Open the filing on EDGARDear Shareholders, Progress Against Our Growth Priorities targeted offers, to programs like our Etsy Insider beta. We’re also moving towards more intentionally serving 2026: Executing With Focus, Building For Growth Q1 2026 Financial Results Key customer metrics are continuing to move in a healthier direction Q1 2026 Operating Expenses our highest-value buyers. And importantly, we’re expanding ownership of our loyalty initiatives across product, Buyer and seller metrics presented below represent the Etsy marketplace only. Merchandise Spotlight: During the first quarter, we continued to see Etsy win in shopping occasions where our sellers offer differentiated merchandise. Buyers appreciate shopping on our marketplace for meaningful purchases, celebrations, and special occasions.Valentines Day performance accelerated with items centered on ‘love,’ ‘breakups’ and ‘galentines’Easter drove buyer demand for personalization across baskets, tags, and toysBirthdays were the largest and fastest growing gift segment in the quarterWe had strong growth in weddings, with buyers customizing the big and little moments across their wedding journeys, and finding ‘quality for value’ heirloomsOur ML and AI curation efforts enable deeper personalization and fresher recommendations, which is an underpinning of success for these initiatives. Reaffirming our Capital Allocation Strategy Y/Y reflects Q1 2026 vs. Q1 2025, Q/Q reflects Q1 2026 vs Q4 2025. engineering, marketing, and operations - because all of those moments together determine whether a We are presenting operating expenses for continuing operations, which exclude Depop in all periods ¹ TTM GMS per active buyer on the Etsy marketplace. We’ve now delivered two consecutive quarters of year-over-year Etsy marketplace GMS growth, and our Given the pending sale of Depop, Etsy’s results of operations are presented on a continuing operations basis, After more than 15 years at Etsy, I’ve stepped into the Chief Executive Officer role with a strong Last year, we began executing against a focused set of growth priorities designed to improve the customer customer chooses to return. Second Quarter 2026 and Updated Full-Year Outlook for Cautionary Statement Regarding Forward-Looking First Quarter 2026 Financial Summary Etsy, Inc. Etsy, Inc. Condensed Consolidated Statements of Cash Flows Currency-Neutral GMS A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is provided in Reconciliation of Net Income (Loss) to Adjusted EBITDA and the Three Months EndedDecember 31,September 30,June 30,2025Continuing Operations (Etsy Marketplace)Continuing OperationsLess: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Net income (loss)$156,213$104,596$45,638$(1,668)$47,306Excluding:Stock-based compensation expense (income) and related payroll taxes60,50256,52155,382(1,048)56,430Depreciation and amortization expense14,09913,29914,59896613,632Provision for income taxes24,91415,55423,26755222,715Interest and other non-operating (income) expense, net(6,419)(7,680)(4,939)160(5,099)Foreign exchange (gain) loss(49)(548)25,356(348)25,704Acquisition, divestiture, and corporate structure-related expenses (income)8(18)5,9034,0931,810Restructuring and other exit costs (income)1,0911,883(3) - (3)Loss on sale of business - - 5,097 - 5,097Adjusted EBITDA$250,359$183,607$170,299$2,707$167,592Divided by:Revenue$831,454$624,153$629,131$17,589$611,542Adjusted EBITDA margin30.1%29.4%27.1%15.4%27.4% presented, and we are showing Reverb’s Q1 2025 contribution in the bar charts below. To help investors With a singular focus on the $10+ billion GMS Etsy marketplace, we are reaffirming our approach to capital outlook points to growth again this quarter. We are investing deliberately in the areas that matter most, guided while Depop is presented as a discontinued operation for all periods presented. Due to the sale of Reverb on understanding of what makes this marketplace special and where we have more work to do. Etsy has a experience and strengthen the core drivers of marketplace performance: visits, engagement, conversion, and the following tables: understand the key drivers of performance, our discussion of year-over-year leverage (as a percentage of structure and capital allocation, which is designed to support continued investment in our marketplace and Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Calculation of Adjusted EBITDA Margin by early proof points and a sharper operating model. As a result, we are seeing our priorities gain traction, June 2, 2025, continuing operations for Q1 2025 include Reverb and Etsy marketplaces, but Q1 2026 reflects differentiated value proposition that remains deeply resonant with buyers and sellers, but we have not retention. These are to: For Sellers: We’re looking to reduce friction and enable growth - particularly for those who drive the most Continuing Operations Statements (in thousands, except percentages; unaudited) (in thousands; unaudited) We calculate currency-neutral GMS by translating current period GMS for goods sold that were listed in non- revenue) in this section is for the Etsy marketplace only. drive shareholder value. Our capital strategy is based on four enduring priorities: Three Months Ended March 31, 2025Continuing Operations(As Reported)Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Revenue$612,204$25,647$586,557Revenue take rate23.9%11.2%25.2%Marketplace revenue$428,236$21,271$406,965Services revenue$183,968$4,376$179,592Gross profit$444,403$12,235$432,168Marketing