Good day, ladies and gentlemen, and welcome to eBay's First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. As a reminder, this conference is being recorded. I'd now like to introduce your host for today's conference, eBay's Vice President of Investor Relations, Selim Freiha. Please go ahead.

Thank you, operator. Good afternoon. Thank you for joining us and welcome to eBay's earnings release conference call for the first quarter of 2018. Joining me today on the call are Devin Wenig, our President and Chief Executive Officer; and Scott Schenkel, our Chief Financial Officer. We're providing a slide presentation to accompany Scott's commentary during the call. All revenue and GMV growth rates mentioned in Devin and Scott's remarks represent FX-Neutral year-over-year comparisons, unless they indicate otherwise. 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 investors.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 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. In addition, management will make forward-looking statements 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 the future performance of eBay Inc. and its consolidated subsidiaries, including the expected financial results for the second quarter and full year 2018 and the future growth in our business. 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 our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at investors.ebayinc.com or the SEC's website at sec.gov. You should not rely on any forward-looking statements. All information in this presentation is as of April 25, 2018, and we do not intend and undertake no duty to update this information. With that, let me turn the call over to Devin.

Thanks, Selim. Good afternoon. In Q1, we delivered good results that were in line with our expectations. Total GMV and revenue were up 7% while active buyers grew 4% to 171 million. GMV and revenue on our Marketplace platform grew at 7% with U.S. Marketplace GMV growing at 7% while international GMV grew 6%. StubHub platforms grew volume at 13% and Classified platforms grew revenue at 10%. Finally, we returned $1 billion to our shareholders through our share repurchase program and we recently announced the acquisition of Giosis Japan, expanding our presence in one of the largest e-commerce markets in the world. As I have consistently communicated, we're focused on delivering the best choice, the most relevance and a powerful selling platform while also sharpening our brand. This includes ongoing work to build an extensive product catalog, launching and scaling new finding experiences and, more recently, beginning to build payment intermediation capabilities on eBay. In Q1, we made progress in each of these areas. Let me share some examples. Over the past year, we moved the majority of our SEO and paid search traffic to land on new product and browse pages to use our product catalog. We've also begun using our catalog to simplify both business and consumer selling, with sellers now being able to save time and money by relying on catalog-level attributes to list and promote their inventory. This quarter, we began focusing our efforts on organic traffic, launching a full product-based commerce experience to a subset of buyers in the U.S. Users searching for a number of specific products are now landing directly on a product-based search result. This is an important first step towards moving a material amount of our GMV to product-driven experiences over time. In Q2, we plan to roll this experience out…

Thanks, Devin. Let's begin with Q1 performance, starting on slide 4 of the earnings presentation. In Q1, we generated $2.6 billion of total revenue, $0.53 of non-GAAP EPS, $495 million of operating cash flow and $337 million in free cash flow, while repurchasing $1 billion of our stock. Moving to active buyers on slide 5, in the quarter, trailing 12-month buyer growth was 4% year-over-year, a one-point deceleration versus Q4. The deceleration was driven by some near-term headwinds in Korea and on our core eBay platform. In Korea, we are lapping active buyer increases related to mobile guest checkout improvements we made, in addition to ongoing impact from the Q4 extended holiday. In our core eBay platform, we have seen some pressure on growth over the past couple of quarters from first-time buyers who buy in low ASP tranches. We are actively working to reverse this trend through a number of initiatives, such as our Under $10 micro sites that we launched in Q1. Growing active buyers remains an important focus for us and, as we expect, many of our efforts, including brand advertising and our new user experiences to drive more active buyer growth over the long term. On slide 6, in Q1, we enabled $23.6 billion of GMV, up 7%. By geography, the U.S. generated $9.5 billion of GMV, while international delivered $14.1 billion of GMV, both growing 7%. Moving to revenue, we generated net revenues of $2.6 billion, up 7%, stable versus the prior quarter. We delivered $2 billion of transaction revenue, up 8%, and $557 million of Marketing Services & Other revenue, up 5%. Diving a bit deeper into our Marketplace platform on slide 8, Q1 GMV grew 7%, slightly higher than the prior quarter. U.S. GMV maintained 7% growth, while international grew 6%, driven by…

Thank you. Our first question comes from Eric Sheridan with UBS. Your line is now open. If your line is one mute, can you please unmute? Mr. Sheridan?

