eBay Inc. (EBAY) CEO Jamie Iannone Presents at Goldman Sachs 30th Annual Communacopia Conference (Transcript)

Start Time: 11:20 January 1, 0000 11:57 AM ET

eBay Inc. (NASDAQ:EBAY)

Goldman Sachs 30th Annual Communacopia Conference

September 21, 2021, 11:20 AM ET

Company Participants

Jamie Iannone - CEO

Steve Priest - CFO

Conference Call Participants

Eric Sheridan - Goldman Sachs

Eric Sheridan

Well, thank you everyone for joining our next session and welcome to the Goldman Sachs 30th Annual Communacopia Conference. For those who don't know me, my name is Eric Sheridan. I’m Goldman Sachs' U.S. large cap Internet equity research analyst. And it's my pleasure to host the management team from eBay today here at the conference. So thank you to Jamie Iannone, CEO; and Steve Priest, CFO for joining us for this fireside chat. Thanks, guys.

Jamie Iannone

Thanks, Eric. Thanks for having us on.

Steve Priest

Good morning, Eric. Great to see.

Eric Sheridan

Great to see both of you. Hope all is safe and well with everyone part of the eBay team. Jamie, I wanted to start with you. It's been around 18 months since you joined the company. I wanted to maybe level set with you taking a step back, reflecting on your first period of time here at the company, what were your big broad agenda items coming in? How are you feeling about those agenda items now as we exit '21 and move on to '22? And what do you see as some of the big opportunities ahead for eBay in your view?

Jamie Iannone

Yes. So first, it's been a fantastic 18 months here at eBay and really excited to join this company with the mission and purpose that we have. I’ll start with the portfolio simplification that we went through. When you look at it, starting with the StubHub transaction, we've created over $20 billion of value for shareholders through cash and equity positions, some of which we still hold. But importantly, not only did we create value for shareholders, but we also allowed the management team, all technology now focused on the core marketplace. We rolled out a strategy last July that we called the Tech-Led Reimagination, a multiyear transformation of the business, and that's been going well. If you remember, the first part was really about going back to our roots and accelerating what's working in the core, and so really vertical by vertical rolling out this innovation playbook. That's worked out really well for us. And we've got more to go and we can get into that.

Secondarily, really being the partner of choice for our sellers. We've invested in eBay stores. We've launched coded coupons. So really exciting for what we've done for our seller community over the past year. And like I said, we're just getting started from that point. And finally, really focusing on not just total buyers and active buyers, but really shifting from this focus, we call it moving from buyers to long-term enthusiasts on the platform, and really focusing on high value buyers. And that progress and transformation has been going well, in addition. So when we look at the three, I think not only that, but we're now innovating at a scale faster than we ever have before, the organization is really motivated and I'm just excited for also what we've been able to do on the ESG standpoint.

Looking back, we put together an ESG Council very focused on what we're doing as a business. And during the COVID time period, we were able to step up and be there for the community. One example is the UK National Health Service came to us and said, can you help distribute PPE in the UK? We’ve now distributed 3 billion PPE items to healthcare providers there. So just also excited about what we've been able to do with the purpose of the company. So, overall, I feel great about the 18 months, but we're just getting started, Eric.

Eric Sheridan

Okay, so good stuff in there that I do want to come back to and maybe go a little bit deeper on some of those topics. But Steve, maybe you're coming at this from a totally different sector. You just joined the company in the last couple of months. I think June if I've got it right. And maybe you can give us your impressions of your early learnings, the decision to join the company and your own perspective on the last couple of months since joining the company?

Steve Priest

Yes. Thank you, Eric. I think I'd start with some of the items that Jamie really talked about around people, culture and purpose. And when I really thought about the transition from my last role to eBay, they were the things that really excited me and gave me some thought. But the other things are really around the innovation that a company drives and the sheer scale of the organization. And coming in about three months ago, I continue to be surprised by not only the sheer scale, but the passion that both our sellers and buyers have for eBay, and the stickiness that the customers have on the platform.

And when I sort of look back and think about the last few months, it's also about the durability of the financial model. We have best-in-class margins, a fortress balance sheet, great free cash flow. And it really gives us an opportunity not only to invest in our business and to stimulate the growth, and to Jamie's point really focus in on those buyers and sellers that come to the platform, but also ensure that we are leaning into our owners, our shareholders and making the requisite returns to them. So delighted to be here. I’m really excited by my early days here, and looking forward to a further chat this morning.