expense$171,857$7,476$164,381Product development expense$100,810$5,166$95,644General and administrative expense$73,906$4,916$68,990Operating expenses$448,276$119,261$329,015Net (loss) income$(35,087)$(106,578)$71,491Net (loss) income margin(5.7)%(415.6)%12.2% and we expect continued progress. At the same time, we recognize that progress is not always linear, and it is the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable. consistently translated that strength into our customer experience. Over the past year, we’ve shared what value to the marketplace - by addressing their most acute pain points. Today, much of the listing process Three Months Ended March 31, 20262025Cash flows from operating activitiesNet income (loss)$69,680$(52,096)Net loss from discontinued operations(34,982)(17,009)Net income (loss) from continuing operations104,662(35,087)Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:Stock-based compensation expense52,96356,178Depreciation and amortization expense15,31517,189Provision for expected credit losses1,1362,385Deferred provision (benefit) for income taxes6,705(2,542)Asset impairment charge - 101,703Other non-cash (income) expense, net(2,257)14,746Changes in operating assets and liabilities(75,988)(104,756)Net cash provided by operating activities of continuing operations102,53649,816Net cash used in operating activities of discontinued operations(21,794)(633)Net cash provided by operating activities80,74249,183Cash flows from investing activitiesPurchases of property and equipment(1,484)(3,248)Website and app development(8,378)(8,950)Purchases of investments(84,460)(116,958)Sales and maturities of investments81,003110,192Net cash used in investing activities of continuing operations(13,319)(18,964)Net cash used in investing activities of discontinued operations(3,202)(1,712)Net cash used in investing activities(16,521)(20,676)Cash flows from financing activitiesPayment of tax obligations on vested equity awards(13,974)(8,169)Repurchase of stock(145,223)(189,177)Proceeds from exercise of stock options2,2382,945Payments on finance lease obligations(1,587)(1,514)Other financing, net100(8,867)Net cash used in financing activities(158,446)(204,782)Effect of exchange rate changes on cash(6,626)14,288Net decrease in cash and cash equivalents(100,851)(161,987)Cash, cash equivalents, and restricted cash at beginning of period1,404,360811,178Cash, cash equivalents, and restricted cash at end of period$1,303,509$649,191 U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates. (in thousands, except percentages; unaudited) (in thousands; unaudited) (in thousands, except per share amounts; unaudited) likely to take time to fully translate into sustained, durable growth. That is the nature of meaningful change. The GMS drivers and key customer metrics presented below are for the Etsy marketplace only. needed to change and the priorities we’re pursuing to bridge that gap. •Show up where shoppers discover - on and off Etsy remains manual, requiring detailed inputs to bring products to life. We are using AI to simplify this work - Our key operating and financial metrics for continuing operations (which excludes Depop’s results, as Depop We are executing against our near-term priorities while improving the ways we work, continuously looking for Maintaining financial strength to fully support organic investment in the Etsy marketplacePreserving strategic flexibility to selectively pursue opportunities to strengthen our businessEnsuring we effectively manage our financial commitmentsEnhancing returns for our equity holders - as made possible by our strong free cash flow generation First Quarter 2026 As ofMarch 31,2026As ofDecember 31,2025AssetsCurrent assets:Cash and cash equivalents$1,214,374$1,355,428Short-term investments211,391224,088Accounts receivable, net8,7118,690Prepaid and other current assets98,625113,953Funds receivable and seller accounts185,863205,002Current assets of discontinued operations393,84553,822Total current assets2,112,8091,960,983Restricted cash7,5918,524Property and equipment, net202,426205,552Goodwill37,60038,067Intangible assets, net13,16814,511Deferred tax assets114,612119,051Long-term investments150,591134,376Other assets42,25638,964Noncurrent assets of discontinued operations - 307,226Total assets$2,681,053$2,827,254Liabilities and Stockholders' DeficitCurrent liabilities:Accounts payable$15,444$27,732Accrued expenses260,602342,200Short-term debt, net 649,301649,008Funds payable and amounts due to sellers185,863205,002Deferred revenue30,34727,049Other current liabilities57,14260,354Current liabilities of discontinued operations51,85452,274Total current liabilities1,250,5531,363,619Finance lease obligations - net of current portion91,90293,482Deferred tax liabilities9,7838,808Long-term debt, net2,334,5702,333,230Other liabilities131,117125,103Noncurrent liabilities of discontinued operations - 1,107Total liabilities3,817,9253,925,349Total stockholders’ deficit(1,136,872)(1,098,095)Total liabilities and stockholders’ deficit$2,681,053$2,827,254 This shareholder letter contains or references forward-looking statements within the meaning of the federal •Match shoppers with the right inventory through better machine learning (ML) building on the AI-powered listing tools developed last year, and expanding into more automated workflows - With the anticipated sale of Depop, which has been classified as discontinued operations beginning in the first is presented as discontinued operations) are presented in the table below for all periods