© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and thank you for standing by. Welcome to the eBay Q4 2021 Earnings Call. [Operator Instructions]. I would now like to hand the conference over your presenter, Vice President, Investor Relations, Joe Billante. Sir, please go ahead.
Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the fourth quarter of 2021. Joining me today on the call are Jamie Iannone, our Chief Executive Officer; and Steve Priest, our Chief Financial Officer. We're providing a slide presentation to accompany Steve's commentary during the call, which is available through the Investor Relations section of the eBay website at investors.ebayinc.com. 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 the 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 Steve's remarks represent FX-neutral year-over-year comparisons unless they indicate otherwise. In this conference call, management will make forward-looking statements, including, without limitation, 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 in our most recent periodic reports on Form 10-K and Form 10-Q in our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of February 23, 2022, 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. Today, I'll begin by sharing highlights since our last earnings call. Then I will focus on the near-term progress we are making towards our strategic vision. And finally, provide a short preview of our Investor Day in 2 weeks. At the end of my remarks, I will turn the call over to Steve, who will discuss our financial performance and outlook in greater detail. The fourth quarter marked another solid quarter for sellers and buyers on eBay. They benefited from investments in our strategy to drive sustainable growth in our marketplace. We are simplifying the seller and buyer experience, increasing customer satisfaction and improving our underlying growth trajectory. Let me highlight a few achievements from the quarter. We are seeing faster GMV growth in focus categories that now represent approximately 20% of global volume. We successfully completed our multiyear payments transition on time with more customer benefits and with greater financial impact than expected. Our advertising business grew faster than marketplace volume as more sellers adopted new ad products. We delivered revenue growth at the high end of our expectations and earnings growth above guidance. And finally, we continue to execute our ESG agenda. In addition to being carbon-neutral, we made progress on our long-term sustainability targets, and eBay for Charity finished a record-breaking year. I'm very pleased with our Q4 financial results. We delivered 5% revenue growth on the back of payments migration and Promoted Listings growth. We also delivered $1.05 of non-GAAP EPS, more than the high end of expectations. For the full year, revenue was up 15%, and non-GAAP EPS was up 21%. As proud as I am of our team for delivering these results, I am more excited about eBay's future based on the response from our customers to the strategy we are implementing. This is evident in focused categories. We are delivering best-in-class customer satisfaction, and it is leading to faster GMV growth. In Q4, focus categories grew 15 points faster than the rest of the marketplace. The next category we are focused on is motors, parts and accessories or P&A for short. This is one of our largest categories globally and is full of enthusiasts who are passionate about what they trade on eBay. Many are very active buyers who shop in multiple categories, with over 60% of the eBay spend coming on products outside P&A. Starting in December, we began investing in top-of-funnel marketing across TV, radio and social sales in partnership with key industry influencers. These ads highlight the valuable choices P&A enthusiasts have on eBay across hundreds of millions of listings. In addition, we implemented monetization changes to higher-priced items and saw an increase in listings during Q4. We are leveraging the scale of our supply in new ways. With input from our P&A sellers, we simplified our global category structure. This makes it easier for buyers to find unique parts from around the world, unlocking more cross-border trade. These initial changes led to modestly better performance in P&A GMV during Q4 relative to the overall business. It's early days, and we plan to make further investments this year to improve our trajectory in this category. In focus categories where we have been investing for several quarters, we have seen growth sustained at higher levels. Sneakers over $100 continued to grow double digits globally. Our success in the U.S. is being replicated in other major markets. Part of that success is authentication, which is scaled to 5 countries over the past year. And in Q4, we started authenticating cross-border transactions into the U.S. But we are not stopping there. Last quarter, we acquired Sneaker Con, a leading authenticator with operations in the U.S., U.K., Canada, Australia and Germany. By bringing additional capacity in-house, we increased the scale and flexibility of our operations. We also introduced 3D true view on select listings. This capability increases trust for buyers shopping for unique, high-value pre-owned items. Given our success in driving customer satisfaction to over 90% and sustained double-digit GMV growth, we have reintroduced monetization in the U.S. for sneakers over $100. The initial customer feedback has been encouraging as sellers continue to benefit from a lower take rate than many other platforms. Sellers are also listing more luxury watches on eBay. We saw a double-digit increase in supply quarter-over-quarter, and total GMV in this category continues to grow at strong double-digit rates in the U.S. In Germany and the U.K., authentication is also leading to higher customer satisfaction. In luxury handbags, we saw acceleration in Q4 to positive double-digit growth in the U.S. Based on the success of authenticity guarantee, we are growing the number of brands covered by the program. In addition, we have expanded selection by authenticating cross-border imports from Japan, a key source of unique inventory. And just a few weeks ago, we announced authenticity guarantee for all single ungraded trading cards sold for over $750 in the U.S. We plan to expand this offering to include graded autograph and pass cars sold for more than $250 later this year. As we exited 2021, our Certified Refurbished program had expanded to over 320 brands. This program now includes brands like Microsoft, Dyson, Samsung Galaxy and KitchenAid. And as a reminder, these products are certified by the manufacturer, are like new and are backed by a 2-year warranty and eBay's money back guarantee. Higher trust has increased customer satisfaction and accelerated GMV to positive double-digit rates. Certified Refurbished products from top brands make up a small percentage of the total refurb activity on eBay but are growing significantly faster. This has inspired us to expand further. And in November, we announced eBay Refurbished, a destination for like new products. This expanded experience adds more inventory from top-rated sellers. These trusted sellers are thoroughly vetted to meet rigorous performance standards so buyers can purchase with even greater confidence. In Q4, we saw promising early results from this expansion in mobile phones and plan to extend to tablets, smart watches and laptops this year. In addition to improvements in focus categories, we made a number of changes during Q4 that benefited sellers