Q3 2026 Etsy Inc Earnings Call

October 28, 2026

Deb Wasser: Earnings conference call. I am Deb Wasser, VP of Investor Relations. Today's prepared remarks have been pre-recorded. Joining me today are Kruti Patel Goyal, our CEO, and our CFO, Lanny Baker. Please keep in mind that our remarks today include forward-looking statements related to our financial outlook, our business, and our operating results, as noted in the shareholder letter posted to our website for your reference. Our actual results may differ materially. As you review our shareholder letter in 10-Q, please keep in mind that on 30 July, we completed the sale of Depop. Etsy's results in those documents and on this call are presented on a continuing operations basis, while Depop's results are presented within discontinued ops.

Speaker #1: Earnings conference call. I'm Deb Wasser, VP of Investor Relations. Today's prepared remarks have been pre-recorded. Joining me today are Kruti Patel Goyal, our CEO, and our CFO, Lani Baker.

Speaker #1: Please keep in mind that our remarks today include forward-looking statements, related to our financial outlook, our business, and our operating results, as noted in the shareholder letter posted to our website for your reference.

Speaker #1: Our actual results may differ materially. As we review our shareholder letter in 10Q, please keep in mind that on July 30, we completed the sale of DePop.

Speaker #1: ETSY's results in those documents and on this call are presented on a continuing operations basis, while DePop's results are presented within discontinued ops. Forward-looking statements involve risks and uncertainties, some of which are described in today's shareholder letter, and our most recent periodic report, in which we'll be updated in future periodic reports that we file with the SEC.

Deb Wasser: Forward-looking statements involve risks and uncertainties, some of which are described in today's shareholder letter and our most recent periodic report, and which will be updated in future periodic reports that we file with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them. Also during the call, we will present GAAP and non-GAAP financial measures, which are reconciled to GAAP financial measures in today's shareholder letter posted on our IR website, along with the replay of this call. With that, I will turn it over to Kruti.

Speaker #1: Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them.

Speaker #1: Also, during the call, we'll present GAAP and non-GAAP financial measures, which are reconciled to GAAP financial measures in today's shareholder letter posted on our IR website, along with the replay of this call.

Speaker #1: With that, I'll turn it over to Kruti.

Kruti Patel Goyal: Thanks, Deb, and good morning, everyone. Thank you for joining us. 2026 has been a year of meaningful transformation for Etsy. We started the year with a clear understanding of what needs to improve and a focus out of priorities to make that happen. At the same time, we have become clearer about what truly differentiates Etsy, the creativity of our sellers, the care and craftsmanship behind what they make, and the human connection that gives those items meaning. And increasingly, we are bringing these together, making Etsy a better place to shop while also making what sets us apart more visible and valuable to our customers. I am proud of the progress we have made so far and even more optimistic about the opportunities still ahead. We are bringing more buyers to Etsy and landing them in an experience that is more personalized and relevant, helping them discover higher quality items and sellers.

Speaker #2: Thanks, Deb. And good morning, everyone. Thank you for joining us. 2026 has been a year of meaningful transformation for ETSY. We started the year with a clear understanding of what needs to improve, and a focus out of priorities to make that happen.

Speaker #2: At the same time, we've become clearer about what truly differentiates ETSY. The creativity of our sellers, the care and craftsmanship behind what they make, and the human connection that gives those items meaning.

Speaker #2: And increasingly, we're bringing these together, making ETSY a better place to shop while also making what sets us apart more visible and valuable to our customers.

Kruti Patel Goyal: I am proud of the progress we have made so far and even more optimistic about the opportunities still ahead. We are bringing more buyers to Etsy and landing them in an experience that is more personalized and relevant, helping them discover higher quality items and sellers.

Speaker #2: I'm proud of the progress we've made so far, and even more optimistic about the opportunities still ahead. We're bringing more buyers to ETSY and landing them in an experience that is more personalized and relevant, helping them discover higher-quality items and sellers.

Kruti Patel Goyal: We are making our marketing investments more effective, enabling us to show up in new places and build relationships with both new and existing audiences. And we are improving the support experience for our buyers and sellers, an important part of building trust and meaningful relationships that extend beyond any individual transaction. After three consecutive quarters of accelerating growth this year, I have increased confidence that our business is now firmly in growth mode. We have real momentum and clear evidence that the changes we have made to how we operate and invest in the marketplace are translating into stronger fundamentals and more durable performance. Etsy's marketplace GMS was $2.6 billion, up 8.8% year over year. Revenue was $692 million on take rate of 26.2%. Adjusted EBITDA was $210 million, or a 30.4% margin. What is especially encouraging is that we are seeing improvement across both sides of the marketplace.

Speaker #2: We're making our marketing investments more effective, enabling us to show up in new places and build relationships with both new and existing audiences. And we're improving the support experience for our buyers and sellers, an important part of building trust and meaningful relationships that extend beyond any individual transaction.

Speaker #2: After three consecutive quarters of accelerating growth this year, I have increased confidence that our business is now firmly in growth mode. We have real momentum and clear evidence that the changes we've made to how we operate and invest in the marketplace are translating into stronger fundamentals and more durable performance.

Speaker #2: ETSY's marketplace GMS was 2.6 billion dollars, up 8.8 percent year over year. Revenue was 692 million dollars on take rate of 26.2 percent. And adjusted EBITDA was 210 million dollars, or a 30.4 percent margin.

Speaker #2: What's especially encouraging is that we're seeing improvement across both sides of the marketplace. Active buyers grew year over year for the first time in two years.

Kruti Patel Goyal: Active buyers grew year over year for the first time in 2 years, and our focus on improved customer relationships is driving an acceleration in growth in GMS per active buyer. Our active seller base grew at its fastest rate in 2 years, with improving retention signaling the relevance of Etsy to creative micro-entrepreneurs. We are still benefiting from some external GMS tailwinds, but importantly, the contribution from our strategic initiatives is accelerating. Our app continues to perform well, paid marketing is becoming more efficient, and organic traffic remains healthy. Our work to improve search and discovery is surfacing higher quality, more relevant inventory, which we believe can truly transform the Etsy experience over time. Lanny will cover GMS drivers in more detail shortly. We hope you have seen the updates on our near-term priorities covered in our shareholder letter. I will cover a few that I am most excited about.

Speaker #2: And our focus on improved customer relationships is driving an acceleration in growth in GMS per active buyer. Our active seller base grew at its fastest rate in two years, with improving retention, signaling the relevance of ETSY to creative micro-entrepreneurs.

Speaker #2: We're still benefiting from some external GMS tailwinds, but importantly, the contribution from our strategic initiatives is accelerating. Our app continues to perform well, paid marketing is becoming more efficient, and organic traffic remains healthy.

Kruti Patel Goyal: Our work to improve search and discovery is surfacing higher quality, more relevant inventory, which we believe can truly transform the Etsy experience over time. Lanny will cover GMS drivers in more detail shortly. We hope you have seen the updates on our near-term priorities covered in our shareholder letter. I will cover a few that I am most excited about.

Speaker #2: And our work to improve search and discovery is surfacing higher-quality, more relevant inventory, which we believe can truly transform the ETSY experience over time.

Speaker #2: Lani will cover GMS drivers in more detail shortly. We hope you've seen the updates on our near-term priorities covered in our shareholder letter. I'll cover a few that I'm most excited about.

Kruti Patel Goyal: Last quarter, we shared how we were testing ways to make our sellers and their creative processes more visible to buyers. Our latest Android test and supporting research show that doing so builds buyer trust, confidence, and perceived value. We are now building on these learnings as we look to bring human connection more deeply into the shopping experience across platforms. By weaving together things like seller stories, craftsmanship details, buyer reviews, and opportunities for connection, we aim to help buyers understand not just what they are purchasing, but who is behind it, how it is made, and what makes it special. Our goal is to make the value our sellers create more visible at every step, building the trust and connection to differentiate Etsy and bring shoppers back. Our investments in discovery and matching are increasingly contributing to GMS momentum.

Speaker #2: Last quarter, we shared how we were testing ways to make our sellers and their creative processes more visible to buyers. Our latest Android test and supporting research show that doing so builds buyer trust, confidence, and perceived value.

Speaker #2: We're now building on these learnings as we look to bring human connection more deeply into the shopping experience across platforms. By weaving together things like seller stories, craftsmanship details, buyer reviews, and opportunities for connection, we aim to help buyers understand not just what they're purchasing, but who's behind it, how it's made, and what makes it special.

Speaker #2: Our goal is to make the value our sellers create more visible at every step, building the trust and connection to differentiate ETSY and bring shoppers back.

Speaker #2: Our investments in discovery and matching are increasingly contributing to GMS momentum. By using AI and machine learning to more deeply understand shoppers’ tastes and interests, we’re helping buyers find what they want and discover things they didn’t know they were looking for.

Kruti Patel Goyal: By using AI and machine learning to more deeply understand shoppers' tastes and interests, we are helping buyers find what they want and discover things they did not know they were looking for. We are seeing tangible proof points. For example, by the Q3, we estimate that personalization improvements alone contributed approximately 2 percentage points to our annualized year-over-year GMS growth rate. We have made progress against the seller experience from helping sellers create and manage listings and customize products to enabling shared shop access, providing clearer financial insights, expanding our appeals process, and making Etsy Ads easier to manage. We are also experimenting with how AI can make running an Etsy shop easier. Our AI-powered seller assistant, currently in beta, provides personalized insights based on shops' unique data and shares actionable ideas for what to focus on next. For buyers, we are continuing to test different ways to recognize and reward loyalty.

Speaker #2: And we're seeing tangible proof points. For example, by the third quarter, we estimate that personalization improvements alone contributed approximately 2 percentage points to our annualized year-over-year GMS growth rate.

Speaker #2: We've made progress against the seller experience, from helping sellers create and manage listings and customized products, to enabling shared shop access, providing clearer financial insights, expanding our appeals process, and making ETSY ads easier to manage.

Speaker #2: We're also experimenting with how AI can make running an ETSY shop easier. Our AI-powered seller assistant currently in beta provides personalized insights, based on shop's unique data and shares actionable ideas for what to focus on next.

Kruti Patel Goyal: Our AI-powered seller assistant, currently in beta, provides personalized insights based on shops' unique data and shares actionable ideas for what to focus on next. For buyers, we are continuing to test different ways to recognize and reward loyalty.

Speaker #2: For buyers, we're continuing to test different ways to recognize and reward loyalty. That includes testing a program where buyers are in stamps towards rewards for actions that broaden and deepen their relationship with ETSY, like supporting sellers across categories and regions.

Kruti Patel Goyal: That includes testing a program where buyers earn stamps towards rewards for actions that broaden and deepen their relationship with Etsy, like supporting sellers across categories and regions. We are also scaling premium support experiences for our top buyers ahead of the holiday season, while expanding general support availability across the marketplace. Lastly, the strategic shifts we have made in marketing have been an important part of our progress this year. I would highlight 3 areas where we have made meaningful changes. First, we are evolving how and where we reach shoppers. Our brand campaigns are reinforcing what makes Etsy different, while we are finding new ways to connect with younger audiences and show up for the occasions that matter to buyers.

