Etsy, Inc. (ETSY) Earnings & Analysis

Latest quarter

Etsy reported Q3 FY2026 revenue of $692.5 million, above the $669.0 million consensus. Adjusted earnings, as counted by the consensus, were $1.55 per share, above the $1.34 estimate.

Revenue rose 10.9% from $624.2 million a year earlier. Etsy’s filing attributed the increase to growth in both marketplace and services revenue: transaction and payment fees benefited from higher gross merchandise sales, while advertising revenue rose primarily because of higher click volume. The filing said Etsy marketplace GMS, the value of items sold rather than Etsy’s own revenue, grew 8.8% year over year.

Etsy reported a gross margin of 72.7%, compared with 73.4% a year earlier, and an operating margin of 16.1%, compared with 17.8%. Diluted earnings per share rose to $7.28 from $0.63; the filing said discontinued operations income increased primarily because of an $839.7 million gain on the sale of Depop, partly offset by a higher operating loss at Depop.

Etsy reported free cash flow of $153.2 million, compared with $207.2 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Kruti Patel Goyal said Etsy was bringing more buyers to a more personalized shopping experience and improving support for buyers and sellers. She estimated that personalization improvements alone contributed approximately 2 percentage points to the annualized year-over-year GMS growth rate by the third quarter.

CFO Lanny Baker said active buyers rose 1% to approximately 88 million on a trailing-12-month basis, returning to year-over-year growth for the first time in two years. He said GMS per buyer rose 3.9%, although purchase frequency remained modestly lower year over year. Baker attributed a growing role in average order value growth to internal initiatives, including more relevant search and a greater emphasis on quality signals.

Asked about pricing, Patel Goyal said Etsy was focused on the quality of the customer experience rather than driving price. She said the company was using information about buyers and inventory to personalize search, recommendations and marketing.

Baker said the take rate rose to 26.2%, primarily because of enhancements to Etsy Ads. He said revenue growth and the August restructuring helped deliver a 30.4% adjusted EBITDA margin, while marketing expense rose as a percentage of revenue as Etsy invested in GMS growth.

Asked about the fourth-quarter outlook, Baker said holiday consumer behavior and the timing of product improvements could affect the result. He said marketing spending would be guided by returns and competitive conditions.

On AI-related marketplace policies, Patel Goyal said, “AI should support seller creativity and not replace it.” She said sellers must include at least one unaltered photo with a real background, and Etsy had clarified that AI-generated functional guides such as patterns and recipes were no longer allowed.

Patel Goyal said Baker would leave Etsy in early March and that the company had engaged a recruiting firm to find a new CFO in Brooklyn.

Guidance

Etsy now expects its full-year 2026 adjusted EBITDA margin to be roughly 30%, Baker said on the latest call. Its previous outlook was 29% to 30%. Baker also said Etsy expects to gradually add product and engineering headcount and capabilities to support long-term growth.