Third Quarter 2026
Shareholder Letter
Nicky, ‘WinkingCatClay’ shop on Etsy
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Dear Shareholders,
2026 has been a year of meaningful transformation for Etsy. We entered the year with a clear diagnosis of the
business’ needs and a set of priorities designed to address them. At the same time, we developed more clarity
and conviction in Etsy’s differentiation: our sellers’ creativity, the craftsmanship and care behind their work, and
the human connection that gives those items meaning. We believe our improving performance reflects our
progress not only in delivering a better shopping experience, but also in making Etsy’s unique value easier for
buyers to discover and appreciate, and for sellers to want to be a part of.
I’m proud of the progress we’ve made so far, and even more optimistic about the opportunity still ahead. We’re
bringing more buyers to Etsy and providing them an experience that is far more personalized and relevant,
helping them discover higher-quality items and sellers, and complete memorable purchases. We’re making our
marketing investments more effective, enabling us to show up in new places and build relationships with both
new and existing audiences. And we’re improving the support experience for our buyers and sellers - an
important part of building trust and meaningful relationships that extend beyond any individual transaction.
After three consecutive quarters of accelerating growth this year, I’m increasingly confident that our business is
now firmly in growth mode. We have sustainable momentum, and clear evidence that the changes we’ve made
to how we operate and invest are strengthening our business and driving more durable performance.
Third Quarter 2026 Key Performance Indicators Point to a Meaningfully Healthier Business
All key performance indicators continued to improve, with year-over-year growth in GMS and revenue
accelerating further in the third quarter. Strong top line performance and disciplined expense management
resulted in an adjusted EBITDA margin slightly above 30% for the quarter. Active buyers grew year-over-year for
the first time in two years, and our focus on improved customer relationships is driving an acceleration in growth
in GMS per active buyer. Our active seller base grew at its fastest rate in two years, with improving retention
signaling the relevance of Etsy to creative micro-entrepreneurs.
Encouragingly, while we are still benefitting from some external GMS tailwinds, the positive impact from our
internal efforts has accelerated. Our App continues to perform very well, paid marketing is becoming more
efficient and organic traffic remains healthy. And our work to improve search and discovery is surfacing higher-
quality, more relevant inventory.
On July 30, 2026 we completed the sale of Depop. Etsy’s results of operations for all periods presented are on a continuing operations basis, while Depop is presented as a discontinued operation through the closing date. Continuing operations for the three months ended September 30, 2026 and 2025 represent the Etsy marketplace only. | ||
Q3 2026 Key Performance Indicators | GMS | |
$2.6B +8.8% Y/Y Etsy Marketplace growth | ||
REVENUE | TAKE RATE | |
$692M +10.9% Y/Y Etsy Marketplace growth | 26.2% +50 bps Y/Y | |
NET INCOME | N E T I N C O M E | ADJ. EBITDA |
$114M +$9 million Y/Y Etsy Marketplace | $210M 30.4% Adj. EBITDA Margin | |
Adj. EBITDA and Adj. EBITDA Margin are non-GAAP financial measures. Reconciliation of non-GAAP financial measures to the most comparable GAAP measures can be found in
“Non-GAAP Financial Measures” below.
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Growth Priorities are Driving Improved Marketplace Performance
Investing in Etsy’s Core Differentiation
Creativity, craftsmanship, and connection are what set Etsy apart, and
we’ve made meaningful progress bringing these characteristics to life more
consistently in the buyer and seller experience. Last quarter, we shared
how we were testing ways to make our sellers and their creative processes
more visible to buyers. Our latest Android test and supporting research
show that doing so builds buyer trust, confidence and perceived value.
When we brought sellers to the forefront, buyers engaged more
deeply — visiting shops and contacting sellers from their shop home
pages more often, for example.
We’re now building on these learnings as we look to bring human
connection more deeply into the shopping experience across platforms. By
weaving together things like seller stories, craftsmanship details, buyer
reviews, and opportunities for connection, we aim to help buyers understand not just what they’re purchasing,
but who is behind it, how it’s made, and what makes it special. Our goal is to make the value our sellers
create more visible at every step, building the trust and connection that bring shoppers back to Etsy.
On-Site Discovery and Matching Drive Better Buyer Understanding and Engagement
Our investments in discovery and matching are increasingly contributing to GMS momentum. By using AI
and machine learning to more deeply understand shoppers' tastes and interests, we're helping buyers find what
they want and discover things they didn't know they were looking for. And we're seeing that progress translate
into tangible proof points. For example, by the third quarter, we estimate that personalization improvements
alone contributed approximately two percentage points to our annualized year-over-year GMS growth rate.
In the third quarter, we continued to build on our momentum by:
•Extending some personalization to signed-out users, making Etsy feel more relevant from the start.
•Expanding and deepening buyer profiles, which now power personalized feeds, recommendations, and
owned marketing for four out of five active buyers.
•Improving recommendation capabilities to help buyers discover fresh inventory across new categories.
We’re also evolving how we define a great match in Search. Rather than simply optimizing for the next click
or the item most likely to convert, we’re increasingly incorporating signals like value and the expected post-
purchase experience. This is helping us surface more relevant and high-quality inventory while maintaining
strong marketplace performance. We're seeing encouraging signs that our personalization efforts are driving
deeper engagement, including more cross-category exploration and new shopping missions on the App. There's
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still much more to do to make discovery more inspiring and relevant, and our goal is simple: to make Etsy better
for buyers every time they come back.
