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Date
Oct. 29, 2025, 5:30 p.m. ET
Call participants
Chief Executive Officer — Jamie Iannone
Chief Financial Officer — Peggy Alford
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Risks
Peggy Alford stated, "we saw a deceleration in year-over-year volume growth starting in September in key markets importing into the U.S. after the removal of the de minimis exemption."
Alford indicated that transaction losses were up 19% in Q3 2025. This was due to "higher consumer protection losses that were due to the ramp of the UK managed shipping program as well as some unfavorable fluctuations in buyer and seller fraud."
Management expects to face a full quarter of impact from the removal of the global de minimis exemption in Q4 2025, compared to only a single month in Q3, which will contribute to a modest deceleration in GMV growth.
Alford forecasted that, net interest income will become a headwind to year-over-year earnings growth in Q4 2025 due to prevailing interest rates and a lower cash balance.
Takeaways
Gross Merchandise Volume (GMV) -- $20.1 billion, up 8% year over year on an FX neutral basis, with sequential acceleration of approximately four percentage points in Q3 2025.
Revenue -- $2.82 billion, representing more than 8% growth year over year on an FX neutral basis, aided by a 120 basis point foreign exchange tailwind in Q3 2025.
Non-GAAP Operating Income -- $764 million in non-GAAP operating income, up 9% year over year in the third quarter.
Non-GAAP Earnings Per Share -- $1.36 non-GAAP, up over 14% year over year; Earnings per share from continuing operations was $1.28, down 1% year over year.
Shareholder Returns -- Returned approximately $760 million through repurchases ($625 million at $88 average price) and cash dividends ($132 million).
Free Cash Flow -- $803 million in free cash flow. Cash and non-equity investments were $5.3 billion, and gross debt was $6.8 billion as of Q3 2025.
Focus Categories GMV -- Exceeded 15% growth, with collectibles as the largest contributor in Q3, and all focus categories achieved positive year-over-year growth, with most seeing sequential acceleration in Q3 2025.
U.S. GMV -- Nearly 13% GMV growth in the U.S, attributed to both sold items and average selling price improvements in Q3 2025.
International GMV -- Nearly 4% FX neutral growth, with a 350 basis point foreign exchange tailwind; improved sequentially despite macroeconomic challenges in Q3 2025.
Active Buyers -- Enthusiast buyers remained steady at 16 million, with annual spend per enthusiast above $3,200 on a trailing twelve-month basis as of Q3 2025.
Take Rate -- 14% take rate, pressured by an uptick in returns/cancellations, category mix, UK C2C managed shipping, and FX in Q3 2025; Net take rate declined by approximately 10 basis points year over year in Q3.
Advertising Revenue -- $525 million total, with 2.6% GMV penetration in Q3 2025; First-party ads grew nearly 23% to $496 million, while legacy third-party display ads declined 40% to $7 million, offset by 32% growth in off-platform ads to $22 million in Q3 2025.
Non-GAAP Gross Margin -- 71.6% non-GAAP gross margin, down more than 80 basis points year over year in Q3 2025 due to managed shipping, traffic acquisition costs, depreciation, and FX; partially offset by tax-related tailwinds.
Non-GAAP Operating Margin -- 27.1% non-GAAP operating margin, down 10 basis points year over year in Q3 2025, with FX contributing a 10 basis point headwind; product development spend increased.
Q4 2025 Guidance -- GMV between $20.5-$20.9 billion (4%-6% FX neutral growth); revenue between $2.83-$2.89 billion (8%-10% FX neutral growth); non-GAAP operating margin of 25.8%-26.3%; and non-GAAP EPS of $1.31-$1.36 (5%-9% growth) for Q4 2025.
Investments and Expenses -- Strategic reinvestment in eBay Live, shipping, vehicles, AI, and C2C; sales and marketing up 2% year over year (flat QOQ), G&A up 4% year over year (down as a percentage of revenue), and transaction losses up 19% in Q3 2025.
eBay Live -- Annual GMV run rate up approximately 5x year over year in Q3 2025, with stable QOQ growth in all tracked KPIs, including viewers and sold items.
AI Shopping Initiatives -- Proprietary in-house large language models enhanced personalized shopping and seller listing efficiency, reducing costs and latency versus commercial models.
Capital Allocation -- Plans to return approximately $3 billion to shareholders in 2025, aiming for 90%-100% of normalized free cash flow through buybacks and dividends in typical years.
2026 Early Outlook -- Expect a third consecutive year of FX neutral GMV and revenue growth in 2026; anticipate a two-point GMV headwind from lapping 2025 performance in trading cards, bullion/coins, and marketing efficiency, plus a one-point headwind from de minimis changes.
Summary
eBay (EBAY 0.07%) reported 8% FX neutral GMV growth to $20.1 billion and 8% FX neutral revenue growth to $2.82 billion, driven primarily by gains in focus categories and the U.S. market in Q3 2025. Non-GAAP operating income rose 9% year over year to $764 million, and non-GAAP EPS increased over 14% to $1.36, while the company returned nearly $760 million to shareholders. Management guided for continued but moderating growth in Q4 as the full effect of de minimis exemption removal, trading card comps, and other lapping factors are expected to pressure sequential results. This guidance reflects management's expectations for FX neutral growth between 4%-6% year over year. Strategic investments in AI, live commerce, fashion collaborations, shipping, vehicles, and emerging verticals remain central priorities, with further international expansions in live shopping and enhanced cross-border shipping solutions for sellers. Cost increases reflect heavier product development, transaction losses, and continued resource allocation to reinforce strategic growth vector resilience amid evolving trade policy headwinds in Q3 2025.
Management noted active buyers rose to 134 million, with annual spend per enthusiast buyer exceeding $3,200 on a trailing twelve-month basis as of Q3 2025, but flagged that macroeconomic pressures outside the U.S. constrained international GMV growth.
The CFO said, Vehicle volume has seen significant quarter-over-quarter growth since launch earlier this year. But the contribution to total volume is still very modest as we expected," and added Carmel's effective take rate will be "low to mid-single-digit range when including both the buy-side and the sell-side monetization."
Legacy third-party display ads revenue continued to decline—down 40% to $7 million—while first-party ads grew nearly 23% and off-platform ads rose 32% to $22 million in Q3 2025.
AI-enabled features such as Magical Listings and unified agentic commerce platforms are credited with accelerating inventory uploads and personalizing buying experiences, enhancing overall marketplace efficiency.
Peggy Alford highlighted that transaction losses were up 19% in Q3 2025, mostly due to the UK managed shipping ramp and unfavorable fluctuations, without indicating the trend was a structural issue.
The Q4 2025 revenue and GMV outlook assumes stronger take rates partially countered by mix shift, full-quarter de minimis impact, and seasonal changes in category and ASP mix over the holidays.
Plans to return $3 billion to shareholders in 2025 and a medium-term target to repurchase and distribute 90%-100% of normalized free cash flow through buybacks and dividends were reiterated.
