eBay Inc. (EBAY) Presents at Goldman Sachs Communacopia + Technology Conference 2022 (Transcript)

eBay Inc. (EBAY) Presents at Goldman Sachs Communacopia + Technology Conference 2022 (Transcript)
eBay Inc. (EBAY) Presents at Goldman Sachs Communacopia + Technology Conference 2022 (Transcript)

eBay Inc. (NASDAQ:EBAY) Goldman Sachs Communacopia + Technology Conference 2022 September 12, 2022 1:00 PM ET Company Participants Jamie Iannone – Chief Executive Officer Steve Priest – Chief Financial Officer Conference Call Participants Eric Sheridan – Goldman Sachs Eric Sheridan Can you hear me now? There we go. Okay. Welcome again everybody. I do know everybody remains to be discovering their seats, however within the curiosity of holding issues on time let’s go on to our subsequent fireplace chat. So it is my pleasure to have the group from eBay Jamie Iannone, CEO; Steve Priest, CFO. Jamie, Steve all the time nice to catch up and thanks a lot for being a part of our mixed Technology Communacopia Conference this yr. Jamie Iannone Great to be right here. Thanks. Steve Priest Good to see you. Question-and-Answer Session Q – Eric Sheridan So Jamie, I feel if we begin possibly with an introduction. I feel the corporate has been by way of one of many extra attention-grabbing transformations to a mixture of the pandemic. And since you’ve got joined and Steve, clearly, joined through the pandemic as nicely. Maybe simply degree set for us. What is the corporate confronted by way of the pandemic? What are your key strategic initiatives? And how are you feeling about executing in opposition to them at this level? Jamie Iannone Yeah. Well, thanks for having me. Great to be right here. So if you look at the transformation that we made 2.5 years in the past, actually leaning into non-new in season and targeted class I feel it traces up very nicely with among the difficult instances that we’re seeing now. I’m significantly glad about what we’re seeing on targeted classes. The thesis was actually to vary buyer satisfaction and NPS and that will change the expertise for patrons and sellers on the platform. And that is precisely what’s occurred. So should you look at the information that we confirmed at our Investor Day with what occurred in our sneakers class, for instance, after we invested in it as targeted classes to what we talked about final quarter with targeted classes rising 9 factors forward of the remainder of the enterprise simply really feel actually good. We simply introduced some current acquisitions, which we will discuss within the vertical house. But additionally should you look, nearly all of our funding remains to be going to horizontal efforts throughout the platform. So the work we did in funds and the innovation that we have pushed even after changing $80 billion to undergo our platform with a lot of new capabilities now, for instance, with purchaser results et cetera, the work that we’re doing in promoting and actually throughout the board with issues like shops, customers itemizing expertise and sellers. So actually glad in regards to the tempo of innovation on the platform. And I assume I’d finish with I’m excited in regards to the group that we have been in a position to put collectively. Not simply Steve, however greater than half of the management group is new and actual specialists within the subject. They’ve been in a position to rent world-class expertise into the group and in order that’s carried out very well. Eric Sheridan Okay. We’re going to come back again to all of that in thoughts lots of that for a a lot wider ranging dialog. I feel simply leaping proper into the broader client, what are you seeing by way of the eBay client proper now? Obviously, it is a unstable macro atmosphere basically, however you talked quite a bit in regards to the eBay client particularly those which might be energy patrons, energy customers on the platform producing an outsized quantity of GMV, how are a few of your initiatives lining up on the customers you need for what your strategic objectives are versus the broader macro atmosphere? Jamie Iannone Yeah, I’d say a few issues. One is nicely, we’re definitely not proof against the macro atmosphere and what’s occurring globally around the globe, however our give attention to non-new in-season has made our enterprise extra resilient from that standpoint, as a result of frankly eBay provides lots of worth. For instance, we lean into our refurbished classes and people have been and actually attention-grabbing alternative to get like new merchandise for 30% off. So from that alignment is de facto nice. When you look at the fanatic purchaser on eBay, they spend over $3,000 on common. They store in eight classes outdoors of their unique class they usually store with us 30 instances a yr. So we’re actually targeted on how will we not solely purchase individuals in as fanatic patrons on the platform, however how will we develop new patrons into fans. And then as we get them onto the platform, how do we actually drive the multiplier impact of getting them to go throughout class of them to turn out to be sellers on the platform after which to purchase in different classes throughout the expertise, and that is been understanding very well for us over the time interval. So Steve has talked on a few the earnings calls in regards to the variations we see with worldwide and our US companies simply due to the conflict, due to what’s occurring in inflation and macro impacts, and provide chain. But general, if you look at the enterprise and our technique by way of what we’re doing, we’re actually excited in regards to the progress that we’re seeing, particularly, in our focus classes and the efficiency of these