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PYPL PayPal

Participants
Gabrielle Rabinovitch Head of IR
Dan Schulman President and CEO
John Rainey CFO
Bill Ready COO
Heath Terry Goldman Sachs
Bryan Keane Deutsche Bank
Tien-tsin Huang JP Morgan
Sanjay Sakhrani KBW
James Fawcett Morgan Stanley
Paul Condra Credit Suisse
Ashwin Shirvaikar Citi
Darrin Peller Barclays
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to PayPal’s Fourth Quarter and Full Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Investor of Head Rabinovitch, Relations. Gabrielle Please go ahead.

Gabrielle Rabinovitch

Sherrie. us. Welcome you, the quarter XXXX. Good conference afternoon joining for fourth year full you thank and to for and call Thank PayPal earnings Holdings’

the me Rainey, Chief John Financial Operating call Joining Chief on are Schulman, and our Ready, our Bill and Dan Officer; Officer. CEO; President our today

through section providing slide presentation presentation conference our being also is both a to the This Relations We’re webcast call and the website. available are call of accompany our Investor and commentary.

We will measures non-GAAP some company’s performance. in our discuss talking about

You can measures measures directly call. find in a the GAAP non-GAAP reconciliation conference of comparable this to these the accompanying presentation most

risks for and the that and In based and current XXXX on and addition, the full statements year of our impact involve forecasts uncertainties. our include first will management These forward-looking quarter guidance statements reform. tax are expectations, expected and make assumptions,

materially statements. results these may actual differ Our from

risks, can that about You XX-K, other our available website. XX-Q on reports report recent and more Relations affect filed in Form quarterly factors Investor SEC of on section could find our on and the annual our Form most information uncertainties with and the results

rely this today’s the expressly call not forward-looking should that, information turn me to to With as let XX, disclaim date, update XXXX. over any obligation in You All any presentation statements. January on of is We the Dan. information.

Dan Schulman

areas today’s us like with Thank I'd cases XXXX Gabrielle, couple breaking consistently many you, in on a highlight call. and record transformative to particular. thanks joining for for of strong everyone was year PayPal and in results.

net and our and core merchants. new relevant record with and actives we our increasing consumers engagement reach platform, both by First, on achieved

in net this new elevated XXXX. level continue Importantly, we anticipate to actives of

As we from effects network scale. our experience increasing

share new for increasing suite Second, and through we in innovative by and a and to experiences our our leadership customers. of introducing mobile our services market grow continue project

announce many combination The potential these customer enabled partnerships move of world each deal have and The geographic payments. in-store positioning in opportunities. companies of growth yielding new strategic Several more of our result platform also from which the the higher long-term up avenues our due we PayPal strengthen billion Fourth, than billion proceeds as Synchrony year, growth a with choice. receiving meaningfully partnership will we freeze new at to inorganic in been to towards competitive we will allocate which with companies. more an The closing. partnership perceived adversaries. cash than customer cash leading and in Third, architecture $X rollout flow expansion previously open choice opened free had $X strategic organic Financial, of

start consecutive generating all up this strong combined $X.XX, areas financial revenue quarter billion. four our I our revenue XX% grew The year-over-year. OpEx of to for did moment, we the QX. Finally, but more a with delivering I first I'll strongest want in results say discuss quarter detail off XXXX. financial pleased landmarks am in was to consistently QX year, results. capping while by the that of XX% third this is Revenue management EPS XX% which $XXX.X non-GAAP basis with was volume and grew neutral of revenue billion, strong a on Payment currency of disciplined X.XX drove performance our to a accelerating growth.

of particularly customer a X.X record were [Technical new drove Our account active metrics We strong. Difficulty]

Operator

line will open. conference begin your is Speakers Thank by stand please gentlemen, your now momentarily. you. and Ladies

Dan Schulman

in I these and the was I’m exciting even Okay, back. results speaker. our of shocked middle

fourth our start quarter. okay, so So, recapping off just me let

to $X.XX consecutive drove this grew performance strong accelerating our disciplined with revenue EPS by payment management XX% is a our XX% As This XX% billion. third was quarter to basis neutral up I up revenue currency year-over-year. of $X.XX OpEx mentioned, volume $XXX.X revenue generating combined and of on billion, growth. our non-GAAP Revenue

And Our strong. the XX% over accounts and And noting of drove now customer X.X that net new platform. the net year XXXX. active record a on with XX than million worth for adding new QX our was up million metrics ended were million accounts, year. actives serve we active that it’s more particular merchants We we million XXX XX

higher engagement transactions Importantly, was again once for at active account. XX.X

last think ads active are engagement. away an growth engagement net in our engagement year, the as a that would new higher similar have have it's same ahead. we growth I increased new than grown total XX% engagement new The that hides and in are underlying we from bodes net to of before cohorts started acquired showing at net new encouraging particularly XX.X%. our that to versus accelerating note If growth bringing XXXX. the true rate acceleration actives approximately It’s with as cohorts well look ever and active obviously on net XXXX take our our net record,

