EBAY - NASDAQ

Good day, everyone. My name is Leyla, and I will be your conference operator today. At this time, I would like to welcome you to the eBay First Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. At this time, I would like to turn the call over to your speaker.

Good afternoon. Thank you all for joining us for eBay's first quarter 2025 earnings conference call. 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 our commentary during the call, which is available through the Investor Relations section of the eBay website at investors.ebayinc.com. Before we begin, I'll remind you that during this conference call, we will discuss certain non-GAAP measures related to our performance. You can find a reconciliation of these measures to the nearest comparable GAAP measures in our accompanying slide presentation. Additionally, all growth rates noted in our prepared remarks will reflect organic FX-neutral year-over-year comparisons, all earnings per share amounts reflect earnings per diluted share, unless indicated otherwise. During 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. 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, Form 10-Q and our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of April 30, 2025. We do not intend and undertake no duty to update this information. With that, I'll turn the call over to Jamie.

Thanks, John. Good afternoon, and thank you all for joining us today. We started off 2025 on a strong note as our Q1 results came in ahead of expectations across all key financial metrics despite a dynamic operating environment. Our gross merchandise volume grew by nearly 2% to approximately $18.8 billion marking our fourth consecutive quarter of positive GMV growth. Revenue increased over 1% to $2.58 billion. Non-GAAP earnings per share grew by 10% to $1.38, and we returned approximately $760 million of capital to shareholders through repurchases and cash dividends. Before I discuss our Q1 results in greater detail, I'd like to acknowledge the significant developments around cross-border trade since we last spoke with you. Tariffs and changes to certain customer requirements in the U.S. have created significant uncertainty for small businesses while concerns over escalating prices for imported goods have weighed on consumer confidence. As more of these new trade policies are implemented, we are focused on helping sellers and buyers navigate these changes with as little disruption as possible. Our SpeedPAK shipping program manages much of the complexity of international shipping for CBT sellers across several of our largest corridors while ensuring compliance with customs regulations in both origin and destination countries. Items shipped through SpeedPAK also have tariff duties included in the total price at checkout, creating greater transparency for buyers. For non-SpeedPAK purchases, we are managing expectations for buyers by educating them on the new costs, information requirements and potential delays associated with international shipments. This includes messaging on the view item and checkout pages on eBay as well as localized information pages with up-to-date guidance amid rapidly changing policy. While our business is not immune to increased cost and friction associated with tariffs, our dynamic global supply and demand is an advantage in this environment. Our extensive selection of pre-loved and non-new in season goods across a variety of categories can also help mitigate the pressure on consumers' discretionary budgets during periods of rising costs. Now let's turn to the key drivers of our Q1 results. Focus category GMV grew by over 6% in Q1 and now makes up more than 1/3 of our total volume globally. Collectibles was the largest contributor to growth for the second straight quarter as year-over-year GMV growth in trading cards accelerated for the ninth straight quarter. This growth was supported by continued innovation on behalf of trading card hobbyists building on what we believe is the industry's leading value proposition. Our strategic partnership with collectors and its subsidiary PSA continues to yield benefits for our marketplace. The PSA storefront on eBay has already sold more than 0.5 million trading cards since PSA launched a seamless integration, enabling its customers to consign cards on eBay in Q3 of last year. In January, we incorporated PSA data directly into the item page for graded trading cards, enabling potential buyers to see the full population of cards at each grade level, allowing them to more easily evaluate their rarity. This delivered on a key request from hobbyists and feedback to this change has been extremely positive. At the end of March, we launched an entirely new capability for buyers looking to purchase trading cards on eBay and have them ship directly to PSA for grading. This saves the buyer time and effort spent on submitting grading paperwork themselves and reduces costs as one shipping leg is eliminated. Grading services from trusted third parties like PSA are a key use case for trading card enthusiasts as grading helps them maximize the value of their collections. Our fashion category generates more than $10 billion of GMV for eBay annually. Over the past year, we've significantly improved the customer experience for luxury fashion, pre-loved apparel and streetwear enthusiasts. We launched AI-powered shopping experiences like Explore and Shop the Look. We expanded our inventory coverage for authenticity guarantee and tapped into new sources of supply in international markets. And we continue to drive consideration of eBay in fashion and reinforce our value proposition of trust and selection through full funnel marketing including earned media reach through our cast of eBay influencers and partnership with Conde Nast. In Q1, we launched U.S. preloved apparel as a new focused category on eBay, as we made significant improvements for sellers and buyers in this category. We continue to increase trust by introducing enhanced condition grading standards for apparel during Q1. We recently launched a new AI-powered discovery experience for fashion shoppers in the U.S. and U.K., which offers a more immersive and engaging browsing experience. We replaced static browse pages with endless feeds organized by theme or subcategory with dynamic visuals and interactive elements. These feeds progressively load content as users go down the page, and are flexible in accommodating varying content formats, such as autoplay video, curated compositions, eBay Live events, promotions and relevant eBay store funds. Throughout 2025, you'll see more innovation in fashion as we work towards solidifying our platform as the trusted destination for pre-loved branded fashion products, where customers can truly shop head-to-toe across a breadth of brands and price points. Our geo-specific initiatives are another key building block for growth in 2025, most notably our consumer-to-consumer initiative in the U.K. As a reminder, in Q4, we introduced a suite of new capabilities to upgrade the U.K. C2C experience, including significantly reducing friction to stimulate consumer selling. This initiative has materially improved our C2C GMV trends versus our prelaunch baseline and has outperformed our internal expectations to date. We reached a major milestone in Q1 and with the introduction of our U.K. buyer protection fee in February, which significantly narrowed the