EBay Inc (EBAY) — Q2 2017 Earnings Call Transcript

Thank you. Good afternoon. Thank you for joining us, and welcome to eBay’s earnings release conference call for the second quarter of 2017. Joining me today on the call are Devin Wenig, our President and Chief Executive Officer; and Scott Schenkel, our Chief Financial Officer. We’re providing a slide presentation to accompany Scott’s commentary during the call. All revenue and GMV growth rates mentioned in Devin and Scott’s remarks represent FX-neutral year-over-year comparisons unless they clarify otherwise. This conference call is also being broadcast on the Internet, and both the presentation and call are available through the Investor Relations section of the eBay website at investors.ebayinc.com. You can visit our Investor Relations website for the latest company news and updates. In addition, an archive of the webcast will be accessible for 90 days through the same link. Before we begin, I’d like to remind you that during the course of this conference call, we will discuss some non-GAAP measures related to our performance. You can find the reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call. In addition, management will make forward-looking statements that are based on our current expectations, forecasts, and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of eBay Inc. and its consolidated subsidiaries, including expected financial results for the third quarter and full year 2017 and the future growth of our business. Our actual results may differ materially from those discussed in this call for a variety of reasons. You can find more information about risks, uncertainties, and other factors that could affect our operating results in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s Investor Relations website at investors.ebayinc.com or the SEC’s website at sec.gov. You should not rely on any forward-looking statements. All information in this presentation is as of July 20, 2017, and we do not intend and undertake no duty to update this information. With that, let me turn the call over to Devin.

