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    EBAY
    Earnings call· Dec 2024(Q4 FY24)

    EBAY INC EBAY

    Feb 26, 2025 Source

    Executive summary

    eBay Q4 FY24 — Strong GMV Growth and AI-Powered Innovation

    eBay concluded a transformative year with strong Q4 results, driven by accelerating GMV in focused categories and significant AI-powered innovation. The company is expanding its reach through strategic partnerships and enhancing seller tools, while navigating macroeconomic challenges and tariff uncertainties. Management remains confident in its strategy to drive sustainable growth and shareholder value in 2025.

    Highlights

    5

    • Full-year GMV grew over 1% to $75 billion, with focused categories up 5%.

    • Q4 GMV grew over 2% to $19.3 billion, accelerating sequentially.

    • Non-GAAP operating income grew over 4% year-over-year, expanding non-GAAP operating margin by 70 basis points for the full year.

    • Non-GAAP EPS grew 15% to $4.88 for the full year, with $3.7 billion returned to shareholders.

    • First-party advertising accelerated to 16% growth in Q4, with total ad revenue up nearly 12% to $445 million.

    Concerns

    4

    • Q1 FY25 GMV guidance between flat and 1% year-over-year, including a 140 basis point FX headwind and 50 basis point headwind from lapping leap day.

    • Q1 FY25 revenue guidance between negative 1% to positive 1% FX-neutral growth, with 60 basis points FX headwind.

    • U.K. C2C initiative created a 50 basis point headwind to take rate in Q4 due to eliminated final value fees.

    • Full-year 2025 operating margins impacted by ~70 basis points net headwinds (depreciation, U.K. managed shipping, M&A).

    Guidance & targets

    12
    CategoryTargetConfidence
    GMV
    $18.3 billion - $18.6 billion
    high materiality
    High
    Revenue
    $2.52 billion - $2.56 billion
    high materiality
    High
    Non-GAAP Operating Margin
    29% - 29.4%
    medium materiality
    High
    Non-GAAP EPS
    $1.32 - $1.36
    high materiality
    High
    GMV
    low single-digit growth
    high materiality
    High
    Revenue
    modestly higher than GMV growth
    high materiality
    High
    Non-GAAP Operating Income Growth
    relatively in line with revenue growth
    medium materiality
    High
    Capital Expenditures
    4% - 5% of revenue
    medium materiality
    High
    Non-GAAP Tax Rate
    16.5%
    low materiality
    High
    Share Repurchases
    at least $2 billion
    high materiality
    High
    Quarterly Dividend
    $0.29 per share
    medium materiality
    High
    Non-GAAP EPS Growth
    high single digits
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    U.S.
    U.S. GMV grew by 1% in Q4, driven by improved traffic trends and strong late-season holiday demand. Trading cards had another strong quarter, posting the fastest quarterly GMV growth observed since 2021.
    		—1%——
    International
    International GMV grew over 3% on an FX neutral basis in Q4, while FX was a tailwind to spot GMV growth of 250 basis points. Benefited from resilient demand over the holiday season and the successful launch of the U.K. initiative, as well as strong trends in cross-border trade from Greater China and Japan.
    		—3% FX-neutral——

    Operational metrics

    66
    GMV
    $75Bover 1% growth
    FY24

    Ended 2024 with 3 consecutive quarters of positive growth.

    Focused category GMV growth
    5%
    FY24

    Accelerated gradually over the course of the year despite increasingly difficult comps.

    Core category GMV growth
    nearly flat
    FY24

    Benefiting from horizontal and geo-specific investments.

    Non-GAAP operating income growth
    over 4%YoY
    FY24

    Enabled by disciplined investments and operational efficiency.

    Non-GAAP operating margin expansion
    70
    FY24

    Expanded due to operational efficiency.

    Non-GAAP EPS growth
    15%
    FY24

    Resulting in $4.88 non-GAAP EPS.

    Capital returned to shareholders
    $3.7B
    FY24

    Through repurchases and dividends.

    GMV
    $19.3Bover 2% growth
    Q4 FY24

    An acceleration of over 1 point sequentially, driven by strong execution and solid consumer demand during the shortened holiday shopping season.

    Focused category GMV growth
    over 6%
    Q4 FY24

    Nearly 6 points faster than core categories.

    Core category GMV growth
    modestly positive1 point acceleration vs Q3
    Q4 FY24

    Benefiting from horizontal innovation, geo-specific investments, cross-category shopping, and the sell-to-buy flywheel.

    Trading cards GMV growth
    healthy double-digit growth
    Q4 FY24

    Making this category the largest contributor to GMV growth in Q4.

    Motors P&A GMV growth
    mid-single-digit growth2nd consecutive year
    FY24

    Consistent with prior quarters of 2024, driven by assortment building.

