Jamie Iannone
President and Chief Executive Officer at eBay
Thanks, Joe. Good afternoon, everyone, and thank you for joining us. Q3 was a strong quarter for the company despite a challenging macro environment. Significant headwinds from inflation, higher energy costs and rising interest rates have impacted discretionary income, and consumer confidence is near record lows in several markets. Our focus on non-new in-season categories has made the platform more resilient against these headwinds.
In the quarter, we continued to execute the tech-led reimagination and we delivered on our near-term commitments. Focus categories narrowed the gap to market growth rates through higher customer satisfaction, increased trust and more effective marketing. And once again, enthusiast buyers spent more on the platform. This playbook is having a positive impact on GMV in the US and internationally.
Site-wide technology investments created a more seamless customer experience, leading to improved conversion rates across the platform. Our advertising business accelerated due to increased seller adoption and the optimization of our ad products. And new payments capabilities removed transactional friction, while adding incremental revenue. The execution of our strategy is strengthening our competitive position, which drove better-than-expected financial outcomes in the third quarter. We delivered over $17.7 billion in GMV and almost $2.4 billion in revenue. We invested in marketing and product, while delivering close to 29% operating margin. And our non-GAAP EPS was $1 per share, up double digits versus last year.
Before I get into more highlights from the quarter, I want to take a step back and look where we are in our long-term journey. As you may recall, heading into the pandemic, volume was declining. Since that time, we have invested in game-changing product experiences and adjusted our approach to marketing. And this has resulted in an improvement in GMV compared to pre-pandemic levels. Specifically, focus categories, excluding Trading Cards, are up over 20% since 2019, due to improvements in customer satisfaction, trust, product experience and marketing. Trading Cards has more than doubled in that time due to market dynamics and the impact of our innovations. And the rest of the platform has improved from declining low-single digits to flat based on site-wide product improvements and the benefits of cross-category shopping.
Taking a closer look at Q3 volume, excluding Trading Cards, focus categories grew over 7 points faster than the rest of the platform, compared to last year. Multiple quarters of improvements in Parts & Accessories, Collectibles, Luxury Goods, and Refurbished Products are driving better relative GMV performance. Motors Parts & Accessories is the largest category we have invested in to-date and it is nearing market rates of growth. Investments in marketing over multiple quarters have increased consideration with enthusiasts, expanding the top of the funnel.
Most recently, we sponsored an automotive makeover show with MTV UK. We also kicked off the eBay Motors' Parts of America Tour, showcasing bespoke car builds using parts found on eBay. Hundreds of thousands of attendees have joined these events to-date and social marketing support for the Tour has driven more than 500 million impressions. The key to unlocking trust for the Parts & Accessories enthusiasts is fitment. Over the last several quarters, we've made significant progress on the foundational work needed to innovate the P&A experience. This included modernizing our taxonomy to align our business globally and open up new cross-border trade opportunities. We also integrated fitment-based technologies into search, merchandising and advertising recommendations.
Now, we are able to make fitment more pervasive throughout the end-to-end experience. We've started adding highly visible trust signals throughout the buyer journey in the US and Canada. We also are reducing the number of steps it takes to find parts, and we've expanded adoption of My Garage, leading to more personalized shopping on every visit. We will continue to invest in trust to deliver even higher customer satisfaction in the coming quarters.
In addition, we are working on increasing the quality and quantity of supply in Parts and Accessories. We recently acquired myFitment, which helps P&A sellers improve listing quality and growth conversion. We are also directly engaging sellers to add more in-demand parts inventory, including certified green parts, OEM, salvage and highest feed products, keeping our global supply over 500 million live listings.
Collectibles is another focus category where sellers and buyers are responding positively to recent innovation. One of the best examples of this is Trading Cards, where GMV trends remained steady at a trajectory more than double pre-pandemic levels. In June, we launched the eBay vault, a seamless end-to-end physical and digital experience, and have initially opened it for Trading Cards. The vault provides a number of benefits, including instant transfer, authentication, insurance, affordable shipping and tax-free storage. The combination of these features gives enthusiasts an unprecedented level of control to grow the value of their collections. During Q3, we expanded our eligibility for vault items, and we are seeing continued momentum week-over-week and are encouraged by the effectiveness of events and accelerating early adoption. While the vault is in its early days, demand is increasing and more enthusiasts are pre-loading their inventory into the vault to enable faster trading.
In addition to innovation, we are marketing our Trading Cards business across multiple channels. For example, in Q3, we expanded our presence at New York Comic Con to showcase the eBay vault and continued Live Commerce pilots, highlighting brands like Funko and MetaZoo. Another important investment for our Trading Card business is the acquisition of TCGplayer, a trusted marketplace for collectable card game enthusiasts that operates a leading technology platform. I am pleased that we were able to close this transaction earlier this week, ahead of schedule. TCGplayer brings strategic omni-channel capabilities popular with Trading Card sellers, including inventory management tools, order fulfillment and cart optimization. I'm excited to see what we can do together to provide our sellers and buyers over time.
In luxury categories, quarter-after-quarter of innovation has led to higher customer satisfaction and faster GMV growth. This has been true in watches, handbags and sneakers since the introduction of authentication, resulting in higher GMV in every country where we've launched to-date. In Q3, we began authenticating jewelry above $500 in the US, and are seeing similar results as other focus categories, with initial customer satisfaction rates for jewelry buyers over 90%.
