Etsy (ETSY -6.20%), a leading online marketplace for handmade, vintage, and unique items, reported its second quarter 2025 earnings on July 30, 2025. The company reported GAAP revenue of $672.7 million, surpassing the consensus GAAP estimate of $647.2 million. Nevertheless, GAAP earnings per share (EPS) fell short, coming in at $0.25 versus the expected $0.48. The primary factor for the GAAP earnings miss was a significant non-cash foreign exchange loss. Overall, the quarter showed revenue stabilization and growth in certain segments, but persistent declines in key marketplace metrics and profitability pressured the company’s results.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Diluted, GAAP) | $0.25 | $0.48 | $0.41 | (39.0%) |
| Revenue | $672.7 million | $647.2 million | $647.8 million | 3.8% |
| Gross Profit | $479.1 million | $463.7 million | 3.3% | |
| Adjusted EBITDA (Non-GAAP) | $169.0 million | $179.4 million | (5.8%) | |
| Adjusted EBITDA Margin (Non-GAAP) | 25.1% | 27.7% | (2.6 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About the Business and Recent Focus
Etsy operates a digital marketplace connecting millions of buyers and independent sellers for a broad mix of handmade, vintage, and personalized goods. The company’s main focus remains on enhancing its core marketplace and building a distinctive assortment that competitors cannot easily replicate. This differentiation is rooted in authenticity, creativity, and the support of small business entrepreneurs.
In recent quarters, Etsy has prioritized investing in technology—including artificial intelligence (AI) and machine learning—to strengthen product discovery and personalization. Management has also paid close attention to marketing and user engagement, with specific initiatives to increase app usage and retain high-value buyers. Success for Etsy hinges on maintaining its unique merchandise offering, growing its core marketplace, and expanding across brands and international geographies.
Quarter in Detail: Key Developments and Segment Trends
The company's GAAP revenue topped expectations, driven primarily by a higher take rate—a ratio of company revenue to Gross Merchandise Sales—which reached 24.0% in Q2 2025, up from 22.0% in Q2 2024. This increase was mostly due to the expansion of Etsy Ads, which are paid product listings, and growth in marketplace payments. However, headline GAAP profits declined as EPS missed consensus, mainly due to a $25.4 million non-cash foreign exchange loss, compared to a gain in the prior year period.
Gross Merchandise Sales (GMS) slipped to $2.8 billion, down 4.8% year-over-year, reflecting weaker buyer traffic and lower spending per buyer. The core Etsy Marketplace generated $2.4 billion in GMS, dropping 5.4% year over year but improving compared to the previous sequential quarter. Mobile commerce has been a bright spot, with GMS on the Etsy App accounting for approximately 45% of marketplace sales and showing both year-over-year and quarter-over-quarter increases. According to management, reactivated and habitual buyers remain a sizable portion of engagement, but Total active buyer and seller counts continued to decrease.
The company’s "House of Brands" strategy includes the resale apparel platform Depop.
Depop stood out, with GMS up 35.3% year-over-year to $249.6 million and particularly strong U.S. growth at 54%. Product enhancements such as improved AI-powered search and seller onboarding tools fueled Depop's momentum. Meanwhile, Etsy completed the sale of Reverb in June 2025; the partial inclusion of its results distorts year-over-year comparisons but helps focus future performance on core segments.
On the cost side, Adjusted EBITDA margin (non-GAAP) narrowed from 27.7% to 25.1%, reflecting higher investment in marketing and technology, as well as increased machine learning/cloud computing expenses.
Net cash provided by operating activities was $157.3 million for the first six months of 2025.
The company’s decision to introduce a $29 shop setup fee for new sellers, meant to weed out low-quality or fraudulent participants, led to a 7.8% drop in seller count but improved new seller performance metrics and retention. Active buyers, meanwhile, fell 4.6% year-over-year to 87.3 million on the marketplace.
Looking Ahead: Guidance and Key Watch Points
For the third quarter, Etsy’s management projects Gross Merchandise Sales between $2.6 billion and $2.7 billion for Q3 2025, suggesting little to no sequential growth and a continued year-over-year decline. The take rate is expected to edge up again, to around 24.5% for Q3 2025. Adjusted EBITDA margin is forecast to remain stable at about 25% for Q3 2025. These targets point to short-term stabilization but not a turnaround in core marketplace trends. Management did not issue full-year guidance.
Looking forward, investors will watch for improvement in the core marketplace’s buyer and seller numbers—especially as the effects of AI-powered discovery, app enhancements, and personalized marketing accumulate. Depop’s growth provides some optimism but accounts for a relatively small slice of overall GMS, representing 6.3% of total GMS for FY2024. Risks remain around continued contraction in user base, the extent to which revenue gains can be sustained by higher take rates rather than organic sales growth, and limited progress in international expansion. Etsy does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