and buyers across all categories globally. We've started a pilot with our API sellers to add video to their listings. To date, we have seen hundreds of thousands of listings add video content. Buyers get a rich shopping experience on individual item pages and in seller stores. Looking ahead, we plan to enable more sellers to tell their story by adding videos through additional listing flows. Another new growth capability we are scaling for sellers is coded coupons. Since launch, sellers have realized over $350 million in GMV. Over 60,000 sellers have driven repeat purchases from almost 6 million buyers. Buyer trust is essential in a third-party marketplace and is an area of focus for our technology investment. In Q4, we leveraged artificial intelligence to significantly decrease the time to detect and remove counterfeits. In the categories where it has been deployed to date, most listings are renewed before a buyer has a chance to see it. These are a few recent examples of how we are using technology to increase trust while simplifying seller and buyer experiences. Moving on to payments. In Q4, we completed the transition to a modern payments platform by migrating all remaining sellers away from the legacy system. This has resulted in a simpler seller experience, lower fees for most sellers, more choice for buyers and better-than-expected financial results. Although this marks the culmination of a major multiyear effort, in reality, this is just the beginning. By managing seller and buyer money flows, we can remove transactional friction and provide more trusted services. We've been systematically eliminating unpaid items, which removed friction for approximately 10 million transactions in 2021. In addition, sellers are being paid faster for weekend sales in most major markets. We are also exploring new ways to allow sellers and buyers to benefit from our scale. In the U.S., we recently launched a partnership with Chase Freedom rewards that increases top-of-funnel impressions, driving buyer traffic to eBay. We are excited by the value payments has provided our seller and buyer community, and we see more growth opportunities ahead. Moving to advertising. In Q4, ad revenue growth once again outpaced volume due to Promoted Listings, driving approximately $227 million in revenue, up 4%. Adoption grew at double-digit rates in both the number of sellers and the number of listings promoted. Looking at the full year, our advertising business, including both first-party and third-party ad products, surpassed $1 billion, up 9%. To drive the next growth cycle in advertising, we expanded the rollout of new products to more sellers and markets during the quarter. PL Express, our auction listings product, was fully launched to all major markets. We also integrated this feature into more listing tools to drive further adoption. For PL Advanced, our cost per click offering, we opened access to AI-driven recommendations for keywords and bid pricing. While this product remains in a limited beta as we optimize the customer experience, we are increasing exposure and streamlining reporting for sellers. For external Promoted Listings, we continue to ramp more affiliate traffic through the eBay partner network. We also increased traffic from external paid search to Promoted Listings in European markets. Participating sellers are seeing increased traffic and conversion while maintaining control over ad pricing. We have carefully meted the rollout out of these new products while balancing impacts to our buyer experience. Despite the limited release, new ad products provide a material contribution to Promoted Listings revenue growth in Q4. We expect this to accelerate in the coming quarters as availability and adoption of these new product increases. Another area where we made significant progress last year was in e-commerce. Volume of pre-loved products grew faster than new products in 2021 driven by demand from younger consumers. For the full year, we delivered $2.7 billion of GMV in pre-loved electronics and apparel in the U.S., U.K. and Canada. In addition to providing customers great value on unique used goods, e-commerce activity also helped to meet our sustainability goals. These purchases reduced carbon emissions by approximately 540,000 metric tons in 2021. eBay is a carbon-neutral company, and I'm thrilled by the recognition we recently received as a sustainability leader in e-commerce. For the third year running, eBay has made the Dow Jones Sustainability World in North American indices, putting us in the top 10% of companies in our industry globally. eBay was also included in Just Capital and CNBC's Just 100 list. This list measures corporate performance and efforts in areas such as climate change, DE&I and employee wellness. When compared to nearly 1,000 companies, eBay ranked 88th overall and fourth in retail when it comes to minimizing our environmental impact. I'm really proud of the progress our team is making here. The eBay community continues to demonstrate its tremendous generosity. In Q4, eBay for Charity enabled sellers and buyers to raise almost $37 million, up 6%. And for the year, customers raised over $145 million, up 18%, the most raised since we started this program almost 20 years ago. Lastly, we were honored this year to receive Glassdoor's 2022 Employees' Choice Award. This award reflects anonymous feedback from current and former employees regarding topics such as crew opportunities, culture and values, and diversity inclusion, just to name a few. We are truly honored to be recognized by the people who make eBay the company it is. Now I would like to talk about our upcoming Investor Day on March 10. In July of 2020, I outlined a clear vision of a winning strategy for the company. Since that time, we increased our focus on sellers and buyers, accelerated the pace of innovation, simplified the portfolio and revamped the leadership team. We also drove successful multiyear initiatives in payments and advertising, both of which exceeded ambitious targets. This unprecedented level of change in eBay all happened in parallel with a global pandemic that massively disrupted short-term consumer behavior. Their early results have demonstrated that our strategy is working, and the business is stronger than it was before the pandemic. Our focus categories are returning to market rates of growth. High-value buyers are growing, and they are spending more. We are empowering sellers by simplifying their experience, saving them money and providing tools to accelerate their growth. Our technology investments are driving a simpler and more sustainable marketplace. And along the way, our investors have been rewarded with strong earnings growth and significant capital returns. Looking ahead, we're excited about the next few years as we build on the momentum we have established. I look forward to introducing you to our world-class leadership team and sharing more about our plans, along with a few new initiatives we will unveil at Investor Day. We have our eyes squarely focused on deepening our relationship with sellers and buyers and building the world's most sustainable marketplace for the eBay community. In closing, I would like to sincerely thank our extraordinary employees for an amazing year. They completed a huge payments transition, executed 2 large dispositions and improved the underlying growth of our business. While doing so, they delivered tremendous sustainability results and supported sellers and buyers during these challenging times. With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.
