eBay (EBAY) Q1 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Wednesday, April 29, 2026 at 5:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jamie Iannone
• Chief Financial Officer — Peggy Alford
• Investor Relations — John Egbert

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Gross Merchandise Volume (GMV) -- $22.2 billion, up 14% on an organic, FX-neutral basis led by broad-based category acceleration.
• Revenue -- $3.09 billion, up 17% organically and FX-neutral, with a 260 basis point foreign exchange tailwind.
• Non-GAAP Operating Income -- $907 million, representing 18% growth year over year and balancing investment with profit leverage.
• Non-GAAP EPS -- $1.66, a 21% increase year over year alongside strong cash generation.
• Active Buyers -- 136 million trailing twelve-month buyers, up 1%; U.S. active buyer growth reached 6% with U.S. enthusiast buyers up 8%.
• U.S. GMV Growth -- Nearly 27%, supported by broad acceleration beyond collectibles and outpacing e-commerce benchmarks.
• International GMV -- Over 2% organic, FX-neutral growth, with a 770 basis point foreign exchange tailwind; growth improved despite macro headwinds.
• Focus Categories GMV -- Up 24%, adding 15 percentage points of outperformance over the rest of the marketplace and contributing significantly to platform momentum.
• Strategic Priorities GMV Mix -- Focus categories, consumer-to-consumer (C2C), and recommerce together represented approximately 70% of total GMV, with high-teens growth.
• C2C GMV Growth -- Delivered double-digit GMV increases across U.S., U.K., and Germany, with U.S. C2C growth meaningfully outpacing B2C.
• eBay Live GMV -- Annual run rate expanded more than 8x year over year, including international events each achieving seven-figure daily GMV milestones.
• Advertising Revenue -- $581 million, up 27%, with first-party ads contributing $555 million (28% growth), and off-platform ads rising 29% as third-party display ads declined.
• Promoted Listings Adoption -- Over 1.2 billion listings used Promoted Listings, with 5.2 million sellers using at least one product in this segment.
• Shipping Revenue -- Double-digit percentage growth, with expanded initiatives including managed shipping and new international solutions.
• Take Rate -- 13.9%, slightly higher year over year, bolstered by advertising, shipping, and buyer fee implementation.
• AI-Driven Seller Tools -- Magical Listing generated over 500 million AI listings, with a 50% increase in new U.S. listing creation rates and double-digit GMV growth per lister.
• Buyer Engagement -- Sessions using AI-powered agentic search beta displayed 50% more search engagement and a double-digit increase in purchase behavior.
• Shareholder Returns -- $639 million returned via $500 million in share repurchases (average $90 per share) and $139 million in cash dividends at $0.31 per share.
• Free Cash Flow -- $898 million, with cash and investments totaling $5.1 billion and gross debt of $6.7 billion at period end.
• Acquisition Developments -- The pending Depop acquisition expected to close by end of Q3 2026 and to add approximately one percentage point to full-year FX-neutral GMV growth, with a low-single digit headwind to non-GAAP operating income growth post-close.
• Q2 2026 Guidance -- GMV expected between $21.3 billion-$21.7 billion, with 8%-10% organic, FX-neutral growth; revenue in the $2.97 billion-$3.03 billion range, and non-GAAP EPS of $1.46-$1.51 (7%-11% growth).
• Full-Year 2026 Outlook -- FX-neutral GMV growth of 7%-7.5%; non-GAAP operating income up 9%-11%; share repurchases targeted at roughly $2 billion; capital expenditures to be 4%-5% of revenue.
• AI-Enabled Marketing -- AI-generated subject lines and creatives drove around 40% more engagement in marketing tests, providing improved returns on marketing spend.
• Operational Efficiencies -- Non-GAAP gross margin increased to 74.6%, supported by lower payment costs, operational optimization, and revenue recognition changes in the U.K. shipping program.
• Strategic Partnerships -- Integration of eBay inventory in Facebook Marketplace search became generally available in the U.S., Germany, and France, enhancing qualified traffic exposure for sellers.

SUMMARY

eBay (NASDAQ:EBAY) delivered double-digit organic growth in GMV, revenue, and non-GAAP operating income, fueled by strong execution of its focus on collectibles, C2C, and recommerce. Management emphasized the impact of recent AI-driven tools and cross-border shipping improvements on reducing friction and expanding unique inventory. Advertising revenue and eBay Live both accelerated meaningfully, reflecting diversified growth levers beyond core marketplace activities. U.S. buyer metrics, particularly among enthusiasts, showed outperformance, even as international performance improved despite ongoing macroeconomic challenges. The company reaffirmed multi-year capital allocation discipline, highlighted balanced reinvestment in strategic priorities, and offered explicit forward-looking guidance, including quantified acquisition impacts.

• Collectibles, including trading cards and Pokémon, drove outsize GMV gains, supported by milestone sales such as a $16 million Pokémon Pikachu Illustrator card through Goldin.
• Motors Parts & Accessories reached its strongest GMV growth since 2021, aided by Guaranteed Fit expansion into Australia and recent software acquisitions to boost supply in salvage inventory.
• Fashion strategy expanded the Authenticity Guarantee program to over 70 U.S. brands, simplified garment sizing, and increased seller onboarding, augmenting listed inventory and conversion metrics.
• AI-powered innovations, including agentic search and expanded Magical Listing, enhanced both seller and buyer experiences, with early international rollout underway following U.S. success.
• Guidance cautioned growth rate deceleration in Q2 due to bullion normalization and lapping effects, while maintaining higher annual GMV and EPS targets attributed to persistent broad-based momentum and acquisition synergies.