initial monetization gap. After introducing buyer-facing fees in the U.K., C2C GMV growth and other KPIs have remained significantly higher than their prelaunch baselines. We continue to ramp our managed shipping offering in the U.K. which dramatically simplifies shipping for C2C sellers while reducing costs and improving trust for buyers. In Q1, we enabled sellers to offer free shipping and added the flexibility for them to select carrier preferences. In Q2, we plan to add pickup and drop-off capabilities that are very popular among U.K. consumers as well as support for larger bulkier items. In recent weeks, we began to gradually mandate adoption of managed shipping in the U.K., starting with new and occasional C2C sellers. At full scale, we expect managed shipping to close the remainder of the monetization gap in C2C drive significant value for customers and create a new source of revenue and operating income for eBay. Our teams continue to leverage artificial intelligence to make our marketplace more efficient and intuitive. At the end of Q1, we rolled out a simplified AI-powered listing flow to all C2C sellers in the U.S., U.K. and Germany, which integrates our magical listing technology and product knowledge graph. Sellers now start their listing with photos and a title, and we leveraged generative AI to identify the exact product in our catalog or filling relevant item aspects wherever possible, including the description. This listing flow also includes a more intuitive step-by-step process to review product details, pricing and shipping information before finalizing the listing. This new listing tool is resonating well with sellers as customer satisfaction rates are 90% or higher across each market, and it's also having a positive impact on our business. We've observed significant increases in completion rates and new and reactivated listers while meaningfully reducing the average time spent on listing. We've also seen measurable increases in sold items and GMV per listing attempt. Our Magical bulk listing tool also continues to drive powerful results for B2C sellers after launching in the U.S. for all categories. This tool has more than halved the average listing time versus our previous book listing tool, giving sellers more time to run their businesses. Magical Bulk Listing has already emerged as the most commonly used tool for listing sports trading cards contributing to a significant increase in the average weekly listings in that category. In February, we expanded this tool to B2C sellers in the U.K. and Germany and have seen similar improvements in average listing times. We're focused on making listing on eBay as simple and as easy as possible because we believe it will unlock a significantly larger total addressable market in e-commerce. Advancements like Magic Listing have demonstrated significant progress toward that goal, and we will continue to invest in making listing even more seamless in the quarters ahead. Turning next to advertising. In Q1, our first-party advertising revenue grew 14%. Active Promoted Listings increased sequentially and made up over $1.1 billion of the more than $2.3 billion total listings on eBay at the end of Q1. Over 3.7 million sellers adopted a single Promoted Listing product during Q1. Our first-party ad revenue growth remained broad-based during Q1. Promoted Listings general ads were the largest contributor to year-over-year growth as we launched several optimizations to make ads on the View Item page more personalized and relevant driving increased engagement. Promoted offsite ads continue to gain adoption. And during Q1, we launched several improvements like automated image optimization technology to maximize impressions for a seller's listings. Promoted Listings priority adds also contributed to growth as we increased coverage of cost per click units across more of our existing ad services. Within payments and financial services, we continue to focus on adding new forms of payment on eBay to expand by our choice, improve conversion and optimize our payments mix. In April, we expanded our partnership with Klarna to offer buy now, pay later solutions to our U.S. customers. We're seeing encouraging early results with average order values on U.S. Klarna transactions more than 3x the market average. In the U.K., adoption of eBay balance continues to ramp among C2C customers, and has already captured a low single-digit share of wallet for U.K. GMV overall. In addition to carrying zero cost of payments, eBay Balance is driving incremental purchase behavior as it encourages sellers to spend more of their earnings on eBay. We also recently announced the addition of Checkout.com as a new payments partner. Additional acquiring partners make our payments platform more resilient and enable us to optimize our authorization rates. And importantly, they strengthened our ability to deliver fast, reliable and frictionless payment experiences to our 134 million customers globally. In closing, in Q1, we delivered our fourth consecutive quarter of positive GMV growth amid ongoing uncertainty in the global economy. Our strategy is working and has put us on a path towards sustainable long-term growth. Today, we also announced some changes to our leadership team. This will be Steve's last earnings call with eBay. I want to personally thank Steve as he has been an exceptional partner during a period of significant transformation. His leadership helped guide us through the uncertainty of the pandemic and laid the foundation for the strength and resilience we see in the business today. I am deeply grateful for his contributions and wish him the best. As Steve transitions, we are excited to welcome Peggy Alford as eBay's incoming CFO on May 12. Peggy brings more than 20 years of experience leading finance, operations and global teams in the technology sector. Peggy has a proven track record of building strong organizations and driving operational excellence. Her leadership and expertise will be tremendous assets as we continue to position eBay for the future. In addition to the CFO change, eBay is evolving its leadership structure designed to fuel faster innovation, deep and cross-functional collaboration and position the Company for long-term growth in a rapidly evolving digital and AI-powered landscape. We are bringing together product and market teams into a more integrated agile structure designed to enhance speed, alignment and customer centricity across the organization. This new organization will be led by Jordan Sweetnam, Chief Commercial Officer. We are also consolidating engineering into a single organization, reflecting a broader ambition to operate with greater speed and drive operational scale. This new combined engineering and technology organization will be led by Mazen Rawashdeh, our Chief Technology Officer. I want to congratulate both Jordan and Mazen on their expanded roles. As part of this evolution, Eddie Garcia, Chief Product Officer, will be leaving eBay. I am deeply grateful to Eddie for his outstanding partnership and visionary leadership in shaping our product strategy which is significantly advanced eBay's offerings and customer experience. He has built a world-class team, and his legacy positions us well for future success. Before passing to Steve, I want to reiterate my gratitude for his leadership and contributions over the last four years. Thank you, Steve. Over to you.