presented. As reported and currency-neutral GMS (decline) growth for the periods presented below are as follows: Three Months Ended March 31, 20262025Revenue$631,277$612,204Cost of revenue175,679167,801Gross profit455,598444,403Operating expenses:Marketing174,239171,857Product development99,052100,810General and administrative62,46173,906Asset impairment charge - 101,703Total operating expenses335,752448,276Income (loss) from operations119,846(3,873)Other income (expense), net9,414(10,714)Income (loss) from continuing operations before income taxes129,260(14,587)Provision for income taxes from continuing operations(24,598)(20,500)Net income (loss) from continuing operations104,662(35,087)Discontinued operations: Loss from discontinued operations before income taxes(35,809)(18,732)Benefit for income taxes from discontinued operations8271,723Net loss from discontinued operations(34,982)(17,009)Net income (loss)$69,680$(52,096)Basic net income (loss) from continuing operations per share attributable to common stockholders$1.09$(0.33)Total basic net income (loss) per share attributable to common stockholders$0.72$(0.49)Diluted net income (loss) from continuing operations per share attributable to common stockholders$0.89$(0.33)Total diluted net income (loss) per share attributable to common stockholders$0.60$(0.49)Weighted-average common shares outstanding:Basic96,235107,084Diluted121,029107,084 operational efficiencies, and keeping tight control on expenses. Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense securities laws. Forward-looking statements include statements relating to our financial outlook for the second While we’re closely monitoring the macroeconomic environment - particularly consumer confidence and Q1 2026 Etsy Marketplace GMS Drivers and Key Customer Metrics Etsy’s path back to long-term growth is grounded in a focused plan: expanding how and where buyers •Retain and reward our most valuable customers so sellers can spend less time managing their shops and more time creating and connecting with buyers. quarter of 2026, our outlook pertains to continuing operations only, or the Etsy marketplace. Additionally, Reverb’s financial results until its sale on June 2, 2025 are included in continuing operations for Three Months Ended March 31,20262025As ReportedCurrency-NeutralFX ImpactAs ReportedCurrency-NeutralFX ImpactGMS - Continuing operations (3.9)%(5.7)%1.8%(8.9)%(8.2)%(0.7)%GMS - Etsy marketplace5.5%3.6%1.9%(8.9)%(8.1)%(0.8)% and related payroll taxes; depreciation and amortization expense; provision (benefit) for income taxes; interest quarter and full year of 2026, and the underlying assumptions; the expected timing of the closing of the Depop discretionary spending trends - our primary focus remains on what we can control: accelerating product discover us, connecting them with items that feel personal and relevant, and building relationships that go •Amplify human connection the three months ended March 31, 2025, but not for the three months ended March 31, 2026. To provide We gained leverage in Etsy marketplace Product Development, as modestly higher employee costs were and other non-operating (income) expense, net; foreign exchange (gain) loss; acquisition, divestiture, and transaction; the momentum of our customer-centric priorities; and the future impact of our strategic innovation, evolving how and where we show up for discovery, reinforcing trust through stronger customer beyond transactions. This is how we’re working to turn the uniqueness and scale of our marketplace into a At the same time, we’re investing more intentionally in understanding what enables our most successful Etsy marketplace GMS advances to solid year-over-year growth We currently assume that overall macroeconomic factors remain relatively consistent, currency tailwinds investors with a meaningful basis for comparing our results year-over-year, we have presented Etsy offset by savings in other areas. We also gained leverage in Marketing, reflecting targeted shifts in portfolio corporate structure-related expenses; asset impairment charge; restructuring and other exit costs (income); Shareholder Letter investments. Forward-looking statements include all statements that are not historical facts. In some cases, experiences, and executing with discipline against the priorities outlined in this letter. lasting advantage, in order to drive greater engagement and stronger frequency. These priorities are designed to operate as a system, not as independent initiatives, to drive repeat purchase sellers to grow and how to make that path more accessible to others, which we expect will ultimately lead to a moderate, and prior-year comparisons become less favorable as we move through the year. For the full year, marketplace results for the three months ended March 31, 2025 below. Our calculation of trailing twelve mix, and a continued focus on efficiency and meeting customers where they discover. We increased year- retroactive non-income tax income; and loss on sale of business. The following tables reflect the reconciliation forward-looking statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” behavior over time. Discovery and Matching help buyers discover and connect with the right items, while stronger inventory offering, better buyer experiences, and higher lifetime value across the marketplace. Etsy marketplace GMS was $2.5 billion, up 5.5% year-over-year, representing a 540 basis-points (bps) we now anticipate that GMS growth will be in the low single-digit range, as our