eBay Inc. (EBAY) Earnings Call Transcript & Summary

All right. Good morning, everyone. Let's kick it off. Thank you so much for being here. My name is Nikhil Devnani. I'm Bernstein's U.S. emerging Internet analyst covering eBay and a host of other SMID-cap Internet marketplaces. We launched coverage last week, and it's great to be here. If you would like to submit questions for this session, you can do so via the Pigeonhole link or via the note cards as well that are available in the room. It's my pleasure to have Steve Priest, eBay's CFO, here with us today. Steve, thank you so much for joining us, and welcome to SDC.

Thanks, Nikhil, and good morning, everyone. Great to be here this morning in New York. Good to see you all.

Steve, I wanted to kick it off with a conversation around current trends. I think everyone right now is trying to get a handle on consumer spending and how the consumer wallet is shifting. And I think eBay is pretty uniquely positioned as one of the largest e-commerce marketplaces in the world. So you have some great kind of data that you're seeing on your end. We heard Jamie, on the Q1 call, talk about this being the most dynamic macro environment that he's seen. You also took down your guidance for the year. So maybe you could just start with some thoughts on what you're seeing on the GMV side of things and how consumers are spending across your business.

Yes. Thank you. So I think it's been an interesting backdrop over the last couple of years, as we all know. And I don't think any of us were expecting what we came into '22 with. So we started the year in a pretty strong position. As you -- many of you know, we had an investor event in the middle of March, and we're seeing the momentum and then the awful tragic activities within Ukraine kicked off. And as we talked about in mid-March, we started to see some softness as a result of the atrocities that are taking place, particularly in our European business. And then obviously, as you've gone through, you're right, we went through with our first quarter earnings and revised the guide. The way I'd think about it is 3 specific areas. Number one is the result of Ukraine. And we're seeing pretty significant declines in consumer confidence, particularly in Europe because of the proximity and particularly because of the inflationary environment. You look at the U.K., you look at Germany, look over our key markets, consumer confidence for the U.K. has been lower than it has been in decades. And we're thinking about Germany, when we talked to the team last week, all-time low. So really, really significant impact as a result of the atrocities. That then flows through to the inflationary environment. And so from an overall macro standpoint, we've seen that come through in the U.S. Obviously, the price of gas in the tank, the inflationary factors that going forward. And obviously, that's having a pretty significant impact on consumer -- not only consumer sentiment but disposable income. And then thirdly, as we considered our guide at a macro level, we assumed that the supply chain challenges that we've seen for the last few quarters continues going forward. So they are the 3 big factors that we continue to see. We were very thoughtful and measured as we put our guide together for the rest of the year. That sort of ended up with the guide that we went out with from a GMV perspective. The other thing I would mention because GMV is an operating metric, it's unhedged. And therefore, with the strength of the dollar versus euro and sterling, you're seeing a more precipitous decline there versus the underlying income of the business. But again, very, very thoughtful about the guide for that for the second quarter and the full year as a result of those big macro impacts that we see.

Yes, understood. And I think during this period, we're seeing different management teams, particularly in the tech landscape, take different approaches. Some are putting their heads down, investing through it. Others are taking a much harder look at discretionary investments. 2022 was intended to be an investment year for eBay. Has that changed at all? How are you thinking about managing through this period?

Yes. So we're in a very privileged position as eBay. We have a fortress balance sheet, best-in-class margins, and we do have the ability to continue to invest in the business. As you would expect, we are leaning into sort of 2022, looking at continued operational efficiencies as we see some softness at the top line. However, we're very, very focused on the longer term. We continue to invest. We continue to invest in focused categories. We continue to invest in advertise, we continue to invest in our payments platform. And so you're going to continue to see eBay invest during 2022 for the longer term while at the same time being very conscious about the earnings potential for 2022, driving some of those cost efficiencies for the short term.

And can you remind folks what the top strategic priorities are for this year? And have those priorities shifted or changed at all in recent months?

