Q3 2026 Financial Results - ETSY INC

Hi, everyone, and welcome to ETSI's third quarter 2026 earnings conference call. I'm Deb Wasser, VP of Investor Relations. Today's prepared remarks have been pre-recorded. Joining me today are Kruthi Patel-Goyal, our CEO, and our CFO, Lani Baker. Please keep in mind that our remarks today include forward-looking statements related to our financial outlook, our business, and our operating results, as noted in the shareholder letter posted to our website for your reference. Our actual results may differ materially. As we review our shareholder letter in 10-Q, please keep in mind that on July 30th, we completed the sale of DPOP. Etsy's results in those documents and on this call are presented on a continuing operations basis, while DPOP's results are presented within discontinued ops. Forward-looking statements involve risks and uncertainties, some of which are described in today's shareholder letter and our most recent periodic report, and which will be updated in future periodic reports that we file with the SEC. 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 GAAP and non-GAAP 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 that, I'll turn it over to Kruthi. Thanks, Deb, and good morning, everyone. Thank you for joining us. 2026 has been a year of meaningful transformation for Etsy. We started the year with a clear understanding of what needs to improve and a focused set of priorities to make that happen. At the same time, we've become clearer about what truly differentiates Etsy, the creativity of our sellers, the care and craftsmanship behind what they make, and the human connection that gives those items meaning. And increasingly, we're bringing these together, making Etsy a better place to shop while also making what sets us apart more visible and valuable to our customers. I'm proud of the progress we've made so far and even more optimistic about the opportunities still ahead. We're bringing more buyers to Etsy and lending them an experience that is more personalized and relevant, helping them discover higher quality items and sellers. We're making our marketing investments more effective, enabling us to show up in new places and build relationships with both new and existing audiences. And we're improving the support experience for our buyers and sellers, an important part of building trust and meaningful relationships that extend beyond any individual transaction. After three consecutive quarters of accelerating growth this year, I have increased confidence that our business is now firmly in growth mode. We have real momentum and clear evidence that the changes we've made to how we operate and invest in the marketplace are translating into stronger fundamentals and more durable performance. Etsy's Marketplace GMS was $2.6 billion, up 8.8% year-over-year. Revenue was $692 million, on take rate of 26.2%. And adjusted EBITDA was $211 million, or a 30.4% margin. What's especially encouraging is that we're seeing improvement across both sides of the marketplace. Active buyers grew year-over-year for the first time in two years, and our focus on improved customer relationships is driving an acceleration in growth in GMS per active buyer. Our active seller base grew at its fastest rate in two-years, with improving retention signaling the relevance of Etsy to creative microentrepreneurs. We're still benefiting from some external GMS tailwinds, but importantly, the contribution from our strategic initiatives is accelerating. accelerating. Our app continues to perform well, paid marketing is becoming more efficient, and organic traffic remains healthy. And our work to improve search and discovery is surfacing higher quality, more relevant inventory, which we believe can truly transform the Etsy experience over time. Lani will cover GMS drivers in more detail shortly. We hope you've seen the updates on our near-term priorities covered in our shareholder letter. I'll cover a few that I'm most excited about. Last quarter, we shared how we were testing ways to make our sellers and their creative processes more visible to buyers. Our latest Android test and supporting research show that doing so builds buyer trust, confidence, and perceived value. We're now building on these learnings as we look to bring human connection more deeply into the shopping experience across platforms. By weaving together things like seller stories, craftsmanship details, buyer reviews, and opportunities for connection, we aim to help buyers understand not just what they're purchasing, but who's behind it, how it's made, and what makes it special. Our goal is to make the value our sellers create more visible at every step, building the trust and connection to differentiate Etsy and bring shoppers back. Our investments in discovery and matching are increasingly contributing to GMS momentum. By using AI and machine learning to more deeply understand shoppers' tastes and interests, we're helping buyers find what they want and discover things they didn't know they were looking for. And we're seeing tangible proof points. For example, by the third quarter, we estimate that personalization improvements alone contributed approximately two percentage points to our annualized year-over-year GMS growth rate. We've made progress against the seller experience, from helping sellers create and manage listings and customize products, to enabling shared shop access, providing clearer financial insights, expanding our appeals process, and making Etsy ads easier to manage. We're also experimenting with how AI can make running an Etsy shop easier. Our AI-powered seller assistant, currently in beta, provides personalized insights based on shops' unique data and shares actionable ideas for what to focus on next. For buyers, we're continuing to test different ways to recognize and reward loyalty. That includes testing a program where buyers earn stamps towards rewards for actions that broaden and deepen their relationship with Etsy, like supporting sellers across categories and regions. We're also scaling premium support experiences for our top buyers ahead of the holiday season, while expanding general support availability across the marketplace. And lastly, the strategic shifts we've made in marketing have been an important part of our progress this year. I'd highlight three areas where we've made meaningful changes. First, we're evolving how and where we reach shoppers. Our brand campaigns are reinforcing what makes Etsy different while we're finding new ways to connect with younger audiences and show up for the occasions that matter to buyers. Second, we are getting smarter