Focus category is not the only area where we are investing to drive GMV. Significant site-wide initiatives that impact all sellers and buyers are driving volume benefits across all categories. Multiple quarters of technology investments drove site-wide conversion improvements in Q3. For example, in search, we leveraged new deep learning model to better understand purchase intent, leading to increased conversion at the top of search. In addition, search recall has materially improved for low and no searches, enabling buyers to discover more relevant inventory. These capabilities have rolled out to English and German speaking markets, adding more than $0.5 billion in GMV annually.
SEO improvements are driving better growth across the platform. In focus categories like sneakers, we have built a more modern browsing experience, which is driving benefits to our SEO traffic. We also optimized our sites to allow significantly more items to show up on search engines, increasing visibility to our newest and best-performing listings. For sellers, we've been making investments over several quarters to modernize our technology stack. And I'm excited to announce that we've recently completed the migration of all desktop sellers to a single unified listing experience globally. This transition eliminates multiple legacy tools and enables faster innovation, particularly as we invest in new focus category listing experiences.
There are a number of benefits sellers are already seeing in the new platform. For example, when listing an item, sellers are receiving better price guidance recommendations that are driving conversion in multiple categories. And sellers can now directly upload videos that can showcase items, highlight unique details or answer commonly asked questions.
Sellers are also benefiting from multiple quarters of innovation in advertising. High return on ad spend is leading to increased adoption of Promoted Listings and higher ad rates. In Q3, first-party ad revenue was $249 million, up 27% year-over-year. This was more than 30 points faster than GMV, keeping us on track towards our long-term advertising target, despite volume headwinds from the macro environment. Investments in AI have resulted in improved search algorithm performance and more accurate ad rate recommendations that are increasing conversion. This is one factor driving up adoption of Standard Promoted Listings. In Q3, almost 2 million sellers adopted at least one ad product and our coverage has expanded to over 600 million listings.
Our newer ad products are also driving faster growth, which once again grew double digits quarter-over-quarter. For Promoted Listings Advanced, we expanded availability on search. We also improved the broad match experience and upgraded our recommendation tools, allowing sellers to further optimize their campaigns.
Payments capabilities are increasing trust between sellers and buyers by removing transactional friction. The Buyer FX experience that we released earlier this year is resonating with customers. Close to 70% are adopting it for cross-currency transactions, allowing them to pay in their local currency. We also expanded Klarna availability to buyers engaged in cross-border transactions on our German site. Lastly, our risk team improved checkout conversion by accepting more purchase transactions, while maintaining low-loss levels.
In addition to removing friction for buyers, we are adding more services for sellers. Recently, we announced that sellers can request on-demand payouts through a debit card and receive funds within 30 minutes or less for a fee. New payment services are delivering better customer outcomes and the pace of innovation has put us on track to deliver $300 million in incremental revenue by 2024.
As consumers in our major markets face persistent inflation, higher interest rates and rising home energy costs, they are increasingly turning to eBay for better value. This is leading to growth in GMV of used and refurbished goods. In fact, in a recent survey, we found that more than three-quarters of sellers used eBay to sell pre-owned goods. Recently, we expanded our efforts to support sustainable commerce with a new seller education offering of eBay Academy. Launched across our major markets, our new course teaches sellers how to assess their current practices and understand how eBay can help them operate more sustainably. Sellers are contributing positively to global communities in other ways. During the third quarter, we raised more than $33 million through eBay for Charity. In addition, the eBay Foundation issued grants to 50 non-profit organizations that support inclusive entrepreneurship in communities around the world. These purpose-driven efforts help us drive economic opportunity for all.
Finally, we are excited to announce that tomorrow, we will be publishing our inaugural small business report. This report highlights our progress towards becoming the seller platform of choice. I've spoken to you in the past about how eBay creates access for entrepreneurs, and through our recent small business survey, we found that seven out of 10 sellers say that eBay helped them start their business. We are proud to partner with our sellers, helping them get up and running on our marketplace and providing the tools they need to build, scale and grow their business.
Sellers recognize these efforts, with over a half of all sellers surveyed strongly agreeing that eBay helped their small business grow. As a third-party marketplace, eBay only wins when our sellers win, and we have earned trust from our seller community over time. In this report, 95% of sellers surveyed say they rely on eBay for their business, with almost one-third saying their small business would not exist without eBay. This data helps to reinforce that the investments we are making reflect the role we play in creating and growing small businesses around the world.
Having just come off a number of large seller events in our major markets, we continue to be inspired by our seller community and we are proud to play a key role in helping our customers navigate these challenging economic times. All of this couldn't be possible without our talented and dedicated teams who work so hard to innovate on behalf of our customers. Thank you to the eBay team for all you do everyday for our community.
In closing, the resiliency of our platform yielded better-than-expected quarterly results despite a challenging macro backdrop. Focus categories grew over 7 points faster than the rest of the platform and maintained higher levels of customer satisfaction. We acquired TCGplayer and myFitment to better serve enthusiasts in two of our largest focus categories. Site-wide improvements in search, SEO and selling improved conversion rates. Advertising growth accelerated, while delivering high returns on ad spend for our sellers. Payments innovation enabled more services and further reduced transactional friction and we continued to support our small business sellers, helped raise $33 million for charity and drove close to $1 billion in economic impact through e-commerce. All of these accomplishments contributed towards our long-term tech-led reimagination of eBay.
With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.