Ladies and gentlemen, thank you for standing by, and welcome to the eBay Q1 2022 earnings call. At this time, all participants are in a listen- only mode. Later, we will conduct a question- and- answer session. To ask a question during the session, you will need to press star one on your telephone. If anyone should require assistance during the conference, please press star then zero on your telephone. I would now like to turn the conference over to your host, Joe Billante, VP of Investor Relations. Please go ahead.
Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the first quarter of 2022. 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 Jamie and 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'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 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 forecasts 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 May 4, 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. Before discussing our first quarter results, I want to acknowledge the terrible human tragedy that continues to unfold in Ukraine. This is a very difficult time for many, and I'm proud of how eBay employees and customers have mobilized to support those affected. At our core, eBay exists to help people and communities around the world. This role is fundamental to our purpose and motivates our workforce. In addition to direct and indirect support for refugees and citizens, we will continue policy actions to help customers in the region. These events have had a negative impact on consumer health, primarily in European markets. Despite this unexpected headwind, our global results for Q1 were strong. Let me highlight a few achievements from the quarter.
Focus category innovation expanded, and these categories continue to grow faster than the rest of the marketplace. 18 million enthusiast buyers continue to shop regularly on eBay, purchasing items over 30 x per year. Sellers are seeing a simpler, unified listing experience, and we made several improvements to eBay stores in the quarter. We announced a deal with Klarna to provide more popular payment methods to German buyers, and we started testing the new eBay wallet. Our advertising business grew faster than GMV due to increased optimization and adoption of new products. Finally, we made significant progress on our recommerce, DE&I, and sustainability goals. Sellers and buyers are turning to eBay, and this led to financial results at the high end of our expectations. We delivered over $19.4 billion in GMV and close to $2.5 billion in revenue.
We continued to make the long-term investments laid out at Investor Day while achieving a 32% operating margin. Our non-GAAP EPS was $1.05, 2 cents ahead of consensus. Given the challenges our customers are facing around the world, we are pleased with our performance to start the year. Since late February, when the war in Ukraine began, we have seen lower e-commerce traffic, inflation in gas prices and home energy costs, and historically low consumer confidence, particularly in the U.K. and Germany. As we look forward to the rest of 2022, we find ourselves in the most dynamic macro environment I have seen since returning to eBay as CEO. We expect more near-term headwinds to e-commerce growth rates this year, and our revised guidance reflects our best view based on recent trends.
Steve will go into more detail about our full year expectations later. During these uncertain times, one thing that remains clear is that the tech-led reimagination is improving the underlying health of our business, and we are on track towards our long-term growth targets. One example is in focus categories. The investments in trust, user experience, and marketing are driving higher customer satisfaction, leading to faster GMV growth. In Q1, excluding trading cards, focus category GMV grew 9 points faster than the rest of the platform. This growth is on top of last year's stimulus-driven surge, which drove exceptional volume in many high ASP products. Despite challenging year-over-year comps, trading cards remains one of our healthiest growth businesses. In the first half of 2021, we saw an unprecedented surge boosted by mobility restrictions and stimulus.
Since that time, volume has remained elevated, and in Q1, GMV was more than double the size of pre-pandemic levels. As a leading trading cards platform, we continue to innovate our experience to increase trust between buyers and sellers. In Q1, we launched Authenticity Guarantee for ungraded cards above $750. Just this week, we expanded authentication to graded cards by signing a strategic partnership with PSA, the global leader in trading card grading and authentication. We expect this partnership will increase customer satisfaction and result in more GMV growth. We are incredibly excited for the launch of the Vault this quarter, which will transform our collectibles business. Items in the Vault will be able to securely transfer between sellers and buyers in a matter of seconds without the need to ship or the need to reauthenticate.
We see an opportunity to hold up to $3 billion of inventory in our Vault in the next few years, creating significant GMV and revenue growth potential. Looking beyond collectibles, we continue to expand coverage of focus categories to more products and markets. Let me share a few examples. At the end of March, we started authenticating high-value handbags in the U.K. and Australia. We also expanded the number of handbag brands covered by our Authenticity Guarantee and began to authenticate men's bags in the U.S. Another focus area in Q1 was eBay Refurbished. After success with certified products direct from manufacturers, we have significantly expanded the program across smartwatches, tablets, laptops, and desktops. Now buyers can shop from vetted sellers across a wide range of refurbished inventory backed by eBay's money-back guarantee and warranties. These trusted products contribute to e-commerce, which saves consumers money and reduces carbon emissions.
The luxury watch category continues to grow at positive double-digit rates on top of last year's strong growth rate. To date, we have authenticated watches over $2,000 across three markets. This quarter, we added the ability for buyers to request expert verification for a fee for watches valued between $1,000 and $2,000. This additional service marks an important milestone in our journey to increase trust through authentication. This feature is portable to other categories and markets across the platform and demonstrates the scalability and effectiveness of our playbook. In our sneakers category, we reintroduced final value fees in the U.S. in January, and growth momentum continued. These fees are lower than most other platforms, and customer satisfaction remains near historically high levels. Sneaker GMV is also growing significantly faster than the rest of the business in our international markets.
