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01/10 20:13
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals solid financial performance with strong U.S. GMV growth and promising AI integration plans. Despite some margin concerns due to strategic investments, the optimistic outlook on durable growth and key opportunities in focus categories, vehicles, and AI partnerships is encouraging. The Q&A session highlights management's confidence in future growth, although some uncertainties remain. Overall, the positive financial guidance, strategic initiatives, and shareholder return plans suggest a positive stock price movement in the near term.
Gross Merchandise Volume (GMV) Grew 8% to $20.1 billion year-over-year. This growth was driven by focus categories, overall strength in the U.S. market, and partially offset by challenging international macroeconomic conditions and changes to U.S. trade policy.
Revenue Increased by over 8% to $2.82 billion year-over-year. Growth was supported by focus categories and advertising revenue, despite headwinds from trade policy changes and macroeconomic challenges.
Non-GAAP Operating Income Grew 9% year-over-year to $764 million. This was attributed to marketing and operating efficiencies, partially offset by product development expenses and foreign exchange headwinds.
Non-GAAP Earnings Per Share (EPS) Grew over 14% year-over-year to $1.36. Growth was driven by strong revenue performance and operational efficiencies.
First-Party Advertising Revenue Grew nearly 23% year-over-year to $496 million. Growth was driven by broad-based adoption of Promoted Listings and enhanced advertising performance through AI capabilities.
Free Cash Flow Generated $803 million in Q3. This reflects strong operational performance and efficient capital management.
Take Rate Remained at 14% in Q3. Strength in advertising was offset by headwinds from returned and canceled orders, category mix shifts, and trade policy changes.
International GMV Grew nearly 4% year-over-year on an FX-neutral basis. Growth was supported by enhancements to the U.K. C2C value proposition but faced challenges from macroeconomic conditions and trade policy changes.
U.S. GMV Accelerated to nearly 13% year-over-year growth. This was driven by broad-based category strength and increased sold items and average selling price.
Focus category GMV growth: Accelerated to over 15% in Q3, driven by collectibles, motor parts, and fashion. Collectibles saw triple-digit growth in Pokémon GMV for the third straight quarter.
eBay Live: Expanded into new European markets, with 5x annual GMV run rate growth year-over-year. Hosted notable events with celebrities and brands.
AI and agentic commerce: Enhanced AI shopping agent and integrated with Apple's iOS 26 visual intelligence feature. Rolled out AI assistant for messaging and improved listing tools.
International expansion: Acquired Tise, a Nordic social marketplace, to strengthen presence in the circular economy and Nordic markets.
Shipping solutions: Launched eBay International Shipping in Canada and expanded SpeedPAK to Germany, improving cross-border trade efficiency.
Advertising revenue: First-party advertising revenue grew nearly 23%, driven by Promoted Listings and AI-enhanced ad performance.
Financial services: Seller Capital program surpassed $1 billion in growth capital disbursed since 2021.
Circular economy: Collaborated with Marks & Spencer in the U.K. for preloved clothing resale and acquired Tise to enhance circular economy initiatives.
Focus on enthusiasts: Invested in focus categories like collectibles, fashion, and motor parts to drive growth and innovation.
Macroeconomic Challenges: Continued macroeconomic challenges across international markets and increased headwinds for cross-border trade into the U.S. These include the elimination of the de minimis exemption for imports under $800, creating incremental cost and friction for cross-border trade.
Focus Category Growth Normalization: The level of growth in focus categories is expected to normalize in the near future, which may impact overall growth momentum.
Cross-Border Trade: Deceleration in year-over-year volume growth in key markets importing into the U.S. after the removal of the de minimis exemption, impacting cross-border trade resilience.
Take Rate Pressure: Take rate was pressured by returned and canceled orders, category mix shifts, and headwinds related to trade policy changes.
International Market Conditions: Relatively more challenging macroeconomic conditions outside of the U.S., impacting international GMV growth.
Strategic Investment Costs: Incremental investments in strategic initiatives such as eBay Live, shipping solutions, and vehicles are expected to pressure operating margins in the short term.
Regulatory and Tax Changes: Potential headwinds from U.S. data transfer policies and reevaluation of non-GAAP tax rates, which may result in increased costs.