Eric Sheridan

Great. Thanks, Steve. Jamie, maybe coming back to you and maybe you'll both weigh in on this, but obviously over the last 18 months and almost time with your arrival, we've gone through the pandemic. Can we talk a little bit about how you've repositioned the company to both think through some of the volume you might have seen in 2020 and absorbing the volume and some of the changed consumer behavior as we moved into 2021? And then a secondary question would be consumer, behavior both in the U.S. and internationally, you have exposure to both. As the world continues to reopen in maybe different paces and what you guys are seeing?

Jamie Iannone

Yes. So first, let me say that I'm really happy that we were able to step up for our customers. And not only that, but our community was able to step up for each other during the COVID time period. And so, when supply chains were disrupted, eBay model worked out really well, having a broad base of inventory really across the world. Secondarily, as a company and a business, we were able to step up. We put together up and running grant programs. We donated $100 million, invested $100 million into small business programs to really help during that time period. And we did a study where 84% of people started selling on eBay, because they needed a little bit of extra income and another 14%, because they had lost their job.

I was talking to a seller who had lost his job at the Orlando Magic. And he had been doing eBay casually as a hobby on the side. And he was able to turn that into a full-time business after losing his job with the Magic. It’s example of the power of the platform. And one of the things we talked about last July that we've been focused on all year is our consumer-to-consumer selling. And so how to bring more of those sellers onto the platform, how to make it easier for them to list with things like computer vision, et cetera? So that's been a big transformation.

And we've been really leaning in to help people during that time period, as well as what we talked about of turning buyers into long-term enthusiasts. You asked as well about U.S. versus international. So, in general, what we've seen is a heavy correlation with mobility. So as mobility has changed, Europe, we talked about last quarter, is a lot more open than what we're seeing in the U.S. And there's also been other factors affecting the U.S., like our stimulus programs in the U.S., different than what we're seeing internationally.

Our trading cards business has been very strong in the U.S., and that's a differentiator, because it's not as strong in some of our international markets. So we are seeing differences across the world based on some macro effects and category-specific things. But overall, we've seen this consistent movement of the business with mobility. I guess I’d just summarize to say that I feel great about during this time period, we did lean in and invest in the business, invest in things like eBay stores, invest in advertising, invest in some of our technology and the velocity around that. And I think we've done a good job leaning into the benefits of COVID for the business.

Eric Sheridan

Got it. Great. And in some of the more recent earnings calls, you guys have highlighted some of the areas of the business, like sneakers and trading cards, where you've seen big upticks in growth or a lot of new focus by the company. I wanted to come at it from two different standpoints. Number one, maybe talk a little bit about some of these subsectors and verticals and why you see eBay as well positioned to capitalize on sort of more niche subsectors of e-commerce and where do you think you're differentiated, and how you think about the opportunity set? What do you think about some of those going forward?

Steve Priest

So, Eric, I'll pick that one up. I think it goes back to my point about the sheer size and scale of eBay. Now we have around 160 million buyers coming onto our platform every year. And I think the beauty of eBay is that we have over 1.4 billion listings across the whole platform. And so when you think about it like that, it means that those buyers are looking across the categories that we have, and shopping across those categories. And so that size and scale enables us to look at various focus categories as we go forward.

You mentioned sneakers. I think about luxury watches, things about handbags, think about collectibles. We’re going vertical by vertical as we sort of go through those various categories. We're already at 10% of those categories that we've touched. We expect to be at 20% of those by the year end. And I think what really excites us here at eBay, the size and scale means that the cost of acquisition of those customers and the type of cost of those customers is very de minimis on an individual basis.

And then when customers come to our platform, they genuinely -- when they are alerted to eBay, they shop across those categories. So a simple example, a customer who buys a luxury watch over $2,000 will spend over $8,000 across the platform on 50 different items. So as you see us going forward, we're going to be really sort of leaning in to focus category after focus category as we continue to go forward because we see that as a huge level of value for our platform, and make sure that we're very, very competitive.

