Online marketplace eBay (NASDAQ: EBAY) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 9.5% year on year to $2.82 billion. Guidance for next quarter’s revenue was optimistic at $2.86 billion at the midpoint, 2% above analysts’ estimates. Its non-GAAP profit of $1.36 per share was 1.9% above analysts’ consensus estimates.
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eBay (EBAY) Q3 CY2025 Highlights:
- Revenue: $2.82 billion vs analyst estimates of $2.73 billion (9.5% year-on-year growth, 3.1% beat)
- Adjusted EPS: $1.36 vs analyst estimates of $1.33 (1.9% beat)
- Adjusted EBITDA: $829 million vs analyst estimates of $829.2 million (29.4% margin, in line)
- Revenue Guidance for Q4 CY2025 is $2.86 billion at the midpoint, above analyst estimates of $2.80 billion
- Adjusted EPS guidance for the full year is $5.45 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 20.4%, down from 23.1% in the same quarter last year
- Free Cash Flow was $803 million, up from -$441 million in the previous quarter
- Active Buyers: 134 million, in line with the same quarter last year
- Market Capitalization: $45.51 billion
"Q3 was another strong quarter for eBay, reflecting continued momentum across our marketplace and disciplined execution of our strategy," said Jamie Iannone, Chief Executive Officer of eBay.
Company Overview
Originally known as the first online auction site, eBay (NASDAQ: EBAY) is one of the world’s largest online marketplaces.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, eBay grew its sales at a sluggish 2.7% compounded annual growth rate. This fell short of our benchmarks and is a tough starting point for our analysis.
This quarter, eBay reported year-on-year revenue growth of 9.5%, and its $2.82 billion of revenue exceeded Wall Street’s estimates by 3.1%. Company management is currently guiding for a 10.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.
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Active Buyers
Buyer Growth
As an online marketplace, eBay generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
eBay struggled with new customer acquisition over the last two years as its active buyers were flat at 134 million. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If eBay wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
Unfortunately, eBay’s active buyers were once again flat year on year in Q3. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the company earns in transaction fees from each buyer. ARPB also gives us unique insights into a user’s average order size and eBay’s take rate, or "cut", on each order.
eBay’s ARPB growth has been subpar over the last two years, averaging 2.7%. This raises questions about its platform’s health when paired with its flat active buyers. If eBay wants to grow its buyers, it must either develop new features or lower its monetization of existing ones. 
This quarter, eBay’s ARPB clocked in at $21.04. It grew by 8.7% year on year, faster than its active buyers.
Key Takeaways from eBay’s Q3 Results
It was encouraging to see eBay’s revenue guidance for next quarter beat analysts’ expectations. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its number of active buyers slightly missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 6.6% to $93.01 immediately after reporting.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