about how we bring our inventory to shoppers, improving how we understand and surface our listings across paid search, social, SEO, and our influencer and affiliate programs, so more people discover items that are relevant to them. And third, we're making our own marketing much more personal. We're combining the scale of AI with the creativity of human curation and storytelling to deliver content that feels more relevant to each individual buyer. Another important area of focus is how we're using AI to make commerce more human. We believe AI will fundamentally change how people discover and shop, and we are leaning into that change. For Etsy, the opportunity is to use this technology to help buyers discover items that feel uniquely right for them, and to help our sellers reach more customers and grow their businesses. And there's an interesting paradox here. As AI makes it easier to create and replicate products at scale, we believe the human creativity, craftsmanship, and connection that have always made etsy special will matter even more as we head into the final stretch of 2026 and develop our growth plans for 2027 we have even greater confidence that our priorities and focused execution are creating a healthier highly differentiated marketplace and positioning us to capture more of the enormous opportunity ahead i would also like to acknowledge our announcement this morning that Lanny will be leaving Etsy in early March. I am so grateful for his leadership and judgment and especially for his partnership during my first year as Etsy CEO as we've navigated this important and transformational time for the company. He'll leave Etsy with stronger momentum for the future. I'm excited for what's ahead for Lanny and wish him all the very best. We've engaged an executive recruiting firm to assist in the search for a new CFO to be based here in Brooklyn. With that, Lani will review our results. Thanks, Kruthi. It has been a great privilege to work with you and to contribute at this crucial stage of Etsy's development. You've brought clarity of focus and a vision of differentiation that are just beginning to have their impact on the marketplace and the business. I'm excited to help close out what's been a pivotal year, and I will do all I can to support a great transition once the company's next CFO has been identified. Turning to our results, I'll start by reviewing our GMS performance in the quarter. Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve marketplace health and further elevate Etsy's differentiation are beginning to play a larger role in the composition of GMS growth. Active buyers returned to year-over-year growth for the first time in two years, increasing 1% to approximately $88 million on a trailing 12-month basis. Sequential growth also accelerated, with active buyers increasing by approximately 540,000 compared to 2Q26. Third quarter gross buyer additions grew 6.2% year-over-year, continuing to benefit from strong new buyer acquisition and reactivation, while trailing 12-month retention amongst existing buyers also began to improve. Habitual and repeat buyers increased modestly on a sequential basis, encouraging evidence that progress is broadening across acquisition, reactivation, and retention. GMS per buyer increased 3.9% year-over-year on a trailing 12-month basis, marking the third consecutive quarter of growth. In addition, this important barometer of marketplace health accelerated sequentially. The impact of our internal initiatives is continuing to scale and play an increasing role in average order value growth, while purchase frequency remains modestly down year over year. The internal initiatives driving these trends include, number one, improving search relevance for buyers through greater personalization built on richer buyer profiles and inventory insight. Two, promoting a stronger selection of high-quality items by increasing the weight of quality signals within search and recommendations. Three, better managing the prominence of physical versus digital items based on what we can understand about buyer intent. And four, differentiating our offering around special occasions where people may be willing to pay a little bit more for just the right item. Looking forward, we seek to continue to grow our wallet share by helping shoppers discover more of the unique, high-quality inventory on Etsy, whether that translates into more valuable orders, more frequent purchases, or both. Moving to revenue and take rate, higher GMS drove strong revenue growth of 10.9% year-over-year in the third quarter. Total revenue reached $692 million, with marketplace and services revenue both contributing to growth, increasing by 9.1% and 15% respectively. Take rate was 26.2%, up 50 basis points year-over-year, primarily driven by further enhancements to Etsy ads and, to a lesser extent, contribution from off-site ads. Etsy Ads is becoming an even more effective tool for sellers to reach buyers, as improvements to our matching and ranking models increased ad relevance and drove higher click-through and conversion rates. Better budget pacing mechanisms also help sellers direct more of their spend toward the most valuable opportunities. Strong revenue growth, together with the impact of our restructuring in August, translated into adjusted EBITDA of $210 million, growing 14.6% year-over-year and representing a 30.4% adjusted EBitda margin. Adjusted EBITda grew faster than revenue for the second consecutive quarter, and we remained disciplined in managing operating expenses while continuing to invest in areas that we believe support Etsy's long-term growth. Marketing remained an important area of investment, and expense grew as a percentage of revenue year-on-year as we leaned into driving profitable GMS growth. Excluding restructuring charges, product development expense gained leverage year-over-year, reflecting lower stock-based compensation and employee-related expenses. Looking ahead, we expect to sustain Etsy's healthy adjusted EBITDA profitability as we gradually add product and engineering headcount and capabilities to support our long-term growth. As of September 30, 2026, ETSI held $2.5 billion in cash, cash equivalents, and short and long-term investments. Proceeds from the sale of DPOP, which closed on July 30, 2020, contributed to our cash balance at quarter end. Subsequently, on October 1, 2026, we paid $649 million in cash to settle the remaining aggregate principal amount of our outstanding 2019 notes and reduce the company's total outstanding debt. We generated strong free cash flow during the quarter. Net cash provided by operating activities of continuing