Good day, ladies and gentlemen and welcome to eBay’s Third Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Tom Hudson, Vice President of Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us and welcome to eBay earnings release conference call for the third quarter of 2014. Joining me today on the call are John Donahoe, our President and Chief Executive Officer; and Bob Swan, our Chief Financial Officer. We are providing a slide presentation to accompany Bob’s commentary during the call. All growth rates mentioned in John and Bob’s prepared remarks represent year-over-year comparisons unless they clarify otherwise. And all segments' results are adjusted for the effects of foreign currency exchange. This conference call is also being broadcast on the Internet and both the presentation and call are available through the Investor Relations section of the eBay website at investor.ebayinc.com. You can visit our Investor Relations website for the latest company news and updates. In addition, an archive of the webcast will be accessible for 90 days through the same link. Before we begin, I’d like to remind you that during the course of the conference call, we will discuss some non-GAAP measures in talking about our company’s performance. You can find a reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying the call. In addition, management will make forward-looking statements relating to the planned separation of eBay Inc.'s Marketplaces and PayPal businesses and our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the fourth quarter and for the full year 2014, the future growth in Payments, Marketplaces and eBay Enterprises businesses and the completion and timing of the planned separation. Our actual results may differ materially from those discussed in this call for a variety of reasons. You can find more information about risks, uncertainties and other factors that could affect our operating results in the most recent Annual Report and our Form 10-K and our subsequent quarterly reports on Form 10-Q available at our IR site. You should not rely on any forward-looking statements. All information in this presentation is as of October 15, 2014 and we do not intend and undertake no duty to update the information. With that, let me turn the call over to John.

Thanks, Tom. Good afternoon everyone and welcome to our Q3 earnings call. Our recent separation announcement underscores our commitment to deliver sustainable shareholder value. We strongly believe that separating eBay and PayPal into independently publicly traded companies best positions each business for long term success. We’ve always been committed to making the right decisions at the right time to do what’s best for eBay, PayPal and our shareholders. And with the decision made, our focus is on moving forward with clarity and speed to minimize distraction and capitalize on the opportunities ahead. Our priority is setting eBay and PayPal up for success as independent companies while ensuring they continue to execute well until separation occurs. Bob and I remain responsible for the financial performance of the company while working closely with Devin Wenig and Dan Schulman to create cohesive business plans for the future. Now let’s take a look at our results for the quarter. We enabled $63 billion of commerce volume in the third quarter up 27%. Mobile and cross-border trade continue to be major contributors accounting for 21% and 22% respectively of our total enabled commerce volume. Overall, revenue was up 12% Q3 and non-GAAP EPS was up 6%. eBay and PayPal both generated double-digit customer growth with PayPal reaching almost 157 million active registered accounts and eBay topping 152 million active buyers. PayPal had another strong quarter. Merchant Services TPV grew 37% in Q3, accelerating for the sixth consecutive quarter. Revenue also accelerated from the prior quarter, up 21% on an FX neutral basis. Increased consumer adoption and expanded merchant coverage continue to drive strong results. And Braintree had another strong quarter, gaining new merchants and launching its v.zero software developer kit. The v.zero SDK enables Braintree merchants to integrate and offer PayPal in as little as…