They haven't. I mean when we came into the pandemic with a business that was declining. And then over the last couple of years, we've sort of driven forward with the tech-led reimagination of eBay. And the cornerstones of that strategy in terms of what we communicated through the investor event is really doubling down on non-new-in-season categories and particularly the focus categories where we've started to win and win back share. Think about sneakers and watches and handbags and trading cards and more recently, parts and accessories on the platform. And so the cornerstone of the strategy is really to look at the non-new-in-season TAM, how that will continue to evolve and how eBay plays a critical part with that with our focus categories. And the way that we're thinking about focus categories is understanding what customers want, building the product that they really support that category, for example, authentication in the categories I've talked about, be it fitment in parts and accessories, and then telling them about it. Pretty simple, just sort of strategic platform. In addition to what we've seen in focus categories and leaning in, we have recently completed the initial migration of our payments platform. And so we now control cradle to grave in terms of not just the commerce side but the payment side and intermediating payments. So that what I would describe as a second pillar of the strategy going forward. And then thirdly, just really growing our advertising business from a $1 billion advertising business in 2021 to a $2 billion advertising business by 2025. So they're the 3 cornerstones of the eBay strategy. But underpinning all that is trust. And I think what I would say is the work that we've been doing is making sure that our customers can trust the transactions that are going through eBay. We've seen accelerated growth in our CSAT scores. And it's very, very clear the strategy is working, and we're looking forward to the years ahead.

Yes. That's great. And we'll dig into each of those pieces in a minute or 2. But if we were to just double-click on the outlook for 2022 GMV, the guidance points to the total GMV base being down about 10% to 12% on a constant currency basis. The first half of the year is tracking down closer to mid-teens. So can you comment on why the expectation is there for things to get a little bit better in the second half of the year?

It's really a function of lapping. And so if we recall the first half of 2021, it doesn't seem that long ago, we were in pretty much full lockdown. And obviously, as a result of that, you saw a real elevation in the GMV, not only through 2020 but certainly through the first half of 2021. And we're starting to lap that. When we initially put our first -- our guidance out at the start of the year at the Q4 earnings, we talked a lot about this half 1, half 2 story. And certainly, you're going to start to see the lapping of that as we sort of cycle through. And so the second half of the year should be the cleanest comps, albeit the macro environment that we're looking at, but the cleanest comps that we've seen for a number of years.

And should we think about the guidance for the year embedding somewhat normal seasonality as we roll through?

Yes. There's no sort of -- we're not expecting any seasonal changes as a result of what we put out there. It's really a function of the lapping from 2021.

Got it. And at Investor Day, you laid out a longer-term vision for the company, which was getting GMV growth back to, call it, mid-single-digit territory, 3% to 5% a year. Is that still the right way to think about the longer-term growth of eBay?

Absolutely. So as I mentioned, we left 2019 with a declining business. The focus categories we've been leaning into, we've seen -- sneakers, for example, we've seen double-digit growth off the back of triple-digit growth. Watches, double-digit growth off the back of double-digit growth. And where we have done our work in the sort of key categories, we've seen the momentum going forward. The way that we articulated this, you're right, at the investor event, is that at the end of 2021, we touched about 20% of our overall GMV through focus categories. We expect to get to 50% by the end of 2024. And so when you think about the market levels of growth in those focus categories at market level of growth or slightly above and the assumption of the other 50% of our GMV is flattish, that gets you to sort of the mid-single-digit growth from a GMV over the long term. Inevitably, we're going to see some choppiness as we migrate through 2022 because of the macro backdrop, but our long-term guide remains intact. Our long-term aspirations remain intact as a result of the strategy that we're embarking on and the investments that we're making for the future. I mean let's just be like really, really clear. We are completely focused on earnings growth at eBay. But it's obviously important to us as well that we have a sustainable business in many, many ways. And we see sort of the opportunities for sustainable top line GMV growth at the same time as driving sustainable earnings growth at the bottom line.

I'd like to dig deeper into some of the focus category efforts. You mentioned sneakers and watches there. Can you just remind us what the most successful categories have been to date through this strategy and what the priority categories are going forward?