Let's move to the next.

Yes, sir. Our next question comes from Ross Sandler with Barclays. Your line is now open.

Hey, guys, thanks for taking the question. This is Deepak on for Ross. Two questions. First, can you talk about the conversion improvements you're seeing from the rollout of product-based experience on search compared to the prior experience? How should we think about the benefit to GMV growth as more traffic is migrated to a full product-centric shopping experience? And then the second question, recently there's a lot of discussion about ePacket program that enables drop shipping from China to U.S. Can you talk about exposure either in terms of GMV or sellers, if any? Thanks.

Hi. Thanks for the question. On the first, I guess, what I'd just say is, this has been an ongoing journey we've been at for the last two years. We've seen, in the aggregate, both at the edge and in the aggregate, conversion pickups as we've moved to structured data experiences. The rollout of that is not uniform everywhere in the world. We have some differences country by country. That includes, even if you look at the experience that would happen not only in core eBay search, but out in SEO and out on the edge. I'd say we're pleased with where we are. We obviously wouldn't be rolling it out if we weren't getting conversion gains. You can expect us to continue to roll that out throughout the balance of the year. And as I said, that will start in Q2 with us rolling a whole bunch of new products and categories into this product-based search. And from there, we'll continue to widen. It's a continual process of test and learn. It's not linear, but I think we are where we expected to be, and we're pretty pleased with the results. I'd say moving to the catalog-based approach, our brand and the other experiences that we've rolled out have been direct contributors to the acceleration in growth we've seen over the last 18 months to two years, and we continue to expect that.

Deepak, on your question on ePacket, our China export sellers did pretty well in Q1, and I don't think it really had a material impact. I'd say that the reason it didn't is we've been working over the last several years to really help our Chinese sellers position inventory into markets and warehouses that we've coordinated with outsourced providers to provide the capability for fast shipping in country. And so while, clearly, that's a pressure, I don't think net-net it had a lot of impact.

Thank you. Our next question comes from Mark May with Citi. Your line is now open. Mr. May, if your line is on mute, can you please unmute? All right, we'll move on to Brian Fitzgerald from Jefferies. Your line is now open.

Thanks, guys. A couple questions. There has been a lot of media attention on Walmart and their potential investment in Flipkart. Any color in terms of your relationship with Flipkart? How a deal from Walmart would impact your investment and your partnership there? And then very topical again is this notion of GDPR. You guys talked to it and understanding you've been doing diligent work on your own systems and your own data and you're helping your advertising partners as they approach the issues too. But if you had to characterize their level of readiness, do you feel like you're doing more handholding for them at a quicker, more frantic cadence? Or have these advertisers been dealing with GDPR and thinking about it for multiple quarters and years also? And so the whole industry, as a whole, is very ready for this?

Yeah, thanks for the question. I'll take them. On Flipkart, look, I won't speculate or comment on what Walmart may or may not do. I'll just reiterate what our relationship with Flipkart is, which is we made a meaningful investment last year. We have an exclusive commercial relationship that has roughly three years left to run, and that is a relationship that makes us both the exclusive importer and exporter of goods on the Flipkart Marketplace. We're happy with that partnership. We'll wait and see how things evolve, but I won't comment because we're not a party to any conversations that may or may not be happening with Flipkart or other parties. On GDPR, we feel like we're ready for GDPR. We've been working on this for quite a while. We have partners in advertising and we're waiting to see how those partners comply. I think it's less a matter of compliance and perhaps it's a matter of what requirements they have or don't have, and that's still evolving. But I feel really good about where we are. Our readiness, our regulatory compliance and I know everybody in the industry is watching it, and we'll watch it very carefully.

Great. Thanks, Devin.

Thank you. Our next question comes from Stephen Ju with Credit Suisse. Your line is now open. Steve D. Ju - Credit Suisse Securities (USA) LLC: Okay. Devin, I know this looks slightly in the rearview mirror, but the Japanese market has been an area where you could have entered at any point in the company's history. So why was it the right time to acquire the Giosis operations? And secondarily, can you talk about the opportunity to now perhaps source supply from both Japan and Korea to sell into the Chinese consumer demand? Thanks.

Yeah, thanks. Good question. I'm really excited about this acquisition. The reason the time was right is we've had an investment in Giosis for...

Since 2009.

