Good day, and thank you for standing-by and welcome to eBay Q3 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers remarks, 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 Communications and Investor Relations. Please go ahead. Good afternoon. Thank you for joining us and welcome to eBay's Earnings Release Conference Call for the Third Quarter of 2021. Joining me today on the call, are Jamie Iannone, our Chief Executive Officer, and Steve Priest, our Chief Financial Officer. We're providing a slide presentation to accompany Steve'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 the non-GAAP measures related to our performance. You can find a 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 Steve'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 October 27, 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. Good afternoon, everyone, and thank you for joining us. Today, I will begin the call with key highlights from the third quarter. Then I will share some updates on the progress we're making towards our strategic vision. At the end of my remarks, I will turn the call over to Steve, who will discuss our financial performance and outlook in greater detail. Q3 was another strong quarter driven by our team's relentless focus on sellers and buyers. I'm excited by the positive impact this is having on the underlying health of the business. The changes we are making to the marketplace are improving results today and are also putting us in a better position to deliver sustainable growth. We remain confident in our long-term vision to grow the core, become the seller platform of choice, and cultivate lifelong trusted relationships with buyers. Let me highlight a few achievements from the quarter that brought us one step closer to this vision. Our business delivered better-than-expected revenue and earnings growth on the high end of our guidance. Our strategic playbook continues to improve customer satisfaction and build trust and is leading to faster GMV growth in our focus categories. The managed payments migration, which is nearly complete, is helping sellers and buyers by reducing friction, lowering costs, and enabling new capabilities. Our advertising business continues to grow faster than marketplace volume, and our product innovation provides sellers new tools to help them scale their eBay businesses. We're also making great strides in our ESG effort. Recently, we received approval from the Science Based Targets initiative for our multi-year carbon emission reduction goal. And importantly, we announced that eBay will be 100% carbon neutral this year, and will remain so going forward. I'm pleased to report that all key business metrics…

Thank you, Jamie. And thank you all for joining us today. I'll begin with our Q3 financial highlights on Slide 4 of our presentation. We delivered another strong quarter. Our results met or exceeded the expectations across all key metrics, while our year-over-year comparisons reflect the extraordinary growth we experienced last year as a result of the pandemic. These results were underpinned by continuous execution, divisions on payments, Promoted Listings, and focus categories. [Indiscernible] year-over-year on an FX-neutral basis. The transaction revenue grew by double-digits Primarily due to contributions from managed payments. Non-GAAP EPS was $0.90 per-share, and our operating margin is 31.7%. We generated $502 million dollars of a free cash flow and returned approximately $2.4 billion to shareholders through share repurchases and cash dividends during Q3. Given the underlying growth in our business and strong free cash flow generation, I'm pleased to announce we've raised our share buyback target for 2021 from $5 billion to $7 billion. Our pending portfolio transactions remain on track to close within previously communicated timelines. We anticipate the sale of other [Indiscernible] shares. So [Indiscernible] were closed during Q4, while the career deal should close out the next year or potentially by the end of 2021. Turning to active buyers on Slide five, we exit Q3 with a 154 million active buyers on a trailing 12-month basis, representing a 5% decrease year-over-year. This decline was primarily driven by low value buyers. [Indiscernible] makes more than half of our buyer base, but only 5% of GMV. As Jamie mentioned, this ongoing trend is a result of our strategy to prioritize attracting and retaining high body buyers. We have confidence in this [Indiscernible] approach, but we recognize the reduction low value buyers could pressure our rolling 12-month active buyer accounts in the coming quarters. Compared…

[Operator Instructions] We'll pause for just a moment to compile the Q&A roster. We have our first question coming from the line of Edward Yruma with KeyBanc Capital Markets. Your line is open.

Hey. Good afternoon, guys. And thanks for taking the question. Really wanted to quick down a little bit on some of the categories that you're re-imagining and some of the success you're noting there. Just help us understand maybe the new customers you're growing into the platform. I know you've identified from dollar amounts, but just to clarify, are those new customers or is that customers that are participating in those categories? And then as a follow-up, what are the marketing plans to encourage new customer growth in these categories that you've re-imagined? Thank you.