We repeated the successful approach first deployed in the U.S., which includes authentication, influencer partnerships, and increased social marketing investments. In parts and accessories, supply chain constraints and low vehicle inventory are driving up the price of new and used cars. These trends are driving more consumers to extend the life of their current vehicles. With approximately 500 million P&A listings, we are well-positioned to supply all the parts they need. We have been investing in full-funnel marketing for parts and accessories since December, and we are starting to see modest gains in initial consideration. This includes partnerships with leading influencers and enthusiasts to showcase our vast inventory selection. A recent example was the eBay Auto Parts Show in New York, where several top influencers showcased their restored and custom vehicles. These do-it-yourself enthusiasts crafted re-concept cars using unique and hard-to-find parts on eBay.
This event generated 3 billion media impressions in one week, supporting the momentum we are seeing in the P&A category. While sellers and buyers love what we are doing in focus categories, we are also making site-wide enhancements to help all sellers grow their business. In Q1, we made several significant changes to further modernize our stores experience. First, our new storefront page provides sellers the ability to tell their story, showcase their brand, and increase trust in their business. Second, we optimized SEO for stores to drive more free traffic. Third, we increased the prominence of store inventory and made it easier for enthusiasts to find stores throughout the buyer journey. To support sellers and help them grow their buyer base, we also increased the ability for buyers to save sellers for future purchases. Now, when buyers purchase items, they are prompted after checkout to save that seller.
This has driven a 4x increase in the number of saved sellers to date, which leads to more purchase frequency. New buyers who save a seller in their first 90 days are more than twice as likely to repurchase an item. More sellers are sending coded coupons to drive repeat purchases. To date, over 7.5 million buyers have purchased an item from a seller-funded coupon, equating to approximately $500 million in GMV. To help sellers improve targeting, they can now categorize their buyers into unique groups for customized marketing campaigns. Our payments platform is enabling new services and reducing transactional friction for sellers and buyers. We signed an agreement with Klarna in early March, bringing two popular payment methods, pay upon invoice and installments, to our German buyers.
Testing is underway, and we are on track to make it available to all German consumers this quarter. We started testing and scaling other payment capabilities in Q1, including the new digital wallet we announced at Investor Day. When sellers earn money, that balance is stored on eBay and readily available for them to purchase items or pay for selling expenses like shipping labels. We will continue to optimize this feature and expand to more customers during the year. Approximately one in five transactions occurs across borders, and our payments platform is reducing friction on these purchases. In Q1, we started giving buyers the option to pay in their local currency in addition to the currency of the listing. This feature simplifies cross-border trade and also enables incremental payments revenue to fund further innovation.
I'm excited by the pace of innovation in payments. After completing the migration last year, we are moving quickly to reduce friction, launch new services, and leverage our scale to benefit sellers and buyers. Another area where innovation is driving growth is advertising. In Q1, our ads business once again outpaced volume. Ad revenue growth was driven by Promoted Listings, which generated $222 million in revenue, up 2%. This was 19 points faster than GMV, and it is accelerated due to product innovation. Our Standard Promoted Listings product, which still drives most of our first-party ad revenue, continues to drive growth through increased adoption and conversion optimization, and we see further runway in the quarters and years ahead. The three new products launched last year are early in the growth cycle but are up more than 50% versus Q4.
The first product, Promoted Listings Express, is increasing conversion and price realization for auction sellers. A typical auction that leverages this feature is attracting several hundred more buyers per listing. The second product, External Promoted Listings, is now open to our entire global seller base. Similar to Standard Promoted Listings, sellers choose the value of their ad spend. We continue to expand the list of affiliate partners in the program to drive more traffic directly to sellers with Promoted Listings. The third product, Promoted Listings Advanced, while still in limited beta, has been scaled to more professional sellers. In Q1, we expanded the number of ad groups, providing more bidding capacity and flexibility. This product will take time to reach its full potential, and we see opportunities for significant growth. We are continuing to invest in our advertising platform and expect ad revenue to outpace volume for the foreseeable future.
We continue to make meaningful progress on ESG. Let me share a few highlights. Firstly, on recommerce. In 2021, our platform generated over $4 billion in positive economic impact from the sale of used and refurbished goods. This activity avoided 1.5 million metric tons of carbon emissions, equivalent to taking 300,000 cars off the road for a year. Recommerce on eBay is growing due to our focus on non-new and seasoned categories. Demand for refurbished and used goods is growing in many categories, and we are well-positioned to hit the long-term goal I shared with you at Investor Day. Secondly, I'm proud of our team's efforts around DE&I. We are about to publish our 6th annual Diversity, Equity and Inclusion Report.
This report provides insights into our four strategic objectives, increased representation, cultivating a sense of belonging, engaging our communities, and building inclusive technology. Aligning and executing on these objectives is how we build a richly diverse, truly equitable, and fearlessly inclusive place to sell, buy, and work. The third area of progress I would like to highlight is reducing our impact on the planet. Last year, we set ambitious long-term science-based targets. For the full year of 2021, we reduced Scope 1 and 2 emissions by 26% versus 2019. For Scope 3, which includes the impact of shipments on our platform, we reduced emissions by 7% versus 2019 despite volume growth. Lastly, 90% of our energy now comes from renewable sources, and we remain a carbon-neutral company. You can find more details about our sustainability programs in our annual impact report later this month.
