eBay Q4 2024 Earnings: No Clear GMV Growth Strategy As Weak Q1 Guidance Adds Pressure
eBay has released Q4 2024 results, with weak Q1 guidance exacerbating concerns about consumer confidence and CEO Jamie Iannone showing no signs of having any idea how to grow GMV and revenue besides shipping rate increases, legacy discounting tactics and stealth ad fee hikes.
Important stats from the press release:
- Revenue of $2.6 billion, up 1% on an as-reported and FX-Neutral basis
- Gross Merchandise Volume ("GMV") of $19.3 billion, up 4% on an as-reported basis and up 3% on an FX-Neutral basis
- Returned $1.0 billion to stockholders in Q4, including $900 million of share repurchases and $128 million paid in cash dividends
Total Active Buyers were reported at 134 Million, which is where they were in Q4 2022.
That means eBay managed to eke out only a 1% boost to Active Buyers with significant discounting in Q4, a tactic that previous CEO Devin Wenig was often criticized for in 2018-2019.
However, despite that minor growth, eBay is still now at 11 consecutive quarters with less active buyers than they had in Q1 2018.
Note: eBay changed the definition of GMV and Active Buyers at the end of 2021 and restated both figures going back to 2018 (chart reflects restated figures per eBay's amended reports.)
Once again, eBay declined to provide Active Seller figures, which were last reported at 17 Million in Q4 2021.
"Enthusiast Buyers" - those with at least 6 purchase days & $800 spend in last 12 months - are still stuck at 16M, which is where they've been since Q4 2022.
That means the steep ~30% discounts eBay has been pumping out in both Q4 and Q1 specifically targeted at turning casual sellers into enthusiast buyers didn't significantly move the needle.
Liz Morton
Both Iannone and CFO Steve Priest were proud of pulling off 4% GMV growth in what they say continues to be a difficult macroeconomic environment, but that number is likely not nearly as impressive as eBay would like us to think.
Remember that eBay defines Gross Merchandise Volume as "the total value of all paid transactions between users on our Marketplace platforms during the applicable period inclusive of shipping fees and taxes."
That means when shipping prices go up, like the USPS zip-code based rate changes in September, or when USPS and other carriers institute peak pricing and/or surcharges for the holidays, eBay gets a GMV bump from the increased prices without actually having to increase sales on the platform.
Plus, when eBay raised the Promoted Listings Dynamic ad rate minimum from 2% to 5% and the Promoted Listings Priority cost per click minimum bid from $0.02 to $0.20 in November, many sellers likely raised their item prices to compensate for the additional costs - which also would have given eBay a GMV bump without actually having to do anything to increase sales on the platform
Liz Morton
If you subtract the cost of all those discounts and account for inflation, it's likely real GMV was much closer to flat or possibly even negative.
Speaking of advertising, First Party Ad Revenue (all the various Promoted Listings ad types paid for by sellers) grew 16% to $434 Million.
Approximately 3.14 Million sellers adopted a single ad product during the quarter and eBay ended the quarter with more than 1.1 Billion live promoted listings out of nearly 2.3 Billion total listings.
Jamie said that Promoted Listings General Cost Per Sale ads were the largest contributor to that growth, on the back of continued ad rate, algorithm and placement optimization - leaving out of course that eBay forced an increase in the minimum rate for PL General Dynamic ads from 2% to 5% with no notice to sellers in November.
Liz Morton
While technically sellers can still manually set a fixed rate of 2%, in practice if they are competing against dynamic rate ads forced into the higher rate, those ads will likely experience a loss in performance, setting the bar higher and making 5% the de facto minimum just to maintain minimum visibility even if it isn't strictly required.
eBay also released a marketing terms update, which went into effect in January, expanding attributable actions for which ad fees will apply and allowing more wiggle room to make future rate increases with no notice - so watch out for the same kinds of shady ad revenue shenanigans in Q1!
Liz Morton
That marketing terms update also included new references to brands being able to pay for ads for their "authorized sellers" even if they don't sell directly on the platform, which Jamie also alluded to on the call.
Analysts seemed skeptical about how much benefit eBay will see from the recently announced Meta Facebook Marketplace partnership, with the reality of the situation finally setting in and counteracting the wildly optimistic initial reaction which temporarily drove the stock price to new heights last month.
Liz Morton
Jamie also touted recent initiatives to use a cast of social media influencers to curate special collections presented as "storefronts" on the site, but didn't provide any insight into how well those efforts actually converted into sales in Q4.
Liz Morton
He also talked up eBay's "partnership" with OpenAI, enabling users to take an "agentic approach" to online shopping.
Magical corporate buzzwords aside, the actual announcement about this collaboration revealed the reality is not nearly as shiny as the AI hype would have us believe.
Liz Morton
UK C2C Initiatives
Iannone says they are punting the UK Simple Delivery mandate to Q2 and will introduce a free shipping option at the seller's expense.
During Q4 we also began to gradually ramp up our managed shipping program for UK C2C sellers, which is live on an opt out basis with Royal Mail and Evri as our initial carriers.
Managed shipping, which is shown to UK customers as Simple Delivery, offers simplicity, lower costs, improved transparency, and great protection against loss or damage, while generating incremental revenue and operating income for eBay.
We've been listening to our sellers feedback during the ramp phase and are launching multiple enhancement to make this program's value proposition even stronger in the coming months.
For instance, we recently gave sellers the ability to select which carriers they're comfortable shipping with. We will soon add a free shipping option with the cost of pre-paid labels automatically deducted from sellers' earnings.
