In the interest of time, I think we're going to get going. Our next fireside chat is with eBay, where we have two speakers, Jamie Iannone, CEO, Peggy Alford, CFO. Jamie and Peggy, thanks so much for being part of the conference this year.
Thanks for having us.
Thanks for having us, Eric.
Okay, so I'm going to do my legal duty first and read the safe harbor. This discussion is publicly available via webcast through the investor relations section of the eBay website at investors.ebayinc.com, where you will also find additional disclaimers. This is the once a year I dust off my old law exam. My law degree. Jamie, let's start with you. I wanted to go back before we go forward. It's been several years now that you've been in the CEO role at eBay. As you look back at that journey, what's changed the most about the business over the last couple of years?
Yeah, look, I feel like the business is performing really well. We just had great Q2 earnings. I think the biggest thing is probably the clarity of focus that we have. We are very focused on 70% of our business now is either focus categories, C2C, or recommerce, which is the areas where we are really leaning in. Each one of those individually and collectively grew 20% in Q2. We see real strength there. We have been complementing that with a real kind of foundational layer, leveraging things like AI, trust, and shipping. Each of those have been game changers for us over the last couple of years, and I am sure we could talk more about that.
Yeah.
I think the third thing is probably just the new growth vectors. C2C has been a great growth vector for us, but we also have great new growth vectors in eBay Live and in vehicles. Live continues to have strong growth and be really complementary to our core business. Vehicles, while new, is now quickly reached hundreds of millions of dollars of run rate on the business. We just sold a $5 million Porsche, and it is like this phenomenal end-to-end customer experience. For any of you collector car people out there, you got to go check out what is happening in vehicles. Overall, what I feel great about is just this clarity of focus, the broad-based nature of the growth that we are seeing, and how each of those elements contribute to each other.
Okay. Maybe sticking with the consumer, we kicked off the conference this morning with a talk with our global economist who talked about the consumer relative to the macro backdrop. You guys have a range of exposure to the consumer, from value-seeking shoppers all the way to discretionary enthusiasts. How would you characterize the consumer behavior you are seeing on your platform today?
You want to take that one?
Sure, yeah. We continue to see an environment where the U.S. consumer has been more resilient than outside of the U.S. But coming back to the business a year and a half ago, one of the things that was so exciting is the fact that we tend to thrive in environments when the economy's doing really well, as well as in times when it's tougher. That's because of the diversity of our platform, where you've got enthusiast buyers that are buying in areas that they're really excited about, discretionary purchases, things like that. But at the same time, value seekers in areas like recommerce, these are areas where you can get a real value for your dollar, so we tend to appeal to the consumer that's looking for a deal as well.
We've really focused on making sure that we're just building out the value proposition, as Jamie described, in areas where we're building trust through Authenticity Guarantee, fitment in vehicles and parts, and then combined with the consumer that is excited to get a deal, but also find that item that they've been uniquely looking for enables us to really thrive in periods of the division between U.S. resilient consumer and challenging macro times outside of the U.S.
Okay. Thank you for that, Peggy. Maybe building on Peggy's answer, Jamie, coming back to you, how do you think about continuing to position eBay against the competitive landscape more broadly? You've talked a little bit about product. You've talked a little bit about giving different value propositions to consumers. How do you think about platform differentiation against the landscape?
I think we've built a series of capabilities and assets that's difficult to replicate. When you think about eBay, we have 2.6 billion listings. We have 136 million buyers. We have 30 years of marketplace history and data. We have a whole set of trust and enablement capabilities that we've built. A lot of that is really unique. When you look at those 2.6 billion listings, 90% of that is what we call non-new in-season, so really kind of unmatched inventory from what's generally available on the web. 70% of it is in our key areas of focus categories, which is a huge business for us. That's over 40% of our inventory, last quarter grew 26%, and these are the categories we've been really focused on driving innovation in.
Recommerce and C2C, that group collectively makes up about 70% of our GMV, and it's where we're strategically heavily focused and aligned. I think the other thing is that, speaking of things like C2C, we've seen really nice growth rates across the marketplaces that we've had. Whether that's U.K. or Germany or U.S., we just made some changes in our Australia market to C2C, and we're seeing growth in every single one of those geographies, healthy growth. We're talking 20% plus growth. That's really great inventory for eBay because when we get a buyer to become a seller, they become more effective even as a buyer. That's been important for us. I think the combination of all those, and then the last is that the horizontal investments that we've been able to make really complement what we're doing in focus categories.
