eBay (NASDAQ:EBAY) Reports Strong Q4 CY2025, Stock Soars

Online marketplace eBay (NASDAQ:EBAY) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 15% year on year to $2.97 billion. On top of that, next quarter’s revenue guidance ($3.03 billion at the midpoint) was surprisingly good and 8.5% above what analysts were expecting. Its non-GAAP profit of $1.41 per share was 4.4% above analysts’ consensus estimates.

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Company Overview

Originally known as the first online auction site, eBay (NASDAQ:EBAY) is one of the world’s largest online marketplaces.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, eBay grew its sales at a sluggish 4.3% compounded annual growth rate. This was below our standard for the consumer internet sector and is a rough starting point for our analysis.

This quarter, eBay reported year-on-year revenue growth of 15%, and its $2.97 billion of revenue exceeded Wall Street’s estimates by 3%. Company management is currently guiding for a 17% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.8% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and implies its newer products and services will not catalyze better top-line performance yet.

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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.

Over the last two years, eBay’s active buyers, a key performance metric for the company, increased by 1.2% annually to 135 million in the latest quarter. This growth rate is one of the lowest in the consumer internet sector, largely a function of its already massive scale and saturated market. If eBay wants to reaccelerate growth, it likely needs to innovate with new products.

Unfortunately, eBay’s active buyers were flat year on year in Q4. 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 decent over the last two years, averaging 5.2%. Its ability to increase monetization while growing its active buyers demonstrates the value of its platform.

This quarter, eBay’s ARPB clocked in at $21.96. It grew by 14.1% year on year, faster than its active buyers.

Key Takeaways from eBay’s Q4 Results

We were impressed by eBay’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 6.4% to $87.31 immediately after reporting.

eBay had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. 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).