Evolving approaches to support Seller and Buyer Loyalty
Creative entrepreneurs come to Etsy to build businesses around their craft, and our ambition is to make Etsy
the best place for them to grow. That starts with listening to our sellers and
acting on what we hear - giving them better tools, insights, and support.
We’ve made progress across the seller experience, from enabling shared
shop access, and expanding our appeals process, to making Etsy Ads easier
to manage. We’re also actively investing in AI to make running an Etsy shop
easier. We've introduced tools that simplify listing creation and buyer
communications, and are continuing to test an AI-powered assistant that uses
each shop's data to provide personalized insights and recommendations.
Over time, our ambition is to move beyond recommendations to helping
sellers take action - so they can spend less time managing their shops and
more time creating and growing their businesses.
For buyers, we’re continuing to test new ways to recognize and reward
loyalty. That includes experimenting with earning ‘Stamps’ towards rewards
for actions that broaden and deepen their relationship with Etsy - like
supporting sellers across categories or regions. We’re also scaling premium support experiences for our top
buyers ahead of the holiday season, while expanding general support availability across the marketplace.
Ultimately, loyalty is much bigger than any one program or feature. It comes from delivering a great experience
from beginning to end - helping buyers feel understood and valued, helping sellers succeed, and building the
trust and connection that give both more reasons to keep coming back to Etsy.
Strategic shifts in marketing have been a big part of our 2026
success
The strategic shifts we’ve made in marketing are increasingly contributing to our
performance - and I’m encouraged that we’re still early in many of these
initiatives. We’ve become more audience-focused, even more disciplined about
where we invest, and better at connecting the right buyers with the best of Etsy,
including:
Reinforcing what makes Etsy different: Our brand campaigns celebrate being
human and are improving buyer perceptions that Etsy is a place to find special
items and shop from and support real people.
Building marketing technology capabilities across our portfolio:
Improvements in how we understand and surface our inventory are helping us
drive better performance across paid search and social, search engine
optimization, and our influencer and affiliate programs.
Making owned marketing truly personal: We're evolving our email and push experiences by combining the
precision and scale of machine learning with the creativity of human curation and storytelling. This approach
allows us to deliver recommendations that are not only relevant to each buyer's interests, but also more
inspiring, engaging, and reflective of what makes Etsy special.
Showing up for the moments that matter: We’re leaning into the purchase occasions where Etsy naturally
shines - from holidays and universal milestones like birthdays and anniversaries, to smaller “mini-stones” and
cultural moments - and we’re seeing strong GMS growth across many of these occasions.
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Reaching younger audiences in new ways: We’re showing up in
more of the places and moments where younger audiences discover
- from music festivals and cultural moments to holiday markets.
These experiences bring Etsy’s humanity to life, while extending our
reach and relevance across paid, owned, and organic channels.
Taken together, this work is helping us show up earlier in the
discovery journey, with more relevant inventory and a more
distinctive expression of our brand - bringing more buyers to Etsy
and giving us more opportunities to build lasting relationships with
them.
Etsy matters more in an AI world
There's an inherent paradox in how we think about AI at Etsy: we're harnessing technology to make
commerce more human - just as we’ve been doing for more than 20 years. AI will fundamentally change
how people discover and shop, and we're leaning in - not just adapting to new shopping behaviors, but actively
evolving how Etsy creates value for buyers and sellers. By combining our sellers' unique inventory with the
trust, breadth, and human connection of the Etsy marketplace, we can make shopping easier and more
personal while helping creative micro-entrepreneurs reach customers and grow their businesses in ways they
simply couldn't on their own. And as AI makes it easier to create, replicate, and sell products at scale, the
human touch that has always differentiated Etsy - in both our items and the shopping experience - matters more
than ever. We don't need to reinvent Etsy for an AI world. We need to get better at delivering on what has
always made us special. And AI gives us powerful new ways to do just that.
Showing up wherever shoppers discover: Thanks to our early-mover relationships and rich natural language
product feeds, Gen AI-powered shopping is an exciting and increasingly important discovery channel for Etsy,
introducing new shoppers to our unique inventory and reengaging existing buyers. Importantly, we're seeing
that shoppers who discover Etsy items through these platforms - often with high intent - continue to come to our
marketplace to explore further and complete their purchases. We believe this speaks to the strength of Etsy's
recognized and trusted brand and differentiated value proposition: when you're shopping for something
meaningful, personalized, or handcrafted, you want to understand more about the item and the person behind it
before you buy.
Making Etsy dramatically more personal: With more than 100 million seller listings (and many multiples more
after accounting for available variations), Etsy’s challenge has never been a lack of choice - it's helping each
shopper find what's uniquely right for them. With rich and expanding data on both our buyers and our inventory,
we’re well positioned to build on-site shopping assistants that understand buyers' tastes and intent more deeply
and connect them with the right items in even more powerful ways than off-site agents. Building on early
learnings from our Gifting Assistant beta - which I encourage you to try this holiday season! - we’re beginning to
test similar experiences for wedding shoppers. Harnessing this rapidly advancing technology to make Etsy feel
ever-more personal to every buyer is where I see our greatest opportunity over time.
We're also embedding AI throughout our business to help sellers spend less time on administrative work and
more time creating and connecting with customers, while enabling our own teams to move faster and solve
customer problems more effectively.
