Open the filing on EDGARDear Shareholders, Growth priorities are working together to create a healthier Creativity reflects imagination, originality, or personal expression from a seller, a buyer, or both.Craftsmanship means made with skill or care, and an experience that helps buyers see and appreciate the craft.Connection means buyers can feel the presence of a real person behind the item or the experience. We are deeply grateful to our departing colleagues for their service, dedication, and contributions, and we are Q2 2026 Financial Results Mobile app GMS growth accelerated to +12.5% year-over-year (vs. +11.2% last quarter).App engagement strengthened in Q2, with visits per MAU and orders per visit both increasing year-over-year.Mobile app drove ~47% of total GMS, increasing ~210 bps year-over-year, approximately flat sequentially. Occasion-led Growth Across Categories: Etsy continues to highlight shopping occasions where our sellers offer differentiated merchandise. We believe this focus contributed to Etsy’s outperformance versus pure-play peers in all our top GMS categories.* Some examples of merchandise trends which drove quarterly GMS appear below. Solid year-over-year growth in important seasonal occasions including Mothers Day, Fathers Day, and graduation giftingEvergreen occasions continued to perform well. Birthdays and weddings both showed double digit growth on a year-over-year basisYear-over-year growth surged in Toys and games and cultural trends - such as Mahjong and custom card games Vintage reached its strongest recent pace of growth in 1H26 as buyers increasingly turned to Etsy for distinctive, hard-to-find vintage items across collectible watches, furniture, and home decorOur ML and AI curation efforts aim to enable deeper personalization and fresher recommendations, which is an underpinning of success for these initiatives. Q2 2026 Operating Expenses Strong Cash Flow Generation enables Increased Share Buybacks; New Board Evolving approaches to support Buyer and Seller Loyalty committed to supporting them through this transition with care and respect. We know these decisions have a
Authorization for $2 billion in Repurchases
marketplace real impact on people's lives, and we didn't make them lightly. They reflect our conviction that focusing our We are presenting operating expenses for continuing operations, which exclude Depop in all periods Given the sale of Depop, which was pending as of June 30, 2026, Etsy’s results of operations are presented In addition to contributing to some of the encouraging visits investments and our team is the best way to build a stronger Etsy. Third Quarter 2026 and Updated Full-Year Outlook for Cautionary Statement Regarding Forward-Looking Second Quarter 2026 Financial Summary (1)% growth Y/Y for the Etsy marketplace is the change in continuing operations for the three and six months ended June 30, 2026, Etsy, Inc. Etsy, Inc. Condensed Consolidated Statements of Cash Flows Currency-Neutral GMS Non-GAAP Financial Measures Reconciliation of Net Income (Loss) to Adjusted EBITDA and the Six Months Ended June 30,20262025Continuing Operations Continuing Operations (As Reported) Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Net income (loss)$219,001$10,551$(108,246)$118,797Excluding:Stock-based compensation expense and related payroll taxes (1)110,362113,0213,035109,986Depreciation and amortization expense30,54431,7875,07826,709Provision for income taxes45,23043,76710943,658Interest and other non-operating (income) expense, net(12,841)(9,841)380(10,221)Foreign exchange (gain) loss(6,266)40,972(573)41,545Acquisition, divestiture, and corporate structure-related expenses757,1664,0933,073Asset impairment charge - 101,703101,703 - Loss on sale of business - 5,097 - 5,097Restructuring and other exit income - (403) - (403)Retroactive non-income tax income(6,036) - - - Adjusted EBITDA$380,069$343,820$5,579$338,241Divided by:Revenue$1,299,590$1,241,335$43,236$1,198,099Adjusted EBITDA margin29.2%27.7%12.9%28.2% Reconciliation of Net Cash Provided by Operating Activities to Free Cash presented, and we are showing Reverb’s Q2 2025 contribution in the bar charts below. To help investors A healthy marketplace requires buyers and sellers to thrive, and we’re As of June 30, 2026, Etsy held $1.3 billion in cash, cash equivalents and short- and long-term investments. From day one as CEO, I've been clear about three things: our differentiation as a human-centered marketplace on a continuing operations basis, while Depop is presented as a discontinued operation for all periods which represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the three and six metrics shared below, the ‘Shop Other Jeffs’ campaign understand the key drivers of performance, our discussion of year-over-year leverage (as a percentage of continuing to make progress on both fronts. Net cash provided by operating activities of continuing operations for the six months ended June 30, 2026 is our greatest strength; we have a massive market opportunity ahead of us; and realizing that opportunity months ended June 30, 2025, as Reverb was sold in the second quarter of 2025. Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Calculation of Adjusted EBITDA Margin Flow presented. Due to the sale of Reverb on June 2, 2025, continuing operations for Q2 2025 include the Reverb also generated significant media coverage and organic One of my responsibilities is to make decisions not only for the Etsy we are today, but also for the Etsy we want 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- Other Key Financial Metrics revenue) in this section is for the Etsy marketplace only. was $268.4 million. On a continuing operations basis, we converted 81% of our Adjusted EBITDA to free (2)Excluded from the tables above is gross merchandise sales (“GMS”) for Depop, which was $455.7 million and $249.6 million for the requires clear strategic focus and disciplined execution. and Etsy marketplaces, but Q2 2026 reflects the Etsy marketplace only. This makes year-over-year continuing celebrity endorsements, extending its reach well beyond to become. That means paying close attention to how the world around us is changing. Buyers are discovering Six Months Ended June 30, 20262025Cash flows from operating activitiesNet income (loss)$23,030$(23,256)Net loss from discontinued operations(195,971)(33,807)Net income from