EBAY Q2 2025: Ad Revenue Rises 17%, GMV Drives Margin Leverage
- Innovative AI & Listing Technologies: eBay’s integration of generative AI into its listing process—evidenced by over half a million daily listings using AI and the continued double-digit growth in its total listings (currently at 2.4 billion)—reduces friction for sellers and is expected to sustainably boost quality inventory on the platform.
- Strength in Focus Categories and eBay Live: The strong performance in focus categories, including over 10% growth in collectibles and a robust trading cards market, combined with the expansion of eBay Live (with growing buyer engagement across categories like luxury watches and pre-loved apparel), forms a solid foundation for sustainable GMV expansion.
- Robust Advertising Revenue Growth: The Q&A highlighted first-party ad revenue growing 17%, with a clear path to increase ad penetration from 2.5% to 3% of GMV. This demonstrates eBay’s success in leveraging AI to refine ad effectiveness, which could significantly enhance top-line growth and operating margins.
- Tariff and Trade Policy Risks: eBay experienced some material disruption from tariffs—such as elasticity breakage and adjustments in Greater China—raising concerns that further tariff increases or elimination of de minimis exemptions could adversely impact gross margins and seller behavior.
- Dependence on Volatile Focus Categories: While focus categories like collectibles and trading cards drove strong growth, their performance has historically been uneven due to release cycles and product-specific momentum, indicating that weak periods could hamper overall GMV growth.
- Challenges in International Markets: International segments, particularly in Europe, face a tough macro environment with low consumer confidence, high inflation, and stagnant GDP growth, which may hinder expansion and offset growth from the robust U.S. market.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Gross Merchandise Volume | Q3 2025 | no prior guidance | Expected between $19.2B and $19.6B with FX‐neutral growth of 3% to 5% | no prior guidance |
Revenue | Q3 2025 | no prior guidance | Expected between $2.69B and $2.74B with FX‐neutral growth of 3% to 5% | no prior guidance |
Take Rate | Q3 2025 | no prior guidance | Expected to remain roughly flat sequentially | no prior guidance |
Non-GAAP Operating Margin | Q3 2025 | no prior guidance | Expected to be between 26.6% and 27.1% | no prior guidance |
Non-GAAP EPS | Q3 2025 | no prior guidance | Expected between $1.29 and $1.34 | no prior guidance |
Tariffs and Trade Policies | Q3 2025 | no prior guidance | Guidance contemplates potential disruptions from impending tariffs and the elimination of de minimis exemptions | no prior guidance |
GMV Growth | FY 2025 | Expected to be low single‐digit on an FX‐neutral basis | Tracking towards the high end or slightly above prior expected range of low single‐digit FX‐neutral growth | raised |
Revenue Growth | FY 2025 | Forecasted to be modestly higher than GMV on an FX‐neutral basis | Expected to grow modestly higher than GMV on an FX‐neutral basis | no change |
Non-GAAP Operating Income Growth | FY 2025 | Expected to be relatively in line with FX‐neutral revenue | Expected between 4% to 5% year over year | no change |
Capital Expenditures | FY 2025 | Expected to be between 4% and 5% of revenue | Forecasted to be between 4% and 5% of revenue | no change |
Non-GAAP Tax Rate | FY 2025 | Expected to remain stable at 16.5% | Expected to remain stable at 16.5% | no change |
Free Cash Flow | FY 2025 | Normalized free cash flow expected to be comfortably north of $2B, excluding unique tax items | Reported free cash flow expected to be approximately $1.5B (with a headwind of $935M) and, on a normalized basis, comfortably north of $2B | no change |
Share Repurchases | FY 2025 | Targeting at least $2B | Targeting approximately $2.5B | raised |
Quarterly Dividend | FY 2025 | Declared a quarterly dividend of $0.29 per share for Q2 | Quarterly dividend of $0.29 per share declared for Q3 | no change |
Non-GAAP EPS Growth | FY 2025 | Expected in the high single digits | Expected growth of 10% to 12% year over year | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Innovative AI & Listing Technologies | In Q1 2025 and Q4 2024, eBay emphasized AI-powered listing flows, magical (bulk) listing tools, enhanced discovery features (including for fashion), and the rollout of proprietary AI platforms and architectures to drive operational benefits and customer satisfaction. | In Q2 2025, eBay focused on generative AI for listings, introduced an improved magical listing tool with image enhancements, launched an AI shopping assistant, and advanced AI in advertising to further reduce listing friction. | Continued focus with expanded functionalities: The sentiment remains bullish as eBay builds on previous AI innovations, now placing additional emphasis on generative AI and enhanced advertising capabilities. |
Focus Categories & eBay Live Expansion | Across Q1 2025 and Q4 2024, eBay’s discussions highlighted strong performance in focus categories—especially collectibles, trading cards, fashion, and motors parts—with strategic geographic initiatives and early efforts on eBay Live, including improved seller tools and case break technology. | In Q2 2025, eBay reported robust growth in focus categories with trading cards leading and additional initiatives in luxury and pre-loved segments, alongside significant enhancements and expansion of the eBay Live experience. | Robust and expanding: The emphasis on focus categories and eBay Live remains consistent and positive, with broadened product adoption and geographic expansion boosting sentiment. |
