eBay signals a new C2C era with Depop deal as U.S. marketplace outpaces global peers

A marketplace redefines its core

A decade ago, eBay’s narrative was about hanging on. This quarter, it sounded more like acceleration. Jamie Iannone, chief executive for the past six years, opened the company’s fourth-quarter 2025 call by stressing “the strongest” underlying health of the business since his arrival. The numbers, for once, backed the rhetoric.

Gross merchandise volume for 2025 rose nearly 6% to about $80bn, with the U.S. surging nearly 10% and accelerating into year-end. Revenue grew slightly faster, up nearly 7% to $11.1bn, flattered by a maturing advertising franchise now at roughly $2bn in annual revenue. Non‑GAAP operating income rose roughly 7% to almost $3.1bn, and non‑GAAP EPS jumped 13% to $5.52, marking a second consecutive year of double‑digit earnings growth. Around $3bn was returned to shareholders through buybacks and dividends.

In a world where e‑commerce growth has become a grind, that kind of mid‑single‑digit GMV expansion combined with double‑digit EPS growth is notable. More striking still is where the growth is coming from: a deliberate pivot away from commoditised new-in-season retailing towards what eBay describes as “recommerce” and enthusiast‑driven categories.

Recommerce – preowned and refurbished goods – now accounts for more than 40% of GMV. Combined with “focus categories” and consumer‑to‑consumer activity, these strategic priorities generated over $50bn of GMV in 2025, growing at roughly 10% and speeding up through the year. That two‑thirds of the company is now tied to these segments is reshaping both the economics and the identity of the marketplace.

U.S. resilience and European drag

The geographic split in Q4 underlined how much the story has become American‑led. Total GMV in the quarter rose more than 8% on an FX‑neutral basis to $21.2bn. But U.S. GMV climbed nearly 19%, with growth accelerating by about six percentage points from the prior quarter, buoyed by collectibles, vehicles, eBay Live, fashion and a still‑favourable lower‑funnel marketing environment, including the Klarna partnership.

Internationally, the tone is more muted. FX‑neutral GMV fell nearly 1%, despite a more than 2.5 percentage point tailwind from currency. Management pointed to weak consumer confidence and subdued retail sales in markets such as the U.K. and Germany, alongside an explicit tax shock: the removal of the de minimis exemption for U.S. imports at the end of August and other trade policy changes.

Those shifts are still working their way through the system. Return and cancellation rates had become a headwind to take rate last year; they stabilised sequentially in Q4, suggesting the worst of the initial disruption is past. But the macro divergence between a resilient U.S. consumer and a softer European one remains a structural backdrop for 2026.

Interestingly, even in tougher markets, the areas where eBay has invested most heavily – focus categories, C2C and recommerce – continue to outperform, which may help cushion the macro drag.

Margins under pressure, but by design

The top line in Q4 grew faster than GMV, with revenue up more than 13% on an FX‑neutral basis to $2.96bn. The take rate moved up 60 basis points year‑on‑year to 14%, helped by shipping economics, a U.K. buyer protection fee and expanding ad revenue. eBay has also completed the remonetisation of UK C2C activity that it had earlier made free for sellers, now largely recouped via buyer‑facing fees and managed shipping requirements.

Against that, the margin story is one of deliberate give‑and‑take. Non‑GAAP gross margin slipped about 80 basis points year‑on‑year to 72.1%, weighed down by the scaling of managed shipping, off‑site traffic acquisition for promoted listings and the Authenticity Guarantee programme. These are not ancillary projects: they have become core to the perceived safety and ease of the platform, especially in higher‑value categories.

Non‑GAAP operating margin came in at 26.1%. Marketing efficiencies helped, but product development spend and transaction losses – primarily in newly launched shipping programmes – offset some of that benefit. Management framed those shipping losses as front‑loaded: higher initially, expected to decline as data accumulates and pricing and operations are refined.

The capital structure, meanwhile, remains robust. Free cash flow in Q4 was $478m. Cash and fixed‑income investments ended the year at $4.8bn, against gross debt of $6.7bn and equity investments of over $900m. eBay repurchased $625m of shares at an average price near $86 and paid $131m in dividends in the quarter.

For 2026, the company plans capital expenditures of 4–5% of revenue and repurchases of roughly $2bn, equivalent to 90–100% of free cash flow in a “normal year”, even after funding its latest acquisition.

Collectibles and cars: the enthusiast economy

Underneath the headline figures, eBay is leaning into what it increasingly sees as its comparative advantage: enthusiasts and the long tail of non‑standardised goods.

Collectibles were the single largest driver of GMV growth in Q4. Trading cards remain the marquee sub‑segment, supported by acquisitions such as TCGplayer and Goldin and now by a new AI‑powered card scanning tool. Using proprietary models trained on more than 40m card samples, the system allows sellers to identify, value and list a card by scanning a single image. Since its November beta launch, users have scanned over 15m cards. That may sound niche; in practice, it lowers friction in a market where identification and pricing are painstaking tasks, and it sits neatly at the intersection of AI, data and an already‑engaged community.

Beyond cards, bullion and collectible coins saw a “notable acceleration” in demand, which the company explicitly links to recent moves in precious metals. Management is clear that this is not a trend to be extrapolated indefinitely; they describe parts of this spike as “less durable”, and have cautioned investors to treat bullion‑driven boosts in Q4–Q1 with care when thinking about run‑rate growth.

Motors, Parts & Accessories (P&A) added more than a full percentage point to total marketplace GMV growth in Q4. Here, the theme is “repair‑over‑replace” as consumers nurse aging vehicles. With over 800m live P&A listings, eBay’s depth matters. Automated fitment in the U.S. – automatically adding compatibility attributes to millions of listings – and guaranteed fit protection are designed to grind down transaction friction. Early evidence suggests that easier returns and fit guarantees lift conversion without sparking a spike in actual return rates.

Vehicles themselves are moving from a listing business to a transaction business. eBay’s “secure, fully digital transaction solution for vehicles” is still in its early innings, but the company is candid about the rationale: each enthusiast vehicle sold is a gateway to recurring P&A demand.

Fashion, Depop and the battle for Gen Z closets

If collectibles and cars speak to nostalgia, fashion speaks to the future. Fashion generated “well north of” $10bn in GMV in 2025, with the U.S. alone adding more than $500m of incremental fashion GMV year‑on‑year, most of it from C2C sellers. In the company’s words, fashion was the second‑largest contributor to U.S. GMV growth in Q4, with particular strength in pre‑loved segments.

eBay’s approach in fashion has mirrored its strategy in collectibles: build, buy and partner. On the build side, the selling experience has been overhauled with “magical listings” – AI‑based tools that can create titles, categories, item specifics and pricing recommendations from images and transaction data. AI‑driven discovery has been rolled out from the U.K. to the U.S., Germany, Australia, Italy and France. The Authenticity Guarantee has been expanded to more brands and price points, including optional authentication for lower‑priced goods. And eBay Live, its live shopping product, has become particularly resonant in fashion, especially for luxury watches and higher‑end apparel.

On the partner side, the group has been unusually aggressive, piggybacking on cultural moments: partnerships with Love Island, Condé Nast and the Vogue Vintage Market; high‑profile advocates such as Emma Chamberlain; and practical collaborations such as Marks & Spencer drop‑off points for apparel destined for resale on eBay. The acquisition of Tise, a leading Nordic C2C marketplace, has added further regional depth.

Into this tapestry, eBay is now stitching Depop. The $1.2bn cash deal, announced alongside earnings and expected to close in Q2 2026 pending approvals, pulls a younger, highly engaged community into the fold. Depop, which Etsy had previously owned, facilitated roughly $1bn in gross merchandise sales in 2025, with nearly 60% year‑on‑year growth in the U.S. and a base of about 7m active buyers and 3m active sellers, most under the age of 34. Over a third of Depop buyers listed at least one product in 2025, a statistic that hints at a powerful “sell‑to‑buy” flywheel.

Strategically, management sees several layers of synergy. Depop’s mobile‑first, socially infused interface complements eBay’s more traditional marketplace format. In time, Depop users should gain access to eBay’s financial services, shipping, cross‑border solutions and authentication programmes, while eBay can cross‑list or route relevant inventory across platforms, much as it now does between Goldin and the main marketplace.

Financially, Depop is expected to contribute 1–2 percentage points to total FX‑neutral GMV growth in 2026 (assuming a Q2 close), but to be a low single‑digit drag on operating income and EPS growth next year. Integration costs, planned investment and the opportunity cost of cash will all weigh, though management expects the deal to turn accretive to non‑GAAP operating income, including synergies, by 2028.

For investors, the key question is whether Depop is simply a bolt‑on, or accelerates a more profound shift. With recommerce already at more than 40% of GMV and fashion one of the company’s largest verticals, the acquisition suggests management intends eBay’s future to be as much about Gen Z’s circular wardrobes as about collectibles and car parts.

AI as infrastructure, not ornament

Throughout the call, AI appeared less as a buzzword than as plumbing. The company’s “horizontal innovation” in 2025 centred on building proprietary AI infrastructure and what it calls “agentic experiences”: tools that don’t just suggest, but do.

On the seller side, the next generation of magical listings is emblematic. Rather than bolt generative AI onto legacy workflows, eBay now uses AI agents from the outset. A smartphone camera becomes an agent: it guides the seller on which photos to take to maximise sale probability, while background models populate titles, categories and item specifics, and then recommend prices based on live transaction data and a deep product knowledge graph. After making this the default experience for new and reactivated listers on U.S. iOS and Android, eBay recorded a more than 25% reduction in listing time, over 50% rise in new listing creation, double‑digit percentage increases in sold items and GMV per lister, and customer satisfaction above 95%.