operations for the three months ended September 30, 2027, was $243 million. And on a continuing operations basis, we converted 112% of our adjusted EBITDA into free cash flow during the quarter. We further accelerated the return of capital to shareholders, repurchasing approximately $395 million in stock and reducing the outstanding share count by approximately 5.2 million shares during the third quarter alone. We currently have $2.2 billion in authorized capacity for future share purchases. and anticipate continuing to repurchase shares at an accelerated rate to further reduce the outstanding share count. Turning to our outlook, we currently anticipate that overall macroeconomic factors remain relatively consistent, foreign currency is a modest growth headwind, and prior year comparisons become less favorable in the fourth quarter. In that context, we currently anticipate that Etsy Marketplace fourth quarter GMS will be between $3.46 billion and $3,52 billion, representing year-over-year growth of approximately 5% to 7% for the quarter. We expect fourth quarter take rate to be approximately 25.6% and adjusted EBITDA margin to be aproximadamente 30%. For the full year, we now anticipate that GMS growth will be approximately 7%, take rate to be about 25.8%, and our full-year adjusted EBITDA margin outlook moves up to roughly 30%. In sum, we are very pleased with the progress we've made in 2026. The marketplace is getting healthier, and as strategy and execution have aligned, we've driven significant outperformance compared with our expectations at the beginning of the year. With that, we'll now turn it over to the operator to take your questions. At this time, if you would like to ask a question, please click on the raised 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. Our first question is from Nikhil Devani at Bernstein. You may now unmute your line and ask you a question. Thank you. Hey, good morning. Thank you for taking the question. I wanted to ask a little bit about this dynamic between app and non-app GMS. I think in the past, the app has sort of been the sandbox for all your personalization efforts and other self-help efforts, and it accelerated first. Now we're seeing the non-app GMS also improve. I'm curious the extent to which you've been able to extrapolate some of those same efforts to the non‑app shopping journey, or if it's something else driving that. And just if you could remind us the overall technical hurdle around data or otherwise to get the non-app shopping experiences to keep improving and keep up with what you are able to do in the app. Thank you. Thanks so much for the question. I think that your insight is exactly right. We started out using the app as a place to really test deeper personalization. and you know as we've talked about before it's an area where we have a lot of information about users because they're all signed in and so as we have learned about how to effectively personalize the experience deliver much more relevant inventory and personalization and we've expanded those learnings and that personalization work throughout across platforms and throughout the experience we're seeing that show up more significantly on web as well as on app there are no significant technical hurdles that I would call out I think that it's just been about sequencing sequencing our work to where we can learn best before we apply it more broadly that's great thank you Krithi all right we'll go to the next question thank you our next question comes from Stephen Forbes at Guggenheim Stephen you may now unmute your line and ask your question Thank you. Good morning, Kruthi, Lani, Deb. Kruthy, maybe just a question around gifting. Curious if you can highlight some of the key attributes that you're hoping the gifting assistant is going to solve or address, including any friction points for the consumer. And then I don't know if you could remind us what the percentage of GMS gifting represents for both the full year in the fourth quarter? You know, I think that when I think about our gifting assistant, it's really our first foray into bringing a shopping agent on site. And so the first application of that to give people a real sense of how to use it and when to use it has been applying it to gifting. It's really been an opportunity for us to learn and experiment with a more conversational interface to understand how that enables people to shop more effectively And it's been a really great learning tool for us. We're seeing that it's particularly effective in helping people when they have broader, more complex queries really effectively narrow down their search. And so as we are learning that, our next steps are going to be to expand both the use cases for this type of a shopping assistant and expand where you can access it throughout the experience rather than a single entry point to just better leverage this kind of an interface experience. Yeah. And in terms of gifting's importance, you know, we've always held the view that Etsy is this destination for really differentiated, considered purchases where that human connection is important. And that's reflected in the fact that about 30% of our GMS comes from gifting, where people are coming to us to try and find an item to give to somebody else. So it's a big portion of our business, and we continue to invest in that and find ways to use personalization to tap into more of the gifting occasions that people have on their calendars. Great, and everybody needs to try it this season. It's really cool. Next question. Thank you. Our next question comes from Andrew Boone at Citizens. Andrew, you may now unmute your line and ask your question. Thank you so much for taking the question. I wanted to go to buyer frequency. Is there anything you can help us understand in terms of cohorts or various groups of buyers in terms of frequency? I'm a little bit surprised to not see this up, given all the progress you guys have made in terms of personalization and a better product. So just help us understand that. Thank you. Sure. You know, in the long-term drivers of our business, frequency is a very important one. And, you know, I think we have early signs of progress in buyer engagement that we're very encouraged by things like the responsiveness to recommendations that we make and clicks on those, the favoriting of items and of sellers, the usage of the app, the cross category shopping experiences that we were able to inspire through personalization. the repeat business activity are all early precursor signs of people starting to build deeper engagement with Etsy. At the same time, there are other countervailing trends. We've