Thank you, Jamie, and thank you all for joining us today. I'll begin with the financial highlights from the quarter and full year on Slide 4 of our investor presentation. Next, I'll walk through key operating and financial metrics in greater detail. Finally, I'll provide our forward outlook and closing thoughts before we begin Q&A. Please note, my comments will reflect year-over-year comparisons at constant currency, unless I note otherwise. Overall, we are pleased with our Q4 results as we met or exceeded expectations across all of our key financial metrics, capping off an exceptional 2021 for eBay. I've been inspired by our team's relentless focus and execution amid uncertain economic and operating conditions throughout the year. Importantly, our performance in 2021 demonstrated the progress we have made towards a return to durable, sustainable growth in the years ahead. Revenue grew 5% to $2.6 billion in Q4, over 15 points faster than volume growth. For 2021, revenue grew 15% to $10.4 billion, up 18 points faster than volume growth. Our non-GAAP operating margin was 31.6% for the quarter. For the full year, we generated approximately $3.5 billion of operating profit at 33.4% margin. Non-GAAP earnings per share grew 24% to $1.05 in Q4. For the full year, EPS grew 21% to $4.02. We generated $2.6 billion of free cash flow in 2021 and returned $7.5 billion to shareholders through repurchases and dividends. Let's take a deeper look into our key operating and financial metrics. As a reminder, we adjusted our definition of GMV in December following the completion of our payments migration. The change had a modest impact on our historical GMV and active buyer figures, but the impact of the change on year-over-year growth for each metric in Q4 was immaterial. Starting with active buyers. We ended 2021 with 147 million active buyers on a trailing 12-month basis, representing a 9% year-over-year decline. The expected decrease in active buyers was primarily driven by low value buyers, which fell 9% versus Q4 of 2019. Growth in high-value buyers over the same period was 3%. Although fewer buyers sold on eBay as compared to prepandemic levels, total high-value buyers were up due to growth in high spending and [indiscernible]. And importantly, even as mobility restrictions have been lifted, spend for high-value buyer continues to expand at healthy rates. Our buyers purchased $20.7 billion of GMV in Q4, which marked an 11% decline and landed near the high end of our outlook. Compared with Q4 of 2019, GMV grew 9% at constant currency, representing a 3-point deceleration sequentially. On a geographic basis, U.S. GMV grew 22% versus Q4 of 2019, while international GMV declined 1% on an FX-neutral basis. Our U.S. and international markets were impacted by softness in overall online shopping activity during the Cyber Five holiday period, but both geographies improved during the remainder of December. Consistent with prior quarters, numerous factors contributed to the growth differential between our U.S. and international markets. Core macroeconomic factors like GDP, retail growth and inflation have been notably stronger in the U.S. than our international markets. Other macro factors like global supply chain disruptions, shipping constraints and other export challenges have had a negative impact on growth in our international markets. These dynamics have particularly impacted sellers involved in cross-border trade, which skew towards non-U.S. markets. Conversely, our domestic sellers likely benefited from item scarcity due to supply changes. Our domestic GMV has benefited from momentum in collectibles, which is largely a U.S. phenomenon. In addition, high ASP luxury categories are growing faster in the U.S. as the rollout of our innovation playbook is more nascent internationally. However, as our luxury categories build momentum and we roll out product improvements in categories like P&A, which represents a higher share of GMV in international markets, growth outside the U.S. should see greater benefit. Our focus category coverage expanded to approximately 20% of GMV as we made product improvements in P&A and broadened our country footprint in existing luxury categories. Focus categories outpaced growth in other categories by approximately 15 points in Q4, demonstrating the impact of our innovation playbook. Net revenue during the quarter was $2.6 billion, up 5%, while transaction revenue also grew 5%. Under our updated definition of GMV, our transaction take rate of 11.8% was roughly in line with Q3 as we completed the managed payments migration. Managed payments contributed 15 points of revenue growth in Q4 and generated $2 billion of incremental revenue in 2021, meeting our full year target. We remain excited about the potential for managed payments to open up new opportunities in financial services for our sellers and buyers. Within our advertising business, Promoted Listings grew 4% during the quarter, outpacing volume by 15 points. As Jamie noted, we are encouraged by the progress of our new ad products, which began to gradually move the needle from Promoted Listings growth during the quarter. Moving down the P&L. Our non-GAAP operating margin in Q4 was 31.6%. For the full year, our non-GAAP operating margin was 33.4%, increasing by close to 200 basis points versus 2019. This leverage was particularly notable given the incremental contribution from managed payments, which generates material operating profit, but is dilutive to reporting operating margins. Cost of revenue rose by over 4 points as a percentage of revenue in Q4 year-over-year due to the variable payment processing costs from managed payments. With the migration behind us, we expect gross margin to stabilize around the current run rate in the short term with normal seasonal fluctuations from quarter-to-quarter. Our other operating expenses declined by over 4 points in aggregate, roughly offsetting the decline in