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Joe Billante - Vice President of Investor Relations
Jamie Iannone - President and Chief Executive Officer
Steve Priest - Senior Vice President, Chief Financial Officer
Douglas Anmuth - JPMorgan - Analyst
Eric Sheridan - Goldman Sachs - Analyst
Colin Sebastian - Baird - Analyst
Stephen Ju - Credit Suisse - Analyst
Deepak Mathivanan - Wolfe Research - Analyst
Curtis Nagle - Bank of America - Analyst
Youssef Squali - Truist Securities - Analyst
John Blackledge - Cowen & Company - Analyst
Richard Kramer - Arete Research LLP - Analyst
Sean Dunlop - Morningstar - Analyst
Operator
Ladies and gentlemen, thank you for standing by. My name is Brent, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the eBay Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.
It is now my pleasure to turn the call over to Mr. Joe Billante, Vice President of Investor Relations. Sir, please go ahead.
Joe Billante - Vice President of Investor Relations
Good afternoon. Thank you for joining us, and welcome to eBay's earnings release conference call for the third 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's 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 and Steve's remarks represent FX-neutral year-over-year comparisons, unless they indicate otherwise.
In this conference call, management will make forward-looking statements, including, without limitation, statements regarding our future performance and expected financial results. These forward-looking statements involve known and unknown risks and uncertainties, and our actual results may differ materially from our forecast for a variety of reasons. You can find more information about risks, uncertainties, and other factors that could affect our operating results in our most recent periodic reports on Form 10-K and Form 10-Q and our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of November 2, 2022, and we do not intend and undertake no duty to update this information.
With that, let me turn it over to Jamie.
Jamie Iannone - President and Chief Executive Officer
Thanks, Joe. Good afternoon, everyone, and thank you for joining us. Q3 was a strong quarter for the company despite a challenging macro environment. Significant headwinds from inflation, higher energy costs and rising interest rates have impacted discretionary income, and consumer confidence is near record lows in several markets. Our focus on non-new in-season categories has made the platform more resilient against these headwinds.
In the quarter, we continued to execute the tech-led reimagination and we delivered on our near-term commitments. Focus categories narrowed the gap to market growth rates through higher customer satisfaction, increased trust and more effective marketing. And once again, enthusiast buyers spent more on the platform. This playbook is having a positive impact on GMV in the US and internationally.
Site-wide technology investments created a more seamless customer experience, leading to improved conversion rates across the platform. Our advertising business accelerated due to increased seller adoption and the optimization of our ad products. And new payments capabilities removed transactional friction, while adding incremental revenue. The execution of our strategy is strengthening our competitive position, which drove better-than-expected financial outcomes in the third quarter. We delivered over $17.7 billion in GMV and almost $2.4 billion in revenue. We invested in marketing and product, while delivering close to 29% operating margin. And our non-GAAP EPS was $1 per share, up double digits versus last year.
Before I get into more highlights from the quarter, I want to take a step back and look where we are in our long-term journey. As you may recall, heading into the pandemic, volume was declining. Since that time, we have invested in game-changing product experiences and adjusted our approach to marketing. And this has resulted in an improvement in GMV compared to pre-pandemic levels. Specifically, focus categories, excluding Trading Cards, are up over 20% since 2019, due to improvements in customer satisfaction, trust, product experience and marketing. Trading Cards has more than doubled in that time due to market dynamics and the impact of our innovations. And the rest of the platform has improved from declining low-single digits to flat based on site-wide product improvements and the benefits of cross-category shopping.
Taking a closer look at Q3 volume, excluding Trading Cards, focus categories grew over 7 points faster than the rest of the platform, compared to last year. Multiple quarters of improvements in Parts & Accessories, Collectibles, Luxury Goods, and Refurbished Products are driving better relative GMV performance. Motors Parts & Accessories is the largest category we have invested in to-date and it is nearing market rates of growth. Investments in marketing over multiple quarters have increased consideration with enthusiasts, expanding the top of the funnel.
Most recently, we sponsored an automotive makeover show with MTV UK. We also kicked off the eBay Motors' Parts of America Tour, showcasing bespoke car builds using parts found on eBay. Hundreds of thousands of attendees have joined these events to-date and social marketing support for the Tour has driven more than 500 million impressions. The key to unlocking trust for the Parts & Accessories enthusiasts is fitment. Over the last several quarters, we've made significant progress on the foundational work needed to innovate the P&A experience. This included modernizing our taxonomy to align our business globally and open up new cross-border trade opportunities. We also integrated fitment-based technologies into search, merchandising and advertising recommendations.
Now, we are able to make fitment more pervasive throughout the end-to-end experience. We've started adding highly visible trust signals throughout the buyer journey in the US and Canada. We also are reducing the number of steps it takes to find parts, and we've expanded adoption of My Garage, leading to more personalized shopping on every visit. We will continue to invest in trust to deliver even higher customer satisfaction in the coming quarters.
In addition, we are working on increasing the quality and quantity of supply in Parts and Accessories. We recently acquired myFitment, which helps P&A sellers improve listing quality and growth conversion. We are also directly engaging sellers to add more in-demand parts inventory, including certified green parts, OEM, salvage and highest feed products, keeping our global supply over 500 million live listings.
Collectibles is another focus category where sellers and buyers are responding positively to recent innovation. One of the best examples of this is Trading Cards, where GMV trends remained steady at a trajectory more than double pre-pandemic levels. In June, we launched the eBay vault, a seamless end-to-end physical and digital experience, and have initially opened it for Trading Cards. The vault provides a number of benefits, including instant transfer, authentication, insurance, affordable shipping and tax-free storage. The combination of these features gives enthusiasts an unprecedented level of control to grow the value of their collections. During Q3, we expanded our eligibility for vault items, and we are seeing continued momentum week-over-week and are encouraged by the effectiveness of events and accelerating early adoption. While the vault is in its early days, demand is increasing and more enthusiasts are pre-loading their inventory into the vault to enable faster trading.