I am always impressed by the generosity of our sellers and buyers. In Q1, eBay for Charity raised over $36 million, up 2%. We recently announced the grand finale of the Power of One charity auction with Warren Buffett. Since launching on eBay over 20 years ago, over $34 million has been raised to support GLIDE, a nationally recognized center for equity. The eBay Foundation, whose mission is to remove systemic barriers to entrepreneurship, committed $11 million to nonprofits in Q1. In addition, during March, over $2.4 million was raised from employee contributions and eBay Foundation matching gifts, many of which went to support Ukrainian relief efforts. Across a number of other employee and customer channels, the company has raised millions of dollars for Ukraine-related causes.
In several countries, customers contributed to Give at Checkout campaigns that supported the Red Cross, Nova Ukraine, and Save the Children. We are very fortunate to work for a purpose-driven company with a team relentlessly focused on helping people and the scale to deliver meaningful impact to our communities. In closing, Q1 was a strong start to the year. We extended focused category coverage in watches, handbags, trading cards, and eBay Refurbished, and we laid the groundwork to launch the Vault this quarter, a game-changing experience for collectors. We released several new features for eBay store sellers, like new storefronts and enhanced SEO. We're encouraging more buyers to save their favorite sellers to drive repeat purchases. In payments, we launched Klarna for German buyers, started testing a new digital wallet, and increased currency payment options for cross-border buyers.
Our advertising business is meaningfully outpacing volume growth through optimization and new product innovation. We're achieving all of this while executing on an ambitious ESG agenda to support our communities and the world we live in. Before I hand it over to Steve, I would like to express my sincere appreciation to our seller and buyer community, whose energy and unique inventory make our marketplace truly differentiated in e-commerce. I would also like to thank all of our global employees for their tireless efforts to delight customers and support our communities. Their dedication and focus are improving our underlying business health every day. Lastly, I'm thrilled to welcome Eddie Garcia back to eBay as our new core product leader.
His wealth of eBay knowledge and track record of innovation will be great assets to continue to drive the tech-led reimagination. 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 our discussion with financial highlights on Slide nine of our Q1 earnings presentation. Next, I'll provide a deeper look into key operating and financial metrics, including a discussion of how ongoing macroeconomic and geopolitical developments are influencing our business. Finally, I'll share our forward outlook and some closing thoughts before we begin Q&A. Please note my comments will reflect year-over-year comparisons of constant currency, unless I note otherwise. Overall, we delivered strong results in Q1 as GMV, revenue, and EPS met or exceeded expectations and performed near the high end of our outlook ranges. Our Q1 results were driven by continued progress against the strategic objectives we outlined at Investor Day, including an expansion in coverage and capabilities of our focus categories and improved tools and technology for our sellers and buyers.
Our first quarter revenue was down 5% to $2.48 billion, outpacing volume growth by approximately 12 points. Non-GAAP operating margin was 32.4% at roughly 80 basis points sequentially. We delivered non-GAAP earnings of $1.05 per share, down 2% as compared to a record quarterly EPS result last year. We generated $546 million of free cash flow and returned approximately $1.4 billion to shareholders through repurchases and dividends. We achieved these results despite some back-end softness associated with changing macro conditions and the tragic conflict in Ukraine. I'm extremely proud of our team's focus and execution amid these challenging circumstances. Let's take a closer look at our performance in Q1.
Gross merchandise volume declined 17% as we lacked a 7 point sequential acceleration during 2021, which was driven by global mobility restrictions and U.S. stimulus payments. As compared to our pre-COVID baseline in Q1 of 2019, GMV grew 7%. We were extremely pleased with the pace of growth, innovation, and execution within our focus categories during Q1. Coming off a record surge in growth in early 2021, trading card volumes appear to be stabilizing at a quarterly run rate more than double pre-COVID levels, indicating continued healthy demand in this asset class. Excluding trading cards, year-on-year growth in focus categories outpaced the remainder of our marketplace by approximately 9 points. We sustained strong positive growth within our luxury categories compared with last year's stimulus driven results, including sneakers over $100, where we reintroduced monetization in the U.S. in January.
Trailing 12 -month active buyers were 142 million during the quarter, down roughly 5 million sequentially due to the same lagging dynamics. Importantly, this anticipated decline was skewed towards our low-value buyers. Trends within our high-value groups remained healthy as our 18 million enthusiast buyers spent an average of over $3,000 across nine categories over the last 12 months. Average spend per enthusiast also rose sequentially and increased low double digits versus 2019. U.S. GMV grew 17% compared to Q1 of 2019, while international GMV was roughly flat. Similar to prior quarters, our U.S. volume benefited from stronger underlying e-commerce growth, beneficial category mix, and earlier launches of focus category initiatives. Meanwhile, our international business has experienced softer economic growth and greater exposure to the supply chain challenges impacting cross-border trade.
When we spoke at our March Investor Day, we were beginning to observe modest softness in our European markets during the early weeks of Russia's invasion of Ukraine. As the conflict intensified in the weeks that followed, the headwinds to our business became more pronounced. We estimate the Ukraine war represents the low single digit negative impact to our global business in Q1. Notably, these macro headwinds have not impacted our product roadmap or other strategic initiatives. Net revenue during the quarter was $2.48 billion, down 5% as positive contributions from payments and ads were offset by comparisons with last year's extraordinary volume growth. Our transaction take rate increased by over 30 basis points sequentially to 12.1%.
