eBay Inc. (EBAY) Q4 2021 Earnings Call Transcript

eBay Inc. (NASDAQ: EBAY) Q4 2021 Earnings Conference Call Feb. 23, 2022

Corporate Participants:

Joe Billante — Vice President, Communications & Investor Relations

Jamie Iannone — President and Chief Executive Officer

Steve Priest — Chief Financial Officer

Analysts:

Scott Devitt — Stifel Nicolaus — Analyst

Ross Sandler — Barclays — Analyst

Stephen Ju — Credit Suisse — Analyst

John Blackledge — Cowen & Company — Analyst

Eric Sheridan — Goldman Sachs — Analyst

Colin Sebastian — Baird — Analyst

Edward Yruma — KeyBanc Capital Markets — Analyst

Thomas Champion — Piper Sandler — Analyst

Brian Fitzgerald — Wells Fargo Securities — Analyst

 

Presentation:

 

Operator

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 to your presenter, Vice President, Investor Relations, Joe Billante. Sir, please go ahead.

Joe Billante — Vice President, Communications & Investor Relations

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 are 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 would like to remind you that during the course of this conference call, we will discuss the 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’s 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 limitations, 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 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 23, 2021, and we do not intend and undertake no duty to update this information.

With that, let me turn it over to Jamie.

Jamie Iannone — President and Chief Executive Officer

Thanks, Joe. Good afternoon everyone and thank you for joining us. Today, I will 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 two 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 on our marketplace. We are simplifying the seller and buyer experience, increasing customer satisfaction, and improving our underlying growth trajectory. Let me highlight few achievements from the quarter. We are seeing faster GMV growth in focused categories that now represent approximately 20% of global volume. We successfully completed our multi-year payments transition on time, with more customer benefit 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 target and eBay finished a record-breaking year. I am 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 focused categories grew 15 points faster than the rest of the marketplace. The next category, we are focused on is motors parts & 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 channels, 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 focused categories where we have been investing for several quarters, we have seen growth sustain at higher levels. Sneakers over $100 continue 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 has scaled to five 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 authenticater 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 trusted 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 listening 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 grade in, autograph, and patch cards 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 two-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 the 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 [Technical Issues] has more inventory from top-rated sellers. These trusted sellers are thoroughly vetted to 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 focused categories, we made a number of changes during Q4 that benefitted sellers and buyers across all categories globally. We have 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 to additional listing products.

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 weekly purchases from almost 6 million buyers. Buyer trust is essential on 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 removed 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 multi-year 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 have 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%. The drive in net growth cycle and 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 listening 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 meter the rollout of these new products, while balancing impact 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 Recommerce. Volume of preloved 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 three preloved electronics and apparel in the U.S., U.K. and Canada. In addition to providing customers great value on unique used goods, Recommerce activity also help 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 am 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 and North American indices, putting us in the top 10% of its companies in our industry globally. eBay was also included in JUST Capital and CNBC’s Just 100 Best. 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 am 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 raise 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 reflect the anonymous feedback from current and former employees, regarding topics such as career 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 10th. In July of 2020, I outlined a clear vision of a winning strategy for the company. At 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 multi-year 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.

The early results have demonstrated that our strategy is working and the business is stronger than it was before the pandemic. Our focused categories are returning to market rates of growth. 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.

Looking ahead, we are excited for 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 in 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 two large dispositions and improved the underlying growth of our business, delivered tremendous sustainability results and supported sellers and buyers during these challenging times.

With that, I will turn the call over to Steve to provide more details on our financial performance. Steve, over to you.

Steve Priest — Chief Financial Officer

Thank you, Jamie, and thank you all for joining us today. Highlights from the quarter and full-year on Slide 4 of our investor presentation. Next, I will walk through key operating and financial metrics in greater detail. Finally, I will provide our forward outlook and closing. 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 have 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, a 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 pre-pandemic levels, total high-value buyers were up due to growth in high spending in enthusiast [Phonetic] buyers. And importantly, even as mobility restrictions have been lifted, spend per high-value buyer continues to expand at healthy rate.