Thank you, Jamie. It's been a privilege to serve as eBay's CFO. I am proud of what we've accomplished. I'm incredibly optimistic about eBay's future prospects. I look forward to ensuring a successful transition with Peggy over the coming weeks. Now turning to our Q1 results. In the first quarter, we exceeded expectations across our key financial metrics. GMV grew nearly 2% to $18.8 billion. Revenue grew over 1% to $2.58 billion. We delivered non-GAAP operating income of $771 million and grew non-GAAP earnings per share by 10% and to $1.38. In addition, we returned approximately $760 million to shareholders through repurchasing cash dividends. I'll take a closer look at our financial performance during the first quarter. Gross merchandise volume grew nearly 2% to $18.8 billion on an organic FX-neutral basis. We continue to navigate an uneven demand environment with shopping activity more muted in February and improving in March. Golden added roughly 30 basis points to total FX-neutral volume growth in the quarter while foreign exchange was nearly 130 basis points of headwind to spot GMV growth. Our growth rates in Q1 also included a net headwind of 50 basis points due to lapping the extra leap day in 2024, partly offset by the timing of Easter. Focused categories were a key driver of GMV, growing over 6% in the quarter with positive growth contributions across trading cards, motors, parts and accessories, luxury goods, refurbished and apparel. Moving on to our geographic performance. U.S. GMV grew nearly 0.5 point in the first quarter, driven by focused categories, in particular, our trading cards business. As a reminder, we report GMV based on the location of the seller. If we were to look at volume based on the location of the buyer, U.S. growth was slightly higher than our international markets in aggregate. International GMV grew nearly 3% on an FX neutral basis in the quarter, while FX was nearly 250 basis points of headwind to spot growth. The macro environment in our international markets has been weaker than the U.S., particularly in Germany and the U.K. However, the investments we made in C2C in both markets over the last two years have improved our growth trajectories compared to the prior baseline and help mitigate these market-wide headwinds. Shifting to our biometrics. Our trailing 12-month active buyers grew over 1% to 134 million in the first quarter. Enthusiast buyers were roughly 16 million and spend per enthusiast buyer grew slightly year-over-year. and remained at over $3,100. Next, I will discuss our revenue and take rate. We reported Q1 revenue of $2.58 billion on an organic FX-neutral basis, representing over 1% growth and an acceleration from Q4. Foreign exchange was a nearly 50 basis point headwind to spot growth. Our take rate was roughly 13.8%, increasing nearly 10 basis points year-over-year. Our U.K. C2C initiative pressured overall take rate by approximately 30 basis points in Q1, which was offset by advertising and financial services contributions and an FX tailwind of 10 basis points. Total advertising revenue was $442 million in Q1, representing GMV penetration of nearly 2.4%. In Q1, we included ad revenue generated by our platform marketplaces like Q10 and TCGplayer in our total reported advertising revenue for the first time. We've included details on the prior year baseline for comparability. Excluding off-platform ads, total advertising revenue would have grown by 12% to $426 million. First-party adds on the eBay platform grew over 14% to $418 million. Our third-party display ads declined by 41% to $8 million as we continue to deprecate these legacy ad units. Moving on to profitability. Non-GAAP gross margin declined by over 0.5 point with headwinds from depreciation expense and traffic acquisition costs related to promoted offsite ads, partly offset by cost of payment efficiencies. As a reminder, we extended the useful life of our servers and networking equipment in 2024, which benefited our margins last year that created a headwind for 2025. In Q1, this depreciation headwind pressure both gross and operating margins by nearly 70 basis points. Our non-GAAP operating margin was 29.8% in Q1, down 0.5 point. In addition to depreciation operating margin was pressured by our U.K. C2C initiative on a year-over-year basis, partly offset by 40 basis points of foreign exchange tailwind. Our non-GAAP earnings per share grew 10% and to $1.38 and GAAP earnings per share grew over 25% to $1.06. A higher GAAP earnings growth rate was primarily due to the lapping of investment losses a year ago. partly offset by a slightly higher GAAP tax rate this quarter. Shifting to our balance sheet and capital allocation. We generated free cash flow of $644 million in Q1 and hold cash and nonequity investments of $6.2 billion at the end of the quarter. After paying down $800 million of senior notes during March, we had gross debt of $6.7 billion on our balance sheet. We repurchased $625 million of eBay shares during the first quarter at an average price of nearly $67. We also paid a quarterly cash dividend of $134 million in March or $0.29 per share. Our equity investments were valued at over $1.1 billion at the end of Q1. The majority of this value is our private stake in earlier with approximately 8% ownership valued at nearly $900 million. Moving on to our outlook. As Jamie noted earlier, tariffs and other trade policy changes have created significant uncertainty for our sellers and buyers. Quarter-to-date, we have observed healthy volume trends due to strength in our focus categories and what could be a modest pull forward of demand from consumers worried about increased costs and complexity at U.S. customs in the near future. To account for a variety of scenarios in the remainder of the quarter, we are providing wider-than-usual guidance ranges for Q2. We expect GMV between $18.6 million and $19.1 billion for the second quarter, representing FX-neutral growth between negative 1% and positive 2% year-over-year. This includes an expected contribution of approximately 20 basis points from Golden and roughly 50 basis points of headwind due to the timing of Easter. Based on current exchange rates, we estimate FX would represent roughly 180 basis points of tailwind to spot GMV growth. We forecast revenue between $2.59 billion and $2.66 billion in the second quarter, implying negative 1% to positive 2% total FX-neutral growth. Based on current exchange rates, we estimate FX would represent roughly 170 basis points of tailwind to spot revenue growth. On a sequential basis, we expect take rate to improve driven by a full quarter of contribution from our U.K. C2C buyer protection fee and ongoing managed shipping ramp. We expect non-GAAP operating margin to be between 27% and 27.8% in the second quarter. We expect headwinds from managed shipping, the depreciation policy change and M&A-related expenses to be partly offset by an FX tailwind. We forecast non-GAAP earnings per share between $1.24 and $1.31 in the second quarter representing year-over-year growth between 4% and 11%. Next, I'll share some perspectives on the full year. Based on the trends we have observed year-to-date, our full year commentary remains unchanged and contemplates a range of scenarios for tariffs and the continuation of an uneven demand environment we have been navigating for many quarters. We are planning our business around these key assumptions for 2025 and investing for the long-term health of our marketplace. However, more severe outcomes for tariffs or a significant deterioration in the U.S. macro environment, would push us toward the lower end of our ranges or make it challenging for us to deliver on these targets. For 2025, we expect to generate low single-digit GMV growth on an FX-neutral basis driven by our focused categories, geo-specific investments and horizontal initiatives. We forecast revenue growth modestly higher than GMV for the full year on an FX-neutral basis, driven by advertising, shipping and financial services. We continue to expect non-GAAP operating income growth to be relatively in line with FX-neutral revenue despite absorbing several unique headwinds on to non-GAAP operating margin year-over-year. We forecast capital expenditures to be between 4% and 5% of revenue for the full year and expect our non-GAAP tax rate to remain stable at 16.5%. Our outlook for free cash flow remains unchanged. Because we have a number of unique tax considerations resulting in 2025 tax payments of over $1 billion related to investment sales last year, repatriation tax and timing of R&D credits. Excluding these unique tax items, normalized free cash flow is expected to be comfortably north of $2 billion. In regards to capital allocation, we are targeting share repurchases of at least $2 billion in 2025 while maintaining the flexibility to lean in opportunistically when appropriate. Our Board also declared a quarterly dividend of $0.29 per share for Q2 to be paid in June. Based on these assumptions, we still expect our non-GAAP earnings per share growth in the high single digits for 2025. In closing, our teams have done a tremendous job executing on our strategy, leading to a strong start to 2025. I'm proud of the strong financial foundation we've established together over the last four years as we reorientated the business towards sustainable long-term growth. It's been a true honor to work with such extraordinary people and serve this vibrant community, and I look forward to chairing on eBay's continued success. And with that, Jamie and I will now take your questions.

