eBay (EBAY) Q3 2025: Focus Category GMV Growth Hits 15%, Driving Durable Marketplace Expansion
eBay’s Q3 2025 results underscore the marketplace’s ability to outpace macro headwinds by leaning into enthusiast-driven focus categories, AI-powered innovation, and strategic reinvestment in growth vectors like live commerce and shipping. With broad-based category acceleration and new AI capabilities, eBay is positioning for continued durable growth, even as margin expansion is tempered by deliberate investment in competitive moats.
Summary
- Focus Category Acceleration: Targeted verticals, especially collectibles and fashion, are fueling platform differentiation.
- AI and Live Commerce Integration: Embedded AI tools and eBay Live are reshaping user experience and seller productivity.
- Capital Allocation Discipline: Sustained reinvestment and shareholder returns signal a balanced approach to long-term growth.
Performance Analysis
eBay delivered broad-based GMV and revenue growth, with focus categories—such as collectibles, motors parts and accessories, and fashion—outpacing the rest of the marketplace by a wide margin. Collectibles, led by trading cards, posted another quarter of triple-digit GMV growth in Pokémon, while off-platform assets like TCGplayer and Goldin also accelerated. Motors Parts and Accessories continued to add over one percentage point to total marketplace GMV, demonstrating resilience in value-driven verticals. Fashion, especially luxury and pre-loved apparel, benefited from new circular economy partnerships and UK authentication expansions.
International growth improved sequentially despite ongoing macro challenges and tariff headwinds, while U.S. GMV growth approached 13% with both sold items and average selling price (ASP) contributing. Advertising revenue, a crucial take rate lever, grew nearly 23% in first-party ads as eBay’s AI-powered ad stack improved targeting and relevance. However, pressure from category mix, shipping initiatives, and trade policy changes modestly diluted take rate and margin expansion, as eBay opted to reinvest top-line upside into product development, eBay Live, and shipping solutions.
- Focus Category Outperformance: Collectibles, P&A, and fashion led growth, with all focus categories growing YoY and most accelerating sequentially.
- Advertising as a Growth Engine: First-party ad revenue reached $496 million, with AI-driven improvements supporting higher yield and adoption.
- Margin Moderation: Operating leverage was partially offset by increased investment in product development and managed shipping, reflecting a deliberate reinvestment cycle.
Active buyers grew 1% to 134 million, with enthusiast buyers stable at 16 million and spend per enthusiast rising above $3,200, underlining the stickiness of eBay’s high-value user base. The company returned $760 million to shareholders through buybacks and dividends, maintaining a disciplined capital return framework.
Executive Commentary
"Our focus categories continue to drive significant growth for our overall marketplace, driven by continued innovation, trusted experiences, and increased selection for enthusiasts worldwide. Our agenda commerce platform opens up entirely new opportunities for eBay by enabling connectivity between on eBay and third-party agents to facilitate personalized conversational shopping experiences that bring eBay's unique inventory and trust to wherever buyers begin their search."
Jamie Iannone, Chief Executive Officer
"We are taking advantage of the strength in our business this year and making incremental investments in focus categories, C2C, eBay Live, shipping, vehicles, Gen AI, and other areas, which will help drive balanced top line and bottom line growth over the medium to long term."
Peggy Alford, Chief Financial Officer
Strategic Positioning
1. Focus Category Strategy Unlocks Enthusiast Spend
eBay’s emphasis on focus categories—verticals like collectibles, luxury fashion, and motors—has proven to be a high-velocity growth engine. These categories not only deliver higher GMV growth but also reinforce eBay’s reputation as a destination for enthusiasts, driving repeat engagement and higher ASPs. The collectibles segment, amplified by trading card innovation and live events, continues to set the pace, while partnerships and authentication programs in fashion and P&A are building durable trust and inventory depth.
2. AI and Agentic Commerce Embedded in User Experience
AI is now woven throughout the eBay ecosystem, from “magical listing” tools that simplify seller onboarding to agentic commerce platforms that personalize search and discovery. eBay’s proprietary large language models (LLMs) and hybrid cloud infrastructure enable lower-latency, cost-effective AI deployment, supporting both first-party and third-party agent integrations. These advances are not only improving listing velocity and buyer recommendations but also setting the stage for seamless conversational commerce across platforms.
3. Live Commerce and C2C Initiatives Drive Engagement
eBay Live’s fivefold GMV run-rate increase and C2C (consumer-to-consumer) enhancements in the UK illustrate the marketplace’s ability to capture new buyer and seller cohorts. Live events, celebrity partnerships, and cross-border C2C shipping programs are expanding eBay’s reach and relevance, especially among Gen Z and millennial audiences. The acquisition of Ties, a Nordic social marketplace, further strengthens eBay’s position in circular economy and social commerce.
