ETSY INC

Previous wording

In addition to our core Etsy marketplace, we also own Depop Limited (“Depop”), a fashion resale marketplace acquired in 2021. On June 2, 2025, we completed the previously announced sale of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019. Our condensed consolidated financial results and related disclosures for the three and six months ended June 30, 2025 include the results of Reverb until June 2, 2025. Our marketplaces operate independently, while benefiting from shared expertise in product development, marketing, technology, and customer support.

Current wording

In addition to our core Etsy marketplace, we also own Depop Limited (“Depop”), a fashion resale marketplace acquired in 2021. On June 2, 2025, we completed the previously announced sale of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019. Our condensed consolidated financial results and related disclosures for the nine months ended September 30, 2025 include the results of Reverb until June 2, 2025. Our marketplaces operate independently, while benefiting from shared expertise in product development, marketing, technology, and customer support.

Previous wording

Second Quarter 2025 Key Metrics and Financial Highlights

Current wording

Third Quarter 2025 Key Metrics and Financial Highlights

Previous wording

As of June 30, 2025, our marketplaces connected 8.1 million active sellers and 93.3 million active buyers in nearly every country in the world. In the three and six months ended June 30, 2025, sellers generated GMS of $2.8 billion and $5.6 billion, respectively.

Current wording

As of September 30, 2025, our marketplaces connected 8.5 million active sellers and 93.2 million active buyers in nearly every country in the world. In the three and nine months ended September 30, 2025, sellers generated GMS of $2.7 billion and $8.3 billion, respectively.

Previous wording

Total revenue was $672.7 million and $1.3 billion in the three and six months ended June 30, 2025, respectively. In the three and six months ended June 30, 2025, we recorded net income (loss) of $28.8 million and $(23.3) million, respectively, and non-GAAP Adjusted EBITDA of $169.0 million and $340.1 million, respectively. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP.

Current wording

Total revenue was $678.0 million and $2.0 billion in the three and nine months ended September 30, 2025, respectively. In the three and nine months ended September 30, 2025, we recorded net income of $75.5 million and $52.2 million, respectively, and non-GAAP Adjusted EBITDA of $171.9 million and $512.1 million, respectively. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with GAAP.

Previous wording

Cash and cash equivalents and short-term investments were $1.4 billion as of June 30, 2025. As of June 30, 2025, we had four outstanding series of convertible notes, which collectively had a net carrying value of $3.0 billion. Additionally, we have the ability to draw down on our $400.0 million senior secured revolving credit facility. In the six months ended June 30, 2025, we had positive operating cash flows of $157.3 million.

Current wording

Cash and cash equivalents and short-term investments were $1.5 billion as of September 30, 2025. As of September 30, 2025, we had four outstanding series of convertible notes, which collectively had a net carrying value of $3.0 billion. Additionally, we have the ability to draw down on our $400.0 million senior secured revolving credit facility. In the nine months ended September 30, 2025, we had positive operating cash flows of $376.3 million.

Previous wording

We collect and analyze operating and financial data to evaluate the health and performance of our business and allocate our resources (such as capital, people, and technology investments). We are providing Etsy marketplace information in certain instances where particularly relevant. The financial results of Reverb have been included in our consolidated financial results until June 2, 2025 (the date of sale) and for all periods presented in this table, except as noted below. The financial measures and key operating metrics we use are:

Current wording

We collect and analyze operating and financial data to evaluate the health and performance of our business and allocate our resources (such as capital, people, and technology investments). We are providing Etsy marketplace information in certain instances where particularly relevant. The financial results of Reverb have been included in our consolidated financial results until June 2, 2025 (the date of sale), except as noted in footnote (3) to the table below. The financial measures and key operating metrics we use are:

Previous wording

(1)Consolidated GMS for the three and six months ended June 30, 2025 includes Etsy marketplace GMS of $2.4 billion and $4.7 billion, Depop GMS of $249.6 million and $483.1 million, and Reverb GMS of $153.0 million and $381.3 million, respectively.

Current wording

(1)Consolidated GMS for the three and nine months ended September 30, 2025 includes Etsy marketplace GMS of $2,432.6 million and $7,167.7 million, respectively, and Depop marketplace GMS of $292.1 million and $775.2 million, respectively.

