Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the eBay Third Quarter 2022 Earnings Conference 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. Thank you. It is now my pleasure to turn the call over to Mr. Joe Billante, Vice President of Investor Relations. Sir, please go ahead.

Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the third quarter of 2022. 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 Jamie's and Steve's commentary during the call, which is available through the Investor Relations section of the eBay website. Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non-GAAP measures related to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call. 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 and our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of November 2, 2022, 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. Q3 was a strong quarter for the company despite a challenging macro environment. Significant headwinds from inflation, higher energy costs, and rising interest rates have impacted discretionary income, and consumer confidence is near record lows in several markets. Our focus on non-new-in-season categories has made the platform more resilient against these headwinds. In the quarter, we continued to execute the tech-led reimagination, and we delivered on our near-term commitments. Focus categories narrowed their gap to market growth rates through higher customer satisfaction, increased trust, and more effective marketing. And once again, enthusiast buyers spent more on the platform. This playbook is having a positive impact on GMV in the U.S. and internationally. Site-wide technology investments created a more seamless customer experience, leading to improved conversion rates across the platform. Our advertising business accelerated due to increased seller adoption and the optimization of our ad products. New payment capabilities removed transactional friction while adding incremental revenue. The execution of our strategy is strengthening our competitive position, which drove better-than-expected financial outcomes in the third quarter. We delivered over $17.7 billion in GMV and almost $2.4 billion in revenue. We invested in marketing and product while delivering close to 29% operating margin. Our non-GAAP EPS was $1 per share, up double digits versus last year. Before I get into more highlights from the quarter, I want to take a step back and look where we are in our long-term journey. Heading into the pandemic, volume was declining. Since that time, we have invested in game-changing product experiences and adjusted our approach to marketing. This has resulted in an improvement in GMV compared to pre-pandemic levels. Specifically, focus categories, excluding trading cards, are up over 20% since 2019 due to improvements in customer satisfaction, trust, product experience, and marketing. Trading cards have more than doubled in that time due to market dynamics and the impact of our innovations. The rest of the platform has improved from declining low single digits to flat based on site-wide product improvements and the benefits of cross-category shopping. Taking a closer look at Q3 volume, excluding trading cards, focus categories grew over seven points faster than the rest of the platform compared to last year. Multiple quarters of improvements in parts and accessories, collectibles, luxury goods, and refurbished products are driving better relative GMV performance. Motors parts and accessories is the largest category we have invested in to date, and it is nearing market rates of growth. Investments in marketing over multiple quarters have increased consideration with enthusiasts, expanding the top of the funnel. Recently, we sponsored an automotive makeover show with MTV U.K., and we also kicked off the eBay Motors Parts of America tour, showcasing bespoke car builds using parts found on eBay. Hundreds of thousands of attendees have joined these events to date, and social marketing support for the tour has driven more than 500 million impressions. The key to unlocking trust for parts and accessories enthusiasts is fitment. Over the last several quarters, we have made significant progress on the foundational work needed to innovate the P&A experience. This included modernizing our taxonomy to align our business globally and open up new cross-border trade opportunities. We also integrated fitment-based technologies into search, merchandising, and advertising recommendations. Now we can make fitment more pervasive throughout the end-to-end experience. We have started adding highly visible trust signals throughout the buyer journey in the U.S. and Canada. We also are reducing the number of steps it takes to find parts, and we've expanded the adoption of My Garage, leading to more personalized shopping on every visit. We will continue to invest in trust to deliver even higher customer satisfaction in the coming quarters. Additionally, we are working on increasing the quality and quantity of supply in parts and accessories. We recently acquired Mine Pivot, which helps P&A sellers improve listing quality and grow conversion. We are also directly engaging sellers to add more in-demand parts inventory, keeping our global supply over 500 million live listings. Collectibles is another focus category where sellers and buyers are responding positively to recent innovation. One of the best examples of this is trading cards, where GMV trends remained steady at a trajectory more than double pre-pandemic levels. In June, we launched the eBay Vault, a seamless end-to-end physical and digital experience that have initially opened it for trading cards. During Q3, we expanded eligibility for Vault items, and we are seeing continued momentum week over week and are encouraged by the effectiveness of events and accelerating early adoption. Another important investment for our trading card business is the acquisition of TCG Player, a trusted marketplace for collectible card game enthusiasts that operates a leading technology platform. I am pleased that we were able to close this transaction earlier this week ahead of schedule. TCG Player brings strategic omnichannel capabilities, popular with trading card sellers, including inventory management tools, order fulfillment, and card optimization. I'm excited to see what we can do together to delight our sellers and buyers over time. In luxury categories, quarter after quarter of innovation has led to higher customer satisfaction and faster GMV growth. This has been true in watches, handbags, and sneakers since the introduction of authentication, resulting in higher GMV in every country where we've launched to date. Focus categories are not the only area where we are investing to drive GMV. Significant site-wide initiatives that impact all sellers and buyers are driving volume benefits across all categories. Multiple quarters of technology investment drove site-wide conversion improvements in Q3. For example, in search, we leveraged new deep learning models to better understand purchase intent, leading to increased conversion at the top of search. In addition, search recall has materially improved for low and well searches, enabling buyers to discover more relevant inventory. These capabilities have rolled out to English and German-speaking markets, adding more than $0.5 billion in GMV annually. SEO improvements are driving better growth across the platform. In focus categories like sneakers, we have built a more modern browsing experience, which is driving benefits to our SEO traffic. For sellers, we have been modernizing our technology stack. Recently, we completed the migration of all desktop sellers to a single unified listing experience globally. This transition eliminates multiple legacy tools and enables faster innovation, particularly as we invest in new focus category listing experiences. Sellers are already benefiting from the new platform. For example, when listing an item, sellers are receiving better price guidance recommendations that are driving conversion in multiple categories. Sellers can now directly upload videos that can showcase items, highlight unique details, or answer commonly asked questions. Our advertising growth accelerated in Q3 while delivering high returns on ad spend for our sellers. In Q3, first-party ad revenue was $249 million, up 27% year-over-year, keeping us on track toward our long-term advertising targets despite volume headwinds from the macro environment. As consumers in our major markets face persistent inflation, higher interest rates, and rising energy costs, they are increasingly turning to eBay for better value. This is leading to growth in GMV of used and refurbished goods. Recently, we expanded our efforts to support sustainable commerce with a new seller education offering on eBay Academy. During the third quarter, we raised more than $33 million through eBay for Charity, and the eBay Foundation issued grants to nonprofit organizations that support inclusive entrepreneurship and communities around the world. Finally, we're excited to announce that tomorrow, we will publish our inaugural small business report. This report highlights our progress towards becoming a seller platform of choice. I’ve spoken to you in the past about how eBay creates access for entrepreneurs. Sellers recognize these efforts with over half of all sellers surveyed agreeing that eBay helped their small business grow. We continue to be inspired by our seller community and are proud to play a key role in helping our customers navigate these challenging economic times. In closing, the resiliency of our platform yielded better-than-expected quarterly results despite a challenging macro backdrop. Focus categories grew over seven points faster than the rest of the platform. We acquired TCG Player and My Fitment to better serve enthusiasts in two of our largest focus categories. All of these accomplishments contributed towards our long-term tech-led reimagination of eBay. With that, I'll turn the call over to Steve to provide more details on our financial performance.

