eBay Inc. (NASDAQ: EBAY)

eBay’s Q2 2025 revenue performance demonstrated resilient growth momentum, with total revenue increasing 6% year-over-year to $2.7 billion. On a foreign exchange neutral basis, revenue grew 4%, indicating the positive impact of currency translation during the quarter. This growth was driven by solid performance across both domestic and international markets, with international revenue representing 49% of total revenue.

Gross Merchandise Volume (GMV) reached $19.5 billion, representing 6% year-over-year growth (4% FX-neutral). U.S. GMV grew 7% to $9.4 billion, while international GMV increased 5% to $10.1 billion. The GMV growth reflects continued strength in eBay’s core marketplace business and successful execution of its focus category strategy.

Profitability metrics showed a mixed picture, with GAAP operating margin declining to 17.7% from 21.3% in the prior year, primarily due to increased investments in product development, sales and marketing, and general administrative expenses. However, Non-GAAP operating margin improved to 28.4% from 27.9%, demonstrating the underlying operational efficiency of the business when excluding one-time items and stock-based compensation.

Earnings per share performance was strong, with GAAP EPS increasing 77% to $0.79 and Non-GAAP EPS growing 16% to $1.37. The significant improvement in GAAP EPS was driven by higher operating income and a lower effective tax rate compared to the prior year period.

Despite strong revenue and earnings growth, eBay experienced negative cash flow generation in Q2 2025, with operating cash flow of negative $307 million and free cash flow of negative $441 million. This was primarily driven by unfavorable working capital changes, particularly increases in customer accounts and funds receivable related to business growth and timing of settlements.

Active Buyers reached 134 million in Q2 2025, representing 1% year-over-year growth. While growth was modest, it demonstrates eBay’s ability to maintain its user base in an increasingly competitive e-commerce environment. The company continues to focus on user engagement and retention through improved discovery experiences and enhanced trust and safety measures.

U.S. Marketplace Performance was particularly strong, with GMV increasing 7% year-over-year to $9.4 billion. This outperformed international markets and reflects successful execution of eBay’s focus category strategy, particularly in collectibles, refurbished goods, and luxury items. The domestic strength was supported by continued investments in user experience and advertising products.

International Markets contributed $10.1 billion in GMV, up 5% year-over-year. International performance was impacted by foreign exchange headwinds, with FX-neutral growth of approximately 3%. Despite these challenges, eBay continued to see solid performance in key international markets, supported by localized experiences and payment options.

Advertising Revenue Growth was a standout performer, with first-party advertising products generating $455 million, up 19% year-over-year (17% FX-neutral). Total advertising offerings, including third-party partnerships, generated $482 million, representing 2.5% of GMV. This growth reflects eBay’s continued investment in advertising technology and the increasing adoption of promoted listings by sellers.

eBay’s focus category strategy continued to show positive results, with particular strength in collectibles, luxury goods, and refurbished items. The company’s Authenticity Guarantee program reached a significant milestone, inspecting over one million items in a single quarter for the first time, driven by the expansion of luxury apparel authentication in the U.K. and increased streetwear and luxury brand eligibility in the U.S.

eBay continued to execute on its strategic transformation initiatives in Q2 2025, focusing on next-generation commerce experiences and technological innovation:

AI and Technology Innovation

• AI Shopping Agent: Announced an AI shopping agent that delivers real-time, hyper-personalized product recommendations and expert guidance based on users’ shopping preferences, currently available to a small subset of U.S. customers
• Generative AI Video Tool: Unveiled a generative AI video tool for U.S. sellers that transforms listing images into short form videos for easy sharing on social platforms like YouTube and TikTok
• Enhanced Discovery: Continued investments in machine learning and AI to improve product discovery and personalization across the platform

Live Commerce and New Experiences

• eBay Live Expansion: Formally launched eBay Live in the U.K. at Comic-Con London and debuted eBay Live on Tour in the U.S., bringing next-generation livestream shopping experiences to collectors
• Collector-Focused Experiences: Enhanced focus on collectibles and memorabilia through partnerships with industry leaders and celebrity collaborations
• Social Commerce Integration: Expanding seller reach through improved social media integration and video content creation tools

Authentication and Trust

• Authenticity Guarantee Expansion: Launched luxury apparel authentication in the U.K. for dozens of top brands and increased streetwear and luxury brands eligible for authentication in the U.S.
• Quality Assurance: Continued investments in fraud prevention and item verification to enhance buyer confidence
• Goldin Integration: Goldin, an eBay company, expanded into unique Hollywood and entertainment memorabilia, marking its first major collectibles category expansion since joining eBay

Payment and Financial Services

• Klarna Partnership Expansion: Deepened partnership with Klarna, expanding Buy Now, Pay Later access across the U.S. to offer customers more choice and flexibility
• Payment Innovation: Continued development of financial services offerings to enhance the transaction experience for both buyers and sellers