talked about it in the past, the addition of new and reactivated buyers into the mix. They tend to buy a little bit less frequently than the established buyers. The fact that as we elevate items that are truly special and differentiated, often they're at a little bit higher price point and we're gaining share of wallet. And as prices are higher, people are a little bit more selective in what they're purchasing, though spending more on Etsy. As we look forward, I think we're very encouraged to start now to see for a couple quarters in a row growth in the number of repeat buyers and the growth in a number of habitual buyers. So those are early indicators of, like, building that habit frequency retention. But we're not yet at a place where the sum total of frequency overall is moving, you know, is comping positively year to year. I'm just going to underscore the point that Lanny said. We see frequency as a really important long-term measure, but it's a hard thing to move materially quarter to quarter. So what we really look at internally is how effectively can we measure indicators of us making the experience more relevant, more engaging in period. And so that's why we've been looking at and sharing a lot of measures of engagement, which we think are great examples of how we're doing that. And then again, over the long term, we're going to be focusing on converting engagement into greater purchase frequency. The other thing that I would just add is, you know, what we're seeing is in terms of the increasing GMS per buyer is that we are providing an experience that compels people to spend more with us over time. And so that's really the North Star that we're looking at is are we gaining wallet share from our buyers? So that's the other thing. That I would encourage you to think about. Perfect. Great. Thank you. We'll take the next question. Thank you, our next question comes from Eric Sheridan. at Goldman Sachs. Eric, you may now unmute your line and ask your question. Thank you. Thanks so much for taking the question. Maybe if I can push on the theme of marketing and what was in the shareholder letter, can you just go a little bit deeper in the key learnings as you continue to diversify the channels with which you market to consumers? And how should we be thinking about the two sides of this, both in terms of what marketing can do in terms OF driving increased volume on the platform, but also through the lens of marketing ROI over the medium term and how you translate some of those early learnings into how it might translate over a longer duration period of time. Thanks so much. Thanks, Eric. I'll start. Marketing in 2026 has had a really great year for Etsy. And I think at the top and most abstract layer, we've, I think from a branding perspective really started to successfully put forward this sort of notion of Etsy's differentiation around human connection. That's been in some of our brand work and in some of our online marketing messages. But when you get into the details of the more direct side of marketing, we've also had a really great year. We made some big progress in page search by better segmenting the feeds that we provide to PLAs in particular, but that's also helped us across social and then within paid social um we've been able to scale at really attractive uh rois the spending that we do in places like tiktok and youtube which are expanding our reach to younger uh audiences and to to new buyers coming into etsy so you know we had a we also in the third quarter had a fabulous in real life event an activation we did with a music performer who you may know olivia rodrigo um and that touched uh you know i don't know was it 90 million uh total views of that activity so you know kind of across the board i think we're we're finding a real stride on the marketing front and you know in the third quarter our uh we increased our marketing spending on a year-over-year basis but the gms from marketing grew faster than that our rois improved year over year on our marketing spend in this third quarter if you remember back to the second quarter, we got pretty good leverage out of our marketing spending in the second quarter. And what you're seeing there kind of play out across a couple quarters is gains in efficiency established in the 2nd quarter were effectively deployed to gains in growth and share in the 3rd quarter. Our engine got more efficient and we invested more behind it. And so we feel really good about the health and the position of our of our Marketing Complex at this point. We could go deeper into detail, but I think that gives you kind of a good high-level view of what's going on there. That's great. Thanks, Lani. We'll take the next question. Thank you. Our next question comes from Rob Kulberth at Evercore ISI. You may now unmute your line and ask your question. Thank you very much. Good morning. Congratulations on the results and to Lani and Deb on terrific runs with the company. Just wanted to ask on the call out, Leni, on digital versus physical goods prominence, you maybe give us a snapshot of how much of the marketplace today is digital, both in terms of GMS and maybe also in terms of ad revenue. And just anything further on just how you're thinking about the change in prominence. Thank you. Yeah, we haven't really, we have a lot of time. We haven't broken out on the past. I don't think we're going to do that today. We'll take, we'll give it some thought. But I think, you know, one of the things that we found is that there were times where our search results were optimizing for conversion. We've talked about that in the past. And the digital items tend to sell at a lower price than the physical items do. And as we've started to get better profiling data and understand better the intent of the buyer, we're much better able to infer whether this is likely a buyer looking for a digital download or likely looking for physical item. And just making small changes in the presentment of the physical items in those circumstances has really helped. I think the goal has been to better meet the buyer intent, and it's had sort of the bank shot outcome of shifting the mix a little bit, and it's actually been a little of a help to average order value as well. Okay, thanks very much. Thanks, Rob. Next question. Thank you. Our next question comes from John Colantoni at Jefferies. John, you may now unmute your line and ask your question. Thank you Can you hear me? Okay, great. Thanks for taking my question. Just wanted to ask a question on pricing. You know, shifting spend towards higher value items has been a key driver of growth. Can you highlight what you're doing here and