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CNBC Exclusive: CNBC Transcript: Jon Fortt Speaks with Ebay CEO Devin Wenig Today on CNBC's "Squawk Alley"

WHEN: Today, Monday, July 20th

WHERE: CNBC's "Squawk Alley"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with eBay CEO Devin Wenig on CNBC's "Squawk Alley" (M-F, 11AM-12PM ET) today. Following are links to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000399078 and http://video.cnbc.com/gallery/?video=3000399101.

All references must be sourced to CNBC.

JON FORTT: WELCOME BACK TO "SQUAWK ALLEY." I'M HERE IN SAN JOSE WITH EBAY CEO, DEVIN WENIG. AND THIS IS THE FIRST DAY IN A LONG TIME THAT EBAY HAS BEEN TRADING WITHOUT PAYPAL AS A PART OF IT. STOCK'S UP, I THINK, AROUND 1.75%. WE TEND TO WATCH THE MOMENT BY MOMENT, BUT I KNOW YOU'VE GOT LONGER TERM THINGS TO THINK ABOUT. I THINK IT'S FAIR TO SAY IN THIS SPLIT, EBAY RIGHT NOW IS COMING OUT AS SORT OF AN UNDERDOG, SMALLER MARKET CAP. THEY SADDLED YOU WITH A BIT MORE DEBT THOUGH YOU ALSO HAVE SOME CASH ON TOP OF THAT. DO YOU EMBRACE THAT?

DEVIN WENIG: WELL FIRST OF ALL, WELCOME TO EBAY THIS MORNING. WE'RE DELIGHTED TO HAVE YOU. THIS IS A REALLY EXCITING DAY. TODAY WE ARE GOING TO CELEBRATE THE HISTORY OF THE COMPANY, BUT MOST OF ALL WE ARE GOING TO LOOK FORWARD. AND WE'RE REALLY EXCITED. FIRST OF ALL, WE'RE DELIGHTED AT THE SUCCESS OF PAYPAL. A LOT OF US WORK VERY HARD TO MAKE PAYPAL SUCCESSFUL AND IT'S A PROUD DAY TO SEE THEM NOW AN INDEPENDENT COMPANY DOING SO WELL. BUT NOW OUR FOCUS IS ON BUILDING EBAY AND THIS IS AN INCREDIBLY STRONG BUSINESS. THIS IS A BUSINESS THAT'S ADDED ALMOST 70 MILLION USERS IN THE LAST FOUR YEARS. INCREDIBLE CASH FLOW AND BALANCE SHEET. AND GROUNDED IN A REAL SENSE OF PURPOSE. SO THE FACT THAT PAYPAL IS DOING GREAT AND NOW EBAY IS DOING GREAT, IT'S A REALLY EXCITING MOMENT FOR THE ENTIRE EBAY FAMILY.

FORTT: AND EBAY IS A STRONG BRAND. A LOT OF PEOPLE KNOW IT. YOU'VE HAD SOME CHALLENGES OVER THE PAST SEVERAL MONTHS. THE HACK, TRYING TO REACQUIRE USERS. YOU'VE HAD THE SEARCH ENGINE ISSUES WITH GOOGLE AND YOU'RE REORGANIZING THE SITE TO MAKE THE CONTENT ON EBAY EASIER TO FIND. YOU'RE NO LONGER DEFINED AS AN OPTION SITE. YOU HAVE A LOT OF OTHER THINGS GOING ON. BUT MAYBE YOU CAN HELP PUT A FINE POINT ON THAT FOR ME. DEFINE EBAY IN THE DEVIN WENIG ERA AS CEO, MAYBE IN TERMS OF WHAT YOU'RE NOT GOING TO BE.

WENIG: I DON'T THINK WE WANT TO BE LIKE ANYBODY ELSE. YOU'LL DEFINE US IN A COUPLE YEARS NOT BY HOW MUCH WE COMPARE TO OUR BIG COMPETITORS, BUT BY HOW LITTLE WE COMPARE TO THEM. THIS IS A MARKET THAT IT'S ALL OF COMMERCE FOR GRAB. IT'S $14 TRILLION. WHEN THE PHONE WAS LAUNCHED A COUPLE OF YEARS AGO, THAT BROUGHT THE BARRIERS BETWEEN ON AND OFFLINE COMMERCE DOWN. IN THAT WORLD, A SHARPLY DIFFERENT EBAY THAT STANDS FOR VALUE AND SELECTION, WHICH IT'S ALWAYS BEEN ABOUT, AND INNOVATES ALONG THAT ACCESS, IS EXACTLY WHERE WE'RE GOING. SO I DON'T LOOK AT ANYBODY ELSE'S BUSINESS WITH ENVY. I START BY SAYING THIS IS ONE OF THE WORLD'S MOST IMPORTANT COMMERCE SITES AND WE'RE GOING TO LEAN INTO THAT.