In addition to innovation, we are marketing our Trading Cards business across multiple channels. For example, in Q3, we expanded our presence at New York Comic Con to showcase the eBay vault and continued Live Commerce pilots, highlighting brands like Funko and MetaZoo. Another important investment for our Trading Card business is the acquisition of TCGplayer, a trusted marketplace for collectable card game enthusiasts that operates a leading technology platform. I am pleased that we were able to close this transaction earlier this week, ahead of schedule. TCGplayer brings strategic omni-channel capabilities popular with Trading Card sellers, including inventory management tools, order fulfillment and cart optimization. I'm excited to see what we can do together to provide our sellers and buyers over time.
In luxury categories, quarter-after-quarter of innovation has led to higher customer satisfaction and faster GMV growth. This has been true in watches, handbags and sneakers since the introduction of authentication, resulting in higher GMV in every country where we've launched to-date. In Q3, we began authenticating jewelry above $500 in the US, and are seeing similar results as other focus categories, with initial customer satisfaction rates for jewelry buyers over 90%.
Focus category is not the only area where we are investing to drive GMV. Significant site-wide initiatives that impact all sellers and buyers are driving volume benefits across all categories. Multiple quarters of technology investments drove site-wide conversion improvements in Q3. For example, in search, we leveraged new deep learning model to better understand purchase intent, leading to increased conversion at the top of search. In addition, search recall has materially improved for low and no searches, enabling buyers to discover more relevant inventory. These capabilities have rolled out to English and German speaking markets, adding more than $0.5 billion in GMV annually.
SEO improvements are driving better growth across the platform. In focus categories like sneakers, we have built a more modern browsing experience, which is driving benefits to our SEO traffic. We also optimized our sites to allow significantly more items to show up on search engines, increasing visibility to our newest and best-performing listings. For sellers, we've been making investments over several quarters to modernize our technology stack. And I'm excited to announce that we've recently completed the migration of all desktop sellers to a single unified listing experience globally. This transition eliminates multiple legacy tools and enables faster innovation, particularly as we invest in new focus category listing experiences.
There are a number of benefits sellers are already seeing in the new platform. For example, when listing an item, sellers are receiving better price guidance recommendations that are driving conversion in multiple categories. And sellers can now directly upload videos that can showcase items, highlight unique details or answer commonly asked questions.
Sellers are also benefiting from multiple quarters of innovation in advertising. High return on ad spend is leading to increased adoption of Promoted Listings and higher ad rates. In Q3, first-party ad revenue was $249 million, up 27% year-over-year. This was more than 30 points faster than GMV, keeping us on track towards our long-term advertising target, despite volume headwinds from the macro environment. Investments in AI have resulted in improved search algorithm performance and more accurate ad rate recommendations that are increasing conversion. This is one factor driving up adoption of Standard Promoted Listings. In Q3, almost 2 million sellers adopted at least one ad product and our coverage has expanded to over 600 million listings.
Our newer ad products are also driving faster growth, which once again grew double digits quarter-over-quarter. For Promoted Listings Advanced, we expanded availability on search. We also improved the broad match experience and upgraded our recommendation tools, allowing sellers to further optimize their campaigns.
Payments capabilities are increasing trust between sellers and buyers by removing transactional friction. The Buyer FX experience that we released earlier this year is resonating with customers. Close to 70% are adopting it for cross-currency transactions, allowing them to pay in their local currency. We also expanded Klarna availability to buyers engaged in cross-border transactions on our German site. Lastly, our risk team improved checkout conversion by accepting more purchase transactions, while maintaining low-loss levels.
In addition to removing friction for buyers, we are adding more services for sellers. Recently, we announced that sellers can request on-demand payouts through a debit card and receive funds within 30 minutes or less for a fee. New payment services are delivering better customer outcomes and the pace of innovation has put us on track to deliver $300 million in incremental revenue by 2024.
As consumers in our major markets face persistent inflation, higher interest rates and rising home energy costs, they are increasingly turning to eBay for better value. This is leading to growth in GMV of used and refurbished goods. In fact, in a recent survey, we found that more than three-quarters of sellers used eBay to sell pre-owned goods. Recently, we expanded our efforts to support sustainable commerce with a new seller education offering of eBay Academy. Launched across our major markets, our new course teaches sellers how to assess their current practices and understand how eBay can help them operate more sustainably. Sellers are contributing positively to global communities in other ways. During the third quarter, we raised more than $33 million through eBay for Charity. In addition, the eBay Foundation issued grants to 50 non-profit organizations that support inclusive entrepreneurship in communities around the world. These purpose-driven efforts help us drive economic opportunity for all.
Finally, we are excited to announce that tomorrow, we will be publishing our inaugural small business report. This report highlights our progress towards becoming the seller platform of choice. I've spoken to you in the past about how eBay creates access for entrepreneurs, and through our recent small business survey, we found that seven out of 10 sellers say that eBay helped them start their business. We are proud to partner with our sellers, helping them get up and running on our marketplace and providing the tools they need to build, scale and grow their business.
Sellers recognize these efforts, with over a half of all sellers surveyed strongly agreeing that eBay helped their small business grow. As a third-party marketplace, eBay only wins when our sellers win, and we have earned trust from our seller community over time. In this report, 95% of sellers surveyed say they rely on eBay for their business, with almost one-third saying their small business would not exist without eBay. This data helps to reinforce that the investments we are making reflect the role we play in creating and growing small businesses around the world.
