ETSY INC
For the period ended Mar 31, 2026. Filed Apr 29, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 29, 2026
ETSY$89.93-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-29.
0001370637-25-000100
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-29.
0001370637-26-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 81 current paragraphs.
31 unchanged; 24 reworded; 26 added; 49 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
On February 15, 2026, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with eBay Inc. (“eBay”) for eBay to purchase Depop Limited (“Depop”), our fashion resale marketplace, for $1.2 billion in cash, subject to certain adjustments as set forth in the Purchase Agreement. The sale is currently expected to close by the end of the third quarter of 2026, subject to regulatory approval and certain other closing conditions as set forth in the Purchase Agreement. We will continue to own and operate Depop through such time as the transaction is completed, with Depop’s assets and liabilities, results of operations, and related cash flows presented as discontinued operations in the Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, and Condensed Consolidated Statements of Cash Flows, respectively, for all periods presented. Unless otherwise noted, all financial results and other metrics discussed in this report are for continuing operations only. In keeping with our current capital allocation approach, we plan to utilize the proceeds from this transaction for general corporate purposes, continued share repurchases, and investment in the Etsy marketplace.
Current report
On June 2, 2025, we completed the sale of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace. The results of Reverb, until its sale on June 2, 2025, are included in all financial results and other metrics discussed in this report, unless otherwise noted.
Current report
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). Our key operating and financial metrics are presented on a continuing operations basis in the table below for all periods presented, since Depop is presented as a discontinued operation due to its pending sale. Due to the sale of Reverb on June 2, 2025, continuing operations includes Reverb and Etsy marketplaces for the three months ended March 31, 2025, but the three months ended March 31, 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 results year-over-year, we have presented Etsy marketplace results for the three months ended March 31, 2025. Our calculation of trailing twelve months free cash flow includes activity for combined continuing and discontinued operations. See “Non-GAAP Financial Measures” for more information regarding our use of Etsy marketplace financial metrics, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow, and reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure.
Current report
Our key operating and financial metrics are (in thousands, except percentages):
Current report
(1)% growth (decline) Y/Y for the Etsy marketplace is the change in continuing operations for the three months ended March 31, 2026, which represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the three months ended March 31, 2025, as Reverb was sold in the second quarter of 2025.
Current report
We disclose key operating metrics because they provide meaningful insight into the performance and health of our business. GMS, active sellers, and active buyers each reflect core drivers of our business—seller success, buyer engagement, and the overall scale of our platforms. We believe these measures help investors and management evaluate our growth potential and the underlying strength of our marketplace.
Current report
GMS from continuing operations decreased by $99.6 million to $2,460.2 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, reflecting a decrease of $228.4 million from the sale of Reverb, partially offset by an increase of $128.7 million from the Etsy marketplace. Etsy marketplace year-over-year GMS growth, which excludes Reverb from the prior year period, was up 5.5%, driven by progress against our strategic priorities, which are beginning to translate into underlying improvements across our marketplace, as well as from foreign exchange tailwinds. We also benefited from softer performance in the prior year comparable period. The Etsy marketplace GMS per active buyer on a trailing twelve month basis increased 1.5% year-over-year to $122, partially offset by a year-over-year decline of 2.1% of active buyers on the Etsy marketplace to 86.6 million.
Current report
Marketplace revenue increased primarily due to an $11.5 million increase in Etsy payments revenue and a $9.7 million increase in Etsy transaction fee revenue, both driven by an increase in Etsy marketplace GMS. These increases in marketplace revenue were partially offset by a decrease of $21.3 million related to the sale of Reverb on June 2, 2025.
Current report
Marketing expenses increased primarily due to targeted shifts in portfolio mix, in which strong returns in specific channels supported incremental spend. Marketing expenses also increased due to increased stock-based compensation, mainly resulting from forfeitures related to an executive departure in the three months ended March 31, 2025 that did not recur in the three months ended March 31, 2026. These increases were partially offset by the sale of Reverb on June 2, 2025. Paid GMS was 21% of overall GMS for the three months ended March 31, 2026 compared to 23% for the three months ended March 31, 2025.
Current report
General and administrative expenses decreased, primarily due to the reversal of previously recognized Canadian digital services tax (“DST”) expense in the first quarter of 2026, following the repeal of the DST in Canada in March 2026. Additionally, general and administrative expenses decreased due to the sale of Reverb on June 2, 2025.
Current report
Asset impairment charge
Current report
The primary driver of our income tax provision for the three months ended March 31, 2026 was tax expense on income before income taxes.
Current report
Loss on Discontinued Operations
Current report
Loss on discontinued operations for the three months ended March 31, 2026 and 2025 was $35.0 million and $17.0 million, respectively, reflecting operating results from Depop. See Part I, Item 1, “Note 2—Discontinued Operations” for more information.
