eBay Inc (EBAY)’s Q4 2014 Earnings Call Transcript

John Donahoe
Ken, so first, what I alluded to in the quarter is PayPal transaction margins have been relatively stable at the 63% level. As we think about 2015, we expect a continued expansion of our served market. More of our growth will come from larger merchants and Brain tree volume, and as a result, we expect take rate to continue to come down and transaction margins to be coming down as well in 2015. However, we said operating margins would improve by 1 to 2 points. And while transaction margins are coming down and we’ll be continuing to invest quite a bit, a simplified org structure and quite a bit of G&A leverage will help contribute to the 1 to 2 points of margin growth. Your second question on card present rates, I’ll just say within our wallet or our funding mix, we’re always looking for instruments that give consumers choice and that, all else equal, given that choice allows us to deliver a proposition for merchants that addresses one of their key criteria, which is, PayPal, how can you help me lower my cost? So we are always looking for opportunities to add instruments and/or use our leverage and/or technology to lower processing costs within the wallet to offset pressures that come with a lower take rate, and we’ll continue to do that in 2015 and beyond.

Operator
Our next question comes from Colleen Sebastian of Robert Bird.

Colleen Sebastian – Robert Bird
Maybe as a follow-up on PayPal, regarding the acceleration in growth in the number of payments, I wonder if you can share more details in that, perhaps some of the same factors, perhaps Brain tree or something else. And then secondly, just wanted your perspective on: given the organizational changes and some of the issues in 2014, the innovation in both e-commerce and payments that’s happening really quickly, so I just wanted to clarify how you’re able to keep up with that pace of change and product initiatives in the face of the separation and the disruptions.

Bob Swan
First, on just the number of payments, I mean, broader ubiquity on merchants giving consumers the ability to use us in more instances, slight improvement on a per user basis. And then as you indicated, the expansion of Brain tree and incremental volume from Brain tree is what’s driving the growth and accelerating growth in the number of payments.

John Donahoe
And on innovation, there’s a lot going on, on the innovation front. Let me say on PayPal, Venmo, Venmo is on fire. Venmo is acquiring new users. It’s a leading peer-to-peer way to pay. And if you go to any college campus across America, they talk about Venmo-ing money to each other. One Touch, which is the way that we can have with One Touch, consumers can pay with PayPal with One Touch on any Brain tree or PayPal-enabled mobile app., which is the Brain tree next-generation platform which started out with third-party developers and small merchants and is now working its way. We’re building our whole next-generation PayPal core platform on it.

Instalments credit, we’ve rolled out instalments credit with Apple online in the U.K. and Germany and that will come to the U.S. That’s a way to allow a merchant to give more choice to consumers and allows the consumer to be able to buy an item, a high-priced or lower-priced item, with great convenience. And then both businesses, mobile continues to be a major source of innovation. PayPal’s got its new Mobile SDK. And if I turn to the Market Place in the midst of what was a very challenging year, to be clear, we got that. But mobile GMV was up 42% for the year. Mobile GMV and eBay’s mobile GMV was $28 billion.