eBay Inc. Price & Performance (EBAY)

These forward looking statements involve known and unknown risks and uncertainties, Our actual results may differ materially from our forecast 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 ks Form 10 Q, our earnings release from earlier today. You should not rely on any forward looking statements. All information in this presentation is as of 02/26/2025. 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. Our strong Q4 results capped off a transformative year for eBay eBay. We executed our 2024 plan with precision and took significant steps toward our vision of reinventing the future of e commerce for enthusiasts. I'll begin with some highlights from the full year. We ended 2024 with three consecutive quarters of positive growth in gross merchandise volume despite continued challenges in the global economy. For the full year, GMV grew by more than 1% to $75,000,000,000 Our focused category volume grew 5% in 2024 and accelerated gradually over the course of the year.

Despite increasingly difficult comps. The rest of our marketplace or core categories also stabilized and were nearly flat year over year in 2024 benefiting from our horizontal and geo specific investments. Building on our success in Germany in 2023, we executed a significant overhaul of our C2C experience in The UK, leading to a notable improvement in GMV trends in Q4. 2024 was also a transformative year from an innovation standpoint, as our enhanced core AI platform enabled us to launch our first proprietary large boost productivity in key areas like engineering and customer service and improve the efficacy of search. The majority of our sellers are now using Gen AI tools like magical listing AI enhanced product backgrounds and automated social media posting. We also wrote out exciting AI powered experiences for buyers. Such as Explore and Shop A Look, [indiscernible] particularly for long tail inventory. We balanced the disciplined investments and long term growth initiatives with continued operational efficiency. Enabling us to grow non GAAP operating income by over 4% Year over year, while expanding non GAAP operating margin by 70 basis points. Lastly, we created significant shareholder value by growing non GAAP earnings per share by 15% to 4.88 while returning nearly $3,700,000,000 of capital through repurchases and dividends.

I'm proud of our teams for achieving these results and laying the groundwork for us to further accelerate innovation for while remaining on the path towards sustainable long term growth. Now I'll discuss some of the key highlights from Q4 before providing insights into our strategic priorities for 2025. We saw continued top line growth in Q4 as GMV grew by more than 2% to $19,300,000,000 acceleration of over one point sequentially. These results were driven by strong execution against our Q4 roadmap and solid consumer demand during the shortened holiday shopping season. Focused categories remained a key driver of overall growth as they accelerated to over 6% GMV growth in Q4. This was nearly six points faster than our core categories, which were modestly positive in Q4 after accelerating by one point Trading cards volume accelerated to healthy double digit growth making this category the largest contributor to GMV growth in Q4. We drove significant innovation for trading card enthusiasts in the past year including rolling out magical bulk listing, expanding our authentication and grading partnerships, scaling up eBay eBay and improving our catalog data across multiple sports and genres. We also added consignment through PSA as its customers can start auction and fixed price listings with just a few clicks.

Overall, these enhancements position eBay well to capitalize on resurgent demand for trading cards throughout 2024. Motors, Parts and Accessories or P and A was also a significant driver of focus category growth. As Q4 GMV trends were consistent with prior quarters of 2024. Our growth benefited from continued investment in building our assortment, including connecting with professional sellers in The UK and Germany, sourcing more certified green parts in The US and expanding our access to private label inventory overseas. On a global basis, our P and A inventory grew by double digit during Q4 and we now have over 700,000,000 live P and A listings on eBay eBay. 2024 marked our second consecutive year of mid single digit GMV growth in P and A our largest focus category. A major driver of this turnaround was reestablishing eBay as a trusted place to shop for auto parts. Earlier this month, we further enhanced the trust equation for millions of auto enthusiasts on eBay which enables a secure end to end online vehicle purchase experience across all 50 U. S. States. Terrible's technology simplifies complexities of a vehicle sale. Including identity and title verification, ownership transfer, financing, insurance, warranty and transportation.

Starting in Q1, U. S. Sellers will be able to list cars, trucks and motorcycles on eBay with Caramel's secure end to end checkout solution. We're excited to welcome the Caramel team to eBay eBay, as we transform the level of trust for vehicle purchases on our platform. We believe eBay's scaled audience of auto enthusiasts combined with Caramel's innovative technology enables us to better tap into the estimated $75,000,000,000 TAM for collectible cars in The U. S. We also expect an improved vehicle transaction experience to drive synergies within other categories as our average vehicle buyer also spends thousands of dollars annually on P and A and non motors items across the eBay marketplace. A key lever for driving awareness and consideration with enthusiasts has been telling the eBay story in new and different ways. In Q4, we began partnering with a cast of influencers across industries to reinforce eBay's position as the trusted marketplace for things people love. Including YouTuber, Emma Chamberlain, Olympic gold medalist, Chloe Kim, fashion designer Margarita Massoni, As passionate eBay customers themselves, these cast members are curating personalized storefronts highlighting their favorite eBay products. Throughout 2025, you'll see this cast amplify our value proposition to their audiences across various forms of media.

In October, we made a significant investment in our second largest market through an overhaul of our C2C value proposition in The UK. We are confident that with these changes, we will capture more of the total addressable market opportunity in The UK. While it's still early, extremely encouraged by the results we've observed to date. In Q4, we saw a double digit improvement in C2C GMV growth versus our pre launch baseline in The UK. Alongside 20 plus point improvements in C2C first generation listers. New and reactivated sellers and local pickup GMV. Notably, sales within focus categories and other mid to high ASP items were the biggest beneficiaries of these changes. Lifting our UK C2C ASP overall in Q4. Following the removal of seller fees for C2C listings across most categories in October, we introduced a buyer protection fee for UK C2C transactions earlier this month. This fee allows us to offer the same protection to buyers that they receive receive when purchasing from business sellers. We rolled out buyer fees progressively over roughly two weeks in February listening closely to our community to ensure our fees were transparent and well understood. While we expected some level of elasticity following the addition of buyer protection encouragingly early results were slightly better than our expectations.