Jamie Iannone

And to be clear, that's $8,000 in categories outside of watches, which is one of the -- in addition to thousands of dollars of buy inside of watches. So one of the key benefits that eBay has is, as we nail the customer satisfaction in any given vertical and create the experience, buyers and sellers follow, GMV follows. But the unique advantage is the cross category nature of the platform, right? People will come in searching for an HDMI cable and end up buying a car part. And it's the serendipity of eBay and the nature of the cross category shopping.

We see the same thing in sneakers where you'll come in and spend $5,000 on sneakers, but then spend $2,000 elsewhere on the platform. And so we're excited because we see that strategy working vertical by vertical of really changing the customer satisfaction, buyers and sellers getting on the platform and then really driving GMV. If you think about sneakers, we were doing double digit comps last quarter on the backs of triple digit comps. So really, I think changing the growth opportunity for the business.

Eric Sheridan

Maybe if I could stick with that point and just do a quick follow up there, Jamie, because I think what some investors try to think through is the concept that you are a scaled platform across all these subsectors, and you do have competitive peers that are popping up in the more verticalized. So sticking with the answer you just said there, maybe talk a little bit about your scale advantages to compete across all the verticals as opposed to some of the competitive dynamic you see on a vertical by vertical basis that you have to sort of meet as sort of an execution challenge for the company?

Jamie Iannone

Yes, so I'd say a couple of things. One is when you look at the CAC and what we're able to do from a marketing standpoint, we're not just acquiring that customer for that vertical, but we're acquiring them for the whole platform. So relative to a vertical competitor, eBay has unique advantages just from a marketing standpoint. The second is that we're able to build platforms that scale across multiple verticals. So if you think about the authentication, which is really a platform that we built, we rolled it out actually first in watches, and it took a couple of months to build in watches.

But then we rolled it out weeks later in sneakers, we just brought it out in handbags, we've been expanding it globally throughout the world launching in UK and Germany with authentication centers. And so you get all of those advantages. Plus, eBay has been strong for the last 25 years in cross border trade and trading across geographies. In fact, this graphic behind me is actually showing transactions throughout the world. And so when we have that scaled opportunity with things like sneakers in every country, that opens up a new opportunity for us as well.

And the last I'd say is just the strength of our of our buyer cohort curves. We talked about these high value buyers on eBay, and leaning in and acquiring more of them into the verticals, we've changed our whole marketing approach. As you see us doing now, we're working with enthusiasts and influencers reaching a new demographic with Gen Z. So that vertical capability for us enables us to be really specific and win in that vertical, but leverage the scale of these platforms that we built over eBay. And that's what gets me really excited is that we're just getting started. Our largest category is things like parts and accessories and fashion and electronics are categories that we actually haven't even yet rolled out the innovation playbook to. So that just speaks to the runway in front of us here at eBay.

Eric Sheridan

Okay. A couple more topics in there I do want to go a little bit deeper on. One that I think took me by surprise, I was sort of observing it from a distance prior to our initiation on Coleman, but that data point you gave on the last earnings call that 20% of the buyer base contributes about 75% of the GMV. I do want to go a little bit deeper because over the years I think we've heard from eBay is different marketing strategies. Now they all predate you, but maybe just put a finer point on what have you learned about the depth of your buyer base and how you want to align those dollars from an acquisition and remarketing and trying to stimulate buying behavior on the platform, so investors have a little bit better sense of how you've reoriented the platform around the scale of GMV you get from that percentage of your buyer base?

Jamie Iannone

Yes, like it's a pretty big shift from where we are in -- where we were in 2019. I think in 2019 and before, it was kind of let's acquire active buyers really at any cost, because buyers will lead to GMV. And that's not really the case. This platform is really driven on high value enthusiast buyers. And we talked about it last July, and it's been a focus for us. I've met these buyers. Some of the buyers at the hardest core, they wake up, they get a cup of coffee, and they get on the eBay app to start shopping. In other examples like the stats that Steve mentioned, they come to us as an enthusiast watch buyer and they end up buying thousands of dollars in other categories on the site. And so from a marketing standpoint, I'd say a couple things.

One is, we're very focused on moving people up the lifecycle and the cohort curves become high value enthusiasts on the platform. With the stats that we talked about last quarter, you see the value of that top percentage and how much GMV they drive versus the bottom 50% only driving 5% of GMV. So a lot of our focus is around what I call the first 90 days, and how to bring people into the marketplace into the right way to turn them into high value enthusiasts. In my past, I've worked in other membership organizations and other kind of areas where we've been able to drive the buyer cohort curves. And that makes a huge difference to the business.

