Ladies and gentlemen, thank you for standing by, and welcome to the eBay Q4 2020 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joe Galante, VP of Communications and Investor Relations, thank you. Please go ahead.
Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the Q4 of 2020. Joining me today on the call are Jamie Iannone, our And Andy Crane, our Interim Chief Financial Officer. We're providing a slide presentation to accompany Andy's commentary during the call, which is available through the Investor Relations section of the eBay website at investors. Ebayinc.com.
Before Before we begin, I'd like to remind you that during the course of this conference call, we will discuss some non GAAP measures related to our performance. You can find a reconciliation of these measures to the nearest Comparable GAAP measures in the slide presentation accompanying this conference call. Additionally, all revenue and GMV growth rates mentioned in Jamie and Andy's remarks Statements regarding our future performance and expected financial results. These forward looking statements involve known and unknown risks and uncertainties, And our actual results may differ materially from our forecast for a variety of reasons. You can find more information about risks, uncertainties and other factors that could affect our operating results and our most recent periodic reports on Form 10 ks and Form 10 Q and our earnings release from earlier today.
You should not rely on any forward looking statements. All information in this presentation is as of February 3, 2021, and we do not intend and undertake no duty to update this information. With that, let me turn it over to Jamie.
Thanks, Joe. Good afternoon, everyone, and thank you for joining us. I'll begin today's call with some key highlights from last quarter last year and walk you through an update on the progress of eBay's tech led reimagination. I will then turn the call over to Andy to discuss the details of our recent performance and near term outlook. Overall, 2020 was a great year for sellers and buyers on eBay.
We are pleased that we closed out the year with strong results. For Q4, gross merchandise volume in marketplaces grew 18%, well ahead of our expectations. 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. Our buyers were very active 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 U. K, it was 1 in 4.
The highest availability in the last 6 years. To put this in context, more than 100 days in 2020 exceeded peak 2019 traffic levels. EBay has been able to seamlessly handle these peaks while keeping our marketplace open for all during a global pandemic. For the full quarter, revenue grew 10 points faster than volume, up 28%, driven primarily by payments and advertising. And we delivered $0.86 in non GAAP earnings per share, which was above our expectations and included reinvestments for the long term.
Our customer metrics grew on both sides of our marketplace in the quarter. Active buyers grew 7% to 180 And our active seller base increased by 5% as more small business and consumer sellers listed and sold on the platform. These results capped off a tremendous year for eBay. In 2020, we added an incremental $14,000,000,000 of GMV, That's more growth in the past 7 years combined. Organic revenue grew 21% and non GAAP earnings per share grew 49% And we returned nearly $5,600,000,000 to shareholders through dividends and buybacks.
In July, I laid out a long term vision for the company And we have re architected our roadmap to achieve our tech led reimagination over the next few years. We also made progress on our multiyear initiatives, payments and advertising, which drove tremendous financial results while providing customers with a significantly improved experience. We continue to make significant advancements with our managed payments transition, Ending the year with over 1,000,000 sellers migrated. 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. In addition to the 5 markets where we already launched, transitions have been announced We're underway in France, Italy, Spain and Greater China. We have also started to transition consumer sellers in the U. S, U. K, Canada and Germany.
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. Over the course of 2021, This roadmap opens up managed payments to all sellers globally and places us firmly on our path toward 100% migration. As the vast majority of the transition will be complete by the end of this year, we are well positioned to deliver at least an incremental $2,000,000,000 in revenue And $500,000,000 in operating income annually in 2022. In Q4, advertising growth outpaced volume once again as sellers lean further into Promoted Listings to grow their business. For the quarter, Promoted Listings delivered over $215,000,000 of revenue, Up 57% despite having lapped a major product launch that drove strong acceleration a year ago.
For the full year, Promoted Listings grew 86%. This product continues to grow in part because sellers who have adopted Promoted Listings are seeing on average a double digit sales increase. Our total advertising revenue reached a new milestone in 2020, Passing $1,000,000,000 for the year. We see tremendous growth potential remaining as this represents approximately 1% of GMV, well below industry benchmarks. We expect advertising revenue to outpace volume for the foreseeable future.
Now I'd like to share an update on the transfer of classifieds to Adeventa. We remain excited to bring together 2 highly complementary businesses that can create tremendous value over time. We believe the deal is on track to close as we have received the vast majority of regulatory approvals. We expect closure by the end of the Q1 subject to the remaining regulatory approvals which we are working to obtain. We also recently announced that we are exploring options for our Korean business.
