Hi, everyone, and welcome to Etsy's Third Quarter 2025 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations. And joining me today for our prerecording are Josh Silverman, CEO; Kruti Patel Goyal, President and Chief Growth Officer; and Lanny Baker, CFO. In addition to our quarterly results, we have some exciting news to review regarding our leadership transition. Once we are finished with the presentation, we will take questions from our publishing sell-side analysts on video. Please keep in mind that our results today include forward-looking statements related to our financial guidance, our business, our operating results and our leadership transition, as noted in the slide deck posted to our website for your reference. Our actual results may differ materially. Forward-looking statements involve risks and uncertainties, some of which are described in today's earnings release and our most recent periodic report and which will be updated in future periodic reports that we file with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them. Also during the call, we'll present both GAAP and non-GAAP financial measures, which are reconciled to GAAP financial measures in today's earnings press release or slide deck posted on our IR website, along with a replay of this call. With that, I'll turn it over to Josh.

Thanks, Deb. Before we dive into our third quarter results, I want to acknowledge the news we announced earlier today. After 8.5 years as Etsy's CEO, I've decided that this is the right time for me to hand over the leadership baton to the next generation. Therefore, we'll be transitioning over the next few months, and I'll become Executive Chair, while the fabulously talented Kruti Patel Goyal takes the reins as our CEO effective January 1. It's been an incredible privilege to lead Etsy through several chapters of evolution and transformation, from the turnaround of 2017 to managing through the hyperscaling of the pandemic to steering us back towards growth again in a more app-centric, discovery-centric world. We've adapted and evolved with creativity, agility, urgency and heart, all while keeping our sellers at the center of everything we do. Now in our third decade, Etsy is entering a new phase, one focused on harnessing AI to further personalize and transform the shopping experience in ways that were previously unimaginable. It's an exciting moment and perfect timing, I believe, for a fresh perspective and a new leader. As you know, following an incredible 2-year run as Depop's CEO reigniting their growth, I asked Kruti to return to Etsy last year as Chief Growth Officer. Kruti has been a key part of Etsy's leadership for over 15 years, and she brings deep knowledge of and passion for our mission, marketplace, customers, and community. Since coming back and ramping up, she's already made a significant impact on the business, evolving our strategic priorities, redefining how we measure success and shifting how we work. She's also already taken on leadership of many of our day-to-day operations. So it's natural and an exciting next step for her to become Etsy's next CEO. If I was the right person to lead Etsy's last chapter, Kruti is the right person to lead our next. Our Board of Directors has been deeply engaged in our succession planning and wholeheartedly endorses her appointment. I also want to acknowledge Fred Wilson, who's been a part of our growth journey since 2007, first as a Board member and then as Chair. He's been an absolutely incredible Chair, passionate, wise, and highly engaged. I couldn't have asked for a better partner, and we're thrilled that he will remain on our Board. On a personal note, serving as Etsy's CEO has been the honor of a lifetime. While I'm incredibly proud of the results and the growth we've delivered as a team, what I'll remember most is the impact we've had on the lives of our sellers and buyers and our role in preserving creativity and human connection in a world increasingly shaped by automation and commoditization. And I'll continue to love hearing 'I love Etsy' every time I hear the Etsy brand mentioned. I've always found purpose in leading through transformation, and I'm excited to make room for new growth, both for Etsy and for myself. Thank you for the trust and confidence you've placed in me. I'm confident Kruti will similarly earn your trust as our next leader. With that, let's turn to our results. We're making steady progress improving our performance in 2025 with our third quarter results exceeding expectations on all three key financial metrics: GMS, revenue, and adjusted EBITDA. I'm pleased to report that GMS for Etsy and Depop combined returned to year-over-year growth, with further sequential improvement expected at the midpoint of our fourth quarter guidance. Etsy marketplace results improved sequentially as we continue to see that the customer-centric priorities Kruti has defined are starting to gain traction. GMS improved approximately 300 basis points sequentially to $2.43 billion, down 2.4% year-over-year. In addition to the impact from these initiatives, there were some external factors that also impacted our results, and Etsy once again proved its resiliency. It gives me tremendous comfort that we benefit from such a dynamic and fundamentally sound business model. Depop's third quarter growth accelerated about 400 basis points sequentially, with GMS up 39.4% year-over-year to $292 million. New user growth and improvements to buyer conversion were primarily responsible for 59% year-over-year growth in Depop's U.S. GMS. And while not a meaningful growth driver in the third quarter, Depop launched its largest ever brand campaign targeted at raising awareness in the U.S. We're really excited that Peter and his team are continuing to build on the foundation that Kruti built at Depop, which has led to the great momentum the business has seen over the past 2 years. That said, we're all clear-eyed that there's significantly more work to do. So I'll turn the call over to Kruti.