    Motors P&A inventory growth
    double digits
    Q4 FY24

    Resulting in over 700 million live P&A listings.

    Live P&A listings
    over 700M
    Q4 FY24

    Global basis.

    Collectible cars TAM
    $75B
    current

    Estimated total addressable market in the U.S.

    U.K. C2C GMV growth improvement
    double-digit improvementvs. prelaunch baseline
    Q4 FY24

    Following an overhaul of the C2C value proposition in October.

    U.K. C2C first-generation listers improvement
    20-plus point improvements
    Q4 FY24

    Observed following the C2C overhaul.

    U.K. C2C new and reactivated sellers improvement
    20-plus point improvements
    Q4 FY24

    Observed following the C2C overhaul.

    U.K. C2C local pickup GMV improvement
    20-plus point improvements
    Q4 FY24

    Observed following the C2C overhaul.

    U.K. C2C ASP
    lifted overall
    Q4 FY24

    Sales within focus categories and other mid to high ASP items were the biggest beneficiaries.

    Managed shipping U.K. C2C mandate
    begin mandating
    Q2 FY25

    After adding features and fine-tuning the program throughout Q1.

    AI model size
    approximately 100x largervs. prior year
    2024

    Enabled by enhanced GenAI capabilities, increased GPU capacity, and supercomputer deployment.

    AI model accuracy improvement
    30%
    2024

    Achieved with 8x smaller model size and 10x lower latency.

    Sellers using GenAI features
    over 10M
    to date

    Unique sellers.

    Listings created with GenAI
    over 100M
    to date

    Generating several billion dollars of GMV.

    GenAI customer satisfaction
    90%
    current

    Satisfaction rates for GenAI tools.

    First-party advertising growth
    16%
    Q4 FY24

    Accelerated growth.

    Ad revenue growth
    nearly 12%
    Q4 FY24

    Total ad revenue reached $445 million.

    Ad revenue as % of GMV
    2.3%
    Q4 FY24

    Eclipsing 2.3% of GMV.

    Sellers adopted single ad product
    approximately 3.4M
    Q4 FY24

    Number of sellers adopting an ad product.

    Live Promoted Listings
    over 1.1B
    Q4 FY24

    Out of nearly $2.3 billion total listings on eBay.

    Third-party display ads revenue decline
    54%
    Q4 FY24

    Revenue declined to less than $12 million as third-party display ads were deprecated.

    Klarna Average Order Value (AOV)
    3 to 4 times highervs. average basket size
    current

    Observed in markets where Klarna buy now pay later solutions are offered.

    Net zero carbon emissions target
    2045
    target

    Validated by the science-based targets initiative.

    Renewable energy sourcing
    100%
    2024

    Reached 2025 renewable energy target 1 year early.

    Active buyers
    nearly 134Mover 1% growth
    Q4 FY24

    Second straight quarter of sequential active buyer growth, driven by steady growth in new and reactivated buyers and improved retention.

    Enthusiast buyers
    roughly 16Mstable
    Q4 FY24

    Number of enthusiast buyers.

    Spend per enthusiast buyer
    more than $3,100slightly up YoY
    Q4 FY24

    Average spend per enthusiast buyer.

    Take rate
    13.3%40 bps lower YoY
    Q4 FY24

    Headwinds from U.K. C2C initiative (~50 bps) and FX (~20 bps) partly offset by first-party advertising, financial services, and shipping.

    Non-GAAP operating margin
    27%over 30 bps expansion YoY
    Q4 FY24

    Driven by operational efficiencies and lower transaction losses, partly offset by full funnel marketing and a 70 basis point foreign exchange headwind.

    Non-GAAP EPS
    $1.25over 16% growth
    Q4 FY24

    Non-GAAP diluted EPS.

    Cash and non-equity investments
    $7.2B
    end of 2024

    Balance at the end of 2024.

    Gross debt
    $7.4B
    end of 2024

    Balance at the end of 2024.

    Share repurchases
    $900M
    Q4 FY24

    Repurchased eBay shares.

    Stock repurchase authorization
    $3.3B
    end of 2024

    Incremental $3 billion authorized, bringing total authorization to roughly $3.3 billion.

    Quarterly cash dividend
    $128M
    December

    Paid in December.

    Equity investments and warrants value
    over $1B
    end of Q4

    Majority in Aurelia, valued at nearly $900 million (8% ownership).

    Q1 GMV FX headwind
    nearly 140
    Q1 FY25

    Expected at prevailing exchange rates.

    Q1 GMV leap day headwind
    50
    Q1 FY25

    Net headwind due to lapping the extra leap day in 2024, partly offset by Easter timing.

    Q1 Revenue FX headwind
    roughly 60
    Q1 FY25

    Estimated at current rates.

    Q1 Operating Margin depreciation increase
    70
    Q1 FY25

    Increase in depreciation expenses due to extended useful life of servers and networking equipment.

