The short version: Etsy said on 28 October that third-quarter revenue rose 10.9% to $692.5 million and active buyers grew for the first time in two years, to about 88 million. The catch for the makers who sell there: Etsy’s revenue now equals 26.2% of everything bought on the site, and the increase came mainly from advertising.
Etsy, Inc., the US online marketplace for handmade, vintage and craft goods, reported its third-quarter results on 28 October 2026. Gross merchandise sales — the value of everything bought on the marketplace — rose 8.8% to $2.65 billion, from $2.43 billion a year earlier, according to the shareholder letter Etsy filed with the US Securities and Exchange Commission. Revenue grew faster, by 10.9%, and net income rose 8.6% to $113.6 million.
The numbers beat Wall Street’s forecasts. Investing.com reported adjusted earnings of $1.00 a share against a consensus of $0.76, with revenue about $24 million above estimates; analysts had expected a small decline. The shares rose about 7% before the market opened. Kruti Patel Goyal, the chief executive who succeeded Josh Silverman, wrote in the letter that the business is “now firmly in growth mode.” Etsy also said its chief financial officer, Lanny Baker, will leave on 1 March 2027 and stay on as an adviser until 1 July while it looks for a successor, according to Investing.com.
The numbers behind the turnaround
The growth is real, but it belongs to a smaller, simpler Etsy. The company sold Depop, the resale app it bought in 2021, on 30 July and now reports it as a discontinued business; the sale produced a gain of $839.7 million. What remains is the Etsy marketplace on its own, and on that measure the trend has turned.
Active buyers reached about 88 million over the trailing twelve months, up 1.0% — small, but the first year-on-year rise in two years. A year earlier TechCrunch reported both sides of the market shrinking, with active buyers down 5% and active sellers down 10.9%. This time Etsy says its seller base grew at its fastest rate in two years, although it did not publish the number. Sales through the Etsy app rose 10.4%.
Etsy now expects full-year sales growth of about 7% and fourth-quarter sales of $3.46 billion to $3.52 billion, up 5% to 7%, with an adjusted profit margin of about 30%. It spent $394.6 million buying back its own shares in the quarter and has $2.2 billion of authorisation left.
Where the extra money comes from
Revenue is growing faster than sales because Etsy is keeping more of each sale. Its take rate — revenue as a share of sales — rose half a percentage point to 26.2%. In plain terms, for every $100 buyers spend on the marketplace, Etsy now books about $26. The letter attributes the increase “primarily” to improvements in Etsy Ads, the paid placements sellers buy inside Etsy’s own search, with Offsite Ads, which promote listings across the wider web, contributing less.
Etsy is also paying more to bring shoppers in. Marketing expense rose to $207.0 million from $173.4 million a year earlier, roughly a fifth higher, as the company widened paid social campaigns on TikTok and YouTube and tested Reddit and Snapchat. The restructuring it completed in August cost $33.9 million in the quarter.
Why now: a marketplace trying to look like a curator again
The more interesting part of the letter is about taste, not money. Etsy says it is “increasing the weight of quality signals” in search and recommendations, and names creativity, craftsmanship and connection as what sets it apart. It wants artificial intelligence to support human creativity rather than replace it, says it is making its rules clearer and enforcing them harder, and is blending machine learning with human curation in its emails and app notifications.
That is a direct response to the problem Faz wrote about when Etsy cut staff in August and leaned harder on algorithmic discovery: a marketplace built on handmade goods loses its reason to exist when its search results fill with things nobody made. The letter does not say what the quality signals are, how “handmade” is policed, or how many listings were removed.
The Faz read
It is worth being honest about what kind of recovery this is. Etsy’s growth came back through better ranking and more advertising, which means a maker’s visibility is increasingly something they rent. When a platform’s take rises because sellers are buying more placement, the platform is behaving like a landlord whose rent goes up as the street gets busier.
That is not a scandal; it is the business model working. But it changes what a shopper sees. The top of an Etsy search is partly a list of who paid, and the quality signals Etsy describes will only help genuine makers if enforcement is as firm as the letter promises. Until Etsy publishes evidence — removals, seller counts, how it defines a good match — the claim of a quality reset is a statement of intent.
The useful conclusion is narrower. Etsy remains one of the best places on the internet to find a small workshop you would never otherwise meet. It is a worse place to stay once you have found one.
What it means if you buy or sell on Etsy
For buyers, three habits help. One. Judge the shop, not the listing: look for photographs of the workspace, named materials, production times that suggest work made to order, and a maker who answers questions in detail. Two. Look past the paid placements at the top of results and search by material or technique rather than by trend words. Three. When you find someone good, follow them to their own website or newsletter, where more of your money reaches the person who made the thing. That is the same logic as buying direct from a small label like Sheth London, which caps runs at 30 pieces a style.
For makers, the lesson is concentration risk. A business whose customers all arrive through one platform’s search is a business whose margins are set by someone else. Faz’s guide to how to tell a small brand that will last from one that won’t makes the point from the buyer’s side: the brands that survive own their relationship with their customers.
Independent designers and craft workshops remain one of the four channels Faz recommends, alongside vintage and estate pieces, accessible luxury and selective mainstream luxury. Etsy is a doorway into the first of those, not a substitute for it.
What happens next
The holiday quarter is the test. Etsy has guided to $3.46 billion to $3.52 billion of sales for October to December, and its fourth-quarter results early next year will show whether buyer growth holds once the comparison with a weak 2025 fades. Two other markers are worth watching: whether Etsy starts publishing its active seller count again, and whether the take rate keeps climbing. Baker’s departure on 1 March 2027 adds a change at the top of the finance team to the list.
The honest takeaway
Etsy has stopped shrinking, and that matters for the millions of sellers who depend on it. But the recovery is being paid for, in part, by those makers’ advertising budgets. Use Etsy to find people. Then buy from them in the place where they keep the most of what you pay.
The next move is yours.
Sources: Etsy Q3 2026 shareholder letter (SEC filing) · Investing.com · TechCrunch
