Its fourth-quarter results, reported Friday (Feb. 19), showed improving buyer engagement and its first positive year-over-year gross merchandise sales (GMS) comparison since 2023.
The company is shifting capital and execution toward its core platform, positioning agentic artificial intelligence (AI) and mobile-first engagement as the foundation for sustainable growth. The move simplifies the business but increases pressure on the flagship marketplace to deliver durable expansion.
Most importantly, Etsy is using AI to sharpen discovery rather than replace the marketplace model.
Agentic traffic in Q4 increased roughly 15 times year over year, though it still accounts for less than 1% of total traffic, CEO Kruti Patel Goyal told analysts on the earnings call. Users arriving through agentic platforms showed higher intent and higher average order values, with a meaningful share including lapsed buyers returning to the platform. Goyal added that orders originating from ChatGPT skewed higher value than more mature acquisition channels.
“Being an early participant in this means we’re able to really, in partnership with these platforms, help shape the experience in ways that we think is really helpful to buyers,” Goyal said.
Etsy expanded integrations with Microsoft Copilot and Google and entered into an agentic payments agreement with Stripe. The company framed these partnerships primarily as discovery engines, noting that users typically flow from AI-generated recommendations to Etsy listings before completing transactions.
On-platform machine learning now powers a greater share of personalization. More than three-quarters of push notifications and email messages are personalized, up from less than one-quarter previously. App homepage clicks per visit rose 14% year over year. App GMS growth accelerated to 6.6% in Q4.
Etsy also applies AI to seller productivity and operational efficiency, automating routine tasks and improving trust, safety and support systems.
Mobile, Loyalty and Younger Buyers Drive the Reset
Etsy reorganized around four priorities: earlier discovery, stronger buyer-item matching, deeper loyalty among high-value customers and renewed emphasis on human connection.
Mobile anchors that strategy. App share of GMS reached 46% in Q4, up five percentage points since the end of 2023. App users generate approximately 40% higher lifetime value than non-app users and visit more frequently.
The company increased investment in social platforms to reach younger buyers. Spending on TikTok doubled sequentially while maintaining similar returns. Buyers acquired via social skew younger.
Etsy added 6.8 million new buyers and reactivated 10.4 million lapsed buyers in Q4. Gross additions rose year over year for the first time in more than two years.
Marketplace metrics are stabilizing but not accelerating. U.S. buyer GMS grew 0.3% year over year, the first positive comparison in four years. Trailing 12-month GMS per active buyer stabilized at $121, supported by higher average order value. Purchase frequency remains slightly below prior-year levels.
Top-Line Results
Consolidated fourth-quarter GMS totaled $3.6 billion, up 2.4% year over year. Excluding Reverb, currency-neutral GMS rose 1.3%. Etsy marketplace GMS increased 0.1% year over year, marking the first positive comparison since Q3 2023.
Active buyers totaled 86.5 million, largely flat sequentially. Consolidated revenue reached a record $882 million, up 6.6% year over year.
For Q1 2026, Etsy expects GMS between $2.38 billion and $2.43 billion, representing 2% to 4% year-over-year growth. Take rate is projected at approximately 25.5%, with adjusted EBITDA margin between 28% and 30%.
For full-year 2026, Etsy expects slight GMS growth with positive comparisons each quarter.
What Else Stood Out
- Habitual buyers remain under pressure and declined 8.6% year over year, underscoring that frequency recovery remains incomplete even as overall buyer counts stabilize.
- Advertising remains under-penetrated. The company noted sellers’ stated willingness to spend on Etsy Ads exceeds current monetization levels, suggesting additional take-rate headroom without raising fees.
- App dominance continues to widen. App downloads rose 4% year over year, and app contribution to total GMS reached 46%. Management pointed to other marketplaces operating closer to 90% app mix, implying further structural runway.
- Personalized categories drove growth. Home and Living returned to positive year-over-year growth, led by higher-ticket subcategories such as vintage decor, rugs and lighting. Growth skewed toward differentiated, less price-sensitive inventory.