Having just come off a number of large seller events in our major markets, we continue to be inspired by our seller community and we are proud to play a key role in helping our customers navigate these challenging economic times. All of this couldn't be possible without our talented and dedicated teams who work so hard to innovate on behalf of our customers. Thank you to the eBay team for all you do everyday for our community.
In closing, the resiliency of our platform yielded better-than-expected quarterly results despite a challenging macro backdrop. Focus categories grew over 7 points faster than the rest of the platform and maintained higher levels of customer satisfaction. We acquired TCGplayer and myFitment to better serve enthusiasts in two of our largest focus categories. Site-wide improvements in search, SEO and selling improved conversion rates. Advertising growth accelerated, while delivering high returns on ad spend for our sellers. Payments innovation enabled more services and further reduced transactional friction and we continued to support our small business sellers, helped raise $33 million for charity and drove close to $1 billion in economic impact through e-commerce. All of these accomplishments contributed towards our long-term tech-led reimagination of eBay.
With that, I'll turn the call over to Steve to provide more details on our financial performance. Steve, over to you.
Steve Priest - Senior Vice President, Chief Financial Officer
Thank you, Jamie, and thank you all for joining us today. I'll begin with highlights from the third quarter on Slide 9 of our earnings presentation. Next, I'll walk through our key operating and financial metrics in greater detail. Finally, I'll provide our outlook for the fourth quarter and some closing thoughts before we begin Q&A. As usual, my comments will reflect year-over-year comparisons on an FX-neutral basis, unless I note otherwise.
Overall, I'm pleased with our third quarter results, as we made significant progress against our long-term objectives, while efficiently navigating a challenging short-term macro-environment. Our GMV, revenue and non-GAAP EPS, each came in above expectations and surpassed the high end of our guidance ranges. Gross merchandise volume declined 5%, improving nearly 9 points sequentially. Revenue was down 2% to approximately $2.4 billion, outpacing volume by nearly 4 points, primarily due to continued momentum within our advertising business.
Non-GAAP operating margin was 28.9%, up modestly quarter-over-quarter, as we continued to invest in our strategic pillars. We delivered $1 of non-GAAP earnings per share, up 11% over the prior year. And we generated $633 million of free cash flow, while returning $421 million to shareholders through repurchases and dividends. Our Q3 results highlight the strength of our scaled marketplace, durability of our financial model and impact of our tech-led reimagination on eBay's underlying growth trajectory.
Let's take a closer look at the drivers of our financial performance during the third quarter. Gross merchandise volume was down 5% year-over-year, but accelerated nearly 9 points sequentially, as easier comps offset a tougher macro environment in Q3. The war in Ukraine, inflationary pressures and rising interest rates continued to weigh on consumer confidence and demand for discretionary goods. In addition, recent currency volatility widened the FX headwind to our reported GMV growth to approximately 6 points in Q3 compared to roughly 4 points in the prior quarter. Despite of these headwinds, our business remains resilient and markedly healthier than when we entered the pandemic, boosted by returns from our investments in focus categories and site-wide innovation across the eBay platform.
Our focus on non-new in-season goods have multiple benefits. It aligns us with the fastest-growing portion of our TAM and extends the life of products. It also makes our marketplace more durable during periods of economic turbulence. Preowned, refurbished, open box and vintage goods are attractive alternatives to brand new items of value-orientated buyer. eBay scale global demand for these goods provides supplemental income to sellers, which can mitigate the burden of their rising cost of living.
Preowned and refurbished goods alone make up over one-third of our GMV, and are growing significantly faster than brand new goods on eBay in recent years. Brand disparity has become more pronounced since the onset of macro weakness [Indecipherable]. GMV from the used and refurb goods has maintained double-digit growth versus 2019 since the start of the pandemic, even if demand for discretionary goods has been pressured in recent quarters.
Our focus category strategy continued to drive underlying growth in our business during Q3. Excluding Trading Cards, focus category GMV outpaced the remainder of our marketplace by over 7 points year-over-year and increased more than 20% versus 2019. In aggregate, our marketplace grew 6% versus Q3 of 2019, primarily driven by faster growth in focus categories, but also supported by relatively stable volumes in other categories.
It's important to note, we've been seeing compelling evidence that other categories are benefiting from our strategy as well. Higher customer satisfaction in focus categories raises trust across the eBay platform. [Indecipherable] engage in cross-category shopping provide a multiplayer effect for our business, and site-wide product improvements have alleviated friction for sellers and buyers across our marketplace. Even amidst a challenging macro environment, our GMV in other categories in Q3 was roughly flat versus the same period in 2019.
Looking at our business on a geographic basis, our US GMV grew 17%, compared to Q3 of 2019 or more than 2 points faster than Q2, aided by slightly easier comps. International GMV was down 3% over the same period, roughly in line with Q2. Although the macro headwinds I outlined earlier are weighing on most global economies, the effects are more pronounced in Europe through September. Consumer confidence remained near historic lows across most of our largest markets, but European consumers remain even more cautious, as they face significant energy price hikes this winter. The labor strikes accompanied by rising cost of living, also threaten the region's near-term outlook. Despite these headwinds, growth in focus category volume modestly outpaced other categories internationally in Q3.
EBay's strong value proposition in Parts & Accessories are not taking countercyclical resale products contribute to this delta. However, the economic situation in Europe has also fueled strength in other categories, which narrowed the relative growth gap in Q3. For example, demand for home energy products in Germany has temporarily surged, as consumers cope with rising utility prices and the uncertainty of energy availability as they head into winter months.