Speaker #2: We're also scaling premium support experiences for our top buyers ahead of the holiday season, while expanding general support availability across the marketplace. And lastly, the strategic shifts we've made in marketing have been an important part of our progress this year.

Speaker #2: I'd highlight three areas where we've made meaningful changes. First, we're evolving how and where we reach shoppers. Our brand campaigns are reinforcing what makes Etsy different, while we're finding new ways to connect with younger audiences and show up for the occasions that matter to buyers.

Kruti Patel Goyal: Second, we are getting smarter about how we bring our inventory to shoppers, improving how we understand and surface our listings across paid search, social, SEO, and our influencer and affiliate programs, so more people discover items that are relevant to them. Third, we are making our own marketing much more personal. We are combining the scale of AI with the creativity of human curation and storytelling to deliver content that feels more relevant to each individual buyer. Another important area of focus is how we are using AI to make commerce more human. We believe AI will fundamentally change how people discover and shop, and we are leaning into that change. For Etsy, the opportunity is to use this technology to help buyers discover items that feel uniquely right for them, and to help our sellers reach more customers and grow their businesses. There is an interesting paradox here.

Speaker #2: Second, we're getting smarter about how we bring our inventory to shoppers. We're improving how we understand and surface our listings across paid search, social, SEO, and our influencer and affiliate programs, so more people discover items that are relevant to them.

Speaker #2: And third, we're making our owned marketing much more personal. We're combining the scale of AI with the creativity of human curation and storytelling to deliver content that feels more relevant to each individual buyer.

Speaker #2: Another important area of focus is how we're using AI to make commerce more human. We believe AI will fundamentally change how people discover and shop, and we are leaning into that change.

Speaker #2: For Etsy, the opportunity is to use this technology to help buyers discover items that feel uniquely right for them, and to help our sellers reach more customers and grow their businesses.

Speaker #2: And there's an interesting paradox here. As AI makes it easier to create and replicate products at scale, we believe that the human creativity, craftsmanship, and connection that have always made Etsy special will matter even more.

Kruti Patel Goyal: As AI makes it easier to create and replicate products at scale, we believe the human creativity, craftsmanship, and connection that have always made Etsy special will matter even more. As we head into the final stretch of 2026 and develop our growth plans for 2027, we have even greater confidence that our priorities and focused execution are creating a healthier, highly differentiated marketplace, and positioning us to capture more of the enormous opportunity ahead. I would also like to acknowledge our announcement this morning that Lanny will be leaving Etsy in early March. I am so grateful for his leadership and judgment, and especially for his partnership during my first year as Etsy's CEO, as we have navigated this important and transformational time for the company. He will leave Etsy with stronger momentum for the future. I am excited for what is ahead for Lanny and wish him all the very best.

Speaker #2: As we head into the final stretch of 2026, and develop our growth plans for 2027, we have even greater confidence that our priorities and focused execution are creating a healthier, highly differentiated marketplace, and positioning us to capture more of the enormous opportunity ahead.

Speaker #2: I would also like to acknowledge our announcement this morning that Lani will be leaving ETSY in early March. I am so grateful for his leadership and judgment, and especially for his partnership during my first year as ETSY CEO, as we've navigated this important and transformational time for the company.

Kruti Patel Goyal: I am so grateful for his leadership and judgment, and especially for his partnership during my first year as Etsy's CEO, as we have navigated this important and transformational time for the company. He will leave Etsy with stronger momentum for the future. I am excited for what is ahead for Lanny and wish him all the very best.

Speaker #2: He'll leave ETSY with stronger momentum for the future. I'm excited for what's ahead for Lani and wish him all the very best. We've engaged an executive recruiting firm to assist in the search for a new CFO to be based here in Brooklyn.

Kruti Patel Goyal: We have engaged an executive recruiting firm to assist in the search for a new CFO to be based here in Brooklyn. With that, Lanny will review our results.

Speaker #2: With that, Lani will review our results.

Lanny Baker: Thanks, Kruti. It has been a great privilege to work with you and to contribute at this crucial stage of Etsy's development. You have brought clarity of focus and a vision of differentiation that are just beginning to have their impact on the marketplace and the business. I am excited to help close out what has been a pivotal year, and I will do all I can to support a great transition once the company's next CFO has been identified. Turning to our results, I will start by reviewing our GMS performance in the quarter. Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve marketplace health and further elevate Etsy's differentiation are beginning to play a larger role in the composition of GMS growth. Active buyers returned to year-over-year growth for the first time in 2 years, increasing 1% to approximately 88 million on a trailing 12-month basis.

Speaker #1: Thanks, Kruti. It has been a great privilege to work with you and to contribute at this crucial stage of ETSY's development. You've brought clarity of focus and a vision of differentiation that are just beginning to have their impact on the marketplace and the business.

Speaker #1: I'm excited to help close out what's been a pivotal year and I will do all I can to support a great transition once the company's next CFO has been identified.

Lanny Baker: Turning to our results, I will start by reviewing our GMS performance in the quarter. Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve marketplace health and further elevate Etsy's differentiation are beginning to play a larger role in the composition of GMS growth. Active buyers returned to year-over-year growth for the first time in 2 years, increasing 1% to approximately 88 million on a trailing 12-month basis.

Speaker #1: Turning to our results, I'll start by reviewing our GMS performance in the quarter. Importantly, as our momentum has accelerated since the start of 2026, internal efforts to improve marketplace health and further elevate ETSY's differentiation are beginning to play a larger role in the composition of GMS growth.

Speaker #1: Active buyers returned to year-over-year growth for the first time in two years, increasing 1 percent to approximately 88 million on a trailing 12-month basis.

Lanny Baker: Sequential growth also accelerated, with active buyers increasing by approximately 540,000 compared to Q2 2026. Q3 gross buyer additions grew 6.2% year over year, continuing to benefit from strong new buyer acquisition and reactivation. While trailing 12-month retention amongst existing buyers also began to improve. Habitual and repeat buyers increased modestly on a sequential basis, encouraging evidence that progress is broadening across acquisition, reactivation, and retention. GMS per buyer increased 3.9% year over year on a trailing 12-month basis, marking the third consecutive quarter of growth. In addition, this important barometer of marketplace health accelerated sequentially. The impact of our internal initiatives is continuing to scale and play an increasing role in average order value growth. While purchase frequency remains modestly down year over year. The internal initiatives driving these trends include, number 1, improving search relevance for buyers through greater personalization built on richer buyer profiles and inventory insight.

Speaker #1: Sequential growth also accelerated, with active buyers increasing by approximately 540,000 compared to Q2 '26. Third-quarter gross buyer additions grew 6.2 percent year-over-year, continuing to benefit from strong new buyer acquisition and reactivation.

Speaker #1: While trailing 12-month retention among existing buyers also began to improve, habitual and repeat buyers increased modestly on a sequential basis—encouraging evidence that progress is broadening across acquisition, reactivation, and retention.

Speaker #1: GMS per buyer increased 3.9 percent year-over-year on a trailing twelve-month basis, marking the third consecutive quarter of growth. In addition, this important barometer of marketplace health accelerated sequentially.

Speaker #1: The impact of our internal initiatives is continuing to scale and play an increasing role in average order value growth, while purchase frequency remains modestly down year-over-year.

Speaker #1: The internal initiatives driving these trends include number one, improving search relevance for buyers through greater personalization built on richer buyer profiles and inventory insight.

Lanny Baker: 2, promoting a stronger selection of high-quality items by increasing the weight of quality signals within search and recommendations. 3, better managing the prominence of physical versus digital items based on what we can understand about buyer intent. 4, differentiating our offering around special occasions where people may be willing to pay a little bit more for just the right item. Looking forward, we seek to continue to grow our wallet share by helping shoppers discover more of the unique, high-quality inventory on Etsy. Whether that translates into more valuable orders, more frequent purchases, or both. Moving to revenue and take rate, higher GMS drove strong revenue growth of 10.9% year over year in Q3. Total revenue reached $692 million, with marketplace and services revenue both contributing to growth, increasing by 9.1% and 15% respectively.

Speaker #1: Two, promoting a stronger selection of high-quality items by increasing the weight of quality signals within search and recommendations. Three, better managing the prominence of physical versus digital items based on what we can understand about buyer intent.

Speaker #1: And four, differentiating our offering around special occasions, where people may be willing to pay a little bit more for just the right item. Looking forward, we seek to continue to grow our wallet share by helping shoppers discover more of the unique high-quality inventory on ETSY, whether that translates into more valuable orders, more frequent purchases, or both.

Speaker #1: Moving to revenue and take rate, higher GMS drove strong revenue growth of 10.9 percent year-over-year in the third quarter. Total revenue reached $692 million with marketplace and services revenue both contributing to growth, increasing by 9.1 percent and 15 percent respectively.

Lanny Baker: Take rate was 26.2%, up 50 basis points year over year, primarily driven by further enhancements to Etsy Ads and, to a lesser extent, contribution from Offsite Ads. Etsy Ads is becoming an even more effective tool for sellers to reach buyers. As improvements to our matching and ranking models increased ad relevance and drove higher click-through and conversion rates. Better budget pacing mechanisms also helped sellers direct more of their spend toward the most valuable opportunities. Strong revenue growth, together with the impact of our restructuring in August, translated into adjusted EBITDA of $210 million, growing 14.6% year over year and representing a 30.4% adjusted EBITDA margin. Adjusted EBITDA grew faster than revenue for the second consecutive quarter, and we remain disciplined in managing operating expenses while continuing to invest in areas that we believe support Etsy's long-term growth.

Speaker #1: Take rate was 26.2 percent, up 50 basis points year-over-year, primarily driven by further enhancements to ETSY ads and to a lesser extent contribution from offsite ads.

Speaker #1: ETSY ads is becoming an even more effective tool for sellers to reach buyers. As improvements to our matching and ranking models increased ad relevance and drove higher click-through and conversion rates, better budget-pacing mechanisms also helped sellers direct more of their spend toward the most valuable opportunities.

Speaker #1: Strong revenue growth, together with the impact of our restructuring in August, translated into adjusted EBITDA of $210 million, growing 14.6 percent year-over-year and representing a 30.4 percent adjusted EBITDA margin.

Speaker #1: Adjusted EBITDA grew faster than revenue for the second consecutive quarter, and we remain disciplined in managing operating expenses while continuing to invest in areas that we believe support Etsy's long-term growth.

Lanny Baker: Marketing remained an important area of investment, and expense grew as a percentage of revenue year on year as we leaned into driving profitable GMS growth. Excluding restructuring charges, product development expense gained leverage year over year, reflecting lower stock-based compensation and employee-related expenses. Looking ahead, we expect to sustain Etsy's healthy adjusted EBITDA profitability as we gradually add product and engineering headcount and capabilities to support our long-term growth. As of 30 September 2026, Etsy held $2.5 billion in cash equivalents, and short and long-term investments. Proceeds from the sale of Depop, which closed on 30 July 2026, contributed to our cash balance at quarter end. Subsequently, on 1 October 2026, we paid $649 million in cash to settle the remaining aggregate principal amount of our outstanding 2019 Notes and reduce the company's total outstanding debt. We generated strong free cash flow during the quarter.