patrons. Eric Sheridan Okay. Great. I wish to come again to these targeted classes as a result of possibly you may lay out for individuals who do not know eBay as nicely or weren’t as aware of what you laid out at the Analyst Day. What are your key focus classes that you just’re investing behind? How ought to we be interested by them widening out the utility on the buyer-side when you concentrate on these targeted classes turning into an even bigger proportion of the combination over time? Jamie Iannone Yes. Well let me take a step again. So if you look at eBay, eBay has the advantage of horizontal scale. We benefit from breadth. We benefit from having a lovely CAC as a result of after we purchase a buyer in we will monetize them throughout eight totally different classes on the positioning which is particularly useful. Now in lots of instances, the true advantage of eBay is that we have now 80% natural site visitors on the platform and so a lot of patrons. So we began with the sneakers class and watches doing vital modifications in these classes, laying out issues like authentication. So we now authenticate merchandise and sneakers and watches and purses, and we begin that in a single class and geography after which broaden that across the globe. So we did purses within the US, then we expanded purses to UK and Australia. Last quarter we’re now authenticating purses in Germany. Why does that make an enormous distinction in that class? A, is it raises the extent of belief that we have now on the class {that a} purchaser has in that class; and B, we additionally defend the vendor as a result of the vendor will get intermediate on the best way again. So it is an actual sport changer by way of NPS and CSAT on the class. So this most up-to-date quarter we introduced jewellery. We’re doing that with a partnership with GIA. We’re actually altering the game-changing degree of belief in what we’re doing in jewellery on the platform. And the technique has been by way of the again finish of 2021 we have gotten to twenty% of GMV on the positioning with targeted classes. At the Investor Day we laid out attending to 50% of GMV by the top of 2024. And in order that’s actually sort of the ramp that we’re on. A variety of improvements, for instance, most just lately in our components and equipment class, huge class over $10 billion of GMV on the enterprise and an actual alternative there to vary the belief change the expertise and alter the vertical particular advertising and marketing that we’re doing. Eric Sheridan Okay. In phrases of the investments it’s a must to make as you construct and scale one in every of these focus classes is there a strategy to give us an instance of among the key investments it’s a must to make if you attempt to widen out one in every of these focus classes? And are there some which might be additional alongside within the funding cycle and a few the place the funding cycle remains to be form of simply beginning? Jamie Iannone Yes. So a few issues. One is we’re doing much more vertical-specific advertising and marketing — full funnel vertical particular advertising and marketing actually directed at buying fanatic patrons into the platform. In one in every of our early conferences this morning I used to be with an investor that mentioned Jamie that is nice. I’ve been wanting at this class and I received a focused promoting inside my Uber app in regards to the work that you just’re doing in that class, which was attention-grabbing given Dara was the final individual up on stage small world right here. But that work is de facto about how will we make it possible for persons are conscious and we’re driving consideration in these key focus classes on the positioning. So let me take an instance of sneakers. In sneakers, eBay used to just do horizontal promoting proper, like eBay fill your cart with shade et cetera. Now you see us like on TikTok doing particular influencer advertising and marketing. We had a marketing campaign a couple of quarters in the past which received 4 billion views. People generated hundreds of client chain invented movies. This is a really totally different eBay. In that class we invested into advertising and marketing. We invested into decreased ultimate worth charges and we noticed such nice progress that we confirmed at Investor Day that we additionally just lately reintroduced monetization again for sneakers over $100. So all of it is dependent upon the class. You take that versus one thing like components and equipment. eBay is the chief in UK and Germany and a really sturdy participant in components and equipment. So we have now over 40 million patrons in components and equipment on the platform. So there, whereas we’re investing in vertical-specific advertising and marketing, an enormous a part of our focus is how do we alter the expertise on the platform. Eric Sheridan Got it. Okay. That’s key. And then, I wish to — clearly, the classes to some extent are provide aspect of the equation. And after we take into consideration the demand aspect of the equation or purchaser progress, clearly, you are seeing the trajectory of purchaser progress come down, however you’ve got defined it because of the main target of the way you’re form of aligning investments in purchaser progress in opposition to yield or return from a GMV foundation. So are you able to simply lay out that view for traders, so that they higher perceive after they see purchaser progress at a sure degree? What among the underlying selections as an organization you guys are making, as to tips on how to make investments and take into consideration the trajectory of purchaser progress? Jamie Iannone Yes, I’d say, should you return to 2019, the