Thank you. We will now begin the question-and-answer session. We'll be utilizing the raise hand feature. If you'd like to ask a question, simply click on the raise hand button at the bottom of your screen. [Operator Instructions] Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Our first question will come from Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.

I'll kick it off by saying thanks to Steve for all the help and always enjoyed all the interactions over the years. So, thank you, Steve, and good luck going forward. In terms of looking out over the full year, I think the main question we're getting from investors right now with respect to the commerce landscape, and I would love to understand how you're thinking about it philosophically or how you factored it into the forward commentary would be how to think about demand elasticity in an environment where pricing might be going up a lot? And how elements of prior period experiences might inform the way you brought that either to your commentary for this year or other ranges of probabilistic outcomes you're thinking about as we go through 2025?

Yes, Eric, I'll start. This is Jamie. So, the macro environment, I think, remains uncertain and difficult to predict, but we've been contending with uneven demand for many quarters, which, I think, frames our Q1 results and our outlook in an even more positive light. I think as it relates to the overall demand elasticity in the macro environment, on a relative basis, we're confident that eBay is in a strong position as our vast global seller base can really leverage the CBT shipping solutions we have and adapted changes in trade policies, and we expect buyers to gravitate towards our non-new in season inventory, especially during periods of consumer pressure. To your question about prior periods, it's what we've seen before, which is at times where I think consumers are more uncertain and are looking for a value, eBay tends to be more resilient because of what we have on the marketplace. Over 40% of our goods now are used to refurbish and that business is growing meaningfully faster than new goods on the marketplace. Frankly, we also see in prior periods that it's an opportunity for us to acquire new sellers onto the marketplace because what it does is people are looking for value, they come out of the marketplace and then they may need money to sell things and eBay is a great environment for that. So last thing I'd say relative to prior periods, and we saw this during COVID is, because we have such a vast seller base, we tend to be a bit more -- our sellers tend to be a bit more nimble and adapt to changes a little bit more quickly because there's no kind of their ability, they're smaller, they can be a bit more agile, and that's what we've seen in the past.

