ETSY INC
For the period ended Sep 30, 2026. Filed Oct 28, 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.
Sep 30, 2026 · Filed Oct 28, 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 2026-06-30; filed 2026-08-05.
0001370637-26-000080
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-28.
0001370637-26-000092
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 104 previous paragraphs and 110 current paragraphs.
59 unchanged; 35 reworded; 15 added; 7 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 27 previous and 27 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 (15)
Current report
On July 30, 2026 (the “Closing Date”), we closed on the sale of 100% of Depop Limited (“Depop”), our fashion resale marketplace, to eBay Inc. (“eBay”) for cash consideration of $1.4 billion. We recognized a gain on the sale of Depop of $839.7 million, which together with Depop’s results of operations through the Closing Date, are included in income (loss) from discontinued operations before income taxes for the three and nine months ended September 30, 2026. Depop results are presented as discontinued operations for all periods through the Closing Date. See Part I, Item 1, “Note 2—Discontinued Operations” for further information. Unless otherwise noted, all financial results and other metrics discussed in this report are for continuing operations only.
Current report
(1)Percent U.S. Buyer GMS - Etsy marketplace was 74% for nine months ended September 30, 2025.
Current report
(1)As reported and currency-neutral GMS for the Etsy marketplace declined (2.4)% and (3.2)%, respectively, for the three months ended September 30, 2025. This resulted in an FX impact of 0.8%.
Current report
Cost of revenue increased primarily due to an increase in payments fees, and to a lesser extent, an increase in hosting and bandwidth costs, capitalized website and app development amortization, and cash-based compensation and benefits.
Current report
General and administrative expenses for the three months ended September 30, 2026 were flat when compared to the three months ended September 30, 2025.
Current 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.
Current report
Income (Loss) on Discontinued Operations
Current report
Comparison of Nine Months Ended September 30, 2026 and 2025
Current report
Income (Loss) on Discontinued Operations
Current report
On October 1, 2026, we paid $10.8 million in cash and recorded $1.3 million to additional paid-in capital to settle conversion notices of $12.1 million aggregate principal amount of outstanding 2019 Notes and paid $637.8 million in cash to settle the remaining aggregate principal amount of our outstanding 2019 Notes. The 2019 Capped Call Transactions expired on September 29, 2026, the second scheduled trading day immediately preceding the October 1, 2026 maturity date of the 2019 Notes. The 2019 Capped Call Transactions expired unexercised, and no shares of our common stock or cash were delivered to us. Our ability to pay our debt when due or to refinance our outstanding indebtedness, including the 2020 Notes, the 2021 Notes, and the 2025 Notes depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. See Part II, Item 1A, “Risk Factors.”
Current report
Net Cash Used in Financing Activities
Current report
Net Cash Used in Operating Activities of Discontinued Operations
Current report
Net cash used in operating activities of discontinued operations is related to net income from discontinued operations, as well as working capital movements and non-cash items. The increase in the nine months ended September 30, 2026 of $211.7 million, compared to the same period in 2025, was primarily due to anincrease of $268.6 million in net loss from discontinued operations, excluding non-cash items, offset by anincrease of $56.9 million in the change in working capital less cash.
Current report
Net Cash Provided by (Used in) Investing Activities of Discontinued Operations
Current report
Net cash provided by (used in) investing activities of discontinued operations primarily consists of cash inflows of $1.4 billion from the sale of Depop, net of cash sold of $78.8 million, in the third quarter of 2026.
Removed paragraphs (7)
Previous report
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 report
General and administrative expenses decreased, primarily due to the sale of Reverb on June 2, 2025, lower professional services expenses, and net favorable non-income tax items. These decreases are partially offset by an increase in stock-based compensation expense.
Previous report
Loss on Discontinued Operations
Previous report
Comparison of Six Months Ended June 30, 2026 and 2025
Previous report
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 report
Loss on Discontinued Operations
Previous report
Net Cash (Used in) Provided by Financing Activities
Reworded paragraphs (35)
Previous 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.