Thanks, John. During my discussion I will reference our earnings slide presentation that accompanies the webcast. The role we play in global commerce continues to grow. eBay Inc.'s Enabled Commerce Volume was $63 billion, up 27%, a one point acceleration versus Q2. Payments volume increased 29% and Marketplaces volume increased 9%. Mobile ECV increased 67% to 13.5 billion representing 21% of Enabled Commerce Volume. Mobile payment volume was $12 billion, up 72% and Marketplaces mobile volume was 7 billion, up 41%. Cross-border trade accelerated one point and grew 27%, representing $13.9 billion or 22% of ECV. Revenue increased 12%, non-GAAP EPS was $0.68, up 6%, and we generated 941 million of free cash flow. Marketplaces growth has been slower than we expected and the U.S. dollar has been stronger than we expected. Combined, these reduced our second half of the year revenue outlook by approximately 300 million and non-GAAP EPS by approximately $0.07. We expect to partially offset the EPS decline with tight cost control and favorability in our tax rate, while reducing our full year revenue guidance but expect to be at the low end of our non-GAAP EPS guidance. In Q3 we generated net revenues of 4.4 billion, up 12%. Organic revenue growth was 10% in the quarter with Braintree and currency each contributing approximately one point of growth. Non-GAAP operating margin was 23.7%, down 310 basis points and non-GAAP EPS was $0.68, up 6%. Our gross margins remain relatively stable. However, we significantly increased our operating expenses to increase traffic and engagement across both eBay and PayPal and to prepare for the peak holiday at eBay Enterprise. Let me provide a little more color on operating expenses which were 45% of revenue in the quarter, up 270 basis points. The biggest driver was sales and marketing which…

(Operator Instructions) Our first question comes from Scott Devitt with Stifel. Your line is open. Scott Devitt – Stifel Nicolaus: Thank you. One question, two parts. So accepting the reasons for currently operating below targets on segment margin, I was just wondering if there is anything that's changed structurally from the Marketplaces and PayPal margin guidance that was given back in the first quarter of ‘13 at the Analyst Day? And then the second part of the question is, as you enter the period over the next 12 months going into the spin, your thoughts around incremental costs that are added to the businesses separately? If you have any visibility to that to the extent there would be more cost in the business split than combined? Thanks.

Scott, first on the structural segment margins, going forward we'll provide you lots more detail about 2015 and beyond once we get through the fourth quarter holiday season. As I think about 2014, specifically you see a few dynamics going on during the course of the year, some which are the same and some which are a little bit different. The same, particularly for Marketplaces, is the first quarter and the fourth quarters are the highest segment margins within the year, and the second and third quarter historically have always been the lowest. So that dynamic is what is continuing during the course of 2014. What exacerbates that is the higher spend we made in Q2 and Q3 to drive traffic particularly in light of the cyber security breach and the FCO changes. So you see Q2 and Q3 a little bit lower than historical perspective. And while we expect Q4 to be better than the Q2, Q3 run rates, we’re going to continue to invest in bringing traffic and expanding the amount of spend on brands and that will continue in 2015. On PayPal, one thing that’s been the same and one thing that’s a little bit different. The thing that’s been the same is transaction margins. For a number of years now we have maintained a very healthy transaction margin business despite the fact that we’ve been growing quite a bit off eBay expanding our presence with large merchants, and as I indicated earlier, rapidly growing with Braintree. With that growth, we’ve still maintained north of 60% transaction margins. More recently what’s different is we’ve begun to invest more in the PayPal brand from a position of strength to drive more brand awareness and drive consumers' perceptions of PayPal to capitalize on what we believe is a wonderful brand that has lots of use cases for merchants and consumers. That’s a little bit different than historical. On incremental cost associated with the separation, I would say that’s a TBD. Obviously we'll incur some onetime costs as we prepare for the separation between now and the next year, consistent with separations that you’ve seen along the way and we’ll provide as much detail and transparency as we can as we go further along in the separation process. Thanks, Scott.

Our next question comes from Heath Terry with Goldman Sachs. Your line is open.

Bob, you mentioned the investments that you guys are marking to reengage consumers post the password reset. But even with the guidance that EPS is going to be at the lower end of the range, it sort of seems like the level of investment that you’re making into this is less than proportionate to the impact that this has had on the business. Is there a reason particularly when you’re talking about a Marketplaces business that is as profitable as this one, is there a reason not to be much more aggressive and whether it’s marketing, whether it’s technology to get people back on the platform reengaged in Marketplaces growth back in line with overall e-commerce growth?

