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ETSY Q2 Earnings Beat on GMS and Ads Strength, Revenues Rise Y/Y
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Key Takeaways
Etsy's Q2 earnings beat estimates as revenues rose 6.2% and marketplace GMS reached $2.6 billion.
Etsy Ads drove take-rate expansion as machine learning improved ad relevance and seller budget pacing.
Etsy raised its 2026 GMS growth outlook and lifted its adjusted EBITDA margin forecast to 29%-30%.
Etsy’s (ETSY - Free Report) second-quarter 2026 earnings of $1.34 per share beat the Zacks Consensus Estimate by 14.53%. The company reported 98 cents per share from continuing operations. Strength in gross merchandise sales, advertising and operating leverage supported the earnings outperformance.
Revenues increased 6.2% year over year to $668 million, surpassing the consensus estimate by 2.87%. On an Etsy marketplace standalone basis, revenues increased 9.3% year over year.
ETSY's Revenue Mix Benefits From Advertising
Marketplace revenues were $456.1 million, accounting for 68.2% of total revenues, up 4.8% year over year on a continuing operations basis. On an Etsy marketplace standalone basis, marketplace revenues increased 8.4% year over year.
Second-quarter Etsy marketplace GMS rose 7.5% year over year to $2.6 billion. On a continuing operations basis, GMS increased 1% year over year, marking the third consecutive quarter of growth for the Etsy marketplace.
Services revenues were $212.2 million, accounting for 31.8% of total revenues, up 9.3% year over year on a continuing operations basis. On an Etsy marketplace standalone basis, services revenues rose 11.2% year over year.
Etsy Ads was the primary driver of take-rate expansion, aided by machine learning improvements that enhanced ad relevance and seller budget pacing. Offsite Ads also contributed as paid marketing shifted toward higher-monetizing channels.
Etsy Marketplace Metrics Gain Momentum
Trailing 12-month active buyers totaled 87 million, down 0.4% year over year but up 0.4% sequentially. Etsy added roughly 350,000 active buyers from the first quarter. Gross buyer additions increased 7.1% year over year to 12.1 million.
New buyers rose 4.4% to 5 million, while reactivated buyers grew 9% to 7.1 million. Repeat and habitual buyer cohorts recorded their first sequential gains since 2023, although both remained below year-ago levels. Etsy Expands Margins With Cost Discipline
Second-quarter adjusted EBITDA rose 14.7% year over year on a continuing operations basis to $195.4 million. The adjusted EBITDA margin expanded 210 basis points to 29.2%, as nearly half of incremental revenues flowed through to adjusted EBITDA.
Second-quarter operating expenses declined 2.1% to $358.8 million. Marketing expenses were $190.9 million, while product development costs totaled $100.9 million. General and administrative expenses fell to $66.9 million, benefiting from headcount discipline, lower professional services spending and a reversal of non-income tax expense.
ETSY's Q2 Balance Sheet & Cash Flow Details
As of June 30, 2026, cash and cash equivalents totaled $901.3 million, down sequentially from $1.21 billion as of March 31, 2026.
Total liquidity, including short- and long-term investments, was approximately $1.28 billion, a sequential decline from approximately $1.58 billion as of March 31, 2026.
The company repurchased 3.9 million shares for $250 million during the quarter. Etsy also authorized a new $2 billion repurchase program. The completed Depop sale is expected to bring approximately $1.4 billion in cash during the third quarter, supporting accelerated buyback activity.
Net cash provided by continuing operations totaled $165.9 million in the reported quarter. Free cash flow from continuing operations was $158.1 million in the second quarter of 2026; this represented approximately 81% of adjusted EBITDA.
Etsy Raises 2026 Outlook
For the third quarter of 2026, management expects GMS between $2.53 billion and $2.58 billion, representing year-over-year growth of 4% to 6%. The take rate is projected at approximately 26%, with an adjusted EBITDA margin of 28% to 30%.
For 2026, Etsy now anticipates mid-single-digit GMS growth, up from its previous low-single-digit growth outlook. Management raised the adjusted EBITDA margin forecast to 29% to 30% from 28% to 30%.
