Good day, and thank you for standing by. Welcome to the eBay First Quarter 2021 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Joe Billante, VP of Investor Relations and Communications. Please go ahead.

Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the first quarter of 2021. Joining me today on the call are Jamie Iannone, our Chief Executive Officer; and Andy Cring, our Interim Chief Financial Officer. We're providing a slide presentation to accompany Andy's commentary during the call, which is available through the Investor Relations section of the eBay website at investors.ebayinc.com. Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non-GAAP measures related to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call. Additionally, all revenue and GMV growth rates mentioned in Jamie's and Andy's remarks represent FX-neutral year-over-year comparisons unless they indicate otherwise. In this conference call, management will make forward-looking statements, including without limitation, statements regarding our future performance and expected financial results. These forward-looking statements involve known and unknown risks and uncertainties, and 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-K and Form 10-Q and our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of April 28, 2021, and we do not intend and undertake no duty to update this information. With that, let me turn it over to Jamie.

Thanks, Joe, and good afternoon everyone, and thank you for joining us. Today, we'll begin the call with key highlights from the first quarter. Then, I will share some reflections from my first 12 months as CEO and provide an update on the status of our tech-led re-imagination. At the end of my remarks, I will turn the call over to Andy, who will discuss our financial performance and outlook in greater detail. The first quarter of 2021 was an excellent start to the year for sellers and buyers on eBay. Gross merchandise volume grew 24%, ahead of expectations. Revenue grew 38% outpacing volume, primarily due to payments and advertising. This is the fastest our revenues have grown since 2005, and we lean [ph] further into technology and vertical marketing investments, but still delivered $1.09 in non-GAAP earnings per share above our expectation. Importantly, our customer metrics grew on both sides of our marketplace. Active sellers grew 8% to 20 million globally, more small businesses are joining the platform and more consumers are engaging and selling. C2C GMV growth outpaced B2C for the fourth quarter in a row. This is positive for the long term as consumer sellers bring unique inventory at compelling prices and spend more than twice as much as buyers, who don't sell. Active buyers grew 7% to 187 million globally. We are retaining buyers acquired over the last year at similar rates as pre-pandemic level, and we're seeing higher customer satisfaction in several categories as well as increased spend per buyer. We have continued to make progress on our multiyear initiatives payments and advertising, which contribute to a seamless customer experience, increase our platform monetization and deliver compelling financial results. Managed payments ended Q1 with over four million sellers migrated. This includes millions of consumer sellers…

Thanks Jamie. I will begin my prepared remarks with our first quarter financial highlights starting on slide four of the earnings presentation. The first quarter was another great quarter for eBay. We generated over $27 billion of GMV, our highest GMV quarter ever. We delivered $3 billion of revenue, $1.09 of non-GAAP EPS, and $855 million of free cash flow, while returning $414 million to shareholders through share repurchases and cash dividends. Moving to active buyers on slide 5. We exited the quarter with 187 million buyers, representing 7% year-on-year growth consistent with the fourth quarter. We've added 13 million buyers to the ecosystem since the beginning of 2020 and are experiencing retention rates that remain in line with historical trends. And as we said throughout 2020, we continue to see growth in GMV per active buyer across all cohorts. Moving to slide 6. In Q1, we enabled $27.5 billion of marketplace GMV, up 24% accelerating six points versus the fourth quarter. On a spot basis this represents growth of 29%, an acceleration of eight points versus the fourth quarter. As over 60% of our GMV is generated outside of the US, we saw a five-point translation benefit due to the weaker dollar. On platform volume, which represents nearly 85% of total GMV grew at 28% a seven-point acceleration versus Q4, driven by site-wide product experience improvements, progress we're making in key categories, increased mobility restrictions and additional stimulus in the US. Our platform business in Korea was relatively stable versus the fourth quarter at 4% year-on-year growth. In the US, we generated $10.4 billion of GMV in Q1, up 36% year-on-year accelerating 11 points from the fourth quarter, driven by mobility dynamics, stimulus payments and strength in our core categories including collectibles. International GMV was up 17% year-on-year, a…

[Operator Instructions] Our first question comes from Ross Sandler with Barclays. Your line is open.

Hey, guys. I have three questions if that's okay. For the guidance, you gave like kind of loss in the year-on-year. But if we look at 1Q to 2Q sequentially, I think, it assumes about a 7% decline Q-on-Q for GMV, normally kind of flat Q-on-Q. So, I guess, can you parse that into how much is like stimulus burning off versus these economies reopening in the context of what Jamie said about buyers retaining at a high level and spend per buyer going up just trying to reconcile that. Second one is on the margins. So, the 29% margin guidance, is that just from all this payment revenue coming in at a lower margin or are there other discrete areas that you're layering in on the investment? And then lastly on the trading cards, are there other categories like this that just kind of have emerged over the last year that you guys maybe had that were nascent and just now are being like activated because consumer behavior has changed? Anything else besides trading cars you would point to that would be an example of coming out of this whole thing why eBay would be in much better shape from a category perspective. Thanks a lot.