how you're thinking about the sustainability of this mixed shift benefit into next year? Thanks. um yeah great question look i think as lanny was just saying we are focused not on driving price we're focused on driving quality of the customer experience and so a big part of that has been thinking through how we change our algorithms to um not just optimize for conversion but to optimize for quality making sure that we're delivering to buyers what they're looking for both in terms of the relevance and the quality in a way that delivers them a really satisfying experience. And so, you know, the work that we're doing around personalization is really coming through here. We've been more effectively leveraging both our understanding of our inventory and our buyers to deliver that more personalized experience across search, across recommendations, and across marketing. And this is a place where we've been able to leverage the buyer profiles that we talked about on our last call, both in terms of the breadth of those profiles and the depth of signals that we're using in those profiles. And that's really allowing us to personalize at scale across platforms. So that's really how I would think about your question. It's about delivering a higher quality experience. And I think that as a driver is what gives us confidence in the sustainability and the durability of those improvements. okay great thank you um next question thank you our next question comes from brian smilick at jpm brian you may now unmute your line and ask your question thankyou great thanks for taking the question um pruthi really curious can you just share progress across highlighting top sellers in the feed i think you did the android takeover which was very interesting um and just the overall impact that top sellers going to the top of the algorithm have on just overall gms and aov on the platform. Thank you. The focus that we've had has been really on highlighting, understanding the seller behind the item. It hasn't just been about top sellers to be clear. And so the work that we did on Android was really to help us understand what information and where in the experience, what information about sellers, the role that they play, who they are, and wherein the experience seeing that information is most valuable. And I think that the really interesting insight that we gathered there was that by showing that information through the experience, it gives buyers not only a deeper understanding of what it is that they're buying, but it conveys more trust in a way that drives more engagement. And so we're looking at, you know, we're expanding those, we're taking those learnings and expanding the application of that throughout the experience. Now, more broadly, what I would say about sellers is that we're really encouraged by the growth that we're seeing on the seller side of the business. And I think that that's evidence of the fact that our platform is becoming more valuable to our sellers. We saw seller growth and importantly, we also saw GMS per seller growth this quarter. And so I think we're providing value to sellers in a number of ways. We're investing in better tools for them to reduce toil. We're invested in agentic experiences to help them run their shops and leverage their insights and data on platform more effectively. And we're really thinking about that end-to-end experience for sellers, including how we support them, our investments in support and trust and safety. And so all in all, we think that this is really paying off in terms of both their engagement with Etsy and their performance that they're seeing on Etsy. Great. Thank you, Ruthie. And thanks, Brian. Next question. Thank you. Our next question comes from Bernie McTernan at Needham & Company. Bernie, please unmute your line and ask your question. Thank you Great. Thanks for taking the question. Karit, you mentioned in the prepared remarks, external GMS tailwinds. Can you maybe define and quantify those tailwind? And then on the internal tailwind, you talked about 200 basis points of growth and personalization. Are there any other major products to call out helping that acceleration and organic trends? Let me try to unpack that a little bit for you. At the start of 2026, the large portion of our growth was coming from what we kind of deemed external factors, which would be the effect of inflation and tariffs on listing prices, currency exchange rates that were going in our favor at that time. and um you know our comps at the start of the year were relatively uh softer than they have been at the at the latter part of the air as we move through the year um it you know the benefit of things that we have done in the product experience are starting to be more clearly definable contributors to growth even as those external factors have you know just have waned currencies have gone from being a benefit to being a modest headwind. The comparisons have gotten more difficult. We've lapped some of those increases in listing prices. And so more and more of the GMS growth is coming from things on our side. We wanted to share with you, we talked a lot earlier this year about personalization, and we wanted to show you some quantification of what that has meant to the business. And to see it contributing a couple points of growth at a relatively early stage where I don't think we're even really started to crack the full code and what we can do with it. I think it's really important to understand that dynamic. There are other factors within the business going on. The improved relevance of search results will be another like internally driven effect. Things that we've done in making our marketing outperform the industry, a time when many in the industry are seeing Google CPCs go up. We're seeing Google CPCS go down. And so there are a lot of things that are sort of accumulating to that internal momentum. They overlap with each other. It's hard to disambiguate them like super cleanly. And we'll do our best to keep communicating about them. All year long, personalization has been a key one. And that's why we try to give you that quantification. Great. Thanks, Lenny. Thanks Bernie. Next question. Thank you. Our next question comes from Rick Patel at Raymond James. Rick, you may now unmute your line and ask your question. Thank you thank you. Good morning. I had a question on the positive inflection in active buyers. So you touched on gross buyer additions being up around six percent. Can you unpack that for us? What's been the most effective strategy in recruiting new buyers and where do you see the most opportunity to continue making progress? You know, it's been a