Speaker #1: Marketing remained an important area of investment, and expense grew as a percentage of revenue year-on-year, as we leaned into driving profitable GMS growth. Excluding restructuring charges, product development expense gained leverage year-over-year, reflecting lower stock-based compensation and employee-related expenses.

Speaker #1: Looking ahead, we expect to sustain ETSY's healthy adjusted EBITDA profitability as we gradually add product and engineering headcount and capabilities to support our long-term growth.

Speaker #1: As of September 30, 2026, Etsy held $2.5 billion in cash, cash equivalents, and short- and long-term investments. Proceeds from the sale of DPOP, which closed on July 30, 2026, contributed to our cash balance at quarter end.

Speaker #1: Subsequently, on October 1st, 2026, we paid $649 million in cash to settle the remaining aggregate principal amount of our outstanding 2019 notes and reduced the company's total outstanding debt.

Speaker #1: We generated strong free cash flow during the quarter, net cash provided by operating activities of continuing operations for the three months ended September 30th, 2026, was $243 million.

Lanny Baker: Net cash provided by operating activities of continuing operations for the three months ended 30 September 2026 was $243 million. On a continuing operations basis, we converted 112% of our adjusted EBITDA into free cash flow during the quarter. We further accelerated the return of capital to shareholders, repurchasing approximately $395 million in stock and reducing the outstanding share count by approximately 5.2 million shares during the Q3 alone. We currently have $2.2 billion in authorized capacity for future share repurchases and anticipate continuing to repurchase shares at an accelerated rate to further reduce the outstanding share count. Turning to our outlook, we currently anticipate that overall macroeconomic factors remain relatively consistent, foreign currency is a modest growth headwind, and prior year comparisons become less favorable in the Q4.

Speaker #1: And on a continuing operations basis, we converted $112 percent of our adjusted EBITDA into free cash flow during the quarter. We further accelerated the return of capital to shareholders, repurchasing approximately $395 million in stock and reducing the outstanding share count by approximately 5.2 million shares during the third quarter alone.

Speaker #1: We currently have 2.2 billion in authorized capacity for future share repurchases, and anticipate continuing to repurchase shares at an accelerated rate to further reduce the outstanding share count.

Speaker #1: Turning to our outlook, we currently anticipate that overall macroeconomic factors remain relatively consistent, foreign currency is a modest growth headwind, and prior year comparisons become less favorable in the fourth quarter.

Lanny Baker: In that context, we currently anticipate that Etsy marketplace Q4 GMS will be between $3.46 billion and $3.52 billion, representing year-over-year growth of approximately 5% to 7% for the quarter. We expect Q4 take rate to be approximately 25.6% and adjusted EBITDA margin to be approximately 30%. For the full year, we now anticipate that GMS growth will be approximately 7%, take rate to be about 25.8%, and our full year adjusted EBITDA margin outlook moves up to roughly 30%. In sum, we are very pleased with the progress we have made in 2026. The marketplace is getting healthier, and as strategy and execution have aligned, we have driven significant outperformance compared with our expectations at the beginning of the year. With that, we will now turn it over to the operator to take your questions.

Speaker #1: In that context, we currently anticipate that ETSY marketplace fourth quarter GMS will be between 3.46 billion and 3.52 billion dollars. Representing year-over-year growth of approximately 5 to 7 percent for the quarter.

Speaker #1: We expect fourth quarter take rate to be approximately 25.6 percent and adjusted EBITDA margin to be approximately 30 percent. For the full year, we now anticipate that GMS growth will be approximately 7 percent.

Speaker #1: Take rate to be about 25.8 percent, and our full year adjusted EBITDA margin outlook moves up to roughly 30 percent. In sum, we are very pleased with the progress we've made in 2026.

Speaker #1: The marketplace is getting healthier, and as strategy and execution have aligned, we've driven significant outperformance compared with our expectations at the beginning of the year.

Speaker #1: With that, we'll now turn it over to the operator to take your questions.

Operator: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form. Our first question is from Nikhil Devnani at Bernstein. You may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. At this time, if you would like to ask a question, please click on the raised hand button, which can be found on the black bar at the bottom of your screen.

Speaker #2: You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your screen from the host, allowing you to talk, and then you will hear your name called.

Speaker #2: Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form.

Speaker #2: Our first question is from Nikhil Devani at Bernstein. You may now unmute your line and ask your question. Thank you.

Nikhil Devnani: Good morning. Thank you for taking the question. I wanted to ask a little bit about this dynamic between app and non-app GMS. I think in the past, the app has sort of been the sandbox for all your personalization efforts and other self-help efforts, and it accelerated first. Now we are seeing the non-app GMS also improve. I am curious the extent to which you have been able to extrapolate some of those same efforts to the non-app shopping journey, or if it is something else driving that. Just if you could remind us the overall technical hurdle around data or otherwise to get the non-app shopping experiences to keep improving and keep up with what you are able to do in the app. Thank you.

Speaker #3: Good morning. Thank you for taking the question. I wanted to ask a little bit about this dynamic between app and non-app GMS. I think in the past, the app has sort of been the sandbox for all your personalization efforts and other self-help efforts.

Speaker #3: And it accelerated first. Now we're seeing the non-app GMS also improve. I'm curious to what extent you've been able to extrapolate some of those same efforts to the non-app shopping journey, or if it's something else driving that.

Speaker #3: And just if you could remind us the overall technical hurdle around data or otherwise to get the non-app shopping experiences to keep improving, and keep up with what you were able to do in the app.

Speaker #3: Thank you.

Kruti Patel Goyal: Thanks so much for the question. I think that your insight is exactly right. We started out using the app as a place to really test deeper personalization. As we have talked about before, it is an area where we have a lot of information about users because they are all signed in. As we have learned about how to effectively personalize the experience, deliver much more relevant inventory and personalization, we have expanded those learnings and that personalization work across platforms and throughout the experience. We are seeing that show up more significantly on web as well as on app. There are no significant technical hurdles that I would call out. I think that it has just been about sequencing our work to where we can learn best before we apply it more broadly.

Speaker #4: Thank you so much for the question. I think that your insight is exactly right. We started out using the app as a place to really test deeper personalization.

Speaker #4: And, you know, as we've talked about before, it's an area where we have a lot of information about users because they're all signed in.

Speaker #4: And so as we have learned about how to effectively personalize the experience, deliver much more relevant inventory and personalization, and we've expanded those learnings and that personalization work throughout across platforms and throughout the experience, we're seeing that show up more significantly on web as well as on app.

Speaker #4: There are no significant technical hurdles that I would call out. I think that it's just been about sequencing sequencing our work to where we can learn best before we apply it more broadly.

Deb Wasser: Great. Thank you, Kruti. All right, we will go to the next question.

Speaker #4: That's great. Thank you, Christy. All right. We'll go to the next question.

Operator: Thank you. Our next question comes from Steven Forbes at Guggenheim. Stephen, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Stephen Forbes at Guggenheim. Stephen, you may now unmute your line and ask your question. Thank you.

Steven Forbes: Morning, Kruti, Lanny, Deb. Kruti, maybe just a question around gifting. Curious if you can highlight some of the key attributes that you are hoping the Gifting Assistant is going to solve or address, including any friction points for the consumer. Then I do not know if you can remind us what the percentage of GMS gifting represents for both the full year and the Q4.

Speaker #1: Good morning, Christy, Lani, Deb. Christy, maybe maybe just a question around gifting. Curious if you can highlight some of the key attributes that you're hoping the gifting assistant is is going to solve or address, including any friction points for the consumer.

Speaker #1: And then I don't know if you can remind us what the percentage of GMS gifting represents for both the full year and the fourth quarter.

Speaker #4: You know, I think that when I think about our gifting assistant, it's really our first foray into bringing a shopping agent on site. And so the first application of that, to give people a real sense of how to use it and when to use it, has been applying it to gifting.

Kruti Patel Goyal: When I think about our Gifting Assistant, it is really our first foray into bringing a shopping agent on site. The first application of that, to give people a real sense of how to use it and when to use it, has been applying it to gifting. It has really been an opportunity for us to learn and experiment with a more conversational interface to understand how that enables people to shop more effectively. It has been a really great learning tool for us. We are seeing that it is particularly effective in helping people, when they have broader, more complex queries, really effectively narrow down their search.

Speaker #4: It's really been an opportunity for us to learn and experiment with a more conversational interface to understand how that enables people to shop more effectively.

Speaker #4: And it's been a really great learning tool for us. We're seeing that it's particularly effective in helping people, when they have broader, more complex queries, really effectively narrow down their search.

Kruti Patel Goyal: As we are learning that, our next steps are going to be to expand both the use cases for this type of a shopping assistant and expand where you can access it throughout the experience, rather than a single entry point, to just better leverage this kind of an interface on the experience.

Speaker #4: And so as we are learning that, our next steps are going to be to expand both the use cases for this type of a shopping assistant and expand where you can access it throughout the experience.

Speaker #4: Rather than a single entry point, to just better leverage this kind of an interface on the experience.

Lanny Baker: Yeah, in terms of gifting's importance, we have always held the view that Etsy is this destination for really differentiated, considered purchases, where that human connection is important. That is reflected in the fact that about 30% of our GMS comes from gifting, where people are coming to us to try to find an item to give to somebody else. So it is a big portion of our business, and we will invest in that and find ways to use personalization to tap into more of the gifting occasions that people have on their calendars.

Speaker #1: Yeah. And in terms of gifting's importance, you know, we've always held the view that ETSY is this destination for really differentiated considered purchases where where that human connection is is important.

Speaker #1: And that's reflected in the fact that about 30 percent of our GMS comes from gifting, where people are coming to us to try to find an item to give to somebody else.

Speaker #1: So it's a it's a big portion of our business. And, you know, we continue to invest in that and find ways to use personalization to tap into more of the gifting occasions that people have on their calendars.

Kruti Patel Goyal: Great, everybody needs to try it this season. It is really cool. Next question.

Speaker #4: Great. And everybody needs to try it this season. It's really cool. Next question.

Operator: Thank you. Our next question comes from Andrew Boone at Citizens. Andrew, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Andrew Boone at Citizens. Andrew, you may now unmute your line and ask your question. Thank you.

Andrew Boone: Thanks so much for taking the question. I wanted to go to buyer frequency. Is there anything you can help us understand in terms of cohorts or various groups of buyers in terms of frequency? I am a little bit surprised to not see this up given all the progress you guys have made in terms of personalization and a better product. Just help us understand that. Thank you.

Speaker #5: Thanks so much for taking the question. I wanted to go to buyer frequency. Is there anything you can help us understand in terms of cohorts or various groups of buyers in terms of frequency?

Speaker #5: I'm a little bit surprised to not see this up, given all the progress you guys have made in terms of personalization. And the better product.

