Jamie Iannone
President and Chief Executive Officer at eBay
Thanks, John. Good afternoon, everyone, and thank you for joining us today.
2022 was a year of consistent execution for eBay, as we made significant progress against our long-term objectives. Our focused categories drove underlying growth in our business, as we expanded global coverage for our 16 million enthusiast buyers. In Motors Parts and Accessories or P&A growth accelerated as we improved our fitment capabilities, increased supply of OEM parts, and enhanced trust signals for buyers. We extended authentication to new categories like trading cards and fine jewelry, and opened authentication centers in several new countries for handbags.
We opened the vault to store and individually transact valuable items, and adoption has grown steadily week over week. We retired legacy technology, simplified the architecture of our core services, and improved our tech velocity. Our advertising growth accelerated as we scaled our three newer Promoted Listings products, optimized performance, and automated more elements of campaigns. We expanded our financial services portfolio by adding FX conversions, new forms of payments like Klarna and Afterpay, faster debit card payouts, and a digital wallet. And we balanced our investments in innovation with prudent cost discipline to establish a strong foundation for sustainable profitable growth for many years to come.
Now turning to the fourth quarter. We delivered solid results in Q4 as our key financial metrics came in ahead of expectations, despite the ongoing macro uncertainty. We generated over $18 billion in GMV, and more than $2.5 billion in revenue. We delivered an operating margin of close to 30% while making critical investments in product and marketing to support our long-term growth strategy. Non-GAAP earnings per share for the quarter were $1.07, up 2% year-over-year.
Our focus category strategy was a major component of our strong financial performance during the fourth quarter. Focus categories grew more than 7 points faster than the rest of our marketplace during Q4, which was 2 points faster than the prior quarter. Establishing a game-changing level of trust between sellers and buyers has been an important driver of the momentum in our focus categories. Authenticity Guarantee enables trust in our luxury categories like watches, sneakers, handbags, and fine jewelry. We have observed notable turnarounds in GMV growth since we launched authentication, improved the product experience, and grew awareness to the great inventory in these categories.
In aggregate, our luxury-focused categories have grown at roughly double-digit CAGR since Q4 of 2019, proving these investments have been highly effective. We dramatically improved trust in our refurbished offering by introducing warranties, and half of re-returns, which attracted more brands and new categories to our marketplace. Those investments paid dividends in Q4, with positive year-over-year GMV growth, and the biggest sales week ever for refurbished goods during Cyber Week.
Trust in our Motors Parts and Accessories category is most reliant on fitment, for ensuring the compatibility of auto parts with a specific vehicle. During the last few months, we have taken major steps forward with our fitment capabilities. We acquired myFitment in Q3, to help sellers populate their listings with accurate fitment data, which ensures compatibility for buyers. In Q4, we began making myFitment's technology accessible to all buyers, starting with a pilot group of P&A sellers. Listings enhanced by this technology are seeing a measurable uplift in conversion, and we will expand this program further in 2023.
Our significant investments in fitment over the past few years allowed us to launch a prominent Fit Your Vehicle badge in Q4. Similar to the Authenticity Guaranteed logo we show on luxury goods, this badge provides a clear indication of which parts fits your vehicle throughout the buyer journey across search, merchandising, view item, and checkout. This is no small feat with over 500 million active P&A listings on eBay, and the increasing complexity of vehicles in the marketplace.
These advancements have significantly elevated our capabilities for P&A shoppers, and I'm pleased to share a new program we launched just last week called eBay Guaranteed Fit. This program is the breakthrough for trust and P&A that Authenticity Guarantee is in luxury, and warranties are for eBay Refurbished. It provides buyers with assurance that eBay will stand behind them, if a part doesn't fit their vehicle. Guaranteed Fit is a huge milestone for the P&A category, and the culmination of our multi-year fitment journey. I'm incredibly proud of our teams for executing the foundational work, making this program possible, and I'm looking forward to seeing their continued innovation in the category.
I'm also excited about our team's work in collectibles, which has benefited from a steady cadence of product development and partnerships, including most recently, our live commerce beta. During Q4, we scaled up a number of eBay live events with select sellers, bringing healthy level of viewers, engagement, and GMV to participating sellers. We also introduced the eBay Live Hub, where users can subscribe to channels, and receive notifications about future events. This hub will serve as a central discovery point as we broaden the availability of live commerce to more sellers and categories this year.
