Operator: Your next question is from the line of Nikhil Divani with Bernstein.
Nikhil Devnani: My first one is on margins. I think the operating margin has kind of stepped down this year, and that’s continuing to the back half as well. Can you just talk about the primary factors that are weighing on that and the degree to which they are temporary versus structural? I know you’re not guiding to ’24 yet, but when you think about next year, what are the levers that would allow you to improve from this kind of 26% margin level?
Stephen Priest: Let me give you a little bit of color on the year-over-year margin. Obviously, we have seen some modest deleverage associated with the current macro environment, which obviously reflected in our full year GMV commentary, and that’s bringing a lot of pressure on margins. I would refer probably to 4 discrete items that have impacted 2023. Firstly, we’ve talked about eBay international shipping. This is both strategically important for us as we open up the aperture across 132 million buyers across 190 countries and gives us a great opportunity to drive more commerce through eBay and, at the same time, drive accretive operating profit dollars. As a reminder for you all, we are now the principal in that relationship versus an agent and, therefore, the accounting treatment has impacted our margins in ’23.
The second item will be around M&A. We have been more acquisitive of late to drive sustainable long-term growth in the business. And as I mentioned in our prepared remarks, we would expect EIS and M&A together to be a 1 point headwind to margins in ’23. The third element, which is slightly nuanced is the FX fluctuations and lapping that we have seen or will see through the second half of the year. We did benefit from significant hedging gains in the fourth quarter of 2022, which we will ultimately lap. And in totality, that will equate to 0.5 point of FX-driven margin dilution for the full year and 2 points in quarter 4 alone. And then finally, obviously, the reinvestments in our business. We are seeing focused category momentum, 7 points of growth over the core platform, horizontal investments in search and buyer and seller experience are driving dividends.
And obviously, the investments in our monetization initiatives like payments and ads is bearing fruit. And so as I think about margins for 2023, we have some unique items, as I’ve said, such as eBay International Shipping, the M&A and the FX fluctuations we’ve talked about. But we’ve also been investing in the business because we feel very confident about the trajectory of the business and how it’s driving long-term sustainable growth. I think that as it pertains to 2024, I’m not going to get ahead of myself. We’ve given you a lot of color for the third quarter. We’ve added some color for the full year. We are — remain committed, as I mentioned to Eric, to the medium-term goals that we’ve put out at our investor event. This will really — the timing will be the function of the duration and severity of the macro headwinds we’re currently facing.
And obviously, we’ll give additional color for ’24 in the quarters ahead.
Nikhil Devnani: And you alluded to that Investor Day GMV framework, which kind of assumed the non-focus categories would be flat. I guess what’s the strategy in your playbook to ensure that those non-focus verticals also remain stable going forward?