Speaker #5: So just help us understand that. Thank you.

Kruti Patel Goyal: Lanny, do you want to start on that?

Speaker #4: Thank you all so much.

Lanny Baker: Sure. In the long-term drivers of our business, frequency is a very important one. I think we have early signs of progress in buyer engagement that we are very encouraged by. Things like the responsiveness to recommendations that we make and clicks on those, the favoriting of items and of sellers, the usage of the app, the cross-category shopping experiences that we are able to inspire through personalization, the repeat visit activity, are all early precursor signs of people starting to build deeper engagement with Etsy. At the same time, there are other countervailing trends. We have talked about it in the past, the addition of new and reactivated buyers into the mix. They tend to buy a little bit less frequently than the established buyers.

Speaker #1: Sure. You know, in our in the long term, drivers of our business, frequency is very important one. And, you know, I think we have early signs of progress in buyer engagement that we're very encouraged by.

Speaker #1: Things like the responsiveness to recommendations that we make and clicks on those, the favoriting of items and of sellers, the usage of the app, the cross-category shopping experiences that we're able to inspire through personalization, and the repeat visit activity are all early precursor signs of people starting to build deeper engagement with Etsy.

Speaker #1: At the same time, there are other countervailing trends. We've talked about it in the past. The addition of new and reactivated buyers into the mix, they tend to buy a little bit less frequently than the established buyers.

Lanny Baker: The fact that as we elevate items that are truly special and differentiated, often they are at a little bit higher price point, and we are gaining share of wallet. As prices are higher, people are a little bit more selective in what they are purchasing, those spending more on Etsy. As we look forward, I think we are very encouraged to start now to see, for a couple of quarters in a row, growth in the number of repeat buyers and the growth in the number of habitual buyers. So those are early indicators of building that habit frequency retention, but we are not yet at a place where the sum total of frequency overall is comping positively year to year.

Speaker #1: The fact that, as we elevate items that are truly special and differentiated, often they're at a slightly higher price point, and we're gaining share of wallet. And, you know, as prices are higher, people are a little bit more selective in what they're purchasing.

Speaker #1: Those spending more on ETSY. As we look forward, I think we're very encouraged to start now to see for a couple quarters in a row, growth in the number of repeat buyers and the growth in the number of habitual buyers.

Speaker #1: So those are early indicators of, like, building that habit frequency retention. But we're we're we're not yet at a place where the sum total of frequency overall is moving you know, is comping positively year to year.

Kruti Patel Goyal: I am just going to underscore the point that Lanny said. We see frequency as a really important long-term measure, but it is a hard thing to move materially quarter to quarter. So what we really look at internally is how effectively can we measure indicators of us making the experience more relevant, more engaging in period. So that is why we have been looking at and sharing a lot of measures of engagement, which we think are great examples of how we are doing that. Then again, over the long term, we are going to be focusing on converting engagement into greater purchase frequency. The other thing that I would just add is, what we are seeing is, in terms of the increasing GMS per buyer, is that we are providing an experience that compels people to spend more with us over time.

Speaker #4: I'm just going to underscore the point that this Lani said. We see frequency as a really important long-term measure, but it's a hard thing to move materially quarter to quarter.

Speaker #4: So what we really look at internally is how effectively can we measure indicators of us making the experience more relevant, more engaging, in period.

Speaker #4: And so that's why we've been looking at and sharing a lot of measures of engagement, which we think are great examples of how we're of how we're doing that.

Speaker #4: And then again, over the long term, we're going to be focusing on converting engagement into greater purchase frequency. The other thing that I would just add is, you know, we're seeing is in terms of the increasing GMS per buyer is that we are providing an experience that compels people to spend more with us over time.

Kruti Patel Goyal: So that is really the North Star that we are looking at, is are we gaining wallet share from our buyers? So that is the other thing that I would encourage you to think about.

Speaker #4: And so that's really the North Star that we are looking at is are we gaining wallet share from our buyers? So that's the other thing that that I would encourage you to think about.

Deb Wasser: Perfect. Great. Thank you. We will take the next question.

Speaker #4: Perfect. Great. Thank you. We'll take the next question.

Operator: Thank you. Our next question comes from Eric Sheridan at Goldman Sachs. Eric, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Eric Sheridan at Goldman Sachs. Eric, you may now unmute your line and ask your question. Thank you.

Eric Sheridan: Thank you so much for taking the question. Maybe if I can push on the theme of marketing and what was in the shareholder letter, can you just go a little bit deeper in the key learnings as you continue to diversify the channels with which you market to consumers, and how should we be thinking about the two sides of this, both in terms of what marketing can do in terms of driving increased volume on the platform, but also through the lens of marketing ROI over the medium term, and how you translate some of those early learnings into how it might translate over a longer duration period of time? Thanks so much.

Speaker #1: Thanks so much for taking the question. Maybe if I can push on the theme of marketing and what was in the shareholder letter. Can you just go a little bit deeper into the key learnings as you continue to diversify the channels with which you market to consumers?

Speaker #1: And how should we be thinking about the two sides of this, both in terms of what marketing can do in terms of driving increased volume on the platform, but also through the lens of marketing ROI over the medium term and how you translate some of those early learnings into how it might translate over a longer duration period of time.

Speaker #1: Thanks so much.

Lanny Baker: Thanks, Eric. I will start. Marketing in 2026 has had a really great year for Etsy, and I think at the top and sort of kind of most abstract layer, we have, I think from a branding perspective, really started to successfully put forward this sort of notion of Etsy's differentiation around human connection. That has been in some of our brand work and in some of our online marketing messages. But when you get into the details of the more direct side of marketing, we have also had a really great year. We made some big progress in paid search, by better segmenting the feeds that we provide to PLAs in particular. But that has also helped us across social.

Speaker #3: Thanks, Eric. I'll start. You know, marketing in 2026 has had a really great year for ETSY. And I think at the, like, top and sort of kind of most abstract layer, we've we've I think from a branding perspective, really started to successfully put forward this this sort of notion of ETSY's differentiation around human connection.

Speaker #3: That's been in some of our brand work and in some of our online marketing messages. But when you get into the details of the, like, the more direct side of marketing, we've also had really great year.

Speaker #3: We made some big progress in paid search by better segmenting the feeds that we provide to PLAs in particular. But that's also helped us across social.

Lanny Baker: Within paid social, we have been able to scale at really attractive ROIs, the spending that we do in places like TikTok and YouTube, which are expanding our reach to younger audiences and to new buyers coming into Etsy. We also in the Q3 had a fabulous in real life event, an activation we did with a music performer who you may know, Olivia Rodrigo. And that touched, I do not know, was it 90 million total views of that activity? So, kind of across the board, I think we are finding a real stride on the marketing front. And, in the Q3, we increased our marketing spending on a year-over-year basis, but the GMS from marketing grew faster than that. Our ROIs improved year-over-year on our marketing spending in the Q3.

Speaker #3: And then within paid social, we've been able to scale at really attractive ROIs the spending that we do in places like TikTok and YouTube, which are expanding our reach to younger audiences and to to new buyers coming into ETSY.

Speaker #3: So I, you know, we had a we also in the third quarter had a fabulous in-real-life event, an activation we did with a music performer who you may know, Olivia Rodrigo, and that touched you know, I don't know, was it 90 million total views of that activity.

Speaker #3: So you know, kind of across the board, I think we're we're finding a real stride on the marketing front. And you know, in the third quarter, our we increased our marketing spending on a year-over-year basis, but the GMS from marketing grew faster than that.

Speaker #3: Our ROIs improved year over year on our marketing spending in the third quarter. If you remember back to the second quarter, we got pretty good leverage out of our marketing spend in Q2.

Lanny Baker: If you remember back to Q2, we got pretty good leverage out of our marketing spending in Q2. What you are seeing there kind of play out across a couple quarters is gains in efficiency established in Q2 were effectively deployed to gains in growth and share in Q3. Our engine got more efficient and we invested more behind it. We feel really good about the health and the position of our marketing complex at this point. We could go deeper into detail, but I think that gives you kind of a good high-level view of what is going on there.

Speaker #3: And what you're seeing there play out across a couple of quarters is gains in efficiency established in the second quarter were effectively deployed to gains in growth and share in the third quarter. Our engine got more efficient and we invested more behind it.

Speaker #3: And so, you know, we feel really good about the health and the position of our marketing complex at this point. We could go deeper into detail, but I think that gives you kind of a good high-level view of what's going on there.

Kruti Patel Goyal: That is great. Thanks, Lanny. We will take the next question.

Speaker #4: That's great. Thanks, Lani. We'll take the next question.

Operator: Thank you. Our next question comes from Rob Coolbrith at Evercore ISI. You may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Rob Colbert at Evercore ISI. You may now unmute your line and ask your question. Thank you.

Rob Coolbrith: Thank you very much. Good morning. Congratulations on the results, and to Lanny and Deb on terrific runs with the company. I just wanted to ask on the call-out, Lanny, on digital versus physical goods prominence. Can you maybe give us a snapshot of how much of the marketplace today is digital, both in terms of GMS and maybe also in terms of ad revenue? Just anything further on just how you are thinking about the change in prominence. Thank you.

Speaker #5: Thank you very much. Good morning, congratulations on the results and to Lani and Deb on terrific runs of the company. Just wanted to ask on the callout, Lani, on digital versus physical goods prominence.

Speaker #5: You may give us a snapshot of how much of the marketplace today is digital, both in terms of GMS and maybe also in terms of, you know, ad revenue.

Speaker #5: And just, you know, any anything further on on just, you know, how you're thinking about the change in prominence. Thank you.

Lanny Baker: Yeah, we haven't broken that out in the past, and I don't think we're going to do that today. We'll give it some thought. I think one of the things that we found is that there were times where our search results were optimizing for conversion. We've talked about that in the past. The digital items tend to sell at a lower price than the physical items do. As we've started to get better profiling data and understand better the intent of the buyer, we're much better able to infer whether this is likely a buyer looking for a digital download or likely looking for a physical item. Just making small changes in the presentment of the physical items in those circumstances has really helped.

Speaker #3: Yeah, we haven't really we haven't broken out on the past. I don't think we're going to do it today. We'll take we'll we'll give it some thought.

Speaker #3: But I think, you know, one of the things that we found is that there were times where our search results were optimizing for conversion.

Speaker #3: We've talked about that in the past. And the, you know, digital items tend to sell at a lower price than the physical items do.

Speaker #3: And as we've started to get better profiling data and understand better the intent of the buyer, we're much better able to infer whether this is likely a buyer looking for a digital download or likely looking for a physical item.

Speaker #3: And just making small changes in the presentment of the physical items in those circumstances has has really helped, I think, the goal has been to better meet the buyer intent and it's had sort of the bank shot outcome of shifting the mix a little bit and it's actually been a little bit of a help to average order value as well.

Lanny Baker: I think the goal has been to better meet the buyer intent, and it's had sort of the bank shot outcome of shifting the mix a little bit. It's actually been a little bit of a help to average order value as well.

