ETSY INC

Previous wording

Etsy operates two-sided online marketplaces that connect millions of creative entrepreneurs with buyers around the world.

Current wording

Etsy operates a two-sided online marketplace that connects millions of creative entrepreneurs with buyers around the world.

Previous wording

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 wording

On February 15, 2026, we executed a Sale and Purchase Agreement (the “Original Purchase Agreement”) to sell all of the outstanding equity interests of Depop Limited (“Depop”), our fashion resale marketplace, to eBay Inc. (“eBay”) for a base purchase price of $1.2 billion in cash, subject to certain purchase price adjustments as set forth in the Purchase Agreement. The Original Purchase Agreement, as supplemented May 21, 2026 (the “First Amendment”) and as amended July 12, 2026 (the “Second Amendment”), is referred to herein collectively as the “Purchase Agreement.” The sale closed on July 30, 2026 (the “Closing Date”). See Part I, Item 1, “Note 2—Discontinued Operations” for further discussion of the executed Purchase Agreement. We continued to own and operate Depop through the date of sale, with Depop’s assets and liabilities, results of operations, and related cash flows presented as discontinued operations in the Consolidated Balance Sheets, 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.

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). 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 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). 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 as of June 30, 2026. The sale closed on July 30, 2026. See Part I, Item 1, “Note 2—Discontinued Operations” for further discussion of the executed Purchase Agreement. Due to the sale of Reverb on June 2, 2025, continuing operations for the three and six months ended June 30, 2025 includes Etsy marketplace and Reverb marketplace through the date of sale, but the three and six months ended June 30, 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 and six months ended June 30, 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.

Previous wording

(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 wording

(1)% growth (decline) Y/Y for the Etsy marketplace is the change in continuing operations for the three and six months ended June 30, 2026, which represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the three and six months ended June 30, 2025, as Reverb was sold in the second quarter of 2025.

Previous 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.

Current wording

(2)Excluded from the tables above is gross merchandise sales (“GMS”) for Depop, which was $455.7 million and $249.6 million for the three months ended June 30, 2026 and 2025, respectively, and $804.6 million and $483.1 million for the six months ended June 30, 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

(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.

Current wording

(4)Active sellers for the three and six months ended June 30, 2026 and 2025 represent the Etsy marketplace only as Reverb was sold on June 2, 2025 and Depop is presented as discontinued operations. 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

(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.

Current wording

(5)Active buyers for the three and six months ended June 30, 2026 and 2025 represent the Etsy marketplace only as Reverb was sold on June 2, 2025 and Depop is presented as discontinued operations. 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.

Previous wording

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 wording

Etsy marketplace year-over-year GMS growth for the three and six months ended June 30, 2026, which excludes Reverb from the prior year period, was up 7.5% and 6.5%, respectively. This growth was driven by continued progress against our strategic priorities, which are translating into underlying improvements across our marketplace, reflected in improving buyer and seller trends and stronger marketplace health. The first quarter of 2026 also benefited from foreign exchange tailwinds and softer performance in the prior year comparable period. The Etsy marketplace GMS per active buyer on a trailing twelve month basis increased 2.8% year-over-year to $124, partially offset by a year-over-year decline of 0.4% of active buyers on the Etsy marketplace to 87.0 million.

Previous 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.

Current wording

There is considerable uncertainty regarding macroeconomic conditions, including geopolitical conflicts, the evolving tariff landscape, and inflationary pressures, 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.

Previous wording

As reported and currency-neutral GMS (decline) growth for the periods presented below are as follows:

Current wording

As reported and currency-neutral GMS growth (decline) for the periods presented below are as follows:

Previous wording

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 wording

Marketplace revenue increased primarily due to a $17.8 million increase in Etsy transaction fee revenue and a $14.5 million increase in Etsy payments revenue, both driven by an increase in Etsy marketplace GMS. These increases in marketplace revenue were partially offset by a decrease of $14.3 million related to the sale of Reverb on June 2, 2025.

Previous 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.