Thank you, Josh, and good morning, everyone. Since returning to Etsy earlier this year, I've been reminded at every turn that this company is built on something rare in e-commerce today: creativity, human connection, and purpose. So it's an incredible honor to be named our next CEO. I'm deeply grateful to our Board for their confidence in me and to Josh for his leadership, mentorship, and support over so many years. He's led Etsy through extraordinary growth. Our customer base, GMS, revenue, profitability, and market cap are all multiples larger than when he started. But Etsy isn't just bigger; Etsy is better and well-positioned for our next chapter of growth. We'll continue to work closely together through this transition period, and I'm so pleased that Josh will remain a sounding board for our executive team and me as our Executive Chair. I'll now cover our four strategic priorities, which are working together to deliver tangible value to our customers and support sustainable growth. We're showing up where shoppers find inspiration, matching them with items that feel tailor-made for them, working to deepen loyalty across our community, and amplifying what sets us apart: the creativity and authenticity of our sellers. Each priority fuels the next, creating a cycle of discovery, engagement, and connection that truly differentiates Etsy. Starting with showing up where shoppers discover, we know today's shopping journey isn't linear. People find inspiration everywhere. To capture this behavior, we're meeting shoppers in more of those moments with content that feels personal and relevant. A great example of how we're capitalizing on the evolving shoppers journey is our partnership with OpenAI, which gives us an early foothold in a fast-growing high-intent discovery channel and helps to create another seamless path from inspiration to purchase. In September, Etsy became the first live partner for their instant checkout feature, allowing users to buy items on Etsy directly through ChatGPT. We now provide a dedicated product feed that enables eligible purchases to be completed seamlessly within the chat experience, processed through Etsy Payments. This integration was designed to ensure buyers know it's Etsy. When a customer purchases a product through Etsy and ChatGPT, they'll see the Etsy brand mark, information about the human seller, and an order confirmation from us. Agentic visits represent a small slice of e-commerce traffic today but they're growing quickly. An early analysis suggests that these buyers come to Etsy with higher purchase intent than those from traditional search. Over time, we believe these types of integrations will drive incremental growth and importantly, brand consideration for Etsy. Another example of how we're showing up where shoppers discover is our marketing approach this holiday season. As we've told you, we're significantly reallocating our brand marketing spend away from linear TV into upper funnel channels intended to spark engagement and inspiration, such as social video and streaming. You'll see us highlight the many ways people shop, decorate, and celebrate, how they're discovering the trends shaping the moment, or honoring the traditions at the heart of the season because shopping on Etsy isn't about checking a box; it's about finding something that makes someone feel seen and reminding the world that the most meaningful items come from real people. Of course, once we get shoppers' attention, the experience on Etsy has to deliver. We've made strong progress improving the Etsy app. In Q3, app GMS outperformed non-app GMS by 13 percentage points, a meaningful indicator that our work is beginning to pay off. This progress reflects a series of thoughtful improvements from a redesigned home screen central hub of what's new and relevant to simpler navigation that helps shoppers reach key features faster to a completely reimagined discovery feed powered by a new recommendations model designed to anticipate what each shopper might love next. Early results are encouraging. Engagement on our app home screen is up significantly, and app home GMS grew 20% year-over-year in the third quarter. Advancements in AI and machine learning power much of this work and are central to how we match shoppers with the right items. Over the past few months, we've made meaningful progress in our machine learning capabilities, particularly in two areas that are core to Etsy's differentiation: buyer understanding and item understanding. In buyer understanding, we've developed new models that more deeply interpret our users' interests through a combination of advanced machine learning and emerging LLM techniques. These models now power our app discovery feed where they've already driven double-digit increases in engagement metrics and have also demonstrated a positive impact in our emails and our web homepage experience. In item understanding, we've strengthened our ability to extract richer insight from listing images, enhancing how we represent and connect inventory. This improvement has delivered measurable conversion gains across search and ads, with further opportunities ahead. Rafe and his team's rapid time to market on these initiatives has been excellent, and we're excited to continue testing and iterating. Turning to our most valuable customers, starting with our buyers. We see a strong opportunity not only to deepen loyalty with our top buyers, but also to nurture customers with the potential to become them by making shopping on Etsy easier and more rewarding. In the near term, we're piloting targeted offers for our most active buyers and launching the latest beta iteration of the Etsy Insider Loyalty program. We imagine with our top buyers in mind, so they feel rewarded every time they shop, with shipping discounts and 5% back in Etsy credit on every purchase, all while seeking to deliver sustainable economics for Etsy. From my perspective, one of the most important elements to our long-term success will be Etsy's ability to continue to attract creative entrepreneurs and support their ongoing success because their creativity and innovation is what makes the Etsy experience like nowhere else. Since becoming Chief Growth Officer, I've been connecting weekly with many different groups of sellers. And it's clear we can better help them spend less time managing and more time creating. We've launched new AI-powered tools to help sellers generate listing titles and draft buyer messages, two of the most time-consuming parts of running an Etsy shop, and improved issue resolution with increased access to live knowledgeable support. We're pleased to see that our efforts are starting to make an impact. For example, seller satisfaction scores are up more than 10 percentage points from this time last year. Finally, we're amplifying our competitive differentiation. The human connection at the heart of our marketplace underpins and is intertwined with each of the other three priorities. And while we see abundant opportunities to weave human touch more deeply into every part of the Etsy experience over time, we've started with simple, high-impact updates that bring sellers and their stories closer to buyers, like adding richer seller information directly on to listing pages. Early test results show that these changes are helping buyers trust listings faster and make purchase decisions with less friction. In closing, thank you to our employees, our community, and to all of you for your confidence in partnership. I'm excited to take the helm come January. While we've been showing continued improved performance, there is so much more we need to do. You'll hear more from me as I continue to evolve our vision and plans for the business. And with that, I'll turn the call over to Lanny.