Thanks, Selim, and good afternoon, everyone. Q2 is a good quarter for us. We delivered strong top and bottom line financial results led by acceleration in our core eBay platform. At a time when retailers are struggling more every day, we were able to accelerate growth by improving our customer experience and beginning to reinvigorate our brand. Overall, total GMV was up 5% for the quarter while revenue was up 7%. Active buyer growth was stable at 4% as we added nearly 2 million buyers to our platforms in Q2. Excluding buyers in India, which will no longer report after our Flipkart transaction closes, growth in buyer acquisition was 5%, accelerating a point. GMV on our Marketplace platform grew 6%, a one point acceleration driven by strength in the U.S., our Classified platform grew revenue at 11% and StubHub volume was down 5%, driven by tough comps and a weaker event landscape than we expected. Finally, we’ve returned $0.5 billion to our shareholders in the form of stock repurchases. Now let me take a moment to put our Q2 performance in the context of our strategy. Two years ago, we began repositioning our business for long-term success by driving the best choice, the most relevance, and the most powerful selling platform while sharpening the eBay brand. At the time, we said we’re confident in our ability to deliver improved user experiences and to accelerate growth on our core eBay platform, now we’re doing just that. We’ve made significant progress to modernize and simplify eBay while bringing forward its unique strengths. We’ve created a product catalog that covers well over half our inventory. We’ve built and launched hundreds of millions of new products and browse spaces and we’ve rolled out a significant number of customer improvements at an accelerating pace. And we’ve begun to reposition the eBay brand to be more differentiated while also correcting longstanding misperceptions about eBay. Over the past two years, we’ve added 14 million active buyers while improving the GMV growth of our core platform and accelerating revenue growth. We’ve delivered well over $4 billion of net income while returning $5 billion of cash to shareholders through share repurchases. We’ve also created renewed vibrancy and energy across our company and our culture as we work together to execute our business strategy and to accelerate growth. As an example, over the past two years, our employee satisfaction has increased while our turnover has decreased. Another important element of our culture is our ongoing commitment to make eBay more diverse and inclusive, which is a competitive advantage in recruiting world-class talent and ensuring that our workforce reflects the diversity of our marketplace. In summary, we’re on track with our plans. We’re making progress in our business and our organization, and we’re right where we expected we would be. We continue to drive best choice by providing our consumers with great selection and value. We’re focused on attracting and retaining sellers and brands that bring differentiated inventory to eBay and this continues to yield good results. For example, in Q2, we collaborated with Disney to offer exclusive Pirates of the Caribbean merchandise and we launched nest and EGI as new brands on our platform. Growth in the global number of eBay business sellers accelerated in Q2, the second straight quarter of acceleration. And just last week, we announced the partnership with Shopify to enable their merchants to list and sell their products on eBay directly from their Shopify account, which will expand merchants and inventory over time. Finally, we launched a price match guarantee on our eBay deals platform ensuring our consumers always have access to the best inventory at the best prices. Traffic to our new structured data enabled user experiences was at 9% exiting the quarter with continued strong conversion in our SEO channel while conversion in our organic and paid traffic channels continues to be stable. Within SEO where our experiences have been in place the longest conversion further improved and we saw strong acceleration in traffic growth this quarter. The rollout of our new homepage has expanded to all users across eight key geographies. We leveraged our structured data and AI to deliver an experience tailored to each eBay user’s interests and passions. Early evidence shows users are responding well to the new homepage with lower bounce rates and better engagement. This tells us we’re matching users with content that’s more relevant to them. We stepped up our brand’s marketing in Q2. In April, we rolled out a national fashion campaign and in June we launched the first activation of our new brand platform ‘fill your cart with color’ using multiple channels including television, digital and social. And while it’s still very early to determine the overall efficacy of our brand advertising, we’re seeing promising early results with better purchase consideration in our fashion category and an increase in traffic from new to eBay visitors. We recently began building on our brand marketing with the launch of a significant out-of-home campaign in the U.S., the next phase of our television and social advertising. We plan to continue to invest in our brand in the second half of this year including the international rollout of the new campaign. Finally, we continue to execute our plans to deliver the most powerful selling platform. In Q2, we engaged our developer community by hosting a developer conference at our San Jose campus, and we announced significant enhancements to our suite of APIs. Over time this will enable better innovation on our platform, which will benefit our sellers of all sizes. We also continue to expand adoption of our Seller Hub product while adding capabilities to enable sellers to more effectively manage their eBay businesses. Our Classified platform had another strong quarter of revenue growth driven across our broad portfolio of assets. We’re focused on increasing traffic and engagement through better mobile experiences and improving our verticals. And our inventory integration between Marketplace and Classifieds continues to perform well. Finally, StubHub had a challenging quarter driven by continued lapping of strong growth comps coupled with the U.S. events landscape that was significantly weaker than we had anticipated. Last year, we benefited from record-setting events such as Hamilton and Copa America along with strong NBA and NHL postseasons and good performance of top selling MLB teams, none of which repeated in Q2 of this year. While U.S. growth lags, we continue to expand our global event marketplace with significant double-digit international GMV growth this quarter and we continue to improve the product experience this quarter with innovations in our native app, social commerce, and a globally integrated event catalog. While we expect to face tough growth comps again in Q3, StubHub is well positioned to grow over the long term due to our leading consumer brand, expanding industry partnerships, and continued innovation. In summary, Q2 was a good quarter for our business with accelerating volume and revenue growth in our core Marketplace platform. In the two years since implementing our strategy, we’ve made the product and technology investments necessary to enable us to deliver growth acceleration. Our focus continues to be on improving the customer experience and we won’t hesitate to trade-off short-term results when necessary. Looking forward to the second half of this year, we expect good execution and an increasing pace of product innovation. And with that I’ll turn it over to Scott to give you more detail on the Q2 results.