Our next question will come from the line of Nathan Feather with Morgan Stanley. Your line is open. Please go ahead.

Hey, everyone. And first off, Steve, it's been great working with you. So, looking forward to what's next. Maybe just a lot of questions, especially on China tariffs and what the impact might be on a sustained basis. I guess, can you provide some color on how big China-based exporters are on eBay, at least in terms of the China to U.S. trade route, the potential to maybe shift some demand to inventory from other regions? And then any way to contextualize the potential sourcing risk for non-China-based sellers who still source from that region?

Yes. Look, our business is not immune to the increased costs from tariffs and the friction associated, but we remain confident in our ability to support our community. Let me size things for you, Nathan, to just help a little bit there. Our Greater China to U.S. quarter makes up about 5% of total GMV for us. And China overall is a little less than 10%. But about 3/4 of that business of the 5% coming from China to the U.S. is forward deployed to the end markets. So, it's already subject to tariffs. And so wouldn't be subject to any changes in de minimis based on the cost of the items. The other half of the inventory or the one quarter that's not forward deployed -- about 50% of that uses a shipping solution that we've helped create, which is called SpeedPAK. And what that does is it really incorporates all of the tariff complexity and customers complexity right into the shipping solution it makes it a lot easier for the seller. And from the buyer perspective, they see full transparency and they're paying for that directly in checkout. And I suspect with incremental changes, we'll see even more sellers. It's been 50% for a while. We'll see even more sellers take advantage of the shipping solutions that we provide. I think overall in the marketplace level, we do see the benefit of having kind of goods and inventory all over is we do see a substitution across the across the marketplace. And so that is available for buyers, but we also feel like the tools that we provided to sellers in all of these shipping solutions, et cetera, provide great solutions and buyers can ultimately decide if new quarters seem more attractive to them.

Our next question will come from the line of Nikhil Devnani with Bernstein Research. Please go ahead.

And Steve, thanks for all your help. It's been great working with you. With respect to advertising revenue, are you seeing any impact from tariffs on that portion of the business, particularly from your China-based merchants that maybe buy ads? And can you also speak broadly to the durability of this revenue stream even through different macro environments? How deep are the auctions such that if one category of sellers might pull back someone else steps in to plug the hole. How should we think about that dynamic?

Yes. We have strong demand across the board for our advertising business, and we continue to drive kind of increasing penetration of the user base. now over 3.7 million sellers have adopted a single ad product Nikhil. And we have 1.1 billion live broader listings out of our nearly $2.3 billion. I would say we've seen no material impact on our advertising to date. We've seen strength across the board in our Promoted Listings General, our CPA product, our CPC-based product, and I talked a little bit on the call about promoted offsite and some of the new innovations that we have there from that perspective. So overall, we're pretty pleased with the performance of advertising. And our ad demand is very distributed across a large celebration, a large number of products. So, we feel good about the ongoing opportunity that we have in advertising.

Our next question will come from Colin Sebastian with Baird. Please go ahead.

Alright. Great. So I appreciate the opportunity. I guess well, first, Steve, also, it's been a pleasure working with you and wishing you all the best. Jamie, first off, a lot of attention, I think, is turning to the concept of Agentic Commerce and you guys are in front of us a bit with really some of the tools you have in partnerships. But I'm curious, in your seat, how you think ultimately consumer staffing behavior changes and the world in the e-commerce marketplace of platform. Mean, if agents are doing more of the steam and be on behalf of consumers? And then Steve maybe on the outlook, I guess I'd be curious.

Hey, Colin, just real quick, you came across pretty muffled in that, and I want to make sure I get your question right. Can you try again on the question there?

So hopefully, you can hear me. I'm in transit. But I was just curious in the view on Agentic Commerce and ultimately, how that [indiscernible].

Yes. So, I think I roughly got your questions around Agentic Commerce. What I'd say is of the pieces that we're building internally already, we feel great about the progress that we're making. So, if you look at -- let me take magical listings, for example, over 10 million unique sellers have used that product to create over 200 million listings, and that's generating several billion dollars of GMV. We continue to use Agent Technology across our marketing, across our customer support et cetera, to really drive efficiencies in how we work. We've launched some new Agentic tools and Shop the Look. This quarter, I talked about a new discovery platform that we've launched in fashion associated with AI. And we've also announced a number of kind of early tests that we're doing, one with OpenAI around exploring, making our inventory available to more shoppers with the work that they're doing as well as some small tests we haven't really talked about yet that we're testing with our own Agentic technology. So, I think across the board, if you were inside this organization, it's more likely to ask which teams are not leveraging AI or how we're not thinking about it in the customer experience because at this point, it's pretty broad-based in how we think about leveraging the AI capabilities for both our customer experience and in how we work.

Our next question will come from Ross Sandler with Barclays. Please go ahead.