Our 2 local platforms, GMarket and IAC, Have built leading e commerce positions by tailing to customer needs with innovative experiences. With a paid loyalty program of over 2,500,000 members And a growing first party inventory program, these businesses primarily focus on new and seasoned products from B2C sellers with limited cross As we mentioned in our press release, we will not be communicating any further information about the strategic review process until there is material information to disclose. I will now provide an update on the progress we have made towards our long term vision for eBay. The 3 strategic priorities to support this vision remain the same. First, to defend our core by building compelling next gen experiences for our enthusiasts second, to become the partner of choice for sellers And 3rd, to cultivate lifelong trusted relationships with our buyers.
In the past few months, we launched several new product experiences aligned with this vision. While we still have a long way to go, we are encouraged by the initial reaction from buyers and sellers and the acceleration in GMV in several categories, during the fall in the U. S, we launched authentication for luxury watches and quickly rolled out a similar experience 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. This new product experience is driving material growth in these categories for U.
S. Business. For luxury watches over $2,000 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. While some volume growth is due to the effects of the pandemic, Significant growth drivers included the authentication rollout, pricing reductions and marketing changes.
Sneaker buyer behavior Great example of the power of the eBay platform. 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. We will continue to drive more cross category shopping to grow GMV per buyer over time. To expand the buyer base, we are investing in new channels, including social marketing to reach more Gen Z and millennial customers.
Another area of non new and seasoned inventory we're focused on is outlet fashion. In the U. K, we launched an optimized brand outlet experience with 150 fashion brands offering products at deep discounts. This contributed to strong double digit GMV growth in fashion ahead of U. K.
Market rates. We also saw active listings double and active buyers in the category grew 30% in Q4. Moving on to the 2nd key priority of our vision, becoming the platform of choice for sellers. In addition to enhancements in payments and advertising, we continue to provide small businesses with more tools and capabilities to help them grow. In Q4, we added more automation and scale to seller initiated offers.
This uniquely eBay feature allows sellers to escape the limits of a buy box By enabling them to offer custom deals to individual buyers. For the year, seller initiated offers drove over $1,200,000,000 of GMV. Another win for sellers on eBay in Q4 was in SEO. The work we have done in the past to optimize our platform for search engine ranking and visibility is paying off. SEO traffic is growing faster than paid channels and delivering more new buyers to small business sellers on eBay.
Last, we continue to increase seller visibility in our native app by driving traffic to their eBay stores. 95% of Store subscribers have migrated to the newest experience and they are seeing a 20% average increase in visits to their storefront. The 3rd key priority of our strategy is to cultivate lifelong trusted relationships with buyers. To achieve this, we are leveraging technology To remove fiction throughout the buying journey, a major focus for us has been the native app experience. 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.
We have maintained high ratings in both iOS and Android and our app was downloaded more than 50,000,000 times in 2020. To drive engagement from buyers on mobile, we have simplified item pages, make it easier to like or share an item and provided more exposure by granting direct Additionally, we improved conversion by enhancing search relevance and streamlining store and filter options, allowing app users to find what they are looking for faster. While we are focused on delivering our vision, we remain committed to keeping our purpose at the forefront By leveraging the power of our platform to support our communities. One way we did this last year was by helping to quickly and efficiently distribute PPE to frontline workers in the UK. EBay partnered with the UK's National Health Service, the Department For Health and Social Care We've delivered more than 1,000,000,000 PPE items to more than 45,000 social care providers in the U.
K. Another way the eBay platform provides opportunity is by enabling a thriving customer community that loves to give back. During the year that has been challenging for so many, The eBay for Charity community continues to be an inspiration. 2020 was a record breaking year with nearly $123,000,000 raised globally The generosity showed by our buyers and sellers is amazing. The spirit of a global community centered around connection Economic opportunity for all is clearly alive and well.
Over the course of 2020, eBay invested more than $100,000,000 to support the growing needs of small businesses around the world through programs like Up and Running. These programs provided the training and resources needed to start selling online and connect new sellers to eBay's global community of buyers. And just last quarter, we announced further assistance to an up and running grant program. In the coming weeks, we will reward a number of eBay U. S.
Small business sellers a grant package worth As I've mentioned in the past, at eBay, we focus our sustainability initiatives on the most impactful goals that will help strengthen our business and provide the most value to all our stakeholders. And our commitment to climate action and transparency is being recognized externally. We were once again included in the Dow Jones Sustainability, World and North America Indices and recognized in the carbon disclosures project A List for the first time. In the past year alone, we have avoided an additional 720,000 metric tons of carbon emissions through people selling their pre owned electronics and apparel on eBay. In summary, we are making progress on our vision to realize the enormous untapped potential of eBay and we have a clear roadmap for 2021 and beyond.
Our payments transition is on track and will largely be completed this year. Our advertising business will continue to outpace volume through Promoted Listings and other products. As we defend the core, we plan to expand our new vertical To date, we've only touched a single digit percentage of our global GMV, But in the coming years, that will expand to a majority of volume. To build the platform of choice for sellers, we will continue to expand the store's experience And give sellers more tools to increase velocity. We will also leverage technology to dramatically simplify the end to end selling process for To create more lifelong buyer relationships, we will connect with them through new channels, Deepen their engagement with the eBay app and deliver trusted experiences when they shop with us.
