Online marketplace Etsy (NYSE: ETSY) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 3.5% year on year to $881.6 million. Its GAAP profit of $0.92 per share was 7.6% above analysts’ consensus estimates.
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Etsy (ETSY) Q4 CY2025 Highlights:
- Announced a definitive agreement to sell Depop to eBay for $1.2B
- Revenue: $881.6 million vs analyst estimates of $884.4 million (3.5% year-on-year growth, in line)
- EPS (GAAP): $0.92 vs analyst estimates of $0.85 (7.6% beat)
- Adjusted EBITDA: $222.5 million vs analyst estimates of $213.4 million (25.2% margin, 4.3% beat)
- Operating Margin: 14.7%, down from 18.2% in the same quarter last year
- Free Cash Flow Margin: 39.4%, up from 30.3% in the previous quarter
- Active Buyers: 93.54 million, down 1.92 million year on year
- Market Capitalization: $4.35 billion
"Our clear strategic focus and solid execution are driving progress on the journey to bring the Etsy marketplace back to sustained growth," said Kruti Patel Goyal, President and Chief Executive Officer of Etsy, Inc.
Company Overview
Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NYSE: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Etsy grew its sales at a sluggish 4% compounded annual growth rate. This was below our standard for the consumer internet sector and is a poor baseline for our analysis.
This quarter, Etsy grew its revenue by 3.5% year on year, and its $881.6 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
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Active Buyers
Buyer Growth
As an online marketplace, Etsy generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Etsy struggled with new customer acquisition over the last two years as its active buyers have declined by 1.4% annually to 93.54 million in the latest quarter. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Etsy wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
In Q4, Etsy’s active buyers once again decreased by 1.92 million, a 2% drop since last year. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the company earns in transaction fees from each buyer. ARPB also gives us unique insights into a user’s average order size and Etsy’s take rate, or "cut", on each order.
Etsy’s ARPB growth has been mediocre over the last two years, averaging 3.9%. This raises questions about its platform’s health when paired with its declining active buyers. If Etsy wants to grow its buyers, it must either develop new features or lower its monetization of existing ones. 
This quarter, Etsy’s ARPB clocked in at $9.43. It grew by 5.6% year on year, faster than its active buyers.
Key Takeaways from Etsy’s Q4 Results
We enjoyed seeing Etsy beat analysts’ EPS expectations this quarter. Also, the company announced a definitive agreement to sell Depop to eBay for $1.2 billion. On the other hand, its number of buyers declined and its revenue was in line with Wall Street’s estimates. Zooming out, we think this was a mixed quarter, but the market is reacting positively to the Depop sale. The stock traded up 21.4% to $53.48 immediately after reporting.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