The second is around our acquisition of where we're going to acquire those buyers. So instead of the massive broad reach buyer acquisition which we've done in the past, which we'll continue to do, but we're also now really focused on how do we go attract these buyers with where they are? So where are the watch enthusiast buyer? Where are those parts and accessories enthusiastic that are DIY for their own automobiles and bring them on to the marketplace in a different way? How do we use new technologies and techniques with paid social, with community, with our affiliate programs to bring those enthusiasts on to the platform? So it's a pretty dramatic shift from where we were in 2019, and we're happy with the progress.

If you look at it year-on-year, high value buyers are not only up, but they're also spending more year-on-year and that's what we want to see is the stickiness of the platform around those really strong cohorts that we have. And so that's going to continue to be a focus for us for a long time, because that's really the magic for eBay. And that's what makes our sellers happy is all that demand that those high value enthusiasts bring to the platform.

Eric Sheridan

Maybe one follow up that sort of jumps out to me, as I've looked at marketplace business models over the years that the more the Venn Diagram, when you get them to C2C between buyers and sellers, and maybe someone playing a role on both sides of the marketplace. As you get these enthusiasts on a vertical by vertical basis, do you see a role to expand an individual's participation as both the buyer and the seller and create a velocity of behavior that could have an amplification effect in addition to what you've already sort of thought through just on the buyer side?

Jamie Iannone

Yes, absolutely, Eric. It's why last July we talked about really focusing on our C2C or our consumer sellers, is because once we get you to sell, even if you just sell a little bit on a platform, you become 2.5x more valuable as a buyer. So there's a huge buying benefit, just trying selling on the platform. But it also brings really unique inventory, right. So no business is producing -- we Guitar Hero items from the old Nintendo product, but they sell like crazy on the platform, because you can't find them anywhere else. That's only coming from a C2C seller. I sold a Hammond B3 organ on the platform. That's not coming from a business seller. There's no business producing these organs, they're 40 years old. And so it brings really unique inventory onto the platform.

But the third thing I'd say is that think about the story of the Orlando Magic person. When you get started on C2C selling, occasionally those people turn into B2C sellers and that's how a lot of people, as I go around and meet sellers, they just started selling on the platform. I met a woman who spent 25 years in the military and she would randomly sell clothing on the side while she was in the military to earn a little bit of extra money. And then when she retired from the military, her new full time job is selling on eBay in our fashion category.

So a lot of our B2C business was created by what I call accidental entrepreneurs, people that start selling from a consumer standpoint and became a seller on the platform. So for all those reasons, we're really leaning into consumer selling, making the process so much easier, because it brings so much value back to the platform.

Eric Sheridan

Got it. I wanted to come back to the topic of authentication, because, Jamie, you touched upon it briefly and Steve, you talked a little bit about how you can go deeper in some of the verticals with some of the investments you want to make. Authentication has been a topic that other marketplace models have struggled with from a profitability standpoint.

I want to talk about the investments you've made in authentication, where those operations sit inside eBay, and how you see them scaling in the coming years as maybe a competitive advantage versus smaller players? Because we've talked about the competitive threat, smaller verticalized players in marketplaces, but maybe this could be an advantage as scale where the authentication costs and processes you put in place work to your benefit. So I want to talk how you think -- where it sits, bring it back to cost, and maybe a little bit of what the output is for you as a platform?

Steve Priest

I think what I would say again is the scale of eBay, so it enables us as the platform that we have to invest in sort of the end-to-end prices for our customers, which really, really drives up MPS. And then to Jamie's point continues to drive those enthusiasts to high value buyers and start to sort of buy to sell. And that's been the sort of fantastic flywheel that's continued to go forward. The actual investment cost, Eric, in terms of the authentication is pretty de minimis. Think of something around like less than half a point a margin versus -- and again, it's because of our scale. It sits in our operating costs and we continue to go forward with it.