Just going back to a previous question. So, it sounds like the China quarter is 10% for China sellers who are kind of labeled and then you've got 40% or over 40% secondhand. So that leaves kind of half the GMV U.S. or European or whatever the location of these other sellers may be -- do you have any sense of how much of those sellers' products do get sourced from China? I know it's probably a tough thing to figure out, but I'd just be curious if you guys ever look at that. And then I guess more broadly, there's always fears about consumer pullback that might happen or may not happen later this year. Your business is quite a bit different than the last time we've had any consumer weakness given the growth of collectibles and not just trading cards, but you've got more luxury, you've got speakers. You've got a bunch of other larger categories at GMV. So, I guess as you guys pencil out these scenarios, how do you see eBay holding up in a recession scenario this time around versus maybe other times in the past when some of these categories were a bit different?

Steve here. I'll pick up the first one and then I'll flip to Jamie to take the second question. You're right. So, as we -- as Jamie reiterated earlier, about 5% of our global GMV goes from the Greater China to the U.S. corridor. Your point about our used and refurbished inventory on the platform is just over 40% of everything we sell, which we see as a real competitive advantage and the strength as consumers are continuing to look for value in this environment. With regards to other listings across the overall platform, there is additional volume on eBay from U.S. sellers who source products from Greater China, and these sellers would need to navigate tariffs similar to our CBT sellers. And as you can imagine, we have contemplated a number of scenarios, as we've sort of thought about our business and continue to plan our business, and this impact has been contemplated as we plan for the various tariff scenarios. Jamie, with regard to the second question?

Yes. Look, what I would say there, Ross, is that we're certainly not immune to impacted consumers when they have kind of less discretionary dollars to spend. But we are advantaged and more resilient because of the inventory that we have on the marketplace. And so, consumers tend to come to us when they're looking for a value -- and that really kind of resonates what we're providing. They come to us looking for used or refurbish. And they're agile in terms of what I said. So, you can imagine like parts and accessories, sellers looking at more salvage opportunities and things like that. The other thing I would say is that as our focus categories have grown, there's often a difference between a higher income buyer and a lower income buyer. So, when you look at the strengths of our business, whether you think that's handbags that we have that are coming from Italy or France or training cards that are predominantly from the U.S. Not only are they from kind of different sources of where they're manufactured, but importantly, have less of an impact of elasticity versus the consumer. So overall, it's why we're glad that we pivoted to non-new in season five years ago. I think it makes our platform more resilient than otherwise would be and the things that we've been leaning into have really helped create kind of more diversification, more shipping solution options, et cetera.

Our next question will come from Deepak Mathivanan from Cantor Fitzgerald. Please go ahead.

Jamie, given the mix of pre-owned and refurb on the platform now, does it make sense to leverage this competitive advantage that you currently have during this time and kind of make a more aggressive push to build top of the funnel and awareness to sort of like gain a permanent competitive edge? And then also somewhat related to that, with all these macro ships, are you seeing any changes in competitive landscape now with maybe some of the subscale players who were previously investing aggressively scale down that's helping the business now?

Yes. Just to make sure I got your question, because of our level of pre-loved you said, and used on the platform or what did you say?

Yes, preowned and refurb goods on the platform, right.

Yes. Look, we are leaning in a lot behind that because we do think it's a unique opportunity. We're doing both on the buying side and on the selling side. So, if you look at our full funnel marketing, it's not only leaning into kind of the breadth of inventory and the trust that you have on the platform. But for example, in the U.K. and Germany right now, we're really pushing the cell message of sell on eBay because it's a great time to bring new sellers onto the marketplace. And what we find is that when we get a buyer to become a casual seller, they end up buying more. So, we're definitely leaning in from that perspective on all the marketing that we're doing. And we believe that there's a significant TAM out there in C2C that we're going after. So, if you look at the average household, they have $3,000 to $4,000 of inventory that could be sold on eBay, and less than 20% of that is online on the platform. And so, the whole vision that we have with magical listing is really making it so simple to unlock all of that inventory onto the platform because we write the description, we fill out all the items, specifics. In fact, the SAP that I talked about on the call is really interesting. Even though the magical listing technology is relatively new in bulk, so we just kind of built this capability to have bulk magical listing. Already, the majority of our listings are coming in for trading cards on that platform. And that's really, really compelling. And so, we're going to continue to push kind of new innovations there. We're leaning into fashion in a big way. We just rolled out a new discovery platform for pre-loved fashion. Think about that as an endless feed now that we've built sizing, and we built styles on the platform. And that's something that we're going to be continuing to lead into 2025. Relative to competition, this is where scale is an advantage. We're able to acquire buyers and leverage them across a lot of different categories. So, let's take a watch buyer. If you come in and buy a watch over $500, you'll end up buying $5,000 in watches, but you'll end up buying more than $5,000 across the rest of the categories which is really compelling as well. We're looking at -- in our vehicles performance, we just launched this new relationship with Caramel and not only would see buyers coming into that, but then those buyers end up buying thousands of dollars. So, I do think we benefit from our global scale from the global supply and demand that we have. And as Steve likes to talk about, we have a strength of our financial model, which gives us the capacity to invest in these time periods to really make sure we're capturing opportunities for eBay.

Our next question will come from Shweta Khajuria with Wolfe Research. Please go ahead.

I very much appreciate it. How would you characterize, I mean, your business is very scaled, it is global. So how would you characterize the health of consumer today from your vantage point? And are there any leading indicators that you're seeing across different geographies that you can point to where you think you may have seen some pull forward in demand so far, and there could be some risk or you may not have seen that and you think that consumer generally is healthy. I would love to hear your thoughts.