Thank you, Kruti. When I joined Etsy, I told our investors and analysts how much I have admired Josh's stewardship and transformation of this incredible business. I want to thank Josh for leading the company to where we are today and setting Etsy up for what comes next. And I can speak on behalf of the full executive team that we are incredibly excited to be part of this next phase of our journey with Kruti as the CEO. As we review our results, please keep in mind that we completed the sale of Reverb on June 2, and we've provided Reverb's Q3 2024 GMS and revenue so you can more easily separate the impact of that sale from the results of our ongoing business. Third quarter consolidated GMS was $2.72 billion, which exceeded the top end of our guidance range driven by better-than-expected results at both Etsy and Depop. Excluding Reverb from all periods, consolidated GMS grew 0.9% year-over-year and consolidated revenue grew 6.1% year-over-year to $678 million. Adjusted EBITDA was $172 million in the third quarter, representing a consolidated adjusted EBITDA margin of 25.4%. Within that, Etsy marketplace margin was just shy of 30% for the quarter, and Depop's margin declined sequentially as we began to accelerate brand marketing to expand Depop's opportunity, particularly in the U.S. Etsy marketplace GMS was down 2.4% year-over-year in the third quarter and down 3.2% year-over-year on an FX-neutral basis. While we're not satisfied with any decline in Etsy GMS, we are encouraged that year-over-year GMS comparisons continued the momentum established earlier this year and improved by another 300 basis points from Q2 to Q3. Importantly, we believe that initiatives aligned with the four priorities that Kruti described earlier were critical factors contributing to that progress. On the tariff and trade lane front, we experienced some pressure on our U.S. import trade route during the quarter. However, sequential improvement in our U.S. domestic trade route helped offset the impact. The expiration of the de minimis exemption at the end of August weighed on performance immediately thereafter, and our business stabilized as we moved through the quarter, resulting in only a modest headwind to quarterly results. While we remain cautious about the potential impact of tariffs and trade restrictions, especially on consumer discretionary expenditures, we are encouraged by Etsy's resilience and responsiveness thus far. We believe we have benefited from the massive amount of inventory on the marketplace and a very high replacement rate on disruptive items. As we've mentioned, we have an abundance of U.S.-based supply including over 60 million active U.S. listings. And we've been highlighting domestic inventory to U.S. buyers for some time. Additionally, our team has been extremely proactive in providing non-U.S. sellers with information, advice, and viable alternative solutions to help them continue shipping into the U.S. Etsy's active buyer count was 86.6 million on a trailing 12-month basis, down 5% year-over-year and 0.8% lower sequentially. We attracted 4.8 million new buyers in the third quarter and reactivated another 6.6 million lapsed buyers. Combined, new and reactivated buyers totaled 11.4 million for the quarter, a slight improvement compared to the second quarter. GMS per active buyer was $121 in the third quarter and this trailing 12-month figure has been stable year-to-date. When we look more closely at GMS provider trends, on a month-by-month basis rather than a trailing 12-month basis, we've seen encouraging improvements since April 2025, with higher average item values as well as improving purchase frequency per buyer. Slicing GMS performance according to estimated household income, we saw a favorable year-over-year inflection across all income levels in Q3, with the strongest performance among our highest income buyers, which is consistent with the U.S. consumer spending trends we are all reading about. GMS comparisons across most of our top six categories improved sequentially. We saw particular strength in Vintage Home & Living, jewelry above $100, and wedding and engagement rings. Kruti mentioned the great progress we're making with the Etsy app, and I want to underscore the importance and the effects of this focus. In the third quarter, on average, Etsy's app users visited roughly five times more often than our non-app users. They viewed three times more pages per visit and were 1.5 times more likely to convert with a purchase. As we've said before, the app platform allows us to deliver a more engaging and personalized experience, form stronger, more direct relationships with buyers, and increase customer lifetime value. With that in mind, we were pleased to see app downloads grow 9% year-over-year with even faster growth in downloads among new buyers. Mobile app GMS accelerated to mid-single-digit year-over-year growth in the third quarter, and the app's contribution to total GMS increased to 46% compared with just under 45% a quarter ago and 42.8% a year ago. Shifting to the seller view. Following stabilization last quarter, active sellers grew 1.7% sequentially in the third quarter leading to a moderation in the year-over-year decline. In fact, both