outlook for the Etsy months free cash flow includes activity for combined continuing and discontinued operations. See “Non-GAAP over-year investment in paid search, where strong returns supported incremental spend, while reducing of net income (loss) to Adjusted EBITDA as well as the calculation of Adjusted EBITDA margin for continuing “estimate,” “expect,” “goal,” “intend,” “may,” “optimistic,” “outlook,” “plan,” “potential,” “should,” “target,” “will,” What gives me confidence is not just what we’re seeing in our metrics, but what’s driving them. We are We saw encouraging signals during the first quarter that our growth priorities are taking hold. We are Loyalty and Human Connection give them reasons to return. improvement compared to GMS growth in the fourth quarter of 2025. On a currency neutral basis, GMS marketplace has improved relative to the full year commentary provided in mid-February. Our updated full Financial Measures” for a reconciliation of our non-GAAP financial measures (Etsy marketplace financial lower-funnel paid social spend to prioritize incrementality and new and lapsed buyer acquisition. We operations, the Etsy marketplace, and the Reverb marketplace: or similar expressions and derivative forms and/or the negatives of those words. Forward-looking statements grounded in what makes Etsy special, and have a clearer understanding of how our marketplace works at its executing with discipline and measuring progress through observable changes in customer behavior. So, The below image reflects our prior seller listing process and where we are heading with this work. growth was up 3.6% year-over-year. Progress in both product development and marketing are beginning to year view incorporates stronger-than-expected first quarter GMS as well as the progress we are making on metrics, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow) to the most directly comparable Consistent with these priorities, we plan to: continued to shift spend away from linear TV toward more efficient digital channels, and reduced above-the- Three Months Ended March 31,20262025Continuing Operations Continuing Operations (As Reported) Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Net income (loss)$104,662$(35,087)$(106,578)$71,491Excluding:Stock-based compensation expense and related payroll taxes (1)55,53757,6394,08353,556Depreciation and amortization expense15,31517,1894,11213,077Provision (benefit) for income taxes24,59820,500(443)20,943Interest and other non-operating (income) expense, net(6,956)(4,902)220(5,122)Foreign exchange (gain) loss(2,448)15,616(225)15,841Acquisition, divestiture, and corporate structure-related expenses391,263 - 1,263Asset impairment charge - 101,703101,703 - Restructuring and other exit income - (400) - (400)Retroactive non-income tax income(6,036) - - - Adjusted EBITDA$184,711$173,521$2,872$170,649Divided by:Revenue$631,277$612,204$25,647$586,557Adjusted EBITDA margin29.3%28.3%11.2%29.1% involve substantial risks and uncertainties that may cause actual results to differ materially from those that we best. And we are rebuilding it around that system: expanding discovery, connecting buyers with meaningful, following the completion of my first quarter as Etsy’s CEO, I have even more conviction in our focus, and translate into underlying improvements across marketplace fundamentals, and we also benefited from foreign our growth priorities, and we continue to expect year-over-year growth in Etsy GMS in each quarter of 2026. GAAP financial measures. line spend overall. Marketing efficiency was further supported by progress in owned channels, which continue Integrated agentic experiences, off-site and on expect. These risks and uncertainties include but are not limited to: (1) macroeconomic, geopolitical, and differentiated items, and creating relationships that go beyond transactions. Etsy has always stood for confidence in our ability to execute and translate recent momentum into durable growth. exchange tailwinds and softer performance in the prior-year comparable period. Continue to target gross debt levels in the range of 3x current Adjusted EBITDA. We are pleased with to scale. We’ve also fully in-sourced our paid social efforts, increasing control, improving efficiency, and other events outside of our control; (2) the level of demand for our services or products sold in our something different - creativity, human connection, and meaningful commerce. As technology continues to Our key operating and financial metrics are (in thousands, except percentages): Non-GAAP Financial Measures the access we’ve had to the debt markets in the past, and maintaining debt levels in this range should positioning this channel for accelerated growth. General and Administrative expenses also gained leverage on Q2 26 OutlookFY 26 OutlookGMS$2.48B to $2.53B+3-5% Y/Y growth for the Etsy marketplaceWe currently expect Etsy marketplace GMS will grow in the low-single-digit range for the full year.Take Rate ~25.7%Roughly equal to 1H 2026Adjusted EBITDA Margin27-29%28-30%, unchanged from prior outlook marketplaces; (3) the importance to our success of the trustworthiness and safety of our marketplaces and First Quarter 2026 Key Performance Indicators evolve, particularly with the rise of AI, we believe those qualities become more important, not less. Given our focus to make the mobile app our premier shopping experience, it is encouraging to see further continue to benefit our credit profile, and provide ongoing flexibility at attractive borrowing costs. a year-over-year