Rob Coolbrith: Okay. Thanks very much.

Speaker #5: Thank you. Thank you very much.

Kruti Patel Goyal: Thanks, Rob. Next question.

Speaker #4: Thanks, Rob. Next question.

Operator: Thank you. Our next question comes from John Colantuoni at Jefferies. John, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from John Colentoni at Jefferies. John, you may now unmute your line and ask your question. Thank you.

John Colantuoni: Can you hear me?

Speaker #1: Can you hear me?

Kruti Patel Goyal: Yep.

Lanny Baker: Yep.

Speaker #4: Yep.

Eric Sheridan: Okay, great. Thanks. Thanks for my question. Just wanted to ask a question on pricing. Shifting spend towards higher value items has been a key driver of growth. Can you highlight what you are doing here and how you are thinking about the sustainability of this mix shift benefit into next year? Thanks.

Speaker #1: Okay, great. Thanks for taking my question. I just wanted to ask a question about pricing. Shifting spend towards higher-value items has been a key driver of growth.

Speaker #1: Can you highlight what you're doing here and how you're thinking about the sustainability of this mix shift benefit into next year? Thanks.

Kruti Patel Goyal: Yeah, great question. Look, I think as Lanny was just saying, we are focused not on driving price, we are focused on driving quality of the customer experience. A big part of that has been thinking through how we change our algorithms to not just optimize for conversion, but to optimize for quality, making sure that we are delivering to buyers what they are looking for, both in terms of the relevance and the quality in a way that delivers them a really satisfying experience. The work that we are doing around personalization is really coming through here. We have been more effectively leveraging both our understanding of our inventory and our buyers, to deliver that more personalized experience across search, across recommendations, and across marketing.

Speaker #4: Yeah, great question. Look, I think as Lani was just saying, we are focused not on driving price. We're focused on driving quality of the customer experience.

Speaker #4: And so a big part of that has been thinking through how we change our algorithms to not just optimize for conversion, but to optimize for quality.

Speaker #4: Making sure that we're delivering to buyers what they're looking for both in terms of the relevance and the quality in a way that delivers them a really satisfying experience.

Speaker #4: And so you know, the work that we're doing around personalization is really coming through here. We've been more effectively leveraging both our understanding of our inventory and our buyers to deliver that more personalized experience across search, across recommendations, and across marketing.

Kruti Patel Goyal: This is a place where we have been able to leverage the buyer profiles that we talked about on our last call, both in terms of the breadth of those profiles and the depth of signals that we are using in those profiles. That is really allowing us to personalize at scale across platforms. That is really how I would think about your question. It is about delivering a higher quality experience. That, I think, as a driver is what gives us confidence in the sustainability and the durability of those improvements.

Speaker #4: And this is a place where we've been able to leverage the buyer profiles that we talked about on our last call, both in terms of the breadth of those profiles and the depth of signals that we're using in those profiles.

Speaker #4: And that's really allowing us to personalize at scale across those across platforms. So that's really how I would think about about your question. It's it's about delivering a high a higher quality experience.

Speaker #4: And that, I think that as a driver is what gives us confidence in the sustainability and the durability of those improvements. Okay, great. Thank you.

Deb Wasser: Okay, great. Thank you. Next question.

Speaker #4: Next question.

Operator: Thank you. Our next question comes from Bryan Smilek at JPMorgan. Brian, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Brian Smilek at JPM. Brian, you may now unmute your line and ask your question. Thank you.

Bryan Smilek: Great. Thanks for taking the question. Kruti, really curious, can you just share progress across highlighting top sellers in the feed? I think you did the Android takeover, which was very interesting. Just the overall impact that top sellers going to the top of the algorithm have on overall GMS and AOV on the platform. Thank you.

Speaker #5: Great. Thanks for taking the question. Kruti, really curious, can you just share progress across highlighting top sellers in the feed? I think you did the Android takeover, which was very interesting.

Speaker #5: And just the overall impact that top sellers go into the top of the algorithm have on just overall GMS and AOB on the platform.

Speaker #5: Thank you.

Kruti Patel Goyal: The focus that we've had has been really on highlighting, understanding the seller behind the item. It hasn't just been about top sellers, to be clear. The work that we did on Android was really to help us understand what information and where in the experience, what information about sellers, the role that they play, who they are, and where in the experience seeing that information is most valuable. I think that's a really interesting insight that we gathered there, was that by showing that information through the experience, it gives buyers not only a deeper understanding of what it is that they're buying, but it conveys more trust in a way that drives more engagement. We're looking at. We're taking those learnings and expanding the application of that throughout the experience.

Speaker #4: The focus that we've had has been really on highlighting understanding the seller behind the item. It hasn't just been about top sellers, to be clear.

Speaker #4: And so the work that we did on Android was really to help us understand what information and where in the experience what information about sellers, the role that they play, who they are, and where in the experience seeing that information is most valuable.

Speaker #4: And I think that the really interesting insight that we gathered there was that by showing that information through the experience, it gives buyers not only a, you know, deeper understanding of what it is that they're buying, but it it conveys more trust in a way that drives more engagement.

Speaker #4: And so we're looking at, you know, we're expanding those we're taking those learnings and expanding the application of that throughout the experience. Now, more broadly, what I would say about sellers is that we're really encouraged by the growth that we're seeing on the seller side of the business.

Kruti Patel Goyal: Now, more broadly, what I would say about sellers, is that we're really encouraged by the growth that we're seeing on the seller side of the business. I think that that's evidence of the fact that our platform is becoming more valuable to our sellers. We saw seller growth, and importantly, we also saw GMS per seller growth this quarter. I think that we're providing value to sellers in a number of ways. We're investing in better tools for them to reduce toil. We're investing in agentic experiences to help them run their shops and leverage their insights and data on platform more effectively. We're really thinking about that end-to-end experience for sellers, including how we support them, our investments in support and trust and safety.

Speaker #4: And I think that that's evidence of the fact that our platform is becoming more valuable to our sellers. You know, we saw seller growth and and importantly, we also saw GMS per seller growth this quarter.

Speaker #4: And so, I think that, you know, we're providing value to sellers in a number of ways. We're investing in better tools for them to reduce toil.

Speaker #4: We're investing in agentic experiences to help them run their shops and leverage their insights and data on the platform more effectively. And we're really thinking about that end-to-end experience for sellers, including how we support them—how our investments in support and trust and safety can help.

Kruti Patel Goyal: All in all, we think that this is really paying off in terms of both their engagement with Etsy and their performance that they're seeing on Etsy.

Speaker #4: And so, you know, all in all, we think that this is really paying off in terms of both their engagement with Etsy and their performance that they're seeing on Etsy.

Deb Wasser: Great. Thanks, Kruti, and thanks, Brian. Next question.

Speaker #4: Great, thank you, Kruti. And thanks, Brian. Next question.

Operator: Thank you. Our next question comes from Bernie McTernan at Needham and Company. Bernie, please unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Bernie McTernan at Needham & Company. Bernie, please unmute your line and ask your question. Thank you.

Bernie McTernan: Great, thanks for taking the question. Kruti, you mentioned in the prepared remarks, external GMS tailwinds. Can you maybe define and quantify those tailwinds? On the internal tailwinds, talk about 200 basis points of growth from personalization. Are there any other major products to call out helping that acceleration in organic trends?

Speaker #3: Great. Thanks for taking the question. Kruti, you mentioned in in the prepared remarks external GMS tail ends. Can you maybe define and quantify those tail ends?

Speaker #3: And then on the internal tail ends, talked about 200 basis points of growth from personalization. Are there any other major products to call out helping that acceleration in organic trends?

Lanny Baker: Bernie, let me try to unpack that a little bit for you. At the start of 2026, the large portion of our growth was coming from what we deemed external factors, which would be the effect of inflation and tariffs on listing prices, currency exchange rates that were going in our favor at that time. Our comps at the start of the year were relatively softer than they have been at the latter part of the year. As we move through the year, the benefit of things that we have done in the product experience are starting to be more clearly definable contributors to growth, even as those external factors have waned. Currencies have gone from being a benefit to being a modest headwind. The comparisons have gotten more difficult.

Speaker #1: It would let me let me try to unpack that a little bit for you. As a start of 2026, there there are large portion of our growth was coming from what we kind of deemed external factors, which would be the effect of inflation and tariffs on listing prices, currency, exchange rates that were going in our favor at that time, and, you know, our comps at the start of the year were relatively softer than they have been at the at the latter part of the year.

Speaker #1: As we move through the year, it it, you know, the benefit of things that we have done in the product experience are starting to be more clearly definable contributors to growth, even as those external factors have you know, just have waned.

Speaker #1: Currencies have gone from being a benefit to being a modest headwind. The comparisons have gotten more difficult. We've lapped some of those increases in listing prices.

Lanny Baker: We have lapped some of those increases in listing prices, so more and more of the GMS growth is coming from things on our side. We wanted to share with you, we talked a lot earlier this year about personalization, and we wanted to share with you some quantification of what that has meant to the business. To see it contributing a couple points of growth, at a relatively early stage, where I do not think we are even really started to crack the full code on what we can do with it. I think it is really important to understand that dynamic. There are other factors within the business going on. The improved relevance of search results will be another internally driven effect. Things that we have done in making our marketing outperform the industry at a time when many in the industry are seeing Google CPCs go up.

Speaker #1: And so more and more of the GMS growth is coming from things on our side. We we we wanted to share with you we talked a lot earlier this year about personalization.

Speaker #1: And we wanted to share with you like some quantification of what that has meant to the business and to see it contributing a couple points of growth at a relatively early stage where I I don't think we're we're even really started to crack the full code on what we can do with it.

Speaker #1: I I think it's really important to understand that dynamic. There are other factors within the business going on. The improved relevance of search results will be another like internally driven effect.

Speaker #1: Things that we've done in making our marketing outperform the industry at a time when many in the industry are seeing Google CPCs go up.

Lanny Baker: We're seeing Google CPCs go down. There are a lot of things that are accumulating to that internal momentum. They overlap with each other. It's hard to disambiguate them super cleanly. We'll do our best to keep communicating about them. All year long, personalization's been a key one, and that's why we try to give you that quantification.

Speaker #1: We're seeing Google CPCs go down, and so there are a lot of things that are sort of accumulating to that internal momentum.

Speaker #1: They overlap with each other. It's hard to disambiguate them super cleanly, and we'll do our best to keep communicating about them.

Speaker #1: All year long, personalization has been a key one. And that's why we try to give you that quantification.

Deb Wasser: Great. Thanks, Bernie. Next question.

Speaker #4: Great. Thanks, Lenny. Thanks, Bernie. Next question.

Operator: Thank you. Our next question comes from Rick Patel at Raymond James. Rick, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Rick Patel at Raymond James. Rick, you may now unmute your line and ask your question. Thank you.

Rick Patel: Thank you. Good morning. I had a question on the positive inflection in active buyers. You touched on gross buyer additions being up around 6%. Can you unpack that for us? What's been the most effective strategy in recruiting new buyers, and where do you see the most opportunity to continue making progress?