Current report
Other Key Financial Metrics
Current report
Given the pending sale of Depop, Etsy results are presented on a continuing operations basis, while Depop results are reported as discontinued operations across all periods presented. Due to the sale of Reverb on June 2, 2025, continuing operations for the three months ended March 31, 2025 includes Reverb and Etsy marketplaces, but the three months ended March 31, 2026 reflects the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable.
Current report
Management believes that presenting these Etsy marketplace non-GAAP financial measures is useful to investors because they:
Current report
•provide a clearer, normalized baseline to evaluate the organic growth, financial performance, and underlying trends of our remaining Etsy marketplace business;
Current report
•facilitate more direct year-over-year comparisons of our continuing operations by removing the impact of the divested Reverb marketplace; and
Current report
•align with how management evaluates the performance of the business, allocates resources, and sets internal operational targets moving forward.
Current report
These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for, financial information prepared in accordance with GAAP. Furthermore, our calculation of these non-GAAP measures may differ from similarly titled measures reported by other companies. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is provided in the following tables below (in thousands, except percentages):
Current report
Adjusted EBITDA
Current report
Free Cash Flow
Current report
Free cash flow represents our net cash provided by operating activities, reduced by purchases of property and equipment and website and app development that are included in cash flows from investing activities. The following table reflects the reconciliation of operating activities to free cash flow for combined continuing and discontinued operations on a trailing twelve month basis (in thousands):
Current report
Upon completion of the Purchase Agreement for eBay to purchase Depop, which is expected to close by the end of the third quarter of 2026, we anticipate receiving approximately $1.2 billion in cash, net of certain purchase price adjustments. See Part I, Item 1, “Note 2—Discontinued Operations” for more information on the Purchase Agreement.
Removed paragraphs (49)
Previous report
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 report
Our strategy is focused around:
Previous report
•Building a sustainable competitive advantage for the Etsy marketplace — our “Right to Win;”
Previous report
•Growing the Etsy marketplace in our core geographies and globally; and
Previous report
•Leveraging our expertise, or “playbook,” in running two-sided marketplaces across our brands.
Previous report
Our investments in technology infrastructure, product development, marketing, trust and safety, member support, helping sellers grow, and fostering engaged and impactful teams, support our strategy, which you can read more about in our Annual Report.
Previous report
Third Quarter 2025 Key Metrics and Financial Highlights
Previous report
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 report
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 report
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 report
Sale of Reverb
Previous report
On June 2, 2025, we closed the previously announced sale of Reverb. We recognized a net loss on the sale of Reverb of $5.1 million, representing the difference between the fair value of the consideration received of $108.2 million and the carrying amount of Reverb’s net assets as of the closing date.
Previous report
Convertible Debt
Previous report
In June 2025, we issued $700.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2030 (the “2025 Notes”) in a private placement to qualified institutional buyers. The initial conversion price of the 2025 Notes represented a premium of approximately 42.5% over the closing price of our common stock on June 11, 2025, the date the 2025 Notes offering was priced. The net proceeds from the sale of the 2025 Notes were $689.5 million after deducting the offering expenses. The 2025 Notes will mature on June 15, 2030, unless earlier converted, redeemed, or repurchased.
Previous report
We repurchased approximately 2.5 million shares of our common stock for approximately $150.0 million concurrently with the issuance of the 2025 Notes. We intend to use the remainder of the net proceeds from the 2025 Notes for general corporate purposes, which may include the repayment or repurchase, at or prior to maturity, of our existing debt securities. For more information on the 2025 Notes, see “Note 10—Debt” in the Notes to Consolidated Financial Statements.
Previous report
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 report
(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 report
(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 report
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 report
(1)Etsy marketplace percent U.S. Buyer GMS was 74% for the three and nine months ended September 30, 2025 and 2024.
Previous report
Active Sellers
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Active Buyers
Previous report
Marketplace revenue decreased primarily due to a decrease of $19.3 million related to the sale of the Reverb marketplace on June 2, 2025. Additionally, marketplace revenue decreased, to a lesser extent, due to a decrease in transaction fee revenue, which was driven by GMS, which declined for the Etsy marketplace and increased for Depop. These decreases were partially offset by an increase in payments revenue of $5.7 million, largely related to an increase in Depop GMS.
Previous report
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 report
General and administrative expenses decreased, primarily due to the sale of Reverb on June 2, 2025 and due to net unfavorable non-income tax items in the prior year which did not reoccur in the current year.
Previous report
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 report
The primary drivers of our income tax provision for the three months ended September 30, 2025 were tax expense on income before income taxes, partially offset by tax benefits from stock-based compensation due to a higher stock price upon exercise of stock options compared to the stock price upon grant.