When you look at authenticity and trust as an example, we've launched specific things like Authenticity Guarantee in watches, sneakers, handbags, et cetera, but we've launched eBay Guaranteed Fit in our motors parts and accessories business. In the vehicles business that I just talked about, we do everything, financing, delivery, title transfer, et cetera. That's the other kind of thing that really enables us to compete, Eric, is that real end-to-end high-quality value proposition that we've put together.
Okay. That's super clear. Sticking with the topic of focus categories, I don't know which one of you would like to take this, but I would love to go a little bit deeper in where you're seeing the greatest operating momentum in focus categories today, and which verticals within focus categories are you most excited about that could generate share gains in the years ahead?
I think the thing that's so exciting about focus categories is that the strength has been so broad-based. I think what's been obvious is how strong collectibles has been. Even within collectibles, trading cards has been especially strong, but also other areas outside of trading cards, like toys and coins. Within trading cards, it's not just Pokémon, it's also the other collectible card games. It's all three of the sports. I think if you look at the investment we've made in that value prop, both whether it's using our entire framework, the build, buy, partner framework, where we built a lot of capabilities around trading card capabilities on the both trust as well as removing friction. Then we acquired TCGplayer, we partnered with PSA.
It's sort of applying our playbook to a market that has an increasing TAM, like trading card does. We're actually creating a differentiated value prop across the category that's really enabled us to capture that capability. Then we have new growth vectors in addition to our existing focus categories like vehicles and Live. Live, which continues to accelerate our collectibles category, but also is a new medium that is growing in TAM that enables us to capture new sellers and new buyers that are transacting on our platform. All of this growth is happening in a very diversified manner across the platform, which gives us a lot of confidence that growth is durable.
Okay, understood. Jamie, even though we're on day one of this conference, I will tell you there's already been a lot of talk about agentic commerce. When you think about agentic commerce more broadly, how do you think about the evolution of eBay towards being more conversational and agent-driven as the landscape evolves?
Yeah, look, AI has been a real structural tailwind for our business. First, the strong growth rates we're putting up today are in part because of all the AI innovation that we've been driving. If you think about a product like Magical Listing, it really kind of makes it so simple to list any product that we're unlocking so much inventory that's sitting in people's houses and closets and garages. What we see, for example, in our U.S. market is we see 50% more listings per lister because of this new AI technology. As a result, we have a much higher customer lifetime value for new sellers joining the platform. We're seeing the same type of results and better engagement in natural language search that we have on the platform, and in new AI-based tools that we're building.
We built a card scanning technology for figuring out the pricing of trading cards, and eBay has the best pricing data that's out there. We have 30 years of history. Now it's incredibly easy to use. We've seen over 80 million scans. We get about a half a million scans every single day. An example of AI making our platform better. The second thing is that we've been able to, with our unique inventory, even though it's small, when our unique inventory is out there in agentic commerce, it does bring us new buyers. What we find is that about half the time, they come back to eBay directly to drive their next purchase. That's really great.
The third thing is, it turns out that this trust and enablement layer that we have been building over the last five, six years has become increasingly important, especially in the world of AI. The fact that you know that this product is guaranteed to fit your vehicle, that we are authenticating that Birkin bag that you have, that we have easy and free returns, et cetera. That whole layer is, I think, really helpful for us in an agentic world as well, and that is what we are seeing from consumers. So overall, we are excited by the innovation that is happening. I am excited about what AI is doing across our business, from marketing, search, to listing products, et cetera. It is a big part of why we are seeing strong growth rates right now is the AI innovation that we are driving on eBay.
Okay. Understood. You mentioned earlier eBay Live. Over the last year, what have you learned about eBay Live on your platform and what it does in terms of buyer and seller behavior and transactional dynamics?
Yeah. So we just had another record quarter in eBay Live. It grew 8x year-on-year last quarter. What we are seeing is that it drives really content, commerce, community, and entertainment all happening at once on eBay Live. It is really great for our sellers on the platform because they are able to have a whole new format to sell to buyers. What we see from sellers is that sellers when they start doing an eBay Live, 90% of them stay on and keep going. What we see is they have 3x higher growth rates than comparable sellers who are not using eBay Live. If you think about it makes sense, right? You have this new engagement tool. You are engaging buyers.