gross margin as payments revenue post fewer fixed expenses. Turning to earnings per share. During the quarter, we delivered $1.05 of non-GAAP EPS, up 24%. Contributions from payments and advertising in conjunction with share repurchases offset the lapping of mobility tailwinds last year. We generated a GAAP loss per share of $1.47 due primarily to mark-to-market losses on our investment portfolio. We generated $372 million of free cash flow in Q4 and ended the year with cash and non-equity investments of $7.3 billion as well as gross debt of $9.1 billion. We repurchased $3 billion of shares during Q4, an average price of approximately $70 per share, with the majority of our buyback executed through accelerated share repurchase programs. Additional ASR details will be available in our 10-K filing. We also paid a quarterly cash dividend of $107 million in December, representing $0.18 per share. Our investments are detailed on Slide 13. After closing our Permira and Korea deals, which yielded approximately $5 billion in cash, our remaining investment portfolio was worth over $8 billion in aggregate at the end of Q4. Our remaining Adevinta shares were valued at $5.4 billion. We held approximately $1.1 billion of Adyen shares after exercising our first tranche of warrants during Q4. Including the estimated value of our remaining warrant tranches, our total Adyen investment amounted to $1.5 billion. Our stake in KakaoBank was worth roughly $700 million. And finally, the fair value of our nearly 20% ownership interest in Gmarket in Korea was approximately $700 million. Moving to our outlook, beginning with the full year on Slide 14. To summarize, 2022 will be the tale of 2 halves. During the first half of the year, we'll lap significant mobility and macro tailwinds from 2021, with margins pressured as we scale investments sequentially. During the second half, we should observe the cleanest year-over-year comps we've encountered since entering the pandemic, revealing the underlying growth and earnings power of our business. For the full year, we forecast GMV to decline by 5% to 8% on an FX-neutral basis, with an FX headwind of roughly 200 to 300 basis points to reported growth. We anticipate the GMV decline in the mid-teens on an FX-neutral basis during the first half as we lap a period of significant global mobility restrictions and the U.S. stimulus effects. In the second half, we expect flat to modestly positive GMV growth and anticipate exiting the year growing volume at 2% to 3% in constant currency. Notably, the quarterly phasing of our GMV should more closely approximate prepandemic seasonality moving forward, assuming mobility and macro factors remain relatively stable throughout the year. We expect our 2022 take rate to expand by roughly 1 point driven primarily by a full year of managed payments and increased revenue contribution from Promoted Listings as we scale our new products. We forecast 2022 revenue of $10.3 billion to $10.5 billion, representing FX-neutral growth of flat to positive 3%. During the first half, we expect revenues to decline in the low to mid-single digits before reaccelerating in the second half to go in the mid- to high single digits in constant currency. As we exit Q4, we expect the relationship between revenue and GMV to tighten as we fully lap the managed payments rollout. We expect non-GAAP operating margin of between 30% and 31% this year. The second quarter should mark the low point for margins during the year as we lap difficult comps and ramp up our pace of investment. Our investments in focus categories last year had a measurable positive impact on growth. Thus, we are doubling down on investments in products and full funnel marketing initiatives in 2022, supporting these categories. We're confident these investments will improve customer satisfaction rates and drive sustainable growth in the years ahead. We forecast non-GAAP EPS of between $4.20 and $4.40 in 2022. During the first half of the year, we expect EPS to be down low single digits year-over-year as we lap last year's outstanding growth and scale investments. However, the midpoint of our outlook implies EPS will grow in the high teens during the second half as GMV turns positive and revenue outpaces volume. Our Board recently increased our share repurchase authorization by $4 billion, bringing our total authorization to approximately $6 billion. We are also raising our quarterly dividend by 22% to $0.22 per share, our third consecutive double-digit raise since establishing our dividend in 2019. Looking at the first quarter guidance on Slide 15. We forecast revenue between $2.43 billion and $2.48 billion, representing a decline between 5% and 7% at constant currency. We expect our take rate to be roughly stable sequentially, implying GMV is down 17% to 19% year-over-year on an FX-neutral basis. We anticipate non-GAAP operating margins between 31.5% and 32% in Q1, up modestly versus Q4 at the midpoint, but down 5 to 6 points year-over-year as we lap extraordinary volume leverage last year due to COVID. We project non-GAAP EPS between $1.01 and $1.05 in Q1, representing a year-over-year decline of 6% to a decline of 3%. In closing, 2021 was an outstanding year for eBay. We delivered strong Q4 and full year results despite a challenging operating environment, uncertain macro conditions and constantly changing consumer behavior throughout the pandemic. Our focus categories meaningfully outpace overall volume growth due to increased customer satisfaction rates, offering demonstrable proof that our innovation playbook is working. We generated $2 billion of revenue from managed payments this year after completing our migration and still see many more opportunities to leverage financial services to reduce friction for sellers and buyers on eBay. We delivered over $1 billion of advertising revenue this year and significantly broadened our ad portfolio to meet the needs of more