Etsy Second Quarter 2025 Financial Results: Sales Up From First Quarter, And Some Initiatives Are Starting To Pay Off
Some of the ways Etsy is trying to boost sales; all slide screenshots © Etsy.
Etsy's second quarter financial report for 2025 was the first in a long time that showed some tangible improvements, so much so that they actually chose to give more solid predictions for the next quarter than they have in over a year. Investors liked it too; the stock went up for most of the day - until the announcement about the US abolishing the $800 de minimis exemption on August 29, that is.
The following is my summary of the second quarter numbers, with context and my commentary. I am covering the tariff issue at the end as it is critical to what Etsy's results will be for the rest of the year and beyond.
But first, the official sources:
transcript of the conference call
slides from the conference call
video of the call (click on “Webcast” under "Latest Quarterly Results)
my summaries of the 1st quarter for 2025, and the 2nd quarter 2024 for comparison
The key numbers (covering April to June 2025, compared to the same period in 2024):
Sales (GMS) on Etsy were $2.4 billion, down 5.4% year over year but up from $2.3 billion last quarter
Total sales for all 3 marketplaces - Etsy, Reverb, and Depop - were $2.8 billion, down 4.8 % (Reverb was sold on June 2, 2025, so this is the last quarter it will be included)
Revenue including all 3 sites was up 3.8% to $672.6 million
Seller service revenue was up 15.3% , while marketplace revenue was down 0.5% across all 3 sites
Etsy had a net income for the quarter of $28.8 million, down almost 46% from 2024
Active buyers on Etsy alone stand at 87.3 million, down 1.2 million from last quarter and 4.2 million from last year
Active sellers on Etsy alone are at 5.4 million, up from the first quarter by 200,000, but still down 1.2 million from the first quarter 2024. [Note that “active” means one charge or transaction in the past 12 months; many “active” shops currently have nothing for sale] That’s a 18% reduction in Etsy sellers in the past year, but the first quarter-to-quarter increase in over 2 years.
And finally, because I get a lot of questions on this topic, here is the breakdown of how much each major category contributed to Etsy sales this quarter:
Instead of adding alt text to that graphic, here are the main category breakdowns and their percentage of total GMS:
Jewelry & accessories 19%
Paper & party supplies 8%
with the remaining 14% divided over other categories such as Pet Supplies.
The second graph shows that US buyers contribute 74% of GMS. I will discuss that more below.
Advertising: On-Etsy Ads, Offsite Ads, Influencer Marketing
As has happened for a few years now, Etsy's increase in revenue was primarily to onsite ads (Etsy Ads), with a bit of increase due to rolling out more Etsy Payments countries in the past 12 months. It's difficult to predict how long they can keep milking the ads for their profit increases. We continually see people complaining about the increased cost of clicks from Etsy Ads, which is probably pushing some of the smaller shops out over time.
Etsy's marketing budget was 16% higher compared to 2024, due to several factors. First, Amazon, Temu and Shein all stopped buying Google Shopping Ads at some points in the quarter, which gave Etsy more visibility and more clicks, and therefore more costs. Etsy also moved to promote more high-performing listings in the US version of Google Shopping, leading to a higher conversion rate and revenue from the ads. They are currently testing that change in the UK.
They are going to reduce spending on standard broadcast TV in the US by the fourth quarter, while they increase all of the other types of marketing. Those increases include more social media spending, and more paid influencers. Following what worked at Depop, they are aiming for higher visibility where people might discuss or even look for products.
Sales from the Etsy app are now at 45% of the total GMS, and that is where Etsy is focussing most of its buyer-facing testing, personalization and changes at the moment. CEO Josh Silverman says that the app is "markedly better, more intuitive, more inspiring and a lot more browsable, with the introduction of multiple new features you can see by simply opening the app homepage."
Since people who use the app spend more and come back to Etsy more frequently, they will continue to push the app while focussing most buyer-facing changes on the app experience.
Personalization And Etsy-Internal Promotion
Etsy's own internal marketing is improving, with sales from emails and push notifications up 1/3 in the quarter. They credit this improvement to increased personalization of the recommendations, including even the email titles, which led to higher open rates. They are also looking for the best time of day to send these emails and notifications to different buyers.