corporate was actually targeted simply on buying energetic patrons, doing issues like couponing and providing percentages off, et cetera, to deliver extra energetic patrons on the platform. When I got here in, we modified that technique, actually targeted on how will we flip patrons into long-term fanatic patrons on the platform and construct a trusted relationship. And why is that necessary? Because our fanatic patrons characterize 70% of GMV on the platform. So we’re actually targeted. They — like I mentioned, they spend over $3,000, which is sort of a membership mannequin degree of spend with out a loyalty program. They store in over eight totally different classes. They store 30 instances a yr. So actually leaning in from that perspective. When I look at the underside — actually the underside 50% of all energetic patrons, they solely contribute 5% of GMV. So what I mentioned at Investor Day is that, we count on some near-term stress on each energetic patrons and fanatic patrons, due to the lapping. It’s a 12-month metric. For instance, the lapping of COVID results that we have now, additionally what is going on on within the macro influence, however the technique of going after and buying fanatic patrons is completely the fitting one. And so, I feel, a greater indicator for traders than wanting at energetic patrons, which we’re much less targeted on is to look at our targeted class progress, as a result of it is a greater main indicator of what is occurring within the enterprise and the success of the technique that we have laid out. And what we talked about final quarter is, we had a 9-point differential in focus classes. We talked about among the successes that we have seen class by class. And we discuss how the playbook that we rolled out within the US is working for us internationally as nicely. And so, we’re persevering with to broaden class by class what we have accomplished within the US and our different main markets. Eric Sheridan Maybe one query I get a good bit from traders is, how ought to people be interested by turning an enthusiastic purchaser into form of a extra enthusiastic purchaser with a wider array of class publicity versus turning a non-enthusiastic purchaser into an enthusiastic purchaser. How ought to we be interested by the form of matrix of what you see within the enterprise and tips on how to finest allocate capital to form of convert patrons into that kind of habits sample? Jamie Iannone Yes. So I’d say a few issues. One is, if I look at the spend of our fanatic purchaser versus 2019, it is up double digits. So we’re truly being profitable at taking our fanatic patrons and getting them to do extra on the platform. Part of that’s, is the superb expertise that we have created. I simply purchased two pairs of authenticated sneakers, some Nike or Jordan 1, they usually are available a ravishing field. They include an NFC tag. I can maintain my telephone as much as see it. I do know that they have been authenticated. So, the standard of the expertise on eBay has modified dramatically. And I can simply let you know tales from each sellers and patrons about, wow, this makes me wish to purchase a lot extra on the platform. For a vendor, as nicely, it is the identical kind of expertise. So what we’re seeing is sellers might have been giving us 20% of their watches or 30% of their watches. And now, they’re like we’ll put all of our watches on to eBay, since you’ve created this superb intermediated expertise between patrons and sellers. So, that is an enormous focus. We nonetheless are targeted on changing patrons into fanatic patrons however we have moved away from the technique of, let’s simply go on the market and get energetic patrons. What we’re truly doing is attempting to amass fanatic patrons right into a class. So, who’s that components and equipment do-it-yourself fanatic that is on the market? And so we’re at the New York Auto commerce present. We’re working with key influencers in that class that the client actually reacts to, to deliver them instantly into {the marketplace}. We’re working with key influencers like we simply did one thing with Chase Utley and Miles Teller that went viral to sort of deliver individuals in. So the technique is — will likely be to graduate patrons to turn out to be fans patrons however extra importantly, let’s exit and goal and purchase them. Lastly let me say, as a result of that is necessary is eBay’s means to amass them must be higher than any particular vertical competitor, as a result of we will monetize them throughout eight totally different classes. So, if I’m a selected vertical competitor in a class, I’ve received to monetize that person simply in opposition to that class. At eBay, if I purchase a watch purchaser, we will promote them artwork, we will promote them components and equipment and in order that’s nice. The different frankly massive profit is that 80% of our site visitors is natural. 