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As we embrace these opportunities, we're equally focused on preserving the creativity, authenticity, and
trust that make Etsy different. We're making our policies clearer, strengthening enforcement, and deploying
product improvements to help ensure that AI supports human creativity rather than obscuring or replacing it. We
believe AI can amplify the creativity and human connections at the heart of Etsy, making our differentiation an
even more powerful competitive advantage and engine for long-term growth.
The Road Ahead
At our recent Etsy Up Close annual seller event in Brooklyn, I had the opportunity to spend time with sellers
who shared their hopes for their businesses, their questions, and honest feedback about their experience with
Etsy. I loved hearing the stories behind their shops and the passion they bring to their craft. It was a powerful
reminder of what makes Etsy so special - and it left me even more energized by the opportunity we have ahead
of us. You can see comments from some of our sellers, and photos from the event below.
As we head into the final stretch of 2026 and develop our growth plans for 2027 we have even greater
confidence that our priorities - together with the progress we’ve made in how we operate - are creating a
healthier, highly differentiated marketplace, and positioning us to capture more of the enormous opportunity
ahead. And perhaps what excites me most of all: we’re still early in realizing the full potential of the work we’ve
only just begun.
Sincerely,
Kruti Patel Goyal
Chief Executive Officer
October 28, 2026
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Q3 2026 Financial Results
Etsy’s results of operations are presented on a continuing operations basis, while Depop is presented as a discontinued operation for all
periods presented through the closing date of July 30, 2026. The GMS drivers and key customer metrics presented below are for the Etsy
marketplace only.
Q3 2026 Etsy Marketplace GMS Drivers and Key Customer Metrics
Etsy marketplace GMS growth accelerated sequentially
Etsy marketplace GMS reached $2.6 billion in the third quarter, up 8.8% year-over-year, or 9.1% on a
currency-neutral basis. Excluding foreign exchange, growth accelerated by approximately 190 basis points
from the second quarter, marking the sixth consecutive quarter of sequential improvement in GMS growth and
reflecting the continuing operational progress we’ve made this year. GMS growth was broad-based across
U.S. and non-U.S. buyers, as well as across household income cohorts within the U.S. We saw strong
performance in both our App and Non-App GMS, up 10.4% and 7.5% year-over-year respectively, with mobile
GMS share stable with the first half of the year at about 47%.
Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve
marketplace health and further elevate Etsy’s differentiation are playing a larger role in the composition of
GMS growth:
•Active buyers returned to year-over-year growth for the first time in two years, increasing 1.0%
to approximately 88 million on a trailing-twelve-month basis. Sequential growth also accelerated, with
active buyers increasing by approximately 540,000 compared to Q2 2026. Third quarter gross buyer
additions grew 6.2% year-over-year, continuing to benefit from strong new buyer acquisition and
reactivation, while trailing-twelve-month retention among existing buyers also began to improve.
Habitual and repeat buyers increased modestly sequentially, providing encouraging evidence that
progress is broadening across acquisition, reactivation, and retention.
•GMS per buyer increased 3.9% year-over-year on a trailing-twelve-month basis, and
accelerated sequentially. The impact from our internal initiatives is continuing to scale and play an
increasing role in average order value while purchase frequency remains modestly down year-over-
year. The internal initiatives driving these trends include: 1) improving search relevance for buyers
through greater personalization built on richer buyer profiles and inventory insight, 2) promoting a
stronger selection of high-quality items by increasing the weight of quality signals within search and
recommendations, 3) better managing the prominence of physical versus digital items based on what
we can understand about buyer intent, and 4) differentiating our offering around special occasions
where people may be willing to pay a little more for just the right item. Looking forward, we aim to
grow wallet share by helping shoppers discover more of the unique, high-quality inventory on Etsy -
whether that translates into more valuable orders, more frequent purchases, or both.
Seller and buyer metrics continued to strengthen
Metrics presented below represent the Etsy marketplace only. Y/Y reflects Q3 2026 vs. Q3 2025, Q/Q reflects Q3 2026 vs. Q2 2026.
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Q3 Merchandise Spotlight: Etsy continues to win for shopping occasions where our sellers offer
differentiated merchandise
 |  |  |  |
Home and Living saw strong growth, largely driven by rugs, home decor and home improvement; meeting demand for ‘quality for value’ and custom solutions for buyers | Wedding-related items delivered healthy GMS gains, as we’ve expanded email/push campaigns and affiliate marketing activities | Strong growth in ‘back to school’ items including the launch of an exclusive collection of custom and monogrammed bedding pieces from sellers | Our merchandising programs bring Etsy's storefront to life: showcasing distinctive inventory, incubating seller growth and driving buyer value across surfaces and channels |
Q3 2026 Revenue and Take Rate Performance
Higher third quarter GMS drove strong revenue growth of 10.9% year-over-year. Total revenue reached
$692.5 million, with Marketplace and Services revenue both contributing to growth, increasing 9.1% and
15.0% respectively. Take rate was 26.2%, up 50 bps year-over-year, primarily driven by further enhancements
to Etsy Ads and, to a lesser extent, contribution from Offsite Ads. Etsy Ads is becoming an even more
effective tool for sellers to reach buyers, as improvements to our matching and ranking models increased ad
relevance and drove higher click-through and conversion rates, while better budget-pacing mechanisms
helped sellers direct their spend toward the most valuable opportunities. Offsite Ads also contributed, primarily
reflecting higher year-over-year paid marketing spend.