Yeah. I'll take that. First on the categories, it really is about both leading into the high-value buyers that are on the platform, as well as attracting new buyers in. If you look at what we're doing in watches and sneakers or -- this quarter we announced what is the cross-category nature of shopping. So, if we acquire a buyer into a handbag, who buys a handbag over $500, they actually end up spending $5,000 dollars in other categories outside of handbags on the site. So, when we think about acquisition, it's not just acquiring it for that category, it's acquiring it more broadly for eBay. That's one of our significant benefits. Excited because we've expanded categories this quarter, we brought our sneakers authentication program to Germany. We brought watches to the UK business, and we launched handbags in the U.S. in terms of that product. From a certified refurbished, we added new brands, [Indiscernible] [Indiscernible] and expanded number of products there, and that's exciting coming into holiday. On your question on marketing, we've really shifted our marketing. I think traditionally we've been a mostly lower funnel with some broad-based campaigns on upper funnel, really driving into how do we inquire high -- acquire high-value buyers and high-value enthusiast in specific verticals. So, what that means is a whole lot more of upper funnel marketing partnerships, leaning in with social media influencers in certain categories, and basically going much broader with our marketing plans to find those buyers where they are. And I guess the last thing I'd say is we're really focused on the first 90-day experience on eBay. Many times, in my career, I've done this where you really get focused on how do you introduce them to the brand, bring them up to life cycle, make sure that they turn into the high-value buyers that we want to do. And that's going to be a continued focus for us over the coming quarters.

Great. Thanks so much.

We have our next question [Indiscernible].

On the core marketplace improvements. You obviously focused a lot on category specific changes and that's working well. How much effort is there in platform wide enhancements? And if there are any sort of specific initiatives there, what will be the timing for those? And then, Steve, maybe with respect to the Q4 outlook, just looking at the sequential ramp versus typical seasonality, it's certainly a little light of historical patterns. Even eBay could be a net beneficiary from supply chain issues, I know, like factoring that into the outlook, but maybe some additional color there would be helpful. Thanks.

Thanks for the question, Colin. So, we do talk a lot about the vertical expansion and focus category work that we're doing and we're excited for what's happening there. If you actually step back and look at it, the vast majority of our resources are actually going to site-wide initiatives across the board. And I'd point to a couple of, one is obviously our ad business, and a lot of investment there across-the-board, especially with the 3 new products that we're at the beginning of launching. Obviously, payments, huge initiative. But other areas that we haven't talked a lot about, like eBay stores. So, working on a next-gen experience in eBay stores, incorporating videos, so allowing sellers to tell their story from that perspective. But a more CRM tool capability so that sellers can be more involved in how we bring buyers back to the platform and drive that repeat business. So, the stat I just mentioned earlier about, we launched it 6 months ago, but now sellers are funding the coupons to drive buyers back to the site from past buyers or interested buyers. And that's a huge benefit for sellers and a huge benefit for eBay because we're involving them and driving them, and already 2.5 million buyers have used that in that time period. And so, we're also testing a new selling experience. You -- if you're on the site, you'll see that there's a beta out there of a new way to sell. So most of the -- the vast majority investments are going to horizontal. But what I like is it's a compliment. Because some of those horizontal lean into some of the vertical work that we're doing in the vertical work and focus categories. Some of the things that we're building for a given category, we're able to use in a number of categories across the site. The 2 also play together well. Steve I'll let you take the second part of the question.

Yeah thank you Jamie. Hi, Colin. Continue to lie out. We will not only move the focus categories but also the momentum alliance. So, payments and ounces have gone forward. On a year over 2 bases, if you think about on a standby year-over-year we're obviously lapping a pandemic. On a year over 2 bases, we're seeing mid-to-high single-digit growth compared to Q4, 2019. I think as a [Indiscernible] First of all, a holiday perspective around Q4 is embedded in the guide. From a headwind perspective, in the prepared comments we had, we talked about supply chain pressure for cross-border trade that we see on one side, but in terms of a tailwind, obviously, eBay is well known for unique and scarce items, which we do expect some support to the holiday periods. So, a few puts and takes, but overall, I'm pleased with the label be continued modestly positive to underlying growth on the platform as a result of the initiatives that we're driving forward.