Yes. I'll start with the trading card ones and then I'll let Andy talk about the other two. So, yes, we've always had a great history in the Collectibles business and a great history in trading cards. Obviously, Q1 was really strong doing it over $1 billion in the quarter, which was more than half of last year's record setting. And I'd say in general, what we see is that when we take category-by-category, and we changed the NPS, and we changed the customer experience, that changes the buyers and sellers and the GMV follows. And in that case, it's similar to what we saw in sneakers and in watches where that change led to a dramatically different performance. We see customization, which we just launched this quarter as another one of those opportunities. We do millions of items on the site today, but we do it in a way that's really full of a lot of friction between the buyer and the seller, and this makes it really seamless and I think gives us the opportunity to open up more GMV. But as I said upfront, we haven't even touched the -- some of the major categories that we have like home and garden, fashion, electronics, and parts and accessories. These are big core categories that all have addressable opportunities that we think can benefit from this playbook.

Yes, Ross. On the other two questions on Q2, and Q1 versus Q2 dynamics. I mean, clearly, the first quarter was a huge quarter for us, as I said, our largest quarter ever. As we indicated in January, we had seen increasing restrictions late last year through most of our markets and those kind of persisted into the first quarter, and the growth in the first quarter driven by two main factors. As we've said, the continued underlying performance and then the correlation between mobility and GMV. And then as the quarter progressed, a lot of further developments and things we learned along the way back to January pace of vaccines were very different from where they are today. Mobility has improved throughout the quarter in most markets. And then you've got as you mentioned the impact of stimulus payments in the US, which it's hard to say exactly the impact, but -- or when it started or when it will stop, but we believe the peak of that impact was probably in the March time frame. So when you look then on a quarter-over-quarter basis, the biggest difference between Q1 and the outlook for Q2 would be the fact that the stimulus -- or not stimulus, sorry, but the mobility is in a better place today than it was at the beginning of the first quarter. Underlying performance continues to be great. And then as we've said, progress on payments is continuing to be very positive as well. That leads a little bit into your second question on margin rate for the year. I think a couple of things to consider. We're still on target for the 30% that we said for next year, and we have said all along, it's not going to be linear. We're going to…

Our next question comes from Colin Sebastian with Baird. Your line is open.

All right. Great. Thanks for the questions. I guess, first off, bigger picture question for you Jamie. You talked a bit about some of the additional product planning with advertising, and so more broadly, I wonder, how you think about the ramp of overall seller monetization, how much additional upside you see there or if you see perhaps an opportunity longer term to shift the model towards more ad orientation like we see with marketplaces in other markets? And then secondly, on the margin side, on the spending side, obviously dynamics this year are a little bit different given the comps. But we've seen periods of reinvestments with eBay over the last decade. And so Jimmy, you outlined a bit of a division last year and it sounds like you're happy with the progress this year so far this year with the verticals. But how do you weigh the need to invest long term and measure your performance on a short-term basis? And how quickly, are you going to be able to pivot if necessary?

Yeah. So, first on the monetization side. So look obviously both payments and advertising are leading to the significant growth in revenue ahead of payments. Since you asked more about advertising, I'll talk about -- we feel great about the business in part, because our sellers are seeing a great return on the ad spend. And we think there's a lot of opportunity left from that perspective to help them be able to move their products with velocity. So what we're announcing this quarter is that, we're basically rolling out three new experiments or pilots in our advertising business. The first being placement for our auctions. So the growth that we've seen to date has really just been on the fixed price business. So that will be a new capability. We're also testing a CPC-based capability for our sellers, which is a new potential growth vector. And we're looking at off eBay opportunities for our sellers to even further increase their exposure. So we continue to look at the monetization and are we adding value to sellers? A great example for that is in watches this quarter, we saw an opportunity to increase our fees there, because of the value that we're creating for our sellers in that category. Overall, when I look at advertising, it's still only 1% of GMV. And if you look at benchmarks, there's significant opportunity above that. And we -- as long as we continue to add value to sellers we think that will be a continued opportunity. On the second side on the investments, we laid out in July, the strategic plan and started with the category idea on verticals specifically of reinventing the experience, changing the NPS and driving GMV. And if you look at the results of the past few quarters, this is the fourth quarter in a row where we have triple-digit growth in sneakers. This is a business that had been declining double-digits. Our watches went from 16% last quarter to 38%. More importantly though we're seeing customer satisfaction metrics in the 80s and 90s. And so we think this concept of really applying it to other parts of the business. So what you're going to see over the next coming quarters and years is us continuing to expand that focus and invest in and roll out additional categories. Like I said upfront, the majority of our big categories like parts and accessories, electronics, fashion all have similar opportunities to follow that playbook. So we're going to continue to do it in a balanced way as I talked about in July, managing what we spend with what we see as the growth opportunity. And we've already done that in a lot of areas especially in marketing over the past couple of quarters.