combination of growth in new buyers and reactivation. And, you know, reactivations been really important. As we've gone into social media, we have, that has really proved to be a very effective channel for us in reactivating prior buyers. Just because the attention span of so many people is dedicated to social media, refining our game there, our mid-funnel and lower funnel game, has really helped us on, as we've said in the past, going back and tapping people on the shoulder, reminding them of Etsy and bringing them back to Etsy. On the new acquisition side, we've shifted more of our spending toward places where we see younger audiences who maybe haven't interacted with Etsy in the past. And a lot of the spending that we've, I think half of our impressions on TikTok reached people in the 18 to 29-year-old demographic. And that's not an area that we were really even spending in, importantly, six months ago. So I would say, you know, changes to the channel are helping us reach younger, new audiences. Changers to our personalization and our owned and operated channels are helping us reactivate. The only other thing that I will add is just like zooming out for a second, the biggest takeaway, I know you asked about new buyer trends particularly, but the biggest takeaway here is that our buyer trends are becoming healthier across the funnel. This is not just a new and reactivated buyer story. We said that our, we shared earlier that, you know, our most valuable buyers are growing sequentially for the second quarter in a row. So we're seeing benefits across new and reactivated buyers acquisition, as well as retention and increased engagement from our most, most valuable buyer. So it's a really good story across the board around buyer, buyer trends. Great. Thank you both. What are the next questions? Thank you. Our next question comes from Naved Khan at Beaver Ely Securities. Naved, you may now unmute your line and ask your question. Thank you. Great. Thanks a lot. Kruti, maybe you can maybe share some of your thoughts around agent tech shopping and how that affects the business. How do you expect to drive personalization and consideration as adoption for agent tech shop and gross? Yeah, I'm really glad you asked. Look, I think that there's understandably a lot of discussion about how, and a lot of interest in how AI is going to reshape commerce. And, you know, just to state the obvious, AI represents one of the most significant shifts in technology that we've seen in a long time. And obviously, that's going to have an impact on how people shop as well. We believe Etsy is incredibly well positioned, not just to participate in the shift towards AI-powered commerce, but to really thrive. And I think that's because our greatest strengths become more important in an AI-driven world. So there are two in particular that I will call out. The first is the differentiation of our inventory. We have over 100 million items from almost 6 million sellers around the world. Every single one of those items has a unique story and provenance. And as AI makes it easier than ever to create and replicate products and that those products become virtually undistinguishable. I believe that things that are created by real people are going to be increasingly valuable. And I would even go so far as to say that we believe human generated items could become the ultimate luxury over time. And we have this incredible breadth of unique human created items that you just can't find anywhere else, certainly not at this scale. And then this connects to the second big strength of ours, which is our brand and the trust and human authorship that that brand conveys. So that is going to be even more important, again, in the context of infinite options. And that's to our buyers, to our sellers, and frankly, to the agents that are going to be helping people shop. When you think about for buyers and their agents, the Etsy brand is a signal of trust that gives you confidence. And not only are you getting something from a human, that item is special and unique. That is what Etsy has always stood for. We already see that as an important factor in our current partnerships with AI discovery platforms. The fact that items come from Etsy is an important signal of quality and drives that traffic and engagement that we see from those channels. And then for our sellers, I think this is really important as well. the vast majority of them are businesses of one. And the value of being part of a trusted marketplace like Etsy becomes even greater in an AI world because as shopping and discovery becomes more fragmented, it's going to be harder for individual sellers to stand out and reach buyers on their own. And that's where we play such an important role in giving our sellers the visibility, the trust, and the access to demand that they need to grow their businesses wherever shopping happens. And so, you know, we think that we are really well positioned. We are, we're not betting on any one platform or any one feature. We're betting on our differentiation and our ability to proactively adapt as shopping evolves. And, so, you know how, how this plays out, I think is in a number of ways, but we've talked a lot about the fact that we think the onsite opportunity in the near to medium term is where the biggest opportunity is here and where we've been leveraging AI to really drive that more personalized and relevant experience on-site and to offer agentic experiences on-sight as well. But we're also engaging really proactively with partners to really make sure that our sellers' items are showing up wherever the shopping journey begins. And we're seeing really encouraging signals there, though I will just reiterate that it's very early days in terms of agentic discovery. Great. Awesome. Thanks, Nived. We'll take the next question. Thank you. Our next question comes from Nick Jones at BNP Paribas. Nick, you may now unmute your line and ask your question. Thank you very much for taking the question. Lani, I guess, could you speak to maybe some of the categories and where I see some strength and maybe some weakness and is there anything kind of tied to macro conditions maybe like homewares and home furnishings tied to existing home sales any any kind of update there would be helpful thank you you know things have been i would really tell you things have Been pretty broad based um across income cohort household income cohorts across geographies and evenly across even across categories i i want to i'll give you a little bit of category context in a second but i would tell you that as we think about our opportunity, we think about it anchored in occasions, the