10% is paid, 10% is basically free by way of issues like search engine optimisation, so simply leveraging the large scale and site visitors that we have now coming to us instantly is the opposite big profit. Eric Sheridan Okay, tremendous clear. I wish to flip to different avenues of monetization that you’ve got talked quite a bit about within the final couple of years. You’ve just lately talked in regards to the traction you are seeing in first-party promoting. You have a number of merchandise, but it surely’s nonetheless an space the place you count on to see lots of innovation and proceed to see each off-eBay promoting on-eBay promoting profit for sellers. Talk a bit bit about what your suite of advert merchandise appear to be as we speak and the way you see them evolving within the subsequent couple of years to broaden out among the promoting income you have got on the platform? Jamie Iannone Yes, I’ll begin after which, Steve can leap in on among the issues that we talked about at Investor Day. So, we grew this enterprise to over $1 billion high advertisers on the platform actually on the backs of a single product, which is our Promoted Listings Standards product, which is basically a pay per acquisition kind of product. And actually nice traction in that product, however nonetheless an enormous quantity of alternative due to the ROAS that we offer to our sellers, sellers basically that use our Promoted Listings are shopping for — or sorry, experiencing double-digit progress of their gross sales on the platform, so it is actually wholesome. And so, over the past yr, we have launched three new merchandise in promoting. We launched Promoted Listings Advanced, which is a CPC-based mannequin. We launched External eBay Advertising, which is the flexibility to associate with our sellers to listing issues externally and get them promoted. And the third is Promoted Listings Express, which is a fixed-fee product, actually designed round our auctions format. And so, we introduced final quarter, these are up 30% quarter-on-quarter and it is nonetheless early days, however we consider they’ve lots of potential. Do you wish to speak in regards to the broader issues we laid out, Steve? Steve Priest Yes. Good morning. Eric. Good morning, everybody. Glad to see you. I feel there’s a few like knowledge factors that I referred to. At the second quarter earnings, we talked in regards to the momentum in promoting. The truth we’re form of 20% — seeing 20% progress over the form of core quantity on the platform, which is a testomony to the execution. We’re about 1.5% by way of take charge on advert aspect of issues as a proportion of GMV. And at Investor Day, as one of many key pillars of driving shareholder returns, we talked about getting that to round 2% by 2025. So as Jamie talked about 4 merchandise, three of them comparatively nascent seen nice execution, an amazing trajectory for the enterprise that can drive shareholder returns over the following few years. Eric Sheridan What are among the key investments you may need to make whether or not it is on the product aspect or the measurement attribution aspect? Are there nonetheless issues we must be watchful for of investments that should be made to marry form of your ambition in promoting with the present ability set in promoting? Jamie Iannone You know, we take into consideration – we take into consideration getting 5% higher day-after-day with what we’re doing in promoting. So we simply take into consideration a steady evolution of how will we make it simpler for sellers to take part in our Promoted Listings product after which how will we speed up the profit for our patrons. So I’ll offer you an instance is just lately we launched a visually comparable Promoted Listings a part of the expertise, the place if I’m in as an instance attire and I’m wanting at black cocktail attire with purple roses on them, I’ll see visually comparable different attire like that. It’s a Promoted Listings product but it surely’s additionally offering profit again to our patrons on the platform. We simply launched in components and equipment new health based mostly fitment based mostly modules. So if I’m in search of a selected components for an Acura MDX from 2017, I’ll see Promoted Listings similar to that particular fitment. So the thought with promoting is de facto simply this continuous march to make it higher each single day. And as Steve talked about, that is why we mentioned, for the foreseeable future. We count on our promoting income to outpace quantity due to the innovation that we’re doing from the product and expertise standpoint. Eric Sheridan Okay. Super clear. Turning to the fee aspect of the enterprise. This was the opposite amplifier or a mixture of income progress and dynamics which have improved lots of the harm round sellers. Maybe simply take a step again first and remind people what has been constructed on the fee aspect and the transition eBay has gone by way of. It’s been fairly a transition over the past couple of years on the fee aspect and the way the fee aspect now units the corporate up by way of interested by whether or not it is progress, vendor dynamics flexibility. However, you guys wish to body up form of the way forward for funds on the platform? Jamie Iannone Yes I’ll begin after which Steve it’s best to leap in. So if I am going again a few years, we mentioned we do $2 billion in fee income and $0.5 billion in working revenue. And I assumed no person thought eBay may pull off with that velocity getting $80 billion of quantity transacted on the platform, and actually happy with the efficiency of what we achieved there. The launch went very easily and we’re now intermediating, which provides patrons and sellers a lot extra selection on the platform, proper? We can now see Google Pay and Apple Pay. We had launched Afterpay in Australia. We simply introduced and applied a relationship with Klarna, as a result of in Germany there’s very particular fee strategies like invoicing which might be very engaging in that market and so opening up new fee strategies. But even having simply launched the platform, we’re persevering with to innovate into new areas like purchaser, FX, et cetera. So possibly you wish to discuss among the future issues that we’re enthusiastic about? Steve Priest Yes. So I feel I’d break it down into three areas. As you mentioned Eric, super execution from the group over the past couple of years to drive ahead. Number one is companies, two is belief