U.S. and international seller counts began growing again on a sequential basis. The number of new sellers who made a sale in the third quarter of 2025 saw strong double-digit year-over-year growth. In addition, the percentage of total sellers with a sale in the last 12 months increased year-over-year, rebounding from the Q1 2024 trough. Moving to revenue performance. Consolidated revenue was $678 million, up 2.4% on a reported basis, which includes Reverb in the prior year period. Services revenue grew 12.7% year-over-year driven by growth in Onsite Ad revenue at both Etsy and Depop. Etsy Ads delivered another quarter of meaningful growth, supported by model enhancements that optimize seller budget pacing and improved ad quality and relevance while Depop continued to expand its boosted ad offering across the platform. Marketplace revenue decreased 1.7% year-over-year, largely reflecting the impact of the Reverb divestiture, which removed that contribution from consolidated results. Consolidated third quarter take rate improved to 24.9%, ahead of our guidance and up 90 basis points sequentially. Compared to one year ago, consolidated take rate expanded by 220 basis points, reflecting the divestiture of Reverb and the benefit of the growth in services and ads revenue that I just outlined. Consolidated product development spend increased by 5.7% year-over-year to $113 million, growing slightly as a percentage of revenue, as shown on the left of this slide and reflecting an increase in the number of dev employees on a year-over-year basis. We continue to be disciplined and focused in our hiring, with the majority of our engineering hires this year allocated towards growth initiatives. Third quarter consolidated marketing spend increased 6% year-over-year to $208 million, representing 30.7% of revenue. The increase in consolidated marketing spending was driven primarily by incremental brand investment at Depop. Etsy marketplace spend was up only slightly from the prior year. As shown on the walk on this slide, Etsy's marketplace marketing spend gained leverage year-over-year as a percentage of consolidated revenue, whereas Depop's marketing spend lost some leverage, netting to a slight deleverage on a consolidated basis. Within Etsy marketplace marketing strategies, we remain highly encouraged by our owned marketing channels. E-mail and push notifications, combined with enhancements to our app, are allowing us to deepen our direct connections with buyers. And these channels are becoming meaningful high-growth drivers of attributed GMS without an associated investment in external ad spend. We also optimized our paid social portfolio through targeted mix shifts informed by incrementality testing, making us even better able to target higher-value audiences. In addition, we shifted low-funnel efforts to zero in on new and lapsed buyer audiences and expanded mid- and upper funnel investment in high-performing channels like TikTok. Lastly, while competitive spending patterns in the Google PLA auction were helpful during the quarter, we continue to reap the benefits of our own data feed optimizations and advanced PLA segmentation strategies. Turning to our financial position. We generated a very healthy $200 million plus in free cash flow in the quarter and $635 million in the trailing twelve months. We ended the quarter with $1.6 billion in cash and investments and approximately $3 billion in convertible debt. We repurchased 2.1 million shares of Etsy stock at a total cost of roughly $120 million. Taking a longer-term view, you can see in the chart on the right that we've reduced our share count by 17% since December of 2023 through our stock buyback program, delivering significant value to our shareholders. Moving to our outlook, which assumes a stable macro environment from where we are now. Although we recognize that there is a higher-than-normal degree of uncertainty about consumer spending into the holiday season, both in the U.S. and overseas, we currently expect Q4 consolidated GMS to be between $3.5 billion and $3.65 billion, which, at the midpoint, would represent further quarter-over-quarter improvement in the apples-to-apples growth rate. We expect that our Q4 consolidated take rate will be approximately 24.5%, primarily reflecting some seasonality. Consolidated adjusted EBITDA margin will be approximately 24%, reflecting stable, strong profitability for the Etsy marketplace paired with a significant sequential increase in brand marketing investment at Depop, which will compress margin performance. This investment in Depop is discretionary and opportunistic arising from our excitement about the scale and growth of the apparel resale market as well as Depop's own very encouraging momentum as the business is now at an annualized run rate of $1 billion plus. Depop's nearly 60% year-over-year GMS growth in the United States is built on top of similarly strong growth in both buyers and sellers, and we see a meaningful opportunity to increase awareness and penetration across a broader demographic range of buyers that are coming into the vintage and resale markets. Thank you all for your time today. I'll now turn the call over to the operator for Q&A.