Of course. So I talked a little bit about this. I mean -- what we found with sneakers, watches, handbags, for example, and I mentioned trust earlier and basically embarking on the key elements of trust in some of those categories and think about collectibles, for example, is authentication. And so building that trust between the sort of buyer and seller and again, it's been incredibly successful journey that we've gone through. We've seen CSAT grow to high 80s, low 90s. And at the same time, as I mentioned, we've seen significant growth on the GMV side. We've pivoted -- and then you look at sort of collectibles. So trading cards has been a great opportunity for us over the last few years. We've continued to embark on that. We've brought tools to the customer like computer vision that enables customers to list their trading cards in a very simple listing environment. And also just really thinking about the collections that individuals have and price guides and everything else so that the collectors can go on to eBay and understand the value of their collections. And again, being very tailored and thoughtful about the categories that we're looking at. More recently, we've leaned into parts and accessories. We have over 0.5 billion listings in terms of parts and accessories on eBay. And the most important thing for the car owner is making sure when they go onto eBay and they search for a part, it fits their car. And so we've launched things like My Garage and making sure the fitment works. So if I want to buy a pair of wiper blades for an Audi Q7, I know it's going to work. And again, just building the tech associated with that. And so we're going category by category, country by country as we sort of go forward. We're launching the Vault this month. And so we're excited about the opportunities that that will provide for us at eBay. We talked about that at Investor Day, and that will continue to drive collectibles. Beyond that, we haven't disclosed exactly what's next, as you can understand, for competitive reasons. At Investor Day, we laid out some of those opportunities for us. But if you think about the size and scale of eBay, we're over an $80 billion GMV business. The size and scale of the platform is immense. We have 5 very large categories that are over $10 billion each. And so we see a huge runway ahead of us with an opportunity again to delight customers, invest in the categories that drive GMV growth for the future.

And as you tackle new categories and new countries, is the go-to-market for the playbook getting quicker and easier to run each time?

Yes. As you can imagine, you go through authentication for like watches with sneakers as a fast follower. You go out and you drive an authenticated center in the U.S. and then we roll out Germany, Australia, et cetera. So the playbook works. We've generally started with the U.S. in terms of the innovation, and then we roll it out globally. The beauty of some of those categories, the playbook that we embarked upon for the likes of authentication, is very applicable to different categories. Obviously, it's -- from a country-to-country basis, it works differently. But yes, we've certainly seen the levels of velocity that we've managed to drive forward on each category go up over time, and it gives us a lot of cause of optimism as we drive the playbook going forward.

Yes. And on the Q1 call, you pointed out that the focus categories grew about 9 percentage points faster than the rest of the GMV base. Is that the right magnitude of uplift we should be thinking about going forward as well?

Yes. I think you're genuinely going to see, as you would imagine, focus category grow at a faster clip than the underlying business. And obviously, we continue to disclose that on a quarter-to-quarter basis. It will depend a little bit on seasonality. It will depend a little bit on lapping. It will depend a little bit on some of how the categories are going on a year-to-year basis. And some categories are growing at a higher acceleration than others. Think about trading cards, for example, or sneakers versus parts and accessories, depending on the macro environment. The thing for us is making sure that we drive these focus categories at or above market levels of growth. And that would sort of drive the playbook as we go forward. But as I've said, we continue to expect the focus category growth to continue to outpace the underlying platform.

That makes sense. And tangential to the category approach is the emphasis on your higher value buyer cohorts as well. Can you just comment on what you're seeing on the growth and engagement from your more valuable buyers, especially during this period of time where e-commerce as a whole is struggling a little bit?

Yes. To just give you a sort of sense of scale of eBay, we have 142 million buyers on the platform. We term the enthusiast buyers of those who go on to the platform and shop at least 6 different times a year and they spend over $800. And we have about 18 million of those buyers and they account for broadly 70% of our GMV. So they're incredibly important to eBay and the momentum that we're taking forward. And as you would expect, there's a strong correlation between those enthusiast buyers and the focus category playbook as we go forward. Having said that, we're very thoughtful about our mid-level buyers and also our low-value buyers, if you may say that, as they come into the platform because that creates the flywheel, someone comes in, buys a pair of sneakers. Maybe a Gen Z comes on, buys a pair of sneakers, gets some stickiness on the platform, starts to go to different categories and then they graduate up the buy cohort curve. I think the most important thing that cohorts say about eBay is the ability, because of our size and scale, those enthusiast buyers are cross-category shopping. And that is one of the most important things that we're seeing, is they come in to buy a pair of sneakers and they end up buying a car part. And so that flywheel, because of the size and scale that we have, particularly as we go forward, category by category is what gives us a lot of confidence in terms of the stickiness of those buyers as the CSAT continues to go up and they're spending more and more on the platform.

And how do you think about overall buyer growth? How should investors think about the longer-term opportunity to grow the active buyer base?

