Company Reports

Etsy’s strategy centers on operating a differentiated, asset-light, e-commerce marketplace connecting millions of buyers with artisans offering unique, handmade, and vintage goods. Unlike retail peers relying on rapid fulfillment and ubiquitous brands, Etsy leans into unbranded, noncommoditized inventory, carving out a niche that insulates it from direct price competition with behemoths like Amazon and Walmart. The firm generates profit primarily through its take rate (24% in 2025) on gross merchandise sales (GMS, $10.4 billion). Ancillary services like Etsy Ads (estimated 70% operating margins) serve as a key pillar of our outlook, though, as we forecast seller services revenue to grow at an 8.5% annual rate.

Etsy's second-quarter results included 7.5% growth in gross merchandise sales, or GMS, to $2.6 billion and revenue of $668 million (up 9.3%). Operating margin for the core marketplace rose 310 basis points to 18.7%, while take rate expanded 50 basis points to 25.9%.

Etsy’s strategy centers on operating a differentiated, asset-light, e-commerce marketplace connecting millions of buyers with artisans offering unique, handmade, and vintage goods. Unlike retail peers relying on rapid fulfillment and ubiquitous brands, Etsy leans into unbranded, noncommoditized inventory, carving out a niche that insulates it from direct price competition with behemoths like Amazon and Walmart. The firm generates profit primarily through its take rate (24% in 2025) on gross merchandise sales (GMS, $10.4 billion). Ancillary services like Etsy Ads (estimated 70% operating margins) serve as a key pillar of our outlook, though, as we forecast seller services revenue to grow at an 8.5% annual rate.

Etsy's first-quarter results featured a 5.5% increase in core marketplace gross merchandise sales, or GMS, to $2.5 billion and revenue of $631 million (up 7.6%). Operating margin for the core marketplace jumped 140 basis points to 19%, while take rate expanded 50 basis points to 25.7%.

Etsy is unwinding its pandemic-era strategy, marked by the 2025 sale of Reverb and the pending 2026 divestiture of Depop to eBay for $1.2 billion. Management contends this will enable it to refocus on the core artisan marketplace that connects roughly 87 million buyers with 6 million sellers.

Etsy’s strategy centers on operating a differentiated, asset-light, e-commerce marketplace connecting millions of buyers with artisans offering unique, handmade, and vintage goods. Unlike retail peers relying on rapid fulfillment and ubiquitous brands, Etsy leans into unbranded, noncommoditized inventory, carving out a niche that insulates it from direct price competition with behemoths like Amazon and Walmart. The firm generates profit primarily through its take rate (24% in 2025) on gross merchandise sales (GMS, $10.4 billion). Ancillary services like Etsy Ads (estimated 70% operating margins) serve as a key pillar of our outlook, though, as we forecast seller services revenue to grow at an 8.6% annual rate.

Etsy's fourth-quarter organic gross merchandise sales rose 2.4% to $3.6 billion, in line with guidance of $3.5 billion-$3.65 billion. EBITDA margin was 25.2%, down 420 basis points on increased marketing for Depop, which has since been sold to eBay (closing later this year).

EBay's fourth-quarter revenue rose 15% on strong gross merchandise volume of $21.2 billion, up 10%. However, operating margin slipped to 20.3% from 21.1%. For fiscal 2025, revenue grew 8%, and GMV increased 7%. Separately, the firm announced the acquisition of Depop from Etsy.

Etsy's organic gross merchandise sales increased 1% in the third quarter, above our estimate for a 1% decrease. EBITDA margin was down 230 basis points to 25.4% on a 6% increase in marketing cost. Shares dropped 10% during Oct. 29 trading on higher marketing spending through the first half of 2026.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominantly small, hobbyist sellers, with about 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. The company is leaning into brand marketing to build more awareness of its apparel platform, Depop. Recent mobile app and artificial intelligence investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.

On Sep. 29, Etsy shares rallied 16% on news that users will be able to purchase items from its platform directly on ChatGPT, saving consumers a step of having to click off the AI search giant's app.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominately small, hobbyist sellers, with about 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. Recent mobile app and artificial intelligence investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.

Etsy's revenue increased 3.8%, as a 4.8% decrease in gross merchandise sales was more than offset by an expansion in the firm's take rate, which clocked in at 24% (up 200 basis points from a year ago). EBITDA margins contracted 260 basis points to 25.1%.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominately small, hobbyist sellers, with about 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. Recent investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.

Etsy's revenue grew 1% in the first quarter as a 6.5% decline in gross merchandise sales, or GMS, was more than offset by expansion in the firm's take rate, which clocked in at 23.3% (up 170 basis points from the prior year). Adjusted EBITDA margin also improved 30 basis points to 26.3%.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominately small, hobbyist sellers, with roughly 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. Recent investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominately small, hobbyist sellers, with roughly 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. Recent investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.

Wide-moat Etsy has endured a tough stretch since its pandemic surge, and the closing quarter of 2024 was rough. All else equal, poor results and guidance would have driven a low-single-digit haircut to our $100 fair value estimate. But taken in tandem with a sourer macroeconomic view since our most recent update—which now contemplates a trough in US real GDP growth in the first quarter of 2026, roughly two quarters later than previously—we plan to lower our fair value estimate for Etsy by a high-single-digit percentage after digesting results. The market responded similarly, with shares trading down 10% during Feb. 19 trading.

Wide-moat Etsy disclosed a flurry of leadership changes on Dec. 5, 2024, although we wouldn't expect any wholesale changes—at least immediately—to the firm's current strategy. The most consequential change is the appointment of Charles Baker as CFO following Rachel Glaser's retirement announcement, with Baker previously serving as the CFO for Eventbrite. Concurrently, the firm announced the promotion of Kruti Patel Goyal, previously in charge of Depop, to the role of president and chief growth officer; the departure of Raina Moskowitz, the chief operating and marketing officer; and what appears to be the termination of Chief Technology Officer Rachana Kumar. We maintain our $100 fair value estimate for Etsy and view shares as deeply undervalued, with the market badly underestimating the firm's ability to return to growth after a challenging few years for consumer discretionary goods spending. We also maintain our Standard Capital Allocation Rating.

Etsy has carved out an interesting competitive niche, jockeying for e-commerce wallet share across a variety of categories in the long tail of unbranded products. Its eponymous core marketplace is filled with artisanal crafts and customizable goods from predominately small, hobbyist sellers, with roughly 30% of products made to order. While Etsy's unique inventory is a key differentiator and a point of strength, it has made marketing its fare broadly quite challenging. Recent investments have focused on improving buyer consideration, emphasizing product quality, and improving platform reliability, which we believe is appropriate.