Etsy (ETSY) spent two years watching its buyer count slip. In the third quarter it started growing again. Active buyers rose from a year earlier for the first time in two years. Active sellers grew at their fastest pace in two years too. It's an early win for Kruti Goyal, who became CEO in January.
Revenue rose 11% to $692.5 million. Analysts had expected $668 million, the Journal's Katherine Hamilton reports. Gross merchandise sales, the value of everything sold on the site, rose 9% to $2.65 billion. The average buyer spent 3.9% more. Executives gave much of the credit to Etsy's own work on search, better items and big gift seasons. Higher prices did some of the lifting too, as sellers passed on tariffs and rising costs.
TikTok and the AI paradox
Etsy moved more ad money to TikTok, where it was barely present six months ago. It now expects full-year goods sold to grow 7%, up from a mid-single-digit forecast. For the holiday quarter it expects $3.46 billion to $3.52 billion in goods sold. Analysts had $3.42 billion in mind. Better personalization, AI included, added about 2 percentage points to its yearly growth rate, Goyal said. Here's the catch. Etsy built its name on handmade goods, and it has taken heat for letting AI-made artwork onto the site. Goyal called it a paradox, “as AI makes it easier to create and replicate products at scale.” Her answer is to show buyers “who's behind it, how it's made, and what makes it special.”
Net income looks huge at $853.5 million, or $7.31 a share, against $75.5 million a year earlier. Most of that comes from selling Depop, a secondhand clothing site, to eBay. Set that aside and profit from the ongoing business was $113.6 million, or $1 a share, up from $104.6 million. Finance chief Lanny Baker leaves March 1 and stays on as an adviser through July 1.
Our read
This one is Cash Flow · M5, with a Career angle. We don't hold Etsy. eBay (EBAY), which bought Depop, is held at weight in 4 books. Nothing added. We read this report for the small sellers behind the numbers. More buyers and more spending per buyer is good news for a shop owner. But part of this quarter's growth came from prices raised to cover tariffs and costs. A seller who raised prices to cover costs didn't get richer. Etsy's fees are mostly a cut of each sale, so they rise with the price either way. AI cuts both ways too, for someone whose pitch is that a human made this. The same tools that help Etsy recommend items make knockoffs easier to produce.
If you or someone in your house runs an Etsy shop, here's the check for this week. Open the shop's payments page and compare this year's order count with last year's, not just the dollars. Then subtract this year's fees, shipping and the cost of what you made. What's left is the real income, and that's the number your plan should use. Give that side income a home too. A SEP-IRA or a solo 401(k) can shelter part of it from tax. Their deadlines differ, so look into them before Dec. 31. A shop that's growing again deserves a plan that counts it, and it's an easy item to bring to a review with us.