eBay Q4 news - part IV - Q+A

Here are my quick and dirty notes from the analyst Q+A on eBay's Q4 call today. My editorial is usually in parens (like this).

Devitt - eBay express and fees

• MW -EE is going to get more traffic in 08 (yuck could this be the 'fixed-price/auction' offering?)
  • JD -EE was a learning lab, we'll take that an put into our innovative mixed fixed-price/auction stuff that is uniquely eBay (? this sounds interesting)
• Pricing - fee rebalance will apply to fp and auction (hmmm!)

Imran - 1) competitors doing prime shipping, how can you match that?! 2) you beat guidance, how conservative are you being?

• JD - we don't control shipping, our sellers do.  We intend to alter policies to incent+reward (DSRs) those sellers with best shipping, feedback, etc.
• BS - we were cautious

Lehman - 1) finding 2.0 - can it handle listings?  2) customer loyalty programs?

• JD - learned alot around relevence-based search (BestMatch) (ee/kr/fr), they are confident can handle increase listings and can serve buyers the best value.
  • Rajiv already talking about the 'race to the top' of the best value, best service listings.
  • auctions will be time ending soonest
• BS - couponing
• JD - top buyers - making it easier, feedback, customer support, etc.
• Lehman - can you quantify?
• JD - it's factored in

Heath Terry (eBay bull!) - BestMatch - any early metrics?

• JD - Bestmatch is not a silver bullet
  • Rolled it out in KR and seen acceleration
  • FR - seeing BM increase ability of buyers to find what they want in auction/fp and a bump in conversion/gmv
  • As we roll in 08, going to be aggressive, yet balanced and thoughtful

BOA - Bri Pitz - Fees - we nuking listing fees or ? Second - lots of advertising, what's up?

• JD - Pricing will shift the balance, but there will still be insertion fees (IN CORE - he specifically called this out).  In stores, we historically have a very lower fee.  We have a second format that allows sellers to upload lots of listings in a lower upfront way.  We'll build these products together that will balance finding/fees in the right format
• BS - some stuff about advertising

Bob Peck - fees site-wide, cat-specific, tell me more on ASPs/GMV/listings/CRs

• JD - site-side in US/UK/DE next week, in some countries, cat-specific, others site-wide. Principles in all three will be similar, yet customized based on results from tests
• BS - In aggregate, the tests showed us increases in listings, modest improvement in CRs, ASPs, because some lower-priced items came on site, ASPs came down.  Looking to have vibrance at all price levels (this is good, the last fee increase nuked the < $30 items from the site)
• BestMatch - will help make sure high quality listings make it to top.

Sanford - eBay is turning from a growth play to more of a value play, are you doing anything to stimulate your 3P business?

• BS - lots of financial-speak
• JD - can you be more specific about 3P comment?
• Sanford - we see sellers going to Amazon, what are you doing to stop that?
• JD - stores is experiencing strong growth
• Increasing exposure of stores items
• Finding right search approach to give best core/store approach

Mary Meeker at MS, Meg - why now?  Bob - rev08 is below consensus, will we get to double digit listing growth?

• Meg - thanks! It's been an incredible journey.
• BS - (long answer, I got distracted sorry) something about margins decreasing on eBay part, but offset by other stuff
• JD - we agree that accelerating eBay is priority number 1.
• Listings growth will be an indicator, but sold items will be the real metric (NEW METRIC ALERT!) due to multi-quantity fixed price.
• MM - active users decelerated to 2%y/y - what the heck is up, how was marketing campaign?! What else?
  • JD - long answer, defended active users, continue to invest in marketing

Ben @UBS - Given all these changes, why such a tight range on guidance?

• BS - we took into account our non-gmv biz momentum, and in gmv-based, we modeled off Q4 stuff (my words).

Justin Post @ML - PayPal, merchant services vs. ebay? how are margins? where they going?

• BS - Great Q, merchant services grew faster than core biz.
• Funding not that different in on/off eBay, more function of products (express/pro merchant, etc.), also tied to merchant+buyer lifecycle (interesting).
• Margins - long-term are in the 20-25% range

Christa Quarles - TWP - ASPs and CRs in Q4 the lift was smaller than previous years. Wassup? (my words) Also how PayPal vs. BillMeLater doing?

• BS - Q4 was hard due to comps from last year due to Wii/PS3 cycle
• Room to improve conversion rates

***END****