Our first question will come from Maria Ripps with Canaccord.

Kruti, congrats and Josh, best of luck with the transition. I guess, I just wanted to ask about your OpenAI partnership. So is this integration available to all U.S. sellers? And how do you prioritize listings that are included? And maybe secondly, can you help us think through the performance fee since Etsy's covering this fee, is it fair to think about this as an extension of your offsite ads? Or are there any transaction costs on your end that you will not be incurring to compensate for this additional fee? How should investors think about this?

I'm happy to start. Thank you, Maria. We are very enthusiastic about the opportunities for Etsy in the realm of agentic commerce. Being the first partner with OpenAI showcases our belief in the significant opportunities available, especially when many others in e-commerce are focusing on defensive strategies. Many sellers are competing on price and speed by offering identical products available elsewhere. Agentic commerce will elevate the buying experience. Etsy has truly unique offerings that set us apart, and we're excited about the chance for consumers to consider Etsy in situations they may not have previously. For major model builders, Etsy provides unique data resources and a strong engineering culture to keep pace with their needs. We believe that being involved early allows us to shape the direction of agentic commerce, including the types of data being processed and how it's presented to buyers, while ensuring our brand identity is maintained. In response to your questions, OpenAI and similar platforms will scrape Etsy to organically include our listings, but for actual purchases, we supply a data feed directly to OpenAI that allows buyers to complete transactions through them. These transactions still go through Etsy's payment system, ensuring customers know they're buying from Etsy. We pay OpenAI a commission based on successful transactions, similar to what we might pay influencers or affiliates. Currently, we are not passing this fee onto our sellers, and this is distinct from our offsite ads program. We will consider how to approach this moving forward.

Congratulations to everyone. I would like to hear from Kruti about the recent changes you've mentioned, specifically regarding the improvements in engagement on the app. Could you elaborate on what you've observed in terms of engagement, especially with the adjustments made to screen real estate for discovery? Additionally, I'm interested in any early insights you have on how these recent learnings are shaping your product development plans for next year as we aim to continue our growth journey and see improvements in GMS trends.

Sure. I can start that out, and then feel free to add on. So on the app side, as you mentioned, we've made some meaningful investments in reshaping what the home screen looks like. And that's really intended to deliver on that first priority that we talked about showing up in a way that really enables discovery on Etsy. And so what you've seen is that we've gone from what was essentially trying to guess exactly what it is that you wanted when you first open the app to now giving you multiple windows and doorways into Etsy. And so you'll see that at the top of the home screen with that central hub that we mentioned, where you can not only pick up where you left off last but look at things that are like what you favorited before or items that you've added to a collection before. And then below that, we've invested in machine learning to power a much more discovery-focused feed of items that are really intended to anticipate what else you might like next that you haven't necessarily engaged with in the past. And that's been basically through leveraging new ML models that are really deciphering what interest you as a buyer might have, and then connecting that to what items match those interests. And we're seeing a meaningful uplift in the engagement in the home screen, particularly through that feed. And we're really encouraged by that. How this is playing into our product development plans more broadly? We're really encouraged by the progress that the teams have made very quickly against all the four priorities, the strategic priorities that we've laid out. And we're really encouraged by the early traction that we're seeing from them. We're seeing really great momentum and early indications of growth across metrics. And so what that does is that gives us confidence in the priorities that we have set and continuing to deepen our focus in those as we go into next year. Really, these four priorities address accelerating the entire flywheel for us through driving discovery, engagement, and connection in ways that we think are going to affect all the metrics that drive our marketplace growth. And so the early traction that we're seeing is encouraging and indicates that we'll continue to invest across these four priorities.