Yeah, since 2009. And they have been steadily building. And now, we feel like they are reaching network effects and exit velocity. It's a business at scale. As I mentioned, we're now at $1 billion. And the growth has been really strong and really consistent. And we feel like they're getting a lot of Japanese buyers, particularly millennial buyers. Their growth has been very consistent and they have not yet had the benefit of global supply, to the second part of your question. So we felt like this is the time. They are reaching that tipping point where it's becoming a scale and meaningful high-growth platform. We think we can add a lot of benefit to Giosis and they can help us. So they have a nice broad Japanese seller base that will complement our smaller base, which has been exporting, and we'll take all of that inventory and export it to all of our Marketplaces around the world like we do. And the first thing we'll do is we'll bring eBay's global supply into Japan for the benefit of Japanese consumers. So I'm really excited by this. And I agree with you, Japan's been a large market. It is not really been meaningful to eBay for its 21-year history, and my hope is now it will, and we're really excited. Steve D. Ju - Credit Suisse Securities (USA) LLC: Thank you.

Thank you. Our next question comes from Heath Terry from Goldman Sachs. Your line is now open. Heath Terry - Goldman Sachs & Co. LLC: Great. Thanks. Wondering if you can just give us a bit of a sense with the benefit that you saw from FX this quarter on GMV growth, how are fluctuations in FX impacting your cross-border business and to the extent you see that as either a headwind or a benefit to the FX-Neutral growth that you're seeing in GMV. And then as we look at the marketing, I guess, sort of deleverage that we saw in this quarter up a little over 100 basis points on a year-over-year basis, how much, Devin, would you consider that sort of investment against revenue in the quarter versus your longer-term investments in sales and marketing that we may see benefits in future quarters from?

Thanks, Heath. I appreciate it. The first part on FX, I think the question is just does it – when you net all the flows out, it doesn't have a meaningful impact. Generally, I don't think it really does. I mean, Scott, do you want to add anything on that?

The way I'd characterize it, Heath, there's always going to be intra-corridor complexities. So, as the pound weakens, the export corridor out of the UK gets a little bit better. As the dollar weakens, it gets a little bit better out of the U.S. and vice versa. Look, I think this quarter, it didn't have a particularly meaningful impact that I would call out, as it has in prior quarters, particularly a year or two ago, but we keep a close eye on it and, quite frankly, really look to maximize that in terms of what's available on the sites as they're (31:00) looking for exports out of those specific corridors where there might be weakness in the currency.

Yeah. And, Heath, on the second part of your question, we're being aggressive about marketing and brand. I'm glad we are. First of all, we're trying – keep in mind that now both promotions and many things that were out of the marketing line are now in it since we've adopted the new accounting standards. First of all, on brand, we're going to keep that on. We're seeing early signs. We've always said it would take a long time and we do think the payoff is large, but it takes time, and we're going to keep that on and keep evolving the brand campaign. And this is one of the top brands in the world, but we think that there's a big opportunity to close the consumer consideration gap. There should be more people shopping on eBay because it's a great product with great inventory. And there's some that just don't consider us because they don't know what we do. So we're going to work hard to close that gap. It takes time, but I'm really glad that we're doing that. The second component is promotions, and promotional activity is now in that line, and we're experimenting with a lot of different things. Now that we feel that our product is evolving, we're getting better conversion. We like the experience that our consumers are getting. We're being aggressive and experimental with our promotions, and we're always disciplined. But we did some promotions this quarter, last quarter, Q1 that we haven't done before, like in the U.S. and in general, we were happy with what we saw and we'll keep experimenting with that. So, right now, we're happy with where we are. We always watch our marketing expense carefully for a return on investment, and we're leaning into drive not just growth, but our future barriers to entry on things like our brand. Heath Terry - Goldman Sachs & Co. LLC: Great. Thank you, both.

Thank you. Our next question comes from Mark May. Your line is now open.

Hi. Sorry about that. A question on StubHub. I believe there's some changes in your working relationship with the NFL, and I wonder if you could talk to us a little bit about how you expect that to impact the business when the season kicks off again. And I think on the one end, there might be some impacts on your pricing, but on the other side, it impacts kind of inventory and quality of inventory. So maybe just help us understand the puts and takes there and net-net what you kind of are expecting? And then can you also help us understand a little bit the potential impact on your business, if there any changes to postal rates as it relates to – I think there's some favorable rates the Postal Service provides for Chinese merchants, and to the extent that that changes, maybe help us frame the exposure there. Thank you.