Last but not least, We will continue to invest in product and technology and evolve how we spend marketing in order to become the best marketplace in the world for buyers and sellers. I know we can accomplish all of this due to the fantastic team I have the privilege of leading. Our employees lived our purpose in 2020 and I look forward to what we can do together for our customers in 2021 and beyond. With that, I'll turn the call over to Andy to provide more details on our financial performance. Andy?
Thanks, Jamie. I will begin my prepared remarks with our Q4 financial highlights starting on Slide 4 of the earnings presentation. In Q4, we generated $2,900,000,000 of revenue, dollars 0.86 of non GAAP EPS $715,000,000 of free cash flow, while returning $529,000,000 to shareholders through share repurchases and cash dividends. Moving to active buyers on Slide 5. We exited the year with 185,000,000 buyers, representing 7% year on year growth, A 2 point acceleration versus the 3rd quarter.
Since the end of Q1, we've added 11,000,000 buyers to the ecosystem and are seeing retention rates in line with Historical cohorts. We continue to see growth in GMV per active buyer across the buyer base. Moving to Slide 6. In Q4, we enabled $26,600,000,000 of marketplace GMV, up 18% year on year. While volume decelerated 3 points versus the Q3, we did see modest acceleration compared to September growth rates, driven by a decrease in consumer mobility And benefits from ongoing improvements in the product experience across horizontal work streams and the progress we're making in key verticals.
In the U. S, we generated $9,600,000,000 of GMV in Q4, up 25% year on year, decelerating 8 points from Q3. 3. International GMV was up 15% year on year, a one point acceleration versus the 3rd quarter, inclusive of growth in our off platform Korean business at 5%, accelerating 1 point from Q3. For the full year, the marketplace platform generated $100,000,000,000 of GMV, up 17% year on year, an acceleration of 19 points versus the prior year.
Turning to revenue on Slide 7. Our Q4 net revenue was $2,900,000,000 up 28% organically, Accelerating 2 points. We delivered $2,600,000,000 of transaction revenue, up 31%, Accelerating 3 points from Q3, driven by our payments migration and strength in advertising. In Managed Payments strong execution continued as we rapidly expanded seller migration to the new payments platform, reaching over 38% of global on platform volume in the quarter. In addition to the higher customer satisfaction metrics that Jamie mentioned, Managed Payments contributed 10 points of incremental revenue growth versus 2019.
Transaction take rate was 9.8% for the quarter, accelerating 40 basis points driven by managed payments and promoted listings, partially offset by FX. This is the 2nd straight quarter with a 40 basis point Increase and we expect take rate to continue to grow as managed payments and promoted listings continue to scale. We delivered $270,000,000 of marketing services and other revenue, up 3%, accelerating 4 points from Q3, Mostly from a lower headwind from lapping the sale of Brands For Friends, partially offset by first party growth in Korea, which decelerated approximately 40 points to 60% year on year growth. For the full year, the marketplace platform generated $10,300,000,000 In revenue, up 20%. Year over year growth was driven by higher volumes as well as strong execution in our initiatives.
In advertising, we cleared $1,000,000,000 ahead of expectations and powered by the 86% growth in Promoted Listings. And managed payments delivered 8 points of incremental revenue growth in the second half of the year. Turning to Slide 8 and major cost drivers. In Q4, we delivered non GAAP operating margin of 28.1%. This is up approximately 20 basis Cost of revenue was up over 1 point year on year, driven by managed payments and our first party inventory program in Korea, partially offset by volume leverage.
Sales and marketing expense was down approximately 50 basis points versus the prior year as volume leverage and spend efficiency We're partially offset by investments in our vertical strategy and brand advertising. Product development costs were Flat as volume leverage was offset by investments in the product experience, including managed payments. G and A was down approximately 70 basis Transaction losses were down 10 basis points as bad debt rates have performed better than expected. For the year, operating margin was 31.3%, up 3 points, 2 points from volume upside Net of reinvestment and one point from continued cost efficiency related to our operational review. Turning to EPS on Slide 9.
In Q4, we delivered $0.86 of non GAAP EPS, up 31% versus the prior year. Non GAAP EPS growth was driven primarily by higher volume, A reduction in share count driven by our repurchases and growth in advertising and payments, partially offset by a higher tax rate and investments in our vertical For the year, we delivered 49% growth in non GAAP EPS, Primarily driven by volume, reduction in share count from our repurchase program, growth in advertising and payments, GAAP EPS for the quarter was $1.12 up 94% versus last year. The increase in GAAP EPS is mostly driven by the same factors as non GAAP performance, plus the change in the value of investments, including the fair value of the Audion warrant, partially offset by a higher tax rate. For the year, we delivered 100% growth in GAAP EPS, primarily driven by the fair value of the Audion warrant, non GAAP performance, our share repurchase program partially offset by a higher tax rate. As always, you can find the detailed reconciliation of GAAP to non GAAP financial measures in our press release and earnings presentation.
