Open the filing on EDGARDear Shareholders, Growth Priorities are Driving Improved Marketplace Performance still much more to do to make discovery more inspiring and relevant, and our goal is simple: to make Etsy better Reaching younger audiences in new ways: We’re showing up in Q3 2026 Financial Results Digging in a bit on Etsy Ads, what distinguishes this service from other ecommerce advertising models is who for buyers every time they come back. more of the places and moments where younger audiences discover As we embrace these opportunities, we're equally focused on preserving the creativity, authenticity, and we serve and the value we create for them. The majority of Etsy Ads revenue comes from sellers with less Strong Cash Flow Generation and Continued Accelerated Share Repurchases
- from music festivals and cultural moments to holiday markets. trust that make Etsy different. We're making our policies clearer, strengthening enforcement, and deploying than $100,000 in annual GMS - solopreneurs and microbusinesses that are at the heart of Etsy, and who look Etsy’s results of operations are presented on a continuing operations basis, while Depop is presented as a discontinued operation for all 2026 has been a year of meaningful transformation for Etsy. We entered the year with a clear diagnosis of the These experiences bring Etsy’s humanity to life, while extending our product improvements to help ensure that AI supports human creativity rather than obscuring or replacing it. We to us for support in being found by consumers. Accordingly, we continuously invest to improve the Etsy Ads Cautionary Statement Regarding Forward-Looking Third Quarter 2026 Financial Summary Nine Months Ended September 30,% Growth / (Decline)Y/Y for Continuing Operations% Growth Y/Y for the Etsy Marketplace (Non-GAAP) (3)20262025Continuing OperationsContinuing OperationsEtsy Marketplace(Non-GAAP)GMS (1)$7,689,975$7,549,052$7,167,7041.9%7.3%Revenue$1,992,059$1,865,488$1,822,2526.8%9.3%Revenue take rate (2)25.9%24.7%25.4%120 bps50 bpsMarketplace revenue$1,356,990$1,292,343$1,256,7635.0%8.0%Services revenue$635,069$573,145$565,48910.8%12.3%Gross profit$1,442,788$1,362,834$1,341,0375.9%7.6%Operating expenses$1,086,241$1,161,602$1,031,475(6.5)%5.3%Net income$332,638$115,147$223,393188.9%48.9%Net income margin16.7%6.2%12.3%1,050 bps440 bpsAdjusted EBITDA (Non-GAAP)$590,433$527,427$521,84811.9%13.1%Adjusted EBITDA margin (Non-GAAP)29.6%28.3%28.6%130 bps100 bps Etsy, Inc. Etsy, Inc. Etsy, Inc. Currency-Neutral GMS Non-GAAP Financial Measures Reconciliation of Net Income (Loss) to Adjusted EBITDA and the Evolving approaches to support Seller and Buyer Loyalty As of September 30, 2026, Etsy held $2.5 billion in cash, cash equivalents and short- and long-term periods presented through the closing date of July 30, 2026. The GMS drivers and key customer metrics presented below are for the Etsy business’ needs and a set of priorities designed to address them. At the same time, we developed more clarity reach and relevance across paid, owned, and organic channels. believe AI can amplify the creativity and human connections at the heart of Etsy, making our differentiation an value proposition for sellers - which historically has come from improved matching quality and relevance, (1)Stock-based compensation expense included in continuing operations in the Condensed Consolidated Statements of Operations for marketplace only. investments. Proceeds from the sale of Depop, which closed on July 30, 2026, contributed to our cash Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Cash Flows Calculation of Adjusted EBITDA Margin the periods presented below is as follows: and conviction in Etsy’s differentiation: our sellers’ creativity, the craftsmanship and care behind their work, and even more powerful competitive advantage and engine for long-term growth. reflecting more efficient utilization of existing ad space rather than increased ad load. We only deploy a Statements (in thousands, except percentages; unaudited) We calculate currency-neutral GMS by translating current period GMS for goods sold that were listed in non- Other Key Financial Metrics Creative entrepreneurs come to Etsy to build businesses around their craft, and our ambition is to make Etsy balance at quarter end. Subsequently, on October 1, 2026, we paid $648.6 million in cash to settle the the human connection that gives those items meaning. We believe our improving performance reflects our Taken together, this work is helping us show up earlier in the portion of sellers’ ad budgets today, and as the Etsy Ads engine becomes more efficient in the future, there is U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates. Three Months Ended September 30,Nine Months Ended September 30, 2026202520262025Cost of revenue$3,970$5,962$14,532$19,623Marketing3,4414,06310,9118,627Product development21,98029,92175,65090,146General and administrative16,31415,17948,75945,828Stock-based compensation expense$45,705$55,125$149,852$164,224 Q3 2026 Etsy Marketplace GMS Drivers and Key Customer Metrics (in thousands, except percentages; unaudited) the best place for them to grow. That starts with listening to our sellers and remaining aggregate principal amount of our outstanding 2019 Notes and reduce the company’s total (in thousands; unaudited) (in thousands, except per share amounts; unaudited) (in thousands; unaudited) (in thousands, except percentages; unaudited) progress not only in delivering a better shopping experience, but also in making Etsy’s unique value easier for discovery journey, with more relevant inventory and a more significant unfulfilled demand for us to access at attractive rates of return for sellers. As