Etsy Inc. grew its gross merchandise sales (GMS) year over year for its third consecutive quarter in its fiscal Q2 2026, which also saw revenue growth.

CEO Kruti Goyal credited Etsy’s marketplace growth, in part, to improvements in discovery and helping buyers select the right items. Meanwhile, she told analysts on Etsy’s Q2 earnings call, “loyalty and human connection give buyers more reasons to return.”

“Together, these enable lasting relationships between buyers, sellers and Etsy,” Goyal said. “We’re seeing very clear signal that these efforts are improving our performance.”

Etsy said its number of active buyers has improved year over year, growing by 350,000 to reach about 87 million. Habitual and repeat buyer cohorts each showed slight sequential growth for the first time since 2023, Goyal said. She referred to those cohorts as Etsy’s “most valuable buyers.”

In addition, she credited the Etsy app with being a key growth driver, with its GMS increasing 12.5%. The number of visits per monthly active user and the number of orders per visit both increased year over year, she said. Etsy’s investments in YouTube and TikTok have driven fivefold increases in visits from millennial and Gen Z audiences in the first half of 2026, Goyal added.

“We’re continuing to evolve how we build loyalty across the marketplace, from testing new approaches for buyers to developing new ways to recognize and support the sellers who best represent what makes Etsy unique,” Goyal said.

Etsy is No. 20 in the Global Online Marketplaces Database. The market research tool ranks the 100 largest marketplaces by third-party gross merchandise value (GMV).

Etsy GMS, revenue in Q2 2026

In its fiscal Q2 2026, Etsy revenue totaled $668.31 million. That marked 6.2% year-over-year growth from $629.13 million the prior year.

Etsy revenue from its marketplace accounted for about two-thirds of that in Q2, at about $456 million. Services accounted for Etsy’s remaining $212.2 million in Q2 revenue.

Chief financial officer Charles Baker said Etsy’s take rate “remained healthy” at 25.9%. That rate included a benefit from selling Reverb, he noted.

He also said the Etsy marketplace’s take rate expanded primarily because of its advertising network, “where we’re using machine learning to enhance relevance and improve seller budget pacing. Offsite Ads also contributed, benefiting from a tilt in paid marketing activity toward higher monetizing channels.”

Meanwhile, Etsy GMS in its fiscal Q2 2026 reached $2.58 billion. That was 1.0% growth from about $2.56 billion the year before.

For the first half of its fiscal year, Etsy revenue increased 4.7% (to about $1.3 billion), whereas GMS declined 1.4% (to about $5.04 billion).

Etsy GMS per active buyer increased 2.8% year over year, reaching $124.

“And while higher seller listing prices remain a contributor, our work to elevate higher-quality items on and off-site is increasingly playing a role,” Goyal said. “While purchase frequency remains below prior year levels, the year-over-year decline moderated compared to the first quarter, an early encouraging signal that we’re improving the overall customer experience.”

How Etsy grew sales in Q2

Goyal attributed Etsy’s Q2 sales growth in part to top-of-funnel marketing tactics. She said the marketplace has seen continuing growth through search engine optimization (SEO) and better segmentation. Etsy’s strategy has been to direct spend toward what Goyal called the marketplace’s “highest quality inventory.” It also has sought to bring in “the right buyers” more efficiently, according to Goyal.

“Then once those buyers arrive, they’re landing on a meaningfully better experience as a result of the on-site product improvements that we’re making,” Goyal said. “We’ve made really steady improvements across discovery and matching from real-time search personalization to more relevant recommendations and a fresher home feed.”

She said those are examples of improvements helping buyers to find more relevant inventory.

Baker noted that over the last year and a half, sellers readjusted their pricing as a result of tariffs and changes in the de minimis exception through the 2025 holiday season. Those increases in listing prices “don’t necessarily flow through to average order value,” Baker said.

He said he thinks the changes in listing prices “will turn out to be fairly durable increases. The year-over-year increase will probably slow down unless there are other stimulants that the sellers are reacting to.”

Addressing an analyst’s question, Baker said “it stands to reason” that higher gas prices have impacted consumer spending. He said Etsy’s consumer demand “held up pretty well” in Q2 and that the marketplace saw growth among both U.S. and non-U.S. buyers. It also saw “accelerated growth” across U.S. buyers and imports in particular, he added.

Etsy to cut about 220 jobs

Baker explained that Etsy has a restructuring plan that includes cutting about 220 jobs from its workforce. That’s about 12% of its staff, he noted.

After the restructuring, he said, Etsy expects its headcount to be about 1,600 people. Baker noted that Etsy expects to incur about $35 million in charges. That will come from cash expenditures tied to severance payments, employee benefits and related costs, he said.

“We anticipate that the charges will be incurred and the execution of the restructuring plan will be substantially complete by the end of the third quarter of 2026,” Baker said.

Also in Q3, he said, Etsy anticipates GMS to grow between 4% and 6% year over year. That would put it at about $2.53 billion to $2.58 billion.

For the full year, Etsy expects mid-single-digit GMS growth.

“Our objective in the restructuring is to not only extend the expense discipline we’ve demonstrated historically, but also to position ourselves to build the organization necessary to execute our strategy and accelerate growth in the years ahead,” Baker said. “Specifically, we intend to deepen our expertise in strategically critical areas across product, engineering and customer operations with a particular focus on expanding and strengthening our team’s machine learning skills.”

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s report on Etsy revenue and GMS.

Do you rank in our databases? 

Submit your data and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the online retail industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, X (formerly Twitter), Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.