Jamie Iannone
President and Chief Executive Officer at eBay
Thanks, John. Good afternoon, everyone, and thank you all for joining us today. We delivered strong results in Q1, even as we continue to navigate ongoing challenges in the global economy. Gross merchandise volume was roughly flat at $18.6 billion, while revenue grew more than 2% to $2.56 billion. Our non-GAAP operating margin was 30.3%, non-GAAP earnings per share rose 13% to $1.25, and we returned $638 million to shareholders through repurchases and dividends. I'm incredibly proud of our teams for delivering these results as they remain relentlessly focused on reinventing the future of e-commerce for enthusiasts. And I am pleased that we remain on track for GMV growth to turn positive by Q3 or Q4 of this year. Now let's walk through some of the key drivers of our quarterly results. Focus categories play an important part in delivering relevant experiences to customers on eBay and remained a significant driver of underlying growth on our marketplace during Q1. Overall, focus category GMV grew nearly 5% last quarter, outpacing the remainder of our marketplace by roughly six points. Motors parts and accessories, or P&A, was once again the largest contributor to growth among focus categories despite facing headwinds in January due to extreme weather patterns in the U.S. Our teams continue to innovate on the P&A shopping experience, growing awareness, enhancing trust and expanding the great inventory our marketplace has to offer. Fitment is a central component of trust within the P&A category, helping customers understand exactly which of our more than 600 million live listings in this category fit their vehicle. We continue to work closely with large P&A sellers to augment their inventory using the MyFitment tool kit.
To date, we have enhanced eligible auto parts with approximately five billion pieces of incremental fitment data, and we've continued to see a double-digit increase in conversion on these augmented listings. Additionally, last quarter, we redesigned our self-service experience to simplify how sellers onboard, view and publish fitment data for P&A listings. Our updated experience better serves small- and medium-sized businesses, which make up our largest cohort of P&A sellers. On the buyer side, we continue to improve our value proposition for mass-market P&A shoppers looking to maintain their vehicles. During Q1, we added a Motors DIY guide page that makes do-it-yourself projects more accessible by integrating expert content for common maintenance jobs alongside eBay listings for the specific parts, tools and materials needed to complete them. Our full-funnel approach to marketing has increased awareness and consideration of eBay as a trusted place to shop for auto parts and accessories. And I'm excited that yesterday, we announced a multiyear partnership with the McLaren Racing Formula one team, which means motor sports enthusiasts around the world will see eBay branding on McLaren team race cars starting with the Miami Grand Prix this week. EBay has been a leading player in collectibles for over two decades. And in recent years, we've accelerated the pace of innovation in areas like trading cards, which is one of our focus categories. We've rolled out new features like My Collections, price guides, authentication and grading partnerships, revamped condition standards, live commerce, vault storage and new shipping methods to reduce costs.
In Q1, we continued to innovate by launching a simplified listing flow for sports trading cards to all U.S. sellers. This experience leverages our proprietary technology to prefill the listing with relevant item aspects, provide simpler shipping options and offer smarter pricing recommendations based on the value and the condition of the card. This rollout has resulted in a double-digit percentage reduction in listing time and measurable increases in completed listings and sold items per customer. We are also seeing a more than 20% increase in CSAT for U.S. sports trading card sellers versus our baseline prior to this rollout. In recent quarters, we've seen improving volume trends in trading cards as many of the new and returning hobbyists who joined eBay during the pandemic remain highly engaged with our platform. With so much enthusiasm in the hobby, it's the perfect time to talk about the definitive agreement we announced a few weeks ago with Collectors, parent company of PSA, which is the gold standard in third-party authentication and grading of trading cards and collectibles. EBay and Collectors have entered into three separate transactions designed to streamline and improve the overall experience for hobbyists. As part of this deal, I'm incredibly excited to welcome Ken Goldin to eBay. We have agreed to acquire Goldin, a leading U.S.-based auction house for high-value collectibles, which brings together two renowned marketplace brands in the trading card hobby. Many of you know Ken from his fantastic series on Netflix, King of Collectibles: The Goldin Touch.