In Q4, we also launched the eBay Balance feature to millions of C2C sellers in The UK. Which enables them to use their earnings to purchase products on eBay eBay, cover selling needs like shipping labels and promoted listings, or withdraw their funds. EBay balance has been well received thus far and adoption rates have exceeded our expectations. The majority of sellers with an open balance have applied it to their eBay purchases. Which is also beneficial to our marketplace as it carries zero cost of payments. During Q4, we also began to gradually ramp up our managed shipping program for UK C2C sellers. Which is live on an opt out basis with Royal Mail and Every as our initial carriers. Managed Shipping is shown to UK customers as simple delivery, offer simplicity, lower cost improved transparency and greater protection against loss or damage. While generating incremental revenue and operating income for eBay eBay. We've been listening to our sellers feedback during the ramp phase and are launching multiple enhancements to make this program's value proposition even stronger in the coming months. For instance, we recently gave sellers the ability to select which carriers they are comfortable shipping with. We will soon add a free shipping option.

With the cost of prepaid labels automatically deducted from sellers' earnings. We are in the process of adding new carriers that support bulky and heavier items. And we plan to introduce out of home pickup and drop off capabilities which many UK customers value due to their convenience, lower cost, privacy, security and environmental benefits. We will continue to manage shipping throughout Q1 as we add features and fine tune the program. And plan to begin mandating it for UK C2C sellers during Q2. As we look at our UK initiative overall, based on the results and behaviors we're seeing so far, we are even more confident that changes we're making across key parts of the C2C experience will allow us to unlock the sizable market opportunity from the vast array of unique inventory sitting in UK consumers' homes. In 2024, we upgraded our Gen AI capabilities by increasing our GPU capacity. Deploying our first supercomputer, improving our hardware utilization, and developing architectures optimized for LLMs. Our enhanced AI platform enabled us to build and run models approximately 100 times larger than the prior year. We leveraged our decades of e commerce data to build our proprietary Lillian models from scratch to accomplish specialized e commerce tasks at greater levels of efficiency.

We also pre trained leading open source models on our dataset to improve their accuracy on specific eBay use cases. By the end of the year, we have launched dozens of customer facing features powered by LLMs across the buyer and seller experiences, [indiscernible] payments [indiscernible] and specific focus categories. In addition to innovating on platform, we've been increasingly focused on meeting customers where they are to drive greater awareness of the breadth and depth of quality inventory on eBay eBay. In January, we became one of the first companies to collaborate with OpenAI's operator, which can direct users to eBay for many of their shopping needs. This agentic approach to commerce could create an entirely new channel for [indiscernible] and shopping online. Although it's early days, we anticipate this collaboration could expand the reach of our sellers giving more buyers exposure to eBay's unique and differentiated inventory. Last month, we also launched a test with Meta in The U. S, Germany and France. That enable Facebook Marketplace users to browse and purchase eBay listings with eBay sellers should benefit as they gain exposure to Facebook's scaled audience while marketplace shoppers can discover a broader array of list The checkout experience and post transaction services are powered by eBay eBay.

Fully leveraging the on platform capabilities we've built including protections like Authenticity Guaranty. The test initially started with a small percentage of users and a subset of our inventory in these three markets, as our company is focused on optimizing the experience within this new surface for third party listings. As the e commerce landscape undergo swift transformation due to rapidly advancing technology, we are focused on positioning eBay at the forefront of emerging shopping paradigms like these. We continue to focus on reducing friction and maximizing the global reach of our sellers' inventory connecting them with more enthusiast buyers around the world. Turning next to advertising. During Q4, first party advertising accelerated to 16% while ad revenue grew nearly 12% to $445,000,000 eclipsing 2.3% of GMV. Approximately 3,400,000 sellers adopted a single ad product during the quarter and we ended Q4 with more than 1,100,000,000 live promoted listings out of nearly 2,300,000,000 total listings on eBay eBay. First party advertising growth was broad based across products during Q4. Promoted Listings general ads were the largest contributor to year over year growth in Q4 on the back of continued ad rate algorithm and placements optimization. Adoption of promoted listings priority and promoted off-site units also increased.

As we introduced enhanced capabilities for campaign and budget management. In Payments and Financial Services, we continue to focus on adding new and locally relevant ways to pay on eBay to expand buyer choice, drive conversion and optimize our payment mix. During Q4, we announced a global strategic partnership with Klarna, to offer buy now pay later solutions in The UK and several new European markets. Expanding on our successful launch in Germany. We've been extremely pleased with the early results as we've observed average order values on client transactions to be roughly three to four times higher than the average basket size in these markets. As a pioneer of e commerce, sustainability continues to be a core part of our purpose as a company. I am pleased to announce that eBay has set a 02/1945 net zero carbon emissions target that has been recently validated by the Science Based Targets Initiative. I'm also proud that in 2024, we sourced 100% of our energy consumption for eBay controlled offices and data centers from renewable sources. Reaching our 2025 renewable energy target one year early. Looking forward, our investments across our strategic pillars in 2024 laid a strong foundation for us to build upon in 2025.

As we continue to work toward reinventing the future of e commerce for enthusiasts. In support of the first pillar of our strategy, relevant experiences, we'll continue to innovate within existing focus categories and extend our playbook to new categories. In collectibles, plan to continue innovating on behalf of the hobby by developing new experiences with PSA, realizing more synergies with TCG Player and Golden, and meaningfully scaling our eBay Live business as we In P and A, we are focused on automating the application of Fitment data on new and existing listings. Developing more experiences for do it for me buyers, and expanding our access to well priced supply in key areas like used and green parts. We'll also invest in our enhanced transaction process for vehicles through Caramel to tap into the significant TAM within collectible cars and drive synergies across our marketplace. In fashion, we plan to leverage AI to better showcase emerging innovate on Explore and Shop A Look and improve merchandising to highlight our sellers vast amount of desirable fashion inventory. We are also focused on improving trust through enhanced condition grading standard and leveraging our global footprint to tap into new sources of luxury supply.