Moving to Slide 10. In Q4, we generated $715,000,000 of free cash flow, up 27 driven by higher earnings. We had a very strong year of cash generation, finishing 2020 with $2,700,000,000 of free cash flow, A 29% increase year on year driven by top line growth, improved working capital and lower CapEx, partially offset by higher cash taxes. Moving to Slide 11. For the quarter, we ended with cash and investments of $4,100,000,000 And debt of $7,800,000,000 In Q4, we repurchased nearly 8,500,000 shares At an average price of $49.46 per share, amounting to $419,000,000 to $5,100,000,000 in total.
We ended the year with $2,000,000,000 of share repurchase authorization remaining. Moving to Slide 12. I'd like to provide an update on our investments, starting with the pending Classifieds transaction. As Jamie said, we remain excited to bring together 2 highly complementary businesses that can create tremendous value over time. When we announced the transfer on July 20, the valuation was $9,200,000,000 based on a mix of cash and out of Vinta shares.
The share price has appreciated by over 10%, which increased the value of the Classifieds business to nearly $10,700,000,000 based on recent trading levels. We We expect that the cash portion of the transfer will provide approximately $2,000,000,000 net of tax, and we currently expect any future sale of our stake would be a taxable event At the prevailing statutory rate. Turning to Audium. The warrant we acquired in Q2 of 2018 It's valued at $1,100,000,000 at the end of Q4, an increase of $770,000,000 year on year. This is an additional value driver stemming from our payments initiative, incremental to the plan of at least $2,000,000,000 of Transaction revenue and $500,000,000 of operating profit that is expected in 2022.
You can find more information on the Audient warrant in our 10 ks. For both of these investments, we remain excited about the optionality they provide, including the significant value each can generate for shareholders. Moving to guidance on Slide 13. Given the limited visibility to potential outcomes in the longer term, we are providing guidance for the Q1 And we'll reassess providing longer term guidance at a later date. For Q1, we are projecting revenue between 2.94 And $2,990,000,000 growing between 35% to 37% on an organic FX neutral basis.
This assumes marketplaces volume growth in the low 20s, driven by strength in e commerce and continued improvements in our user experience. In addition, we expect further take rate expansion driven by ongoing strong execution in managed payments and advertising. We expect non GAAP EPS of $1.03 to $1.08 per share, representing 49% to 57% growth. We expect non GAAP EPS growth will be driven primarily by volume, Lower share count, managed payments and advertising, partially offset by continued investments in product and marketing. We are expecting GAAP EPS from continuing operations in the range of $0.81 to $0.86 per share in Q1.
In February, our Board approved a 13% increase to our quarterly dividend, raising it to $0.18 per share. The dividend will be payable to shareholders of record as of March 1 with a payment date of March 19. Our Board has also approved an additional share repurchase authorization of $4,000,000,000 with no expiration, Raising the total authorization to approximately $6,000,000,000 While we aren't guiding for the full year, we do want to provide some additional context On volume, while we are in early days, we feel great about the progress we are making on the strategy we've laid out and believe these efforts will continue to deliver growth as we scale. In the near term, it is important to note that we will begin to lap Significantly tougher comps toward the end of Q1. And looking at Q2 specifically, we will be facing into our peak level of growth in 20 20 that was driven by the 1st wave of mobility restrictions, stimulus payments around the world and supply chain disruptions that our globally into managed payments nears completion and we expect ads to continue to grow faster than volume on our way to the next $1,000,000,000 On margin, we expect to continue to drive operational efficiency, while investing into higher rates of long term revenue growth.
We maintain our commitment of delivering 2 points of margin expansion versus 2019, achieving at least 30% by 2022. We expect to deliver strong free cash flow and will continue to return capital to shareholders through share buybacks and dividends, while being opportunistic To improve rates on our outstanding debt within our existing targets and tenants. We will continue to optimize our capital structure And recently announced our intention to call our retail bond that we plan to replace with debt at favorable rates in 2021. In summary, 2020 was an extraordinary year. We added $14,000,000,000 of GMV and 11,000,000 active We executed in payments and advertising, which delivered a combined 7 points of incremental revenue growth compared GMV for the year, 13 points in the 4th quarter.