Industry glossary
De minimis exemption: A trade policy provision allowing imports below a certain value threshold (formerly $800 into the U.S.) to enter duty-free and with simplified customs requirements, now eliminated for most eBay imports causing new friction.
C2C: Consumer-to-consumer e-commerce transactions, where individual sellers transact directly with buyers, as opposed to business-to-consumer (B2C) sales.
GMV: Gross merchandise volume, representing the total value of all items sold via the marketplace within a given period, excluding certain fees and adjustments.
KPI: Key performance indicator; operational metrics used by management to benchmark company or segment performance.
Take rate: The ratio of total company revenue generated from GMV, reflecting the percentage monetized by the platform through fees and other revenue sources.
Carmel: eBay's secure vehicles checkout solution, offering an integrated end-to-end purchase/service platform for vehicles sold through the marketplace.
Halo attribution: Ad measurement model that attributes ad-driven sales not only to immediate clicks but also to broader activity associated with promoted listings, impacting reported advertising revenue and seller ROAS.
Agentic commerce platform: eBay's AI-driven commerce framework integrating hybrid cloud infrastructure, proprietary large language models, and third-party agent compatibility for enhanced personalized shopping and listing experiences.
Full Conference Call Transcript
Jamie Iannone, our Chief Executive Officer, and Peggy Alford, our Chief Financial Officer. We are providing a slide presentation to accompany our commentary during the call, which is available through the Investor Relations section of the eBay Inc. website at investors.ebayinc.com. Before we begin, I will remind you that during this conference call, we will discuss certain non-GAAP measures related to our performance. You can find a reconciliation of these measures to the nearest comparable GAAP measures in our accompanying slide presentation. Additionally, all growth rates noted in our prepared remarks will reflect FX neutral year-over-year comparisons, and all earnings per share amounts reflect earnings per diluted share unless indicated otherwise.
During 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. 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, 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 10/29/2025. We do not intend and undertake no duty to update this information. With that, I'll turn the call over to Jamie.
Jamie Iannone: Thanks, John. Good afternoon, and thank you all for joining us today. I'm pleased to report we delivered better than expected results across our key financial metrics in Q3. Our gross merchandise volume grew 8% to $20.1 billion. Revenue increased by over 8% to $2.82 billion, and our non-GAAP earnings per share grew over 14% year over year to $1.36. We achieved these strong top and bottom line results amid continued macroeconomic challenges across our international markets and increased headwinds for cross-border trade into the U.S. Now let's go deeper into the key drivers behind our strong Q3 performance. Focused category GMV growth accelerated to over 15% in Q3, outpacing the remainder of our marketplace by roughly 11 percentage points.
This growth was broad-based as all of our focus categories grew positively year over year with most accelerating sequentially. Although we expect the level of growth in focus categories to normalize in the near future, our momentum speaks to the level of innovation we've driven for customers, and the increased likelihood that enthusiasts consider eBay Inc. when shopping in these categories. Within our focus categories, collectibles was the largest contributor to growth, driven by another quarter of accelerating year-over-year GMV growth in both collectible card games and sports trading cards. Our off-platform marketplaces, TCG Player and Golden, also saw GMV accelerate sequentially.
Pokemon GMV grew in the triple digits year over year for the third straight quarter, benefiting from a strong product release cadence. We believe our continued momentum in trading cards is a direct result of the trust and innovation we've driven for hobbyists in recent years with features like My Collection, AI-powered listing tools, authentication and grading, consignment partnerships, and integrated PSA population data. We've added new ways to buy and connect with other enthusiasts through eBay Live. We've also benefited from a consistent drumbeat of activations at major tentpole events like New York Comic Con and the National Card Collectors Convention where we had our biggest presence ever this year.
While we do not expect GMV growth in this category to be linear every quarter, particularly as we face more challenging comps starting in Q4, we are confident in a long runway for secular growth in trading cards. Motors, Parts and Accessories, or P&A, was our second largest contributor to GMV growth in Q3, generating more than one point for the overall marketplace. The introduction of easy and free returns in the U.S. continued to build upon our trusted value proposition in P&A.
While the cost and return rates for this program are well within our forecasted ranges, we continue to expand choice and selection in key inventory segments, such as salvage and used parts, which help consumers find value at a time when many are stretched financially. Overall, we have over 750 million live P&A listings, which enables us to offer the largest online selection of unique auto parts and accessories in most of our major markets. Fashion was another notable driver of GMV growth in Q3, led by our luxury, streetwear, and pre-loved apparel focused categories. In Q3, we reinforced our commitment to the circular economy through a collaboration with Marks and Spencer, one of the UK's most iconic retail brands.
UK consumers can now drop off used clothing at Marks and Spencer stores. The program keeps quality fashion in circulation by repairing, cleaning, and reselling wearable items and responsibly recycling the rest. We're excited by the potential of this partnership to unlock more pre-loved clothing on eBay Inc., extend the lifespan of high-quality products, and raise awareness of our growing role in driving the circular economy. In September, we expanded our authenticity program in the UK to cover 70 luxury and premium brands in apparel, shoes, and accessories, building upon our existing offerings in sneakers, watches, handbags, and fine jewelry.
This makes the UK our first market where luxury items can be authenticated from head to toe, reducing buyer friction and unlocking more high-value transactions across premium brands. eBay Live continues to build momentum, with consistent quarter-over-quarter growth across every major key performance indicator we track, including viewers, watch time, sold items, and GMV. In recent weeks, eBay Live's annual GMV run rate was up approximately five times year over year. We've created more personalized entry points into eBay Live across our homepage, search, and view item pages, making it easier for our scaled buyer base to discover and join live shopping events that speak directly to their passions.
In Q3, we hosted some incredible eBay Live shopping events in the U.S. The Backstreet Boys joined Paradise Card Breaks at the eBay Open in Las Vegas. We had Milwaukee Bucks superstar Giannis Antetokounmpo and his brothers join Ken Golden for a memorable event at the National. Ken also teamed up with Logan Paul for a high-end sports card box break which drew approximately 20,000 viewers over a multi-hour stream. eBay Live is also gaining strong traction in the UK following its formal launch in May at Comic Con London.
Since then, we've seen a consistent cadence of exciting live shopping events, from a Love Island charity auction stream and eBay's endless runway event at London Fashion Week, to Pokemon weekend, and new channels for toys and memorabilia. In September, SharkNinja also hosted our first refurbished appliance sales event with great success. It's exciting to see how quickly eBay Live is building cultural relevance and meaningful engagement with enthusiasts across the UK. Overall, we're thrilled by the response we're seeing from sellers and buyers on eBay Live and see significant potential for live commerce to become a strategic growth vector for our marketplace.