sellers, helping them grow their businesses on eBay. We've made prudent investments in people, product and technology to support our strategic pillars. We believe these investments will drive durable growth in our marketplace in the years ahead. We grew non-GAAP EPS by 21% on top of strong earnings growth in the prior year, generated $2.6 billion of free cash flow, unlocked billions more from our portfolio divestitures and returned $7.5 billion to shareholders through repurchases and dividends. We are proud to have taken meaningful steps to improve our environmental impact this year by achieving 100% carbon neutrality, setting ambitious science-based targets for the future and the continuous progress we are making as we focus on driving e-commerce and the circular economy as a whole. I would like to echo Jamie's thanks to our incredible employee base as their tireless efforts have been instrumental in bringing our strategy to life. To our valued sellers and buyers in the eBay community, your response to our investments in trust and innovation give us conviction that we are on the right path. We are excited to reveal more details about our future road map very soon. To the investment community, we appreciate your continued interest and look forward to hosting you at our virtual Investor Day on March 10. With that, Jamie and I will now take your questions. Operator?
[Operator Instructions]. Your first question comes from the line of Scott Devitt from Stifel.
I have two. The first, U.S. and international GMV growth rates have been diverging recently, favoring the U.S. for a variety of reasons. And so as we get through to the second half of '22, in which overall GMV improves to flat to modest -- modestly positive and you begin lapping the -- of stimulus and mobility dynamics, supply chain cross-border and differences in the reopening time in various countries, should we assume that U.S. versus international growth dynamics converge, even maybe favoring international due to cross-border? And are there any specific countries you point out in one direction or the other relative the overall growth rate of the business when we get back to that kind of normal period of time again? And then secondly, I know you just divested a number of businesses, but valuations of companies that could be bolted on to the platform has changed considerably just in the past few months. And I'm curious if the environment change has made you more open to considering acquisitions within the marketplace category.
Yes. So Scott, this is Jamie. So on the U.S. versus international, as we talked about last quarter, there's a couple of dynamics that are impacting the differences in the growth rate. First, on the macro side, just different markets, GDP growth, inflation growth, retail growth are different and lower in Europe than what we're seeing in the U.S. We've talked about the supply chain challenges, which have a bigger impact on our international business than on our U.S. business. So in some cases in the U.S., we're favored by it in things like video graphics cards, which are in high demand. At the same time, we have a strong cross-border trade business, and some of our sellers are impacted by some of the supply chain dynamics and export challenges. And that hits our international segment more than our U.S. segment. The third component is really the focus categories are much more nascent in our international business than in the U.S. So think a category like watches, which has been live for several quarters in the U.S., we just rolled that out to U.K. and Germany this quarter, ditto with some of our other products and focus categories where they're still rolling it off to our international markets. And as we've seen, it takes a few quarters for us to achieve the growth rate levels that we saw in the U.S. But we believe that, that playbook will apply and that will help the convergence that you talked about. The last thing is really just the collectible difference between the 2 markets. Trading cards and that whole segment is stronger in the U.S. than it is in international. So it's a long way to say that there's a number of factors that are at play there. But yes, we believe, over time, as the categories roll out, that will drive the convergence as well as some of the macro effects like the supply chain and other pieces change over time. On your second question on M&A, yes, we continue to look at M&A as an opportunity to accelerate our tech-led reimagination. We've said we will be opportunistic to look at areas that are asset-light and consistent with our business to drive the strategy that we've laid out. The example I would point to is, most recently, Sneaker Con and that investment with authentication properties and services in 5 different countries enabling us to accelerate even faster what's happening on sneakers, where we've seen really great success. In fact, we think the playbook has worked well enough now that we're actually remonetizing sneakers this quarter for sneakers over $100. So it gives us scale, and it gives us flexibility, and that was the point of the acquisition.
And your next question comes from the line of Ross Sandler from Barclays.
Just following up from Scott's question. I think looking at the exit run rate for '22, some investors we talked to, I think, were hoping to see a little bit more than 2% to 3% GMV growth with all the focus category activity and initiatives that you're working on. So I guess why aren't we seeing higher growth once we kind of hit the easier comp period? Are we still cleaning up some of the lower-quality buyers? Anything that you would call out in terms of why that growth rate isn't quite up to the e-commerce averages at the end of '22? And then, Steve, you mentioned new opportunities in managed payments now that we're 100% covered. Just can you elaborate a little bit on what you guys are going to potentially roll out in payments, that would be great.