Thanks, Devin. Let’s begin with Q2 performance, starting on Slide 4 of the earnings presentation. In Q2, we generated $2.3 billion of total revenue, $0.45 of non-GAAP EPS and $517 million of free cash flow. We repurchased $507 million of our stock and this week our Board of Directors approved an additional $3 billion share repurchase authorization. Moving to active buyers. In the quarter, we increased our total active buyer base to 171 million while trailing 12-month growth was stable at 4%. Underlying the overall trends, we saw stable retention and continued positive momentum in new user acquisition with particular strength coming from the U.S. and Korea. On Slide 6, in Q2, we enabled $21.5 billion of total GMV, up 5%. By geography, the U.S. generated $8.8 billion of GMV, up 30%, while international delivered $12.7 billion of GMV, up 7% year-over-year. Moving to revenue, we generated total net revenues of $2.3 billion up 7% on an FX neutral basis and up 6% organically, both stable versus the prior quarter. We delivered $1.8 billion of transaction revenue, up 6%, and $511 million of marketing services and other revenue, up 9%. Turning to Slide 8. Our Marketplace platform grew GMV by 6% in Q2, one point acceleration versus the prior quarter. U.S. GMV accelerated one point quarter over quarter to 5% and international GMV grew 6%, stable versus the prior quarter. Underlying those trends, our B2C growth rate was 6% year-over-year and C2C growth was 3%, both slightly improving versus the prior quarter. Total Marketplace revenue was $1.9 billion up 7% year-over-year, two point acceleration versus the prior quarter. Transaction revenue also grew 7% and accelerated two points versus Q1, one point faster than GMV as the pricing changes we announced in Q1, which are enabling increased investments to drive velocity for our sellers went into effect. Marketing services and other revenue grew 4%, a deceleration of two points versus the prior quarter. The deceleration was driven by the elimination of certain third party ads on our site in addition to lapping significant Q1 growth from our co-branded credit card revenue, which is recognized annually in the first quarter. As we continue to shift our advertising strategy away from third party and towards first party advertising, this will favor transaction revenue putting ongoing pressure on MS&O revenue growth. Moving to Slide 9. StubHub GMV declined 5% year-over-year decelerating 11 points from Q1 while revenue grew 5%, a deceleration of 14 points versus the prior quarter. This quarter we lapped the strongest growth rates from all of last year in addition to facing into a weaker events landscape as Devin discussed earlier. While we will continue to face tough comps through most of Q3, we believe Q2 will be the low point of growth for this year. Moving to Slide 10. In Q2, Classifieds grew revenue 11%, one point acceleration versus Q1. We’re seeing strong growth across our key markets driven by improved user traffic and engagement, partially offset by ongoing monetization headwinds as traffic shifts to our mobile app platforms. Turning to Slide 11 and major cost drivers. In Q2, we delivered non-GAAP operating margin of 27.3%, which is down 180 basis points versus last year, 80 basis points of which was driven by a stronger U.S. dollar impacting all spend categories. I will focus my remaining comments on the operational dynamics of our expenses. Cost of revenue increased year-over-year driven by our Ticketbis acquisition, our first party inventory program in Korea and incremental investments in eBay customer support. Q2 sales and marketing expenses decreased as a percentage of revenue as productivity and marketing channels and reallocations across platforms more than offset increased Marketplace brand advertising. In June, we launched a new multichannel brand campaign in the U.S. which will rollout across our key international markets throughout the remainder of the year. Product development costs were relatively flat as a percentage of revenue as we are now lapping increased product investments from the second quarter of last year. We continue to drive operating leverage to fund ongoing investments in key areas such as the expansion of structured data and the product experience enhancements across our platforms. G&A expenses were up year-over-year driven by the addition of Ticketbis operating expenses and investments in data, security, and employee benefits and services. Turning to EPS on Slide 12. In Q2, we delivered $0.45 of non-GAAP EPS, up 5% versus prior year with FX negatively impacting EPS growth by five points. EPS growth was driven by revenue growth and the net benefit of share repurchases partially offset by the cost dynamics described earlier. GAAP EPS for the quarter was $0.02 down $0.36 versus last year. Our GAAP results were negatively impacted this quarter by a non-cash income tax charge of $311 million caused by the foreign exchange remeasurement of a deferred tax asset related to the ongoing realignment of our legal structure. As always you can find the detail of reconciliation of GAAP to non-GAAP financial measures on our press release and earnings presentation. On Slide 13 in Q2 we generated $517 million of free cash flow, which was down 16% on a year-over-year basis primarily driven by timing differences of cash tax payments. CapEx was 8% of revenue in Q2 and we continue to expect to be in the range of 7% to 9% of revenue for the year. Turning to Slide 14. We ended the quarter with cash, cash equivalents and non-equity investments of $13.6 billion of which $4.9 billion is in the U.S. Our capital allocation strategy is designed to manage the capital structure in a way that optimizes our financial flexibility, access to debt and our cost of capital to enable capital return and drive long-term shareholder value. In Q2, we raised $2.5 billion of debt, which we plan to use for general corporate purposes, repayment of our near-term debt obligations, share repurchases, and M&A activity. Additionally, we repurchased 15 million shares at an average price of $33.79 per share amounting to $507 million in total. We ended the quarter with $479 million of share repurchase authorization remaining and as I previously mentioned our Board of Directors approved an additional $3 billion authorization this week. We remain committed to capital return at a minimum of 50% of free cash flow for the full year and we will continue to be in the market opportunistically at levels above that. Before discussing our Q3 guidance, I’d like to remind you that we will start to utilize hedge accounting to better protect revenue from currency movements in the second half of 2017. As I mentioned on our January earnings call, we implemented a new hedging program that is intended to reduce volatility of our top-line from foreign exchange. Going forward, our hedging results will be recorded in our net revenue line and not our interest and other line. With that let’s turn to our Q3 guidance on Slide 15. We are projecting revenue between $2.35 billion and $2.39 billion representing organic FX neutral growth of 6% to 8% year-over-year. Our guidance assumes continued improvement in marketplace volume and revenue growth. We expect non-GAAP EPS of $0.46 to $0.48 per share representing year-over-year growth of 3% to 7% on an as-reported basis. EPS growth will be driven by revenue growth and the net benefit of our share repurchase program offset by continued investments to drive improved user experience and to market our brand. Additionally, we expect FX to impact us by approximately five points of growth on a year-over-year basis. For Q3, we expect GAAP EPS in the range of $0.30 to $0.32. For the full year, we continue to expect revenue in the range of $9.3 billion to $9.5 billion, organic FX and revenue growth of 6% to 8%, non-GAAP operating margin in the range of 29% to 31%, non-GAAP EPS in the range of $1.98 to $2.03 per share and free cash flow of $2.2 billion to $2.4 billion. Assuming foreign exchange rates remain where they are today, we would expect revenue dollars to be slightly above the high-end of our guidance range. We are updating our full-year GAAP EPS guidance to $1.65 to $1.75 per share reflecting the impact of the previously mentioned non-cash income tax charge recorded in Q2. As our legal structure realignment process continues throughout this year, it may result in further non-cash adjustments that are not currently factored into our GAAP guidance. In summary, we are seeing positive momentum and we expect to launch an increasing number of product enhancements throughout the remainder of this year in addition to increasing our brand advertising to drive improved consideration and traffic. As we significantly changed the eBay user experience, the improvement in our results may not always be linear. However, we believe we are investing in the right initiatives to meet our commitment to accelerate growth. We are on the right track and execution will be key for the second half of this year as we continue to set the business up for longer-term success.

