Etsy Q2 Earnings Call Highlights

Key Points

• Etsy’s marketplace momentum accelerated: Second-quarter GMS rose 7.5% year over year to $2.6 billion, revenue reached $668 million, and adjusted EBITDA was $195 million. Active buyers increased sequentially to about 87 million, while app GMS growth accelerated to 12.5%.
• The company raised its 2026 outlook and expanded capital returns: Etsy now expects full-year mid-single-digit GMS growth and an adjusted EBITDA margin of 29%–30%. It also authorized a new $2 billion share repurchase program after buying back about $250 million of stock in the second quarter.
• Etsy announced a workforce restructuring while emphasizing reinvestment: The plan will eliminate roughly 220 roles, or about 12% of its workforce, and incur approximately $35 million in charges. Management said the changes aim to reduce organizational silos and strengthen product, engineering and machine-learning capabilities rather than serve solely as a cost-cutting measure.

Etsy NYSE: ETSY reported accelerating second-quarter marketplace growth, raised its full-year 2026 outlook and authorized a new $2 billion share repurchase program, while also announcing a restructuring that will reduce its workforce by roughly 12%.

CEO Kruti Patel Goyal said the company’s strategy around discovery, matching, loyalty and human connection is improving marketplace fundamentals. Etsy marketplace gross merchandise sales, or GMS, totaled $2.6 billion in the second quarter, rising 7.5% from a year earlier. Revenue was $668 million, while adjusted EBITDA was $195 million, representing an adjusted EBITDA margin of 29.2%.

The company said its reported continuing-operations comparisons are affected by portfolio changes. Depop was sold to eBay on July 30 and is now classified as discontinued operations, while Reverb, sold in June 2025, remained part of continuing operations in the prior-year quarter. Etsy said financial results discussed on the call cover continuing operations or the Etsy marketplace only.

Buyer Activity and App Growth

Etsy reported that active buyers increased by 350,000 sequentially to about 87 million, remaining roughly flat year over year. Gross buyer additions accelerated, and the company said its habitual and repeat buyer cohorts posted slight sequential growth for the first time since 2023.

Trailing 12-month GMS per active buyer rose 2.8% year over year to $124. Patel Goyal said higher seller listing prices continued to contribute, but Etsy’s efforts to surface higher-quality inventory through search, recommendations and other experiences were increasingly supporting the increase.

Purchase frequency remained below prior-year levels, but the year-over-year decline moderated from the first quarter. Etsy also cited improving seller health, including year-over-year seller growth and stronger retention of sellers that were active in the prior year.

Mobile app performance remained a focal point. App GMS growth accelerated to 12.5% year over year, and the app accounted for about 47% of total GMS, according to Patel Goyal. Visits per monthly active user and orders per visit both increased from a year earlier.

Patel Goyal said Etsy has been making its app feed fresher by reducing the prevalence of recently viewed items and displaying more new and diverse listings. The company said this work has supported feed favoriting, listing views, new searches and new shopping missions.

Marketing, Personalization and Younger Buyers

Management attributed growth partly to stronger marketing efficiency and product improvements. Patel Goyal said Etsy improved product listing ad performance through better segmentation and bidding strategies, while product updates such as real-time search personalization, more relevant recommendations and a fresher home feed were helping buyers find more suitable inventory.

The company said richer buyer profiles now cover more than 65 million buyers. Patel Goyal said those profiles become more detailed as users engage with Etsy and can be used across search, recommendations, app home feeds and marketing communications.

Etsy is also targeting younger consumers through social channels, creators and cultural partnerships. The company said investments in YouTube and TikTok drove a fivefold increase in visits from Millennial and Generation Z audiences in the first half of 2026. Etsy cited its Olivia Rodrigo partnership, which includes an in-person activation and exclusive merchandise collaboration, as an example of its approach.

CFO Lanny Baker said younger buyers currently have lower lifetime values than older cohorts but offer higher lifetime-value growth potential as they move through life and household changes. He added that Etsy expects its approach to younger consumers to work internationally as well as in domestic markets.

Profitability, Capital Returns and Restructuring

Second-quarter revenue increased 6.2% year over year on a continuing-operations basis and 9.3% for the standalone Etsy marketplace. Marketplace revenue rose 8.4%, while services revenue increased 11.2%.

Take rate was 25.9%, up 130 basis points from a year earlier, including an approximately 80-basis-point benefit from the Reverb divestiture. Baker said Etsy marketplace take rate expanded primarily due to Etsy Ads, where machine learning has been used to improve relevance and seller budget pacing. Offsite ads also contributed as paid marketing shifted toward higher-monetizing channels.

Nearly half of the year-over-year increase in Etsy marketplace revenue flowed through to adjusted EBITDA, Baker said. The company held $1.3 billion in cash equivalents and investments as of June 30 and converted 81% of adjusted EBITDA into free cash flow during the quarter on a continuing-operations basis.

Etsy also received $1.4 billion in cash proceeds from the Depop sale. During the second quarter, it repurchased about $250 million of stock, roughly 70% more than in the first quarter, reducing its outstanding share count by approximately 3.9 million shares. The company had $578 million remaining under its prior authorization at quarter-end before announcing the new $2 billion authorization.

The restructuring will eliminate about 220 roles, primarily in product and engineering, leaving expected headcount of about 1,600. Etsy expects to incur roughly $35 million in charges, mostly for severance, benefits and related costs, and expects the plan to be substantially complete by the end of the third quarter.

Patel Goyal said the restructuring was not designed as a cost-cutting initiative, but rather to reduce organizational silos, create flatter teams and strengthen capabilities in areas including machine learning. Baker said Etsy intends to reinvest some savings in product, engineering, customer operations and research and development.

Updated Outlook

For the third quarter, Etsy expects marketplace GMS of $2.53 billion to $2.58 billion, representing year-over-year growth of approximately 4% to 6%. The company expects a take rate of about 26% and an adjusted EBITDA margin between 28% and 30%.

For full-year 2026, Etsy now expects mid-single-digit GMS growth, reflecting stronger second-half momentum than it had previously anticipated. It expects its full-year take rate to be roughly in line with the first half and raised its adjusted EBITDA margin outlook to 29% to 30%.

Management said artificial intelligence remains central to its efforts to improve discovery, matching and personalization. Patel Goyal said traffic from agentic commerce experiences remains below 1% of Etsy’s total traffic, though it has shown higher intent and higher average order value. The company is also experimenting with AI-native shopping experiences, including its gifting assistant.

About Etsy (NYSE:ETSY)

Etsy, Inc operates two-sided online marketplaces that connect buyers and sellers primarily in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. Its primary marketplace is Etsy.com that connects artisans and entrepreneurs with various consumers. The company also offers Reverb, a musical instrument marketplace; Depop, a fashion resale marketplace; and Elo7, a Brazil-based marketplace for handmade and unique items. In addition, it offers various seller services, including Etsy Payments, a payment processing service; Etsy Ads, an advertising platform; and Shipping Labels, which allows sellers in the United States, Canada, the United Kingdom, Australia, and India to purchase discounted shipping labels.

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