Our acquisition of TCGplayer has also greatly enhanced our collectibles category, and in Q4, we began developing synergies between our respective marketplaces. In addition to its customer base of nearly 800,000 hobbyists, a major competitive advantage for TCGplayer is its relationship with thousands of local brick-and-mortar hobby shops with many subscribing to its point of sale and channel management solution. Due to this software, sellers can now more easily streamline listings and inventory, on both TCGplayer and eBay. TCGplayer also further diversified its marketplace by introducing Comex [Phonetic] during Q4, which is a natural adjacency to collectible card games. eBay's historical sales data enabled TCGplayer to launch Comex [Phonetic] with robust pricing intelligence, which will help us scale this offering. While our integration is in its early days, I'm incredibly excited to see what TCGplayer community will bring to eBay over time.
One of the key pillars of our strategy is being the platform of choice for sellers. eBay's scale and global footprint represent key advantages for our platform as we work toward achieving this vision. In 2022, roughly one-fifth of our GMV was facilitated through cross-border trade. Sellers who activate their listings internationally can reach buyers in over 200 countries globally. However, less than half of the inventory in our Top 3 markets is currently available for export, due to the friction associated with these transactions. To unlock more valuable inventory for global buyers, last fall, we announced a major revamp of our cross-border capabilities with the launch of eBay International Shipping. Under this program, eBay handles any customs forms, coordinates duties with buyers, and intermediates returns. Sellers are protected from item not received complaints, while buyers benefit from greater selection and lower shipping costs. The program is resonating well, as we gradually ramp enrollment for sellers, while buyer satisfaction on eBay international shipping transactions reached 80%. Steve will discuss the financial implications of this program, and I'm confident it will increase cross-border inventory and drive incremental GMV for eBay.
Investments in AI are also improving customer perception of our shipping capabilities. In Q4, we deployed a new machine learning model for estimated delivery date in the U.S. and select international markets, enabling us to make more accurate delivery predictions to buyers. Applying this model in the U.S. reduced the average delivery estimate by 1.5 days for all domestic listings, resulting in a noticeable uplift in conversion. A separate model deployed for eligible Authenticity Guarantee products resulted in an average reduction of approximately two days for U.S. listings. These rollouts are just the latest example of our ability to leverage AI to make our existing processes more efficient, which will be a continued focus for us in 2023 and beyond.
Moving on to ads. Our marketplace continues to benefit from innovation in our advertising business, which delivered strong growth in Q4, despite headwinds in the broader digital ad market. Promoted Listings drove first-party ad revenue of $276 million, up 27% or more than 30 points faster than GMV growth. Over 2 million sellers adopted a single ad product in Q4, and we eclipsed $700 million live Promoted Listings. Additionally, our total ad revenue is nearing 1.8% penetration of GMV.
Promoted Listing Standard was again the largest contributor to growth, both on a sequential and an annual basis as optimization gains from prior quarters continued to benefit ad rates. In Q4, we also improved our merchandising algorithms to show a greater diversity of products, which improves buyer satisfaction, while also preserving relevance and conversion.
Our newer ad products also continued to scale nicely in Q4, and grew more than 20% quarter-over-quarter. Promoted Listings Advanced, our cost per click product, continues to be a standout among the new products. Seller adoption of Advanced has grown as we have expanded access and automated more elements of campaign management, to make this powerful ad unit easier to use.
In Q4, we launched Quick Setup, a one-click campaign creation solution for sellers, where eBay automates and optimizes the campaign structure, ad groups, targeting, and keyword bids for CPC advertisers. We also introduced multi-user account access across our full suite of Promoted Listings, which enables eBay sellers to delegate campaign management, to trusted third parties like brands or ad agencies.
Turning to payments. We continue to roll out additional payment services to support high ASP transactions and improve buyer conversion. During Q4, we introduced split payments in the U.S. for transactions over $1,000, enabling buyers to spread large purchases across two credit cards. We've already processed transactions from thousands of buyers, at an average order value of over $3,000, and we're excited to expand this offering globally later this year, to better support our focus categories. Additionally, building on the success of Afterpay, we recently partnered with Zip to introduce a suite of buy now, pay later options to our Australian buyers. Zip supports purchases of up to $10,000, extending our ASP coverage in this valuable market.
By managing our end-to-end payments process, we are also able to leverage our own proprietary risk models to assess transaction requests across our marketplace. Last year, our risk and protections team, with our enhanced controls that allowed us to approve transactions that may have otherwise been declined in the past, enabling over $0.5 billion of annualized GMV, and reducing potential escalations to customer service.
In connection with risk management, we continue to invest in the security of our marketplace to ensure our capabilities remain world-class. Last week, we announced the acquisition of 3PM Shield, a provider of state-of-the-art marketplace compliance tool. 3PM Shield offers effective solutions for the prevention, and identification of counterfeit listings and prohibited items. Combining this technology with our proprietary data, will further enhance the integrity of our marketplace.
