Etsy Shares Rise 8.5% as Q3 Earnings Beat Forecasts and Buyer Growth Returns

Etsy Inc. (NASDAQ:ETSY) shares advanced 8.54% in pre-market trading on Wednesday after the online marketplace reported third-quarter 2026 earnings and revenue above analyst expectations, supported by higher merchandise sales and renewed growth in active buyers.

The company reported adjusted earnings per share of $1.00, exceeding the consensus estimate of $0.76. Revenue increased 10.9% year over year to $692.47 million, compared with analysts’ expectations of $668.05 million.

Gross merchandise sales (GMS) increased 8.8% to $2.6 billion, marking the sixth consecutive quarter of sequential improvement in the company’s growth performance.

Active Buyers Return to Growth After Two Years

Etsy reported a 1% year-over-year increase in active buyers to approximately 88 million on a trailing 12-month basis, representing the first return to growth in two years.

Gross merchandise sales per buyer increased 3.9%, supported by improvements in search relevance, personalised recommendations and product quality indicators.

The company has been investing in its marketplace technology to improve product discovery and customer engagement.

Chief Executive Officer Kruti Patel Goyal highlighted the continued improvement in business performance.

“After three consecutive quarters of accelerating growth this year, I’m increasingly confident that our business is now firmly in growth mode,” Goyal said.

The increase in active buyers and spending per customer contributed to higher overall marketplace sales during the quarter.

Advertising Revenue Supports Higher Take Rate

Etsy’s take rate, which measures the proportion of gross merchandise sales retained as revenue, increased by 50 basis points year over year to 26.2%.

The improvement was primarily supported by enhancements to Etsy Ads and contributions from the company’s Offsite Ads programme.

Adjusted EBITDA increased 14.6% to $210.4 million, representing a margin of 30.4%.

The company reported adjusted EBITDA growth exceeding revenue growth for the second consecutive quarter, reflecting improved profitability alongside expanding marketplace activity.

Etsy Forecasts Continued Growth in Fourth Quarter

For the fourth quarter of 2026, Etsy expects gross merchandise sales of between $3.46 billion and $3.52 billion.

The forecast represents year-over-year growth of approximately 5% to 7%, with a midpoint of $3.49 billion indicating growth of around 6%.

The company anticipates a take rate of approximately 25.6% and an adjusted EBITDA margin of around 30% during the quarter.

The guidance reflects expectations for continued marketplace activity during the year-end shopping period.

Full-Year 2026 Outlook

For the full year, Etsy expects gross merchandise sales growth of approximately 7%.

The company forecasts an annual take rate of around 25.8%, alongside an adjusted EBITDA margin of approximately 30%.

The outlook follows three consecutive quarters of accelerating growth, supported by increased buyer activity, higher spending per customer and advertising improvements.

Etsy Outlook

Etsy’s third-quarter results exceeded market expectations, with revenue increasing 10.9% to $692.47 million and adjusted earnings per share reaching $1.00.

Gross merchandise sales rose 8.8%, while active buyers returned to annual growth for the first time in two years.

The company also reported improved profitability, with adjusted EBITDA increasing 14.6% and its take rate reaching 26.2%.

Shares gained 8.54% before the opening bell as investors assessed the earnings performance and the company’s expectations for continued growth through the remainder of 2026.

Etsy stock price