Etsy Posts Quarterly Revenue of $692.469 Million as Sales Grow 8.8%
Key Facts
Etsy reported third-quarter results on October 28 for the quarter ended September 30, posting revenue of $692.469 million, up 10.9% year over year, and gross merchandise sales on its marketplace of $2.647 billion, up 8.8%. The company said in its shareholder letter that sales growth was 9.1% on a currency-neutral basis, accelerating by about 190 basis points from the second quarter. It was the sixth consecutive quarter in which the sales growth rate improved from the previous quarter. Revenue exceeded FactSet estimates, according to coverage published on the day results were announced. In Wednesday afternoon trading, Etsy shares rose 5.4%, according to MT Newswires.
Platform metrics showed improvement in the customer base: active buyers totaled 87.5 million, up 1.0% year over year and 0.6% quarter over quarter. Etsy added about 540,000 active buyers from the previous quarter, recording the first annual increase in this metric in two years. Gross buyer additions also rose 6.2% to 12.1 million. Gross merchandise sales per active buyer over the trailing twelve months were $126, up 3.9% year over year and 1.4% quarter over quarter. These metrics reflect a broader user base and improved spending per buyer, while performance remains measured through separate metrics for additions, active buyers and spending.
Marketplace sales also improved after excluding the effect of exchange rates, rising 9.1% year over year on a currency-neutral basis, compared with reported growth of 8.8%. Etsy said currency-neutral growth accelerated by about 190 basis points from the second quarter, extending the sequential improvement for the sixth consecutive quarter. The company estimated that personalization improvements alone added about two percentage points to the annualized year-over-year gross merchandise sales growth rate in the third quarter. That estimate places improvements to product discovery among the factors the company said supported marketplace performance. This coincided with annual growth in active buyers, while spending per buyer remained a separate indicator of demand trends.
Etsy's take rate, which measures its share of marketplace activity value, rose to 26.2% in the third quarter, up 50 basis points from the same period last year. The company attributed the increase mainly to incremental improvements in Etsy Ads and a smaller contribution from offsite advertising. Etsy said improvements to ad matching and ranking models increased ad relevance, resulting in higher click-through and conversion rates. It added that budget control tools helped sellers direct spending toward higher-value opportunities. Offsite advertising also contributed in part as paid marketing spend increased, according to the shareholder letter. The higher take rate was associated with growth in services revenue, which the company said was driven primarily by increased advertising revenue.
Etsy raised its forecast for gross merchandise sales growth in fiscal 2026 to about 7%, and estimated an annual take rate of 25.8% and an adjusted EBITDA margin of about 30%. For the fourth quarter, it forecast Etsy marketplace sales of between $3.46 billion and $3.52 billion, equivalent to year-over-year growth of about 5% to 7%. It also forecast an adjusted EBITDA margin of about 30% for the quarter. The guidance puts the year-end shopping season at the center of investor focus on the platform's performance following the third quarter. The company had no upcoming events scheduled on its investor relations calendar at the time of review.
In management and financial developments, Etsy said Chief Financial Officer Lanny Baker will remain in his role through March 1, 2027, then serve as an adviser through July 1, 2027, while the company has engaged an executive search firm to find his successor. The company also paid $648.6 million in cash on October 1 to settle the remaining principal on notes issued in 2019, reducing its total debt. The payment came after the reported quarter ended, as part of its financial moves at the start of the fourth quarter. The company’s guidance points to continued marketplace growth in the coming quarter, with sales ranging from $3.46 billion to $3.52 billion. No date for a subsequent investor disclosure or event had been set on the company calendar at the time of review.