Yeah, thanks. On the NFL, I think we mentioned this a quarter or two ago that we signed a deal with the NFL to be one of their partners in the secondary ticket market. What that means is that we'll integrate with the teams in the NFL so that we can now have barcode scanning and mobile ticketing, seamless ticketing. So that's a real positive. That means both we'll have high-quality supply directly from NFL teams and a great customer experience with lower customer support because we see lower customer issues and customer support when we have fully integrated tickets and mobile scanning. So we're really happy with that, and it's great to be a partner with the NFL. I think what we said at the time, and I still believe, is the net impact of that might be slightly positive to growth and slightly negative to expenses because we're obviously paying a share for those integrated tickets. It's early – the NFL just announced their schedule, I think, a few days ago, so it's a little early to gauge how that is all going. But we've been really happy with the relationship we have with Major League Baseball, and this is similar to that. It's a similar arrangement where we're partnered with the league and what we're getting is a high-quality supply and a great fan experience through integration, and in return, we're giving up a little bit of that revenue.

Yeah, Mark, on your postal question, look, I'd start with the fact that no one corridor is really that substantial in the greater scheme of things, particularly when you're looking cross border. But if postal rates change, I would call out a couple of things. First off, remember, today, roughly 70% of what's in the U.S. is free shipping today, and two-thirds – approximately two-thirds arrives in two to three days or less. And that volume that we see going through the USPS will continue to represent our sellers and their volume to get the best possible rates within what rates are out there. And so, we'll just continue to work on that.

Thank you. Our next question comes from Colin Sebastian with Robert W. Baird. Your line is now open. Colin Alan Sebastian - Robert W. Baird & Co., Inc.: Great. Thanks. I guess, first, I was hoping you could expand a bit on the buyer promotions in Q1, I guess, first in terms of linearity through the quarter and then secondly, if those will continue through the year. And then as a follow-up on payments, Devin, I was hoping you could talk about how much of the new infrastructure and the integration with iDEN (36:45) is already in place for the beta, or it will need to be for the beta and the first part of the rollout in the second half of the year? Thank you.

Hey, Colin, to your question on marketing and linearity, as you know, we spend marketing across a number of different levers. And so you when you step back across all of those levers, it was relatively linear. But now that contra revenue for buyers is in marketing expense, what you'll see is, the kind of within month, within week incentives that we drive to take advantage of what's going on in the market. So, for instance, as we started to see a little bit of a delay in tax payments and the opportunity to jump in and kind of incent the buyer base and our non-buyer base to be able to activate on eBay in a more material way, you saw us lean in more in March than you have in the past, and you've seen some of those big coupons that were out there trying to drive higher ASP, higher value items on the site. And, yeah, I think you should expect that to continue. We've been signaling that for a number of quarters that between brand and our marketing incentives that we'll be out trying to bring new active buyers in this ecosystem and drive GMV.

Colin, on the second part of your question, the number one thing that's important to me as we go down this new path is that our buyers and sellers have a great experience. We're very focused on making sure, because this is new, that buyers get more choice, as we said before, and that sellers see both, a lower cost of selling as well as just a seamless integrated experience. On the specifics of your question, I don't want to get too technical, but they're kind of two pieces of payment intermediation at a high level of generality. One is the frontend that customers will see and one is the backend, which is the ledger, which accounts for the money. The frontend is being built very rapidly, and I'm really pleased with the progress there. The ledger will take more time. And actually what we'll do with the 5% market test is we'll actually use audience ledger and then we'll build the eBay ledger in the background. That won't come in until we move into 2019. But I'm pretty pleased with where we are. There's a lot of work to do. It is a meaningful product build and migration, but we're obviously incredibly focused on this. It is a meaningful value driver for our business and we're out of the gate really fast. Colin Alan Sebastian - Robert W. Baird & Co., Inc.: Thank you.

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

Hello. This is Dae Lee on for Doug. Thanks for taking the question. I just have one on how you're engaging with brand and retail sellers on your platform. How do you think about the balance between those sellers on your platform? And I believe there was a recent line on (39:56) Target potentially moving out of eBay, how do you think about that and does that impact (40:00) your platform going forward?