Thank you, Jamie, and thank you all for joining us today. I'll begin with highlights from the third quarter on Slide 9 of our earnings presentation. Overall, I'm pleased with our third quarter results as we made significant progress against our long-term objectives while efficiently navigating the challenging short-term macro environment. Our GMV revenue on non-GAAP EPS each came in above expectations and surpassed the high end of our guidance ranges. Although GMV was down 5%, it improved nearly nine points sequentially. Revenue was down 2%, primarily due to continued momentum within our advertising business. We delivered $1 of non-GAAP earnings per share, which is 11% over the prior year. Our Q3 results highlight the strength of our scaled marketplace, durability of our financial model, and impact of our tech-led reimagination on eBay’s underlying growth trajectory. Gross merchandise volume was down 5% year-over-year, improving nearly nine points sequentially. The war in Ukraine, inflationary pressures, and rising interest rates continue to wear on consumer confidence and demand for discretionary goods. Despite these headwinds, our business remains resilient. Our focus on non-new-in-season goods aligns us with the fastest-growing portion of our TAM. Preowned and refurbished goods are attractive alternatives to brand new items. eBay's scale provides supplemental income for sellers, which can mitigate the burden of the rising cost of living. Preowned and refurbished goods are growing significantly faster than brand new goods on eBay in recent years. Our focus category strategy continues to drive underlying growth as we reach 6% growth versus Q3 of 2019, primarily driven by faster growth in focus categories. Excluding trading cards, focus category GMV outpaced the remainder of our marketplace by over seven points year-over-year. It's important to note that we have been seeing compelling evidence that other categories are benefiting from our strategy as well. Looking at our business geographically, our U.S. GMV grew 17% compared to Q3 of 2019, while international GMV was down 3% over the same period. Although the macro headwinds are more pronounced in Europe, we are seeing some non-focus category momentum in Germany. Overall, our GMV in other categories in Q3 was roughly flat versus 2019. In terms of active buyers, we had 135 million active buyers shopping on eBay during the trailing 12 months, with active buyers, excluding those from Turkey, down slightly quarter-over-quarter. An average spend per user continues to be healthy at over $3,000 per year, which is up double digits versus 2019. On revenue, net revenue was down 2% to approximately $2.4 billion during the third quarter, primarily due to the impact of currency. Our advertising revenue grew 22%, while first-party ads grew 27%. These strong results were primarily driven by continued optimization of our Standard Promoted Listings product. We anticipate non-GAAP operating margin of 29.7% to 30.3%. For Q4, we now expect to generate between $17.5 billion and $18.1 billion of GMV, representing an FX-neutral decline between 9% and 6%. We expect non-GAAP earnings per share between $1.03 and $1.09, reflecting negative growth versus the prior year due to macro headwinds. Our marketplace remains resilient in the face of inflationary pressures, and we continue to support our small business sellers, raising $33 million for charity and driving close to $1 billion in economic impact through e-commerce. Thank you for your time.