Okay. Thank you.

Thank you. We have our next question coming from the line of Q - Deepak Mathivanan with Wolfe Research. Your line is open.

Great, thanks for taking the question just 2 quick ones. First, can you elaborate on the new Promoted Listings offerings? I mean, should we expect these offerings to drive adoption among a broader range of sellers? And maybe related to that, can you provide an update on why you [Indiscernible] question, I realize this might be a little bit [Indiscernible] for next year. [Indiscernible] feels like you have plenty of capacity [Indiscernible] you're thinking about to do it in a more programmatic way after the 7 billion this year. Thank you.

Yes. On the new Promoted Listings offerings, let me just explain the 3 in details. The first one which is Express, is really to give us a Promoted Listings product against auctions. Since we launched this product 5 years ago, it's really only applied to fixed price. And so, this opens up your wallet smaller format at the site of format that has not been open to advertising before. Promoted Listings Express is a C2C -based product. Gives sellers the opportunity to drive more velocity, goes after a different type of marketing budget for that perspective and given us the opportunity to work with a secondary and supplementary advertising format. And the third is off eBay advertising, and that's using the vast marketing reach that eBay does today, partnering with our sellers to drive advertising as part of that off eBay outreach to bring existing buyers and new buyers back to the platform. I will say for you is that it's early days on these 3 products. If you look back, we started our ad business 5 years ago and we've grown to a billion dollars now over 5 years. So, we're at the point now where we're testing, we're learning. We've got invited sellers into the program. And just like it took us time to build up the CPA based program, I think it will take us time here to build up the advertising program. In terms of penetration, we still have a lot of opportunity left, both in terms of the sellers and Listings. I believe the last that we shared was that only 400 million of the Listings have advertising associated with them. So, there's a lot of opportunity for additional penetration. I'll let Steve take the second question about how we're thinking about the future.

I'll take that. I'm not going at that myself for 2022. We haven't what the guidance out there, but I'll give us a little bit of color in terms of where we are. As we've previously said, reinvestments in the business is our first priority, whether that's Farrell Boto partner, but having said that, beyond that any excess cash that we do have continues to drive returns. We'll continue with a disciplined return of capital to shareholders. And this is not any different in the past. We had a strong and consistent history. I've actually noticed some capital returns, and in 2021 must be no exception. So, think about us going from 2 billion at the start of the year, lifting up to 5 billion, and most recently on this call, we're talking about $7 billion. I think when I stand back and think about eBay as a whole, the balance that we have and the benefits for the franchise, is we often have the ability to do both, in terms of reinvesting the business and the and capital we bought.

Got it. Okay. Thank you very much.

We have our next question coming from the line of Ross Sandler with Barclays. Your line is open.

Hey, guys. 2 questions. One on just U.S. versus international. So, it seems like a big reason why your U.S. GMV is way above 3Q '19, I think you said it was about 23 or something like that, compared to international is a little bit on the IST comp, but also from these focus category initiatives. So, what's holding back the same type of uptick for international? Is it structural or is it just a timing thing, and we should see a ramp up after you roll those out after starting in the U.S. And then the second question is on how will eBay Motors these days are not a big category historically, and just can you talk about a little bit about the opportunity there in terms of making that one focus category emerging departs with the motors?