customer this reduces out reform our will the the for sharing in We substantially of our for profile. overall the later capital, and new they This leadership our X our be Customer John digital and our for sharing down experiences approximately important it in year, in evolution profit Our these billion past of The out. we provides Canada in results to on in payments opted expectations UK, repatriate tax double our will XX position And continues element outgain the States transaction in more ability growth. essential Australia, life our million and the the and cash. up as be passed and to consumers, the In in introduced call enabling partnership innovative where volume the billion to as about consumers and annualized to decline. increase say for of in the to quarters, QX churn. choice margin. has our a our lift than more our rollout efficiently with the United live future now into centers Phase the Financial increasing expanded And previous to merchants this strategic position, by Across set host Synchrony States, to funds OI quarter, experiences the a XXXX. contact opportunities. months, frees of in recently effort X in. our earlier, us If rates substantially yielding more are we accomplishes from cash service driving our transaction flows benefits to continue to significant in we cash with dramatically credit bill, flexibility transaction our consistent Japan strength meaningful while the we saw It competitors. our we remain with fourth a completed we strategy. choice asset detail product United I further expectations our said see XX the every due and reduction our with an cash engagement Synchrony combined been differentiation and we growth. discuss well opportunity than of evidenced and our on us of payment the to higher and within more risk expenses windfall choice continue the impacts globe, Synchrony goal Partnership opportunities In

feature despite into I lower centers fact, accounts overall attribute million choice, did lines decrease made Bill our transaction. the our and In increasing customer volume and availability to and to experiences of reduction but additional tremendous reduce service literally as our we functionality to fourth active latency have call our of enhancing XX in year, across in base we in experienced of the billion call to than platform. not XXXX, by quarter core only increase this Steve our friction strides improved in QX from

in who choosing the and to platform. PayPal number an new competitive deliver for our are tools need in increasingly compete of Merchants This notable and quarter was large particularly mobile increasingly environment. significant merchants global the that PayPal the thrive to joined and ability

with If and the why XXX million of value a for to their acquisition compelling strong the you engage that we bring can see omni-channels, consumers have such combine you merchants. we value

the BookMyShow reshaping mobile among online QVC XX new U.S. company travel three market at growth to the quarter in increasing and on which platform engagement mobile clearly Company. retail offering season. retailers. e-commerce North accepting nation's Dillards, the driven signed agreement and PayPal is strong to the drove QVC America the country. available payment the credit in number PayPal we quarter, holiday season volume The Group the is mobile the consumer trends began to fourth in that make the quarterly agreed Italian is driving fashion in MakeMyTrip, Disney holiday largest powerful XX% and behaviors ticketing commerce entertainment processed by and India, largest Dell has platform the three global on customers. in Europe, penetration These trends pay online our Internet place in This ePRICE shopping Walt welcome the This largest In which to In largest in was PayPal are that a UK. busy according and Retailer. smartphones. demonstrated of TPV. of the PayPal a our number PayPal XX% as over billion We began year-over-year the their in ranks and payments and available with way

year. mobile year, platform volume on to XXX XX% payment volume total payment of full growing XX% the represented the For for with mobile overall our billion

able the in leadership by exceptional Our we're to mobile continuously deliver. experiences driven

expenses consumer totaled our the million from generation ago. to the Venmo opted One ago. the year One define users continue with We X One in number more engaging for up with compared a And Touch, Touch here of payments million passionate Touch offering million fourth and into product. XX quarter ended fast, drive over a continues million year of now than consumers We frictionless merchants U.S. with to XX a digital XX

of volume the the billion X QX, in year-over-year. quarter, more XX payment in surpassed For billion an XX. with XX% they're increase in time processed first

process. XX% Venmo's XX billion year, payment full the For in volume volume with increased almost

and very its also of net Venmo annual another We new in strong quarter Venmo to asset added net to largest the cohort actives history. of new experienced

with pay users and this rollout merchants access giving Venmo providing our to love more with our service to the to demographic. our continue Venmo covenant they with We pay ways

While we're in encouraged we're by very still leads monetization, stages of early the initial on engagement. our

able above the Venmo history. experienced of fact, adoption to In its services is in the point tracking we're on similar at a monetize PXP that Venmo adoption

believe opportunities compelling. our we experience future year, our are this and extensive past Given

the where leading digital the areas opportunities. mobile partnerships these XXXX, in transformations redefined our with world. of during are and the devices. of strategically powerful writing take full We're advantage by ourselves into two mass the moving created positioning digitization to accelerating and actively our We’re business the around and competitive transformation and trends, echo Throughout believe of companies position global strategic cash strongest system creating of trends adoption we our these mobile we tailwinds many the

down are process Bank MasterCard, UnionPay. We productive Discover, with Visa, expensive implemented of the partnerships the and of America China and

We are are of majority with in working and closely The which issuers PayPal. campaigns to to card world. largest kicked off with the the encourage over engage cases credit customers many incent XX in of

into Citi enhanced FIS, consumer to industry that is driving XXs of seamlessly For thriving with increase send the their all example, we to we create within experiences of now engagement sellers have and adding now fund is can directly strategic to cards also to Citi life, accounts in used working Citi's are rollout to of will as points to We existing FIS commerce enable use a will on PayPal to our wherever as adding invoices Chinese customers PayPal to With year, from PXP Citi are our accounts Messenger to corporate buyers integrate PayPal way the their both provision and is way experience of a PayPal property. the to conversations. transactions of contextual use available AliExpress link with part reward new in-store payments to PayPal behalf potential directly the With relationships expanded consumers an ability that NFC merchants at for or purchase partners begin our a from FIS PayPal online issuers activation. a of substantially by credit with card payments banking disburse we In Bank this they source are outside of America as on a funding major we with where Facebook everyday to signed Wallet, And with as customers. when as consumers to In clients. to well of And order quarter, standard mobile China partnership the our agreement XXXXs website China. opportunity. PayPal pay merchants. tokens accepted. to PayPal Messenger, allows transact