Thanks so much for taking the question. Maybe taking a step back as we look into that part of the year, I want to know if you could frame some of those key investments that you think are necessary to continue the momentum in the business that you’re seeing in Q2 over Q1 and what we should be watching towards those investments play out in terms of the key metrics on either the top line users, sellers GMV? How should we be measuring that? Thanks so much.

I’ll talk about the investments and then Scott can just frame it. It’s not a lot different than what we’re doing. We think we’re on the right track and we will continue to build out our catalog and continue to build out our structured data foundation. You’ll see an accelerating pace of user innovation on top of that meaning the eBay site will continue to evolve. There are some significant product deliverables in the second half built on that foundation, which we’ve already announced, which in the coming weeks and months we’ll update on when the delivery is, but there is significant move on things like guaranteed delivery and things like authentication. And all of that’s built on the same foundation and we’ve already discussed that and we think those are on the right path. You’ll also see us continue to expand the brand advertising campaign. As an example, we’ve launched it in the U.S. We have not launched it yet internationally and that will happen in the second half. So on the back of those things, what we’re seeing is traffic improve, buyers improve, and conversion improve. We like that. So, we’re going to keep expanding the surface area of that and it’s on that basis that we’ve given the guidance in the second half that we’ve given, which implies continuing improvement. I don’t know if you have anything to add, Scott.

No, you covered it.

Great, guys I just had a couple of questions. First is the spring seller update, can you just talk about the overall impact to back half revenue, just going to be revenue neutral or accretive and you know if StubHub continues to underperform and I think Scott’s comment about exceeding the high-end of the revenue range that he just made. What would that imply for marketplace GMV ex-FX relative to that 8% at the high-end? And then second question is any – I think you mentioned the U.S. active buyers are picking up in the second quarter. Any early feedback or metrics around the ad campaign that launched in the quarter? Is that was driving in or is it something else? Any color there would be helpful. Thank you.