From a geographic perspective, we'll continue optimizing the C2C experience in The UK and Germany. While also investing in significant enhancements to our global buying hub, which serves millions more buyers around the world. Within our second pillar, We aim to continue driving healthy growth in advertising by increasing seller adoption of promoted listings priority and promoted off-site. We plan to continue optimizing promoted listings general placements and recommendations. We will add new capabilities to promoted stores and allow brands to fund these ads for third party sellers to promote re commerce. Within financial services, we'll continue to add more locally relevant payment options. Streamline the checkout experience, and optimize our cost of payments. We also plan to scale up our seller capital offering to serve the needs of more small and medium sized businesses which make up the majority of volume on eBay eBay. And as it pertains to our third pillar, magical innovation, In 2025, we'll build on our core AI foundation to train and deploy models significantly larger and more sophisticated than what we operated in 2024 including visual and multimodal models. We'll also conduct pre training and instruction tuning of existing models to distill them to smaller sizes optimized for specific tasks, driving improved accuracy, reduced latency, and lower compute costs.

I'm excited to see how our enhanced AI capabilities will continue to improve experiences like magical listing, Shop The Look, Explore in 2025. We will also leverage these models to touch more parts of the consumer experience this year make it more modern and seamless. I'm also energized by how much our company has embraced this new technology to change how we work and execute as a company. This year, we are empowering every employee to leverage Gen AI tools to fundamentally change the experience on eBay and deliver value to customers. And importantly, we expect these strategic pillars to support continued GMV growth healthy operating income trends and robust growth in earnings per share in 2025 to ensure our roadmap continues to drive significant value for shareholders. With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.

Thank you, Jamie, and thank you all for joining us today. I'll begin with the financial highlights section of our earnings presentation. Next, I'll discuss our key financial and operating metrics in greater detail. Outlook for the rest of the year. Before we begin Q and A. My comments will reflect year over year comparisons on an organic FX neutral basis unless I note otherwise. Ebay delivered strong results in the fourth quarter as we met or exceeded expectations across our key financial metrics. GMV grew over 2% to $19,300,000,000 Revenue grew 1% to $2,580,000,000 Non GAAP operating income grew approximately 2% to $698,000,000 We delivered $1.25 of non GAAP earnings per share up over 16% and we returned more than $1,000,000,000 to shareholders who repurchased in dividends. Now let's take a closer look at our financial performance during the fourth quarter. Gross merchandise volume grew over 2% to $19,300,000,000 on organic FX neutral basis. Golden added about 30 basis points to total FX neutral volume growth while foreign exchange was 130 basis points tailwind to spot GMV growth. Our strategic initiatives were instrumental to our GMV growth acceleration throughout 2024. We saw better than expected shopping activity late in the holiday season as we benefited from improved AI models the delivery day estimates and greater visibility of items with fast shipping.

Focused category GMV grew over 6% in Q4, and outpaced core categories by nearly six points. We saw positive growth contributions across trading cards, P and A [indiscernible] and refurbished. GMV growth across the remainder of our driven by a horizontal innovation geo specific investments cross category shopping, and the Seltzer by Flywheel. Shifting to our geographic trends. U. S. GMV grew by 1% in Q4 driven by improved traffic trends and strong late season holiday demand. Trading Cards had another strong quarter posting the fastest quarterly GMV growth observed since 2021. International GMV grew over 3% on an FX neutral basis in the quarter while FX was a tailwind to spark GMV growth of two fifty basis points, Although underlying macro trends in The UK and Germany eBay challenged, We saw resilient demand over the holiday season. As Jamie discussed earlier, the successful launch of our UK initiative provided an incremental boost to both our C2C and overall volumes, International GMV growth also benefited from strong trends in cross border trade especially from Greater China and Japan. Moving on to our trading twelve month biometrics. Active buyers grew over 1% to nearly $134,000,000 in Q4, Our second straight quarter of sequential active buyer growth was driven by steady growth in new and reactivated buyers and improved retention.

Enthusiasm bars remained stable at roughly $16,000,000 and spend per enthusiast buyer grew slightly year over year to more than $3,100 Next, let's take a closer look at revenue. We grew revenue by nearly 1% to $2,580,000,000 in Q4, Spot revenue growth was nearly 30 basis points lower due to foreign exchange headwinds. Our take rate was 13.3% in the fourth quarter, about 40 basis points lower year over year. Our UK C2C initiative was a headwind of approximately 50 basis points as we eliminated final value fees for C2C sellers in October FX also represented another 20 basis points impact to TEG rates in the quarter. These headwinds are partly offset by tailwinds from first party advertising financial services [indiscernible] Total advertising revenue grew nearly 12% to $445,000,000 in the quarter, as GMV penetration increased to 2.3%, First party ads growth to $434,000,000 We further deprecated third party display ads with revenue declining 54% in Q4, for less than $12,000,000 Now turning to profitability. Non GAAP gross margin was approximately flat year over year as a reduction in cost of payments authentication related costs and lower depreciation expenses are roughly offset by traffic acquisition costs foreign exchange headwinds and tax related matters.