Before we move on, I'd like to touch on the actions we've taken to sharpen our focus as a company and run our business more efficiently, particularly in light of the uncertain economic environment. Earlier this month, we made the difficult decision to eliminate approximately 500 jobs, or roughly 4% of our global employee base. This decision followed a thoughtful review of our organization to ensure our people and roles were aligned with priorities, that advance eBay's commitment to long-term sustainable growth. These changes provide additional flexibility for us to invest efficiently and create new roles in high potential areas of our business, like new technologies, trusted customer experiences, and key markets. There is no easy way to say goodbye to our talented colleagues. Their passion and accomplishments over the last few years have helped us get us to where we are today. We are incredibly thankful for their contributions, and are committed to supporting them through this difficult transition.
Next, I'd like to share a few milestones from our ESG efforts last year, starting with recommerce. In 2022, our marketplace generated $4.6 billion in positive economic impact through the sale of pre-loved and refurbished goods. This activity avoided 1.6 million metric tons of carbon emissions and kept 73,000 metric tons of waste from going into landfills. Recommerce continues to provide significant economic benefit for sellers and buyers during these uncertain times, and buying pre-loved items shows no sign of slowing down. In fact, just yesterday, we published our third annual Recommerce Report, which found that 90% of surveyed respondents engaged in recommerce during 2022. Cost savings were the most popular motivator for buying pre-loved, especially among Gen Z buyers. 64% of whom said its financial savings as a primary reason for shopping recommerce and sustainability was the second most important factor, with people increasingly turning to pre-loved to help the environment. This positions us well as we continue to pave the way as an industry leader, enabling economic empowerment and sustainability through our platform.
Now, let's turn to impact. I'm always amazed by the tremendous generosity of the eBay community. In Q4, eBay for Charity enabled sellers and buyers to raise more than $35 million. And for the year, customers raised over $163 million. This represents an all-time high in fund raised through eBay for Charity, since we started this program 20 years ago. The eBay Foundation granted nearly $23 million in 2022, primarily to non-profit organizations, advancing inclusive entrepreneurship, and through our employee matching gift programs. This represents another all-time high for annual foundation grants.
I am fortunate to lead a purpose-driven company with a team dedicated to helping communities around the world, while protecting our planet. For the fourth year in a row, eBay was included in the Dow Jones Sustainability World and North American indices. We were also included on CDP's A List for 2022, which recognizes companies that are leading the way in environmental transparency and performance on climate change. Additionally, eBay ranks Number 1 on Cross-Border Commerce Europe's list of the top sustainable marketplaces operating in Europe.
Looking to 2023, I'm incredibly excited about the road map ahead of us. Today, I'll offer just a glimpse of a few areas where you should expect to see progress from us this year. We'll continue to innovate for customers in our focus categories, and extend to new countries and categories this year. We will continue our work in P&A, by expanding the guaranteed FIT program and Fit Your Vehicle badge globally. We'll also grow our tire installation capabilities, after we began improving the end-to-end tire shopping experience, and broaden our network of installation partners in five markets during Q4.
We'll ramp assets in the vault, and extend eligibility for more collectible items. While integrations with TCG player and known Origin will strengthen our value proposition for collectors, we will also continue to iterate next-gen shopping features like live commerce, to better engage with enthusiasts, and we will further develop the category landing pages we debut for sneakers, watches, and handbags in Q4, which offer trending inventory and personalized recommendations, powered by machine learning.
Sellers across our marketplace will benefit from the expansion of our international shipping program to more markets, which will drive incremental GMV, as sellers tap into our global demand. We will continue to scale our advertising offerings, as we track toward our next $1 billion by 2025, we'll simplify and grow adoption of float listings advance, deliver more AI-driven optimization, and further expand our ads portfolio. Finally, just as we have done in focus categories, this year we will adapt our one-size-fits-all approach, to build more relevant and compelling localized experiences, in some of our European markets. We will enhance local discoverability, reduce friction through simplified selling experiences, offer new local forms of payment, and address other market-specific experience gaps in search, language, and return policies.
In closing, I would like to thank our extraordinary eBay employees for their accomplishments this year. Their unrelenting focus on serving our community has supported our sellers and buyers during these challenging economic times. I'm confident that with our talented eBay team, our strategic vision, and a persistent focus on operational excellence, we will continue to develop compelling experiences for customers, and create long-term value for our shareholders.
With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.