and three is about selection. And in order Jamie alluded to by way of going after companies within the varied international locations that we have rolled out, not solely to provide that for patrons but additionally to monetize. Buyer FX is such an amazing alternative for us, excessive ASP. We’ve just lately launched the Bolt at eBay, the place you are driving and promoting increased common promoting worth gadgets. That’s the necessary crucial. The second factor, as I discussed is about belief. And so the truth that we have now a cradle-to-grave platform now, not simply from the commerce aspect however the fee aspect as nicely, will allow us to essentially drive higher belief on the platform significantly for our sellers. The quantity of unpaid gadgets has gone down considerably and that actually is driving the underlying belief on the platform, as a result of we’re in a position to seamlessly handle that as we go ahead. And then the third ingredient is selection. And so take into consideration as Jamie alluded to totally different markets, totally different alternatives. Klarna paying bill in Germany, it is a totally different market. Faster payout, so if I’m a vendor and I wish to receives a commission out extra swiftly, I will pay for these companies. And I feel the spine of getting that idea of companies belief and selection, is an actual alternative for us to go ahead as we laid out an incremental $300 million of profit, by way of the cycle of the investor interval that we talked about at our Investor Day, again in March. Eric Sheridan Certainly, volatility round FX, as a service is fairly apropos within the atmosphere, we discover ourselves proper now with foreign currency shifting round the best way they’re. Just strive all of it collectively on funds for us. When you concentrate on GMV progress versus funds progress, how ought to traders take into consideration these issues both being correlated with one another, or much less correlated with one another, as you layer in sure parts of companies within the funds piece. Steve Priest We’ve clearly, seen momentum over the previous few years, by way of our general take charge. The margin ought to truly the enterprise and the revenue that we have been producing. And so to your level, Eric, the core underlying take charge the ultimate worth price has continued to be comparatively constant, as we get the stability proper between our investor neighborhood and being a platform of selection as sellers. The incremental advantages that we have seen funds, we’re beginning to get in direction of the top of the lapping of that one other created super worth from a take charge standpoint, as we have gone by way of funds. That will reasonable a bit over time, even if we have talked about incremental alternatives with the funds initiatives that we laid out again in March. The third ingredient is de facto round promoting. And as we talked about earlier, going from about 1.5 proportion of GMV within the final quarter by way of to only round 2% by 2025. So we must always proceed to see the evolution of the take charge Eric, as we proceed to deliver these monetization gadgets in. But a little bit of the dislocation that we noticed, as you went by way of the funds intermediation course of for the final couple of years, noticed some divergence in GMV and income and that ought to normalize a bit bit as we form of go ahead, however nonetheless loads of alternatives forward for us as a enterprise. Eric Sheridan When you concentrate on take charge broadly and also you examine your market to different marketplaces there’s been a divergence. Maybe there will be this theme of convergence again to some extent, however how do you concentrate on the broader divergence take charge. Some of those classes have authentication. They’re very totally different than commoditized versus non-commoditized. E-commerce could be very totally different, by way of what you would possibly be capable to cost. How do you concentrate on take charge as a dynamic mechanism within the enterprise, over the medium to long run when you concentrate on the client and the vendor parts of take charge? Steve Priest I’ll kick off and possibly Jamie, can add. I feel it is about — as I discussed earlier, it is necessary that we have now to belief proper, not solely with our patrons and sellers. We stay extremely aggressive and so we’re wanting by way of the lanes of the competitors and ensuring that we get best-in-class companies for our patrons, as they form of come on to the platform and ensuring that is aggressive. The different factor, that I wish to say that, we do have a really resilient monetary mannequin and it offers us the flexibleness to ramp issues as much as get traction after which monetize them at a barely later date, as we go ahead. And so that you noticed us try this in sneakers for instance, as we form of lent into authentication initially and took it ahead. I discussed this on our final couple of earnings calls. If you concentrate on the financial mannequin or the monetary mannequin akin to eBay, final quarter, we introduced we touched 4 million gadgets from an authentication standpoint and it is round a degree of margin. For many opponents that will be extremely difficult. For firm like eBay, it means we will lean in. We can make investments for the longer term. We can construct companies that sellers and patrons actually crave for. It drives aggressive benefit, however then it suits in with the general take charge and economics that we see for the enterprise as we go ahead. Eric Sheridan Yes. Understood on what you’ve got invested in authentication and the way it’s constructed momentum. I feel that is been an space that shocked