Managed payments contributed over 8 points of revenue growth during the quarter as we fully migrated to our proprietary platform, while new initiatives like Buyer and Seller FX are scaling in line with expectations. First party ads, Primarily Promoted Listings, grew 2% during Q1 and outpaced volume by approximately 19 points. This marks an acceleration from roughly 15 points in Q4 as we further optimized our Standard Promoted Listings product and recent additions to our ads portfolio grew in scale and adoption. In terms of margins, we delivered a non-GAAP operating margin of 32.4% in Q1, an increase of more than 80 basis points sequentially. This improvement was driven by lower seasonal spend in sales and marketing, which was offset by volume deleverage as we lapped last year's GMV acceleration.
During the first quarter, we delivered $1.05 of non-GAAP EPS, down 2% from our record quarterly EPS in Q1 of 2021. The impact of share repurchases and contributions from payments and ads were offset by the lapping of mobility tailwinds. We generated a GAAP loss per share of $2.28, with the delta driven by losses on our investment portfolio amid recent market volatility. We generated $546 million of free cash flow in Q1, down 37% due to lower volume and the lapping of one-time working capital benefits associated with the managed payments migration, partly offset by lower cash taxes. As we discussed at Investor Day, we do expect our cash taxes to rise this year due to the timing of repatriation payments and new federal tax treatment of R&D credits.
These dynamics are not unique to eBay, and we expect to revert to a more normalized cash tax rate after 2025. We ended the quarter with cash and non-equity investments of $6.3 billion and gross debt of $8.3 billion after we paid down $750 million of notes due in March. We repurchased $1.25 billion of shares during the quarter at an average price of approximately $57. This was in addition to a portion of shares from our Q4 accelerated share repurchase program that settled in early Q1. Additionally, we paid a quarterly cash dividend of $129 million in March, representing $0.22 per share. Our investments are detailed on Slide 19.
Our remaining portfolio was valued at over $5 billion at the end of Q1 after a quarter of significant market volatility. We sold roughly $600 million of Adyen and Kakao Bank shares during Q1. We will continue to manage our investment portfolio with the goal of maximizing shareholder value, which includes maintaining our investments when we believe we can generate incremental value for shareholders, or monetizing them when we see an opportunity to do so. To that end, we sold Adyen shares during Q1 at an average price more than 7 x the strike price of our first tranche of warrants. Moving to our outlook. Russia and Ukraine have historically made up less than 1% of our global volume, but the war in Ukraine has measurably impacted economic growth and consumer confidence throughout Europe and other parts of the world.
This conflict arose as global economies were already contending with inflationary pressures and supply chain challenges. On top of that, rising interest rates may further hinder near-term economic growth, while sanctions related to the war could raise already high fuel prices, leading to additional pressure on consumer spending. We're confident our business will remain resilient in the current environment, but we're revising our expectations for the remainder of 2022 to reflect the macro conditions we've observed over the last two months. Despite the near-term uncertainty, we continue to invest in our focus categories and other strategic initiatives to achieve the long-term growth targets we outlined at Investor Day. For the full year, we are lowering our FX-neutral growth forecast for GMV by approximately 5%. The strengthening US dollar also reduces our spot GMV outlook by roughly $1.3 billion versus our prior guidance.
We now expect GMV of between $73.2 billion and $75.2 billion in 2022, representing a decline between 12% and 10%. We forecast revenue of $9.6 billion-$9.9 billion, representing a decline of between 6% and 3%. Our updated forecast calls for operating margin between 29% and 30%, as we expect to mitigate some macro-driven volume pressure through cost efficiencies. We forecast non-GAAP earnings per share between $3.90 and $4.10, representing -3% to +2% growth. Looking to the second quarter, we expect to generate $18.02 billion-$18.42 billion of GMV, representing a decline between 16% and 14% or between 2% and 4% growth versus Q2 of 2019.
We forecast revenue between $2.35 billion and $2.40 billion, representing a decline between 9% and 7%. We anticipate non-GAAP operating margin between 26.5% and 27.5% as we scale our planned investments in product and full-funnel marketing initiatives. We project non-GAAP earnings per share between $0.87 and $0.91, representing a decline of between 12% and 8%. In closing, Q1 was another strong quarter for eBay. We met or exceeded expectations across all key metrics despite facing a challenging confluence of geopolitical and macroeconomic developments in March. We expanded our coverage and capabilities within focus categories, which are delivering innovative new shopping experiences for our community and fueling positive underlying growth in our business. Advertising and payments initiatives are outpacing volume growth, delivering incremental revenue at healthy margins and helping eBay sellers grow their businesses.
Our balanced approach to capital allocation enabled us to invest in strategic initiatives, maintain our best-in-class margins, and return more than double our quarterly free cash flow to shareholders. Our focus on e-commerce and sustainable, inclusive business practices has enabled us to achieve these results while supporting our people, our purpose, and our planet. Finally, I'd like to echo Jamie's thanks to our extraordinary eBay employees. Their focus and execution amid the challenges of the last few months has been truly inspiring. We continue to innovate and remain on track to deliver on the product roadmap we laid out at Investor Day. With that, Jamie and I will now take your questions.