basis as employee costs were stable on a larger revenue base, and we had a one-time Agentic commerce as a driver of incremental traffic to Etsy. Much of the conversation around AI in our ability to attract and retain active and engaged communities of buyers and sellers; (4) any real or Three Months Ended March 31,% (Decline)GrowthY/Y for Continuing Operations% Growth (Decline) Y/Y for the Etsy Marketplace (Non-GAAP) (1)20262025Continuing OperationsContinuing OperationsEtsy Marketplace(Non-GAAP) GMS (2)$2,460,195$2,559,821$2,331,462(3.9)%5.5%Revenue $631,277$612,204$586,5573.1%7.6%Revenue take rate (3)25.7%23.9%25.2%180 bps50 bpsMarketplace revenue $432,773$428,236$406,9651.1%6.3%Services revenue$198,504$183,968$179,5927.9%10.5%Gross profit $455,598$444,403$432,1682.5%5.4%Operating expenses$335,752$448,276$329,015(25.1)%2.0%Net income (loss) $104,662$(35,087)$71,491(398.3)%46.4%Net income (loss) margin16.6%(5.7)%12.2%2,230 bps440 bpsAdjusted EBITDA (Non-GAAP) $184,711$173,521$170,6496.4%8.2%Adjusted EBITDA margin (Non-GAAP) 29.3%28.3%29.1%100 bps20 bps acceleration in its GMS growth, with app share of the total continuing to climb. This is important, as app users Other Key Financial Metrics reversal of non-income tax expense. ecommerce has focused on agentic shopping - and we’re leaning into that opportunity through our perceived inaccuracies in our operational metrics; (5) if we or our third-party providers are unable to protect We thank our employees for their creativity and dedication, our buyers and sellers who continue to build Etsy consistently visit more often, engage more deeply, and convert at higher rates than non-app users on Consistently retain cash on hand to cover the next 18-24 months of debt maturities. We believe this partnerships with OpenAI, Microsoft, and Google. We’re encouraged by the early learnings shared on our last We’re continuing to expand the role of our personalized home feed recommendations. After driving We are pleased that all key performance indicators are in-line with or ahead of the outlook provided for the (in thousands, except percentages; unaudited) against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents; (6) our with us, and you, our shareholders, for your continued trust. Q1 2026 Revenue and Take Rate Performance average. conservative posture has and will continue to insulate against maturity pressures and allow us to be Q1 26 Continuing Operations Operating Expenses earnings call - and data continues to support strong growth in traffic and high-intent engagement from strong gains in engagement last year and into the first quarter, we are now inspiring discovery beyond a quarter, as shown in the table below. More importantly, we are beginning to see early improvements in dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; (7) Mobile app continued to drive GMS share gains, reaching ~47% of total GMS (~240 bps year-over-year expansion).Mobile app GMS growth accelerated to +11.2% year-over-year in the first quarter of 2026 (vs. +6.6% last quarter).Non-app GMS also improved, growing +1.0% year-over-year (vs. -4.8% last quarter). Reconciliation of Net Cash Provided by Operating Activities to Free Cash opportunistic in accessing the market for refinancing. Product DevelopmentMarketingGeneral & Administrative buyers who come to Etsy through agentic search. We see this channel as an important and growing source of shopper’s immediate intent. Early experiments using AI-generated buyer profiles are encouraging, driving customer behavior that reflect progress against our strategy: active buyers grew sequentially for the first time Given the pending sale of Depop, Etsy results are presented on a continuing operations basis, while Depop operational and compliance risks related to our payments systems; (8) the global scope of our business; (9) discovery - particularly for a marketplace like Etsy, which has high brand awareness, but has historically exploration across new shopping missions. in two years, though still down from the prior year, and we delivered year-over-year growth in new buyers, Flow Of our total $631 million first quarter 2026 revenue, Marketplace revenue was $432.8 million, up 1.1% yearresults are reported as discontinued operations across all periods presented. Due to the sale of Reverb on our ability to recruit and deploy that talent effectively; (10) our ability to compete effectively; (11) our ability to Sincerely, Continue to use excess cash above and beyond these constraints to accelerate shareholder returns lacked buyer consideration for the many types of purchase occasions we can serve. These are early active sellers, and GMS per buyer, alongside continued momentum in our mobile app. over-year on a continuing operations basis and 6.3% for the Etsy marketplace, and Services revenue was June 2, 2025, continuing operations includes Reverb and Etsy marketplaces for the three months ended enhance our current offerings and develop new offerings to respond to the changing needs of sellers and through the repurchase of our shares. Over the past 24 months, share repurchases have enabled Etsy to (in thousands; unaudited) partnerships in a space that is evolving rapidly: for example, we recently developed an Etsy App in ChatGPT, More personalized content in our owned email and push channels continues to drive strong $198.5 million, up 7.9% year-over-year on a continuing operations basis and 10.5% for the Etsy marketplace. March 31, 2025, but the three months ended March 31, 2026 reflects the Etsy marketplace