Thanks for taking the questions. I know you talked about doing more full funnel marketing in the focus categories. Just curious about some of the results that you're seeing there, and then how you've expanded those efforts more materially to some other categories as well. And if you could just comment on the buyback as well, a smaller number than what we've seen in recent quarters. If there's any commentary you can add there. Thank you.

Yes. Hi, Doug, I'll take the first one. So part of our strategy and the shift in our marketing was really to approach this full funnel marketing and move away from just lower funnel optimization. That's worked out really well for us. For example, in P&A, we're seeing good strength, approaching market growth rates. We're driving consideration across enthusiasts and leveraging tourism shows to expand that. We're continuing to expand this strategy to other categories. Steve, do you want to take the one on buyback?

Yes, of course, hi Doug. Yes, we continue to demonstrate our commitment to returning excess cash to shareholders. I wouldn’t look at this on a quarter-to-quarter basis. Year-to-date, we've returned $3.2 billion or 200% of our free cash flow. So buybacks and dividends will continue to be a core component of value creation for our shareholders.

Thanks for taking the questions. Maybe two, if I can. First, curious what is embedded in the guidance in terms of the macro environment changing Q4 versus Q3? Are you willing to give us some sense of the bottom end of the range versus the top of the range, and maybe elements of how macroeconomic volatility might push you in one direction or another as you look out over the next couple of months? As well, if the macroeconomic activity did become more volatile, how should we think about those investments that you want to make next year?

Hi, Eric, good afternoon. Yes, we’ve taken a very balanced approach to our Q4 guide. Consumer demand is pressured. We expect further energy challenges and labor challenges in Europe. We have purposely given a wider range of potential outcomes. The outcome of the quarter really will depend on the macro environment. We will continue to invest in the core business and protect that as we navigate the forthcoming quarters.