    Q1 Operating Margin M&A-related expenses
    20
    Q1 FY25

    Headwind from M&A-related expenses.

    FY25 GMV FX headwind
    over 1 point
    FY25

    For full year spot growth, based on current exchange rates.

    FY25 Revenue FX headwind
    40
    FY25

    To spot growth.

    FY25 Operating Income FX tailwind
    roughly 50
    FY25

    To spot operating income growth at current rates.

    FY25 Operating Margin depreciation headwind
    0.5 point
    FY25

    For full year gross and operating margins due to server/networking equipment depreciation dynamics.

    FY25 Operating Margin U.K. managed shipping headwind
    roughly 30
    FY25

    Due to gross revenue recognition, based on updated ramp schedule. Expected to contribute positive operating income dollars.

    FY25 Operating Margin M&A headwind
    nearly 20
    FY25

    Estimated impact.

    FY25 Operating Margin FX tailwind
    30
    FY25

    Estimated based on current rates, partly offsetting other headwinds.

    Net cash taxes related to prior transactions
    nearly $650M
    Q2 FY25

    Related to Adevinta, Aurelia, Adyen, and Gmarket transactions in 2024.

    Repatriation tax obligation
    $292M
    Q2 FY25

    Final year payment.

    R&D expenses tax treatment headwind
    over $100M
    FY25

    Impact on free cash flow due to changes in tax treatment.

    China to U.S. GMV exposure
    approximately 5%
    current

    Of total GMV, subject to de minimis shipping changes.

    Greater China GMV exposure
    a little less than 10%
    current

    Of total GMV.

    Forward deployed Greater China volume
    approximately 3/4
    current

    Already subject to tariffs.

    GMV generated from GenAI listings
    several billion dollars
    to date

    Generated from over 100 million listings created by over 10 million unique sellers using GenAI features.

    Industry KPIs

    4
    MetricValueDetails
    Ai cloud revenue backlog—
    Regional market performance—
    Advertising revenue take rate$445MUSD
    Operating income EBIT and adjusted EBITDA$698MUSD

    Product announcements

    5
    ProductTypeDetails
    eBay Balancelaunch
    Managed Shipping Programlaunch
    OpenAI Operator Collaborationlaunch
    Meta (Facebook Marketplace) Testlaunch
    Klarna Buy Now Pay Laterexpansion

    Deals & partnerships

    7
    CaramelAcquisition of a technology company enabling secure end-to-end online vehicle purchase experiences.

    Acquired Caramel to simplify complexities of vehicle sales including identity and title verification, ownership transfer, financing, insurance, warranty, and transportation. U.S. sellers can list cars, trucks, and motorcycles on eBay with Caramel's checkout solution starting Q1.

    Permira and Blackstone consortiumConsortium exercised option to purchase a portion of eBay's ownership stake in Aurelia.just over $1B

    Consortium led by Permira and Blackstone exercised its option in Q4 to purchase roughly 10% of eBay's ownership stake in Aurelia for just over $1 billion. eBay's remaining stake in Aurelia is approximately 8%, valued at nearly $900 million.

    AdyenExit of equity investment and warrants.roughly $600M

    Exited equity investment in Adyen in Q4. No longer hold any warrants in Adyen, with remaining tranches expired at the end of January 2025.

    Apollo Korea (Gmarket)Sale of ownership stake.over $320M

    Sold nearly 20% stake in Apollo Korea, the owner of Gmarket, on December 17.

    KlarnaGlobal strategic partnership to offer buy now pay later solutions.

    Partnership announced in Q4 to expand buy now pay later solutions to the U.K. and several new European markets, building on a successful launch in Germany.

    OpenAICollaboration on OpenAI's Operator.

    eBay became one of the first companies to collaborate with OpenAI's Operator in January, which can direct users to eBay for shopping needs.

    Meta (Facebook Marketplace)Test to enable browsing and purchasing eBay listings within the Facebook Marketplace app.

    Launched a test last month in the U.S., Germany, and France. The checkout experience and post-transaction services are powered by eBay, leveraging on-platform capabilities like Authenticity Guarantee.

    Risks & headwinds

    7
    Macroeconomic ChallengesQ1 FY25 and FY25

    U.K. and Germany demand weaker; lower consumer confidence and GDP growth

    Mitigation: Continued focus on strategic initiatives, remaining nimble, and leveraging diversified global marketplace.

    Tariff UncertaintyQ1 FY25 and FY25

    Potential impact of tariffs and de minimis changes; consumer elasticity to price changes

    Mitigation: Planning to help sellers and buyers navigate changes with minimal disruption; diversified global marketplace can adapt.

    Depreciation ExpensesQ1 FY25 and FY25

    70 basis point increase in Q1 FY25; 0.5 point headwind for full-year gross and operating margins

    Mitigation: Result of extending useful life of servers and networking equipment in 2024.