Previous wording

(3)Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 5.4 million and 87.3 million, respectively, and excludes Reverb active sellers and active buyers as of June 30, 2025.

Current wording

(3)Consolidated active sellers and active buyers include Etsy marketplace active sellers and active buyers of 5.5 million and 86.6 million, respectively. Reverb active buyer and seller metrics are reflected in the 2024 periods presented and excluded from the 2025 periods presented following the completion of its sale.

Previous wording

GMS decreased $143.0 million to $2.8 billion in the three months ended June 30, 2025 compared to the three months ended June 30, 2024, and GMS decreased $336.2 million to $5.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease in GMS between the three and six months ended June 30, 2025 and 2024 was primarily driven by a decrease in Etsy marketplace GMS and the sale of Reverb on June 2, 2025, partially offset by an increase in GMS for the Depop marketplace. At the start of 2025, Etsy marketplace GMS was impacted by pressure on consumer discretionary product spending, a highly promotional and competitive retail environment, category mix, and changes to Etsy’s product development strategy last year which prioritized foundational investments over near-term GMS driving initiatives. While some of these factors persist, we saw momentum in the second quarter attributable in part to improved app performance and effective marketing initiatives. The Etsy marketplace GMS per active buyer on a trailing twelve-month basis declined 2.9% year-over-year to $120, along with a year-over-year decline of 4.6% of active buyers on the Etsy marketplace to 87.3 million.

Current wording

GMS decreased $190.6 million to $2,724.7 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024, and GMS decreased $526.8 million to $8,324.3 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. GMS decreased for both the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, reflecting lower Etsy marketplace GMS and the sale of Reverb, with the former having a greater impact on the year-to-date comparison. For both the three and nine months ended September 30, 2025 and 2024, these decreases were partially offset by an increase in GMS for the Depop marketplace. At the start of 2025, Etsy marketplace GMS was impacted by pressure on consumer discretionary product spending, a highly promotional and competitive retail environment, category mix, and changes to Etsy’s product development strategy last year which prioritized foundational investments over near-term GMS driving initiatives. While some of these factors persist, we saw momentum in the third quarter attributable in part to improved app performance, effective marketing initiatives, and other areas of investment. Although Etsy marketplace GMS declined year-over-year, quarterly year-over-year comparisons continued to improve sequentially, reflecting early progress from these initiatives. The Etsy marketplace GMS per active buyer on a trailing twelve-month basis declined 1.6% year-over-year to $121, along with a year-over-year decline of 5.0% of active buyers on the Etsy marketplace to 86.6 million.

Previous wording

U.S. buyer GMS is GMS from transactions in which the shipping address entered by the buyer at the time of sale is in the U.S., net of refunds. GMS from transactions in which the shipping address entered by the buyer at the time of sale is not in the U.S is non-U.S. buyer GMS. Percent U.S. buyer GMS for the periods presented below are as follows:

Current wording

U.S. buyer GMS is GMS from transactions in which the shipping address entered by the buyer at the time of sale is in the U.S., net of refunds. GMS from transactions in which the shipping address entered by the buyer at the time of sale is not in the U.S, net of refunds is non-U.S. buyer GMS. Percent U.S. buyer GMS for the periods presented below are as follows:

Previous wording

(1) Etsy marketplace percent U.S. Buyer GMS for the three and six months ended June 30, 2025 and 2024 was 74%.

Current wording

(1)Etsy marketplace percent U.S. Buyer GMS was 74% for the three and nine months ended September 30, 2025 and 2024.

Previous wording

There is considerable uncertainty as to when specific tariffs may go into effect, how recent and potential future changes to de minimis exemptions may play out, and the impact higher tariffs may have on consumer demand and discretionary wallet share. Any circumstances that reduce consumer demand or hinder our sellers' cross-border trade may adversely affect our business. See Part II, Item 1A, “Risk Factors” for further detail.

Current wording

There is considerable uncertainty regarding the evolving tariff landscape, how recent changes to de minimis exemptions may play out, and the impact higher tariffs might have on consumer demand and discretionary wallet share. Any circumstances that reduce consumer demand or hinder our sellers' cross-border trade may adversely affect our business. See Part II, Item 1A, “Risk Factors” for further detail.