Yeah, let me work backwards real quick. First off on active buyers. As Devin called out, excluding India, we grew active buyers by 5%, which accelerated nearly a point quarter-over-quarter with particular strength in the U.S. and we’d call that also augmented by Korea. Three dynamics under there, some of which we’ve talked about, some of which I’ll just expand upon. First is retention. We continue to see that stable as we exposed more users to our new experiences. New buyers, we see new buyers coming particularly from our new SEO landing pages based on the structured data pages that underlie that. And we’re starting to activate the brand much more at scale than we have and we expect that to supplement new buyer growth with increased consideration. This is in early phases, but we’re happy with the early start. If I go back to your first couple questions, first maybe start with guidance. You know as I called out the Q3 organic revenue as well as the total year organic revenue of between 6% and 8% is really going to be based on the acceleration that we expect to see in marketplaces GMV and revenue. The pricing change that we made will continue to favor transaction revenue and much of that as I call that my remarks will be reinvested to try and accelerate the pace that we see in our growth. What was the other one? Active buyers…

I think that was it.

That was it. Anything to add…

How the brand campaign is doing? I just say – look we’re pleased with it. I think the response has been really good. To some extent we started feathering brand marketing in earlier in the year, but we really kicked that in at the back half of Q2 and you’ll see that continue throughout the year and expand internationally. We’ve seen traffic respond nicely. It’s a little early to be calling virus, but we’ve seen traffic respond nicely and we’ve seen that traffic come from new to eBay users, which is really the intention of a brand campaign as to expand those – expand our consideration. And you know a month, a month and a half in, we think that’s happening, but with all brand campaigns you’re going to keep it on and that’s what we’re going to do. So we’ve – again, it’s – these are all themes, we think we’re on the right track and we’re going to keep doing it but on an accelerating pace.

Yeah, let me double-click real quick on Marketplaces GMV. If you back up here, we’ve accelerated Marketplaces GMV from 4-ish to 5% to 6% over the course of the last year, and this has been driven by the U.S., which has accelerated roughly one point per quarter over that same time period, while international has been relatively stable. So we’ve made the most improvement, as Devin called out, to our foundation and as well as changes to the Marketplaces ecosystem in the U.S. and we’re in the – and we’re further along in the brand activation, as Devin called out, in the U.S. And those improvements, the changes in the ecosystem, the brand are in the process of rolling out across our platform and our properties internationally. And so in a global ecosystem, it’s highly dependent on many factors. But as I said, things won’t always be linear, but we believe we’re making the right investments and we’re making balanced trade-offs to drive that growth, and our outlook and guidance assumes that.

Thanks. Let’s go ahead and go to the next question.

Thanks for taking the question. Devin just wanted to ask you about structured data. You talked about SEO being strong and conversion improving. I hope you could also just talk about what you’re seeing in terms of organic and SEM as well. Thanks.

Yes, those metrics are stable and consistent with previous levels since we haven't fully penetrated that area yet. In the last quarter, we really expanded our presence in SEO, reaching 22% of total SEO shares with these new experiences. It's noteworthy that these experiences have been established longest in SEO, providing the most surface area for growth. About two quarters ago, we mentioned seeing solid double-digit gains in conversion rates, and that trend has continued to improve this quarter. We're also experiencing significant traffic acceleration in SEO, which we find encouraging. In the core areas where we are beginning to overlap with search and the homepage, performance remains stable, which is expected. We anticipate that performance will improve over time, but we’ve indicated that gains at the edge won't be as pronounced as those near the core. While we believe we will achieve gains, the profile will differ. Overall, this is developing as we hoped, with improved conversions and SEO as we transition from the edge to the core. I'll reiterate what I mentioned last quarter: the pace of improvement isn't linear. It is expected to accelerate in the second half, and you will see the new experiences on eBay by this holiday season, which we still believe will happen.

Okay, thank you.

Thanks. Next question.

Thanks guys. I had a couple of questions. First, with the active buyer activity picking up, I wonder if you’re seeing a corresponding increase in seller activity, not only in terms of the number of sellers but more granular metrics such as the number of listings per seller or something like that. And then secondly, as a follow-up on the advertising strategy, Devin, are you closer to the point now where some of the investment in the brand initiatives at the top of the spending funnel can graduate towards more of a transactional or a direct response effort? And if that’s the case, how quickly should we expect to see the benefits of that shift in volume?