In our fourth quarter guidance, we are anticipating fairly significant sales and marketing spend in our Marketplaces business. We spent dramatic acceleration in Q3 and we’ll continue to accelerate that level of spend in Q4. What you see in our guidance is earnings growth is much higher in Q4 and Q3. I think there is a few things that really drive that acceleration. First, Q4 is a seasonally much larger business and while we’re going to spend a lot of more on marketing, we do have quite a bit of fixed cost where we’ll get operating leverage from Q3 to Q4 that will drive more earnings expansion just because of that volume. Secondly, as I mentioned, we expect to have a lower tax rate in the fourth quarter. In prior years, the US R&D tax credit was, well at least in 2013 and 2012, was improved earlier in the year. This year we’re expecting that change to happen in the fourth quarter. So earnings will be higher Q4 versus Q3 and one of the drivers will be a lower effective tax rate in Q4. All that being said, we are stepping up our level of sales and marketing spend in the third quarter and going into the fourth quarter holiday season to drive traffic to eBay and to drive PayPal brand awareness domestically and across the globe.

Great. I appreciate that. I guess one other just sort of higher level question. What kind of freedom do you and John see Devin and Dan having ahead of the actual split to make decisions around investments and technology initiatives that might have the impact of taking you a lot further away from the margin structure that the company has fought so hard to maintain and the guidance that you guys have given in the past?

Not whatsoever, Heath. We’re going to try to do what’s right for both businesses. I mean that’s the whole rationale behind the separation. We did it based for the right reasons, on our timeframe for the right reasons to set the businesses up to succeed over the medium to long term, short, medium to long term. And that’s what the Board cared about, that's what Bob and I care about and that’s going to continue to be the guiding principal over the next six to nine to 12 months is to set each of these businesses up to succeed. As I said in my remarks, Bob and I are clearly -- we’re still accountable for the results until the separation occurs and we look forward to working closely with Dan and Devin to set each business up to be successful both in 2015 and beyond.

Okay, thank you. I appreciate it.

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

Great, thanks. Good afternoon. I guess first question, with the headwinds from the spring algorithm change still having an impact, can you add a little more color on how the SEO strategy will evolve in terms of managing search as well as the timeframe that you have in mind for seeing a step up in volumes? And if you could remind us also what portion of traffic is being generated from the search engine, that will be helpful? Thanks.

Well Colin, the first thing I'd say is we don’t give specific amounts, but eBay has been and continues to be blessed with the majority of its traffic being organic and that’s always been a strength of eBay and continues to be and frankly the Q4 brand campaign we think will help reinforce that organic traffic. SEO is a relatively small portion of our traffic, but it’s a portion that’s important and in particular brought us new users. And the dilemma we had in the SEO world over the last, really it’s been four, five years, is we're unique. We’re the world’s largest collection of unstructured data. We've got 8 million listings. They tend to turn over every 14 days. So even when a seller is selling the same thing, they do a new listing. And so it’s a little more challenging for the search index to index our inventory. And what tended to happen is when there have been changes to that search index, we get impacted and this is not the first time it’s happened. So what we’re doing is we’re going to try to do everything we can to put our inventory in a form and format that allows more sustainability of SEO results and so in some way mirrors more structured data approaches. And that means it’s going to take a little longer to do, it’s a little more manual to do, but Devin and team I think are taking the right approach on this so that we take out a little bit of the SEO volatility we’ve had. I don’t love it. This impacted our business, this SEO change, I don’t like that. But I think we’re going to do it the right way here so that it reduces volatility going forward, but it will take time. It’s not going to pop back up in the next one, two or three quarters. It'll come up a little bit at a time as we index more and more of that inventory back in.

Okay. Thanks, John. Maybe just one quick follow-up to Heath’s question on marketing. I’m wondering how much of that is allocated towards the branding campaign compared to more of an action or direct response based campaign with coupons and discounts and the like and how quickly we might see a response to that. Thanks.

