It has been about a month since the last earnings report for Etsy (ETSY). Shares have lost about 12.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Etsy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Etsy Q3 Earnings & Revenues Surpass Estimates, Both Increase Y/Y
Etsy reported third-quarter 2025 earnings of 63 cents per share, which beat the Zacks Consensus Estimate by 21.15% and increased 40% year over year.
Third-quarter 2025 revenues increased 2.4% year over year to $678 million. The figure also exceeded the Zacks Consensus Estimate by 2.69%. Revenue growth was primarily driven by continued strong Etsy and Depop on-site ad performance.
ETSY’s Top-Line Details
Marketplace revenues were $468.1 million (69% of total revenues), down 1.7% from the year-ago quarter’s level. The figure surpassed the Zacks Consensus Estimate by 1.79%.
ETSY acquired 4.8 million new buyers in the quarter. The total number of active buyers on its marketplace was 86.6 million on a trailing 12-month basis, which decreased 5% year over year.
Services revenues were $210 million (31% of total revenues), up 12.7% on a year-over-year basis, driven by growth in Onsite Ad revenue at both Etsy and Depop. The figure beat the Zacks Consensus Estimate by 4.39%.
ETSY’s Active User Base & GMS Decrease Y/Y
Etsy’s active buyer base decreased 3.7% year over year to 93.2 million. The figure exceeds the consensus mark of 82.6 million.
The active seller base was 8.5 million, down 0.2% year over year. The figure beat the consensus mark of 8.2 million.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were a record 6.6 million, up 3.8% year over year.
Consolidated GMS totaled $2.7 billion, up 0.9% year over year (excluding Reverb) and down 6.5% on a reported basis (including Reverb). On a currency-neutral basis, GMS increased 0.1% year over year. The reported figure surpassed the Zacks Consensus Estimate by 1.48%.
The consolidated take rate for the third quarter reached 24.9%, expanding 220 basis points year over year. Take rate expansion reflects tailwinds from Reverb divestiture, continued on-site ads expansion and growth in Depop payments and shipping labels.
ETSY’s Operating Results
In the third quarter of 2025, total operating expenses were $400.7 million, representing a 2.7% year-over-year increase. As a percentage of revenues, the figure expanded 20 basis points (bps) year over year to 59.1%.
Marketing expenses increased 5.8% year over year to $207.8 million. As a percentage of revenues, marketing expenses increased 100 basis points year over year to 30.7%.
Product development expenses increased 5.7% year over year to $113.4 million. As a percentage of revenues, product development expenses are up by 50 bps year over year to 16.7%.
General and administrative (G&A) expenses decreased 7.8% year over year to $79.5 million. As a percentage of revenues, G&A expenses come down 130 bps to 11.7%.
Adjusted EBITDA decreased 6.4% year over year to $171.9 million in the reported quarter. The adjusted EBITDA margin declined 240 bps on a year-over-year basis to 25.4%. ETSY reported an operating income of $82.7 million compared with $86.8 million in the prior-year quarter.
ETSY’s Balance Sheet
As of Sept. 30, 2025, cash and cash equivalents totaled $1.25 billion, up from $1.18 billion as of June 30, 2025, reflecting a sequential increase in liquidity.
As of Sept. 30, 2025, long-term debt totaled $2.98 billion, unchanged from June 30, 2025.
Short-term investments were $259.2 million, up from $229 million in the previous quarter.
Under its stock repurchase program, Etsy repurchased an aggregate of approximately $120 million or 2.1 million shares of its common stock in the third quarter of 2025.
ETSY’s Q4 Guidance
For the fourth quarter of 2025, Etsy anticipates the take rate to be 24.5%. Consolidated GMS is projected to be between $3.5 billion and $3.65 billion.
The adjusted EBITDA margin is expected to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.72% due to these changes.
VGM Scores
Currently, Etsy has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Etsy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Etsy, Inc. (ETSY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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