to 3% of net sales, positioning it as a leading pet membership program.

Michael Morton asked about Chewy's competitive advantages beyond customer service that drive incremental market share, and how this is reflected in the outlook amidst improving pet household formation. He also requested details on whether the hardgoods recovery is primarily volume or ASP driven.

Answer

Sumit Singh, CEO & Director, Chewy, clarified that hardgoods recovery is primarily volume-driven due to expanded in-stock, new brands, and high in-stock levels. He highlighted Chewy's differentiation through its comprehensive health ecosystem (pharmacy, compounding), B2C/B2B software, and Chewy Vet Care, emphasizing the value proposition of Chewy Plus in consolidating customer NESPAC and driving faster growth.

Michael Morton of Mizuho Securities asked how the consumer journey has evolved post-COVID and how the competitive environment, particularly in advertising auctions, is reacting to improving pet industry trends.

Answer

CEO Sumit Singh stated that the secular shift to e-commerce remains strong, with Chewy's site traffic picking up due to its own recent efforts. He described the competitive landscape as relatively stable, noting some increased promotionality in non-discretionary categories. However, he emphasized that Chewy is well-insulated due to its revenue mix, with approximately 85% coming from consumables and health categories.

Michael Morton of MoffettNathanson inquired about the company's affordability initiatives, asking what has been learned from reducing fees on small baskets and how the unit economics of these orders compare to traditional large baskets.

Answer

CEO & Chair Fidji Simo noted that the $10 minimum basket change has successfully grown GTV and frequency without cannibalizing large baskets. CFO Emily Reuter added that the unit economics for small baskets are favorable because they are layered onto an existing dense order network. She explained that strategies like increased batching make these incremental orders additive to the ecosystem, helping to engage customers more regularly and drive them back for their larger weekly shops.

Michael Morton asked for details on the drivers of the transaction take rate, its seasonality, and the year-over-year AOV performance of the core grocery business, considering various macro and business factors.

Answer

CFO Emily Maher explained that the transaction take rate fluctuates as the company reinvests shopper efficiencies into affordability initiatives and new use cases like restaurants. She noted Q4 AOV was impacted by restaurants and smaller holiday orders, while Q1 AOV will be affected by restaurants and the new $10 minimum basket feature.

Michael Morton asked about the drivers behind fixed operating expenses running higher than some expected and inquired about the future needs for headcount growth, especially with AI efficiencies.

Answer

CFO Ravi Inukonda advised modeling OpEx at roughly 2% of GOV, stating that while the long-term goal is leverage, the company is still finding great pockets for disciplined investment, particularly in product and engineering. CEO & Chair Tony Xu added that DoorDash is now a growing set of five businesses, and much of the headcount growth is geared towards solving new problems in these emerging areas, which may be obscured in the overall averages.

Michael Morton followed up on net revenue margin, asking if grocery affordability initiatives are targeting new users or frequency and if competitive intensity has changed. He also asked about the outlook for competitive intensity in a consolidating European food delivery market.

Answer

CFO Ravi Inukonda clarified that affordability investments aim to drive order volume across both restaurants and grocery by improving efficiency for consumers, impacting both new user acquisition and frequency. CEO Tony Xu added that the company focuses on customer value over competitive intensity, viewing Europe as a scale business where DoorDash can introduce more products.

Michael Morton asked about the profitability curve in international markets, referencing the use of NOLs, and inquired about DoorDash's strategy for integrating with AI agents and assistants to enhance local commerce.

Answer

CFO Ravi Inukonda stated that the international portfolio is gross profit positive, with profitable countries funding investments in others. CEO Tony Xu addressed AI, explaining a two-pronged approach: first, perfecting the physical-world logistics, and second, leveraging AI and LLMs with DoorDash's vast data to improve personalization and operations.

Michael Morton asked about the grocery business, specifically the potential to onboard more large grocers like Wegmans and the trends seen with long-term grocery partners. He also inquired about the demographics of new customer cohorts.

Answer

CEO Tony Xu expressed excitement about grocery growth, noting the success of the 'top-up' use case has expanded to weekly stock-ups, and that new grocery delivery customers come to DoorDash first. He confirmed that cohorts increase their spend and wallet share over time. CFO Ravi Inukonda explained that new cohorts are not demographically different and often come from suburban markets or start their journey directly with grocery, while older cohorts continue to show strong engagement and wallet share growth.