traders positively as a result of there’s lots of firms that actually wrestle with authentication enterprise fashions we have appeared at earlier than. So, I wish to get again to the stability between progress and margins and possibly I’ll ask it a few other ways. Obviously, within the short-term we dwell on this atmosphere the place there’s volatility within the macro atmosphere that is outdoors of your management. You’ve talked about progress getting a bit bit improved within the second half of this yr and you then’ve received targets for 2023. How do you concentrate on the buckets of, Jamie, you’ve got talked about earlier than investing in what it’s a must to spend money on for progress for the long-term versus managing to a margin construction versus managing progress volatility to a macroeconomic atmosphere? How do you concentrate on balancing these three form of countervailing elements inside the corporate? Jamie Iannone Yes. Well, we have all the time mentioned that investing in our core enterprise is our precedence and we’re lucky sufficient to have a extremely sturdy monetary mannequin and stability sheet et cetera to essentially have flexibility and be capable to do all of it, to spend money on our core enterprise, to look at alternatives, to construct purchase and associate like we have just lately introduced, and in addition to return lots of worth to our shareholders and that is an actual advantage of eBay. So, we’re actually persevering with to lean in on the alternatives in tech reimagination [ph] as a result of they’re working. The success we’re seeing in targeted classes is nice. The alternatives that we specified by funds to go after one other $300 million of income we’re proper on observe with our commitments that we introduced on Investor Day. So, we really feel nice about it. As our CFO would you add some ideas? Steve Priest Yes, in fact. So, if you concentrate on it, Eric it is all about earnings progress, proper? So, we form of sit there from an earnings progress very a lot targeted on working revenue and getting the stability proper as a result of should you look again to the form of final decade, lots of that earnings progress is fueled by capital returns and capital allocation. And I feel we all know a brand new paradigm at eBay which is once more within the stability proper between working revenue and the fitting ranges of form of capital allocation as we go ahead. As I stand again general and I take into consideration eBay and the place we’re in 2022, there’s not many entities at this cut-off date which might be seeing the midpoint of their steerage with earnings progress over 2021. And I feel we’re lapping the primary half of 2021 the place we noticed the lockdowns related to COVID. We’re in fairly a dislocated macro atmosphere at the second and regardless of that once more the midpoint of our EPS information for the complete yr is seeing earnings progress. And I feel that goes again to the testomony and the management Jamie is bringing to the group about getting them the main target proper between leaning into the short-term and driving operational efficiencies to provide us the flexibility to try this. While at the identical time we proceed to spend money on eBay for the long-term with the construct by associate framework that Jamie laid out. Eric Sheridan Okay. I wish to ask yet another on the investing aspect that ties again to the way you deploy your advertising and marketing {dollars}. The first one can be when you concentrate on the broader advertising and marketing atmosphere we discovered ourselves and lots of firms have talked about advertising and marketing inflation and ROIs being compressed and it being harder with among the privateness modifications which were made. I do know you get lots of direct site visitors, however of the areas the place it’s a must to deploy advertising and marketing investments, what’s your present view of the panorama you see on the market by way of incomes the ROIs you are attempting to attain from a advertising and marketing greenback standpoint? Jamie Iannone I’d say a few issues. One is, I’ll simply reiterate that 80% of eBay’s site visitors is natural and what an amazing asset. You look at us versus every other market or vertical particular competitor or no matter and that is simply such a superb alternative to monetize the huge quantity of site visitors that we have now on the platform. As you look at advertising and marketing basically on the market, we nonetheless see opponents leaning in to spend advertising and marketing {dollars} regardless of having to — having a really totally different perspective on the world. We’re clearly actually balanced by way of what we’re doing, however I’d say is it has been an enormous combine shift as nicely. So we have taken among the sort of pure decrease funnel work that we have been doing and actually invested that in a full funnel advertising and marketing which has a extremely higher — typically it takes a bit bit longer, however as a greater long-term ROI by way of the shoppers that we’re in a position to deliver on the platform from that shift. We’ve additionally accomplished issues like we stopped doing a 1% loyalty program that we had for a very long time to essentially take these {dollars} and reinvest it again within the issues that we all know are working the influencer advertising and marketing that we have now on the market partnering and doing extra full funnel perspective class by class and that is made an enormous distinction. Would you add something? Steve Priest No nothing. Eric Sheridan Maybe one final one on advertising and marketing. You talked about enthusiastic patrons. How a lot of that’s an effort that could