Great. Thank you.

Our next question comes from Edward Yruma with KeyBanc. Your line is open.

Hey. Thanks so much for taking the question. I guess just first as a follow-up to the previous question, it was interesting that you took up take rate and watches. I guess, Jamie if you step back and look at take rate overall base take rate, are there more opportunities to take uptake rate? Are there services you can continue to add that exclude advertising that would allow you to have that higher take rate? And then I guess as you guys make some of these muscle moves in specific verticals, any sense as to how large these verticals are as a percent of total GMV? And then a follow-up on fashion. I know you've been doing some off-price fashion tests in the UK timing on rolling that out to the US? Thank you.

Yes. So on take rate, obviously, with payments we actually think we are -- for the vast majority of sellers they're going to experience lower fees even though it will mean at least $0.5 billion of operating income to our business. And we continue to look for ways that we can drive kind of the new experience. The off eBay advertising is a great example of that. And to your comment on watches, it's really kind of a category-by-category basis of us looking at what value are we creating and what opportunities are there for our sellers. On how large this can be? Why we're focused on the non-new in season is because we believe it's a $500 million total addressable market. And if you look at our categories on the site, we have high single-digit, low double-digit penetration. And so we think there's lots of opportunity. And coming back to the core of what we said about re-commerce, I think more and more especially in younger generations are interested in the re-commerce of pre-loved items. And so it's why we're leaning in so much towards that. Also we're seeing this strategy is working with C2C. So our C2C again, outgrew our B2C growth 34% versus 21%. But that only -- not only brings the unique inventory, but it turns those buyers into twice as valuable buyers when they try casual selling. And then lastly, the tests we've been doing on the brand outlet side in the UK has been performing well. We're growing double-digits ahead of market rates. And as I mentioned before, what's great is that while we went out and sourced all of the initial programs to kind of build that up and now the brands are actually calling us and asking us to be part of that program. So you've seen this playbook from us over the past few quarters where we're trying things in different markets, finding success and then rolling them out more broadly. So we've had a lot of success with sneakers in the US and we're now rolling that out to UK, Canada and Australia this quarter. And you could see us continue to follow that playbook.

Good. Thank you.

Our next question comes from Tom Champion with Piper Sandler. Your line is open.

Hi. Good afternoon. Just wanted to ask a follow-up to the prior question. I think last quarter, you framed GMV covered by new category experiences and it was single-digits or kind of less than 10% of GMV in the fourth quarter. And just curious if you could update that metric, where these new category experiences reach this quarter and maybe what could be achieved by year-end? Any comments on that would be helpful. And then Jamie I'm just curious, if you could talk about what are the remaining seller pain points that you're really focused on? You've clearly done a lot of work with payments and maybe reach on the advertising side. But what are you hearing from sellers as to the features that they'd like to see? Thank you.

Yeah. So look what I'd say is that on the categories that we've tackled thus far we're still in single-digit percentage territory. And what we've said is that we believe that over half over the -- coming years over half of the GMV is addressable in this type of opportunity and especially in some of these major categories. And frankly there's probably opportunities across all categories over time to be able to ever change it. We really wanted to see if the thesis that we laid out worked and it's been working pretty consistently and that's the feedback we're getting from buyers and sellers and we're obviously seeing it in the business. There's a lot of opportunity for us on the seller side. So on the store side, we're migrating all of our stores to the NextGen platform. That's mostly complete, which is a much better platform for them. This quarter we're rolling out CRM capabilities, which has been a long-standing ask of theirs, so that they can remarket to buyers through packing slips, through e-mail et cetera. So that's been pretty significant. And then even things like the customization that we're launching is a long-standing seller request to drive their business. We didn't talk much about this but one of the pain points that's existed in the eBay community for our sellers has been unpaid items for -- since the company really started payments was divorced from -- or separated from purchase, and so sellers sometimes would have a transaction close without getting paid. The ability -- now that we've launched manage payments and we're migrating a bunch of new technologies, we actually reduced that by 80% for our sellers. So that's a pain point that we're really happy to be able to eliminate for them. And then on the C2C side, it’s really about making it easier, why you see us launching things like image base listing? It is because we want to take all of the friction of the experience and make it a really short couple of minute process to get your items up on to the platforms. So, we’re doing a lot more education, things around the seller business, really focused on continuing to drive that C2C business. So I think each quarter, we'll be rolling out features that really address this key thesis of taking all the friction of the experience and making this the best marketplace in the world.