new discovery Our key operating and financial metrics for continuing operations (which excludes Depop’s results, as Depop The Road Ahead Third Quarter 2026 acting on what we hear - giving them better tools, insights, and support. outstanding debt. As ofSeptember 30,2026As ofDecember 31,2025AssetsCurrent assets:Cash and cash equivalents$2,065,658$1,355,428Short-term investments245,043224,088Accounts receivable, net8,9478,690Prepaid and other current assets64,149113,953Funds receivable and seller accounts219,559205,002Current assets of discontinued operations - 53,822Total current assets2,603,3561,960,983Restricted cash8,0548,524Property and equipment, net195,566205,552Goodwill37,28038,067Intangible assets, net10,89114,511Deferred tax assets119,629119,051Long-term investments150,392134,376Other assets42,50838,964Noncurrent assets of discontinued operations - 307,226Total assets$3,167,676$2,827,254Liabilities and Stockholders' DeficitCurrent liabilities:Accounts payable$19,612$27,732Accrued expenses288,224342,200Short-term debt, net 1,298,793649,008Funds payable and amounts due to sellers219,559205,002Deferred revenue35,01127,049Other current liabilities55,04860,354Current liabilities of discontinued operations - 52,274Total current liabilities1,916,2471,363,619Finance lease obligations - net of current portion92,13493,482Deferred tax liabilities11,1408,808Long-term debt, net1,688,3452,333,230Other liabilities137,646125,103Noncurrent liabilities of discontinued operations - 1,107Total liabilities3,845,5123,925,349Total stockholders’ deficit(677,836)(1,098,095)Total liabilities and stockholders’ deficit$3,167,676$2,827,254 Three Months Ended September 30,Nine Months Ended September 30, 2026202520262025Revenue$692,469$624,153$1,992,059$1,865,488Cost of revenue189,324166,230549,271502,654Gross profit503,145457,9231,442,7881,362,834Operating expenses:Marketing207,002173,369572,169536,279Product development110,78199,766310,754299,902General and administrative73,92973,783203,318223,718Asset impairment charge - - - 101,703Total operating expenses391,712346,9181,086,2411,161,602Income from operations111,433111,005356,547201,232Other income (expense), net17,2689,14536,385(26,764)Income from continuing operations before income taxes128,701120,150392,932174,468Provision for income taxes from continuing operations(15,064)(15,554)(60,294)(59,321)Net income from continuing operations113,637104,596332,638115,147Discontinued operations: Income (loss) from discontinued operations before income taxes (including gain on sale of $839.7 million in the three and nine months ended September 30, 2026)740,594(28,065)544,016(64,556)(Provision) benefit for income taxes from discontinued operations(714)(1,028)(107)1,656Net income (loss) from discontinued operations739,880(29,093)543,909(62,900)Net income$853,517$75,503$876,547$52,247Basic net income from continuing operations per share attributable to common stockholders$1.25$1.05$3.53$1.11Total basic net income per share attributable to common stockholders$9.37$0.76$9.30$0.50Diluted net income from continuing operations per share attributable to common stockholders$1.00$0.86$2.84$0.98Total diluted net income per share attributable to common stockholders$7.31$0.63$7.36$0.47Weighted-average common shares outstanding:Basic91,09999,33494,273103,660Diluted117,235124,957120,441124,024 Nine Months Ended September 30, 20262025Cash flows from operating activitiesNet income$876,547$52,247Less: Net income (loss) from discontinued operations543,909(62,900)Net income from continuing operations332,638115,147Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:Stock-based compensation expense149,852164,224Depreciation and amortization expense46,60345,086Provision for expected credit losses4,5867,100Deferred provision for income taxes2,93321,274Asset impairment charge - 101,703Other non-cash (income) expense, net(12,783)35,549Changes in operating assets and liabilities (net of impact of sale of business)(12,536)(95,204)Net cash provided by operating activities of continuing operations511,293394,879Net cash used in operating activities of discontinued operations(230,307)(18,589)Net cash provided by operating activities280,986376,290Cash flows from investing activitiesPurchases of property and equipment(4,122)(13,891)Website and app development(19,994)(26,315)Purchases of investments(255,768)(251,091)Sales and maturities of investments219,112227,563Proceeds from sale of business, net of cash sold - 100,485Net cash (used in) provided by investing activities of continuing operations(60,772)36,751Net cash provided by (used in) investing activities of discontinued operations1,302,813(5,222)Net cash provided by investing activities1,242,04131,529Cash flows from financing activitiesPayment of tax obligations on vested equity awards(66,349)(42,526)Repurchase of stock(789,432)(643,670)Proceeds from exercise of stock options14,93415,331Proceeds from issuance of convertible senior notes - 700,000Payment of debt issuance costs - (11,339)Payments on finance lease obligations(3,192)(4,594)Other financing, net250(17,784)Net cash used in financing activities(843,789)(4,582)Effect of exchange rate changes on cash, cash equivalents, and restricted cash(9,886)36,487Net increase in cash, cash equivalents, and restricted cash669,352439,724Cash, cash equivalents, and restricted cash at beginning of period1,404,360811,178Cash, cash equivalents, and restricted cash at end of period$2,073,712$1,250,902 This shareholder letter contains or references forward-looking statements within the meaning of the federal buyers to discover and appreciate, and for sellers to want to be a part of. distinctive expression of our brand - bringing more buyers to Etsy channels