Speaker #6: Thank you. Good morning. I had a question on the positive inflection and active buyers. So you touched on gross buyer additions being up around 6%.

Speaker #6: Can you unpack that for us? What's been the most effective strategy in recruiting new buyers? And where do you see the most opportunity to continue making progress?

Lanny Baker: It has been a combination of growth in new buyers and reactivation. Reactivation has been really important. As we have gone into social media, that has really proved to be a very effective channel for us in reactivating prior buyers. Just because the attention span of so many people is dedicated to social media, refining our game there, our mid-funnel and lower funnel game, has really helped us on.

Speaker #1: You know, it's been a combination of growth in new buyers and reactivation. And, you know, reactivation has been really important. As we've gone into social media, we have that has really proved to be a very effective channel for us in reactivating prior buyers.

Speaker #1: Just because the attention span of so many people is dedicated to social media, getting refining our game there our mid-funnel and lower funnel game has really helped us on as we've said in the past, going back and tapping people on the shoulder, reminding them of Etsy and bringing them back to Etsy.

Lanny Baker: As we have said in the past, going back and tapping people on the shoulder, reminding them of Etsy, and bringing them back to Etsy. On the new acquisition side, we have shifted more of our spending toward places where we see younger audiences who maybe have not interacted with Etsy in the past. I think half of our impressions on TikTok reached people in the 18 to 29-year-old demographic, and that is not an area that we were really even spending in, importantly, 6 months ago. I would say, changes to the channel are helping us reach younger, new audiences. Changes to our personalization and our owned and operated channels are helping us reactivate.

Speaker #1: On the new acquisition side, we have we've shifted more of our spending toward places where we see younger audiences, who maybe haven't interacted with Etsy in the past.

Speaker #1: And, you know, a lot of the spending that we've I think half of our impressions on TikTok reached people in the 18 to 29-year-old demographic.

Speaker #1: And that's not an area that we were really even spending in importantly six months ago. So I would say, you know, changes to the channel are helping us reach younger new audiences.

Speaker #1: Changes to our personalization and our owned and operated channels are helping us reactivate.

Kruti Patel Goyal: The only other thing that I will add is just zooming out for a second. The biggest takeaway, I know you asked about new buyer trends particularly, but the biggest takeaway here is that our buyer trends are becoming healthier across the funnel. This is not just a new and reactivated buyer story. We shared earlier that our most valuable buyers are growing sequentially for the second quarter in a row. We are seeing benefits across new and reactivated buyers of acquisition, as well as retention and increased engagement from our most valuable buyers. So it is a really good story across the board around buyer trends.

Speaker #4: The only other thing that I will add is just like zooming out for a second. The biggest takeaway I know you asked about new buyer trends, particularly, but the biggest takeaway here is that our buyer trends are becoming healthier across the funnel.

Speaker #4: This is not just a new and reactivated buyer story. We said that our we shared earlier that, you know, our most valuable buyers are growing sequentially for the second quarter in a row.

Speaker #4: So we're seeing benefits across new and reactivated buyers, acquisition, as well as retention and increased engagement from our most most valuable buyers. So it's a really good story across the board.

Speaker #4: Around buyer trends. Great, thank you both. We'll go to the next question.

Deb Wasser: Great. Thank you both. We will go to the next question.

Operator: Thank you. Our next question comes from Nav Khan at B. Riley Securities. Nav, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Nave Kahn at Beaver Isley Securities. Nave, you may now unmute your line and ask your question. Thank you.

Nav Khan: Thanks a lot. Kruti, maybe you can share some of your thoughts around agentic shopping and how that affects the business. How do you expect to drive personalization and consideration as adoption for agentic shopping grows? Thanks.

Naved Khan: Thanks a lot. Kruti, maybe you can share some of your thoughts around agentic shopping and how that affects the business. How do you expect to drive personalization and consideration as adoption for agentic shopping grows? Thanks.

Speaker #7: Thanks a lot. Kruti, maybe you can maybe share some of your thoughts around agentic shopping and how that affects the business, how do you how do you expect to drive personalization and consideration as adoption for agentic shopping grows?

Kruti Patel Goyal: Yeah, I am really glad you asked. Look, I think that there is understandably a lot of discussion about how, and a lot of interest in how AI is going to reshape commerce. Just to state the obvious, AI represents one of the most significant shifts in technology that we have seen in a long time. Obviously that is going to have an impact on how people shop as well. We believe Etsy is incredibly well-positioned, not just to participate in the shift towards AI-powered commerce, but to really thrive. I think that is because our greatest strengths become more important in an AI-driven world. There are two in particular that I will call out. The first is the differentiation of our inventory. We have over 100 million items from almost 6 million sellers around the world. Every single one of those items has a unique story and provenance.

Speaker #7: Thanks.

Speaker #4: Yeah. I'm I'm really glad you asked. Look, I think that there's understandably a lot of discussion about how and a lot of interest in how AI is going to reshape commerce.

Speaker #4: And, you know, just to state the obvious, AI represents one of the most significant shifts in technology that we've seen in a long time.

Speaker #4: And obviously, that's going to have an impact on how people shop as well. We believe Etsy is incredibly well positioned, not just to participate in the shift towards AI-powered commerce, but to really thrive.

Speaker #4: And I think that's because our greatest strengths become more important in an AI-driven world. So there are two in particular that I will call out.

Speaker #4: The first is the differentiation of our inventory. You know, the the inventory we have over 100 million items from almost 6 million sellers around the world.

Speaker #4: Every single one of those items has a unique story. And provenance. And as AI makes it easier than ever to create and replicate products, and that those products become virtually undistinguishable, I believe that things that are created by real people are going to be increasingly valuable.

Kruti Patel Goyal: As AI makes it easier than ever to create and replicate products, and those products become virtually undistinguishable, I believe that things that are created by real people are going to be increasingly valuable. I would even go so far as to say that we believe human-generated items could become the ultimate luxury over time. We have this incredible breadth of unique human-created items that you just cannot find anywhere else, certainly not at this scale. This connects to the second big strength of ours, which is our brand and the trust in human authorship that that brand conveys. That is going to be even more important, again, in the context of infinite options. That is to our buyers, to our sellers, and frankly, to the agents that are going to be helping people shop.

Speaker #4: And I would even go so far as to say that we believe human-generated items could become the ultimate luxury over time. And we just we have this incredible breadth of unique human-created items that you just can't find anywhere else certainly not at this scale.

Speaker #4: And then this connects to the second big strength of ours, which is our brand. And the trust in human authorship that that brand conveys.

Speaker #4: So that is going to be even more important, again, in the context of infinite options. And that's to our buyers, to our sellers, and frankly, to the agents that are going to be helping people shop.

Kruti Patel Goyal: When you think about for buyers and their agents, the Etsy brand is a signal of trust that gives you confidence that not only you are getting something from a human, but that item is special and unique. That is what Etsy has always stood for. We already see that as an important factor in our current partnerships with AI discovery platforms. The fact that items come from Etsy is an important signal of quality and drives that traffic and engagement that we see from those channels. For our sellers, I think this is really important as well.

Speaker #4: When you think about for buyers and their agents, the Etsy brand is a signal of trust that gives you confidence in not only you're getting something from a human that that that that item is special and unique.

Speaker #4: That is what Etsy has always stood for. We already see that as an important factor in our current partnerships with AI discovery platforms. The fact that items come from Etsy is an important signal of quality and drives that, you know, traffic and engagement that we see from those channels.

Speaker #4: And then for our sellers, I think this is really important as well. The vast majority of them are businesses of one. And the value of being part of a trusted marketplace like Etsy becomes even greater in an AI world because as shopping and discovery becomes more fragmented, it's going to be harder for individual sellers to stand out and reach buyers on their own.

Kruti Patel Goyal: The vast majority of them are businesses of one, and the value of being part of a trusted marketplace like Etsy becomes even greater in an AI world, because as shopping and discovery becomes more fragmented, it is going to be harder for individual sellers to stand out and reach buyers on their own. That is where we play such an important role in giving our sellers the visibility, the trust, and the access to demand that they need to grow their businesses wherever shopping happens. We think that we are really well positioned. We are not betting on any one platform or any one feature. We are betting on our differentiation and our ability to proactively adapt as shopping evolves.

Speaker #4: And that's where we place such an important role in giving our sellers the visibility, the trust, and the access that, you know, to demand that they need to grow their businesses wherever shopping happens.

Speaker #4: And so, you know, we think that we are really well positioned. We are we're not betting on any one platform or any one feature.

Speaker #4: We're betting on our differentiation and our ability to proactively adapt as shopping evolves. And so you know, how how this plays out, I think, is in a number of ways.

Kruti Patel Goyal: How this plays out, I think, is in a number of ways, but we have talked a lot about the fact that we think the on-site opportunity in the near to medium term is where the biggest opportunity is here, and where we have been leveraging AI to really drive that more personalized and relevant experience on-site, and to offer agentic experiences on-site as well. But we are also engaging really proactively with partners to really make sure that our sellers' items are showing up wherever the shopping journey begins, and we are seeing really encouraging signals there, though I will just reiterate that it is very early days in terms of agentic discovery.

Speaker #4: But we've talked a lot about the fact that we think the on-site opportunity in the near to medium term is where the biggest opportunity is here.

Speaker #4: And where we've been leveraging AI to really drive that more personalized and relevant experience on-site and to offer agentic experiences on-site as well. But we're also engaging really proactively with partners to really make sure that our our our sellers' items are showing up wherever the shopping journey begins.

Speaker #4: And we're seeing really encouraging signals there, though I will just reiterate that it's very early days. In terms of agentic discovery. Great. Awesome. Thanks, Nadeb.

Deb Wasser: Great. Awesome. Thanks, Nav. We will take the next question.

Deb Wasser: Great. Awesome. Thanks, Naved. We will take the next question.

Speaker #4: We will take the next question.

Operator: Thank you. Our next question comes from Nick Jones at BNP Paribas. Nick, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Nick Jones at BNP Paribas. Nick, you may now unmute your line and ask your question. Thank you.

Nick Jones: Great. Thanks for taking the question. Lanny, I guess, could you speak to maybe some of the categories and where Etsy's seeing some strength and maybe some weakness, and is there anything kind of tied to macro conditions, maybe like homewares and home furnishings tied to

Speaker #5: All right. Thanks for taking the question. Lani, I guess, could you speak to maybe some of the categories and and where Etsy is seeing some strength and maybe some weakness?

Speaker #5: And is there anything kind of tied to macro conditions, maybe like homewares and home furnishings tied to existing home sales? Any any kind of update there would be helpful.

Nick Jones: existing home sales. Any kind of update there would be helpful. Thank you.

Speaker #5: Thank you.