Yes. Let me start with U.S. versus international. First off, let me say, I'm really pleased with the momentum we're seeing in the overall business. We're growing at 9% year-over-two-year basis, based on the strategic vision we impacted by mobility returning to really pre-COVID levels, coupled with an unprecedented in snapback in travel and leisure activities in Europe. In addition, as Steve mentioned a little bit earlier, our international cross-port trade. Trade sellers were also pressured by supply chain disruptions that tends to be more in our international segment from across border perspective than in our U.S. segment. On the other hand, in the U.S., we've seen strong growth driven by momentum in our core business. To your question on the focus categories, it's not a structural change. We actually think the work we're doing applies across the whole globe, it's really a timing thing. In most of these areas, we actually roll them out in the U.S., get them perfected here and then expand them internationally. For example, Sneakers is just now launching this quarter in Germany, we launched watches in the U.S. We just started that expansion in the UK this quarter, handbags we just launched in the U.S. and that hasn't expanded yet. So, it's really a timing thing, but we think the playbook that we have is relevant in every single market that we have. Probably with the exception of trading cards and collectibles. That's just so much stronger in the U.S. than it is internationally, but that's a huge U.S. benefit and a lot of the pieces that we're doing there are our key focus for that. But overall, feel great about the health of the business and our ability to expand those focus categories internationally. On your second question on P&A, we haven't disclosed…

Thank you. We have our next question coming from the line of Doug Anmuth with JPMorgan. Your line is open.

Thanks for taking the questions. To on payments, you've removed a lot of the friction already. Now that you have 90 plus percent of sellers can migrate on to managed payments. Just what's next in terms of improving the experience going forward? And then just curious if you have any preliminary thoughts on some of the managed payments numbers in '22 in terms of revenue and operating income. Thanks.

Yeah. First on the friction, the whole idea of bringing commerce and payments together gives us great opportunities to remove friction. So, on the selling side, people now only have to set up for single account and get selling. All of their claims are managed in one place. Tons of benefits from there. One of the ones that I'm really excited by is that since I worked at eBay, the last time starting in 2001, unpaid items have been on this platform forever. And so now, we've eliminated it and fixed-price virtually. We're doing so in best offer. And so, sellers won't have to face that issue, and it takes friction out of the platform. On the buy-side, it allows us to open up new opportunities for different forms of payments. Clearly, we've already integrated Apple Pay and Google Pay, but we launched the partnership with After pay in our Australia business for buy now, pay later. After pay is a very strong brand in that market. And that's bringing us new customers. It's already at 10% of our business there. And we're continuing to look at new opportunities for forms of payment for our buyers. Secondarily is on the seller financing -- payments through the business. So, like I said in the call, the way I look at it, the migration is complete, but we're just getting started in terms of the opportunity of what we can do with commerce and payments together in a single flow -- in a single experience.

Hi, Doug. With regards to your question on payments rollout 2022, too early to talk about 2022. We're not taking drive that at this point, but I did want to read, that's why I had delighted we are with the progress we've made with over 90% of the platform volume, with over 18 million sellers joint to the platform now. We laid out some goals, joining back a couple of years with regards to $2 billion of incremental revenue and $500 million of ROI. We're well on track. Margin is in line. So, we're very, very happy with where we are.

Great. Thank you both.

Thank you, sir.

We have our next question coming from the line of Brian Fitzgerald with Wells Fargo. Your line is open.

Because a couple of quick questions. Any impact on auction bid density from the loss of low-quality buyers? Or any impacts that we have on the marketplace beyond that just percentage of GMV? And then you recently, during the summer, started showing buyers all shipping services offered by sellers, allows them to select carriers and shipping costs, and estimated deliveries. It's still early days, but can you talk about what impact that's having, if any, on conversion rates?

