Etsy Q2 2025: Revenue Up 3.8%, GMS Down 4.8%, Depop Shows Strong Growth

Etsy's Q2 2025 revenue rose 3.8% to $672.7 million, while Gross Merchandise Sales fell 4.8% to $2.8 billion. The company executed significant strategic moves, including a $700 million convertible notes placement and $335 million in share repurchases. Depop, a subsidiary, showed strong growth with a 35.3% increase in GMS, reaching $249.6 million. Etsy's take rate improved to 24.0%, and adjusted EBITDA stood at $169 million with a margin of 25.1%.

Etsy Inc. reported its Q2 2025 earnings, revealing a mixed performance with an earnings per share (EPS) of $0.25, falling short of the expected $0.48. Despite this, the company exceeded revenue forecasts, reporting $672.7 million against an anticipated $646.86 million, leading to a notable 8.79% pre-market stock surge to $65.6. With a market capitalization of $6.46 billion and an impressive gross profit margin of 72.3%, Etsy maintains strong fundamentals [1].

Etsy's revenue rose 3.8% to $672.7 million, while Gross Merchandise Sales (GMS) fell 4.8% to $2.8 billion. The company executed significant strategic moves, including a $700 million convertible notes placement and $335 million in share repurchases. Depop, a subsidiary, showed strong growth with a 35.3% increase in GMS, reaching $249.6 million. Etsy's take rate improved to 24.0%, and adjusted EBITDA stood at $169 million with a margin of 25.1% [1].

The company's EPS of $0.25 represented a significant miss from the forecasted $0.48, resulting in a 47.92% negative surprise. However, the revenue exceeded expectations by 3.99%, providing a counterbalance to the EPS miss and supporting a positive stock reaction. Despite the EPS miss, Etsy's stock surged 8.79% in pre-market trading to $65.6. This movement suggests that investors are focusing on the positive revenue surprise and strong future guidance, with the stock nearing its 52-week high of $68.45 [1].

Looking forward, Etsy projects consolidated GMS for Q3 2025 between $2.6 billion and $2.7 billion, with a take rate of 24.5%. The company maintains an optimistic outlook with a consolidated adjusted EBITDA margin guidance of 25%, aiming to recover from previous year’s opportunity costs. InvestingPro data shows that 4 analysts have recently revised their earnings upward for the upcoming period, supporting the company’s positive outlook [1].

Executive Commentary
CEO Josh Silverman expressed optimism, stating, "We’re seeing early promising signals that our flywheel is gaining speed." Chief Growth Officer Kruthi Patel Goyal emphasized the company’s strategy, saying, "We want shoppers to engage with Etsy naturally across all the places they spend time." CFO Lanny Baker affirmed, "We’re back in that game at a large size," indicating confidence in Etsy’s market positioning [1].

Risks and Challenges
Declining active buyer numbers could indicate market saturation. The significant EPS miss may highlight operational inefficiencies. Competitive pressures in the online retail space could impact growth. Economic uncertainties may affect consumer spending patterns. Dependence on AI and tech innovations requires ongoing investment [1].

Reference List:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-etsy-q2-2025-shows-revenue-beat-despite-eps-miss-93CH-4160393