of for launch been our to themselves also have looking years partnership. are the domestic Baidu operations market We India buyers. In merchants international of another for announced supporting in substantial PayPal, while forward we Indian launch opening purely a helping we upcoming November, to by our

eBay. would than PayPal. for opportunity and work PayPal a key we market We well. markets a to modern is offers I opportunities and also this and towards like community and XXXX. for in to be with able now to as online expand is deepening the on a to building merchants more are to well economy, view compelling in With with drive engagement working to our significant programs a India these our planned India comment demonetization in in We merchants and which Indian India digital digital strong actively as merchant priority sell more billion aggressively our thriving government consumers the domestically throughout relationships scale. will a We XXXX. continue China substantial believe

we’re a governed of following a to merchant to for of close entities a X.X also separation. with through allows to allows eventually to history overtime the merchant to as long is payment agreement service transition platform companies operating a from experience become XXXX. thoughtful smooth lays The providers operating five capabilities. record. for payment independent their for more eBay by the jointly partnership owned This through role actively very July of direct The managing operating years years with and help a work have agreement agreement and allows out another migration agreement that an and and eBay. We runs The of record transition merchant implementation on alternate their eBay with eBay record partnering play in for

guidance July I our pleased eBay transition, to and am the a the through to a of our XXXX PayPal period. part impact our XXXX. at anticipated manageable quite provide announce, which least services brand Both includes and multi-year of is very already signed medium-term term that, to As eBay over economic have the sheet

we need such medium-term no see As change to guidance. our

Devin agreed believe our history and our sustained I pleased to with relationship both sellers, am we've a Wenig long in Given and interest established since best we is the and partnership on relationship forward extend of look and strong mutual have very eBay buyers manageable customers. to transition building I separation. our

one and scale. year accomplishments for fronts. through These of expanded foreseeable accelerating my growth with at our XXXX XXXX remarks, a and our primary the of for multiple future. differentiated with We��ve XXXX. predictable PayPal entered supporting branded expands relationship said sustainable PayPal I our propositions on in beginning eBay us up July XXXX, was and set landmark and which was trends, the As the We over value strong goals increasingly

on to the our work from to even harder leave value, shareholders and customers the Before need to deliver and expect us. we up understand

that, next year And call over decade will with I shape We John. another have XXXX. a over the to are the looking forward to strong to opportunity of substantial payments and the in digital future we turn

John Rainey

partners PayPal in commitments strategic delivering many a XXXX are employees on thank for plans. We achieved XXXX great to significant Thanks, year. I well-positioned our also executing milestones want and and continue customers, and Dan. our against to our making

Before I few for go to full-year. I fourth of into quarter, would provide the details the a like highlights

billion. grew volume exceeded to neutral rate. For of growing XX% for volume for basis. the was Revenue XXXX, XX% over Approximately $XX the growth to where and active saw currency grew acceleration basis billion $XXX this XX% XX% XXX Payment points basis XXXX currency a year. volume XX% mobile growth neutral million XXXX we accounts of on on $XXX

X%, more eBay three eBay than rate legacy the service merchants' our to year, places revenue full the with grew XX% market revenue while business. times grew our For market places related

the the to of step shareholders. to work ability For and a forward earnings to grew of tax billion of like impact per The non-GAAP year, than tax allocate long we the of and and and XX% further more PayPal is in our the impact if require and clarification interpretation I efficiently utilize the which available. to We that reform. an its expect path we’re still medium define a would estimated over open full term, significant its benefit. The $X share shareholders. we capital is $X.XX believe U.S. to we items first of clear future information return modernization code discuss and number unmitigated strategically in I'd quarters, may become value note

the subsidiaries earnings Our the GAAP deemed repatriation on results fourth for quarter charge include assets unrelated related and million liabilities. one-time to foreign the of and revaluation deferred tax XXX of a

the the over effective in We years. tax three XX% be to to non-GAAP expect of next our XX% range rate

Financial. this tight the to credit to to consumer items provide from portfolio with will changes review range the adjust normalized as Synchrony I results held reduce in for U.S. sale discussion. our like from clarity. the We're our non-GAAP agreement more will periods. prior to now included November comparability of We changes. give relating these to These relevant would results we'll to reclassification I receivables

Following principal in the will charge transaction related the of expect sit on to quarter, the U.S. interest. any closing our of cost portfolio occur we longer no for longer encore credit off will no consumer third we which the sheet, to balance the and

added of for quarter the recognized $XX as million result by First, in revenue receivables no benefited U.S. a reserves other credit the value approximately consumer longer on portfolio. services interest

and recognizing portfolio; were agreement $XX approximately that. principal those is investor offs a Second, to closer interest. and earning transaction on to quarters update transaction from million and our the with the for and credit by There impacted loan non-transactional U.S. in are principal of third, the consistent of GAAP the incurred impact charge negatively reserves receivables related also related prior noticed $XX the losses expenses recognition no for from benefited longer consumer by million

