Etsy Inc. saw revenue climb in its fiscal Q3, as stronger app engagement helped stem another year‑over‑year drop in gross merchandise sales (GMS).

Alongside the earnings results, the company announced that CEO Josh Silverman will step down at the end of 2025. Longtime executive Kruti Patel Goyal, currently president and chief growth officer, will take over as CEO starting in 2026.

Patel Goyal is set to lead Etsy as it leans more heavily on artificial intelligence (AI) — including a new partnership with OpenAI — to help reignite growth amid continued sales declines.

For the quarter ended Sept. 30, Etsy reported total GMS of $2.73 billion, down 6.5% from $2.92 billion a year earlier. That figure includes Reverb, the musical instrument marketplace Etsy sold in June. Excluding Reverb, consolidated GMS rose 0.9%. Sales in Etsy’s core marketplace declined 2.4% to $2.43 billion in Q3.

Etsy ranks No. 20 in the Global Online Marketplaces Database. The database is Digital Commerce 360’s ranking of the 100 largest marketplaces by third-party gross merchandise value (GMV). Before Etsy sold Reverb, it ranked No. 45 in the database. In addition to its namesake marketplace, Etsy owns a used-clothing marketplace called Depop, which currently ranks No. 49.

Marketplace trends and Etsy sales in Q3

Despite the overall gross merchandise sales decline, Etsy cited promising signs in Q3.

On the earnings call, Silverman said combined GMS for Etsy and Depop returned to year-over-year growth, while core marketplace GMS improved by about 300 basis points sequentially.

“We’re making steady progress improving our performance in 2025 with our third quarter results exceeding expectations on all three key financial metrics: GMS, revenue and adjusted EBITDA,” he said.

Etsy’s take rate — or the portion of GMS it keeps as revenue — increased to 24.9%, up from 22.7% a year earlier. Net income also rose to $75.5 million from $57.4 million.

On the consumer side, buyer and seller activity remained mixed.

Etsy said it ended the quarter with 86.6 million active buyers, down 5% year over year. However, it added 4.8 million new buyers and reactivated 6.6 million lapsed ones. Additionally, GMS per active buyer fell 1.6% year over year to $121.

Active seller count dropped 10.9% to 5.5 million, though it rose 1.7% from Q2 as the impact of Etsy’s $15 shop setup fee began to ease, chief financial officer Lanny Baker said.

Higher-income shoppers also drove the most growth in the quarter, with strength in categories like vintage home goods, fine jewelry and wedding items, Baker said.

Tariff changes and trade trends

Baker also addressed recent trade policy shifts and the expiration of the de minimis exemption in August, which previously allowed imports under $800 to enter the U.S. duty-free.

He said the change briefly disrupted shipments but ultimately had a minimal impact on third-quarter results.

“Right around a couple of weeks of the end of the de minimis exemption, we saw a little bit of pause in the marketplace,” Baker told investors, “But that came back and was a very modest headwind for the total quarter.”

He added that stronger domestic trade helped offset the disruption. Etsy is keeping a close eye on future tariff and trade policy changes, he added, especially given their potential negative impacts on discretionary spending.

Product updates, app upgrades

Also in Q3, Etsy released a new suite of seller tools. Among them are new AI-driven assistants to help draft buyer messages and listing titles in bulk.

“We’re pleased to see that our efforts are starting to make an impact,” Patel Goyal said of the tools, citing a 10 percentage point rise in seller satisfaction scores year over year.

During the quarter, Etsy also rolled out updates to its app, including a redesigned home hub, improved discovery feeds, and a refreshed Shop Tab.

App users now visit Etsy five times more often than non-app users, view three times more pages and are 1.5 times more likely to convert, Baker said. App GMS grew at a mid-single-digit rate and now accounts for 46% of total GMS, up from 42.8% a year ago, he added.

The company has also expanded its use of AI for search and discovery. Patel Goyal said new machine learning models are surfacing more relevant items, especially on the home screen, where Etsy is seeing higher engagement.

In September, Etsy became the first live partner to support instant checkout through ChatGPT. The integration allows users to buy items directly from Etsy without having to leave the generative AI platform. Silverman said Etsy pays OpenAI a commission on each sale — similar to an affiliate fee — but is not passing those costs on to sellers at this time.

While agent-driven visits still make up a small slice of total ecommerce traffic, Patel Goyal said they’re “growing quickly.” She added that an early analysis suggests ChatGPT buyers shop on Etsy “with higher purchase intent than those from traditional search,” she said.

“Over time, we believe these types of integrations will drive incremental growth and, importantly, brand consideration for Etsy,” she said.

Leadership transition

As part of the transition, Patel Goyal will become CEO on Jan. 1, 2026, and Silverman will shift to executive chair through 2026 to support continuity.

Board chair Fred Wilson will step down from that role but remain on the board, Etsy said.

“After over 8 years as Etsy’s CEO, I’ve decided that this is the right time for me to hand over the leadership baton to the next generation,” Silverman said in a statement.

Patel Goyal has held multiple leadership roles since joining Etsy more than a decade ago, including chief product officer. She also served as CEO of Depop for nearly three years, overseeing a period of strong growth, the company said.

Under her leadership, Etsy said Depop’s GMS and buyer base nearly doubled. The platform has recently posted some of its strongest performance since its 2021 acquisition.

In Q3, Depop reported GMS of $292.1 million, up 39.4% year over year. U.S. GMS surged 59%, fueled by stronger conversion and new user growth.

Depop ended the quarter with 3 million active sellers (up 40.8%) and 6.6 million active buyers (up 38.8%).

In September, Etsy launched Depop’s largest brand campaign to date, focused on expanding awareness in the U.S. The investment will continue into the first half of 2026, Baker said.

“It’s an opportunity right now to really make this business quite a bit bigger and more valuable in the long term,” he said. “And we’re going after that pretty aggressively.”

Check back for more earnings reports. Here’s last quarter’s report on Etsy revenue and GMS.

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