I think why I'm so excited about this journey around focus categories is the scalability of it. Because not only can you start on a focus category by focus category, think about sneakers, then think about handbags. But also, from a geographical standpoint, we've been genuinely rolling these initiatives out in the U.S. And then we'll have very fast followers in the likes of Germany, but we also get the speed associated with it. And whether it's to do with authentication, whether it's to do the grading services, it really gives us an opportunity to again drive up that MPS making a great [ph] competitive situation to the marketplace, so that we can continue to attract the customers going forward.

And for those categories that we've leaned in so far, we've seen an astronomical increase in the MPS. And so think about some of those categories sitting around 90%. And when you continue to invest in these products, the MPS goes up and then you get the continued retention of customers. So very, very happy with the progress that we've continued to make. And you'll see us do more of that in the forthcoming months and years.

Eric Sheridan

Great.

Jamie Iannone

I’d just add on, Eric, that it's bringing a game changing level of trust into the platform, right, which is what we've been talking about for years. How do we change the trust on the platform? And in this case, we're using authentication. In the case of our certified refurbished program, which we're now expanding, it's actually putting warranties, 30-day hassle free returns, eBay money back guarantee. And not only that, but we've talked for a while now about how we're getting obsessed with the customer experience.

So when you actually get your authenticated pair of sneakers or watches, there's an NFC tag on there. You hold up your phone, you can see the product that you have, we actually authenticated in both directions. So we're actually protecting our sellers as well on the return standpoint. And what we're hearing from the community is just this is a whole new level of trust on the platform, which is really helping lean in not only for existing buyers, but to bring new buyers onto the platform.

And so we just launched these products internationally in some of our European markets, and we're seeing the same level of enthusiasm, excitement that we saw when we launched them in the U.S. So you’ll continue to see us -- authentication, by the way, is just in our luxury products. And in other categories, we're rolling out different solutions, like I talked about for a certified refurbish, and category by category, we're saying how do we change the trust on the platform? So we kind of take that out of the equation for our buyers and sellers, and couldn't be more pleased with the results that we've seen so far.

Eric Sheridan

Great. Okay. I want to turn to the advertising business, because one of the themes we've written about as a team is talking about the blurring of the lines between traditional commerce models and traditional advertising models. You guys have built an advertising business basically from a low base and into something that's contributing a fair bit of growth and take rate momentum.

In the last earnings call, you talked about pivoting and introducing a CPC product as opposed to just a CPA product. Can you talk a little bit about that transition as well as where you see the ad business from a format standpoint going over the medium to long term?

Jamie Iannone

Yes, so a couple of things. One is we were able to build 1 billion plus advertising business really on the backs of a single product in a single format, so just a CPA product just on our fixed price business. And that made us a top 20 advertiser, even though our main business is e-commerce. And so as we look at our advertising portfolio, I'm excited that we launched three new innovations.

The one that you talked about, which is CPC from a CPA model, in addition, opens up new inventory, new velocity opportunities, and potentially even new marketing budgets from that standpoint. So that's a big opportunity. We opened up an ad product for our auctions business. And while auctions is a smaller percentage, for the last couple of years we've been building our ad business, there's been no way to have a promoted listings business with auctions. So that's a new product.

And the third new product is off eBay advertising. And what I like about that is it essentially changes the denominator, right. It opens up a much broader scale than even the massive eBay traffic that we have for advertising opportunities, and gives us the opportunity to work with our sellers to bring more buyers, bring more traffic onto eBay. And we're really leaning in to how do we unlock the power of our community through our advertising program?

I'll just give you one example, as we just launched coded coupons on the platform where sellers could go back to interested buyers or buyers that they've interacted with in the past, and offer them coupons. And already 1 million buyers have purchased with coded coupons from sellers. So you think about this off eBay advertising and what we can unlock not just with the advertising potential, but with new products like that. And it talks about the runway that we have in front of us in advertising. So we're about 1% of GMV now.

When you look at the competitive benchmarks of other advertising platforms, it's low single digits to 5% of GMV. And so we think there's a lot of opportunity. And the important thing that I focus in on as the CEO is, is it working for our buyers and is it working for our sellers? So we're able to have a better buying experience with our advertising platform. And when we look at the row [ph] as the return on ad spend that our sellers have, the return is a multiple better than what they're getting on other platforms, which speaks to the potential of what we have go forward with our advertising platform.

So we're excited about the path forward, we're excited what these new products will contribute to growth of the ads. And we've said for a while, we believe our ads growth will accelerate faster than volume for the near term.