continuing operations219,00110,551Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:Stock-based compensation expense104,147109,099Depreciation and amortization expense30,54431,787Provision for expected credit losses2,6504,908Deferred provision (benefit) for income taxes18,447(1,018)Asset impairment charge - 101,703Other non-cash (income) expense, net(8,604)33,184Changes in operating assets and liabilities (net of impact of sale of business)(97,744)(121,402)Net cash provided by operating activities of continuing operations268,441168,812Net cash used in operating activities of discontinued operations(147,144)(11,492)Net cash provided by operating activities121,297157,320Cash flows from investing activitiesPurchases of property and equipment(2,718)(10,101)Website and app development(14,915)(18,318)Purchases of investments(179,142)(197,570)Sales and maturities of investments156,256184,207Proceeds from sale of business, net of cash sold - 100,485Net cash (used in) provided by investing activities of continuing operations(40,519)58,703Net cash used in investing activities of discontinued operations(6,529)(3,157)Net cash (used in) provided by investing activities(47,048)55,546Cash flows from financing activitiesPayment of tax obligations on vested equity awards(40,687)(28,959)Repurchase of stock(394,925)(523,852)Proceeds from exercise of stock options10,2495,654Proceeds from issuance of convertible senior notes - 700,000Payment of debt issuance costs - (10,500)Payments on finance lease obligations(3,192)(3,045)Other financing, net(753)(17,226)Net cash (used in) provided by financing activities(429,308)122,072Effect of exchange rate changes on cash(10,063)37,241Net (decrease) increase in cash and cash equivalents(365,122)372,179Cash, cash equivalents, and restricted cash at beginning of period1,404,360811,178Cash, cash equivalents, and restricted cash at end of period$1,039,238$1,183,357 U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates. three months ended June 30, 2026 and 2025, respectively, and $804.6 million and $483.1 million for the six months ended June 30, (in thousands, except percentages; unaudited) (in thousands; unaudited) For buyers, we are developing initiatives meant to drive overall frequency, cash flow during the quarter, approximately one third higher than the rate of conversion realized in the year- (in thousands; unaudited) (in thousands, except per share amounts; unaudited) (in thousands, except percentages; unaudited) Buyer and seller metrics continued to strengthen, with healthier trends on both sides of the operations results not directly comparable. The GMS drivers and key customer metrics presented below are paid channels. products in new ways. Sellers have access to increasingly powerful tools to build their businesses. And the Our key operating and financial metrics for continuing operations (which excludes Depop’s results, as Depop 2026 and 2025, respectively. We remained disciplined on operating expenses in the second quarter, while investing behind the areas particularly with our top buyers - those who are mid-to-high frequency and ago quarter. Second Quarter 2026 The results we are reporting today reinforce our conviction that this focus is translating into stronger As ofJune 30,2026As ofDecember 31,2025AssetsCurrent assets:Cash and cash equivalents$901,281$1,355,428Short-term investments221,007224,088Accounts receivable, net8,6648,690Prepaid and other current assets100,063113,953Funds receivable and seller accounts193,840205,002Current assets of discontinued operations450,41953,822Total current assets1,875,2741,960,983Restricted cash7,6558,524Property and equipment, net200,272205,552Goodwill37,40838,067Intangible assets, net12,01314,511Deferred tax assets104,115119,051Long-term investments160,665134,376Other assets41,76538,964Noncurrent assets of discontinued operations - 307,226Total assets$2,439,167$2,827,254Liabilities and Stockholders' DeficitCurrent liabilities:Accounts payable$20,449$27,732Accrued expenses247,805342,200Short-term debt, net 649,594649,008Funds payable and amounts due to sellers193,840205,002Deferred revenue32,47827,049Other current liabilities49,94060,354Current liabilities of discontinued operations76,20552,274Total current liabilities1,270,3111,363,619Finance lease obligations - net of current portion90,30293,482Deferred tax liabilities11,0318,808Long-term debt, net2,335,9112,333,230Other liabilities126,690125,103Noncurrent liabilities of discontinued operations - 1,107Total liabilities3,834,2453,925,349Total stockholders’ deficit(1,395,078)(1,098,095)Total liabilities and stockholders’ deficit$2,439,167$2,827,254 Three Months Ended June 30,Six Months Ended June 30, 2026202520262025Revenue$668,313$629,131$1,299,590$1,241,335Cost of revenue184,268168,623359,947336,424Gross profit484,045460,508939,643904,911Operating expenses:Marketing190,928191,053365,167362,910Product development100,92199,326199,973200,136General and administrative66,92876,029129,389149,935Asset impairment charge - - - 101,703Total operating expenses358,777366,408694,529814,684Income from operations125,26894,100245,11490,227Other income (expense), net9,703(25,195)19,117(35,909)Income from continuing operations before income taxes134,97168,905264,23154,318Provision for income taxes from continuing operations(20,632)(23,267)(45,230)(43,767)Net income from continuing operations114,33945,638219,00110,551Discontinued operations: Loss from discontinued operations before income taxes(160,769)(17,759)(196,578)(36,491)(Provision) benefit for income taxes from discontinued operations(220)9616072,684Net loss from discontinued operations(160,989)(16,798)(195,971)(33,807)Net (loss) income$(46,650)$28,840$23,030$(23,256)Basic net income from continuing operations per share attributable to common stockholders$1.21$0.44$2.29$0.10Total basic net (loss) income per share attributable to common stockholders$(0.49)$0.28$0.24$(0.22)Diluted net income from continuing operations per share attributable to common stockholders$0.98$0.39$1.87$0.10Total diluted net (loss) income per share attributable to common stockholders$(0.36)$0.25$0.25$(0.22)Weighted-average common shares outstanding:Basic94,358103,21295,618105,246Diluted119,961121,514120,908107,393 This shareholder letter contains or references forward-looking statements within the meaning of the federal marketplace for the Etsy marketplace