XXXX our grew fourth neutral volumes $X.XX spot basis a XX% $XXX a quarter to results, currency component currency payments $XX volumes associated across to our merchant XX% includes XX% the quarter. and Merchant and total total grew on core, a compared XX% represented our basis. in and billion fourth of basis on years and the PXP up eBay of Zoom XX% quarter total a to volume volume was neutral billion for and of Moving XX% Volume XX% of of ago. for services, the Venmo services represented billion on with is which to the volume. approximately two XX% represented volume, payment XX%

the growth of ended $XX quarter, the XX% in growth we've hedge QX total to by five in services fourth strong added was net Braintree accounts. accounts. the our of Transaction in During as growth held in revenue growth an XX% take hedging added of incurred spot $XX quarter quarter new core Account accounts a effect record revenue accounts. consumer and from million X.X program, business in Revenue million the Swift XX%. and quarter, XXX transaction with accounts in in transaction accounting million the QX revenue. by the and resulting acceleration the primarily core Financial, sale was services. accounts, and on active value quarter million other growth we in active PayPal with the revenue by added by quarters, This XXXX compared added XX% In million from value the for other active grew strong basis consecutive growth affected in hedging was last as driven gains PayPal we the growth We period. was side in have followed a loss the driven a number marks primarily growth of growth customer Venmo in fourth well both as a by a customer headwind of driven of our experienced of where transaction we credit We first normalizing acquisition in businesses, losses each gain quarter. are for in our recognized international the $XX rates and

led our designation million. accounting accounting that to benefitted XXXX. of Increased the maintain losses quarter loan lower relative first costs and Transaction XX PXP. funding by as from as offset fourth Loan XXXX down approximately expenses related XX We X.XX%, quarter, $XX take our fourth basis decline by businesses million, transaction XX to effect with of thirds business held $XX sale from the XX% mix of for from conjunction XXXX, growth. consistent effect of nearly losses in of other PXP would funding or QX. the the points XX we X.XX%, called were income no basis XXXX, back accounting result these was would in basis expense pressure held was strong decline, impact basis we for statement. expenses for also the held from period points half statement this change QX income points the restructuring in expenses. in $XXX Due our in For in the quarter hedging resulted core of are rate eBay were have the effect growth XX% last was remaining as PayPal of loss rate for the grew line of TPV, non-transaction loss year. million approximately for down of volume fourth rate grown incurred the well with and quarter the with half line was sale XXXX in in with and our our two lower for expenses as points based Normalizing estimate that QX expense decline the the total a the change same part a growth Venmo of and by resulting reflecting see in item of the Growth of growth. losses basis Braintree longer the TPV Transaction losses in accounting, less on on $X.X year-over-year. our the and points result represented take charges X and from take the the sale of expectations in flat rate Volume to billion year

perform This in the expectations. was dollars line highest versus for consumer XX%. margin Adjusted with for since separation. year. sale represents was Our the accounting XX% in to growing representing last billion, X.X portfolio impact held margin $X billion of Transaction growth rate transaction continues our of growth credit

For approximately grew basis, these a XX% quarter. points non-transaction in the have the Normalizing In margin costs of an On and rate our which costs. expenses adjusted in held QX XX.X%. and quarter, expected XX.X% Further at was acquisitions ’XX, they product other Swift the to related for as Financial Non-transaction were XXX grew costs related we expenses expenses and leverage. would quarter. discretionary the the for previously X% marketing approximately we for in transaction Financial support basis accounting year X%. related development seen and sales margin incremental grew quarter, cadence adjustments, fourth discussed. of XX.X%. costs or that have of non-transactional increased for transaction TIO, the operating of customer grown operating support our would spending to sale Relative Consistent XX% the expenses and quarter Networks, to and with to this resulted TIO grow marketing operations have acquisitions grow adjusting customer sales XX%, Swift rate of expenses was

After business, India for the global at our In launch merchant pay approximately every of addition, expenses incremental in core our with for our every and in of and our our Venmo payments revenue only our improving for per domestic enhance choice year, income leverage and out and XX% related in with resulting on only million increased were product $XXX expenses quarter, operating increased revenue fourth underlying XXX to leverage. every for And non-transactional expenses an expenses After scalability initiatives. $X.XX XX% for revenue. the these TIO, earnings increasing the operating in the PXP grew $X.XX. these fourth revenue. capital associated businesses of costs XX% $X.XX the sale of incremental we development, the marketing support invested of increased for accounting QX or In we dollar in full acquisitions launch experiences. basis consumer of points campaigns Swift in to adjusting back share dollar for Financial indicative model. quarter treatment incremental top-line grew million XXX And growth QX X% and $X.XX Non-GAAP in revenue. dollar operating held

change credit result designation this of operations in U.S. flow cash of from from investing would of quarter. recognized reduced been billion in amount a cash Prior have flows the in consumer portfolio, $X.X designation, this receivables the new As our changes loans net activities. from to

flow back of stock and for we quarter a million result, the We fourth with XXXX, $X.X the of every recognized As $XX. repurchases On approximately negative and average free flow with billion ended million flow from equivalents flow have price cash of our In basis, quarter free cash million. approximately of the revenue. investments return cash operations free to a quarter buying dollar the $X would we billion. cash $XXX cash, in the normalized $XXX shareholders in in in negative stock cash was form generating of $X.XX $XXX