Yes, the active buyer base, a couple of things I would say, is that back to my point about trust, we took a fair amount of trust actions over the last couple of years. Really, we're thinking about some of these one-and-done buyers that came onto the platform, particularly through the pandemic and making sure that we really think about making sure when they buy what they're going to buy. And when the buyers are going to get what they wanted to get, so sort of think about the likes of a phone charger from Greater China, for example, we saw sort of various shipping issues associated with supply chain as we went through the pandemic and really thinking about where the opportunity is for high-value buyers that sort of come to eBay that drives good earnings power for the company. And so as we've naturally expected as we've sort of thought about those trust actions, we've seen some of the overall buyer numbers come down, and we expect that to happen. Secondly, as we lap the pandemic, obviously, we saw elevated growth during the pandemic and we continue to sort of see some declines. And so as we said for a number of quarters, we expect that number to continue to go down. However, as we continue to lean into focus categories, as we continue to drive the strategy forward, we continue to see growth in our mid-value buyers and ultimately our high-value buyers as we come through the lapping of the pandemic.

And as we think about eBay in a more normal environment, should we think about the order of things as you work on these categories, you improve the shopping experience, and then at that point, you can lean harder into new customer acquisition after that?

Yes. And I think part of that is what I said earlier about telling customers about what we're doing. So identify the need, build the product, tell our customers about it. And we used to do a lot more lower funnel marketing, couponing, et cetera. And think about parts and accessories for example. We have leaned in heavily to full funnel marketing, Toner Store, we launched a big campaign with The Auto Show in New York. We're using a lot more social. Sydney Sweeney, the actress, she's spent a lot of time, she's a massive car enthusiast. And we've seen these social partnerships with influencers, at the same time as using the overall focus categories to drive the brand affinity for eBay. And so as we go through that, we're seeing more new customers come to eBay and sort of drive it forward. And so again, as we think about the categories, that gives us an opportunity to sort of really lean into our communication messages through various media to sort of bring those buyer cohorts as we go forward.

Understood. And e-commerce, obviously, is a very competitive space. Buyers have a variety of different options. You face a slew of competitors that are vertical-specific. There's also this thesis now that e-commerce's landscape is just structurally more competitive because you had legacy retailers that were forced to take the digital channel a lot more seriously during the pandemic. Is that something you agree with? Has it gotten harder to compete? And how do you think about eBay's competitive positioning going forward?

It's certainly a very competitive environment. But I go back to my point about the size and scale of eBay. We have 1.6 billion listings on the platform. We cover a multitude of categories. We have a huge number of customers that cross-category shop. And I think that is the difference between eBay and some of the competitors. If you think about those that come in and they're very focused on certain verticals, and as I mentioned, 5 specific categories of over $10 billion at eBay gives us the opportunity to scale and go forward. The other thing that's really important, as I mentioned at the start, is our financial architecture. Because of our best-in-class margins, it gives us the ability to invest. If you think about authentication, the last quarter, we talked about having authenticated over 3 million different items. And the cost of authentication is relatively de minimis, it's about a point of margin. And so when you've got a bunch of competitors out there that just do not have that level of financial durability that we have at eBay, it ensures that we can compete incredibly effectively, particularly in a more challenged macro environment. And again, we will continue to invest over the next few years to make sure that we can compete effectively with the other players in the market.

Switching gears a bit to some of your seller services. You mentioned payments and ads, and I'd love to hit on those. If we could start with payments, obviously, the team has delivered on the payments -- managed payments transition over the past few years. But I think there's a misconception maybe that you're done with payments now. Can you just remind us why you're not done? What you're still working on? And where you can unlock more value for sellers?

I always talk about it being the end of the beginning. The team have done a tremendous job. So if you think about the last 18 months to 2 years, we're now, as I mentioned, intermediating over $80 billion of GMV over the last couple of years. And so the platform is built. We're going forward with that. And now there's an opportunity to really monetize it. Obviously, the ink is barely dry. But now we've got the opportunity to think about a number of opportunities for us to take that forward. At the investor event, we talked about an incremental $300 million of opportunity around payments with a number of things. The first thing I would talk about is the likes of buyer FX. So in the old world, you think about eBay be in a position where the arbitrage on exchange rate, the benefits of that would go to financial institutions. If you're a buyer and you want to pay in your home currency or whether you want to pay in the currency of the seller, we can now sort of offer buyer FX through eBay, and there's an opportunity to sort of do that. The second thing is about faster payout. So we've got sellers who will actually pay a fee to get their funds more quickly. And again, not only is that a great service for our sellers, but it also offers an opportunity for our shareholders. The third one that really does excite me is higher average selling price items. So if you think about the Vault that we're launching, you think about some of those higher value collectible items, bringing in payment methods through the platform that offer buyers and sellers to transact on the platform for a higher average selling price, ASP, item means that we can bring again, a, offer the services, but b, bring more economic benefit to eBay. And then off that platform, you'll then get into a lot of the financial service opportunities as we go forward. But I'm very excited by the work that is being done by the payments team. We've built the foundation. We've got a bunch of services off the back of it. And then we're innovating very quickly in terms of offering the right services for the right market. So recently, we announced the partnership with Klarna. In Germany, for example, pan invoice is a key way that consumers transact, and we've already launched that last month in terms of going forward. So very, very quick velocity in terms of the ideation to the execution in the payments platform. And again, we see this as a key pillar of our strategy as we go forward.