evolve, both organic and paid, we see significant opportunity to continue to develop advertising as a is presented as discontinued operations through the Closing Date) are presented in the tables below. Due to As reported and currency-neutral GMS growth (decline) for the periods presented below are as follows: Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense Etsy marketplace GMS growth accelerated sequentially Given the sale of Depop on July 30, 2026, Etsy results are presented on a continuing operations basis, while securities laws. Forward-looking statements include statements relating to our financial outlook for the fourth and giving us more opportunities to build lasting relationships with service model to help buyers discover our sellers’ unique inventory, both on and off Etsy. the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30, 2025 20262025As ReportedCurrency-NeutralFX ImpactAs ReportedCurrency-NeutralFX ImpactThree months ended September 30,GMS - Continuing operations 8.8%9.1%(0.3)%(10.1)%(10.8)%0.7%Nine months ended September 30,GMS - Continuing operations1.9%1.3%0.6%(8.8)%(9.1)%0.3%GMS - Etsy marketplace (1)7.3%6.7%0.6%(5.6)%(5.9)%0.3% and related payroll taxes; depreciation and amortization expense; provision for income taxes; interest and We’ve made progress across the seller experience, from enabling shared At our recent Etsy Up Close annual seller event in Brooklyn, I had the opportunity to spend time with sellers We generated strong free cash flow during the quarter: net cash provided by operating activities of continuing Depop results are reported as discontinued operations across all periods presented through the Closing Date. quarter and full year of 2026, and the underlying assumptions; our strategy, growth, goals, and initiatives; our I’m proud of the progress we’ve made so far, and even more optimistic about the opportunity still ahead. We’re them. includes Etsy marketplace and Reverb marketplace until the date of sale, while all other periods reflect the other non-operating (income) expense, net; foreign exchange (gain) loss; restructuring and other exit costs; shop access, and expanding our appeals process, to making Etsy Ads easier who shared their hopes for their businesses, their questions, and honest feedback about their experience with Etsy marketplace GMS reached $2.6 billion in the third quarter, up 8.8% year-over-year, or 9.1% on a operations for the three months ended September 30, 2026 was $242.9 million, and we converted 112% of Due to the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30, advertising opportunities; our capital allocation and repurchase activity; the momentum of our customerbringing more buyers to Etsy and providing them an experience that is far more personalized and relevant, Q3 2026 Operating Expenses Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable for acquisition, divestiture, and corporate structure-related expenses; asset impairment charge; loss on sale of to manage. We’re also actively investing in AI to make running an Etsy shop Etsy. I loved hearing the stories behind their shops and the passion they bring to their craft. It was a powerful currency-neutral basis. Excluding foreign exchange, growth accelerated by approximately 190 basis points our Adjusted EBITDA to free cash flow during the quarter. We further accelerated the return of capital to Shareholder Letter 2025 includes Etsy marketplace and Reverb marketplace through the date of sale, while all other periods centric priorities; the future impact of our strategic investments, including product and engineering headcount helping them discover higher-quality items and sellers, and complete memorable purchases. We’re making our the nine months ended September 30, 2026 and 2025, while the three months ended September 30, 2026 business; and retroactive non-income tax income. The following tables reflect the reconciliation of net income easier. We've introduced tools that simplify listing creation and buyer reminder of what makes Etsy so special - and it left me even more energized by the opportunity we have ahead from the second quarter, marking the sixth consecutive quarter of sequential improvement in GMS growth and shareholders, repurchasing approximately $394.6 million in stock and reducing the outstanding share count reflect the Etsy marketplace only. This makes year-over-year continuing operations results not directly and capabilities; our AI-related initiatives and the impact thereof; and the timing of any of the foregoing. marketing investments more effective, enabling us to show up in new places and build relationships with both and 2025 are directly comparable. To provide investors with a meaningful basis for comparing our results Strong revenue growth, together with the impact of our restructuring in August, translated into adjusted (loss) to Adjusted EBITDA as well as the calculation of Adjusted EBITDA margin for continuing operations, the communications, and are continuing to test an AI-powered assistant that uses of us. You can see comments from some of our sellers, and photos from the event below. reflecting the continuing operational progress we’ve made this year. GMS growth was broad-based across by approximately 5.2 million shares during the third quarter alone. We currently have $2.2 billion in authorized comparable for the nine months ended September 30, 2026 and 2025, while the three months ended Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking new and existing audiences. And we’re improving the support experience for our buyers and sellers - an year-over-year, we have presented Etsy marketplace results for the nine months ended September 30, 2025 EBITDA of $210.4 