only. (3)Revenue take rate is revenue divided by GMS. expectations they have of Etsy continue to rise. By investing in the capabilities that matter most for the future of With the sale of Depop, which has been classified as discontinued operations beginning in the first quarter of is presented as discontinued operations) are presented in the table below. Due to the sale of Reverb on June As reported and currency-neutral GMS growth (decline) for the periods presented below are as follows: where we are seeing the clearest evidence of return. As Etsy marketplace GMS growth improved, the Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense comprise a meaningful part of our GMS - but who may drift down in marketplace fundamentals and accelerating growth. We are encouraged by our progress, and increasingly Given that the sale of Depop was pending as of June 30, 2026, Etsy results are presented on a continuing securities laws. Forward-looking statements include statements relating to our financial outlook for the third In another tangible example of our commitment to the marketplace, we believe Etsy will be better positioned to innovate more quickly, and ultimately deliver more 2026, our outlook pertains to continuing operations only, or the Etsy marketplace. 2, 2025, continuing operations for the three and six months ended June 30, 2025 includes Etsy marketplace 20262025As ReportedCurrency-NeutralFX ImpactAs ReportedCurrency-NeutralFX ImpactThree months ended June 30,GMS - Continuing operations 1.0%0.8%0.2%(7.5)%(8.5)%1.0%GMS - Etsy marketplace7.5%7.2%0.3%(5.4)%(6.3)%0.9%Six months ended June 30,GMS - Continuing operations(1.4)%(2.4)%1.0%(8.2)%(8.3)%0.1%GMS - Etsy marketplace6.5%5.4%1.1%(7.1)%(7.2)%0.1% leverage in our model was evident: nearly half of incremental revenue flowed through to Adjusted EBITDA in (income) and related payroll taxes; depreciation and amortization expense; provision for income taxes; frequency over time. These include: Free cash flow represents our net cash provided by operating activities, reduced by purchases of property Etsy repurchased approximately 3.9 million shares of its stock in the second quarter at an aggregate cost of confident in our ability to create long-term shareholder value, reflected in our improved outlook for 2026 and As of June 30,% Decline Y/Y20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities - trailing twelve months$657,391$689,695(4.7)%Free cash flow - trailing twelve months (Non-GAAP)$610,141$634,622(3.9)% operations basis, while Depop results are reported as discontinued operations across all periods presented. quarter and full year of 2026, and the underlying assumptions; the growth potential of our business; our ability Buyer and seller metrics presented below represent the Etsy marketplace only. Q2 2026 Etsy Marketplace GMS Drivers and Key Customer Metrics creativity, craftsmanship, and connection, Etsy value for our customers, community, and shareholders. and Reverb marketplace through the date of sale, but the three and six months ended June 30, 2026 reflects the quarter, creating room to fund our top priorities while sustaining healthy profitability. interest and other non-operating (income) expense, net; foreign exchange (gain) loss; acquisition, divestiture,
- Growing direct relationships with our most active buyers by and equipment and website and app development that are included in cash flows from investing activities. $250 million, stepping up from recent quarters in reflection of Etsy’s strong liquidity and growing confidence in Y/Y reflects Q2 2026 vs. Q2 2025, Q/Q reflects Q2 2026 vs. Q1 2026. new $2 billion share repurchase authorization. Due to the sale of Reverb on June 2, 2025, continuing operations for the three and six months ended June to drive long-term loyalty and fully capitalize on Etsy’s value proposition; our ability to deliver value for our recently launched the Craft Catalyst Initiative, a new We currently assume that overall macroeconomic factors remain relatively consistent, and that currency the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable. and corporate structure-related expenses; asset impairment charge; loss on sale of business; restructuring optimizing how and when we communicate with them, delivering our strategic execution. As of June 30, 2026, we had $578.2 million remaining on our current Board- 30, 2025 includes Etsy marketplace and Reverb marketplace through the date of sale, but the three and six Shareholder Letter buyers and sellers and create long-term value for our shareholders; the momentum of our customer-centric impact strategy and philanthropic endeavor in Sincerely, Etsy marketplace GMS achieved year-over-year growth for the third consecutive quarter, reflecting tailwinds and prior-year comparisons become less favorable as we move through the year. To provide investors with a meaningful basis for comparing our results year-over-year, we have presented Marketing was the clearest example of this approach in the second quarter. We increased investment where and other exit income; and retroactive non-income tax income. The following tables reflect the reconciliation of more timely, relevant and valuable experiences across the app and The following table reflects the reconciliation of operating activities to free cash flow for combined continuing authorized share repurchase program. On August 3, our Audit Committee, acting pursuant to a delegation of Just as importantly, we continue to see significant opportunity to further strengthen relationships with our buyers months ended June 30, 2026 reflects the Etsy marketplace only. This makes year-over-year continuing priorities, and our ability to build on our momentum and support the next phase of Etsy's evolution into 2027 partnership with the national nonprofit Center for continued improvement across marketplace fundamentals Etsy marketplace results for the three and six months ended June 30, 2025 below. Our calculation of trailing returns supported it, scaled back where they did not, and continued to drive efficiency across the portfolio, net income (loss) to Adjusted EBITDA as well as the calculation of Adjusted EBITDA margin for continuing offsite channels; and discontinued operations on a trailing twelve month basis (in thousands): authority from our Board, authorized a new $2 billion share repurchase program. As previously outlined, the and sellers to drive long-term marketplace value. In this letter, I’ll share how our strategic priorities are improving operations results not directly comparable. and beyond; statements concerning our Restructuring Plan, including the objectives, the amount of the Craft. Through this initiative, Etsy is investing $10 twelve months free cash flow includes activity for combined continuing and discontinued operations. See gaining leverage year-on-year as a percentage of revenue. Here are some highlights: Q3 26 OutlookFY 26 OutlookGMS$2.53B to $2.58B+4-6% Y/Y growth for the Etsy marketplaceWe currently expect GMS will grow in the mid-single-digit range for the full year, an increase from prior outlookTake Rate ~26%Roughly equal to 1H 26Adjusted EBITDA Margin28-30%29-30%, up from prior outlook of 28-30% operations, the Etsy marketplace, and the Reverb marketplace:
- Testing new ideas to reinforce buyer loyalty, such as bespoke and ‘high touch’ premium support for sale of Depop, which brings approximately $1.4 billion in cash into Etsy in the third quarter, enables us to performance today, as well as how we’ll evolve our organization to lay the foundation for Etsy’s next stage of related charges and cash and non-cash expenditures, the anticipated timeline of such costs, charges, million into American craft communities to support the In the second quarter, Etsy marketplace GMS was $2.6 billion, growing 7.5% year-over-year, or 7.2% on a “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial measures (Etsy marketplace our best buyers, and proactive outreach when we observe a potential delivery issue before we are As of June 30,20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities$657,391$689,695Purchases of property and equipment(8,111)(18,412)Website and app development(39,139)(36,661)Free cash flow$610,141$634,622 further accelerate our stock buyback program. growth. To provide investors with a meaningful basis for comparing our ongoing operating results year-over-year, we implementation, and the expected benefits, if any; our ability to attract, deepen, and elevate talent in areas people and organizations that make these creative currency-neutral basis. Excluding foreign exchange, GMS growth accelerated by approximately 360 basis financial metrics, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow) to the most directly •Product listing ad (“PLA”) spend remained relatively stable as a percentage of revenue while Three Months Ended June 30,20262025Continuing Operations Continuing Operations (As Reported) Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Net income (loss)$114,339$45,638$(1,668)$47,306Excluding:Stock-based compensation expense (income) and related payroll taxes (1)54,82555,382(1,048)56,430Depreciation and amortization expense15,22914,59896613,632Provision for income taxes20,63223,26755222,715Interest and other non-operating (income) expense, net(5,885)(4,939)160(5,099)Foreign exchange (gain) loss(3,818)25,356(348)25,704Acquisition, divestiture, and corporate structure-related expenses365,9034,0931,810Loss on sale of business - 5,097 - 5,097Restructuring and other exit income - (3) - (3)Adjusted EBITDA$195,358$170,299$2,707$167,592Divided by:Revenue$668,313$629,131$17,589$611,542Adjusted EBITDA margin29.2%27.1%15.4%27.4% contacted; and Kruti Patel Goyal have presented certain Etsy marketplace financial measures for the three and six months ended June 30, consistent with our growth priorities; our AI-related initiatives and the impact thereof; the expected impact of ecosystems possible, helping ensure artisans have points from the first quarter, marking the fifth consecutive quarter of sequential improvement. Both U.S. and comparable GAAP financial measures. supporting GMS growth, aided by enhanced segmentation techniques to direct more spend toward
- Exploring several unpaid loyalty tactics - such as rewards and ‘stamps’ - to supplement the testing Chief Executive Officer Second Quarter 2026 Key Performance Indicators 2025 in this Shareholder Letter. These measures include the following non-GAAP financial measures for the the Depop sale; and the future impact of our strategic investments. Forward-looking statements include all the resources to grow, connect, and keep craft non-U.S. buyer GMS grew year-over-year, with U.S. growth improving sequentially and showing broad-based Importantly, we've learned that when buyers feel a connection to a maker, they often want to continue that higher-performing, higher-quality listings. we are continuing to do on ‘Etsy Insider.’ We are specifically evaluating how these types of programs August 5, 2026 Restructuring Plan three and six months ended June 30, 2025 where we exclude the impact of Reverb: (1) Revenue and statements that are not historical facts. In some cases, forward-looking statements can be identified by terms thriving for generations to come. strength across all household income levels. While Etsy continued to capitalize on some external factors that Our key operating and financial metrics are (in thousands, except percentages): relationship. Today, Etsy doesn't provide a clear way to do that. We see an opportunity to strengthen human •In paid social, we refined our platform mix to scale in areas of strength, such as TikTok. can be used as levers to build emotional connection to one of our key brand-defining characteristics - Revenue take rate, (2) Marketplace revenue, (3) Services revenue, (4) Gross profit, (5) Marketing expense, such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” “expect,” “goal,” “intend,” “may,” “outlook,” support GMS growth, our product and marketing strategies are delivering meaningful benefits that are connection before a purchase - building confidence and helping buyers discover the right item - and then carry •In brand marketing, we continued to target a younger demographic, shifting away from linear TV and buyers’ desire to support small business through their Etsy purchases. We are encouraged that all key performance indicators continue to show improving momentum. Second quarter As referenced above in our CEO Letter, today we announced a restructuring to reduce the size of our (6) Product development expense, (7) General and administrative expense, (8) Operating expenses, (9) Net “plan,” “potential,” “should,” “will,” or similar expressions and derivative forms and/or the negatives of those