FORTT: BUT HOW DO YOU DIFFERENTIATE? BECAUSE AMAZON DOESN'T WANT TO GIVE YOU ANY ROOM TO RUN. THEY WANT TO BE EVERYTHING. THEY JUST HAD THIS PRIME DAY THING. THEY ARE TRYING TO CREATE THEIR OWN HOLIDAYS NOW. THEY SPENT TIME BUILDING UP THIS LOGISTICS INFRASTRUCTURE THAT YEARS AGO LOOKED LIKE IT WAS A PROBLEM BECAUSE IT AFFECTED MARGINS AND IT AFFECTED PROFITS. TURNS OUT INVESTORS DON'T SEEM TO CARE ABOUT PROFITS ANYMORE WHEN IT COMES TO AMAZON. SO WHAT DOES EBAY DO THAT MAKES YOU DIFFERENT ENOUGH THAT PEOPLE SAY, NAH, I'M NOT GOING TO GO TO AMAZON FOR THAT. I'M GOING TO GO TO EBAY.

WENIG: 160 MILLION PEOPLE SHOP ON EBAY ALL THE TIME BECAUSE WE HAVE THE MOST THINGS FOR SALE. WE HAVE THE BEST CHOICES. WE HAVE THE BEST VALUE. AND OUR BRAND STANDS FOR SOMETHING DIFFERENT. IN MANY WAYS IT'S AN EMOTIONAL BRAND, IT'S NOT A UTILITY. PEOPLE COME TO EBAY WHEN AS MUCH THEY DON'T KNOW WHAT THEY WANT TO BUY AS WHEN THEY DO. IT'S A PLACE THAT THEY FUEL THEIR PASSIONS. IT'S A PLACE THAT THEY CAN ENGAGE WITH THE COMMUNITY. THAT'S REALLY DIFFERENT ABOUT EBAY. AND ON THE SELLER SIDE, WE DON'T COMPETE WITH OUR SELLERS. WE'RE A MARKETPLACE. THAT'S A BIG DEAL AND THAT'S WHY WE'RE THE WORLD'S BIGGEST STORE. THAT'S WHY WE HAVE 25 MILLION SELLERS AND I THINK THE NEXT BIGGEST MARKETPLACE MIGHT HAVE A COUPLE MILLION. SO THIS IS A COMPANY WITH EXTRAORDINARY ADVANTAGES. WE'RE STARTING TODAY WITH A GREAT SENSE OF ENTHUSIASM. IN MANY WAYS THE FOCUS THAT THE PAYPAL SPINOFF BRINGS US GIVES US GREAT OPPORTUNITY TO INNOVATE IN THAT CORE. AND I THINK THAT'S WHAT OUR CONSUMERS AND OUR SELLERS WANT FROM US.

FORTT: SPEAKING OF INNOVATION, A LOT OF NAMES IN E-COMMERCE ARE BRANCHING OFF INTO DIGITAL MEDIA. USED TO BE YOU BOUGHT YOUR BOOKS, YOUR CDs, YOUR MOVIES AND TV SHOWS IN A PHYSICAL MEDIA FORM, NOW A LOT OF THAT IS STREAMING. DOES THAT JUST MEAN THAT'S AN AREA THAT EBAY IS NOT GOING TO TOUCH ANYMORE, OR DO YOU DO SOMETHING EITHER BY YOURSELVES OR THROUGH PARTNERSHIPS IN STREAMING DOWN THE LINE?

WENIG: WE'LL SEE. I THINK IT'S A REALLY GOOD QUESTION. I DON'T THINK THE WORLD NEEDS ANOTHER STREAMING MUSIC SERVICE OR ANOTHER MOVIE SERVICE.

FORTT: YOU'RE THE ONLY ONE IN SILICON VALLEY WHO SEEMS TO THINK THAT.