Lanny Baker: Things have been, I would really tell you things have been pretty broad-based across income cohort, household income cohorts, across geographies, and even across categories. I will give you a little bit of category context in a second, but I would tell you that as we think about our opportunity, we think about it anchored in occasions. The occasion where you are giving a gift, the occasion where you want something personalized, the occasion where you want something handmade, the occasion around a fandom or a passion that you have. And we think about those occasions because we believe that that is really how Etsy buyers come to Etsy, and that is really how the differentiation of Etsy shines best. Our multi-category inventory really plays best in that, a little bit different, like occasion-based, occasion-denominated part of the thinking about how the market works.

Speaker #6: You know, things have been I would really tell you things have been pretty broad-based. Across income, cohort, household income, cohorts, across geographies, and evenly across even across categories.

Speaker #6: I I want to I I give you a little bit of category context in a second, but I would tell you that as we think about our opportunity, we think about it anchored in occasions.

Speaker #6: The occasion where you're giving a gift, the occasion where you want something personalized, the occasion where you want something handmade, the occasion around a fandom or a or a passion that you have.

Speaker #6: And and we think about those occasions because we believe that that's really how Etsy buyers come to Etsy and that's really how the differentiation of Etsy shines best.

Speaker #6: Our our like multi-category inventory really plays best in that like a a little bit different like occasion-based occasion-denominated part of the kind of thinking about how the market works.

Lanny Baker: In the last few months, call it three to 6 months, home and living, jewelry, those have been categories, vintage, have been pretty strong. But as I said, across the board, there isn't really any big up, big down. It's been a pretty broad-based improvement relative to where we were a year ago.

Speaker #6: In a you know, in the last few months, in the last you know, like call it three to six months, home and living, jewelry, those have been categories that vintage, have been pretty strong.

Speaker #6: But as I said, across the board, it there isn't really any like big up, big down. It's been a pretty broad-based broad-based improvement relative to where we were a year ago.

Kruti Patel Goyal: Yes. Perfect. Thanks, Lanny. The other thing we highlighted in the shareholder letter, also occasion-based, was weddings have been doing really well.

Speaker #4: Yes. Perfect. Thanks, Lani. The other thing we highlighted in the Sheryl the letter also occasion-based was weddings have been doing really well. We had a couple of other ones in there back to school.

Lanny Baker: Yeah.

Kruti Patel Goyal: We had a couple of other ones in there, back to school.

Lanny Baker: Halloween.

Kruti Patel Goyal: Halloween. Yeah. Halloween's a big one. All right, next question.

Speaker #6: Halloween.

Speaker #4: Halloween. Yeah. Halloween's a big one. All right. Next question.

Operator: Thank you. Our next question comes from Marvin Fong at U.S. Bancorp BTIG. Marvin, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Marvin Fong at US Bancorp, BTIG. Marvin, you may now unmute your line and ask your question. Thank you.

Marvin Fong: Great. Good morning. Thanks for taking the question. Congrats on the results and good luck, Lanny. Just a question on the guidance. It is a pretty reasonable range here, but I would just love to kind of double-click a little bit deeper on what could possibly drive the low and higher ends of that, particularly around what you are assuming around further improvements in personalization. Is any embedded in that? As well as your marketing spend. You mentioned there has been some movement in the CPCs, kind of like help us think about your ability to kind of flex that in the quarter if marketing returns either improve or get worse.

Speaker #7: Great. Good morning. Thanks for taking that question. Congrats on the results and good luck Lani. Just a question on the guidance. You know, it's pretty reasonable range here, but it just love to kind of double-click a little bit deeper on on, you know, what could possibly drive the low and higher ends of that, particularly around kind of what you're assuming around, you know, further improvements in in personalization.

Speaker #7: Is any embedded in that as well as as your marketing spend? You mentioned there's been some movement in the CPCs. Kind of like help us think about your ability to kind of flex that in the quarter if if if marketing returns either improve or or get worse.

Lanny Baker: Yeah.

Marvin Fong: Thanks so much.

Speaker #7: Thanks so much.

Lanny Baker: Okay. First, let me just say I am not going anywhere. I am going to be here through March. So, thank you for that. But I am fully focused on getting through the end of the year and getting next year started off really, really well. The high end, low end of our outlook includes, I would say at the highest level, the natural variability of predicting the future and guessing what consumers are going to do through the holiday. Then the question we always have, which is, the exact timing at which the benefits of things that we are changing in our product are going to pay off. So those are inherent in why there is a range of the $100 million or so that there is there for the next quarter.

Speaker #6: Okay. First, let me just say I'm not going anywhere. I'm going to hear through March. So thank you for that. But I am fully focused on on getting through the end of the year and getting next year started off really, really well.

Speaker #6: The the you know, high end, low end, of our outlook includes you know, I I'd say it's the highest level the natural variability of predicting the future and guessing what consumers are going to do through the holiday.

Speaker #6: And then the question we always have, which is like the exact timing at which the benefits of things that we are changing in our product are going to pay off.

Speaker #6: You put and and so those are those are inherent in why there's a range of of the you know, $100 million or so that there is there for the for the next quarter.

Lanny Baker: I think that from a marketing perspective, this is going to sound like beating an old drum, but we spend to our ROI target. Our budget or our spending levels will be determined by spending the last dollar we can to drive growth at an acceptable rate of return. That depends on external dynamics. It depends on our ability to be competitive in those dynamics. Our ability to be competitive in those dynamics is a function of things like the PLA segmentation that we have done and other things we do on-site to improve conversion. We will spend in Q4, guided by the gains in efficiency that we have made year to date, and what we see as the attractive return for our company and for our shareholders on that marketing spending. That is all incorporated in the outlook.

Speaker #6: I think that from a marketing perspective, this is going to sound, you know, back kind of beating an old drum, but like we don't we spend to a ROI target.

Speaker #6: And our our budget or our spending levels will be determined by spending about last dollar we can to drive growth at an acceptable rate of return.

Speaker #6: And you know, our that depends on external dynamics. It depends on our ability to be competitive in those dynamics. Our ability to be competitive in those dynamics is a function of, you know, things like the PLA segmentation that we've done and other things we do on-site to improve conversion.

Speaker #6: But so we will we'll spend in the fourth quarter guided by the gains in efficiency that we've made year to date. And what we see as the like attractive return for our company and for our shareholders on that marketing spending.

Speaker #6: And that that's all incorporated in the in the outlook. So you know, within a reasonable range, I think you those are the factors that put us at the upper end and lower end.

Lanny Baker: Within a reasonable range, I think those are the factors that put us at the upper end and lower end.

Kruti Patel Goyal: Okay. Thanks, Lanny. Next question.

Speaker #4: Perfect. Thanks, Lani. Next question.

Operator: Thank you. Our next question comes from Anna Andreeva at Piper Sandler. Anna, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Anna Andreeva at Piper Sandler. Anna, you may now unmute your line and ask your question. Thank you.

Anna Andreeva: Great. Thank you so much. Can you hear me?

Speaker #8: Great. Thank you so much. Can you hear me?

Kruti Patel Goyal: Yeah. All set.

Speaker #4: Yeah. All set.

Anna Andreeva: Okay. Terrific. Congrats on nice results, and best of luck to Lanny. We had just two quick questions. First, a follow-up on frequency. You talked about that extensively. Did that improve sequentially? What has been the trend in frequency since Etsy started prioritizing those higher quality listings on the platform? Just as a follow-up, in Q2, I believe you said higher income households grew a little bit faster than lower income, and I think you said broad-based strength this quarter, which is great. Did the lower income cohorts improve a bit, and was there anything specific that you think drove that? Thank you so much.

Speaker #8: Okay. Terrific. No, congrats on nice results. And best of luck to Lani. We had just two quick questions. First a follow-up on frequency. You talked about that extensively.

Speaker #8: Did that improve sequentially? And what has been the trend in frequency since Etsy started prioritizing those higher quality listings on the platform? And just as a follow-up, in 2Q, I believe you said higher income households grew a little bit faster than lower income.

Speaker #8: And I think you said broad-based strength this quarter, which is great. So did the lower income cohorts improve a bit? And was there anything specific that you think drove that?

Speaker #8: Thank you so much.

Kruti Patel Goyal: Yeah. I will talk about frequency a little bit, and then I will pass it to Lanny. Frequency is down modestly as it has been throughout the year. I think that the thing to remember here, as I was saying before, is frequency is a long-term focus of ours rather than a quarter-to-quarter metric that we are trying to move. Behind that, the idea is that our focus is on building stronger buyer relationships through a better end-to-end experience. The way that we think about that is, first, we need to bring more buyers into Etsy, then we need to deepen their engagement, and then we need to make sure that they have a great purchase experience. Because ultimately, having a great experience is the single biggest driver of somebody coming back and returning again and purchasing again.

Speaker #4: Yeah. So I'll talk about frequency a little bit and then I'll I'll pass it to Lani. So frequency is down modestly as it has been throughout the year.

Speaker #4: I think that the thing to remember here, as I was saying before, is both the frequency is a long-term focus as far as rather than a quarter-to-quarter metric that we're trying to move.

Speaker #4: But behind that, the idea is that our focus is on building stronger buyer relationships through a better end-to-end experience. And the way that we think about that is first we need to bring more buyers into Etsy, then we need to deepen their engagement, and then we need to make sure that they have a great purchase experience.

Speaker #4: Because ultimately, having a great experience is the single biggest driver of somebody coming back and returning again and purchasing again. And so when I look at that, right, we're doing a great job at bringing buyers back into the funnel.

Kruti Patel Goyal: When I look at that, we are doing a great job at bringing buyers back into the funnel. We talked about the active buyer growth returning to year-over-year growth for the first time in 2 years. This is great evidence of that. We are seeing stronger engagement. This is really the most important thing to be thinking about in terms of near-term indicators when we think about long-term frequency. We are seeing increasing engagement with our recommendations. We are seeing more favoriting. We are seeing more cross-category orders. We are seeing repeat visit rates improve. Together, these are all really encouraging signs that buyers are finding more reasons to engage with Etsy and finding more value on the platform. So, we are continuing to focus on that long-term frequency, but right now, I would encourage you all to look at the engagement drivers.

Speaker #4: We you know, we talked about the active buyer growth returning to year-over-year growth for the first time in two years and great evidence of that.

Speaker #4: We're seeing stronger engagement. This is really the most important thing to be thinking about when in terms of near-term indicators when we think about long-term frequency, right?

Speaker #4: We're seeing increasing engagement with our recommendations. We're seeing more favoriting. We're seeing more cross-category orders. We're seeing repeat visit rates improve. Together, these are all really encouraging signs.

Speaker #4: The buyers are finding more reasons to engage with Etsy and finding more value on the platform. So you know, we're continuing to focus on that long-term engagement, but right now or that long-term frequency, but right now I would encourage you all to look at at the engagement drivers.

Lanny Baker: As we look at the household income cohorts, kind of that breakdown, I think what we are seeing at Etsy is pretty similar to what we hear other companies talking about. That is that there is growth across all income cohorts in spending right now, but it is a little bit stronger, relatively stronger on the high end. There wasn't any big change in those trends this quarter in either cohort relative to the momentum they have had. They have been building momentum throughout the year, and we saw that again this quarter. I think that we can see people perhaps being slightly more selective and really making sure that where they are spending money, it is on stuff that matters and that is really meaningful. I think we feel well-positioned to play into that with the efforts that we have.