And a couple of nuggets we gave in the call: app users, people who've downloaded and are using our app visit five times more often than people that are web-only. And in each of those visits on average, they see three times as many pages. So they're visiting more often, and their engagement is a lot higher. As Kruti's talking about that flywheel, that gives us an opportunity to get to know them so much better. So that each visit we're able to become a lot more personalized. We've talked for so many years about the consideration opportunity at Etsy. The people think of us for home furnishings, or they think of us for clothing, or they think of us for gifts. And we want them where we can serve so many of their needs. And of course, you can buy TV ads saying, think of us for lots of things. But the best way to do it is when you're on Etsy to show you not only the thing you came for, but also to exposure to really cool things you didn't even think to ask for, so you broaden your understanding of Etsy. And that's the flywheel, and we're encouraged by the early results we're seeing from these efforts.

I'm going to pile on just to say that all of that also is powering our owned media channels. And so the data that we're gathering about those app users when they're visiting much more frequently, when they're looking at many more pages, when they're responding to the ML prompts that we are providing to them is helping us profile them, which is helping us better target our outbound email and push notifications, which are becoming quickly becoming a really prominent and very high return marketing channel for Etsy. So the flywheel connects through the marketing as well.

Great. And let me add my congrats as well to Kruti and Josh. Josh, you will be missed. But yes, congrats, guys. We had a follow-up on the guide for the fourth quarter. So great to hear about the sequential improvement at core Etsy GMS. Are you seeing further improvement here in Q4, just given the momentum of the initiatives and the easy compares that the business is lapping? And just curious, talk about maybe how you approach the holiday. Any specific opportunities for the business? We had a shortened holiday last year, which was not a positive. What could Gift Mode do this year? So curious on that. And then, Kruti, maybe it's early for this question, but Etsy's profitability is some of the highest among the peer set. Just strategically, do you think there's an opportunity to invest more just to reignite growth even faster? Or do you think it's important to preserve profitability?

Let me discuss the outlook for the fourth quarter. The consumer outlook remains uncertain, with a higher level of uncertainty this holiday season compared to previous years. However, if consumer health remains steady as it has been throughout the year, that will serve as our macroeconomic foundation. We believe the progress we've made since the start of the year is largely due to initiatives we've implemented. We expect to continue this progress into the fourth quarter. Our projections for the quarter indicate that at the midpoint, we anticipate a further improvement in year-over-year growth for both our consolidated results and the Etsy business. The upper end of our range suggests a healthier consumer and continued progress in our initiatives, while the lower end indicates a more challenging environment for consumers. We've aimed to provide a clear picture of what we expect for the fourth quarter in our outlook.

For our holiday season, we've got a really exciting campaign planned that really leans into the humanity of Etsy. What makes Etsy really different than the fact that you are seeing what's special in the other person and recognizing what's meaningful in the other person. It's a really great set of campaigns that will be reaching people where they consume media now, which is very different than where they have in prior years. So we're really excited about that. And on Gift Mode, in particular, it's really now deeply integrated into search and the core home screen. And so instead of having to go to a separate tab for it, it's really integrated into the core experience. And as we're getting better and better at recommendations with these new ML models, we're also getting even better at finding the perfect gift for you, both through edited and curated gift lists and then ML just for you. So we're super excited about that.

And then on the last part of your question, it is early to comment on the specifics there. But what I will say is that we have seen the profitability of our marketplace is the real strength of our marketplace. And we've always been really disciplined and thoughtful about our investments. So I would point to Depop as really a great example of where we've been willing to make deeper investments where we think there is a lot of opportunity. And just to step back and talk about that for a moment, I'm really proud of what we've been able to accomplish at Depop. We went from 3 years of flat GMS to 2 years of accelerating growth. And over that time, we nearly doubled the scale of GMS and the number of active users and tripled the number of listings on the platform. All of that goes to show that we've really achieved incredible product-market fit, and the growth is not just momentum; it's sustained growth based on that product-market fit. And so this is really the perfect time to be making that step-up in investment against marketing Depop to really increase the exposure that we're giving to people who may not have heard of Depop before, but for whom the value proposition is really relevant and will resonate. I would just look to that as an example for us of when and where we think there are really great opportunities to invest more, we will absolutely take them. And we continue to see our profitability profile as a strength of the business.