Non GAAP operating margin expanded by over 30 basis points year over year to 27% in the quarter, driven by operational efficiencies, and lower transaction losses partly offset by full funnel marketing and foreign exchange headwind of 70 basis points. Our non GAAP operating income grew approximately 2% in Q4 and non GAAP earnings per share grew over 16% to $1.25 On a GAAP basis, earnings per share was $1.4 Our higher GAAP earnings were primarily due to a one time tax credit partly offset by stock based compensation expense. Next, I'll discuss our balance sheet and capital allocation. We generated free cash flow of $560,000,000 in the quarter and nearly $2,000,000,000 for the year consistent with our guidance. At the end of twenty twenty four, we had cash, and non equity investments dollars 7,200,000,000.0 and gross debt of $7,400,000,000 We repurchased $900,000,000 of eBay shares during Q4 at an average price of nearly $64 In December, our Board authorized an incremental $3,000,000,000 under our stock repurchase plan bringing our total authorization to roughly $3,300,000,000 at the end of the year. In addition, we paid a quarterly cash dividend of $128,000,000 in December or $0.27 per share. Next, I'll give an update on our investment portfolio.

Our equity investments and warrants were valued at over $1,000,000,000 at the end of the quarter. The majority of this value in Eurelia, with our approximately 8% ownership valued at nearly $900,000,000 This is our remaining stake after the consortium led by Premier and Blackstone exercised its option in Q4 to purchase roughly 10% of our ownership stake for just over $1,000,000,000 In Q4, we exited our equity investment in Adian, realizing roughly $600,000,000 in gross cash proceeds, We no longer hold any warrants in Adeom, as the remaining tranches expired at the January 2025. On December 17, we sold our nearly 20% stake in Apollo Korea, the owner of G Market, generated over $320,000,000 in gross cash proceeds from the transaction. Moving on to our outlook. For the first quarter, we expect GMV between $18,300,000,000 and $18,600,000,000 representing FX neutral growth between flat and 1% year over year. This includes an expected contribution approximately 30 basis points from Golden. The Providing exchange rates, we expect FX to be nearly 140 basis points of headwind to GMV growth in Q1. Our guidance assumes continued momentum in focused categories positive contributions from horizontal innovations, and continued benefits from our UK initiative.

However, our outlook is tempered by continued macroeconomic challenges in The UK and Germany, the potential impact of tariffs and calendar considerations. We are contemplating a range of outcomes for tariffs in our guidance based on what we can see on forecast. We also face a net headwind of 50 basis points due to lapping extra week day in 2024, partly offset by Easter falling in April, as opposed to March. The Easter timing is a benefit this year as we typically see less shopping activity during the holiday. We expect to generate revenue between $2,520,000,000 and $2,560,000,000 in the first quarter. Implying negative 1% to positive 1% FX neutral growth. We estimate FX would represent roughly 60 basis points of headwind to spot revenue growth at current rates. The UK C2C initiative were on our Q1 take rate a year over year basis as bioprotection fees were rolled out midway through the quarter. Additionally, we plan to begin mandating managed shipping in The UK during Q2 as we implement the enhancements, the C2C sellers that Jamie discussed We forecast non GAAP operating margin between 2929.4% in the first quarter, On a year over year basis, we expect Ads and Financial Services to contribute to margins along with a modest contribution from bioprotection fees.

These tailwinds are more than offset by a 70 basis point increase in depreciation expenses and 20 basis points of M and A related expenses As a reminder, we extended the useful life of our servers and networking equipment from three to four years in 2024. This change benefited our margins last year but created a headwind for 2025. Based on these assumptions, we forecast non GAAP earnings per share between $1.32 and $1.36 the first quarter. Representing a year over year growth between 69%. Next, I'll share some updated thoughts on the full year. We expect to generate low single digit GMV growth in 2025 on an FX neutral basis. Based on current exchange rates, FX would be over one point of headwind for full year spot growth. This outlook is balanced against the risks and uncertainties surrounding tariffs and how they could change demand due to consumer elasticity. Our outlook includes a modest volume contribution from vehicles, following the Caramel acquisition although we expect the impact to be immaterial in Q1, and gradually ramp throughout the year, The existing vehicles business on eBay Motors was not included in reported GMV for many years since we did not charge transaction fees.

However, we will start reporting GMV for vehicle sales executed through Caramel's end to end service. For the full year, expect revenue growth modestly higher than GMV on an FX neutral basis. With FX creating a 40 basis point headwind, to spot growth, Advertising, shipping, financial services are all key drivers of revenue and take rate this year, Once managed shipping is fully ramped, we'd expect our U. K. C2C take rate to be slightly higher than our run rate prior to the Q4 of twenty twenty four. We expect non GAAP operating income growth relatively in line with revenue on an FX neutral eBay. We estimate FX would represent roughly 50 basis points of tailwind spot operating income growth at current rates. There are several headwinds embedded in this outlook that we expect to impact fully operating margins. First, the servers and networking equipment depreciation dynamics I called out for Q1 will be a 0.5 headwind for full year gross and operating margins. Second, based on our updated ramp schedule, U. K. Managed shipping should negatively impact operating margins by roughly 30 basis points due to gross revenue recognition. We continue to expect positive operating income dollar contribution from this program in 2025.

Third, we estimate nearly 20 basis points of M and A related headwind These headwinds are partly offset an estimated 30 basis point tailwind from FX based on current rates. We forecast capital expenditures to be between 45% of revenue for the full year. We are significantly increasing our GPU capacity again in '20 I'm pleased to be able to do so within our historical average budget. We expect our non GAAP tax rate to remain stable at 16.5%. As it pertains to free cash flow, have a number of unique tax considerations in 2025. In addition to our standard tax payments, in Q2 of twenty twenty five, we expect to pay net cash taxes of nearly $650,000,000 related to our AdavenTA [indiscernible] Adient and G market transactions in 2024. We will also pay the final year of our repatriation tax obligation for $292,000,000 in Q2. Additionally, changes to the tax treatment of R and D expenses represents a headwind of over $100,000,000 in 2025. While these unique items were weighed on reported free cash flow this year, excluding these impacts, normalized free cash flow is expected to be comfortably north of $2,000,000,000 None of these impacts are expected to repeat in 2026 with the exception of the R and D headwind which will be less material as we have built up a five year history of capitalized R and D assets.

