Etsy, Inc. reported diluted earnings per share of $0.92 for its fourth‑quarter 2025, beating the consensus estimate of $0.84 to $0.88 by $0.04 to $0.08 and a 4.3% to 7.6% beat. The company’s revenue of $881.6 million was $0.1 million below the $881.47 million to $884.9 million range that analysts had projected, a miss of less than 0.1% of the lower end of the consensus. Revenue grew 6.6% year‑over‑year when the divested Reverb segment is excluded, reflecting steady demand in the core marketplace despite broader macro‑economic headwinds.
The fourth‑quarter gross merchandise sales (GMS) rose 2.4% to $3.59 billion, or 1.3% on a currency‑neutral basis, again excluding the prior‑year contribution from Reverb. Compared with Q4 2024, when GMS was $3.48 billion, the growth rate accelerated, indicating a rebound in U.S. buyer activity that had been flat for four years. EPS, however, fell from $1.03 in Q4 2024 to $0.92 in Q4 2025, a decline that the company attributes to the absence of a non‑cash foreign‑exchange gain that boosted the prior year’s earnings.
Full‑year 2025 net income totaled $163 million, a sharp decline from $303.3 million in 2024, largely driven by the loss of the foreign‑exchange gain and a modest increase in operating expenses related to AI and advertising investments. Management highlighted that the company’s core marketplace remains resilient, citing a 1.3% increase in active sellers and a 3.4% decline in active buyers, which suggests a stable seller base and a slight contraction in buyer activity that is expected to normalize as the economy improves.
Etsy’s guidance for the first quarter of 2026 projects GMS between $2.38 billion and $2.43 billion, a take rate of approximately 25.5%, and an adjusted EBITDA margin of 28% to 30% for continuing operations. The guidance represents a modest upward revision from the prior outlook and signals confidence in the company’s ability to maintain profitability while investing in AI‑driven discovery and advertising capabilities.
Management emphasized the strategic focus behind the results. “Our clear strategic focus and solid execution are driving progress on the journey to bring the Etsy marketplace back to sustained growth,” said President and CEO Kruti Patel Goyal. “What sets Etsy apart is not just what we sell, but who we’re built for: buyers seeking something personal and sellers bringing creativity to life.” Chief Financial Officer Lanny Baker added, “We ended the year with solid results, in‑line with or better than our expectations.” The company also announced a definitive agreement to sell its resale marketplace Depop to eBay for $1.2 billion, a move that is expected to close in the second quarter of 2026 and is intended to streamline operations and focus resources on the core marketplace.
Investors reacted strongly to the earnings announcement, with Etsy’s shares surging between 13.4% and 21.5% in pre‑market trading. The market’s enthusiasm was driven primarily by the EPS beat, the return to positive U.S. buyer GMS growth after four years of flatness, and the strategic clarity provided by the Depop sale. Analysts noted that the company’s ability to maintain margins while investing in AI and advertising suggests a solid balance between growth and profitability.
The combination of a solid earnings beat, modest revenue miss, and forward‑looking guidance indicates that Etsy is navigating a challenging macro environment while positioning itself for long‑term growth. The company’s focus on AI, strategic portfolio restructuring, and core marketplace resilience are expected to underpin future performance, even as it continues to manage headwinds such as consumer discretionary spending pressure and competitive retail dynamics.
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