Our buyers purchased $20.7 billion of GMV in Q4, which marks an 11% decline and landed near the high end of our outlook. Compared with Q4 of 2019, GMV grew 9% at constant currencies, 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 5 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 that had a negative impact on growth in our international markets. These dynamics have particularly impacted sellers involving cross-border trade, which is key towards non-U.S. markets.

Conversely, our domestic sellers likely benefited from item scarcity due to supply chain issues. 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, we rollout 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 focused 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. Focused 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%. And 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 contributes 15 points of revenue growth in Q4. That’s a $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 on 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 diluted 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 for managed payments. With the migration behind us, we expect gross margins 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 bodes fewer fixed expenses.

Turning to earnings per share. During the quarter, we delivered $1.05 of non-GAAP EPS, that’s 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 at an average price of approximately $70 per share, with a 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 is 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 one tranches, our total Adyen investment amounted to $1.5 billion. Our stake in Kakao Bank is 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 two halves. During the first half of the year with less significant mobility and macro tailwinds from 2021 as margins pressured as we scale investments sequentially. During the second half, we should observe the cleanest year-over-year comps, we have 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 that 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 exiting the year growing volume at 2% to 3% in constant currency.

Notably, the quarterly phasing of our GMV should more closely approximate pre-pandemic 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 revenues 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 grow in the mid to high single digits at 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 focused 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 are confident that 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 lapped 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 focused categories meaningfully outpaced 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 grown our ads portfolio to meet the needs of more sellers helping them grow businesses on eBay. We 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 through 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 Recommerce and the circular economy as a whole.

I would like to echo, Jamie’s facts to our incredible employee base as their tireless efforts have been instrumental in bringing our strategy for life. To our valued sellers and buyers in the eBay community, your response to our investments and trust in innovation give us conviction that we are on the right path. We are excited to reveal more details about our future roadmap very soon. To the investment community, we appreciate your continued interest and look forward to hosting you at our virtual Investor Day on March 10th.

With that, Jamie and I will now take your questions. Operator?

Questions and Answers:

 

Operator

[Operator Instructions] Your first question comes from the line of Scott Devitt from Stifel. Your line is now open.

Scott Devitt — Stifel Nicolaus — Analyst

Thank you for taking the question. 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 to through to the second half of ’22 in which overall GMV improves to flat to modest — modestly positive and to begin lapping of stimulation, mobility dynamic, supply chain cross-border and differences in the reopening timing in various countries. Should we assume that U.S. post international growth dynamics converge even maybe favoring international due to cross-border? And are there any specific countries you’d point out in one direction or the other relative to 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 onto the platform has changed considerably just in the past few months and I am curious if the environment change has made considering acquisitions within the marketplace category? Thank you.

Jamie Iannone — President and Chief Executive Officer

Yes, so — hi, Scott. This is Jamie. So on the U.S. versus international, as we talked about last quarter, there was 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 are seeing in the U.S. We have 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 buyers 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 focused 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, did over with some of our other products in focused categories where they’re still rolling out to our international markets. And as we have 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 playbook will apply and that will help the convergence that you talked about.

The last thing is really just the collectible difference between the two markets, trading cards in that whole segment is stronger in the U.S. than it is in the international. So it’s a long way to saying that there is a number of factors that are at play there. But yes, we believe over time as the categories rollout 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 have said we will be opportunistic to look at areas that are asset light and consistent with our business to drive the strategy that we have laid out. The example I would point to you is most recently Sneaker Con and that investment with authentication properties and services in five different countries, enabling us to accelerate even faster. What’s happening on sneakers where we have seen really great success.

In fact, we think the playbook has worked well enough now that we are actually re-monetizing 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.

Scott Devitt — Stifel Nicolaus — Analyst

Thank you.

Operator

Thank you. And your next question comes from the line of Ross Sandler from Barclays. Your line is now open.

Ross Sandler — Barclays — Analyst

Hey, guys. Just following-up from Scott’s question, I think, looking at the exit run rate for ’22 some investors we talk to you, I think, were hoping to see a little bit more than 2% to 3% GMV growth with all the category activity and initiatives that you are working on. So I guess, why are 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 down over 100% covered just elaborate a little bit on what you guys are going to potentially rollout in payments, that would be great.