only. This makes buyers; (12) risks related to our environmental, social, and governance activities and disclosures; (13) barriers Our outlook assumes currency exchange rates remain unchanged at current spot levels. reduce shares outstanding by approximately 19%, net of new issuances. The pending sale of Depop will allow aligned with Open AI’s shift for agentic shopping to be focused on retailer-run apps. On February 15, we entered an agreement to sell Depop to eBay for $1.2 billion. We have received regulatory clearance for the transaction in the United States and Germany, and reviews are in progress for other markets (including the United Kingdom and Australia). Closing is currently expected by the end of the third quarter of 2026. Given this pending sale, Etsy’s results of operations are presented on a continuing operations basis, while Depop is presented as a discontinued operation for all periods presented. Due to the sale of Reverb on June 2, 2025, continuing operations presented herein includes Reverb and Etsy marketplaces for Q1 2025, but Q1 2026 reflects the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable. To provide investors with a meaningful basis for comparing our go-forward operations, we have included Etsy marketplace standalone year-over-year comparisons for GMS, Revenue, and Net Income below, along with comparisons on a continuing operations basis.Q1 2026 Key Performance Indicators GMS$2.5B+5.5% Y/Y Etsy Marketplace growth-3.9% Y/Y Continuing Operations basisREVENUETAKE RATE$631M+7.6% Y/Y Etsy Marketplace growth+3.1% Y/Y Continuing Operations basis25.7%NET INCOMENET INCOMEADJ. EBITDA$105M+$33 million Y/Y Etsy Marketplace+$140 million Y/Y Continuing Operations basis$185M 29.3% Adj. EBITDA Margin engagement - focusing on relevance over volume, helping deepen direct relationships with buyers. year-over-year continuing operations results not directly comparable. to international trade and our efforts to grow our marketplace globally; (14) acquisitions, dispositions, or us to further accelerate the direct return of capital to shareholders via repurchases. Free cash flow represents our net cash provided by operating activities, reduced by purchases of property First quarter take rate was 25.7%, up 180 bps year-over-year, including an approximate +130 bps impact from strategic partnerships that may prove unsuccessful or divert management attention; (15) our ability to deal With respect to our outlook, a reconciliation of Adjusted EBITDA margin guidance to the closest Kruti Patel Goyal and equipment and website and app development that are included in cash flows from investing activities. We’re also leaning into agentic commerce on Etsy - and have begun testing conversational AI the Reverb divestiture. Etsy marketplace take rate expansion was led by Etsy Ads, where we continued to To provide investors with a meaningful basis for comparing our ongoing operating results year-over-year, we effectively with fraud or other illegal activity increasingly amplified by advances in AI; and (16) litigation and We are also seeing solid performance from our marketing efforts, as we continue to evolve our portfolio mix to corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to Chief Executive Officer The following table reflects the reconciliation of operating activities to free cash flow for combined continuing functionality. We’ve built two ‘agents’ (as shown below) - one for buyers, whose initial focus is to help them As we move through the year, we’re investing where benefit from machine learning-driven improvements to relevance and seller budget pacing. Offsite Ads and have presented certain Etsy marketplace financial measures for the three months ended March 31, 2025 in evolving global legal and regulatory requirements, including privacy and data protection laws, tax laws, meet shoppers where they discover, and scale the impact of our owned and organic channels. In the first the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA; April 29, 2026 and discontinued operations on a trailing twelve month basis (in thousands): find a great gift, and one for sellers, which brings together insights from across the platform - intended to we see the greatest opportunity to drive change - Etsy Payments also contributed to take rate expansion, with Offsite Ads benefiting from a shift in paid this Shareholder Letter. These measures include the following non-GAAP financial measures for the three product liability laws, laws regulating speech and platform moderation, antitrust laws, and intellectual property quarter, we leaned into paid search, where we saw strong returns and benefited from continued structural in particular, stock-based compensation expense and related payroll taxes, foreign exchange (gain) loss, help them make better decisions, access the right resources, and reduce operational friction. particularly in Discovery - evolving our marketing marketing activity toward higher-monetizing channels, and Etsy Payments continuing to see tailwinds from months ended March 31, 2025 where we exclude the impact of Reverb: (1) Revenue and Revenue take rate, and counterfeiting regulations. These and other risks and uncertainties are more fully described in our filings improvements in product listing ad (PLA) segmentation, data feeds, and reach. We also benefited from search interest and other non-operating income, net, provision for income taxes, acquisition, divestiture, and As of March 31,20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities$724,973$732,619Purchases