You are building new trust with buyers by communicating via this live channel, so you help grow your core business on eBay as a result. The other thing that we are seeing is that it really helps drive buyer engagement. So take a buyer in collectibles. When they start watching eBay Live, they end up buying 70% more than comparable buyers. A big part of that is actually on the core business. In some cases, people are actually being introduced to whole new hobbies by watching eBay Live. So they may get involved in comic books, or Peggy was telling me she had never bought a luxury watch before. Peggy Alford told me she had never bought a luxury watch before, but she started watching a bunch of eBay Lives, and all of a sudden, she understood kind of what watch eBay Lives were.
The opportunity to build the marketplace between sellers and buyers to really create kind of a new sense of community. Some of you may not know, I was at eBay from 2001- 2009, when the site was predominantly very auction-driven and had a lot of community on the platform. What is exciting to me about eBay Live is seeing that same thing happen. We have built things like Popcorn Bidding in eBay Live, where the bidding gets extended, the chats are rolling continuously. Sellers are doing one-second giveaways of stuff. People are getting educated on whole new categories of opportunity. What is really exciting to see is I have always said, when you give sellers a new tool, just watch what they will do with it, and it becomes pretty amazing. That is what is happening with eBay Live.
Our sellers are coming up with really creative ways to engage buyers, leverage their social media channels out there to bring more traffic to eBay. We just started launching simulcasting, so now sellers can simulcast on their other kind of social channels. All of this is driving a really nice flywheel for the core business.
Okay. I am glad that was not my phone. I can sense it is an iPhone, so it was not me.
Okay. All right.
Thank God. Because I would have to apologize. Flywheel. This is a topic you have talked about a lot in the role of CEO, Jamie. Talk to us a little bit about how important it is to continue to drive momentum across buyers turning into sellers, and sellers turning into buyers, and how that is a potential natural tailwind for the business.
Yeah, it has been a big focus of ours for many years now, is really focusing on that C2C and turning buyers into sellers. Historically, eBay had just marketed the buying side of things, but over the last few years, we have been very focused on the C2C value proposition, marketing that value proposition of what we are doing. Changing formats and capabilities in different geographies around the world. The reason is really a couple fold. First is when a buyer becomes a seller, they become 2x- 2.5x more valuable as a buyer on the platform. That is great for us. Think about it, we have features like eBay Balance, right? Where you go sell a bunch of stuff on the platform, it sits there in your eBay Balance. What do you do? You go splurge on something that you really wanted.
That is a key opportunity. The second is those C2C sellers usually bring unique inventory to the platform. So it is stuff that generally is not available. I sold a Hammond B-3 organ on the site. That is not a product that there is some business selling Hammond B-3 organs. I bought a vintage guitar, a Guitar Hero, because my son wanted that. That is not a B2C product. That is going to come from someone's closet. So it opens up really unique inventory on the platform, and that does help complement our B2C inventory as well, because a lot of those C2C buyers that sell start buying from our B2C inventory. So it really helps grow it overall. So we have been focused. It is why we have put a lot of innovation into Magical Listing. The newest version is truly fantastic.
It is built with this vision that we had of if AI already existed, how should you list a product? It guides you through the whole process like, "Hey, those are great shoes. Show me the label. I figured out that they're used. Show me the sole. Here's how you should price them." You're done. That's it. All the technologies, we made shipping easier. In a lot of our geographies, we have what's called Managed Delivery. Historically on eBay, you'd have had to buy the label and go through that process yourself. Now we just say, "We leverage AI. We can figure out what it's going to cost to ship those sneakers.
We'll take care of the whole thing." We've also built technologies that say, "We're going to open up the global demand of the world to you, but make it feel like you're selling to your neighbor." If you had sold those shoes to someone in Poland, we'd say to you, "Eric, just ship them to Chicago, we'll take care of the rest." The duties, the tariffs, all that stuff, that's a product we built called eBay International Shipping. We've built this whole series of capabilities to really drive this C2C capability in a way, and it's why our C2C businesses are growing north of 20%, is because of this real focus that we've put on it. I'll close with where you started.
It creates a really nice flywheel between selling and buying, and between C2C and B2C, and that's what we really like about what's happening there.
