Etsy, Inc. Posts Impressive Third Quarter Earnings Report
Etsy, Inc. Delivers Strong Q3 Performance
Etsy, Inc. (NYSE: ETSY), renowned for connecting creators with consumers through its two-sided online marketplaces, has announced its financial results for the third quarter ending September 30, 2025. The company has demonstrated a promising recovery, outperforming expectations on key financial metrics.
CEO Remarks on Q3 Outcomes
Josh Silverman, CEO of Etsy, expressed satisfaction with the results, stating, "Our consolidated results for the third quarter exceeded our projections across the board. We observed year-over-year growth in Gross Merchandise Sales (GMS) for Etsy and Depop combined, reflecting our focus on customer-driven initiatives. This includes enhancing AI capabilities for product matching and bolstering customer retention efforts, which together amplify the unique human connection synonymous with Etsy. We are excited to see Depop continue its momentum in the growing resale clothing segment in the United States."
Highlights from Third Quarter 2025
The highlights of the third quarter performance include:
- GMS: GMS reached $2,724.7 million, marking a 0.9% year-over-year increase and a slight 0.1% uptick on a currency-neutral basis, after excluding the impact of Reverb's previous year GMS.
- Revenue: The company's revenue totaled $678.0 million, reflecting a 6.1% year-over-year increase when adjusted to exclude Reverb.
- Take Rate: The company's take rate stood at 24.9%, fueled by strong performance across on-site ads on both the Etsy and Depop platforms.
- Net Income: Etsy posted a net income of $75.5 million, resulting in a margin of 11.1% and diluting net income per share at $0.63.
- Adjusted EBITDA: The non-GAAP Adjusted EBITDA was reported at $171.9 million, with an associated margin of approximately 25.4%.
- Cash Position: Ending the quarter with $1.6 billion in cash and equivalents, Etsy's stock repurchase program saw approximately $120 million allocated to buy back 2.1 million shares of common stock.
Marketplace Performance Insights
Etsy's marketplace showed mixed results:
- The Etsy GMS experienced a decline of 2.4% year-over-year to reach $2,432.6 million.
- Item purchases via the Etsy App increased by 5%, accounting for about 46% of GMS.
- Etsy initiated a significant partnership with OpenAI, enabling users of ChatGPT in the U.S. to explore and purchase unique goods directly through the ChatGPT interface.
- Numerous product and marketing advancements were made, including improved search algorithms, new seller management tools, and enhancements to the Etsy App for a more curated shopping experience.
- Active sellers numbered 5.5 million, marking a 10.9% decrease year-over-year; however, we saw a slight increase sequentially.
- While active buyers dipped to 86.6 million (5% decrease year-over-year), 6.6 million buyers were reactivated in this quarter, which represented a 3.8% improvement from the prior year.
Depop Marketplace Highlights
Depop's performance was particularly robust:
- GMS soared 39.4% year-over-year, amounting to $292.1 million, primarily due to new user acquisition and better buyer conversion mechanics.
- The number of active sellers on Depop escalated to 3.0 million with active buyers reaching 6.6 million.
- Depop launched its largest brand campaign to date and introduced innovative in-app features, enhancing user engagement.
Looking Ahead
Lanny Baker, Chief Financial Officer, shared optimism on future performance, stating, "We expect our fourth quarter consolidated guidance to represent progressive sequential gains in GMS across both Etsy and Depop. This reflects stable profitability for the Etsy marketplace, coupled with elevated brand marketing investments at Depop. Although these investments may compress margins, they are strategically aimed at capitalizing on the impressive growth within the apparel resale market." Etsy's projections rely heavily on stable currency exchange rates to maintain their anticipated margin forecasts moving forward.
Frequently Asked Questions
What were Etsy's total revenues for Q3 2025?
Etsy reported total revenues of $678.0 million for the third quarter of 2025.
How did Etsy's GMS perform compared to last year?
Gross Merchandise Sales for Etsy were $2,724.7 million, reflecting a 0.9% increase year-over-year.
What are the future expectations for Etsy's fourth quarter financials?
The fourth quarter is expected to show continued growth in GMS, with strategic investments in marketing to enhance brand visibility, especially for Depop.
How many active buyers does Etsy have?
Etsy has 86.6 million active buyers, though this represents a 5.0% decrease year-over-year.
What strategic initiatives did Etsy implement in Q3 2025?
Etsy enhanced its marketplace with new AI technologies, improved search algorithms, and added features to the Etsy App for personalized shopping.
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