Nikhil Devnani : Hey guys, thank you for taking the question. I had a couple, please. Just following-up on that operating leverage theme, as you think about prioritizing kind of the highest ROI investments next year, what initiatives are really making that top of that list? And which ones are you maybe more willing to push out a little bit if times get tougher? And then on the focus categories, it’s kind of nice to hear the market share stability. When you observe what’s changed pre and post your improvements, is this a function of conversion rates functionally improving or are you also now able to kind of drive better traffic to those focus categories?
Jamie Iannone: Yeah. So first on the initiatives, we’re still obviously in planning for next year. But I’d say a couple of things. As Steve talked about the cost structure, one of the things we’re looking at is how do we leverage AI and technologies so that our costs don’t grow as our volume grows? So I’ll give you an example of, one of the areas we’ve been investing a lot in is our customer support. And so if you look at like our GCX expenses, our customer support expenses, we’ve been rolling out conversational help bots over the course of the last few quarters, really advancing what we’re doing there so that we can, focus a lot of our efforts into handling more calls and greater volume with higher customer satisfaction. As an example, we just launched that as a trial in Germany.
We’ve had that live in some of our English markets. An example of some of the initiatives that we’re going to do next year to manage the business and make sure that as Steve said, we’re going after the growth opportunities in the business, while being prudent about our expense structure. When you think about focus categories and what’s driving the success there, I would say it’s a couple of things. One is that, if I look at like for P&A, for example, this is our third quarter of seeing mid-single digit growth, which is in-line with markets. And we’re just now launching Guaranteed Fit, which is one of the big value propositions for us in that category, to our markets, our second and third largest markets in UK and Germany, where we do have a leading marketing position from that standpoint.
And what we’re seeing is that, the new work that we’ve been doing in Fitment, for example, has really been helpful. I talked about 2 billion new Fitment combinations based on my Fitment, and then our sellers are seeing double digit increases in their conversion. So to your point I think, we’re doing a better job with our full funnel marketing in each category, acquiring enthusiasts into those categories. And then when we bring them on, we’re having a better experience for them in converting them into sales and converting them into repeat buyers, because of the changes we’ve made in trust, because of the changes we’ve made in the experience. I mean, think about like our luxury category. This is the third quarter where we’re seeing positive growth in luxury, even in this market, and you’re seeing kind of what’s happening and what others are saying.
And it’s because of the customer value proposition that we’re bringing to these categories that we’re seeing those results. So we’re going to continue to innovate and push forward on that strategy, because we like the results that we’re seeing and the consumers responding. And then we’re enhancing the focus category work with a lot of site-wide investments. And those site-wide investments not only help us in focus categories, but they help us in our other core categories in the business. So I’d use the example of magical listing. It certainly helps sell a sneaker faster or a training card or a watch or a handbag, but it also helps sell a musical instrument faster or a board game or a book or all the things that people sell on eBay, because we’re taking so much time out of the listing process that we’re looking to unlock more of what’s in people’s closets, garages and basements with this technology.
And we think that those investments will help both focus categories and our other core categories on the business.
Nikhil Devnani : Thanks, Jamie.
Operator: Thank you. Our next question comes from the line of Thomas Champion from Piper Sandler. Please go ahead with your question.
Thomas Champion : Hi, good afternoon. Jamie or Steve, I’m wondering if you could just talk a little bit about EIS and how that is performing relative to your expectations around transactions or inventory and how the cost drag is performing and whether you’re making progress there. And then maybe Steve, specifically for you, notice the buyback uptick this quarter. Can you just walk us through the thought process behind that? Thank you.
Jamie Iannone: Yeah, thanks, Thomas. So look, on EIS, we love the success we’re seeing in the program. It’s making cross-border trade much easier on the program. eBay handles everything for the seller, the customs, the duty forms with buyers. We intermediate the returns, and we protect sellers from item not received complaints. So we continue to ramp the program over time. Half of our big three inventory is not available to be shipped internationally, so we’re excited about the goal of this program, which is basically make it super easy for sellers, so they don’t have to think, and we handle all of that cross-border trade for them. We continue to scale it during Q3. We now have over 400 million live listings. We launched some new features with the program, for example, the ability to combine shipping.
So for example, I was with a seller or a buyer, a collectible buyer in Japan of trading cards, whose buying trading cards out of the U.S. Now he can buy multiple trading cards. We can combine them in a single shipping invoice, just making the whole EIS program a lot better. The last thing I’d say is that, when I look at the program overall for sellers, it has a 30-point higher customer satisfaction than the previous program that we’ve had. So all of the work that we did to bring things in-house last year, Steve talked about the financial implications, we’re seeing that in CSAT and sellers, and we’re seeing them react in terms of what’s available internationally. Steve, do you want to handle the second part?
Steve Priest: Yeah, and just to say, Tom, with regard to EIS, we’re really pleased with the momentum, largely in line with our expectations from a financial architecture standpoint. As we said, we expect this program to be committed to operating profit for this year, and by the year end, it will be in line with core margins on the platform. So, pleased with what we’re seeing. Specifically, with regard to your question on capital returns, the duty of the eBay franchise, where we’re generating just under $2 billion of free cash flow a year, gives us the ability to invest in the business, but continue to drive healthy returns to shareholders. We laid out a path to 125% of free cash flow to shareholders who stock buybacks and dividends, cumulatively between 2022 and 2024. Since the beginning of 2022, we’ve returned nearly $5.2 billion to shareholders, and we’re roughly at 125%, so we’re right on track with the commitments that we made.
Thomas Champion : Thank you, guys.
Operator: Thank you. Our next question comes from the line of Lee Horowitz from Deutsche Bank. Please go ahead with your question.
Lee Horowitz: Great. Thanks so much. Two, if I could. So, the macro environment is obviously a massive challenge for the business at the moment, but as we look out to next year, can you maybe help us better understand what leverage do you think you have at your disposal to perhaps get volumes back to even modest growth if the macro environment proves to be persistently weak in the medium term? And then, just to contextualize some of the comments around slower cost growth into next year relative to revenue, I think investors will be pleased to hear it, but is this a more cautious stance on investment impacting in any way the pace at which you think you can roll focus category coverage out over the next 12 to 24 months, or are those investments already fully baked and the pace shouldn’t be impacted in any way? Thanks so much.