Ross, Steve here. Thank you for the questions. I think the thing I would say is that we've made a very significant progress in our growth at eBay over the last couple of years. As you recall, prior to the pandemic, as we left 2019, the overall 2019, the business was shrinking, minus 2. We actually exited 2019 at minus 4. And as we've gone through the pandemic, we've made the right investments, we've really driven the tech-led reimagination and really driven our focus category playbook, which is working very, very effectively. As you sort of cycle through the pandemic, as we've said, the second half of the year -- the first half, we obviously are lapping very significant mobility challenges associated with the pandemic last year. As we come through the first half and get into the second half, it is obviously the cleanest comps that we've got from the pandemic. But we've always said over the last couple of years, the tech-led reimagination is a multiyear process. I'm delighted with the progress that we've made. The momentum is working. We're going category by category. And as we said, we're exiting the year in the -- well, our expectations to exit the year at sort of 2% to 3% growth. The thing with the focus categories, I'd also like to add, is that those areas that we've lent into are growing at about 15 points higher than the rest of the platform. And so again, it's very, very clear that strategy is working, and it will continue to take some time. The second thing I would talk about is obviously on managed payments. Magnificent work by the team. Very proud of what was achieved in 2021. I would describe it as being the end of the beginning. We completed the transition, enabled us to drive a seamless experience for our customers, both from a commerce standpoint and a payments standpoint, gives us the opportunity to eliminate things like UPIs or unpaid items, which is continuing to take friction away from the platform and increase trust. But again, we have opportunities as we go forward. I'm really excited that we have the opportunity to have Julie Loeger, who is leading our payments platform and the initiatives going forward, who will be joining us at our investor event on the 10th of March, who will be sharing with us our longer-term strategy, and I'm looking forward to you dialing in and seeing us on the 10th of March.
Moving on, your next question comes from the line of Stephen Ju from Credit Suisse.
So Jamie, your seller base has always been SMBs and individuals. And it seems like the ad products that seem to be fairly popular with smaller advertisers are those that are doing a lot of that automating of spend for them. So some sellers may be pretty savvy, and they might want to do -- manage the campaigns on their own, but I would imagine more folks would probably rather have eBay do the spending for them. So can you talk about where you may be in terms of simplifying PLAs for your sellers to expand the adoption rate? And expanding on that do-it-for-me theme, can you talk about where you may be in terms of the adoption rate for your external Promoted Listings product?
Yes. So thanks for the question. So we agree with you. So we think the benefit of having multiple advertising products is to appeal to not only multiple types of sellers but multiple types of advertising occasions. So we built our first $1 billion business over the last 5 years on a single product, which is a CPA-based product. And we've introduced 3 new products: Express, which is a fixed price, easy-to-understand product; external, which is really just an opt-in product for our external promoter listings, so that one is pretty straightforward: and then Advanced, which is actually a quite sophisticated product for SMBs, ones that are more used to keyword bidding, campaigns, daily budget levels, CPC amounts, et cetera. And so what I would say is that we're happy because the CPA-based product, our product that's out there for 5 years, is actually a pretty easy product and a low-risk product, meaning, I only pay when I sell the product from that perspective. But we're also excited that the new products actually round out the portfolio of opportunities to drive advertisement. The Advanced ones like CPC are still in a nascent stage. So we're still in a limited beta with those products. And it's really -- it'll take time just like it did for multi-years with the CPA to build the optimization, to drive trial, to drive adoption, et cetera. But exactly what you said is why we have the portfolio of products. And yes, we continue to look at ways to leverage artificial intelligence and other things to make not only the products easier for sellers to adopt, but also make them more effective in terms of the ROAS or the return on ad spend that we're seeing. Thus far, we've been really pleased with the ROAS that sellers are getting and shows us that there's continued opportunity in our advertising portfolio.
Your next question comes from the line of John Blackledge from Cowen.
Two questions. First, on the focus categories based on the current GMV guide. Do you expect the focus categories to sustain that growth differential -- the 15% differential versus non-focus categories in fiscal '22? And then second question on margin/investments. The 1Q '22 op margin is a bit higher than the '22 op margin guide, and you cited some investments. Could you discuss the investment spend that's kind of being phased in throughout '22?
Yes. So I'll start with the first one, and then, Steve, you can take the margin question. So on the focus category, yes, over time, we will be adding additional focus categories. Our next one is parts and accessories. And that category is a very large category on eBay, one where we come in from a position of strength. Especially in the U.K. and Germany, we have a market-leading position. There are some differences. Trading cards had a very strong year in '21. And so thus far, the category is performing well. But overall, I would say, yes, we think that the focus categories will continue to maintain a significant margin to the rest of the business. And frankly, it's why we're excited and why we're investing, to your second question. If I just back up and take sneakers. Sneakers have been declining for 3 years, John, at double digits. We invested in the category. We've built critical specific marketing campaigns. We built an A+ experience that had over 90 customer satisfaction. And what you saw there is that the business really took off. We grew triple digits a year ago, still doing double digits in that business. And in fact, the category is still healthy now that we're actually remonetizing it. So we just reintroduced monetization over $100 for sneakers. And that's part of the investment that we're looking to do in '22 is to continue to roll out this winning formula that we have in the playbook to additional categories.
