Etsy Earnings: A Little Bit of Progress

Key Points

• Etsy beat revenue expectations thanks to a rising take rate, although currency fluctuations ate into earnings.

• Gross merchandise sales slumped, and so did the number of buyers and sellers on the company’s platform.

• Etsy is in turnaround mode, but a return to GMS growth is going to take time.

• 10 stocks we like better than Etsy ›

Here's our initial take on Etsy's (NASDAQ: ETSY) fiscal 2025 second-quarter financial report.

Key Metrics

The Second Quarter Was a Mixed Bag

Online marketplace Etsy is in turnaround mode as sales volumes on its platform decline. Etsy reported a 4.8% drop in gross merchandise sales in the second quarter, or a 2.6% drop excluding Reverb, which has been sold. The number of active buyers fell by 3.4% to 93.3 million, and the number of active sellers slumped 7.8% to 8.1 million.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

While Etsy's marketplace is becoming a little less busy, there were two pieces of good news for investors. First, Etsy is successfully bumping up its take rate, which is the percentage of gross merchandise sales it takes as revenue. Etsy reported a take rate of 24% in the second quarter, up from 22% in the prior-year period, with revenue from ads the main growth driver. Second, Etsy's Depop fashion marketplace is thriving. Depop grew gross merchandise sales by 35.3% year over year in the second quarter to $249.6 million, putting the business on a $1 billion annual GMS run rate.

Etsy's priority right now is to return to GMS growth. The company is in the middle of multiple initiatives that aim to do just that, including improving the search and browsing experience for buyers, personalizing marketing, deploying AI technology, and retaining its most valuable customers. Etsy has 6.1 million habitual buyers, and it acquired 4.8 million new buyers during the quarter despite the overall decline in buyer activity.

Etsy's earnings per share tumbled 39%, although this was mostly due to a noncash charge related to currency fluctuations. Adjusted EBITDA was down just 5.8%, and the company reported solid free cash flow of nearly $150 million for the first six months of the year.

Immediate Market Reaction

Shares of Etsy were up around 5% in premarket trading on Wednesday despite the company reporting a decline in gross merchandise sales and missing analyst expectations for earnings. The company beat expectations for revenue thanks to a rising take rate, and the earnings miss was largely due to currency. Going into the report, Etsy stock was up about 14% year to date.

What to Watch

For the third quarter, Etsy is guiding for gross merchandise sales of $2.6 billion to $2.7 billion, along with a take rate of approximately 24.5%. There will be no contribution from Reverb in the third quarter, so the guidance range compares to $2.7 billion in ex-Reverb GMS that Etsy reported for the second quarter.

Etsy is taking multiple steps to stop the exodus of buyers and sellers on its platform, and while the effort is still in its early stages, the company is managing to grow revenue while maintaining strong profitability. Depop should help the cause as it grows, although the Etsy marketplace is still much larger in terms of GMS.

Helpful Resources

• Full earnings report
• Investor relations page

Should you invest $1,000 in Etsy right now?

Before you buy stock in Etsy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Etsy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $630,291!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,075,791!*

Now, it’s worth noting Stock Advisor’s total average return is 1,039% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 29, 2025

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy. The Motley Fool has a disclosure policy.