Speaker #6: And as we look at the household income cohorts, kind of that breakdown, I think what we're seeing at Etsy is pretty similar to what we hear other companies talking about.

Speaker #6: And that is that there is growth across all income cohorts in spending right now, but it's a little bit stronger, relatively stronger on the high end.

Speaker #6: There wasn't any big change in those trends this quarter. With with in either cohort, relative to the momentum they've had, they've been building momentum throughout the year and we saw that again this quarter.

Speaker #6: I think that you know, there is you know, I think that we can see people perhaps being slightly more selective and really making sure that where they are spending money, it's on stuff that matters and it's really meaningful.

Speaker #6: And I think you know, we're we feel well-positioned to play into that with the efforts that we have you know, with first the base of inventory that we have that is really special, that is built by a human, that is that is differentiated.

Lanny Baker: With first, the base of inventory that we have that is really special, that is built by a human, that is differentiated. Then by the things that we are doing that are so brand consistent and becoming more and more legible across our experience, that an Etsy purchase is really differentiated. So we feel pretty well positioned vis-à-vis where the consumer mindset is right now.

Speaker #6: And then by the the things that we are doing that are so brand consistent, it becoming more and more legible across our experience that like an Etsy purchase is really differentiated.

Speaker #6: So we we feel we feel pretty well-positioned vis-à-vis where the consumer mindset is right now.

Kruti Patel Goyal: Yeah, the nice thing about what we have seen throughout economic cycles, and we see it across household income, is that because of the breadth of our inventory and the range of price points, we really have something for everyone's needs, really in any economic climate or with any wallet size. So we have seen that work really well for us, and we see that playing out now, too.

Speaker #4: Yeah. And the nice thing about what we've seen throughout economic cycles and we see it across household income is that because of the breadth of our inventory and the range of price points, we really have something for everyone's needs, really in any economic climate or with any wallet size.

Speaker #4: And so we've seen that we've seen that work really well for us and we see that that playing out now too. Great. Thank you.

Deb Wasser: Great. Thank you, and thanks, Anna. Next question.

Speaker #4: And thanks, Anna. Next question.

Operator: Thank you. Our next question comes from Maria Ripps at Canaccord. Maria, you may now unmute your line and ask your question. Thank you.

Speaker #2: Thank you. Our next question comes from Maria Ritz at Canaccord. Maria, you may now unmute your line and ask your question. Thank you.

Maria Ripps: Great. Good morning, and thanks so much for taking my question. I just wanted to ask about your AI product listings policy changes that were announced a couple of days ago. I guess, do you anticipate an impact on GMS either later this quarter or early 2027 from some possible listing removals? Then, I guess maybe more broadly, how do you expect this stricter human-made positioning to affect how AI agents rank Etsy relative to some of the competitors?

Speaker #8: Great. Good morning. And thanks so much for taking my question. I just wanted to ask about your AI product listings policy changes that were sort of announced a couple of days ago.

Speaker #8: I guess do do you anticipate an impact on GMS sort of either later this quarter or early '27 from some possible listing removals? And then I guess maybe more broadly, how do you expect sort of this stricter human-made positioning to affect how sort of AI agents rank Etsy relative to some of the competitors?

Kruti Patel Goyal: Great question. Look, just kind of zooming out for a second, I think this is a really important moment for Etsy. As I was saying earlier, as AI makes it easier to create and replicate things at scale, it's really that human creativity, craftsmanship, and connection behind our marketplace that get even more valuable. So that was the motivation for making the changes that we're making. I want to be clear about the philosophy that drives this. The point is that AI should support seller creativity and not replace it. So the goal of this was to make sure that sellers understood what tools they could use and how they could represent their products on the marketplace, and we want to make sure that buyers understand with confidence what they're going to be receiving. So, there were a few changes that we made.

Speaker #4: Great question. Look, just kind of zooming out for a second, I think this is a really important moment for Etsy. As I was saying earlier, as as AI makes it easier to create and replicate things at scale, it's really that human creativity craftsmanship and connection behind our marketplace.

Speaker #4: That get even more valuable. So that that was the motivation for making the changes that we're making. And I want to be clear about kind of the philosophy that drives this.

Speaker #4: The point is that AI should support seller creativity and not replace it. So the goal of this was to make sure that sellers understood what tools they could use and how they could represent their products on the marketplace.

Speaker #4: And we want to make sure that buyers understand with confidence what they're going to be receiving. So you know, there are a few changes that we made.

Kruti Patel Goyal: One of them was about clarifying our policies. The biggest thing here was making sure that sellers include at least one unaltered photo of the item that they are selling with a real background. This is really about making sure that buyers can accurately understand and feel confident in the item that they are seeing. We also clarified our policies around AI-generated functional guides, like patterns and recipes. Those are the things that are no longer allowed on Etsy, but it is really much more about making sure that you can understand what you are seeing. Then we are also committing to making some changes around stronger enforcement. Really, that is about investing in better technology and tools to make sure that we are better identifying things that are misleading or have the potential to be fraudulent earlier and faster.

Speaker #4: One of them was about clarifying our policies. The biggest thing here was making sure that sellers include at least one unaltered photo of the item that they're selling with a real background.

Speaker #4: This is really about making sure that there's a that that buyers can accurately understand and feel confident in the item that they're seeing. We are also we also clarified our policies around AI-generated functional guides.

Speaker #4: Like patterns and recipes. So those are the things that are no longer allowed on Etsy, but it's really much more about making sure that you can understand what you're seeing.

Speaker #4: So that that we're also committing to making some changes around stronger enforcement, really that's about better investing in better technology and tools to make sure that we're better identifying things that are misleading or have the potential to be fraudulent earlier and faster.

Kruti Patel Goyal: The other thing that we are committing to, of course, is just like providing a more transparent shopping experience to make that creativity and craftsmanship more apparent. We think this is going to be a net benefit to the marketplace because people are going to have more confidence, and I think that applies to people and agents. The more strongly our value proposition comes through, the products that we offer and the data that we provide, the more confidence everyone should have buying on Etsy wherever they start their shopping journey.

Speaker #4: And then the other thing that we're committing to, of course, is just like providing a more transparent shopping experience to make that creativity and craftsmanship more apparent.

Speaker #4: So you know, we think this is going to be a net benefit to the marketplace because people are going to have more confidence. And I think that applies to people and agents.

Speaker #4: The the more strongly our value proposition comes through the products that we offer and the data that we provide, the more confidence everyone should have buying on Etsy.

Speaker #4: Wherever they start their shopping journey.

Lanny Baker: I mean, to me, the GMS, we do not think there will be any material GMS impact in the near term. But as Kruti Patel Goyal just said, this is important. It is an important underpinning of our differentiation that should contribute, along with 100 other things that we are doing, contribute to our differentiation and our long-term GMS growth. This is one in many steps we are taking for the long-term health of the marketplace.

Speaker #6: And vis-à-vis the the GMS, we don't think there'll be any material GMS impact in the near term, but as Kruti just said, this is important it's an important underpinning of our differentiation that should contribute to to along with a hundred other things that we're doing, contribute to our differentiation and our long-term GMS growth.

Speaker #6: So you know, this is one in one in many steps we're taking for the long-term health of the marketplace.

Kruti Patel Goyal: Great. I am actually going to turn it over to Kruti Patel Goyal now for some closing remarks. Thanks, Deb Wasser. Before we wrap up, I just wanted to share a final thought. As we enter the holiday season, I have been doing a lot of reflecting on the year and where we have come from and what that tells us about where we are going. As I reflect on the progress that we have made this year, what gets me most excited is not just the growth that we are delivering, it is really what that progress tells us about the opportunity ahead. We are seeing real evidence that we are focused on the right priorities and that we are executing against them with real focus, real discipline.

Speaker #4: Great. I'm actually going to turn it over to Kruti now for some closing remarks.

Speaker #8: Thanks, Deb. You know, before we wrap up, I just wanted to share a final thought. As we enter the holiday season, I've been doing a lot of reflecting on the year and where we've come from and what that tells us about where we're going.

Speaker #8: And as I reflect on the progress that we've made this year, what gets me most excited isn't just the growth that we're delivering. It's really what that progress tells us about the opportunity ahead.

Speaker #8: And we are seeing real evidence that we're focused on the right priorities and that we're executing against them with real focus, real discipline, and we're only just starting to begin to see what's possible as we bring AI together.

Kruti Patel Goyal: We are only just starting to begin to see what is possible as we bring AI together with our understanding of our buyers and our inventory to really make Etsy that incredibly personal, relevant, and inspiring and unique place to shop that we believe is so valuable. We clearly have a lot more work to do, and we are excited to dig in there, but we are seeing our efforts already translate into results, and I am more confident than ever in our ability to execute and in the growth opportunity ahead of us. I wanted to share that, and before we wrap up, I also wanted to just take a moment to recognize someone who has been such an incredible partner to me and to Etsy. This is Deb Wasser's last earnings call before her retirement.

Speaker #8: With our understanding of our buyers and our inventory, to really make Etsy that incredibly personal, relevant, and inspiring and unique place to shop that that we believe is so valuable.

Speaker #8: We we clearly have a lot more work to do and we're excited to dig in there, but we're seeing our efforts already translate into results.

Speaker #8: And I'm more confident than ever in our ability to execute and in the growth opportunity ahead of us. So I wanted to share that and before we wrap up, I also wanted to just take a moment to recognize someone who's been such an incredible partner to me and to Etsy.

Speaker #8: This is Deb Wasser's last earnings call before her retirement. She has had an incredible career, spanning more than 40 years, in investor relations, including the last eight and a half here at Etsy.

Kruti Patel Goyal: She has had an incredible career spanning more than 40 years in investor relations, including the last eight and a half here at Etsy. Deb, we are so grateful for the experience, the steady counsel, and all of the very many purchase days that you have made on Etsy. I also want to take a moment to welcome Sarah Marx, who as you know, has been working really closely with Deb and will be stepping in to lead investor relations. Deb, thank you.

Speaker #8: And Deb, we are so grateful for the experience, the steady counsel, and all of the very many purchase days that you've made on Etsy.

Speaker #8: I also want to take a moment to welcome Sarah Marks, who as you know, has been working really closely with Deb and will be stepping in to lead investor relations Deb, thank you.

Deb Wasser: There is hugging happening here.

Speaker #7: This hugging happening here.

Kruti Patel Goyal: We are going to miss you.

Speaker #4: We are going to miss you.

Deb Wasser: Thank you, Kruti. I will miss you all very much, and I will keep shopping, I promise. With that, we will conclude today's call. Thank you all for joining.

Speaker #7: Thank you, Kruti. I will miss you all very much. And I will keep shopping, I promise. And with that, we will conclude today's call.

Speaker #7: Thank you all for joining.

Operator: This concludes today's call. You may now disconnect. Thank you.

Speaker #1: This concludes today's call. You may now disconnect. Thank you.

Kruti Patel Goyal: Well done.