eBay Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Focus Categories: Collectibles GMV grew over 10%, with momentum broad-based across trading card subcategories. Strategic initiatives in collectibles included ramping grading add-on, bulk selling capabilities, and integrating inventory from Goldin Auctions. P&A saw growth driven by strength in major markets and trade quarters, with initiatives like automating fitment data enhancement and launching easy free returns in the U.S. Luxury and apparel focus categories benefited from authentication expansions and marketing efforts like sponsoring the Met Gala.
• eBay Live: Continues to grow with accelerating contributions from categories like luxury watches, jewelry, etc. Launched in the U.K. and innovated on the live commerce experience with features like redesigned seller host console and autocharge/combined shipping capabilities.
• Advertising: First-party advertising revenue grew 17%, with balanced growth across the ads portfolio. Optimizations included leveraging models on buyer behavior and using LLMs to surface relevant promoted products.
• Payments and Financial Services: Expansion of Klarna partnership into U.S. was successful, and other initiatives like eBay Balance in the U.K. and Seller Capital for small businesses continued to deliver value.

Segment Performance:

• GMV grew 4% to $19.5 billion. Revenue grew over 4% to $2.73 billion. Non-GAAP operating income grew 8% to $775 million, and non-GAAP earnings per share grew 16% to $1.37.
• Focus categories: GMV grew over 10% in Q2. Collectibles was a significant growth driver, with Pokemon cards seeing triple-digit GMV growth for the second straight quarter. Motors, Parts and Accessories (P&A) contributed nearly 1 point of year-over-year GMV growth. Luxury and apparel focus categories also contributed positively.
• Advertising: First-party advertising revenue on the eBay platform grew 17% in Q2, driven by balanced growth across the ads portfolio.
• Payments and financial services: Expansion of partnership with Klarna into the U.S. market was a key highlight, with incremental GMV and new/reactivated buyers surpassing initial expectations.

Guidance:

• Q3: Expect GMV between $19.2 billion and $19.6 billion (FX-neutral growth 3%-5%), revenue between $2.69 billion and $2.74 billion (FX-neutral growth 3%-5%), non-GAAP operating margin between 26.6% and 27.1%, and non-GAAP earnings per share between $1.29 and $1.34 (year-over-year growth 8%-12%).
• Full Year 2025: GMV tracking to low single-digit FX-neutral growth high end or above. Revenue growth higher than GMV driven by advertising, shipping, and financial services. Non-GAAP operating income growth 4%-5% as-reported. Forecasted free cash flow ~$1.5 billion, targeting share repurchases of ~$2.5 billion.

Risks:

• Tariffs and trade policy changes: Disruption to direct shipped inventory from Greater China following tariff increases and removal of de minimis exemption, though there were offsets like increased ASP on remaining sales and expansion of product availability to other countries.

Question and Answer: Q: Eric Sheridan with Goldman Sachs asked about marketing return on spend and AI agentic commerce.

A: Jamie J. Iannone responded that there were efficiencies in marketing spend due to competitive dynamics, and AI represents a significant opportunity with a multipronged strategy including doubling down on inventory, investing in vertical experiences, and innovating on platform agentic capabilities.

Q: Michael Morton with MoffetNathanson Research asked about category growth drivers and AI search traffic.

A: Jamie J. Iannone said existing focus categories and those yet to be launched are drivers, and AI search traffic has high shopping intent with users converting well.

Q: Nathan Feather with MoffetNathanson Research asked about U.S. vs international business and H2 investments.

A: Jamie J. Iannone said U.S. was more favorable with consumer demand holding up, Europe remains tougher but initiatives offset macro trends, and H2 investments include U.S. pre-loved fashion, geographic C2C work, eBay Live, and AI.

Q: Ross Sandler with Barclays asked about U.S. market vs Temu and fashion category opportunity.

A: Jamie J. Iannone said ASP growth in U.S. was from multiple factors including forward deployed inventory and Klarna partnership, and fashion category has potential with generative AI and influencer marketing.

Q: Nikhil Devnani with Bernstein Research asked about trading cards growth durability and margins.

A: Jamie J. Iannone said trading cards growth is durable with long-term potential despite cyclicality, and Peggy M. Alford noted high gross margin from top line growth driving operating leverage.

Q: Colin Sebastian with Baird asked about active and enthusiast buyer base and long-term growth outlook.

A: Jamie J. Iannone said active buyers grew, focused on enthusiast buyers who drive 70% of GMV, and growth is from focus categories, geo-specific investments, and horizontal initiatives.

Q: Tom Champion with Piper Sandler asked about listings volume and Caramel.

A: Jamie J. Iannone said listings are growing with AI adoption, and Caramel has potential in the collectible car market with synergies to Parts and Accessories.

Q: Ygal Arounian with Citi asked about margins and tariffs.

A: Peggy M. Alford said focus is on investing to drive GMV growth and healthy margins, and Jamie J. Iannone said tariffs had limited impact with offsets like ASP uplift.

Q: Shweta Khajuria with Wolfe Research asked about ad revenue durability and GMV growth durability.

A: Jamie J. Iannone said ad revenue has long runway with adoption and scaling new products, and GMV growth is from focus categories, horizontal initiatives, and geo-specific investments.

Q: Lee Horowitz with Deutsche Bank Research asked about international GMV and eBay Live.

A: Jamie J. Iannone said international GMV was impacted by macro backdrop, and eBay Live has strong seller/buyer interest with potential in various categories and ongoing innovation.