Current wording

Theincrease in cost of revenue was primarily driven by an increase in payments fees, cost of refunds, and, to a lesser extent, cloud-related hosting and bandwidth costs, partially offset by the sale of Reverb on June 2, 2025.

Previous 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.

Current wording

The primary drivers of our income tax provision for the three months ended June 30, 2025 were 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 tax expense on income before income taxes.

Previous wording

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 wording

Loss on discontinued operations for the three months ended June 30, 2026 and 2025 was $161.0 million and $16.8 million, respectively, reflecting operating results from Depop. The increase was primarily due to investments that Etsy made in the Depop business which after period end were recovered through purchase price adjustments at the Closing Date. See Part I, Item 1, “Note 2—Discontinued Operations” for more information regarding the financial results of discontinued operations.

Previous wording

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.

Current wording

Services revenue increased primarily due to a $33.5 million increase in advertising revenue, primarily driven by higher click volume and an increase in average price per click on Etsy Ads.

Previous wording

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 wording

Marketing expenses increased primarily due to targeted shifts in portfolio mix, in which strong returns in specific channels supported incremental spend and an increase in stock-based compensation, mainly resulting from forfeitures related to an executive departure in the six months ended June 30, 2025 that did not recur in the six months ended June 30, 2026. This increase was partially offset by the sale of Reverb on June 2, 2025, which reduced marketing expenses. Paid GMS was 23% of overall GMS for both the six months ended June 30, 2026 and 2025.

Previous 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.

Current wording

Asset impairment charge was $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 7—Goodwill” for more information.

Previous wording

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 wording

Given that the sale of Depop was pending as of June 30, 2026, Etsy results are presented on a continuing operations basis, while Depop results are reported as discontinued operations for all periods presented. Due to the sale of Reverb on June 2, 2025, continuing operations for the three and six months ended June 30, 2025 includes Etsy marketplace and Reverb marketplace through the date of sale, but the three and six months ended June 30, 2026 reflects the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable.

Previous 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.

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 and six months ended June 30, 2025 in this Quarterly Report. These measures include the following non-GAAP financial measures for the three and six months ended June 30, 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 income (loss) and Net income (loss) margin, and (7) Adjusted EBITDA and Adjusted EBITDA margin.

Previous 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):

Current wording

Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense (income) and related payroll taxes; depreciation and amortization expense; provision 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; loss on sale of business; restructuring and other exit income; and retroactive non-income tax income. The following tables reflect the reconciliation of net income (loss) from continuing operations to Adjusted EBITDA from continuing operations and the Etsy marketplace. The tables also reflect 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 $1.4 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.

Current wording

Cash and cash equivalents and short-term investments were $1.1 billion as of June 30, 2026. Additionally, we have $160.7 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 June 30, 2026, we had net working capital from continuing operations of $230.7 million and in the six months ended June 30, 2026, we had positive operating cash flows of continuing operations of $268.4 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

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.

Current wording

Upon completion of the sale of Depop to eBay, which closed on July 30, 2026, we received approximately $1.4 billion in cash. See Part I, Item 1, “Note 2—Discontinued Operations” for more information.

Previous 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.

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 six months ended June 30, 2026 of $99.6 million, compared to the same period in 2025, was primarily due to anincrease of $76.0 million in net income, excluding non-cash items and anincrease of $23.7 million in the change in working capital less cash.

Previous 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.

Current wording

Net cash (used in) provided by 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, and any proceeds from sale of business. The decrease in the six months ended June 30, 2026 of $99.2 million, compared to the same period in 2025, was primarily due to the proceeds from sale of Reverb, net of cash in 2025.

Previous 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.

Current wording

Net cash (used in) provided by financing activities primarily consists of cash outflows for stock repurchases and payment of tax obligations on vested equity awards, and any cash inflows from the issuance of convertible notes. The decrease in the six months ended June 30, 2026 of $551.4 million, compared to the same period in 2025, was primarily due to the issuance of the 2025 Notes in 2025 offset in part by an increase in stock repurchases.