Etsy, Inc.

What they do

Etsy operates a two-sided online marketplace connecting millions of creative entrepreneurs with buyers worldwide. It generates revenue from marketplace activities, including transaction fees, payments processing fees, and listing fees, as well as from optional seller services like on-site advertising and shipping labels. The company also operated Depop, a fashion resale marketplace, until its sale to eBay closed on July 30, 2026.

Revenue drivers

• Etsy marketplace GMS — Gross Merchandise Sales on the Etsy marketplace were $10,460.7 million in 2025, representing 87.8% of total consolidated GMS.
• Depop GMS — Depop generated $1,074.9 million in GMS in 2025, or 9.0% of total consolidated GMS. Sold to eBay for $1.2 billion in cash, closed July 30, 2026.
• Transaction, payments, and listing fees — Primary revenue streams from marketplace activities, including fees on transactions, payments processing, and listings.
• Seller services — Optional services for sellers, including on-site advertising and shipping labels, contributing to revenue take rate.

Recent performance

In the quarter ended June 30, 2026, revenue was $668.3 million, compared to $631.3 million in the prior quarter. Annual revenue grew from $2.33 billion in 2021 to $2.88 billion in 2025, though net income declined to $163 million in 2025 from $303 million in 2024. Operating cash flow was $693.4 million in 2025, down from $752.5 million in 2024. At June 30, 2026, the company had $901.3 million in cash and equivalents and $2.34 billion in long-term debt, with shareholders' equity of negative $1.40 billion.

Strategy

Management's stated priorities include 'Right to Win' growth strategies, investments in artificial intelligence, and marketing and product initiatives. After the Depop sale, the company plans to use proceeds for general corporate purposes, share repurchases, and investment in the Etsy marketplace. On August 3, 2026, the Audit Committee approved a Restructuring Plan to simplify Etsy's structure, including an approximate 12% reduction (about 220 employees) in the Etsy marketplace workforce. The company intends to lower operating costs in the near term while continuing to invest to drive long-term growth.

Risks

• Macroeconomic pressures — Inflation, interest rates, recessionary factors, tariffs, and foreign exchange volatility could pressure consumer discretionary spending and reduce GMS and revenue.
• Discontinued operations transition — The sale of Depop closed July 30, 2026; execution risks include purchase price adjustments, regulatory conditions, and integrating the proceeds into capital allocation.
• Workforce restructuring — The Restructuring Plan involves approximately 220 employees and expected charges of about $35 million, with execution risks including disruption to operations and key talent retention.
• Competition and retention — Failure to attract and retain sellers and buyers, or convert visits into sales, could adversely affect operating results and key metrics.

Outlook

Management expects the Restructuring Plan to be substantially complete by the end of the third quarter of 2026, with restructuring charges of approximately $35 million expected in that quarter. They plan to build the organization needed to execute their strategy and drive long-term growth, while using Depop proceeds for general corporate purposes, share repurchases, and Etsy marketplace investment. The company also acknowledged continued pressure on consumer discretionary spending and e-commerce, with uncertainty from macroeconomic and geopolitical factors.