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An online marketplace where independent artisans, crafters, and vintage sellers from dozens of countries list handmade goods, from jewelry and ceramics to personalized gifts, alongside the fashion-resale app Depop. Founded in 2005 in a Brooklyn apartment, it grew out of founder Rob Kalin's wish for a place where small makers could sell their work. The name "Etsy" reportedly came from the Italian phrase "eh, sì" ("oh, yes"), which Kalin heard while watching the Fellini film 8½.
Etsy marketplace GMS rose 7.5% in Q2 2026, its second straight quarter of growth, while the Depop sale closed post-quarter for $1.2 billion.
Etsy's core marketplace grew for a second consecutive quarter — the first time in over three years. from rose 6.2% to $668.3 million and reached $114.3 million, helped by a swing to foreign exchange gains and lower operating expenses. The post-quarter sale of Depop for $1.2 billion leaves Etsy as a standalone marketplace with a fortified balance sheet, but a 12% workforce reduction signals a pivot to leaner operations.
Key takeaways
Etsy marketplace rose 7.5% to $2.58 billion, the second straight quarter of growth after a multi-year decline, driven by strategic progress and improving buyer and seller trends.
from increased 6.2% to $668.3 million, with services revenue up 9.3% on higher Etsy Ads click volume and marketplace revenue up 4.8% on the higher GMS.
from was $114.3 million, compared to a $46.6 million loss a year ago that included a $25.4 million foreign exchange loss; this quarter included a $29.2 million foreign exchange gain.
Section summaries
Management's Discussion and Analysis
Etsy marketplace GMS grew 7.5% YoY in Q2 FY2026, driving revenue up 9.3% and net income to $114.3M, while Depop was sold post-quarter.
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Etsy marketplace rose 7.5% to $2.58B in Q2, driven by strategic progress and improving buyer and seller trends, partially offset by a 0.4% decline in active buyers to 87.0M.
Operating expenses fell 2.1% to $358.8 million, as lower general and administrative costs from the Reverb sale and favorable tax items more than offset increased product development compensation.
The company announced a restructuring to reduce its workforce by approximately 12%, or 220 employees, with about $35 million in charges expected in Q3 2026.
Cash and short-term investments totaled $1.1 billion at quarter-end, and the $1.2 billion sale of Depop to eBay closed on July 30, 2026, after the period ended.
What changed
The Q1 2026 watch item on Etsy marketplace GMS sustainability was answered: the 5.5% growth in Q1 accelerated to 7.5% in Q2, confirming the inflection was not a one-quarter event driven solely by foreign exchange tailwinds.
The active buyer decline narrowed to 0.4% from 2.1% in Q1, suggesting stabilization as GMS growth returns, though the count of 87.0 million remains below the 91.6 million peak two years ago.
Services growth decelerated to 9.3% from 7.9% in Q1, reversing the expected further slowdown from the maturing Etsy Ads pricing lift, as higher click volume supplemented the pricing benefit.
The pending Depop sale flagged in prior quarters closed on July 30, 2026, for $1.2 billion in base cash proceeds, removing the overhang of the divestiture and providing substantial liquidity for share repurchases and Etsy marketplace investment.
What to watch
Q3 2026 Etsy marketplace GMS to see if the 7.5% growth rate can be sustained or accelerates further without the foreign exchange tailwinds that aided Q2, particularly as macroeconomic headwinds from tariffs and inflation persist.
Q3 2026 impact from the $35 million and the 12% workforce reduction, and whether the leaner cost structure offsets the loss of Depop's contribution post-sale.
Q3 2026 active buyer count to see if the stabilization at 87.0 million holds or begins to grow again now that GMS is expanding, a key signal for the core marketplace's ability to re-engage lapsed buyers.
Use of the $1.2 billion in Depop sale proceeds, particularly the pace and scale of share repurchases, given the company's history of aggressive buybacks and the remaining authorization.
Total from continuing operations increased 6.2% to $668.3M, with services revenue up 9.3% on higher Etsy Ads click volume and marketplace revenue up 4.8% on higher .
from continuing operations surged 150.5% to $114.3M, aided by a $29.2M foreign exchange gain versus a $25.4M loss last year and a 2.1% decline in operating expenses.
Operating expenses fell 2.1% to $358.8M, as lower general and administrative costs from the Reverb sale and favorable tax items offset increased product development compensation.
The company announced a restructuring plan to reduce the Etsy marketplace workforce by approximately 12% (220 employees), expecting to incur about $35M in charges in Q3 2026.
Liquidity remained strong with $1.1B in cash and short-term investments as of June 30, 2026, and the post-quarter Depop sale to eBay for $1.2B in base cash proceeds closed on July 30, 2026.
Quantitative and Qualitative Disclosures About Market Risk
Management believes there are no material changes to our quantitative and qualitative disclosures about market risks during the six months ended June 30, 2026, compared to those disclosed in the Annual Report.
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Management believes there are no material changes to our quantitative and qualitative disclosures about market risks during the six months ended June 30, 2026, compared to those disclosed in the Annual Report.
Macroeconomic headwinds, restructuring execution, and platform trust and safety are the most material risks to Etsy's business and financial performance.
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Macroeconomic conditions like inflation, recessionary factors, and tariffs are depressing consumer discretionary spending, directly impacting Etsy's and .
The August 2026 Restructuring Plan may fail to achieve intended benefits, cause disruption, and lead to greater-than-forecast costs or personnel attrition beyond planned headcount reductions.
Maintaining a trusted and safe marketplace is critical, but Etsy faces escalating threats from bad actors using AI for fraud, which could erode buyer and seller confidence.
Etsy's growth depends on attracting and retaining active buyers and sellers, but dissatisfaction with fees, shipping, or customer service, or a shift away from unique goods, could harm engagement.
Etsy is highly dependent on Google Cloud for its marketplace infrastructure; any significant disruption or cost increase could seriously harm operations.
Evolving global regulations, including the elimination of de minimis trade exemptions in the U.S. and E.U., are increasing the cost and complexity of cross-border transactions for Etsy's sellers.