Earnings Call Insights: Etsy, Inc. (ETSY) Q4 2025
Management View
- Kruti Goyal, CEO, opened her first earnings call with the announcement of a definitive agreement to sell Depop to eBay for $1.2 billion in cash, stating this will allow Etsy to “focus exclusively on the compelling opportunity we see in front of us to grow the Etsy marketplace in ways that matter most to our buyers and sellers.” Goyal noted, “Our goal last year was to return our core marketplace to growth, and we achieved that in the fourth quarter. While we still have work ahead, the trajectory is clearly improving.”
- Goyal described a diagnostic review revealing that while Etsy’s value proposition remains differentiated, “perceptions of differentiation have softened over time.” She outlined four strategic priorities: earlier presence in the shopping journey, improved machine learning-driven matching, deeper loyalty with top customers, and emphasizing human connection.
- Operational changes included reorganizing around customer outcomes, consolidating product and engineering teams, unifying trust, safety, and customer support, and shifting marketing from channel-first to customer-first.
- Goyal highlighted progress: “Q4 U.S. buyer GMS grew for the first time in 4 years,” app GMS growth accelerated to 6.6% year-over-year, homepage clicks per visit increased 14%, and customer support satisfaction for sellers rose 15.5% since last year.
- On AI and agentic commerce, Goyal said “agentic traffic to Etsy in Q4 was about 15x what it was last year,” with partnerships expanding to Microsoft Copilot, Google, and Stripe. Early indicators suggest agentic discovery channels are additive to the ecosystem, with higher value orders through ChatGPT.
- Charles Baker, CFO, stated, “Fourth quarter consolidated GMS was $3.6 billion, up 2.4% year-over-year, excluding Reverb. This was above the midpoint of our guidance range and up 1.3% year-over-year on a currency-neutral basis. Consolidated revenue was $882 million, up 6.6%, excluding Reverb, a new quarterly record. Adjusted EBITDA was $222 million, representing a consolidated adjusted EBITDA margin of 25.2%.”
Outlook
- Baker reported, “We currently anticipate that first quarter 2026 GMS will be in the range of $2.38 billion to $2.43 billion, representing year-over-year growth of approximately 2% to 4% for the quarter.”
- For full year 2026, Baker stated, “We expect to further improve our performance this year, achieving slight growth for 2026, with positive year-over-year GMS comparisons in each quarter of the year.”
- The company expects the Q1 2026 take rate to be approximately 25.5%, and adjusted EBITDA margin between 28% and 30%. Full year take rate and adjusted EBITDA margin are expected to be roughly consistent with the first quarter.
Financial Results
- Etsy delivered record consolidated revenue of $882 million in Q4 2025, with services revenue growing 9.9% year-over-year and marketplace revenue up 0.8%.
- Marketplace GMS in Q4 was up 0.1% year-over-year, the first positive comparison since Q3 2023. U.S. buyer GMS grew 0.3% year-over-year, marking the first quarter of positive growth in 4 years.
- Mobile app downloads grew 4% year-over-year, with app GMS share reaching 46%. The trailing 12-month active buyer count in the U.S. increased slightly from Q3 to Q4, and GMS per active buyer was $121.
- Etsy ended Q4 with $1.8 billion in cash and investments, generated $735 million in adjusted EBITDA for 2025, and repurchased $133 million in stock during the quarter, totaling $777 million for the year.
- Depop Q4 GMS was $300 million, up nearly 38% year-over-year, with U.S. GMS growing 60%.
Q&A
- Trevor Young, Barclays: Asked about improvement in gross buyer adds and sustainability. Baker responded that sequential improvement is due to investments in product, app usage, personalized marketing, and social media, with social channels being effective for reactivating buyers.
- Bryan Smilek, JPMorgan: Inquired about sustaining GMS growth and marketplace dynamics. Goyal explained that four strategic priorities—discovery, matching, loyalty, differentiation—are “designed to work as a system to really improve the entire ecosystem to do exactly that, to drive durable growth.” Baker detailed stabilization in buyer numbers, growth in average order value, and efforts to improve frequency.