Well, I think both are up. I mean the brand campaign is the largest brand campaign we’ve done since I think 2008 or 2009 which was the last time we did a major one. And this is going to be live in three or four countries. It’s a global campaign. And it’s intended to have enough [huff] (ph) that it breaks through. At the same time, the other marketing channels are also experiencing increased investments year-over-year, whether that's direct response marketing, whether that’s coupons and offers, whether that's daily deals. So as Bob said earlier, the team has done a very good job of controlling its overall expenses and headcount to enable reallocating fairly heavily into a very strong marketing investment in Q4.

Thank you.

Our next question comes from Ross Sandler with Deutsche Bank. Your line is open.

Thanks guys. Just the two quick ones. First is, do you have any sense of when the commercial agreement between the two companies would be in place relative to the S-4 filing that's supposed to be hit in the first half? And as you look at that commercial agreement, what kinds of factors are being considered? Do you expect any meaningful changes to the economic transfer between Marketplaces and PayPal? And then the second question is, it looks like you guys are picking up some really nice market share on the Google Wallet side here in a number of new countries. Do you expect to be a funding option for Apple Pay? And if so, when could that happen? Thank you.

I will do the first, John, and you can do the second. On the commercial agreement, yeah, obviously we want to get those in place before the Form 10 filing in the first half and that will be a work in process and you’ll know when that gets filed. But as I indicated earlier, speed and clarity to avoid distraction is our modus operandi. In terms of the agreements themselves, I mean we’ve had the talks over the years about the natural benefits that have existed between the two businesses. Marketplaces has been a source of new users for PayPal in the past, so we want that to continue. Marketplaces has been a place where PayPal has been able to launch its innovations to drive higher penetration of PayPal on eBay, to drive consumer credit growth on eBay, to drive SMB credit on eBay more recently and to drive mobile payments on eBay. So, we have new users, we have PayPal innovations and then lastly we have data. And the sources of data that eBay benefits from PayPal and vice versa have made the company stronger because of those relationships with each other. The intent of the operating agreements is simply to capture those benefits going forward, to minimize any [dis-synergies] (sic) associated with the separation, while also giving the individual businesses the inherent flexibility to compete and win in their respective markets. That’s the tradeoffs that we’ll be making with the operating agreements to create value for shareholders in the short to medium and the long term by benefiting from the dependencies but also positioning the businesses for success. And again Ross, that’s one that’s going to be -- it’s been actively worked and we’ll update you as we file in the first half of next year.

And Ross, on your second question on PayPal and Google Wallet, Apple Pay, just to reiterate what I said when we talked about separation, over the last couple of years PayPal has been working really hard to be able to enable payments in all the technology ecosystems. Our ambition is to be able to enable payments anywhere consumers want to shop and pay and that was one of the things that contributed to our acquisition of Braintree and it’s something that is an important part of PayPal’s future. And we’ve been working hard to make sure that PayPal can be an effective form of payment inside of Google’s ecosystem. And as you said, I think we’ve made some nice progress on that, it’s going well. And with respect to Apple, Apple has always been an important partner of both eBay and PayPal and it remains to be seen. We’re hopeful but we will work toward whatever is right in the months and years ahead.

Thank you.

Our next question comes from Mark Mahaney with RBC Capital Markets. Your line is open.

I know you’ve talked about SEO changes, but could you talk about paid marketing changes and any new thoughts on social marketing channels or paid searching? And just want to follow-up on Heath’s question about thinking who -- with Dan and Devin coming in and taking over these businesses, how much of the investment plans that you have now are fully baked with them? Obviously Devin has been with the business for a long time, so I’m sure he is fully aboard. But Dan is relatively new to the business. To what extent should we be concerned or think about whether you go through this investment cycle and then we go through another major one halfway through or as we get closer to the spin, how do we know that these plans are consistent with what we’ll see post spin or maybe that’s unrealistic? Thanks.