John, Steve here. So let me just give you a little bit of color on the overall margin position as we've guided the full year margin for 2022 of 30% to 31%. There's a number of items at play here. Number one, we've got volume deleverage that's happening in the overall business as we cycle through the lapping of the pandemic, which is much more significant in the first half, as you can imagine. Secondly, as we sort of lap the payments transition that we went through, that's also a dilutionary effect. On the flip side, we have been doing a lot of work on our operational efficiency and going deep on our cost structure to identify opportunities to take cost out of the business to enable us to go forward with reinvestment. And then finally, we have been, as Jamie said, really delighted with the trajectory that we've had with regard to our focus categories. Think about sneakers, think about watches, think about the 15% -- 15-point increase over the core platform. And that's been a result of investments that we have made to really change the tide and turn the tide on the focus category we've had. So we're going to be leaning in to product. We're going to be leaning into full funnel marketing as we go category by category in '22. So it continues to be an investment year as we go forward. Q2 will be the lowest point of the margin for the year when, firstly, we do continue to lap through that significant COVID lapping from last year, but also the phasing of the investments as they start to ramp in the second quarter and ramp through the rest of the year as we go forward. So hopefully, that gives you a little bit of a shape of the macro picture, but also the shape of margin trajectory as we go through 2022.
Your next question comes from the line of Eric Sheridan from Goldman Sachs.
Maybe a multi-parter on buyers that sort of dovetails with some of the questions you've gotten so far. If we were to compartmentalize buyer growth going forward, how should we be thinking about the headwinds you're facing in sort of a post-pandemic environment, elements where you yourself are not choosing buyer growth and where there could be tailwinds to buyer growth from some of the new verticalized experiences you're trying to build out for the platform over the medium to long term? So sort of -- I don't know if there's a way to sort of characterize it that way, but if we were to think about those 3 buckets and elements of headwinds and tailwinds and how it feeds back in to thinking about buyer growth going forward.
Yes. So look, on high-value buyers, we've talked about the shift in strategy where back in 2019, we were focused on the total number of active buyers. And I've refocused the organization since last July on this idea of turning buyers into enthusiasts and really focusing on our high-value buyers. High-value buyers, if you look at it, are really made up of 2 groups, buyers who sell and then high-value buyers, buyers who buy over $800 and shop 6 times a year. When we look at high-value buyers in total this quarter, they're up 3% year on 2 year, whereas our low-value buyers are down 9% year on 2 year. So this is a very conscious strategy to not do low ASP couponing and some of the stuff that we were doing. To your question, both of -- these metrics for buyers are trailing 12-metric -- 12-month metric. So what we're seeing is a slight deceleration from the infrequent sellers, and that's something that we had planned to see and will likely see for coming quarters in some time period. But the second group, the enthusiast buyers, is growing. And in fact, their spend is growing more each quarter so that it grew again this quarter. We call those our enthusiast buyers. I've met a lot of these enthusiast buyers, right? They wake up. They grab a cup of coffee, and they open up the eBay app. They shop eBay across multiple categories. And when you look at their spend, it's a very healthy spend level, right, $2,000-plus. So what we're going to be focused on is things like driving the cross-category shopping nature of those buyers. And so take watches, for example, when we acquire a watch buyer, we'll get them to spend $9,000 in watches, but they'll go on to spend $7,000 in other categories. So we get this multiplier effect on eBay from being able to acquire somebody into a category and having them spend across the vast breadth that we offer. So you'll see different patterns over time. We'll continue to see some deceleration from these infrequent sellers. And quarter-to-quarter, we may see some changes in high-value buyers. But overall, when we look at the trajectory of what we're doing is we're making the business a whole lot healthier by focusing on this group, getting to go cross-category and, frankly, acquiring enthusiasts right into our focus categories. That's the strategy that we'll have, and we'll go into more detail on Investor Day on March 10 on that.
Your next question comes from the line of Colin Sebastian from Baird.
Maybe two for me as well. A follow-up, Jamie, on the comments around sustainable growth and focus categories. Is P&A the only incremental vertical category change embedded in the guidance for the first half? And beyond easier comps then, does the second half growth outlook include other category enhancements you haven't really talked about yet? And then maybe, Steve, secondly, there were some changes to seller pricing announced recently. I wonder if you could perhaps unpack the size of that impact from those changes in the take rate and how that flows through the year in terms of the guidance.
Yes. So as you've seen, Colin, I don't like to talk about where we're going next for competitive reasons and kind of giving away what is our next focus area. So the other one that we've announced is going after parts and accessories next as a large category dominant market leader position and a great opportunity for us. We talked about investment. You're starting to see full funnel marketing from what we're doing in parts and accessories from a leading position as well as a number of product changes like opening up our global category structure to make it easier to do cross-border trade business, putting all of our parts into the vehicles apps, et cetera. And so we'll go into a lot more depth on Investor Day at what we're seeing in the focus categories that we worked on and our path forward, but that's all that we've announced up until this point.