of property and equipment(13,677)(15,199)Website and app development(40,141)(32,496)Free cash flow$671,155$684,924 to engage shoppers earlier in their journey and expansion efforts implemented in 2025. (2) Marketplace revenue, (3) Services revenue, (4) Gross profit, (5) Marketing expense, (6) Product with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Annual engine optimization (SEO) improvements, which strengthened search visibility and ranking. corporate structure-related expenses, and other non-recurring expenses. in more inspirational contexts. This includes development expense, (7) General and administrative expense, (8) Operating expenses, (9) Net (loss) Report on Form 10-K for the year ended December 31, 2025, and subsequent reports that we file with the curated, occasion-based experiences, such as income and Net (loss) income margin, and (10) Adjusted EBITDA and Adjusted EBITDA margin. Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing Additional drivers of Q1 2026 GMS include: recent activations around cultural moments, that environment. New risks emerge from time to time. It is not possible for our management to predict all risks, •GMS growth was driven by higher spend per buyer, with active buyers returning to modest sequential Discovery and Matching are positively contributing to our performance Webcast and Conference Call Information (1)% growth (decline) Y/Y for the Etsy marketplace is the change in continuing operations for the three months ended March 31, 2026, showcase Etsy’s differentiated, design-led inventory Management believes that presenting these Etsy marketplace non-GAAP financial measures is useful to nor can we assess the impact of all factors on our business or the extent to which any factor, or combination growth, as detailed below, though still below prior-year levels. which represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the three months For both Buyers and Sellers: In order to better support and build trust with both our buyers and sellers, and help expand when and how buyers consider investors because they: of factors, may cause actual results to differ materially from those contained in any forward-looking ended March 31, 2025, as Reverb was sold in the second quarter of 2025. •GMS per active buyer increased year-over-year for the first time since late-2022, reaching $122 on a (1)Stock-based compensation expense included in continuing operations in the Condensed Consolidated Statements of Operations for Today, we’re seeing our systematic approach come to life most clearly in the areas of Discovery and we’re making targeted improvements to the Etsy Purchase Protection program designed to make it more Etsy. (2)Excluded from the table above is GMS for Depop, which was $348.9 million and $233.5 million for the three months ended March Etsy will host a webcast conference call to discuss these results at 8:30 a.m. Eastern Time today, which will the periods presented below is as follows: statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee future trailing twelve month basis and marking a fourth consecutive quarter of sequential improvement. Matching, where coordinated investments are already driving meaningful impact across the customer 31, 2026 and 2025, respectively. effective and valued by our customers. Separately, we’re strengthening our customer support experience - be live-streamed via our Investor Relations website under the Events section. •provide a clearer, normalized baseline to evaluate the organic growth, financial performance, and results, levels of activity, performance, achievements, or events and circumstances reflected in the forward- Purchase frequency remained modestly lower than prior-year levels, while average order value Three Months Ended March 31, 20262025Cost of revenue$5,832$6,886Marketing3,77264Product development27,53831,986General and administrative15,82117,242Stock-based compensation expense$52,963$56,178 (3)Revenue take rate is revenue divided by GMS. experience and in our financial results. At its core, Etsy’s growth will depend on helping buyers discover items testing more targeted support and issue resolution for our top buyers and sellers. underlying trends of our remaining Etsy marketplace business; looking statements will occur. Forward-looking statements represent our beliefs and assumptions only as of increased year-over-year. In the bar chart graphic above, Q1 2026 continuing operations results reflect the Etsy marketplace only, while Q1 2025 results include that feel personal, relevant, and worth coming back for. A replay of the webcast will be available through the same link following the conference call starting at 12:00 the date of this shareholder letter. We disclaim any obligation to update forward-looking statements. ◦Several factors - some of which we expect to be temporary - contributed to higher AOV, both Etsy and Reverb. As of March 31,% Decline Y/Y20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities - trailing twelve months$724,973$732,619(1.0)%Free cash flow - trailing twelve months (Non-GAAP)$671,155$684,924(2.0)% •facilitate more direct year-over-year comparisons of our continuing operations by removing the impact Amplifying Human Connection. Buyers come to Etsy not only for what they buy, but for who they buy it [Left: Tanner Fletcher x Etsy collaboration for New Quarterly 2025 Continuing Operations Net Income (Loss) and Etsy p.m. Eastern Time today, for at least three months thereafter. including foreign exchange tailwinds, the expiration