On the capital allocation front, we are targeting share repurchase of at least $2,000,000,000 in 2025. Our Board also declared a quarterly dividend of $0.29 per share for Q1 of twenty twenty five. To be paid in March, an increase of $0.02 from the quarterly dividends paid out in 2024. Based on these assumptions, we still expect non GAAP earnings per share growth in the high single digits for 2025. In closing, eBay delivered strong financial results in 2024. Improving our GMV operating income and EPS growth year over year. We have created a solid foundation for 2025 and our outlook reflects our confidence in eBay's initiatives despite tariff and macro uncertainties it demonstrates our ability to generate sustainable, long term growth and deliver healthy capital returns and robust earnings for shareholders. With that, Jamie and I will now take your questions.

Thank you. We will now begin the question and answer session. In the queue, Your first question comes from the line of Michael Morton from MoffettNathanson. Your line is open.

Hi there. Thank you for the question. I I'll start with one. I would love if you could size eBay's position and exposure to changes in de minimis shipping and maybe just specifically to China, I know there's a lot of moving parts with that, but from what we see, it appears that most of your large category offerings are already sitting in U. S. Warehouses when we look at shipping times. So that would suggest they've gone through proper channels and tariffs Is that a reasonable assumption? And then I have a follow-up after this.

Yes. Michael, yes, it is.

If you look at the China to U. S. Quarter, that makes up approximately 5% of total GMV for eBay eBay.

China overall is a little less than 10% of GMV. But approximately three quarters of our Greater China volume is forward deployed. So as you said, it's already subject to tariffs. And of the remainder, about half of that is we manage that directly through a program we have called Speedback, which obviously can help sellers handle the complexity of tariffs. As cost is not the only challenge. So overall, we're planning to do all we can to help sellers and buyers navigate these changes with as little disruption as possible we feel confident in our diversified global marketplace can help them adapt to changes in tariff policies.

That's great. Thank you.

And then another question, you show the chat GPT operator in the presentation and there's a view there's a lot of changes coming to the e commerce discovery funnel. Some retailers are treating this differently. They want to wall off the agents or assistants and others want to open up to them. Would love to know eBay based, like you've obviously indicated one thing so far, how you're thinking about this big picture over the long term? As consumer behavior could be shifting?

Yes, look, we were one of the first companies to collaborate with OpenAI on their research preview here. And our feeling is that we're obviously building a lot of great agentic technology on eBay, whether that's in how products are sold with magical listing or how they're bought with Shop, Look, Explore, But we've really focused on having a differentiated set of inventory over 2,300,000,000 listings and see an opportunity to allow our sellers to get greater exposure to more sets of diverse buyers. So it's why you see us doing the preview with OpenAI You see the partnership that we've created with Facebook around marketplace is really about opening up that inventory.

If you think about what we've been doing for decades in buying Google placement ads or the SEO work that we've doing, that we've done, those have been good sources for us to acquire new buyers into into eBay. So we've been looking at it as another channel, another opportunity [indiscernible] but we've continued to build out all of our own agents and run our own pilots internally as well. To just continually improve the shopping experience on eBay eBay.

Thank you.

Your next question comes from the line of Lee Horowitz from Deutsche Bank. Your line is open.

Thanks so much for the question. Maybe as we look out to 2025 and sort of growth FX neutral growth, maybe no better than where you're exiting 2024. Can you perhaps break things down a little bit more in terms of what you're thinking about in terms of focus category growth next year? That continue to improve? Anything as it relates to expected focus category expansion? Or perhaps maybe step back in the core business around the macro? Any help on those moving pieces would be great.

Yes. No, we can see continued momentum in the work that we're doing in focus categories. So if you look back over the last two years, we've had really healthy growth there. 6% last quarter, 5% over the course of the year. In our largest category in P and A, we've had mid single digit growth now for two years. So we feel really good about the momentum in the business and what we're seeing. And the continued pace of innovation. We're going to continue to invest in existing categories as well as in new categories. You see our core categories have gotten stronger as well over the course of 'twenty four. We had a roughly one point growth in our core category business And we see a lot of opportunities in additional work in our focus categories. So in fashion, we have the opportunity to go much deeper. I talked about some of that on the call. We added UK fashion to our focus categories, etcetera. So we still have five categories that are over $10,000,000,000 of opportunity. We see a lot of growth. We actually think the non new in season will grow faster than new in season.

And that's what we've been seeing on our platform, which is really great and healthy for us. For the long term growth of the business.

Okay.

And then maybe one follow-up on the Facebook Marketplace partnership. Any more details you could provide as it relates to just the specifics of how it works? Any limiters as to how many listings you guys can maybe show on their marketplace? Anything as it relates to sort of revenue share? I know you're not going to give the details exactly, but sort of how the economics may work And anything you're seeing early or you expect to see in terms of relative ASR of what you may sell through that marketplace versus sort of ASPs that you get on sort of your core eBay platform?

Yes. Look, we think the partnership is great for the eBay seller community. As they can benefit from Facebook's scaled audience and the large demand that they have. And similar to what I talked about with OpenAI where we see it as meeting customers where they are and helping our sellers broaden their reach. So So we'll continue to bring a broader array of unique eBay listings there. We feel like it's great because we get all the benefits of the trust for the buyers there. They get the day guarantee, the checkout process and the post transaction services. On economics, we usually don't comment on specifics of partnerships, but we're excited by the potential. I'd say it's not we're not just simply buying ads on marketplace and it's not an eBay off-site ad product. But I'd also eBay, look, it's still early days. So we're encouraged by the early learning. But we're gradually scaling up the test and each company is working to optimize the experience.