We processed over 38% of on platform GMV through managed payments in the 4th quarter, While improving experiences for buyers and sellers, we cleared $1,000,000,000 in advertising in the year, highlighted by 86% growth within promoted Thanks. We grew non GAAP EPS by 49% and delivered strong free cash flow of $2,700,000,000 We executed a comprehensive portfolio review, including the divestiture of StubHub for $4,000,000,000 The pending transfer of ECG assets at a favorable valuation and announced the decision to explore options for Korea in January. We returned nearly $5,600,000,000 to shareholders through share repurchases and cash dividends, repurchasing 5,100,000,000 of our own shares, Taking advantage of a market price that we do not believe reflects the value of our company. And in these unimaginably tough times, we were there to help Having improved the underlying health of the business by delivering on the strategy we implemented this year, and we entered 2021 focused and excited to deliver on the next phase of the strategy
Our first question comes from Eric Sheridan with UBS, your line is open.
Thanks so much for taking the questions. Maybe 2 if I can. Appreciate all the color On some of the vertical moves you're making, especially with respect to watches and sneakers, can you talk a little bit just strategically about how much you already have in place To capitalize on looking going vertical by vertical within the marketplace or how much are sort of investments You have to make to unlock the opportunity over the longer term. And then understand on what you face in the middle part of the year with respect to comping against the growth from a year ago. Can you just talk philosophically about how much you think your exit velocity is going to matter against running against that comp Versus how much you might want to make investments to sustain momentum in either buyer growth or buyer behavior Just sort of outrun the comp through some of the investments you may be able to make against the business or just letting sort of the market play out from a comp perspective?
Thanks so much.
Yes. Thanks, Eric. Let me take the first one on verticals and then Andy can take a second. So we invested in those verticals really based on the strategy that we laid out in July of focusing on non new and seasoned And if you look at those categories being watches, sneakers, which we rolled out shortly after watches and then We saw really great growth rates. I mentioned the triple digit growth rate that we saw in sneakers.
You got to remember, this was a business that had been in decline. And so to see it As strong as this shows us the power of really focusing on those verticals and the end to end experience for our customers. And so while those Categories represent a single digit percentage of our GMV. The plan is to continue to roll out new category experiences from an end to end perspective over The course of the coming years, eventually meeting the majority of our GMV. I will add that we included another area for us The U.
K. Where we piloted a fashion brand outlet with 150 fashion brand sellers performed really well double digit growth Ahead of the market and ahead of what we expected. And so that kind of gives us the confidence that the strategy is working And the confidence to continue to roll out more categories over the coming quarters years.
Eric, and then on the second part of your On comps and investment, clearly there's a lot of noise now with what's going on with the pandemic, but That hasn't stopped or really changed the approach we've taken towards building towards longer term growth. It's given us a little bit of a tailwind To lean in a bit on investment, but the beauty of this model is, as I said in my prepared remarks, we're committed to the 30% margin and we believe We've got a very strong plan to get there and we feel like we've done or made great progress on the initiatives this year, Exiting the year stronger, certainly stronger than we entered and stronger than we had anticipated when we entered the year. As we look at
Our next question comes from Edward Yruma with KeyBanc. Your line is open.
Hey, guys. Two quick ones for me. I guess first, You've made some really strong strides in getting some new customers getting them back to the platform. I guess what are you doing To kind of ensure that they aren't just 1 and done, if it's out there, they were buying some COVID related or buying a video game system for their kids this holiday. And then as a follow-up, nice to see the strength in sneakers and watches.
I know you guys have a third party authentication services, I believe. What's the scalability of those solutions as you continue to grow those businesses? Thank you.
Yes. So starting on the buyer ones, We acquired 11,000,000 buyers over the course of the year. And what we're seeing is that the behavior when we look at things like frequency and retention It's not different and is as strong as we've seen in past cohorts, which means they didn't just come to us for eBay to buy a specific PPE and then we won't see them again. We're doing a good job of turning a percentage of them into enthusiasts. And what we're really focused on is how do we turn them into cross category shoppers.
So as I mentioned in the remarks, a sneaker buyer who comes into eBay is going to be worth $2,500 well, they'll be buying $2,500 worth of GMV, But only 20% of that is in sneakers and 80% of that will be in other categories across the site. And that's a huge advantage for us because the The cross category nature that we have of the platform and it's also a specific focus and something that we lean into a lot is driving it. And a lot of that growth is Coming from C2C and is bringing Gen Z and millennials to the platform, which is also critical and part of our strategy. In terms of the authentication, we've ramped up the amount of authenticating we're doing to now every sneaker over $100 going Through the authentication platforms, and we're seeing great response and great operations there. So consumers are getting their sneakers really quickly And the authentication process is working.
And look, while it's a very, very small percentage of things that we find where there are issues, that Guarantee for customers is a huge differentiator and is a big part of what's leading to the triple digit growth. So we're leaning in a lot In terms of marketing and acquiring those customers in that category, and we're excited for what we're seeing.
Thank you.
Our next question comes from Ross Sandler with Barclays. Your line is open.