INDUSTRY GLOSSARY

• GMV (Gross Merchandise Volume): The total value of goods sold via eBay's marketplaces within a given period, regardless of actual revenue recognition.
• C2C (Consumer-to-Consumer): A model facilitating direct sales between individual consumers, as opposed to sales involving business sellers (B2C).
• Focus Categories: eBay-defined verticals receiving prioritized investment and operational resources, such as collectibles, motors, and fashion.
• Recommerce: Sales of pre-owned and refurbished items, contributing to the circular economy by extending product life.
• AI (Artificial Intelligence): Machine learning technologies powering marketplace features like card scanning, search, and listing automation.
• eBay Live: eBay's live-stream shopping experience allowing real-time buyer-seller engagement and sales velocity in select categories.
• Magical Listing: eBay's AI-driven tool that automates creation of item listings by generating recommended details and optimizing presentation.
• Agentic Search: An AI tool enabling conversational, multi-turn, natural language-driven search refinement for buyers.
• Guaranteed Fit: Program ensuring correct automotive part fitment, offering buyers a money-back guarantee if items do not fit as certified for specific vehicles.
• Take Rate: Revenue as a percentage of GMV, reflecting monetization from fees, advertising, and services.
• 1P (First-Party) Ads: Advertisements sold directly by eBay on its own platform, as opposed to third-party ad units served by external partners.

Full Conference Call Transcript

John Egbert: Good afternoon. Thank you all for joining us for eBay Inc.’s first quarter 2026 earnings conference call. Joining me today on the call are Jamie Iannone, our chief executive officer, and Peggy Alford, our chief financial officer. We are providing a slide presentation to accompany our commentary during the call, which is available through the Investor Relations section of the eBay Inc. website at investors.ebayinc.com. Before we begin, I will remind you that during this conference call, we will discuss certain non-GAAP measures related to our performance. You can find a reconciliation of these measures to the nearest comparable GAAP measures in our accompanying slide presentation.

Additionally, all growth rates noted in our prepared remarks will reflect organic, FX-neutral year-over-year comparisons. All earnings per share amounts reflect earnings per diluted share unless indicated otherwise. All year-over-year growth rates versus 2025 are also based on recast financials, reflecting our adoption of the new internally developed software accounting guidance in 2026. During this conference call, management will make forward-looking statements, including, without limitation, statements regarding our future performance and expected financial results. These forward-looking statements involve known and unknown risks and uncertainties. Actual results may differ materially from our forecast for a variety of reasons.

You can find more information about risks, uncertainties, and other factors that could affect our operating results in our most recent periodic reports on Form 10-K, Form 10-Q, and our earnings release from earlier today. You should not rely on any forward-looking statements. All information in this presentation is as of 04/29/2026. We do not intend and undertake no duty to update that information. With that, I will turn the call over to Jamie.

Jamie Iannone: Thanks, John. Good afternoon, and thank you all for joining us today. I am pleased to report we are off to a very strong start in 2026. Our first quarter results exceeded our guidance and consensus estimates across the board, despite ongoing macroeconomic and geopolitical uncertainty across many of our major markets. During Q1, gross merchandise volume rose by 14% to over $22 billion, while revenue grew 17% to more than $3 billion. Strong flow-through of this top-line momentum led to 18% year-over-year growth in non-GAAP operating income, which reached over $900 million. And our non-GAAP earnings per share increased by 21% year over year to $1.66.

These strong top- and bottom-line results were driven by a broad-based GMV acceleration across all of our major categories, alongside improved year-over-year trends across most of our key geographies. Our most established strategic priorities now make up approximately 70% of our total GMV. This includes focus categories, our consumer-to-consumer, or C2C, business, and recommerce, which is made up of pre-owned and refurbished items. These priority areas each individually grew faster than overall GMV in Q1, and collectively they grew in the high teens year over year, reflecting the impact of our strategic investments over the last several years.

Our focus categories continue to build momentum in Q1, with GMV growth accelerating to 24%, reflecting the benefits of our continued investments in trust, product experience improvements, and full-funnel marketing. The collectibles category was the largest contributor to GMV growth in Q1, reflecting broad-based momentum across the category. The 30th anniversary of Pokémon in late February fueled significant enthusiasm that translated into strong demand on our platform, which we supported with coordinated activations across our core marketplace, eBay Live, TCGplayer, and Goldin.

Sports trading card GMV growth accelerated notably in Q1 and was a larger contributor to GMV growth than Pokémon, as we benefited from strong late-season demand for the NFL and NBA, as well as 2026 releases for Major League Baseball. Outside of trading cards, we observed strong GMV growth across much of our broader collectibles offering, including in right-to-win areas like collectible coins, toys, action figures, and comic books. We also saw a transitory benefit to GMV growth from gold and silver bullion in response to precious metal prices, but this demand began to normalize in late Q1 as expected and should revert to historical levels in Q2.

Our off-platform marketplaces, TCGplayer growth remains strong, and Goldin growth accelerated as it reached a new quarterly GMV record in Q1. Goldin facilitated several landmark sales during the quarter, including a Pokémon Pikachu Illustrator card that sold for over $16 million, officially becoming the most valuable trading card ever sold at auction. To further support our trading card enthusiasts, we continue to enhance our AI-powered card scanning feature, which recently surpassed 30 million cumulative scans. This tool allows users to scan a single photo and instantly identify a card, surfacing historical prices and population data to help enthusiasts trade with confidence.

In Q1, we expanded the card scanning feature beyond sports to cover our top five collectible card game genres, including Pokémon, Magic: The Gathering, and One Piece. Overall, our continued investments in both on- and off-platform experiences are deepening engagement with collectibles enthusiasts. Through our innovation across multiple sports, genres, buying formats, and price points, we are further solidifying eBay Inc. as a premier global shopping destination for the hobbyist community. Importantly, the momentum we observed in Q1 extended well beyond collectibles, as the remainder of our U.S. business also delivered double-digit GMV growth and outpaced broader e-commerce benchmarks.

Our Motors Parts & Accessories business, or P&A, delivered its strongest quarter of year-over-year GMV growth since 2021, contributing approximately two points of growth to our overall marketplace in Q1. Our Guaranteed Fit program has meaningfully increased conversion on fitment-enabled listings in the U.S., U.K., and German markets, helping fuel the strongest quarter of P&A GMV growth we have seen in several years. Given the success we have seen in our initial markets, we recently expanded Guaranteed Fit to Australia, helping further solidify our online P&A leadership in this market by giving motors enthusiasts confidence to tackle their most complex projects, knowing they will have the right part for the job every time or their money back.