Our significant free flow. cash business generates

optionality for addition, cash as capital the transaction decisions. In the requirements it Synchrony and our from implication expected with liquidity, proceeds position PayPal with reform to cash in conjunction allocation and relates flexibility go its meaningful forward

a to balanced expect increase partnerships of this we allocation preserve capital flexibility We pursue to and to growth. and continue deploy stock deliver acquisitions continue make disciplined level organically term In to in to our strategic investing planned and and approach shareholder durable long repurchases. value to investment XXXX, increases and

with regulatory consequences and currently liquidity our The strategies We of objectives. long conjunction plans. cash serve requirements regional tax to in repatriation business these term on planning are affect our strategies may executing

and In of billion We quarter, December. we like credit unsecured I of drove and continue to would new discuss move full the the maximize to toward end announced quarter XXXX our a the the for more guidance optical facility capital at and structure allocation to first fourth support decisions $X billion year. down value. $X now capital

points expect XXXX, receivables. the currency impact and $XX the through we guidance revenue For of in is line consumer billion X.X with This representing of between we the full billion provided $XX.XX year and expected update the U.S. growth approximately neutral our of in mid-January to incorporates sale XX%. XX%

Our non-GAAP $X.XX be we modest per margin operating non-GAAP share $X.XX. effective expansion we our and to XXXX non-GAAP anticipate earnings and XX% expect of to guidance tax in in and rate XX% contemplates between

XXXX, For to than we proceeds year. will which on of credit the operating be between normal next segment. cash is The flow This split higher of exceed anticipate free $X.X flow receivables activities to our and cash billion. our sale investment due

a For to XX% $X.XX revenue $X.XX or of XX% expect the to billion the on quarter, currency we in range growth first neutral billion basis.

In of we the $X.XX. our made growth. operator with XXXX our customers to enrichment with an that, our business We We've to over Synchrony. $X.XX it We XXXX per many acceleration led and have improvements and and forward structure continue U.S. you. to cost for I'll significantly increase With turn pleased on to record stable de-risked the to the the questions. the to opportunities in We consumer transaction we progress Thank value. shareholders look also expect progress demonstrated and earnings are our of have credit our to further this building earnings a revenue experiences consumer great with closing and focused fronts. which patterns across to share efforts non-GAAP we

Operator

comes question first Our Instructions] with Sachs. from Goldman [Operator you. Heath Thank Terry

Heath Terry

that expansion is being those between be and powering. bit the the press to disconnect it's to and Can the for of Adyen talking connect this call that try or dots -- a intend partnership how we coming the get that their is us the basically I transition this about to experience about that financial eBay original they're payment meaningful impact eBay not partnership way between clarify John, partnership on that a bit sort that primary their being marketplace the help majority primarily their the know little new now they of how of partner and seems presenting XXXX the difference Adyen's in as you've Dan two? the Adyen a the release, here that for new is being date, the that there across any And way customers you talked of to change? end does versus that

Dan Schulman

I’m And relationship XXXX. really I and just partnership and through with pleased that So that a branded history expanding the a long we're off start that on have together. July had saying close PayPal eBay

have operating are know, that, As And and most we’ve the here any July we're got till X.X the of operating agreement an end included all through terms. a And the people was to our thoughtful there meant assumption. companies consequently that no to the to gradually assure that left with our plans and that transition eBay assumed transition another this both in years that And separation, post-separation. changes the call agreement XXXX. operating I have we, of the a it think all there as become governs MOR. announcement, agreement is for our always on smooth numbers, will of halfway five-year And of both

is MOR eBay our a part given that’s as the or change assumption. as outlook. us. we give around does a our of to facts And guidance the medium-term you our transition this not way our me that medium-term strongly that So manageable about believe we've some long-term because that quite guidance, result, for announcement And think we let

volume eBay do John why X.X So XX% down last mentioned total process TPV, about basis the that years. today, about think is process our and of So volume, XXX transaction points our we in that? as

So we coming on large had And We are X.X over balances exactly years. thing next way of aggressive that. acquisitive, to cash no that the which a same the acquisitions happens that finds as you ourselves let's just are us. have we assume we know

takes they at the operating So assuming our approximately, the acquisition, second to end our But actually we great we no agreement talk our will what And the is actually acquisitions retain have experience and market of post moves customers a go of with becomes MOR. MOR, real we the and the of about been to experienced of post insight of strategy their forward. seen we’ve MOR marketplaces. out, checkout. that the XX% that years share MOR, a and that’s it the X% because give with first OA TPV. in of X.X be so the that’s worked see going same assuming takes follows before and can majority to the them this check number move years years because we XX% the a of for X.X example several amount where again eBay retain XX% of several host of That’s we've And And about happens we part marketplaces end marketplaces share to and we than go about still about eBay majority of revenues. the it less they If years. as typically to our

the profit. partnering the in little this two and end One, substantial because as important maintain and customers. thoughts far to set an business fastest I'll is OA, what commoditized it's is way be as places OA. of today. And really doing very and renewed think is manageable and the it our able see of the a this one give PayPal on branded transition that the other the of element, And today part as world going eBay way restricts it profitability still agreement, We'll part most there important largest, you the the be profitable processing, piece yields we're also still it. growing a the of is it's maintain unbranded to branded And this but cost the we to from result MOR. a because element it’s with undifferentiated, the most largest branded, market post large through going as operating the be with to relationship. this, more On multiple very a low is important. a that And go it we’re relationship also two, to we'll we we over three, going in the happens of in it to So, business far years a most highly to usual

the extension prohibition generates of largest this full is at Today, third-party place market TPV, growing dollars would allowed So, neutral us is XX a we’ve tens were and simply places becoming fully be. XX% it year-over-year prevented operating that with keep tens and fully of top world what market partner agreement immense. the service, the and billions and that of of from that of to places to an in done could tens the just platform. fraction opportunity a And

over us. up plans. Two, we OA. a MOR. in opens opportunities So, largest if to a with multiple assumes One, it's there our very and manageable post we work guidance, the for think it the It's all years, large in be real very very three transitions market always it next place up to is you sum our going generation for us