    U.K. Managed Shipping Impact on Operating MarginsFY25

    Negatively impact operating margins by roughly 30 basis points (FY25)

    Mitigation: Due to gross revenue recognition, but expected to contribute positive operating income dollars in 2025. Enhancements are being implemented.

    M&A-related ExpensesFY25

    Nearly 20 basis points of headwinds for full year operating margins

    Calendar TimingQ1 FY25

    Net headwind of 50 basis points to GMV growth in Q1 FY25

    Mitigation: Due to lapping the extra leap day in 2024, partly offset by Easter timing.

    Unique Tax ConsiderationsQ2 FY25 and FY25

    Net cash taxes of ~$650M (Adevinta, Aurelia, Adyen, Gmarket), $292M repatriation tax, >$100M R&D expenses tax treatment headwind

    Mitigation: These impacts are not expected to repeat in 2026 (except R&D headwind, which will be less material). Normalized free cash flow expected to be north of $2B.

    What to watch in Q1 FY25

    5

    U.K. C2C Managed Shipping Mandate

    Q2
    CurrentGradually ramping up, opt-out basis
    TargetMandatory for U.K. C2C sellers

    Why it matters

    This initiative is key to the U.K. C2C overhaul, expected to improve transparency, lower costs, and generate incremental revenue/operating income for eBay.

    We will continue to manage shipping throughout Q1 as we add features and fine-tune the program and plan to begin mandating it for U.K. C2C sellers during Q2.

    Q&A highlights

    5

    What is eBay's exposure to changes in de minimis shipping, especially from China, given that most large category offerings appear to be in U.S. warehouses?

    China to U.S. cross-border trade is approximately 5% of total GMV, with China overall less than 10%. Approximately 75% of Greater China volume is forward deployed and already subject to tariffs. Half of the remainder is managed through SpeedPAK. eBay is confident in its ability to help sellers and buyers adapt.

    “China to U.S. quarter, that makes up approximately 5% of total GMV for eBay. China overall is a little less than 10% of GMV. But approximately 3/4 of our Greater China volume is forward deployed. So as you said, it's already subject to tariffs.”

    asked by Michael Morton · answered by Jamie Iannone

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Pillars & AI Innovation

    eBay's 2024 performance was marked by precision execution of its strategy to reinvent e-commerce for enthusiasts, achieving three consecutive quarters of positive GMV growth. The company significantly enhanced its core AI platform, launching proprietary large language models (LiLiuM) and leveraging GenAI tools for sellers (magical listing, AI-enhanced product backgrounds) and buyers (Explore, Shop the Look), boosting productivity and search efficacy.

    02

    Focused Category Momentum

    Focused categories, including trading cards and Motors P&A, were key growth drivers, accelerating to over 6% GMV growth in Q4, outpacing core categories by nearly 6 points. Trading cards saw healthy double-digit growth, while P&A achieved mid-single-digit GMV growth for the second consecutive year, driven by assortment expansion and trust-building initiatives.

    03

    U.K. C2C Overhaul

    A significant overhaul of the C2C experience in the U.K. in October led to a double-digit improvement in C2C GMV growth in Q4, alongside 20-plus point improvements in first-generation listers and reactivated sellers. The introduction of a buyer protection fee in February, following the removal of seller fees, performed better than expected, and managed shipping is ramping up for mandatory adoption in Q2.

    04

    External Partnerships & Reach

    eBay is expanding its reach by meeting customers where they are, collaborating with OpenAI's Operator to direct users to eBay and launching a test with Meta (Facebook Marketplace) in the U.S., Germany, and France. These initiatives aim to broaden exposure for eBay sellers and leverage the platform's unique inventory and trust features like Authenticity Guarantee.

    05

    Acquisition of Caramel

    The acquisition of Caramel enhances the end-to-end online vehicle purchase experience in the U.S., simplifying complexities like title verification and financing. This move is expected to tap into the estimated $75 billion TAM for collectible cars and drive synergies with the P&A category, as vehicle buyers often spend thousands annually on related items.

    06

    Financial Services & Advertising Growth

    First-party advertising grew 16% in Q4, contributing to total ad revenue of $445 million, representing 2.3% of GMV. The company also expanded financial services, including a global strategic partnership with Klarna for buy now pay later solutions in Europe, which has shown average order values 3-4 times higher than the average basket size.

    07

    Capital Allocation & Shareholder Returns

    eBay returned nearly $3.7 billion to shareholders in 2024 through repurchases and dividends, with non-GAAP EPS growing 15%. The board authorized an incremental $3 billion for share repurchases and increased the quarterly dividend to $0.29 per share for Q1 2025.

    AI-generated summary of the company’s earnings call. Not investment advice.