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Digging in a bit on Etsy Ads, what distinguishes this service from other ecommerce advertising models is who
we serve and the value we create for them. The majority of Etsy Ads revenue comes from sellers with less
than $100,000 in annual GMS - solopreneurs and microbusinesses that are at the heart of Etsy, and who look
to us for support in being found by consumers. Accordingly, we continuously invest to improve the Etsy Ads
value proposition for sellers - which historically has come from improved matching quality and relevance,
reflecting more efficient utilization of existing ad space rather than increased ad load. We only deploy a
portion of sellers’ ad budgets today, and as the Etsy Ads engine becomes more efficient in the future, there is
significant unfulfilled demand for us to access at attractive rates of return for sellers. As new discovery
channels evolve, both organic and paid, we see significant opportunity to continue to develop advertising as a
service model to help buyers discover our sellers’ unique inventory, both on and off Etsy.
Q3 2026 Operating Expenses
Strong revenue growth, together with the impact of our restructuring in August, translated into adjusted
EBITDA of $210.4 million, growing 14.6% year-over-year and representing a 30.4% adjusted EBITDA margin.
Adjusted EBITDA grew faster than revenue for the second consecutive quarter and we remained disciplined
in managing operating expenses, while continuing to invest in areas that support Etsy’s long-term growth.
Marketing remained an important area of investment, and expense grew as a percentage of revenue year-
over-year as we leaned into driving profitable GMS growth. At the same time, structural improvements to our
marketing technology over the past year are making our investments more productive and efficient. On the
paid side, continued benefits of our product listing ad (“PLA”) segmentation work from earlier in the year
supported paid-search efficiency, creating room to invest further. We also expanded investment in paid social,
with increased spend on TikTok and YouTube and tests on new platforms such as Reddit and Snapchat, to
reach younger audiences. Across our marketing portfolio, the return on our spending increased meaningfully
year-over-year, a reflection of the progress made optimizing mix, increasing efficiency and landing the right
messages. We also continued to invest in organic search, including in emerging AI-driven channels, by
maintaining the quality and breadth of the underlying product data, feeds, and web content that help these
systems understand and recommend Etsy inventory.
Product Development expense remained consistent as a percentage of revenue year-over-year, as
restructuring charges were offset by lower stock-based compensation, as well as lower employee-related
expense following the restructuring. Looking ahead, we expect to sustain Etsy’s healthy adjusted EBITDA
profitability as we gradually add product and engineering headcount and capabilities to support long-term
growth.
Q3 26 Etsy Marketplace Operating Expenses
Product Development | Marketing | General & Administrative |
1 See “Non-GAAP Financial Measures” below for a reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for Q3 2026 and 2025.
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Strong Cash Flow Generation and Continued Accelerated Share Repurchases
As of September 30, 2026, Etsy held $2.5 billion in cash, cash equivalents and short- and long-term
investments. Proceeds from the sale of Depop, which closed on July 30, 2026, contributed to our cash
balance at quarter end. Subsequently, on October 1, 2026, we paid $648.6 million in cash to settle the
remaining aggregate principal amount of our outstanding 2019 Notes and reduce the company’s total
outstanding debt.
We generated strong free cash flow during the quarter: net cash provided by operating activities of continuing
operations for the three months ended September 30, 2026 was $242.9 million, and we converted 112%1 of
our Adjusted EBITDA to free cash flow during the quarter. We further accelerated the return of capital to
shareholders, repurchasing approximately $394.6 million in stock and reducing the outstanding share count
by approximately 5.2 million shares during the third quarter alone. We currently have $2.2 billion in authorized
capacity for future share repurchases and anticipate continuing to repurchase shares at an accelerated rate to
further reduce the outstanding share count.
Fourth Quarter 2026 and Updated Full-Year Outlook for
Continuing Operations
With the sale of Depop, which has been classified as discontinued operations beginning in the first quarter of
2026, our outlook pertains to continuing operations only, or the Etsy marketplace. We currently assume that
overall macroeconomic factors remain relatively consistent, foreign currency is a modest growth headwind,
and prior-year comparisons become less favorable. Our outlook assumes currency exchange rates remain
unchanged at current spot levels.
Q4 26 Outlook | FY 26 Outlook | |
GMS | $3.46B to $3.52B +5-7% Y/Y | ~7% |
Take Rate | ~25.6% | ~25.8% |
Adjusted EBITDA Margin | ~30% | ~30% |
With respect to our outlook, a reconciliation of Adjusted EBITDA margin guidance to the closest
corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to
the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA;
in particular, stock-based compensation expense and related payroll taxes, provision for income taxes,
interest and other non-operating (income) expense, net, foreign exchange (gain) loss, acquisition, divestiture,
and corporate structure-related expenses, and other non-recurring expenses.
Webcast and Conference Call Information
Etsy will host a webcast conference call to discuss these results at 8:30 a.m. Eastern Time today, Wednesday,
October 28, which will be live-streamed via our Investor Relations website under the Events section.
A replay of the webcast will be available through the same link following the conference call starting at 12:00
p.m. Eastern Time today, for at least three months thereafter.
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Cautionary Statement Regarding Forward-Looking
Statements
This shareholder letter contains or references forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements include statements relating to our financial outlook for the fourth
quarter and full year of 2026, and the underlying assumptions; our strategy, growth, goals, and initiatives; our
advertising opportunities; our capital allocation and repurchase activity; the momentum of our customer-
centric priorities; the future impact of our strategic investments, including product and engineering headcount
and capabilities; our AI-related initiatives and the impact thereof; and the timing of any of the foregoing.
Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking
statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,”
“expect,” “goal,” “intend,” “may,” “optimistic,” “outlook,” “plan,” “potential,” “should,” “target,” “will,” or similar
expressions and derivative forms and/or the negatives of those words. Forward-looking statements involve
substantial risks, uncertainties and other important factors that may cause actual results to differ materially
from those that we expect. These risks and uncertainties include but are not limited to: (1) macroeconomic,
geopolitical, and other events outside of our control; (2) the level of demand for our services or products sold
in our marketplaces; (3) the importance to our success of the trustworthiness and safety of our marketplaces
and our ability to attract and retain active and engaged communities of buyers and sellers; (4) any real or
perceived inaccuracies in our operational metrics; (5) if we or our third-party providers are unable to protect
against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents; (6) our
dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; (7)
operational and compliance risks related to our payments systems; (8) the global scope of our business; (9)
our ability to recruit and deploy talent effectively; (10) our ability to compete effectively; (11) our ability to
improve the customer experience for buyers and sellers, including through new products and features and our
advertising offerings, and to respond to their changing needs; (12) risks related to our environmental, social,
and governance activities and disclosures; (13) barriers to international trade and our efforts to grow our
marketplace globally; (14) acquisitions, dispositions, or strategic partnerships that may prove unsuccessful or
divert management attention; (15) our ability to deal effectively with fraud or other illegal activity increasingly
amplified by advances in AI; and (16) litigation and evolving global legal and regulatory requirements,
including privacy and data protection laws, tax laws, product liability laws, laws regulating speech and
platform moderation, antitrust laws, and intellectual property and counterfeiting regulations. These and other
risks, uncertainties and other important factors are more fully described in our filings with the Securities and
Exchange Commission, including in the section entitled “Risk Factors” in our most recent periodic report, and
in subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a
very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for
our management to predict all risks, nor can we assess the impact of all factors on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements we may make. In light of these risks, uncertainties, and
assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and
circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent
our beliefs and assumptions only as of the date of this shareholder letter. We disclaim any obligation to
update forward-looking statements.
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Third Quarter 2026 Financial Summary
(in thousands, except percentages; unaudited)
Our key operating and financial metrics for continuing operations (which excludes Depop’s results, as Depop
is presented as discontinued operations through the Closing Date) are presented in the tables below. Due to
the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30, 2025
includes Etsy marketplace and Reverb marketplace until the date of sale, while all other periods reflect the
Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable for
the nine months ended September 30, 2026 and 2025, while the three months ended September 30, 2026
and 2025 are directly comparable. To provide investors with a meaningful basis for comparing our results
year-over-year, we have presented Etsy marketplace results for the nine months ended September 30, 2025
below. Our calculation of trailing twelve months free cash flow includes activity for combined continuing and
discontinued operations. See “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial
measures (Etsy marketplace financial metrics, Adjusted EBITDA, Adjusted EBITDA margin, and free cash
flow) to the most directly comparable GAAP financial measures.
Our key operating and financial metrics are (in thousands, except percentages):
Three Months Ended September 30, | % Growth (Decline) Y/Y | ||
2026 | 2025 | ||
Continuing Operations | Continuing Operations | ||
GMS (1) | $2,646,888 | $2,432,587 | 8.8% |
Revenue | $692,469 | $624,153 | 10.9% |
Revenue take rate (2) | 26.2% | 25.7% | 50 bps |
Marketplace revenue | $468,143 | $429,081 | 9.1% |
Services revenue | $224,326 | $195,072 | 15.0% |
Gross profit | $503,145 | $457,923 | 9.9% |
Operating expenses | $391,712 | $346,918 | 12.9% |
Net income | $113,637 | $104,596 | 8.6% |
Net income margin | 16.4% | 16.8% | (40) bps |
Adjusted EBITDA (Non-GAAP) | $210,364 | $183,607 | 14.6% |
Adjusted EBITDA margin (Non-GAAP) | 30.4% | 29.4% | 100 bps |
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Nine Months Ended September 30, | % Growth / (Decline) Y/Y for Continuing Operations | % Growth Y/Y for the Etsy Marketplace (Non-GAAP) (3) | |||
2026 | 2025 | ||||
Continuing Operations | Continuing Operations | Etsy Marketplace (Non-GAAP) | |||
GMS (1) | $7,689,975 | $7,549,052 | $7,167,704 | 1.9% | 7.3% |
Revenue | $1,992,059 | $1,865,488 | $1,822,252 | 6.8% | 9.3% |
Revenue take rate (2) | 25.9% | 24.7% | 25.4% | 120 bps | 50 bps |
Marketplace revenue | $1,356,990 | $1,292,343 | $1,256,763 | 5.0% | 8.0% |
Services revenue | $635,069 | $573,145 | $565,489 | 10.8% | 12.3% |
Gross profit | $1,442,788 | $1,362,834 | $1,341,037 | 5.9% | 7.6% |
Operating expenses | $1,086,241 | $1,161,602 | $1,031,475 | (6.5)% | 5.3% |
Net income | $332,638 | $115,147 | $223,393 | 188.9% | 48.9% |
Net income margin | 16.7% | 6.2% | 12.3% | 1,050 bps | 440 bps |
Adjusted EBITDA (Non-GAAP) | $590,433 | $527,427 | $521,848 | 11.9% | 13.1% |
Adjusted EBITDA margin (Non-GAAP) | 29.6% | 28.3% | 28.6% | 130 bps | 100 bps |
(1)Excluded from the tables above is gross merchandise sales (“GMS”) for Depop, which was $199.8 million and $292.1 million for the
three months ended September 30, 2026 and 2025, respectively, and $1,004.4 million and $775.2 million for the nine months ended
September 30, 2026 and 2025, respectively.