We also recently strengthened our P&A value proposition with the acquisition of Aladine Systems, a U.K.-based software provider for salvage yards. We expect this acquisition to bring more P&A inventory onto the eBay Inc. platform, which provides value for cost-conscious consumers and supports the circular economy. Our acquisition of Caramel a little over a year ago is helping us bring a more comprehensive eBay Inc. Motors offering by combining the strength of our scaled P&A business with our nascent but fast-growing vehicles business. We see meaningful opportunities for synergies between these businesses as they are highly complementary.

Vehicles sold on eBay Inc. create a natural opportunity for future engagement in P&A as buyers return to the marketplace to maintain, repair, and personalize their vehicles. In vehicles, our secure fully digital transaction capabilities are driving improvements across the purchase, and we are seeing encouraging traction as we expand from our initial focus on C2C transactions and begin serving small dealerships as well. While it is far earlier in its journey than P&A, vehicles continue to scale month over month and exited Q1 at an annualized GMV run rate in the hundreds of millions of dollars.

In fashion, we are building on the momentum we initially created by enhancing trust across high-ASP categories like watches, handbags, jewelry, sneakers, and streetwear through Authenticity Guarantee. More recently, we have expanded Authenticity Guarantee eligibility to a wider selection of pre-loved and luxury apparel, shoes, and accessories for a more complete head-to-toe value proposition for fashion enthusiasts. After diversifying our brand and inventory coverage in the U.K. and Germany last year, we followed suit in the U.S. during Q1 by expanding Authenticity Guarantee to more than 70 shoe and fashion accessory brands. We have also improved our value proposition for fashion recommerce by streamlining and calibrating garment sizing across global standards.

These changes have simplified the listing process for sellers, removed a major point of friction for buyers, and contributed to measurable increases in quality views, bought items, and conversion velocity in fashion. Our breadth and depth of selection in branded pre-loved fashion inventory is also key to our relevance in the category. Our AI tools, like the latest generation of Magical Listing experience, are making it dramatically simple for sellers to list pre-loved fashion items on eBay Inc., helping drive a mid-teens year-over-year increase in casual fashion listers in Q1.

At the same time, we are strengthening our position in fashion by using community to drive greater awareness and consideration with enthusiasts. eBay Live is becoming a meaningful driver of GMV in certain fashion categories, and in March, we held our first direct-from-brand live shopping event with Marks & Spencer in the U.K. Our second annual Vogue Vintage market events in the U.S. and U.K. were another strong example of how curated events elevate eBay Inc.’s relevance in pre-loved fashion, consistently showing up at the cultural moments that matter most to fashion enthusiasts, including the Grammys, the Oscars, and Berlin Fashion Week during Q1.

We have also driven engagement through our sponsorships of the new Saturday Night Live and Love Island All Stars programming in the U.K. Taken together, these efforts are making eBay Inc. a more compelling destination for enthusiasts and helped accelerate overall fashion GMV growth in Q1, including healthy double-digit growth across our fashion-focused categories in aggregate. Our C2C business remains one of the most important strategic priorities. C2C sellers bring the unique, hard-to-find inventory that differentiates eBay Inc. and strengthens our position in recommerce. Multiple years of investment have reduced friction and helped reinvigorate growth in a segment that makes up more than one quarter of our total GMV.

We saw that momentum continue in Q1, as C2C delivered double-digit GMV growth across the U.S., U.K., and Germany, meaningfully outpacing B2C growth in those markets. We believe this momentum reflects the enhanced value proposition for consumer sellers in these markets, with reduced transactional friction driving a healthier sell-to-buy flywheel. In May, we plan to revamp our consumer selling experience in Australia, our fourth-largest market by demand. We will remove selling fees for consumer sellers in Australia and introduce a buyer-facing fee on C2C transactions, while also tailoring our seller segmentation and managed shipping service to cater to local market dynamics.

Similar to our C2C initiatives in the U.K. and Germany, our goal is to reduce friction for casual sellers, increase our supply of differentiated inventory, and ultimately unlock a larger addressable market opportunity. Another area where we are seeing strong momentum is eBay Live. In categories where trust, storytelling, and community are central to the purchase experience, eBay Live gives sellers a powerful way to showcase unique inventory and engage buyers in real time, helping us bring more customers into high-value enthusiast experiences. Now operating in seven markets globally, eBay Live continues to scale rapidly, with an annual GMV run rate more than 8x higher year over year in recent weeks.

We supported that momentum in Q1 through strong growth in programming across a diverse mix of categories and improved event discovery throughout the eBay Inc. mobile app, including the recent addition of an eBay Live button on the bottom navigation for U.S. users on iOS. In Q1, we hosted our first livestream shopping event outside of the holidays, as our 48 Hours of Drops event in the U.S. set a new daily record for eBay Live GMV, with each day outpacing our previous record on Black Friday by 60%.

We also saw impressive results internationally, where local 24-hour events in the U.K. and Germany each reached seven-figure daily GMV milestones, proving that our live playbook is effectively capturing enthusiast demand across geographies. We continue to leverage our AI capabilities to reimagine core experiences across the marketplace. For sellers, the latest generation of our Magical Listing experience uses our proprietary models, product knowledge graph, and 30 years of marketplace data to do much of the hard work of creating a listing, from guiding sellers on which photos to take to generating key details like titles, categories, item specifics, and pricing.

The U.S. rollout of this experience has been one of the most impactful launches we have had in years, as it has driven a greater than 50% increase in new listing creation rate, double-digit percentage increases in sold items and GMV per lister, stronger retention, and a material increase in estimated customer lifetime value for these sellers. Based on these compelling results in the U.S. market, we began expanding this experience to new and reactivated listers in Germany in April, where early A/B tests are showing directionally similar uplift on key seller KPIs as the U.S. launch, which gives us confidence to extend this experience to more countries and seller segments in the coming months.

For buyers, our Authentic Search beta is creating a more intuitive and conversational way to shop by allowing customers to refine results in natural language and a multi-turn dialogue, much like working with a personal shopper that understands sizes, styles, and brand preferences. While still early, we have observed some encouraging learnings from this beta, as we are seeing approximately 50% more search engagement in sessions utilizing AI-powered refinements, which is ultimately translating into double-digit percentage increases in purchase behavior. These innovations are just two examples of our transition to an AI-native marketplace.