I think I've said on almost every call for the last year-and-a-half that we're very focused on brands. We're not particularly focused on big retailers. Brands are increasingly coming to eBay. We're extremely pleased with the rate of brand acquisition. I think they're coming to eBay because the retail landscape is changing. They get sales from multiple channels that may not be around in a few years and they're looking at their alternatives, and eBay is one of the very few at-scale marketplaces in the world, and we don't compete with our sellers. That's very rare and very unique. So brands that may, years ago, have been skeptical of selling on eBay are now successfully coming to our platform, and they are coming at an increasing rate. There was a time when eBay was very focused on big retailers. We're not now. That doesn't mean that we wouldn't situationally partner with a big retailer here or there, but we're not at all dependent on big retailers for our GMV and, quite frankly, it's not an area of significant focus for us. It is about brands and it's about our small and medium-sized sellers. That's always been the engine of our growth.

Got it. Thank you.

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

Thanks for taking my question. Sorry about the tech problems before. One, on your own advertising business, wanted to know if we could go a little bit deeper in terms of what you're seeing from sellers willing to engage in some of the changes you've made in the advertising business, and what that might mean as we look out over the next couple of quarters in terms of evolution of the P&L for your own business. That's number one. And number two, on your own marketing spend, where should we be thinking about your marketing dollars going as we move through 2018? Is it towards that organic traffic still? Or is it towards stimulating velocity of shopping within the active buyers that have come into your ecosystem over the last 12 months? Or what are your rank priorities for marketing dollars? Thanks, guys.

Yeah, I think on the latter question, Eric, the first thing I'd call out is, as you know, we've got a broad cross-section of marketing levers at our calling. And I think it will continue to be in the mix of what we have today in the sense of IM (42:29) plus improving the output from our SEO initiatives, plus brand, et cetera, as well as buyer coupons that you're now seeing show up in marketing expense. And I would expect, as we've talked about, that to escalate over time a bit as we look to activate traffic, bring new buyers and increase share of wallet with our existing buyers. So I don't know, Devin, if you want to comment any further on that one before we go back to 1P?

Yeah. Look, we're disciplined marketers. We are marketing more aggressively, but it hasn't changed our overall philosophy. We measure marketing really carefully. We don't buy growth. We care that the customer cohorts we bring in have a positive customer lifetime value. And there are new tools in our arsenal and we're trying many of them. Some of them we're happy with, some of them we're not, and we'll try and we won't repeat. But I suspect that you'll see us evolve into acquiring healthy customer cohorts and reactivating our existing base are the two most important priorities of our marketing spend, always has been, it just that the means are evolving. On advertising, just to remind you, we've been on this journey now for a year or two where we are growing a first-party advertising business, which is existing sellers on our Marketplace can promote their items, and we have been slowly but surely moving out of some of the third-party advertising that really was almost all of the advertising business that we had on the Marketplace. We would never entirely get out of third-party advertising. We still think there's healthy advertising, but basically we're on a journey to which if you're a brand or you're a seller and you want our significant customer base or volume, you've got to have a store on eBay and you got to promote it through 1p. A year ago, we said it was starting to scale, and obviously we've talked about this the last three quarters. This is a rapidly growing exciting business now. Last quarter, we saw 200% growth. It doesn't yet really show up because we're bleeding third-party down as we grow first party, but eventually we think that is going to be a meaningful contributor to growth. We think there's lots of runway. Although our growth is fast, we're underpenetrated, and there's a lot of room to grow the first-party business, and we're very, very focused on that. So it's one of the things that we think will be a growth driver of this business for the next several years.

Great. Thanks for the color.

Operator, we'll take one more question.

Yes, sir. Ladies and gentlemen, the last question will come from Justin Post with Bank of America. Your line is now open.

Hi. This is Akshay Bhatia on for Justin. When we look at revenue growth, for the first quarter, it came in at 7% FX-Neutral, and the guidance midpoint for the second quarter is 7% as well. What are some of the drivers to achieve the 9% high end of the range for the full year, particularly as growth comps are about 100 basis points tougher in the back half?

Yeah, I wouldn't call out anything different than we've already spoken about in terms of what we expect to happen from our user experience changes and further expansion of those as well as our brand campaigns. So I wouldn't necessarily highlight anything different, it's just more acceleration in the second half as you call out.

Great. Thanks.

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you very much for your participation and you may all disconnect. Have a wonderful day.