Great. Thanks so much. [indiscernible] next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is open. Thanks so much for taking the question. Maybe two if I could. First, curious for your take on the overall health of the consumer. There seems to be a bit of a renewed debate among investors on how to interpret the state of the consumer based on sort of income levels and discretion over non discretionary spend. We'd love to get a sense of what you guys are seeing across the platform and across some of your geographies. And then in terms of focus categories, the momentum that you built coming out of 2024, how would you want folks to think about the potential for that momentum to continue And what are the building blocks of sustained focus category growth that you're most focused on executing on deeper into 2025? Thanks so much.

Yes. Same with the macro environment continues to be dynamic as it was through 'twenty four. I'd say demand in The U. S. Has been more resilient with trends in The UK and Germany still relatively weaker amid lower consumer confidence and lower GDP growth there. And I just note that we've made significant progress last year despite these trends. And in 2025, we're going to continue to remain nimble would say the more affluent customers, our luxury businesses handbag, I talked about collectibles being double digit growth right now. And so I think it's more the less affluent consumer who is pressured in this environment. When you think about the momentum in 2024 of focus categories, we see us building on a lot of strengths that we've created and the momentum that we have in 2024. Building off of non new in season. So So I talked about collectibles, right? We are just getting started in how we're working with PSA, how we're working with TCG Player to take advantage of the opportunities in collectibles and build on the focused strategy that we have there. I'd say ditto for eBay Live and the growth that we're seeing and the new collectible based features we've launched there like case breaks and BuySpot, etcetera.

Have been recently increasing the exposure of what we have done in eBay eBay on the homepage and on our Live Hub I talked about the work in P and A and we see vehicles as not only another opportunity to drive growth in the business, but another opportunity to drive synergies with our parts and accessories business, which is one of our largest focus categories, as you know. And then when I look at fashion, Eric, we do over $10,000,000,000 in fashion. And in my opinion, eBay is just starting to innovate on this focused category, right? It wasn't until two quarters ago that you could even save your size on eBay, which is a pretty simple feature. And now we're using AI to do things like shop the look and explore and both great discovery and what that does is it really shows off the amazing inventory. And you can tell by the size of the category we have amazing inventory on the platform and that's what we hear from buyers. Soon being able to put our playbook against that category is exciting. So I guess I'd just say, I feel really good about the momentum in Focus categories, what we're seeing.

And the roadmap and the plans that we have for 2025 to keep that going. Your next question comes from the line of Ygalarounian from Citi. Your line is open. Hey, thanks guys. First, maybe just on the GMV outlook and from 1Q and the full year. Steve, I think you hit on some of the components like autos, GMV coming in, but maybe a little bit more color to help. A, just what's happening in the deceleration between 4Q and 1Q what are you seeing there? And then as we work our way through the year, there's an implied acceleration in GMV. Again, I know you gave some of the puts and takes around autos. This is Is it mostly around autos? Is there a contribution in your guidance from the Facebook marketplace?

Coming through. Just how do we think about all the puts and takes between now and the end of the year?

I'll pick this one up. Good to speak to you. As Jamie alluded to earlier, we are continuing to operate in quite a challenged macro environment. Particularly in Europe. And now more recently, we're facing the uncertainty around U. S. And de minimis changes. There's three factors I would call out. With regards to the Q4 to Q1 detail. First of all, I'd eBay, did have a particularly strong uptick in demand late in Q4 during the holiday season, which we're coming off the back of. Secondly, we are as I mentioned, continuing to operate in this environment. And looking at a number of scenarios and we've implied some of that in our first quarter guide. And then thirdly, there's some calendar timing dynamics. Creates roughly a point of headwind for GMV growth for Q1 partly offset by the beneficial timing of Easter. In terms of offsetting some of those headwinds, we obviously continue to drive momentum. Across focused categories across the geo specific investments, particularly the likes of The UK, the horizontal innovation that is driving greater trust across the platform momentum for the rest of the year. Damien has talked a lot about the focused category momentum. We're excited about the investments we continue to make.

In 2025. That sequentially will improve GMV as we go through the year. And gave us the confidence to talk about the positive GMV momentum for 2025.

And I'd just add, we don't see it as the caramel vehicles is what's driving the growth in Q1, that's going to be relatively immaterial. And in the full year that's going to be very modest.

And I would say the same about Facebook Marketplace. We're excited by the test, but we're not baking in in material contributions to the low single digit color that we put out there. It's really the strength and underlying momentum of the business that makes us feel good about the rest of the year and what we're doing. And Steve talked about some of the one time impacts the calendar, etcetera, in Q1. And overall, we feel like really good momentum off this off the backs of the strategy that we've laid out and the plans that we have for 2025. eBay, thanks.

All that's really helpful. My follow-up, maybe back to AI and proprietary LLMs. Jamie, that you called out.

It sounds like we're seeing benefits both here on obviously the platform improvements and then also on the cost side, you call that engineering And any way to quantify are you able to you guys even do that, the the benefit that you're seeing from AI whether it's on the top line or on the margins and what the particularly on the margins, maybe what the longer term opportunity is and cost efficiencies that you could drive here? Yes. Look, I mean, the level of change we're seeing kind of quarter after quarter is pretty significant. As I mentioned, the models in 2024 are 100 times larger than the ones that were using for 2023. In terms of quantizing the size of how our consumers are using this, Over 10,000,000 unique sellers have used our Gen AI features to date, and they've created well over 100,000,000 listings and that generates several billion dollars of GMV. And it's a product that has 90% customer satisfaction rates in terms of just the selling side. On the buying side, continue to roll out new features and enhance things like Shop A Look, and Explore. As you think about productivity of our models, in 2024, we achieved a 30% improved accuracy on five of our kind of core e commerce tasks.

