eBay Beats Wall Street Expectations For Q4 2020 – GMV Up 18% – Earnings Call Highlights

eBay beat Wall Street expectations for its fourth quarter 2020 earnings, much of it driven by the COVID pandemic sending holiday shoppers online. Here are some of the financial highlights:

• Revenue of $2.9 billion, up 28% on both an as-reported basis and an FX-Neutral basis.
• Gross Merchandise Volume of $26.6 billion, up 21% on an as-reported basis and up 18% on an FX-Neutral basis.
• GAAP and Non-GAAP EPS per diluted share of $1.12 and $0.86, respectively, on a continuing operations basis.
• GAAP and Non-GAAP operating margin of 23.6% and 28.1%, respectively.
• Returned $529 million to shareholders in Q4, including $419 million of share repurchases and $110 million paid in cash dividends.
• The Board of Directors declared a quarterly dividend of $0.18 per share, a 13% increase from the prior quarterly dividend, and expands share repurchase authorization by an additional $4.0 billion.
• Full Year GMV was $100.0 billion, up 17% on both an as-reported basis and an FX-Neutral basis.

“I am proud eBay was able to be there for our buyers, sellers and community, especially in the face of a global pandemic. We finished the year with strong financial results, but what inspires me most is the support we’ve been able to extend to small businesses — providing them with tools, resources and access to millions of buyers globally. We will continue to invest in product and technology in order to deliver the best marketplace in the world for our customers.”

Jamie Iannone, Chief Executive Officer at eBay

eBay Earnings Call Highlights

Here are curated highlights for eBay sellers and buyers from the eBay fourth-quarter and full-year earnings call on Wednesday night. All bullet points are direct quotes. Editorial clarifications are noted in brackets.

Comments from eBay CEO Jamie Iannone

• The holiday season contributed to the strong performance as we saw record volume with high velocity in hard-to-find and sold-out items. Refurbished gifts also emerged as a top trend, and we saw many products from top brands in our certified refurbished experience sell out completely.
• [During the holiday season] in the U.S., 1 in 10 online shoppers bought something on eBay. In Germany, that number was 1 in 7. And in the UK, it was 1 in 4.
• During the quarter, eBay managed payments for over 38% of on-platform volume. In the U.S., we exited the year with over 50% of the migration complete.
• Seller satisfaction has improved compared to Q3 and NPS scores from sellers in managed payments remain more than 10 points higher than the NPS of sellers who have yet to migrate.
• This roadmap opens up managed payments to all sellers globally and places us firmly on our path toward 100% migration.
• We have put a greater focus on protecting buyers and sellers by preventing counterfeits and eliminating fraudulent returns. These experiences are driving significantly higher-than-average customer satisfaction, and we see opportunities to expand this capability to other verticals and markets.
• For luxury watches over $2,000, we saw a double-digit increase in GMV growth in Q4 versus Q3, driven by higher sell-through rates and higher average prices. For sneakers over $100, we saw triple-digit growth year-over-year in Q4.
• In 2020, the average customer who purchased a pair of sneakers over $100 spent a total of $2,500 on eBay. Approximately 80% of that spend was in categories outside of sneakers.
• [Sneakers and resulting cross-category] growth is coming from C2C, and is bringing Gen Z and millennials to the platform, which is also critical and part of our strategy.
• For the year, seller-initiated offers drove over $1.2 billion of GMV.
• SEO traffic is growing faster than paid channels and delivering more new buyers to small business sellers on eBay.
• On the SEO… there’s a number of things that we’ve been doing in terms of how we structure our listings and work with our content and designers that actually specifically drives it. There was some Google algorithmic change which we benefited from.
• We continued to increase seller visibility in our native app by driving traffic to their eBay stores. 95% of our store subscribers have migrated to the newest experience, and they are seeing a 20% average increase in visits to their storefront.
• In 2020, almost half of our global GMV was transacted in the app, and it continues to grow faster than the overall business as buyer and seller preferences evolved.
• A big reason why we also focused on C2C selling is because if we acquire that buyer to come in as a buyer and then we get them to just do any kind of casual selling, they become 2x to 2.5x more valuable to us as a buyer.
• On the advertising business, [we] feel great about hitting the $1 billion milestone. As we look at it, a lot of that growth is being driven by the growth of promoted listings.
• Cross-border trade for us has always been a great business, a really unique business to eBay and specifically in the Greater China corridor and helps us bring on new buyers to the platform and a different type of inventory.
• What we saw is that 72% of our sellers that come and start selling on the platform are doing so because they need to earn a little bit of extra money and some percentage of those are actually because they lost their job, and so they’re looking for opportunities on just making money on the platform.
• Buy It Now remains the vast majority of what’s on the platform. We do see strength in auctions in areas like collectibles, which is a category that’s growing strong for us.

Comments from eBay Interim Chief Financial Officer Andy Cring

• We exited the year with 185 million buyers, representing 7% year-on-year growth, a 2 point acceleration versus the third quarter.
• Since the end of Q1, we’ve added 11 million buyers to the ecosystem and are seeing retention rates in line with historical cohorts.
• In Q4, we enabled $26.6 billion of marketplace GMV, up 18% year-on-year.
• In the U.S., we generated $9.6 billion of GMV in Q4, up 25% year-on-year.
• International GMV was up 15% year-on-year.
• In summary, 2020 was an extraordinary year. We added $14 billion of GMV and 11 million active buyers to our ecosystem.

Complete eBay Earnings Information

Please see the eBay Investor Relations website for more details on the company’s fourth-quarter and full-year 2020 results.

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