million, growing 14.6% year-over-year and representing a 30.4% adjusted EBITDA margin. Etsy marketplace, and the Reverb marketplace for the periods indicated: each shop's data to provide personalized insights and recommendations. U.S. and non-U.S. buyers, as well as across household income cohorts within the U.S. We saw strong capacity for future share repurchases and anticipate continuing to repurchase shares at an accelerated rate to September 30, 2026 and 2025 are directly comparable. statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” important part of building trust and meaningful relationships that extend beyond any individual transaction. below. Our calculation of trailing twelve months free cash flow includes activity for combined continuing and Adjusted EBITDA grew faster than revenue for the second consecutive quarter and we remained disciplined Over time, our ambition is to move beyond recommendations to helping As we head into the final stretch of 2026 and develop our growth plans for 2027 we have even greater performance in both our App and Non-App GMS, up 10.4% and 7.5% year-over-year respectively, with mobile further reduce the outstanding share count. “expect,” “goal,” “intend,” “may,” “optimistic,” “outlook,” “plan,” “potential,” “should,” “target,” “will,” or similar discontinued operations. See “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial Reconciliation of Net Cash Provided by Operating Activities to Free Cash in managing operating expenses, while continuing to invest in areas that support Etsy’s long-term growth. Three Months Ended September 30,20262025Continuing Operations Continuing Operations Net income$113,637$104,596Excluding:Stock-based compensation expense and related payroll taxes (1)47,94156,521Depreciation and amortization expense16,05913,299Provision for income taxes15,06415,554Interest and other non-operating income, net(12,768)(7,680)Foreign exchange gain(3,433)(548)Restructuring and other exit costs33,8641,883Acquisition, divestiture, and corporate structure-related expenses - (18)Adjusted EBITDA$210,364$183,607Divided by:Revenue$692,469$624,153Adjusted EBITDA margin30.4%29.4% sellers take action - so they can spend less time managing their shops and confidence that our priorities - together with the progress we’ve made in how we operate - are creating a GMS share stable with the first half of the year at about 47%. To provide investors with a meaningful basis for comparing our ongoing operating results year-over-year, we expressions and derivative forms and/or the negatives of those words. Forward-looking statements involve After three consecutive quarters of accelerating growth this year, I’m increasingly confident that our business is measures (Etsy marketplace financial metrics, Adjusted EBITDA, Adjusted EBITDA margin, and free cash more time creating and growing their businesses. healthier, highly differentiated marketplace, and positioning us to capture more of the enormous opportunity have presented certain Etsy marketplace financial measures for the nine months ended September 30, 2025 Flow substantial risks, uncertainties and other important factors that may cause actual results to differ materially (1)As reported and currency-neutral GMS for the Etsy marketplace declined (2.4)% and (3.2)%, respectively, for the three months now firmly in growth mode. We have sustainable momentum, and clear evidence that the changes we’ve made flow) to the most directly comparable GAAP financial measures. Fourth Quarter 2026 and Updated Full-Year Outlook for Marketing remained an important area of investment, and expense grew as a percentage of revenue year- ahead. And perhaps what excites me most of all: we’re still early in realizing the full potential of the work we’ve Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve in this Shareholder Letter. These measures include the following non-GAAP financial measures for the nine from those that we expect. These risks and uncertainties include but are not limited to: (1) macroeconomic, ended September 30, 2025. This resulted in an FX impact of 0.8%. to how we operate and invest are strengthening our business and driving more durable performance. over-year as we leaned into driving profitable GMS growth. At the same time, structural improvements to our Investing in Etsy’s Core Differentiation (in thousands; unaudited) For buyers, we’re continuing to test new ways to recognize and reward only just begun. marketplace health and further elevate Etsy’s differentiation are playing a larger role in the composition of months ended September 30, 2025 where we exclude the impact of Reverb: (1) Revenue and Revenue take geopolitical, and other events outside of our control; (2) the level of demand for our services or products sold Our key operating and financial metrics are (in thousands, except percentages): Continuing Operations marketing technology over the past year are making our investments more productive and efficient. On the (1)Excluded from the tables above is gross merchandise sales (“GMS”) for Depop, which was $199.8 million and $292.1 million for the loyalty. That includes experimenting with earning ‘Stamps’ towards rewards GMS growth: rate, (2) Marketplace revenue, (3) Services revenue, (4) Gross profit, (5) Operating expenses, (6) Net income in our marketplaces; (3) the importance to our success of the trustworthiness and safety of our marketplaces Third Quarter 2026 Key Performance Indicators Point to a Meaningfully Healthier Business Creativity, craftsmanship, and connection are what set Etsy apart, and three months ended September 30, 2026 and 2025, respectively, and $1,004.4 million and $775.2 million for the nine months ended