Hey, guys. Just two questions. First is international. It looks like you had some nice acceleration there. You mentioned Korea, but I would guess that UK and Germany We're also accelerating and based on your guidance, it's probably happening again in 1Q.
So I guess can you just walk How much of that's like these company specific initiatives versus just the overall kind of macro situations like mobility and lockdowns In 4Q and 1Q. And then second question is, you mentioned that SEO is growing faster than paid, I think, with the comment. And that was a problem area from like 6, 7 years ago. So just I guess what are you doing that's new to unlock that SEO And how big could that channel be for you guys on a go forward basis? Thank you.
Got it. Hey, Ross, I'll take the first one. On Q4 dynamics and then the international versus U. S. Split, it looks Like there's a bit of a difference between U.
S. And international growth rates with the U. S. Down 8% and international accelerating on Quarter over quarter basis, that's really less an impact of what we saw in the 4th quarter and more an impact of kind of the unwind of the 2nd quarter And how 3rd quarter rates play through. So keep in mind in the U.
S. In the Q3, the growth rate, the deceleration from Q2 So when we look at Q3 or Q4 and how it plays through into the first, It's really for us more what we saw what we've seen since September with some acceleration really in all basically all countries Around the world, and that's played through to the Q1 and it's implied in the acceleration you see in our Q1 guidance. So clearly, mobility plays a large role in sustaining a level of growth and Driving a bit of acceleration. But again, the initiatives we're working on and the progress we've made With regards to product marketing and managed payments and search, contribute as well to the acceleration on a quarter over quarter basis. Clearly, the majority of that's going to be mobility driven, but underlying performance is better.
Yes. And I'd say on the SEO, look, there's a number We've been doing in terms of how we structure our listings and
what we're seeing in the past, and we're seeing a lot of the things that we've been doing in terms of how we structure our listings and what we're
seeing in the past that actually specifically drives it. Important thing to remember is, in general, 80% of our Traffic on the site is organic and people coming to us directly and that's really one of the strengths and assets of eBay. But certainly, The SEO is helping us with our initiatives to drive cross category purchase and drive consideration.
Our next question comes from Colin Sebastian with Baird. Your line is open.
How new this initiative is? Is this something you're working on throughout 2020? And if you have any metrics on The number across category purchases. And then secondly, I know there's some more focus on the competitive landscape. Perhaps you guys could comment on how you're perceiving the landscape with some, call them, up and coming marketplaces that's across some of your key categories.
All right. Thanks.
Yes. So look, on the cross marketing, I think it's been important for eBay since I was here the first time. It It continues to be a really important thing when you look at driving the CLTV of our buyers. If I go back to the sneakers example, I talked about the 80% outside the category And that represents them purchasing in 10 categories outside of the out of that core category. I would even broaden that question to So we're really studying a lot that first kind of 90 day experience for a customer looking at all the things that drive the retention of them.
And so getting them to download the mobile app, getting them to shop across category, getting them to watch or save items and really driving more of our marketing technology to align to driving the retention of the buyers and that's why we're excited to see that. A big reason that we also focus 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 So really that whole kind of introductory life cycle of being really algorithmic and using our best data science and AI, Really working on our marketing technology to be able to leverage that more is a key focus for us. And look on the competitive landscape, We feel great about our positioning. We significantly improved the NPS of our experiences, especially in those focused verticals that we talked about. And we're seeing really good feedback from buyers and sellers and that's always the leading indicator is that CSAT and NPS performance And what's happening there.
And so that combined with the payment CSAT stuff we're seeing where Sellers that are moving to our payments 2.0, our managed payments platform have a 10 point higher NPS is making us feel really good about where our competitive positioning is. Last thing I'd say is just thinking about the scale, right? So we talked about $14,000,000,000 GMV that we grew year on year last That's more than the last 7 years combined. That's more than most vertical competitors would do in a year. We grew more than that amount.
So being able to leverage those 185,000,000 buyers and have them purchasing cross category is a huge and unique asset for eBay. Great. Thanks, Jamie.
Our next question comes from Steven Yu with Credit Suisse. Your line is open.
Okay. Thank you. So I think Jamie, previous management teams have talked about looking at managing the amount of page real estate Promoted listings for system or legacy forms of advertising. So are you yet in a place where you have had to make those types of trade off And secondly, you recently announced the rollout of managed payments to both merchants and Buyers in China, so I think part of the benefit of working with Adyen has been that you can accept different forms of online payment, which you probably couldn't do before. And this theoretically should help you take down some of the friction against cross border trade.
