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Etsy, Inc. Reports Second Quarter 2025 Results

Etsy, Inc. (NASDAQ: ETSY), a company known for operating two-sided online marketplaces, has recently disclosed its financial outcomes for the second quarter of 2025, ending June 30. The company is dedicated to connecting millions of enthusiastic and creative buyers with sellers worldwide.

Josh Silverman, the CEO of Etsy, expressed optimism about the performance of the second quarter, attributing it to progress in critical investment areas aimed at enhancing customer relationships within the Etsy marketplace. These efforts, which involve improved buyer engagement and a resurgence in Gross Merchandise Sales (GMS) growth, have laid the groundwork for future expansion.

Key Achievements of Q2 2025

• - Sale of Reverb: Etsy concluded the sale of Reverb on June 2, 2025, which had contributed $153 million to the GMS in the prior two months, while the same period last year saw a contribution of $225 million.
• - Overall GMS: Despite facing a year-over-year decline of 4.8%, the GMS reached $2.8 billion. Excluding Reverb's figures, the consolidated GMS showed a smaller decline of 2.6%, totaling $2.7 billion.
• - Revenue Metrics: Revenue climbed by 3.8% compared to the second quarter of 2024, reaching $672.7 million. The take rate stood strong at 24% thanks to successful on-site advertising initiatives.
• - Net Income: The company reported a net income of $28.8 million, although this indicates a significant drop from last year due to non-cash foreign exchange losses. The net income margin was about 4.3% with a diluted earnings per share of $0.25
• - Adjusted EBITDA: Non-GAAP Adjusted EBITDA was listed at $169 million, resulting in an Adjusted EBITDA margin of approximately 25.1%.
• - Cash Position: Etsy ended the quarter with $1.5 billion in liquid assets. The company also executed a private placement of convertible notes, raising around $700 million in cash.

Performance Insights for the Etsy Marketplace

The Etsy marketplace witnessed a GMS of $2.4 billion, showcasing a decline of 5.4% on a yearly basis, which reflects challenges particularly early in the quarter. However, GMS trends improved as the quarter progressed. Notably, GMS through the Etsy App represented about 45% of the total marketplace GMS, showing its growing importance.

Key initiatives included refining search algorithms to enhance product visibility, leveraging AI-powered discovery features, and introducing new tools for sellers to streamline operations. Additionally, targeted marketing strategies significantly improved user engagement and retention.

Etsy managed to reactivate 6.5 million buyers during this quarter, marking a 2.8% increase year-over-year, while new buyer registrations reached 4.8 million.

Depop's Performance

Depop, which Etsy owns, demonstrated exceptional growth, bolstering its GMS to $249.6 million, representing a year-over-year increase of 35.3%. This was accompanied by significant growth in the U.S. market, recording a 54% rise. Efforts to optimize search and recommendation offerings further enhanced seller visibility, with record sign-ups attributed to successful marketing campaigns.

Outlook and Future Steps

Looking ahead, Etsy has set a clear focus on restoring GMS growth through strategic initiatives. Silverman emphasized the importance of connecting shoppers with relevant content, rewarding valued customers, and amplifying the human connection that is integral to Etsy's brand.

The financial prospects for the third quarter appear favorable, with expectations of continued revenue expansion and an improved GMS outlook. As Etsy continues to adapt to changing market conditions and reinvest in growth avenues, the company aims to enhance its long-term viability and stakeholder value.

With $1.5 billion in cash reserves and robust expectations for ongoing free cash flow generation, Etsy remains well-positioned to manage its debts, execute stock repurchases, and continue its investment strategy, underpinning its confidence in future growth opportunities.

Conclusion

Etsy, Inc.'s second quarter results exemplify the resilience and adaptability of a company dedicated to preserving a human-centered approach to commerce. As Etsy navigates through its challenges and explores new growth domains, its commitment to innovation and community engagement remains steadfast, promising a bright path ahead.