Moving to active buyers. A 135 million active buyers shopped on eBay during the trailing 12 months, including 2 million buyers from our Turkish business, where we ceased operations in July. Active buyers, excluding Turkey, were down 2 million quarter-over-quarter, a more modest step down from prior quarters. Notably, close to 90% of our buyers who churned in Q3 were low-value buyers. Enthusiast buyers accounted for approximately 17 million of our active buyers in Q3. Downward migration between the enthusiast and mid-value buyer groups decelerated as lapping headwinds eased. Macro pressure may continue to cause migration between buyer groups in the short term, but average spend per enthusiast grew sequentially and continues to be healthy at over $3,000 per year, up double digits versus 2019.
Turning to revenue. Net revenue was down 2% to approximately $2.4 billion during the third quarter, an acceleration of nearly 5 points, compared to Q2. Our transaction take rate was 12.8% in Q3, an increase of nearly 40 basis points sequentially and close to a 100 basis points versus the prior year. Advertising was the primary driver of our take rate increase, both sequentially and year-over-year. Recent foreign currency volatility was also a significant driver of the increase versus Q2, as reported GMV growth was more impacted by FX headwinds than revenue due to our hedging practices.
Total advertising revenue grew 22% during the quarter, while first-party ads grew 27%, outpacing volume by more than 30 points. This marked an acceleration of more than 10 points versus the GMV delta in Q2, as both Promoted Listings and total ads eclipsed the double-digit growth we have anticipated. This strong result was primarily driven by continued optimization of our Standard Promoted Listings product, along with ramping contributions from our newer ad products, which continued to grow adoption and evolve their capabilities.
Although our ad growth benefited from some one-time changes and a significant portfolio expansion this year, we are pleased that our ad business remains on track to roughly double by 2025 despite a tougher macro environment that we had contemplated back in March. As expected, advertising surpassed managed payments as the primary driver of our take rate growth, as the payments migration is nearly complete in Q3 of last year. Payments contributed roughly 10 basis points of our sequential take rate increase due to the ramp of new payment services. We are pleased these additional services remain on track to meet the $300 million target we discussed at Investor Day.
Moving to profitability. Non-GAAP operating margin was approximately 28.9% in Q3, up nearly 30 basis points sequentially, but down close to 3 points year-over-year. Gross margins were roughly in line with the prior year, while sales and marketing and product development were notable areas of investment, as we continued to invest in our focus categories and site-wide product expansion. We delivered $1 of non-GAAP EPS in Q3, up 11%, which is ahead of expectations due to volume upsizing cost efficiency. We generated a GAAP loss per share of $0.13, primarily driven by losses on our investment portfolio due to ongoing market volatility.
Turning to our balance sheet and capital allocation. Free cash flow grew 26% to $633 million in Q3, largely due to the timing of working capital items. Our balance sheet position remains strong, as we ended the quarter with cash and non-equity investments of $4.8 billion and gross debt of $7.7 billion. We repurchased roughly $300 million of shares at an average price of approximately $44 during Q3 and have more than $3.1 billion remaining under our current authorization. We paid a quarterly cash dividend of a $120 million in September or $0.22 per share. Year-to-date, we've returned over $3.2 billion to shareholders through repurchases and dividends or roughly double our free cash flow. Although our share repurchases are elevated during the first half of the year due to our excess cash position, our capital allocation philosophy remains unchanged. Earlier this week, we closed our acquisition of TCGplayer ahead of schedule for a total consideration of up to $295 million in cash. We are excited to have the team on board and expect them to accelerate innovation in our collectibles categories.
Our investment portfolio is detailed on Slide 19 of our investor presentation. Our equity investment stake are valued at approximately $3 billion at the end of Q3. Our $405 million Adevinta shares was valued at roughly $2.4 billion. We saw the remainder of the Adyen shares acquired through the first tranche of warrants for approximately $120 million in Q3. Our remaining Adyen investment is calculated based on the estimated value of our remaining warrant tranches. As always, we continued to manage our investment portfolio with the goal of maximizing shareholder value.
Moving on to our outlook. Despite our resilient performance in Q3, the macro environment remains dynamic and difficult to predict. Consumer confidence remains near historic lows across our major markets, while the effects of the energy crisis in Europe may worsen as temperatures fall during the fourth quarter. Recent and upcoming Royal Mail strikes in the UK and other industry workforce disruptions across the region has incremental risk during the holiday. And despite the relative strength of the US consumer through September, prolonged exposure to decades high inflation appears to be softening demand in [Indecipherable] as well.
In October, growth in our US volume slowed by several points versus our 2019 [Indecipherable]. In addition, recent declines in the Euro and Sterling led to an incremental FX headwind of approximately $300 million in Q4 GMV versus our prior outlook. Our hedging program should mitigate much of the incremental FX impact to revenue, operating income and EPS within the fourth quarter.
For Q4, we now expect to generate between $17.5 billion and $18.1 billion of GMV, representing an FX-neutral decline between 9% and 6% with an FX headwind to spot growth of roughly 7 points. We anticipate revenue between $2.42 billion and $2.5 billion, equating to a decline between 4% and 1% year-over-year. We forecasted non-GAAP operating margin between 29.7% to 30.3%. We expect to deliver non-GAAP earnings per share between $1.03 and $1.09, which were negative 2% and positive 4% year-over-year growth.
As the duration of severity of the current macro headwinds remain uncertain, recent trends suggest it's increasingly likely they will represent a meaningful headwind to our business well into the coming year. Additionally, if the strength of the US dollar is hold at today's rates, FX would represent an estimated headwind of 3 points to year-over-year GMV growth in 2022. We would also face a 5 point to 6 point headwind in non-GAAP earnings per share next year.