By embedding these capabilities into the core of our platform, we are fundamentally changing the pace at which we can remove friction, unlock supply, and drive long-term value for our enthusiasts. We are also extending the reach of our marketplace through partnerships. Following a successful pilot of eBay Inc. inventory in Facebook Marketplace search results last quarter, this integration has transitioned to general availability. eBay Inc. inventory is now enabled in the search box for the majority of Facebook Marketplace users in the U.S., Germany, and France. This integration further enhances the visibility of our differentiated inventory to Facebook’s scaled audience, which could drive qualified incremental traffic to our sellers’ eBay Inc. listings.

Our search integration complements our existing presence in the Marketplace feed for a subset of users, and we continue to iterate on the experience and gather valuable learnings. Now turning to shipping. Shipping solutions are a major focus for us this year as we leverage our scale and expertise to help sellers tap into demand across borders amid an increasingly complex trade policy landscape. In Q1, we continued to scale eBay International Shipping in Canada following its Q4 launch, and we expanded access to SpeedPAK for sellers in Germany and six other markets. Our SpeedPAK partnership continues to perform well in Greater China and Japan, as these capabilities are becoming increasingly important as cross-border trade grows more complex.

Before concluding my prepared remarks, I am proud to share that eBay Inc. was once again recognized as one of Fortune’s Most Innovative Companies. In January, we also released eBay Inc.’s inaugural Climate Transition Plan, a company-wide roadmap to reach net zero greenhouse gas emissions by 2045. This plan reflects how we are well-positioned to drive sustainable commerce at scale, and as a result, create enduring value for our customers, communities, and the planet. In closing, we delivered a very strong start to 2026 with results that exceeded our expectations and reflected broad-based momentum across the marketplace. A few key themes stand out from the quarter. First, our strategic priorities are driving the majority of our GMV growth.

Focus categories, C2C, and recommerce now represent approximately 70% of our total GMV and continue to gain share through our disciplined execution, which enhances our long-term resilience and strengthens the structural growth profile of our marketplace. Second, our GMV growth is broad-based and extends well beyond any single category. While collectibles continues to outperform, we saw improved trends across all of our major categories, including accelerating GMV growth across eBay Inc. Motors, electronics, and fashion. eBay Live continues to scale rapidly across a diverse group of categories, and we are in the early stages of realizing valuable synergies between P&A and vehicles. Third, we are progressing from AI-powered optimizations to building fully AI-native experiences on eBay Inc.

We are increasingly embedding AI into foundational elements of our marketplace to remove friction and unlock supply at scale, and deliver more personalized and relevant products to our customers. While the macro environment remains dynamic, as I look toward the balance of 2026, I am confident in the sustainability of our underlying business trends and the durable foundation we have established to support long-term growth. With that, I will turn the call over to Peggy to provide more details on our financial performance. Peggy, over to you.

Peggy Alford: Thank you, Jamie. I will begin with our financial highlights for the first quarter. GMV grew by 14% to $22.2 billion. Revenue grew 17% to $3.09 billion. Our non-GAAP operating income grew 18% year over year to $907 million. Non-GAAP earnings per share grew 21% year over year to $1.66, and we returned $639 million to shareholders through repurchases and cash dividends. Let us take a closer look at the key drivers of our strong Q1 performance. GMV grew over 14% to $22.2 billion on an organic FX-neutral basis. Foreign exchange provided a tailwind of approximately 400 basis points to spot GMV growth.

We saw broad-based strength this quarter, with year-over-year growth improving sequentially across all our major categories, with most contributing positively to GMV growth, led by collectibles, eBay Inc. Motors, electronics, and fashion. Focus category GMV grew 24% in the quarter and outpaced the remainder of our marketplace by 15 percentage points. Shifting to our major geographies, U.S. GMV growth was particularly strong in Q1, up nearly 27%, driven by a broad-based acceleration across categories. Strength extended beyond collectibles, while the remainder of our U.S. business also delivered double-digit GMV growth and outpaced broader e-commerce benchmarks.

Several of our strategic initiatives contributed more meaningfully to growth than prior quarters. eBay Live and C2C were each larger contributors, and exports from the U.S. to our international markets also accelerated, supported by improvements to our eBay International Shipping program and a weaker U.S. dollar. International GMV grew over 2% on an organic, FX-neutral basis, and growth also accelerated in Q1, with foreign exchange providing a tailwind of 770 basis points to spot GMV growth. While macroeconomic conditions remain challenging in our largest international markets, we are investing effectively in areas where we have a right to win. Focus categories, C2C, and eBay Live each contributed to improved trends in the U.K. and Germany.

We also saw cross-border growth recover across key regions like Greater China and Japan, reinforcing the benefits of our investments in shipping solutions, which are making it easier for buyers and sellers to transact globally amid a more complex trade environment. Next, let us look at our buyer metrics. Our trailing twelve-month active buyers grew 1% to nearly 136 million in Q1, including buyers from recently acquired entities. On an organic basis, active buyers were over 135 million, also up 1% year over year. Buyer growth was especially strong in the U.S., accelerating to nearly 6% in the quarter.

Enthusiast buyers remained at roughly 16 million but grew by nearly 2% year over year, and spend per enthusiast buyer exceeded $3,400 on a trailing twelve-month basis. In the U.S. market, enthusiast buyers grew even faster at 8% year over year. Now turning to our income statement. We generated revenue of $3.09 billion, up 17% on an organic FX-neutral basis, with foreign exchange providing a tailwind of 260 basis points to spot growth. Our take rate was 13.9% in Q1, up modestly year over year. Tailwinds from advertising, shipping initiatives, and lapping of our U.K. C2C buyer fee rollout in the prior year were partially offset by rapid growth in eBay Live and ongoing category and ASP mix changes.