And eight times smaller model size, 10 times lower latency, So we've not only kind of been putting more features to change the experience out there, but we've been doing it in a much smarter way with kind of how we're consuming and etcetera. So we're really excited by the consumer facing features, We're excited about how our employees are embracing this across all the areas that you mentioned. And I think we're going to see another step level change in how we leverage AI both for our consumers and internally next year in 2025.

Thank you.

Your next question comes from the line of Nathan Fether from Morgan Stanley.

Your line is open.

Hey, everyone. Thanks for the question. You made a lot of interesting feature enhancements in The UK, which seem to be driving some strong early traction. Are there any features or initiatives that are working well, which you could roll out more broadly? And maybe thinking in particular [indiscernible] Yeah. Like the feature that we've rolled out globally that's working well is magical list Across all of our markets, what we're seeing is really great performance from sellers, really good satisfaction, etcetera. As it relates to the C2C approach in The UK, we feel really good about what we're doing there. We rolled out the buyer fee and that's been performing better than our expectations as I talked about, although it's still early days. And with managed shipping, we're really focused on how do we create an experience where we're making a lot easier for sellers because they don't have to go through kind of the choice of what services do I want to use and what do I [indiscernible] And for buyers, we get better tracking. And the early work on this, I mean, it's very early days, right? We're just ramping up this business in The UK. But what I would say is that we hope to perfect it over time really get CSAT.

And every market is different as it relates to shipping. There's very different dynamics and there's some unique dynamics in The UK that make it specifically attractive to have managed shipping in that market. So that's really where we're focused on growing that and really how it ties into the overall C2C value proposition that we put together. Which so far is working great. Our UK C2C business is growing double digits faster it was before these changes and so we're pleased with the results.

Great. Thank you. [indiscernible] Your next question comes from the line of Collin Sebastian from Baird.

Your line is open.

Thanks guys. Good afternoon.

First off, on advertising as a follow-up and the up [indiscernible] I guess how are you thinking about the longer term attach rate opportunity? Yes. Look, we were really pleased with the growth. We had 16% 1P growth in our ad business in Q4 and 17% overall. And really no, it's still the strength of the core platform. So our CPA business, Promoted Listings General was the largest driver in growth in the quarter. And we still think that has a lot of runway and opportunity with optimization, with more seller using it, etcetera. We continue to see nice growth in our CPC business.

And our newest products are launching, but they're still they're still not the workhorse that the CPA is. And we continue to put new features out there. I'd probably call out the AI First dashboard that we launched last year is really helping sellers navigate advertising And I think about the same way as listings, right, which is what we're doing is using AI and other technologies to make it really easy to adopt to manage, for example, CPC based campaigns on the platform, etcetera. And that's what's been performing well. So we continue to see a lot of runway, a lot of opportunity with advertising and excited both by the existing formats and the optimization and the new ad products that we've launched. Okay. And if I could just ask one quick follow-up on the magical listings tools. Does that have a material impact on trading card selection and volumes? And if it did, I guess, would you expect to see a similar tailwind as other category starts start to adopt that? Thanks. Yes. Look, it's really great for that category because kind of seamless. And if you've been been paying close attention, it's not just that we've done magical listing in that category, which is great, but we've been doing better integrations with our partners like PSA, for example, So now if I list a graded card, we'll actually bring over all the data from TSA about the history of that card right into the view item page on eBay eBay.

A couple of weeks ago, we made it easier to kind of copy and do more research etcetera, around those cards. We've launched better integrations between PSA and eBay, so that I can now launch auction and fixed price listings. Right as I've had them graded onto the eBay platform, So I would say in general, what we're seeing is, it was a strong quarter for collectible card games, etcetera. But it really leveraged all of the innovations that we have been driving in trading cards to make that successful. But yes, we feel bullish that as we as we have expected in that category, we're rolling out just make it easier and easier to list. And the way I think about it is, the average household has $3,000 of items that they could sell online. Less than 20% of that is online. And if we make that incredibly easy through magical listing, we can bring on so much attractive inventory onto the platform. And when we get those buyers to turn into sellers, they become 2x to 2.5x more valuable, as buyers on the platform. And they bring really unique inventory to the platform. Think about all the stuff that's used sitting in people's houses, garages, etcetera.

To bring online. And so that's why we're really I'm really excited eBay the advancements that we're making in the progress, the satisfaction that we're getting from customers and the reception in general from the seller base. Thanks, Jim.

Your next question comes from the line of Ross Sandler from Barclays. Line is open. Great. Just one on The UK and then one on the operating margins.

The UK C2C growth acceleration, how does that map to what you saw in Germany in the first few months and is the double digit improvement is that kind of now at a new equilibrium or should we increase further potentially And then on the revenue side over there, does that fully catch up to GMV once we have like a full quarter in 2Q? Any color on that? And then I'll ask the follow-up next.

Yes, I'll take the first part and then Steve can talk about what we're seeing on the take rate. So yes, we're really pleased with the improvement that we've seen in the business and similar to what we saw in Germany. Remember that we launched there, I talked about a 20 improvement in CSAT, and we're seeing here 20 improvements in C2C first gen listers new and reactivated sellers, in local pickup GMV. So exactly what we intend to see. Your question on fully ramped, what we saw in Germany was even a year post launching, we continue to see that strong momentum in the business. And that's what I expect to see in The UK. We've got a strong CSAT It's really resonating with customers, etcetera. Steve, maybe you want to talk about the overall take rate?

Yes. So with regards to the bioprotection fees, we've recently put those in into The UK, and we're still ramping managed shipping as we go through the quarter. And this phasing is creating a temporary headwind for Takeaway. Obviously is mostly offset by Ads and Financial Services in the guide that we've given. As it pertains to your question about getting back to normalized levels, in the full year, we are expecting a tight rate expansion in 2025 overall.