Improvements to our consumer-to-consumer, or C2C, proposition in key geographies represent another strategic growth factor for our business. One year after we launched our UK C2C initiative, we continue to see compelling results. In 2025, we saw UK C2C GMV growth remain well above our prelaunch baseline. As we introduced a buyer-facing fee, and ramped adoption of our managed shipping program, which streamlines the shipping process, reduces cost, and improves trust. In Q3, we introduced additional C2C changes including faster payouts for long-tenured sellers, greater transparency into all-in pricing when sellers are listing items and negotiating offers, and more competitive terms for items priced below 20 British pounds.
As a result, we saw UK customer satisfaction improve notably alongside accelerating year-over-year GMV growth during the quarter. We recently added shipping support for bulky and heavy items through DHL. And we exited Q3 with the majority of UK C2C transactions utilizing our managed shipping program, which is now mandated for all eligible items. Earlier this month, we closed the acquisition of Ties, a leading social marketplace in the Nordics focused on pre-loved fashion and lifestyle goods. Ties has built a highly engaged Gen Z and millennial community and a strong track record in social community-led commerce.
This acquisition strengthens our leadership in the circular economy, increases our presence in the Nordic markets, and accelerates our work to make consumer selling more seamless, trusted, and scalable. I'm excited to welcome the Ties team to eBay Inc. and I look forward to our teams learning from each other as we drive innovation for enthusiasts and accelerate the circular economy. Our years of investment in artificial intelligence have enabled us to leverage our scale and three decades of commercially relevant data and insights to transform the eBay Inc. experience for customers. In recent years, we've utilized generative AI to dramatically improve the selling experience on eBay Inc. through progressive iterations of our magical listing technology.
In addition to selling, we've been testing a variety of agentic experiences in search and shopping to learn how buyers and sellers engage with AI at different phases of the customer journey. This includes both on eBay Inc. agentic experiences like our AI shopping agent pilot, and third-party agents from companies like OpenAI. Our AI shopping agent has given buyers a new way to shop across our inventory, with personalized product picks and expert guidance, based on their individual shopping preferences. As the pilot has progressed, we've significantly improved the underlying technology powering the experience.
For example, we were able to build hyper-optimized large language models in-house that perform specific shopping agent tasks at lower latency and for significantly reduced costs versus commercial models. With these learnings and efficiency improvements, we're now poised to gradually bring agentic capabilities into the core of eBay Inc.'s business through the main search experience over the coming quarters. Our early learnings have also guided the development of our unified agentic commerce platform, which integrates our hybrid cloud infrastructure, large language model ecosystem, our model context protocol server, and other agentic proprietary data layers.
This platform enables a fully connected experience between eBay Inc. agents and generalized third-party agents from companies like OpenAI, which allows us to service the most personalized and relevant products to shoppers in real-time based on our thirty years of listings, pricing, transactions, and behavior signals. We believe this platform will enable us to deliver more personalized, seamless, and trusted experiences for eBay Inc. buyers regardless of where they started their shopping journey. With these capabilities now in place, we are well-positioned to continue improving the on eBay Inc. experience with agentic tools touching more of the end-to-end shopping journey but also connect to compelling third-party agentic experiences.
I'm also excited to see how easy and seamless it is to shop on eBay Inc. using the iPhone camera after our recent integration into Apple's Visual Intelligent feature in iOS 26. Now, when a user takes a photo or screenshot of a product they'd like to shop for online, they can quickly surface relevant listings on eBay Inc., helping more iOS users discover our breadth and depth of unique inventory in an intuitive experience. iPhone users can also take advantage of a great new feature for auctions after we launched live activities functionality on iOS in September, which gives bidders real-time updates directly on their phone's lock screen during the final ten minutes of an eBay Inc. auction.
This engaging feature has seen click-through rates more than four times higher than our standard push notifications for auction listings, helping ensure buyers never miss a chance to bid on their next great eBay Inc. find. Connections between buyers and sellers have always been at the heart of eBay Inc.'s marketplace. And now we're using AI to make those interactions faster and easier to manage. In Q3, we rolled out an AI assistant for member-to-member messaging across the U.S., U.K., and Australia. This tool takes information from the listing details to provide immediate high-quality suggested answers to buyer inquiries, enabling quicker responses.
Sellers have told us this feature has been extremely helpful in answering buyer questions promptly, giving them more time to list items and grow their businesses on eBay Inc. Within member-to-member messaging, we've also rolled out a fully integrated offers experience directly into the messaging flow for customers in the U.S., Germany, and Australia. This means buyers and sellers can now negotiate offers, view their full offer history, and execute counteroffers without ever leaving the conversation thread, reducing friction and driving improved sales velocity. With each successive quarter, AI is becoming more embedded throughout the eBay Inc. experience.
As we build on this progress, we believe AI will continue to make eBay Inc. simpler, more personal, and more connected for every user. Moving to advertising. In Q3, first-party advertising revenue on the eBay Inc. platform grew nearly 23%, driven by broad-based growth across our ads portfolio. Active Promoted Listings comprised nearly 1.2 billion of more than 2.4 billion total listings on eBay Inc., while over 4.4 million sellers adopted at least a single Promoted Listing product during the quarter. Promoted Listings general ads were the largest contributor to year-over-year ad revenue growth in Q3, followed by PL Priority placements, promoted off-site ads, and promoted stores units. We continue to leverage our proprietary AI capabilities to enhance advertising performance.
For instance, we recently launched a new multimodal embedding model on view item pages to deliver more relevant recommendations to buyers. This model led to a measurable uplift in promoted listings revenue, by leveraging a listing's imagery in addition to its title and other listings details to surface higher quality recommendations. In financial services, we reached a major milestone for our Seller Capital program in Q3. Since the inception of this program in 2021, more than $1 billion in growth capital has been dispersed to eBay Inc. sellers across the U.S., U.K., and Germany through our financing partners, including more than $200 million through 2025.
Many sellers have told us this additional working capital has made a significant difference in their ability to invest in inventory, people, and technology to grow their businesses on eBay Inc. Turning next to our shipping initiatives, which have become a critical strategic imperative in today's increasingly complex environment for cross-border trade. The recent elimination of the de minimis exemption for imports under $800 has created incremental cost and friction for cross-border trade into the U.S. To help our sellers and buyers navigate these challenges, we meaningfully accelerated our multi-year product roadmap for shipping solutions. In October, we launched eBay International Shipping in Canada, our third largest corridor for U.S. imports, after Greater China and Japan.
This rollout brings the best parts of the U.S. program to both business and consumer sellers in Canada, along with additional capabilities like delivery duties paid functionality, and automated application of country of origin data. In Q4, we also began enabling business sellers in Germany to access SpeedPack, an end-to-end cross-border shipping solution offered through a joint venture, which is already available to sellers in Greater China and Japan. SpeedPack automates customs documentation and tariff calculations, helping sellers manage new trade requirements with greater efficiency. By simplifying compliance and improving delivery time predictability, SpeedPack strengthens the resilience of cross-border trade on eBay Inc. and ensures buyers continue to receive a reliable shopping experience with transparent duties.