On the buyer side, the company quietly began rolling out “agentic search” to a subset of U.S. mobile traffic in December. The idea is to allow shoppers to conduct a back‑and‑forth dialogue in natural language with the search system, much as they might with a store associate who knows their preferences and history. Crucially, the system is not a side experiment: it is embedded in core search and built on lightweight proprietary models that mediate between latency, cost and query optimisation quality. Scaling this through 2026 is expected to set the stage for more personalised shopping journeys.

The AI work extends beyond front‑end experiences. Cross‑border shipping products such as eBay International Shipping (EIS) and SpeedPAK automate customs documentation and tariff calculations, lowering the compliance barrier for small exporters. In Canada, EIS is ramping ahead of schedule; in Japan, SpeedPAK now carries the majority of direct shipments to the U.S.

Management is candid that the traffic currently flowing from third‑party AI platforms to eBay is still small but highly intent‑driven, with strong conversion. The company has built an “agentic commerce platform” to plug into external agents, and is an early participant in OpenAI’s ads pilot. But the emphasis remains on building internal experiences that leverage a vast corpus of unique listings, trust signals and transaction data – assets that generic AI aggregators lack.

Live commerce and the evolving flywheel

eBay Live, launched cautiously, is now being scaled more aggressively and illustrates how the company is re‑imagining engagement. Initially focused on collectibles, the live shopping product is becoming a multi‑category destination, with fashion and luxury watches particularly prominent. During the 2025 holiday peak, the platform hit a single‑day GMV record on Black Friday, including a roughly $2m haul from a single live event. Overall, eBay Live GMV is running at an annualised rate about seven times higher than a year ago, driven largely by the U.S.

Geographically, the live product is now in seven countries, including Germany, Australia, France, Italy and Canada. The logic is straightforward: live video formats let sellers “story‑tell” and build trust faster, something especially valuable in categories such as fashion and collectibles where condition and authenticity are paramount. For buyers, it adds a social, real‑time layer to a platform that has historically been more transactional.

The company is also experimenting with how external platforms can feed into its flywheel. The partnership with Facebook Marketplace is being expanded: in Q1, eBay’s inventory began appearing in Facebook Search – a higher intent surface – with more categories and volume flowing through. Management sees this as a way to expose sellers’ listings to Facebook’s reach while letting Facebook users discover eBay’s depth.

2026: guidance and accounting undercurrents

Looking ahead, eBay’s 2026 outlook (excluding Depop) projects continuity more than transformation. The company is planning around FX‑neutral GMV growth similar to 2025’s near‑6%, underpinned by focus categories, C2C, recommerce and emerging vectors such as live commerce and vehicles. The headwinds are known: tariffs, de minimis changes, tough comparables in segments such as Pokémon trading cards and bullion, and the normalisation of marketing tailwinds that kicked in last year.

Revenue is expected to grow in line with or slightly ahead of GMV on an FX‑neutral basis, as advertising continues to gain share, though mix shifts – including faster growth in live and vehicles – will partially offset. Non‑GAAP operating income is forecast to rise 8–10%. Non‑GAAP EPS growth should be broadly similar, with share repurchases offset by higher interest expense and a higher non‑GAAP tax rate (17.5%) reflecting global tax policy and geographic mix.

There are some accounting subtleties. From 1 January 2026, eBay will expense all product development costs, reducing capitalisation of internal use software. It has provided recast 2024 and 2025 income statements to align baselines. The company is also switching its U.K. managed shipping programme from gross to net revenue recognition, modestly dampening the reported take rate in 2026, particularly as it laps last year’s C2C remonetisation tailwind.

Even with the Depop cheque to be written, capital returns remain central to the narrative. The Board has authorised an additional $2bn of share repurchases, on top of roughly $800m remaining from prior approvals, and has lifted the quarterly dividend to $0.31 per share, up $0.02 from 2025.

A circular economy thesis

Beyond the financials and product charts, there is an ideological thread to eBay’s strategy. The company set five‑year “impact” goals for 2021–2025 around recommerce and claims to have beaten them: an estimated $25bn of positive economic impact from pre‑loved and refurbished goods (against a $22bn target), about 8.2m metric tons of avoided carbon emissions (above the 8m goal) and roughly 360,000 metric tons of waste diverted from landfill (surpassing a 350,000‑ton target).

Such figures are, by definition, estimates. But they reflect a conviction that circular commerce is not just good optics, but economically accretive, especially with younger cohorts. Depop’s growth profile and user base – predominantly under 34, and comfortable with buying and selling pre‑owned fashion as standard behaviour – dovetail with that thesis.

For investors, the emerging picture is of a company that has chosen not to compete head‑on with general‑purpose mega‑retailers on convenience and price for new goods, but to double down on categories where uniqueness, community and trust matter more than speed alone. Executed well, that positioning in recommerce and enthusiast niches could prove more resilient than the headline GDP‑linked, one‑way retail growth that defined an earlier e‑commerce era.