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ETSY Q2 Earnings Beat on GMS and Ads Strength, Revenues Rise Y/Y
Key Takeaways
Etsy’s (ETSY - Free Report) second-quarter 2026 earnings of $1.34 per share beat the Zacks Consensus Estimate by 14.53%. The company reported 98 cents per share from continuing operations. Strength in gross merchandise sales, advertising and operating leverage supported the earnings outperformance.
Revenues increased 6.2% year over year to $668 million, surpassing the consensus estimate by 2.87%. On an Etsy marketplace standalone basis, revenues increased 9.3% year over year.
ETSY's Revenue Mix Benefits From Advertising
Marketplace revenues were $456.1 million, accounting for 68.2% of total revenues, up 4.8% year over year on a continuing operations basis. On an Etsy marketplace standalone basis, marketplace revenues increased 8.4% year over year.
Second-quarter Etsy marketplace GMS rose 7.5% year over year to $2.6 billion. On a continuing operations basis, GMS increased 1% year over year, marking the third consecutive quarter of growth for the Etsy marketplace.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
Services revenues were $212.2 million, accounting for 31.8% of total revenues, up 9.3% year over year on a continuing operations basis. On an Etsy marketplace standalone basis, services revenues rose 11.2% year over year.
Etsy Ads was the primary driver of take-rate expansion, aided by machine learning improvements that enhanced ad relevance and seller budget pacing. Offsite Ads also contributed as paid marketing shifted toward higher-monetizing channels.
Etsy Marketplace Metrics Gain Momentum
Trailing 12-month active buyers totaled 87 million, down 0.4% year over year but up 0.4% sequentially. Etsy added roughly 350,000 active buyers from the first quarter. Gross buyer additions increased 7.1% year over year to 12.1 million.
New buyers rose 4.4% to 5 million, while reactivated buyers grew 9% to 7.1 million. Repeat and habitual buyer cohorts recorded their first sequential gains since 2023, although both remained below year-ago levels.
Etsy Expands Margins With Cost Discipline
Second-quarter adjusted EBITDA rose 14.7% year over year on a continuing operations basis to $195.4 million. The adjusted EBITDA margin expanded 210 basis points to 29.2%, as nearly half of incremental revenues flowed through to adjusted EBITDA.
Second-quarter operating expenses declined 2.1% to $358.8 million. Marketing expenses were $190.9 million, while product development costs totaled $100.9 million. General and administrative expenses fell to $66.9 million, benefiting from headcount discipline, lower professional services spending and a reversal of non-income tax expense.
ETSY's Q2 Balance Sheet & Cash Flow Details
As of June 30, 2026, cash and cash equivalents totaled $901.3 million, down sequentially from $1.21 billion as of March 31, 2026.
Total liquidity, including short- and long-term investments, was approximately $1.28 billion, a sequential decline from approximately $1.58 billion as of March 31, 2026.
The company repurchased 3.9 million shares for $250 million during the quarter. Etsy also authorized a new $2 billion repurchase program. The completed Depop sale is expected to bring approximately $1.4 billion in cash during the third quarter, supporting accelerated buyback activity.
Net cash provided by continuing operations totaled $165.9 million in the reported quarter. Free cash flow from continuing operations was $158.1 million in the second quarter of 2026; this represented approximately 81% of adjusted EBITDA.
Etsy Raises 2026 Outlook
For the third quarter of 2026, management expects GMS between $2.53 billion and $2.58 billion, representing year-over-year growth of 4% to 6%. The take rate is projected at approximately 26%, with an adjusted EBITDA margin of 28% to 30%.
For 2026, Etsy now anticipates mid-single-digit GMS growth, up from its previous low-single-digit growth outlook. Management raised the adjusted EBITDA margin forecast to 29% to 30% from 28% to 30%.
ETSY’s Zacks Rank & Stocks to Consider
Currently, Etsy carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Retail-Wholesale sector are The TJX Companies (TJX - Free Report) , StubHub Holdings, Inc. (STUB - Free Report) and Abercrombie & Fitch (ANF - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The TJX Companies shares have returned 3% in the past six months. TJX is set to report its second-quarter fiscal 2027 results on Aug. 19, 2026.
StubHub Holdings shares have declined 9.8% in the past six months. STUB is slated to report its second-quarter 2026 results on Aug. 12.
Abercrombie & Fitch shares have gained 18% in the past six months. ANF is slated to report its second-quarter 2026 results on Aug. 26.