Yes, that makes sense. And sticking with services, if we could hit on ads as well. You mentioned earlier the target to double the ad business in the next, call it, 4 years. Can you just bridge that gap for us from the $1 billion today to $2 billion by '25?

Yes. We built the $1 billion business on one product, Promoted Listings Standard. And that's like a cost per action type advertising platform. And over the last 12 months, we have lent in and we've developed 3 new ad products. If you think about Promoted Listings Express, which is really around auctions, so a lot of consumers will come on to auctions. Sellers want to sort of broaden the opportunities for the buyers to see and hear their products. The second one is really about cost per click. And you think about our consumers, sellers, really pushing their brands on eBay, which is Promoted Listings Advanced. And that gives them the opportunity to really broaden their profile on the platform. And again, that's evolving over time. And then the third one is off-eBay ads. And in partnership with some of our sellers, if you think about having a seller brand, off-eBay and in partner with the sellers, we get the opportunity to bring consumers into eBay. Again, that's a sort of huge opportunity. They're in their nascent stages in terms of those 3 ad products that we've got. We continue to beta test them. We continue to innovate, and we see a good trajectory going forward. If you look at last quarter, we saw a 19-point growth in advertising over and above volume growth on the core platform. And so we're seeing momentum. We're seeing the teams innovate very boldly as we go forward. And that really gives us the confidence to get to the sort of $2 billion business by 2025 as we sort of continue to have a higher penetration of GMV.

And how -- you mentioned 19 points delta. I mean, how sensitive is the ad business to what you're seeing on the current GMV side of things? Is there just still a lot more low-hanging fruit that you can continue to pull even with GMV being down?

Yes. I mean there's -- and that's the absolute point. So obviously, there's a natural correlation with the absolute dollars associated with advertising and the GMV. But as -- we've got a lot of runway even with Promoted Listings Standard, our core product, where we continue to work on the algorithms as we sort of drive seller behavior as we go forward. Needless to say, the new products that are rolling out. And so we've seen this quarter after quarter, whether it is positive delta between the advertising growth and the core GMV on the platform.

Perfect. And I'd love to spend a few minutes on capital allocation and investment priorities as well. Given this is an investment year, given there's an eye on the longer-term opportunity, how should investors think about the progression of eBay's margins going forward?

Well, first of all, on the sort of capital allocation side of things, we've been very thoughtful, very balanced and disciplined about how we allocate capital. I think the very recent history shows that as we've gone forward and happy to sort of go a little bit deeper as required. Specifically on your sort of margin question and how we're seeing things, our primary objective for capital investment is around the core business because that's where we see the best opportunity. That's where we see the best runway. And we have this philosophy about build by a partner. And whether build it ourselves and we can get into some of the detail in terms of the core platform, we've leaned into certain acquisitions. And then obviously, we've partnered as we've gone forward. Some good examples of that. I talked about computer vision that we sort of built ourselves. The Vault is another example that we're building ourselves. We lent into sort of the buy side with an acquisition of Sneaker Con that really supported our overall authentication process. And then an example of partnership is really with Adyen, who has been a tremendous partner as we've gone through the payment platform. But in terms of capital allocation, the primary objective is to invest in the core business. We do have best-in-class margins. We have purposely lent into investing some margin in 2022. We clearly laid out at our investor event some accretion in margin as we go forward as we continue to get operating leverage at the top line. But I feel like it's a very balanced and thoughtful approach, a, to drive the top line, but more importantly, to continue to drive overall earnings growth for the investor community that invests in eBay.

And this is probably a good time to weave in a question from the audience here. But in that Investor Day outlook, you pointed to low 30s, 31%, 32% operating margin by 2024. Is that the right end state for eBay? Or is that just a stepping stone given the reinvestment priority right now?