Additionally, foreign exchange was a headwind of approximately 20 basis points to our reported take rate year over year. Total advertising revenue was $581 million, representing GMV penetration of over 2.6%. First-party ads grew 28% to $555 million. Promoted Listings comprised over 1.2 billion of the over 2 billion total listings on eBay Inc., and 5.2 million sellers adopted at least one Promoted Listings product during the quarter. In addition, off-platform ads grew 29%, while third-party display ads declined as expected due to our continued deprecation of these legacy ad units. Revenue from our shipping programs grew in the double digits during Q1 and is becoming a more significant contributor to our take rate.

Our shipping solutions are also strategically important as they leverage eBay Inc.’s scale and expertise to reduce cost and complexity, improve trust, and increase conversion and overall sales velocity. We intend to further scale our shipping initiatives, including managed shipping solutions for domestic C2C sales and cross-border solutions through EIS and our partnership with SpeedPAK. Moving to our profitability and earnings. Non-GAAP gross margin was 74.6% in the first quarter, up one point year over year, driven primarily by lower cost of payments and operational efficiencies. In addition, gross margin benefited from our U.K. managed shipping program switching from gross to net revenue recognition on January 1, as discussed last quarter.

Our non-GAAP operating income grew 18% to $907 million in Q1, reflecting our ability to balance continued investment in our strategic priorities with strong flow-through to earnings. Sales and marketing expense increased in the quarter, primarily reflecting higher marketing investment behind strategic priorities like C2C and eBay Live, as well as incremental spending to capitalize on favorable returns in lower-funnel marketing. Transaction losses increased as expected in Q1, reflecting newer shipping programs and customer experience enhancements. We were encouraged to see loss trends improve toward the end of the quarter, and we continue to expect these shipping programs to follow a typical curve with higher losses initially that moderate over time as we learn and optimize.

Non-GAAP earnings per share was $1.66, up 21%, and GAAP earnings per share was $1.12. Shifting to our balance sheet and capital allocation. We generated free cash flow of $898 million in the first quarter, and ended the period with cash and fixed income investments of $5.1 billion and gross debt of $6.7 billion on our balance sheet. Our equity investments and warrants were valued at roughly $770 million. In March, we received approximately $190 million from Adevinta’s shareholder distribution. This return of capital reduced the carrying value of our Adevinta investment to approximately $470 million at the end of Q1.

We repurchased $500 million of eBay Inc. shares in Q1 at an average price of approximately $90 and paid a quarterly cash dividend of $139 million in March, or $0.31 per share. Our pending acquisition of Depop is now expected to close by the end of 2026. We have received regulatory clearances for the transaction in the U.S. and Germany, and reviews are in progress and on track in other markets, including the U.K. and Australia. Now turning to our outlook starting with the second quarter. We expect GMV between $21.3 billion and $21.7 billion, representing total FX-neutral growth between 8% and 10% year over year.

Based on current exchange rates, we estimate FX would represent a roughly 100 basis point tailwind to spot GMV growth. Our Q2 guidance reflects continued broad-based GMV growth within our strategic priorities and incremental contributions from Live and vehicles. Our guidance also contemplates lapping dynamics from lower-funnel marketing efficiencies and our U.S. Klarna partnership, which became noticeable growth drivers during Q2 of last year. These factors, combined with gold and silver bullion volume reverting to historical levels in Q2, account for the majority of the implied year-over-year growth deceleration from Q1 to Q2. We forecast revenue to be between $2.97 billion and $3.03 billion in Q2, implying total FX-neutral growth of 8% to 10% year over year.

Based on current exchange rates, we estimate FX would represent a 120 basis point tailwind to spot revenue growth. We expect non-GAAP operating income growth between 6% and 10% year over year in Q2, implying non-GAAP operating margin between 27.6% and 28.1%. Our guidance contemplates a healthy balance between investments in strategic priorities with strong flow-through of operating leverage to the bottom line. We forecast non-GAAP earnings per share between $1.46 and $1.51, representing year-over-year growth between 7% and 11%. Next, I will share some updated thoughts on the full year, excluding the impact of the pending Depop acquisition, which I will discuss separately.

For 2026, we are now planning our business around year-over-year GMV growth between 7% and 7.5% on an FX-neutral basis. This updated view reflects the strong momentum we are seeing across our business balanced against more challenging comparisons as we move through the year, including lapping considerations from the prior year and a moderation of some of the category-specific tailwinds we have discussed on this call. We continue to expect revenue growth to be in line to slightly ahead of GMV for the full year on an FX-neutral basis, as healthy growth in advertising and shipping revenue is expected to be partially offset by mix shifts in our business, including higher growth contributions from Live and vehicles.

We are now anticipating non-GAAP operating income growth of between 9% and 11% for the full year, reflecting our stronger GMV and revenue expectations. As we have noted previously, when our business outperforms, we will continue to evaluate opportunities to reinvest a portion of that upside into our strategic priorities to further strengthen our marketplace and drive future growth. We continue to expect non-GAAP earnings growth to be relatively in line with non-GAAP operating income in 2026. We anticipate our lower cash balance and higher interest expense would pressure the net interest and other line item year over year, partially offsetting the tailwind from our share repurchases.

We continue to expect a non-GAAP tax rate of 17.5% for the full year, which is one percentage point higher than our tax rate in 2025. Our capital allocation outlook remains unchanged. We forecast capital expenditures to be between 4% and 5% of revenue for 2026. We are targeting roughly $2 billion of share repurchases for the full year. In addition, our board declared a quarterly cash dividend of $0.31 per share for the second quarter to be paid in June. As I noted earlier, we expect our pending acquisition of Depop to close by the end of Q3 2026.

Given the updated timeline, we expect Depop to contribute approximately one percentage point to total FX-neutral GMV growth year over year in 2026. From a profitability perspective, we expect the acquisition would represent a low single-digit headwind to the 9% to 11% operating income growth we anticipate for the core eBay Inc. marketplace, which includes planned investments in Depop and integration costs. We would also expect the Depop acquisition to dilute our non-GAAP earnings per share growth by low single digits, with the EPS impact modestly higher than operating income due to foregone interest income from the cash used for this transaction.

