eBay (EBAY -1.70%), the global online marketplace, released its second quarter 2025 results on July 30, 2025. The company exceeded Wall Street expectations, reporting GAAP revenue of $2.73 billion compared to the $2.64 billion analyst consensus and non-GAAP earnings per share of $1.37 versus the $1.30 estimate. While both revenue and profits were above forecasts, the period saw a sharp reversal in free cash flow, which turned negative. The quarter highlighted the impact of recent technology investments and advertising growth, but also brought attention to challenges in cash generation and rising operational costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.37 | $1.30 | $1.18 | 16% |
| Revenue (GAAP) | $2.73 billion | $2.64 billion | $2.57 billion | 6% |
| Operating Margin (Non-GAAP) | 28.4% | 27.9% | 0.5 pp | |
| Net Income (Non-GAAP) | $643 million | $602 million | 7% | |
| Free Cash Flow (Non-GAAP) | ($441 million) | $278 million | ($719 million) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
eBay's Business Model and Strategic Priorities
eBay operates a global online marketplace that connects millions of buyers and sellers. It facilitates transactions in categories such as collectibles, fashion, electronics, and more. The company generates most of its revenue from transaction fees, advertising services, and payments-related activities.
Recently, eBay has focused on advancing its technology, especially through artificial intelligence (AI) features that improve the buying and selling experience. Key priorities include growing advertising revenue, maintaining a healthy marketplace ecosystem, and building trust through authentication and compliance with global regulations. The company is also investing in expanding targeted categories like pre-owned fashion, collectibles, and luxury goods, which are important for its ongoing success.
Quarterly Highlights and Developments
During the quarter, eBay reported GAAP revenue of $2.73 billion, a 6% increase from the prior year and above analyst expectations by more than $50 million. Non-GAAP earnings per share were $1.37, beating consensus by $0.07 and representing a 16% year-over-year increase. Gross Merchandise Volume (GMV), which measures the total value of goods sold on the platform, reached $19.5 billion, up 6% from the previous year. U.S. GMV grew 7% year-over-year, while international GMV increased 5% over the same period.
The number of active buyers rose modestly to 134 million, a 1% increase from a year earlier. Advertising revenue was a key contributor, with total ad sales reaching $482 million, or 2.5% of GMV. First-party advertising products, such as Promoted Listings, generated $455 million, up 19% from the prior year. Adoption of these advertising tools remained strong, with more than 3.7 million users and over 1.1 billion listings promoted as of the first quarter of 2025.
eBay continued to roll out new technology, including the launch of "eBay Live" shopping in the UK and the expansion of the “eBay Live on Tour” initiative in the U.S. The company introduced an AI shopping agent for personalized experiences and a generative AI video tool that helps U.S. sellers turn listing images into short-form videos for social media. The Authenticity Guarantee program expanded, authenticating over 1 million items in a single quarter for the first time, with new luxury categories in the UK and additional brands in the U.S. The Goldin business, which focuses on high-value collectibles, also entered the Hollywood memorabilia market.
On the sustainability front, eBay was recognized on TIME’s World's Most Sustainable Companies 2025 list and Newsweek’s America’s Greenest Companies 2025 list. The platform helped raise $47 million for charity through partnerships. In regulatory matters, eBay contributed to the formation of the bipartisan Recommerce Caucus in the U.S. Congress and continued to adapt to new digital service regulations in Europe and the UK.
Financially, the company faced some pressures. The GAAP operating margin declined to 17.7% from 21.3% in the prior-year period, mainly due to higher legal expenses, restructuring costs, and increased bonus accruals. While the non-GAAP operating margin improved slightly, cash flow was a notable concern: operating cash flow was negative $307 million, and free cash flow dropped to ($441 million) from $278 million a year earlier. eBay returned $759 million to shareholders through share repurchases and dividends, but its cash and investments portfolio fell to $5.4 billion as of June 30, 2025, down from $7.6 billion at the end of fiscal 2024. The board declared a quarterly dividend of $0.29 per share, payable in September.
Looking Ahead: Guidance and Key Areas to Watch
For the third quarter of 2025, eBay’s management expects revenue between $2.69 billion and $2.74 billion, which would represent 3% to 5% year-over-year growth on a currency-neutral basis. The non-GAAP earnings per share outlook is $1.29 to $1.34, and GMV is projected to be between $19.2 billion and $19.6 billion. Management maintained a cautious outlook, noting uneven demand internationally, especially in the UK and Germany, where consumer confidence remains low. The guidance points to steady but moderate growth, with no major changes to broader targets.
Investors should monitor the normalization of cash flow, the sustainability of advertising revenue growth, and any further changes in legal or regulatory costs that could affect margins. The impact of ongoing investments in AI and marketplace enhancements on eBay’s operational performance and competitive position will also be important in the coming quarters.
The quarterly dividend was maintained at $0.29 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