Three Months Ended June 30,% Growth (Decline)Y/Y for Continuing Operations% Growth Y/Y for the Etsy Marketplace (Non-GAAP) (1)20262025Continuing OperationsContinuing OperationsEtsy Marketplace(Non-GAAP) GMS (2)$2,582,892$2,556,644$2,403,6551.0%7.5%Revenue $668,313$629,131$611,5426.2%9.3%Revenue take rate (3)25.9%24.6%25.4%130 bps50 bpsMarketplace revenue $456,074$435,026$420,7174.8%8.4%Services revenue$212,239$194,105$190,8259.3%11.2%Gross profit $484,045$460,508$450,9465.1%7.3%Operating expenses$358,777$366,408$355,542(2.1)%0.9%Net income$114,339$45,638$47,306150.5%141.7%Net income margin17.1%7.3%7.7%980 bps940 bpsAdjusted EBITDA (Non-GAAP) $195,358$170,299$167,59214.7%16.6%Adjusted EBITDA margin (Non-GAAP) 29.2%27.1%27.4%210 bps180 bps Discovery and Matching Drive Better Buyer Understanding and Engagement reflected in improving buyer trends and stronger marketplace health. that connection beyond the transaction to encourage repeat visits, deepen affinity for the marketplace, and focusing on over-the top (“OTT”), social video, and partnerships. GMS and revenue growth accelerated on a sequential basis, and we delivered healthy flow-through of revenue workforce by roughly 220 employees or approximately 12% (the “Restructuring Plan”). Following the income (loss) and Net income (loss) margin, and (10) Adjusted EBITDA and Adjusted EBITDA margin. words. Forward-looking statements involve substantial risks and uncertainties that may cause actual results to *Consumer Edge data versus U.S. pure-play e-commerce peers across top categories, as listed in our 2025 10-K filing. Moving to other Discovery investments, we continue to test how and where conversational ‘agentic’ further amplify what makes Etsy different. We're also learning more about how to make human connection •Lastly, owned push and email channels continued to drive strong GMS growth, efficiently re-engaging On the seller side, we are investing in the sellers who best represent what makes Etsy unique. We are growth to adjusted EBITDA, again demonstrating the strength of our business model. Etsy marketplace GMS Restructuring Plan, headcount is expected to be approximately 1,600 people. We expect to incur an Our outlook assumes currency exchange rates remain unchanged at current spot levels. differ materially from those that we expect. These risks and uncertainties include but are not limited to: (1) the One useful way to understand our performance is by looking at three main levers of growth that drive Etsy shopping fits as a durable, distinctly Etsy experience. In May, we launched the beta version of our new ‘Gifting Along our journey to move from a buyer’s past purchases or interests and ‘in the moment’ conversion-focused tangible in the shopping experience - such as by improving the conversation interfaces between buyers and buyers through more personalized touchpoints. kicking off work to evolve our ‘Star Seller’ program - a designation launched five grew year-over-year for the third consecutive quarter, reflecting sequential growth in trailing twelve month active estimated $35 million in charges, largely made up of cash expenditures consisting of severance payments, Management believes that presenting these Etsy marketplace non-GAAP financial measures is useful to preliminary nature of our estimates of the charges and cash expenditures to be incurred in connection with marketplace GMS: active buyers, purchase frequency, and average order value. We made encouraging Assistant’ to help buyers discover meaningful gift ideas through natural conversation. While it’s very early days, experiences, recent improvements in buyer understanding are enhancing the shopping ideas we present to sellers. years ago which highlights ‘how’ a seller runs their shop - their reviews, shipping buyers, and a 2.8% year-over-year increase in trailing twelve month GMS per buyer. employee benefits, and related costs. We anticipate that the charges will be incurred, and the execution of the investors because they: “We expect the restructuring to lower operating costs in the near-term, and have incorporated the expected benefit into our increased full-year adjusted EBITDA margin outlook. We believe that higher GMS and revenue growth - sustained over time - can create far greater absolute cash flow and shareholder value than can margin expansion alone. Accordingly, our objective in the restructuring is not only to extend the expense discipline we’ve demonstrated historically, but also to position ourselves to build the organization necessary to execute our strategy and accelerate growth in the years ahead. Specifically, we intend to deepen our expertise in strategically critical areas across product, engineering, and customer operations, with a particular focus on expanding and strengthening our team’s machine learning skills. We also plan to explore additional R&D investment in new product capabilities, marketing initiatives, customer trust, and international growth to accelerate our learnings in 2026 and inform our plans for 2027. We will be purposeful and disciplined in the investments we make, and remain committed to maintaining the very attractive profit margin profile of our business.” Lanny Baker, Chief Financial Officer Q2 2026 Revenue and Take Rate Performance the Restructuring Plan, which are subject to change as we make decisions and refine these estimates over progress across each. agent usage skews to new, high-intent buyers coming from Etsy-driven sources (email or other), and it has buyers whether it's on the app home screen, push, or email. Our vision is to create a shopping experience that In Product Development, we gained slight year-over-year expense leverage as modestly higher employee transparency and customer response - with a goal to make it more meaningful to Restructuring Plan will be substantially complete by the end of the third quarter. The following table reflects the reconciliation of operating activities to free cash flow for continuing operations time; (2) timing delays in implementing the Restructuring Plan due to legal requirements and other factors; (3) received positive user feedback. We’re excited to test and learn with these capabilities in order to ensure we are proactively helps buyers shop for the people, passions, goals, and moments that matter most. During the We're currently evaluating more comprehensive seller-forward shopping