Maybe I'll comment on both. You can add to the second as well. On Marketplaces marketing, one of the things that Devin and team are really focused on this year is really diversifying our marketing channels and marketing spend. And so we continue to be, without a doubt, a very major player in paid search marketing, SEM. But there is a lot of work with Facebook and other social platforms to try to find ways to spend more on those platforms and benefit from the strong consumer engagement that Facebook and others have with their consumers and I think some nice shared innovation and working together and some nice early progress on that. So overtime, eBay wants to be able to be wherever consumers are starting their shopping experience. And so I think continued focus on that. And on your second question, we can probably both comment on this. I don’t -- you will get a chance to hear on the first quarter and then the second quarter about what those investment plans are, but I don’t think there is anything dramatically different on the horizon. As I said earlier, we’re going to work closely to figure out how to best position both eBay and PayPal for the future. I think Payments is going through a really interesting time right now where there is digital payments accelerating and I think that creates a greater addressable market and we’ll want to make sure we position PayPal to capitalize on that. And as I said earlier, I think with eBay, this allows them more focused and aligned eBay around its strategy and capital allocation. So we’ll work closely over the six to nine months to position each business to be successful. And early 2015 both Bob and I and Devin and Dan will talk about how that looks for the future.

The only thing I would add, Mark, just that Devin has been here for a few years, so he knows the business we'll. And I think what you’ve seen, obviously the industry is changing fairly rapidly. I am sure continuing to invest in mobile to capitalize on the industry dynamics will be important and help free enough capacity to invest in marketing and brand to drive traffic. That's something you see more recently and I would expect that to continue. You’re familiar with Devin and he’s been here for a few years. Yeah, I think I don’t want to presuppose for Dan, but the way we’ve thought about the business overtime is we have a merchant and a consumer value proposition in a role that we play in the ecosystem where we can charge a fee for the services we provide and generate very strong transaction margins. And again, I use the 60% plus range over the years. All along the way, the easiest thing for us to do would have been to simply dramatically expand the segment margins of PayPal because it has got strong transaction margins and it gets good operating leverage. Along the way, we’ve used that growth and that value proposition and have now adjusted the payments ecosystem to reinvest back into driving the growth over the long term for the business. And I am sure that Dan is going to think about it the same way is how do I use this wonderful franchise to continue to invest and grow the business for the long haul and not be too preoccupied with what the segment margins are quarter-by-quarter. And as John said, you’ll hear from them as we go into 2015.

Thanks, Bob. Thanks, John.

Our next question comes from Eric Sheridan with UBS. Your line is open.

Thanks for taking the question. First one, John, for you maybe, on the merchant side, the competitive environment seems to be getting more intense. Amazon continues to push 3P. Their platform is looking for deeper advertising services. Now, Google is extending Google Shopping Express to include additional merchants and additional cities. Maybe help us understand the landscape for eBay looking at things like eBay Enterprise, eBay Now, eBay Stores and maybe even extending eBay deeper as an advertising services platform long term to continue to strengthen those merchant relationships? Thanks.