Ladies and gentlemen, as a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Colin Sebastian from Baird. Colin, your line is open.
All right. Thanks. Good afternoon, guys. Two questions for me. I guess the message here is the tech-led reimagination is on track, but you've hit these macro headwinds that depress volumes in the near term. So with that context, Jamie, I was hoping you could drill down a bit more on growth in enthusiast buyers, and in particular, how you expand the size of this group, drive more engagement, and if this relies on converting less active buyers into enthusiasts, those that are already on the platform, and I have a follow-up.
Yeah. Thanks for the question, Colin. Absolutely. You know, when you look at our enthusiast buyers, you know, we have 18 million of them. They drive 70% of our GMV. You know, that group is a very productive group for us. You know, they shop more than 30 days, they spend over $3,000. Even though some of them are, you know, mid-value, move in and out of mid-value, when you look at our mid-value buyers that we outlined at Investor Day, they're actually, you know, of the cumulative lifetime value of most other platforms. They're also very valuable customers as well. You know, the key things we're doing is A, driving our focus category strategy.
When we look at those enthusiast buyers, 94% of them shop in focus categories, that's a big opportunity. 25% of them are selling on eBay, and that obviously drives the flywheel of performance. When we look at it versus 2019, it's not just about the numbers, but how do we get that group to buy more. Versus 2019, they're buying double digits more on the platform. That has to do with getting them to go cross-category, getting them to be more sticky within their focus category or their initial category, and then all the pieces that we know kind of drive retention. The last one I'll just pick up on is it's also tied into our seller strategy.
Part of the things that we announced this quarter with sellers, things like new eBay storefronts, enhancements to the eBay coupons, improvements to SEO, it's all about how it's just not eBay and the platform driving retention of those enthusiast buyers, but how do we put more tools in our sellers' hands so that they can drive the retention of the buyers as well. Feel really good that the strategy is working and the plans are intact.
Well, that's helpful. Secondly, maybe for Steve, it looks like guidance for the back half of the year implies somewhat normal sequential seasonality and volume for Q3 and Q4 off of that lower Q2. I guess this suggests the outlook assumes no improvement or no worsening in the macro environment if that's the right way to think about it.
Hi, Colin. Good to speak to you. As you can imagine, we've been very deliberate in terms of how we've looked at the outlook for the remainder of 2022 based on this very sort of uncertain and challenging environment. You're correct in terms of your assumptions as we go forward with regard to seasonality. Just as a reminder, as we talked about at our last earnings call, we do have a half one, half two underlying story for 2022 as we lap some of the significant tailwinds associated with COVID in 2021 in the first half as we go forward.
We, despite the, I suppose, at a macro level, do see this overall softness driven by the macroeconomic environment, but we still expect a sort of seasonal shape of the GMV as we go forward.
Great. Thank you.
For our next question, we have Eric Sheridan from Goldman Sachs. Eric, your line's open.
Thanks. Thanks very much for taking the question. Maybe two, if I can, just following up on Colin and following- up on the macro issue. Are you seeing different behaviors in the macro environment between your high-value buyers and low-value buyers? Would that inform any decisions of maybe accelerating some of the investments you want to make in terms of improving the SKU of your buyer base as we go through 2022? That would be sort of question number one. Then secondarily, you know, you pointed out the gap between GMV and ads, which was quite wide. How should we think about that gap between ads outperformance relative to GMV, beyond just what you reported in Q1, given your innovation curve around ads longer term? Thanks so much.
Yeah, thanks, Eric. Look, when we think about the impact macro, it's really across the board. You know we can look at obviously our own traffic and traffic of our competitors, and specifically in Europe or more so in Europe, you know, really coincidental with the war, we saw the impact overall to the business. You know, there's various movements. You know, I would say last year with the pandemic, we moved some mid-value up into enthusiast buyers as we looked at the segments. But really, it's kind of across the board, you know, everyone's energy prices are going up, more cost of fuel inflation, et cetera. To your second question, we're really happy with the performance of ads being at 19% above GMV this quarter.
We talked about kind of the growth that we're seeing in the new products. Although, you know, the large part of it is still our core product, which is the Promoted Listings Standard. But, you know, continue to drive optimization, continue to drive adoption. We're still in kind of the early stages of the new products on advertising.
For our next question, we have Tom Champion from Piper Sandler. Tom, your line's open.
Great. Thank you. Good afternoon. Jamie, maybe you could talk about the focus category growth of 9%. I think it was 15% previously. Can you help us interpret that in terms of ongoing sustainability? Thank you.
Yeah. You know, a couple of things. One is, you know, really pleased to see that 9 points faster growth in terms of the focus categories. We are lapping some stimulus from last year in our numbers, so that's certainly a factor. Then over time, Tom, the, you know, the math would say as we increase our coverage of focus categories, obviously the delta will decrease just because of the math of more of the numerator being in the denominator as well. You know, as we look at this as a multi-year, the strategy that we laid out at Investor Day is right, you know, is consistent, getting them to grow at or above market growth rates.
What I'd say I'm really happy about this quarter is that we're seeing the same type of deviation between focus categories in international that we saw in the U.S. in terms of their outperformance of the rest of the site. We've been talking for, you know, a couple quarters now about how international was more nascent, and we're starting to see that traction in the focus categories. We talked about some of the new launches that we're seeing internationally.