Combining Goldin with eBay enhances our respective marketplace offerings by expanding the range of inventory available to eBay customers and opening up an expansive global audience for Goldin sellers. We believe this will enable a more well-rounded collecting experience across price points and service models, complementing our acquisition of TCGplayer and recent partnership with sports trading card company COMC. Additionally, eBay has entered into commercial agreements with Collectors and PSA to reduce friction in the authentication and grading of trading cards. We also agreed to divest the eBay vault to PSA. Through a newly branded service offering, our companies plan to launch an integrated program to buy, sell, grade and store trading cards. EBay will become PSA's exclusive marketplace partner for trading cards, enabling hobbyists to more easily list and sell their cars on eBay at the time of grading. Importantly, these deals enable each company to prioritize what it does best. At eBay, we can focus on enhancing our marketplace and streamlining the buying and selling experience for millions of hobbyists, while collectors can concentrate on its operational expertise in grading, authenticating and securely storing collectibles. There'll be more we can share about our company's joint plans after the deals close, which we expect to occur during Q2, subject to closing conditions. In Q1, we also continued to rapidly innovate on our eBay Live experience, which now spans multiple categories, including collectibles. We expanded coverage to new categories like comics and sports memorabilia.
We introduced a revamped auctions experience that makes bidding more seamless and reliable. We enabled viewing on desktop so that buyers can join live events wherever they are shopping. And we dramatically improved the event discoverability on the home page with personalized recommendations. While eBay Live remains in beta, we are extremely excited about continuing to scale this experience throughout the year. As a pioneer of recommerce, giving pre-owned goods a second life is core to who we are as a company. We reached a major milestone in Q1 as pre-owned and refurbished goods reached 40% of total GMV on our marketplace after consistently outpacing the sales of brand-new goods since the pandemic. In service of that mission, a major priority in 2024 is strengthening our consumer value proposition in pre-owned fashion. Through our multiyear partnership with Love Island in the U.K., we have grown awareness of the sustainability benefits of recommerce and educated consumers on the potential economic savings from shopping for pre-owned items. But there is more we can do to unlock consumers' closets and accelerate the circular economy. To that end, last month, we began to dramatically streamline the buying and selling experiences for pre-owned fashion on eBay, focusing on the U.K. We redesigned our shopping experience from the ground up to reduce friction and better meet the needs of modern fashion consumers. Our initial rollout included a number of features and improvements such as a simplified selling flow, curated item specifics, photo guidance, intelligent pricing suggestions and condensed shipping options.
We also eliminated final value fees on pre-owned apparel for C2C sellers in the U.K. and introduced new AI-powered tools to enhance discovery and drive more inspirational shopping behavior on our marketplace. One such feature is explore a new AI-powered shopping feed, enabling users to browse a nearly unlimited list of personalized recommendations based on implicit and explicit interest signals, such as the users' style preferences and sizes. The explore feed updates in real time in response to products that users interact with, while buyers can refine their shopping journey using our visually similar search feature powered by computer vision. Explore is focused on fashion to start, and we plan to expand its capabilities later this year. Explore is currently live for all U.K. users in beta alongside small pilots in other countries as we gather feedback and insights. In April, we also rolled out an early version of shop the look, which leverages generative AI to create shoppable content and fashion recommendations. Shop the look showcases a variety of styles such as business casual, Scandinavian minimalism or urban athleisure. Recommended outlets are linked to visually similar products on eBay, drawing from our hundreds of millions of live listings in fashion. Shop the look is live in iOS in the U.S. and U.K., and we will evolve this experience throughout 2024 based on customer feedback, including additional styles, greater diversity of outfits and increased user control over personalization. Next, I'd like to go deeper on the transformative power of AI. Last quarter, I talked about the meaningful strides we've taken in establishing eBay as a leader in generative AI for e-commerce.