In closing, Q3 was another strong quarter for eBay. We exceeded expectations for GMV, revenue and EPS, despite an increasingly challenging macro environment. Our marketplace remains resilient in the face of inflationary pressures, and our non-new in-season focus enables to offer consumers low-cost alternatives to brand new products. Our advertising business accelerated meaningfully, while new payment services are scaling in line with expectations, providing incremental capacity for investments. Our fortress balance sheet, differentiated scale and durable financial model enable us to mitigate the margin impact of recent macro pressure, protect investments in our core strategic initiatives and generate healthy earnings and cash flow. And we've returned roughly double our free cash flow to shareholders through repurchase and dividends this year, alongside inorganic investments to accelerate our strategy. Finally, I'm incredibly appreciative of how our employees have maintained their focus and support of our community during this challenging times.
With that, Jamie and I will now take your questions.
Operator
[Operator Instructions] Your first question comes from the line of Doug Anmuth with JPMorgan. Your line is open.
Douglas Anmuth - JPMorgan - Analyst
Thanks for taking the questions. I know you talked about doing more full-funnel marketing in the focus categories. Just curious about some of the results that you're seeing there, and then how you've expanded those efforts more materially to some other categories as well? And then, if you could just comment on the buyback as well, smaller number than what we've seen in - in the recent quarters? If there's any commentary you can add there? Thank you.
Jamie Iannone - President and Chief Executive Officer
Yeah. Hi, Doug. I'll take the first one. So a part of our strategy and the shift on our marketing was really to approach this full-funnel marketing and move away from just kind of lower-funnel optimization, and that's worked out really well for us. So, if you look, for example, at P&A, we're seeing good strength in P&A. We're approaching market growth rates in what we're doing there. And importantly, we're driving consideration. And that whole strategy has really been around not just going after, you know, buyers, but going after enthusiast buyers.
It's why you see us in the parts shows, in the, you know, sponsoring, like I talked about, the UK MTV reboot, is really aimed at that. And so we started that playbook with sneakers and some of our luxury and it worked well. We've been expanding it to P&A. And so we're continuing to look at it because what we're seeing is it changes initial consideration for those categories and then we get the multiplier effect that I talked about at Investor Day, plus it makes the lower funnel work harder, work easier with the support of the upper funnel.
Steve, do you want to take the one on buyback?
Steve Priest - Senior Vice President, Chief Financial Officer
Yeah, of course. Hi, Doug. I hope all is well. Yeah, we continued to demonstrate our commitment to returning excess cash to shareholders. We've been doing this extensively over the last number of years, and we'll continue to do so. I wouldn't be looking at this on a quarter-to-quarter basis. In fact, if you look year-to-date, we're tracking well ahead of the targets we laid out at our Investor Day. While we're committed to return a 125% of the free cash flow, year-to-date, we've returned $3.2 billion or 200% of our free cash flow. So buybacks and dividends will continue to be a core component of a value creation for our shareholders and I'm pleased with where we are.
Douglas Anmuth - JPMorgan - Analyst
Thanks, Jamie and Steve.
Operator
Your next question is from the line of Eric Sheridan with Goldman Sachs. Your line is open.
Eric Sheridan - Goldman Sachs - Analyst
Thanks so much for taking the questions. Maybe two if can. First, you know, curious what is embedded in the guidance in terms of the macro-environment changing Q4 versus Q3? Are you willing to give us some sense of the bottom end of the range versus the top of the range? And maybe some elements of how the macroeconomic volatility might push you in one direction or another as you look out over the next couple of months? And then looking beyond just one quarter forward, if - if the macroeconomic activity did become more volatile, how should we be thinking about those investments that you want to make next year, whether it's enthusiastic buyer growth or focus categories that are must investments, where you're willing to make them irrespective of the margin impact in a - in a downward economic activity environment versus elements of where you can pull on levers to sort of manage margin outcomes if the overall volumes were slow? Thanks so much.
Steve Priest - Senior Vice President, Chief Financial Officer
Hi, Eric. Hi. Good afternoon. Steve here. I'll pick this up. So as you would imagine, we've taken a very balanced and thoughtful approach to our Q4 guide. It's an incredibly dynamic macro-environment that we're navigating through. So there's a number of factors that I'd highlight. The first one would be the underlying consumer environment. That obviously continues to be pressured. We've seen that for several quarters in Europe. And in October in line with the prepared comments, we began to see US consumer demand start to weaken. And secondly, we do expect further energy challenges as we enter the winter and we're also facing labor challenges in Europe, particularly the Royal Mail, who are - who got a series of strikes in the UK. And then thirdly, we are seeing the impact of currency. The US is, obviously, particularly strong against the euro and sterling, which is impacting both our forecast and our reported results.
So, what I would say in terms of the fourth quarter, given the uncertainty in this environment, we have purposely given a wider range of potential outcomes. But really, the - where we ultimately land in the quarter will be a function of the macro-environment and how that goes forward. Specifically, as we think going forward in terms of investment, I think that's the beauty of the eBay architecture and the durability of our financial model. We've continued to lean-in in the short term to drive operational effectiveness as we think about our business. And that sort of manifests itself in cost savings as we go through.
Secondly, the business continues to be fueled by the ad strength that we saw in the third quarter and the momentum that we're seeing, and the investments that we're making in payments. As we think about going forward, we will continue to invest in the core business and we will protect that, as we navigate the forthcoming quarters to continue to drive further strategy and protect the long-term growth of the enterprise. That's what we've done for the last few quarters and it's something we'll continue to do, and our financial architecture enables us to do that.