Yes, I'm not going to get ahead of myself. We've really clearly laid out an architecture for the next couple of years. I think it was very important to explain to the investor community, the strategy overall for the company. Secondly, our capital allocation strategy and what that means for the core financial architecture of the company. Again, eBay has, what I describe as, best-in-class margins with a fortress balance sheet that really supports the investments in the business. And going through that margin trajectory through sort of 2024, we'll continue to assess it for the long term. But again, when I think about top line growth, the operating leverage that that continues to provide, it frees up capacity for us to continue to invest in the business and then to continue to stimulate earnings growth at the bottom line. So I'm very happy with the architecture that we laid out and very optimistic about the future potential for the company.

And should we think about some of the seller services like advertising as being accretive and giving you more flexibility to reinvest in the core?

Yes. I mean there are certain things that we laid out, as you can imagine, the margins associated with the payments transition as you went through that. And obviously, there's a balance right between the level of investment that we want to go forward with the product. But certainly, the sort of top line, the growth on the revenue, we talked about a 2-point delta and the sort of 2- to 3-point delta at the end of the investment period in terms of revenue versus GMV. And needless to say that the benefits that comes forward both from a margin and an income standpoint, again, continues to enable us to continue to invest in other seller services, continue to invest in payments and focus categories, again, to continue to support earnings growth.

And on your capital allocation philosophy, imagine when you're making a decision, there is the thought of do we build, buy or partner. Can you just remind us again of how you think about those things and what that decision-making process looks like?

Yes. It's really about a return on investment. And there are a couple of things we sort of think about. One is speed to market. And is there an ability to get these products out to our customers more quickly. And then overarching is, what does it mean for earnings growth, and so -- over the sort of medium to long term. And so we look through those lenses. And taking things off the shelf where we can go and acquire them, like the Sneaker Con example. We've already built a partnership with them. We always -- we are already using their resources and technology. And it was a good opportunity for us to acquire that going forward. There's other things that -- after the last 26 years, we've done a really, really nice job of building great data. We've got exceptional talent at eBay. The computer vision side of things, it made absolute sense for us to build that in-house, as we went forward because we've got the data, we've got the expertise, we've got the tech. And so it's always a trade-off. But at the end of the day, it's all about the velocity of getting the right products to customers and ultimately about earnings growth.

And another one on capital. Obviously, eBay sits on excess capital today. You're very free cash flow-generative model, which is a nice place to be right now in tech. Should we expect you to hold on to more dry powder in a period like this, given the potential for M&A opportunities? Or is the approach to capital return still the same?

We've been very consistent. Again, I go back to the team here, and we say this a lot, balance and discipline. We have key tenets that we sort of look at in terms of our gross debt to EBITDA, our net debt to EBITDA and, obviously, sort of investment-grade metrics, so currently sitting at BBB+. So nothing has changed from that perspective. We continue to have a decent sort of cash balance on the balance sheet, offset with certain debt. And so I wouldn't expect -- I wouldn't suggest to investors that anything is changing in the medium to -- medium term. You've seen our disciplined approach to capital allocation over the last few years. We've continued to invest in the business. We've continued to drive capital returns with buybacks and also through the increase in dividends. So I don't expect any sort of change in that philosophy going forward.

Okay. And a somewhat related question around capital return or buybacks. Any thoughts around maybe speeding it up given where share prices are today?

Again, we've been very thoughtful. On most recent earnings call, we talked about the buyback for the first quarter. We've been very, very consistent over the last few years. The team did an incredible job through divestitures. We generated over $20 billion through simplifying the business. It enables us to focus on the core. We did have some more accelerated buybacks and returns to shareholders during that period. But continue to get that capital allocation, I believe, in the right spot, and we'll continue to think about that as we go forward.

And I wanted to just touch on ESG a little bit. I think it's been a growing area of focus for eBay, but also for investors as a whole. And -- could you just remind us, what are the main ESG initiatives that you're -- that you'd like to highlight for investors today?