experiences on Android to better costs were offset by savings in other areas, and we remained deliberate about where we deployed product sellers and impactful to our business. Further, as a result of our inventory On July 30, 2026 we completed the sale of Depop to eBay. Etsy’s results of operations for Q2 2026 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 Q2 2025, but Q2 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.Q2 2026 Key Performance Indicators GMS$2.6B+7.5% Y/Y Etsy Marketplace growth+1.0% Y/Y Continuing Operations basisREVENUETAKE RATE$668M+9.3% Y/Y Etsy Marketplace growth+6.2% Y/Y Continuing Operations basis25.9%NET INCOMENET INCOMEADJ. EBITDA$114M+$67 million Y/Y Etsy Marketplace+$69 million Y/Y Continuing Operations basis$195M 29.2% Adj. EBITDA Margin Our four growth priorities are designed to work together to build lasting relationships between buyers, sellers, •provide a clearer, normalized baseline to evaluate the organic growth, financial performance, and (in thousands): potential disruption to our business and operations as we implement the Restructuring Plan; (4) Revenue was $668 million in the second quarter of 2026, up 6.2% on a continuing operations basis and 9.3% •Active buyers improved during the quarter, growing by approximately 350 thousand sequentially to ready as more buyers become inclined to use conversational assistants in their Etsy shopping journeys. quarter: understand how these ideas work together across the end-to-end shopping journey. The experience shown and engineering resources. General and Administrative expenses also gained year-over-year leverage, driven understanding work, we also have new insights about Star Sellers who, in and Etsy. Discovery and Matching help buyers find and connect with the right items. Loyalty and Human underlying trends of our remaining Etsy marketplace business; macroeconomic, geopolitical, and other events outside of our control; (5) the level of demand for our services for the Etsy marketplace alone. Revenue growth accelerated alongside continued GMS strength, with both approximately 87 million for the trailing 12 months, returning to roughly stable levels on a year-over- below is intended to illustrate the direction we're exploring rather than a final product. These tests are helping us by employee cost leverage from continued headcount discipline, lower professional services spend, and a addition to great customer service, also provide distinctive inventory (the ‘what’ Connection give buyers more reasons to return. Three Months Ended June 30, 20262025Net cash provided by operating activities $165,905$118,996Purchases of property and equipment(1,234)(6,853)Website and app development(6,537)(9,368)Free cash flow $158,134$102,775 or products sold in our marketplace; (6) the importance to our success of the trustworthiness and safety of our Marketplace and Services revenue delivering solid year-over-year growth, increasing 8.4% and 11.2% (1)Stock-based compensation expense included in continuing operations in the Condensed Consolidated Statements of Operations for year basis. Gross buyer additions accelerated, increasing 7.1% year-over-year, with growth across •facilitate more direct year-over-year comparisons of our continuing operations by removing the impact Buyer profiles have taken a significant step forward in quality and coverage as outlined below, and we are working to extend that buyer understanding beyond feed-based discovery into search.Improvements to feed freshness, including suppressing over 80% of previously viewed and engaged listings, drove gains in feed favoriting, listing views, and new searches while remaining GMS neutral.App Home continued to expand buyer consideration, helping more buyers start new shopping missions, with year-over-year growth in new missions per weekly active user. learn how to make Etsy feel more human in ways that strengthen trust, highlight our differentiation, and improve one-time reversal of non-income tax expense. they sell) and have a track record of proven buyer demand. Given that buyers who marketplace and our ability to attract and retain active and engaged communities of buyers and sellers; (7) the periods presented below is as follows: respectively for the Etsy marketplace. both new and reactivated buyers. We were also encouraged to see early signs of growth among our of the divested Reverb marketplace; and the overall buyer experience. purchase from this seller cohort have meaningfully higher lifetime value, we’ll be In addition to headline metrics - GMS and its main levers of active buyers, frequency, and AOV - we closely any real or perceived inaccuracies in our operational metrics; (8) if we or our third-party providers are unable Three Months Ended June 30,Six Months Ended June 30, 2026202520262025Cost of revenue$4,730$6,775$10,562$13,661Marketing3,6984,5007,4704,564Product development26,13228,23953,67060,225General and administrative16,62413,40732,44530,649Stock-based compensation expense$51,184$52,921$104,147$109,099 most valuable buyers, with habitual and repeat buyer cohorts each showing slight sequential gains for Q2 26 Continuing Operations Operating Expenses developing new approaches to support them, as well as to help others reach this track a broader set of faster-moving metrics that help provide early signals of the impact of our work on the •align with how management evaluates the performance of the business, allocates resources, and sets to protect against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents; Take rate remained healthy and consistent with our expectations at 25.9% in the second quarter, up 130 bps the first time since 2023. Product DevelopmentMarketingGeneral & Administrative level of excellence. Over time, we believe these initiatives will drive seller success customer experience and overall marketplace health. These signals span acquisition, engagement, mission internal operational targets moving forward. (9) our dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; year-over-year, including an approximate +80 bps impact from the Reverb divestiture. Etsy marketplace yearand retention, repeat buyer rates, and overall marketplace value. conversion and expansion, post-purchase experience, buyer-seller connections, and retention. We do not (10) operational and compliance risks related to our payments systems; (11) the global scope of