Eric Sheridan - Goldman Sachs - Analyst
Appreciate that color. Thank you.
Operator
Your next question is from Colin Sebastian with Baird. Your line is open.
Colin Sebastian - Baird - Analyst
Thanks and good afternoon. And I guess, first off, I want to go back to the comment, I think, Jamie, you made it around cross-category shopping from - from focus over to non-focus categories. I was hoping you could dig into that a little bit more with respect to how large an impact that's having and if that's something that will pick up speed in coming quarters. And then, maybe regarding the October trends in the US, does that suggest that some of the resiliency of the platform in non-new in-season that you mentioned in Europe that - maybe that's not as applicable in the US market or is it just a matter of timing with respect to when these geographies are weakening? Thanks.
Jamie Iannone - President and Chief Executive Officer
Yeah. So first thing I'd say is that we are seeing strength in our refurbished and used. It's about a third of our GMV and that's up double digits versus 2019, so in terms of the consumer reacting to the challenging economic times. You know, in terms of the cross-category that we laid out in March, we continued to see that and the metrics are very helpful as we think about the CACs we can afford to pay - to pay and how we leverage our focus categories across the business. So if I take the example of a - of a sneakers buyer, an average buyer who buys a $100 pair of sneakers, they'll spend about $500 on sneakers, but $1,900 outside of sneakers and other categories.
If I look at that number for handbags, we just expanded what we're doing in handbag authentication. A buyer who buys over $500, they'll spend $2,500 in handbags, but $5,000 in the other categories. So that is really key for us when you think about our strategy that we laid out at Investor Day with really driving focus categories. Part of the propping up of non-focus in addition to the horizontal work that we're doing is the impact of the cross-category shopping when we bring a buyer into - to focus categories. So we're doing more and more programs to help make that available to buyers and accelerate that, but we feel really good about the stats of what we're seeing there.
Steve Priest - Senior Vice President, Chief Financial Officer
Colin, I'll pick up the other one. Specifically, your question about the US, as we get into the fourth quarter and the holiday season, it's pretty broad-based. And I continued to be pleased to see the delta between our focus category penetration and momentum versus non-focus categories based on the investments that we're making. But as we - as we look forward, as we look into October, it's pretty broad based across all the categories that we have on the platform.
And one of the things I would say on an international basis, we are seeing some non-focus category momentum in Germany, in particular, as the German community continues to be concerned about energy availability as we get into the winter and we're seeing pockets of non-focus category inventory get some momentum on the platform. But overall, I think all this is a reflection of the broader macroeconomic climate that we're operating within.
Colin Sebastian - Baird - Analyst
Great. Thanks, guys.
Operator
Your next question is from the line of Stephen Ju with Credit Suisse. Your line is open.
Stephen Ju - Credit Suisse - Analyst
Okay. Thanks, guys. So can you talk about generally cross-border activity, I guess, on the back of the stronger US dollar versus almost all other global currencies? And I know there is a natural hedge there, but are there certain larger corridors or categories, which might be giving you an outsized headwind or a tailwind? Thanks.
Jamie Iannone - President and Chief Executive Officer
Yeah. So, you know, a couple of things I'd say. One is, you know, there's been some easing of the supply chain as demand has come down, which has certainly helped from that perspective of our sellers. And obviously, currency differences make an impact in terms of certain corridors are stronger depending on the strength of any given currency. But we're leaning into the opportunities in cross-border trade and I'd highlight two specific things. One is that we've actually, with the rollout of Buyer FX, made it easier in terms of currency choice for the buyer to buy in their local currency or in their - in the currency of the seller. And we've seen a 70% adoption of that and it's been performing well. We expanded that now into 38 currencies.
And the other thing that we're doing is making it easier, starting with our US business, to do exports and execute exports on the business. So we've had a global shipping program for quite some time to make it easier. But the new enhancements that we're making or attempting to make it as easier to ship from, you know, Northern California to Southern California as shipping an international product off to, you know, Central America and really taking the friction out of that for - for our sellers. So those are the things that I would highlight in terms of the focus of what we're doing on a - on a cross-border business.
Stephen Ju - Credit Suisse - Analyst
Thank you.
Operator
Your next question is from the line of Deepak Mathivanan with Wolfe Research. Your line is open.
Deepak Mathivanan - Wolfe Research - Analyst
Great. Thanks for taking the questions and apologies if this was asked before. Sorry, I was jumping around a few calls. I know you called out the outperformance of focus categories versus the rest, and that's encouraging to see trends in the right direction. But can you give additional color on what the growth is on some of the larger focus categories inside that, you know, generic term? With some of them now kind of a few months under the new experience, how do you feel about these efforts helping with sustainable long-term growth in them? And then maybe a second question. Can you also provide some additional color on how currency weighs on your margins? Is there a sort of a framework to think about how some of the key currencies like euro, maybe on a sensitivity basis, could weigh on percentage of margin points? Thank you so much.
Jamie Iannone - President and Chief Executive Officer
Yeah. So first on focus categories, we're pretty pleased with the performance that we're seeing across the board. And I'd highlight a couple of things. First of all, our trading cards business continues to be at twice the volume it was coming into the pandemic. And when I look at Parts & Accessories, the work that we're doing around fitment and specifically around driving initial consideration is helping us move towards market rates of growth there. And as we highlighted at our Investor Day, it's a huge category of over $10 billion of GMV.
The other thing that I would highlight is that as we've expanded the playbook from the US to international, we're seeing the same type of impact that we saw in the international markets as we saw in the US. So if I look at our luxury categories, this is sneakers, watches and handbags. We're seeing double-digit year-over-year growth in those categories internationally and higher customer satisfaction, similar to what we saw in our - in our US market. So we're continuing to lean in. You saw our recent announcement of jewelry and authenticating jewelry over $500. That's led to customer satisfaction over 90%. And we're going to continue to push forward and roll out additional categories and continue to improve in the focus categories that we've already launched.