Steve Priest — Chief Financial Officer

Hi, Ross. So, Steve here. Thank you for the questions. The thing I would say is that we have made 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 have gone through the pandemic, we have made the right investments, with really driven the tech-led reimagination and really driven our focused category playbook, which is working very, very effectively.

As you saw us cycle through the pandemic, as we have said, the second half of the year, the first half, we obviously are lapping very significant mobility challenges associated with pandemic last year. As we come to the first half and get into the second half, it is obviously the cleanest comps that we have got from the pandemic. But we have always said, over the last couple of years, the tech-led reimagination is a multi-year process. I am delighted with the progress that we have made. The momentum is working, we are going category by category. And as we have said, we are exiting the year in — or expectation to exit the year with a 2% to 3% growth. The thing with the focused categories, I would also like to add, is that those areas that we blend into are growing 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 our managed payment. 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 payment standpoint. Gives us the opportunity to eliminate things like the 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 am really excited that we have the opportunity to have Julie Loeger, who is leading our payments platform and the initiatives going forward will be joining us at our investor event on March 10th, who will be sharing with us longer-term strategy and looking forward to you dialing in and seeing us on the March of 10th.

Operator

Thank you. Moving on, your next question comes from the line of Stephen Ju from Credit Suisse. Your line is now open.

Stephen Ju — Credit Suisse — Analyst

Okay, thank you. So Jamie, your seller has always been SMBs and individuals and it seems like the ad products that seem to be fairly popular, which are those that are doing a lot of that automating of spend for them. So some sellers maybe 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? Thank you.

Jamie Iannone — President and Chief Executive Officer

Yeah. So, thanks for the question. 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 build our first billion-dollar business over the last five years on a single product, which is a CPA-based product and we have introduced three new products, Express, which is a fixed price easy-to-understand product, which is really just an opt-in product for our external Promoted Listings so that one is pretty straightforward. And then Advanced, which is actually a sophisticated product for SMBs ones that are more used to keyword bidding campaigns, daily budget levels, CPC amounts, etc.

And so what I would say is that we are happy because the CPA-based products are products that’s out there for five 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 are also excited that the new products actually round out the portfolio of opportunities to drive advertisement. The advanced ones like CPC are still in the nascent stage. So we are still in a limited beta with those products, and it’s really — it will take time, just like it did for multi-years, with the CPA to build the optimization, to drive trial, to drive adoption, etc.

But exactly what you said is why we have the portfolio of products. And yes, we continue to look at ways to artificial intelligence and other things to make not only the product easier for sellers to adopt, but also make them more effective in terms of the rollouts or the return on ad spend that we are seeing. Thus far, we have been really pleased with the rollouts that sellers were getting and shows us that there is continued opportunity in our advertising portfolio.

Stephen Ju — Credit Suisse — Analyst

Thank you.

Operator

Thank you. Your next question comes from the line of John Blackledge from Cowen. Your line is now open.

John Blackledge — Cowen & Company — Analyst

All right, great. Thanks. Two questions, first on the focused categories, so based on the current GMV guide, do you expect the focused categories to sustain that growth differential, the 15% differential versus non-focused categories in fiscal ’22? And then second question on margin/investment the 1Q ’22 op. margin is a bit higher than the ’22 op. margin guide. You cited some investments, could you discuss the investment spend, that’s kind of being phased in throughout ’22? Thank you.

Jamie Iannone — President and Chief Executive Officer

Yeah. So I will start with the first one and then Steve you can take the margin question. So on the focused categories, yes, over time, we will be adding in focused categories. Our next one is parts and accessories and that category is a very large category on eBay, one where we come from a position of strength, especially in 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 focused categories will continue to maintain a significant margin to the rest of the business, and frankly it’s why we are excited and why we are investing to your second question. So if I just back out and take sneakers, sneakers have been declining for three years, John, at double digits. We invested in the category, we grove protocol specific marketing campaigns, we built an A-plus 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 are actually re-monetizing it. So we just reintroduced monetization over $100 for sneakers. And that’s part of the investment that we are looking to do in ’22 as we continue to rollout this winning formula that we have in the playbook to additional categories.