(2)Revenue take rate is revenue divided by GMS.
(3)% growth Y/Y for the Etsy marketplace is the change in continuing operations for the nine months ended September 30, 2026, which
represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the nine months ended
September 30, 2025, as Reverb was sold in the second quarter of 2025.
As of September 30, | % Decline Y/Y | ||
2026 | 2025 | ||
Continuing and Discontinued Operations | Continuing and Discontinued Operations | ||
Net cash provided by operating activities - trailing twelve months | $598,110 | $691,249 | (13.5)% |
Free cash flow - trailing twelve months (Non-GAAP) | $557,125 | $635,357 | (12.3)% |
14
Etsy, Inc.
Condensed Consolidated Balance Sheets
(in thousands; unaudited)
As of September 30, 2026 | As of December 31, 2025 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $2,065,658 | $1,355,428 |
Short-term investments | 245,043 | 224,088 |
Accounts receivable, net | 8,947 | 8,690 |
Prepaid and other current assets | 64,149 | 113,953 |
Funds receivable and seller accounts | 219,559 | 205,002 |
Current assets of discontinued operations | — | 53,822 |
Total current assets | 2,603,356 | 1,960,983 |
Restricted cash | 8,054 | 8,524 |
Property and equipment, net | 195,566 | 205,552 |
Goodwill | 37,280 | 38,067 |
Intangible assets, net | 10,891 | 14,511 |
Deferred tax assets | 119,629 | 119,051 |
Long-term investments | 150,392 | 134,376 |
Other assets | 42,508 | 38,964 |
Noncurrent assets of discontinued operations | — | 307,226 |
Total assets | $3,167,676 | $2,827,254 |
Liabilities and Stockholders' Deficit | ||
Current liabilities: | ||
Accounts payable | $19,612 | $27,732 |
Accrued expenses | 288,224 | 342,200 |
Short-term debt, net | 1,298,793 | 649,008 |
Funds payable and amounts due to sellers | 219,559 | 205,002 |
Deferred revenue | 35,011 | 27,049 |
Other current liabilities | 55,048 | 60,354 |
Current liabilities of discontinued operations | — | 52,274 |
Total current liabilities | 1,916,247 | 1,363,619 |
Finance lease obligations—net of current portion | 92,134 | 93,482 |
Deferred tax liabilities | 11,140 | 8,808 |
Long-term debt, net | 1,688,345 | 2,333,230 |
Other liabilities | 137,646 | 125,103 |
Noncurrent liabilities of discontinued operations | — | 1,107 |
Total liabilities | 3,845,512 | 3,925,349 |
Total stockholders’ deficit | (677,836) | (1,098,095) |
Total liabilities and stockholders’ deficit | $3,167,676 | $2,827,254 |
15
Etsy, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts; unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2026 | 2025 | 2026 | 2025 | |
Revenue | $692,469 | $624,153 | $1,992,059 | $1,865,488 |
Cost of revenue | 189,324 | 166,230 | 549,271 | 502,654 |
Gross profit | 503,145 | 457,923 | 1,442,788 | 1,362,834 |
Operating expenses: | ||||
Marketing | 207,002 | 173,369 | 572,169 | 536,279 |
Product development | 110,781 | 99,766 | 310,754 | 299,902 |
General and administrative | 73,929 | 73,783 | 203,318 | 223,718 |
Asset impairment charge | — | — | — | 101,703 |
Total operating expenses | 391,712 | 346,918 | 1,086,241 | 1,161,602 |
Income from operations | 111,433 | 111,005 | 356,547 | 201,232 |
Other income (expense), net | 17,268 | 9,145 | 36,385 | (26,764) |
Income from continuing operations before income taxes | 128,701 | 120,150 | 392,932 | 174,468 |
Provision for income taxes from continuing operations | (15,064) | (15,554) | (60,294) | (59,321) |
Net income from continuing operations | 113,637 | 104,596 | 332,638 | 115,147 |
Discontinued operations: | ||||
Income (loss) from discontinued operations before income taxes (including gain on sale of $839.7 million in the three and nine months ended September 30, 2026) | 740,594 | (28,065) | 544,016 | (64,556) |
(Provision) benefit for income taxes from discontinued operations | (714) | (1,028) | (107) | 1,656 |
Net income (loss) from discontinued operations | 739,880 | (29,093) | 543,909 | (62,900) |
Net income | $853,517 | $75,503 | $876,547 | $52,247 |
Basic net income from continuing operations per share attributable to common stockholders | $1.25 | $1.05 | $3.53 | $1.11 |
Total basic net income per share attributable to common stockholders | $9.37 | $0.76 | $9.30 | $0.50 |
Diluted net income from continuing operations per share attributable to common stockholders | $1.00 | $0.86 | $2.84 | $0.98 |
Total diluted net income per share attributable to common stockholders | $7.31 | $0.63 | $7.36 | $0.47 |
Weighted-average common shares outstanding: | ||||
Basic | 91,099 | 99,334 | 94,273 | 103,660 |
Diluted | 117,235 | 124,957 | 120,441 | 124,024 |
16
Etsy, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands; unaudited)
Nine Months Ended September 30, | ||
2026 | 2025 | |
Cash flows from operating activities | ||
Net income | $876,547 | $52,247 |
Less: Net income (loss) from discontinued operations | 543,909 | (62,900) |
Net income from continuing operations | 332,638 | 115,147 |
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||