Previous report
The primary drivers of our income tax provision for the three 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 report
Comparison of Nine Months Ended September 30, 2025 and 2024
Previous report
Revenue
Previous report
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 report
Costs and Operating Expenses
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Cost of Revenue
Previous report
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 report
Marketing
Previous report
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 report
Product development
Previous report
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 report
General and administrative
Previous report
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.
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Reworded paragraphs (24)
Previous wording
Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces share a mission to “Keep Commerce Human,” and we’re committed to using the power of business and technology to strengthen communities and empower people.
Current wording
Etsy operates two-sided online marketplaces that connect millions of creative entrepreneurs with buyers around the world.
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Our primary marketplace, Etsy, is the global destination for unique and creative goods. It connects artisans and entrepreneurs with thoughtful consumers seeking items that reflect their tastes and values. We aim to create a virtuous cycle that benefits all of our stakeholders. Ultimately, our success is tied to our sellers; we make money when they do. In addition to providing them with access to tens of millions of buyers, we offer a range of tools and services that address key business needs. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs.
Current wording
The Etsy marketplace is the global destination for unique, creative goods from independent sellers, connecting artisans with thoughtful consumers seeking items that reflect their tastes and values.
Previous wording
We generate revenue primarily from marketplace activities, including transaction (inclusive of offsite advertising), payments processing, and listing fees, as well as from optional seller services, which include on-site advertising and shipping labels.
Current wording
We generate revenue primarily from marketplace activities, including transaction fees (inclusive of offsite advertising), payments processing fees, and listing fees, as well as from optional seller services, which include on-site advertising and shipping labels.
Previous wording
Gross merchandise sales (“GMS”) is the dollar value of items sold in our marketplaces, excluding shipping fees and net of refunds, within the applicable period. GMS does not represent revenue earned by us. GMS is largely driven by transactions in our marketplaces and is not directly impacted by Services activity. However, because our revenue and cost of revenue depend significantly on the dollar value of items sold in our marketplace, we believe that GMS is an indicator of the success of our sellers, the satisfaction of our buyers, and the health and scale of our business. We track “Paid GMS” for the Etsy marketplace and define it as Etsy marketplace GMS that is attributable to our performance marketing efforts, which excludes most of our marketing investments focused on brand awareness like TV and digital video.
Current wording
(2)Excluded from the table above is gross merchandise sales (“GMS”) for Depop, which was $348.9 million and $233.5 million for the three months ended March 31, 2026 and 2025, respectively. GMS is the dollar value of items sold in our marketplaces, excluding shipping fees and net of refunds, within the applicable period. GMS does not represent revenue earned by us.
Previous wording
(2)Revenue take rate is consolidated revenue divided by consolidated GMS.
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(3)Revenue take rate is revenue divided by GMS.
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An active seller is a seller who has had a charge or sale in the last 12 months. Charges include Marketplace and Services revenue fees, discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Business.” A seller is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple seller accounts and can count as a distinct active seller in each of our marketplaces, and we continue to exclude certain disqualified sellers. We succeed when sellers succeed, so we view the number of active sellers as a key indicator of consumer awareness of our brands, the reach of our platforms, the potential for growth in GMS and revenue, and the health of our business.
Current wording
(4)An active seller is a seller who has had a charge or sale in the last 12 months. A seller is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple seller accounts and can count as a distinct active seller in each of our marketplaces. As part of our commitment to integrity and transparency, we continuously monitor, and from time to time adjust, the criteria for disqualifying a seller as an active seller.
Previous wording
An active buyer is a buyer who has made at least one purchase in the last 12 months. A buyer is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple buyer accounts and can count as a distinct active buyer in each of our marketplaces. We generate revenue when buyers order items from sellers, so we view the number of active buyers as a key indicator of our potential for growth in GMS and revenue, the reach of our platforms, consumer awareness of our brands, the engagement and loyalty of buyers, and the health of our business.
Current wording
(5)An active buyer is a buyer who has made at least one purchase in the last 12 months. A buyer is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple buyer accounts and can count as a distinct active buyer in each of our marketplaces.
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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.
Current wording
There is considerable uncertainty regarding macroeconomic conditions, including geopolitical conflicts and the evolving tariff landscape, how recent changes to de minimis exemptions may play out, and the impact any of the foregoing 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.
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As reported and currency-neutral GMS decline for the periods presented below are as follows:
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As reported and currency-neutral GMS (decline) growth for the periods presented below are as follows:
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Revenue increased primarily driven by an increase in services revenue, and partially offset by a decrease in marketplace revenue.
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Revenue increased primarily driven by an increase in services revenue, and, to a lesser extent, an increase in marketplace revenue.
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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.
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Services revenue increased primarily due to a $14.4 million increase in advertising revenue, primarily driven by an increase in average price per click on Etsy Ads.