Steve Priest — Chief Financial Officer

Hi, John. Steve here. So let me just give you a little bit of color on the overall margin position as we have guided the full year margin for 2022 to 30% to 31%. There is a number of items that play here. Number one, we have 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 in our cost structure to identify opportunity to take cost out of the business to enable us to go for the reinvestment. And then finally, we have been as Jamie said, really delighted with the trajectory that we have had with regard to our focused categories. Think about sneakers, think about watches, think about the 15% — 15 point increase over the core platform and that’s been the result of investments that we have made to really change the tide and turn the tide on the focused categories we had.

So we are going to be leaning in to product, we are going to be leaning in to full funnel marketing as we go category by category in ’22, so to be an investment year as we go forward. Q2 will be the lowest points of the margin for the year wherein 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 shape of the macro picture, but also the shape of the margin trajectory as we go through 2022.

John Blackledge — Cowen & Company — Analyst

Thank you.

Operator

Thank you. Your next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is now open.

Eric Sheridan — Goldman Sachs — Analyst

Thanks for taking the question. Maybe a multi-parter on buyers that sort of dovtails with some of the questions you have gotten so far. If we were to compartmentalize buyer growth going forward, how should we be thinking about the headwinds you are facing in sort of a post-pandemic environment, elements where you yourself are not choosing buyer growth for the sake of chasing buyer growth. And where there could be tailwinds to buyer growth from some of the new verticalized experiences you are trying to build out for the platform over the medium to long-term. So sort of I don’t know if there is a way to sort of characterize it that way, but if we were to think about those three buckets and elements of headwinds and tailwinds and how it feeds back in so thinking about buyer growth going forward. Thanks.

Jamie Iannone — President and Chief Executive Officer

Yeah. So look on high-value buyers, we have talked about the shift in strategy, where back in 2019 we reported of the total number of active buyers and as we focus the organizations 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 two groups. Buyers, who sell and then high-value buyers, buyers who buy over $800 and shop 6x a year. But we look at high-value buyers in total this quarter, they are up 3% year on two year whereas our low-value are down 9% year on two year. So this is a very conscious strategy to not to 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 are seeing is a slight deceleration from the infrequent sellers and that’s something that we had planned to see and will likely to 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 it grew again this quarter, so we call those our enthusiasts buyers. I have met a lot of these enthusiast buyers. 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 standalone $2,000 plus.

So what we are 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 will 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 will see different patterns over time, we 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 are doing, is we are making the business a whole lot healthier by focusing on this group getting to go cross-category and frankly acquiring enthusiasts right into our focused categories. That’s the strategy that we’ll have and we’ll go into more detail on our Investor Day on March 10th on that.

Eric Sheridan — Goldman Sachs — Analyst

Thanks for the color, Jamie.

Operator

Thank you. Your next question comes from the line of Colin Sebastian from Baird. Your line is now open.

Colin Sebastian — Baird — Analyst

Great. Good afternoon, guys. Maybe two for me as well. A follow-up on the comments around sustainable growth in focused categories, is P&A the only incremental vertical category change embedded in guidance for the first half? And beyond easier comps and does the second-half growth outlook include other category 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?

Jamie Iannone — President and Chief Executive Officer

Yes, so as you have seen, Colin, I don’t like to talk about where we are going next for competitive reasons and kind of giving away what is our next focus area. So the only one that we have 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 are starting to see full-funnel marketing from what we are doing in parts and accessories from a leading position, as well as the number of product changes by 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, etc.

And so, we will go into a lot more depth on Investor Day on what we are seeing in the focused categories that we have worked on and our path forward, but that’s all that we have announced up until this point.

Steve Priest — Chief Financial Officer

Hi, Colin. Thanks for the question. I will talk about take rate. So just as a reminder, our take rate is ballpark around 12%. But aid to that final value Phase III on payments, one on ads. There is a little bit of — there is a number of items that we are going through, as we drive through the trajectory of 2022. The first thing is that we are obviously starting to lap payments. And so some of that trajectory that we saw grow significantly as went through 2021 will plateau off. We are obviously continuing to see some of the ads momentum that Jamie sort of alluded to earlier. And then there’s obviously puts and tides in terms of category mix and the 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 payment. So we still create an 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.

