eBay Inc. (NASDAQ:EBAY) Q4 2014 Earnings Conference Call - Final Transcript

Jan 21, 2015 • 05:00 pm ET


eBay Inc. (NASDAQ:EBAY) Q4 2014 Earnings Conference Call - Final Transcript


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Q & A

(Operator Instructions) Eric Sheridan, UBS.

Eric James Sheridan

I guess two. One on the PayPal take rates, I wanted to know if we can get a little bit of color on the pressure you're seeing on take rates as TPV growth stays quite strong and maybe even gets stronger as you get bigger in mobile going forward and Braintree becomes a bigger portion of the pie going forward, so maybe a little bit of commentary on the cadence there.

And then John on the Marketplaces business, you made a comment about shutting down or stopping initiatives that might not yield positive results longer term for Marketplaces. I want to know if we can get a little more color there?

Robert H. Swan

Sure. On the PayPal take rate, there's really been one dynamic that has been driving take rate for quite a bit of time now. And it primarily focuses on opportunities we see to expand our served market and enter new areas and they've come in three forms. One, credit, as we expand our credit portfolio, all else equal, our monetization on credit-related transactions is higher. Secondly, as we expand with larger merchants over time, all else equal, our take rate has a tendency to be lower. And then third, as we expand into new markets, the shared economy through Braintree, our take rate has a tendency to be lower.

So in all three cases, we've expanded our served market. The implications are a lower take rate

Unidentified Speaker

and yet we're still able to generate 60% transaction margins. As we project going forward, there will continue to be take rate on -- sorry, pressure on PayPal's take rate and it's going to be primarily because of our success with the growth of Braintree and the growth of PayPal ubiquity in large merchants. And we expect that trend of a compressed take rate to continue to come down going forward.

John J. Donahoe

And Eric, regarding the things at Marketplaces, de-prioritizing or stopping it, let me just step back. And what this is grounded in is an increasingly competitive environment that requires us to sharpen and focus the Marketplace strategy. And as I mentioned earlier, we talked a lot over the last several years about the lines between eCommerce and mobile and offline (inaudible) the taking of $1 trillion market and making it a $10 trillion market, and that is still the case but Marketplace in this competitive world is going to focus on the $4 trillion where our core consumers align with our competitive strengths. This is where we think we can win.

And in particular it's -- in simplest terms, it's not the convenience consumer. It's the average and -- I'm sorry, the avid shopper, the person who loves great value, loves selection, loves shopping. That's the majority of our current customer base, and that actually is 40% of the market, $4 trillion. And so Devin and team are more focused on -- focusing on what specifically that consumer wants than ever before.

So an example, that consumer wants