Previous wording

Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization; provision for income taxes; interest and other non-operating income, net; foreign exchange loss (gain); asset impairment charge; acquisition, divestiture, and corporate structure-related expenses; loss on sale of business; retroactive non-income tax expense; and restructuring and other exit (income) costs. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. See “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

Current wording

Adjusted EBITDA represents our net income adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization; provision for income taxes; interest and other non-operating income, net; foreign exchange (gain) loss; asset impairment charge; acquisition, divestiture, and corporate structure-related expenses; loss on sale of business; restructuring and other exit costs; and retroactive non-income tax expense. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. See “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.

Previous wording

The growth in Services revenue was primarily driven by an increase of 12.7% in on-site advertising revenue, primarily due to an increase in average price per click on Etsy Ads, and, to a lesser extent, an increase in on-site advertising revenue from the Depop marketplace.

Current wording

Services revenue increased primarily due to a $13.5 million increase in advertising revenue, primarily driven by an increase in average price per click on Etsy Ads.

Previous wording

Marketing expenses increased, primarily driven by increased direct marketing costs. This was driven by an increased focus on performance marketing, as we continued to increase investments in efficient channels with positive return on investment, including search engine marketing, product listing ads, and paid social. The increase in performance marketing was partially offset by a decrease in spend on brand marketing as a result of a decrease in broadcasting investments across different media channels primarily in North America, including no prime time big game television advertisement as compared to 2024. Paid GMS was 23% of overall GMS for the six months ended June 30, 2025 compared to 21% for the six months ended June 30, 2024.

Current wording

Marketing expenses increased primarily due to an increase in performance marketing, driven by greater investment in search engine marketing and product listing ads. To a lesser extent, marketing expenses increased due to an increase in brand marketing spend, although brand marketing investment decreased for the Etsy marketplace. These net increases were partially offset by the sale of Reverb on June 2, 2025. Paid GMS was 23% of overall GMS for the three months ended September 30, 2025 compared to 21% for the three months ended September 30, 2024.

Previous wording

As part of ongoing trade negotiations between Canada and the United States, the Canadian government may formally repeal its DST legislation, which, if rescinded, would result in the reversal of DST expense recorded in prior periods.

Current wording

As part of ongoing trade negotiations between Canada and the United States, the Canadian government may formally repeal its digital services tax (“DST”) legislation, which, if rescinded, would result in the reversal of DST expense recorded in prior periods.

Previous wording

Other expense, net decreased from other income, net, primarily driven by changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a loss for the three months ended June 30, 2025 as compared to a gain for the three months ended June 30, 2024. Other expense, net decreased to a lesser extent due to a net loss on the sale of Reverb.

Current wording

Other income, net increased from other expense, net, primarily driven by changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a gain for the three months ended September 30, 2025 as compared to a loss for the three months ended September 30, 2024.

Previous wording

The growth in Services revenue was primarily driven by an increase of 9.4% in on-site advertising revenue, primarily due to an increase in average price per click on Etsy Ads, and, to a lesser extent, an increase in on-site advertising revenue from the Depop marketplace.

Current wording

Services revenue increased primarily due to a $42.9 million increase in advertising revenue, primarily driven by an increase in average price per click on Etsy Ads.

Previous wording

Marketplace revenue decreased primarily due to an overall volume decrease in transaction fee revenue of 5.2%, primarily driven by a decline in GMS for the Etsy marketplace, and to a lesser extent, the Reverb marketplace given the sale on June 2, 2025, and partially offset by an increase in GMS for the Depop marketplace. This decrease was partially offset by an increase in the seller set-up fee as well as expansion of the fee to additional locations. Additionally, marketplace revenue increased as a result of a 2.4% increase in payment revenue, primarily driven by an increase in transactions on the Etsy and Depop marketplaces in locations in which we charge a higher payments fee, as well as volume related to Depop payments expansion, and partially offset by a decrease related to the sale of the Reverb marketplace.

Current wording

Marketplace revenue decreased primarily due to a $26.5 million decrease related to the sale of the Reverb marketplace on June 2, 2025 and additionally, a decrease of $26.0 million in transaction fee revenue, which was driven by a decline in Etsy marketplace GMS and an increase in Depop GMS. These decreases were partially offset by an increase in payments revenue of $17.0 million, primarily related to an increase in Depop GMS, and a $15.0 million increase in Etsy marketplace seller set-up fee revenue.