Colin, thanks for the question. I'll talk about take rate. So just as a reminder, our take rate is ballparked around 12%, but 8 to that final value feed, 3 on payments, 1 on ads. There is a little bit of -- there's a number of items that we're going through as we go through the trajectory of 2022. The first thing is that we're obviously starting to lap payments. And so some of that trajectory that we saw grow significantly as we went through 2021 will plateau off. We're obviously continuing to see some of the ads momentum that Jamie sort of alluded to earlier. And then there's obviously puts and takes in terms of category mix and category pricing as we go forward. In the prepared comments, we talked about an incremental 1 point of take rate as we go through 2022, and that's primarily going to be a result of the payments rollout for the full year effect as we go forward. The other thing I would say is that we continue to drive great value for our sellers. If you think about prior to payments rollout, we actually brought the combined take rate down as a result of going through managed payments. So we still create and offer extremely good value for our sellers as we go forward and eBay being the platform of choice for those great sellers as we go forward.
Yes. A good example of that is in sneakers, right? So I talked about us remonetizing sneakers for sneakers over $100. We're still a great value for buyers and sellers versus other places that they can sell and buy sneakers. So we feel great about that. And that's the feedback that we've gotten from the community. We'll continue to make other smart changes like we did in parts and accessories, in watches and in certain categories constantly with this viewpoint of how do we provide the right value for our sellers on the platform to make sure we're bringing the best inventory on.
Your next question comes from the line of Edward Yruma from KeyBanc Capital Markets.
Two quick ones for me. I guess, first, to the extent you could talk about it, with some of these changes in the pricing structures as a follow-up to the last question, do you see any adverse impact in terms of the number of sellers or the performance level when you reprice some of these categories tactically? And then as a follow-up to that, as you look across the rest of the portfolio, do you think that there are other opportunities for you to take price given the strong momentum the platform has?
Yes. So in general, we obviously studied the elasticity quite a bit. And what I was saying about sneakers is true, which is we're maintaining a double-digit growth in that category. And relative to other places that they can sell their sneakers, we're still very economical and the best value for doing so. So we always look at the elasticity, what's our opportunity to bring more demand. In certain cases, we do, for example, C2C promotions to bring sellers onto the platform in our various markets. But we're kind of rebalanced obviously being a great value for our sellers and our, ultimately, monetization. I'd probably point you back, Ed, to what Steve said about advertising, which is the main vector for us in terms of driving monetization across the board and increasing the take rate. Other than that, we're really just looking at category by category and making sure that we're competitive.
Your next question comes from the line of Tom Champion from Piper Sandler.
Jamie, I'm wondering if you could talk a little bit about the impact on buyer activity from video content and video added to listings. And then, Steve, maybe just a quick one for you. Not to beat a dead horse on managed payments and the take rate, but notice the transaction take rate remained flat quarter-over-quarter. 3Q to 4Q, all else equal, I would think that would go up a little bit. Is that kind of evidence of offering a discount or lower core transaction take rate in some categories or a function of mix? Just curious if you could discuss that result a little bit.
Yes, Tom. So on the videos, what I would say it's very, very early days. So we just rolled out the feature. Excited about it from 2 elements, though. One is excited for our eBay store sellers that they can now build a video to tell their story. One of the unique parts of eBay is it's not just a transactional model. So if you look at some of these models, your brand doesn't meet a whole lot. At eBay, we let the seller really build the brand and have access to 160 million buyers. And so that, I think, will be really powerful as more and more sellers adopt it. The same thing is true for our listings and bringing video across the platform. One is it just makes the engagement of the platform much more compelling. I think about an oboe I recently bought them a platform of 2 quarters ago from my daughter. It was great, lots of pictures and lots of description, but god, a video and being able to hear it would have been even more compelling. You could think about that in a lot of categories. So it's really early days. We're just adopting it for our API-based sellers and moving into our core listing flows. But we think over the coming quarters and years, it'll be an exciting new element for us on eBay.
Tom, with regards to the payments take rate, great question. What I'd say is we were essentially complete as we entered the fourth quarter of last year with regards to the payments migration, as we talked about. Fantastic work by the team. And so on the basis of that and the fact that, as you put it, you got a bit of seasonality in there and category mix. So nothing to see there. It's just a function of those two items.
Your next question is from Brian Fitzgerald from Wells Fargo.
A little bit about growth in preowned, particularly among young buyers and the sustainability push across the company. Just wondering if you could talk a little bit more about the sustainability vision, how that aligns with your younger buyer cohorts, anything you could tell us about kind of brand awareness and association with that sustainability focus among younger users, growth in those younger cohorts.
Yes. Great. So even really pioneered e-commerce, and I think the strategy we laid out last July of leaning into e-commerce, is leaning into right where the next generation is going. And I'm really happy because not only leading into where Gen Z is, but we're keeping products in circulation, keeping them out of the landfill. We did a survey recently, and 87% of respondents said they had sold preowned goods in the last 12 months. And it's really important to Gen Z because it plays a huge role in their experience. 81% of Gen Z said that buying preowned items has become more common for them in the last year. So we feel great from a business perspective, but also from an ESG perspective. If you think about what e-commerce does, we just made the Dow Jones Sustainability World in North America indices for the third year in a row. I talked about some of the other recognition that we had as an organization. We've saved hundreds of millions of dollars in terms of emissions, just in apparel and preloved electronics. So from an ESG standpoint, we think ESG is so core to what eBay does, that we should be in every ESG fund. So both from a business and an ESG standpoint, we think we're leaning into a great vector of growth.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.