Advertising Revenue Growth | In Q1 2025 and Q4 2024, advertising revenue was underscored through strong first-party growth, adoption of Promoted Listings products, AI-driven dashboard innovations, and improvements in CPA/CPC products, contributing to steady revenue increases. | In Q2 2025, eBay highlighted a 17% growth in first-party advertising revenue with continued expansion of active Promoted Listings and additional optimizations leveraging proprietary models and LLMs for better ad targeting. | Consistent upward momentum: The focus on ad revenue growth remains strong and is enhanced by further adoption of AI-driven ad tools, signaling ongoing improvement and optimization. |
Tariff and Trade Policy Risks | In Q1 2025 and Q4 2024, eBay addressed tariff and trade policy impacts by discussing rising uncertainty for small businesses, cross-border trade complexities, and strategies such as the SpeedPack/SpeedPAK program to integrate tariff costs, while acknowledging moderate impacts and providing cautious guidance. | In Q2 2025, eBay reaffirmed its resilience to tariff shifts, noting minor elasticity breakage in Greater China and emphasizing geographic diversification and ASP uplifts to offset impacts. | Cautiously resilient: The tone remains mixed but stable, with proactive mitigation measures and geographic diversification helping to manage trade policy risks. |
International Market and Macroeconomic Challenges | In Q1 2025 and Q4 2024, eBay reported international GMV growth (around 3% FX-neutral in Q1 and over 3% in Q4) but noted headwinds from weak consumer confidence in key European markets, notably the U.K. and Germany, along with macro uncertainties that impacted demand forecasts. | In Q2 2025, international GMV growth was reported at nearly 2% FX-neutral, with significant investments in the U.K. and Germany helping to mitigate a challenging European macro environment, though challenges from tariff changes slightly disrupted shipments from Greater China. | Cautiously adaptive: While macro challenges, especially in Europe, persist, strategic investments and geographic adjustments continue to help sustain moderate international growth. |
GMV Growth Sustainability Concerns | In Q1 2025 and Q4 2024, eBay highlighted several quarters of positive GMV growth driven by focus categories, operational enhancements, and strategic investments, while also noting external risks such as tariffs and uneven demand, which were acknowledged with measured optimism. | In Q2 2025, eBay emphasized the role of active and enthusiast buyers along with focus category success and geo-specific initiatives to sustain GMV growth, with leadership expressing positive long-term outlooks despite external headwinds. | Optimistic yet vigilant: The company continues to see a sustainable pathway driven by active buyer engagement and strategic initiatives, maintaining confidence while monitoring external pressures. |
Offline Inventory Activation | Not mentioned in Q1 2025 or Q4 2024 earnings calls [N/A]. | Not mentioned in Q2 2025 earnings call [N/A]. | Not applicable: This topic has not been raised in any period. |
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Margin Leverage
Q: Does GMV growth lift margins naturally?
A: Management explained that as GMV increases, operating leverage improves margins by driving higher operating income while balancing top‐line investments. -
GMV Drivers
Q: What fuels sustainable GMV growth?
A: They highlighted that strategic investments in focus categories, C2C initiatives, and horizontal improvements are propelling GMV growth, with focus categories reaching about 10% growth. -
US Market Strength
Q: Why is the US market outperforming international?
A: Management noted robust US consumer demand versus softer European conditions, where low consumer confidence and stagnant GDP are challenges. -
Category Performance
Q: Which categories consistently show high growth?
A: The team pointed to collectibles, trading cards, and P&A, with trading cards often enjoying double-digit gains and strong long-term fundamentals. -
Listings & Acquisitions
Q: Are listings and acquisitions boosting growth?
A: They reported double-digit listing growth and emphasized new capabilities, including AI-powered listings and the Caramel vehicle business, as key expansion drivers. -
Marketing & AI
Q: How is marketing efficiency enhanced by AI?
A: Management described a well-rounded, full-funnel approach where AI-driven personalization has increased listing quality and buyer engagement, reducing reliance on lower-funnel paid search. -
Advertising Revenue
Q: What underpins sustained ad revenue growth?
A: Robust first party advertising—up 17%—combined with AI enhancements is driving improved ad penetration and long-term durability. -
Tariff Impact
Q: How have tariffs and de minimis changes affected performance?
A: While higher tariffs limited direct shipments from China, strategic offsets via forward-deployed inventory and market diversification kept overall impact modest. -
eBay Live Opportunity
Q: How significant is eBay Live for future growth?
A: Early signals from eBay Live show strong community engagement across categories like luxury and collectibles, hinting at incremental GMV potential. -
Buyer Base Role
Q: How crucial is the active and enthusiast buyer segment?
A: Management stressed that enthusiast buyers contribute around 70% of GMV, underlining the importance of attracting and retaining this core group.
Research analysts covering EBAY.