Previous wording

The increase in cost of revenue was primarily driven by an increase in cloud-related hosting and bandwidth costs, cost of refunds, and Etsy Insider loyalty program costs, which launched in beta form in the third quarter of 2024. These increases were partially offset by a net decrease in payments processing fees, driven by a net GMS decrease, cost optimization efforts, and the sale of Reverb on June 2, 2025.

Current wording

The increase in cost of revenue was driven by an increase in cloud-related hosting and bandwidth costs and, to a lesser extent, cost of refunds and Etsy Insider loyalty program costs, which launched in beta form in the third quarter of 2024. These increases are partially offset by the sale of Reverb on June 2, 2025 and a net decrease in payments processing fees driven by a net GMS decrease and cost optimization efforts.

Previous wording

Marketing expenses increased, primarily driven by an increase in direct marketing costs. This was driven by an increased focus on performance marketing, as we continued to increase investments in efficient channels with positive return on investment, including search engine marketing, product listing ads, and paid social. The increase in performance marketing was partially offset by a decrease in spend on brand marketing as a result of a decrease in broadcasting investments across different media channels primarily in North America. Paid GMS was 24% of overall GMS for the three months ended June 30, 2025 compared to 21% for the three months ended June 30, 2024.

Current wording

Marketing expenses increased primarily due to an increase in performance marketing, driven by greater investment in search engine marketing, product listing ads, and paid social. This increase was partially offset by a decrease in brand marketing spend, although brand marketing investment increased at Depop. The sale of Reverb on June 2, 2025 also reduced marketing expenses. Paid GMS was 23% of overall GMS for the nine months ended September 30, 2025 compared to 21% for the nine months ended September 30, 2024.

Previous wording

Product development expenses decreased, primarily due to an increase in the amount of employee-related costs capitalized as a result of several larger projects, and a decrease in stock-based compensation, primarily due to forfeitures related to the sale of Reverb on June 2, 2025. These decreases were largely offset by increased employee compensation-related expenses.

Current wording

Product development expenses increased, primarily due to increased employee compensation-related expenses. This increase was partially offset by the sale of Reverb on June 2, 2025 and, to a lesser extent, an increase in the amount of employee-related costs capitalized as a result of several larger projects.

Previous wording

General and administrative expenses decreased, primarily due to net favorable non-income tax items as well as retroactive non-income tax expense related to the DST legislation in Canada, which was enacted on June 28, 2024 retroactive to January 1, 2022 and recorded in the second quarter of 2024. General and administrative expenses also decreased due to a decrease in stock-based compensation, including lower performance-based restricted stock units.

Current wording

General and administrative expenses decreased, primarily due to net favorable non-income tax items as well as retroactive non-income tax expense related to the DST legislation in Canada, which was enacted on June 28, 2024 retroactive to January 1, 2022 and recorded in the second quarter of 2024. Additionally, general and administrative expenses decreased due to a decrease in stock-based compensation, including lower performance-based restricted stock units, and the sale of Reverb on June 2, 2025.

Previous wording

Asset impairment charges were $101.7 million in the six months ended June 30, 2025, related to the impairment of the goodwill of Reverb. See Part I, Item 1, “Note 6—Goodwill” for more information.

Current wording

Asset impairment charges were $101.7 million in the nine months ended September 30, 2025, related to the impairment of the goodwill of Reverb. See Part I, Item 1, “Note 6—Goodwill” for more information.

Previous wording

Other expense, net decreased from other income, net, primarily driven by changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a loss for the six months ended June 30, 2025 as compared to a gain for the six months ended June 30, 2024. Other expense, net decreased to a lesser extent due to a net loss on the sale of Reverb.

Current wording

Other expense, net decreased from other income, net, primarily driven by changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a larger loss for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Previous wording

The primary drivers of our income tax provision for the six months ended June 30, 2025 were tax expense on income before income taxes excluding the impairment charge and tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant.

Current wording

The primary drivers of our income tax provision for the nine months ended September 30, 2025 were tax expense on income before income taxes excluding the impairment charge and tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant.

Previous wording

The primary drivers of our income tax provision for the six months ended June 30, 2024 were tax expense on income before income taxes, tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant, and state and local income taxes.

Current wording

The primary drivers of our income tax provision for the nine months ended September 30, 2024 were tax expense on income before income taxes, tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant, and state and local income taxes.

