Etsy Q2 2026 Earnings Call: Complete Transcript

On Wednesday, Etsy (NASDAQ: ETSY ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Etsy Inc.

6 billion. The company announced a $2 billion share repurchase program, reflecting confidence in strategic execution and the return of capital from the sale of Depop. 5% year over year. Etsy plans to restructure its organization, reducing the workforce by approximately 12%, to enhance execution and focus on machine learning and strategic capabilities.

Guidance for Q3 2026 anticipates GMS growth between 4% to 6% and a take rate of approximately 26%, with full-year GMS growth expected in the mid-single-digit range. Full Transcript Deb Wasser, VP of Investor Relations Hi everyone and welcome to Etsy's second quarter 2026 earnings conference call. I'm Deb Wasser, VP of Investor Relations. Today's prepared remarks have been prerecorded.

Joining me today are Kruti Patel Goyal, our CEO, and our CFO, Lanny Baker. Please keep in mind that our remarks today include forward-looking statements, including statements related to our financial outlook, our business, and our operating results. Our actual results may differ materially due to risks, uncertainties, and other important factors. And as noted in the shareholder letter posted to our website and in our most recent periodic reports, any forward-looking statements that we make on this call are based on our beliefs and assumptions today and we disclaim any obligation to update them.

Also during the call, we'll present both GAAP and non-GAAP historical financial measures, which are reconciled to GAAP financial measures in today's shareholder letter posted on our IR website along with the replay of this call. 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. As you review our shareholder letter and 10-Q, please keep in mind that on July 30th we completed the sale of Depop to eBay.

Etsy's results in those documents are presented on a continuing operations basis while Depop's results are presented within discontinued operations. I also want to note that Reverb, which we sold in June of last year, is included in Q2 2025 continuing operations, whereas Q2 2026 reflects only the Etsy Marketplace. This makes year-over-year continuing operations results not directly comparable, and we have included Etsy standalone marketplace component comparisons where most relevant in order to provide investors with a more meaningful basis for evaluating our go-forward operations.

Financial results presented on this call cover our continuing operations, or the Etsy Marketplace only. With that, I'll turn it over to Kruti. Kruti Patel Goyal, Chief Executive Officer Thanks, Deb, and good morning, everyone. Thank you for joining us.

Since I stepped into this role, I've been clear about three things. Our greatest strength is our differentiation as a human-centered marketplace. We have a massive market opportunity ahead of us, and realizing that opportunity requires clear strategic focus and disciplined execution. Our second quarter results reinforce our conviction that this focus is translating into stronger marketplace fundamentals and accelerating growth.

We're encouraged by our progress and increasingly confident in our ability to create long-term shareholder value, reflected in our improved outlook for 2026 and our new $2 billion share repurchase authorization. Just as importantly, we continue to see significant opportunity to further strengthen relationships with our buyers and sellers to drive long-term marketplace value. So today I'll share how our strategic priorities are improving performance, as well as how we're evolving our organization to lay the foundation for Etsy's next stage of growth.

Starting with our performance, second quarter GMS and revenue growth accelerated on a sequential basis and we delivered healthy flow-through of revenue growth to adjusted EBITDA, again demonstrating the strength of our business model. Etsy Marketplace GMS grew year over year for the third consecutive quarter, reflecting continued improvement across marketplace fundamentals. 5% year over year. 9%.

2% adjusted EBITDA margin. We're beginning to see how our four priorities reinforce one another to improve marketplace health and performance. Discovery and matching help buyers find and connect with the right items, while loyalty and human connection give buyers more reasons to return. Together, these enable lasting relationships between buyers, sellers, and Etsy.

We're seeing very clear signal that these efforts are improving our performance. Active buyers improved, growing by 350,000 sequentially to approximately 87 million, roughly stable on a year-over-year basis. Gross buyer additions accelerated, and habitual and repeat buyer cohorts, our most valuable buyers, each showed slight sequential growth for the first time since 2023. 8% year over year to $124.

And while higher seller listing prices remain a contributor, our work to elevate higher-quality items on and off site is increasingly playing a role. While purchase frequency remains below prior year levels, the year-over-year decline moderated compared to the first quarter, an early encouraging signal that we're improving the overall customer experience. 5% year over year, and visits per monthly active user and orders per visit both increasing year over year. And we continue to see evidence of a healthier seller base, including year-over-year seller growth and stronger retention of prior-year active sellers.

We have a lot to cover today, so I won't review each of our priorities in the level of detail they're discussed in our shareholder letter, but here are a few updates I'm most excited about. First, we're making Etsy's core differentiation more consistently visible and tangible throughout the experience. We're bringing creativity, craftsmanship, and human connection to the forefront across both the marketplace and our brand marketing, which celebrates being human and the way Etsy sellers bring meaning to moments that matter, big and small.

Second, we're making Etsy feel much more personal through richer buyer profiles, real-time personalization in search, and fresher content that helps buyers discover new shopping missions and more of Etsy sellers' unique inventory. Third, we're reaching younger buyers much earlier in their discovery journey by evolving the channels, content, and experiences where Etsy shows up. One example is our Olivia Rodrigo partnership, which combines an in-person activation with an exclusive merchandise collaboration, and our investments in YouTube and TikTok drove a fivefold increase in visits in those channels from Millennial and Gen Z audiences in the first half of 2026.

Finally, we're continuing to evolve how we build loyalty across the marketplace, from testing new approaches for buyers to developing new ways to recognize and support the sellers who best represent what makes Etsy unique. Over the past year we've sharpened our strategy, strengthened execution, and are encouraged by the progress we're seeing across the marketplace. We've inflected Etsy's year-over-year growth trajectory from high single-digit GMS declines in early 2025 to mid single-digit growth anticipated for the full year 2026, a more than 10 percentage point improvement in performance.

As a result, we have even more conviction in our strategic direction to build the Etsy we envision. At the same time, we've gained additional clarity about the organization we'll need to deliver it. So we're announcing a restructuring of parts of our organization and a reduction of our workforce, with most of the changes concentrated in our product and engineering group. We're changing our structure with fewer silos to reduce handoffs and with flatter, faster teams built to solve more broad and complex problems.

And we'll invest more deeply in the skills and capabilities we need to accelerate execution and impact. This is not a cost-cutting move. It's about leaning in during a period of strong momentum so that we can move faster and execute with even greater focus. We are deeply grateful to our departing colleagues for their service, dedication, and contributions, and we're committed to supporting them through this transition with care and respect.

We know these decisions have a real impact on people's lives, and we didn't make them lightly. They reflect our conviction that focusing our investments in our team is the best way to build a stronger Etsy. One of my responsibilities is to make decisions not only for the Etsy we are today, but also the Etsy we want to become. That means paying close attention to how the world around us is changing.

Buyers are discovering products in new ways, sellers have access to increasingly powerful tools to build their businesses, and the expectations they have of Etsy continue to rise. By investing in the capabilities that matter most for the future of the marketplace, we believe Etsy will be better positioned to innovate more quickly and ultimately deliver more value for our customers, community, and shareholders. Thank you for your time this morning. I'll turn the call over to Lanny for more insights on our Q2 performance, our outlook, and the financial implications of our restructuring plan.

Lanny Baker, Chief Financial Officer Thanks, Kruti. Great to connect with all of you today. Kruti already covered Etsy Marketplace, GMS, and our headline metrics, so I'll focus on revenue, profitability, capital allocation, and our outlook. 3% for the Etsy Marketplace.

2%, respectively. 9% for the second quarter, up 130 basis points year over year, including an approximate 80 basis point benefit from the Reverb divestiture. Meanwhile, Etsy Marketplace take rate also expanded year to year, primarily driven by Etsy Ads, where we're using machine learning to enhance relevance and improve seller budget pacing. Offsite ads also contributed, benefiting from a tilt in paid marketing activity toward higher-monetizing channels.

On the operating expense side, we remained disciplined in the second quarter while continuing to invest in areas with the clearest evidence of attractive returns. As Etsy Marketplace GMS growth has improved, we have gained leverage across marketing, product development, and G&A. Nearly half of the year-to-year growth in Etsy Marketplace revenue flowed through to adjusted EBITDA in the quarter, creating room to fund our top priorities while sustaining healthy profitability. Turning to capital allocation, our balance sheet remains strong.

