8-K: Etsy Reports Q4 2025 Results, Plans Depop Sale to eBay

Etsy, Inc. announced its fourth quarter and full year 2025 financial results, with the Etsy marketplace returning to slight GMS growth and plans to sell Depop to eBay for $1.2 billion.

Summary

• Consolidated GMS was $3,592.6 million in Q4 2025, down 3.8% year-over-year on an as-reported basis, but up 2.4% excluding Reverb from the prior-year period.
• Consolidated revenue was $881.6 million in Q4 2025, up 3.5% year-over-year on an as-reported basis, and up 6.6% excluding Reverb.
• Net income for Q4 2025 was $110.7 million, a decrease of 14.8% year-over-year, primarily due to a non-cash foreign exchange gain in Q4 2024 with no comparable gain in Q4 2025.
• Non-GAAP Adjusted EBITDA was $222.5 million in Q4 2025, with a consolidated margin of approximately 25.2%.
• The Etsy marketplace GMS was $3,292.9 million, up 0.1% year-over-year, but down 1.0% on a currency-neutral basis.
• Depop marketplace GMS grew 37.2% year-over-year on a currency-neutral basis to $299.7 million in Q4 2025, driven by strong U.S. buyer GMS growth of 60.2%.
• Etsy completed the sale of Reverb on June 2, 2025.
• Etsy has entered into a definitive agreement to sell Depop to eBay Inc. for $1.2 billion in cash, with the sale expected to close in the second quarter of 2026.
• The company ended the fourth quarter with $1.8 billion in cash and cash equivalents and shortand long-term investments.
• Etsy repurchased approximately $133 million, or 2.3 million shares, of its common stock during Q4 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report. While consolidated metrics show declines due to divestitures, the core Etsy marketplace's return to GMS growth and strong Depop performance, coupled with strategic streamlining and positive 2026 guidance, indicate a favorable trajectory.

Positives

• The Etsy marketplace GMS returned to slight year-over-year growth of 0.1% in Q4 2025, indicating a positive inflection point.
• Depop GMS demonstrated robust growth of 37.2% year-over-year on a currency-neutral basis, with U.S. buyer GMS up 60.2%.
• Consolidated revenue increased 6.6% year-over-year when excluding the impact of the Reverb sale.
• Growth in revenue was primarily driven by continued strong consolidated on-site ads performance.
• Etsy ended Q4 2025 with a strong cash position of $1.8 billion in cash and cash equivalents and shortand long-term investments.
• The company repurchased $133 million (2.3 million shares) of its common stock in Q4 2025, returning value to shareholders.
• GMS transacted on the Etsy app grew 6.6% year-over-year, representing approximately 46% of total GMS.
• Gross buyer additions increased 2.7% from the prior year, totaling 17.2 million new and reactivated buyers.
• Etsy outperformed peers in half of its top six categories, and the Home and Living category grew year-over-year.
• The core Etsy marketplace achieved its highest Adjusted EBITDA margin level of 2025, at approximately 30% in Q4.
• Management expects slight year-over-year GMS growth for the core Etsy marketplace for the full year 2026, with positive comparisons in every quarter.

Negatives

• Consolidated GMS was down 3.8% year-over-year on an as-reported basis in Q4 2025 and down 5.3% for the full year 2025.
• Consolidated net income decreased 14.8% year-over-year in Q4 2025 and 46.3% for the full year 2025.
• Etsy marketplace GMS was down 1.0% on a currency-neutral basis in Q4 2025.
• Active sellers on the Etsy marketplace decreased 1.5% year-over-year to 5.6 million.
• Active buyers on the Etsy marketplace decreased 3.4% year-over-year to 86.5 million.
• GMS per active buyer on a trailing twelve-month basis was down 0.5% year-over-year.
• Consolidated Adjusted EBITDA decreased 11.2% year-over-year in Q4 2025 and 6.0% for the full year 2025.
• Net cash provided by operating activities for the trailing twelve months decreased 7.8% year-over-year to $693.4 million.
• Free cash flow for the trailing twelve months decreased 9.9% year-over-year to $638.8 million.

Risks

• Macroeconomic, geopolitical, and other events outside of control could impact business performance.
• The level of demand for services or products sold in marketplaces is a key uncertainty.
• The trustworthiness and safety of marketplaces and the ability to attract and retain active and engaged communities of buyers and sellers are crucial for success.
• Real or perceived inaccuracies in operational metrics could affect investor confidence.
• Inability to protect against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents poses a significant threat.
• Dependence on continued and unimpeded access to third-party services, platforms, and infrastructure creates operational risk.
• Operational and compliance risks related to payments systems could lead to disruptions or penalties.
• The global scope of the business exposes the company to various international market risks.
• Ability to recruit and retain employees and deploy that talent effectively is vital for growth and innovation.
• The company's ability to compete effectively in a rapidly changing e-commerce environment is a continuous challenge.
• Ability to enhance current offerings and develop new offerings to respond to the changing needs of sellers and buyers is critical for relevance.
• Risks related to environmental, social, and governance activities and disclosures could impact reputation and compliance.
• Barriers to and uncertainty around international trade and efforts to grow the marketplace globally could hinder expansion.
• Acquisitions, dispositions, or strategic partnerships may prove unsuccessful or divert management attention.
• Ability to deal effectively with fraud or other illegal activity, increasingly amplified by advances in AI, is a growing concern.
• 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, present ongoing compliance and financial risks.