Silverman said that most of Etsy's current personalization makes connections at the listing level. For example, if I like listing X, they will show me the listings liked by other people who also liked listing X. That obviously fails a lot, so the goal is to personalize based on more detailed perceptions of what each shopper is interested in. We know from previous quarterly calls that they are doing much of their data collection and testing of personalization through the buyer app.
I keep track of what Etsy promotes in its emails through 3 different accounts, which for the past several months have received different emails on the same day more often than they used to. Let me use a few of those emails and a recent purchase to illustrate how Etsy's personalization is still not doing a good job.
In early July, I purchased this wonderful fish from the Etsy shop EtnaLavaRockShop. What they sell is relevant, so let me show you:
A few days after my purchase, Etsy sent the following personalized email to my buyer account.
The first item is related to a supply purchase from earlier in the year. The other 5 are all fish to be hung on a wall, and 4 of them are ceramic. Note the colours do not really match what I bought, lovely as they all are, except for maybe the one that isn't ceramic (top right). Furthermore, what attracted me to the shop was the fact the art is painted on genuine lava from Mount Etna (I mean, how cool is that?) The ceramic component was less important, but Etsy is now sending me items that are all ceramic, just because I bought a lava fish that had ceramic paint on it.
When I went to leave feedback, I took a look though the shop's fish pendants. This is the next personalized email I received from Etsy:
Okay, so now we have 2 jewellery findings, 3 ceramic fish pendants, and one listing for multiple types of semi-precious gemstone fish pendants. The 3 ceramic pendants are not colours I would wear, just as most of the fish in the previous screenshot aren't colours I would use to decorate my house. And they didn't even bother to promote the shop I actually bought from and then looked through again!
With my main account, Etsy shows me a lot of my own items, or minimalist jewellery from others that doesn't really match my style. With my closed shop account, Etsy shows me unattractive novelty throw pillows and some odd vintage boxes and tins. [I'm not sure what testing I was doing in that account to cause those results, but the emails are definitely not based on anything I bought or favourited there. Or even like.]
So it is good that Silverman admitted Etsy is in the early days of personalization, because the personalization I am getting is not showing me anything I would want to buy. [I was thinking of buying some of the fish pendants I looked at, to hang on the wall around the bigger fish, but of course Etsy wouldn't show me what I had shown real interest in!] I don't need to buy more of the clasps I actually bought, and I am not really interested in ceramic fish, although they are all very attractive. I am more interested in lava (and have in the past favourited other lava items with that account, and have bought gemstones and other geology items with it too).
So while I am glad to see that Etsy is working on improving what used to be dismally-bland daily emails, they obviously have a long way to go. Still, the fact sales have already improved with just some rudimentary changes is very encouraging.
President and Chief Growth Officer Kruti Patel Goyal, now back at Etsy after her stint as CEO of Depop, admitted that Etsy Insider loses Etsy money overall, so they will be changing the rules. Despite economic issues, it did increase visits and sales from the semi-regular buyers it targeted starting last year, so they see promise and want to continue to test it.
The changes include also offering the program to the most frequent buyers (who were previously excluded), rewards on every order, and more personalization of offers. An announcement in the Etsy forum details how they plan on making the program less expensive: "[m]embers will still get free shipping, but we’re adding a minimum order amount and changing the maximum shipping costs Etsy will cover per order."
Depop is still increasing sales - up 35.3% from 2024 - and sales from their recommendations are also up. The numbers were even better in the US alone, with GMS up 54% from the second quarter of 2024. Etsy claims Depop is "the fastest-growing player in this large online fashion resale market", which is impressive, since the clothing resale market also continues to grow in the US.
Plans are to put more investment into Depop in the third quarter.
while the quarter started flat, May and June improved a fair amount. This was in part due to less fluctuation in consumer spending during those months. Etsy is also seeing less difference between the spending of economically well-off shoppers versus those who are lower income, compared to previous quarters.
they are predicting third quarter sales across both sites to be between $2.6 and $2.7 billion. They haven't given actual numbers for several quarters now, so this was a bit of a surprise.
for the first time in over a year and a half, gifting was only mentioned in passing. The Gifts link is still on every shopping page, though, so I don't think they are giving up on that push just yet.