Steve, do you want to take the currency?
Steve Priest - Senior Vice President, Chief Financial Officer
Yeah. Hi, Deepak, and good afternoon. And first - first on the highlights on the short term. And we have a great track record here at eBay of managing FX volatility. And the teams did a really nice job. And that obviously, GMV is an operational metric and that is not - that continues to be exposed and is not insulated from changes in exchange. But quarter-to-quarter, we continued to hedge ROI, revenue and EPS. And so the quarter-to-quarter impacts are rather de minimis.
And what we've called out today is about the longer term. So if the US dollar remains in a strong position it is today and that continues through 2023, there is a natural challenge that you would incur as you get into 2023 because it's much further out from a hedging standpoint. And we would expect that headwind to be approximately 3 points on GMV and between 5 points and 6 points to EPS, which obviously, from that perspective, because product is going to be revenue would have an implication on margins. And really, that's a reflection if the US dollar remained at its current state versus the Euro and Sterling.
Deepak Mathivanan - Wolfe Research - Analyst
Got it. Thank you so much.
Operator
Your next question is from the line of Curtis Nagle with Bank of America. Your line is open.
Curtis Nagle - Bank of America - Analyst
Hi. Good afternoon, and thanks very much for taking the question. And so I wanted to dig a little bit more into these strong advertising numbers in the quarter. And I guess, just what drove the incremental improvement from 2Q, right? So you guys have rolled out a number of initiatives with the Promoted Listing Advanced and a few other things. Did that pick up more? Or was it perhaps sellers maybe trying to get a little bit more visibility through your platform in a retail backdrop that's just a little more competitive and a little bit more promotional? What's driven that improvement?
Jamie Iannone - President and Chief Executive Officer
Yes. So look, we're really pleased with the performance of the ads revenue up 27% year-on-year on an FX-neutral basis. I'd say the reaccelerated growth is really driven by two factors. One is just the optimization of our Promoted Listing Standard that improved search algorithm performance, and we created more accurate ad rate recommendations that help us increase conversion. And the second is just the ongoing contribution from our newer ad products. Our three new products contributed double digits quarter-on-quarter.
So certainly, in Q3, it had some one-time step-ups from - from the product optimization and from that portfolio expansion of three new products, the external, advanced and our other products. But when I think about it, the thing that makes me bullish on our - on our product is when I think about the ROAS, we're still having a really healthy ROAS. And so the benefit of - to our sellers is, you know, it continues to be healthy. So we're on track to meet our stated goals of doubling our ads business by 2025.
Curtis Nagle - Bank of America - Analyst
Okay. Thanks. That's really helpful. Appreciate it.
Operator
Your next question is from the line of Youssef Squali with Truist. Your line is open.
Youssef Squali - Truist Securities - Analyst
Hi, great. Thank you very much. Two questions for me, please. One, at Analyst Day, you guys presented some targets. I think it was mid-single digit GMV growth in 2023, 2024, and total margin expansion of about 100 bps 2022 to 2024. I know a lot happened since then already. Just wanted to - to get a sense from you guys, sitting where you sit right now on the back of this performance, if you think those targets are still achievable?
And second, on the M&A, I was wondering, Jamie, maybe if you guys have any interest in expanding further into the use of luxury apparel maybe through M&A, just given some depressed valuations for some of the - the players that we've seen out there. I think through the acquisition of TCG, you guys now have some fulfillment - order fulfillment capabilities. Wondering if doing the same thing in luxury apparel could be attractive to you? Thank you.
Steve Priest - Senior Vice President, Chief Financial Officer
Hi, Youssef. I'll - I'll pick up the first one. And we remain confident in the long-term goals that we laid out at our Investor event back in March. And the strategy is clearly working. We're coming out of the pandemic in a much stronger position than we went into it. GMV is continued to be fueled in our focus categories by the investments we continued to make. The payments entity within our enterprise has continued to deliver and we're well on track for the $300 million that we laid out back in March. And as you've heard from our prepared remarks, our advertising business is - is moving very strongly. And so I'm very encouraged by the investments we're making in the long-term strategy and how that's getting executed.
The timing of the delivery of the goals that we laid out is really going to be a function of the macro environment in which we're operating in. See, you know, it's very, very clear in terms of the severity of the headwinds that are going through, it's likely to continue to impact us in 2023. As we've talked about, we expect that to sort of go into the next year. But really, it's around that severity and duration that will imply the timing of when we get to those long-term targets that we continue to be confident in. So…
Jamie Iannone - President and Chief Executive Officer
And let me just take the M&A one. Yeah, M&A has been and will continue to be a key part of our strategy. I've talked about the Build By Partner framework that we have. And as you noted, TCGplayer was really about helping us in a core category of collectibles and specifically in collectible Trading Cards, giving us new capabilities and tools and access to local hobby shops. I'd also point to myFitment, which I've talked for two quarters now about the importance of Fitment, building trust in the Parts & Accessories category, and so excited by that one. So you should expect us to continue to look at key areas such as vertical expansion or boosting our core strategy, tech and talent and then opportunities to expand our overall capabilities. Always doing it in the framework that I've outlined to Build By Partner that we think has the best return for shareholders.
Youssef Squali - Truist Securities - Analyst
Great. Thank you both.
Operator
Your next question comes from the line of John Blackledge with Cowen. Your line is open.