Current wording
Etsy operates a two-sided online marketplace that connects millions of creative entrepreneurs with buyers around the world. 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
On August 3, 2026, the Audit Committee of the Board of Directors approved a Restructuring Plan intended to better align the organization with Etsy's long-term strategic priorities, including by simplifying Etsy’s structure to improve coordination and speed of decision-making (the “Restructuring Plan”). The Restructuring Plan includes an approximate 12% net reduction of the Etsy marketplace workforce, which is approximately 220 employees. Charges of approximately $35 million related to restructuring and other exit costs are expected to be incurred in the third quarter of 2026, and the execution of the Restructuring Plan is expected to be substantially complete by the end of the third quarter of 2026. While we expect the reorganization to lower operating costs in the near term, we will also continue to invest to build the organization necessary to execute our strategy and drive Etsy’s long-term growth.
Current wording
On August 3, 2026, the Audit Committee approved a restructuring plan intended to better align the organization with Etsy’s long-term strategic priorities, including by simplifying Etsy’s structure to improve coordination and speed of decision-making (the “Restructuring Plan”). The Restructuring Plan included an approximately 12% reduction of the Etsy marketplace workforce, or approximately 220 employees. Charges of $33.9 million related to restructuring and other exit costs were incurred in the third quarter of 2026, and the execution of the Restructuring Plan was substantially complete by the end of the third quarter of 2026. See Part I, Item 1, “Note 15—Restructuring and Other Exit Costs” for more information regarding the Restructuring Plan.
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 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.
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 tables below for all periods presented, since Depop is presented as a discontinued operation. Due to the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30, 2025 includes Etsy marketplace and Reverb marketplace until the date of sale, while all other periods reflect the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable for the nine months ended September 30, 2026 and 2025, while the three months ended September 30, 2026 and 2025 are directly comparable. To provide investors with a meaningful basis for comparing our nine months ended September 30, 2026 results year-over-year, we have presented Etsy marketplace results for the nine months ended September 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
(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.
Current wording
(1)Excluded from the tables above is gross merchandise sales (“GMS”) for Depop, which was $199.8 million and $292.1 million for the three months ended September 30, 2026 and 2025, respectively, and $1,004.4 million and $775.2 million for the nine months ended September 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
(3)Revenue take rate is revenue divided by GMS.
Current wording
(2)Revenue take rate is revenue divided by GMS.
Previous 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.
Current wording
(3)Active sellers for the three and nine months ended September 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)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.
Current wording
(4)Active buyers for the three and nine months ended September 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
(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.
Current wording
(5)% growth Y/Y for the Etsy marketplace is the change in continuing operations for the nine months ended September 30, 2026, which represents activity for the Etsy marketplace only, compared to the Etsy marketplace excluding Reverb for the nine months ended September 30, 2025, as Reverb was sold in the second quarter of 2025.
Previous wording
GMS from continuing operations increased by $26.2 million to $2,582.9 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025, and decreased by $73.4 million to $5,043.1 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase in GMS between the three months ended June 30, 2026 and 2025 reflects an increase of $179.2 million related to the Etsy marketplace, partially offset by a decrease of $153.0 million from the sale of Reverb. The decrease in GMS between the six months ended June 30, 2026 and 2025 reflects a decrease of $381.3 million from the sale of Reverb, partially offset by an increase of $308.0 million from the Etsy marketplace.
Current wording
GMS from continuing operations increased by $214.3 million to $2,646.9 million in the three months ended September 30, 2026 compared to the three months ended September 30, 2025, and increased by $140.9 million to $7,690.0 million in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase in GMS between the nine months ended September 30, 2026 and 2025 reflects an increase of $522.2 million from the Etsy marketplace, partially offset by a decrease of $381.3 million from the sale of Reverb.
Previous 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.
Current wording
Etsy marketplace year-over-year GMS growth for the three and nine months ended September 30, 2026, which excludes Reverb from the prior year period, was up 8.8% and 7.3%, respectively. This growth was driven by continued progress against the Company's strategic priorities, reflected in improving buyer and seller trends and stronger marketplace health metrics. The Etsy marketplace GMS per active buyer on a trailing twelve month basis increased 3.9% year-over-year to $126, with a year-over-year increase of 1.0% of active buyers on the Etsy marketplace to 87.5 million.