Shweta, it's Steve here. Thank you for the question. It's clear that the macro environment clearly remains uncertain and difficult to predict. But we have been operating in rather choppy environment for the last number of quarters as we managed through this. I think I'd carve in between U.S. and international. Demand in the U.S. continues to be more resilient, and we've seen healthy volume trends so far in the second quarter, and that's informed us in terms of how we thought about the second quarter guide and the color that we've continued to provide for the full year, assuming that there's no discernible change in that underlying environment. I think as it pertains to Europe and particularly Germany and the U.K., leading indicators in the U.K. like consumer confidence remain depressed. There continues to be concerns over cost of living and inflation, which in our second largest market is obviously quite pertinent. And then when I think about Germany, it continues to remain tough. Our consumer confidence was impacted by recent elections and geopolitical events. And I think it's fair to say that German consumers are now concerned about the spillover effects of U.S. trade policy and its government is now predicting a third consecutive year of zero GDP growth. So that's the general overall dynamic that we're seeing. But having said that, we do continue to execute. And I think it's a real testament to the work the Company is doing, the investments that we're driving forward and the fact that we now have four consecutive quarters of positive GMV growth that we continue to do that. And so, this continued softness, I suppose, in the overall macro environment is contemplated in the guide assuming that there's no discernible change in the macro environment.

Thanks a lot, Steve. Just a quick follow-up. Given the resiliency of your platform, what are your thoughts on leaning more aggressively on marketing spend to gain greater share?

I think we've continued to get the balance right. We have continued to lean in to drive operational efficiencies across the platform. We're investing for the long-term future of the Company and to stimulate the long-term sustainable growth. And I really think about all the cost factors that we have about across the Company. Marketing is one of them. And I think we've been very effective in those investments over recent quarters.

Our next question will come from Tom Champion with Piper Sandler. Please go ahead.

Jamie, I think you mentioned over 2 billion listings. I think that's up mid-teens year-over-year and maybe that's the second year in a row that it's up that magnitude. I'm just curious what you attribute that to? And maybe any broader implications of that? And then for Steve, wish you the best. It has been great working with you. I wanted to go back to your comments on the linearity of the quarter. I think you said March might have been better than February. And just curious what you'd attribute that to? I don't know if it's just the leap year comp, but just any additional thoughts there would be helpful.

Yes. Thanks for the question, Tom. I'll start on the selling side. Yes, you're correct on 2.3 billion listings. And the majority of that is based on the strength of what we've been seeing from our overall kind of selling experiences and specifically our C2C seller base. So, listings have been growing at double digits on the platform. Since 2023, every quarter, we've been growing the active -- the 12-month active seller count on the platform. And the majority of our sellers by count are C2C sellers and small businesses make up about 70% of that. And it's really the work that we've been doing to lean in to make the C2C value proposition stronger and take out all the friction. So, think about it as the combination of all the work that we're doing in magical listing and there's a bunch of work around that with how you can much more easily enhance your images, et cetera. It's taking friction out of the shipping experience. In the U.S., we do that through the eBay international shipping. In China, we do that with our SpeedPAK solutions. In other markets like in U.K., we're rolling out managed shipping, which makes it really easy for a C2C seller in that market to be able to ship their goods. So, by taking all of that friction, by leaning into the work that we've done in U.K. and Germany around our C2C business and the marketing that we're doing really kind of talking about the C2C value proposition for consumers is really resonating, and that's helping us both drive sellers on the platform as well as drive the listing count in a really healthy way. Steve, maybe you want to talk about the second question?

Yes. Tom, good to speak to you. I think it's probably fair to say we saw some uneven demand particularly as we came into the year. January and February saw some -- and even a slightly softer environment, particularly in February. And then, we've seen healthy momentum during March and April. Not only do we think maybe some of that is a little bit of the pull forward as we talked about in our prepared remarks. But candidly, also the underlying health of the platform -- as we talked about the health of the focus category momentum that we saw 6% up year-over-year and 6% faster than the rest of the platform. And so little bit of unevenness across the early part of the year, but really pleased with the continued execution that we're seeing from the teams.

Our next question will come from Nick Jones with JMP Securities.

Just curious, as you kind of lean into fashion in 2025, can you speak to maybe your appetite kind of for M&A or buy versus build. There are some kind of private competitors out there. You made acquisitions like PCG player to bolster that category that's been going quite well. So, can you maybe talk through kind of appetite for M&A, the funnel and just how you're thinking about that kind of focused category this year?