of the de minimis tariff exemption, and of the divested Reverb marketplace; and Our app is central to this transformation. It is where our investments in personalization, machine learning, from. This connection is among our most defensible sources of differentiation - and one we have not yet fully York Bridal Fashion Week. Right: PinkPantheress x subsequent seller listing-price increases. We anticipate that these benefits, and the resulting Balance Sheet Update Marketplace Adjusted EBITDA and direct buyer relationships come together most effectively. We’re seeing that translate into performance, delivered on. Over the past several months, we have taken a more structured approach to understanding how •align with how management evaluates the performance of the business, allocates resources, and sets Etsy collaboration for Coachella.] impact to AOV, will moderate as the year progresses. with app GMS growth continuing to outpace non-app GMS growth, and now representing ~47% of total GMS. signals of seller identity - including craftsmanship, process visibility, and maker stories - influence buyer internal operational targets moving forward. (in thousands, except percentages; unaudited) ◦Product improvements have also benefited AOV, including changes to our search and As of March 31, 2026, Etsy held $1.6 billion in cash, cash equivalents and short- and long-term investments. That gives us both validation and a clear path forward: as we continue improving personalization, optimizing behavior. We’re seeing from early tests that when these signals are more visible, buyers engage more deeply discovery algorithms that better surface higher-quality, more differentiated inventory, as Net cash provided by operating activities of continuing operations for the three months ended March 31, 2026 owned marketing, and growing adoption, we see meaningful opportunity to further increase app share and and make decisions with greater confidence. Now we’ll begin to integrate these elements into core shopping Three Months EndedDecember 31, 2025September 30, 2025June 30, 2025March 31, 2025Net income (loss) from continuing operations $156,213$104,596$45,638$(35,087)Net income (loss) margin from continuing operations 18.8%16.8%7.3%(5.7)%Adjusted EBITDA - Etsy Marketplace (Non-GAAP) $250,359$183,607$167,592$170,649Adjusted EBITDA margin - Etsy Marketplace (Non-GAAP)30.1%29.4%27.4%29.1% described above. Digging Deeper to Build Loyalty and Strengthen Human Connection was $102.5 million. We converted 50% of our Adjusted EBITDA to free cash flow during the quarter, more drive frequency over time. surfaces, strengthening trust, differentiation, and the overall experience.
- Both U.S. and non-U.S. buyer GMS grew year-over-year, with non-U.S. buyer GMS growth positive than twice the rate of conversion realized in the year-ago quarter. on a constant currency basis for the first time since 2023. Retaining and Rewarding Our Most Valuable Customers. Our highest-value buyers and sellers drive a We are making meaningful progress improving how we match buyers with the right inventory. During the first quarter, Etsy repurchased an aggregate of approximately $145 million in stock, which reduced disproportionate share of marketplace performance, making them a critical focus for driving growth. We are Historically, our search systems have often prioritized what was most likely to convert in the moment - Etsy Marketplace year-over-year revenue, net income growth, Adj. EBITDA and Adj. EBITDA Margin are non-GAAP financial measures. Reconciliation of While we are carefully watching global macroeconomic trends for any potential softening in consumer the outstanding share count by approximately 2.7 million shares. As of March 31, 2026, we have $827.9 prioritizing activities that enable us to test, learn and build conviction around the most effective ways to favoring popular items over those most relevant to an individual buyer. We are shifting toward a more non-GAAP financial measures to the most comparable GAAP measures can be found in “Non-GAAP Financial Measures” below. Speeding time-to-market. These are early examples of how we believe ML and AI will make our marketplace discretionary spending, as of the publication of this letter, we have seen relatively stable trends. Further, our million remaining on our current Board-authorized share repurchase programs. deepen engagement for these customers. Here are some examples: personalized, relevance-driven approach with ML models that learn from both past behavior and real-time meaningfully better for our customers at every touchpoint. Just as importantly, we’re now able to build and first quarter 2026 GMS growth was broad-based across all income cohorts, with the strongest performance intent. In early tests, these improvements are driving increases in add-to-cart rates and conversion. Examples iterate on these experiences in weeks rather than months by leveraging advances in modeling capabilities - Laura Garcia, ‘artandpeople’ shop on Etsy continuing to come from the highest household income segment. Images presented above are for illustrative purposes only and may depict work in progress. For Buyers: We’re learning that long term loyalty isn't built through a single program or initiative - but across are shown below. allowing us to move faster and learn more quickly, and ultimately contribute to our growth. 13 14 15 16 17 18 19 20 21 22 every interaction. So our approach spans the full experience - from more personalized recommendations, to 2 3 4 5 6 7 8 9 10 11 12