For our next question, we have Deepak Mathivanan from Wolfe Research. Deepak, your line's open.
Great, thanks for taking the questions. Just sticking with the macro discussion. You know, the 5 points lower revision on full year GMV guide, maybe can you elaborate a little bit on what signals you're seeing now to arrive at the 500 basis points reduction? I mean, a lot of uncertainty is still kinda ahead of us. So does this revised guide, you know, reflect what you're seeing now? Or does this also factor in, you know, potential unfavorable trends in the second half? And then how should we think about, you know, your expectations for 2023 and 2024 based on the revised 2022 targets? Thank you so much.
Hey, Deepak. I'll pick those up. As I mentioned on the previous question, we've been very thoughtful and deliberate about the 2022 guide as we look out for the remainder of the year and really reflecting what we see as ongoing macroeconomic challenges in the overall environment. I think I would pull it down to sort of three specific areas as you think and contemplate the guide that we put out. First, the continued negative economic impact of the terrible atrocities associated with the war in Ukraine. Our expectation that those negative impacts will continue through 2022. The other is overall the continued headwinds from the broader macro environment. You think about things like interest rates, fuel prices, energy costs, that's putting additional pressure on the consumer and their discretionary spend.
We're particularly seeing this in Europe and a couple of our key markets in the U.K. and Germany, where we're seeing consumer confidence at historic lows. We are also assuming as a third item the expected continuation of the supply chain disruptions that we've seen for a number of quarters here that continues to put a drag on our international business. When I think about you know those three areas, that's what we've contemplated when we look in the macro environment and we went forward with our 2022 guide. Beyond 2022, as you recall, we talked to the investor community back in March at our investor event, and we remain confident in our long-term guide. We see these issues as transitory. Our long-term guide contemplated mid-single-digit GMV growth. We remain confident in that.
We continue to make the investments for the long-term future. You heard Jamie talk about the momentum that we're seeing in our prepared comments. We certainly see that as a longer-term perspective as we navigate these choppy waters in the near term.
Got it. Okay, thanks so much.
For our next question, we have Stephen Ju from Credit Suisse. Stephen, your line's open.
Okay, thank you. Jamie, your commentary about expanding the authenticated brands and bags is interesting. It sounds like you're not quite done going deeper into the category. You know, kind of along with that, can you talk about how parts and accessories rollout will then proceed? I mean, is it gonna be a gradual rollout on a category by category, model by model basis? And is there a similar opportunity to go deeper into watches as well? I think to also follow up on Eric's question earlier, I think throughout 2021, you've more than doubled the number of Promoted Listings sellers, but that's still a minority percentage of the total sellers. I get that, you know, this product is probably not appropriate for everybody, but, you know, what can you do to drive greater seller adoption?
Is it just a matter of awareness or is there, you know, does the product suite need to be expanded? Thanks.
Yeah, great question. First, you know, the way I think about the focus categories, it's not like we invest in the category and that we're done. If you look at it, we're still investing in sneakers, which we launched quite some time ago. We continue to make innovations even in categories that we've launched. You know, the category that you first brought up, handbags, you know, we expanded what we're doing in authentication to the U.K. in a beta this quarter. We also expanded it in the U.S. to men's bags this quarter, so now currently authenticating in the U.S., U.K., and Australia. That will be a continued playbook.
I would say the same thing about parts and accessories is in addition to all the things we're doing around consideration, we're continuing to drive quarter after quarter, new features, new capabilities for those categories. You mentioned watches at the end, that's another category. You know, even though we launched authentication a couple quarters back for watches, this quarter, we built a new capability, which is actually allowing buyers to pay for authentication if they want it for watches between $1 and $2,000. It'll be a continued evolution, of focus categories as we launch new ones and continue to, enhance them. I'd say a couple things about the collectibles category. I'm really excited by this quarter.
Our Vault is on track that we talked about at Investor Day, and a lot of potential there to save re-authenticating, to save reshipping the products. On Monday, we announced a partnership with PSA. PSA is the most popular grader for trading cards, and now you can have your cards authenticated by PSA over $2,000. You know, like I said before, everything is kind of a continued evolution of enhancements to drive customer satisfaction. On your question on advertising, yeah, we feel great. The thing that makes us feel great about the opportunity for more penetration is the ROAS that we continue to see. We have strong ROAS for our sellers, it's obviously easiest to get the largest sellers to start using the product and drive that penetration first.
We're, for example, launching a new unified listing experience, which has a great advertising inclusion. This quarter, we announced some optimization tools for our Promoted Listings Advanced. Look, it took us five years to get the standard product to where it is today. These things do take time to drive adoption, to drive optimization, but we feel like the suite of products that we launched is the right one.
Thank you.
For our next question, we have Ross Sandler from Barclays. Ross, your line's open.
Hey, guys. Just have two questions. First, can you remind us what cross-border GMV peaked at pre-pandemic compared to the 20% today? You mentioned the new payment partnerships and this new wallet potentially getting that going in the future. How material could that be? I guess other than like some of the logjam clearing up in China outbound, what else can you do to crank up cross-border? The second question is, you normally have a downtick in 2Q operating margins seasonally. This one's a little bit more pronounced than normal. Just any color on those investment levels, or is that just from some of the GMV weakness you were talking about previously? Thanks a lot.
