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Etsy's EPS of $1.55 beat estimates by 15.67%, while revenues rose 10.9% to $692.5M, topping forecasts.
Marketplace GMS rose 8.8% to $2.65B as Etsy's improved ad matching lifted click-through and conversion.
Active buyers rose year over year for the first time in two years, while Etsy forecast 5%-7% Q4 GMS growth.
Etsy (ETSY - Free Report) reported third-quarter 2026 earnings of $1.55 per share, beating the Zacks Consensus Estimate by 15.67%. Diluted earnings from continuing operations rose 16.3% year over year to $1 per share. Stronger gross merchandise sales (GMS) and improved advertising monetization supported the earnings beat.
Revenues rose 10.9% year over year to $692.5 million, surpassing the consensus mark by 3.51%.
ETSY's Revenue Mix Benefits From Advertising
Marketplace revenues increased 9.1% year over year to $468.14 million, contributing 67.6% of total revenues. Services revenues grew 15% to $224.33 million, accounting for the remaining 32.4%. The faster expansion in services revenues reflected growing advertising contributions.
Third-quarter Etsy marketplace GMS advanced 8.8% year over year to $2.65 billion, supported by improved search relevance and rising spending per buyer.
The revenue take rate, which measures revenues as a percentage of GMS, increased 50 basis points to 26.2%. Improvements to Etsy Ads' matching and ranking models enhanced ad relevance, click-through and conversion rates. Better budget pacing helped sellers target their spending, while Offsite Ads provided additional support.
Etsy Marketplace Buyer Trends Improve
Trailing 12-month active buyers increased 1% year over year to 87.5 million, marking their first annual increase in two years. The active buyer base added about 540,000 shoppers sequentially, while gross buyer additions grew 6.2% to 12.1 million. Active sellers rose 6.5% year over year to 5.8 million.
Trailing 12-month GMS per active buyer increased 3.9% year over year to $126, marking the third consecutive quarter of growth. Repeat and habitual buyers improved sequentially, although purchase frequency remained modestly lower year over year. App GMS grew 10.4% and non-app GMS advanced 7.5%, reflecting broader marketplace momentum.
ETSY's Personalization and Marketing Lift Engagement
Etsy estimates that personalization improvements contributed approximately two percentage points to its annualized year-over-year GMS growth rate by the third quarter. Expanded buyer profiles now support personalized feeds, recommendations and owned marketing for four out of five active buyers. Some personalization also reaches signed-out shoppers.
Greater emphasis on product quality, search relevance and buyer intent is helping shoppers discover higher-value merchandise. Marketing efficiency improved through refinements to paid-search product feeds, while expanded spending on TikTok and YouTube helped Etsy reach younger audiences. AI-powered gifting and seller assistants remain areas of experimentation.
Adjusted EBITDA climbed 14.6% year over year to $210.36 million, supported by revenue growth and an August restructuring. The adjusted EBITDA margin expanded 100 basis points to 30.4%, as adjusted EBITDA outpaced revenue growth for the second consecutive quarter. Gross profit rose 9.9% to $503.15 million, although gross margin narrowed to 72.7% from 73.4%.
Operating expenses rose 12.9% year over year to $391.71 million. Marketing expenses climbed to $207 million from $173.37 million, while product development costs totaled $110.78 million and general and administrative expenses reached $73.93 million. Net income from continuing operations increased 8.6% to $113.64 million, although net margin contracted 40 basis points to 16.4%.
ETSY's Q3 Balance Sheet & Cash Flow
As of Sept. 30, 2026, Etsy held $2.5 billion in cash, cash equivalents and short- and long-term investments, including proceeds from the July sale of Depop. On Oct. 1, the company paid $648.6 million to settle the remaining principal of its 2019 notes.
Etsy repurchased $394.6 million in shares, reducing shares outstanding by approximately 5.2 million, and retained $2.2 billion in authorized buyback capacity.
Net cash provided by operating activities of continuing operations was $242.85 million in the quarter. Free cash flow from continuing operations rose 10.3% to $236.37 million, equivalent to 112% of adjusted EBITDA.
Etsy Projects Continued Growth in Holiday Quarter
For the fourth quarter of 2026, management forecasts GMS between $3.46 billion and $3.52 billion, representing 5% to 7% year-over-year growth. The company expects a take rate of approximately 25.6% and an adjusted EBITDA margin of roughly 30%.
For full-year 2026, Etsy now anticipates about 7% GMS growth, a take rate of 25.8% and an adjusted EBITDA margin near 30%. The outlook assumes broadly consistent macroeconomic conditions, modest foreign-exchange headwinds and tougher year-ago comparisons. Holiday shopping trends and the timing of product improvements remain factors shaping the fourth-quarter range.