Well, Eric, the way we step back and look at this sort of blending commerce landscape, which as you said is huge when you combine online and offline, and let me actually start with eBay Marketplaces then go to eBay Enterprise. I said earlier that one of things I think or I know you’ll see eBay Marketplaces doing is beginning to focus more on our target segment. The largest retailers in the world all have pretty clear articulation of who their target consumer is and eBay has a very clear target consumer who forms the bulk of our customer base and frankly is a large part of the market. And Devin is driving a process where we’re getting even more clarity about who that target consumer is and how we can position eBay to win with that target consumer and make sure we’re most aligned with that target consumer and not -- we won’t be aligned with necessarily everyone else in the market. And so I think you’re going to see a more focused eBay and I think it’s going to be a more special eBay, frankly anything a large retailer or large commerce provider has to do. I also think as part of that some of the -- there is an enormous amount of money that’s going to be spent as you see in same-day delivery in those services and I don’t think that’s going to be -- that’s not essential to our core target consumer. What you can see though that our core target consumer likes is they like to avoid shipping costs and so things like our Argos partnership in the UK I think has something that's aligned with our target consumer where our small sellers are able to provide same-day pickup or pickup that a consumer can avoid shipping expense and get the best of worlds without eBay investing tons and tons of money. So I think there are some creative ways of addressing that. So, eBay you’ll see I think more focused on our target consumer. eBay Enterprise is more an enabler for the larger retailers of how they compete in this omnichannel world. And eBay Enterprise, in particular its VendorNet capability, is really I think helping buy online, pickup and store, buy online, ship from store capabilities for the large retailers as I described earlier and there is a lot of demand for that and we’ll continue to particularly invest in that part of eBay Enterprise's capability.

Thanks, Eric.

Our next question comes from Gil Luria with Wedbush Securities. Your line is open.

Thanks for taking my question. In the past you’ve been ambivalent in terms of your approach to Near-Field Communication. Now that it looks like in 12 to 18 months we may actually get to critical mass of installed base with the retailers, will you try to make the PayPal wallet usable with NFC for the consumer to be able to consummate transactions at their point-of-sale through NFC and in that way leverage the EMV deadline for next year and the impact that Apple Pay is going to have?

Short answer, Gil, is yes, and that’s actually a relatively straightforward thing for us to do. As you know, PayPal has always been sort of technology agnostic around how a consumer wants to pay. And as you said, for quite a while we thought NFC was not going to be -- get very fast adoption. Now with the recent industry changes, with localization, I think that will be accelerated. Although it’s important to understand, accelerated may be from a three to five-year horizon to a one to three-year time horizon. This is not something that's going to happen in months. And we’ll see. It’s interesting, in Australia there is a fair amount of NFC use and consumer adoption and there are times where they tap their phones, there are other times they tap their cards in an NFC format. So our goal is to have PayPal to be enabled for however our consumer wants to pay and so that’s what we’re doing. And as I said, anything that increases digitization of payments I think expands our addressable market.

That’s great. And then in terms of the impact of currency, do you mind isolating – now you made a comment that slower marketplace growth in currency, you have a combined 300 million impact on the second half. One point of currency on third quarter is about $40 million. So what's just the impact of currency on the fourth quarter?

Yeah. Roughly speaking it’s going to be 110 million to 120 million with no change in currency. So I think the reason it was lower in Q3 versus Q4 is just the dollar strengthening since we last spoke in the middle of July until today. So we’re a very global business with over 40% of our revenues from outside the U.S. The UK or the pounds, euro, and the Aussie dollar are virtually 35% of our volume and exposures in those three currencies since the middle of July have depreciated roughly 7% across the board relative to the dollar. So as they depreciated during the course of the quarter, they'll have a bigger impact in Q4 than it did in Q3. So we said roughly 150 million since the last time we spoke with you, 30 million was in the third quarter and roughly 120 million in the fourth quarter.

Excellent, thanks.

Thanks Gil.

Our next question comes from Douglas Anmuth with JPMorgan. Your line is open.

Great, thanks for taking the question. This is Kaizad on line for Doug. I was wondering if you could elaborate on the impact Braintree on the payment segment margin a little bit? Was that more in the take rate or the loss rate? Thanks.

I think the question is about Braintree and its impact on profitability. It’s primarily a take rate dynamic. We've had rapid growth of Braintree. It contributed three points to the acceleration of Merchant Services growth. And as you probably remember, we monetize Braintree at a much lower level than PayPal. So rapid growth, much lower take rate has a impact on transaction margins in the quarter and going forward. Thank you.

Our next question comes from Ben Schachter with Macquarie. Your line is open.