possibly be accomplished in-house by exhibiting merchandise the UI that an enthusiastic purchaser has versus advertising and marketing {dollars} to drive enthusiastic purchaser habits? How a lot of that’s form of owned and operated inside the home to the place you may drive comparatively excessive ROI versus having to spend some advertising and marketing {dollars} in opposition to the enthusiastic purchaser dynamic? Jamie Iannone Yeah. So I’ll let you know what we see which is that due to the change in expertise by way of market-leading buyer satisfaction that alone is de facto useful in driving the CLTV for fanatic patrons. So I talked about them being up of their spend double-digits versus 2019. A variety of that’s as a result of what an amazing expertise shopping for that watch on eBay. And should you take a watch purchaser they will purchase $8,000 — our fanatic patrons in watches will purchase $8,000 in watches on eBay, however then they’re going to go by $9,000 in different classes on the positioning as nicely. So you concentrate on what’s our means to sort of actually monetize in opposition to the CAC. So that does two issues: one is it simply helps the general enterprise and helps our relative place within the market; however two, it offers us the chance to go on the market and purchase extra fanatic patrons instantly into that class onto the positioning as a result of we will successfully monetize that CAC throughout a wider set. And so it is a good distance of claiming for any given class we’re attempting to do each, proper? Make positive that the prevailing fanatic patrons take components and equipment. We offer you a tremendous expertise at a ridiculous worth with good fitment, you are going to come again and purchase increasingly of these components on eBay. I had a my dentist throughout COVID is like I’m doing much less dental appointments due to COVID, I’ve began restoring my outdated truck. So I purchased my first half on eBay after which my second half is like I’m now as much as like 10 totally different components to revive my outdated truck on eBay, he will have an amazing expertise. But then, how will we go purchase a brand new purchaser into that class who’s additionally an fanatic — who may probably purchase lots of components and equipment. Eric Sheridan Okay. Since the final earnings name, you guys have accomplished quite a bit on the M&A entrance. There’s been this form of vary of bulletins within the final couple of weeks and months. And I wished to take this chance so that you can form of lay out the technique behind what we have been seeing from the surface on the M&A, you’ve got been doing how does it match into the broader narratives you laid out an Analyst Day? And then possibly we’ll deliver it again to the broader capital allocation technique, however I wished to provide the discussion board to only assist us perceive a bit bit of what is been driving among the M&A exercise we have seen? Jamie Iannone Yeah. So collectibles has all the time been and remains to be an enormous enterprise for us on eBay. So, we talked at Investor Day, it is over a $10 billion class within the platform. And so we have been leaning in to essentially lengthen the experiences on eBay and make them game-changing higher. So, over the course of the final 18 months, we have accomplished issues like pc imaginative and prescient, so you may listing your playing cards a lot simpler. We launched a my collections and a worth information characteristic so you may observe your gadgets on eBay. We put in new delivery strategies to make issues very easy. This final quarter, we introduced the Vault. We did a partnership with PSA for authentication for high-end greeting playing cards. So the acquisition of TCGplayer, which was our newest acquisition, was actually in line with this concept of actually specializing in collectibles as one of many focus class and the chance. So TCGplayer is a – has phenomenal relationships with collectible card sport fans. They have superb relationships with interest store, which brings an entire various set of stock on the platform. They have nice success capabilities. They have nice assortment capabilities. So it is very in line with how we glance at the enterprise and as we have mentioned all alongside, we glance at construct purchase or associate. In instances like jewellery, we did a partnership with GIA. Here on this class, we thought what an amazing alternative to deliver TCGplayer into the fold by way of what we’re doing for collectibles. And we’ll have extra to say about that, when the deal closes. The subsequent one – nicely, I assume, the opposite one to speak about within the focus class is our acquisition of KnownOrigin, that was actually about expertise within the digital house. eBay is the place that folks go to gather. So when NFTs turn out to be standard, they only began exhibiting up on the eBay platform. So right here we have now expertise to consider how bodily and digital can work collectively sooner or later. It’s early days, however we’re excited by what that may do. Lastly I’ll discuss myFitment. So what I’ve mentioned with targeted classes all alongside that it is a totally different playbook that brings a game-changing degree of belief within the classes. In purses and watches and sneakers, a part of that was authenticating, or truly contact the product. In components and equipment, it is actually about good fitment on the product, a a lot simpler buying expertise. We’re already an amazing chief in P&A in lots of the geographies that we function in. So myFitment is a superb functionality to truly – for in all probability 70% of our US GMV, we will speed up the work that we’re doing from a