Hey, Ross. I'll pick up the first item on cross-border. We've pretty steadily been about 20% of our business has been from a cross-border standpoint as we've gone forward. We haven't sort of seen any major change of that. Obviously, as we've gone through the supply chain challenges that we've been seeing over numerous quarters that we've talked about extensively, that has continued to put some additional pressure on that. Maybe I can just kick off on a few items on payments and then and then allow Jamie to sort of continue to address other items associated with that. I have to say, I've been really taken by the exceptional execution the team has gone through over the last 18 months-24 months with the integration of the whole payments platform.
It gives us a great opportunity to continue to, you know, drive value for our shareholders as we go through that, whether that's through, you know, faster payouts, Buyer and Seller FX, higher ASP items, that we talked a lot about on our investor event that generates the, you know, $300 million as we go forward. The wallet, we're really excited about, and that's something we also talked about at the Investor Day. Jamie, do you wanna just elaborate a little bit more from your perspective?
Yeah, Ross, I'm happy with our pace of innovation. So, you know, the Klarna deal that we announced, which we'll be launching this quarter, actually allows us to accept forms of payments which are very popular in Germany, which we've not been able to accept, primarily pay upon invoice, and financing. That's one component. Steve talked about the eBay wallet, which is in beta now, which obviously helps us with the flywheel, also helps sellers because they can store a balance for their selling costs like shipping, et cetera. You know, to your question on cross-border trade, we are doing things to help that are having somewhat of an impact, being able to forward deploy inventory through a partnership that we've done.
Our cross-border trade elements, as Steve said, have been roughly steady.
Ross, just to pick up your question around sort of Q2 margins. There's naturally an underlying seasonal impact that we sort of go through. As we talked about on our last earnings call, we did expect Q2 would be our lowest margin for the year, based on the phasing of our investments. As you can imagine, we are leaning in, based on the macro environment, to sort of shorter-term costs, but we are continuing to invest in product, full funnel marketing, and making sure that the longer-term strategy stays on track. Those are some of the dynamics at play with regard to our second quarter margin profile that you've heard about today.
Our next question we have Dan Salmon from BMO Capital Markets. Dan, your line's open.
Great. Thank you. Good afternoon, everyone. Jamie, you welcomed back Eddie Garcia in your prepared remarks, and that's a change that's happened since we last saw you all at the Investor Day. Could you elaborate maybe a little on the transition from Pete Thompson to him? Is there any new particular direction or new initiatives that you expect Eddie to lead as he takes over responsibility for your product? Put a stamp on things, so to speak. Thanks.
Yeah. With the departure of Pete and that transition, I went out and tried to find the absolute best product person in the world that I could find. Eddie has a really unique ability. He combines product, UX, and technology like no other executive that I've met. Importantly, too, he has a decade of background with eBay, which is extremely valuable to come in and really hit the ground running. He's already started. I think he's on day 8 today, and is doing a great job. Really excited to have him here. I would say no, nothing changes in terms of the product roadmap. He's got a great team of leaders underneath him. We have a strong organization, and the roadmap is very solid for the year.
I mean, if I just look at payments as an example, you know, this quarter, they announced, you know, they announced a deal with Klarna at Investor Day. They're about to launch it. They launched a new capability to do buyer FX so that buyers could pay in their local currency. They've made enhancements and ramped up stored value, all of that within a single quarter. I'm happy with our pace of innovation across the board and just thrilled that Eddie could be part of the leadership team and help us push forward on the tech-led reimagination.
Okay, great. Thank you.
For our next question comes from the line of Richard Kramer from Arete Research. Richard, your line's open.
Thanks very much. Jamie, there's a big echo here. Jamie, you mentioned quite a bit about the focus strategy and laying that out, but it still seems to leave eBay vulnerable to vertical sites and specific categories, which have some social commerce or community hosting to engage users. How far might you see stores evolving to allow them to have their own, maybe distinct brands or IDs and try to engage users in more ways than just simply commerce or buying?
Steve, I guess the other question, if you look at the guidance for 6 points to 7 points of upside from payments and ads, is that simply lapping the payment saturation or completion, or do you imply some sort of slowing of ads growth over the course of the year despite all these new formats you mentioned? Thank you.
Yeah, Richard, great question. I'll take the first one. Steve should take the second. Absolutely. You know, one of the benefits that eBay has versus any vertical specific marketplace is our scale. The fact that we can get buyers to buy cross-category, that we can acquire them at a lower cost. You know, if you look at, let's say, a parts and accessories buyer, they're gonna come in and buy $1,200 in parts and accessories, but then $1,500 elsewhere on the site. We are leaning into the areas that you're talking about. How do we make it easier for buyers and sellers to transact on the marketplace? How do we build retention between them? I'd point to a couple things that we've launched in the last few quarters. The first is our new member-to-member messaging system.
It's very simple and easy to use. It's chat-like interface very familiar for a Gen Z customer to interact between a buyer and seller. That's a huge improvement over the legacy product that we've had out there for a long time. We've been opening up the ability for couponing and reaching back out to interested buyers on the platform that have transacted with you. Really as you talk about stores is really the opportunity to let sellers build a brand and communicate with buyers. This quarter, we launched all new storefronts on for our eBay store sellers. We actually improved the ability for them to drive more SEO via their stores on the platform.