Congrats on seeing the good improvement in execution overall. Kruti, as you step into the CEO role, can you just elaborate a bit more on how you strategically are thinking about driving sustained GMS growth here? Is it more of the same execution or leveraging the Depop playbook across product marketing? Or is there just anything else to keep in mind?

You're right. My focus is squarely on delivering robust, sustainable growth, and that has been my focus since the moment I stepped back here at Etsy from Depop. One of the nice things about the way that this transition is playing out is that I've had the ability to really lay the groundwork for growth over this last year. You're already seeing the investments and the changes that we think are going to be really critical to driving growth next year and over time. The way that I would think about it is that we step back and say, what are the things that we really need to do to strengthen the value proposition of Etsy for both our buyers and our sellers, our entire community? That's what really underpins the four strategic priorities that we've laid out, really driving that flywheel of discovery, engagement, and connection, all with human connection at the center of what makes Etsy different. I think we all feel very encouraged by the quick progress that we've made, the rapid time to market against these priorities, and the early traction that we're seeing. We're excited about the traction, but we're far from satisfied with the growth that we're seeing. There is a ton of potential ahead. And because we see these working, you can expect us to continue to invest in these strategic priorities going into next year.

Just wanted to come back to loyalty and rewards and sort of build on that as a broader conversation piece. What have been your key learnings so far as you've rolled out more loyalty on the platform? How do those learnings inform the innovation or iteration of the loyalty you're announcing today that looks like it's going into beta this week? And how should we think about the GMS opportunity attached to loyalty over the longer term?

Sure. I can start on that, and then please feel free to add on. So at the core of this priority around loyalty is the idea that Etsy should get better and better for our customers as they use it more and more. That's true for buyers and sellers, but let's talk about buyers in this case since you asked about the loyalty program. I think there are two main ways that Etsy can feel like that, can feel like it's getting better as you use it more. The first is what we were talking about earlier, which is our investments in personalization. It's really the number one way that we can show our buyers that we really understand them that we're paying attention to all of the signals that they give us, and that's informing an experience that feels really tailor-made just for them that we think drives ongoing engagement and loyalty over time. Another piece of that is our investment in the Etsy Insider Loyalty beta program. As you noted, we are evolving that program into version 2.0 of our beta. What we've learned from the initial version is that the rewards we offered both drove adoption of the loyalty program and drove a meaningful uplift in frequency of engagement and purchasing. That was a really important learning from this first version. What we're changing in this next version is we're really reorienting it to really focus on our more frequent buyers. So again, to that point of making sure it feels like you are recognized and rewarded for the time and investment that you make in Etsy. The changes that we're making are really around the reward structure, so that the benefits you get are benefits you experience with every purchase. So shipping discounts on every purchase, rewards, and Etsy credit back on every purchase. What we're looking for is, again, to see continued adoption, frequency of engagement, frequency of purchasing, and over time, renewal rates in that loyalty program. So that's the goal. As we learn more, we'll share that.

I would start by considering Etsy generating $120 in gross merchandise sales per buyer over a 12-month period. Our opportunity to enhance purchase frequency through rewards, incentives, and retention benefits is significant for us. We know that many customers are spending five to ten times that amount with us in any given year. We are aligning our programs, marketing, and personalized communications to encourage more customers to think of Etsy sooner, and the focus really comes back to that gross merchandise sales per buyer in the long term.

Excellent. Congrats all around. So maybe first question for Josh or Kruti, and this is really a follow-up to the prior question, but how do you balance the push for traffic from these GenAI platforms versus maybe direct/mobile, where arguably the value that accrues to Etsy over time is higher? And then, Lanny, can you maybe unpack a little bit more the nature of the investments planned for Depop in Q4, which will compress margins near term? Is this a one-quarter type of phenomenon around the holidays? Or is this more structural going forward?