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ETSY Q3 Earnings Beat Estimates on GMS & Ads Growth, Revenues Rise Y/Y
Key Takeaways
Etsy (ETSY - Free Report) reported third-quarter 2026 earnings of $1.55 per share, beating the Zacks Consensus Estimate by 15.67%. Diluted earnings from continuing operations rose 16.3% year over year to $1 per share. Stronger gross merchandise sales (GMS) and improved advertising monetization supported the earnings beat.
Revenues rose 10.9% year over year to $692.5 million, surpassing the consensus mark by 3.51%.
ETSY's Revenue Mix Benefits From Advertising
Marketplace revenues increased 9.1% year over year to $468.14 million, contributing 67.6% of total revenues. Services revenues grew 15% to $224.33 million, accounting for the remaining 32.4%. The faster expansion in services revenues reflected growing advertising contributions.
Third-quarter Etsy marketplace GMS advanced 8.8% year over year to $2.65 billion, supported by improved search relevance and rising spending per buyer.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
The revenue take rate, which measures revenues as a percentage of GMS, increased 50 basis points to 26.2%. Improvements to Etsy Ads' matching and ranking models enhanced ad relevance, click-through and conversion rates. Better budget pacing helped sellers target their spending, while Offsite Ads provided additional support.
Etsy Marketplace Buyer Trends Improve
Trailing 12-month active buyers increased 1% year over year to 87.5 million, marking their first annual increase in two years. The active buyer base added about 540,000 shoppers sequentially, while gross buyer additions grew 6.2% to 12.1 million. Active sellers rose 6.5% year over year to 5.8 million.
Trailing 12-month GMS per active buyer increased 3.9% year over year to $126, marking the third consecutive quarter of growth. Repeat and habitual buyers improved sequentially, although purchase frequency remained modestly lower year over year. App GMS grew 10.4% and non-app GMS advanced 7.5%, reflecting broader marketplace momentum.
ETSY's Personalization and Marketing Lift Engagement
Etsy estimates that personalization improvements contributed approximately two percentage points to its annualized year-over-year GMS growth rate by the third quarter. Expanded buyer profiles now support personalized feeds, recommendations and owned marketing for four out of five active buyers. Some personalization also reaches signed-out shoppers.
Greater emphasis on product quality, search relevance and buyer intent is helping shoppers discover higher-value merchandise. Marketing efficiency improved through refinements to paid-search product feeds, while expanded spending on TikTok and YouTube helped Etsy reach younger audiences. AI-powered gifting and seller assistants remain areas of experimentation.
Etsy Expands Margins Despite Higher Operating Costs
Adjusted EBITDA climbed 14.6% year over year to $210.36 million, supported by revenue growth and an August restructuring. The adjusted EBITDA margin expanded 100 basis points to 30.4%, as adjusted EBITDA outpaced revenue growth for the second consecutive quarter. Gross profit rose 9.9% to $503.15 million, although gross margin narrowed to 72.7% from 73.4%.
Operating expenses rose 12.9% year over year to $391.71 million. Marketing expenses climbed to $207 million from $173.37 million, while product development costs totaled $110.78 million and general and administrative expenses reached $73.93 million. Net income from continuing operations increased 8.6% to $113.64 million, although net margin contracted 40 basis points to 16.4%.
ETSY's Q3 Balance Sheet & Cash Flow
As of Sept. 30, 2026, Etsy held $2.5 billion in cash, cash equivalents and short- and long-term investments, including proceeds from the July sale of Depop. On Oct. 1, the company paid $648.6 million to settle the remaining principal of its 2019 notes.
Etsy repurchased $394.6 million in shares, reducing shares outstanding by approximately 5.2 million, and retained $2.2 billion in authorized buyback capacity.
Net cash provided by operating activities of continuing operations was $242.85 million in the quarter. Free cash flow from continuing operations rose 10.3% to $236.37 million, equivalent to 112% of adjusted EBITDA.
Etsy Projects Continued Growth in Holiday Quarter
For the fourth quarter of 2026, management forecasts GMS between $3.46 billion and $3.52 billion, representing 5% to 7% year-over-year growth. The company expects a take rate of approximately 25.6% and an adjusted EBITDA margin of roughly 30%.
For full-year 2026, Etsy now anticipates about 7% GMS growth, a take rate of 25.8% and an adjusted EBITDA margin near 30%. The outlook assumes broadly consistent macroeconomic conditions, modest foreign-exchange headwinds and tougher year-ago comparisons. Holiday shopping trends and the timing of product improvements remain factors shaping the fourth-quarter range.
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 Arcos Dorados (ARCO - Free Report) , Best Buy Co., Inc. (BBY - Free Report) and FIGS, Inc. (FIGS - 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.
Arcos Dorados’ shares have declined 5.7% year to date. ARCO is set to report its third-quarter 2026 results on Nov. 12.
Best Buy’s shares have gained 44.9% year to date. BBY is slated to report its third-quarter fiscal 2027 results on Nov. 24.
FIGS' shares have surged 81.9% year to date. FIGS is slated to report its third-quarter 2026 results on Nov. 5.