Yes. On the first question, on auction by density, no, we're not seeing an impact from that. Frankly, that format has actually been really strong because of the strength we're seeing collectibles where it tends to be a more used format. And I'm excited that we are starting to launch Express because that will give our auction sellers the ability to drive some more visibility for them and then to have a tool that they haven't been able to use before. In terms of the shipping services, this has been a constant march for us. Last year, we expanded in the U.S. to have USPS, UPS and FedEx in there and did the same thing with Royal Mail and Australia Post to greatly exceed the amount of tracking. On the specific shipping test that's going on, now, it's kind of too early to tell. What I would say in general is how to think about this, Brian, is I'm trying to get the whole Company focused on how do we make things as simple and as easy to do on the platform. So, what we're doing with our new seller flows, with computer vision and trading cards is how do we take all of the work out of the listing process. We're trying to do the same type of thing with our sellers and the stores product and making it really easy to get that setup on the platform. Shipping is one of those areas where there's an opportunity to take a lot of the friction out. The new partnerships that we've created, the integrated tracking, the smoother returns process is all part of this evolution of just make the whole platform so much easier to use. And so, we'll keep you posted on how these tests roll out, but I'm happy with the progress so far.

Thanks, Jamie. I appreciate it.

We have our next question coming from the line of Tom Champion with Piper Sandler. Your line is open.

Good afternoon. And thanks very much. Jamie, I'm wondering if you could talk a little bit of about [Indiscernible] hopefully, I'm pronouncing it right. It looks like you made an investment, but seems like kind of a B2B or commercial products. How does this fit strategically? And then I noticed the C2C GMV was down 13%. I think that was a little below GMV overall, this usually outperforms and just curious what might have driven the result there. And Steve maybe just a quick one for you. Buybacks to 7 billion, looks like 3 billion in repurchases this quarter, increase from 5 billion in repurchases last quarter. I'm just curious if the increase in the buyback reflects greater confidence in the fundamentals. Any thoughts on that would be helpful. Thank you.

Yeah. On the first one, look, I've been talking since last July about the game changing level of trust on the platform. And we've been doing that kind of category by category. So, the authentication that we've been doing in the luxury categories really takes trust off the table. These 2-year warranties that we put in place for certified refurbished does the same thing. And eBay actually has a good size business and industrial business in capital equipment, and [Indiscernible] allows us to put a whole different level of trust in there. They're a long-time seller in partner on eBay and the capabilities that they will bring to that category will help bring a new level of trust and just help buyers and sellers in that category move forward. So that's what I would say I'm going to do. On the C2C, it's really just a lapping of the COVID dynamics that we saw from last year, in terms of time period and just some of the macro dynamics. What I'd tell you is I'm really happy with the progress and continue to be a huge focus for us is on our C2C selling experience, bringing them onto the platform making it as extremely easy, making that payment sign-up process really, really simple. And so that's going to continue to be something that we're going to focus on quarter-after-quarter because as I mentioned in the past, we -- when we talk about high-value buyers, that includes buyers themselves. By nature, it helps drive them up their buyer cohort curves as well as bringing that unique inventory. So, we're going to continue to push forward there. And then Steve, do you want to take the last one?

Yeah, thanks Jamie. Tom, I think it's been interesting thing the coming about 4 months now and I think the one thing I would say is just what's rated strengthening the durability of the financial model, with best-in-class margins, really significant value with the ongoing platform and that [Indiscernible] Balance Sheet. If you take that and you pair it with the structure that Jamie is laid out, and the momentum that we're going forward with, I think anybody franchise translates pretty misunderstood. One of the things that we need to do about a job is just really ensuring that the investor community understand a little better Again, your points is well made. The momentum is shown on the buyback and capital allocation as we progress through 2021, from the 2 billion to the 5 billion and at the 7 billion is really a source of reflection of that in terms of our thought process around balanced and disciplined capital allocation, and getting that balance right between reinvestment in the business, just the right growth, and providing the very best returns to our shareholders.

Thank you.

We have our next question coming from the line of Stephen Ju with Credit Suisse. Your line is open.

Okay. Thank you so much. So, Jamie, I think in your prepared remarks, you talked about what sounded like a 3D modeling technology. You're using in the sneaker’s category. So how easy or difficult is this to do and presumably, and hopefully, this is driving higher conversion rates were this is rolled out as you're presenting more information to the buyers, Apache might be rolled out to. And I guess as a follow-up to the earlier C2C question, as you get more and more buyers to become sellers over time, are you seeing pretty consistent behavior with the newest batch of converted users versus the earlier cohorts. Thanks.