paid side, continued benefits of our product listing ad (“PLA”) segmentation work from earlier in the year for actions that broaden and deepen their relationship with Etsy - like Sincerely, (loss) and Net income (loss) margin, and (7) Adjusted EBITDA and Adjusted EBITDA margin. and our ability to attract and retain active and engaged communities of buyers and sellers; (4) any real or Three Months Ended September 30,% Growth (Decline)Y/Y20262025Continuing OperationsContinuing OperationsGMS (1)$2,646,888$2,432,5878.8%Revenue $692,469$624,15310.9%Revenue take rate (2)26.2%25.7%50 bpsMarketplace revenue $468,143$429,0819.1%Services revenue$224,326$195,07215.0%Gross profit $503,145$457,9239.9%Operating expenses$391,712$346,91812.9%Net income$113,637$104,5968.6%Net income margin16.4%16.8%(40) bpsAdjusted EBITDA (Non-GAAP) $210,364$183,60714.6%Adjusted EBITDA margin (Non-GAAP) 30.4%29.4%100 bps Free cash flow represents our net cash provided by operating activities, reduced by purchases of property September 30, 2026 and 2025, respectively. we’ve made meaningful progress bringing these characteristics to life more supported paid-search efficiency, creating room to invest further. We also expanded investment in paid social, Q3 Merchandise Spotlight: Etsy continues to win for shopping occasions where our sellers offer supporting sellers across categories or regions. We’re also scaling premium support experiences for our top •Active buyers returned to year-over-year growth for the first time in two years, increasing 1.0% perceived inaccuracies in our operational metrics; (5) if we or our third-party providers are unable to protect (2)Revenue take rate is revenue divided by GMS. and equipment and website and app development that are included in cash flows from investing activities. All key performance indicators continued to improve, with year-over-year growth in GMS and revenue consistently in the buyer and seller experience. Last quarter, we shared With the sale of Depop, which has been classified as discontinued operations beginning in the first quarter of with increased spend on TikTok and YouTube and tests on new platforms such as Reddit and Snapchat, to differentiated merchandise buyers ahead of the holiday season, while expanding general support availability across the marketplace. to approximately 88 million on a trailing-twelve-month basis. Sequential growth also accelerated, with (3)% growth Y/Y for the Etsy marketplace is the change in continuing operations for the nine months ended September 30, 2026, which Management believes that presenting these Etsy marketplace non-GAAP financial measures is useful to against technology vulnerabilities, service interruptions, security breaches, or other cyber incidents; (6) our Etsy matters more in an AI world accelerating further in the third quarter. Strong top line performance and disciplined expense management how we were testing ways to make our sellers and their creative processes 2026, our outlook pertains to continuing operations only, or the Etsy marketplace. We currently assume that reach younger audiences. Across our marketing portfolio, the return on our spending increased meaningfully Home and Living saw strong growth, largely driven by rugs, home decor and home improvement; meeting demand for ‘quality for value’ and custom solutions for buyersWedding-related items delivered healthy GMS gains, as we’ve expanded email/push campaigns and affiliate marketing activitiesStrong growth in ‘back to school’ items including the launch of an exclusive collection of custom and monogrammed bedding pieces from sellers Our merchandising programs bring Etsy's storefront to life: showcasing distinctive inventory, incubating seller growth and driving buyer value across surfaces and channels represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the nine months ended active buyers increasing by approximately 540,000 compared to Q2 2026. Third quarter gross buyer investors because they: dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; (7) The following table reflects the reconciliation of operating activities to free cash flow for combined continuing resulted in an adjusted EBITDA margin slightly above 30% for the quarter. Active buyers grew year-over-year for more visible to buyers. Our latest Android test and supporting research overall macroeconomic factors remain relatively consistent, foreign currency is a modest growth headwind, September 30, 2025, as Reverb was sold in the second quarter of 2025. year-over-year, a reflection of the progress made optimizing mix, increasing efficiency and landing the right Ultimately, loyalty is much bigger than any one program or feature. It comes from delivering a great experience additions grew 6.2% year-over-year, continuing to benefit from strong new buyer acquisition and Kruti Patel Goyal operational and compliance risks related to our payments systems; (8) the global scope of our business; (9) and discontinued operations on a trailing twelve month basis (in thousands): the first time in two years, and our focus on improved customer relationships is driving an acceleration in growth There's an inherent paradox in how we think about AI at Etsy: we're harnessing technology to make show that doing so builds buyer trust, confidence and perceived value. and prior-year comparisons become less favorable. Our outlook assumes currency exchange rates remain messages. We also continued to invest in organic search, including in emerging AI-driven channels, by from beginning to end - helping buyers feel understood and valued, helping sellers succeed, and building the reactivation, while trailing-twelve-month retention among existing buyers also began to improve.