In Q1, we doubled our GPU capacity versus the end of 2023, which enabled our teams to accelerate our training and fine-tuning of foundational large language models to power a number of eBay features and services. In addition to powering consumer-facing features like explore, shop the look, magical listing and background enhancement, we're increasingly leveraging generative AI to change how we work, driving meaningful productivity and efficiency improvements across our organization. A prime example of this is within our Global Customer Experience organization, or GCX. We are in the midst of a multiyear journey to transform our GCX capabilities using technology. Our north star for customer service is not just to reduce cost, but meaningfully improve the quality of interactions. Recently, we implemented generative AI technology that supports our GCX teammates by analyzing incoming communications to create a simple summary of customers' needs and intent. This technology automatically extracts relevant solutions and next steps from an LLM fine-tuned using our comprehensive knowledge base and policy documents. We are now able to present solutions and a clear and concise structure to our GCX team, allowing them to quickly provide customers with the help and support they need, improving the accuracy, consistency and quality of support. With tens of millions of live customer contacts annually, these efficiencies should yield meaningful cost savings for our GCX organization. Generative AI tools are also improving our developer productivity and accelerating our overall tech velocity.
Last year, we made GitHub Copilot available to all of our developers and saw encouraging results. We observed measurable improvements in productivity, along with code acceptance and accuracy. Nearly 3/4 of our developers now use Copilot every day. In parallel, we began building internal tools to streamline our development processes and improve efficiency. We fine-tuned an open-source LLM with eBay's codebase and other internal data to develop a proprietary coding assistant that has been incredibly helpful in labor-intensive areas like code migration and software upkeep. For instance, we estimate these tools can reduce the time required for code migration by as much as 20%. We also created an internal GPT specifically for developers that answers thousands of questions per week, serving as a knowledge base for our internal documentation. Overall, we're still early in our generative AI productivity journey, but these are just a few examples of proprietary tools we've introduced to our GCX and technology teams that are already yielding tangible benefits. Turning to advertising. Our ads business continued to deliver healthy growth at scale while improving velocity and price realization for our sellers at compelling return on ad spend levels. During Q1, first-party advertising grew 28%, while total ad revenue represented 2.1% of GMV. During the quarter, over three million sellers adopted a single ad product, and we ended the quarter with over 950 million live Promoted Listings. Our standard cost per acquisition units remain the largest contributor to year-over-year ad revenue growth in Q1, followed by our cost per click advanced product. We are also seeing promising results from some Promoted Listing products in beta.
One such product that's continued to gain traction in beta is Offsite Ads. This off-eBay solution enables sellers to more actively participate in extending the reach of their listings through CPC ads placed on external services. This product leverages eBay's decades of advertising technology investment on behalf of those sellers, enabling advanced targeting, campaign management and pricing optimization. We expanded our go-to-market efforts for Offsite Ads towards the end of last year, and this product emerged as a material contributor to first-party ad revenue growth in Q1. We have ambitious road map to further optimize these ad units and increase seller adoption throughout 2024. Now let's turn to impact. The eBay community continues to impress us with their generosity. Last quarter, eBay for Charity enabled sellers and buyers to raise more than $46 million, up 18% year-over-year. We also recently published our eighth annual diversity, equity and inclusion report. With our purpose of connecting people and building communities to create economic opportunity for all, we know diversity makes us a better and stronger place to work, sell and buy. Among the highlights from our 2023 DE&I report was the launch of our first-ever inclusion index, which helps us gain a stronger understanding of our employee experience, measure our progress over time and determine how we can better support our employees as a workplace. Our Communities of Inclusion, our internal eBay resource groups, also remained an integral part of what we do. In 2023, our 11 COIs hosted more than 360 global events, reaching more than 17,000 attendees during the year.
And finally, for the eighth year in a row, we've concluded our gender pay equity study, and I'm proud to report our gender pay ratio remained consistent at just over 100% globally. In closing, Q1 marked a strong start to 2024 as we exceeded our financial targets and continued to make progress toward our goal of long-term sustainable GMV growth. Focus categories maintained significant momentum despite ongoing macro pressure on discretionary e-commerce. After many quarters of consistent innovation in focus categories like luxury, P&A, refurbished, sneakers and streetwear, we are bringing our innovation playbook to pre-owned fashion in the U.K. to simplify selling, drive inspirational shopping and promote the circular economy. Our agreement with Collectors would further strengthen our value proposition for hobbyists as we streamline the process of buying, selling, grading and storing trading cards. And we believe our advancements in generative AI are fundamentally changing the customer experience on eBay, increasing productivity across our organization and ultimately driving more value for shareholders. Our momentum and excelling pace of innovation are a testament to the incredible work of our employees, who continue to execute our strategic road map and service of our customers.
With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.