In closing, we are encouraged by our strong start to the year and the broad-based momentum across the business. Our results reflect continued execution within our established strategic priorities and strong returns on our investments in emerging growth vectors like eBay Live and vehicles. As we look ahead, we remain committed to balancing disciplined investments in areas that can strengthen our business over time with continued earnings growth and thoughtful capital allocation. Overall, we feel very good about the path ahead and our ability to create long-term value for our shareholders. With that, Jamie and I will now take your questions. We will now open the call for questions.

Operator: Today’s session will be utilizing the raise hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen. If you have dialed in, please press star 9 to raise your hand and star 6 to unmute. Once you have been called on, please unmute yourself and begin your question. Thank you. We will now pause a moment to let the queue assemble. Our first question will come from Nikhil Devnani with Bernstein. Please unmute and ask your question.

Nikhil Devnani: Hey there. Thank you for taking my question. Jamie, I was hoping you could help bridge the gap between that 6% U.S. buyer growth number and GMV number, which was much higher than that. What have you seen on order frequency trends relative to ASP growth? And I guess bigger picture, is the funnel for new buyers that are coming to eBay Inc. expanding again?

Jamie Iannone: Yes. We are encouraged by what we are seeing with our buyers, and we see even more positive signals when you look at the underlying trend. So, while global active buyers increased by 1% year over year and enthusiasts grew by 2% year over year, that really does not tell the whole story. Our U.S. growth has been much stronger at 6% year over year, and U.S. enthusiast buyers grew even faster at 8%. We have also talked about our mid-value buyers, Nikhil, and what we have seen is they have also grown year over year every quarter since the beginning of 2024, consistently outpacing our total active buyer growth, which really suggests strong trends beneath the surface.

That is somewhat counterbalanced by some of the trends that we are seeing internationally, mitigated by the macro pressure. So overall, what I would say is I am very pleased with the strength we are seeing across the board: the improvements in buyer count, the cohort mix, the engagement, and the spend. And it is really balanced. When you look at U.S. GMV, Nikhil, it is balanced between active buyers, sold items, and ASP, which I think is a healthy place to be.

Nikhil Devnani: And maybe if I could follow up with a question around gross margin and COGS for Peggy. As we think about initiatives like Live and all the AI product investment you are making now, how do we think about the puts and takes on COGS over the long term for the business? And any offsets that you might have elsewhere—productivity gains or otherwise—to counter that? Thank you.

Peggy Alford: Thanks for the question. When we look at our Q1 gross margin, we saw it was driven primarily by cost of payments and operational efficiencies. We said it was up one point year over year. It benefited from the U.K. managed shipping program switching from gross to net accounting at the beginning of the year. And as we look further into the year, we do see that there are going to be some similar puts and takes to the gross margin drivers. But what we are really excited about is that we are continuing to see a lot of strength on the top line.

And because of the diverse nature of our growth areas—if you look at Live and some of the AI efficiencies that we are seeing—you are going to see different drivers to gross margin, but all of this is going to benefit both the top line as well as our operating profit dollars as we scale.

Operator: Our next question will come from Nathan Feather with Morgan Stanley. Please unmute your line and ask your question.

Nathan Feather: Hey, everyone. Thanks for taking the question. Broadly, consumer sentiment has weakened a bit over the past two months, although spending seems like it has held strong. How do you think about balancing those inputs as you put together guidance for the remainder of the year? And then more generally, what have you been seeing in consumer health over the past few months as gas prices move?

Jamie Iannone: Look, we continue to see a dynamic global macro environment with a divergence between the U.S. and international. In the U.S., for our business, consumer demand continues to be resilient so far, despite the volatility in trade policy and geopolitics. Strength was really broad-based across the board in Q1, including collectibles, motors, and fashion. I would say it is a different story in Europe where it is more challenging, as reflected in the consumer confidence and some of the data, but the investments we have been making in the region have really helped offset that, and our international year-over-year growth improved from Q4 to Q1, as did CBT and our other solutions.

We have maintained a status quo approach in our assumptions. Our ability to incrementally guide Q2 and raise the year is really based on the confidence in the resilience we are seeing in our marketplace. Remember, Nathan, we are a bit more resilient because even in more challenging times, people turn to eBay Inc. to find value and used or refurbished items. From that perspective, we feel well positioned.

Nathan Feather: Great. That is helpful. And then, given the really strong GMV performance over the past twelve months, on a go-forward basis—if we look at maybe a two-year stack to exclude the impact of softer comps—any limitation that would prevent the GMV momentum you are seeing in Q2 from persisting into the back half?

Jamie Iannone: We feel really good about the momentum that we are seeing overall. Peggy talked about the real divergence that you see between Q2 and Q1 as just due to the number of factors she called out, whether that be bullion or some of the lapping dynamics. But what we continue to see is a strong consumer, and more importantly, we see a great return on the investments that we are making in the business. So when you look this quarter at the focus category growth of 24%, the areas that we have invested in are really resonating with consumers. We feel good about the back half and the strong two-year stack.

We feel great about what we are seeing in the consumer right now and the underlying growth in the business.

Operator: Your next question will come from Wells Fargo. Please go ahead.

Zach Morrissey: Thanks, guys. This is Zach Morrissey on for Ken. I just wanted to double-click on the C2C strength specifically in the U.S. It has obviously been a source of strength—you said double-digit GMV growth there. Just curious what you are seeing from a competitive dynamic. Vinted appears to be scaling and investing more aggressively in the U.S. Curious if you are seeing that reflected in parts of your business, or is this contributing to broader industry secular growth? And then on marketing investments, specifically in C2C, is that something we should expect to continue to be an area of focus throughout the course of the year? Thanks.

Jamie Iannone: We continue to have a very strong C2C business around the globe. The U.S. is among our strongest businesses in C2C, and we saw really healthy growth there. We have been operating in a very competitive global landscape for fashion recommerce for years, and it has really raised the bar for the customer experience and helped unlock the total addressable market that is locked up in closets, attics, basements, and garages. What we are seeing as we roll out things like Magical Listing—using AI for listings, which is now up to 500 million listings created with AI—is more listings per lister and great seller metrics because of our ability to unlock all that inventory.