- provide a clearer, normalized baseline to evaluate the organic growth, financial performance, and Chief Executive Officer our ability to recruit and deploy talent effectively; (10) our ability to compete effectively; (11) our ability to As of September 30,% Decline Y/Y20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities - trailing twelve months$598,110$691,249(13.5)%Free cash flow - trailing twelve months (Non-GAAP)$557,125$635,357(12.3)% in GMS per active buyer. Our active seller base grew at its fastest rate in two years, with improving retention commerce more human - just as we’ve been doing for more than 20 years. AI will fundamentally change When we brought sellers to the forefront, buyers engaged more unchanged at current spot levels. maintaining the quality and breadth of the underlying product data, feeds, and web content that help these trust and connection that give both more reasons to keep coming back to Etsy. Habitual and repeat buyers increased modestly sequentially, providing encouraging evidence that underlying trends of our remaining Etsy marketplace business; October 28, 2026 improve the customer experience for buyers and sellers, including through new products and features and our As of September 30,20262025Continuing and Discontinued OperationsContinuing and Discontinued OperationsNet cash provided by operating activities$598,110$691,249Purchases of property and equipment(5,519)(18,154)Website and app development(35,466)(37,738)Free cash flow$557,125$635,357 signaling the relevance of Etsy to creative micro-entrepreneurs. how people discover and shop, and we're leaning in - not just adapting to new shopping behaviors, but actively deeply - visiting shops and contacting sellers from their shop home Q4 26 OutlookFY 26 Outlook GMS$3.46B to $3.52B+5-7% Y/Y ~7%Take Rate ~25.6%~25.8%Adjusted EBITDA Margin~30%~30% systems understand and recommend Etsy inventory. progress is broadening across acquisition, reactivation, and retention. advertising offerings, and to respond to their changing needs; (12) risks related to our environmental, social, •facilitate more direct year-over-year comparisons of our continuing operations by removing the impact evolving how Etsy creates value for buyers and sellers. By combining our sellers' unique inventory with the pages more often, for example.
Strategic shifts in marketing have been a big part of our 2026
and governance activities and disclosures; (13) barriers to international trade and our efforts to grow our Encouragingly, while we are still benefitting from some external GMS tailwinds, the positive impact from our of the divested Reverb marketplace; and trust, breadth, and human connection of the Etsy marketplace, we can make shopping easier and more Product Development expense remained consistent as a percentage of revenue year-over-year, as •GMS per buyer increased 3.9% year-over-year on a trailing-twelve-month basis, and success marketplace globally; (14) acquisitions, dispositions, or strategic partnerships that may prove unsuccessful or internal efforts has accelerated. Our App continues to perform very well, paid marketing is becoming more personal while helping creative micro-entrepreneurs reach customers and grow their businesses in ways they We’re now building on these learnings as we look to bring human restructuring charges were offset by lower stock-based compensation, as well as lower employee-related accelerated sequentially. The impact from our internal initiatives is continuing to scale and play an •align with how management evaluates the performance of the business, allocates resources, and sets divert management attention; (15) our ability to deal effectively with fraud or other illegal activity increasingly efficient and organic traffic remains healthy. And our work to improve search and discovery is surfacing higher- simply couldn't on their own. And as AI makes it easier to create, replicate, and sell products at scale, the connection more deeply into the shopping experience across platforms. By expense following the restructuring. Looking ahead, we expect to sustain Etsy’s healthy adjusted EBITDA increasing role in average order value while purchase frequency remains modestly down year-over- internal operational targets moving forward. The strategic shifts we’ve made in marketing are increasingly contributing to our amplified by advances in AI; and (16) litigation and evolving global legal and regulatory requirements, quality, more relevant inventory. human touch that has always differentiated Etsy - in both our items and the shopping experience - matters more weaving together things like seller stories, craftsmanship details, buyer profitability as we gradually add product and engineering headcount and capabilities to support long-term year. The internal initiatives driving these trends include: 1) improving search relevance for buyers performance - and I’m encouraged that we’re still early in many of these including privacy and data protection laws, tax laws, product liability laws, laws regulating speech and than ever. We don't need to reinvent Etsy for an AI world. We need to get better at delivering on what has reviews, and opportunities for connection, we aim to help buyers understand not just what they’re purchasing, growth. through greater personalization built on richer buyer profiles and inventory insight, 2) promoting a These non-GAAP financial measures have limitations as analytical tools and should not be considered in initiatives. We’ve become more audience-focused, even more disciplined about platform moderation, antitrust laws, and intellectual property and counterfeiting regulations. These and other On July 30, 2026 we completed the sale of Depop. Etsy’s results of operations for all periods presented are on a continuing operations basis, while Depop is presented as a discontinued operation through the closing date. Continuing operations for the three months ended September 30, 2026 and 2025 represent the Etsy marketplace only. Q3 2026 Key Performance Indicators GMS$2.6B+8.8% Y/Y Etsy Marketplace growthREVENUETAKE RATE$692M+10.9% Y/Y Etsy Marketplace growth26.2% +50 bps Y/YNET INCOMENET INCOMEADJ. EBITDA$114M+$9 million Y/Y Etsy Marketplace$210M 