Yes. Look, I would say nothing has changed. We think about the build, buy and partner framework that we've had in place for a while and that served us really well. You brought up TCGplayer, and I'll just talk about the framework that we've used in trading cards. In that case, we have a partnership with Collectors Universe, which is the owner of PSA, and we launched another great new capability there for collectors where -- now if I buy an ungraded trading card on the platform, I can actually, with one click, send that directly into PSA to be graded whereas before, I would have to wait to get it shipped to me, I would have to then retype in all the information about those cards into the PSA form, send them in a massive benefit. So that's a partner example just in collectibles. On the buy side, we have both TCGplayer, which has been performing very well as well as golden auctions. And that's really helped us accelerate certain capabilities. And then on the build side, we've obviously built a lot. I talked about magical bulk listings that we're using and how that's driving the majority of business that we have or of listings that we have in that category. So, we continue to look at opportunities to accelerate our capabilities we look at in a disciplined way, how do we kind of think about build, buy and partner. You mentioned the fashion category. That's an example where we've done interesting things, right? We've done an acquisition in that space with Certilogo, which is a company out of Milan that helps with digital authentication of fashion products. It's -- they're helping build digital product passports with leading brands which leads to kind of one-click reselling on eBay, which is beneficial, and that's a nice long-term benefits. We're partnering with folks like the Vogue and a cast of influencers to really get the message out about the amazing fashion inventory that we have on eBay. You think about influencers like Margherita Missoni or Emma Chamberlain, and so we're applying a similar playbook to all of our categories, which is really focusing on what in the build by partner makes sense for that category and how do we accelerate the transformation, and we're excited by what we're seeing in pre-loved fashion and collectibles in the work that we've done in P&A with the recent acquisition there, and we're going to continue to follow the same exact playbook.

Our next question will come from Ygal Arounian with Citi. Please go ahead.

Also, I just want to echo all the good working with you, Steve. You've always been really helpful. And maybe just to continue kind of on the de minimis thoughts for a second with -- particularly with Temu and Shein, stepping back materially on marketing spend and I think they would have one of the largest impacts, not the largest on the de minimis rules. Is that an opportunity for you guys to think that can be a potential tailwind? And can you talk about if you're seeing any changes in your marketing channels and CPCs or if there's an incremental opportunity there?

Yes. We're constantly looking on a daily basis how to maximize the ROI of our marketing spend. I'd say a couple of things. One is we were less impacted because when they came in, spending a significant amount, especially in the U.S. market, because so much of our traffic is organic on the platform. And so, it's really less of an impact on our business. When you look at the products that they're selling, it's a really immaterial GMV overlap. We moved away from the low ASP items a while ago as we strategically focused on non-new in season on focus categories, et cetera. I would say overall, our marketing ROI has been healthy year-to-date, but nothing really to call out other than in addition to the dynamics of the marketplace, we're continuing to find ways to use AI for our marketing as well. So, we're starting to incorporate AI into CRM and how we're communicating with our customers in a completely different way. So that's also helping drive the ROI of our marketing spend. And we continue to lean in opportunistically where we think there's an opportunity.

Operator, can we do one last question, please?

Yes. Your final question will come from Lee Horowitz with Deutsche Bank Research. Please go ahead.

Great. So maybe following up on Nikhil’s question earlier, I guess, while you haven't seen any material impact to add revenue to date, presumably a lot of your sellers have stocked up, and thus, they're not seeing any cost pressures. I guess how are you thinking and contextualizing the risks to advertising revenue going forward in a world where China tariffs stay remained above 50% and those sellers are going to see some substantial pressure on gross margins, if not potentially go out of business.

We've been really pleased with the continued momentum, Lee, that we've seen on our ads business. We've obviously continued to have multiple levels with multiple products in the ad space. And we've seen momentum and strength from quarter-to-quarter. Q1 was a good reflection of that. And as we always said, we continue to see a path to sort of 3% of GMV across the overall ad side of things. We do have a truly global platform, and we've seen success not only through the greater China sellers but across our other geographies as well. And so, this has been a good revenue vector for us at eBay, and we expect to continue to do that. So, I'm pretty comfortable with where we're sitting. And as we talked about contemplating various scenarios, we've contemplated the economics associated with the current environment and the color that we provided for the full year today.

Understood. And Steve echo all the comments as well, great work with you. Maybe just one follow-up. Just category by category. The color on some of the used good merchandise in the platform and how much how defensive maybe the platform may be over time is helpful. But maybe focusing on the collectibles part of your business. We get a lot of questions on that. I guess, how are you guys thinking about what may happen to that piece of the business through any broader macro softness? Has that business expanded such that it will not be impacted as much as it maybe has been in the past? Just any thoughts on how collectibles may react to a broader consumer slowdown would be helpful.

Yes. Look, we're really pleased with the trading cards growth. It grew healthy double digits year-on-year in Q1 and growth accelerated for the ninth straight quarter. And we just continue to innovate for hobbyists on the platform. The relationship that I talked about before with PSA and making that easier. The inverse of that is already live today, which is if I get a card graded, it's one click to have that resell on the platform where we're making it really easy magical listing has been a huge opportunity for us. eBay Live has been compelling for us in the collectible card space, and we're seeing nice uptake while it's still early days. We've been enhancing our seller dashboard. We built case break technology into eBay Live, et cetera. And we feel really good about kind of the -- all the investments that we've made to make that business strong. When you look at the overall business, obviously, there's different fluctuations in the business over time. What I feel really good about, Lee, is that the growth in trading card volumes that we've seen in recent quarters, has been mostly driven by sold item growth, not just ASP, which signals the recent strength is more sustainable than, for example, the surge we saw in 2001, which was more ASP-driven. So, we're going to continue to invest in that category. We feel really good about -- sorry, the surge in 2021 that we saw with ASP. We feel really good about the underlying business, what we've built and the capabilities for collectors and enthusiasts and the new capabilities like eBay Live that we're bringing to that overall category on the platform.