And top for growth is we’re on and bottom look the our the position so well best continue strong actually now the both all in line line to thoughts PayPal, this at.

And look feel in plans our going. good we feel we're on so, that and now very certainty have that very, it come this where all that the we is we about we always out, it's been carefully, direction good,

Operator

Thank you.

Bryan from comes question next Deutsche Our Bank. with Keane

Bryan Keane

just that. a follow-up I on want

of exactly become that what but trying when P&L? process when just means is And understanding economics, to then, And -- to no the just understand trying Just be my longer then the guys in will you And don't payments. button is choice, that impacts won't XXXX it the going be of how still will you PayPal understanding out about the forward card the just my some that's thinking MOR. a MOR? figure

Bill Ready

a question. It's great

things, retailers relative merchant work are as them to even things command, much conversion deliver the to they of as are now the marketplace One functioning and customer is, our with doing business a we record understand rates, we we're a with acquisition, with to many go greater other that card we merchant those of of as for merchants and there, it's higher because work the able record. that out we processing across as or premium all

know a fully commenting and how have and as plays we've have that those or moved insight a our Dan the paying business record laid separation other still forums plans other and because small been merchant led the of us was exactly or on small doing PayPal that we how merchant works to to into inside started that of as as contemplate lot and record either marketplaces quite, in business predominant of marketplaces forums. So this earlier with future out, way being able

John Rainey

impact that the John. what to. is would there's economic I a add to I this sort of maybe you're Bryan, and getting things is couple you overall to point that that of think

quarters is, that average we've at flat those margins as of And their actually suggested Dan points, last it's that has growing, during separation, that been if keep you to declined of business, period, growth couple business -- for our prepared eBay the had, been quarters of in to right. XXX his First remarks since the our all has over percentage X%. part able terms our of And look years. basis in we've of revenue the XX our

year you roughly them operating has of XX% you agreement, in our of the business mid than at project each the if If just to through is that you grown -- you other our not were point of can't business so to look take larger the and the but project that at time. eBay at in XX% revenue suggest the growth end that XXXX history is that necessarily entire -- that XX%, would XXXX forward, those if numbers

we quite thing eBay is incur support cost that actually to today. other a the So, I'd point to

TPV. into the eBay at losses look those of or our their we disproportionately when relatively to skewed things center, volumes So, like op towards our percentage call

thoughts feel operate very continue here. there's about been going So, after this we and continue grow forward to our can our we and confident today trajectory what's to we line ability announced top line that and our bottom that nothing it changes

Operator

Thank you.

Tien-tsin Our next Morgan. with Huang comes question JP from

Tien-tsin Huang

after your follow-up or to been all unusual A of not for But it the is think Sorry the eBay But maintain to today? share savings because the cutting like here fair your this guidance, or how that, how be of the helpful. organic efforts is whence? share require longer cost get or of your repurchase midterm assumption it just efforts cost one couple your eBay it curious, higher that with more, cutting hack of share, could would just to much does ability and sort from on But questions. fair integrated checkout checkout am change? all sure year? from confidence could it new your to like numbers mediation requires And remediation extra just any share, even if XX% term questions marketplace the any think come of I your you is I if that if profits you’ve

Dan Schulman

assumption our have going start. we that and from our going leverage forward. forward is realize The I’ll scale to that, continue So the we benefits Tien-tsin, will

And required would we of so we’ve I layoffs doing kind continue seen; performance expect this. years. we restructuring And to this been or not suggested, two as this is massive for that

generate fact kind We of of that $X.XX and can for you year our grow this every our dollar. incremental continue leverage. back that to of growing cost half the we business point to this based we’re continue to other parts I’ll

like you not anything forward. other of does to like assume terms acquisitions your so my part losing about the Brian’s some for that anything business think and and share back question, go of and question, -- you if going to think that? in we Now It of answer does about that

out and profitability marketplaces at the and and that about in fastest the also in largest can agreement We’re points the a ability world. few and with opportunities, fact world, the backfill and out We this that places inorganic going market talking to to revenue doesn’t now easily impact of go growth looking be address the growing partner the with the operating mid-XXXX. have largest in of

we opportunity might these eBay. chapter to of All transition as this backfill, give have of that gap next with to us kind an we we