As we advance our strategic initiatives, we're equally focused on fostering the culture and talent that makes this progress possible. I'm proud that our dedication to building an inclusive workplace environment continues to be recognized externally. eBay Inc. has been named one of Forbes America's best employers for company culture, one of Time World's best companies, and one of Newsweek America's greatest companies for 2025. These acknowledgments reaffirm our efforts to foster a positive, high-performing culture that attracts and retains some of the best talent in the industry. In closing, Q3 was another strong quarter for eBay Inc., underscoring the momentum in our strategy and the resilience of our marketplace.
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 agentic commerce platform opens up entirely new opportunities for eBay Inc. by enabling connectivity between on eBay Inc. and third-party agents to facilitate personalized, conversational shopping experiences that bring eBay Inc.'s unique inventory and trust to wherever buyers begin their search. AI also continues to make selling on eBay Inc. more seamless and efficient, from our magical listing technology to our new member-to-member messaging tools, that help sellers manage buyer inquiries in real-time.
I'm incredibly excited about our expansion of eBay Live into new Europe, which builds upon the tremendous momentum we're seeing in the U.S. as we bring live, community-driven commerce to more enthusiasts. Lastly, our investments in global shipping services are not only helping us support sellers in the current environment but are accelerating our roadmap to make cross-border trade more frictionless, which can drive more velocity for consumers and small businesses around the world. Together, these investments keep eBay Inc. well-positioned for continued long-term sustainable growth as we reinvent the future of e-commerce for enthusiasts. With that, I'll turn the call over to Peggy, who will provide more details on our financial performance and outlook. Peggy, over to you.
Peggy Alford: Thank you, Jamie. I will begin with the financial highlights of the third quarter. GMV grew 8% to $20.1 billion. Revenue grew over 8% to $2.82 billion. Our non-GAAP operating income grew 9% year over year to $764 million. Non-GAAP earnings per share grew over 14% year over year to $1.36, and we returned approximately $760 million to shareholders through repurchases and cash dividends. Let's take a closer look at our financial and operating metrics for the third quarter. GMV grew 8% to $20.1 billion on an FX neutral basis, accelerating by roughly four points sequentially.
Our growth in Q3 was primarily attributable to our focus categories and overall strength in the U.S. market, partially offset by a relatively more challenging macro environment and changes to U.S. trade policy, including the elimination of de minimis exemption globally in late August. Foreign exchange provided a tailwind of approximately 180 basis points to spot GMV growth. Focus categories grew over 15% in Q3, with all focus categories contributing to our total growth from collectibles to P&A, luxury, refurbished, apparel, and sneakers. In our U.S. market, GMV growth accelerated to nearly 13%, driven by broad-based strength across categories and by increases in both sold items and average selling price.
In addition to overall strength in the U.S. market, our GMV growth continued to benefit from tailwinds like our Klarna partnership and efficiency in lower funnel marketing spend. Because GMV is reported based on the location of the seller, the delta between U.S. and international GMV growth was also influenced by demand shifting toward domestic sellers due to tariffs. International GMV grew nearly 4% on an FX neutral basis, with foreign exchange providing a tailwind of 350 basis points to spot growth. Despite facing relatively more challenging macroeconomic conditions outside of the U.S. in Q3, our international GMV growth also improved sequentially.
Recent enhancements to our C2C value proposition in the UK contributed to an overall acceleration in UK volume growth. Our cross-border business was resilient in the third quarter. However, we saw a deceleration in year-over-year volume growth starting in September in key markets importing into the U.S. after the removal of the de minimis exemption. Shifting to our biometrics, our trailing twelve-month active buyers were over 134 million, up 1% year over year. Enthusiast buyers remained stable at roughly 16 million, while spend per enthusiast buyer grew year over year to over $3,200 on a trailing twelve-month basis.
Moving on to our income statement, revenue grew over 8% to $2.82 billion on an FX neutral basis in Q3, while foreign exchange was a tailwind of over 120 basis points to spot growth. Our take rate was 14% in Q3 as continued strength in advertising was partially offset by several headwinds. As sellers and buyers adjust to the new trade policies, we are seeing an uptick in returned and canceled orders, which led to a roughly 10 basis point headwind to our Q3 take rate as these transactions are included in GMV, but not revenue. Our average selling price was also increased in recent quarters, mostly driven by category mix shift, which also pressured our take rate.
In addition, UK C2C represented a modest year-over-year headwind as we continued to scale our managed shipping initiative during Q3. Lastly, foreign exchange was a headwind of nearly 10 basis points to our take rate year over year. Total advertising revenue was $525 million, representing GMV penetration of 2.6%. Within the eBay Inc. platform, first-party ads grew nearly 23% to $496 million. We continue to deprecate legacy third-party display ads, which declined by 40% to $7 million. Off-platform ads grew 32%, reaching $22 million. Non-GAAP gross margin of 71.6% declined by over 80 basis points year over year due to expected headwinds from managed shipping, traffic acquisition costs related to promoted off-site ads, depreciation expenses, and foreign exchange.
These factors were partially offset by tax-related tailwinds as we lapped one-time expenses a year ago and continued cost of payment efficiencies in the quarter. Our non-GAAP operating margin was 27.1%, down 10 basis points year over year, including a foreign exchange headwind of 10 basis points. Marketing and operating efficiencies generated leverage in the quarter, which was partially offset by product development expenses. As we noted last quarter, given the recent strength in our business, we are reinvesting a portion of top-line upside in order to accelerate our strategic initiatives, including eBay Live, shipping solutions, and vehicles.
We are also expanding our global employee footprint in order to optimize our location strategy and to comply with U.S. data transfer policies. Non-GAAP earnings per share was $1.36, up over 14% year over year, and GAAP earnings per share from continuing operations was $1.28, down 1% year over year as we lapped investment gains from last year. Turning to our balance sheet and capital allocation, we generated free cash flow of $803 million in Q3 and ended the quarter with cash and non-equity investments of $5.3 billion and gross debt of $6.8 billion on our balance sheet. Our equity investments were valued at over $900 million.
We repurchased $625 million of eBay Inc. shares in Q3 at an average price of nearly $88 and paid a quarterly cash dividend of $132 million in September, or $0.29 per share. Moving on to our outlook, for the fourth quarter, we expect GMV between $20.5 and $20.9 billion, representing FX neutral growth between 4-6% year over year. Based on current exchange rates, we estimate FX would represent roughly 180 basis points of tailwind to spot GMV growth. Our guidance reflects a continuation of the durable growth trends we've observed in recent quarters, driven by our momentum in focus categories and other strategic initiatives.
Additionally, as commodity prices for precious metals have appreciated in recent months, we have observed a notable acceleration in demand for bullion and collect coins on eBay Inc., which may be a less durable trend. Our acquisition of Ties is also expected to contribute roughly 10 basis points to total FX neutral GMV growth in Q4. These tailwinds are expected to be offset by a few lapping dynamics. In Q4 of last year, we observed exceptional GMV growth in trading cards due to a strong release calendar. We also saw a double-digit improvement in UK C2C volume growth and better-than-expected holiday season demand overall.
