Online marketplace eBay (NASDAQ: EBAY) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 1.1% year on year to $2.59 billion. Guidance for next quarter’s revenue was better than expected at $2.63 billion at the midpoint, 0.9% above analysts’ estimates. Its non-GAAP profit of $1.38 per share was 3.2% above analysts’ consensus estimates.
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eBay (EBAY) Q1 CY2025 Highlights:
- Revenue: $2.59 billion vs analyst estimates of $2.55 billion (1.1% year-on-year growth, 1.6% beat)
- Adjusted EPS: $1.38 vs analyst estimates of $1.34 (3.2% beat)
- Adjusted EBITDA: $831 million vs analyst estimates of $822.1 million (32.1% margin, 1.1% beat)
- Revenue Guidance for Q2 CY2025 is $2.63 billion at the midpoint, above analyst estimates of $2.6 billion
- Adjusted EPS guidance for Q2 CY2025 is $1.28 at the midpoint, below analyst estimates of $1.28
- Operating Margin: 23.8%, in line with the same quarter last year
- Free Cash Flow Margin: 24.9%, up from 21.7% in the previous quarter
- Active Buyers: 134 million, up 2 million year on year
- Market Capitalization: $31.32 billion
"eBay's first quarter results were ahead of expectations, as we delivered our fourth consecutive quarter of positive GMV growth," said Jamie Iannone, Chief Executive Officer at eBay.
Company Overview
Originally known as the first online auction site, eBay (NASDAQ: EBAY) is one of the world’s largest online marketplaces.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, eBay struggled to consistently increase demand as its $10.31 billion of sales for the trailing 12 months was close to its revenue three years ago. This was below our standards and is a tough starting point for our analysis.
This quarter, eBay reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 1.6%. Company management is currently guiding for a 2.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months. Although this projection indicates 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. 
Luckily, eBay added 2 million active buyers in Q1, leading to 1.5% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating buyer growth.
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 mediocre over the last two years, averaging 3.2%. 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 $19.29. It was flat year on year, worse than the change in its active buyers.
Key Takeaways from eBay’s Q1 Results
It was encouraging to see eBay beat analysts’ revenue expectations this quarter. We were also glad its revenue guidance for next quarter slightly exceeded Wall Street’s estimates. On the other hand, its number of active buyers was in line and its EPS guidance for next quarter fell slightly short of Wall Street’s estimates. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The areas below expectations seem to be driving the move, and the stock traded down 1.4% to $67.20 immediately after reporting.
So do we think eBay is an attractive buy at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