Yeah. On your first question, it's a very early test in pilot that we're doing. But the idea is we want buyers to be able to see in real detail, the actual item that they're going to be buying. So, you're going to see us launching a couple of sneakers in the coming weeks using this. It's a very early pilot that we're doing with Select Sellers. But it's all about building trust on the platform. I bought a $4 thousand OBO on the platform last year and it was great. I can see a lot of images, but the opportunity to really get in there in 3D and then see what a [Indiscernible] product looks like is an interesting opportunity. So, like I said, it's very real, you will start to see some products that we had. I'm using that technology, but I'm -- what I'm excited by is, like the innovation in computer vision, we're using our AI resources and computer vision resources here to do some interesting things that over time, I think will really change the buying experience on eBay. To your question on C2C, it looks pretty consistent in terms of them coming on to the platform continuing to list, and then turning into buyers. You know what I'd say is -- the other thing is that a lot of our business sellers actually started out as C2C sellers. So, it's another reason we lean in there. I was visiting with a seller years ago. He had an extra set of tires, sold them on eBay, and then just started selling a couple of more things in tires and [Indiscernible] that's helped a lot of our B2C sellers actually get their start on the platform.

Operator, I think we've got time for one more.

Thank you. We have our next question coming from the line of Dan Salmon with BMO Capital Markets. Your line is open.

Good afternoon, guys. Thanks for slipping me in. First Jamie, can you just expand a little bit on the affiliate program that you cited is one of the 3 new initiatives for Promoted Listings the opportunity to take it off platform, what are you hoping -- what probably hoping to sell for your sellers with that? And if you could add some color on how significant you think that opportunity could be relative to the 1 billion run rate that you're approaching for the onsite Promoted Listings business. And then just second [Indiscernible], will you go to exit [Indiscernible] you expect the metric to remain under pressure? And the strategy certainly seem sound, but is your goal here to ultimately exit all of those low value buyers? I'm just hoping you can add some context to the scope of the strategy. Thank you.

Yes. On the first one, the off eBay advertising product, let me separate that from the affiliate advertising we do [Indiscernible] -- form and be an affiliate. But the 2 definitely work hand-in-hand together. The whole vision there is really connecting enthusiasts to sellers. So being out on the platforms where those enthusiasts star and letting our sellers partake in that advertising type thing by putting really interesting items in front of those enthusiasts of driving that marketing, because eBay has been doing this marketing. And when we do it in cooperation with our sellers it gives us a really broad reach. For sellers It gives them another tool as well, to take all the great inventory that they have on eBay and put it out in front of sellers. And various communities, to really drive that traffic to their business on eBay. I'll let Steve take the second one and maybe I'll maybe I'll add on a bit

Hi Dough (ph.), you know, it's not -- it's not about -- I think it's about focus. And I think we're constantly thinking about acquisition of buyers and growth on the platform. And really, it is about really changing our strategy and our focus. And I just want to reiterate about the value of various buyers bring. So, if I think about our top 20 high-value buyers, or 20% of our buyers, and deliver 75% of our GMV. Nice buyers are making 6 different purchases 6 different times a year and over $800 and net buyers itself. But the low value buyers, it's about 50% of our -- on that strategy as we continue to evolve the platform, focus on the enthusiasts, focus on cost category selling. But it's very, very important that we continue to have a pipeline as we evolve the business in growth going forward.

Actually, it ties in well with your first question, Dan, about the off eBay advertising product is, how do we make sure we're in those places where actually going to apply those high-value enthusiasts. And putting our -- but much more focus on how we turning buyers in the high-value enthusiasts, and how we're altering our marketing plans so that were out there actually acquiring them onto the platform, because that's what drives the real health of the businesses, is the growth of those high-value buyers and how we're doing in connecting those enthusiasts. So good question because the 2 really tie together.

Great. Great. That was very helpful. Thanks.

Thank you. And that concludes the Q&A session for today. Thank you for participating. You may now disconnect.