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The increase in cost of revenue was primarily driven by an increase in cost of refunds and cloud-related hosting and bandwidth costs, partially offset by the sale of Reverb on June 2, 2025.
Current wording
Theincrease in cost of revenue was primarily driven by an increase in cost of refunds, payments fees, and cloud-related hosting and bandwidth costs, partially offset by the sale of Reverb on June 2, 2025.
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Product development expenses increased primarily due to increased employee compensation-related expenses, partially offset by the sale of Reverb on June 2, 2025.
Current wording
Product development expenses decreased primarily due to the sale of Reverb on June 2, 2025, offset by increased Etsy marketplace employee compensation-related expenses.
Previous 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.
Current wording
Asset impairment charge was $101.7 million in the three months ended March 31, 2025, related to the impairment of the goodwill of Reverb. See Part I, Item 1, “Note 6—Goodwill” for more information. There was no asset impairment charge in the three months ended March 31, 2026.
Previous 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.
Current wording
The primary drivers of our income tax provision for the three months ended March 31, 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
Adjusted EBITDA and Adjusted EBITDA Margin
Current wording
To provide investors with a meaningful basis for comparing our ongoing operating results year-over-year, we have presented certain Etsy marketplace financial measures for the three months ended March 31, 2025 in this Quarterly Report. These measures include the following non-GAAP financial measures for the three months ended March 31, 2025 where we exclude the impact of Reverb: (1) Revenue and Revenue take rate, (2) Marketplace revenue, (3) Services revenue, (4) Gross profit, (5) Operating expenses, (6) Net (loss) income and Net (loss) income margin, and (7) Adjusted EBITDA and Adjusted EBITDA margin.
Previous 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.
Current wording
Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization expense; provision (benefit) for income taxes; interest and other non-operating (income) expense, net; foreign exchange (gain) loss; acquisition, divestiture, and corporate structure-related expenses; asset impairment charge; restructuring and other exit costs; and retroactive non-income tax income. The following table reflects the reconciliation of net income (loss) from continuing operations to Adjusted EBITDA from continuing operations and the Etsy marketplace. The table also reflects the calculation of Adjusted EBITDA margin from continuing operations and the Etsy marketplace for each of the periods indicated (in thousands, except percentages):
Previous 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.
Current wording
Cash and cash equivalents and short-term investments were $1.4 billion as of March 31, 2026. Additionally, we have $150.6 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 (the “2023 Credit Agreement”). As of March 31, 2026, we had net working capital from continuing operations of $520.3 million and in the three months ended March 31, 2026, we had positive operating cash flows of continuing operations of $102.5 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
We have the ability to draw down on a $400.0 million senior secured revolving credit facility (the “2023 Credit Agreement”). See Part I, Item 1, “Note 10—Debt” for more information on the 2023 Credit Agreement.
Current wording
We have the ability to draw down on the 2023 Credit Agreement. See Part I, Item 1, “Note 10—Debt” for more information on the 2023 Credit Agreement.
Previous wording
Net Cash Provided by Operating Activities
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Net Cash Provided by Operating Activities of Continuing Operations
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Our cash flows from operations are largely dependent on revenue generation and net income, as well as working capital movements and non-cash items. Non-cash working capital at any specific point in time is subject to many variables, including variability in the timing of cash receipts and payments (including payment of taxes), and vendor payment terms. The decrease in the nine months ended September 30, 2025 of $61.2 million, compared to the same period in 2024, was primarily due to a $74.0 million decrease in the change in working capital less cash, partially offset by an increase of $12.8 million in net income, excluding non-cash items.
Current wording
Our cash flows from continuing operations are largely dependent on revenue generation and net income from continuing operations, as well as working capital movements and non-cash items. Non-cash working capital at any specific point in time is subject to many variables, including variability in the timing of cash receipts and payments (including payment of taxes), and vendor payment terms. The increase in the three months ended March 31, 2026 of $52.7 million, compared to the same period in 2025, was primarily due to a $28.8 million increase in the change in working capital less cash and an increase of $24.0 million in net income, excluding non-cash items.
Previous wording
Net Cash Provided by (Used in) Investing Activities
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Net Cash Used in Investing Activities of Continuing Operations
Previous 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.
Current wording
Net cash used in investing activities of continuing operations 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. The decrease in the three months ended March 31, 2026 of $5.6 million, compared to the same period in 2025, was primarily due to a decrease in net purchases of investments.
Previous 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.
Current wording
Net cash used in financing activities primarily consists of cash outflows for stock repurchases and payment of tax obligations on vested equity awards. The decrease in the three months ended March 31, 2026 of $46.3 million, compared to the same period in 2025, was primarily due to a decrease in stock repurchases.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Revenue increased primarily driven by an increase in services revenue, and partially offset by a decrease in marketplace revenue.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
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: