8-K: Etsy Beats Q3 Forecasts, Depop Fuels Growth

Etsy, Inc. exceeded Q3 2025 financial expectations, reporting consolidated GMS growth and strong Depop performance.

Summary

• Consolidated GMS reached $2,724.7 million, marking a 0.9% year-over-year increase on a currency-neutral basis, excluding Reverb from the prior-year period. As reported, consolidated GMS was down 6.5% year-over-year.
• Consolidated revenue was $678.0 million, up 6.1% year-over-year excluding Reverb, and up 2.4% as reported.
• The take rate for the quarter was 24.9%, primarily driven by strong on-site ads performance on both Etsy and Depop.
• Net income increased by $18.1 million year-over-year to $75.5 million, with diluted net income per share at $0.63.
• Non-GAAP Adjusted EBITDA was $171.9 million, resulting in a consolidated margin of approximately 25.4%.
• Etsy ended the quarter with $1.6 billion in cash and cash equivalents and shortand long-term investments.
• The company repurchased approximately $120 million, or 2.1 million shares, of its common stock during the third quarter of 2025.
• Etsy marketplace GMS was $2,432.6 million, a 2.4% decrease year-over-year (3.2% currency-neutral), but showed sequential improvement.
• GMS transacted on the Etsy App grew 5% year-over-year, accounting for approximately 46% of total GMS.
• A partnership agreement was signed with OpenAI, enabling U.S. ChatGPT users to discover and purchase items directly from U.S. Etsy sellers.
• Active sellers on the Etsy marketplace totaled 5.5 million, a 10.9% year-over-year decrease, but a modest sequential increase.
• Active buyers on the Etsy marketplace were 86.6 million, down 5.0% year-over-year and 0.8% sequentially, though 6.6 million buyers were reactivated (up 3.8% YoY).
• Depop marketplace GMS surged to $292.1 million, up 39.4% year-over-year, with U.S. GMS growing 59% year-over-year.
• Depop active sellers increased 40.8% to 3.0 million, and active buyers grew 38.8% to 6.6 million.
• Depop launched its largest-ever brand campaign in the U.S. in September and introduced a new in-app styling feature called 'Outfits'.

Sentiment

Score: 7

Explanation: The company exceeded its consolidated GMS guidance, driven by strong performance from both Etsy and Depop. While the core Etsy marketplace GMS saw a decline, the sequential improvement and strategic initiatives like the OpenAI partnership are positive. Depop's accelerated growth and planned marketing investment indicate strong future potential. The increase in net income and significant stock repurchases also contribute to a positive outlook, despite some year-over-year declines in overall GMS (as reported) and Adjusted EBITDA.

Positives

• Consolidated results surpassed expectations across all three key financial metrics (GMS, Revenue, Adjusted EBITDA).
• Consolidated GMS, excluding Reverb, returned to year-over-year growth at 0.9%.
• Consolidated revenue, excluding Reverb, grew 6.1% year-over-year.
• Net income increased significantly by $18.1 million year-over-year to $75.5 million, with diluted EPS rising to $0.63.
• Etsy and Depop on-site ads performance was strong, contributing to revenue growth.
• Etsy marketplace GMS improved sequentially, and its year-over-year decline moderated.
• Etsy App GMS grew 5% year-over-year, indicating strong mobile engagement.
• A strategic partnership with OpenAI allows U.S. ChatGPT users to discover and purchase Etsy items, tapping into high-intent traffic.
• Improvements in search ranking models led to a lift in conversion rates.
• New AI-powered seller tools, such as title suggestions and Writing Assistant, were launched to support business growth.
• Reactivated 6.6 million buyers, a 3.8% increase from the prior year.
• Depop's GMS accelerated to 39.4% year-over-year growth, with U.S. GMS up 59% year-over-year.
• Depop saw substantial growth in active sellers (up 40.8% to 3.0 million) and active buyers (up 38.8% to 6.6 million).
• Depop launched its largest-ever brand campaign in the U.S. and introduced innovative features like 'Outfits'.
• The company maintains a strong cash position with $1.6 billion in cash and investments.
• Etsy repurchased $120 million of its common stock, demonstrating confidence and returning value to shareholders.

Negatives

• Consolidated GMS on an as-reported basis (including Reverb's Q3 2024 GMS) was down 6.5% year-over-year.
• Etsy marketplace GMS declined 2.4% year-over-year (3.2% on a currency-neutral basis).
• Active sellers on the Etsy marketplace decreased 10.9% year-over-year to 5.5 million.
• Active buyers on the Etsy marketplace decreased 5.0% year-over-year to 86.6 million.
• GMS per active buyer on a trailing twelve-month basis was down 1.6% year-over-year.
• Consolidated non-GAAP Adjusted EBITDA decreased 6.4% year-over-year to $171.9 million.
• Consolidated non-GAAP Adjusted EBITDA margin declined to 25.4% from 27.7% in the prior-year period.
• Depop's margin declined sequentially due to a significant increase in brand marketing investment.
• Nine-month net income was significantly lower at $52.2 million compared to $173.4 million in the prior year, primarily due to an asset impairment charge and loss on sale of business.

Risks

• Macroeconomic, geopolitical, and other events outside of the company's control.
• The level of demand for services or products sold in the marketplaces.
• The importance of the trustworthiness of the marketplaces and the ability to attract and retain active and engaged communities of buyers and sellers.
• Any real or perceived inaccuracies in operational metrics.
• Inability to protect against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents.
• Dependence on continued and unimpeded access to third-party services, platforms, and infrastructure.
• Operational and compliance risks related to payments systems.
• The global scope of the business.
• Ability to recruit and retain employees.
• Ability to compete effectively.
• Ability to enhance current offerings and develop new offerings to respond to changing needs of sellers and buyers.
• Risks related to environmental, social, and governance activities and disclosures.
• Barriers to international trade and efforts to grow the marketplace globally.
• Acquisitions, dispositions, or strategic partnerships that may prove unsuccessful or divert management attention.
• Ability to deal effectively with fraud or other illegal activity.
• Litigation and evolving global legal and regulatory requirements, including privacy and data protection laws, tax laws, product liability laws, laws regulating speech and platform moderation, antitrust laws, and intellectual property and counterfeiting regulations.

Future Outlook

For the fourth quarter of 2025, Etsy provides guidance for consolidated GMS between $3.5 billion and $3.65 billion, a take rate of approximately 24.5%, and an Adjusted EBITDA margin of approximately 24%. The company anticipates further sequential improvement in its combined Etsy marketplace and Depop year-over-year growth rate. The outlook reflects stable, strong profitability for the Etsy marketplace, alongside a significant, discretionary, and opportunistic sequential increase in brand marketing investment at Depop, which will compress overall margin performance. This investment is driven by excitement for the apparel resale market and Depop's encouraging momentum. Guidance assumes current currency exchange rates remain unchanged.

Management Comments

• Josh Silverman, CEO: "Etsy's third quarter consolidated results surpassed expectations across all three of our key financial metrics and GMS for Etsy and Depop combined returned to year-over-year growth."
• Josh Silverman, CEO: "Etsy marketplace GMS improved sequentially, reflecting growing traction in our customer-centric priorities from showing up where shoppers discover, to enhancing AI-powered matching, retaining and rewarding our most valuable customers, and further amplifying the human connection that makes Etsy so unique."
• Josh Silverman, CEO: "Depop also continued to accelerate GMS growth, building its position as a leading player in the U.S. resale clothing business."
• Lanny Baker, CFO: "Better than expected performance at both Etsy and Depop enabled us to exceed the top end of our consolidated GMS guidance range."
• Lanny Baker, CFO: "Etsy marketplace year-over-year GMS comparisons improved approximately 300 basis points sequentially driven primarily by our strategic priorities."
• Lanny Baker, CFO: "Our expectation for fourth quarter consolidated adjusted EBITDA margin reflects stable, strong profitability for the Etsy marketplace, paired with a significant sequential increase in brand marketing investment at Depop which will compress margin performance. This investment in Depop is discretionary and opportunistic, arising from our excitement about the scale and growth of the apparel resale market, as well as Depop's own very encouraging momentum."

Industry Context

Etsy operates in the dynamic e-commerce and online marketplace industry, specializing in unique and creative goods. The company's strategic partnership with OpenAI to integrate listings into ChatGPT reflects a broader industry trend towards leveraging AI and conversational platforms for product discovery and sales, aiming to capture high-intent consumer traffic. Depop's accelerated growth positions Etsy strongly within the rapidly expanding U.S. resale clothing market, a segment that continues to gain traction among consumers, particularly younger demographics. The company's focus on AI-powered matching, personalization, and enhanced seller tools aligns with industry-wide efforts to improve user experience, conversion rates, and seller efficiency in competitive online retail environments.

Stakeholder Impact

• Shareholders: Positive impact from exceeding guidance, increased net income, and a $120 million stock repurchase program. Potential for future growth driven by Depop's momentum and strategic investments.
• Sellers: New AI-powered tools and marketplace insights aim to support business growth. The OpenAI partnership could increase visibility and traffic for U.S. sellers. However, active sellers on the Etsy marketplace decreased 10.9% year-over-year.
• Buyers: Enhanced Etsy App features, improved search ranking, and the OpenAI partnership are designed to make shopping more personalized, engaging, and efficient, leading to better discovery.
• Employees: The ability to recruit and retain employees is identified as a risk, suggesting ongoing focus on talent management.

Next Steps

• Host a video webcast conference call on October 29, 2025, at 8:30 a.m. Eastern Time to discuss these results.
• Continue strategic investments in both the Etsy marketplace and Depop through 2026.
• Monitor the Investor Relations website and Etsy News Blog for material non-public information and disclosure obligations.

Key Dates

Recommendation

While Etsy exceeded its consolidated GMS guidance and Depop demonstrated significant accelerated growth, the core Etsy marketplace GMS experienced a year-over-year decline in active sellers and buyers. Strategic initiatives like the OpenAI partnership and new seller tools are promising, and the company's stock repurchase program is a positive signal. However, the mixed performance, particularly the ongoing challenges in the core marketplace, suggests a 'hold' position until these initiatives demonstrate a clear reversal of the Etsy marketplace's GMS trend. The significant investment in Depop's marketing, while opportunistic, will also compress short-term margins.

Keywords

Etsy, ETSY, Depop, e-commerce, online marketplace, financial results, Q3 2025, GMS, revenue, net income, Adjusted EBITDA, stock repurchase, seller tools, buyer engagement, AI, ChatGPT, resale, fashion, brand campaign, investor relations