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Management is divestiture-focused, selling Depop to eBay for $1.2 billion to concentrate resources exclusively on the core Etsy marketplace and its higher return on invested capital.
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A deep diagnostic revealed that while Etsy’s value proposition remains resonant, the platform failed to translate scale into a clear advantage, leading to softened perceptions of differentiation.
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Performance attribution for the Q4 return to growth is credited to a reorganization around customer outcomes rather than functional silos, unifying product, engineering, and marketing teams.
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Management identifies a ‘presence gap’ rather than an ‘appeal gap’ among younger demographics, necessitating a shift from lower-funnel transactional marketing to inspirational, discovery-based content.
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The strategic framework has pivoted from optimizing purely for conversion to investing in ‘specialness’—human connection, seller stories, and discovery—to unlock the broader e-commerce TAM.
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Operational changes include consolidating Trust & Safety with Customer Support to improve resolution speed, which has already resulted in a 15.5% increase in seller satisfaction.
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Full-year 2026 guidance anticipates slight GMS growth with positive year-over-year comparisons in every quarter, though Q1 is expected to be the strongest due to currency tailwinds.
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The financial model assumes Depop will be classified as a discontinued operation starting January 1, 2026, with core Etsy adjusted EBITDA margins projected between 28% and 30%.
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Strategic initiatives for 2026 focus on ‘agentic discovery,’ leveraging AI to match buyers with unique items more effectively than traditional keyword search.
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Management expects the full impact of product and marketing pivots to take time to compound, emphasizing disciplined execution over ‘single bold ideas’ for sustainable growth.
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Capital allocation plans for the Depop proceeds include general corporate purposes, continued share repurchases, and investment in the Etsy marketplace.
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The sale of Reverb was completed on June 2, 2025, impacting year-over-year consolidated comparisons and contributing to take rate expansion.
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Depop’s historical performance acted as a 350 basis point drag on consolidated adjusted EBITDA margins in 2025, a headwind that will be removed in 2026.
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Management flagged that while agentic traffic grew 15x year-over-year, it still represents less than 1% of total traffic, making it a high-growth but currently immaterial channel.
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Macroeconomic assumptions for 2026 guidance rely on stable consumer discretionary spending levels relative to current conditions.