We'd expect advertising to the biggest driver of that. But as we sort of noticed, as we get the full ramp out of The UK initiative with the bio fees and the managed shipping goes through, we expect our UK C2C take rate to reach a run rate slightly higher than the level prior to The UK initiative.

Got it. Okay. And then on the op margin guidance for full year, Steve, think the slide said that Op Inc will grow in line with revenue, but it was also like a hundred bps of like those kind of headwind items around depreciation and a few other things offset by FX. So I guess the question is, are op margins, non GAAP op margins going up or are they flat? Like, I was just a little confused as to what we were saying in that slide.

Yes, that's probably. So we continue to target the optimal combination Our GMV growth and operating margin to Mac maximize operating income dollar growth. That's the key thing for us. That's our North Star.

In terms of generating operating income dollar growth. And we're obviously pleased with the progress that we made in 2024.

As you stated and as we stated in the outlook, we've got our expectations is that operating income dollar growth will modestly be ahead of our low single digit GMV growth for 2025, but it implies the operating margin is relatively flat Despite headwinds, of around 70 basis points net, which I outlined earlier. The depreciation around 50 basis points U. K. Managed shipping because we're recognizing that growth. About 30 basis points from M and A pressure of 20 bps offset by some FX goodness of 30 basis points. We'll continue to get the balance right. We're going to continue to reinvest in the business drive long term sustainable growth while continuing to deliver robust earnings growth in 2025. Thank you.

Your next question comes from the line of Nick Jones from Citizens. Your line is open. Great. Thanks for taking the questions.

I guess if I could ask maybe a bigger picture question. As we look at all these kind of great innovations and investments you're making around product and focus categories, And kind of tie that to kind of GMV growth expectations and then maybe a step further laying that against kind of the broader backdrop [indiscernible] e commerce continues to grow, retail it is more difficult to retail is kind of hanging there. And I guess philosophically, how are you thinking about eBay's eBay position in a world where kind of wallet shares kind of consolidating to the Amazon, the Walmarts of the world and then Shopify is enabling a bunch of single product for any companies to come. I guess how do you view e commerce from here as you're making these investments and where a marketplace like eBay sits in? Thanks.

Yes, good question. So when you look at let's start with our focus categories. The whole thesis that we laid out was getting focus categories to grow at e commerce rates of growth and and they have been. So our focus categories are growing 5% in 2024. In aggregate, we actually think we picked up share in 2024 in our focus categories eBay a bit. And so we're seeing exactly what we intended to see. When you look at the overall e commerce numbers to your question, it's important to take into consideration that UK and Germany are second and third largest markets. And when you look at those e commerce growth rates, over the course of last year, they've been kind of hovering around the 0% range.

And that's overall e commerce. So that includes consumable e commerce, which is like grocery pickup, etcetera, is all in those numbers, which which has been growing, especially with inflation. And we play more on the discretionary e commerce. So from a relative perspective in this macro environment, we feel really great about the performance that we're seeing. The past three quarters, we've seen positive GMV growth. But we're only partway through the strategic work that we're doing. As we get to new focus categories, as we've made improvements in the horizontal experience, leveraging Gen AI, we've gotten to the point where our core categories are growing as well. And then we're continuing to invest really around this non new and seasoned area where we see market share growing potentially even faster than new in season over time. So, we're going to continue to launch new areas new verticals, new categories like I talked about with vehicles and eBay eBay we're locking a much bigger TAM opportunity in The UK what we're doing in C2C. And we feel good about building off of the momentum that we have even in this macro environment. Operator, can we do one last question please?

Your final question comes from the line of Steven Chu from UBS.

Your line is open.

Thank you. So Jamie, the slide in your deck about Karna was interesting.

Just wondering if there's an opportunity for you to capture some share of the economics that they might be generating because presumably you're helping them source loans from the activity on eBay eBay. Or should we just view this as a potential accelerant to the GMV growth?

Don't ever comment on specific economics of specific partners. What I would tell you is that Klarna is actually it's a partnership that we announced in Q4 to expand to most of our countries in Europe. And what is nice about it is it's really helping consumers lean into higher ASP products. So when we see the average order value on Klarna, it's three to four times higher than the market average.

And it's a continuation of what we've been doing, which is providing more choice to customers, more forms of payment, etcetera. And it's driving it's helping us drive incremental GMV on the platform. If I take a step back, when I look at what's happening [indiscernible] It's not just about kind of the the economics that we've created by bringing payments on the platform. It's the synergies that we've created with our strategy. So one that I would call out recently is eBay Balance. So by bringing payments in house, that's enabled us on our C2C strategy to basically help those buyers who turn into casual sellers buy more on the platform. And what we're seeing is that it actually stimulates the flywheel for us. It helps drive more buying behavior. The majority of them are using their eBay balance to purchase back on eBay eBay. And in that example, we end up with a cost of payments of zero. And so it does help us on the expense side as well. And it's another example of how we're leveraging our financial solutions product. I'll end probably with seller capital. Another example of what it does is it helps sellers get loans in a few minutes and grow their business on eBay eBay.

And I was talking to Angie, who's one of our sellers, she runs a store called Green Go Surplus, And around the elections, her business was a little soft as she had to buy a truck for her business. And she filled out we work with a partner called Libris she fills out this form in a couple of minutes and then relatively quickly has that loan. And she was like, this helped me get through that tough time period of my business. I've already paid off a third of the loan here really quickly. And it's another example of how we're kind of supporting small business on the platform. So excited for the Clarna deal, but also just excited more broadly with the work that's happening with our financial services team. [indiscernible] And this concludes eBay's fourth quarter twenty twenty four earnings conference call. Thank you for your participation. May now disconnect.