Okay. One last one on this topic, but broadening out the conversation and bringing Peggy back in. Peggy, enthusiast buyers are so important for the platform more broadly. Talk to us a little bit about what an enthusiast buyer looks like today, and what are some of the initiatives as a team you guys are putting in place to continue to grow and evolve enthusiast buyers in the years ahead?
Sure. Enthusiast buyers have always been a focus for us, like those that are buying at a high velocity. Because the majority of our GMV comes from our enthusiast buyers, something like 85% of our GMV is bought by enthusiasts. While we really care about the top of the funnel and getting new active buyers, we are really doing that in service of getting these buyers to become enthusiast buyers. Enthusiast buyers grew 3% in Q2, but in the U.S., they grew 9%. What we saw is that the amount that they are buying continues to increase, I think, every quarter over the last several years. The dollar in the last 12 months that an enthusiast buyer has increased, it is $3,600 as of Q2.
We are really focused on the experiences that are going to enable them to increase their velocity on the site, things that Jamie mentioned around our features around trust, Authenticity Guarantees, shipping solutions. Because we know that these enthusiast buyers not only are going to buy in the category that caused them to become an enthusiast, but also they then buy across the platform, which is very beneficial given the diversity of what we offer on the platform. That is why we have really been focused on driving that velocity and increasing sort of the number of enthusiast buyers that we have on the platform.
Yeah. Since they now represent about 70% of our GMV on the platform, and they are generally aligned in our strategic areas. We are 70% of our businesses in recommerce, in C2C, and focused categories. The combination of those two built a really kind of great competitive mode for us as you think about all the things we are doing to drive that enthusiast behavior. I like to say GMV follows happy customers and CSAT. As we have grown the CSAT kind of category by category, that has helped drive that GMV for our enthusiast buyers that Peggy talked about, the $3,600.
Okay. Jamie, bringing you back in, there was an evolution of talking about younger buyers about 18 months ago, then you did the Depop acquisition. Talk a little bit about buy versus build and how your strategy with respect to attracting younger buyers to the platform is changing and evolving.
Yeah. Gen Z and millennials is the fastest-growing demographic that we have on eBay across the board. We have a lot of things that we've built in the experience to continue to drive that. We're excited to make the acquisition of Depop because Depop really leans into that Gen Z and millennial demographic, which is our fastest-growing demographic. They build a real mobile kind of social-forward experience, really, that leverages a lot of the focus of that generation on sustainability and e-commerce. They are much more focused, at least than I was at that age, on buying pre-loved, unlocking stuff from their closet. I've heard them say, "Everything you ever need in this world already exists.
You have to just go create it." What we're doing is opening up all of this inventory, which hasn't been online before, through the combination of the work that we're doing on eBay, and the work that we're now doing with Depop. I had a group of about 50 interns join this summer, and I asked my head of recruiting, or my head of interns recruiting, I said, "Find me four or five of these folks that know a lot about Depop," because we had just signed the deal, but we hadn't closed. 25 people showed up, and to a person they're like, "Oh my God, we love Depop. Here's how we use it." It really spoke to kind of attracting this generation that they've done so well.
What we see now is that we've seen even stronger growth rates than when we've acquired it because of the real opportunity that's creating. There was so much GMV to be unlocked that isn't yet online, that that's our real opportunity with Depop and a big part of why we did the acquisition.
Okay, understood. Peggy, just maybe a couple for you. Let's start with advertising. What's the current state of advertising in terms of the business on the platform today, and how do you think about the evolution of your advertising products in the years ahead?
Yeah. We've been really excited about the strength in advertising. We set a near-term goal of 3%, and we're at 2.8% now. We don't view that as a ceiling because we have a lot of opportunities to continue to grow. I think we're really focused on the penetration of our listings and increasing that. The adoption of sellers to one of our Promoted Listings products. We've used a lot of AI capabilities to really increase the relevance of these advertising products and to make them even more effective. Because we're really focused on making sure that we're still delivering a strong ROAS. So we're focused as much on the penetration as we are on making sure that it's a quality product. We have a new Promoted Offsite product, which enables us to give even more surface to this advertising off of the platform.
We recently introduced Promoted Stores as well. There's a lot of opportunity for us to continue to grow advertising even faster than GMV in total, and do that while still really preserving the experience for both buyers and sellers.
Okay. You both talked about trust in various answers here. Talk a little bit to me about the Authenticity Guarantee and how trust-based investments continue to grow, scale, and allows the platform to continue to a lot of its growth momentum going forward.