WENIG: WE'LL SEE, BUT I DON'T THINK THAT'S THE ONLY DIGITAL CONTENT THAT'S RELEVANT. AND EBAY STARTED DOWN THE TAIL AND EBAY AGGREGATED A LONG FRAGMENTED SET OF GOODS. I NOW LOOK AT WHAT'S HAPPENING IN DIGITAL CONTENT AWAY FROM BIG MOVIES AND MUSIC, AND I SAY HOW DO WE GET SMALL ARTISANS AND CREATORS OF NICHE CONTENT TO BETTER MONETIZE IN AN ADVERTISING DOMINATED WORLD. THAT MIGHT BE AN OPPORTUNITY FOR US.

FORTT: DOES THAT MEAN YOU BUY ETSY?

WENIG: NO, WE'RE TALKING DIGITAL CONTENT. AND I THINK THERE ARE MANY OPPORTUNITIES PERHAPS TO ALLOW DIGITAL CREATORS TO MONETIZE BETTER. BUT NOT COMPETE WITH NETFLIX AND APPLE. WE DON'T WANT TO DO THAT.

FORTT: OKAY. YOU HAVE $8 BILLION IN CASH OVERALL, NEARLY $7 BILLION IN DEBT, I BELIEVE. DOES THAT TIE YOUR HANDS AT ALL WHEN IT COMES TO ACQUISITIONS? DO YOU PLAN TO ACQUIRE AT ANY SCALE OR ARE YOU IN A POSITION OF BEING CONSERVATIVE?

WENIG: I THINK THE HALLMARK OF OUR COMPANY HAS BEEN DISCIPLINE AND CAPITAL ALLOCATION. WE ARE ACQUISITIVE BUT WE'RE TOUGH ON OURSELVES. WE DON'T BUY THINGS JUST FOR THE SAKE OF BUYING THEM TO GET BIGGER. THIS IS A COMPANY THAT HAS AN INCREDIBLY STRONG FREE CASH FLOW POSITION. IT'S A GREAT BUSINESS MODEL. THIS YEAR WE'VE SAID WE'LL GENERATE BETWEEN $2.1 AND $2.3 BILLION OF FREE CASH AND MORE NEXT YEAR. SO EVEN WITH A BALANCE SHEET THAT HAS $1 BILLION OF NET DEBT, THIS COMPANY GENERATES BILLIONS OF FREE CASH FLOW A YEAR. HOW WE'LL USE THAT WILL BE – WE'LL ALLOW THAT CAPITAL TO COMPETE FOR THE BEST USE FOR OUR SHAREHOLDERS. UNDOUBTEDLY WE'LL DO ACQUISITIONS. WE MAY ALSO RETURN CAPITAL TO SHAREHOLDERS. AND OUR FIRST USE ALWAYS IS TO INVEST ORGANICALLY IN OUR BUSINESS AND TO INNOVATE. SO WE HAVE TREMENDOUS FLEXIBILITY. WE DON'T FEEL ANY FINANCIAL CONSTRAINT WHATSOEVER TO ACCOMPLISH OUR MISSION.

FORTT: TWO YEARS FROM NOW, WHAT'S THE ONE METRIC THAT PEOPLE ARE GOING TO LOOK AT WITH EBAY AND SAY, I'M SURPRISED THAT THAT DID AS WELL AS IT DID?

WENIG: I THINK THEY WILL LOOK AT IT AND SAY I'M SURPRISED THIS BUSINESS HAS GROWN AS MUCH AS IT HAS.

FORTT: IS THAT REVENUE? IS THAT USERS? WHICH ONE?

WENIG: I THINK IT'S USERS AND GMV ARE THE TWO METRICS OUR INVESTORS LOOK AT. CAN WE GROW OUR USER BASE AND CAN WE ULTIMATELY – GMV FOR US IS MEASURED SALES.

FORTT: RIGHT. GROSS MERCHANDISE VOLUME.

WENIG: CORRECT. AND LAST YEAR THAT WAS $83 BILLION. AND IF YOU LOOK AT THE FOUR YEARS, WHICH IS MY TIME FRAME HERE, IT GREW ABOUT 11% COMPOUND ANNUAL GROWTH AND USERS GREW FASTER, ABOUT 15. LAST YEAR, SOME CHALLENGES, BUT OUR GOAL IS TO GET OUR GROWTH BACK, WORK IT BACK UP AND BE DISCIPLINED IN HOW WE DO THAT. SO EXCITING FUTURE.

FORTT: EXCITING INDEED. EXCITING DAY FOR YOU GUYS HERE AT EBAY. DEVIN WENIG, CEO OF EBAY, ON ITS FIRST DAY IN A LONG TIME TRADING SEPARATELY FROM PAYPAL. GUYS, BACK TO YOU.

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