Yes. The first one I'll talk about eBay, it's -- they're not initiatives, it's part of our DNA. So we've been around for sort of 26 years, we're the pioneer of e-commerce, and that is a cornerstone of what we do. And we think very hard about the impact that we have on the communities that we serve and creating economic opportunities for buyers and sellers in those markets. We think about the impact on the planet associated with eBay as we go forward. And it's not just one initiative. It's built and weaved very clearly into the DNA of the company. Just to talk about a couple of key areas. From an environmental standpoint, we became carbon neutral in 2021. This is something that the leadership team's incredibly passionate about. Obviously, our primary focus is to reduce emissions. We put science-based targets out there from the Scope 1 perspective. And Scope 2, which is really the direct impact that we're having on the environment as a result of our data centers and offices. And then Scope 3, which is really associated with the shipping and the partnership with the sort of transportation networks to help serve our customers. Obviously, through using renewable sources of energy, really focused on reducing those emissions. But for the time being, we'll continue to purchase carbon offsets to go forward. So very, very thoughtful about the environmental impact. Another key pillar is about the impact that we have on commerce. And as I mentioned, recommerce is a really key cornerstone of the strategy going forward. It's a focused category that we're working on, we've partnered with over 300 brands, key brands across the globe where we look at like refurbished, seller refurbished or certified refurbished products that customers can go on eBay. It keeps products out of landfill. It means that consumers get better value for money in terms of what they're buying. They're backed by the eBay money-back guarantee. And so you can get a 30-day return and get your money back and 2-year warranties on a lot of the products that we're selling on the platform through that platform. So very, very thoughtful approach to overall recommerce. And then thirdly, we just think about -- again, for the communities and the sellers and the employees that we have through the D&I lens. And as part of the leadership team, we have conversations that are driven behind a lot of these measures that we're going forward. So it's a cornerstone for the company. It's important to us. And I think -- as I think about the prevalence of the ESG funds as we go forward, eBay would be the ideal entity that would sit in any sort of ESG fund because of our thoughtfulness around the impact that we have on the communities and the planet as we go forward.

Got it. And at this point, I'll start taking some of the questions from the audience. As a reminder, if you'd like to submit questions, you can use the Pigeonhole link. A question here on, eBay leans into non-new, non-in-season, as you talked about. We've heard from retailers pretty recently about having too much inventory. Is that a source of incremental supply for eBay down the road? Has that been a source of supply through prior cycles as well?

Yes, again, to give some sort of context, non-new in-season, whether it's outlet, whether it's pre-loved, whatever that might be, open box is, obviously, a key. Last season's products are key opportunities for us at eBay and for our customers. Certainly, from an outlet standpoint, think about the U.K., for example, that's a big market where we sort of see some activities. We have over 1.6 billion listings on the platform. So it certainly continues to be an opportunity. We've sort of seen some of that. It doesn't have a, I would describe as a, hugely discernible impact on the overall platform but certainly an opportunity that we'll continue to look at as we go forward.

Got it. And when you think about the focus verticals, you've talked about new categories coming into play and also new markets as well. How do you -- is the bigger opportunity in the new categories that haven't been addressed yet? Or is it from replicating the U.S. playbook in new regions?

It's a bit of both. So our work is never done. So even sneakers, right? We talk about sneakers, and we've recently started to think about monetizing some of the sort of sneaker activity for certain categories within there. We've looked at watches and offering sort of additional buyer services for luxury watches between $1,000 and $2,000. And so just thinking about the playbook, not only within the categories but also from an international standpoint where we continue to sort of roll out authentication, for example, in some of the key markets like Germany and Australia. And then at the same time, we're going sort of category by category, as I say, parts and accessories are the latest one, now launching this month. And so the way I describe it, it's a little bit of both, and we'll continue to rate and welcome the categories as we go forward. But at the same time, lending into the new ones as we see the opportunities.

And a couple of questions here on buyer engagement. I think in Q1, we saw GMV per active buyer step down a little bit. Is that just macro or something bigger that's worth touching on there?

Yes. Generally, we are seeing buyers spend more on the platform. When you think about -- there's a number of factors going on with regards to that. You have got some inflationary factor that's going on. You think about the focus categories generally being higher average selling price, higher ASP. And then within the categories, we are seeing sort of some of our customers leaning towards higher value items. We're continuing to see sort of double-digit ASP growth as we sort of cycle past 2019. So -- now the momentum of average GMV per buyer continues to go up at the same time as we're driving forward the strategy.

And maybe a bigger-picture question on engagement. How do you think about the potential for GMV per buyer growth? Is that a lever that's easier or harder to pull than getting new customers in the door? Like what would you expect to be the bigger driver of opportunities?

I think, again, it's a bit of both. It's -- the buyers come onto the platform. A big focus for us is the sort of stickiness. We're investing in things like the first 90 days because when we sort of see either a buyer come onto the platform and continue to transact up to 90 days, the stickiness goes up, their average spend goes up. We're also focused on the buyers that ultimately sell because once you've got them on both sides of the flywheel, that continues to go forward. And so there's the element about continued buyer engagement and attracting new buyers to the platform through the communication philosophy that I talked about earlier. But secondly, by improving trust on the platform, by improving the experience that customers have and driving not only in-category shopping, but cross-category shopping means that ultimately the amount of spend per buyer continues to go up. So we'll be successful as we continue to bring new buyers to the platform, but also continue to lean in towards higher spend per buyer on eBay. So it's a factor of both elements.