John Rainey

guidance also think I that this. And say assumed Yes. our

that guidance guidance that knew we we assumed happening. to going in happen that So that is and put has is medium-term that out this means giving there this what been we’ve the

we that things we know, can our target. can out and that that into means we models, built that costs we've target So, revenues take and

the going eBay will have This constantly, have be I place as our is would is this So, at guidance. obviously forward. that the that our will we of term operating the and for when all been of and feel plans. assume, like, agreement Otherwise, modeling our agreement think haven’t move, we we contemplated of the us kind that manageable wouldn’t branded this multi-year I giving be exactly in one to check-out and covered operating transition isn't will medium they one about the anything events it where in have, of a is the we solution. all surprise be quite experiences that of end this not was of it will, but what

Dan Schulman

like one Tien-tsin, the market of about, you of things talk the places that. one And

plus Uber, Dan only earlier many not already, large to, of the marketplaces. think As hiring we volume as many for our billions alluded others. payment Airbnb that in platform and and as know, best world we’re But to already of XX% of for business alluded the next us you that gen other marketplaces dollars tens in and of growing many growths as in that Dan

absolute seen on growth already from growth outpacing basis an we see As we is eBay. the

more our So lot there we engaging just a we the is un-federal ahead are an able to there at opportunity already way, from as we the us way think marketplaces are contemplate for engaging we’re eBay outpace of there. growth and and that see

touched checkout reasonable what embedded specifics and preferred our given is our going across with launch XX% share it's don’t made see and was consistently business forum or we've be up a overtime small we strongly where approximately would you've certainly one about the other our is place been engagement consumer other if in base yes and around as of about when we consumer penetrate our You the of that disclose to share for over being we relationship to points expect checkout seen base.

a the and a we eBay and long part to eBay to like on very we've personally So and PayPal a to are so PayPal we certainly been is to any us buyers as of is our done that's more with we the the with your consumers using branded increasing how of now continuity important across overtime goes for deals why will continue our becoming and preference and big portions engagement marketplace think both is see we point so and tend there well future. time left work choosing of that into for eBay a for us that their us checking with all about significant share have

Operator

question KBW. next Our comes from Sanjay with Sakhrani

Sanjay Sakhrani

that ones, discussions other those can point these that are partnerships And Just be with you road interchange that then some what have how on marketplaces. the And impact maybe networks, larger merchant could economically significant thinking of of to you into lesser any does just have with transaction have for sort you many with a How your had that of the eBay? opportunities? on that being expenses? cost element the about

Dan Schulman

I well. to consensus out services from We've for we of are conversations with with part operating to marketplaces, operating don't Obviously, operating of that terms you've them, part spoken that respecting as the as to was competitors we're eBay marketplaces the it agreement have our know had there us, offerings just these the each them are agreement. prohibited direct to just name that the of all -- agreement, that the spoken but this really largest of with other are does MOR they

so, confidential. do everything But will what to that do we we all DRA end to be I And the sincere, able they about out and of with give they information conversations believe today's think this until those is point want are work quite get closer to you that's about to us. how can more

Operator

from Stanley. question Morgan James next Fawcett comes Our with

James Fawcett

to as just there of up PayPal some were that so wanted instead that, see always I'm to to additional have in there? eBay of ask the to I'm on to of curious that checkout relationship or the And in a think as qualitative, can wondering agree improve next give of XXXX? I and extra guess additional your years eBay. there deliver give whatever eBay presence you how positioning terms agree follow-up part waiting able to had services to through why And maybe now secure on would question what we about like presence should qualitative that I to long-term being then an you of

Dan Schulman

we MOR agreement can out do on Yes. capabilities. experiment they year permitted solution. to to laid that and James, year choose the of MOR with coming within thought that in first It’s OA, as volume this an the countries when X% up eBay operating versus the two up

for One all post largest something do us. to our end. time branded. of be very part a the at on because deal, that that long not branded We this the wanted the And piece today. unbranded partners be to most these number profitable looked the restricted time the And unbranded two, sense thought the work business we we going globe. business was and of negotiations and was both side the it always like part carefully we’ve we and terms feel that for both around never the made all we the felt with largest and of at ability of we’d it’s marketplaces we’re way the felt was So the no the in parts right in to the OA of this

going to forward. us that was both going partners for going didn't give we thought really we're this that So eBay, natural important a -- extension. do it’s it’s now. be to up, be It to everything we close is to signal like we This to very us important

Bill Ready

point this firm retailer. it as these say things, just given another I’d was on Yes. alluded to slightly large with whatever is very Dan much

we large serve certainly we’re would give are how like them restricted that or commensurate of do that things as of others we we not when So retailers, volumes. rates But in ways their that. with

standard So it’s very commercial regular that of line we along retailer. have a the relationship would

Dan Schulman

just one thing, other too add I’ll James.

important since volume a more what relates profitability been. from in to so confidence do rates lot conviction go agreement would acquire a to and interested our quarter each going And of where is up have is many from the other us we demonstrated certainly but to do We forward than in places. separation part unbranded As we’ve obviously as perspective. that profitability. was this that ending business, of can And is it and weren’t at profitable volume we the this have it unbranded something ability

Operator

Thank you.