Previous wording

The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated:

Current wording

The following table reflects the reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated:

Previous wording

(1)Beginning in the first quarter of 2025, we are excluding payroll tax expense related to stock-based compensation from Adjusted EBITDA because these taxes are directly related to stock-based compensation expense which is excluded from Adjusted EBITDA. Additionally, these taxes fluctuate with settlements and exercises of stock-based compensation awards, our stock price, and other factors that are beyond our control, and therefore we believe they are not reflective of our ongoing business operations or the underlying trends in our business. Management does not consider these taxes when evaluating the performance of our business or making operating plans. We believe excluding this expense from Adjusted EBITDA provides investors with a better understanding of the performance of our core business and serves as a tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. We did not retrospectively apply this change to prior periods as the impact was immaterial to such periods. In the three and six months ended June 30, 2024 payroll tax expense related to stock-based compensation was $3.1 million and $4.1 million, respectively.

Current wording

(1)Beginning in the first quarter of 2025, we are excluding payroll tax expense related to stock-based compensation from Adjusted EBITDA because these taxes are directly related to stock-based compensation expense which is excluded from Adjusted EBITDA. Additionally, these taxes fluctuate with settlements and exercises of stock-based compensation awards, our stock price, and other factors that are beyond our control, and therefore we believe they are not reflective of our ongoing business operations or the underlying trends in our business. Management does not consider these taxes when evaluating the performance of our business or making operating plans. We believe excluding this expense from Adjusted EBITDA provides investors with a better understanding of the performance of our core business and serves as a tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. We did not retrospectively apply this change to prior periods as the impact was immaterial to such periods. In the three and nine months ended September 30, 2024, payroll tax expense related to stock-based compensation was $0.7 million and $4.8 million, respectively.

Previous wording

Cash and cash equivalents and short-term investments were $1.4 billion as of June 30, 2025. Additionally, we have $126.6 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility. As of June 30, 2025, we had net working capital of $1.2 billion and in the six months ended June 30, 2025, we had positive operating cash flows of $157.3 million. We believe that this capital structure, as well as the nature and framework of our business, will allow us to meet all debt covenants, sustain our business operations, and be able to react to changing macroeconomic conditions.

Current wording

Cash and cash equivalents and short-term investments were $1.5 billion as of September 30, 2025. Additionally, we have $108.3 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility. As of September 30, 2025, we had net working capital of $1.2 billion and in the nine months ended September 30, 2025, we had positive operating cash flows of $376.3 million. We believe that this capital structure, as well as the nature and framework of our business, will allow us to meet all debt covenants, sustain our business operations, and be able to react to changing macroeconomic conditions.

Previous wording

Net cash provided by (used in) investing activities results from purchases and maturities of investments and cash capital expenditures, including investments in website and app development and purchases of property and equipment to support our business initiatives, and any proceeds from sale of business. The increase in the six months ended June 30, 2025 of $83.3 million, compared to the same period in 2024, was primarily due to the proceeds from sale of Reverb, net of cash.

Current wording

Net cash provided by (used in) investing activities results from purchases and maturities of investments and capital expenditures, including investments in website and app development and purchases of property and equipment to support our business initiatives, and any proceeds from sale of business. The increase in the nine months ended September 30, 2025 of $68.3 million, compared to the same period in 2024, was primarily due to the proceeds from sale of Reverb, net of cash, offset in part by net purchases of investments.

Previous wording

Net Cash Provided by (Used in) Financing Activities

Current wording

Net Cash Used in Financing Activities

Previous wording

Net cash provided by (used in) financing activities primarily consists of cash inflows from the issuance of convertible notes offset in part by cash outflows from stock repurchases and payments of debt issuance costs. The increase in the six months ended June 30, 2025 of $460.3 million, compared to the same period in 2024, was primarily due to the issuance of the 2025 Notes offset in part by an increase in stock repurchases and payment of debt issuance costs related to the 2025 Notes.

Current wording

Net cash used in financing activities primarily consists of cash inflows from the issuance of convertible notes and cash outflows from stock repurchases and payment of tax obligations on vested equity awards. The increase in the nine months ended September 30, 2025 of $500.2 million, compared to the same period in 2024, was primarily due to the issuance of the 2025 Notes offset in part by an increase in stock repurchases and payment of tax obligations on vested equity awards.