"…we’re retooling our ranking platform to more effectively leverage capabilities of LLMs in generative AI, allowing us to understand our listings, users, and their activity much more deeply as we work to deliver better search results." Yes, you aren't imagining it; they keep changing the algorithms, as always. They just didn't give us much detail on how that is happening this time, other than the personalization push with recommendations, and of course, lots of AI.
"better buyer-seller conversations" are apparently coming before the holidays; they didn't dive into what that would actually mean.
there were a few mentions of wanting to keep their top sellers happy, but no real info on how they want to go about that. I am still leaning towards them trying to sell us more tools, whether individually or as tier subscriptions.
"A higher percentage of current active sellers have made a sale in the last 12 months versus before we introduced the onboarding fee and the number of new sellers who made a sale in the second quarter grew year-over-year." As mentioned in previous quarters, they are trying to spread sales to a broader base of sellers. [I know people used to say Etsy did this, but now they are actually making the effort.]
The Bad News - The End Of Tariff-Free Shipping Into The US
During the question and answer portion, Silverman said "[w]e have not seen any big shifts in spending across those related to tariffs or trade announcements that have happened." Unfortunately for Etsy, the tariff situation changed dramatically later the same day, with the United States announcing that the $800 de minimis exemption for items entering the US would end August 29. Around the same time, several countries had their US tariffs increased.
Per Etsy's own stats over the past few quarters, sales from non-US sellers to US buyers make up about 1/4 of total GMS. Another quarter of Etsy sales are between non-US buyers and non-US sellers. They are not going to want too many non-US shops closing up in response to the potential loss of US sales, as that will cut into domestic orders in those countries. Unfortunately, many shops will close or at least downsize if they can't access Etsy's vast majority of buyers that live in the US.
No matter how Etsy approaches this issue, if the end of de minimis goes through as announced, the site will be hurt. Some non-US sellers have already emptied their shops or have stopped shipping to the US. That will mean fewer items available to buyers who want to "shop local" in those countries, as well as to American buyers. And fewer sellers to buy shipping labels and Etsy Ads - you know, those ads that are responsible for Etsy growing its revenue every quarter.
While Etsy needs to let us charge tariffs upfront so we can prepay them and thereby avoid Customs delays and angry US customers facing not only tariffs but brokerage fees, they also need to do many other things:
allow sellers to enter the country of origin on the backend of a listing, just as we can do with the harmonized codes. That way, Etsy can display it to buyers on the listing and let shoppers make an informed choice on whether to buy or not. (It would also make life easier for shop owners, who currently have to enter this on each shipping label for every item purchased.)
fix the global and domestic pricing tool so that it actually works; right now it sometimes charges the wrong price to the wrong country, and Etsy makes it tough to get a refund for those Etsy errors. The tool also needs to be available for every country, not just "domestic" and "everywhere else".
make label deals with more shipping providers that allow tariffs to be prepaid.
provide sellers with more information on how the country of origin is decided on handmade items. Bonus option: publish an easy-to-understand primer on how to get products declared compliant with the current free trade agreement between the US, Canada and Mexico (CUSMA, or USMCA, depending on where you live). Items that are allowed under that agreement have no tariffs applied. That's right - many Canadian and Mexican handmade sellers can still sell to the US without worrying about tariffs, but they have to show that their items comply with CUSMA. It's more complicated than country of origin rules for everyone else, though, so sellers need information and guidance.
let us know how they are going to approach this problem as soon as possible. Etsy's latest announcement on the topic of tariffs said they would have more information "soon". Soon needs to be this week, and the information needs to be detailed. Non-US sellers will be fleeing Etsy to go to any platform that figures this out first -eBay already has a solution with the Global Shipping Program - given that items sold today may already incur tariffs if they don't get through US Customs by August 29.
Will Etsy do any of this by August 29th? Usually, I would doubt it, but the end of de minimis affects a much larger chunk of Etsy's income than many previous legal changes. If they want to continue forward momentum, they will have to adapt, fast. I worry about what they will break along the way.
Needless to say, no one can predict what will happen over the next few months, as the situation in the US changes almost daily. Still, this development puts a lot of tarnish on Etsy's plans, and those decent predictions for the third quarter now look like a joke, should de minimis actually end.
A note to readers: given increasing issues with the platform, this will likely be the last quarterly report I publish on Tumblr. The current plan is to move them to my website blog.
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