Previous 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.
Current wording
Marketplace revenue increased primarily due to a $19.6 million increase in Etsy transaction fee revenue and a $17.3 million increase in Etsy payments revenue, both driven by an increase in GMS.
Previous wording
Services revenue increased primarily due to a $19.1 million increase in advertising revenue, primarily driven by higher click volume on Etsy Ads.
Current wording
Services revenue increased primarily due to a $30.9 million increase in advertising revenue, primarily driven by higher click volume on Etsy Ads.
Previous wording
Product development expenses increased primarily due to increased cash-based compensation and benefits. This increase is partially offset by a decrease in stock-based compensation expense and the sale of Reverb on June 2, 2025.
Current wording
Product development expenses increased primarily due to increased cash-based compensation and benefits primarily related to severance associated with the Restructuring Plan, partially offset by a decrease in stock-based compensation expense.
Previous 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 June 30, 2026 as compared to a loss for the three months ended June 30, 2025.
Current wording
Other income, net increased, driven by an increase in dividend income and to a lesser extent, changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a higher gain for the three months ended September 30, 2026 when compared to the three months ended September 30, 2025.
Previous wording
The primary drivers of our income tax provision for the six months ended June 30, 2026 were tax expense on income before income taxes and state and local income taxes.
Current wording
The primary drivers of our income tax provision for the three months ended September 30, 2026 were tax expense on income before income taxes and state and local 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 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.
Current wording
Income (loss) on discontinued operations for the three months ended September 30, 2026 primarily increased due to the gain on sale of Depop of $839.7 million, which was completed on July 30, 2026, partially offset by an increase in the operating loss of Depop. See Part I, Item 1, “Note 2—Discontinued Operations” for more information regarding the financial results of discontinued operations.
Previous wording
Revenue increased driven by an increase in both services and marketplace revenue.
Current wording
Revenue increased driven by an increase in both marketplace and services revenue.
Previous wording
Marketplace revenue increased primarily due to a $27.4 million increase in Etsy transaction fee revenue and an increase in payments revenue of $26.0 million, both driven by an increase in Etsy marketplace GMS. These increases in marketplace revenue were partially offset by a decrease of $35.6 million related to the sale of Reverb on June 2, 2025.
Current wording
Marketplace revenue increased primarily due to a $47.1 million increase in Etsy transaction fee revenue and an increase in payments revenue of $43.3 million, both driven by an increase in Etsy marketplace GMS. These increases in marketplace revenue were partially offset by a decrease of $35.6 million related to the sale of Reverb on June 2, 2025.
Previous 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.
Current wording
Services revenue increased primarily due to a $64.4 million increase in advertising revenue, primarily driven by higher click volume, and to a lesser extent, an increase in average price per click on Etsy Ads.
Previous wording
The increase in cost of revenue was primarily driven by an increase in cost of refunds, payments fees, and, to a lesser extent, cloud-related hosting and bandwidth costs, partially offset by the sale of Reverb on June 2, 2025.
Current wording
Cost of revenue increased primarily due to an increase in payments fees and cost of refunds and, to a lesser extent, cloud-related hosting and bandwidth costs and capitalized website and app development amortization. This increase in cost of revenue was partially offset by the sale of Reverb on June 2, 2025.
Previous wording
Marketing expenses decreased primarily due to the sale of Reverb on June 2, 2025, offset by an increase due to targeted shifts in portfolio mix, in which strong returns in specific channels supported incremental spend. Paid GMS was 25% of overall GMS for the three months ended June 30, 2026 compared to 24% for the three months ended June 30, 2025.
Current wording
Marketing expenses increased primarily due to strong returns in specific channels which supported incremental spend. This increase was partially offset by the sale of Reverb on June 2, 2025, which reduced marketing expenses. Paid GMS was 24% of overall GMS for the nine months ended September 30, 2026, compared to 23% for the nine months ended September 30, 2025.
Previous wording
Product development expenses decreased, primarily due to the sale of Reverb on June 2, 2025 and a decrease in stock-based compensation. These decreases were offset by an increase in cash-based compensation and benefits.
Current wording
Product development expenses increased primarily due to cash-based compensation and benefits from restructuring and other exit costs associated with the Restructuring Plan, partially offset by a decrease in stock-based compensation, and to a lesser extent, the sale of Reverb on June 2, 2025.
Previous 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.
Current wording
Asset impairment charge was $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 7—Goodwill” for more information.
Previous 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 six months ended June 30, 2026 as compared to a loss forthe six months ended June 30, 2025.
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 nine months ended September 30, 2026 as compared to a loss forthe nine months ended September 30, 2025.
Previous wording
The primary drivers of our income tax provision for the three months ended June 30, 2026 were tax expense on income before income taxes and state and local income taxes.
Current wording
The primary drivers of our income tax provision for the nine months ended September 30, 2026 were tax expense on income before income taxes and state and local income taxes, partially offset by a tax benefit related to research and development tax credits.
Previous wording
The primary drivers of our income taxprovision forthe 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 forthe 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
Loss on discontinued operations for the six months ended June 30, 2026 and 2025 was $196.0 million and $33.8 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.
Current wording
Income (loss) on discontinued operations for the nine months ended September 30, 2026 primarily increased due to the gain on sale of Depop of $839.7 million, which was completed on July 30, 2026, partially offset by an increase in the operating loss of Depop. See Part I, Item 1, “Note 2—Discontinued Operations” for more information regarding the financial results of discontinued operations.
Previous 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.
Current wording
Given the sale of Depop on July 30, 2026, Etsy results are presented on a continuing operations basis, while Depop results are reported as discontinued operations for all periods presented through the Closing Date. Due to the sale of Reverb on June 2, 2025, continuing operations for the nine months ended September 30, 2025 includes Etsy marketplace and Reverb marketplace until the date of sale, while all other periods reflect the Etsy marketplace only. This makes year-over-year continuing operations results not directly comparable for the nine months ended September 30, 2026 and 2025, while the three months ended September 30, 2026 and 2025 are 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 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.
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 nine months ended September 30, 2025 in this Quarterly Report. These measures include the following non-GAAP financial measures for the nine months ended September 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 (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):
Current wording
Adjusted EBITDA represents our net income adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization expense; provision for income taxes; interest and other non-operating (income) expense, net; foreign exchange (gain) loss; restructuring and other exit costs; acquisition, divestiture, and corporate structure-related expenses; asset impairment charge; loss on sale of business; and retroactive non-income tax income. The following tables reflect the reconciliation of net income (loss) to Adjusted EBITDA as well as the calculation of Adjusted EBITDA margin for continuing operations, the Etsy marketplace, and the Reverb marketplace for the periods indicated (in thousands, except percentages):
Previous 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.
Current wording
Cash and cash equivalents and short-term investments were $2.3 billion as of September 30, 2026. Additionally, we have $150.4 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 September 30, 2026, we had net working capital from continuing operations of $687.1 million and in the nine months ended September 30, 2026, we had positive operating cash flows of continuing operations of $511.3 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
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.
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. Depop has historically operated at a loss and required recurring capital investment by the Company to fund Depop operations. Going forward, we expect that the elimination of these cash outflows will contribute favorably to operating and free cash flow generation. 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 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.
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 nine months ended September 30, 2026 of $116.4 million, compared to the same period in 2025, was primarily due to anincrease of $82.7 million in the change in working capital less cash and anincrease of $33.7 million in net income, excluding non-cash items.
Previous 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.
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 nine months ended September 30, 2026 of $97.5 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) 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.
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, and any cash inflows from the issuance of convertible notes. The increase in cash used in financing activities during in the nine months ended September 30, 2026 of $839.2 million, compared to the same period in 2025, was primarily due to the issuance of the 2025 Notes which resulted in cash inflow of $700.0 million in 2025, which did not reoccur in 2026, and to a lesser extent, an increase in stock repurchases.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Marketing expenses increased primarily due to strong returns in specific channels which supported incremental spend. Paid GMS was 26% of overall GMS for the three months ended September 30, 2026 compared to 23% for the three months ended September 30, 2025.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Etsy operates a two-sided online marketplace that connects millions of creative entrepreneurs with buyers around the world.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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.