Etsy — Q3 2026 Earnings Summary

Financial Performance:

• Gross Merchandise Sales (GMS) for the Etsy marketplace reached $2.6 billion, an 8.8% year-over-year increase (9.1% currency-neutral), marking the sixth consecutive quarter of sequential GMS growth improvement.
• Total revenue was $692.5 million, up 10.9% year-over-year; Marketplace revenue grew 9.1% and Services revenue grew 15.0%.
• Revenue take rate was 26.2%, an increase of 50 basis points year-over-year, driven primarily by enhanced Etsy Ads performance.
• Net income from continuing operations was $113.6 million, up 8.6% year-over-year.
• Adjusted EBITDA was $210.4 million, a 14.6% year-over-year increase, resulting in an adjusted EBITDA margin of 30.4% (up 100 basis points year-over-year).
• Net cash provided by operating activities for continuing operations was $242.9 million, with a free cash flow conversion rate of 112% of Adjusted EBITDA.
• Cash, cash equivalents, and short- and long-term investments totaled $2.5 billion as of September 30, 2026.
• Short-term debt was $1.3 billion, while long-term debt was $1.7 billion as of September 30, 2026.

Guidance and Future Outlook:

• Q4 2026 GMS is projected to be between $3.46 billion and $3.52 billion, representing 5-7% year-over-year growth.
• Full-year 2026 GMS is expected to grow approximately 7%.
• Q4 2026 take rate is guided to be approximately 25.6%, with a full-year 2026 take rate of approximately 25.8%.
• Adjusted EBITDA margin is guided to be approximately 30% for both Q4 2026 and the full year 2026.
• Outlook assumes macroeconomic factors remain relatively consistent, foreign currency is a modest headwind, and prior-year comparisons become less favorable.

Business Segments and Product Lines:

• Active buyers grew 1.0% year-over-year to approximately 88 million (trailing twelve months), the first year-over-year growth in two years.
• GMS per active buyer increased 3.9% year-over-year, with sequential acceleration driven by personalization and search relevance improvements.
• The active seller base grew at its fastest rate in two years with improving retention.
• App GMS grew 10.4% year-over-year, while Non-App GMS grew 7.5%; mobile GMS share remained stable at approximately 47%.
• Personalization improvements contributed approximately two percentage points to the annualized year-over-year GMS growth rate.
• Key product initiatives include extending personalization to signed-out users, expanding buyer profiles for four out of five active buyers, and testing AI-powered shop assistants.
• Marketing investments expanded into TikTok, YouTube, Reddit, and Snapchat to reach younger audiences, while maintaining investment in organic search and AI-driven channels.
• Specific category performance included strong growth in Home and Living (rugs, decor), Wedding-related items, and Back to School items.

Market and Competitive Landscape:

• The company emphasizes differentiation through creativity, craftsmanship, and human connection, positioning itself against AI-driven replication of products.
• Gen AI-powered shopping is identified as an emerging discovery channel, with Etsy leveraging natural language product feeds to introduce new shoppers to its inventory.
• The company notes that shoppers discovering items through AI platforms often return to the marketplace to complete purchases, indicating strong brand trust.
• Internal efforts to improve marketplace health and differentiation are increasingly driving GMS growth composition, reducing reliance on external tailwinds.

Risks and Challenges:

• Forward-looking statements are subject to risks including macroeconomic, geopolitical, and demand fluctuations.
• Risks include the ability to maintain trustworthiness and safety of the marketplace, attract and retain active buyers and sellers, and protect against technology vulnerabilities or cyber incidents.
• Operational and compliance risks related to payments systems, global scope, and international trade barriers are noted.
• Risks related to AI include the potential for fraud or illegal activity amplified by AI advances, and the need to ensure AI supports rather than obscures human creativity.
• Litigation and evolving global legal and regulatory requirements, including privacy, tax, and antitrust laws, present ongoing challenges.

Management Commentary and Tone:

• CEO Kruti Patel Goyal expressed confidence that the business is "firmly in growth mode" following three consecutive quarters of accelerating growth.
• Management highlighted that internal efforts are playing a larger role in GMS growth composition, with improvements in search, discovery, and marketing efficiency.
• The tone is optimistic regarding the potential of AI to make commerce more human and to amplify Etsy's differentiation, stating the company does not need to reinvent itself for an AI world but rather deliver on its unique value proposition.
• Management noted that marketing investments are becoming more effective, with return on spending increasing meaningfully year-over-year.

Other Key Points:

• On July 30, 2026, Etsy completed the sale of Depop, which is now classified as a discontinued operation.
• On October 1, 2026, Etsy paid $648.6 million in cash to settle the remaining aggregate principal amount of its outstanding 2019 Notes.
• The company repurchased approximately $394.6 million in stock during Q3 2026, reducing the outstanding share count by approximately 5.2 million shares.
• $2.2 billion in authorized capacity remains for future share repurchases.
• Proceeds from the sale of Depop contributed to the cash balance at quarter-end.
• The company introduced tools to simplify listing creation and buyer communications for sellers, including testing an AI-powered assistant.
• The company is testing "Stamps" rewards for buyers and scaling premium support experiences for top buyers ahead of the holiday season.
• Net income from discontinued operations included a gain on the sale of $839.7 million for the three and nine months ended September 30, 2026.