Yes. That makes sense. And another question here on GMV and kind of recent trends. Are you seeing divergence in growth across categories at this point in time? We heard from retailers talking about some pretty big discrepancies across their mix. And also maybe worth commenting on what you're seeing in the U.S. versus markets abroad?

Yes, a couple of things. Obviously, different categories are growing at different rates. Think about -- I'll use a couple of examples. Think about trading card through the pandemic and alternative assets. That grew sort of significantly as you went through that and you start to sort of lap some of those dynamics. Think about the size and scale of parts and accessories, and that's really a function of supply chain in terms of thinking around the availability of the parts, but also the average selling price of each of those parts as they go up. So the categories that we are working through, you're going to have differential growth rates within those categories as we go forward. But obviously, the tide will continue to rise the more categories that we go forward with. From a geographical standpoint, what we've seen over recent quarters is the U.S. has grown at a faster rate than the overall international business when we compare it to 2019. There's a couple of factors at play there. The first one is really the continued economic momentum that we've seen in U.S. versus other parts of the world. That's the first factor. The second one is really about supply chain. The GMV that we measure comes from where the sellers reside. So if you think about some of the cross-border challenges, the supply chain, 1 in 5 of our transactions is cross-border. So our international business has been more pressured as a result of the supply chain dynamic. And then thirdly, we're seeing, as I've mentioned, when we roll out the playbook, when we go through each focus category, we generally start in the U.S. And so the international business is a little bit more nascent when it comes to the focus category growth. But again, some of the examples I've given you this morning, we're continuing to sort of see momentum in the international markets as we roll out authentication, as we roll out products, et cetera. And so there is a different geographical dynamic that we've seen between international and U.S. in the numbers that we report to the market.

And any color on how different international markets are trending? I think the commentary on Europe was very clear, but anything on some of the other parts of the world?

Yes. I think that's the biggest thing that I would focus on. International markets, as we talked about, cross-border trade, particularly out of the Far East is impacted, continues to be impacted by some of that supply chain. Europe, as I think about it, again, a couple of our key markets are the U.K. and Germany. It's really a function of consumer sentiment, particularly because their trust is in Ukraine. But when you're looking at the inflationary factors, you're looking at discretionary spend, you're looking at the dollars that individuals have or the sterling and euros that people have in their pockets and that's definitely having an impact, a more significant impact in the European business versus the U.S. But obviously, the inflationary effect is having some impact over here. But again, as we laid out our expectations on macro for the rest of the year, we sort of laid all that out in the guide that we put forward.

Got it. And a question here on listing and listing inventory. Would eBay consider charging for inventory that's been listed for a longer period of time, say, unsold after 30 days?

I think for us it's about reducing friction on the platform and it's about building trust. And we have a great set of tools and a very viable economic model for our sellers that makes eBay the place for them to come. We want to be very thoughtful about the take rate. We want to continue to stimulate e-commerce on the platform. And so I don't foresee sort of a changing philosophy as we go forward. I think the structure and the approach that we've taken with our sellers has been very, very effective, and it continues to build trust on the platform.

Maybe a final question here to wrap up on sellers. I mean how do you think about growing the overall funnel for sellers on eBay? What do you think the longer-term opportunity there is?

Yes. I mean it's back to one of your previous questions, be clear about having the right tools for our sellers and making it economically attractive for sellers to come to eBay. When you've got 142 million buyers on the platform, when you've got that captive audience, and then you think about stores, you think about advertising opportunities, you think about share of wallet for those sellers, you think about the listing experience and accelerating that, our objective for sellers is to make it easy to do business on eBay. And our philosophy on that is if you make it easy to do business, you accelerate and simplify the listing flow. You have the captive audience of the 142 million buyers, then sellers will want to continue to come to eBay because it makes sense for them. So we're very, very much focused on making sure that we reduce the friction on the platform, build trust and make it a great shopping experience for both our sellers and our buyers.

Perfect. With that, I think we're right at time. So thank you so much, Steve, for being here with us. We appreciate it, and thank you, everyone, for listening in.

Thank you very much. Thank you for this morning.