This year, we will also face a full quarter of impact from the removal of global de minimis exemption, versus a single month of impact in Q3. We expect the net of these headwinds to lead to a modest deceleration in GMV growth during Q4. We forecast revenue to be between $2.83 and $2.89 billion, implying FX neutral growth of 8% to 10% year over year. Based on current exchange rates, we estimate FX would represent roughly 190 basis points of tailwind to spot revenue growth. Our guidance implies year-over-year take rate expansion primarily due to our remonetization of UK C2C volume and first-party advertising growth, partially offset by mix shift and headwinds related to trade policy.
As I noted for GMV, we expect a full quarter impact from the de minimis change to apply incremental pressure on our core take rate, advertising, and financial services monetization. On a sequential basis, take rate is expected to be modestly lower due to these factors as well as normal Q4 seasonality attributable to category and ASP mix over the holidays. We expect non-GAAP operating margin between 25.8-26.3% in Q4, representing non-GAAP operating income growth between 5-9% as reported. The year-over-year decrease in operating margin is primarily due to continued investment in our strategic initiatives as we reinvest a portion of our top-line strength in order to drive medium- to long-term growth.
We forecast non-GAAP earnings per share between $1.31 and $1.36, representing year-over-year growth between 5-9%. We expect net interest income to become a headwind to year-over-year earnings growth in Q4 given prevailing interest rates and our lower cash balance. We forecast capital expenditure to be between 4-5% of revenue for the full year, and our non-GAAP tax rate to remain stable at 16.5%. We expect reported free cash flow of approximately $1.5 billion for this year, including a headwind of $935 million from the unique tax items we paid this past Q2. On a normalized basis, free cash flow is expected to be roughly $2.5 billion for 2025.
Lastly, we continue to plan on repurchasing approximately $2.5 billion of our shares for the full year. In addition, our Board declared a quarterly cash dividend of $0.29 per share for the fourth quarter to be paid in December. Next, I'll share a few preliminary thoughts on 2026. We are planning our business around the third consecutive year of positive FX neutral GMV and revenue growth, reflecting our confidence in our initiatives and a continuation of the strong underlying momentum from this year. However, we are also mindful of several notable lapping dynamics in 2026. These include exceptionally high growth in trading cards, and more recently in bullion and coins, and unexpectedly strong marketing efficiency.
In aggregate, we estimate these factors could represent a lapping consideration of approximately two points of GMV growth for the full year in 2026. In addition, we expect to face incremental headwinds from annualizing breakage associated with the global de minimis changes. If the current level of impact remains stable throughout 2026, it would result in a headwind to FX neutral GMV growth of approximately one point.
We expect the gap between GMV and revenue growth to be relatively narrow in 2026 as continued healthy growth in first-party advertising revenue is expected to be partially offset by pressure on cross-border sellers and a higher mix of GMV from emerging businesses like vehicles and eBay Live next year, which have lower average take rates. With regards to profitability, as we finalize our planning decisions, we'll maintain our focus on targeting the optimal combination of GMV growth and operating margin to maximize operating income dollar growth over the medium to long term. We expect to face a few modest headwinds in 2026 below the operating income line.
Our lower cash balance and the expected slope of interest rates would pressure our net interest income year over year. And we are reevaluating our non-GAAP tax rate in 2026 and beyond, which may result in a modest increase partially due to U.S. tax dynamics. Finally, a few observations on capital allocation. We expect to return approximately $3 billion of cash to shareholders through share repurchases and cash dividends in 2025, which would amount to over $12 billion of capital returns to shareholders from 2022 to 2025. Over the last few years, we were pleased to monetize several equity investments at attractive valuations, including Ataventa, Adyen, and Gmarket.
These asset sales enabled us to return significantly more capital to shareholders than our normalized free cash flow. Going forward, our framework for capital allocation has not changed. Our priority remains organic investment in the business to drive sustainable growth, and we will continue to evaluate inorganic opportunities to accelerate our roadmap. With regard to excess capital, we will continue to lean into returns to shareholders. Given our remaining investment portfolio, we do expect that free cash flow from our core business will be the primary source for capital returns in 2026 and beyond.
In a normal year, we plan to target repurchases and cash dividends totaling between 90% to 100% of normalized free cash flow, absent organic or inorganic needs for that capital. In closing, we believe our strong Q3 results and Q4 guidance reflect the momentum we are seeing in our business. Our strategy is working, and we believe much of our growth is sustainable. 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. With that, Jamie and I will now take your questions.
We will now begin Q&A. For today's session, we will be utilizing the raise hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen.
Leila: If you have dialed in, please press star 9 to raise your hand and star 6 to unmute. Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Your first question will come from Scott DeVitt with Wedbush Securities. Please unmute and ask your question.
Scott DeVitt: Thanks for taking my question. Been impressive to see the business growing at the rate that it is again. And, you know, we're kind of entering this new moment in time and I just wanted to zoom out, you know, for a minute. When you look back on the history of the Internet, Google search, and then the transition to mobile were significant developments that caused seismic change. And so we're kind of here again with AI. You talked, you know, a bit about some of the features and functionality that you're integrating into the platform and how you're, you know, attempting to use ChatGPT and otherwise.
I'm just curious as you plan for the changes that AI is going to bring to the business, what you think are the two, three, four most significant changes that you're anticipating in the way that eBay Inc. is going to be connecting with buyers and sellers as well as the approach to advertising in coming years.
Jamie Iannone: Yeah. Thanks for the question, Scott. So, look, I think in a number of ways. I mean, I think one of the biggest opportunities for us being really focused on non-new in-season and used supply is to really be that unlocker of supply for consumers across the world. And so when you think about what's sitting in garages, closets, you know, people's houses, the ability to leverage AI to make that almost instantaneous to list is a vision of ours that we've been progressing towards with magical listing and it is going well.
What I hear from consumers is, "Oh my God, if it's that easy to list, I have so much stuff that I could sell on the platform." So that's a big opportunity for us. The second is how it's transforming how people shop, and the level of discovery that we can give them on the platform. When I look at what we're doing now with having so much rich data of thirty years of data, what's happening with our consumers in the marketplace, being able to leverage that in a way that really kind of delights the user and gives them an ideal experience, I think is another benefit.
How it changes recommendations, how it changes search, how it changes discovery on the platform, is probably the second area that I'm most excited by. And then the last one I would say is really kind of the pace of innovation of the company, you know, leveraging AI. And you're seeing that, you know, this quarter as we announced a new visual camera intelligence with Apple in the camera phone. As we bring new capabilities to save sellers time like in our member-to-member messaging that we're launching here. The work that we're doing in our own shopping assistant, we have a screenshot of some of that type of stuff that you're seeing in the slides that we put together.