our business; over-year take rate expansion was primarily driven by Etsy Ads, as machine learning-driven improvements •While frequency remained modestly below prior-year levels on a trailing twelve month basis, the rate expect these signals to move in a straight line or translate into financial results at the same pace, but together A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is provided in (12) our ability to compete effectively; (13) our ability to enhance our current offerings and develop new continued to enhance relevance and support more effective seller budget pacing. Offsite Ads also contributed, of decline moderated sequentially. We also saw improvement in the 30-day repeat purchase rate - Making Strong Progress, with More Work to Do they help us understand where product and marketing investments are gaining traction, and where we need to the following tables: offerings to respond to the changing needs of sellers and buyers; (14) risks related to our environmental, benefiting from the shift in paid marketing activity toward higher-monetizing channels. good signal coming from a faster-moving metric. We believe these encouraging trends reflect the adjust. As we’ve moved through 2026, these indicators are providing evidence that we are working on the right social, and governance activities and disclosures; (15) barriers to international trade and our efforts to grow Three Months Ended June 30, 2025Six Months Ended June 30, 2025Continuing Operations(As Reported)Less: Reverb MarketplaceEtsy Marketplace(Non-GAAP)Continuing Operations(As Reported)Less: Reverb MarketplaceEtsy Marketplace(Non-GAAP)Revenue$629,131$17,589$611,542$1,241,335$43,236$1,198,099Revenue take rate24.6%11.5%25.4%24.3%11.3%25.3%Marketplace revenue$435,026$14,309$420,717$863,262$35,580$827,682Services revenue$194,105$3,280$190,825$378,073$7,656$370,417Gross profit$460,508$9,562$450,946$904,911$21,797$883,114Marketing expense$191,053$3,904$187,149$362,910$11,380$351,530Product development expense$99,326$2,105$97,221$200,136$7,271$192,865General and administrative expense$76,029$4,857$71,172$149,935$9,773$140,162Operating expenses$366,408$10,866$355,542$814,684$130,127$684,557Net income (loss) $45,638$(1,668)$47,306$10,551$(108,246)$118,797Net income (loss) margin7.3%(9.5)%7.7%0.8%(250.4)%9.9% cumulative impact of our efforts to improve the overall Etsy customer experience. priorities to make Etsy more relevant, trusted, and valuable to our customers. Over the past year, we have sharpened our strategy, strengthened execution, and are encouraged by the •We saw further growth in buyers engaging with new shopping missions and discovering fresh, crossour marketplace globally; (16) acquisitions, dispositions, or strategic partnerships that may prove We’ve also been evolving the way Etsy shows up on various discovery channels - both organic and paid. Our progress we're seeing across the marketplace. We have inflected Etsy’s year-over-year growth trajectory from category inventory through the app home feed, reflecting continued progress in our personalization unsuccessful or divert management attention; (17) our ability to deal effectively with fraud or other illegal foundational investments include work on our inventory signals, content feeds, and product listing ad campaign •As in the first quarter, average order value was the largest contributor to GMS growth, with higher Six Months Ended June 30,% (Decline) GrowthY/Y for Continuing Operations% Growth Y/Y for the Etsy Marketplace (Non-GAAP) (1)20262025Continuing OperationsContinuing OperationsEtsy Marketplace(Non-GAAP)GMS (2)$5,043,087$5,116,465$4,735,117(1.4)%6.5%Revenue$1,299,590$1,241,335$1,198,0994.7%8.5%Revenue take rate (3)25.8%24.3%25.3%150 bps50 bpsMarketplace revenue$888,847$863,262$827,6823.0%7.4%Services revenue$410,743$378,073$370,4178.6%10.9%Gross profit$939,643$904,911$883,1143.8%6.4%Operating expenses$694,529$814,684$684,557(14.7)%1.5%Net income$219,001$10,551$118,7971,975.6%84.3%Net income margin16.9%0.8%9.9%1,610 bps700 bpsAdjusted EBITDA (Non-GAAP)$380,069$343,820$338,24110.5%12.4%Adjusted EBITDA margin (Non-GAAP)29.2%27.7%28.2%150 bps100 bps Human Connection - Investing in our Core Differentiation high-single-digit GMS declines in early 2025 to mid-single-digit growth anticipated for the full year 2026 - a more efforts. Encouragingly, these changes are introducing fresher, more differentiated content without Images presented above are for illustrative purposes only and may depict work in progress. activity increasingly amplified by advances in AI; and (18) litigation and evolving global legal and regulatory structures. This work is critical to ensure that the long-tail of Etsy inventory is highly visible and consumable listing prices being the prevailing driver. Our efforts to elevate higher-quality items on- and offsite With respect to our outlook, a reconciliation of Adjusted EBITDA margin guidance to the closest than 10 percentage point improvement in performance. As a result, we have even more conviction in our disrupting existing buyer intent or near-term marketplace performance. requirements, including privacy and data protection laws, tax laws, product liability laws, laws regulating across all external platforms, including as agentic experiences become across search, discovery, and marketing are increasingly contributing to a shift toward higher AOV corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to strategic direction to build the Etsy we envision. At our best, Etsy stands for creativity, craftsmanship, and connection - it’s our core differentiation. While •At the same time, we continued to improve real-time personalization in Search while evolving our speech and platform moderation, antitrust laws, and intellectual property and counterfeiting regulations. These more important over time. We believe Etsy sellers’ unique breadth of items. Reflecting these trends, GMS per active buyer increased to $124 on a trailing twelve-month the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA; these qualities have always been part of what makes Etsy special, we believe that by making them more approach to quality, moving beyond surfacing what has historically been most popular or most likely to and other risks and uncertainties are more fully described in our filings with the Securities and Exchange inventory and brand represent an important competitive