3 billion in cash, cash equivalents, and short- and long-term investments, and we continue to generate significant cash on a continuing operations basis. 4 billion in cash proceeds from the sale of Depop at the end of last week. Many of you have expressed interest in when or how we would step up our share repurchases given the cash coming in from the sale of Depop. I'm pleased to report we've already done so.

During the second quarter, we stepped up our buyback program and repurchased approximately $250 million in stock. 9 million shares. At quarter's end, we had $578 million remaining on our current Board-authorized share repurchase program, and we're announcing today a new $2 billion share repurchase program. The additional authorization reflects our growing confidence in strategic execution and will enable us to continue the return of excess capital to shareholders and accelerate our buyback program with the proceeds from the sale of Depop.

As outlined in our shareholder letter, the restructuring plan will reduce the size of our workforce by roughly 220 employees, or approximately 12%. Following the restructuring, our headcount is expected to be approximately 1,600 people. We expect to incur approximately $35 million in charges, largely made up of cash expenditures associated with severance payments, employee benefits, and related costs. We anticipate that the charges will be incurred and the execution of the restructuring plan will be substantially complete by the end of the third quarter of 2026.

58 billion, representing year-over-year growth of approximately 4% to 6% for the quarter. We expect third quarter take rate to be approximately 26% and adjusted EBITDA margin to be within a range of 28% to 30%. For the full year, we now expect the Etsy Marketplace to sustain a bit stronger GMS growth momentum across the second half of the year than we had anticipated previously. Accordingly, we anticipate that GMS growth at Etsy will be in the mid-single-digit range for the full year 2026.

We currently expect full year take rate to be roughly equal to what we've reported in the first half of the year, and our full year adjusted EBITDA margin outlook tightens upward to 29% to 30%. We expect the restructuring to lower operating costs in the near term, and we've incorporated an expected benefit into our increased full year adjusted EBITDA margin outlook. We believe that higher GMS and revenue growth sustained over time can create far greater absolute cash flow and shareholder value than can margin expansion alone.

Accordingly, our objective in the restructuring is to not only extend the expense discipline we've demonstrated historically, but also to position ourselves to build the organization necessary to execute our strategy and accelerate growth in the years ahead. Specifically, we intend to deepen our expertise in strategically critical areas across product, engineering, and customer operations, with a particular focus on expanding and strengthening our team's machine learning skills.

We also plan to explore additional R&D investment in new product capabilities, marketing initiatives, customer trust, and international growth to accelerate our learnings in 2026 and inform our plans for 2027. We will be purposeful and disciplined in the investments we make, and we remain committed to maintaining the very attractive profit margin profile of our business. With that, we'll now turn it over to the operator to take your questions. OPERATOR At this time.

If you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question.

As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form. Okay, our first question will come from Rick Patel with Raymond James. Your line is now open.

Please go ahead. Rick Patel, Analyst at Raymond James Thank you. Good morning, and congrats on the progress. Can you dig deeper on what you think are the most effective drivers of strong and improved GMS growth in Q2?

What's working, and where do you see the most opportunity for improvement? And second, can you provide additional color on the initiative to improve discovery among young buyers? How will you tackle this, and are you seeing early signs of progress? Kruti Patel Goyal, Chief Executive Officer Thanks for the question, Rick.

First of all, what I would say is that what we're seeing is the result of strong execution against a clear set of strategic priorities. And the results that we're seeing are exactly what we expected when we laid out these priorities. Just as a reminder, you shouldn't think about them as independent initiatives. They're designed to reinforce one another to create a stronger marketplace over time, and we're seeing those marketplace health indicators in the quarterly results that we shared.

The clearest examples of how this is working are in how our product and marketing improvements are working together to drive growth this quarter. So first, at the top of the funnel, our marketing is becoming more efficient at bringing buyers in. We're continuing to see strength in owned channels like SEO, and we've improved our PLA performance really meaningfully through better segmentation and bidding strategies that direct spend towards our highest-quality inventory and bring in the right buyers more efficiently. Then once those buyers arrive, they're landing on a meaningfully better experience.