Thanks and good afternoon. I want to go back to the comment you made around cross-category shopping. I was hoping you could dig into that with respect to how large an impact that's having, and if that's something that will pick up speed in coming quarters. Regarding the October trends in the U.S., does that suggest that some of the resiliency of the platform is not as applicable in the U.S. market?

Yes, we are seeing strength in our refurbished and used categories, which is about a third of our GMV. In terms of the cross-category shopping established in March, we continue to see that. Buyers are showing an interest in categories where a highlighted example is if a buyer purchases in sneakers, they'll spend more outside of that category too. We feel good about these metrics. Regarding October, we see some broad-based softness, which is consistent across categories, but we have seen some momentum in Germany.

I continue to be pleased to see the delta between our focus category momentum versus non-focus categories based on the investments that we're making. As we look into October, it's pretty broad-based across all categories. But overall, all this reflects the broader economic climate.

Okay, thanks guys. Can you talk about generally cross-border activity on the back of the stronger U.S. dollar versus almost all other global currencies? Are there certain larger corridors or categories that might be giving you an outsized headwind or a tailwind?

There’s been some easing of the supply chain as demand has come down, which has certainly helped from that perspective. We're leaning into cross-border trade. We've rolled out buyer FX, making it easier for buyers to buy in their local currency. We've seen a 70% adoption of that. We're also enhancing export processes making it easier for sellers around the globe.

Thanks for taking the questions. I know you called out the outperformance of focus categories versus the rest. Can you give additional color on what the growth is on some of the larger focus categories? And can you also provide some additional color on how currency weighs on your margins?

We're pleased with the performance in focus categories, such as trading cards and parts and accessories. Trading cards continue to perform well at twice the volume coming into the pandemic. Our luxury categories are seeing double-digit growth internationally. And with recent efforts to penetrate more segments, we expect sustained growth. Regarding currency, if the U.S. dollar remains strong, this could incur a headwind for GMV and margins, especially as these are not further hedged quarter-over-quarter.

I wanted to dig a little more into the strong advertising numbers in the quarter. What drove the incremental improvement from Q2?

We're pleased with the performance of our ads revenue, up 27% year-on-year. The reaccelerated growth is driven by two factors: the optimization of our Promoted Listing Standard and the contributions from new ad products. The return on ad spend remains healthy, and we’re on track to meet our stated goal of doubling our ads business by 2025.

At Analyst Day, you presented targets for mid-single-digit GMV growth and total margin expansion from 2022 to 2024. Do you think those targets are still achievable? Also, do you have any interest in expanding further into the luxury apparel market through M&A?

We remain confident in the long-term goals we laid out at our Investor event. The strategy is working, and we are coming out of the pandemic in a much stronger position. The timing of the delivery of our goals is a function of the macro environment, but we are optimistic about our continued progress.

Yes, M&A remains a key part of our strategy. We've engaged in acquisitions that enhance our core capabilities. We’ll continue to look at key areas, potentially expanding into luxury apparel if it aligns with our strategy and offers a good return for shareholders.

How are the enthusiast buyers holding up in the current macro environment? Have you noticed any changes sequentially? Also, should we think that the ads will grow through these challenging macro headwinds in Q4 and into '23?

In Q3, we had 17 million enthusiast buyers, which was relatively flat to Q2. We do expect some pressure on that count in the coming quarters due to the macro environment. In terms of advertising, we don't expect linear growth, but we believe the healthy ROAS will continue to drive strength as we roll out our new ad products.

In your recent interview, you raised the white flag about competing in-season. What proportion of GMV do these still represent? Additionally, can you quantify what impact the advertising investment had on GMV?

Non-new-in-season represents about 90% of what we sell on the platform. We also see a significant portion of our GMV from pre-owned and refurbished goods growing faster. The advertising spent by sellers is tied directly to GMV, especially through our CPA-based programs.

Trying to think a little bit about GMV sensitivity and potential consumer trade down. How much pricing have sellers taken on the eBay platform?

We’re not immune to macro impacts, but we have a resilient model now, focusing on non-new-in-season and refurbished. Value is key to our buyers. Additionally, Gen Z is increasingly interested in pre-owned goods, which supports our ESG efforts.

Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.