4. Shipping and Cross-Border Resilience Amid Regulatory Change
eBay is proactively addressing cross-border trade friction by accelerating shipping solution rollouts like eBay International Shipping and Speedpack, automating compliance and improving delivery predictability. While the removal of the de minimis exemption for imports under $800 has created new headwinds, eBay’s diversified inventory and domestic supply base are mitigating the impact, supporting continued global marketplace resilience.
5. Capital Allocation and Shareholder Returns Remain Disciplined
eBay’s capital return strategy—targeting 90 to 100% of normalized free cash flow via buybacks and dividends—remains intact, even as the company reinvests in growth initiatives. Asset sales have boosted capital returns in recent years, but management signals that future returns will be funded primarily from core business free cash flow, reinforcing a focus on sustainable, organic growth.
Key Considerations
eBay’s Q3 was shaped by a deliberate balance between reinvestment and operational leverage, with management prioritizing durable category leadership, AI-driven productivity, and strategic expansion into live and social commerce. Investors should weigh the following:
Key Considerations:
- Focus Category Durability: Growth in collectibles and fashion is broad-based, but management cautions that comps will become tougher and GMV may not be linear.
- AI as a Differentiator: eBay’s proprietary LLMs and agentic commerce capabilities are now central to both buyer and seller experience, with ongoing investment expected to drive further innovation.
- Margin Trade-Offs: Margin expansion is intentionally limited by reinvestment in product development, shipping, and emerging businesses like vehicles and eBay Live.
- Cross-Border and Regulatory Headwinds: The elimination of the de minimis exemption is creating incremental cost and friction, but eBay’s shipping solutions and domestic inventory help offset risk.
- Capital Return Policy: Share repurchases and dividends remain a priority, but future returns will rely more on operational cash flow as asset sales moderate.
Risks
eBay faces several material risks, including regulatory uncertainty in cross-border trade, exposure to macroeconomic softness in international markets, and competitive threats from both horizontal and vertical e-commerce players. The normalization of trading card comps, dependence on enthusiast categories, and the need for ongoing reinvestment in AI and live commerce could create volatility in both growth and margin trajectories. Management’s guidance incorporates caution around lapping dynamics and external policy shifts.
Forward Outlook
For Q4 2025, eBay guided to:
- GMV of $20.5 to $20.9 billion, reflecting 4% to 6% FX-neutral growth
- Revenue of $2.83 to $2.89 billion, up 8% to 10% FX-neutral
- Non-GAAP operating margin of 25.8% to 26.3%
- Non-GAAP EPS of $1.31 to $1.36
For full-year 2025, management maintained its plan to:
- Repurchase approximately $2.5 billion in shares
- Pay a quarterly cash dividend of $0.29 per share
- Deliver normalized free cash flow of roughly $2.5 billion
Management highlighted several factors that will shape Q4 and 2026:
- Full-quarter impact from de minimis exemption removal, creating incremental pressure on GMV, take rate, and advertising
- Lapping of outsized trading card and UK C2C growth from prior year
- Emerging businesses like vehicles and eBay Live expected to grow mix but carry lower take rates
- Continued reinvestment in AI, shipping, and category expansion as strategic priorities
Takeaways
eBay’s Q3 results confirm the marketplace’s ability to drive durable, category-led growth while navigating regulatory and macro headwinds. Management’s willingness to reinvest in strategic moats—AI, live commerce, and shipping—signals a focus on long-term competitive advantage, even at the expense of near-term margin expansion.
- Category Depth as a Moat: Focus categories are fueling market share gains, but investors should watch for normalization as comps stiffen in trading cards and fashion.
- AI and Live Commerce Are Not Optional: eBay’s rapid embedding of AI and live shopping is essential for user growth and platform stickiness, requiring ongoing capital and talent investment.
- Cross-Border Risk Management: The company’s proactive shipping solutions and domestic supply diversity are critical to sustaining global GMV amid regulatory shifts.
Conclusion
eBay’s Q3 2025 showcased a marketplace in strategic transition, balancing high-velocity category growth with disciplined reinvestment in AI, live commerce, and shipping. Investors should monitor the durability of focus category momentum and the company’s ability to translate AI and operational investments into sustained buyer and seller engagement, as well as the resilience of cross-border trade amid evolving regulatory headwinds.
Industry Read-Through
eBay’s quarter highlights the growing importance of vertical focus, AI-powered personalization, and live commerce as competitive differentiators in global marketplaces. The acceleration of regulatory friction in cross-border trade is a warning signal for all global e-commerce platforms, requiring agile shipping and compliance solutions. AI-driven seller tools and agentic commerce are quickly becoming table stakes, with the potential to reshape cost structures and user engagement across the sector. Platforms with deep enthusiast verticals and resilient domestic inventory are best positioned to weather macro and regulatory volatility.