Giving more relevant recommendations to our buyers on the view item pages. You talked about advertising. Even what we announced this quarter where we're taking a multimodal approach to our advertising performance, provides more high-quality recommendations. So, I'd say, every quarter, AI is becoming more embedded throughout our experience. I feel, you know, privileged to be in a situation where we've got a technology infrastructure that really blends a hybrid cloud infrastructure, our own LLMs that we've been building on, agentic protocols, and thirty years of data, that all together to kind of bring those simpler, more seamless, and more magical experiences to life for customers.
Scott DeVitt: Thanks, Jamie.
Leila: Your next question will come from Nikhil Devnani with Bernstein Research.
Nikhil Devnani: Hi. Thank you for taking my question. I wanted to ask about margins. You've had really strong growth this quarter and again in the guide. But it doesn't seem to be flowing through the margin upside to the same degree. So could you please elaborate on where some of the incremental investments are right now? It's noticeable that product development has been ramping for the last couple of quarters. Should we be looking at this as a pull forward of certain fixed costs that would otherwise have happened in 2026? Because you can now? Or are there also other more variable and persistent expenses that we need to take into account as we think about margins next year? Thank you.
Peggy Alford: Sure. Thank you for the question. So when we think about margins, we're really trying to balance driving long-term growth and then returning flowing through upside to the bottom line. I'm very pleased with the 9% operating profit growth that we achieved in Q3 and this momentum that we continue to see in the business. Our non-GAAP operating margin in Q3 was 27.1% and that included an FX headwind of 10 basis points and we did generate operating leverage in the quarter. In terms of some of the expense lines, sales and marketing expense was up 2% year over year and flat quarter over quarter. And this was due to marketing efficiencies.
Product development expenses that you mentioned, we actually did take some of the upside and we were investing in product development against some of our very strategic initiatives, including eBay Live, our shipping solutions where we pull forward our CBT roadmap to really help sellers navigate the changes in the trade policies. And then really looking at more investment in our vehicles business as well. And we believe this strategy is working and will primarily benefit our growth next year and beyond. Our G&A expenses were up about 4% year over year and down 40 basis points as a percentage of revenue, and this was driven by lower employee-related spend. And then lastly, transaction losses were up 19%.
A lot of it had to do with our higher consumer protection losses that were due to the ramp of the UK managed shipping program as well as some unfavorable fluctuations in buyer and seller fraud. This is an area that fluctuates quarter by quarter, but nothing really concerning in the trends. So overall, we will continue to focus on ensuring that we're balancing top-line growth and margin flow through and trying to really get this balance right as we think about it going forward.
Nikhil Devnani: Thanks, Peggy. If I could just follow-up there. Does some of the investment this year ease the burden on next year? Or is there just a long list of things you want to go after as you think about the product roadmap?
Peggy Alford: We will continue to invest in our priority areas as we look into Q4 and next year. We're pretty early in the planning cycle, and so we'll definitely provide more commentary as we get more information about how we want to invest in getting that balance right between top line and bottom line. But you can be assured that's what we'll be focused on.
Nikhil Devnani: Thank you.
Leila: Your next question will come from Nathaniel Jay Feather with Morgan Stanley.
Nathaniel Jay Feather: Hey, everyone. Thanks so much for taking the question. And really impressive growth this quarter. I guess just two on my end. First, given how quickly the marketplace has accelerated, you know, how are you thinking about the portions that might be more temporary to this year and the portions that are more durable for 2026? And then looking forward to next year, what are the key kind of one or two that you think could be the most incremental to continue the sustained improvement? Thank you.
Jamie Iannone: Yeah. So, good to hear from you, Nathaniel. So look, I think the strength that we see was really broad-based in Q3, both in our focus categories and our core categories. And it's really, for us, the culmination of years of investment and that's helped us fuel consistent market share gains. When we look at the first half of this year, we think we picked up two points of segment share gains in our focus categories. And you saw the strength across, you know, core and across our focus categories. In terms of the durability, you know, we did see some GMV upside from what we would characterize as transitory factors, which we discussed in our prepared remarks.
But we do believe the majority of our growth was durable in nature. And overall, confident our strategy is working and we're leaning in towards a path of sustainable growth. You know, and as we think about growth vectors, I think it's, you know, a continuation of the areas that you've seen. The acceleration that we're seeing in focus categories, you know, we've added fashion as our newest focus category, and we're seeing continued momentum there. We're going to continue to invest in the horizontal areas that we've been going after across selling, search, leveraging AI, new discovering experiences, which we think will help focus categories and core categories.
And we're excited about some of our newest areas of growth, particularly, you know, eBay Live. I talked about, you know, the growth we're seeing, which is, you know, a five times greater run rate than we saw a year ago. And we're just launching some new geographies there in the UK and Germany. As well as our vehicles business. You know, we're in the early phase of growth there. But the early customer satisfaction and feedback from our sellers and buyers is that the new secure checkout proposition is really resonating with them.
And, you know, we're seeing great activity and purchases, you know, multistate purchases, that are now leveraging our financing, our insurance, our warranty, our transportation title verification, that end-to-end process, which is pretty exciting. So, those are the growth factors that I would point out to you.
Nathaniel Jay Feather: Great. Thank you.
Leila: Your next question will come from Deepak Mathivanan with Cantor Fitzgerald.
Deepak Mathivanan: Great. Thanks for taking the questions. Jamie, maybe I'll ask a couple of questions for you. So first, how do you how are you currently strategically approaching partnerships with, you know, AI assistants and agents? Obviously, it seems like a lot of things are happening fast in e-commerce on the agent side. Are there any technical constraints or any other things that you would call out as potential constraints for you?
And then second question, you know, staying on the AI topic, how should we think about the areas where you would be deploying the advancements that just that we are seeing with, you know, LLMs and other AI tools in 2026 into the eBay Inc. platform to improve the buyer experience? Anything you can share there would be great.
Jamie Iannone: Yeah. Great. Thanks for the questions, Deepak. So, you know, look. On the on the working with agentic partners, like we've seen on the selling side, where it's really helped us improve our experience, we're excited that our early work for buyers with agentic shopping and discovery really opens up new ways to explore eBay Inc.'s inventory. So, you know, for now, for more than a year, we've been testing a variety of agentic experiences to learn how buyers and sellers engage at different phases of the journey. We've called that our AI shopping assistant. That's been live and making improvements month after month to, you know, to really kind of fine-tune the experience there.
And that's all led us to build what we call the unified agentic commerce platform. Think about that as, you know, taking our hybrid cloud infrastructure, the LLM ecosystem that we've built, including these models that we've been fine-tuning over time, along with our MCP servers and driving that, leveraging the LLMs that we built, these agentic protocols, combining, you know, eBay Inc.'s thirty years of data and our rich history of what's happening with our customers.
