Etsy’s first-quarter 2025 results underscore the company’s operational resilience amid continued macroeconomic challenges, with solid execution on strategic priorities such as personalization, mobile engagement, and product innovation. Gross Merchandise Sales (GMS) declined 6.5% year-over-year to $2.79 billion, driven primarily by an 8.9% drop in Etsy marketplace GMS to $2.3 billion. However, Depop delivered record GMS, marking its strongest quarter since being acquired in 2021, with standout performance in the U.S.

Despite pressure on the top line, revenue grew modestly by 0.8% YoY to $651.2 million, aided by a 7.7% increase in services revenue to $192.7 million, thanks to strong demand for on-site advertising. The take rate reached a new high of 23.3%, up 170 basis points, reflecting enhanced monetization of platform activity. Gross profit held steady at $459.1 million, while operating expenses surged 23.2%, driven by a $101.7 million non-cash goodwill impairment related to the planned sale of Reverb. This impairment resulted in a net loss of $(52.1) million, compared to $63 million in net income a year ago. Nonetheless, Etsy’s adjusted EBITDA rose 1.9% to $171.1 million, with margin improving to 26.3%.

On the user side, consolidated active buyers fell 1.7% to 94.8 million, while active sellers dropped 11.3% to 8.1 million, a decline Etsy attributes to its new $29 shop setup fee aimed at enhancing seller quality. Buyer reactivation rose modestly, with 6.5 million reengaged, and mobile momentum accelerated — the Etsy app now accounts for an all-time high of 44.5% of marketplace GMS, with app downloads and conversion rates up YoY.

Depop stood out as a growth engine, with over 90% of transactions via mobile and continued investment in recommendation algorithms and seller tools. Meanwhile, Etsy progressed in its AI and personalization roadmap, rolling out a new “algotorial” shopping experience, improved app navigation, and enhanced iOS integration through Apple’s App Intents. Marketing spend shifted more heavily to paid social, which delivered strong GMS growth and improved ROI.

Looking ahead, management expects Q2 GMS to decline at a similar or slightly better pace than Q1 and projects a 25% adjusted EBITDA margin, factoring in higher marketing and personnel costs. The Reverb divestiture, valued at $105 million, is set to close in the coming months, with minimal operational disruption. Etsy continues to monitor the tariff environment but sees limited direct exposure and potential competitive upside if broader e-commerce prices rise.

In summary, while Etsy navigates a tough macro backdrop with softness in buyer and seller activity, it is showing encouraging signs of traction from strategic investments, particularly in mobile, personalization, and services. With nearly $1 billion in cash, robust margins, and a disciplined approach to growth, the company remains well-positioned to drive incremental improvement throughout 2025.