Stock-based compensation expense | 149,852 | 164,224 |
Depreciation and amortization expense | 46,603 | 45,086 |
Provision for expected credit losses | 4,586 | 7,100 |
Deferred provision for income taxes | 2,933 | 21,274 |
Asset impairment charge | — | 101,703 |
Other non-cash (income) expense, net | (12,783) | 35,549 |
Changes in operating assets and liabilities (net of impact of sale of business) | (12,536) | (95,204) |
Net cash provided by operating activities of continuing operations | 511,293 | 394,879 |
Net cash used in operating activities of discontinued operations | (230,307) | (18,589) |
Net cash provided by operating activities | 280,986 | 376,290 |
Cash flows from investing activities | ||
Purchases of property and equipment | (4,122) | (13,891) |
Website and app development | (19,994) | (26,315) |
Purchases of investments | (255,768) | (251,091) |
Sales and maturities of investments | 219,112 | 227,563 |
Proceeds from sale of business, net of cash sold | — | 100,485 |
Net cash (used in) provided by investing activities of continuing operations | (60,772) | 36,751 |
Net cash provided by (used in) investing activities of discontinued operations | 1,302,813 | (5,222) |
Net cash provided by investing activities | 1,242,041 | 31,529 |
Cash flows from financing activities | ||
Payment of tax obligations on vested equity awards | (66,349) | (42,526) |
Repurchase of stock | (789,432) | (643,670) |
Proceeds from exercise of stock options | 14,934 | 15,331 |
Proceeds from issuance of convertible senior notes | — | 700,000 |
Payment of debt issuance costs | — | (11,339) |
Payments on finance lease obligations | (3,192) | (4,594) |
Other financing, net | 250 | (17,784) |
Net cash used in financing activities | (843,789) | (4,582) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (9,886) | 36,487 |
Net increase in cash, cash equivalents, and restricted cash | 669,352 | 439,724 |
Cash, cash equivalents, and restricted cash at beginning of period | 1,404,360 | 811,178 |
Cash, cash equivalents, and restricted cash at end of period | $2,073,712 | $1,250,902 |
17
Currency-Neutral GMS
We calculate currency-neutral GMS by translating current period GMS for goods sold that were listed in non-
U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates.
As reported and currency-neutral GMS growth (decline) for the periods presented below are as follows:
2026 | 2025 | |||||
As Reported | Currency- Neutral | FX Impact | As Reported | Currency- Neutral | FX Impact | |
Three months ended September 30, | ||||||
GMS - Continuing operations | 8.8% | 9.1% | (0.3)% | (10.1)% | (10.8)% | 0.7% |
Nine months ended September 30, | ||||||
GMS - Continuing operations | 1.9% | 1.3% | 0.6% | (8.8)% | (9.1)% | 0.3% |
GMS - Etsy marketplace (1) | 7.3% | 6.7% | 0.6% | (5.6)% | (5.9)% | 0.3% |
(1)As reported and currency-neutral GMS for the Etsy marketplace declined (2.4)% and (3.2)%, respectively, for the three months
ended September 30, 2025. This resulted in an FX impact of 0.8%.
18
Non-GAAP Financial Measures
Other Key Financial Metrics
(in thousands, except percentages; unaudited)
Given the sale of Depop on July 30, 2026, Etsy results are presented on a continuing operations basis, while
Depop results are reported as discontinued operations across all periods presented through the Closing Date.
Due to the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30,
2025 includes Etsy marketplace and Reverb marketplace through the date of sale, while all other periods
reflect the Etsy marketplace only. This makes year-over-year continuing operations results not directly
comparable for the nine months ended September 30, 2026 and 2025, while the three months ended
September 30, 2026 and 2025 are directly comparable.
To provide investors with a meaningful basis for comparing our ongoing operating results year-over-year, we
have presented certain Etsy marketplace financial measures for the nine months ended September 30, 2025
in this Shareholder Letter. These measures include the following non-GAAP financial measures for the nine
months ended September 30, 2025 where we exclude the impact of Reverb: (1) Revenue and Revenue take
rate, (2) Marketplace revenue, (3) Services revenue, (4) Gross profit, (5) Operating expenses, (6) Net income
(loss) and Net income (loss) margin, and (7) Adjusted EBITDA and Adjusted EBITDA margin.
Management believes that presenting these Etsy marketplace non-GAAP financial measures is useful to
investors because they:
•provide a clearer, normalized baseline to evaluate the organic growth, financial performance, and
underlying trends of our remaining Etsy marketplace business;
•facilitate more direct year-over-year comparisons of our continuing operations by removing the impact
of the divested Reverb marketplace; and
•align with how management evaluates the performance of the business, allocates resources, and sets
internal operational targets moving forward.