- Michael Morton, MoffettNathanson: Asked about AI platform traffic, consumer behavior, and risks to on-site ads. Goyal noted agentic is in “very, very early days,” but signals are encouraging, with high-intent, higher average order value customers. Baker addressed ongoing optimization opportunities for Etsy Ads and potential for greater integration of advertising into agentic platforms.
- Rakesh Patel, Raymond James: Focused on acquiring younger buyers. Baker highlighted the mobile app and social channels, especially TikTok, as key levers, with doubled TikTok spending this quarter and stable returns.
- Kenneth Gawrelski, Wells Fargo: Asked about search and discovery competition with agentic platforms and capital allocation. Goyal stressed leveraging AI for richer intent signals and improving on-site experience. Baker said excess cash will go towards share repurchases or high-return investments, with current focus on internal investment.
- Jason Helfstein, Oppenheimer: Questioned marketing allocation post-Depop sale. Baker clarified that Etsy’s investment focus is on product development rather than marketing, noting over $400 million spent on product development last year.
- Deepak Mathivanan, Cantor: Asked about agentic platform learnings and technical approach. Goyal said early signals support agentic as a strong discovery channel, while Baker noted repeat agentic shoppers indicate strong satisfaction.
- John Colantuoni, Jefferies: Queried app versus website performance. Goyal emphasized strong app engagement and significant headroom for growth as only 46% of GMS is from the app.
- Shweta Khajuria, Wolfe Research: Asked about agentic commerce risks to take rates and frequency growth potential. Goyal said it’s “impossible to predict” exact risks but highlighted Etsy’s adaptability. She saw no structural reason frequency cannot improve with ongoing investments.
Sentiment Analysis
- Analysts pressed for sustainability of buyer gains, the impact of agentic commerce, competitive risks, and allocation of proceeds from the Depop sale, with a neutral to slightly skeptical tone, particularly on AI and advertising risks.
- Management maintained a confident and transparent tone, emphasizing “clear plan,” “disciplined execution,” and “encouraging signs,” while acknowledging “more work to do” and the early stage of several initiatives. Goyal stated, “We feel confident that those investments will compound into the kind of sustainable growth we all believe Etsy is capable of.”
- Compared to the previous quarter, analysts’ tone was more focused on structural risks and strategic clarity, while management’s tone shifted from transitional to assertively forward-looking and focused on execution.
Quarter-over-Quarter Comparison
- The Q4 call featured a major strategic shift with the announced sale of Depop, compared to Q3’s focus on leadership transition.
- Guidance language evolved from “further quarter-over-quarter improvement” in Q3 to expectations for “slight growth for 2026” and positive GMS each quarter.
- Management emphasized AI, agentic commerce, and operational reorganization more strongly in Q4, while analysts shifted from general momentum and product improvement questions to forward-looking concerns about AI risks and capital allocation.
- Key metrics improved: Q4 saw the first positive marketplace GMS comparison since Q3 2023 and a return to U.S. buyer GMS growth, while GMS per active buyer stabilized above the Q1 trough.
- The tone of management became more confident, with greater focus on execution and leveraging AI, while analysts pressed harder on strategic risks and the impact of AI platforms.
Risks and Concerns
- Management recognized that the “full impact” of new initiatives will “take time to translate into stronger sustainable growth,” and acknowledged ongoing work to improve frequency and retention.
- Analysts questioned risks to on-site ad revenue from agentic platforms, competition for discovery, and the potential impact of AI agents on take rates.
- Goyal stated, “it’s impossible to predict right now for every one of those situations, what might happen,” but emphasized Etsy’s adaptability.
- The company is monitoring macroeconomic conditions, especially those impacting consumer discretionary spending, and is prepared to adjust investments accordingly.
Final Takeaway
Etsy’s Q4 2025 earnings call marked a pivotal shift as the company announced the sale of Depop to eBay for $1.2 billion, setting the stage for a focused strategy on its core marketplace. Management reported record revenue, improving GMS trends, and highlighted progress in AI-driven discovery, buyer engagement, and operational efficiency. Looking ahead, Etsy expects slight GMS growth in 2026 with positive comparisons each quarter, supported by ongoing investments in personalization, loyalty, and app engagement. While management acknowledged uncertainties and the early stage of several initiatives, the company expressed confidence in its strategic direction and its ability to adapt and deliver sustainable growth.