Etsy, Inc. (ETSY Quick QuoteETSY - Free Report) emphasized strengthening marketplace fundamentals, improving buyer engagement and expanding AI-driven personalization during its third-quarter 2026 earnings call. Management highlighted accelerating gross merchandise sales (GMS) growth and improving customer trends as evidence that its strategic changes are gaining traction.

CEO Kruti Patel Goyal expressed growing confidence in the company's turnaround while acknowledging that purchase frequency remains under pressure. Management also outlined its holiday-quarter expectations, marketing priorities and plans to reinforce Etsy's differentiation.

Etsy reported quarterly earnings of $1.55 per share, beating the Zacks Consensus Estimate of $1.34. Revenues of $692.47 million topped the consensus mark of $669 million.

Etsy, Inc. Price, Consensus and EPS Surprise

Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote

ETSY Outlines Holiday-Quarter Growth Expectations

Chief financial officer Lanny Baker projected fourth-quarter GMS of $3.46 billion to $3.52 billion, calling for year-over-year growth of 5-7%. Management expects a take rate of approximately 25.6% and an adjusted EBITDA margin near 30%.

For 2026, Etsy anticipates GMS growth of approximately 7%, a take rate of 25.8% and an adjusted EBITDA margin of roughly 30%.

During the analyst discussion, Baker identified holiday demand variability and the timing of product improvements as factors influencing the outlook. Management also expects tougher comparisons and modest foreign exchange headwinds.

Etsy's Personalization Investments Gain Traction

Goyal highlighted personalization as an increasingly important contributor to marketplace growth. Management estimated that improvements in personalization contributed approximately two percentage points to annualized year-over-year GMS growth.

ETSY reported third-quarter GMS growth of 8.8%, with app and non-app GMS increasing 10.4% and 7.5%, respectively.

Responding to Bernstein's questions, Goyal explained that Etsy initially prioritized personalization within its app before expanding capabilities across platforms. She identified no significant technical barriers to extending those improvements to web shoppers.

ETSY Faces Continued Pressure on Purchase Frequency

Active buyers increased 1% year over year to approximately 88 million, marking the first annual increase in two years. GMS per active buyer rose 3.9% on a trailing-12-month basis.

During the Q&A, Citizens questioned why purchasing frequency had not improved despite better personalization. Baker explained that new and reactivated buyers generally purchase less frequently, while higher-value merchandise influences purchasing patterns.

Goyal emphasized that stronger engagement, repeat visits and cross-category shopping represent important precursors to higher frequency. Management maintained that improving purchase frequency remains a longer-term objective.

Etsy Expands Marketing Reach and Advertising Efficiency

Baker highlighted improvements in paid-search efficiency and expanding investment across TikTok and YouTube. Marketing spending increased during the quarter, but management reported faster growth in marketing-driven GMS.

Responding to Goldman Sachs, Baker said improved product listing ad segmentation and social advertising effectiveness had strengthened marketing returns.

Etsy Ads also benefited from better matching, ranking and budget-pacing capabilities. Services revenue increased 15%, while the marketplace take rate expanded 50 basis points to 26.2%.

ETSY Positions Human Creativity Within AI Commerce

Goyal emphasized that Etsy's differentiated inventory and trusted marketplace remain central to its AI strategy. The company is developing conversational shopping assistants while expanding AI-powered discovery and seller tools.

During the Q&A, B. Riley questioned how agentic commerce could influence Etsy's competitive positioning. Goyal emphasized opportunities for on-site personalization and partnerships with external AI discovery platforms.

Canaccord Genuity also questioned stricter AI-generated merchandise policies. Goyal outlined clearer listing requirements and stronger enforcement, while Baker indicated that management does not anticipate a material near-term GMS impact.

Etsy Prioritizes Capital Returns and Operational Discipline

Baker reported adjusted EBITDA of $210.4 million, representing a 30.4% margin. The company benefited from revenue growth and its August restructuring.

ETSY repurchased approximately $394.6 million of shares during the quarter and retained $2.2 billion in authorized repurchase capacity.

Management expects continued accelerated repurchases while gradually rebuilding product and engineering capabilities to support growth.

ETSY Maintains Focus on Marketplace Improvement

Goyal characterized Etsy's progress as evidence that its operating priorities are translating into healthier marketplace fundamentals. She emphasized improving discovery, customer relationships and seller experiences.

Management's focus entering 2027 remains on extending personalization, strengthening differentiation and converting buyer engagement into sustained marketplace growth.

Etsy's Zacks Rank and Style Scores

ETSY currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Value Score of C, Growth Score of D, Momentum Score of B and VGM Score of D reflect comparatively stronger momentum characteristics than growth and combined style attributes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Style Scores complement the earnings-revision-based Zacks Rank, with A and B grades representing more favorable characteristics. Etsy's combination presents a mixed near-term profile. The Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results.