I'm happy to start with the agentic commerce. The great news for Etsy is I don't think that it's a zero-sum game. I don't think it's an or. I think it's an and. People are going to shop agentically sometimes. When they do so, I think the smart agents are not going to say, here's the answer. Very rarely is there one right answer. I think they're going to provide a range of choices. They're going to say, for example, this is the cheapest thing you can buy. This is the thing that will arrive the fastest. And this is the thing that's most special or unique. In that offering of a few curated choices, I think disproportionately Etsy is going to be presented and is going to win a lot more often than consumers on their own might have thought of Etsy. In all of these presentations, whether they buy that particular thing from Etsy or not, they're going to be constantly reminded, oh, Etsy has something to offer for you. These customers are also going to go and launch their app. It's going to prompt people to think, 'Oh, Etsy is so relevant for me so often.' I don't think in any near-term future, most people are going to exclusively shop via agents. They will continue to use the app sometimes. I think it's going to actually be a virtuous cycle that accrues disproportionately to Etsy's benefit.

In terms of our marketing investment, thank you for the question. As noted earlier, this is a significant market, and we hold a strong position. We have a product at Depop and a compelling value proposition that we are confident about. This is an opportunity for us to significantly grow this business and enhance its long-term value, and we are pursuing that actively. Our main opportunity in the near term is to increase awareness of this excellent product and service. This is a brand campaign that will extend beyond the next three months into the first half of next year. It will take time to evaluate our performance effectively. We are dedicated to maintaining our brand investment to ensure we successfully raise awareness of the product. We appreciate the long-term potential here. While this will affect margins this quarter, we are committed to continuing this investment. If conditions improve more than anticipated, we may increase spending. Conversely, if things don't go as planned, we can adjust our expenditures accordingly. Our current intention, based on our observations in the market, is to invest for the long-term growth of the business. Over the past few years, as we've enhanced the product and rapidly increased our user base, this business has shown its capacity to deliver a high percentage of incremental revenue growth to the bottom line. We trust in its long-term profitability and are eager to scale effectively.

The cool thing on that is there's a huge opportunity for the core Etsy business in the future, but there is also a huge opportunity in Depop. Can Depop be the Venmo to our PayPal? Depop, I think we think can be on its own a multibillion-dollar asset. What you're seeing is us take a discrete amount of investment dollars to invest in marketing. We think it's likely to work. We'll be measured and disciplined about how we track progress there. If it doesn't work, we can turn it off. But we think it's likely to work, and we think there's huge potential for Depop.

Okay. Operator, we can get one more in.

Josh and Kruti, congratulations to both of you on the transition. A couple of questions. So just on the agentic commerce, Kruti, you spoke during the call about the tailwinds you're seeing from improved buyer understanding. Just wanted to ask if you think there's a continued opportunity there in agentic context. Do you think there's going to be a meaningful agent-to-agent communication and associated optimization opportunity in those channels over time? And then, Lanny, a quick follow-up. Can you just maybe help us size a bit the exogenous factors, the de minimis impact to the extent you saw it over the course of Q3?

Sure. I can start by saying that we believe there are many exciting possibilities ahead, including what you mentioned and others we haven't even considered yet. Our investment in enhancing buyer understanding is going to benefit us along any of those future paths as opportunities arise. The team has done a fantastic job of quickly capitalizing on the evolving capabilities of AI and LLMs to significantly improve our buyer understanding, which is currently reflected in the models we are deploying on-site. This includes enhancements in our on-site and on-app experiences, particularly in search and recommendations. These are some of the engagement improvements I referenced earlier, especially on the app, as well as the positive impacts on conversion in search and ads that I mentioned during my earlier remarks. We are enthusiastic about the potential that this enhanced buyer understanding presents, and we will certainly take advantage of it as new opportunities emerge in areas such as agentic search.

Can I just build on that for just a sec? One of the ways that customers are trained right now is to give three keywords or two keywords. Etsy has just an unusually vast amount of inventory of really neat things that are relevant, and people are suddenly being trained to give paragraphs of information and context. That's going to be exceptionally helpful to us in getting into the very perfect thing. So we're super excited about that.

On a quick tour of exogenous factors, the foreign currencies were about the same in the third quarter as they were in the second quarter. The competitive dynamics continued to allow us to gain opportunistically some search market share, as we described. From a trade and tariff perspective, we've seen the resilience in Etsy marketplace of stronger growth in U.S. domestic with a little bit slower growth in international imports in the United States, right around a couple of weeks of the end of the de minimis exemption, we saw a little bit of pause in the marketplace, but that came back and was a very modest headwind for the total quarter.

Great. All right. We are out of time. Thanks, everyone, for joining this morning.

Thank you all.

Thank you.

Thank you.