Etsy misses Q4 revenue estimates, signaling cooling demand for personalized gifts

Etsy’s fourth-quarter results underscored a paradox for makers of personalized gifts: solid per-buyer spending but softer overall demand. The company posted revenue of $881,640,000 and GAAP earnings of $0.92 per share for Q4 2025, while gross merchandise sales showed signs of strain that point to cooling interest in the kinds of bespoke items Etsy is known for.

Alongside the earnings, Etsy announced a definitive agreement to sell fashion resale app Depop to eBay for about $1.2 billion in cash. The deal prompted an immediate market reaction; shares jumped intraday, with one report noting a 9 percent pop and another recording a 13.39 percent pre-market surge to $49.95. Kruti Patel Goyal said the Depop sale would allow the company to “focus exclusively” on its core marketplace.

User and monetization metrics painted a mixed portrait. Active buyers declined to 93.54 million, down roughly 2 percent year over year, while active sellers grew to 8.76 million, up 7.7 percent. Average revenue per buyer rose to $9.43, an increase of 5.6 percent year over year, and adjusted EBITDA reached $222.5 million for the quarter, a 25.2 percent margin even as operating margin narrowed to 14.7 percent from 18.2 percent a year earlier. Free cash flow margin expanded to 39.4 percent.

The measure of marketplace volume remains contested. FactSet placed consolidated GMS at $3.59 billion, a 3.8 percent decline from the prior year, and the company attributed part of that decline to the sale of musical-instrument marketplace Reverb, which closed last June. Another report presented an alternate view, citing consolidated GMS of $3.6 billion and a 2.4 percent year-on-year increase, highlighting differences in how outlets and data providers reconcile divestitures and timing.

Management framed the results against tougher consumer dynamics. In its annual filing the company said it has “been pressured by an ongoing pullback in consumer discretionary spending and ‘evolving buyer behavior.’” At the same time, Etsy pointed to investments in app personalization and targeted social marketing as drivers of improved engagement; Kruti Goyal said, “Our app is making it our most personalized and engaging platform.”

Guidance suggested the near term will remain choppy: Etsy projected first-quarter GMS of $2.38 billion to $2.43 billion versus prior-year first-quarter GMS of $2.8 billion and sell-side expectations near $2.68 billion. Balance-sheet metrics remain ample; one report showed cash and cash equivalents of roughly $1.8 billion at year-end.

Institutional and insider moves accompanied the release. Several funds reduced positions markedly, including one firm removing 3,880,316 shares estimated at $215,124,719, while CEO-level selling included 458,330 shares sold for approximately $29,297,520. Market-cap estimates varied by source, roughly in the $4.3 billion to $4.8 billion range.

Etsy’s challenge for personalized gifting is now tactical: sustain ARPB gains and seller growth while arresting the slide in active buyers. The Depop divestiture and bets on app-driven personalization will determine whether the marketplace can convert higher per-buyer spending into durable top-line growth.