Future Outlook

For Q1 2026, Etsy expects GMS for continuing operations (core Etsy marketplace) to be between $2.38 billion and $2.43 billion, with a Take Rate of approximately 25.5% and an Adjusted EBITDA Margin of approximately 28-30%. For the full year 2026, the company anticipates slight year-over-year GMS growth for the core Etsy marketplace, with positive year-over-year comparisons in each quarter, and Take Rate and Adjusted EBITDA Margin roughly consistent with Q1 2026 guidance.

Management Comments

• Kruti Patel Goyal, President and CEO, stated: "Our clear strategic focus and solid execution are driving progress on the journey to bring the Etsy marketplace back to sustained growth."
• Kruti Patel Goyal emphasized: "What sets Etsy apart is not just what we sell, but who we're built for: buyers seeking something personal and sellers bringing creativity to life."
• Kruti Patel Goyal added: "By strengthening how we connect the right people with the right items at the right moments, we see a meaningful opportunity to grow relevance, engagement, and market share over time, while continuing to deliver long-term value to all of our stakeholders."
• Lanny Baker, CFO, commented: "We ended the year with solid results, in-line with or better than our expectations."
• Lanny Baker noted: "Fourth quarter consolidated GMS was $3.6 billion, up 2.4% year-over-year excluding Reverb from the prior-year period. Etsy marketplace GMS grew slightly year-over-year, driven by the impact of our near-term priorities as well as some benefit from foreign exchange rates and competitive spending patterns in certain marketing channels."
• Lanny Baker highlighted: "We saw stabilization and some improvement in our key customer metrics, including moderation in active buyer declines, sequential stabilization in trailing twelve month GMS per active buyer, growth in total gross buyer additions, and sequential growth alongside higher retention of active sellers."
• Lanny Baker further stated: "Fourth quarter Adjusted EBITDA was $222 million, representing a consolidated Adjusted EBITDA margin of 25.2%, with the core Etsy marketplace hitting our highest Adjusted EBITDA margin level of 2025, at approximately 30%."
• Regarding the 2026 outlook, Lanny Baker said: "As we enter 2026, we have a focused set of product and marketing initiatives in flight and several early indicators of progress, and we expect that the full impact of these will take time to translate into long-term sustainable growth."
• Lanny Baker concluded on 2026 outlook: "We've improved the Etsy marketplace's annual GMS performance over the last two years, and we expect to further improve our performance this year achieving slight growth for the full year, with positive year-over-year comparisons in every quarter."

Industry Context

StockSavvy.ai notes that Etsy's strategic divestitures of Reverb and the planned sale of Depop indicate a clear focus on streamlining operations and concentrating on its core marketplace for unique and creative goods. This move positions Etsy to better compete in a specialized niche within the broader e-commerce landscape, differentiating itself from mass-market retailers. The strong performance of Depop prior to its sale underscores the robust growth in the fashion resale market, a significant trend in retail. Furthermore, Etsy's integration with AI-powered platforms like Google Search, Gemini, and Copilot Checkout, along with a payments partnership with Stripe, reflects a broader industry shift towards enhancing user experience through advanced technology and seamless transaction capabilities.

Comparison to Industry Standards

• Etsy outperformed peers in half of its top six categories, demonstrating competitive strength in specific product segments within the e-commerce market.
• Depop's 37.2% currency-neutral GMS growth significantly outpaces general e-commerce growth rates, indicating strong performance in the fashion resale sector, potentially comparable to other leading resale platforms, though specific competitor data is not provided in the filing.

Stakeholder Impact

• Shareholders: Potential positive impact from the strategic divestiture of Depop for $1.2 billion, providing significant capital and allowing for a singular focus on the core Etsy marketplace. Ongoing stock repurchases also return value to shareholders. The expected return to GMS growth in 2026 could boost investor confidence.
• Customers (Buyers): Enhanced shopping experience through new AI-powered integrations with Google, Microsoft, and Stripe, making purchases more seamless. Expanded third-party shipping partner program aims to improve cross-border shipping and delivery reliability.
• Customers (Sellers): Benefit from the expanded third-party shipping partner program, which improves cross-border shipping, delivery reliability, and Delivery Duties Paid coverage, potentially increasing international sales opportunities.
• Employees: The strategic refocusing on the core Etsy marketplace may lead to shifts in resource allocation and organizational structure, though no direct impact on employment levels is mentioned.
• Creditors: The significant cash proceeds from the Depop sale could strengthen the company's balance sheet, potentially improving its credit profile.

Next Steps

• The sale of Depop to eBay Inc. is expected to close in the second quarter of 2026, subject to certain closing conditions.
• Depop's financial results will be classified as discontinued operations on Etsy's consolidated financial statements beginning in the first quarter of fiscal year 2026.
• Etsy will host a video webcast conference call on February 19, 2026, at 8:30 a.m. Eastern Time to discuss these results.
• The company will continue to implement focused product and marketing initiatives to translate into long-term sustainable growth for the core Etsy business.

Key Dates

Recommendation

The core Etsy marketplace has achieved a critical inflection point by returning to GMS growth in Q4 2025, a key indicator of business health. The strategic divestiture of Depop for $1.2 billion provides substantial capital and allows management to focus solely on the primary marketplace, which is showing signs of stabilization and improvement in key customer metrics. The positive outlook for 2026, projecting slight GMS growth for the core business, coupled with ongoing stock repurchases, suggests a company that is streamlining operations for sustained, profitable growth. These factors present a compelling investment opportunity.

Keywords

Etsy, E-commerce, Online Marketplace, Financial Results, Q4 2025, Full Year 2025, Depop Sale, Reverb Divestiture, GMS Growth, Revenue, Net Income, Adjusted EBITDA, Stock Repurchase, Active Buyers, Active Sellers, AI Integration, Google Partnership, Microsoft Partnership, Stripe Partnership, Resale Market