Yeah. I think Jamie mentioned he's a boomerang. I'm a boomerang as well. Trust has been something that's always been core to the eBay offering, and Authenticity Guarantee gives us a real opportunity to demonstrate how trust can really be an accelerator, a velocity driver on the platform, or it really enables buyers and sellers to have confidence in transacting. So we continue to focus on growing our Authenticity Guarantee both geographically. An example would be we now authenticate trading cards in Europe. We are authenticating coins in the U.S. We're authenticating fashion in over 100 brands.
What we see is that that gives buyers and sellers the trust to use our platform, and it sort of repels folks from deciding that they're going to use the eBay platform in ways to push product that either not only aren't real, but also potentially the condition is not the same as described in the listing. We are able to offer this Authenticity Guarantee at scale because we have facilities where we have specialists that are able to take a lot of product and continue to put more and more volume through, either by expanding categories or expanding geographically, and do it in a way that also enables us then to get the product to the end buyer in a fast way.
Okay. Peggy, sticking with you, maybe turning to capital allocation. You guys obviously just did the Depop deal. Talk to us a little bit about the evolution of your capital allocation strategy, what you think of the balance sheet today, the free cash flow generation, the business throws up a lot of free cash flow, and how you think about the priorities going forward post Depop closing for allocating capital more broadly.
Sure. We continue to take a very balanced approach to capital allocation. Obviously, we are focused on the many opportunities we have in the business to drive top-line growth. You mentioned we have healthy margins, so the more top-line growth that we can drive the more ultimate flow through to OI and EPS. We have taken opportunity in the recent quarters where we over-deliver on the top line and are able to invest in our strategic priority areas like Vehicles and Live and C2C, and really be able to continue those healthy top-line growth numbers that you're seeing, while also being able to continue to grow OI and EPS. We are also very focused on making sure that we're returning capital to shareholders. We have talked about our framework of 90%-100% of organic free cash flow return through dividends and share buyback.
We've been able to do that even with the Depop acquisition. So we're really focused on making sure that we can kind of do it all, continue to grow the top line, but also have predictable returns to shareholders through both buybacks and dividends.
So we have got a few minutes left, Jamie. Bring us home with bringing that all together. We talked a lot today about where you want to take the buyers and sellers on the platform, how you want to grow the platform, how you want to invest in the platform. What are the two or three strategic priorities that you are the most excited about for the company when you look out over the next couple of years?
Yeah. First thing I would say is what I feel great about is, why I feel great about the durability of the growth is that the areas that we have been investing in in years are the areas where we are seeing really outsized growth. I talked about the 70% of our business growing north of 20%. Our focus categories now represent 40% of our business. They are growing at 26%. I am excited by the strong growth rates we are seeing in our new businesses like vehicles and Live. The second thing I would say is that I am really excited for how AI is this real tailwind for our business. We have seen great success with Magical Listing, but every single week and month, the team is innovating on things like natural language search, think about the recommendations.
Peggy talked about how strong AI is for our advertising business. Our marketing team, when you think about eBay's 2.6 billion listings and how much of a long tail of inventory that is, and the ability to communicate in a new way with a customer because now you can write their email subject lines leveraging AI, and we are seeing 80% better engagement. When I talk about 50% listings per lister, I have been around this business for 2001. It is very rare to see things like this have that outsize of an impact. We are going to continue to push the envelope on what that does for AI.
The last thing I would say is this trust, this enablement layer, the works that we are doing in innovating and shipping, like the examples that I talked about, are really great for the overall platform because it helps differentiate not only our inventory, but the value-added services that we provide because of that inventory. Those things coming together, I think, are really powerful. When you think about going forward, Peggy just talked about one of our newest categories, which is coins. We continue to innovate in fashion. Vehicles, we are only a year into it, and we are already at a 100 millions of dollars of run rate. We see lots of opportunity to continue to drive that growth in these new categories, and those things all build on each other.
I hate to overuse the word flywheel, but it is a really nice part of the strategy that we have to reinventing the future of e-commerce for those enthusiasts. Excited about the quarters, months, and years ahead.
Okay. Well, we're never against using the word flywheel, so we're all for that. Jamie, Peggy, thanks so much for being part of the conference. Please join me in thanking eBay for attending this year.