Eric Sheridan

Got it. Okay. I do want to turn to the payments business. You've spoken about managed payments being on track for 90% plus of the volume on the platform? Can you talk a little bit about the impact on the seller and the buyer base of this transition into managed payments, what kind of feedback you've gotten? And now that we're coming on '21 going into '22, which is how you initially framed the payment opportunity, how should investors be thinking about the payment opportunity over the next three to five years continuing to evolve?

Jamie Iannone

Yes, so I'll start and then I'll let Steve talk about some of the financial aspects. So from a customer experience perspective, if you think about it from the buy side, we've made it a whole lot easier to transact on a platform, because I don't need to go create a separate account and fund a separate account to buy on eBay. It's now integrated as one single experience. We've opened up new forms of payment, like Apple Pay and Google Pay on the platform. And in some markets, we've even opened up different types of financing. So in our Australia market, we have a partnership with Afterpay where you can do buy now and pay later and in installments. We will continue to have more opportunities like that for our buyers as we integrate this onto one platform.

I'd say the same is true on the selling side which is from a selling standpoint, I can manage my whole business now in one location. The vast majority of sellers will actually see lower fees from a combined standpoint with the platform. And as we look at what we can do and think about this, for 25 years commerce and payments have been separated on eBay. And so I bought items and then I've had to figure out how to pay for them. And one of the frustrations for sellers that that’s meant has been unpaid items for someone's bought it, but they haven't paid for it. Well, now with the rollout of managed payments, we're able to help sellers by integrating that and essentially working to eliminate unpaid items. So buying is paying. And so already, we've eliminated 99% of unpaid items in our fixed price business. And we're working on it for best offer and for auctions as well.

I recently did a session with a couple thousand sellers here in our U.S. business and they virtually applauded this type of change, because they know we're investing in our sellers, we want to partner with them. And this is an example of how we're using managed payments to that effect. And look, I've known sellers from my eight years in the company before, sellers generally hate change on eBay. And there's always bumpiness as we introduce new features. But what I love is that we're investing in features that help both buyers and sellers, and make things more seamless on the platform. Maybe you want to talk, Steve, about the penetration of what we announced last quarter and what we think go forward?

Steve Priest

Indeed, I can. And as Jamie said, this is not only great for our buyers and sellers and for the whole ecosystem in terms of having a marketplace on payments platform in the same place and gives us the opportunity to innovate, but it's also great for our owners, our shareholders. So we laid out a couple of years ago the $2 billion of incremental revenue, the $500 million of incremental ROI, that is well on track.

At the last quarter, we announced -- at the end of the quarter, we were 80% of intermediation and then we expect it to be at 90% by the end of this quarter. So the team are doing a spectacular job of rolling this out across the platform, the speed and obviously having the right controls and the right processes in place. But we couldn't be happier with the momentum. And obviously as we get to the cusp of the financial year and get into 2022, we see further opportunities as we go forward.

Eric Sheridan

Okay. And I want to stick with that point and maybe directed for you, Steve. When you think about the evolution of the take rate in the business model of what it means for the evolution of margins in the model, obviously advertising and payments are tailwinds to take rate. We've seen that impact over the last 12, 18 months. Looks from the comments you're making here as the team is set to continue, just maybe bring it back to the P&L and help us understand a little bit about the take rate dynamics eBay is seeing in the business and what it means for incremental margins in the business from those two efforts around advertising and payments?

Steve Priest

Yes. So if I sort of write the take rate out, there's like three components to it. First of all, it’s the fees associated with selling on the platform, and that's around 8%-ish. You've then got the payment side of things. Now in the second quarter, we talked about that being around 2.3% of the overall 11.3% that we talked about. That as we go through the full payments process and ramp, we expect just to be over just around -- just over 3%. So we’ve got 8% on the selling items, we’ve got just over 3% on payments.

And then we've got about 1% take rate on ads, this sort of 1% roughly of GMV as we go forward. And we see potential further opportunity as we continue to roll out the ads products that Jamie talked about earlier. So steady state take rate is in sort of the ballpark of 12%. So that means that it really enables us to sort of drive forward the business incredibly well, and how that translates into margins.