That now puts us, and this is more to your second question, Deepak, that now puts us more in a really enviable position from a technology standpoint to experiment and innovate and really leverage the insights that we've had and that we've gained by doing that work. You know, when I think about, you know, eBay Inc. as it relates to, you know, agentic commerce, clearly, we're working on bringing agentic commerce to our buyers on the platform, allowing them to search via natural language searches, etcetera. You'll see an example of that in the slides that we put forth together if you're not in that test case.
Of how we're using that to give them more variability and discovery opportunities as well. But as we think about our inventory, we think we've got really unique inventory because we're focused on non-new in-season and used and refurbished, you know, across both C2C and B2C sellers and have 2.4 billion listings. Secondarily, when you think about eBay Inc.'s inventory, it's generally more what I would say is a considered purchase rather than, you know, a commodity type of thing that you're just kind of refilling. And the third is that our focus category strategy over the last couple of years has really allowed us to apply services and value around the transaction.
Think about Authenticity Guarantee, guaranteed fit, warranties on refurbish, you know, one-click grading, what we're doing in international, etcetera. So all of those, I think, you know, gives us the experience of a really unique set of inventory, which is why we fine-tune and train our LLMs to be able to search and discover that inventory and collect all those into an MCP server that really leverages that data and insights. So overall, we're going to continue to do the type of thing that we showed in the slides there, which is allow agentic technologies to be used on the platform to discover inventory, to improve how our sellers surface inventory on the platform.
To improve how recommendations show up on the platform by leveraging AI agentic technologies. And we also now have the technology we can really have this collaboration between third-party agents and first-party agents on our own platform.
Leila: Our next question will come from Shweta Khajuria with Wolfe Research. Please unmute and ask your question.
Andrew Boone: Hi, this is Andrew up for Shweta. Thanks for taking the question. Wanna focus a little bit on trading cards. How should we think about the sustainability of growth within the category and, you know, what type of signals or metrics could we use to kind of evaluate the success of the category? Thanks.
Jamie Iannone: Yeah. Thanks for the question, Andrew. Look. As it relates to trading cards, we see a long runway of growth for trading cards. We believe most of the recent growth has been driven by the trust and the innovation that we've driven for hobbyists over the last several years. Think about all the things we've introduced, Andrew, like My Collection, magical listings, bulk listing capabilities, our partnership with PSA on grading and authentication, and on vault storage. So, I've always said that our trading card business is not linear.
It's going to ebb and flow based on the popularity of whether it's new releases or collaborations or new rookie classes or chase cards, you know, and we won't always be firing on all cylinders like we are now with, you know, all the sports leagues, NFL, NBA, MLB, as well as Pokemon and Magic. Really having strong years. But what we see today is really a healthy balance between new buyers, sold items, and ASP contributing to that growth. And that's what gives us the confidence and the durability of our GMV run rate moving forward. Even if the year-over-year growth decelerates in the coming quarters.
Leila: Your next question will come from Michael Morton with MoffettNathanson. Michael, you may now unmute your line and ask your question.
Michael Morton: Hey, sorry about that. Thanks for the question. One big picture one and then maybe one more near-term financial. When we look at the strategy that you deployed with the trading cards, what seems to be really successful was the ability to reduce friction. We don't need to, like, walk through all the steps, but we know how that played out through the business. And a question we get a lot from investors recently is how big can your vehicles business be? And, like, when we look at what Carmel does and what you've done with prior focus categories, it was pretty effective and it's obvious that cars come at high ASPs. And it's going to be booked as GMV.
So how should we think about this flowing through the model over the next year and any implications for take rates that could move one way or another we might not have thought through. And then just a near-term one, I think you rolled out halo attribution in the U.S. and, like, other North American markets starting in 2026, and I think you had a lot of success with that in other countries around the ad product. So wondering what the expectations are there to drive ads and the take rate. Thank you so much.
Jamie Iannone: Yeah. Look. You're right on the, you know, vehicles experience. It really is about making it a seamless experience end-to-end, like we've done in trading cards and in other categories. And what we saw in Carmel was really this for sellers and buyers where we handle everything for them. So identity, title verification, the transfer of ownership, payments, financing, insurance, warranty, and transportation because a lot of these cars go across state lines, for example. So, where we're focused is really in the collectible car market, which is about a $75 billion addressable market of the $1 trillion plus used car market that's out there. You know, we're excited by it because, a) it's really resonating with customers.
We're seeing, you know, great activity that's really leveraging this end-to-end. So, we just had a 2015 Rolls Royce Ghost sold for $113,000, and it uses our secure purchase. Our DMV services actually use our buyer financing, etcetera. Ranging all the way to a school bus from 2008 that was converted into an RV sold for $31,000 for a seller in California and a buyer in Missouri. And again, using that full end-to-end suite of services. It kind of speaks to the opportunity that we have in vehicles. I think the other reason we're excited by it is because of the synergies and overlap we see with our parts and accessories business.
You know, since we are going after this collectible car market, it's really congruent with those that want to restore, fix up older and collectible cars and it tends to be enthusiasts that are into parts and accessories are also really into these collectible vehicles. So we think there's really nice synergies from both the buyer and the seller base there. Peggy, maybe you want to touch a little bit on the higher ASP of vehicles and the impact of that on take rate?
Peggy Alford: Sure. Absolutely. So we're really excited about this long-term opportunity in vehicles. And what secure purchase unlocks. Vehicle volume has seen significant growth quarter over quarter since we launched earlier this year. But the contribution to total volume is still very modest as we expected. We estimate that Carmel's effective take rate will fall to the low to mid-single-digit range when including both the buy-side and the sell-side monetization. But the revenue contribution also so far this year has been immaterial. And so I don't expect that it would have any material impact on your models for the rest of this year or next year.
Jamie Iannone: On the ads attribution change, we think that the new halo attribution better aligns the value of our CPA ads with the velocity that we provide to sellers. I think it helps better calibrate the return on ad spend levels between CPA and CPC. You're right, Michael. This is something that we released back in Germany in February, expanded in the June timeframe to other key markets across the European region, and then we announced today we plan to roll that to the U.S. and Canada in the new year. And this was really based on the learnings that we saw from other markets.
Where, you know, those learnings said that, you know, what we saw from sellers was they can certainly adjust and adopt their bids as a result of these changes. But the net effect of the attribution change was positive for our ads monetization in Germany. And importantly, we're very focused on the ROAS levels for our sellers. And our ROAS levels remain healthy for our sellers and they continue to adopt our CPA ads. So, that's why we've extended it now to the U.S. and Canadian markets.
Leila: Your next question will come from Thomas Steven Champion with Piper Sandler.
Thomas Steven Champion: Hi, good afternoon. Jamie, it looks like engaged buyers spend increased and your listings count has made tremendous progress over the last couple of years. I think it was 2.4 billion this quarter. And I guess the question is when do you think this better inventory and maybe personalization features translate into more active buyers and enthusiast buyers? I'd be curious about your view on that. And then maybe just any update for us on the Facebook marketplace partnership. Thank you.