advantage and basis, up 2.8% year-over-year. in particular, stock-based compensation expense (income) and related payroll taxes, provision for income At the same time, we have gained additional clarity about the organization we’ll need to deliver it. So today consistently visible and tangible throughout the experience, we will reinforce our unique value for customers. convert, toward helping buyers discover the best our sellers have to offer for their specific shopping Commission, including in the section entitled “Risk Factors” in our most recent periodic report, and in position us well as AI-driven discovery grows. taxes, interest and other non-operating (income) expense, net, foreign exchange (gain) loss, acquisition, we’ve announced a restructuring of parts of our organization and a reduction of our workforce, with most of the mission. This approach reminds buyers what they love about Etsy and why they should come back in subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a Underpinning our stronger marketplace health are product enhancements which help buyers discover more divestiture, and corporate structure-related expenses, and other non-recurring expenses. changes concentrated in our Product and Engineering group. We are changing our structure -- with fewer silos We also continue to evolve our marketing strategy to encourage discovery We've strengthened our conviction that the breadth of our inventory is an advantage, that handmade is a the future. very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for relevant, differentiated inventory, combined with marketing strategies which bring more buyers into those to reduce handoffs and flatter, faster teams built to solve broader, more complex problems. And we’ll invest in among younger buyers: point of differentiation to lean into, and that the individuality of our sellers is one of our greatest •Underpinning these improvements are significantly richer buyer profiles - now covering more than 65 our management to predict all risks, nor can we assess the impact of all factors on our business or the extent improved experiences. Our mobile app is a strong example of this dynamic, and remains the surface where an organization capable of accelerating initiatives to drive customer frequency and retention. This is not a cost •Removing storefront friction and improving tooling for our Creator strengths. For buyers, seeing more of the maker's process is one of the strongest drivers of trust, confidence, million buyers and providing three times more signals than earlier this year - with an average of about to which any factor, or combination of factors, may cause actual results to differ materially from those personalization, direct buyer relationships, and owned marketing can most effectively compound - as Webcast and Conference Call Information cutting move - it is meant to lean in during a period of strong momentum so that we can move faster and Collective program; and perceived value. We also see that signals of seller identity, craftsmanship, and the creative process 30 interests and preferences per buyer. This enables more forward-looking recommendations across contained in any forward-looking statements we may make. In light of these risks, uncertainties, and demonstrated by the continued app momentum during the quarter, shown below. Non-app GMS also execute with even greater focus. •Organizing top-tier partnerships anchored to cultural moments; Etsy Marketplace year-over-year revenue and net income growth as well as Adj. EBITDA and Adj. EBITDA Margin, are non-GAAP financial measures. reinforce one another throughout the buyer journey, helping expand what buyers believe Etsy is for. Etsy. assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and continued to improve, growing 3.4% year-over-year, accelerating from the first quarter and marking its Reconciliation of non-GAAP financial measures to the most comparable GAAP measures can be found in “Non-GAAP Financial Measures” below. •Expanding our brand presence on YouTube and TikTok to reach circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent Etsy will host a webcast conference call to discuss these results at 8:30 a.m. Eastern Time tomorrow, second consecutive quarter of growth. In the bar chart graphic above, Q2 2026 continuing operations results reflect the Etsy marketplace only, while Q2 2025 results include younger buyers earlier in their discovery journey. In the first half, These richer buyer profiles increasingly reflect buyer’s interests, shopping goals, relationships, and seasonal our beliefs and assumptions only as of the date of this shareholder letter. We disclaim any obligation to both Etsy and Reverb. Thursday August 6, which will be live-streamed via our Investor Relations website under the Events section. This focus on Human Connection is also amplified in our brand positioning - which celebrates what it means visits from Millennial and Gen Z audiences through those two needs, allowing us to make more proactive recommendations. For example, my own buyer profile looks like this update forward-looking statements. to be human and the unique role Etsy sellers play in helping people mark moments that matter, big and small. channels grew approximately 5X year-over-year, giving us
- and shows that Etsy really gets me! A replay of the webcast will be available through the same link following the conference call starting at 12:00 For example, our ‘Shop Other Jeffs’ campaign creative was designed to resonate with a younger audience - confidence that we are reaching more target buyers and allocating During the period leading up to the Depop close date we continued to invest in the growth of the business, the costs of which were recovered through purchase price adjustments on the closing date. These investments contributed to Depop’s Q2 26 76% year-over-year revenue growth, which is disclosed in our Quarterly Report on Form 10-Q for the period ended June 30, 2026. Sol, ‘SolProano’ shop on Etsy p.m. Eastern Time tomorrow, for at least three months thereafter. Gen Z and Millennials. spend toward the highest-impact channels.
14 15 16 17 18 19 20 21 See “Non-GAAP Financial Measures” below for a reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for Q2 2026 and 2025. Left: Etsy marketing on TikTok; Right: New Olivia Rodrigo partnership. 2 3 4 5 6 7 8 9 10 11 12 13 22 23 24 25