Hey guys. Can you remind us what are the key countries for the cross-border trade and how the FX fluctuations actually impact the operation in cross-border business? And then separately, there seems to be some conflicting information in the market about the tax implications regarding potential acquisition for eBay and/or PayPal. Can you help us understand if there are any waiting periods or any other issues we should understand around how potential buyers may be impacted in terms of the tax implications? Thanks.

First on cross-border trade. As we indicated, cross-border accelerated in the quarter for the business overall where $13.9 billion of our volume was from cross-border trade. We have significant quarters from U.S. to Europe, from greater China to rest of the world’s fast developed markets and it’s been a source of growth for us in a way to give our merchants around the globe access to new markets that they otherwise did not access. So big part of the business, historically growth rates accelerating and we'd expect that to continue. In terms of currency movements, both our merchants and consumers are relatively quick at capitalizing on great deals. So the consumers that come to eBay looking for great deals, merchants are looking for how do I expand my services across the globe and anybody’s weak currency is another -- is an opportunity for them to expand into markets with strong currencies. And we see that dynamic, merchants and consumers taking advantage of that over time and Q3 was no different. Your second question on tax implications. I would just simply say that, and maybe to state the obvious, we have a wonderful business with very low tax basis. And in the event that somebody were going to come along try to buy one of those businesses, there would be a significant tax liability associated with the acquisition of any one business between now and the time of separation. So that’s the real tax consequences. What we’re focused on is trying to position both of these businesses for long term success. And what we indicated that we believe we’re able to do is effect the separation on a tax-free basis in the second half of 2015. So that’s what we’re focused on and that’s what we expect to do over the course of the next nine months or so.

Operator, I think we have time for one last question.

Our next question comes from Mark May with Citi. Your line is open.

Hi. Thanks for taking my questions. I just wanted to -- clarifying questions back on the SEO topic. So, earlier in the year I believe that Google made some changes that negatively impacted the Marketplaces and I think what you're talking about, there are some changes that you guys might make on your end that could create some additional new headwinds. So I was hoping you could elaborate on exactly what changes you might be making and why those would have a negative impact? And I know there are some estimates that are out there that SEO represents 15% to 20% of your traffic. Can you also help us think a little bit about the magnitude of the changes that you are contemplating doing on the Marketplaces business? And then just a quick additional question. I believe buybacks in the quarter were quite a bit lower than what we saw in the first half of the year. Is there anything that we should be reading into that this quarter? Thanks.

Mark, I’ll take the first. Bob, maybe you take the second. On the first point let me be really clear. Google made some SEO changes in May that had a significant negative impact on our SEO traffic. Anything we’ve been doing since then are trying to respond in a way that are consistent with the new rule changes. So we’re not doing anything other than trying to figure out how do we best take 800 million listings, which is unstructured data, and put them into the index in a way that allows steady significant traffic and growth. Second, I’m not going to say how much our SEO traffic was, but it’s certainly less than what you said as a portion of our traffic.

And your second question, Mark, on buybacks. We came into the year and the Board authorized an additional $5 billion share buyback. We aggressively executed against that in the first half of the year. So we’ve completed 3.5 billion out of the 5 billion and we have a little over $2 billion left on our outstanding authorization. We were not in the market in the third quarter maybe for obvious reasons. As we think about fourth quarter and going forward, we have $15 billion in cash. Our philosophy has been to maintain a conservative financial policy so we have the capacity to invest organically to make acquisitions that we think make sense and to opportunistically reduce our outstanding share count when we believe that the value the firm is not reflected in how the stock trades. We’ll continue to view it that way in the fourth quarter and going forward. We have a wonderful balance sheet. We have over $2 billion left on our authorization and we’ll be opportunistic to reduce our share count as we see fit. So not a dramatic change. Q3 we're out of the market for obvious reasons.

Okay.

With that, operator, we’ll wrap it up and we'll look forward to talk to you again January.

Thank you. Thanks, everybody.