Michael Morton asked for clarification on the recently announced Nuro and Lucid partnership, addressing investor concerns that it might signal a negative read-through for the Waymo relationship and indicate surprising capital intensity for a marketplace model. He also inquired about Uber's long-term strategy for owning AV assets.

Answer

CEO Dara Khosrowshahi positioned the partnership as a positive move to increase AV supply, stating Uber can afford to invest in catalysts for the ecosystem while returning significant capital to shareholders. CFO Prashanth Mahendra-Rajah added that the new $20 billion share repurchase authorization underscores their commitment to shareholder returns, and that AV investments will be funded in part by recycling proceeds from existing minority stakes. Mahendra-Rajah stressed these investments will be modest compared to buybacks and are intended to build a knowledge base to attract third-party financing later.

Michael Morton asked about the possibility of Uber partnering with large language models (LLMs) for local commerce and inquired about the growth duration and margin profile of Uber's expansion into less dense, 'sparse' markets.

Answer

CEO Dara Khosrowshahi indicated that while Uber is experimenting with LLMs, the current focus is on improving internal user experiences like search, not yet on external partnerships for commerce. CFO Prashanth Mahendra-Rajah explained that sparse markets extend the company's growth runway, as core cities still grow at double-digit rates. He affirmed that once mature, these sparse markets achieve margin profiles in line with core urban markets.

Michael Morton from MoffettNathanson asked about potential business models for AVs, including whether Uber would purchase cars directly, and inquired about the long-term global addressable market for AVs given varying international driver costs.

Answer

CEO Dara Khosrowshahi explained that while Uber may take some early balance sheet risk to catalyze the AV market, he expects ownership to eventually shift to fleet partners and financial players. He estimated the addressable market for AVs over the next five years to be around 10-15% of the total marketplace, concentrated in high-revenue-per-mile markets in the U.S. and Europe as regulations and operational domains expand.

Michael Morton asked about the on-site behavior of agentic chatbot traffic and how AI-generated copy is helping to unlock paid social as a traffic source, given Etsy's unique inventory structure.

Answer

CEO Josh Silverman stated that agentic traffic volume is still too small to analyze behavior but believes Etsy is well-positioned to win due to its unique inventory and strong engineering. He explained that Generative AI is crucial for paid social, not just for ad copy, but for creating personalized landing experiences on the fly, which helps solve the challenge of Etsy's 'broad but not deep' inventory.

Michael Morton requested quantification of the gross margin headwinds from the free shipping loyalty beta program and increased costs for machine learning and search development.

Answer

CFO Lanny Baker confirmed that both higher compute costs for ML/search and the loyalty program created modest deleverage on gross margin. He indicated that while investment in ML and search will continue, he does not expect the headwind from the loyalty program, which is still in beta, to grow dramatically from its current level during the year.

Michael Morton inquired about Lyft's ability to invest in the recently acquired FREENOW and the expected business mix between taxis and rideshare. He also asked about changes in consumer shopping behavior as pricing stabilizes.

Answer

CEO David Risher positioned FREENOW as a premium, taxi-first marketplace with a large offline opportunity in Europe. CFO Erin Brewer added that the deal aligns with their capital strategy and should close in 2H 2025. On consumer behavior, Brewer noted affordability has long been a focus, while Risher highlighted how products like PriceLock build habits through reliability, not just low prices, citing its high retention rate.

Michael Morton of MoffettNathanson requested details on what drove the outperformance in cost of revenue relative to guidance and the reasons for the quarter-over-quarter decrease in G&A expenses.

Answer

CFO Erin Brewer explained that the outperformance in cost of revenue was primarily due to shorter average trip distances. Regarding G&A, she noted that the line can be lumpy as less than half is fixed cost and it includes variable items like tax and legal accruals and excess insurance. She stated there wasn't a single specific item to call out for the quarterly change.

Michael Morton asked how Amazon is planning for potential disruption to its e-commerce discovery funnel as other companies roll out their own AI agents and assistants.

Answer

CEO Andy Jassy responded that retailers like Amazon will establish their own terms for interacting with external agents, given the significant investments in their platforms. He emphasized Amazon's focus on its own AI assistant, Rufus, which is continuously improving. He highlighted its current utility for finding product facts and summarizing reviews, and noted its personalization and discovery capabilities will expand significantly through 2025, making it more helpful to customers.