John Blackledge - Cowen & Company - Analyst
Oh, great. Thanks. Two questions. First, how are the enthusiast buyers holding up in the current macro-environment? Have you noticed any changes sequentially, call it, 3Q versus 2Q or versus 1Q? And then second question, kind of a follow-up on the advertising business. Should we think that the ads will grow through these challenging macro headwinds in 4Q and into 2023, similar to the strength that we saw in the third quarter? Thank you.
Jamie Iannone - President and Chief Executive Officer
Yeah, so on enthusiast buyers, in Q3, we had 17 million enthusiast buyers, which was relatively flat to Q2. And so the way you think about that is we're no longer facing the tough lapping from our comps related to the COVID dynamics. But we do expect some pressure on that count in the coming quarters as a result of the current macro-environment. But when we look at it, the vast majority of enthusiasts remain active buyers. It's just a movement between mid-value and enthusiast buyers. And for us, enthusiast buyers is a very healthy spend. If you think about the average spend of that being $3,000 a year, that's up to like membership level spend. So over the - over the next few years, we expect enthusiast buyers to continue to grow and spend more as we continue to execute on our strategy. As I talked about, their spend is up double digits versus 2019, so really healthy.
So - and the other thing I'd say on the ad business is we don't expect it to be linear quarter-to-quarter. But we've been enhancing and adding new products. I talked about the quarter-over-quarter growth that we're seeing in our new products. So we're on track to $2 billion. As I said, there were some one-time step-up things that we saw in Q3. But overall, our ROAS is healthy. I mentioned the statistics on the call that, you know, we now have 2 million sellers who have purchased at least one ad product in their listing, which is healthy. So we feel - we feel right on track with the goals that we outlined back in Investor Day.
John Blackledge - Cowen & Company - Analyst
Thank you.
Operator
Your next question is from the line of Richard Kramer with Arete Research. Your line is open. Richard Kramer, your line is open.
Richard Kramer - Arete Research LLP - Analyst
Sorry, I was on mute. Jamie, in your - in the recent FT interview, you basically raised the white flag about talking about in-season, new in-season goods and not competing with some of the bigger players. Can you give us a sense of what proportion of GMV these still represents as you're transitioning the business to the enthusiast focus category as you mentioned? And then also, just to dig in a little bit on the algo changes you made and that led to the acceleration in advertising, can you quantify or track what sort of GMV resulted from the incremental $40 million your sellers would have invested in ads this quarter? Are you able to directly see that, that advertising investment that gets made is lifting GMV in some material way? Thanks.
Jamie Iannone - President and Chief Executive Officer
Yeah, so on the first question, when we think about the non-new in-season, it represents about 90% of what we sell on the platform. So that's both used and refurbished and think N minus 1 last year's fashion, white-label goods, all of those types of things. So the majority of what we sell is actually in the non-new in-season business that we have on the platform. The stat that I talked about earlier is that one-third of our business is - about one-third of our GMV is used and refurbished, and that's actually accelerating faster given the - given the ties that we see.
In terms of the advertising money that our - that our sellers are spending, the majority of what we collect is via our CPA-based program, which is Promoted Listing Standard, which is a direct attribution program. So as - as we're able to drive incremental sales for them, we monetize that. So we've added the new products like the CPC-based products in Promoted Listings Advanced. But what we're doing from a CPA standpoint has a direct tie to GMV. I would say the same is true for our Summer Program, which is partnering with our sellers to drive external traffic to their listings on eBay, which as I said before, sellers are seeing a really good ROAS on our platform, especially relative to other places that they can market their products.
Richard Kramer - Arete Research LLP - Analyst
Okay, thanks.
Joe Billante - Vice President of Investor Relations
Thank you. Operator, we have time for one more.
Operator
Your final question comes from the line of Sean Dunlop with Morningstar. Your line is open.
Sean Dunlop - Morningstar - Analyst
Great, thanks for squeezing me in. So a lot of my questions have been asked, but just trying to think a little bit about GMV sensitivity and potential consumer trade down. So for the 3P marketplaces, it can sometimes be a little bit tougher for us to see. But I'm wondering if you could indicate how much pricing sellers have taken on the eBay platform even if that's just truly ASP? And if that potentially improves the eBay value proposition on a relative basis?
And then, my second question would be about 32% of GMV from used and refurb goods that you talked about, Jamie. I'm just curious how that held up in the last big downturn maybe in 2007 to 2009? I appreciate it.
Jamie Iannone - President and Chief Executive Officer
Yeah. So I'd say in general, we're not immune to the macro impact. And so Steve talked earlier in his remarks about we think there'll be likely meaningful headwinds into 2023. But we do have a more resilient business model because of the shift in focus of moving towards non-new in-season and refurbished. And so that 32% is growing faster than the rest of the site. And I'd just say, in general, value is a key tentpole for our buyers on the site, and we're continuing to push it.
From some perspective, I think this is a double win for us because we've been pushing Recommerce, ReLove, et cetera, as part of our massive ESG efforts that we have on the - on the platform and really being the pioneers of Recommerce and saving products from the landfill, et cetera. And now where consumers want to value, we're seeing a real willingness to purchase there. The last thing I'd say is that Gen Z is much more inclined to buy pre-owned and pre-loved goods, and so we're leaning into that trend. So it's great to see that from the value standpoint. It's also great in terms of the ESG impact that it has in the business. I'd like to say that ESG is so core to eBay that we should be in every ESG fund because of the importance of it and the role we play in Recommerce. But that's – that's how I would kind of characterize where we are today, and I think what we'll see into the coming quarters.
Sean Dunlop - Morningstar - Analyst
Great. Thanks. Very helpful.
Jamie Iannone - President and Chief Executive Officer
Thanks, Sean.
Operator