eBay (NASDAQ:EBAY) will report fourth quarter earnings on Wednesday, Jan. 31, after the market close. This holiday season report could be very important for investors -- eBay is coming off a third quarter in which it saw its fastest growth in gross merchandise volume (GMV) in three years, which drove an acceleration in revenue growth over prior periods.

Read on for a breakdown of management's growth strategy and key numbers for investors to watch.

eBay headquarter campus in San Jose, California.

Image source: eBay Inc. 

eBay's growth strategy appears to be working

In the last quarter, eBay showed it's not doomed to remain in mid-single-digit growth territory. On a currency-neutral basis, both revenue and GMV growth accelerated to 8% and 7%, respectively, and management is nowhere close to finished with its turnaround efforts. Take a look at the recent trend for these two metrics:

Metric Q3 2017 Q2 2017 Q1 2017 Q4 2016  Q3 2016
GMV YOY Growth 7% 5% 5% 6% 5%
Revenue YOY Growth 8% 7% 7% 6% 8%

DATA SOURCE: eBay THIRD-QUARTER EARNINGS RELEASE. YOY = YEAR OVER YEAR. GMV AND REVENUE GROWTH RATES EXCLUDE THE CHANGE IN CURRENCY.

Management has been making many changes to the marketplace over the past few years, including the use of what management calls "structured data", which organizes marketplace items around products instead of listings. The end goal is to help buyers find what they are looking for, help sellers manage their businesses more efficiently, and differentiate and better organize the inventory listed on the marketplace.

Only 12% of marketplace pages feature the use of structured data, so the company still has a long way to go with this effort that played a key role in the revenue growth acceleration last quarter.

Diagram of Google Assistant helping eBay user find an item.

GOOGLE HOME CAN HELP EBAY USERS FIND THE RIGHT ITEM. IMAGE SOURCE: EBAY INC.

eBay is also investing heavily in the use of artificial intelligence and machine learning to personalize the shopping experience. One example is the integration of the eBay Shopping Assistant with Alphabet's Google Home, where the user can have a conversation with Google Assistant to find certain items on eBay and then tell Google Assistant to send the listing information to a phone.  The culture of eBay has historically shown a knack for getting ahead of the curve in the technological changes sweeping across the retail industry, and current CEO Devin Wenig's focus on positioning eBay for AI-assisted shopping fits that pattern.

These changes are part of management's plan to differentiate eBay's inventory and keep the company growing amid stiffer competition. Amazon.com and Wal-Mart Stores' high growth in their respective e-commerce businesses are major threats to the once fast-growing auction site that helped the internet gain the image as a friendly place to shop.

That's why it's particularly encouraging to see eBay's acceleration in revenue and GMV last quarter -- it shows management's strategy is working and also validates eBay as a differentiated brand in a highly competitive retail landscape. Investors will want to see that strength and momentum is sustainable.

The headline numbers

For the fourth quarter, management's guidance (highlighted in the following table) suggests that eBay has hit a new plateau from what we've seen over the past year, as the guidance for revenue growth is consistent with the company's third quarter results.

Metric Revenue YOY Revenue Growth Non-GAAP EPS YOY EPS Growth
Q4 2017 Guidance  $2.58 billion to $2.62 billion 7.7% to 9.4% $0.57 to $0.59 5.5% to 9.2%

DATA SOURCE  eBay THIRD-QUARTER EARNINGS RELEASE. YOY = YEAR OVER YEAR. EPS = EARNINGS PER SHARE.

Other than those headline numbers, investors should watch the growth in active buyers, which has been stable at 5% year over year in recent quarters. This marks an improvement over the 3% growth rate reported in Q3 2016. If active buyer growth saw an uptick over the holidays, it could signal that eBay is making even more progress.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and eBay. The Motley Fool has a disclosure policy.