These non-GAAP financial measures have limitations as analytical tools and should not be considered in
isolation, or as a substitute for, financial information prepared in accordance with GAAP. Furthermore, our
calculation of these non-GAAP measures may differ from similarly titled measures reported by other
companies. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is
provided in the following tables:
Nine Months Ended September 30, 2025 | |||
Continuing Operations (As Reported) | Less: Reverb Marketplace | Etsy Marketplace (Non-GAAP) | |
Revenue | $1,865,488 | $43,236 | $1,822,252 |
Revenue take rate | 24.7% | 11.3% | 25.4% |
Marketplace revenue | $1,292,343 | $35,580 | $1,256,763 |
Services revenue | $573,145 | $7,656 | $565,489 |
Gross profit | $1,362,834 | $21,797 | $1,341,037 |
Operating expenses | $1,161,602 | $130,127 | $1,031,475 |
Net income (loss) | $115,147 | $(108,246) | $223,393 |
Net income (loss) margin | 6.2% | (250.4)% | 12.3% |
19
Reconciliation of Net Income (Loss) to Adjusted EBITDA and the
Calculation of Adjusted EBITDA Margin
(in thousands, except percentages; unaudited)
Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense
and related payroll taxes; depreciation and amortization expense; provision for income taxes; interest and
other non-operating (income) expense, net; foreign exchange (gain) loss; restructuring and other exit costs;
acquisition, divestiture, and corporate structure-related expenses; asset impairment charge; loss on sale of
business; and retroactive non-income tax income. The following tables reflect the reconciliation of net income
(loss) to Adjusted EBITDA as well as the calculation of Adjusted EBITDA margin for continuing operations, the
Etsy marketplace, and the Reverb marketplace for the periods indicated:
Three Months Ended September 30, | ||
2026 | 2025 | |
Continuing Operations | Continuing Operations | |
Net income | $113,637 | $104,596 |
Excluding: | ||
Stock-based compensation expense and related payroll taxes (1) | 47,941 | 56,521 |
Depreciation and amortization expense | 16,059 | 13,299 |
Provision for income taxes | 15,064 | 15,554 |
Interest and other non-operating income, net | (12,768) | (7,680) |
Foreign exchange gain | (3,433) | (548) |
Restructuring and other exit costs | 33,864 | 1,883 |
Acquisition, divestiture, and corporate structure-related expenses | — | (18) |
Adjusted EBITDA | $210,364 | $183,607 |
Divided by: | ||
Revenue | $692,469 | $624,153 |
Adjusted EBITDA margin | 30.4% | 29.4% |
Nine Months Ended September 30, | ||||
2026 | 2025 | |||
Continuing Operations | Continuing Operations (As Reported) | Less: Reverb Marketplace | Etsy Marketplace (Non-GAAP) | |
Net income (loss) | $332,638 | $115,147 | $(108,246) | $223,393 |
Excluding: | ||||
Stock-based compensation expense and related payroll taxes (1) | 158,303 | 169,542 | 3,035 | 166,507 |
Depreciation and amortization expense | 46,603 | 45,086 | 5,078 | 40,008 |
Provision for income taxes | 60,294 | 59,321 | 109 | 59,212 |
Interest and other non-operating (income) expense, net | (25,609) | (17,521) | 380 | (17,901) |
Foreign exchange (gain) loss | (9,699) | 40,424 | (573) | 40,997 |
Restructuring and other exit costs | 33,864 | 1,480 | — | 1,480 |
Acquisition, divestiture, and corporate structure-related expenses | 75 | 7,148 | 4,093 | 3,055 |
Asset impairment charge | — | 101,703 | 101,703 | — |
Loss on sale of business | — | 5,097 | — | 5,097 |
Retroactive non-income tax income | (6,036) | — | — | — |
Adjusted EBITDA | $590,433 | $527,427 | $5,579 | $521,848 |
Divided by: | ||||
Revenue | $1,992,059 | $1,865,488 | $43,236 | $1,822,252 |
Adjusted EBITDA margin | 29.6% | 28.3% | 12.9% | 28.6% |
20
(1)Stock-based compensation expense included in continuing operations in the Condensed Consolidated Statements of Operations for
the periods presented below is as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2026 | 2025 | 2026 | 2025 | |
Cost of revenue | $3,970 | $5,962 | $14,532 | $19,623 |
Marketing | 3,441 | 4,063 | 10,911 | 8,627 |
Product development | 21,980 | 29,921 | 75,650 | 90,146 |
General and administrative | 16,314 | 15,179 | 48,759 | 45,828 |
Stock-based compensation expense | $45,705 | $55,125 | $149,852 | $164,224 |
Reconciliation of Net Cash Provided by Operating Activities to Free Cash
Flow
(in thousands; unaudited)
Free cash flow represents our net cash provided by operating activities, reduced by purchases of property
and equipment and website and app development that are included in cash flows from investing activities.
The following table reflects the reconciliation of operating activities to free cash flow for combined continuing
and discontinued operations on a trailing twelve month basis (in thousands):
As of September 30, | ||
2026 | 2025 | |
Continuing and Discontinued Operations | Continuing and Discontinued Operations | |
Net cash provided by operating activities | $598,110 | $691,249 |
Purchases of property and equipment | (5,519) | (18,154) |
Website and app development | (35,466) | (37,738) |
Free cash flow | $557,125 | $635,357 |
The following table reflects the reconciliation of operating activities to free cash flow for continuing operations
(in thousands):
Three Months Ended September 30, | ||
2026 | 2025 | |
Net cash provided by operating activities | $242,852 | $226,067 |
Purchases of property and equipment | (1,404) | (3,790) |
Website and app development | (5,079) | (7,997) |
Free cash flow | $236,369 | $214,280 |