Thank you.

Our next question comes from Mark Mahaney with Evercore ISI. Your line is open.

This is Shweta for Mark. I was wondering if you could please comment on buyer growth. You laid out some of the initiatives that you are taking to continue to drive growth. So where do you think -- what do you think could be a sustainable growth rate for buyers? And then the second thing, you also pointed to some of your top category and that includes collectibles, home and garden, electronics, fashion, parts and accessories. I may have missed some, but how big are they currently today as a part of -- as a percentage of GMV? And how do you think the cross-category shift plays out in face of reopening? Thank you.

Yeah. So first on buyers look in Q1, we added 7% to our active buyer count to $187 million globally. Over the past year we've added 13 million buyers to the marketplace. And what we're seeing is that those buyers are behaving with strong performance like pre-pandemic. So they're not just coming to eBay for during the pandemic time period and leaving. We're converting a good amount to our strategy of long-standing enthusiasts. We're really focused on the first 90 days for buyers and making sure that they have a great experience on the site. And what you're seeing is that the NPS is up, especially in focused categories like watches and sneakers, certified refurbished where you now have a two-year warranty and have the free returns. So we're really pleased with that. The cross-category nature and the size of these categories is one of the best assets of eBay. We talked last quarter about our sneaker buyer where we acquire a new Gen Z buyer; they end up buying $500 in sneakers but another $2,000 outside sneakers. We're seeing the same type of thing in watches where we're acquiring a buyer of new high-end watches and they're spending thousands of dollars outside of other categories. So we continue to lean in because it's a huge accelerator for us to get buyers purchasing cross-category and a lot of the marketing technology that we've built and we worked on, the AI with recommendations et cetera is really centered on this idea of capturing buyers and having them transact in multiple categories.

Okay. Thank you.

Our next question comes from Justin Post with Bank of America. Your line is open.

There's going to be a lot of moving parts this year with e-commerce facing the comps and it's not just you. And so what do you think is the best way to measure your progress this year as we think about it? Is it market share versus e-commerce spend? And what specific milestones if GMV matches your outlook, should we be looking for that really show you're making progress this year? Thank you.

Yes. So I mean one that we're clearly looking at is with last year being such an anomaly with the pandemic is a year over two-year and the growth that we're seeing there, which we're excited by. Clearly we'll be lapping some of the buyer, extensive buyer growth that we had in last Q2 but we're looking at the performance of those active buyers on a go-forward basis and we're pretty pleased with that performance. And then the last thing I'd say is that, look, a lot of the stuff that we're doing on the core strategy is really about the long-term growth. So we're going to see things in the short-term variances versus prior year. But I think for me the core thing is the playbook that we put in place is working. This thesis of really changing the growth trajectory of the category by investing in the playbook is what the team is focused on. And we're going to stay on that for the near to medium future. If I look at coming into this in 2019, we were I think declining 2% from a GMV perspective. And if you look at our revenue growth projected next quarter, we're looking at double-digit revenue growth. So we feel good about where we're positioned coming out of the pandemic.

Great. Thank you.

Our next question comes from Stephen Ju with Credit Suisse. Your line is open.

Okay. Thank you so much. So Jamie, now that the US payment penetration is -- seems to be approaching the finish line here, is there anything you can say about how the simplified checkout versus what the buyer has had to go through before? And how that might be resulting in, hopefully a decrease to the overall friction and hence an increase in conversion rate or purchase velocity? And I guess as a follow-up to some of the earlier questions on advertising, as an increasing portion of the transactions end up being C2C or what might be more unique, collectible or enthusiast items, should we still be thinking that that type of gross merchandise value is still appropriate for PLA because it seems like advertising should work best for probably those categories where there are multiple sellers trying to sell a fairly homogeneous item? Thanks.