We've added video into the stores platform, so now you can tell your story about an eBay seller, and that's very appealing. We'll continue to build more of those features to improve the interactions between buyers and sellers because it's one of the very unique capabilities of eBay is that vast army of sellers that we have, helping drive retention in buyers and helping drive engagement there. Great question. Steve, do you want to take the second part?
Yeah. Hey, Richard. I think you're talking about the 6-point delta between the FX-neutral GMV and FX-neutral revenue. I'd say there's three dynamics at play. Number one, you're right. We're sort of lapping through the completion of managed payments as we've transitioned from 2021 - 2022. We see less of a tailwind associated with that. On the flip side, the other two items is the continuing momentum with regards to the investments we're making in both payments with some of the items that Jamie talked about earlier in terms of the execution from the team and what's being driven associated with that. Then the continued success in the ads platform. As we mentioned, in the first quarter, ads was growing at 19 points faster than GMV.
It's really the combination of those three factors that I've talked about that gets the implied guide going forward.
Okay, thanks.
For our next question, we have John Blackledge from Cowen. John, your line is open.
Great. Thank you. Two questions. First, could you expand a bit on how the trading card segment performed in the first quarter, and how does the launch of the Vault help the trading card and overall, collectible business? Second, which e-commerce verticals were the biggest headwinds to GMV or perhaps had the toughest comps in 1Q and 2Q? Thank you.
Yeah. I'd say on trading cards, you know, what we said in there is that we're obviously lapping kind of the massive stimulus that we saw last year. We're settling out at twice the level of GMV that we were beforehand, and we're really kind of leaning in to fuel the growth in trading cards. To your question on Vault, the beauty of the Vault is, you know, a lot of for a lot of collectors, you know, it's not something that they need to have around their house. They want to be able to trade. You could see trades happening, you know, in the middle of a game where a rookie all of a sudden is on fire, and people wanna start trading that. That trade becomes really seamless when it sits inside the Vault.
It's authenticated on the way in. It doesn't have to be shipped anywhere, validated, et cetera. You could see, you know, this billions of dollars of inventory, we could start to drive turns on that, on a much more rapid basis. We're excited by that. We're also excited by the grading partnership that we announced on Monday, which complements what we've been doing for ungraded cards over $750 because it builds more authenticity and trust into what we're doing from a trading cards perspective. That builds on top of last year's launches that we had, like the improved shipping labels, the computer vision that we're working on in that category, et cetera. Really excited by that.
You know, when I look at the rest of the categories, you know, watches continues to be strong. We sustained, you know, double-digit growth on top of last year's strong growth rate. We've been able to remonetize sneakers and keep the momentum in that category. Strong growth in handbags as well, and we talked about some of those announcements in the business. You know, across the board, I think, you know, the strategy that we have is working. We're seeing the change in customer satisfaction and the change of the business and the, you know, the differentiation that these categories are able to create. Then we're starting to see that expand internationally.
Operator, we've got time for one more.
Thank you. For our last question, we'll have Justin Post from Bank of America. Justin, your line's open.
Great. Thank you. Just a couple questions. You know, there's been a lot of write-downs in the group, and obviously the e-commerce group is under pressure. You have the advantage of really strong cash flow. How are you thinking about the asset opportunities, bringing things in to eBay? Second, just on the U.S. GMV, it was down quarter-over-quarter, which has happened in the past sometimes. Did you see a slowdown there related to Ukraine as well, or gas prices a factor? Thank you.
Yeah. On the first one, you know, we continue to look at build, buy, and partner and those opportunities. You know, we talked about Sneaker Con at the Investor Day and why we did that and how it made sense to accelerate our focus and what we were doing in that category. We continue to look at opportunities that we think will help push that further in terms of, you know, new features, new functionality or a new audience. We do look at it as a build, buy, and partner. You know, a great example is what we announced on Monday, which is a partnership with PSA to really build an opportunity to tie that closely into, you know, the best marketplace that exists for trading cards on eBay.
We'll continue to be opportunistic across all of those different elements, as we go forward, as long as they align with the strategy, and we think create value for shareholders. On the international versus GMV, I'll start off, and then Steve, you can jump in. Clearly a more profound effect in our international business. You know, when I talk to our eBayers in the U.K., you know, they're getting their April energy bills, and they're a multiple of what they were before. Definitely more of an impact, but definitely an impact across the whole world, including our U.S. business. Do you wanna expand on that?
Yeah. I'll just give a little bit of extra color. I think when we bifurcate what we've seen between international and the U.S. in terms of consumer sentiment, U.S. and U.K. consumer sentiment is at pretty much historic lows based on what they've seen. As you can imagine, some of this has percolated over to the U.S. in terms of, you know, inflation going up, higher prices at the pump, and also, you know, the inflation that's going forward. The U.S. is not immune to this. We saw in the first quarter some deeper penetration, the challenges in the European business. I think it's a fair comment, Justin, that there has been some slowdown.
As we go further forward during 2022 at a macro level, you can sort of see that implied in our guide as we go forward.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.