That has had a meaningful impact on our performance. If you look at total GMV growth in fashion, it accelerated sequentially in Q1. Our fashion-focused categories contributed roughly a point of growth to our overall marketplace, with luxury growing at healthy double digits. Our improved C2C value proposition has been impactful in fashion and, frankly, across the board, and we have seen double-digit growth in each of our top three markets by demand—the U.S., U.K., and Germany. Overall, we feel really great about the momentum that we are seeing in fashion. And our pending acquisition of Depop indicates that we are leveraging our build, buy, and partner playbook—just like we did in collectibles—to enhance the fashion experience for enthusiasts.

Peggy, do you want to talk about the full-funnel marketing that we are doing?

Peggy Alford: Sure. In Q1, we leaned into full-funnel investments in support of our strategic priorities, notably in focus categories, C2C, and Live. Full-funnel marketing remains a really important way for us to support our strategic priorities. It drives awareness and consideration of eBay Inc. We did a number of events and activations during the quarter. Going forward, we continue to see it as a strong lever. We also take the opportunity, when we have strong GMV performance and strong profitability in the quarter, to invest—including in sales and marketing—in order to continue that growth ahead.

That is the important balance we will continue to look at: balancing strong flow-through to the bottom line with investing in continued growth from quarter to quarter, with sales and marketing being one of those levers.

Operator: Our next question will come from Eric Sheridan with Goldman Sachs. Your line is open. Please ask your question.

Eric Sheridan: Thanks so much for taking the question. Maybe building on the last answer and asking a two-parter. When you look out over the next six to twelve months, what do you see as the critical investments to maintain and build momentum around the enthusiast-buyer part of your business, so that continues to move in a very positive direction? That would be one.

And then against the dynamic of what you laid out with respect to marketing, how do you think about marketing changes that you are seeing out there across the social media and the search landscape, referencing back to what kind of ROI you might be able to get as marketing ramps for you relative to innovations that are happening across performance marketing more broadly? Thanks so much.

Jamie Iannone: We are going to continue to invest in the areas that are really driving healthy growth across the business. We will continue to invest in focus categories; you are seeing the nice return from the investments that we have made there. We are leveraging AI throughout the entire product experience, really taking friction out of the experience, and you are seeing more and more of that with the agentic search beta that we have going on and the incremental improvements in the new Magical Listing.

We have been investing in Live and seeing really nice returns from that—growing in the last few weeks 8x year on year in that format—and it is really engaging buyers and sellers in a new and different way. And while a little bit earlier, vehicles is also going to be another area for us to continue investing over the course of this year. We are really pleased with the ROI that we are seeing from those investments. On our marketing plan, our full-funnel approach has been working. You have seen more mid- and lower-funnel supported by the upper-funnel that we are doing.

We have been driving really interesting activations across social media—we were at all the popular events from the Grammys to the Oscars. We are sponsoring Saturday Night Live and Berlin Fashion Week, driving all the way down to putting products that are most relevant inside of people’s social feeds. Facebook is a good example. We have new tests with them going on, in addition to putting items inside of Facebook Marketplace in the search experience. We are going to continue to push forward.

AI is giving us a ton of new capabilities there—the ability to create creative at incredibly low cost and build a lot more of a test-and-learn infrastructure is really compelling, and we are seeing strong ROI on that. It is also helping in our own marketing and CRM. As one example, AI-generated subject lines and creatives are driving around 40% more engagement in some tests. I feel really good about how our marketing team is embracing those new AI technologies to speak to the long tail of inventory and opportunities that we have on eBay Inc.

Operator: Your next question will come from Needham. Your line is open. Please ask your question.

Analyst: Great. Thanks for taking the questions. I wanted to ask on strategic priorities. GMV from strategic priorities grew and accelerated in Q1. Is this mostly C2C, or is the strength more broad-based? Within C2C, is this primarily being driven by Magical Listings or any other product you would call out? Thank you.

Jamie Iannone: It is really broad-based across the board in our year-over-year growth across all of our major categories sequentially, with the strongest growth in focus categories like collectibles, motors, and fashion. And while U.S. GMV was particularly strong at 27%, we also saw improvements in our international trends. When you look at our specific strategic areas—you asked about C2C, but focus categories, C2C, and recommerce now make up about 70% of total GMV—and individually they each saw double-digit growth. That gives you a sense of how broad-based the growth is.

The strength we are seeing in C2C is coming from significant and helpful marketing about Magical Listing and the value proposition we have there, and we are finding that the KPIs are fantastic. It has a customer satisfaction of 95%. We are seeing 50% more listings per lister and more engagement. It is driving a higher customer lifetime value for the sellers that are using it. This is why we are expanding it to new geographies, and we will expand it to additional seller segments over time. But it is really helping us drive that part of the business. Overall, it is across all of those priorities that we are seeing really nice double-digit growth.

Operator: Your next question will come from Andrew Boone with Citizens. Your line is open. Please ask your question.

Andrew Boone: Thanks so much for taking the questions. I wanted to ask about advertising strength in the quarter. It surprised us in terms of the strength you saw. And then can you connect that into just expectations for 2026? And then you called out the benefits of AI search. Where are we in the process of making search more performant? What are the benefits today, and what should we expect going forward? Thank you.

Jamie Iannone: First on advertising—strong quarter. Ads grew 27%. That was a combination of strong volume growth and the continued monetization of our ads products. That was mainly driven by our 1P business, which grew 28%. Across the board, our CPA and CPC products on eBay Inc. and our off-site ads all contributed to Q1. Looking forward, we continue to expect ads revenue growth for 2026 to be healthy, driven by multiple levers, including seller adoption, listings penetration, ad rate optimization, and scaling new products. We are now leveraging AI in our advertising products to increase the yield on the same types of placements while continuing to give sellers a strong ROAS.

We continue to see advertising revenue outpacing GMV for the foreseeable future, and I am really pleased by the innovations happening there.

Operator: Your next question will come from Shweta R. Khajuria with Wolfe. Please unmute your line and ask your question.