Yes. So first on the payment side, I would say, yes, not only buyers now have more choices of how to pay including Google Pay, Apple Pay, credit card, debit, PayPal, et cetera. But you no longer have to set up two different accounts. You no longer have to manage a claims process or returns process in two different areas. It's one eBay money back guarantee. So to us it dramatically simplifies the whole experience for a buyer and makes it easier. They keep that payment on file and it's just a dramatically easier experience. And then it's helping the seller too because I mentioned the unpaid item example earlier on the call but also the ability for them to manage all their business in one place makes it much more streamlined to just run a business on eBay. On the Promoted Listings, we see opportunities really across every category and every price point of GMV. The beauty of the CPA model that we've had of the cost per acquisition model has been just the simplicity of it of just adding the percentage and it makes it really easy. But the PC model that we're launching also gives the opportunity to really kind of push volume in a different way with a different set of capabilities. But even on single and unique items, people want to promote those items and get more exposure for them. They have for the longest period of time. It's why we're launching the ad feature for auction and testing that is to really go after it. And it's still not -- we still have a lot of opportunity across our listings to increase the penetration. Like I said before, we're only at 1% of GMV.

Thank you.

Our next question comes from Deepak Mathivanan with Wolfe Research. Your line is open.

Great. Hey, guys. Thanks for taking the question. So first can you provide some color on what categories are specifically seeing reversals with mobility improving in second quarter? And then on the commentary around the second half GMV trends, comps are also progressively getting easier once you navigate past second quarter, but you're saying that potentially GMV trends could be similar to second quarter. I know there are always certain one-time items in 2Q and there's potentially some geographies coming out later in terms of mobility. But can you parse out between those? And do you expect further reversal in terms of kind of comparable basis on volumes beyond 2Q?

Yes. I'll take the first one and I'll let Andy take the second. So on the category piece, we talked about last year was, people started by panic buying everything that was related to kind of health needs across the board on eBay. And then we saw that expand into kind of stay-at-home categories, fitness and laptops, those types of things in our electronics business. And then, really went kind of across the board over the course of the year. So as you think about this year it's really just a change against the backdrop of what we were buying last year. I'll let Andy take the second part of that.

Yes. And look, we didn't provide guidance for the second half just because of the dynamic environment and the wide range of outcomes. You are right. When you look at the comps for Q3 and Q4 they are modestly easier as we go through the year. The second piece, I'd say is, we continue to expect to see the underlying business perform. I think the wildcard in all of this is the macro factors, mobility and stimulus, incredibly hard to predict. There's certainly some benefit in the second quarter to those. And it's possible that as regions open up and mobility improves that that offsets some of the comps, the easier comps that we see in the second half. It's a scenario. It's just -- it's hard to accurately predict where mobility heads.

Got it.

Operator, we've got time for one more.

Our final question comes from Brian Nowak with Morgan Stanley. Your line is open.

Thanks for taking my question. I wanted to ask about -- you've done a great job of tackling and handling these categories with sneakers and luxury watches authenticated and now trading cards. And as someone who sold a Barry Sanders rookie card, it is a much better experience. So the question is, as we sort of look ahead to the next 10%, 20%, 30%, 40%, 50% of GMV that you're going to redo, what is sort of the main technological constraint that you think is going to sort of dictate how quickly or slowly you're going to be able to sort of redo the rest of the categories on the platform? And as you're talking about the back half, are you assuming you're going to have more categories rolled on to the new stronger interface yet?

Yes. So the first thing I'd say is that, on the category piece, in some cases the categories have overlapped in terms of features or capabilities we need to build in order to make that a winning NPS for us. So we build authentication once. It took us a couple of months to build it out, but then we're able to roll it out to the next category in a couple of weeks and expand that geographically. And so, I think that's actually true for a lot of areas, where there's components or features that we're building specifically to drive the NPS of a category that will be applicable to a broad set of categories across the experience. And in terms of pace, we're going to continue to do what we've done before, which is, roll them out in a specific geography, make sure that we're seeing the intended impact and then roll it out across the board. We don't really want to talk about which category is next and what we're focused on for competitive reasons. But I would just say that, we're really pleased with the playbook. We're really pleased that we're able to drive significant growth and a significant change in trajectory and most importantly, a significant change in the customer experience. And so, you're just going to see us continue feature after feature, category after category. The second thing I'd say is that the verticals is not the only investment that we're making. A lot of our investment is going to site-wide investments that impact all categories. Clearly, that's true for payments and advertising, but the same is true across our seller tools, across our API business, across the CRM and couponing capabilities that we just rolled out, investments that we have in search and in SEO, which apply to the whole business. So the way I think about them is kind of, a good amount of investment in vertical to really change the NPS of those categories, but a significant amount of site-wide investments as well, which lifts all categories. So that's the strategy. That's how we think about it and we're really pleased with the performance.

There are no further time for questions. This concludes today's conference call. Thank you for participating. You may now disconnect.