fitment standpoint to make it obtainable to extra patrons on the platform et cetera. And in order that one is de facto about persevering with to drive that very sturdy class for eBay with what helps to be a extremely game-changing degree of belief in that class. Eric Sheridan And final form of big-picture matter, I wish to discuss after we see that sort of M&A, we all the time come again to the capital return targets from the Analyst Day. And simply wish to verify in and make it possible for, there hasn’t been a change within the capital allocation philosophy? How you concentrate on balancing among the commitments made at the Analyst Day versus seeing alternatives, particularly in an atmosphere the place VC capital has turn out to be extra restrained and possibly there’s extra alternatives to speed up inorganic progress. So, how do every of you concentrate on these broader objectives on what you’ve got mentioned thus far within the public area versus accelerating among the longer-term initiatives? Steve Priest There’s no change to the capital allocation technique, we laid out at Investor Day. We stay dedicated and assured almost about that. I feel, it is among the themes you’ve got heard from each Jamie and I as we speak, which is we have now an extremely resilient monetary mannequin, regardless of navigating by way of uneven waters on this macro atmosphere that we see. First precedence is to spend money on the enterprise, by way of the construct purchase associate framework. But at the identical time, you’ve got seen us proceed to return capital to shareholders. We’ve created by way of the simplification of eBay and the divestitures that we went by way of over the past couple of years over $20 billion of worth. We’ve been very considerate about how we allocate capital, and the group continues to do an amazing job. Eric Sheridan Okay. Well with the previous few minutes we have now Jamie I all the time like to show it over to our audio system to say. You’ve received the ground. How you are most enthusiastic about thematically for the enterprise? How you are aligning investments in opposition to these thematic parts, particularly going again to Analyst Day which wasn’t that far way back. Maybe simply deliver us house by way of a few of what’s high of thoughts for you and messages you wish to go away with traders on the broader eBay story? Jamie Iannone Yes. Well look we talked quite a bit about focus classes as we speak, and I’m extremely excited in regards to the innovation that we’re doing there, persevering with to innovate category-by-category, regularly span throughout worldwide in numerous markets. But that is only one piece of what we’re doing though we talked quite a bit about it as we speak, we’re additionally making lots of investments horizontally on the enterprise. So we’re investing in issues like eBay shops. We’re in the midst of launching a brand new unified itemizing expertise to make itemizing on the platform a lot simpler. We’re investing within the general expertise in our apps and our expertise and pc imaginative and prescient. And so these horizontal investments are additionally extremely necessary for us. Our two greatest horizontal investments of huge scale are promoting and funds. And what I’d let you know is I’m actually excited by the tempo of innovation that is occurring at the corporate. When I got here again, I actually began this effort round our tech velocity and that had two parts. Both, simply actually tech velocity of we’re now deploying our cellular app weekly and we used to do it month-to-month. The check time used to take hours and now it takes minutes, in order that we will drive a degree of tempo of innovation to go in any case of these alternatives on the platform has been necessary. The second key a part of that has simply been the expertise within the group. We introduced in a ton of recent expertise into eBay and clearly a troublesome macro atmosphere can be one other good time to usher in nice expertise. So we proceed to rent world-class expertise. I’ve modified out greater than half of the management group with superb nice leaders. We’ve received new heads of varied — new Head of AI, a brand new Head of Selling. That expertise is a extremely necessary a part of our technique as nicely. And we have been actually profitable there. So you set the mixture of what we’re doing in focus classes, you set collectively the mixture of the horizontal investments that we’re making to enrich what we’re doing on the class aspect. And then, you look at the expertise that we’re bringing in, I feel it is nice. The very last thing I’ll say is that, for these traders on the market who actually have an ESG focus. ESG just isn’t an initiative at this firm it is the core of what we do. We’ve pushed the Recommerce business of what is occurring at eBay. We put our carbon neutrality, our new Scope one and two targets out, however I feel extra importantly, what this platform does to create small companies, to create over a million jobs for the economic system. Since I’ve been again — since we have launched it we have raised $1 billion to eBay for charity. So I’m additionally simply actually happy with the position that this market performs within the international economic system. End of Q&A Eric Sheridan Great. Well due to each of you for being part of the convention. Please be a part of me in thanking Jamie, Steve and the entire eBay group being a part of the convention this yr. Jamie Iannone Thanks Eric. Steve Priest Thanks gents. Thank you.

https://seekingalpha.com/article/4540512-ebay-inc-ebay-presents-goldman-sachs-communacopia-technology-conference-2022-transcript

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