occasion where you're giving a gift, the occasion where you want something personalized, the occasion where you want something handmade, the occasion around a fandom or a passion that you have, and we think about those occasions because we believe that that's really how Etsy buyers come to Etsy, and that's really how the differentiation of Etsy shines best. Our multi-category inventory really plays best in that a little bit different occasion-based, occasion-denominated part of thinking about how the market works. In the last few months, call it three to six months, home and living, jewelry, those have been categories that vintage have been pretty strong but as i said um across the board it there isn't really any like big up big down it's been a pretty broad base broad base uh improvement relative where we were a year ago yep perfect thanks lani the other thing we highlighted in the shareholder letter also occasion based was weddings have been doing really well we had a couple of other ones in there back to school halloween hallowteen yeah halloweens a big one all right um next question thank you our next question comes from marvin pong at us bangkok btig marvin you may now unmute your line and ask your question thank you oh great uh good morning thanks for taking the question um congrats on the results and good luck uh lanny uh just a question on the guidance uh you know it's a pretty reasonable range here but i just love to kind of double click a little bit deeper on on you know what could possibly drive uh the low and higher ends of that uh particularly around kind of what you're assuming around you know further improvements in personalization is any embedded in that as well as as your marketing spend i mean you mentioned there's been some movement in the cpc it's kind of like help us think about uh your ability to kind of flex that in the quarter if if marketing returns either improve or or get worse um thanks so much okay um first let me just say i'm not going anywhere. I'm going to be here through March. So thank you for that. But I am fully focused on getting through the end of the year and getting next year started off really, really well. The, you know, high end, low end of our outlook includes, you Know, I'd say the highest level, the natural variability of predicting the future and guessing what consumers are going to do through the holiday and then the question we always have which is like the exact timing at which the benefits of things that we are changing in our product are going to pay off you put and so those are those are inherent in why there's a range of the you know 100 million dollars or so that there is there for the for the next quarter um i think that uh from a marketing perspective this is going to sound you know back kind of beating a old drum but like we don't we spend to a roi target and our our budget or our spending levels will be determined by uh spending the last dollar we can to drive growth at an acceptable rate of return and you know our that depends on external dynamics uh it depends on our ability to be competitive in those dynamics our ability be competitive in those dynamics is a function of you know things like the pla segmentation that we've done and other things we do on site to improve conversion um but so we will we'll spend in the fourth quarter guided by the gains in efficiency that we made year to date and what we see as the like attractive return for our company and for our shareholders on that marketing spending um and that's all incorporated in the in the outlook so you know within a reasonable range i think you Those are the factors that put us at the upper end and lower end. Thanks, Lani. Next question. Thank you. Our next question comes from Anna Andreeva at Piper Sandler. Anna, you may now unmute your line and ask your question. Thank you, Leni. Great. Thank you so much. Can you hear me? Yeah, all set. Okay, terrific. Now, congrats on nice results and best of luck to Lani, We had just two quick questions. First, a follow-up on frequency. You talked about that extensively. extensively did that improve sequentially and what has been the trend in frequency since Etsy started prioritizing those higher quality listings on the platform and just as a follow-up into Q I believe you said higher income households grew a little bit faster than lower income and I think you said broad-based strength this quarter which is great so did the lower income cohorts improve a bit and was there anything specific that you think thing drove them. Thank you so much. Yeah. So I'll talk about frequency a little bit and then I'll pass it to Lani. So frequency is down modestly as it has been throughout the year. I think that the thing to remember here, as I was saying before, is both the frequency is a long-term focus of ours rather than a quarter to quarter metric that we're trying to move. But behind that, the idea is that our focus is on building stronger buyer relationships through a better end-to-end experience. And the way that we think about that is, first, we need to bring more buyers into Etsy, then we needto deepen their engagement, and then weneed to make sure that they have a great purchase experience. Because ultimately, having a great experience is the single biggest driver of somebody coming back and returning again and purchasing again. And so when I look at that, right, we're doing a great job at bringing buyers back into the funnel. We talked about the active buyer growth returning to year-over-year growth for the first time in two years, and great evidence of that, we're seeing stronger engagement. This is really the most important thing to be thinking about in terms of near-term indicators when we think about long-term frequency, right? We're seeing increasing engagement with our recommendations. We're seeing more favoriting. We'RE seeing more cross-category orders. We'Re seeing repeat visit rates improve. Together, these are all really encouraging signs that buyers are finding more reasons to engage with Etsy and finding more value on the platform. So, you know, we're continuing to focus on that long-term engagement, but right now, or that long term frequency, but right now I would encourage you all to look at the engagement drivers. And as we look at the household income cohorts kind of that breakdown, I think what we're seeing at Etsy is pretty similar to what we hear other companies talking about. And that is that there is growth across all income cohords in spending right now. But it's a little bit stronger, relatively stronger on the high end there wasn't any big change in those trends this quarter uh with with in either