These strategic initiatives position eBay to capitalize on emerging commerce trends while strengthening its core marketplace business. The company’s focus on AI-powered personalization, live commerce, and enhanced authentication services directly addresses key consumer needs and competitive challenges in the evolving e-commerce landscape.

eBay’s cash flow performance in Q2 2025 showed temporary weakness due to working capital timing, while the company maintained its disciplined approach to capital allocation:

• Operating Cash Flow: Negative $307 million in Q2 2025 compared to positive $367 million in Q2 2024, primarily driven by unfavorable working capital changes related to business growth and payment timing
• Free Cash Flow: Negative $441 million compared to positive $278 million in the prior year, including $134 million in capital expenditures for technology infrastructure and facilities
• Cash Position: Maintained strong liquidity with $5.4 billion in cash, cash equivalents, and non-equity investments as of June 30, 2025

The negative cash flow was primarily driven by increases in customer accounts and funds receivable, which is largely a timing issue related to the company’s payments business and settlement cycles. Management expects this to normalize in subsequent quarters as business patterns stabilize.

Capital Allocation Strategy

Despite the temporary cash flow pressure, eBay maintained its commitment to returning capital to shareholders:

• Returned $759 million to stockholders through $625 million in share repurchases and $134 million in dividends
• Repurchased approximately 9 million shares, with $2.0 billion remaining under the current repurchase authorization
• Declared a Q3 2025 dividend of $0.29 per share, payable September 12, 2025
• Six-month share repurchases totaled $1.24 billion, demonstrating consistent capital return execution

The company’s capital allocation priorities remain focused on: (1) investing in strategic growth initiatives including AI and technology development, (2) maintaining dividend payments, and (3) opportunistic share repurchases. The strong balance sheet and cash position provide flexibility to continue these priorities while managing short-term working capital fluctuations.

eBay’s Q2 2025 performance reinforced its differentiated position in the global e-commerce landscape, with particular strength in focus categories and unique value propositions:

Competitive Advantages

• Focus Category Leadership: Continued market leadership in collectibles, refurbished goods, luxury items, and unique inventory that is difficult to find elsewhere
• Global Marketplace Scale: Presence in over 190 markets worldwide with localized experiences and payment methods
• Trust and Authentication: Industry-leading Authenticity Guarantee program and fraud prevention capabilities
• Seller Ecosystem: Strong relationships with both individual sellers and business sellers, supported by comprehensive tools and services

Market Trends and Positioning

eBay is well-positioned to benefit from several key market trends:

• Circular Economy Growth: Leadership in establishing the bipartisan Recommerce Caucus in U.S. Congress, advancing circular economy policy
• Authenticity and Trust: Growing consumer demand for authenticated goods drives adoption of eBay’s verification services
• Social Commerce: Investment in livestream shopping and social media integration addresses changing consumer behaviors
• AI-Powered Commerce: Early adoption of AI technologies for personalization and discovery enhancement

Brand Partnerships and Cultural Relevance

eBay continued to strengthen its cultural relevance through high-profile partnerships and events:

• Grammy-winning singer Chappell Roan wore an upcycled look made from vintage eBay finds at the Met Gala, later auctioning pieces exclusively on eBay
• Partnership with WNBA legend Sue Bird on a curated auction of basketball memorabilia
• Collaboration with model Winnie Harlow and Resident Stylist Brie Welch during the 2025 Formula 1 Miami Grand Prix
• Recognition on TIME’s World’s Most Sustainable Companies 2025 and Newsweek’s America’s Greenest Companies 2025 lists

These initiatives demonstrate eBay’s ability to maintain cultural relevance while supporting its core business objectives of driving traffic and transaction volume in key categories.

eBay provided the following guidance for Q3 2025, reflecting continued momentum and strategic execution:

• Revenue expected between $2.69 – $2.74 billion, representing 3-5% FX-neutral year-over-year growth
• GMV expected between $19.2 – $19.6 billion, also representing 3-5% FX-neutral year-over-year growth
• GAAP diluted EPS expected between $0.97 – $1.02
• Non-GAAP diluted EPS expected between $1.29 – $1.34
• Quarterly dividend of $0.29 per share declared for Q3 2025

The guidance reflects several key assumptions and factors:

• Seasonal Patterns: Q3 typically shows sequential moderation from Q2 due to seasonal shopping patterns
• Strategic Investments: Continued investments in AI, technology infrastructure, and new business initiatives
• Market Conditions: Expectation of stable economic conditions and consumer spending patterns
• Competition: Assumption of continued competitive pressure across e-commerce markets

Management expressed confidence in eBay’s long-term growth trajectory, citing several positive factors:

• Strong execution of focus category strategy driving market share gains
• Successful rollout of new AI-powered features and experiences
• Growing adoption of advertising products by sellers
• Expansion of authentication services supporting premium category growth
• International market opportunities supported by localization investments

The company remains focused on its core strategic priorities: enhancing the user experience through technology innovation, expanding in focus categories where eBay has competitive advantages, and driving long-term sustainable growth while maintaining disciplined capital allocation.