Jamie Iannone — President and Chief Executive Officer

Yes, a good to of that is in sneakers, right. So I talked about our as we monetizing sneakers for sneakers over $100 were 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 as the feedback that we have gotten from the community, we will continue to make other smaller changes like we did in parts and accessories, in watches and in certain categories. Counseling with this viewpoint of how do we provide the right value for our sellers on the platform to make sure we are bringing the best inventory out.

Colin Sebastian — Baird — Analyst

Okay, thank you.

Operator

Thank you. Your next question comes from the line of Edward Yruma from KeyBanc Capital Markets. Your line is now open.

Edward Yruma — KeyBanc Capital Markets — Analyst

Thanks for taking the question. Two quick ones from me. I guess, first, to the extent you can talk about it with some of these changes in the pricing structures with the thoughts on 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 your take price given the strong momentum the platform has? Thank you.

Jamie Iannone — President and Chief Executive Officer

Yes. So in general, we are actually obviously studied the elasticity quite a bit. And what I was saying about sneakers in true, which is, we are maintaining a double-digit growth in that category and relative to other places that they can sell their sneakers, we are 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 seller on to the platform in our various markets. But we are kind of — we balance, obviously, being a great value for our sellers and ultimately monetization.

I 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 are really just looking at category by category and making sure that we are competitive.

Edward Yruma — KeyBanc Capital Markets — Analyst

Thanks so much.

Operator

Thank you. Your next question comes from the line of Tom Champion from Piper Sandler. Your line is now open.

Thomas Champion — Piper Sandler — Analyst

Thank you. Good afternoon. Jamie, I am 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 that beat a dead horse on managed payments and the take rate, but notice that transaction take rate remained flat quarter-over-quarter 3Q to 4Q. All else equal would think that would go up a little bit is kind of evident of offering a discount or lower core transaction take rate in some categories or function of mix? Just curious if you could discuss that result a little bit. Thank you.

Jamie Iannone — President and Chief Executive Officer

Yes, Tom. So on the videos what I would say is very, very early days. So we just rolled out the feature, excited about it from two elements though. One is excited for our eBay store sellers that they can now build a video, tell the 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 need 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 it — although I recently bought on the platform two quarters for my daughter. It was great, lots of pictures, and lots of description, but got a video and be 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 are 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 will be exciting new element for us on eBay.

Steve Priest — Chief Financial Officer

Hi, Tom. With regards to the payments take rate, great question. What I will say, we were essentially complete as we entered the fourth quarter of last year with regards to the payments migration as we talked about, fantastic whereby the same. 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.

Thomas Champion — Piper Sandler — Analyst

Thanks, guys.

Jamie Iannone — President and Chief Executive Officer

Operator, I think we have got time for one more.

Operator

Perfect. Your next question is from Brian Fitzgerald from Wells Fargo. Your line is now open.

Brian Fitzgerald — Wells Fargo Securities — Analyst

A little bit about growth in pre-owned, particularly among young buyers and the sustainability push across 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 in association with that sustainability focus among younger user, growth in those younger cohorts. Thanks.

Jamie Iannone — President and Chief Executive Officer

Yeah. Great. So eBay really pioneered Recommerce and I think the strategy we laid out last July of leaning into Recommerce is leaning into right where the next generation is going. And I am really happy because not only leaning into where Gen Z but we are keeping products in circulation, keeping them out of the landfill. We did a survey recently and 87% of respondents said they had sold pre-owned 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 pre-owned 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 we Recommerce does, we just made the Dow Jones Sustainability World and 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 have saved hundreds of millions of dollars in terms of just in apparel and preloved electronics. So from an ESG standpoint, we think ESG is still core to what eBay does and we should be in every ESG fund. So both, from a business and an ESG standpoint, we think we are leaning into a great vector of growth.

Brian Fitzgerald — Wells Fargo Securities — Analyst

Great, thanks, Jamie. Appreciate it.

Jamie Iannone — President and Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks]