Key Highlights
- Q1 revenue reached $631.3M, surpassing Wall Street’s $621M forecast
- Marketplace gross merchandise sales climbed 5.5% YoY to $2.5B — marking the first annual increase in more than two years
- Earnings per share from continuing operations totaled $0.89, crushing the $0.62 consensus
- Sequential growth in active buyers recorded for the first time since 2024
- Shares of ETSY rallied approximately 11% in response to the earnings report
The online marketplace operator delivered first-quarter fiscal 2026 revenue totaling $631.3 million, exceeding Wall Street’s projection of roughly $621 million. The stronger-than-expected performance was fueled by a notable rebound in gross merchandise sales, which expanded 5.5% on a year-over-year basis to reach $2.5 billion across the Etsy platform.
This GMS performance is particularly significant as it ends a prolonged downturn. The company had reported a 0.5% contraction in the previous quarter, making the current period the first time annual GMS has turned positive in more than 24 months.
Earnings per share on a diluted basis from continuing operations registered at $0.89, substantially exceeding analyst expectations of $0.62. Net income from continuing operations reached $104.7 million, marking a dramatic reversal from the $35.1 million net loss recorded in the same quarter last year, when results were impacted by a $101.7 million asset impairment expense.
The company reported adjusted EBITDA from continuing operations of $184.7 million, translating to a margin of 29.3%. Management also executed approximately $145 million in share repurchases throughout the quarter, reducing the share count by around 2.7 million.
Chief Executive Kruti Patel Goyal characterized the quarter as displaying “encouraging signals” that strategic growth initiatives are gaining traction, expressing heightened confidence in transforming recent positive trends into sustainable long-term expansion.
Customer Metrics Show Positive Shift
The platform recorded sequential expansion in active buyers for the first time in two years. Spending per active buyer on a trailing twelve-month basis hit $122 — rising year-over-year for the first time since the fourth quarter of 2022 and representing the fourth consecutive quarter of sequential gains.
GMS originating from the mobile application increased 11.2% compared to the prior year, with app-based transactions now accounting for roughly 47% of total merchandise sales.
Chief Financial Officer Lanny Baker informed Reuters that consumer demand on Etsy has remained consistent across various income segments, despite ongoing concerns about inflation and tariff-related uncertainty affecting consumer spending power. He emphasized that the company faces minimal direct tariff exposure, given that approximately 90% of materials used by sellers to create their products are obtained from domestic sources.
While artificial intelligence-driven traffic is expanding on the marketplace, Baker indicated it still represents only a low single-digit percentage of overall platform activity, meaning the financial impact remains relatively minor at this stage.
Forward Guidance and Asset Divestiture
For the second quarter of fiscal 2026, management projected marketplace GMS in the range of $2.48 billion to $2.53 billion, implying year-over-year growth between 3% and 5%. The company anticipates a take rate of roughly 25.7% and an adjusted EBITDA margin spanning 27% to 29%.
For the complete fiscal year, Etsy now forecasts low single-digit GMS growth for its core marketplace — representing an upgrade from previous guidance — while reaffirming its full-year adjusted EBITDA margin target of 28% to 30%.
Management indicated it expects positive year-over-year GMS growth throughout each remaining quarter of 2026.
The company concluded the first quarter with $1.6 billion in cash, cash equivalents, and short-term investments.
These financial results exclude Depop, which Etsy agreed to divest to eBay for $1.2 billion in a transaction announced in February. The sale is anticipated to finalize by the conclusion of the third quarter of fiscal 2026.
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