30.4% Adj. EBITDA Margin always made us special. And AI gives us powerful new ways to do just that. but who is behind it, how it’s made, and what makes it special. Our goal is to make the value our sellers stronger selection of high-quality items by increasing the weight of quality signals within search and isolation, or as a substitute for, financial information prepared in accordance with GAAP. Furthermore, our Nine Months Ended September 30,20262025Continuing Operations Continuing Operations (As Reported) Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Net income (loss)$332,638$115,147$(108,246)$223,393Excluding:Stock-based compensation expense and related payroll taxes (1)158,303169,5423,035166,507Depreciation and amortization expense46,60345,0865,07840,008Provision for income taxes60,29459,32110959,212Interest and other non-operating (income) expense, net(25,609)(17,521)380(17,901)Foreign exchange (gain) loss(9,699)40,424(573)40,997Restructuring and other exit costs33,8641,480 - 1,480Acquisition, divestiture, and corporate structure-related expenses757,1484,0933,055Asset impairment charge - 101,703101,703 - Loss on sale of business - 5,097 - 5,097Retroactive non-income tax income(6,036) - - - Adjusted EBITDA$590,433$527,427$5,579$521,848Divided by:Revenue$1,992,059$1,865,488$43,236$1,822,252Adjusted EBITDA margin29.6%28.3%12.9%28.6% where we invest, and better at connecting the right buyers with the best of Etsy, risks, uncertainties and other important factors are more fully described in our filings with the Securities and create more visible at every step, building the trust and connection that bring shoppers back to Etsy. Q3 26 Etsy Marketplace Operating Expenses recommendations, 3) better managing the prominence of physical versus digital items based on what calculation of these non-GAAP measures may differ from similarly titled measures reported by other including: Exchange Commission, including in the section entitled “Risk Factors” in our most recent periodic report, and Showing up wherever shoppers discover: Thanks to our early-mover relationships and rich natural language Product DevelopmentMarketingGeneral & Administrative we can understand about buyer intent, and 4) differentiating our offering around special occasions companies. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is in subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a With respect to our outlook, a reconciliation of Adjusted EBITDA margin guidance to the closest product feeds, Gen AI-powered shopping is an exciting and increasingly important discovery channel for Etsy, On-Site Discovery and Matching Drive Better Buyer Understanding and Engagement The following table reflects the reconciliation of operating activities to free cash flow for continuing operations where people may be willing to pay a little more for just the right item. Looking forward, we aim to provided in the following tables: Reinforcing what makes Etsy different: Our brand campaigns celebrate being very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to introducing new shoppers to our unique inventory and reengaging existing buyers. Importantly, we're seeing (in thousands): grow wallet share by helping shoppers discover more of the unique, high-quality inventory on Etsy - human and are improving buyer perceptions that Etsy is a place to find special our management to predict all risks, nor can we assess the impact of all factors on our business or the extent the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA; Nine Months Ended September 30, 2025Continuing Operations(As Reported)Less: Reverb MarketplaceEtsy Marketplace (Non-GAAP)Revenue$1,865,488$43,236$1,822,252Revenue take rate24.7%11.3%25.4%Marketplace revenue$1,292,343$35,580$1,256,763Services revenue$573,145$7,656$565,489Gross profit$1,362,834$21,797$1,341,037Operating expenses$1,161,602$130,127$1,031,475Net income (loss) $115,147$(108,246)$223,393Net income (loss) margin6.2%(250.4)%12.3% that shoppers who discover Etsy items through these platforms - often with high intent - continue to come to our Our investments in discovery and matching are increasingly contributing to GMS momentum. By using AI whether that translates into more valuable orders, more frequent purchases, or both. items and shop from and support real people. to which any factor, or combination of factors, may cause actual results to differ materially from those in particular, stock-based compensation expense and related payroll taxes, provision for income taxes, marketplace to explore further and complete their purchases. We believe this speaks to the strength of Etsy's and machine learning to more deeply understand shoppers' tastes and interests, we're helping buyers find what Three Months Ended September 30, 20262025Net cash provided by operating activities $242,852$226,067Purchases of property and equipment(1,404)(3,790)Website and app development(5,079)(7,997)Free cash flow $236,369$214,280 contained in any forward-looking statements we may make. In light of these risks, uncertainties, and interest and other non-operating (income) expense, net, foreign exchange (gain) loss, acquisition, divestiture, recognized and trusted brand and differentiated value proposition: when you're shopping for something they want and discover things they didn't know they were looking for. And we're seeing that progress translate
Seller and buyer metrics continued to strengthen Building marketing technology capabilities across our portfolio:
assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and and corporate structure-related expenses, and other non-recurring expenses. meaningful, personalized, or handcrafted, you want to understand more about the item and the person behind it into tangible proof points. For example, by the third quarter, we estimate that personalization improvements Metrics presented below represent the Etsy marketplace only. Y/Y reflects Q3 2026 vs. Q3 2025, Q/Q reflects Q3 2026 vs. Q2 2026. Improvements in how we understand and surface our inventory are helping us circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent before you buy. alone contributed approximately two percentage points to our annualized year-over-year GMS growth rate.