Jamie Iannone: Yeah. Look. On the buyer side, our trailing twelve-month active buyers grew by 1% to 134 million in Q3. As you say, top of the funnel is important for us. But we are very focused on driving active buyers to become enthusiast buyers. And what we're seeing there is that we've seen consistent, albeit gradual improvements in our year-over-year growth rate for enthusiasts over the past three years. We've seen GMV per enthusiast buyer grow. In Q3, it was over $3,200 annually. And continued to grow year over year.
And what we also see is despite the fact that we're in a challenging environment, macro environment in Europe, and that's part of our buyer growth, we really don't see our enthusiast buyers churn on the marketplace. If anything, because of the macro, they may move to mid values. But our mid-value buyers, which is the cohort just below enthusiasts, have been growing year over year every quarter since the beginning of 2024. So we're continuing to invest in full-funnel marketing across the board. We think that, obviously, that has a longer payback for buyers than just pure kind of lower funnel spend. But we think it's the right mix of marketing that we're doing across the board.
As it relates to Facebook Marketplace, we continue to be optimistic about the long-term potential of our partnership there. Both companies are working together to optimize the experience and during Q3, we continued to scale that test and improve the integrated checkout experience, which was important for us to kind of get that right. And we believe it's great for our seller community because as we expose their listings to face a scaled audience, that's great for Facebook Marketplace users as they discover the breadth and, obviously, great for our sellers on the platform. So going to continue to scale that test and work on every piece of the funnel.
Every time we worked on it, we've seen pretty significant and great improvements, which has been great to see.
Leila: Your next question will come from Andrew Boone with Citizens. Thanks so much for taking questions. I wanted to ask about one of the pieces you gave for 2026 in terms of the narrowing of revenue and GMV, and it sounds like some pressure on advertising. Can you guys just unpack that and help us understand kind of what exactly that means? And then Magical Listings has really made the seller process easier. Can you guys just help us understand how that manifests back in the GMV? What happens on the sell side as you guys do get that long-tailed listings? How do you guys really optimize that?
Jamie Iannone: Yeah. So let me start with the magical listings point, and then we'll talk a little bit about the advertising of the pieces. So what we see with Magical Listings is really kind of an unlock of more inventory when sellers are starting to use it. So, it helps them spend less time creating listings, and more time growing their business. So over 10 million sellers have used our Magical Listings tool. I think we're up to over 300 million items have been augmented leveraging AI. And so, it's really about driving more velocity in selling and driving our overall CSAT experience in selling.
Think about that as listing completion rates, you know, listings per list, or etcetera, which all help us perform really well. We're not just focused on the listing experience, right? As we're helping them create better pictures to help them sell more. We're actually using AI to figure out if you're putting a promoted off-site together, how do we which pictures do we use and how to alter all of that to kind of help you drive sell-through, etcetera. And, you know, what's great about eBay Inc. is having a large base of C2C sellers, and they're bringing really unique items onto the platform.
And so if you look at the average household, we think they have three to $4,000 of items that could be on eBay Inc., and less than 20% of that is on eBay Inc. today. It's really about unlocking all of that inventory by making it so easy with Magical Listings. I think on advertising, the comments we're making were more about Q4 versus Q3, where we saw strong ad growth in Q3, due to our strong volume growth and ads adoption and we expect our 1P ads to normalize to the low to mid-teens growth in Q4, was the comment that we're making about advertising.
But when you look at the ROAS that we're providing to sellers, when you look at the experience that we're providing, we feel really good about the trajectory of our advertising portfolio and opportunities.
Peggy Alford: And then, Andrew, in terms of your question around the narrowing of GMV versus revenue that we commented on in 2026. We do expect the gap between GMV and revenue growth to be relatively narrow in 2026. And this is driven from our continued healthy growth in first-party advertising. Which is partially offset by two things. One, fewer imports into the U.S. by CBT sellers, which slightly pressures our advertising and financial services monetization. And then we are seeing we expect to see a higher mix of GMV from our emerging businesses like vehicles and eBay Live that have a lower average take rate. So that's what's driving that. Thank you.
Jamie Iannone: Operator, could we do one last question, please?
Leila: Yes. Your final question will come from Ygal Arounian with Citi.
Ygal Arounian: Hey. Thanks, guys, for squeezing me in. I guess just to look at the 2026 guidance. Maybe a little bit more closely and you know, the commentary on positive GMV growth and you know, Peggy, you gave the kind of three points of headwind impact. Can you maybe elaborate a little bit more on what positive means and kind of where you feel like you fall in that trajectory, you know, spent, you know, the better part of an hour talking about a lot of the improvements you guys have made. You know, Jamie, you've called a lot of the growth durable. So I think just helping investors kind of feel for Frameware we land in that positive.
I know it's early, on the de minimis impacts, you know, clearly, that has gotten bigger. Any way to frame in a little bit more detail what you're seeing there? Thanks.
Peggy Alford: Sure. So we are early in our planning process, which is why we sort of provided only high-level remarks on our preliminary commentary for next year. We have the holiday ahead of us, and so it would be premature to talk too much about how we're thinking about it specifically. We do expect our strategic initiatives to remain the core driver of our growth, namely as we've talked about focused categories, geographic initiatives, horizontal innovation. We're super excited about what we know eBay Live in vehicles. Will contribute given the incremental investments and focus that we had this year. We've pointed out some of the lapping dynamics that we're expecting.
Some of those are, as you were asking, related to tariff announcements, where we do expect to see a full annualized amount from the one month we saw in Q3 and the full quarter that we'll have in Q4. And our expectations in terms of that one point was really annualizing a similar trend to what we're currently seeing.
Jamie Iannone: And on your question on de minimis Ygal, so we did observe breakage related to tariffs in Q3, particularly after de minimis exemption was removed for the rest of the world in late August. That subjected, you know, a significant amount of imports to tariffs for the first time. And sellers in, you know, Japan and Canada were amongst the most impacted. What we've really focused on is supporting our customers which is why we're accelerating our product roadmap for cross-border shipping services. So we talked earlier about eBay International shipping in Canada, that's our third largest corridor into the U.S. Really giving them a solution similar to what we brought to U.S. sellers.
And that's launched and is performing well. More extending Speedpack, which we've talked about for China, then we extended it to Japan. We're expanding Speedpack to our German sellers. These tools help sellers manage the friction and the complexity associated with the changes while providing buyers price transparency. So overall, we feel confident our marketplace is well suited to help sellers and buyers navigate these challenges. You know, Peggy talked about some of the lapping dynamics for next year from that. But one of the benefits we have is, you know, our diversified supply of domestic and cross-border inventory is an advantage in this environment. While also our non-new in-season used and refurbished inventory help consumers find value as well.
Great. Thanks so much.
Ygal Arounian: Yeah. Thank you.
Leila: Thank you for joining. This concludes today's call. You may now disconnect.