Paul Our Suisse. question with comes from next Condra Credit

Paul Condra

a just eBay, I wanted now Adyen. to sounds they’re this with clarify starting you I just it -- like know bit, process that can

just partnerships no I’m So on topic. a then different and follow-up actually wondering looking restricted you are of start my marketplaces, is other to longer when

of industry if you a setting, in about wonder something the about bit sale little mention standard just detail that? could more did I point You tokens give

Dan Schulman

Bill take Yes. and part can that second then the I’ll part. first the take of

goes underlying marketplaces have we know, an probably we for But the the within the carved with agreement. Uber were operating that of Airbnb, ability away So, out competitors agreement, as for not payment of platform them could operating which the as and here for And there was set at end in to eBay others. MOR. that of many you partner a serve the

July lifted. of XXXX So at the that end restriction is

can start So, a the experiment year to countries two they that and X% beginning in year, PSPs up they of to do to volume within eBay alternative has of then the to select can with within this of XX% two up those last the and agreement. go volume operating so countries ability

a change to So they have experiment.

as sense with slow of for as them Just separated to us eBay. places competitive with this market leading makes from there, we presented chance from part operating might as of working eBay that of out have that we we it's we just agreement and being their then think both with work

Bill Ready

just network MasterCard our offering. the really were of is we it about in-store and our there what in-store, took tokens implementation and standard around continuation for So like Visa of

network efforts, we RBs relationship that MasterCard previously, previously to GooglePay and with work of consistent and standard those with deployment discussed we rollout our and around continuing tokens other in-store around we as with So, announced. things we’re

Operator

Thank you.

comes next from question with Citi Ashwin Our Shirvaikar

Ashwin Shirvaikar

non and trends question and the one are engagement higher, countered think merchant but on And transactions consumer comment I it active related the is, per transaction you both per want mean payment And revenue account decelerated but CAN change, there active I eBay separately? multipart idea payment seems separated an or then kind eBay Sorry and just would that. get answer out as get your you merchant of engagement? the to if for well?

Dan Schulman

in So actives in we're grew anything if so in to be the my terms which is comparisons opening engagement, that X%, on before. remarks said normalize overall bringing that the decelerating change net to many by I new because year of you

to here ramped a on year a is the when would throughout customer had so up been or bring have they we levels engagement new this two year been. comes And it on for somebody obviously them that

those we at at every and came one we it, the of to when versus So works their look a we brought levels look than on the that cohorts see co work look XXXX XX million actives patient our at new what we And that XXXX that on. take work XXXX. have XXXX cohort co brought we over more that which was XX net engagement is we in

large future the of of net well platform are engaging that cohorts that for more levels before what So overtime, as engaged it there does, new those actives bodes that the takes that very start our help. with engagement

see the if And engagement actually you net a from double-digit would so increase with increase new and actives. you normalize in

and on of also we things the we we break one thing merchants that other that I acceleration although do PayPal out the platform think could we're the out, see don't as having will just a number and so are one I say well. those number coming in of

also experienced -- we well. our merchant as So, as with of now have XX the on our seen, same growth growth million that's merchants we've consumer platform, type the

Operator

last Barclays. with one Thank Darrin question you. Peller from We've for time

Darrin Peller

wanted more guys you now given diversify a Look just further. some of hear but other to be a be mentioned off I contribution was to available mean things I deal eBay you to post you the I minor, reform, cash. know like a give ton One, deploying help guess opportunities. you I obviously, describing capital Synchrony rolls should you're this for tax there lot cash relatively considerable of unlevered

M&A, since around while give what on potential of kind before? been size we've can you've seen then fast, they done us more M&A? incremental material you way buybacks it's color So how a the And thoughts

John Rainey

John. It's

for changed. our haven't So, priorities allocation, capital in those of terms

do be right much and cash opportunities, are be to then there invest disciplined we rigorous the in more past, that in that the we organic certainly that is sure return that pretty aggressive creates and pretty in landscape that all be shareholder always M&A looking there making perhaps move opportunities out different and is the also we of but and given there, priority at the profitable have looking top value. we're for ability at can we balance the across both to allude can to growth Our also borders,

additional out Being doing try to our accretion thing long creates do can more pressured that. area good much time, could and going payback of measured -- loud large want returning to to we The show expect term opportunities international and us that for or is fundamentally you anything that like absolutely shareholders point that and to thoughtful in immediately is there. So, active to I be the thing. you would same opportunities it believe pay At a over taking a a go feel this we to chunk buyback. cash press know in stock that and that, the example cash and don't upon creates

there's as So and balance a all for be when we'll and we'll and time on shareholders acquire -- to fronts. companies active do there the return that expect those we but to us right of is you those cash we believe could of fine all

Dan Schulman

strength. the happy that, assets we We've we're the product robust say agree John. a to we very John's we're capabilities have I of that to I'd And ready compete today. with have are and of as and and market the set I think to just with from to pipeline, got position the leader planning point add

look and we industry. flow, resilient I of sheet XXXs the another every small from X our strong a to in of weapon balance to intend in quarter and We bringing year, cash a us, cash, X free billion billion at opportunities as consolidator is think have. do and for thoughtful each ones, be that set be strong expect larger needs stay accelerate that geography But piece and discipline look a to bottom-line vertical are key as don’t our fit of we at, that progress and vision to that very matter. of into John and this both but acquisitive, or some we need our to criteria either said mission across technology investments we and disciplined, and the

you we us soon. Okay. thank today. operator. want it really look to Well, joining you. to time and appreciate I Thank We to forward your speaking everybody with for you, Thank

Operator

great participation your concludes the Everyone and call. may Ladies have you disconnect you. concludes gentlemen, today’s for Thank question-and-answer you program This afternoon. now. and This today’s conference in thank a session.