Q3 2026 Revenue and Take Rate Performance
Forward-looking statements notice
drive better performance across paid search and social, search engine our beliefs and assumptions only as of the date of this shareholder letter. We disclaim any obligation to optimization, and our influencer and affiliate programs. Webcast and Conference Call Information update forward-looking statements. Making Etsy dramatically more personal: With more than 100 million seller listings (and many multiples more In the third quarter, we continued to build on our momentum by: Higher third quarter GMS drove strong revenue growth of 10.9% year-over-year. Total revenue reached after accounting for available variations), Etsy’s challenge has never been a lack of choice - it's helping each •Extending some personalization to signed-out users, making Etsy feel more relevant from the start. $692.5 million, with Marketplace and Services revenue both contributing to growth, increasing 9.1% and Making owned marketing truly personal: We're evolving our email and push experiences by combining the shopper find what's uniquely right for them. With rich and expanding data on both our buyers and our inventory, •Expanding and deepening buyer profiles, which now power personalized feeds, recommendations, and 15.0% respectively. Take rate was 26.2%, up 50 bps year-over-year, primarily driven by further enhancements Etsy will host a webcast conference call to discuss these results at 8:30 a.m. Eastern Time today, Wednesday, precision and scale of machine learning with the creativity of human curation and storytelling. This approach we’re well positioned to build on-site shopping assistants that understand buyers' tastes and intent more deeply owned marketing for four out of five active buyers. to Etsy Ads and, to a lesser extent, contribution from Offsite Ads. Etsy Ads is becoming an even more October 28, which will be live-streamed via our Investor Relations website under the Events section. allows us to deliver recommendations that are not only relevant to each buyer's interests, but also more and connect them with the right items in even more powerful ways than off-site agents. Building on early •Improving recommendation capabilities to help buyers discover fresh inventory across new categories. effective tool for sellers to reach buyers, as improvements to our matching and ranking models increased ad inspiring, engaging, and reflective of what makes Etsy special. learnings from our Gifting Assistant beta - which I encourage you to try this holiday season! - we’re beginning to relevance and drove higher click-through and conversion rates, while better budget-pacing mechanisms A replay of the webcast will be available through the same link following the conference call starting at 12:00 test similar experiences for wedding shoppers. Harnessing this rapidly advancing technology to make Etsy feel We’re also evolving how we define a great match in Search. Rather than simply optimizing for the next click Adj. EBITDA and Adj. EBITDA Margin are non-GAAP financial measures. Reconciliation of non-GAAP financial measures to the most comparable GAAP measures can be found in helped sellers direct their spend toward the most valuable opportunities. Offsite Ads also contributed, primarily p.m. Eastern Time today, for at least three months thereafter. Showing up for the moments that matter: We’re leaning into the purchase occasions where Etsy naturally “Non-GAAP Financial Measures” below. ever-more personal to every buyer is where I see our greatest opportunity over time. or the item most likely to convert, we’re increasingly incorporating signals like value and the expected post- reflecting higher year-over-year paid marketing spend. shines - from holidays and universal milestones like birthdays and anniversaries, to smaller “mini-stones” and purchase experience. This is helping us surface more relevant and high-quality inventory while maintaining cultural moments - and we’re seeing strong GMS growth across many of these occasions. We're also embedding AI throughout our business to help sellers spend less time on administrative work and strong marketplace performance. We're seeing encouraging signs that our personalization efforts are driving more time creating and connecting with customers, while enabling our own teams to move faster and solve deeper engagement, including more cross-category exploration and new shopping missions on the App. There's 11 12 13 14 15 16 17 customer problems more effectively. Nicky, ‘WinkingCatClay’ shop on Etsy See “Non-GAAP Financial Measures” below for a reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for Q3 2026 and 2025. 2 3 4 5 6 7 8 9 10 18 19 20