Andrew Ruff: Hi, this is Andrew Ruff for Shweta. Thanks for taking the question. I want to ask about agentic commerce. Starting off more broadly, what are your updated thoughts on agentic commerce and eBay Inc.’s role in that, particularly as it relates to third-party partnerships? And if we think about the terminal state of agentic commerce as more agent-to-agent based, would that impact the ad revenue potential? Is eBay Inc. okay with making a trade-off of ad revenue for volume growth? Your thoughts on that would be great. Thanks.

Jamie Iannone: We see agentic AI as a real structural tailwind for eBay Inc., and it plays right into our core strengths. First, our innovations leveraging AI are already having a meaningful benefit for our business today. Take Magical Listing—we have talked about the compelling stats. Sellers have created roughly 500 million listings using our AI tools. And our agentic search beta—where we are seeing higher engagement and increased purchase behavior—shows encouraging early proof points. We will continue to bring the latest agentic technologies to eBay Inc. to make it easier for sellers to list and for buyers to find the things they love.

Second, eBay Inc. offers unmatched breadth and depth of unique and differentiated inventory—90% of our 2.5 billion listings are non–new in season—where items are more likely to be one-of-a-kind. In our strategic priority areas, we have optimized the end-to-end experience to make it more seamless and enjoyable. Third, and most importantly, what differentiates eBay Inc. is the trust and enablement layer we have built over decades. Capabilities like our global network of authentication centers, our suite of proprietary global shipping solutions, regulatory compliance, Guaranteed Fit—these provide a trusted experience for everything from a trading card to a designer dress to a vintage car sold across state lines.

All three of these areas are enhanced by our 30 years of proprietary data, which gives us powerful insights that no one else has. Overall, we see AI as a powerful force multiplier for our business, and it is already supporting the accelerated GMV we are seeing today. On agentic search specifically, it is early innings, but there are encouraging proof points about the quality of that traffic. Even though it is still very small, new buyers who find us via AI the majority of the time come back directly and organically to eBay Inc. We will continue to test and learn.

You see us doing the OpenAI ads pilot, and we have expanded more of our inventory to Facebook Marketplace as the space evolves.

Operator: Your next question will come from Tom Champion with Piper Sandler. Your line is open. Please ask your question.

Tom Champion: Hi, good afternoon. Jamie, you have made a tremendous amount of progress over the last several years around authenticity and shipping cost for sellers. I am curious what you think of as the remaining frictions for sellers today. What are you looking to improve from here on out for the seller experience? And then, Peggy, could you talk a little bit about headcount growth and how you are thinking about that through the year as you incorporate efficiencies from AI? Thank you.

Jamie Iannone: It is more than just Authenticity Guarantee. It is really trust across the board that we are focused on. That includes Authenticity Guarantee, Guaranteed Fit in Motors, eBay Money Back Guarantee, warranties against refurbished, secure checkout that we are building in vehicles, and more. Having that trust layer at eBay Inc. is incredibly important to us and to our consumers, and we will continue to invest in it. You just saw us roll out more authentication—expanding to 70 clothes, shoes, and accessory brands in the U.S.—to drive that program further and build trust in fashion.

Beyond shipping, it is all of the selling services we provide, whether that is eBay International Shipping, which we expanded into Canada last quarter, SpeedPAK—which we expanded from China and Japan to now Germany and six more markets—or our forward deployment centers. Handling those end-to-end pieces makes it really easy for sellers. We will continue investing in our payments technology to make it easier, and we continue to invest in areas like seller financing and other elements that help sellers grow their business with working capital, along with compliance and protection, to ensure we run an incredibly trusted marketplace.

We are seeing really nice AI efficiency giving our teams leverage so we can innovate more on behalf of our seller community. It is why we are seeing great response to the tools we are building and strong seller CSAT. We are going to continue to invest to make eBay Inc. a great destination where you can not only get started, but build a strong business on the platform.

Peggy Alford: We are really focused, as Jamie mentioned earlier, on investing in our strategic priorities. To do that well—and still do what we are very focused on, which is balancing our top-line growth and our operating income dollar growth—we are looking to create efficiencies in the business so that we can invest in our strategic priorities. Even as we invest significantly in our AI talent, capabilities, and tech stack, we are able to maintain that balance and generate more capacity to invest in these areas without pressuring our bottom line. That is the balance we will continue to take: drive efficiency to create capacity to grow these very strategic initiatives.

Operator: Your next question will come from Michael Morton with MoffettNathanson. Your line is open. Please ask your question.

Michael Morton: Hi, good evening. Thank you for the question. I wanted to talk about live shopping. It is something e-commerce platforms have tried for almost my whole career, and listening to what you are saying, it sounds like it is hitting a real inflection point. I was curious to hear why you think it is gaining so much momentum now. We were at an industry conference, and people were talking about eBay Inc.’s live commerce momentum. And this is a long shot, but would love if you could maybe quantify the impact or your expectations for the impact to GMV growth going forward. Thank you so much.

Jamie Iannone: You have seen live shopping be strong in Asian markets, and we are seeing real excitement and momentum with live shopping in our Western markets. After our recent expansion, eBay Live is available across seven countries. It is becoming a more meaningful contributor to growth, particularly in our collectibles and fashion categories. That is part of why we saw such strong growth in focus categories. We have been doing meaningful activations around eBay Live. This quarter, we did a 48 Hours of Drops in the U.S., and we did the same in the U.K. and Germany where we did 24 Hours of Drops. That helped drive engagement and boost sales, with each market reaching a single-day milestone as a result.

Even our newest markets—the U.K. and Germany—saw a seven-figure day on that day. We continue to scale by adding new sellers, growing content density, and expanding entry points. This quarter, we added eBay Live to the bottom navigation for all mobile iOS users in the U.S., helping to increase discoverability. What we are hearing is that buying inventory on eBay Inc. Live is different—there is engagement, community, and excitement. Many of our sellers are finding that streaming on Live brings their community together and drives excitement that not only drives new business for them in Live, but also drives more visits and buyers to their core business as a result.

Our scale, global buyer base, and high bar for trust really differentiate us in live commerce. While it is still early, we believe Live can be a meaningful growth factor over time and an increasingly important part of how enthusiasts shop on our platform.

Operator: Thank you for joining. This concludes today’s call. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has positions in and recommends eBay. The Motley Fool has a disclosure policy.