So does this help you think about potentially expanding your
Yes. So first on the advertising business, feel great about hitting the $1,000,000,000 milestone. As we look at it, a lot of that growth is being driven by the growth of Promoted Listings. And as we analyze it, we're seeing better Seller penetration of people coming on the platform, better technology and tools in terms of our ability to do relevance and we're not seeing it degrade the buyer experience, Which is what gives us comfort that when we look at it in total being 1% of our total GMV that we have the opportunity They continue to have advertising grow faster than our GMV on the platform and really based on that strength of Promoted Listing. On your question on managed payments, absolutely.
It's a huge part of the win is really streamlining the payment process and providing more Payment options. 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 in a different type of inventory. So Between what we're doing in terms of speed pack and some of the forward deployed inventory plus now as we expand payments To Greater China, we think that will help a number of the quarters in terms of our cross border trade business.
Thank you.
Our next question comes from Thomas Forte with D. A. Davidson. Your line is open.
Great. Thanks for taking my question. So you sort of touched on this
in the prepared remarks, but
I was hoping you could give a little more of an answer on it. You've made a number of changes to your operating assets over the last 18 months. I wanted to get additional details on Your thoughts on your long term capital allocation strategy, including M and A, buyback and dividend. And on the M and A part, Are you looking more for tuck ins or would you be looking for something more of a growth type asset too? Thank you.
There was really nothing different about our thinking towards capital allocation. Our model gives us the flexibility to both invest back In our business organically and opportunistically to look at M and A as well as return capital To shareholders, our business generates a high amount of free cash flow. We have a strong balance sheet. And I think we have a track record of both Exercising discipline in our portfolio as well as maximizing value for shareholders. So we'll continue to look opportunistically at M and A and do so for tech and talent or areas that we believe are going to accelerate the strategy that we laid out Andy, do you want to add anything to that?
Yes. I mean, I think the only thing I'd add is, while we do it's a pretty active playing field with What's coming with ECG and the like, I think if you look at historically what we've done with StubHub and some of the things in the past, You can expect it will be consistent in what we've done. Our tenants and targets are unchanged and our number one focus is do what we can to invest back The business to grow organically, look at M and A where it helps us to do that. We remain committed to shareholder return And I just expect us to continue to do that.
Great. Thanks for taking my questions.
Our next question comes from Tom Champion with Piper Sandler. Your line is open.
Great. Good afternoon. We've done survey work here that reflects a rising interest in pre owned goods among Gen Z and the I'm just curious if you're seeing this trend reflected in your new buyer growth as well, whether you'd kind of agree with that? And then Maybe just a second question around advertising. There are clearly some larger Internet platforms saying iOS changes will make Small business advertising more difficult and degrade ROI this year.
And just curious if You think this represents an opportunity for eBay to step in and offer a solution among the SMBs?
Thank you.
Yes. So first on the Gen Z and Millennials, absolutely, it's a huge area of why we're focused on pre owned, Not only because of the attractiveness there, but also just the impact on the planet. If you look at the numbers that we talked about from saving 720,000 Metric tons of carbon emission. We recently did a survey, probably sounds like much the survey that you've done. And 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. Other thing that's important to remember is that we believe that people have about $4,000 of items in their house that they can sell, less than 20% of that is online. And so there's a huge kind of social element which we're leaning into as part of that, But definitely a focus on the Gen Z and millennials. And you're seeing that in sneakers. You're seeing that in what we did with our brand fashion outlet in the U.
K. And you'll see us continue to focus on attracting that customer to the platform.
Your next question comes from Youssef Squali with Drew Securities. Your line is open.
And before you do, I I forgot that I didn't answer your advertising question. So let me just cover that one real quickly. So look, we believe that ads is beneficial for us because we essentially have a closed platform. We're able to drive the majority of that growth through Promoted Listings where we actually can see the actual relevance, The click throughs all of the data that make that impactful. So yes, that gives us I think a lot of bullishness in terms of the future For us in advertising, especially since we're only penetrated at 1% of GMV.
And we think there's opportunities We continue to expand the number of sellers that use the platform as well as build new capabilities to make that platform even more With some new tools, etcetera, which you'll see over the coming quarters and coming years. Can you hear me? Yes, go ahead. Sorry about that. Excellent.
Hey, no, thanks a lot. Thank you for taking the question. I just had a 2 part question. 1, If I look at Slide 6, the GMV breakdown, it looks like U. S.
GMV was up 25% year on year, which is pretty impressive. If I look at it on basis, it was actually slightly down in a seasonally strong quarter. I was wondering if you can expand on that. And then related to that, As I look at your guidance for Q1, kind of what's baked into your guidance in terms of the mix between U. S.
Growth versus international? Thank
you. Sorry, what was the second?
The second
was just about U. S. Versus international for Q1
Yes. I'll take that one first. Just on the it's a little similar to the question earlier. Based on the trends we saw in the Q4, kind of the movement in U. S.