We are in the process of adding new carriers that support bulky and heavier items and we plan to introduce out of home pick up and drop off capabilities which many UK customers value due to their convenience, lower cost, privacy, security and environmental benefits.
We will continue to ramp Managed Shipping throughout Q1 as we add features and fine tune the program and plan to begin mandating it for UK C2C sellers during Q2.
My take: eBay is delaying the mandate due to major pushback from sellers and the fact that some features are not ready for prime time.
Liz Morton
He also said "in Q4, we saw a double digit improvement in C2C GMV growth versus our pre-launch baseline in the UK, alongside 20 plus point improvements in C2C first generation listers, new and reactivated sellers, and local pickup GMV."
Keep in mind however, eBay dropped selling fees at the beginning of Q4 but had not yet brought in Buyer Fees, so those GMV trends may likely not hold through the back half of Q1 and beyond.
Payment changes which hold private seller funds until after delivery also had not gone into effect in Q4 for most sellers, and that could potentially impact Q1 if sellers pull back on listing new inventory as a result of the delay in payment.
Liz Morton
Iannone also says the Buyer Fee rollout has gone better than expected.
We rolled out buyer fees progressively over roughly two weeks in February, listening closely to our community to ensure our fees were transparent and well understood.
While we expected some level of elasticity following the addition of buyer protection fees, encouragingly the early results were slightly better than our expectations.
As usual it would seem the key to having "better than expected" results with eBay is to simply set your expectations at rock bottom - otherwise, I have no idea how anyone could call what actually happened during that buyer fee roll out a success in any way.
Liz Morton
As far as fee transparency - I'll just say that almost 3 weeks later, UK buyers and sellers still have no idea how or why it appears eBay is charging £0.72 instead of £0.75 for the fixed portion of the Buyer Protection Fee and so far eBay has provided no real explanation beyond a vague reference to VAT.
Liz Morton
Predictably, analysts raised questions about eBay's exposure to looming tariff and de minimis changes and Iannone sought to quell those concerns by explaining most of eBay's inventory from China is "forward deployed", meaning it is in US warehouses.
If you look at the China to US quarter, that makes up approximately 5% of total GMV for eBay, China overall is a little less than 10% of GMV, but approximately 3/4 of our Greater China volume is forward deployed, so as you said, it's already subject to tariffs.
And of the remainder, about half of that we manage directly through a program called Speedpak, which obviously can help sellers handle the complexity of tariffs.
What that answer doesn't address is that some believe the tariff changes may apply to items with a Country of Origin of China, not just those shipped from China - which could impact shipments of China made goods coming from other countries as well, as we saw with sudden changes to Global Shipping Program costs from the UK to US that were made and then quickly reverted a few weeks ago.
Liz Morton
When asked about mixed reports on consumer sentiment, Iannone said he believes lower income consumers are feeling more of the pressure in the current environment but eBay believes higher income shoppers in collectibles and luxury goods will maintain their buying habits.
Unfortunately for eBay, competition in those high value categories remains fierce and other marketplaces like Walmart are gaining ground in taking market share - with the help of some strategically recruited ex-eBay talent.
Liz Morton
And finally, when asked a very direct question as to whether or not the bulk Magical AI listing tool had a material impact on trading card selection and volumes and if so, could that be expected to follow as the tool rolls out to more categories, Iannone gave an impressive display of corporate word salad gymnastics which managed to duck the question completely.
It's really great for that category because it's kind of seamless and if you've been paying close attention, it's not just that we've done magical listing in that category, which is great, but we've been doing better integrations with our partners...
...so now if I list a graded card well I can actually bring over all the data from PSA about the history of that card into the view item page on eBay...so I would say in general, what we're seeing is a strong quarter for collectible card games etc. but it really leveraged all of the innovations we've been driving in trading cards to make that successful.
But yeah, we feel bullish that as we had expected in that category, we're rolling out continued enhancements to magical listing which does make it easier and easier to list. The way I think about it is, the average household as $3,000 of items that they could sell online and less than 20% of that is online and if we make that incredibly easy through magical listings, we can bring on such much attractive inventory onto the platform.
And when we get those buyers to turn into sellers, they become 2 to 2.5 times more valuable as buyers and they bring really unique inventory to the platform...and so that's why I'm really excited by the continued advancements that we're making, the satisfaction we're getting from customers and the reception in general from the seller base.
Final Thoughts
As Iannone flails around trying to avoid answering even the most basic, direct questions, it's clear now more than ever that he simply has no clue how to create sustainable growth for eBay outside of taking a larger piece of every transaction through ratcheting up ad rates, while increasingly having to turn to legacy discounting tactics which were rightly criticized by investors during the previous CEO's tenure.
Once again, I must conclude with nothing truly magical on the horizon and no clear vision for a strong strategy to reinvigorate sales across the site while holding competitors at bay, eBay's long-term prospects don't like bright.
eBay's stock price fell over 10% after hours in reaction to weak Q1 guidance and concerns about macroeconomic headwinds and tariff uncertainty.
As many of the items I sell are £10 or less, this makes it not worth the bother and I'll probably have to give it away to the charity shop.
Add that to the "buyer protection" fee they've added on - and the costs are making it untenable for people trying to clear the house, or make a few bob from old bits and pieces. Not happy at all and there doesn't seem to be a way of opting out.
The sooner these sleazebags at the top can be got rid of, or some community-run buy/sell/swap sites come up - the better. We don't need ebay.