It has been about a month since the last earnings report for Etsy (ETSY Quick QuoteETSY - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Etsy due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Etsy, Inc. before we dive into how investors and analysts have reacted as of late.

ETSY Q2 Earnings Beat on GMS and Ads Strength, Revenues Rise Y/Y

Etsy’s 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%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, Etsy has a average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Etsy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Etsy belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, Carvana (CVNA Quick QuoteCVNA - Free Report) , has gained 7.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Carvana reported revenues of $7.38 billion in the last reported quarter, representing a year-over-year change of +52.4%. EPS of $0.42 for the same period compares with $0.26 a year ago.

Carvana is expected to post earnings of $0.49 per share for the current quarter, representing a year-over-year change of +133.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.9%.

Carvana has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.