Yeah, two good questions. So let’s start with active buyers. On the seller side, we’re seeing a really nice acceleration of the number of sellers on eBay. It’s the second straight quarter of acceleration. So we’re seeing a lot of small and medium-sized businesses start selling on eBay for the first time, we’re really happy about that. I also talked about brands while we’re acquiring a lot of SMBs and small sellers, we’re also starting to acquire brands at an increasing pace, which is excellent. I am really pleased about that. So listings. I think what’s interesting is over time, listings, as structured data penetrates our site and our experiences, listings will become a less important metric than products will. We’re not quite there yet, but I’ll just give you one example. So listings are growing, but we’re working with sellers to take duplicates now. And we’ve been pretty aggressive about that right now because it clutters the site and it depresses conversion. So listings might not linearly or exponentially keep going up. There may be periods when it comes down but we’re actually adding the number of products. So the most important thing are sellers and inventory, and both are increasing at an accelerated pace. Vis-a-vis marketing, Colin, we’re doing both at the same time. So we’re doing the brand and there’s a significant amount of consideration work that’s implicit in the brand. But we’re also doing a lot of the normal advertising that we do, which is buy this. And you saw some very active over the last several weeks selling our deals, selling deals that are in our Price Match program. So it’s all of the above, and that’s implicit in our expectation of further acceleration in the second half.

And if you go back to some of the conversations we’ve had in the last few quarters, we’ve invested a lot in structured data and we’ve invested a lot in new experiences. And I think you’re seeing that pay off in our parts and accessories experience, which is also where we’re seeing nice growth in very differentiated based on the experiences that we’ve developed.

Great, thanks.

Thanks a lot. Your Q3 guidance obviously implies further revenue acceleration despite a – I think it’s a 100 basis point tougher comp and despite, as you mentioned, the continued headwinds from StubHub, Did the company exit Q2? And/or are you entering Q3 seeing this acceleration? And that’s what’s giving you the confidence to provide that outlook or are there some things that you plan to do or see throughout the quarter that’s driving that expectation for improved growth going forward? And then just quickly on the comment regarding Q3 revenue potentially being above your guidance, if FX rates hold, can you just clarify that comment. Is that because you’re using maybe a different FX assumption in your guidance? Thanks.

I won’t discuss our current position this week, but I would say that we’re noticing overall improvement in all the metrics we want to track. As time passes and we implement our strategy more effectively with our new product and enhanced customer experiences, we are seeing improvements in buyers, traffic, and conversion rates. This growth gives us the confidence to provide the guidance that we have shared. While I won’t compare this week to last week, I can confidently say that the business has been consistently getting healthier over time. Though it’s not always a straight line, we believe we understand the trends. We anticipate continued progress and expect to see an acceleration in the second half of the year. With much of the foundation now established, we plan to move forward more quickly, and I’m observing the results we had hoped for, leading us to accelerate our efforts. Regarding revenue growth, Scott will address the impact of foreign exchange, but the primary driver of revenue acceleration is the growth in gross merchandise volume, which tends to move in tandem with revenue.

As I mentioned in my prepared remarks, if FX rates remain where they are today, then all I was calling out was that the revenue dollars that we report at the end of the year would be at or above, really above the high end of the range. That said, the organic FX neutral growth rate of 6% to 8% remains and that’s driven by the dynamics we just talked about.

Operator, we will take one more question.

Great, thanks for taking the question. I wanted to go back a little bit to the new homepage and the product. And Devin, you talked about lower bounce rates and better engagement rates from the new homepage. Are you seeing the same on mobile with the mobile product pages launched? And if you could comment around mobile conversion rates as well that would be helpful. Thank you.

It’s a little bit different because the homepage is obviously a different experience on mobile than it is on the desktop. But what I would say is that historically for everyone’s e-commerce business, mobile conversion is less than desktop conversion. But we’re seeing improvements in mobile conversion alongside the improvements of the desktop from a lower base but we’re seeing the improvements as we begin to roll the structured data experiences out to mobile as well. So SEO on mobile is driven just the same by structured data experiences. Our product pages are now in our native app and in our mobile web experience. So it’s moving right along at the same, yes, mobile is less than desktop, but it is for everyone and we’re seeing it move up lockstep with the desktop, so we’re pretty pleased by that, no real difference depending on the floor mat.

Thank you.