cohort um relative to the momentum they've had they've been building momentum throughout the year and we saw that again this quarter i think that you know there is you know i think that we can see people perhaps being slightly more selective um and really making sure that where they are spending money it's on stuff that matters and it's really meaningful and i think you know we're we feel well positioned to play into that with the efforts that we have you know with first the base of inventory that wehave that is really special that is built by a human that is that is differentiated and then by the the things that we are doing that are so brand consistent and becoming more and more legible across our experience that like an etsy purchase is really differentiated so we feel we feel pretty well positioned vis-a-vis where the consumer mindset is right now yeah and the nice thing about what we've seen um throughout economic cycles and we see it across household income is that because of the breadth of our inventory and the range of price points we really have something for everyone's needs really in any economic climate or with any wallet size um and so we've seen that um we've seeing that work really well for us and we see that that playing out now too great thank you and thanks anna um next question thank you our next question comes from maria rips at canaccord maria you may now unmute your line and ask your question. Thank you. Great. Good morning. And thanks so much for taking my question. I just wanted to ask about your AI product listings policy changes that were sort of announced a couple of days ago. I guess, do you anticipate an impact on GMS sort of either later this quarter or early 27 from some possible listing removals? And I guess maybe more broadly, how do you expect sort of this stricter human made positioning to affect how sort of AI agents rank Etsy relative to some of the competitors? Great question. Look, just kind of zooming out for a second, I think this is a really important moment for Etsy. As I was saying earlier, as AI makes it easier to create and replicate things at scale, it's really that human creativity, craftsmanship and connection behind our marketplace that get even more valuable. So that was the motivation for making the changes that we're making. And I want to be clear about kind of the philosophy that drives this. The point is that AI should support seller creativity and not replace it. So the goal of this was to make sure that sellers understood what tools they could use and how they could represent their products on the marketplace. And we want to make sure that buyers understand with confidence what they're going to be receiving. So, you know, there are a few changes that we made. One of them was about clarifying our policies. The biggest thing here was making sure that sellers include at least one unaltered photo of the item that they're selling with a real background. This is really about making sure that buyers can accurately understand and feel confident in the item that they're seeing. We also clarified our policies around AI-generated functional guides, like patterns and recipes. So those are the things that are no longer allowed on Etsy, but it's really much more about making sure that you can understand what you're seeing. So that we're also committing to making some changes around stronger enforcement. Really, that's about better investing in better technology and tools to make sure that we are better identifying things that are misleading or have the potential to be fraudulent earlier and faster. And then the other thing that we re committing to, of course, is just like providing a more transparent shopping experience to make that creativity and craftsmanship more apparent. So, you know, we think this is going to be a net benefit to the marketplace because people are going to have more confidence. And I think that applies to people and agents. The more strongly our value proposition comes through the products that we offer and the data that we provide, the more confidence everyone should have buying on Etsy wherever they start their shopping journey. And basically, the GMS, we don't think there'll be any material GMS impact in the near term. But as Kruthi just said, this is important. It's an important underpinning of our differentiation that should contribute, along with 100 other things that we're doing, contribute to our differentiation and our long-term GMS growth. So this is one in many steps we're taking for the long-time health of the marketplace. Great. I'm actually going to turn it over to Kruthia now for some closing remarks. Thanks, Deb. You know, before we wrap up, I just wanted to share a final thought. As we enter the holiday season, I've been doing a lot of reflecting on the year and where we've come from and what that tells us about where we're going. And as I reflect on the progress that we've made this year, what gets me most excited isn't just the growth that we're delivering. It's really what that progress tells us. About the opportunity ahead. And we are seeing real evidence that we are focused on the right priorities and that we executing against them with real focus, real discipline, and we're only just starting to begin to see what's possible as we bring AI together with our understanding of our buyers and our inventory to really make Etsy that incredibly personal, relevant, and inspiring and unique place to shop that we believe is so valuable. We clearly have a lot more work to do, and we're excited to dig in there, but we're seeing our efforts already translate into results, and I'm more confident than ever in our ability to execute and in the growth opportunity ahead of us. So I wanted to share that. And before we wrap up, I also wanted to just take a moment to recognize someone who's been such an incredible partner to me and to Etsy. This is Deb Wasser's last earnings call before her retirement. She's had an incredible career spanning more than 40 years in investor relations, including the last eight and a half here at Etsy and Deb, we are so grateful. for the experience, the steady counsel, and all of the very many purchase days that you've made on Etsy. I also want to take a moment to welcome Sarah Marks, who, as you know, has been working really closely with Deb and will be stepping in to lead investor relations. Deb, thank you. There's hugging happening. We are going to miss you. Thank you, Karithi. I will miss you all very much and I will keep shopping, I promise. And with that, we will conclude today's call. Thank you all for joining. This concludes today's call. You may now disconnect. Thank you.