Sign in

    eBay Inc (EBAY)

    Q2 2024 Earnings Summary

    Reported on Jan 6, 2025 (After Market Close)
    Pre-Earnings Price$55.61Last close (Jul 31, 2024)
    Post-Earnings Price$55.06Open (Aug 1, 2024)
    Price Change
    $-0.55(-0.99%)

    What went well

    • Active buyer count increased fractionally year-over-year to 132 million for the first time since early 2021, showing improvements in buyer acquisition and retention strategies. Enthusiast buyers remain consistent at 16 million, with an average annual spend of approximately $3,100 per year, driving 70% of GMV.
    • Advertising presents a significant growth opportunity, with current penetration at 2.2% of GMV and a line of sight to 3%, as discussed at Investor Day. eBay is enhancing its advertising products to be more accessible, which is expected to further boost adoption and revenue.
    • Strong capital returns to shareholders, including an increase in the 2024 share repurchase target to at least $2.5 billion, and an 8% increase in quarterly dividend over the last three quarters, demonstrating eBay's commitment to returning excess cash while investing in long-term growth.

    What went wrong

    • eBay's active buyer count has been "flattish" and only "fractionally positive" year-over-year for the first time since early 2021, indicating stagnation in user growth.
    • The number of "enthusiast buyers" has remained consistent at 16 million for several quarters, showing no growth in this key revenue-driving segment.
    • Management states that active buyers are not the core metric they focus on, which may raise concerns about user acquisition and overall marketplace growth strategies.

    Q&A Summary

    1. Advertising Growth and Take Rate Expansion
      Q: Can advertising take rate expand beyond previous expectations?
      A: Management believes there is a long runway for advertising growth, with opportunities in adoption, listing penetration, ad rate optimization, and scaling new products like promoted offsite and promoted stores. They are currently at 2.2% penetration and see a line of sight to 3%, which is not a ceiling, indicating potential for further expansion.

    2. Capital Allocation and Shareholder Returns
      Q: Are you keeping funds for M&A or focusing on shareholder returns?
      A: The company maintains a balanced approach to capital allocation, focusing on investing in long-term growth while returning excess cash to shareholders. They've increased their 2024 share repurchase target to at least $2.5 billion, in addition to an 8% increase in quarterly dividend over the last three quarters.

    3. Q3 GMV Growth and Guidance
      Q: Why is Q3 GMV growth guidance flat after recent progress?
      A: Despite positive momentum and 1% FX-neutral GMV growth in Q2, the environment remains uneven and dynamic. One-off impacts like elevated summer travel demand and global sports events are causing month-to-month fluctuations. The guidance balances these uncertainties, aiming for long-term sustainable growth.

    4. Macro Environment Impact
      Q: What's your view on consumer health in the U.S. and Europe?
      A: Consumer spending is shifting due to the macro environment, with more pressure on less affluent customers. For the first time, 40% of products are used or refurbished, and these goods have consistently outpaced new goods since the pandemic. Categories like luxury remain positive for the sixth straight quarter.

    5. Active Buyers and Enthusiast Buyer Trends
      Q: How do you plan to improve active buyer metrics?
      A: Active buyer count was $132 million, fractionally positive year-over-year for the first time since early 2021. While not the core focus, improvements in buyer acquisition and retention strategies are helping. Enthusiast buyers, who drive 70% of GMV, remain at 16 million and are spending approximately $3,100 annually.

    6. International Dynamics and Growth Opportunities
      Q: What are you seeing internationally and opportunities there?
      A: The international environment, particularly in Europe, remains uneven due to discretionary spend pressure. Investments in C2C initiatives in Germany and U.K. pre-loved fashion are offsetting headwinds. Cross-border trade from Greater China and Japan shows momentum, with international GMV growing over 1% year-over-year on an FX-neutral basis in Q2.

    7. Future Investment Cycle and Margins
      Q: Will investment needs decrease after laying growth foundations?
      A: Management will continue investing where opportunities for long-term sustainable growth exist. The company expects 60 to 100 basis points of margin expansion this year while supporting focus category momentum and horizontal investments. The financial architecture allows ongoing investment without compromising margins.

    8. Collectibles Business and Competitive Landscape
      Q: How does a seller moving to Fanatics affect your collectibles business?
      A: Management won't comment on individual sellers but feels positive about innovations in collectibles. The acquisition of Goldin brings desirable inventory and capabilities. Partnerships with collectors and PSA simplify grading and selling, enhancing customer adoption. eBay Live events grew 50% quarter-over-quarter in Q2, indicating strong momentum.

    9. AI Enhancements and Friction Points
      Q: What friction points can AI address immediately?
      A: AI is making it easier to list items, predicting attributes, creating titles, and writing descriptions. Enhanced background images improve item presentation. New features like "Shop the Look" and "Explore" personalize buyer experiences. These capabilities accelerate innovation and drive engagement.

    Related Publications