Interest Rate Environment: Prevailing interest rates and a lower cash balance are expected to pressure net interest income year-over-year.
Lapping Dynamics: Exceptional growth in trading cards and bullion in prior periods creates challenging comparisons for future growth metrics.
Q4 2025 GMV: Expected to be between $20.5 billion and $20.9 billion, representing FX-neutral growth between 4% and 6% year-over-year. FX is estimated to represent roughly 180 basis points of tailwind to spot GMV growth.
Q4 2025 Revenue: Forecasted to be between $2.83 billion and $2.89 billion, implying FX-neutral growth of 8% to 10% year-over-year. FX is estimated to represent roughly 190 basis points of tailwind to spot revenue growth.
Q4 2025 Non-GAAP Operating Margin: Expected to be between 25.8% and 26.3%, representing non-GAAP operating income growth between 5% and 9% as reported.
Q4 2025 Non-GAAP Earnings Per Share: Forecasted to be between $1.31 and $1.36, representing year-over-year growth between 5% and 9%.
2025 Free Cash Flow: Expected to be approximately $1.5 billion, including a headwind of $935 million from unique tax items paid in Q2. On a normalized basis, free cash flow is expected to be roughly $2.5 billion for 2025.
2026 GMV and Revenue Growth: Planning for a third consecutive year of positive FX-neutral GMV and revenue growth, reflecting confidence in initiatives and strong underlying momentum from 2025.
2026 GMV Growth Considerations: Lapping dynamics in trading cards, bullion, coins, and marketing efficiency could represent a lapping consideration of approximately 2 points of GMV growth for the full year in 2026. Incremental headwinds from annualizing breakage associated with global de minimis changes could result in a headwind to FX-neutral GMV growth of approximately 1 point.
2026 Revenue Growth: Gap between GMV and revenue growth expected to be relatively narrow, with healthy growth in first-party advertising revenue partially offset by pressure on cross-border sellers and a higher mix of GMV from emerging businesses like Vehicles and eBay Live.
2026 Profitability: Focus on targeting the optimal combination of GMV growth and operating margin to maximize operating income dollar growth over the medium to long term. Modest headwinds expected below the operating income line due to lower cash balance, expected slope of interest rates, and potential modest increase in non-GAAP tax rate.
Cash Dividends: We returned approximately $760 million to shareholders through repurchases and cash dividends. Paid a quarterly cash dividend of $132 million in September or $0.29 per share. Our Board declared a quarterly cash dividend of $0.29 per share for the fourth quarter to be paid in December.
Share Repurchases: We repurchased $625 million of eBay shares in Q3 at an average price of nearly $88. We continue to plan on repurchasing approximately $2.5 billion of our shares for the full year. Over the last few years, we were pleased to monetize several equity investments at attractive valuations, enabling us to return significantly more capital to shareholders than our normalized free cash flow.
The earnings call reveals solid financial performance with strong U.S. GMV growth and promising AI integration plans. Despite some margin concerns due to strategic investments, the optimistic outlook on durable growth and key opportunities in focus categories, vehicles, and AI partnerships is encouraging. The Q&A session highlights management's confidence in future growth, although some uncertainties remain. Overall, the positive financial guidance, strategic initiatives, and shareholder return plans suggest a positive stock price movement in the near term.
The earnings call presented a mixed picture. While there were positive aspects such as AI-powered initiatives, focus on operational efficiency, and strong ad revenue growth, the guidance for Q2 was weak, with GMV and revenue growth expected to be flat. The Q&A revealed management's reluctance to provide long-term growth projections, which may concern investors. The lack of a new partnership announcement or strong financial metrics further tempers expectations. Given these factors, the stock price is likely to remain stable, resulting in a neutral sentiment.
The earnings call shows mixed signals: strong financial metrics with revenue and EPS growth, but weak guidance with flat GMV and revenue projections. Positive factors include share repurchase plans and a strong liquidity position, but concerns arise from declining margins, leadership transition risks, and unclear responses in the Q&A about tariffs and consumer slowdown. Additionally, the market strategy and expenses hint at potential pressures. Without market cap data, a neutral rating is prudent, expecting minimal stock price movement within -2% to 2% over the next two weeks.
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