So if we think about where we came into and talked about in the last quarter's earnings, excluding Korea, that we sold, we are expecting 2021 margins to be at 33%, which is an incremental 150 basis points over the sort of 2019 restated base. So we're making great strides, great momentum, really happy with the take rate dynamics that we have going forward. And really sort of driving best-in-class margins for our business with further opportunities ahead of us to continue to grow net income as we sort of come out the other side of the pandemic.

Eric Sheridan

Perfect. Okay, great. And maybe one follow up on there, and I'd love both of you maybe to weigh in on this topic. But the idea of margins, balancing profitability and some of the rising tailwinds in the business versus wanting to reinvest against all the things Jamie talked about on the growth side, what's the broader margin narrative you want to bring to the market as folks think about the next couple of years for eBay as a collection of businesses and trying to balance that growth versus that profitability?

Steve Priest

Eric, I think I’ll describe as balance and discipline. And that's probably what you'd expect a CFO to say. What I'm particularly excited about, we came out of '19 in sort of negative growth territory. So we sort of came into early 2020 minus 3 in terms of where we're coming in off the back of '19, and so coming out of the pandemic in a stronger position than we went into it. And so when I think about that -- and from a top line growth standpoint. And when you continue to drive top line growth, again, it continues to drive the flywheel. And ultimately, I'm focused on free cash flow and net income that comes off the business.

And so in terms of balance, I think it's that balance between making sure that we continue to drive top line growth, we continue to drive best-in-class margins, and making sure that we return the requisite returns to our shareholders. And the beauty of eBay, because of the durability of the financial model, we can do both, whether it's building, buying or partnering in the core business, which is our first priority, outlined with a strategy that we talked about earlier. And then any excess cash, any excess returns we have off the back of that.

You've seen us drive continued capital returns to our shareholders. And through the divestitures that we've done over the recent past, we've created an astonishing $20 billion of value, over $20 billion of value to our shareholders. So again, great durability to the financial model, great balance between top line and bottom line growth. And I'm very excited about the strategy coming out the other side of the pandemic in terms of the flow for the company as we go forward.

Eric Sheridan

I think we only have a few minutes left. And I think investors that are tuned in that have seen me do these firesides over the years know I always love to end on capital allocation. And I'm going to bring Jamie into the conversation that Steve just started there. Jamie, you started with all the things you've done over the last 18 months. Now the portfolio continues to be realigned for the long term.

Maybe you can give us your perspective on where the portfolio of assets sit inside eBay today? You hold equity stakes in some companies around the globe. How you think about shareholder returns? How you think about maximizing for tax outcomes for shareholders? What's your bigger, broader picture of elements of capital allocation and shareholder returns when we think over the next couple of years for eBay?

Jamie Iannone

Yes. So, look, we're really focused on maximizing value for our shareholders. And that starts with investing in our core business and what we're doing there to drive growth and realize the potential of our business, but also in what we've done with the assets in the portfolio simplification. If you look just at the equity stake of ad event and the increase that we had between sale and close, creating billions of dollars of opportunity and return for our investors, if you look at the sale of Korea that we announced and holding back that Cacau shares and now realizing the benefit of those posts the IPO, we've been really focused on how do we maximize value for our shareholders, both from the portfolio standpoint and from investing in this core business, because driving growth in the core business actually fuels, as Steve was saying, a lot of opportunity overall for us to work that flywheel.

And that's what we did during COVID is we took the tailwinds that we had and invested in things like the technology, infrastructure, accelerated payments to have that accelerate even faster than what we had communicated to the Street, investing in areas like eBay stores and investing in our sellers, which we haven't invested in for years. And so I’d come back to what Steve said, which is we're very aligned around balance and discipline, and how do we maximize value for our shareholders through capital allocation. I think we've shown over the last couple of years since I've been here the ability to do that and the focus on that, and that will continue to go forward.

Question-and-Answer Session

Eric Sheridan

Great. Well, I think with that, we're coming right up on time. First, I want to thank Jamie and Steve for making themselves available for all the insights today during the fireside chat. Thanks for all your perspectives on eBay as a business Thanks to all the investors for tuning in to the Goldman Sachs Communacopia Conference this year. So thanks joining from eBay, and look forward to catching up soon.

And with that, I think we're going to close out the fireside chat. Thanks, guys.

Jamie Iannone

Thank you, Eric. Great to see you this morning.

Steve Priest

Thanks, Eric.