Etsy’s first quarter results for 2025 disappointed the market, with shares falling sharply despite revenue and adjusted profit that surpassed Wall Street consensus. Management attributed the flat sales to persistent macroeconomic headwinds, including weaker discretionary spending and a decline in active buyers. CEO Josh Silverman highlighted that efforts to improve the mobile app and increase personalization are starting to show results, but acknowledged that “active buyers are down slightly this quarter and we are certainly disappointed by that and working with urgency to get that number up.” The company also noted that category declines were broad-based, with gifting remaining a relative bright spot during key holidays.
Is now the time to buy ETSY? Find out in our full research report (it’s free).
Etsy (ETSY) Q1 CY2025 Highlights:
- Revenue: $651.2 million vs analyst estimates of $642 million (flat year on year, 1.4% beat)
- Adjusted EBITDA: $171.1 million vs analyst estimates of $164.2 million (26.3% margin, 4.2% beat)
- Operating Margin: -3.4%, down from 10.5% in the same quarter last year
- Active Buyers: 94.78 million, down 1.61 million year on year
- Market Capitalization: $5.57 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Etsy’s Q1 Earnings Call
- Shweta Khajuria (Wolfe Research) asked about the outlook for GMS trends and margin guidance. CEO Josh Silverman highlighted that product and marketing improvements should accumulate through the year, but margin pressure will persist due to higher marketing spend.
- Bryan Smilek (JPMorgan) inquired about the future of the app and its share of GMS. Silverman said the next step is to advance personalization so that trend and item recommendations become individualized, moving beyond one-size-fits-all experiences.
- Nikhil Devnani (Bernstein) questioned whether a decline in active sellers is contributing to the buyer drop. Silverman clarified that a deliberate setup fee reduced low-quality sellers, while the drop in buyers is attributed to macroeconomic weakness rather than platform effects.
- Michael Morton (MoffettNathanson) asked about gross margin headwinds from free shipping and technology investments. CFO Lanny Baker explained that increased costs from machine learning and loyalty programs will remain a moderate drag on gross margins for the year.
- Ygal Arounian (Citi) asked about risks and opportunities from changes to de minimis import exemptions and the impact of AI-driven shopping platforms. Silverman said Etsy is well-positioned given its low China exposure and expects AI agents to highlight Etsy’s unique and differentiated offerings.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be closely watching (1) whether improvements in app personalization and engagement translate into higher active buyer growth, (2) how effectively marketing spend in social channels boosts customer acquisition and retention, and (3) Etsy’s ability to sustain margin discipline while investing in technology and loyalty initiatives. The regulatory environment around tariffs and import rules will also be a key area of focus.
Etsy currently trades at $53.60, up from $46.15 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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