Etsy, Inc. (ETSY) Earnings

Management highlights

Kruthi stepped into her first quarter as CEO after 15+ years at Etsy. Etsy's focus is translating its differentiated value proposition into better customer experience. Priorities include expanding buyer discovery, connecting with relevant items, building relationships. In Q1, key KPIs were at or ahead of expectations. Strategy built around four priorities: showing up where shoppers discover, matching with right inventory, retaining/rewarding valuable customers, amplifying human connection. App is centerpiece of transformation with personalized home feed and AI-generated buyer profiles. Work on search to be more personalized. Loyalty and human connection focus on earning engagement of valuable buyers and sellers. AI and ML used to improve marketplace. Sold Depop to eBay, transaction expected to close by end of Q3 2026.

Guidance

Etsy currently anticipates that Etsy Marketplace second quarter GMS will be between $2.48 and $2.53 billion, representing year-over-year growth of approximately 3% to 5% for the quarter. Expect second quarter take rate to be approximately 25.7% and adjusted EBITDA margin to be 27% to 29%. For the full year, now anticipate that GMS growth will be in the low single-digit range. Continue to expect year-over-year growth in Etsy GMS in each quarter of 2026. Full year take rate to be roughly equal to that of the first half of the year. Full year adjusted EBITDA margin outlook of 28 to 30% remains unchanged.

Segment performance

Etsy marketplace GMS was $2.5 billion, up 5.5% year-over-year. Revenue was $631 million on take rate of 25.7%, adjusted EBITDA was $185 million, or a 29.3% adjusted EBITDA margin. App GMS is continuing to significantly outpace non-app growth and now makes up about 47% of total GMS, expanding 240 basis points year over year. Mobile app GMS was up 11.2% year over year in Q1 2026. Active buyers grew sequentially for the first time in two years. Active sellers grew 3.3% to 5.6 million. Q1 26 trailing 12 month active buyer count was 86.6 million. GMS per active buyer reached $122 on a trailing 12-month basis.

Analyst Q&A

• Q: Michael Morton with Moffitt Nathanson asked about the most impactful changes to the app and if personalized home feed recommendations are driving measurable increase in frequency.

  A: Kruthi said app users have 40% higher LTV, work on home feed shifting to show items based on buyer interests, showing traction in engagement but frequency not inflected yet as it requires full end to end experience shift.

• Q: Trevor Young with Barclays asked about take rate path.

  A: Kruthi said focus is on growing revenue through GMS growth, offer valuable services to sellers, expect modest improvement in take rate over longer term.

• Q: Nikhil Devnani with Bernstein asked about cross category shopping on Etsy.

  A: Kruthi said in early days, encouraging signs from app home feed changes, serving buyers for horizontal shopping missions.

• Q: Maria Ripps with Canaccord asked about active buyers returning to growth and lag between product improvements and sustained growth inflection.

  A: Maria said work on product experience, personalization, customer service, etc. to build environment for existing buyers, focus on bringing in new and reactivating prior buyers, made changes to marketing mix.

• Q: Nick Jones with BNP Paribas asked about using AI technology to drive conversion.

  A: Kruthi said leveraging AI to build personalized experience, early progress in understanding inventory, buyer interests, intent, introduced conversational agent for buyers, at early stages but excited about opportunity.

• Q: Marvin Fong with BTIG asked about consumer health and impact on seller behavior.

  A: Lani said US consumer remains resilient, non-US currency neutral GMS grew for first time since 2023, monitoring macro environment, focused on executing strategy.

• Q: Brian Smilick with JP Morgan asked about initial impact of app within OpenAI.

  A: Kruthi said shift reinforces hypothesis agentic shopping can be meaningful discovery channel, strong traffic growth but very small fraction of total traffic.

• Q: Nathan Feather with Morgan Stanley asked about stabilization in habitual buyers.

  A: Lani said stabilization is fruit of strategic efforts, numbers still lower year to year but stable, hope for modest growth.

• Q: Bernie McTernan with Needham asked about non-app GMS growth.

  A: Lani said combination of product work and marketing activities, product work having impact across system, marketing spend effective, own channels driving GMS.

• Q: Yusuf Squally with Truist Securities asked about main drivers of low single-digit GMS growth and active buyer growth.

  A: Lani said outlook predicated on underlying fundamental improvement, comparisons get trickier later, FX tailwind moderates, AOV influenced by product improvements.

• Q: Shweta Kajaria with Wolf Research asked about balance of AOV and frequency and retention.

  A: Kruthi said encouraging signs, impact on user behavior, hard to predict exact timing, early but encouraging signals from personalization.

• Q: Navid Khan with B. Riley asked about AOV on FX-neutral basis.

  A: Lani said AOV growth from product optimizations to surface higher quality items, most increase from foreign currency and listing price changes but product work influences.

• Q: Jason Helfstein with Oppenheimer asked about Etsy's thought process on AI deployment.

  A: Kruthi said proactive in thinking about AI, leverage hybrid of internal and external tools, use as force multiplier across teams, accelerate build times and time to learning, will continue proactive approach.