Versus International was relatively similar. So as we look into Q1, what we've seen thus far in the quarter and therefore implied in the guide is similar movements By country, so no real difference U. S. And international in terms of quarter over quarter dynamics. And then the first question, Was it U.
S. GMV only, the deceleration?
Yes, yes, yes. It's basically showing that on Slide 6. Thank you.
Sorry, Youssef. That one, I think, again, if you is less an issue or less A component of Q4 activity as much as it is a hangover in Q3 of The spike in Q2. So the U. S, I mean, we had a clearly a very large volume spike in the second quarter. Volume in the U.
S. Hung in longer in the Q3, partially as a result of stimulus, partially as a result of some of the supply chain disruption. And then as that slowed down through the end of Q3, some of that's what you're seeing play through in the quarter over quarter dynamics. But as I said, from September on, the activity by country has been relatively similar.
Our next question comes from Bob Drbul with Guggenheim Securities, your line is open.
Hey, guys. Just a couple of quick questions really. On the 7% Increase in buyers. What would you put as the largest factors to the new buyers during this period versus what we've seen over the last, I don't know, 9 to 12 months. And I guess the second question is just, are you seeing any change in buy it now versus the option type buying with the consumer?
Thanks. Yes. Sure, Bob. So look, the increase in buyer is in part doing a lot of the strategic That we're doing and the focus verticals, you saw us do more marketing in the quarter, really talking about some of the new capabilities that we have out there. And we leaned in from a reinvestment standpoint to not only acquire those buyers, but to really to work on driving the retention of those buyers into our So obviously, in a number of countries, it's also pandemic related relative to mobility, But we've also been leaning in to kind of take advantage of that and drive our cohort curves.
And we've been impressed what we've been seeing from that perspective. In terms of the makeup of different formats, buy it now remains the vast majority of what's on the platform. We do see And auctions in areas like collectibles, which is a category that's growing strong for us. But now it is buy now remains strong, but We've innovated over the years in things like best offer and in seller initiated offers. And seller initiated offers, as an example, is Almost the inverse of best offer.
Best offer is the buyer making an offer. Sellers can actually make specific individual offers to sellers who have interacted with one of their products. And we're doing $1,200,000,000 already in that. It's one of the unique elements of the eBay platform is auctions, best offer, star initiated offers are always for buyers Great. Thank you very much.
Hey, operator, we got time for one more.
Our final question will come from Brian Nowak with Morgan Stanley. Your line is open.
Thanks for taking my question. I have 2. Just The first one, Gene, I appreciate all the color around sort of the way you're studying the 1st 90 days of experience of the consumers and sort of the 80% of the traffic I'd be curious to hear about in the U. S, talk to us about what you've seen as being the 1 or 2 Key categories that have been the biggest enablers of the new people have come to the platform. And how have you seen that change from last spring to now?
Which categories are sort of driving the new people to the category? Then secondly, just as we think about the advertising business, just talk to us about qualitatively what types of investments you still see yourself Needing to make internally to sort of ensure that the advertising business is set up to continue to scale and deliver value for the merchants? Thanks.
Yes. So, look, the buying behavior that we follow over the course of the year, it started in PPE equipment, then went to kind of stuff that people needed To work from home or stay at home, fitness equipment and laptops and that type of thing. But after that, it was really broad based and continues to be broad based In terms of where we're acquiring buyers. So from everything from people spending time in their hobbies in parts and accessories or fixing up their cars To certify and refurbish and what we're doing there, we're definitely seeing strength in buyer acquisition and the focus verticals that we've been talking about. So like apparel that we worked on in the quarter with the brand fashion outlet and in the areas that we announced in the U.
S. And We'll be expanding globally. So more important for us is not only where we acquire them, but getting really smart and using a lot of AI about what's The best second category, how are we using all of our tools and capabilities across marketing and the apps and the websites to get them to Interact in different parts of the business. And that's where I think about it just getting a little bit better every single day and how we're able to do that is going to be what continues to help drive those numbers. From an ads perspective, we're focused on the tools and capabilities to make it easier for sellers to use the product To give them templating and reporting of how it's doing and be able to have that closed loop ROI on the spend that they have on the platform To make it more applicable to C2C sellers and make it really easy there because obviously if you think about a sophisticated B2C seller, It's easier to interact with and much easier to understand than advertising product.
So that's a big component of what we're doing. And then also just building new algorithms and relevance and machine learning into are we displaying the best thing that we continue to expand the program while not degrading the buying experience and ideally enhancing the buyer experience Through what we're doing on our advertising products. So what you'll see is just continued quarter after quarter innovation in that product to Great. Thanks, Jamie.
Yes.
Ladies and gentlemen, we have reached the end of the allotted time Questions have been answered. I'll now turn the call back over to the company for closing remarks.
I think we're all set. We can close the call. Thanks, everyone. Thanks, everyone.
This concludes today's conference call. You may now disconnect.